Canadian Transportation Agency Clears Runway For Flair Airlines

After several months of uncertainty, the legal future of Canada’s Flair Airlines has been determined by the Canadian Transportation Agency (CTA). On Wednesday, the CTA ruled that the Edmonton-based low-cost carrier had satisfied concerns raised in a Preliminary Determination issued on 03  March 2022. The preliminary determination finding stated that ‘the influence of 777 Partners LLC (777), a non‑Canadian, over Flair was dominant and that 777 may have control in fact of Flair and consequently Flair may not be Canadian, as defined in subsection 55(1) of the CTA.’

In its summary of the findings, the CTA stated, “The Agency finds, after considering all of the facts, that the changes implemented since the Agency’s Preliminary Determination, including to the Unanimous Shareholder Agreement (USA) and Promissory Note, have addressed the concerns raised by the Agency in its Preliminary Determination. Accordingly, the Agency finds that, as Flair meets the incorporation and voting interest requirements and that Canadians control in fact Flair, Flair is Canadian, as defined in subsection 55(1) of the CTA.”

Regarding Flair’s shareholding, the CTA advised that ‘the voting interests in Flair are owned and controlled 58.3 percent by Canadians and 41.7 percent by non-Canadians.’ The determination acknowledged that Flair had made changes to address the agency’s concern. In one of the points, the agency stated that: “Flair now has the ability to acquire aircraft from suppliers of its choosing, as 777 can no longer unilaterally veto aircraft acquisition decisions.” The agency did state repeatedly that Flair Airlines was ‘financially dependent’ on 777 Partners for the leasing of aircraft and continued funding of the airline’s operations.

Stephen Jones the chief executive officer of Flair Airlines spoke to the media on Wednesday and said, “The decision that has come out today is very clear, it’s black or white: Flair is Canadian.” CBC News reported Mr. Jones said that the airline had gone “line-by-line” to address the concerns of the CTA. One aspect of this will be to expand the number of seats on the airline’s board of directors to nine and to ensure that at least seven of those seats are filled by Canadians. Mr. Jones did acknowledge that “on reflection, the governance document when it was written in 2018 could have been written more clearly about all those things we added.”

In an op-ed piece for National News Watch published a day before the CTA determination Mr. Jones took aim at what he called ‘Big Air Carriers’ in particular WestJet after an article titled ‘Don’t reward rulebreakers: WestJet’s perspective on possible Flair Shutdown’. A war of words between Flair and other Canadian airlines had escalated in recent months after the publication of a statement by industry bodies representing Flair’s competition. Citing the recent op-ed by WestJet executive Andrew Gibbons, the Calgary-based airline’s Vice President of Government and Regulatory Affairs, Mr. Jones stated that “they (WestJet) try to steamroll Ultra Low-Cost Carriers like Flair Airlines because Canadians saving money and having more options is a threat to their high-price status quo.”

In response to the CTA’s determination Mr. Jones declared, “Together, we can make the dream of showing up to your office with a suitcase and a plane ticket for an affordable, after-work, long-weekend jaunt to another city, or country a reality. We can help more people see all that this wonderful country has to offer. But we can only do this by breaking Big Air’s stranglehold and fostering a thriving, competitive and innovative airline industry that delivers affordable airfares and greater choice for Canadians.”

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