NUNAVUT
It has been a challenging year for airline operators in the North.

A recent internal First Air memo suggests the company is facing a difficult market and is looking for ways to cut costs, including sub contracting some routes to Summit Air. - Walter Strong/NNSL photo

Just how challenging it has been is not easy to determine. None of the Northern-owned major national operators – Canadian North, First Air, and Air North – are publicly traded, and so do not publish financial information.

But a Nov. 21 internal memo obtained by Nunavut News/North from First Air President and CEO Brock Friesen addressed to all employees suggests the company

faces a difficult operating environment.

"In … recent meetings with employees across our larger stations as well as with union leaders, we discussed the current market challenges and the need to reduce our cost of operation," Friesen stated in the memo.

"Although we continue to carefully decrease our costs in all areas, it remains that our overhead and cost of flying are too high. We need to make changes to the way we operate."

In the memo, Friesen goes on to describe a number of existing, regularly scheduled First Air routes that he said would be operated under expanded contracts with Summit Air as early as December, and increasing into the first quarter of 2015.

"As we continue to evaluate options and assess key business factors such as route structure, operating costs, utilization, passenger/cargo requirements and revenue, a difficult decision was recently undertaken," Friesen stated.

"Soon we will be expanding our partnership with Summit Air."

Summit Air already operates flights to and from mine sites on First Air's behalf.

Despite Friesen's describing the decision to potentially subcontract routes to Summit Air as "difficult," a First Air spokesperson has since stated that the company anticipates no job losses from the arrangement.

"We don't envisage job losses at First Air as a result of this partnership extension," stated Alethea Arnaquq-Baril, First Air spokesperson in an e-mail to Nunavut News North.

"We already work with Summit Air in many other areas, so we see this step as the next logical extension of our current partnership."

Arnaquq-Baril went on to say that First Air may need to hire more staff if it continues its current growth trend.

First Air would not elaborate on the details what the arrangement with Summit Air would look like, or whether changes were already underway.

In the memo Friesen mentioned First Air's Yellowknife-Rankin Inlet-Iqaluit flights and it's Edmonton-Yellowknife-Norman Wells as routes that could benefit from increased cooperation with Summit Air.

Summit Air did not respond to a request for comment by press time.

Union representation for First Air said they were aware of the possibility.

Nathalie Stringer, Regional Vice-President in Quebec for the Canadian Union of Public Employees, which represent the more than 80 First Air flight attendants, described the memo as a contingency plan following the rejection a month earlier of a proposed merger between First Air and Canadian North.

"They tentatively sent out this memo just as a heads-up, but this is not their intention," said Stringer.

"They're trying to get other contracts in order to keep the planes and keep the jobs, but there's no numbers yet. There's nothing forecasted. This is just a plan B, in case they cannot find new contracts."

Ken Smith, CUPE component president at First Air, said he didn't believe that Summit Air was ready to take on the workload yet, but he didn't discount the possibility of losing the routes.

"Summit Air is not ready to do anything at this time so we don't know much more than the company has indicated to us," he said.

Other indicators of contraction

This memo is not the first indication that First Air – 100 per cent owned by Nunavik's Makivik Corporation – is looking for cost savings.

In October, Bert van der Stege, First Air president of commercial operations called for more government investment in airport and air safety infrastructure.

He made his remarks at the Economic Club of Canada in Ottawa where a First Air employee received an award.

"There is not much 'economic' about flying to and within the Arctic," van der Stege said. "Most importantly the operating costs are very steep."

In recent months, First Air has announced a reduction in service to some Northern routes. As of Oct. 1, First Air had eliminated its service to Naujaat (formerly Repulse Bay), leaving the community with Calm Air as its sole provider of scheduled flights.

The decision to eliminate service in Naujaat came quickly and unexpectedly.

"The community had no idea the airline was even contemplating discontinuing the route," said Naujaat SAO Kowesa Etitiq.

"We were really shocked about the decision."

In June, First Air served layoff notices to nine employees; three full-time and six part-time. Seven new full-time positions were created for a net loss of only two positions.

Canadian North reports that 2014 was a strong year for the airline, despite challenges in some resource sectors areas and on certain Northern routes.

"While we have seen some weakness in resource sector demand in certain markets such as the Mackenzie Valley and our trans Arctic service, our healthy industrial charter program has offset these declines with significant double digit growth from our resource sector customers in 2014," stated Canadian North spokesperson Kelly Lewis in an e-mail to Nunavut News/North.

The 100 per cent Inuvialuit Development Corporation-owned airline has added its tenth Boeing 737-300 to its fleet, giving it 20 aircraft in total.

- with files from Darrell Greer and Evan Kyoshi French

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