All Things Flair

[Guest1]

Flair Airlines becomes first Canadian airline with service to Hollywood Burbank Airport

20 November 2021Canadian Aviation News

• Inaugural flight to Los Angeles/Burbank is Sunday from Vancouver
• Service from Edmonton to Los Angeles/Burbank begins December 16

Edmonton, Alberta, November 20, 2021 – Flair Airlines, Canada’s only independent ultra low-cost carrier (ULCC), becomes the first Canadian airline to provide service to Hollywood Burbank Airport with the inaugural flight from Vancouver International Airport on Sunday. Flair is rapidly expanding into the US and Mexico, and service to the Los Angeles area will continue to grow as Flair adds flights from Edmonton International Airport starting December 16.

“We are excited to bring our low fares to LA and become the first Canadian airline to serve Hollywood Burbank Airport,” said Stephen Jones, President and CEO, Flair Airlines. “Our flight today is the start of connecting Hollywood North with Hollywood while providing a hassle-free experience straight to the hustle of downtown LA, the Hollywood hills and Burbank’s neighboring film studios.”

The inaugural flight from Canada to Hollywood Burbank Airport will depart on Sunday, November 21, at 11:15am.

“We are delighted to add a new route with Flair Airlines offering travellers options to visit Greater Los Angeles for some sunshine and Hollywood fun,” said Russell Atkinson, Director Air Service Development, Vancouver Airport Authority. “We know that more choices and affordable airfares are important to travellers now more than ever. We look forward to the continued success of Flair and seeing their growth as they connect the people of B.C. to more new destinations.”

“We’re looking forward to having Canadian travelers experience the most convenient way to visit the Los Angeles metro area,” said Frank Miller, Executive Director of Hollywood Burbank Airport. “We also know our local passengers will welcome and enjoy the ease and convenience of using this service to get from Southern California to Vancouver.”

One-way fares, including taxes and fees, begin at $99 CAD from Vancouver or Edmonton. There are limited seats and availability for the fares. Both routes are available for booking at flyflair.com.

The new service to Los Angeles/Burbank is among other US destinations Flair started in November, including Orlando, Fort Lauderdale and Las Vegas. Flair will also be starting service to Palm Springs and Phoenix-Mesa in December. Flair is disrupting the Canadian market with affordable air travel options as part of an ambitious goal to grow to 50 aircraft in 5 years.

About Flair Airlines

Flair Airlines is Canada’s only independent Ultra Low-Cost Carrier (ULCC) and is on a mission to liberate the lives of Canadians by providing affordable air travel that connects them to the people and experiences they love. With an expanding fleet of Boeing 737 aircraft, Flair is growing to serve 31 cities across Canada, the U.S., and Mexico. For more information, please visit flyflair.com.

 

 

Flair Airlines, Vancouver YVRFlair Airlines, Vancouver YVR

[Guest1]

Flair Airlines is expanding rapidly, but internal discord and regulatory scrutiny raise questions about its ambitious growth – Canadian Aviation News (wordpress.com)

Flair Airlines is expanding rapidly, but internal discord and regulatory scrutiny raise questions about its ambitious growth

5 December 2021Canadian Aviation News

From The Globe and Mail – link to source story

ERIC ATKINS, TRANSPORTATION REPORTER, THE GLOBE AND MAIL | 4 DECEMBER 2021

Flair has announced plans to lease and fly 13 Boeing 737 Max passenger jets.HO/THE CANADIAN PRESS

30 COMMENTSSHAREBOOKMARKLISTEN TO ARTICLE

It’s early 2021, and almost a year into the pandemic the skies around Canada’s airports are mostly quiet. Porter and Sunwing are grounded, Air Canada, WestJet Airlines and Air Transat are operating a small number of daily flights, cancelling orders for new planes and losing millions of dollars every day as air travel in much of the world is halted.

It’s a different picture at Flair Airlines, the tiny discount carrier based in Edmonton. On Jan. 27, Flair announced plans to lease and fly 13 Boeing 737 Max passenger jets. The bigger fleet would fly new routes to eight Canadian cities – 18 by the summer. “With this order, Flair is well on the way to achieving its ‘F50′ ambition of growing to 50 planes within five years,” said Flair, which at the time had just three 737s, two of which were essentially grounded by the pandemic.

The new planes would be leased from 777 Partners, the Miami-based private equity company that owns 25 per cent of Flair and is a major creditor to the airline, which bills itself as a low-cost alternative to its large rivals.

It was a bold move, coming as the global airline industry was in crisis and largely grounded. Canadian airlines were seeking billions in aid from Ottawa to cover rent and other costs as thousands of aviation workers were at home or working on wages topped up by government subsidies. Flair unveiled another step in its expansion last month, with the planned addition of Mexico and other vacation destinations, and added Hollywood Burbank to its growing list of U.S. destinations.

But as Flair plotted its rapid expansion, one finance official warned the airline’s top executive that the plan was too risky.

Jocelyn Harris, Flair’s vice-president of finance until the end of 2020, said she advised chief executive officer Stephen Jones that the airline could not afford the expansion, given that it was almost completely shut down and could not pay its bills.

“I couldn’t comprehend it,” Ms. Harris said of the plan to lease planes from 777 Partners. “In the fall we were completely insolvent, and they were going to go and sign on these contracts for these planes.”

Ms. Harris, who has filed a wrongful dismissal and harassment lawsuit against Flair, alleged in a court filing and interview that 777 Partners was calling the shots at Flair. She said she warned executives that the control exerted by the U.S.-based company was a possible violation of Canadian laws. A foreign investor cannot hold more than 25 per cent of a Canadian airline’s shares, nor is it allowed to take charge of company decision-making, known by the regulator as “control in fact.”

Ms. Harris’s allegations come amid a tumultuous time for the airline industry, which is facing new travel restrictions due to the Omicron variant. Flair is also facing a lawsuit from its largest Canadian investor, Prescott Strategic Investments, which is partly owned by Jim Scott, Flair’s former CEO.

The Globe and Mail has learned that the Canadian Transportation Agency, the airline industry regulator, is investigating Flair’s financial arrangement with 777 Partners, which was founded in 2015 by Steven Pasko and Joshua Craig Wander.

“Flair is required to comply with the Canada Transportation Act’s Canadian ownership and control requirement to hold its licences,” the CTA said in a statement to The Globe. “In assessing the control in fact requirement, the CTA considers a number of factors, including any implications that may arise from the leasing of assets from non-Canadians. There is, however, no specific restriction precluding the leasing of assets from non-Canadians.

“CTA staff are aware of the arrangement between Flair and its U.S. investor, and is currently looking into the situation,” said the regulator, a quasi-judicial body that has the power to levy fines, sanctions or suspend operating licences.

The CTA said the Flair investigation has not yet been referred to a panel.

Mr. Jones, Flair’s CEO, said in a statement that his airline is “58-per-cent owned and controlled by Canadians, well above the minimum standard established under federal regulation.”

Flair lawyer Mike Wagner declined to comment on the lawsuit filed by Prescott, citing a publication ban and sealing order on the file sought by Flair.

Justice Ward Branch of the B.C. Supreme Court on July 12 issued a publication ban on the lawsuit and sealed the file. In an e-mail, Mr. Wagner said the publication ban prevented him from saying why he sought the publication ban. Mr. Scott and Prescott lawyer Steve Warnett declined to comment. Prescott also named 777 Partners in the suit. The investor declined to comment.

Ms. Harris, who left the airline on Dec. 31, 2020, alleges she was fired in retaliation for her complaint about harassment by Juan Arciniegas, a 777 Partners executive who was working at the Edmonton office. She also alleges she was let go for “raising concerns with respect to the increasing control of 777 Partners, contrary to the Canada Transportation Act,” according to her statement of claim, which has not been proven in court.

“Flair is vigorously opposing these unsubstantiated allegations through all proper legal channels,” Mr. Jones said.

Michael Robinson, a spokesman for 777 Partners, said Ms. Harris’s claims of “verbal harassment and bullying” are “without merit and will be vigorously defended should an attempt be made to involve the company.”

Mr. Robinson said the CTA inquiry is a routine part of the regulator’s “routine ownership stake review,” adding that “777 Partners has, and will continue to, assist Flair in any dialogue the CTA wishes to have with the airline.”

In 2019, 777 Partners bought a 25-per-cent stake in Flair for an undisclosed amount. Flair, in a statement announcing the investment, said 777 Partners’ “financial strength” would help it grow and compete with Canada’s two dominant airlines.

The private equity investor does not disclose financial data. It made headlines in the sporting world in September with the purchase of Italy’s oldest professional soccer team, Genoa Cricket and Football Club, for a reported US$175-million. Its other investments include Synchrono Group Inc., a North Carolina-based insurance underwriter. Its aviation stakes include Air Black Box, a technology platform that allows a handful of Asian airlines to cross-sell seats; World Ticket seat-sales software; and Bonza Aviation, an Australian low-cost airline slated to launch in 2022 with two or three Boeing 737s. The investor has also bought the rights to use the name World Airways Inc., the U.S. carrier that stopped flying in 2014.

“Our senior management team is composed of industry veterans with backgrounds in private equity, venture capital, investment banking, financial technology, insurance, actuarial science, asset management, structured-credit, risk analytics, complex commercial litigation and computer science,” the company’s website says. “We partner directly with our management teams and portfolio companies to build long term value for all stakeholders.”

In 2004, 777 Partners co-founder Mr. Wander was convicted of cocaine trafficking in a Florida court, pleading no contest to the charges. He received 16 years’ probation, according to Florida court records. According to a news report on his trafficking case, the then-22-year-old admitted that a package containing 31 grams of cocaine was for him and a friend. He reportedly avoided a jail term of as long as 26 years with his plea.

Flair and 777 Partners representatives did not address questions about Mr. Wander’s criminal record nor grant an interview with him.

“The company will not comment on any legacy issues regarding Mr. Wander’s distant past,” Mr. Robinson said.

Jamina Kotak, Flair’s chief of staff, said in an e-mail that the airline is “pleased to be associated with Mr. Wander and 777 Partners. We could not imagine a more supportive director, shareholder and lender.”

The 737s that 777 Partners will lease to Flair are among the 24 aircraft the private equity company is buying from Boeing. The deal includes an option to buy another 60 of the aircraft. Flair this month is flying nine 737 Max aircraft, five of which are leased from 777 Partners and four from an unrelated company, Ms. Kotak said.

Ms. Harris said Flair owed about $129-million to 777 Partners at the end of 2020. The loan came with 18-per-cent interest. The airline’s executives and Mr. Wander held talks with government lenders Export Development Canada and the Business Development Bank of Canada for emergency financing but were turned down, Ms. Harris said.

Flair declined to answer questions about its financial picture. “As a private company, Flair generally does not publicly disclose or discuss its confidential financial information, which includes among other things debt, financing, lending and aircraft leasing details,” Ms. Kotak said. “Flair has benefited from a tremendous amount of support from its vendors throughout the COVID pandemic. Several vendors agreed to defer payments.”

To be granted an air operating licence to fly from point to point in Canada, an airline must be majority-owned by Canadians. Foreign ownership is capped at 49 per cent, or 25 per cent for a single individual or entity. In addition, the airline must be controlled in fact by Canadians.

According to the CTA’s website, “control in law is generally shown by owning enough shares to carry the right to a majority of votes. Control in fact goes beyond control in law as it includes the ability to exert control by any direct or indirect influence.

“Although the term is not defined in the [Transportation] Act, the agency considers control in fact to be: the power, whether exercised or not, to control the strategic decision-making activities of an enterprise and to manage and run its day-to-day operations,” the CTA says. “Those who may have the power to influence a company’s decisions can include minority owners, designated representatives, financial institutions, employees and others.”

Ms. Harris said 777 Partners stayed out of the aircraft operations and maintenance component of the airline. “But on the commercial [side] – the schedule, what planes we were going to fly, how are we going to advertise and market, and the vendors we engaged with – it felt everything had to be almost run through them,” she said.

David Gillen, a transportation professor at the University of British Columbia, said the leases do not appear to violate Canada’s foreign ownership laws. “The lessor might wield a lot of weight in decision-making but they are not an owner, any more than the bank holding one’s mortgage is an owner – unless of course, you cannot make a payment, at which time they might become an unintentional owner,” Prof. Gillen said.

The rules are intended to ensure Canadians make the decisions that affect domestic airlines, said John Gradek, who teaches aviation leadership at McGill University.

“If Flair is trying to disrupt the Canadian marketplace without really having to follow the same rules and the same practices as other Canadian carriers, it gives them an unfair competitive advantage,” he said. Other domestic carriers would welcome the chance to have greater access to foreign funding, he added.

Flair drew the attention of the regulator due to the nature of its financial arrangements with 777 Partners, Mr. Gradek said, leasing planes from the same part-owner and lender. “I think it was the fact that 777 Partners … was the entity that really wanted to deploy airplanes into Canada,” he said.

The Flair investigation appears to be at the initial stage of fact gathering to support a recommendation of action or dismissal. “And then it’s handed up to the [CTA] panel for them to do the adjudication and the formal issuance of CTA order, if one is required,” Mr. Gradek said.

“If it’s a serious enough breach of regulations and practices they can look at … monetary penalties or they can make a recommendation to Transport Canada for a regulatory remedy, including suspension of the airline operating licence.”

 

Related

 

[Guest1]

Flair Airlines strengthens commitment to Kitchener-Waterloo with new aircraft and 50+ new jobs

23 February 2022Canadian Aviation News

• Canada’s independent low fare airline will base a third aircraft in Kitchener-Waterloo
• Each aircraft brings increased passengers, greater connectivity, and approximately 50 additional direct and indirect jobs to the region
• New service to Charlottetown and Saint John from Kitchener-Waterloo starts in June

Kitchener, Ontario, February 23, 2022 – Today, Flair Airlines, Canada’s everyday low fare airline, announced the expansion of its base today at Region of Waterloo International Airport. A total of three aircraft will be based at the airport, bringing economic growth and greater connectivity to the region. With every new aircraft comes new routes, and Flair is pleased to add more destinations out of YKF, with the announcement of service to Charlottetown and Saint John, both beginning in June. Charlottetown will be flown two times per week on Thursdays and Sundays, while St. John will be flown three times per week on Mondays, Wednesdays, and Fridays.

“Kitchener-Waterloo is an incredibly important part of the Flair network and we’re excited to expand our base here,” said Stephen Jones, President and CEO, Flair Airlines. “Strengthening our ties with Region of Waterloo International Airport will allow us to serve more destinations from the airport in the future, as well as create new jobs for the region. As the airport completes extensive renovations, we feel that it is the perfect time to reaffirm our commitment to the region and grow with the airport.”

Flair first established a base in Region of Waterloo International Airport with two aircraft. Flair maintains bases in Vancouver, Edmonton, Ottawa, Toronto, and Kitchener-Waterloo. The addition of the third aircraft will make Region of Waterloo International Airport one of Flair’s largest bases.

Each aircraft brings approximately 50 jobs to the region, bringing the total to approximately 150 jobs, both directly and indirectly, including customer service agents, ground handlers, cabin crews, maintenance staff, and more. From Kitchener-Waterloo, Flair flies to Calgary, Cancun, Edmonton, Fort Lauderdale, Halifax, Kelowna, Orlando-Sanford, Vancouver, and Winnipeg. Service to Deer Lake, Newfoundland begins in June.

Service to Charlottetown Airport begins on June 9, with service to Saint John beginning on June 8. One-way fares to Charlottetown and Saint John, including taxes and fees, begin at $29. There are limited seats and availability for the fares. Both routes are available for booking at https://www.flyflair.com.

About Flair Airlines

[Airband]

Federal regulator launches formal probe into Flair Airlines’ compliance with Canadian ownership laws

Tue Mar 01, 2022 - The Globe and Mail
Eric Atkins - Transportation Reporter

Quote

'The formation of the CTA panel signals staff investigators found there is enough evidence to proceed with the new level of investigation'

Canada’s transportation regulator has launched a formal investigation into Flair Airlines’ compliance with laws that limit the control a foreign investor can have in a domestic carrier.

The Canadian Transportation Agency took the step after a review of Edmonton-based Flair’s ownership, which includes Miami-based 777 Partners. The U.S. investment firm owns 25 per cent of Flair, occupies three of its five board seats, and leases several planes to the airline.

The CTA said its probe came about as part of its monitoring of the industry. The federal regulator, which has the power to issue fines and suspend an airline’s operating licence, recently formed a panel to review the issue after a preliminary investigation.

“The CTA, as part of its ongoing regulatory activities, monitors airlines’ compliance with the Canadian ownership and control requirement,” the agency said in an e-mail. “Staff initiated a review of Flair’s ownership interest to assess its compliance with this requirement.”

Foreign investment in a Canadian airline cannot exceed 49 per cent, or 25 per cent by an individual. Additionally, foreigners cannot control the airline, something the CTA calls “control in fact.”

The CTA defines control in fact as “the power, whether exercised or not, to control the strategic decision-making activities of an enterprise and to manage and run its day-to-day operations. Those who may have the power to influence a company’s decisions can include minority owners, designated representatives, financial institutions, employees and others.”

“The mind of the organization has to be in Canada and controlled by Canadians,” said John Gradek, a former Air Canada executive who teaches aviation leadership at McGill University.

The formation of the CTA panel signals staff investigators found there is enough evidence to proceed with the new level of investigation, he said.

“They have finished their investigations and there are enough grounds for the CTA to convene a panel, to bring in witnesses and have depositions. It’s a fairly formal process.”

“Flair is completely compliant with all applicable airline regulations, including those dealing with Canadian control,” Stephen Jones, the airline’s chief executive officer, said in a statement. “Flair is a private company, and while we have always and will continue to co-ordinate with all regulators as necessary, our shareholdings and financial affairs are confidential

In November, Flair said it was 58-per-cent owned by Canadians. Three of Flair’s five directors are Americans who either own or are employed by 777 Partners, according to incorporation filings in British Columbia.

A spokesman for 777 Partners did not answer e-mailed questions.

The CTA describes itself as a “quasi-judicial body” but operates largely in secret, without public hearings. “In situations when the CTA identifies concerns about the Canadian status of the air carrier, the CTA typically issues a preliminary determination in which it provides the carrier a time period for it to respond to those concerns,” the CTA said in an e-mail. The CTA’s decisions may be appealed to the Transportation Appeal Tribunal of Canada.

An allegation that the airline is controlled by Americans was also made last fall in a wrongful dismissal lawsuit filed by the airline’s former finance director, Jocelyn Harris. That claim has not been tested in court.

Flair is embroiled in a legal battle with its largest Canadian investor, Prescott Strategic Investments, partly owned by Flair’s former CEO, Jim Scott. Flair sought and was granted a publication ban and sealing order on that lawsuit. Steve Warnett, a lawyer for Prescott, declined to comment, citing the court order.

Flair, which describes itself as “Canada’s everyday low fare airline,” flies 12 planes to destinations in Canada and abroad.

The airline announced plans in early 2021 to boost its fleet to 50 aircraft by 2025, leasing the first 13 of the Boeing 737 Max jets from 777 Partners, its biggest U.S investor. In December, Flair said it would add another 14 737 Max planes, leasing them from “a mix of lessors,” including 777 Partners.

[Guest1]

The Canadian Transportation Agency issues preliminary determination on whether Flair is Canadian

31 March 2022Canadian Aviation News

March 3rd 2022 – Gatineau, QC – Canadian Transportation Agency

The Canadian Transportation Agency (Agency) issued March 3rd, 2022 its preliminary determination that Flair may not be controlled in fact by Canadians and may, therefore, not be ‘’Canadian’’, as defined in the Canada Transportation Act, SC 1996, c 10.

Flair holds licenses authorizing domestic, scheduled international, and non-scheduled international air services. Pursuant to the Act, Flair must be Canadian to provide these air services. Three requirements must be met for an air carrier to be considered Canadian: (1) the incorporation or formation requirement, (2) the voting interest requirement, and (3) the control in fact requirement.

The Agency has provided Flair with the opportunity to respond, no later than 60 calendar days from the date of issuance. At the end of the review process, the Agency will issue a final public determination with reasons and its conclusions, which will be posted on its website.

The Agency does not comment on its determinations as they speak for themselves.

Background

The Agency is responsible for ensuring all air carriers licensed to provide domestic air services meet the Canadian ownership requirements set out in the Act. These requirements state that air service licensees must be owned and controlled “in fact” by Canadians. The Agency uses business and other information to determine whether a licence holder or applicant is “in fact” Canadian.

For more information, consult the CTA’s Guide to Canadian Ownership and Control in Fact for Air Transportation and frequently asked questions on air licencing.

Federal review threatens Flair Airlines’ licence

31 March 2022Canadian Aviation News

From CTV News link to source story and video – thanks to PN

Stephanie Villella, CTV News Kitchener Videographer • March 30, 2022

Travelers line up at a Flair Airlines counter at the Region of Waterloo International Airport on March 30, 2022. (Dan Lauckner/CTV News)

An airline that operates out of the Region of Waterloo International Airport is under review by the Canadian Transportation Agency.

Flair Airlines is facing turbulence as to whether or not its Canadian controlled.

On March 3, the transportation agency released its preliminary ruling, finding that the Edmonton-based carrier is not, in fact, Canadian owned.

If a final ruling is confirmed, the airline’s licence to operate could be suspended or cancelled.

John Gradek, a faculty lecturer at the McGill Aviation Management Program calls it a “predicament.”

“It sort of is a risk and I hope the Kitchener–Waterloo Airport Authority has some insurance on their program,” he said.

The review comes as the region spends $44 million to expand the Region of Waterloo International Airport to accommodate more passengers and planes.

The region credits Flair for the airport’s passenger growth.

“We are aware of the preliminary ruling and are monitoring the situation,” a spokesperson for the region said in a statement. “At this point in time, no action is required by the region. Flair will respond to the decision and the CTA will determine if any actions are needed to be taken by the organization. Flair has demonstrated the viability of YKF and the interest of travelers in our market area to use YKF as a gateway to other destination.”

Gradek said he recommends the region holds off on signing anymore contracts with Flair.

“Since the airport has invested capital to support Flair and that money is coming from taxpayers … my view is, I would not be looking at contracting any major expenditures on airport improvements until the [Canadian Transportation Agency] has concluded their investigation,” Gradek said.

According to the agency, to be licensed, an airline must be incorporated in Canada, at least 51 per cent of voting interests must be owned and controlled by Canadians, and it must be controlled in fact by Canadians.

A Miami-based company called 777 Partners owns part of Flair Airlines and provides aircrafts to it.

“Not only are they an equity provider, they’re also a major provider of aircrafts, and that’s what’s causing concern,” Gradek said.

In a statement to CTV News, Flair’s CEO and President, Stephen Jones said, “Flair Airlines is a Canadian airline and is controlled by Canadians both in law and in fact. Flair Airlines, at all times, operates its business in compliance with the laws and regulations governing air transportation in Canada.”

“Flair is here for the long term and is committed to finally bring sustainable, affordable airfares to the people of the Kitchener-Waterloo region. Customers can absolutely book with confidence, and we look forward to welcoming them aboard this summer.”

The airline has 60 days from March 3 to respond to the transportation agency’s preliminary report.

[Tango Foxtrot]

So if you lease your aircraft from ALC or GECAS  they own your airline

 If YKF is a viable operation,  someone will fill the void should Flair disappear. 

[Guest1]

1 hour ago, Tango Foxtrot said:

So if you lease your aircraft from ALC or GECAS  they own your airline

 If YKF is a viable operation,  someone will fill the void should Flair disappear. 

Re ownership it is more about control and has nothing to do with leasing the aircraft or so it seems.

Quote

The investigation commenced after concerns were raised following a routine review of the airline's corporate structure and financial backers. This review highlighted that Miami-based 777 Partners owns 25% of the carrier amongst the airline's investors. Moreover, a point that is giving further concern is that the same investor also occupies three of five seats on the airline's board. Not only that, but it also leases numerous aircraft to the Canadian carrier.  Foreign investment in any Canadian airline cannot exceed 49% in total or 25% by any single individual. Additionally, foreigners cannot have overarching control of the airline or 'control in fact' as using the terminology used by the CTA. The legal definition of 'control in fact' is quite broad in this regard

 

[Super 80]

This was basically the issue that kept the premium startup Platinum Jet Air on the ground as Ottawa decided that they were indivisible from the British lessor of their Fokker fleet.

https://otc-cta.gc.ca/eng/ruling/728-a-2005

[Tango Foxtrot]

If they want to replace one of their board of directors with a Canadian,  I'll take the job and vote however they want me to

 

 P.S. thanks KargoKings  

 Posts like yours are what make this forum great. 

Edited April 2, 2022 by Tango Foxtrot

[MCPSPEED]

https://www.theglobeandmail.com/business/article-flair-airlines-faces-possible-loss-of-operating-licence-after/
 

 

[Guest1]

Not surprising:

Canada’s Major Airlines Respond to Exemption Request made by Flair Airlines

19 April 2022Canadian Aviation News

Apr 19, 2022 • News Releases

OTTAWA, April 19, 2022 – Suzanne Acton-Gervais, Interim President and CEO of the National Airlines Council of Canada, which represents Canada’s largest air carriers (Air Canada, Air Transat, Jazz Aviation LP and WestJet) and John McKenna, President and CEO of the Air Transport Association of Canada, which represents Canadian carriers of all categories and flight training organizations, as well as aviation industry product and service suppliers, jointly issued the following statement concerning the exemption request from Flair Airlines to meet the requirements of Canadian ownership under the Canada Transportation Act:

“The competitiveness and stability of Canada’s aviation industry relies on a number of factors – chief among them, the application of statutes and regulations that give Canadian travelers confidence they are receiving service from domestic carriers that have demonstrably proven their Canadian ownership and investment. It is entirely reasonable for Canadians to expect companies to comply with the clear and longstanding rules of the Canada Transportation Act.

It is with this basic principle in mind that Canada’s airlines are calling on the Government of Canada to reject Flair Airlines’ request for an exemption under the Act.  If granted, this unprecedented request would allow Flair to continue operating outside the bounds of existing Canadian law, setting a troubling precedent while also threatening consumer confidence in the sector, at a time when the travel industry is working hard to provide a strong and sustainable future for air travel for Canadians.

The Canada Transportation Act maintains important benchmarks for the reliable, longstanding operation and growth of the aviation sector within the country.  In Canada, travelers have access to diversified, competitive commercial air travel options.  Airlines have worked diligently for decades to ensure the sector remains resilient and offers significantly increased choice for customers, while air fares in Canada have steadily dropped in the last ten years.

By failing to comply with basic, longstanding Canadian ownership and control rules, Flair places considerable uncertainty on the shoulders of travelers, potentially leaving them stranded without a backstop should Flair fail to abide by Canadian ownership and control requirements, as ordered by the Canadian Transportation Agency.

Adherence to existing laws regarding ownership and control-in-fact of major companies that are part of Canada’s critical infrastructure (including airlines) is an important principle to uphold.  These laws ensure that companies make a firm commitment to Canada, protecting the industry’s viability, incentivizing growth and new routes, allowing for expansion and building strong networks across the country and globally that collectively make up a strong ecosystem. Domestic control and ownership is not just a “nice to have”, it is a necessary underpinning of the system, and should be defended.  It ensures that there is fundamental fairness and protects against one diluted or foreign owned business causing harm to the competitiveness of the whole industry.

At a time when traveler confidence is reviving, and the entire tourism industry is edging toward the beginnings of a post-COVID recovery, it is in the public interest for the Minister of Transport to dismiss this exemption request and require Flair to meet their statutory obligations as prescribed by the Canadian Transportation Agency.  Allowing Flair’s continued operation outside of longstanding, clear laws would set a dangerous precedent for those in aviation, business, and most importantly, Canadian consumers.  The Government of Canada has an obligation to protect Canadians and uphold its own laws, and the best way it can do this is by ensuring all carriers comply with the applicable statutory obligations.

NACC and ATAC member airlines stand ready to work with the Minister of Transport to mitigate the impacts on travellers and workers, including by offering alternatives and options as a result of the Canadian Transportation Agency’s investigation into Flair, or the Government of Canada’s denial of this exemption request.  We commit to working with the government to ensure that the public interest remains top of mind for law-abiding air carriers.”

About the National Airlines Council of Canada:

The National Airlines Council of Canada represents Canada’s largest national and international passenger air carriers:  Air Canada, Air Transat, Jazz Aviation LP and WestJet.  It promotes safe, sustainable and competitive air travel by advocating for the development of policies, regulations and legislation to foster a world-class transportation system.  Prepandemic our members collectively carried over 80 million passengers annually, directly employed over 60,000 people and served as a critical component of Canada’s overall air transport and tourism sector, which supported more than 630,000 jobs.

About the Air Transport Association of Canada

The Air Transport Association of Canada (ATAC) serves as Canada’s national trade association for the commercial aviation representing Canadian carriers of all categories and flight training organizations, as well as aviation industry product and service supplier.  ATAC is recognized as a strong advocacy organization that successfully supports its members in their pursuit of a safe, world-class and sustainable Canadian air transport industry.

 

Related

 

[MD2]

This part in the Globe article about sums it up:

 

”….Other than its deliberate violation of the law, there is simply nothing unique about Flair,” WestJet said. “If Flair’s licence were suspended or cancelled, other Canadian airlines – that respect the legislative requirements for holding domestic licences – will fill the gap and provide comparable competition, local service and jobs.”

[Trader]

Surprise, surprise. The big boys led by WJ attempting to quash, once again, any competition by misrepresenting the situation.

 

The CTA foreign ownership rules have two primary components:

1. Governance, essentially how is the ownership structured and how much is owned by foreign interests

2. Control in fact - do any shareholders or other foreign interests have the ability to influence the company or other shareholders or, more clearly, that the Canadians holding 51% or more of the voting interests can and will actually exercise control in all circumstances. That is the actual test.

Control in fact can be exerted in a number of ways and so the CTA's decision is always subjective and looks at debt, rights of debt holders etc. So it is not simple and prescriptive. If they determine, after an investigation, that they do not believe control in fact is established than the airline must make changes to ensure they do.

That is where the Flair issue currently sits and the May 3rd deadline is the date that Flair must submit their documentation at which point the CTA begins its investigation.

 

WJ knows this but likes to push the narrative (through media) that somehow Flair is an evil, foreign conspiracy. Again, the big boys fearful of competition.

[MD2]

Oh make no mistakes, the opposition to Flair’s advantage is from all Canadian carriers, especially Air Canada, the biggest member. And the CTA has already made the preliminary ruling.

A little research reveals that Flair seems to have had a falling out with its (only?) Canadian investor who is suing it now, and as a result it has delved deeper into its relationship with 777. It basically is the only major stakeholder in the company, at the moment provides most of its aircraft, and clearly controls it. Flair is asking for 18 months hoping to find a replacing investor. Jetlines searched for many years. They may never come!

The argument may be coming from its competitors, but it doesn’t make it less true. Flair’s own actions and statements seem to indicate that it has knowingly been in breach of foreign ownership and controls laws.

[conehead]

42 minutes ago, MD2 said:

A little research reveals that Flair seems to have had a falling out with its (only?) Canadian investor who is suing it now..

Who was that Canadian investor, if you don't mind? (I havn't researched it.)

[Guest1]

19 minutes ago, conehead said:

Who was that Canadian investor, if you don't mind? (I havn't researched it.)

This is all I could find.

The Edmonton-based airline announced Tuesday that Miami-based 777 Partners acquired a 25 per cent equity stake — the maximum amount a foreign entity can own under federal regulations — in the company for an undisclosed sum. It intends to use the investment to upgrade its fleet to larger planes.

Chief executive Jim Scott said Flair decided to publicize its new financial backer — the company was owned by Scott’s investment firm and another employee before it closed the deal earlier this spring — to level the playing field since the public knows Swoop is backed by WestJet.

[Maverick]

4 hours ago, Trader said:

Surprise, surprise. The big boys led by WJ attempting to quash, once again, any competition by misrepresenting the situation.

 

The CTA foreign ownership rules have two primary components:

1. Governance, essentially how is the ownership structured and how much is owned by foreign interests

2. Control in fact - do any shareholders or other foreign interests have the ability to influence the company or other shareholders or, more clearly, that the Canadians holding 51% or more of the voting interests can and will actually exercise control in all circumstances. That is the actual test.

Control in fact can be exerted in a number of ways and so the CTA's decision is always subjective and looks at debt, rights of debt holders etc. So it is not simple and prescriptive. If they determine, after an investigation, that they do not believe control in fact is established than the airline must make changes to ensure they do.

That is where the Flair issue currently sits and the May 3rd deadline is the date that Flair must submit their documentation at which point the CTA begins its investigation.

 

WJ knows this but likes to push the narrative (through media) that somehow Flair is an evil, foreign conspiracy. Again, the big boys fearful of competition.

Well, to be fair. Those that remember you know that you've always had an axe to grind with WestJet. As MD2 stated this is hardly just WJ but you know that.

Edited April 20, 2022 by Maverick

[MD2]

2 hours ago, conehead said:

Who was that Canadian investor, if you don't mind? (I havn't researched it.)

https://biv.com/article/2021/07/lawsuit-week-shareholder-takes-aim-airlines-expansion-plan

“A shareholder in Flair Airlines Ltd. is taking the low-cost carrier to court, claiming it’s wrongfully withholding key information about a significant expansion of the company’s fleet of aircraft announced in the midst of the COVID-19 pandemic.

Prescott Strategic Investments LP by its general partner Prescott Strategic Investments Ltd. filed a petition in BC Supreme Court on June 18, naming Flair and Florida-based 777 Partners LLC, a “significant creditor” of the aviation firm, as respondents. Prescott, run by Canadian aviation industry veterans Jim Scott and Jerry Presley, claims in the court filing that the dispute was spurred by Flair’s management deciding to “aggressively expand its operations during a global pandemic” by signing leases on 13 new Boeing 737-8 airplanes with a subsidiary controlled by 777 Partners, also a Flair shareholder.”

 

The details are ordered sealed, but it was also revealed at the time that Flair owed 777 about 140 millions at 18% interest…

[Guest1]

26 minutes ago, MD2 said:

https://biv.com/article/2021/07/lawsuit-week-shareholder-takes-aim-airlines-expansion-plan

The details are ordered sealed, but it was also revealed at the time that Flair owed 777 about 140 millions at 18% interest…

18%  hollycow

[Specs]

50 minutes ago, MD2 said:

....at 18% interest…

Seriously?  That seems a bit much or am I out of touch with today's financial markets?

[conehead]

Wow!!

 

[Kip Powick]

When I moved to Ontario I had an RBC mortgage that was portable (14%)

It had to be renewed the next year and the rate I got was 18 %

I know mortgages have nothing to do with big $$$ deals on aircraft purchases etc. but it does show how  the economy moves. 

Edited April 20, 2022 by Kip Powick
speling

[Maverick]

5 minutes ago, Kip Powick said:

When I moved to Ontario I had an RBC mortgage that was portable (14%)

It had to be renewed the next year and the rate I got was 18 %

I know mortgages have nothing to do with big $$$ deals ion aircraft purchases etc. but it does show how  the economy moves. 

In this case it's more than likely the risk involved, right now L.O.C.'s can be had for 5% for low risk borrowers. If this is true,  (I have heard they were into some expensive money) this is what the market has priced into for a loan to Flair.

Edited April 20, 2022 by Maverick

[GDR]

Flair CEO to respond.

https://globalnews.ca/news/8775020/flair-airlines-ownership-review/

[J.O.]

18% interest is what you have to pay when your business lacks the solid footing that comes with a proven revenue stream and solid customer base.

Now when you see such rates used to finance a corporate takeover, you're probably dealing with a corporate raider who's only looking to maximize short term earnings and couldn't care less if it bankrupts the host.