The entire Canadian airline industry is waiting with baited breath for the CTA to make its pronouncement, scheduled for Wednesday, 01JUN, which may seal the fate of startup airline Flair.
The Canada Transport Agency said it would decide by 01JUN whether the Edmonton-based airline violates foreign-owneship rules. If it’s found in violation, Flair would be banned from flying domestic flights in Canada.
At issue is whether Flair Airlines Ltd.’s partnership with Miami-based investment company 777 Partners LLC violates Canada’s foreign-ownership rules.
As Open Jaw reported in APR, the Canada Transportation Agency (CTA) had determined that Edmonton-based Flair Airlines may be in violation of the law that requires it to be controlled by Canadians.
Flair is 25-per-cent owned by Miami-based 777 Partners, and its five-person board of directors includes three Americans who either own part of 777 Partners or are employed by 777 Partners.
CTA regulations say that a Canadian airline that flies domestically or internationally must be 51-per-cent owned by Canadians, with no single foreign entity owning more than 25 per cent. Additionally, foreigners cannot exert control over the airline, a situation the CTA calls “control in fact.”
Flair denied any violation of Canadian laws in an email to The Globe & Mail, however, it has made a number of changes to its structure, including promised changes to its board of directors to begin to address the CTA’s concerns.
In addition, Flair requested an 18-month exemption from the regulations to address the CTA’s concerns.
That has the rest of Canada’s aviation industry crying foul.
The National Airlines Council of Canada (NACA) and the Air Transport Association of Canada issued a joint statement 19APR, “calling on the Government of Canada to reject Flair Airlines’ request for an exemption.”
NACA, which represents the country’s largest carriers including Air Canada, Air Transat, WestJet and Jazz, as well as the Air Transport Association of Canada, representing all types of carriers as well as flight training organizations, plus industry suppliers - have all banded together to condemn start-up Flair Airlines’ request to be exempted from Canadian ownership requirements, even on a temporary basis, citing “fundamental fairness” and “consumer confidence.”
“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," their statement said.
Flair fired back to the industry statement in APR: “It’s no surprise that Canada’s big air carriers want Canadians to pay more for airfare, sow confusion with passengers and eliminate the competition,” Flair's statement said. “No matter how much they want to take us down, Flair is here to stay.”
Stephen Jones, CEO of Flair, has already called a media conference to issue a statement following the release of the CTA’s decision sometime 01JUN.