September 21, 2001

Northern airlines set for financial battering

Northern passengers stay home

JANE GEORGE
Nunatsiaq News

MONTREAL — Northern airlines won’t escape the financial battering that North American air carriers will endure in the aftermath of last week’s terrorist plane hijackings in the U.S.

Last week, as air traffic was frozen throughout North America, Canadian North saw its operations come to a standstill.

But now that its planes are back in the air, Northern passengers are staying home.
“What’s hurting is that people are cancelling left, right and centre. There is absolutely a loss of revenues,” said Kelly Kaylo, Canadian North’s director of marketing and sales.

“Passenger travel is a perishable commodity, it’s a perishable product. You can’t get back what you lost... I’m not sure what we’ll be able to do.”

Even when Northern air services were restored at the end of last week, many Northern airline passengers didn’t show up for scheduled flights.

“Fearful flyer” programs?

“Fearful flyers” are now expected to avoid unnecessary air travel in droves.
One survey, a Harris poll taken last week in the U.S., showed that 64 per cent of those polled didn’t want to fly for a few days and 34 per cent would avoid planes for a few months.

Northern airlines may recover more rapidly because purposeful travel — for meetings, medical appointments, or communities off the road network — drives air transportation in the North.

“It’s a critical form of transportation, and Northerners will have to continue to fly,” Kaylo said.

Meanwhile, Canadian North is scrambling to comply with new, tougher security regulations as they are announced, or revised, on a near-daily basis by Transport Canada.

First Air and Air Inuit, the two airlines owned by the Makivik Corporation, have also lost passengers and money since last week.

“Our people are still trying to figure it out,” said Makivik president Pita Aatami. “There are losses, but I can’t tell you how much.”

First Air and Air Inuit are also following the Canadian airline industry as they beef up security measures.

These efforts may turn out to be costly if the federal government doesn’t help airlines pay the cost of tighter security— and if air travellers continue to stay put.

Southern carriers have already reacted by slashing jobs and flights.

The U.S. carrier Continental Airlines Inc. laid off 12,000 employees and cut its flight schedule by 20 per cent as bookings nose-dived and security needs rose following the hijackings.

The value of Air Canada’s stock fell by 38 per cent soon after the Toronto Stock Exchange re-opened.

The International Air Transport Association says last week’s crisis has already cost the global airline industry at least $15 billion.

No price increases yet

Despite the expected losses, Aatami still promised that there wouldn’t be any “sudden increases” for cargo rates or ticket prices on First Air or Air Inuit.

Given the new pressures on First Air, reviving a scheduled jet service between Canada and Greenland is now even more remote than before.

Aatami said Greenlandair was acting on directives from Greenland’s home rule government when it decided to end its partnership with First Air on the route.

Aatami said he’s made a similar commitment to Nunavik’s beneficiaries — that their airline be financially sound.

“We’re in the business to make money, not to lose it,” Aatami said.