Backgrounder: Unique air travel challenges for northern and remote communities

The Competition Bureau’s market study on competition in Canada’s airline industry included an analysis of the unique challenges faced by northern and remote communities.

Highlights from the Competition Bureau’s market study of Canada’s airline industry

Inuktitut version (PDF):

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June 19, 2025 – GATINEAU (Québec), Competition Bureau

The Competition Bureau’s market study on competition in Canada’s airline industry included an analysis of the unique challenges faced by northern and remote communities.

For these communities, air transportation is essential—not optional. It impacts even those who never fly. Residents depend on it for access to healthcare, groceries, medicine, jobs, and social connection. Yet harsh weather, small populations, limited facilities, and high costs make it difficult for airlines to serve these markets.

This backgrounder summarizes the market study’s key findings concerning air travel for Canada’s northern and remote communities, and our recommendations on how to improve competition.

What we heard

The Bureau consulted with nearly 50 stakeholders on the challenges faced by northern and remote regions, including airlines, industry associations, academics, airports, consumer associations, regional chambers of commerce, and provincial, territorial, and federal governments. We also heard from over 200 members of the public about northern issues during public consultations in June and August 2024. To gain a deeper understanding of these challenges, Bureau employees visited Iqaluit as a part of this study and met with local stakeholders.

Residents across the North—particularly in Nunavut—shared consistent concerns about the high cost of air travel, limited competition, and unreliable service.

Most routes in Nunavut are served by two airlines: Canadian North, which primarily operates in the Qikiqtaaluk and Kitikmeot regions, and Calm Air, which mainly serves the Kivalliq region (with both carriers overlapping only at Rankin Inlet). This limited competition, combined with rising costs and reduced flight options, affects residents’ ability to travel, access essential services, and get work or business opportunities.

The Bureau’s prior work in northern aviation

The Bureau has examined competition issues in northern and remote airlines markets in the past. For example:

• In 2016, the Bureau investigated concerns over alleged predatory pricing by First Air and Canadian North to block a new entrant, GoSarvaq. While there were signs that First Air’s and Canadian North’s pricing promotions likely had some impact on GoSarvaq’s entry plans, the Bureau concluded that there was not enough evidence to take enforcement action. GoSavarq ceased operations shortly thereafter.
• In 2019, the Bureau reviewed the merger of Canadian North and First Air and concluded it would likely reduce competition and lead to higher prices and worse service. However, the federal cabinet, on the recommendation of the Minister of Transport, approved the merger with conditions to limit price hikes and service cuts. In April 2023, those conditions were amended due to the pandemic's impact on the airline industry.

Although our current study did not re-examine these cases in detail, stakeholders consistently raised concerns about aggressive competitive responses to entry and cited the merger of Canadian North and First Air as an example of how limited competition and policy gaps have harmed air service in the North.

Persistent challenges in northern aviation

In our report, we identified barriers that make it difficult for new players to enter and expand services in northern and remote communities. These include:

• Vast geography and isolation: Small, spread-out populations in the North limit potential revenue for airlines, a significant challenge as they also face high operating costs—such as fuel, labor, and housing.
• Underdeveloped airport facilities: Infrastructure such as buildings, weather monitoring systems, and runways play a large role in airlines’ operations. This airport infrastructure is underdeveloped in the North, making it more challenging for airlines to operate, and causing their costs to rise.
• Regulations are not adapted to northern factors: Regulations play an important role in the aviation sector, but their standard application in northern and remote regions can impose burdens on airlines that cost them money and may drive them to exit the market. A one-size-fits-all approach to regulations does not work for the specific conditions of northern communities.
• Unnecessary bidding restrictions on government contracts: Government contracts are important to northern airlines. When contracts are difficult for smaller operators to bid on, it can limit the number of airlines that can compete.
• The strategic behaviour of existing airlines: Existing airlines can make it hard for new airlines to enter the northern market by restricting access to airline-owned airport facilities and by aggressively cutting prices and adding extra seats on routes served by the new airlines.

These unique challenges show why solutions must be tailored to northern needs. While the economics of operating in the North limits the number of competitors serving many routes, competition can be enhanced by making it easier for newer or more efficient airlines to operate in the market.

Our recommendations

To improve competition in northern and remote communities, the Bureau makes the following recommendations to governments:

1. Coordinate leadership of northern and remote aviation. Establish a national working group focused on remote air transportation to properly address the unique challenges of these regions. This group should prioritize competitive solutions that lead to high-quality and accessible air service for northern communities.
2. Tailor regulations to the northern context. Adopt an approach to policy specific to the North that reduces unintended regulatory costs on northern operators.
3. Leverage government investments and tools to foster competition. Improve critical infrastructure at key northern airports and develop open-access airport facilities to reduce operational barriers and enable broader carrier access. Open government contracts to as many bidders as possible and promote interlining agreements to expand carrier participation and support regional connectivity.

We make additional recommendations in our market study to promote airline entry and growth, as well as to support informed passenger decision-making. Those recommendations would also benefit northern and remote communities.