Would an airline merger compel competitors to move in?

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What sort of ripple effects could a First Air and Canadian North merger have? Will other airlines seize the opportunity to provide competition? Will grocery costs rise or fall at Northern stores and Co-ops? These are the responses that Nunavut News received:

If Canadian North and First Air become a single entity, it doesn’t appear other major airlines will swoop in to provide competition.
Brian Tattuinee photo

Calm Air
Is Calm air planning to expand its operations in the North as a result of a proposed First Air merger with Canadian North?
“The answer is no,” stated Gary Bell, president and CEO of Calm Air. “Splitting the traffic to communities as far apart and as sparsely populated as they are in Northern Canada (including Nunavut) does not provide a viable economic return. It is very difficult to achieve any economies of scale even with 100 per cent of the traffic, given the large territories, small populations, harsh conditions and higher costs to operate in the North.”

Air Canada
“We currently do not have immediate plans to add services to Canada’s North,” said Angela Mah, spokesperson for Air Canada.

WestJet
“We are not considering the Iqaluit route at this time,” said Morgan Bell, adviser, public and media relations with WestJet.

Arctic Co-operatives
“The challenges of high cost and small market sizes are ones we understand full well,” said Duane Wilson, vice-president of stakeholder relations with Arctic Co-operatives. “I’ve got a great degree of confidence that the cost structure can be lower (for a combined airline)… time will tell how that translates into lower prices or better service.”
If there is an increase in cargo costs, retail customers will ultimately bear those extra costs in retail outlets, Wilson acknowledged.

North West Company
“We do not expect the merger to have a significant impact on our operations in the near term. We will continue to monitor the situation and do not have anything further to add at this time,” stated Derek Reimer, North West Company’s director of business development.