LILLEY: Trudeau government botches cheap flights for Canadians

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It is only in Canada that an airline in which the government has invested millions of tax dollars can be punished for not being a Canadian airline within the meaning of the law. This is the kind of story that can only exist in bureaucratic Ottawa.

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Flair Airlines, a discount carrier offering cheap flights to Canadians, could finally be shut down for not being Canadian enough, even as the Trudeau Liberals put millions of taxpayer dollars in company subsidies at risk aerial.

It’s a situation that has allowed Flair to operate in the air – putting jobs and cheap flights at risk and potentially stranding passengers – but also has the rest of the airline industry crying over potential special treatment. .

The Trudeau government is the regulator that must determine whether Flair Airlines is allowed to continue operating while being an investor in that same airline. They made themselves a referee and a player on the field at the same time, which is why others in the industry are crying foul.

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If they close Flair because they are not Canadian enough by law, jobs are lost and competition is reduced. If they don’t shut down Flair, they play favorites and tell other airlines that follow foreign ownership rules that those rules don’t really apply.

Flair began as a freighter and charter airline and attempted to carve out a niche as Canada’s first independent Ultra Low Cost Carrier (ULCC). This puts them in competition with the budget division of Air Canada Rouge and Swoop, which is owned by WestJet, and Lynx, the just-launched ULCC is due to start flying next month.

As part of its expansion to provide the traveling public with a wide range of inexpensive flights, Flair has partnered with Miami-based 777 Partners LLC. The company leased their planes from Flair and 777 took a 25% stake in the airline.

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During the COVID travel shutdown, Flair sought other funding from 777 and that’s what led to the current issue.

In a statement released March 3, the Canadian Transportation Agency said “Flair may not be controlled in fact by Canadians and may, therefore, not be ‘Canadian,’ as defined in the transportation in Canada”. They gave the company 60 days to respond, and the company requested an 18-month extension to review “its corporate governance and funding structure.”

It is a tacit admission that Flair, as currently structured, apparently does not meet Canadian ownership requirements. Put aside any opinion you might have about these requirements – I’ll be blunt and say I’m not a big fan – but these ownership requirements are the rules in place.

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WestJet is in the process of acquiring charter airline Sunwing. Would Sunwing CEO Stephen Hunter have accepted the deal if he had known he could have gone to a US hedge fund to keep him alive until business picked up?

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What obscures all of this is the $11.3 million that taxpayers have invested in Flair. The first installment was $3 million from the Federal Economic Development Agency for Southern Ontario in April 2021, while the second installment was $8.3 million from Economic Diversification of Ontario. West in August 2021.

This funding of 777 was advanced at the same time as Flair received funding from the government. The government is now saying that funding 777 is against the rules, didn’t they do their due diligence before handing over millions of dollars to taxpayers?

Shutting Flair down for not being Canadian enough would surely mean that money would be lost in more ways than one. There would be no chance of the company paying it back, and the economic activity it was supposed to promote would disappear.

The Trudeau government must set clear rules and let the airlines soar or be grounded. They cannot play all sides of an industry they regulate.

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