The ultra-thin Canadian carrier Flair Airlines, which for two months faced the threat of closure by state regulators due to accusations that it is not controlled by Canadians, on Wednesday received the green light to continue operations.
The Canadian government’s decision in favor of Flair will be a relief for Boeing.
Flair is a new customer of the Boeing 737 MAX aircraft, in its current fleet of 11 MAX, as well as three older 737 NG models. At a virtual press conference from Edmonton, Alberta, CEO Stephen Jones said Fleur will now move forward and within a week will take another MAX from Boeing, three more will come in June and another in July.
Flair says it intends to have a fleet of 30 aircraft by the end of next year. “We got on the floor in that regard,” Jones said.
A final decision by the Canadian Transportation Agency on Wednesday announced that changes to Flair’s management and funding structure mean it now meets the government airline’s ownership requirements because it is controlled by Canadians rather than its financial backing from the US, 777 Partners. Miami.
Fleur is trying to break the power of the country’s major carriers, Air Canada and WestJet, by imposing very low Ryanair fares in Europe and flying to secondary airports such as Kitchener / Waterloo, about a 90-minute drive from Toronto.
“Flair challenges the status quo in this country, which accepts cloud-based domestic airfare as a fact of life, a status quo created and protected by major airlines, making flying to Europe cheaper than flying to Halifax,” Jones said. “You don’t have to spend $ 800, you can spend $ 150 to fly around the country.”
“This is just the beginning of what we see as a major shift in air travel for Canadians,” he said.
Major Canadian carriers have reacted to Flair’s rebranding and growth plan in 2021 by aggressively criticizing its often unreliable flight schedule and campaign in the media to convince regulators that the airline has violated the country’s ownership rules.
While major Canadian airlines received government subsidies to survive the recession of the COVID-19 pandemic, Fleur took out a high-interest loan from U.S. investors 777 Partners and then leased its MAX from the same company that bought them from Boeing.
This has led some industry veterans to question Flair’s business model as an unbearable combination of expensive airlines with low prices. But Jones insists that MAX aircraft rental rates are the industry standard and that the business model will work.
American financial patrons Flair – whose name is not related to the Boeing 777, simply indicating its original address in Miami – have various investments in insurance, consumer and commercial finance, media, entertainment and sports, including football teams in Europe and South America.
It is a relatively new player in the field of aircraft leasing, with an unusual business model of buying aircraft, which will then be leased only to airlines in which it has a stake.
It supports not only Flair in Canada, but also a similar high-end startup in Australia called Bonza, which is expected to start flying this year.
Stephen Udvar-Hayes, a leading figure in the airline leasing business that leases aircraft to rival Flair Air Canada, said in an interview that the Australian company is questionable because four airlines already operate there domestically and he sees no place for Bonza.
But Josh Wonder, co-founder of 777 Partners, insists that such an opportunity exists in both Australia and Canada, because the aviation of both countries is dominated by full-cost airlines. He said he expects every airline to grow.
“We hope that in the coming years we will buy many more aircraft,” he said.
“We don’t worry about restricting leasing to our own airlines,” Vander added. “We really believe in our own airlines. And we expect that in the near future there will be more than two that you know about. “
Vander’s firm has a total of 68 MAX orders from Boeing, all ordered in 2021 in the midst of a pandemic.
Since then, demand for MAX has grown, allowing 777 Partners to make a profit and reduce risk by selling other lessors four of the 11 aircraft delivered so far and leased to Flair.
Wander expects to purchase more MAX later. “We expect that the book of orders will increase significantly in the near future,” he said.
To get approval from the Canadian Transportation Agency, Jones said 777 Partners expelled some directors from Flair’s board of directors and extended the debt repayment date.
In addition to combating the claim that it is controlled by the U.S., Fleur has for months faced criticism for last-minute flight cancellations and inadequate customer service.
On Wednesday, Jones said the problems are the result of the world coming out of a pandemic in air travel and that many airlines are facing a similar shortage of manpower and capacity.
“All airlines are experiencing difficulties now as we see the system growing and people are trying to come back after the pandemic. Airports are crowded, security lines are full, ”he said.
Jones said Flair is working on the reliability of its schedule and has invested in automated technology in its call centers to improve customer service response times.