Flair Airlines celebrated a major victory on Wednesday as a federal regulator ruled the rookie company is Canadian.
The decision by the Canadian Transportation Agency (CTA) means that Edmonton-based Flair can maintain its operating license, ending the Flair battle for months to clear its ownership and government structure or lose their right to fly in that country.
It also makes irrelevant Flair’s previous request for an 18-month extension to comply with the rules.
“The decision today is very clear, it’s in black and white,” Flair Airlines CEO Stephen Jones told a news conference in Edmonton just minutes after the ruling was made public.
“Flair is Canadian: there is no middle ground, no conditions.”
Flair Airlines was launched in 2004 as a charter airline and began offering a scheduled service in 2018.
For the past year and a half, the airline has been in a mode of aggressive growth, publicly stating that it wants to expand its fleet to 50 aircraft over the next five years as it seeks a larger customer base from travelers seeking a low cost and no travel options with steering wheels.
But Flair has been under scrutiny by the CTA, which has been investigating whether it complies with Canadian airlines’ foreign ownership rules.
Legislation does not allow foreign entities to own more than 49% of a Canadian airline, and the Canada Transportation Act also states that no foreign player may own or control more than a quarter of an airline. cash on it.
This put under the microscope Flair’s relationship with the Miami-based investor 777 Partners. In a preliminary determination in March, the CTA found that Flair may not be “de facto controlled” by Canadians and said 777 Partners has a “dominant” influence over the carrier.
Flair had until May 3 to address the issues and demonstrate his Canadian vocation.
In its determination on Wednesday, the regulator said Flair has done just that, changing the composition of his board so that at least half of the councilors are Canadian. In addition, 777 members will no longer have any sole shareholder rights.
The CTA said Flair has also shown that it can generate a positive cash flow from its operations, easing concerns that it would be financially dependent on the 777 in the future.
The airline is also refinancing its debt with 777 to ensure that debt financing is available at least until 2026, which, according to the CTA, significantly mitigates “777’s ability to influence Flair.”
Flair currently leases six of its 14 aircraft to 777 and the rest to companies based in the United States and Ireland. Jones said Wednesday that the airline has informed the CTA that from now on, some of its leases will be self-contained with no link to 777.
“It simply came to our notice then [the CTA’s concerns]”We and 777 Partners have made significant concessions and changed things to make sure our position is unquestionable: we are a Canadian airline.”
In March, two airline associations representing Air Canada, WestJet and some 30 other airlines asked Transport Minister Omar Alghabra to reject Flair’s request for an exemption and warned that a green light would establish a “worrying precedent.”
But Jones suggested the opposition is a “natural reaction” to the competitive threat he believes Flair poses to the industry.
“There’s been such a cozy duopoly here for so long, that whenever you stir the pot, every time you ruin the party … of course people will be upset,” he said.