Fort Frances council's airline slush fund may leave taxpayers grounded

On May 13, 2026, the Fort Frances Times reported that council of the Town of Fort Frances has ratified an agreement with North Star Air to return passenger air service to the Fort Frances Municipal Airport (YAG). While the newspaper's reporting suggests that the half-million dollar deal is a 'win' for the community, the fine print of the agreement leaves much to be desired. It may, in fact, leave taxpayers grounded.

About the Agreement

The agreement (which is publicly available on council's agenda) is aimed at restoring scheduled passenger air service between Fort Frances and Thunder Bay (YQT). On its face, the decision is understandable. Transit connectivity matters. Communities without reliable passenger service struggle to attract investment, professionals, tourism, and even to support medical travel for local families.

But council did not merely approve an airline route. It approved a two-year agreement that could expose taxpayers to up to $500,000 in direct financial support for a business, waiving numerous airport fees, committed additional marketing dollars, and significantly restricted the next council's ability to walk away from the arrangement once signed - even if the airline does not meet expectations.

The structure of the deal is essentially a public revenue guarantee for a private airline. The Town has agreed to backstop North Star Air’s revenues up to half a million dollars over the term of the agreement. If ticket sales and cargo revenues do not meet targets, municipal taxpayers fill the gap.

That alone is not necessarily unreasonable. Many regional airports rely on some form of public support (including the airport in International Falls, Minnesota (INL), which benefits from a U.S. federal government subsidy). The question is whether this agreement adequately protects the public interest.

There are significant reasons to doubt that it does.

The first concern is the economics.

The Town’s own report projects that the new route requires approximately $780,000 annually to remain sustainable for the operator. Even using what administration describes as “conservative” assumptions, the report anticipates annual revenue shortfalls approaching $172,000.

Meanwhile, fares are startlingly expensive for a regional route of this short length. Depending on class, one-way fares range from roughly $450 to $799 before travellers even leave Northwestern Ontario. That raises an obvious question: who exactly is expected to use this service often enough to make it viable? Especially when roundtrip air travel between Thunder Bay or Winnipeg (YWG) and Toronto (YYZ/YTZ) alone can often be secured for less than $350.

The agreement appears to assume substantial business and connecting travel demand. But nowhere does the deal require North Star Air to secure route integration with larger airlines. There is no requirement for codesharing, interline agreements, protected connections, or even seamless single-ticket booking with carriers flying onward from Thunder Bay.

That omission matters enormously. Without integration into larger airline networks, passengers may be forced to book separate tickets, reclaim baggage in Thunder Bay, and personally absorb the risk of missed connections. From anecdotal experience, we know that it has hurt ridership that our recently-restored passenger bus service, provided by Ontario Northland, does not operate on a daily basis or offer connections to other points of departure in Winnipeg and Thunder Bay. The airline agreement replicates a similar shortcoming.

This is not how most modern regional feeder systems operate. And it is difficult to imagine frequent business travellers embracing a system built around disconnected bookings and only three flights per week. A missed connection could leave travellers stranded without another available departure for several days. They will also be on the hook for any new ticket they need to book from Thunder Bay onward with a separate airline.

From personal experience (as likely one of the most frequent air travellers in the community), that is not a gamble I would likely take. There is no value proposition at these fares that makes sense without better ticketing integration.

The second concern is the imbalance of risk.

The agreement heavily socializes downside risk while leaving much of the upside with the airline.

If revenues fall short, taxpayers pay. But if revenues exceed targets, North Star keeps 60% of the surplus immediately.

Even the remaining “Revenue Protection Pool” ultimately flows back to the airline at the end of the term unless both parties agree otherwise. In other words, the municipality functions less like a commercial partner and more like a venture-stage guarantor.

More troubling still is the agreement’s termination language. The Town may only terminate the agreement after the entire $500,000 guarantee has been exhausted. Council has effectively committed future councils and taxpayers to remain in the arrangement regardless of shifting economic conditions, operational concerns, or political priorities. That is an extraordinarily rigid commitment for a municipality of Fort Frances’ size.

Equally concerning is what the agreement does not contain.

There appear to be no meaningful penalties for poor service reliability by the airline. The airline is expected to maintain 95% on-time performance, but if it fails to do so, the consequence is essentially a meeting to discuss the issue. There are no performance credits. No clawbacks. No service abatements. No municipal suspension rights tied to chronic reliability failures. The public report also does not indicate whether council received external legal or aviation-sector advice regarding the structure of the agreement.

There is also little evidence in the public report from municipal staff of any robust independent due diligence. It is not apparent that council was provided with any independent market studies, sensitivity analyses, downside-case financial modelling, competing carrier assessments, or broader regional demand projections. It is entirely unknown whether the municipality even attempted to negotiate an agreement for better connecting flight options to Toronto, Winnipeg, or Thunder Bay with Delta Airlines (operated by SkyWest Airlines), the existing commercial carrier operating out of International Falls, just a few kilometres away.

Instead, taxpayers are effectively being asked to trust a financial model whose own projections already show substantial annual deficits.

Why Should One Private Business Get a Municipal Slush Fund?

Perhaps what will be most jarring to many local entrepreneurs is the decision of council to bankroll a private business that is (apparently) unwilling to independently take on the risk of a new venture in Fort Frances.

Many local businesses might reasonably ask why this particular private enterprise is entitled to a publicly-backed revenue guarantee when other employers facing economic pressures receive no comparable protection. Certainly, there are many other local businesses and professional services in the community that would benefit from a municipal slush fund to support their marketing, would put the community in a difficult position if they closed down, and have options to operate elsewhere for greater revenues.

Should other business owners start writing council to ask for their own sweetheart deals on municipal fees and licenses too?

Final Thoughts

None of this is to say that restoring passenger air service is a bad goal. It may well be worth pursuing. Regional isolation has real economic consequences, and Northwestern Ontario has long struggled with transportation connectivity.

But public enthusiasm for restoring flights should not exempt council from scrutiny. Half a million dollars is not symbolic money in a community this size. Neither is the decision to tie the municipality to a long-term private revenue guarantee with limited exit rights and uncertain demand fundamentals.

Council may ultimately prove right. The route may thrive. Ridership may exceed expectations. The service could become an important regional asset (noting here that none of the other municipalities are contributing to the start-up costs).

But if taxpayers are underwriting the risk, they deserve a far more rigorous public conversation about the assumptions, safeguards, and long-term exposure built into this agreement than they have received so far. Until then, this airline bailout appears poised to land the community in yet another tailspin piloted by this council.

Douglas W. Judson