Right at the outset of the March Break exodus on Saturday, 11MAR, Ultra-low Cost Carrier (ULCC) Flair Airlines had four of its aircraft seized for non-payment of its leases in a move it's calling "unprecedented" - but which affected passengers and experts say may be pointing out the risks of the ultra-low cost air travel business model.
"Unprecedented"
A spokesperson for Flair confirmed to media Saturday that it had four aircraft seized as a result of a "commercial dispute" with a U.S. hedge fund and aircraft lessor. Two of the aircraft were seized in Toronto, one in Edmonton, and the fourth in Waterloo, Ontario.
The aircraft seizures at the beginning of March Break resulted in flight cancellations, Flair confirmed. While apologizing to affected passengers, the privately-owned, Edmonton-based ULCC expressed outrage at the move.
“The airline is aggrieved by this unprecedented action,” said the airline's statement. “Flair Airlines has been involved in ongoing communications with the lessor and payment has been initiated, as they have been previously done.”
It added it would use "additional planes to minimize the impact on passengers and did not foresee any major disruptions to its route map," adding it was "taking steps" to get affected pax to their destinations "with minimal disruption."
Risky Business?
Global News reports families scrambling to recover their March Break travel plans, some reportedly offered refunds or flights weeks away, and forced to pay thousands out of pocket to book with other airlines to travel during their booked time off work and school.
“Sometimes, low price is just too good to be true, right?” one affected passenger told Global News. “And you get what you pay for, I suppose.”
The report also quotes John Gradek, an aviation expert at McGill University, saying "This scenario of getting airplanes seized and losing 20 per cent of your aircraft fleet is a significant blow to the credibility and to the brand that is that the fleet is trying to build in Canada."
He pointed out that lease rates on aircraft like Flair deploys may have been about $200,000 per month during the pandemic, but that, in a booming air travel recovery we're experiencing now, those rates have likely doubled and may even triple in high season. The ULCC "was likely charging too low to cover the cost of leasing," he told Global News.
“They weren’t basically making enough cash flow, in my opinion, to cover off the costs of these leases.”
