Canadian aviation industry opposes Flair Airlines bid for 18-month exemption from ownership rules

A plane is silhouetted as it takes off from Vancouver International Airport in Richmond, British Columbia, May 13, 2019.JONATHAN HAYWARD/The Canadian Press

Much of Canada’s aviation industry said on Tuesday it opposes Edmonton-based Flair Airlines’ appeal to the government to be temporarily exempted from Canadian ownership requirements.

The Canadian Transportation Agency has issued a preliminary finding that Flair may be controlled by a U.S. investor in violation of Canadian law and has given the airline until May 3 to make changes or face the potential loss. of its operating license. Flair asked Transport Canada for an 18-month exemption from the regulations to address the regulator’s objections.

Two aviation industry groups, representing Air Canada AC-T, WestJet and several other companies, issued a joint statement on Tuesday opposing Flair’s exemption request.

“If granted, this unprecedented request would allow Flair to continue to operate outside the confines of existing Canadian law, setting a troubling precedent while threatening consumer confidence in the sector, at a time when the Voyage is working hard to provide a strong and sustainable future of air travel for Canadians,” the statement from the National Airlines Council and the Air Transport Association of Canada reads.

Flair Airlines could lose its operating license after the questioning of the Canadian control of the company

To operate as a national airline, a company’s foreign investment cannot exceed 49 percent or 25 percent by a single entity. A non-Canadian also cannot exercise control over the airline, a situation the CTA calls “control in fact”.

The CTA investigation found that Flair’s 25% owner, Miami’s 777 Partners, wields “dominant” influence over the airline by being a major lender and supplier of leased aircraft. Three of Flair’s five directors are connected to 777 Partners. “Flair’s reliance on 777 for funding, and 777’s apparent ability and willingness to exert control over Flair, are strong indicators that Flair is in fact controlled by 777,” said the CTA in its preliminary decision published on March 3.

John McKenna, head of the Air Transport Association of Canada, said his members were not trying to shut down Flair, but wanted a ‘level playing field’ as the sector tries to emerge from heavy financial losses from the pandemic. . “We say, ‘Play by the same rules as everyone else,'” Mr McKenna said by telephone.

The National Airlines Council represents Canada’s largest airlines: Air Canada, Air Transat, Jazz Aviation and WestJet. The Air Transport Association of Canada represents approximately 65 airlines and over 100 affiliates, including Porter Airlines, PAL Airlines and Nolinor Aviation.

Industry groups have said their members stand ready to lessen the impact on workers and travelers of a possible Flair shutdown or license suspension by bringing stranded passengers home or through other measures.

Tuesday’s joint statement from industry groups said internal screening of an airline is not just “nice to have”, but an essential requirement that ensures the airline is committed to Canada, its roads and the viability of the industry.

“By failing to adhere to basic and long-standing Canadian ownership and control rules, Flair places considerable uncertainty on travelers’ shoulders, potentially leaving them stranded without a safety net,” the group’s statement read.

Flair issued a statement accusing industry groups of causing fear and confusion in the market.

“It’s no surprise that Canada’s major airlines want Canadians to pay more for plane tickets, confuse passengers and eliminate competition,” the statement said. “No matter how badly they want to take us down, Flair is here to stay.”

The airline, in its request for exemption from the government, said the loss or suspension of its license would be harmful to travelers, its employees and its contractors. Flair said its low fares provide affordable travel and connect communities underserved by other airlines, and it’s confident it will address the majority of CTA’s concerns by May 3. But he added: “There are a number of practical reasons why Flair needs more time to comprehensively address CTA concerns as Canadian air travel returns to normal levels following challenges presented by the COVID-19 pandemic.

Flair did not respond to requests from The Globe and Mail to explain those reasons.

Transport Canada is conducting a public interest assessment on Flair’s exemption request, seeking submissions from interested parties. The deadline for submission was April 18.

WestJet, in its submission to Transport Canada on Flair, said it would be inappropriate for the Minister of Transport to grant an exemption and intervene in the jurisdiction of the CTA, an independent quasi-judicial body.

“Apart from its willful breaking of the law, there is simply nothing unique about Flair,” WestJet said. “Should Flair’s license be suspended or revoked, other Canadian airlines – which meet the legislative requirements to hold national licenses – will fill the void and provide comparable competition, local service and jobs.”

The CTA declined to comment on Flair’s request to Transport Canada.

Flair chief executive Stephen Jones is due to hold a webcast press conference on Thursday to address the CTA investigation.

The Globe reported that Flair owed $129 million to 777 Partners at the end of 2020. The investor took a stake in Flair in 2019. In early 2021, Flair said it would lease 13 Boeing 737 Max aircraft from 777 Partners, a fleet that would grow to 50 in five years.

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