Flair Airlines faces opposition from powerful consumer groups in its bid for an 18-month exemption from limits on foreign control of Canadian air carriers.
Flair has asked Transport Canada for the time to address financial and other issues related to its control by a Miami-based investor after the Canadian Transportation Agency found the airline might not be a domestic carrier under law. The CTA gave Flair until May 3 – 60 days – to respond or risk losing its licence.
Two consumer advocacy groups say the government should impose strict rules to protect customers if Edmonton-based Flair is allowed more time to resolve possible violations the CTA highlighted in its preliminary ruling.
Tahira Dawood, a lawyer with the Public Interest Advocacy Centre, said in an interview the group is “strongly” opposed to any exemption, but would support giving Flair 90 to 120 days to comply with the law in order to ensure passengers’ airfares are not lost or their travel plans disrupted.
“No airline should be allowed to avoid the law and regulatory requirements,” the group said in its submission to Transport Canada, which is holding a public interest assessment of Flair’s exemption request. “Otherwise, going forward other airlines and entities could follow in similar footsteps, and find ways to cut corners and defy the set laws and regulations to suit their needs and business interests.”
The Canadian Automobile Association, in its submission, said it supports more competition but said all airlines should follow the same rules. In order to protect passengers, the CAA said Flair should be made to adhere to the rules in a limited but unspecified time frame.
“More competition is better than less,” Ian Jack, a spokesman for the CAA, said by phone. “We think they should be allowed to keep flying but not indefinitely.”
“Consumers deserve resolution of this situation as soon as possible so they know whether Flair is a viable option for them, so this period should be the shortest possible that still leaves the carrier a reasonable chance of success in its attempted reorganization,” the CAA said in its submission.
Canadian airlines must be majority-owned by Canadians, and no foreigner can own more than 25 per cent.
Flair is 25-per-cent owned by 777 Partners of Miami, a company that is also a major lender and provider of leased planes. It holds three of five board seats and plays an active role in management. This would mean 777 Partners controls Flair, in violation of the Canadian Transportation Act.
Flair’s chief executive, Stephen Jones, said on Thursday the airline is adding Canadians to its board and refinancing some of its debt, but needs 18 months to refinance the larger part of its debt to 777 Partners.
In considering Flair’s request for the temporary exemption, Transport Canada sought input from the consumer groups, as well as aviation industry members. Hicham Ayoun, a Transport Canada spokesman, said the department will “in due course” make recommendation to Transport Minister Omar Alghabra, who will make the final decision on the exemption.
The Public Interest Advocacy Centre said Flair should stop selling tickets beyond the end of any exemption period it is granted. This will ensure passengers do not lose their money if Flair’s licence is suspended, and will create an incentive for Flair to bring its operations in compliance with the law. Additionally, Flair should prepare a plan for other airlines to carry its passengers in case it shuts down, and it should post notices on its website and social media that its status is under regulatory review, the group said.
The CAA said Flair should be allowed to sell tickets beyond the end of its possible exemption date, but passengers must be made aware of the airline’s review, and the money must be held separately, in Canada. Passengers should receive full refunds if the airline cannot fulfill its schedule or is ordered to shut down, the CAA said. “Consumers must be protected to the greatest extent possible,” the group said in its four-page submission.
The Globe and Mail reported last week that WestJet Airlines and most of the aviation sector oppose Flair’s bid for an exemption to the Canadian rules on ownership and control. The National Airlines Council and the Air Transport Association of Canada, which collectively represent most airlines and supporting companies, said domestic control of the industry is essential, and allowing Flair to operate outside the bounds of the laws would set a “troubling precedent.”
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