All Things Flair

[Rich Pulman]

“No one was injured, says the TSB.”

Until next week when some of the passengers decide to extract their pound of flesh.

[Seeker]

6 minutes ago, Rich Pulman said:

“No one was injured, says the TSB.”

Until next week when some of the passengers decide to extract their pound of flesh.

Yeah, someone has to be so traumatized that they can never fly again after the terror they must have felt.

[Airband]

 

points awarded for flaky consistency..

Flair Airlines agrees to pay $67-million in unpaid taxes after court order

Mon Jan 29, 2024 - The Globe and Mail
by Eric Atkins - Transportation Reporter

Quote

"The order directs the Sheriff of Alberta or other licensed agency to “seize and sell the real property or immovables and the personal property or movables within your jurisdiction of Flair Airlines Ltd.”

The federal government has obtained a court order that allows it to direct the seizure and sale of Flair Airlines Ltd. property in Alberta to recoup more than $67-million in unpaid taxes.

Flair incurred the taxes from the import of 20 Boeing 737 Max aircraft, and has made arrangements to pay the amount owed, said Ashley Fields, a spokeswoman for the airline.

The ruling was issued by the Federal Court of Canada on Nov. 23, months after a leasing company repossessed four of Flair’s aircraft for missed rent payments.

Court documents obtained by The Globe and Mail certify that the Edmonton-based discount airline owes the Canada Revenue Agency $67,174,123.37, plus penalties, interest and other fees.

“We have a mutually-agreed-upon payment plan with CRA to pay these importation duties, and we are current with that plan,” Ms. Fields said in an e-mail on Saturday.

The court issued the writ of seizure and sale at the request of the government’s assistant director of revenue collections. The order directs the Sheriff of Alberta or other licensed agency to “seize and sell the real property or immovables and the personal property or movables within your jurisdiction of Flair Airlines Ltd.”

Ms. Fields did not comment on whether any Flair property has been seized and sold, but said the airline’s operations have not been affected by the court order, and the terms of the repayment agreement are confidential. Eighteen of the planes – all 737 Max models – were imported beginning in 2021, she said.

Kim Thiffault, a CRA spokeswoman, declined to answer specific questions on the matter, citing privacy laws.

Ms. Thiffault said the department’s collection policy is to resolve tax arrears in a “mutually satisfactory way” with payment arrangements based on a party’s ability to pay. “As a last resort, we may take additional legal collection actions, such as seizing property or assets to protect the interests of the Crown,” Ms. Thiffault said in an e-mail.

Flair flies 20 leased Boeing 737s to domestic, U.S. and tropical destinations. The airline was founded in 2005, and is partly owned by Miami’s 777 Partners, which has been the company’s main provider of leased aircraft and financing. 777 Partners did not respond to e-mailed questions on Saturday.

Flair’s tax situation unfolds as the airline industry’s recovery from the pandemic is well under way. Demand for air travel has recovered but airlines find themselves in tough competition as the economy shows signs of slowing and consumers face seat prices that have risen sharply in recent years.

Canada’s domestic airline industry is dominated by Air Canada, which accounted for almost half of the market in 2023, followed by WestJet Airlines’ 26-per-cent share, according to Cirium, an aviation data company. Flair has about 10 per cent of the domestic market.

In March, 2023, an aircraft leasing company repossessed four Flair Boeing 737 planes for non-payment of rent. Airborne Capital of Dublin seized the four aircraft at airports in Edmonton, Toronto and Waterloo, Ont. The leasing company said Flair failed to make payments worth “millions” of dollars over five months.

Before the seizures, The Globe reported, Airborne and another lessor, BOC Aviation, were offering a total of 11 of Flair’s 19 planes to other airlines.

Flair CEO Stephen Jones has said that part-owner 777 Partners repaid the amount owed on seven of the planes, which remain in Flair’s possession. Mr. Jones said Flair paid Airborne $4.2-million shortly before the seizures and promised another $1-million was coming before the planes were repossessed “in the dark of night.”

Airborne disputed Mr. Jones’s account, and said the missed payments were persistent.

The Canadian Transportation Agency in 2022 launched an investigation of Flair to ensure that 777 Partners was not exerting effective control of the airline, in violation of laws that require an airline be Canadian controlled. The CTA’s preliminary inquiry found that 777 Partners owned 25 per cent of Flair but held “dominant” influence as a major lender and provider of leased aircraft. Three of Flair’s five directors were tied to 777 Partners.

Foreign investment in a Canadian airline is limited to 49 per cent, or 25 per cent by one person. Additionally, foreigners cannot call the shots, something the CTA calls “control in fact.”

After Flair agreed to reduce its reliance on 777 Partners for financing and leases, and to add more Canadians to the board of directors, the CTA ruled that Flair was Canadian.

A CTA spokesman said on Friday that the agency “continuously monitors Flair for any change that may impact” its Canadian status. “The agency will take action if the situation warrants it, to ensure that Flair, as all carriers, uphold its licensing obligations,” Jadrino Huot said.

Megan Sutton, a spokeswoman for Edmonton International Airport, where Flair has its headquarters, declined to comment on the airport’s financial arrangements with the airline.

[Malcolm]

Latest update:

A tough industry’: Flair CEO puts expansion plans on hold amid debt, delivery delays

 

Flair CEO Stephen Jones says he's effectively suspending the budget airline's expansion plans for at least a year as it contends with plane delivery delays and hefty debts.

"This will be a more muted year," he said in an interview, "but we’ll look to get back into growth mode strongly in 2025.”

 

As recently as the fall, the Edmonton-based company aimed to boost its fleet to 26 Boeing 737 Max jetliners in 2024, up from its current roster of 20. On Monday, Jones said the fleet likely won't grow much in the coming year, due partly to hold-ups at Boeing Co.

The U.S. plane-making giant has faced scrutiny from regulators over its safety record, most recently after a midflight blowout of a side panel earlier this month that grounded 737 Max 9 jetliners for weeks. 

Jones said the Max program has had a number of delays on delivery. Aircraft that were slated to arrive in the spring won't be landing at Flair's gates until late fall, "which is not a great time for capacity growth."

This is a tough industry," he said. "The development of the financial performance will take some time."

Flair Airlines owes the federal government $67.2 million in unpaid taxes, court documents show, prompting the Canada Revenue Agency to obtain an order for the seizure and sale of the carrier's property.

The sum relates to unpaid import duties on the 20 Boeing jets that make up Flair's fleet, Jones said.

However, he said the Federal Court order obtained by the tax agency in November has no impact on the carrier's operations, which have expanded over the past year and ratcheted up competition with rival airlines. The company has agreed to settle the debt with the CRA, he said.

"We have a plan in place with them for repayment of the outstanding amount," Jones confirmed over the phone. The court-issued writ of seizure and sale was a "belt-and-braces arrangement that they put in place if we were to fail on that plan — which we don't plan on doing," he added.

While the terms of the deal are confidential, Jones said it involves monthly payments and characterized the CRA as "understanding."

The revenue agency said it cannot comment on specific cases for confidentiality reasons, but that it looks to make arrangements with companies "based on their ability to pay" before it takes further steps to recover the money.

 

"As a last resort, we may take additional legal collection actions such as seizing property or assets to protect the interests of the Crown," said spokeswoman Kim Thiffault in an email.

The court order from Nov. 23, first reported by The Globe and Mail, allows the "Sheriff of Alberta or any civil enforcement agency" to seize and sell Flair's property and assets.

It marks the latest chapter in a multi-year struggle to stay solvent and within regulatory lines, as the airline repeatedly crossed paths with the courts.

Last March, Flair saw four of its planes repossessed in the middle of the night after aircraft leasing manager Airborne Capital claimed that the company regularly missed rent payments that amounted to millions of dollars over the preceding five months.

In response, Flair launched a $50-million court action against Airborne and three other leasing firms, arguing that ongoing demands for payment from the four companies were "baseless."

 

Flair has touted its achievements in recent months, claiming gains in passenger numbers, the top flight completion rate in the country at 98 per cent and an on-time performance of 69 per cent — weak globally, but solid compared with its Canadian competitors.

But the ultra-low-cost carrier faces increased competition from WestJet — newly retrenched in Western Canada even as the Calgary-based carrier wound down low-cost subsidiary Swoop in October — and from Porter Airlines and budget rival Lynx Air, both of which are expanding swiftly.

A greater focus on sun destinations this winter has also put Flair in direct competition with other airlines that continue to do likewise, including WestJet-owned Sunwing Airlines as well as Air Transat.

"I think Flair is probably in the toughest position of any player in the Canadian marketplace right now," said Duncan Dee, former chief operating officer at Air Canada.

 

He pointed to Flair's debts and plane seizures as evidence of a struggle to stay afloat.

"The picture that it paints is one where Flair faces much more significant challenges than what would appear on the surface," Dee said

Jones says Flair has been running a smooth operation propelled by high passenger numbers for much of the past year, despite growing pains at the debt-laden company that’s still striving to stabilize its finances and gain consumer confidence.

In 2022, the Canadian Transportation Agency prompted Flair to rejig its board and revoke shareholder rights from top investor 777 Partners in order to comply with rules around domestic ownership.

Moreover, Flair must continue to make payments of more than US$7 million per month on its 20-odd Boeing 737 plane leases and manage loans amounting to between US$200 million and US$300 million — making import taxes on those same jets all the tougher to pay — Jones told The Canadian Press in August.

 

He cited rates of 18 per cent on loans from 777 Partners, the Miami-based company that owns one-quarter of the airline.

The interest is “non-cash” — no monthly payments required — and merely adds to the principal, he noted last summer. "At some point there will be some form of reckoning, whether it’s a restructure or whatever."

Meanwhile, a Facebook page dedicated to Flair passenger woes continues to log issues, but features fewer complaints than in mid-2022, when travel chaos descended on a sector unprepared for the surge in post-pandemic flight demand.

This report by The Canadian Press was first published Jan. 29, 2024.

— With files from Tara Deschamps in Toronto

Companies in this story: (TSX:TRZ)

Christopher Reynolds, The Canadian Pres

[Airband]

Discount carriers Flair Airlines and Lynx Air in merger talks, industry insiders say

The Airline Observer reports the two companies were in “advanced” talks about a deal that would see Flair take over Lynx

Wed Feb 14, 2024 - The Toronto Star
by Josh Rubin - Business Reporter

Quote

“They were chasing each other down the rabbit hole with low fares. It just wasn’t sustainable. They were barely making enough to cover fuel costs on some of those flights,”

Airline industry sources say a merger between discount carriers Flair Airlines and Lynx Air could be announced as soon as Thursday.

Flair declined to confirm or deny the two carriers were in advanced discussions about a potential alliance.

“As a company policy, we refrain from commenting on rumours or speculation. Our focus remains on delivering value to our customers and stakeholders through our products and services,”  airline spokesperson Gabrielle Poirier said in an email.

Lynx didn't immediately respond to requests for comment.

Three separate industry sources, however, confirmed to the Star that the two airlines are in discussions about a potential merger, and said a deal could be announced as soon as Thursday.

The sources all said, however, that the exact timing and structure of a deal remains to be seen.

A report in industry publication The Airline Observer earlier this month said the two companies were in “advanced” talks about a deal that would see Flair take over Lynx.

Flair currently has 20 planes in its fleet, while Lynx has eight.

A merger between the two airlines would likely mean the end of at least some of the ultralow prices offered by Flair and Lynx, says aviation expert John Gradek.

“The price war is now over. Fares will go up, without a question. The days of Toronto to Calgary for $99 are over,” said Gradek, a former Air Canada executive and head of McGill University’s Global Aviation Leadership Program.

The ultra low-cost carrier model used by both Flair and Lynx simply wasn’t sustainable at the prices the airlines were charging, Gradek said.

“They were chasing each other down the rabbit hole with low fares. It just wasn’t sustainable. They were barely making enough to cover fuel costs on some of those flights,” said Gradek, who also expects more potential mergers or other alliances in the industry. “This is not the end of it."

Still, University of Manitoba business professor Barry Prentice said a merger ultimately might be good for Canadian travellers, even budget-conscious ones.

“Could they stop some duplication? Sure. But there are other cities that Flair doesn’t service at all right now. And this would allow them to get to some of those,” said Prentice, director of the University of Manitoba’s Transportation Institute.

While Prentice doesn’t expect fares to change much, at least in the short term, he acknowledged that Flair and Lynx have long been facing skepticism about their business models.

“There’s been a lot of skepticism about how many airlines can be sustainable. But I definitely think there’s room for an ultra low-cost carrier in this market,” said Prentice.

It has been a tumultuous year for Flair. In November, the airline was ordered by the Canada Revenue Agency to pay $67.2 million in taxes.

Last March, Flair had four of its planes seized after an Irish leasing company said the airline fell behind on payments.

Flair is partly owned by Miami-based private equity firm 777 Partners. Lynx is partly-owned by Indigo Partners, which also has stakes in other airlines, including U.S. discount carrier Frontier Airlines.

[Jaydee]

Trouble at Flair Airlines exposes Trudeau government's massive incompetence

Company owes millions to feds over GST non-payment that the Trudeau government doesn't want to talk about.

 

The Trudeau government let more than $67 million in GST go uncollected from a start-up airlines over the past several years.

Now the red-faced government is looking to sweep the matter under the rug, claiming privacy concerns.

 

In November, the Federal Court in Ottawa ordered all “real properties and immovables” of Flair Airlines be seized and sold to recoup $67,174,123 in back taxes. When the story broke in January, the company tried to dismiss concerns about the payments as relating to import duties, except airplanes aren’t subject to import duties.

There is however a requirement to pay 5% GST at time of import, something Flair appears not to have done as they brought 20 Boeing 737 MAX aircraft over the past several years. The amount owed by Flair matches the GST due on the aircraft but neither the government nor Flair is willing to say much.

On Feb. 20, that writ of seizure was quietly rescinded after the government and Flair came to an agreement on paying back the money. The agreement comes after months of high-powered lobbying of several ministries and the prime minister’s office by Liberal insiders.

 

“We don’t comment on client matters,” wrote Andrew Steele, of Strategy Corp, when asked about the 48 meetings he had with government about Flair, including four with the PMO.

 

 

Flair didn’t respond directly to questions about how they were able to import the planes without paying the GST, but they did maintain they are in full compliance with the law.

 

Regarding the amount in question, Flair refrains from commenting on the specifics of tax credits or their utilization. We maintain rigorous compliance with Canadian tax regulations and regularly seek professional advice to ensure adherence to all legal requirements,” Flair’s Chief Financial Officer Joseph Lee said in a statement to the Sun via email.

That may be technically true now given that Flair has obviously entered into a repayment agreement with the Canada Revenue Agency, but something was clearly amiss last fall when the order to seize and sell the airline’s property to recoup the money was issued. Courts are not in the habit of giving the government the power to seize the assets of a company and liquidate them without a valid legal reason.

 

As for repaying a sum that large, it’s not clear how Flair will be able to do so since there is good reason to believe the company is struggling.

Last March, four of Flair’s planes were seized by the company that was leasing them to the airline – the reason given, non-payment. At the time, Flair launched legal action and claimed the demand for payment was “baseless.” While the court will decide who is right, the dispute raises questions about Flair.

 

https://torontosun.com/opinion/columnists/lilley-trouble-at-flair-airlines-exposes-trudeau-governments-massive-incompetence

[Malcolm]

Flair Airlines hopes to get some Lynx airplanes, even after shutdown scuttles deal

By Staff  The Canadian Press

Posted March 5, 2024 12:03 pm

 Updated March 5, 2024 12:47 pm

Flair Airlines CEO Stephen Jones says he still hopes to add several Lynx Air planes to his fleet, even after their tentative deal fell through when Lynx shut down last month.

Jones said in a phone interview that the grounded Boeing 737 Max 8s are the same that comprise the bulk of his 20-plane fleet, and would bolster the discount airline’s stalled growth plans.

In an Edmonton court filing, Flair’s chief executive says it has asked Lynx to include it among the parties allowed to bid on the insolvent carrier’s assets.

 

2:13Flair Airlines CEO seeks to reassure prospective passengers

The affidavit from Jones says the court-supervised asset sale currently proposed could lead to an “anti-competitive result” if large airlines are allowed to bid while Flair is locked out.

Court filings state that Lynx has $345 million in property and equipment, with its nine leased planes counted as assets.

Trending Now

[Airband]

Flair flunks the smell test...

Airline on the hook for spoiled seafood, small-claims court says

Even though man packed prohibited items, the airline assumed liability when it checked baggage, tribunal rules

Fri Mar 15, 2024 - CBC News
by Jason Proctor

A B.C. small-claims court says ultra-low-cost carrier Flair Airlines has to shell out nearly $800 to compensate a passenger for a bag full of fish products that went rotten during the five days his luggage was delayed.

Brian Vu packed a suitcase full of crab meat, fish cakes, sea cucumbers and dandelion root in defiance of a plane ticket warning passengers not to put perishable items in checked luggage.

But in a decision released this week, a member of B.C.'s Civil Resolution Tribunal said it wasn't the contents of the bag that mattered as much as the fact a Flair employee agreed to check the luggage in the first place.

"I agree with Mr. Vu," wrote Peter Mennie.

"The Canadian Transportation Agency has repeatedly held that if an airline accepts checked baggage then the airline assumes liability for the baggage even if the airline has not agreed to transport certain items."

Crab meat, fish cakes, sea cucumbers, dandelion root

According to the ruling, Vu flew from B.C. to Ontario in November 2022 — paying $72.45 to pack each of his two bags.

One showed up on the other end of his voyage, but the other went missing for five days.

"Mr. Vu packed crab meat, fish cakes, sea cucumbers and dandelion root in his checked bag," Mennie wrote.

"He says these items spoiled while the bag was delayed. Mr. Vu estimates that he paid $250 for the crab meat, $120 for the fish cakes, $80 for the sea cucumbers, and $72 for the dandelion root."

The evidence in the case included a video which Vu claimed depicted the spoiled items in his bag — but Mennie said he wasn't able to open the file.

Regardless, there seemed to be no dispute that the products were actually spoiled.

Flair argued that its contract with passengers specifically prohibits perishable items in checked bags — warning that the airline "is not liable for any spoilage of perishable items."

"Flair says passengers must declare they are not carrying restricted items during the check-in process," Mennie wrote.

"Flair also provided a screenshot of its website which says that perishable items must not be included in checked bags."

But Vu argued that regulations upheld by the Canadian Transportation Agency and federal law entitled him to compensation for checked bags lost for less than 21 days.

Mennie agreed, finding that the law doesn't allow an airline to use a contract to get out of liability for bags frontline staff agree to put on an airplane — no matter how fishy the contents.

'They were emitting odours'

Mennie's decision adds to a body of precedent built at the expense of ruined goods.

In 2005, a Quebec court refused to compensate a traveller for more than $4,381 after Continental Airlines said it was forced to destroy suitcases containing raw meat and vegetables "because they were emitting odours and various liquids were leaking out."

But in that case the judge found the traveller had made his claim outside of a four-month window designed to make sure complaints are made as quickly as possible.

Other cases have involved shipments of polio vaccine that were ruined by flight delays and the failure of airlines to properly refrigerate them.

Flair has to pay Vu a total of $780.22 — including roughly $600 for baggage fees and spoiled items and the $150 it cost him to file the lawsuit.

[Kip Powick]

Based on this article.......Flair got screwed...

[deicer]

Just means check in process is going to be lengthened by having to make a declaration and sign a waiver that your luggage contains none of the restricted articles.

Also, unfortunately, it will spread to all carriers and costs will rise because of it.

[Airband]

Or it is considered to be a low-probability event, and carriers shrug and move on.

[moeman]

https://www.ch-aviation.com/news/138191-canadas-flair-airlines-accuses-firm-of-withholding-funds

 

Flair Airlines (F8, Kelowna) has accused Peoples Trust, a financial services firm, of withholding about CAD25 million Canadian dollars (USD18.5 million) in funds from the company.

The budget airline said Peoples Trust ceased regular transfers to it in February 2024 and now plans to take the matter to court after trying to solve the issue amicably. In a statement sent to ch-aviation, the airline said Peoples Trust has no legitimate reason to withhold these funds.

Stephen Jones, Chief Executive Officer at Flair Airlines, said the company has implemented an alternative payment processing system to avoid disruptions.

Peoples Trust is a branch of Peoples Group, a company that has provided “tailored financial services to the Canadian marketplace for more than 35 years.” The firm told ch-aviation it maintains robust standards around the management of funds. “We set and manage card transaction reserves following standard industry practices to protect consumers who have pre-paid merchants — like airlines — for services they have not yet received.”

Earlier this year, Flair Airlines began a lawsuit against lessors that seized and repossessed four Boeing, and reached an arrangement with the Canada Revenue Agency to pay a CAD67 million (USD49.5 million) tax debt. It was also linked to a failed merger proposal with bankrupt Lynx Air (Calgary), and is interested in acquiring the airline's B737 MAX fleet and orders.

The ch-aviation fleets module shows Flair Airlines’ fleet comprises 20 in-house aircraft, including eighteen B737-8s, and two B737-800s. Additionally, it wet-leases on A320-200 from Canada Jetlines (AU, Toronto Pearson).

 

[Airband]

Flair Airlines cuts over 600 flights as it faces multimillion-dollar financial woes

Fri Mar 22, 2024 - The Globe and Mail
by Eric Atkins - Transportation Reporter

Flair Airlines has reduced its spring schedule by more than 600 flights, making cost-saving cuts to its domestic network even as it adds holiday routes after the failure of low-cost rival Lynx Air.

Flair eliminated a number of flights departing its major hubs, including Toronto, Ottawa, Calgary and Edmonton, for March, April and May, according to Cirium, an aviation data company. The Edmonton-based no-frills carrier has also added flights to Florida, Mexico, Las Vegas and other resort destinations.

Flair’s discount rival, Lynx Air, ceased flying on Feb. 26 and is under court-granted protection from creditors. The nine-plane airline said it could not pay for its daily operations and will wind up the business or be sold in a court-supervised process under the Companies’ Creditors Arrangement Act.

The recent changes in the discount segment precede what is expected to be a busy summer travel period for Canada’s airlines. The industry has enjoyed healthy demand and higher airfares since COVID-19-related restrictions were lifted.

Flair’s schedule changes come as the airline faces a tax repayment bill worth $67-million, a move by a financial services company to hold back $25-million in customer receipts, in addition to a sharp credit-rating downgrade of Flair’s U.S. shareholder’s reinsurance unit, which is a lender to Flair.

Overall, Flair has slashed its schedule for March, April and May by about 8 per cent, the airline confirmed. Rivals Air Canada, WestJet Airlines and Porter Airlines, meanwhile, have all boosted the number of scheduled flights for the same months by about 6 per cent, according to Cirium.

Eric Tanner, Flair’s vice-president of revenue management and network planning, said the airline made the cuts to reduce flights in a crowded market, and is focusing on longer, pricier domestic routes that better defray the high costs of landing at Canadian airports. The longer flights mean Flair, on an overall basis, has increased its capacity, measured by available seat miles, an industry gauge. As well, Flair added sun destinations in Mexico and the Caribbean after seeing strong demand last year, he said.

“Our [year-over-year] average fare for this period is substantially exceeding the increase in [flight] length,” Mr. Tanner said. “For March through May, we anticipate an improvement of over 50 per cent in our average base fare.”

John Gradek, who teaches aviation leadership at McGill University, said the airline has eliminated or reduced flying frequencies on poorer-selling routes that are costing it money to operate. “Spring break is over and they’ve got to be conserving cash,” Mr. Gradek said.

Flair’s route cuts come as it faces challenges on a few fronts:

• A payment-processing company, Peoples Group, is withholding $25-million in transfers to Flair. The airline says the company, which acts to protect consumers who have prepaid for services, is acting unjustly. “We will pursue resolution through legal channels,” Flair chief executive Stephen Jones said in a statement.

Peoples Group declined to answer questions specifically about Flair. In an e-mail, Peoples said it manages reserve funds that protect consumers when they deal with merchants that offer prepaid services, including airlines. It increases the amount in the fund according to the risk posed by a merchant.

“Should a flight be cancelled and not rebooked by an airline and the airline cannot refund the money, cardholders are entitled to request a refund, or chargeback, from their card-issuing bank,” Peoples Group said in a statement, speaking generally. “When a chargeback is received, the airline’s payment acquirer [Peoples or another processor] must refund the purchase from a reserve account,” Peoples said, adding that its “underwriting team reviews the risk associated with each one of our merchants and determines the right reserve required to match the risk.”

Flair owes $67-million in tax repayments to the federal government for aircraft imports, and says it is making payments on the amount. A court granted Ottawa the right to seize and sell Flair property worth the amount owed, but has not apparently done so.

• The government has registered interests or liens on Flair’s Boeing 737 flight simulator, unspecified Flair real estate and “all of the debtor’s present and after-acquired” personal property. Flair says the interests are related to the tax bill. The Canada Revenue Agency declined to comment.
• Alberta’s property registry shows about 25 liens on Flair aircraft and other assets have been made or amended since 2022. The assets include leased aircraft, a spare engine, forklifts and blanket claims on all Flair property.
• Aircraft leasing companies in March, 2023, seized four Flair aircraft for missed rent payments over several months. Mr. Jones has said U.S. investor 777 Partners paid the arrears on another seven aircraft, which Flair retained.

Mr. Jones, in an e-mail, said the Alberta registrations are standard practice. “Just like any other airline, Flair has security agreements on its aircraft and equipment pursuant to leasing agreements. These security agreements are a common practice and do not impede our ability to operate efficiently,” said Mr. Jones, who was unavailable for an interview on Wednesday and Thursday.

Alfonso Nocilla, a law professor at Western University in London, Ont., said leasing companies and creditors typically register their interests in properties when a deal is made, while others might do so to ensure they are viewed as secured creditors.

“The registry exists to give notice to anyone else in the world that you have a security interest in the property that’s covered by that registration,” Prof. Nocilla said.

Flair says it’s managing its finances.

“Customers can be assured that Flair remains dedicated to fulfilling tax obligations, managing financial responsibilities, and providing affordable, accessible air travel options, guided by principles of compliance, stability and transparency,” Mr. Jones said in a e-mail.

A major U.S. investor in Flair, meanwhile, is fielding its own challenges. Flair is 25 per cent owned by 777 Partners LLC, a Miami-based private equity company.

New York-based credit-rating agency AM Best has downgraded 777 Partners’ insurance arm, 777 Re Ltd., twice since November, from “excellent” to “weak.” AM Best cited Bermuda-based 777 Re’s ability to meet its financial and insurance obligations, its “weak” balance sheet and exposure to “illiquid” affiliated private investments.

Those related-party investments include several European soccer teams and Flair Airlines.

777 Partners’ stable of soccer teams includes Genoa CFC, Sevilla Futbol Club, Hertha Berlin, Standard Liege and Vasco da Gama. Its proposed purchase of the Everton Football Club in Britain is awaiting approval from the Premier League.

When asked how Flair is affected by 777’s situation, Mr. Jones said the airline “maintains the full support of our financial backers, and we remain steadfast in our commitment to providing competitive services in the market.”

A 777 Partners spokesperson declined to comment.

AM Best said 777 Re is working with the industry regulator, the Bermuda Monetary Authority, to reduce the company’s exposure to the affiliated assets. As a reinsurer, 777 Re sells policies to insurance companies looking to reduce their own risks. Typically, a reinsurance company invests in assets seen as stable and secure. Soccer teams and airlines are known for their financial volatility. Bermuda offers reduced regulation and is home to many reinsurance companies.

The reinsurance division of privately held 777 Partners is a significant lender to Flair Airlines, with credit totaling US$58-million in 2022 and US$37-million in 2021, according to 777 Re documents filed with the Bermuda Monetary Authority. Investments in entities related to 777 Partners totalled US$1.4-billion in 2022.

AM Best said its ratings downgrades “reflect 777 Re. Ltd.’s balance sheet strength, which AM Best assesses as very weak, as well as its marginal operating performance, very limited business profile and weak enterprise risk management.” AM Best and the Bermuda Monetary Authority declined to comment further.

Companies with poor ratings are viewed as riskier than average investments, and typically must borrow money at higher interest rates.

[deicer]

Boeing 737-86N - Untitled | Aviation Photo #7524511 | Airliners.net

[North of You]

Was in CUN the other week.  While we were taxing out, we heard a discussion  between a Flair flight and ground. The short of it was, they will not get taxi clearance until they talk to the maintenance company down there.  It sounded like they aren’t paying their bills down there.  

[neverminds]

I believe that had to do with this incident:

https://globalnews.ca/news/10370151/flair-airlines-calgary-cancun-delay/

[Airband]

Another stranded passenger saga in waiting...

Flair Airlines’ website malfunctions on weekend, in another blow to the discount carrier

Mon Mar 25, 2024 - The Globe and Mail
by Eric Atkins - Transportation Reporter

Flair Airlines’ flight-booking functions on its website were down over the weekend, preventing would-be travellers from buying seats.

Flair said in an e-mail on Sunday night it worked overnight Saturday on a solution, and hoped the website would be working again “within the next few hours.” Flair did not address questions about the cause.

The site remained down into Sunday evening.

The problem, which apparently took hold on Saturday, appeared to affect the seat purchase function on the website. Destinations and prices were displayed as usual, but the booking and payment functions failed.

“We are currently experiencing a service interruption,” a message read. “Please check back soon.”

Flair’s travails have made news recently.

In January, The Globe and Mail reported the airline owes $67-million in tax repayment for imported aircraft. Flair said it has a repayment agreement with the federal government and is following the schedule.

Financial services company Peoples Trust, meanwhile, recently withheld $25-million from Flair, the airline said. Peoples, a payment processor, declined to address questions about the money. Speaking generally, Peoples said in a statement it boosts the size of a payment reserve fund according to the risks posed by a merchant.

“Should a flight be cancelled and not rebooked by an airline and the airline cannot refund the money, cardholders are entitled to request a refund, or chargeback, from their card-issuing bank,” Peoples said the statement.

“When a chargeback is received, the airline’s payment acquirer [Peoples or another processor] must refund the purchase from a reserve account,” Peoples said.

Flair said Peoples acted improperly and promised unspecified legal action.

Flair is Canada’s lone discount airline after the failure of Lynx Air in February. Lynx was granted court protection from creditors, and its leased fleet will be auctioned off. Flair’s fleet was reduced by four last year, when the Boeing 737 Max aircraft were seized for non-payment of rent.

The Globe reported on Friday that Flair reduced its spring schedule by about 600 flights. Flair spokeswoman Gabrielle Poirier said the reductions were made months before Lynx shut down, and are unrelated to its financial position.

“We acknowledge we have faced financial challenges, but these are not impacting operations, now or in the future,” she said in an e-mail on Friday. “We are actively managing our finances and fulfilling our obligations, guided by principles of compliance, stability and transparency.”

[Seeker]

The signs are obvious.  For those buying tickets - consider carefully.

[Malcolm]

Flair Airlines is now Canada’s lone low-cost carrier. Can it rise to the moment?

By Craig Lord  Global News

Posted March 29, 2024 2:00 am

 Updated March 28, 2024 7:49 am

 8 min read

Travel expert Claire Newell joins us for a quick trip through the latest aviation news. We learn about Flair Air's expansion plans post-Lynx Airlines closure, and the billion-dollar lawsuit against Boeing. She also discusses lightning strike safety concerns and the online uproar over Southwest Airlines' new seat design. – Mar 7, 2024

The recent demise of Lynx Air leaves Flair Airlines alone holding the banner for ultra-low-cost carriers in the Canadian airspace.

Heading into the busy summer travel season when airlines make much of their money, some experts say travellers booking tickets across Canada will have to weigh cheap airfare against the reputational and financial uncertainty dogging Flair.

The CEO of the Edmonton-based carrier tells Global News that he is confident there’s a place for the airline among “price-sensitive” consumers, but experts say Flair faces headwinds in making the ultra-low-cost fare model work in Canada.

Calgary’s Lynx Air announced in late February that it would close up shop and file for creditor protection. Filings show Lynx had hoped an acquisition by rival Flair would help it avoid bankruptcy, and Flair has said it is eyeing Lynx jets in plans to grow its own fleet.fter being left stranded by Lynx Air

Stephen Jones, CEO of Flair Airlines, says it was a “sad day” when Lynx left the market. He says he feels for people at Lynx, particularly because they had the shared vision of bringing into Canada the ultra-low-cost-carrier or “ULCC” model that’s worked well in Europe and the United States.

But Jones tells Global News that he is not discouraged to see the collapse of another company with the same model. Flair has seen a “big uptick” in demand for its seats since Lynx’s departure, he says.

“We are the sole low-cost carrier left in the market, and it’s a great place to be. We have the price-sensitive leisure market here, really, to ourselves,” he says.

Low-cost flight options are limited outside Flair in Canada between Air Canada’s Rouge banner and WestJet’s Swoop, which it absorbed last year. WestJet also plans to wind down Sunwing and integrate the low-cost carrier into its main business by October. Canada Jetlines also flies primarily to warm weather destinations out of a few Canadian hubs.

While Flair has been a player in Canadian airspaces for over two decades, its modern iteration as a ULCC started with its rebranding in 2019. Lynx Air, once known as Enerjet, took to the skies as a low-cost carrier during the COVID-19 pandemic in late 2021 and folded just a couple years later.

Jones argues that Lynx did not have the time to build up the “economies of scale” needed to succeed in the Canadian market. He says the failure of Lynx does not have any bearing on whether the same business model can succeed under Flair.

“There’s nothing about Canada that says that the ULCC model shouldn’t work. People love to travel and people love a deal,” he says.

Challenges of the low-cost model in Canada

Jacques Roy, professor with the department of logistics and operations management at HEC Montreal, tells Global News that “it’s very difficult to operate a low-cost airline model in Canada.”

The low-cost model that originated with Southwest Airlines in the U.S. and later spread to Europe relies on having reliable “city pairs” where airlines can squeeze many seats into a suitable aircraft to lower their cost-per-customer enough to drive down the price of airfare, Roy says.

The distances between the cities in Canada can mean a less comfortable ride for longer, he says, which affects the value proposition for domestic travel.

Weighing down the bottom line for all air carriers in Canada are costly airport improvement fees that make taking off and landing domestically a considerable cost eating away at airlines’ margins, Roy says.udget flight options

Flair itself has acknowledged the impact of landing fees at Canadian airports.

In shifting its spring schedule to reduce its overall number of flights but boost service to sun destinations outside the country, the airline indicated in a statement to Global News last week that it was saving more money on the longer trips. Flair also said it was responding to Canadians’ demand for more sun destinations in the spring months.

Jones says the high fees imposed in Canadian air travel are unique to the market, and that ultimately means those costs are covered by the customer in the price of airfare.

“The fact that the airport fees are high here does mean that, at the margins, people will choose not to travel because they can’t afford it,” he says.

Duncan Dee, the former chief operating officer at Air Canada, says the decision to pivot away from Canadian destinations in the spring season “absolutely” makes sense when it comes to reducing airport fees.

 

 

[W5]

Bonza & Flair Investors 777 Partners Accused Of Running A Ponzi Scheme

https://simpleflying.com/bonza-flair-777-partners-ponzi-scheme/

777 Partners, a minority stakeholder in Flair Airlines and the owners of the now-insolvent Australian carrier Bonza, has been accused of years-long fraud by a British asset management company in a lawsuit in the United States.

 

777 Partners’ personal piggy bank

The lawsuit, filed by Leadenhall Capital Partners with the US District Court of the Southern District of New York on May 3, 2024, accused three individuals, 777 Partners, and associated companies, including Advantage Capital Holdings (A-CAP), of fraud, perpetrated by the defendants. The full text of the lawsuit can be read here.

 

According to Leadenhall, one of the defendants, a managing partner at 777 Partners, pledged over $350 million in assets while knowing that these assets did not exist, were not owned by any entities owned by the 777 Partners executive, or had been pledged to another party as 

The British company had entered into a credit facility agreement with several companies, including 777 Partners, in May 2021. To sign the agreement, the defendants pledged $350 million in assets to withdraw funds between May 2021 and September 2024.

 

“And because the value of the borrowers’ assets also functioned as the borrowing base, the borrowers were required to re-affirm, on a monthly basis and each time they drew funds from the facility, that they owned any assets pledged as collateral to Leadenhall “free and clear” of any other interests.”

 

 

As such, the British firm stated that if the defendants could not ensure that the pledged assets were free and clear of other legal obligations, the credit facility would become “an illegal and unsecured personal piggy bank that” 777 Partners and its executives could use to finance “finance risky private equity investments in aviation” and other industries.

 

Ponzi scheme at worst

The lawsuit explained that the fraud related to the credit facility started to unravel in September 2022, when Leadenhall received an anonymous tip alleging that one of the 777 Partners executives was deceiving the British company about the free use of the pledged assets. In March 2023, a US-based company informed Leadenhall that 777 Partners had also pledged resources for their credit agreement, with a subsequent investigation revealing that the defendants double-pledged $185 million in 

However, while the defendants pledged to resolve the issue, further investigations unveiled that 777 Partners cannot act independently since A-CAP was the company that provided funding for 777 Partners and their ventures, including aviation-related business. An insider told Leadenhall that, essentially, A-CAP had an express agreement with 777 Partners, which allowed the former to control the operations of the latter. As such, Leadenhall’s lawyers bluntly stated that the defendants,

 

 

“[…] are operating a giant shell game at best, and an outright Ponzi scheme at worst, that takes money in from investors and lenders and shuffles it around to various money-losing alter egos in the enterprise to disguise their true financial condition.”

 

Startups, MAXs And Tech - The Synergies Of 777 Partners

Breaking up with 777 Partners

Nevertheless, according to the lawsuit, 777 Partners owned 10% of the Canada-based low-cost carrier Flair Airlines. While the airline was close to having its aircraft repossessed since it owed the Canada Revenue Agency (RCA) CAD67 million ($49 million), the airline’s chief executive officer (CEO), Stephen Jones, said that the carrier and RCA had agreed upon a payment plan and that Flair Airlines has been staying “current with 

RELATED

Canada’s Flair Airlines Reportedly Owes $67 Million In Tax

In March 2023, an aircraft lessor repossessed three Boeing 737 MAX 8 and one 737-800 aircraft from the Canadian airline due to unpaid leases for the assets. The four, formerly registered as C-FLKI, C-FLKD, C-FLRS, and C-FFLA, still belong to Airborne Capital. Between February 2022 and March 2023, Flair Airlines’ fleet decreased by 12 aircraft, including 11 Boeing 737 MAXs, according to ch-aviation data.

 

Still, the airline kept breathing and has since broken away from 777 Partners. On May 1, the Canadian carrier announced that an affiliate of its largest senior lender is acquiring “a portion” of the shares owned by 777 Partners while also providing non-binding funding.

 

Different fortunes

However, Bonza, the Australian low-cost carrier, was not so lucky. On April 30, the airline announced that it has entered voluntary administration and suspended commercial services up to and including May 7. Qantas Group, which includes Jetstar, and Virgin Australia responded to the suspension of flights, offering Bonza customers an opportunity to fly with them free 

 

Still, the loss of Bonza will not significantly impact the Australian market. Data from the aviation analytics company Cirium showed that as of last week, the low-cost carrier scheduled 172 weekly domestic flights. In total, there are 11,702 scheduled weekly domestic flights in Australia in May, meaning that the airline’s market share was 1.46%, with the latest schedule update showing Bonza planning to operate 168 flights or a market share of 1.43%.

 

In an exclusive report by Australian Aviation, a source familiar with the matter told the publication that Bonza was never responsible for paying leases for its four Boeing 737 MAX 8 aircraft, and instead, 777 Partners were obliged to cover the payments.

 

 

 

 

[Malcolm]

1. I guess only time w

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• Flair Airlines CEO bullish on future of discount airlines. Others aren't so sure

• Edmonton-based Flair the only ultra-low cost carrier left standing

• 1. 
  2. Paula Duhatschek · CBC News · Posted: May 10, 2024 4:34 PM MDT | Last Updated: 2 hours ago
  1. 
  2. Working in Flair's favour, said one anal

With Swoop folded into WestJet and Lynx folded altogether, Edmonton-based Flair Airlines has emerged as the only ultra-low cost carrier left standing in Canada. 

Is CEO Stephen Jones nervous?

"Not at all, we're going to have a great summer," said Jones, speaking to CBC News on the sidelines of the CAPA Airline Leader Summit in Calgary this week.

Stephen Jones is the CEO at Flair Airlines. (Paula Duhatschek/CBC)

Others aren't so sure about the future of discount airlines. 

While in Europe the ultra-low cost carrier model has allowed travelers to scoop up flights for about the cost of a pizza, the industry has struggled in Canada thanks in part to high, third-party fees and the country's low population base.

John Gradek, a lecturer in aviation management at McGill University, believes the months ahead will be a key test for Flair. The privately owned company will have to keep prices low enough to entice customers, but high enough to make money — all while avoiding getting flicked off the game board by larger players, he said. 

"The game is going to be played sometime starting at the end of this month, beginning of June, to see the intestinal fortitude that Air Canada, WestJet and Flair have to fill their airplanes up and how low do the prices go to fill those airplanes," said Gradek. 

Why ultra-low cost carriers struggle

Population is one major barrier to the success of ultra-low cost carriers in this country. 

Compared to Europe or even the U.S., Canada simply doesn't have enough people to fill planes and support an ultra-low cost carrier, according to John Weatherill, chief commercial officer with WestJet. 

"What we recognized with Swoop was that even with very low cost … the market just wasn't big enough to be able to stimulate the type of traffic they need to be successful," said Weatherill, speaking on a conference panel Thursday.

 

John Weatherill is the chief commercial officer with WestJet. (Paula Duhatschek/CBC)

Taxes and fees are another problem. Canadian airports, which are not-for-profit facilities, rely on airport improvement fees to generate revenue and some charge $40 or more. 

At Westjet, for example, Weatherill said the business sold about 2.5 million tickets in 2023 with a base fare of under $100 — but had to absorb about $70 per ticket in fees and taxes.

"That makes it more difficult for airlines to put an affordable fare out into the market," he said in an interview with CBC News. 

With Lynx out of the mix, McGill's Gradek said Flair has had some wiggle room to raise prices, but will have to be careful not to overplay its hand such that they're no longer enticing to budget-conscious customers. 

Meanwhile, he said, the company will have to fend off larger players, who he said have the power to drop ticket prices temporarily to compete directly with the ultra-low cost carrier. 

"What do you think happened for the last 10 guys who tried this?" he said. 

"All kinds of carriers played this game of price differentiation and as soon as the big guys say 'That's it, we're done, goodbye, boom' — six weeks and they're history."

---

Flair has faced financial turbulence already. Earlier this year, The Canadian Press reported Flair was facing a seizure order from the federal government related to $67.2 million in unpaid taxes.

At the time, Jones told CBC News the airline was on track with a "mutually agreed-upon" payment plan with CRA.

The case for Flair

Working in Flair's favour, said analyst Lori Ranson, is the brand recognition that comes with being the only ultra-low cost carrier in the market. 

"There's a lot of history of low-cost and ultra-low cost carriers not really doing well in Canada, but I think Flair is trying to change the narrative," said Ranson, senior analyst for the Americas with CAPA Centre for Aviation. "We just have to see how it's going to play out."

Lori Ranson is a senior analyst with CAPA Centre for Aviation. (Paula Duhatschek/CBC)

Part of their strategy, said CEO Jones, is to "swing" routes seasonally between domestic and international. In the winter, the airline focuses more on sun destinations and offers more Canadian routes in the summer. 

"It will be 65 per cent domestic through the summer whereas through last winter we were 70 per cent heading south," said Jones, speaking on a conference panel, and adding that the airline plans to pick up more domestic routes left unfilled by Lynx's departure. 

He also said the airline has benefited from a partnership with the Region of Waterloo airport in Ontario, which gave the airline temporary, exclusive rights to certain routes. 

Despite the cost challenges that come with operating in Canada, Jones said the low-cost model has worked in similarly sparse Australia, and he believes there's no reason it shouldn't work here. 

Onstage at the CAPA conference, Jones described the airline's biggest competition as "the couch" —  meaning that he's not trying to coax travelers away from other airlines, but rather attract those who aren't flying at all right now because it's too expensive.

Asked about the future of the low-cost carrier model in Canada, Jones said there's plenty of interest and that his planes are "90 per cent full."

"We see the opportunity in getting more people off the couch … because affordability for travel in Canada has been a real problem," he told CBC News.

[Airband]

Flair Airlines CEO Stephen Jones to step down

Flair Airlines CEO Stephen Jones in one of the company's Boeing 737 MAX 8 aircraft

Wed Jun 05, 2024 - The Globe and Mail
by Eric Atkins - Transportation Reporter

Quote

“Startups are difficult, but it just did seem that we’re constantly being picked on for the things that we did … So, yeah, perhaps I didn’t manage the media relations well enough.”

Flair Airlines is looking for a new leader after chief executive officer Stephen Jones announced his retirement on Tuesday.

Mr. Jones, 63, departs the Edmonton-based discount airline on June 28 after four years – a period in which the carrier expanded rapidly from a few aircraft to about 20 Boeing 737 Max passenger jets.

“It’s just the right time for me,” Mr. Jones said in an interview.

He said he will spend time in Vancouver and his native New Zealand, pursuing his love of ocean sailing.

At the helm of Flair, Mr. Jones was an outspoken critic of Canada’s two dominant airlines, Air Canada and WestJet Airlines. He labelled them “Big Air,” and accused them of using their market share to squeeze out the smaller players with route matching and predatory pricing. “Big Air will say anything to make sure Canadians keep paying too much for airfare,” he said two years ago on social media.

Flair is recruiting candidates, and has named operating chief Maciej Wilk as his interim replacement, chairwoman Julia Haywood said in a statement.

As an upstart that charged low airfares in a concentrated market, Flair faced financial challenges. The Globe and Mail reported in January the airline owed the federal government more than $67-million in tax repayment related to the import of aircraft. A year earlier, aircraft leasing companies seized four Flair planes for missed rent payments. Mr. Jones said at the time U.S. investor 777 Partners paid the arrears on another seven aircraft.

It was the involvement of Miami-based 777 Partners that drew the attention of the regulator, the Canadian Transportation Agency, in 2021. The CTA found 777 Partners’ control, investment and board seats allowed it to call the shots, in violation of Canadian majority ownership laws. Facing the possible loss of its operating licence, Flair loosened 777 Partners’ grip and received approval from the CTA to carry on.

On May 2, Flair said 777 Partners had reduced its 25-per-cent stake to less than 10 per cent, shortly after Australian airline Bonza ceased operations and received court protection from creditors. The investor is facing legal and financial troubles in the U.S. amid scrutiny over its bid to buy an English soccer club.

Mr. Jones, who was hired at a time 777 Partners had seats on board, declined on Tuesday to name the investor that has replaced 777 Partners. New York’s Advantage Capital Holdings LLC is a creditor of 777 Partners, and its loans were reportedly secured by 777′s assets.

Mr. Jones has bristled at news coverage of Flair’s financial troubles, complaining reporters were ignoring the real story – Flair’s affordable airfares.

When asked what he thought could have gone better in his tenure, Mr. Jones took another shot at the coverage. “I wish some of the media would have got behind the business a bit earlier and actually focused on the benefits that we brought to the Canadian aviation industry. It seems that there was plenty of of focus on the troubles that we had,” he said.

“Startups are difficult, but it just did seem that we’re constantly being picked on for the things that we did … So, yeah, perhaps I didn’t manage the media relations well enough.”