Indigenous and Northern Affairs committee  That's an excellent point. Obviously our pricing is based on the volume and the aircraft type to move that volume most effectively. Under the current program we're using an extremely large aircraft, moving 100,000 pounds per flight, at roughly the same fuel cost that it used to be to move 50,000 pounds per flight.

Indigenous and Northern Affairs committee  There would definitely be a difference in staging the food mail from Ottawa or Montreal as opposed to Val d'Or. I mean, we're flying large aircraft out of Ottawa, and flying it into Val d'Or 45 minutes later. The cost of that cycle is significant with landing fees, cycle costs, engine costs, and everything else.

Indigenous and Northern Affairs committee  The difference in the stage length to Kuujjuaq from Ottawa or Val d'Or is minuscule. The costs that are driven by Val d'Or are the cycle costs, the engine costs of landing, flying big equipment over a 45-minute stage length. Those aircraft are based on a minimum of three hours per cycle, per flight, so your costs go up exponentially.

Indigenous and Northern Affairs committee  I just spent $20 million on two airplanes to add capacity and reduce costs. Will I need those aircraft next week?

Indigenous and Northern Affairs committee  The simple answer is you can't plan. You work out three or four different scenarios and you wait anxiously for the correct answer to come out. A huge volume under this program is being shipped through the staging points right now. A lot of infrastructure has been put in place. You've got multi-zone coolers and warehouses and ground-handling equipment and a lot of things like this.

Indigenous and Northern Affairs committee  I can't speak to the other contracts. I can only speak to the service standards in the markets we serve. I'm not familiar with the other regions of the country.

Indigenous and Northern Affairs committee  The current food mail program has specific staging points, entry points. Food mail we can only receive. It has to be inspected by the Canada Post inspection agent at the staging point. For other products, other than food mail, cargo and otherwise, we'll accept our customers' cargo anywhere in the country, but food mail has to be through those specific staging points under the current program.

Indigenous and Northern Affairs committee  Just to make it clear, our customer, with regard to the food mail program, is the current administrator. It's Canada Post. They carry out the inspection at inception and basically we tender it at destination to a Canada Post representative or a representative of the ultimate customer.

Indigenous and Northern Affairs committee  Historically, the way the process works is that the administrator of Canada Post comes out with a request for proposals by the carriers operating in the regions. It generally identifies the volume of the different products to be tendered at the different entry points, and all of the carriers make a proposal, give their unit price per kilo, and present their value proposition to Canada Post.

Indigenous and Northern Affairs committee  I would suggest that the value proposition is a combination of service, capability, and price.

Indigenous and Northern Affairs committee  Generally the requirements of the RFP, as I think Andy and the others alluded to, include our having to show a capability of moving food mail product from origin to destination in a pre-determined time. We also have to show the ability to self-measure our performance and to report back to Canada Post against our contractual obligations on a monthly basis.

Indigenous and Northern Affairs committee  I think that might have been somebody else's comment. These are all my customers. We'll negotiate a value proposition with each of them that allows us to maintain the majority of the food mail.

Indigenous and Northern Affairs committee  The principle is the same. But generally speaking, your larger-volume customers get the benefit of a volume discount, for sure.

Indigenous and Northern Affairs committee  That was a benefit of the program, because they bundled their buying power and everybody benefited from a flat rate.

Indigenous and Northern Affairs committee  Good afternoon, Mr. Chairman, and members of this standing committee. Thank you very much for the opportunity to take five short minutes and present to you. My name is Scott Bateman, and I am the president and CEO of First Air. First Air is the wholly owned subsidiary of Makivik Corporation, Makivik Corporation being the birthright organization representing the interests of the Inuit of Nunavik.