Price war drives down cost of Iqaluit-Ottawa flights this summer

Something rarely seen in Nunavut air travel — a competitive price war — has erupted in Iqaluit as Go Sarvaq prepares to enter the market in May.

Go Sarvaq launched its online bookings Monday, offering a number of seats on its Iqaluit-Ottawa route for $499 one-way for a limited time. Hours later, First Air and Canadian North each launched a seat sale of their own, offering a similar deal: $399 for seats on their Iqaluit-Ottawa flights May through August.

A seat on the route usually goes for upwards of $1,200 one-way.

While some Iqaluit customers are thrilled at the cheap prices, many are wary of the move by the larger airlines.

"I'm not happy with how this is going," said Alacie Joamie. "I'm OK with the first cheaper prices that were made, but not too happy with the copycat deal. It's just creating chaos."

Aaju Peter was skeptical of the airlines' motives.

"Canadian North and First Air shouldn't just do this to get the other people out of business," she said. "Doesn't it mean that they've been charging us $1,500, way too much all this time?" 

Robert Kokonis, a Canadian aviation analyst, says the sale is "typical competitive behaviour."

"For passengers it's good in the short term, but if the new arrival carrier ... if they get pushed out because of the seat sale pricing, then likely fares will just gravitate back upwards to where they were before," he said.

Canadian North and First Air said the sale is a business move to remain competitive in the market. 

"First Air will continue to offer competitive pricing in every market we serve, and that includes the Ottawa-Iqaluit route," said vice-president Bert van der Stege. 

"Like any other business, our fares are determined by supply and demand and they reflect market conditions."

Kelly Lewis, spokesperson for Canadian North, echoed that.

"To be clear, we set our prices independently and as part of our overall business strategy we are committed to offering competitive pricing in all markets we serve at all times," he said.

"Certainly we respect an open marketplace and that's why we're pricing ourselves competitively. We respect anyone who wants to compete with us, but we're going to compete right back with them. We won't stand idly by and let other organizations determine market pricing.

"We've received a challenge from the competition and we're responding to it."

Go Sarvaq's vice-president Allan Hayward wouldn't comment on the move by the larger airlines, but said he's "really pleased with the amount of traffic that's gone to [Go Sarvaq's] website and call centre."

On Tuesday, Go Sarvaq sent out an email to its customers asking for their opinion on how it should respond to the price war, stating "our introductory pricing at $499 is what we can afford to offer ... at minimum in an ongoing and sustainable way." 

It asked people to vote for one of two options for the company: to stay the course and keep offering $499 prices year-round or to match the $399 price now and possibly raise prices later to recoup lost revenue.