[Witness spoke in Inuktitut and provided the following text:]

Ullukut angayurqaat ammalu purtunirsauqatitit.

[Witness provided the following translation:]

Good afternoon, honourable Chair and esteemed members of the committee.

[English]

Thank you for the opportunity to speak today. My name is Shelly De Caria, and I'm the president and CEO of Canadian North. With me is Nick Purich, our chief financial officer.

For over 75 years, we have been providing essential air transportation services to 25 communities in the Northwest Territories, Nunavut and Nunavik, the northern region of Quebec.

Of those communities, 21 are isolated from the rest of the country and do not have road access. Air transportation is the only reliable year-round way to move people and access food and critical supplies, as well as medical and other vital services.

Access to safe and reliable air transportation services is literally a lifeline for these communities. As a 100% Inuit-owned company and as an Inuk myself, we truly understand the vital role air travel plays in these regions, and we are committed to ensuring that our services meet the needs of the communities we serve.

Operating an airline in the northern regions of Canada comes with unique challenges over and above those in the south. Extreme weather conditions, limited infrastructure and vast distances significantly increase operational costs. These factors make it difficult for any airline to maintain frequent and reliable service while keeping prices affordable.

The cost of providing air service in the north is inherently high. Fuel costs, maintenance and the need for specialized equipment to operate in harsh climates and from short gravel runways all contribute to the overall expenses.

We have also invested heavily in ensuring that our services are dependable even under challenging conditions. This includes maintaining a fleet capable of handling extreme weather and ensuring that our staff are trained to meet the unique demands of northern operations. On top of that, the lower passenger volumes compared to the southern routes mean that costs per passenger are higher. As a case in point, it is estimated that the total population of the 25 communities we serve is around 130,000, roughly the size of Kelowna, B.C., or Sherbrooke, Quebec.

While we continuously strive to optimize our operations and reduce costs where possible, the economic realities of northern aviation cannot be overlooked. It isn't just enough to bring in other airlines, which generally focus on the larger, easier communities. More than a decade ago, Air Canada and WestJet began offering flights on the Edmonton-to-Yellowknife route. They introduced increased competition, which initially resulted in lower airfares. These major carriers leveraged their larger networks and economies of scale to offer competitive prices, attracting passengers who were previously served by smaller regional airlines. However, it also led to the significant challenges for smaller regional airlines, including financial strain, service reductions and exits from the route, which in turn had complex and potentially negative long-term implications for market competition and community connectivity.

Do you remember those 25 communities I just spoke about? For years, our Yellowknife route helped subsidize those smaller, less profitable routes, which the other airlines refused to service.

While the challenges are significant, there are ways to improve the situation. We welcome the opportunity to work with the government and other stakeholders to explore solutions that can enhance air travel in the north. There are a few avenues that we potentially could collaborate on.

Government subsidies can help offset the high operational costs and make air travel more affordable for residents. There are similar programs in other essential services.

Enhancing airport infrastructure can improve service reliability and efficiency. Investments in better facilities and equipment would enable more frequent and reliable flights.

Regulatory adjustments that recognize the unique challenges of northern aviation could create a more favourable operating environment, encouraging both existing and new airlines to invest in the region.

There could be a system-wide cost review to understand how the user-pay model of aviation infrastructure funding in Canada impacts consumers.

We at Canadian North are committed to collaborating with the government, communities and other stakeholders to ensure that air travel in the north is not only viable but also thrives, supporting the economic and social well-being of all residents.

[Witness spoke in Inuktitut]

Thank you for your time and the opportunity to speak here today.

Honourable Chair and esteemed members, I am happy to answer any questions you may have.