Airline company GoSarvaq blames competition's seat sales for failure to launch
‘You feel lost, you feel small, you feel like you don't have a say,’ says GoSarvaq customer
Folded airline company GoSarvaq is blaming dramatic drops in prices by competitors First Air and Canadian North for killing its discount air service between Iqaluit and Ottawa, saying that prices available during a recent seat sale were "not a part of [their] business model.
"Who could have predicted that the incumbents in this market were going to drop their price by more than 75 per cent?" said GoSarvaq's Allan Hayward.
He said the seat sale prices announced by First Air and Canadian North resulted in a significant number of passengers calling for refunds.
"We had a price, we were sticking to that price. We wanted to provide service, but we can't compete at those prices."
Although he stopped short of saying his competitors' actions were predatory, Hayward did say GoSarvaq was reviewing legal options and speaking with the Competition Bureau.
'We had to respond'
Bert van der Stege, First Air's vice-president of commercial, said Monday that he wasn't surprised by GoSarvaq's failure to launch, adding that announcing an airline is easy, but running one long-term is much harder.
"We had to respond, we had to react when we saw this attempt by Sarvaq," said van der Stege. "We launched attractive seat sales.
"It's a free market, it's based on supply and demand and that's the business sense that prevails," he added.
Van der Stege said that First Air will continue to offer competitive seat sale prices as the market dictates.
However, despite his company's failure, Hayward believes GoSarvaq had a positive impact on Nunavut's aviation market — forcing the competition to offer cheaper airfares.
Refunded customers frustrated
Although GoSarvaq says that it has issued full refunds to all customers who purchased tickets, passengers who banked on the company say they are frustrated with the additional costs the changes have added to their travel plans.
"I was naive as a consumer, ordering with the one new airline when they hadn't even had a flight yet," said Mads Sandbakken, who had booked tickets from Iqaluit to Halifax on GoSarvaq for himself and his three sons. The family will then head to Norway to visit family.
"I'm looking at a bump of over $4,000, and that's only to Ottawa," he said. "Then I'll need tickets to Halifax, and a hotel room for the night, I'm guessing. So all of a sudden it's almost double my budget."
The news that GoSarvaq has folded has hit customers such as Sandbakken, who find themselves with few options, hard.
"You feel lost, you feel small," he said. "You feel like you don't have a say."