Revenue sharing agreement with airline nets First Nation over $1M

WEBEQUIE — The chief of Webequie First Nation says a recent royalty payment from one of its business partners will be budgeted to improve the bottom line of the community’s various departments, like education and economic development.

Officials and staff with North Star Air were in Webequie, a remote First Nation located about 540 kilometres north of Thunder Bay, on Friday to publicly present the most recent dividend of a revenue sharing agreement between the airline and the First Nation, totalling just over $1.026 million.

“We have a partnership with North Star Air, and that is our preferred airline for travel in and out of our community,” Webequie Chief Cornelius Wabasse told Newswatch. He said the public presentation to the community — which took place during Friday afternoon’s festivities as part of the First Nation’s 50th annual Neebin Odaminowin summer festival — was to show members “that we are working with our airline and, as we work together, that we are generating revenue that can benefit our community.”

North Star Air currently has 12 such agreements with First Nations in northern Ontario, said Jeff Stout, North Star’s president and chief operating officer, who was one of the company officials in Webequie for the presentation. He said the total represents just over two years worth of their agreement.

“It’s been a longstanding partnership for the airline and the community and (it’s) really celebrating the success of that partnership,” he said.

Stout called the agreement a “strategic partnership,” which effectively returns to the First Nation a percentage of the revenue North Star derives from that community, including scheduled passenger trips, charters and cargo and fuel flights.

The partnership between North Star and Webequie was signed in 2015.

In total, between the 12 First Nations (who each signed agreements with the airline at different times), Stout said the company has dispersed over $12 million since the agreements began in 2014.

“(It’s) great for the airline, of course it’s allowed us to expand, but more importantly for the communities and (having) these funds for projects and initiatives within their communities,” he said.

Striking revenue sharing partnerships with communities the airline serves was the brainchild of company chair Frank Kelner, Stout said, with the first two communities being Sachigo Lake and Muskrat Dam.

“For those communities, they really wanted to see a return from their airline, and having those conversations with Frank led to the creation of the program,” Stout said.

“Some are communities that just wanted to have a change — they have a partner that wasn’t just providing the service but truly a partner in the community because their service is essential to what goes on in the community members’ way of life up here.”

Wabasse said its his community’s intention to mutually beneficially work with business, like Hydro One and various mining companies.

“We try to work with them in a positive way so that we can develop that relationship and, hopefully, in the near future, we’ll be able to work together to prosper our community.” – snnewswatch.com

article website here

Maybe Rickford and Hajdu can explain to me exactly how this legal.

I am going to assume that much if not all funds that FNs use to pay for air services come from the Province of Ontario and the Government of Canada  via different programs and grants.

My understanding of the facts in the story is that FNs are profiting from a deal they have made with North Star Air to the detriment of Canadian taxpayers.   We are talking about millions of dollars here.  Not an insignificant sum.

I believe that the airline is charging more than is necessary to service the remote FNs and giving some if not all of those extra charges to the FN communities.  Money laundering?   Am I wrong?

Maybe the reporter can interview Rickford and/or Hajdu and have them explain just how the Canadian taxpayer is not getting shafted.

The whole thing stinks.   The cost to fly should be the cost to run the airline plus a reasonable profit.  There should not be a dividend unless the FNs invested into the company and even then, the fact that the FNs are the sole customer base for the airline makes that possibility stink as well.

I feel Canadian taxpayers are getting screwed here.

PS: this deal is very similar to one between the City of Thunder Bay and TbayTel.  The difference is that the City of Thunder Bay owned the phone company and the money coming into TbayTel are from its customers. Not the provincial and/or federal governments. Other than that, they are very much alike.