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Can Flair Airlines survive as Canada's only remaining ultra-low-cost carrier?

Can Flair stay afloat when all others have shut down?
Flair Airlines held a conference on April 17, 2024, at Vancouver International Airport (YVR) about sustainability and the viability of low-cost airlines.

Flair Airlines is now Canada's last remaining ultra-low-cost carrier — but travellers have expressed concerns about the airline's viability.

Hundreds of passengers were stranded at the eleventh hour after Lynx Air unexpectedly shut down operations on Feb. 25, citing fierce market competition, surging fuel prices, exchange rates, and increasing airport charges. 

In the fall of 2023, WestJet shut down operations on its budget brand, Swoop, citing similar reasons.

In March 2023, the federal Competition Bureau greenlighted WestJet's merger with Sunwing Airlines. The airline plans to wind down the Sunwing brand over the next two years. 

Is there still room for ultra-low-cost carriers in Canada?

Flair Airlines held a press conference on Wednesday, April 17 at Vancouver International Airport (YVR) to announce its new sustainability initiatives, including on-board waste reduction strategies, such as replacing single-use plastic items with compostable cups and cutlery to reduce its in-flight waste to landfills by 55 per cent.

The airline is now the first in Canada to publicly report its monthly CO2 emissions.

CEO Stephen Jones told reporters the airline hopes to pioneer change and "set a new standard for the aviation industry" but he also expressed confidence that these changes will allow it to continue providing affordable airfare.

When asked if there is still a market for low-cost carriers in Canada, he told V.I.A. "Absolutely."

"People love to travel and people love a deal," he said.

Jones added that it was "sad to see" relative newcomer Lynx Air go but noted that they aren't comparable to Flair.

"They are about half our size," he pointed out, adding that "they were late to the market."

Jones also believes that Swoop, WestJet's low-cost option, wasn't intended to promote competition. 

"Swoop by design was meant to quell competition and keep companies like Flair down and ultimately got wrapped back into surprises there."

How does Flair Airlines manage to stay afloat? 

With jaw-dropping airfares starting for as little as $9, many people find it hard to believe Flair can turn a profit. The airline recently released its 2024 winter and 2025 spring flight schedules and an updated one displaying year-round itineraries. 

The new schedules show several domestic options from Vancouver for under $50, including flights to Winnipeg for $49, Calgary for $44, and Kelowna for $24. Direct flights from Vancouver to Las Vegas start at $40 and ones to Phoenix at $51. One-way tickets to San Francisco start at $94.

But airfare is only a portion of the airline's revenue, Jones says. 

"Our ancillary revenue, including things like Buy on a really important part of the ultra-low-cost business model. It makes up about 40 per cent of our total revenue," he explains. 

"We are doing about 70 dollars per passenger in ancillary revenue at the moment."

Jones adds that "headline fares" - such as those for under $49 - constitute only a percentage of the total sales. 

"It's a tough industry, I'm not here to sugarcoat that," he admits. 

"Anyone can put a low price in the market...but to offer that sustainability requires a low-cost business model and that's Flair."

The CEO adds: "The future will be what the future will be but I'm here to tell you that Flair will be here."

Flair Airlines qualifies as a "large carrier" under Canadian law

Numerous passengers have raised concerns about Flair's flight disruptions and cancellations, with some left stranded at the eleventh hour or needing to turn to the media to receive compensation

Flair now qualifies as a "large carrier" in Canada. The ultra-low-cost carrier transported over two million passengers per annum over the last two years, allowing it to meet Canada's criteria of a "large carrier" instead of a "small carrier," according to the definition in the Air Passenger Protection Regulations (APPR).

Under Canadian law, large airlines must pay passengers more compensation than small ones. For example, large carriers must pay them $400 if passengers arrive late at their destination by over three hours but under six, while small ones must pay out $125. 

The airline also owes the federal government $67.2 million in unpaid taxes, court documents show, prompting the Canada Revenue Agency (CRA) to obtain an order for the seizure and sale of the carrier's property.

The revenue agency said it cannot comment on specific cases for confidentiality reasons, but that it looks to make arrangements with companies "based on their ability to pay" before it takes further steps to recover the money.

"As a last resort, we may take additional legal collection actions, such as seizing property or assets to protect the interests of the Crown," the CRA told V.I.A.

The order marks the latest chapter in a multi-year struggle to stay solvent and within regulatory lines, as the airline repeatedly crossed paths with the courts.

With files from the Canadian Press.

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