Northern airlines First Air and Canadian North say they have "completed the transaction" that allows them to begin merging into a single carrier.
The news comes a month after Transport Canada gave the two corporations federal approval to press ahead with creating one airline.
While the federal competition bureau found a merger would be significantly detrimental to residents, Ottawa said in June it had taken precautions – in allowing the merger – to guard against that outcome.
The merged airline must operate for seven years under a series of conditions. For example, it cannot increase beneficiary fares or change beneficiaries' free baggage allowances in that time, nor reduce the routes it offers.
The airline will retain the name Canadian North alongside First Air's livery. Completing every aspect of the merger is expected to take up to two years, the groups said.
"First Air and Canadian North are pleased to announce that their respective owners, Makivik Corporation and the Inuvialuit Regional Corporation, have completed the transaction that will enable them to begin merging their operations," read a statement issued on Wednesday.
The two corporations said the result would be "a strong and unified airline that will provide safe and sustainable air service to northern customers and charter clients."
Customers are told the two separate brands will be maintained in "the initial stages" of the merger, with no immediate change to operations.
Later this year, a "combined flight schedule" – allowing customers to book any flight operated by First Air or Canadian North – will be released. Canadian North's Aurora Rewards program will be expanded to include First Air.
The corporations have long argued a single airline is the only way to guarantee financial viability.
In Wednesday's statement, the groups called the current arrangement a "highly inefficient status quo" with overlapping schedules, capacity that "far exceeds" demand, and – they argued – higher airfares and cargo rates as a result.
Northern residents, by contrast, worry about the consequences of the resulting monopoly on many routes, if one airline is – once the seven-year period of federal conditions elapses – allowed to set prices of its choice.
Chris Avery, currently president and chief executive of First Air, will lead the merged organization.
"We are embarking on an exciting journey and our destination will be a stronger and more sustainable airline, focused entirely on providing safe and friendly passenger and cargo service to the people, organizations and communities that depend on us," Avery said in a statement.
"We understand that our actions touch many lives, so we will maintain a ‘community-first’ approach throughout this integration, which includes carefully considering the essential needs of our customers when making decisions, communicating clearly, and listening for feedback."
While Wednesday's news release acknowledged the two airlines' sets of employees will be brought together, there was no mention of possible job losses as a result.
The groups said merging the two staffs would be "a gradual process" and pledged the new airline would be "a top employer" with a focus on Inuit recruitment.
Merging the two sets of pilots' seniority lists will be one of the key challenges.
Brian Shury, vice-president of Canada's Air Line Pilots' Association, last year told Cabin Radio: "There are a lot of different ways to merge seniority lists – there is no perfect way to do it."
Shury said at the time: "The pilots are excited about the merger. They see only good things coming out of this.
"The mergers that I’ve gone through, the airline ends up being a stronger carrier. You are taking best practices, both on the corporate and pilot sides, and you end up with a much stronger carrier at the end of the day."