Nunavut government hopes for new bidders to drum up competition in airline market
The government spends around $75M on air travel annually
The government of Nunavut is trying to drum up competition in the territory's airline market as it looks for new bidders for its medical and work travel business.
Its airline contracts are due for renewal this year.
In the request for proposals issued on Jan. 11, the government deviated from its previous contract configuration by breaking out the most travelled routes connecting Nunavut to southern Canada.
In the past, airlines bid on contracts split into Nunavut's three regions — Qikiqtaaluk, Kitikmeot and Kivalliq.
This time businesses will be able to bid on seven separate regions and routes:
- Qikiqtaaluk
- Kitikmeot (includes medical travel from communities to Yellowknife and Edmonton)
- Kivalliq
- Iqaluit – Ottawa
- Iqaluit – Rankin Inlet – Yellowknife – Edmonton
- Rankin Inlet – Winnipeg
- Sanikiluaq – Winnipeg
"What we're hoping to do with the larger number of regions is to allow more competition and invite more airlines to enter into the competitive process," said Mark McCulloch, the government's senior manager of procurement and logistics.
$75M on air travel a year
The government is the largest airline customer in the territory, spending about $75 million in the last fiscal year on travel and accounting for more than a third of all air travel in Nunavut.
It spends about $15 million annually on duty travel for its employees.
It is responsible for getting Nunavummiut to medical appointments and health care services elsewhere in Canada that are not available in the territory — common destinations include Yellowknife, Winnipeg and Ottawa.
In the 2017-18 fiscal year it spent $60 million on medical travel, up from $55 million in the 2016-17 year.
In the data provided in the request for proposals, medical travel is costing the territory's Department of Health about $5 million more every year.
The high cost of medical travel and management concerns has been brought up multiple times by MLAs since the last airline contracts were issued.
- MLA outlines 'ludicrous' medical travel situation, as Nunavut contracts set to expire
- Poor planning of medical travel is costing the government, says Nunavut MLA
- Nunavut health minister pitches Kivalliq medical boarding home as way to ease travel issues
Creating competitive marketplace
In 2017, the government hired Lufthansa Consulting to look at its contracting format to find ways both the government and its contracted airlines could be more efficient.
Based on Lufthansa's advice, the government decided to continue combining its medical and duty travel contracts.
Another concern for the government is the potential Canadian North-First Air merger on the horizon.
It will be at least spring before the federal government will announce if the merger will be allowed, for competition reasons.
"We prefer to have more vendors than less vendors and anytime the marketplace compresses this way it does cause us to have some concerns," McCulloch said.
The tender closes for bidding on March 15 and contracts are expected to be awarded by fall this year.