Both Canadian carriers announced a strategic cooperation that might be the first step into something bigger. Their consolidated services should increase the pressure on market leader Air Canada Cargo on domestic routes.
The step taken by both capacity providers seems to be more than logical as a look at their respective route map reveals. While Cargojet links all major Canadian Centers from coast to coast, thus operating mainly on routes between the Atlantic and Pacific, First Air considers itself being the number one airline of the North, connecting roughly 30 Arctic destinations with major centers like Montreal, Winnipeg or Edmonton. Hence, by joining forces they enlarge their individual networks considerably with only minor overlapping of city-pair routes.
As things stand, Cargojet will be the primary and exclusive provider of freighter aircraft lift from the southern points in Canada to and from Iqaluit, while First Air will be the primary provider of cargo lift within Nunavut and across the Northern Territories. Joint sales and marketing initiatives of each other’s respective networks “will create new revenue opportunities for both parties while providing seamless services to the marketplace,” reads a release.
More initiatives to follow
Furthermore, the two airlines plan to widen their cooperation into other areas, such as joint cargo handling and aircraft maintenance.
In addition, the agreement includes strategic and financial fleet decisions, demonstrated by Cargojet’s acceptance to assume the lease obligations of First Air’s sole Boeing 767-200 Extended Range Freighter. This aircraft will continue to provide scheduled service on behalf of operator First Air between Ottawa and Winnipeg to Iqaluit at the Baffin Island, the former Frobisher Bay, on three days per week. “Cargojet is a perfect fit for First Air, a complementary network and an outstanding record of reliability and service. Both companies will benefit from synergies that will be mutually beneficial for both companies as well as for our cargo customers," commented Brock Friesen, President and CEO of First Air while sealing the deal.
"We are looking forward to working with First Air allowing both organizations to benefit from reduced costs, enhanced revenues and to offer a seamless, flexible and reliable air cargo service to
Canadian shippers across Canada," said Ajay K. Virmani, President and CEO of Cargojet.
Currently, Cargojet’s fleet comprises 22 aircraft consisting of Boeing 767-300ER, 767-200ER, 757-200ER and 727-200AF long range freighter aircraft.
First Air operates a fleet of 23 aircraft including the only two civilian owned and operated Hercules freighters in Canada.
In their joint announcement both carriers stress their will to offer enhanced overall reliability and service to all customers, but leave no doubt about their ongoing sovereignty by maintaining their respective and existing end-user customer relationships.
Important pending decisions
Fact is however that First Air only has one B767 which is leased and the company seems to be losing quite a lot of money on operating it.
Cargojet‘s fleet of ten B767s is the best bet and makes the deal worthwhile for both carriers as it would be suicidal for both if they were to be in head on competition in the north Canadian market.
Interesting to note is that Cargojet has its headquarters in Hamilton near Toronto and First Air in Ottawa. Who is going to move where and how will the planned consolidation of services remain within two companies?
Time and success will tell.
Heiner Siegmund / John Mc Donagh
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