SOMBA K'E/YELLOWKNIFE - An association representing Canadian North, First Air and other Northern air carriers has urged the territorial governments to adopt a "buy local" policy when booking flights for passengers and cargo, but the GNWT says it already has such a system in place.

Canadian North president Tracy Medve says revenue from the airline's flights to and from Yellowknife is down compared to last summer - no surprise given the lowering of airfares ever since southern competiton WestJet arrived on the scene in May. - photo courtesy of Canadian North

In a letter dated July 30, Joseph Sparling, president of the Northern Air Transport Association – on whose board of directors both Canadian North and First Air sit – said the presence of southern-based companies like Air Canada and, more recently, WestJet, threatens to impede the viability of Northern airlines.

Both Air Canada and WestJet – the latter of which began offering daily flights from Yellowknife to Edmonton in May and is now here to stay – "are many times larger than any of the Northern carriers and they have both the will and the ability to absorb prolonged losses on any particular route if they feel they can achieve long-term gain by eliminating the competition," wrote Sparling.

Revenue on summer flights to and from Yellowknife has declined compared to last summer, said Tracy Medve, president of Canadian North.

"Some people would climb onto our flight and go, 'Geez, flights are full,'" said Medve. "So what it's done is, in some cases we've carried more passengers. But the revenue number is less than when we were carrying fewer passengers."

Price matching as a result of WestJet's considerably low fares are to blame, said Medve.

"If you were sharp, about two weeks ago you could have purchased a ticket between Yellowknife and Edmonton for $55, just to put it in perspective," she said.

In July, Chris Ferris, vice president of marketing and sales for First Air, said while his company has not increased fares for community flights to make up the cost of matching WestJet's prices, the airline may consider doing so.

First Air could not be reached for further comments for this story.

Asked if Canadian North will be forced to make changes to its service schedule for the NWT and Nunavut's other communities, Medve said, "Let me say it this way: Canadian North's mandate is to provide safe, reliable air transportation services to the North. That's why we exist. So if I'm here to tell you that we have every intention of Canadian North continuing to meet that mandate … then the changes that I make will have to be designed around making sure we can continue (that mandate).

"We're not going poking around in places where we don't belong."

Sparling's main suggestion is that the territorial governments "immediately each adopt a 'buy local' or 'buy Northern' purchasing policy for air transportation services."

But Doug Doan, assistant deputy minister of the GNWT's Department of Industry, Tourism and Investment, called it a moot point, saying the GNWT already has such a policy.

"The way it works is any air travel service that's valued under $5,000 must be purchased only from a Business Incentive Plan (BIP)-approved Northern business," said Doan. "A business under BIP would have its head office in the territories, its employees in the territories.

"Essentially, in the air transport area, there are three companies that are BIP: one is First Air, one is Canadian North and the other is Northwestern Air Lease."

There are some rare exceptions, however.

"…That is when, for example, the scheduling or timing doesn't work.There's always going to be the odd time when it just doesn't work," said Doan.

"I can't tell you whether they adhere to it or not, because I'm not privy to what they do in terms of spending money flying on Air Canada and WestJet," said Medve. "But it would be hard to believe that they don't spend a dime on them."

Medve added the BIP program is hardly foolproof, sometimes resulting in loss of potential business for Northern flight companies.

"(A) general contractor might buy Northern goods and services, but we've seen cases where there's subcontractors who will use a southern carrier to bring the workers into the North and … they price that into the cost of their bid," said Medve.

"Unless they're policing that, there's nothing specific that says, 'You and everybody that provides services and pricing to you has to also abide by this.' We know that that's not happening."

Sparling's letter also asks the territories to express their concerns to the federal government about proposed debt financing to Air Canada.

"We pay tax dollars to the federal government, who turns around and gives that money back to one of our competitors. I don't know why anyone wouldn't find it ironic," said Medve.

So far, neither Sparling nor Medve has received a response from the GNWT, which Medve called "disappointing."