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Paying the price

Richard Gleeson
Northern News Services

Yellowknife (Feb 08/02) - Have you ever wondered why it costs so much to fly in the North? Airlines say it's the cost of doing business in a region where many planes take off with empty seats

Talk to anyone who flies around the North and you'll hear complaints about the high cost.

Ask the two big airlines who serve the NWT and Nunavut, and you'll hear an explanation about the cost of doing business in the North.

The already high cost of flying in the North went up in December when First Air and Canadian North raised all airfares by six per cent.

The effect of the increase was not felt until Jan. 19, when a seat sale both airlines implemented on the heels of the hike came to an end.

"It's pretty expensive for someone my age," said 19-year-old Shawn Tutcho of the hefty cost of flying to Edmonton. "I do most of my trips down south driving. I can't really afford (to fly)."

Some who aren't even paying their way find airfares up here startling.

"People up here are being held hostage by the airlines," said Mike Bourassa, a worker at one of the diamond mines. Though it did not come out of his pocket, Bourassa said he was startled when he saw the cost of a ticket from his home in Kelowna to Yellowknife -- $1,700 one way.

"The planes are also only one-third to one-half full from Vancouver to Edmonton and I think the fee for that is $235 to $245," Bourassa said.

So why does it cost as much to fly from Yellowknife to Edmonton as it does to fly from a southern centre to, say, just about anywhere short of Antarctica?

That's a question Carmen Loberg, president of Canadian North, hears often.

"One of the largest enemies of low-cost airfare is unused capacity," said Loberg. He offered, as an example, a flight he took from Iqaluit to Yellowknife earlier in the week. The Boeing 737 was filled to profitable levels for the first leg of the flight, from Iqaluit to Rankin. From Rankin to Yellowknife it was mostly empty.

"We have holes in our network where we can never expect a good load," Loberg said.

The Yellowknife-Edmonton route is not one of those holes. It accounts for roughly 35 per cent of each airline's passenger volume.

Canadian North is competing with First Air for control of the NWT and Nunavut markets. Both airlines pitch themselves as aboriginal- owned. Canadian North is owned by Nunavut and Inuvialuit beneficiaries, First Air by the Inuit of Northern Quebec.

Higher costs

Empty seats are just part of the cost of doing business in the North.

Though she would not say how much a flight from Yellowknife to Edmonton costs "for competitive reasons," First Air spokesperson Tracy Beeman said operating an airline in the North costs about twice as much as in the south.

Fuel has to be bought in bulk and shipped during barge season. Building costs for hangars and office space are higher, and the salaries of staff are higher, Beeman said.

Lomen said prices went up in December to offset increased costs, mainly a 200 to 300 per cent increase in insurance premiums that followed in the wake of the Sept. 11 terrorist attacks.

Next time you are awaiting take-off, grinding your teeth about the $900 hammering your bank account took to fly to Edmonton, take whatever consolation you can from the knowledge that others on the same flight likely paid more.

The pricing structure of seats on any given flight is a science known in the industry as yield management.

Seats are divided into blocks. Seats in each block are priced differently. The price of any seat on a given flight depends partly on how far in advance it is booked and partly on how quickly seats on the flight have sold.

"If you fill the plane with low airfares all the time, you wouldn't make any money," said Canadian North's Kelly Kaylo. "Our objective is to fill (it) with the right mix (of prices)."

Kaylo said in 1994 there were five seat sales. That increased to 20 by 1997, with the introduction of sales to stimulate attendance at Northern events such as Caribou Carnival. In 2001, Canadian North offered 40 different airfare deals.

Price lists

Yellowknife-Edmonton round trip:

Yellowknife-Inuvik round trip:

First Air includes 'M' Class discounts for flights with low bookings, including a 7-day advance booking rate of $589.93