Deadline for Flair Airlines to respond to ownership concerns

The deadline has come for Flair Airlines to respond to Canada’s transportation watchdog on foreign ownership concerns, but experts say we could wait weeks or months to find out the fate of the price carrier. very cheap.

The Canadian Transport Authority (CTA) found in a preliminary ruling published in March that Edmonton-based Flair maybe not enough Canadians to qualify for domestic flight permits.

The watchdog has set a May 3 deadline for Flair to formally respond to concerns, giving the airline 60 days to obtain its balance sheet.

The CTA did not confirm whether Flair will meet the date on Tuesday, but said it will provide an “update” to the review on Wednesday.

The agency said a panel assigned to the case would review Flair’s case and decide on next steps from there, adding there was “no specific timeline” for when to make a decision. determined.

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“The panel will review all the evidence and if at the end of the process it is determined that Flair is not Canadian, Flair’s license will be suspended,” a CTA spokesperson reiterated Tuesday.

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A Flair spokesperson would also not confirm on Tuesday whether the airline had submitted a response, saying instead that “the airline is working closely with the CTA to resolve the issue, but will not get more status updates.”

“I think we have to be patient. It will probably be up and running in a few weeks or months,” Frederic Dimanche, a professor of tourism at Toronto Metropolitan University, told Global News on Tuesday.

Is it safe for me to fly Flair this summer?

Despite the uncertainty surrounding the CTA’s decision, Flair CEO Stephen Jones remains adamant that the low-cost airline will fly this summer.

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In a press conference in response to ownership concerns last month, he outlined all the steps the airline has taken so far to minimize the perceived control that investors have Miami-based, 777 Partners, may apply to the company.

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This includes changing the board of directors to dilute the 777’s control and other governance changes.

The final piece of the puzzle, Jones said, is finding new financing to cover the debt 777 Partners has taken on to survive the downturn caused by the COVID-19 pandemic.

Flair has applied to the Minister of Transport, Omar Alghabra, for an 18-month waiver from Canada’s title regulations while seeking to refinance the debt.

A spokesman for Transport Canada said the department was “still reviewing” the request and had not yet made a recommendation to the minister.

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“The minister will then make the final decision on the waiver request. There is no legal timeline regarding these steps,” the statement read.

Dimanche says it “makes sense” for him that Flair may need more time to respond to CTA concerns, such as changes in a company’s governance structure that don’t come within a year. one afternoon early.

McGill University management professor Karl Moore told Global News now is the “worst time in aviation history” to call for more investment, given the uncertain COVID-19 recovery.

For that reason, he said giving Flair a little more time to refinance and meet Canada’s licensing standards is understandable, but an extra 18 months is a “long, long time.”

“I was torn by it. I would say give them a little more time, a little more flexibility, but you don’t give them forever,” he said.

A final waiver may not be necessary if the CTA lengthens its decision-making process on the question of actual ownership, Moore notes.

If Flair is able to address the watchdog’s concerns within the next few months, the final ruling could show the airline’s efforts are sufficient to meet the law.

Moore also said that if Flair ultimately fails to prove its control in Canada and has its license revoked, the government will make it eligible for passengers to receive refunds and book alternative trips.

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That said, credit card flight bookings and travel insurance are solid options for anyone flying Flair this summer, he said.

“I think about the next thing, although you can safely buy it, I would think about insurance quite seriously.”

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Aviation industry calls for crackdown on Flair

Meanwhile, corporations in the airline industry want the book thrown at Flair for crossing the line of foreign ownership.

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The head of Canada’s National Council of Airlines, which represents major companies such as Air Canada, WestJet and other airlines, told Global News in a statement on Tuesday that the country’s post-pandemic recovery The industry depends on the “reasonable application” of Canadian laws and regulations, which are the “basis for the long-term and reliable operation” of the aviation industry.

“Foreign companies adopting these ground rules threaten that confidence and cause a lot of uncertainty for visitors and workers alike,” said Suzanne Action-Gervais, the council’s interim CEO. work in this field.

She urged the CTA to “maintain” foreign ownership and control requirements, and Alghabra rejected Flair’s request for an exemption.

John McKenna, president of the Canadian Air Transport Association, an industry group representing companies in the airline industry of all sizes, said in an interview that giving Flair an exemption would “create precedent” that airlines of any size can circumvent the law and evade. with it.

The problem with Flair, says McKenna, isn’t necessarily that its ownership is foreign or Canadian, but that it’s the only airline in Canada that feels it can get outside funding to survive the pandemic. translate and deal with regulations after the fact, says McKenna.

He dismissed the idea that Flair should continue to fly because of the jobs and connections it provides to secondary markets like Abbotsford, BC, Waterloo, Ont. and Deer Lake, Nfld.

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“The majority of airlines in Canada have not met the threshold for government support. So they are not alone. But no one else is floating outside the law to survive. They did what they had to do. They cut operations. They struggled to get through it,” he said.

“The fact that you are providing a service to the community that would otherwise not have much or no service is not an excuse for illegal activity.”

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However, Dimanche said the additional competition Flair offers to airline giants Air Canada and WestJet could be reason enough for the government to want to create conditions to keep the low-cost carrier in operation. .

For the same reason that Flair can take advantage of the economic and consumer benefits to keep its license, larger players in the industry, however, may see regulations as a way to tough to maintain control over Canadian spaces.

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“If they have a chance to push that opponent down and keep them, they basically will,” says Dimache.

“So to me, it’s a fair game. It’s a business game. ”

– with files from Global News’ Anne Gaviola

© 2022 Global News, a division of Corus Entertainment Inc.

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