https://windsor.ctvnews.ca/yqg-travelle ... -1.5870802
Flair Airlines CEO Stephen Jones came out swinging against “Big Air” Thursday during a news conference about regulatory review.
“There is zero chance Flair will lose its licence on May the third,” says Jones. “The May third deadline that’s been widely reported in the media is not a drop dead date.”
Jones says Flair has until that date to respond to the Canadian Transportation Agency (CTA) over their review of the ultra-low cost carriers’ corporate governance and finances.
In a review launched on March 3, the CTA wrote, “Flair may not be controlled in fact by Canadians and may, therefore, not be ‘Canadian’, as defined in the Canada Transportation Act, SC 1996, c 10.”
In order to be a licensed domestic airline, the company must be incorporated in Canada and at least 51 per cent of voting interests must be owned and controlled by Canadians, according to the CTA.
Jones says 58 per cent of the voting shares in Flair are owned by Canadians and no non-Canadian owns more than 25 per cent of the airline.
Flair Airlines, according to Jones, is incorporated in British Columbia.
“The CTA accepts that non-Canadians are entitled to take steps to protect the value of their investment,” says Jones. “The CTA raised concerns regarding requirements within Flair’s governing documents to ensure that Canadian control of decision-making is maintained.”
Jones says the CTA “called out the depth” of Flairs’ relationship with a company called 777 Partners, one of their creditors, shareholders and aircraft lessors.
777 Partners is based in Miami, which Jones says helped Flair Airlines stay afloat during the pandemic.
“777 Partners never used the fact that they were providing us cash to exert day-to-day control. As CEO, I run Flair Airlines only with my management team and the more than 700 people working hard every day for Flair,” says Jones.
Jones says Flair did get some emergency funding to grow regional connectivity but says the airline was never a part of the “billions and billions” of bailout funding provided to other carriers like Air Canada or West Jet.
“Instead we turned to our shareholders to survive and 777 Partners provided a lifeline to protect thousands of jobs from coast-to-coast,” says Jones.
He says it’s a priority to repay the debt by running a successful airline, refinancing some loans and ultimately listing Flair on the Toronto Stock Exchange.
Jones says they have already repaid $18 million to 777 Partners but adds, “the refinancing of the balance of the debt will take some time and it is for this reason alone that we have sought a time-bound, 18-month exemption from the Ministry of Transport.”
In terms of governance, Jones says CTA found their “Unanimous Shareholders Agreement did not enforce Canadian control explicitly enough.”
He says the board agreed the document, created in 2018, needed revisions to clarify that Flair is indeed controlled by Canadians.
In a new agreement, ratified by the board last week, Jones says 777 Partners lost their veto power and can only appoint two directors to the board, down from three.
Flair’s board will also now have nine total members; seven Canadians and two non-Canadians.
“777 Partners wholeheartedly supported the changes and this amended Unanimous Shareholders Agreement will form part of Flairs’ response to CTA on May the third,” says Jones.
Jones believes these changes should ease at least 80 per cent of the CTA’s concerns with their operation.
When asked his opinion of Air Canada and West Jet publicly denouncing the payment exemption, Jones told reporters he’s not surprised by the actions of what he calls “big air.”
“These guys have been ripping off the Canadian public for decades,” says Jones. “When I go out and talk to people everybody’s complaining about their duopoly. So don’t be surprised that they get defensive when a company that’s genuinely efficient at providing low-cost airfares comes into the market. It’s a threat to their existence.”
In an eight-page letter to the CTA, Air Passenger Rights talks about this duopoly seen here.
Gabor Lukacs notes Air Canada and West Jet have received at least 90 per cent of the market share on flights in Canada between 2014 and 2019.
“The entry of a new competitor in such a highly concentrated market undoubtedly increases competition and lowers fares,” writes Lukacs who says Flair’s predecessor airline (NewLeaf) forced a 23 per cent reduction in fares in Canada.
Jones was asked about public criticism of Flair’s customer service and changes to flight plans.
“There’s also issues Flair has had that I would describe as growing pains,” says Jones. “There’s an industry-wide shortage of staff, in particular the on-ground staff.”
Jones admits their customer service department needed some help and says they have now boosted their staff from 10 to more than 70 working in customer service.
“I don’t claim that we’re perfect but I apologize to those people who we have disappointed,” says Jones.
Officals CTA said they will not comment as the matter is before the agency. Windsor International Airport could not be reached for comment.
Here is the full statement by the CTA about Flair:
The Canadian Transportation Agency (Agency) issued March 3rd, 2022 its preliminary determination that Flair may not be controlled in fact by Canadians and may, therefore, not be ‘’Canadian’’, as defined in the Canada Transportation Act, SC 1996, c 10.
Flair holds licenses authorizing domestic, scheduled international, and non-scheduled international air services. Pursuant to the Act, Flair must be Canadian to provide these air services. Three requirements must be met for an air carrier to be considered Canadian: (1) the incorporation or formation requirement, (2) the voting interest requirement, and (3) the control in fact requirement.
The Agency has provided Flair with the opportunity to respond, no later than 60 calendar days from the date of issuance. At the end of the review process, the Agency will issue a final public determination with reasons and its conclusions, which will be posted on its website.
The Agency does not comment on its determinations as they speak for themselves.
