No evidence of anti-competitive acts between First Air and Canadian North: Competition Bureau
Investigation began in 2016 amid predatory pricing allegations
The Competition Bureau has found no evidence of anti-competitive acts between First Air and Canadian North in its investigation of predatory pricing toward the now-defunct GoSarvaq.
While the bureau found First Air and Canadian North's seat sales, which coincided with GoSarvaq's launch, had an impact on GoSarvaq, "the Bureau did not find sufficient evidence to conclude that these were anti-competitive acts as required by the [Competition] Act," according to a statement from the bureau.
The seat sales saw one-way tickets along the Ottawa-Iqaluit route go below $500 from the roughly regular $1,200 fare.
The bureau looked at whether the bigger airlines dropped their prices so low that they would make less money than not flying at all. If they did, with the intent to recoup the lost revenues after GoSarvaq went out of business, it would be illegal.
But the bureau didn't find any evidence to indicate the airlines broke any laws.
Although the Bureau found evidence indicating the bigger airlines saw GoSarvaq as a threat, and that the airlines took deliberate actions in response to GoSarvaq's launch, it found no evidence that First Air and Canadian North were price-fixing with each other.
Canadian North pleased, unrepentant
Canadian North says its pleased with the conclusions from the Bureau, along with how the bureau acknowledged the challenges of flying in the North.
As for the alleged predatory pricing along the Ottawa-Iqaluit route, the airline says the route is important to its operations in Nunavut as a gateway to the Eastern Arctic.
"Whether profitable or not, we'd never want to surrender market share on that route," said Canadian North's communications manager Kelly Lewis, adding it's also an important cargo route.
"We've operated for two decades on that route, almost. We've worked hard to build a lot of market share. To not respond [to GoSarvaq's low introductory rate] would have been, basically, surrendering and put the sustainability of our business at risk and certainly put jobs at risk."
Asked why customers haven't seen a similar seat sale since, Lewis said GoSarvaq's initial fare was an introductory offer.
"You have to compete to a changing market conditions, and we were comfortable, for the short term, doing that," Lewis said.
"Is that a price that we we would want to offer on an ongoing basis? I wouldn't think so, no. But nobody had stated that was going to be a permanent standing price for that route."
No findings on codeshare partnerships
The competition bureau also investigated First Air and Canadian North's codeshare agreement — which saw both airlines sell seats on each other's planes on certain routes — but closed the investigation after First Air ended the codeshare agreement in May.
The bureau also looked into the 2015 merger between First Air and Calm Air in the Kivalliq. But in consulting financial and economic experts ahead of its investigation, the experts determined the merger was "likely to result in significant effiency gains" and those gains were likely to significantly outweigh its anti-competitive effects.
From those findings, the bureau didn't find enough grounds to challenge the merger.