GN airline policy under review
$700,000 contract to study medical and duty travel draws praise, criticism
Derek Neary
Northern News Services
Monday, September 18, 2017
NUNAVUT
The Government of Nunavut has chosen German-based Lufthansa Consulting to study options on how to structure medical and duty travel, and that choice of contractor is eliciting a mix of accolades and doubts.
Lufthansa Consulting, headquartered in Frankfurt, Germany, with offices in Moscow and Rio de Janeiro, will be paid $698,000 to assess business options such as direct contract negotiations with the airlines, relying on the free market by having no formal contracts, and the possibility of moving to a sealift pricing model whereby a minimum level of service is guaranteed in each community through "government volume pricing" to public and private-sector clients.
Victor Tootoo, president of the Baffin Regional Chamber of Commerce, said the airline procurement strategy is important to businesses because the outcome could have a broader impact on pricing and could have tremendous consequences for the airlines.
"Neither of the major carriers - First Air or Canadian North - would be able to survive without any of the government business. So the outcome of this strategy is going to have a huge effect on all the businesses and residents in Nunavut," Tootoo said, adding that it's critical for the strategy to be more than about accounting.
Canadian North declined to comment on the airline procurement policy. First Air's manager of marketing and communications said the airline has "no concerns" with the process.
The contract requires the consulting firm to make trips to six Nunavut communities. Regardless, Lufthansa will be at a severe disadvantage compared to a company with Northern experience, said Tootoo, who also served as a senior bureaucrat in intergovernmental affairs, finance and human resources.
"The reality is the answers are here (in Nunavut). If you're not able to get those answers from here and you bring in solutions that are external with an external view, my sense is that it's not going to work," he said. "I guess I would say that I'm somewhat discouraged that there wasn't any Nunavut-based or Canadian firms who were the successful proponent for this project. Whoever does come in to do the work will need to have a huge education on what the reality of living, working and travelling in and out of Nunavut is like. You don't have a real appreciation for it until you do it."
Rick Erickson, an airline analyst with RP Erickson & Associates in Calgary, called Lufthansa Consulting the "Mercedes Benz" of airline consulting firms.
"They are certainly one of the elite of the aviation consulting firms on the planet... from any of the past work I've seen them do, I've always been impressed," Erickson said. "Kudos to Nunavut to win such a prestigious company to undertake the work."
While Erickson did question what contracts Lufthansa has fulfilled that would be comparable to the distinct conditions existing in Nunavut, he said Nunavummiut can be assured "these people will be truly independent."
"I can't believe Lufthansa's got any kind of contacts with either the commercial players or government players in Nunavut," he said.
"As indicated in the public bid documents," said Kris Mullaly, policy analyst and communications officer with the Department of Community and Government Services, "the proposals that were submitted are reviewed and scored according to evaluation criteria. We are looking forward to working with Lufthansa Consulting in the coming months."
Related to the German airline Lufthansa, the German consulting agency has until July 2, 2018 to submit recommendations to the GN. The new model is expected to be in place as of Sept. 1, 2019.
