aklak wrote:

I think a lot of people here are oversimplifying the situation under the assumption that having majority Canadian ownership makes the company Canadian-controlled. If 777 Partners controls the money that keeps Flair afloat, then 777 controls the company. That's likely how they got three board seats despite not owning more than a quarter of the company. The outcome of this situation depends on the agreement that was signed when 777 bought in to the company: if they required control of the board in exchange for their investment, and Prescott felt the alternative was letting the company go bankrupt, then they may have signed control of the board over to 777. Moreso, if 777 required that all of Flair's loans in the future would come from 777 at exorbitant interest rates, that all aircraft would be leased from 777, and that 777 would decide how many aircraft Flair would be required to lease, it would be pretty cut-and-dry that 777 controls the company in fact. The solution now might not be so simple, because voiding such an agreement in order to comply with the Canadian ownership rules would likely result in 777 pulling their money and aircraft. I think that's why Prescott sued their own airline and have been hand-wringing in the media: they had to sign over control of the company, because the only alternative was bankruptcy, so they don't have any actual power. Any agreement that Flair will come up with that ameliorates the CTA will alienate 777, so I have a hard time seeing any outcome that results in the company staying in operation.

Some interesting points there, but there’s still some oddities that aren’t explained away by it.

For one, no one forced F8 to enter into an agreement with 777. I agree that the terms of that agreement are the key to this; namely what Prescott promised 777 it would do if the latter agreed to invest. I get the impression that F8 brought them in with ambitious promises, but with no real intention of following through - i.e. looking for someone to keep the lights on and pay checks going, while avoiding delivering on their promises by using the pandemic as the excuse.

777 eventually wised up to the game and booted the Prescott crew out, which is when the bad blood really set in. Prescott presumably thought they could get away with their status quo approach (F8 wasn’t doing much pre-777) by virtue of being the majority Canadian shareholder, but that went out the window when 777 removed the former CEO (Prescott co-founder). With the pay checks gone, Prescott seems to have gone scorched earth.

If that’s what transpired, it takes us into a weird (complex?) world where 777 is actually fulfilling the terms of the agreement with its majority Canadian shareholder, but the Canadian shareholder (either due to good old risk aversion or something less benign, like outside financial inducement) doesn’t actually want to see the agreement fulfilled - i.e. doesn’t want F8 to actually start running the operation it, itself, sought investment for.

Which is why I see this turning into a bigger legal case that could very well drag the USTR in. Namely, what happens when a Canadian investor makes promises they don’t intend to keep, get called out by their US investors who take steps to ensure the original agreement is fulfilled, and then try to burn it down because they now disagree with the promises they themselves made (with a side of ego issues caused by lost CEO and CFO salaries).

The track record of the folk behind Prescott is … well, it tells a tale of its own.

Just want to confirm that the Denver flights are not going to happen and if so why?

Kden95 wrote:

Just want to confirm that the Denver flights are not going to happen and if so why?

Was supposed to be Summer seasonnal but it's now scheduled as a Winter seasonal route starting in November

ElPistolero wrote:

YEGFlyer wrote:

jimbo737 wrote:

I can assure you that other than ad hoc analysis for various parties, I have zero interest, nor any skin in the game in the Cdn domestic market place.

There are far bigger fish to fry elsewhere on the big blue marble.

I've been around long enough to have a pretty good idea of what'll sustainably work in Canada and what won't. I don't like what I see.

No one's building a network to sustain traffic through the chronically weak 220 days a year.

As for reliability, Flair is running their -800's about 9.75 block hrs a day, the Max's about 10.55 block hours a day. There is no spare, unless C-FLRS which arrived from PAE on Friday, is available. They're getting a tad over 4 sectors a day per tail on average with an asl of 1,119 miles.

Flair is a very different airline than WS was circa 2000 with 12 tails and an asl of about 460 miles. Network, network, network.

Let me get this straight- Prescott wants flair to do some hubbing, hire a few more CS agents, and keep a spare aircraft on hand for IRROPS... And that's basically what this dispute is all about? Seems pretty incredible that it has escalated to this point...

Haha.

I think Prescott was looking for someone to keep the lights on and salaries going during the pandemic, and to do that, they sold 777 on some ULCC vision, probably with the caveat that, alas, there was nothing to be done but keep the lights on and salaries paid till the pandemic passed. That kind of “scheme”, as one of the posters here calls them.

Then the Prescott folk got booted like (or, more precisely, sent to Prescott’s HQ in what appears to be a plastic factory(?) on google). And then the recriminations began. I guess the CEO and CFO didn’t think they’d get booted - although it’s not clear why they thought they would be kept on given their track record. I suspect they found some new benefactor to fund their legal battle (and salaries, and lease at said plastic factory) when F8 launched its plans - presumably someone who didn’t like the idea of an actual ULCC turning up in Canada. If I were a betting man, I’d bet that it’s the same benefactor as the one behind the media hatchet job. Here’s hoping there’s a legal battle that lays it all out.

On an entirely separate note, I also found it interesting that the only airline taking a public stance on all of this is WS. I’m inclined to think that vindicates my suspicion that it’s insistence on carrying on as an overpriced LCC feeding off AC scraps for about 8 years too long made it very vulnerable to anyone outflanking it on price. Not sure how much stock I’d put in the “Canadian talent” behind that amusingly lazy strategy (ah, rent-seeking), but at least the Germans and Australians have started shaking things up.

Still think their lack of a decent FF program/alliance membership is going to give Lynx a free run at them, so F8’s inevitable demise is only a temporary reprieve.

Ahh it appears Air Canada and others have taken a stance on the issue at hand.



Two aviation industry groups, representing Air Canada, WestJet and several other companies, on Tuesday released a joint statement opposing Flair’s request for an exemption.

“If granted, this unprecedented request would allow Flair to continue operating outside the bounds of existing Canadian law, setting a troubling precedent while also threatening consumer confidence in the sector, at a time when the travel industry is working hard to provide a strong and sustainable future for air travel for Canadians,” said the statement from the National Airlines Council and the Air Transport Association of Canada.

The National Airlines Council represents Canada’s biggest airlines: Air Canada, Air Transat, Jazz Aviation and WestJet. The Air Transport Association of Canada speaks for about 65 airlines and more than 100 related companies, including Porter Airlines, PAL Airlines and Nolinor Aviation.


Source: https://www.theglobeandmail.com/busines ... -18-month/

Interesting development, let’s see what transpires on May 3.

So surprising. The boards are filled with WestJet and Air Canada representation.

I don’t know about Air Canada, but I’m sure Westjet and Porter would like to see the rule of law followed.

Westjet was shut down by Transport Canada for two weeks very early in its career due to questions about its maintenance scheduling. Porter was threatened with a shut down for many issues, (of which many were allowed to be kept private), but was able to avoid it.

I’m sure they would like to see equal application of the same shutdown possibility. They all had to follow the same rules and they all weathered the same bad press.

cirrusdragoon wrote:

Ahh it appears Air Canada and others have taken a stance on the issue at hand.



Two aviation industry groups, representing Air Canada, WestJet and several other companies, on Tuesday released a joint statement opposing Flair’s request for an exemption.

“If granted, this unprecedented request would allow Flair to continue operating outside the bounds of existing Canadian law, setting a troubling precedent while also threatening consumer confidence in the sector, at a time when the travel industry is working hard to provide a strong and sustainable future for air travel for Canadians,” said the statement from the National Airlines Council and the Air Transport Association of Canada.

The National Airlines Council represents Canada’s biggest airlines: Air Canada, Air Transat, Jazz Aviation and WestJet. The Air Transport Association of Canada speaks for about 65 airlines and more than 100 related companies, including Porter Airlines, PAL Airlines and Nolinor Aviation.


Source: https://www.theglobeandmail.com/busines ... -18-month/

Interesting development, let’s see what transpires on May 3.

I guess the other post I replied to got deleted because it didn’t have a link?

Anyway, not really surprised that the incumbents have come out swinging; F8 is a disrupter. Both have a very tenuous relationship with competition (or rather, a history of anti-competitive activities) and an apparent addiction to rent-seeking is the only plausible explanation for their overpriced and dire Y products in Canada. That aside, no self-respecting journalist would take NAC and ATAC seriously - they’ve long been mouthpieces.

As I said earlier, interesting that they’re playing the PR game on jobs. It seems F8’s political and public outreach has been effective enough for it to be “very dangerous”.

CrewBunk wrote:

I don’t know about Air Canada, but I’m sure Westjet and Porter would like to see the rule of law followed.

Westjet was shut down by Transport Canada for two weeks very early in its career due to questions about its maintenance scheduling. Porter was threatened with a shut down for many issues, (of which many were allowed to be kept private), but was able to avoid it.

I’m sure they would like to see equal application of the same shutdown possibility. They all had to follow the same rules and they all weathered the same bad press.

Maintenance is a safety issue. People can get hurt or worse.

Ownership does not have a similar bearing on safety.

As a general rule, outside of safety, airlines in Canada don’t have to follow the same rules. Some of them are based on the size of the airline (APPRs), others are based on old acts (ACPPA).

If F8 has safety problems, shut it down.

ElPistolero wrote:

If F8 has safety problems, shut it down.

Oh I agree with your comments, but do you really think Transport Canada is that “logical”?

Having once owned a small air carrier (nine aircraft), I’ve dealt with them a lot. They are (mostly) black or white, A or B, comply or don’t comply. Not a lot of grey area in there and virtually no flexibility. I really don’t think Transport Canada looks at where one sits on the spectrum to see whether compliance, of any issue, is necessary.

Perhaps there are differing rules. But, with regard to ownership/control, the rules are the same.

ElPistolero wrote:

CrewBunk wrote:

I don’t know about Air Canada, but I’m sure Westjet and Porter would like to see the rule of law followed.

Westjet was shut down by Transport Canada for two weeks very early in its career due to questions about its maintenance scheduling. Porter was threatened with a shut down for many issues, (of which many were allowed to be kept private), but was able to avoid it.

I’m sure they would like to see equal application of the same shutdown possibility. They all had to follow the same rules and they all weathered the same bad press.

Maintenance is a safety issue. People can get hurt or worse.

Ownership does not have a similar bearing on safety.

As a general rule, outside of safety, airlines in Canada don’t have to follow the same rules. Some of them are based on the size of the airline (APPRs), others are based on old acts (ACPPA).

If F8 has safety problems, shut it down.

Just a thought to ponder, this is the same Air Canada and same Transport Canada that allowed for air crews to be fatigued enough for them to nearly cause the greatest aviation disaster ever (AC759).

With regard to AC759, Air Canada was in full compliance with the law. Transport Canada would have no say. However our Minister of Transport has chosen to ignore this issue and to date, Canada has among the least safe duty rules on the earth.

In my opinion, Air Canada would dearly love stricter duty rules, as then all Canadian carriers would be under the same rules.

CrewBunk wrote:

ElPistolero wrote:

If F8 has safety problems, shut it down.

Oh I agree with your comments, but do you really think Transport Canada is that “logical”?

Having once owned a small air carrier (nine aircraft), I’ve dealt with them a lot. They are (mostly) black or white, A or B, comply or don’t comply. Not a lot of grey area in there and virtually no flexibility. I really don’t think Transport Canada looks at where one sits on the spectrum to see whether compliance, of any issue, is necessary.

Perhaps there are differing rules. But, with regard to ownership/control, the rules are the same.

I mean, I have as much faith in TC/CTA acting in the public interest as would be warranted by their dogs breakfast of APPRs, sub-par FDRs and an air travel competition policy so outdated, it was roundly criticized by a government-sanctioned review in 2016, with no effect. Which is to say, zero to none.

That said, there is a precedent for allowing different levels of foreign investment within a protected sector (telcos - based on size). No reason to believe that wouldn’t work here - notwithstanding some very public questioning of TC/CTA’s bias/links to industry.

I won’t wade into FDRs here - off topic (and I think the US TSB report speaks for itself), except to agree that it speaks volumes about who’s bidding TC is actually doing - even at the cost of safety.

ElPistolero wrote:

That said, there is a precedent for allowing different levels of foreign investment within a protected sector (telcos - based on size). No reason to believe that wouldn’t work here - notwithstanding some very public questioning of TC/CTA’s bias/links to industry.

Such changes would be up to the government to make, not the regulator. TC and the CTA apply the law as it is currently written, and they aren't granted the authority to amend it or ignore it in the name of public benefit. We would be appalled if TC selectively decided which companies had to comply with maintenance or training regulations, and I don't see why so many people are in favour of breaking the rules when it's not considered a safety issue. Several posters have complained that the foreign ownership rules have given AC and WS an unfair advantage by limiting competition, and yet in this situation AC and WS have been handcuffed by adhering to those rules which have prevented them accessing foreign funding; people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it? Does that system protect AC and WS by limiting competition, or does it tie their hands by limiting foreign funding? Does it keep costs high because there's no competition, or does it keep costs high because AC and WS have a harder time getting investment? Why is it atrocious when they engage in corporate espionage and anti-competitive behaviour, but when Flair breaks the rules they're applauded for it?
The rules regarding telcos were changed by the government, not the CRTC. Also, considering that the telco rules are exempted for companies that have less than 10% market share, and Flair aims to exceed that in the aviation market, I don't think that's the best example, since a similar setup for airlines would still result in Flair not being in compliance. The rules may change in the future, but the question is whether Flair will survive long enough to see that happen.

aklak wrote:

ElPistolero wrote:

That said, there is a precedent for allowing different levels of foreign investment within a protected sector (telcos - based on size). No reason to believe that wouldn’t work here - notwithstanding some very public questioning of TC/CTA’s bias/links to industry.

Such changes would be up to the government to make, not the regulator. TC and the CTA apply the law as it is currently written, and they aren't granted the authority to amend it or ignore it in the name of public benefit. We would be appalled if TC selectively decided which companies had to comply with maintenance or training regulations, and I don't see why so many people are in favour of breaking the rules when it's not considered a safety issue. Several posters have complained that the foreign ownership rules have given AC and WS an unfair advantage by limiting competition, and yet in this situation AC and WS have been handcuffed by adhering to those rules which have prevented them accessing foreign funding; people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it? Does that system protect AC and WS by limiting competition, or does it tie their hands by limiting foreign funding? Does it keep costs high because there's no competition, or does it keep costs high because AC and WS have a harder time getting investment? Why is it atrocious when they engage in corporate espionage and anti-competitive behaviour, but when Flair breaks the rules they're applauded for it?
The rules regarding telcos were changed by the government, not the CRTC. Also, considering that the telco rules are exempted for companies that have less than 10% market share, and Flair aims to exceed that in the aviation market, I don't think that's the best example, since a similar setup for airlines would still result in Flair not being in compliance. The rules may change in the future, but the question is whether Flair will survive long enough to see that happen.

Flair is following the rules. They have majority Canadian shareholding as far as I'm aware. The issue is "effective control" which doesn't have black and white rules of course. Due to the lack of clarity regarding this issue many on this thread simply do not trust the government regulator to make a fair judgement/assessment. I don't.

I feel that a boardroom dispute is dragging the government regulators into this swamp and it won't end well for Flair. I still don't see how Prescott (the majority Canadian owners) benefits by provoking this whole mess.

Skywatcher wrote:

The issue is "effective control" which doesn't have black and white rules of course. Due to the lack of clarity regarding this issue many on this thread simply do not trust the government regulator to make a fair judgement/assessment. I don't.

The CTA has very clear guidelines regarding what factors are involved in determining if a company is Canadian-controlled in fact. https://otc-cta.gc.ca/eng/publication/g ... sportation

Although the term is not defined in the Act, the Agency considers control in fact to be:

the power, whether exercised or not, to control the strategic decision-making activities of an enterprise and to manage and run its day-to-day operations.
Those who may have the power to influence a company's decisions can include minority owners, designated representatives, financial institutions, employees and others. They may use their influence either positively or negatively. For example, they may demonstrate a positive influence by requiring positive approval when a decision needs to be made. Conversely, negative influence could be the ability to veto a decision. Either way, the influence needs to be dominant or determining to be considered "control in fact."

Determining who has "control in fact" is a question of fact. The Agency evaluates this on a case-by-case basis, as each case is unique. The principles that the Agency follows when determining "control in fact" are listed at Annex B. The factors that the Agency considers are shown at Annex C. All managerial, financial and operational air carrier relationships (or proposed relationships) must be considered before making a determination.

From Annex C:

To determine who has "control in fact," the Agency assesses every applicable factor. This includes whether that factor, individually or in combination with others, provides any non-Canadians with:

direct means to control the company (e.g., formal voting or other rights), and/or
indirect means to control the company (e.g., ability to exert influence through their investment in the company or through any other means).
The Agency also considers the intent and ability of the non-Canadian(s) to exercise control over the company, particularly where control is obtained through indirect means.
List of factors
Corporate Governance Factors
Board of Directors
Officers
Shareholder and Board of Directors' meetings
Shareholder Rights Factors
Veto rights
Security rights, options, and warrants
Rights of first refusal/Pre-emptive rights
Power to wind up the company
Risks and Rewards Factors
Risks and benefits
Concentration of voting interests
Business Affairs and Activities Factors
Debt
Guarantees
Lease of assets
Financial strength and business activity
Management agreements
Operational or service agreements
Charterer/air carrier relationship

I would like to emphasize "Power to wind up the company", "Debt" and "Lease of assets". Flair is being kept alive using 777's investment money, almost all of their debt is owed to 777, and a large amount of their fleet is leased from 777, an amount that they intend to continue growing. It's very black-and-white what the interpretation will be here. Then there's "Corporate governance factors" and "Management agreements", which haven't been made public, but if, as I suspect, Prescott signed over 3/5 board seats to 777 in order to keep the lights on then it'll be even more cut-and-dry.
The CTA has no authority to change the ownership rules; those are established by law. The CTA may think it's in the public interest to keep as many operators in business as possible, but if their investigation finds that Flair is controlled in fact by 777 then they are required by law to take corrective action. They can't just decide that the ownership and control rules are no longer applicable, any more than the police can decide that DUI is now legal because they like drinking and driving.

aklak wrote:

Such changes would be up to the government to make, not the regulator. TC and the CTA apply the law as it is currently written, and they aren't granted the authority to amend it or ignore it in the name of public benefit.

You’d be better off taking that up with the poster who previously suggested otherwise.

But yes, I agree it’s for the government to decide. That said, both these organizations are responsible for putting recommendations forward. And judging by what’s been coming out on things like FDR, APPR, etc, their track record on acting in the public interest is, well, self-evident.

aklak wrote:

We would be appalled if TC selectively decided which companies had to comply with maintenance or training regulations, and I don't see why so many people are in favour of breaking the rules when it's not considered a safety issue.

We wouldn’t be appalled, however, if TC recommended changes to the law to advance the public interest.

Granted, I would be shocked if they did.

aklak wrote:

Several posters have complained that the foreign ownership rules have given AC and WS an unfair advantage by limiting competition, and yet in this situation AC and WS have been handcuffed by adhering to those rules which have prevented them accessing foreign funding;

Why they take the position they take is irrelevant to the public interest. They’ve both got a track record of breaking rules when it suits them.

aklak wrote:

people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it?

No. People are applauding F8 for being a disrupter in a rent-seeking market. There is a possibility that they are breaking the rules. No one is cheering them on breaking the rules. A subtle, but important, difference.

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest.

Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms

Because of F8, a few more people are asking the question. “Very dangerous” people - like politicians apparently.

aklak wrote:

Does that system protect AC and WS by limiting competition, or does it tie their hands by limiting foreign funding? Does it keep costs high because there's no competition, or does it keep costs high because AC and WS have a harder time getting investment?

I suggest you look at their “record profits” annual reports from 2015-2019 to figure out how oligopolies work. If you end up in a market that pairs ULCC configurations with prices that are multiples of other developed markets, it’s pretty clear that the issue isn’t a lack of foreign investment in AC/WS; it’s a lack of competition.

Nice try, but it doesn’t work.

aklak wrote:

The rules regarding telcos were changed by the government, not the CRTC.

But they did change. And someone recommended them - Industry Canada or CRTC.

aklak wrote:

Also, considering that the telco rules are exempted for companies that have less than 10% market share, and Flair aims to exceed that in the aviation market, .

We can revisit that when they do.

aklak wrote:

I don't think that's the best example, since a similar setup for airlines would still result in Flair not being in compliance. The rules may change in the future, but the question is whether Flair will survive long enough to see that happen.

If and when it does, we can assess what it means for the market. As it stands, the rules don’t appear to serve the public interest. Rules stopping hacking and anti-competitive practices do serve the public interest, so not a good comparison.

I don’t think F8 will survive that long, but I genuinely question the intellectual honesty of the arguments being put forth by its detractors.

aklak wrote:

Skywatcher wrote:

The issue is "effective control" which doesn't have black and white rules of course. Due to the lack of clarity regarding this issue many on this thread simply do not trust the government regulator to make a fair judgement/assessment. I don't.

The CTA has very clear guidelines regarding what factors are involved in determining if a company is Canadian-controlled in fact. https://otc-cta.gc.ca/eng/publication/g ... sportation

Although the term is not defined in the Act, the Agency considers control in fact to be:

the power, whether exercised or not, to control the strategic decision-making activities of an enterprise and to manage and run its day-to-day operations.
Those who may have the power to influence a company's decisions can include minority owners, designated representatives, financial institutions, employees and others. They may use their influence either positively or negatively. For example, they may demonstrate a positive influence by requiring positive approval when a decision needs to be made. Conversely, negative influence could be the ability to veto a decision. Either way, the influence needs to be dominant or determining to be considered "control in fact."

Determining who has "control in fact" is a question of fact. The Agency evaluates this on a case-by-case basis, as each case is unique. The principles that the Agency follows when determining "control in fact" are listed at Annex B. The factors that the Agency considers are shown at Annex C. All managerial, financial and operational air carrier relationships (or proposed relationships) must be considered before making a determination.

From Annex C:

To determine who has "control in fact," the Agency assesses every applicable factor. This includes whether that factor, individually or in combination with others, provides any non-Canadians with:

direct means to control the company (e.g., formal voting or other rights), and/or
indirect means to control the company (e.g., ability to exert influence through their investment in the company or through any other means).
The Agency also considers the intent and ability of the non-Canadian(s) to exercise control over the company, particularly where control is obtained through indirect means.
List of factors
Corporate Governance Factors
Board of Directors
Officers
Shareholder and Board of Directors' meetings
Shareholder Rights Factors
Veto rights
Security rights, options, and warrants
Rights of first refusal/Pre-emptive rights
Power to wind up the company
Risks and Rewards Factors
Risks and benefits
Concentration of voting interests
Business Affairs and Activities Factors
Debt
Guarantees
Lease of assets
Financial strength and business activity
Management agreements
Operational or service agreements
Charterer/air carrier relationship

I would like to emphasize "Power to wind up the company", "Debt" and "Lease of assets". Flair is being kept alive using 777's investment money, almost all of their debt is owed to 777, and a large amount of their fleet is leased from 777, an amount that they intend to continue growing. It's very black-and-white what the interpretation will be here. Then there's "Corporate governance factors" and "Management agreements", which haven't been made public, but if, as I suspect, Prescott signed over 3/5 board seats to 777 in order to keep the lights on then it'll be even more cut-and-dry.
The CTA has no authority to change the ownership rules; those are established by law. The CTA may think it's in the public interest to keep as many operators in business as possible, but if their investigation finds that Flair is controlled in fact by 777 then they are required by law to take corrective action. They can't just decide that the ownership and control rules are no longer applicable, any more than the police can decide that DUI is now legal because they like drinking and driving.

Ha - I invite you to read some of the CTA rulings adjudicated by that former ATAC guy.

I don’t think it’s any secret that - no matter what the rules or laws - every FF knows that they’re better off going to small claims than to the CTA on consumer issue.

Like Skywatcher, I don’t trust them on the control issue either.

ElPistolero wrote:

We wouldn’t be appalled, however, if TC recommended changes to the law to advance the public interest.

That's irrelevant. Changing the rules after Flair broke those rules wouldn't change whether Flair is currently in violation of those rules.

ElPistolero wrote:

Why they take the position they take is irrelevant to the public interest. They’ve both got a track record of breaking rules when it suits them.

In the case of the corporate espionage incident, WestJet was punished and fined for breaking the rules. Yet now, when Flair potentially breaks the rules, they're cheered on with the justification that WestJet has also broken rules. Since WestJet broke the rules, even though they were punished, that grants smaller operators free rein to do as they please?

aklak wrote:

people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it?

ElPistolero wrote:

No. People are applauding F8 for being a disrupter in a rent-seeking market. There is a possibility that they are breaking the rules. No one is cheering them on breaking the rules. A subtle, but important, difference.

No? Statements like this don't sound to you like the encouragement of rule-breaking in order to shake up the system?

ElPistolero wrote:

What’s “dangerous” here? That F8 has built “political clout” (read public support) by “enamouring” itself to consumers and underserved airports/populations, to the extent that it might actually force a review of existing ownership laws because they may not serve the public interest?

Nor this?

ElPistolero wrote:

Whatever it’s flaws (and there are many), F8 certainly has an uncanny ability to make the mask slip.

That doesn't sound to you like the cheering on of a violation of the regulations in order to "disrupt" the market?

ElPistolero wrote:

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest. Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms.

The reason they go against the public interest is because aviation is a crucial part of Canada's infrastructure. It's the same reason we don't sell our highways and railways to foreign companies: allowing outside interests to control vital infrastructure would absolutely not be in the interest of Canadians. If all ownership restrictions were eliminated and DL bought WS, or UA bought AC, do you think the Canadian market would get better served? Airlines don't have unlimited resources, and if an aircraft can be better utilized on a more-profitable route then it will be taken elsewhere, as seen by recent issues in the US with small markets losing airline service and EAS contracts being abandoned. Do you really think DL would maintain jet service to YXE or YQR when they could send multiple flights to SLC or MSP daily to feed the rest of their network? Do you think UA would keep CRJs going to YZF when they could send them to DEN? You'd be very naive to think that giving Flair a monopoly on domestic routes, or I suppose an oligopoly of Flair and Lynx, wouldn't immediately result in an increase in fares.
If that's nationalism, then it's nationalism in the same way that I think Canadians deserve to have hospitals and roads without having to pay American companies to use them, or worse still, having those American companies shut down the hospitals and roads so they can use the equipment on more profitable locations in the US.

ElPistolero wrote:

I suggest you look at their “record profits” annual reports from 2015-2019 to figure out how oligopolies work. If you end up in a market that pairs ULCC configurations with prices that are multiples of other developed markets, it’s pretty clear that the issue isn’t a lack of foreign investment in AC/WS; it’s a lack of competition.

Yes, that's precisely the point! If foreign investment doesn't matter, then why does Flair need an exemption to the rules about foreign control? If it's just a lack of competition, and Flair offers that competition, then they should be able to stand on their own feet, no? If that's the case, then what does it matter if they "make the mask slip"? What does it matter if the foreign-ownership rules change?

ElPistolero wrote:

But they did change. And someone recommended them - Industry Canada or CRTC.

Yes, and until they did no one set up shop in violation of the rules. No one started a telecom that was under the control of foreign investors, and then tried to get an exemption for it after being caught. If the rules change in the future, Flair can operate under those rules, but those rules aren't in effect now.

ElPistolero wrote:

If and when it does, we can assess what it means for the market. As it stands, the rules don’t appear to serve the public interest. Rules stopping hacking and anti-competitive practices do serve the public interest, so not a good comparison.

That's a completely subjective determination, and you certainly don't speak on behalf of all Canadians. I dare say that you probably speak for a minority of Canadians, and if Canadians wanted the rules to change it would become an election issue. The fact that it isn't one indicates that they're satisfied with the status quo. With all the issues over aviation in the last two years, I don't see anyone raising a stink about opening up ownership laws except supporters of an airline that's potentially been breaking those laws.

aklak wrote:

ElPistolero wrote:

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest. Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms.

The reason they go against the public interest is because aviation is a crucial part of Canada's infrastructure. It's the same reason we don't sell our highways and railways to foreign companies: allowing outside interests to control vital infrastructure would absolutely not be in the interest of Canadians. If all ownership restrictions were eliminated and DL bought WS, or UA bought AC, do you think the Canadian market would get better served? Airlines don't have unlimited resources, and if an aircraft can be better utilized on a more-profitable route then it will be taken elsewhere, as seen by recent issues in the US with small markets losing airline service and EAS contracts being abandoned. Do you really think DL would maintain jet service to YXE or YQR when they could send multiple flights to SLC or MSP daily to feed the rest of their network? Do you think UA would keep CRJs going to YZF when they could send them to DEN? You'd be very naive to think that giving Flair a monopoly on domestic routes, or I suppose an oligopoly of Flair and Lynx, wouldn't immediately result in an increase in fares.
If that's nationalism, then it's nationalism in the same way that I think Canadians deserve to have hospitals and roads without having to pay American companies to use them, or worse still, having those American companies shut down the hospitals and roads so they can use the equipment on more profitable locations in the US.

I completely agree. This is a very important point that's quite easy to dismiss when it has pretty bad consequences.

aklak wrote:

ElPistolero wrote:

We wouldn’t be appalled, however, if TC recommended changes to the law to advance the public interest.

That's irrelevant. Changing the rules after Flair broke those rules wouldn't change whether Flair is currently in violation of those rules.

ElPistolero wrote:

Why they take the position they take is irrelevant to the public interest. They’ve both got a track record of breaking rules when it suits them.

In the case of the corporate espionage incident, WestJet was punished and fined for breaking the rules. Yet now, when Flair potentially breaks the rules, they're cheered on with the justification that WestJet has also broken rules. Since WestJet broke the rules, even though they were punished, that grants smaller operators free rein to do as they please?

aklak wrote:

people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it?

ElPistolero wrote:

No. People are applauding F8 for being a disrupter in a rent-seeking market. There is a possibility that they are breaking the rules. No one is cheering them on breaking the rules. A subtle, but important, difference.

No? Statements like this don't sound to you like the encouragement of rule-breaking in order to shake up the system?

ElPistolero wrote:

What’s “dangerous” here? That F8 has built “political clout” (read public support) by “enamouring” itself to consumers and underserved airports/populations, to the extent that it might actually force a review of existing ownership laws because they may not serve the public interest?

Nor this?

ElPistolero wrote:

Whatever it’s flaws (and there are many), F8 certainly has an uncanny ability to make the mask slip.

That doesn't sound to you like the cheering on of a violation of the regulations in order to "disrupt" the market?

ElPistolero wrote:

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest. Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms.

The reason they go against the public interest is because aviation is a crucial part of Canada's infrastructure. It's the same reason we don't sell our highways and railways to foreign companies: allowing outside interests to control vital infrastructure would absolutely not be in the interest of Canadians. If all ownership restrictions were eliminated and DL bought WS, or UA bought AC, do you think the Canadian market would get better served? Airlines don't have unlimited resources, and if an aircraft can be better utilized on a more-profitable route then it will be taken elsewhere, as seen by recent issues in the US with small markets losing airline service and EAS contracts being abandoned. Do you really think DL would maintain jet service to YXE or YQR when they could send multiple flights to SLC or MSP daily to feed the rest of their network? Do you think UA would keep CRJs going to YZF when they could send them to DEN? You'd be very naive to think that giving Flair a monopoly on domestic routes, or I suppose an oligopoly of Flair and Lynx, wouldn't immediately result in an increase in fares.
If that's nationalism, then it's nationalism in the same way that I think Canadians deserve to have hospitals and roads without having to pay American companies to use them, or worse still, having those American companies shut down the hospitals and roads so they can use the equipment on more profitable locations in the US.

ElPistolero wrote:

I suggest you look at their “record profits” annual reports from 2015-2019 to figure out how oligopolies work. If you end up in a market that pairs ULCC configurations with prices that are multiples of other developed markets, it’s pretty clear that the issue isn’t a lack of foreign investment in AC/WS; it’s a lack of competition.

Yes, that's precisely the point! If foreign investment doesn't matter, then why does Flair need an exemption to the rules about foreign control? If it's just a lack of competition, and Flair offers that competition, then they should be able to stand on their own feet, no? If that's the case, then what does it matter if they "make the mask slip"? What does it matter if the foreign-ownership rules change?

ElPistolero wrote:

But they did change. And someone recommended them - Industry Canada or CRTC.

Yes, and until they did no one set up shop in violation of the rules. No one started a telecom that was under the control of foreign investors, and then tried to get an exemption for it after being caught. If the rules change in the future, Flair can operate under those rules, but those rules aren't in effect now.

ElPistolero wrote:

If and when it does, we can assess what it means for the market. As it stands, the rules don’t appear to serve the public interest. Rules stopping hacking and anti-competitive practices do serve the public interest, so not a good comparison.

That's a completely subjective determination, and you certainly don't speak on behalf of all Canadians. I dare say that you probably speak for a minority of Canadians, and if Canadians wanted the rules to change it would become an election issue. The fact that it isn't one indicates that they're satisfied with the status quo. With all the issues over aviation in the last two years, I don't see anyone raising a stink about opening up ownership laws except supporters of an airline that's potentially been breaking those laws.

Here's your solution. Make a law that forces all carrier to carry certain mandatory routes. Your foreign investment restriction still doesn't stand the test no matter how you try to spin. Also why not fine Flair instead of cancelling the licence of an airlines outright. Where is the fairness? You want Flair to fix their management issue and in compliance with Canadian rules instead of simply broad blanket suspending their licence outright without any hearing and without listening from Flair The CTA only gave them 2 months to comply. How is that fair?

IceCream wrote:

aklak wrote:

ElPistolero wrote:

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest. Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms.

The reason they go against the public interest is because aviation is a crucial part of Canada's infrastructure. It's the same reason we don't sell our highways and railways to foreign companies: allowing outside interests to control vital infrastructure would absolutely not be in the interest of Canadians. If all ownership restrictions were eliminated and DL bought WS, or UA bought AC, do you think the Canadian market would get better served? Airlines don't have unlimited resources, and if an aircraft can be better utilized on a more-profitable route then it will be taken elsewhere, as seen by recent issues in the US with small markets losing airline service and EAS contracts being abandoned. Do you really think DL would maintain jet service to YXE or YQR when they could send multiple flights to SLC or MSP daily to feed the rest of their network? Do you think UA would keep CRJs going to YZF when they could send them to DEN? You'd be very naive to think that giving Flair a monopoly on domestic routes, or I suppose an oligopoly of Flair and Lynx, wouldn't immediately result in an increase in fares.
If that's nationalism, then it's nationalism in the same way that I think Canadians deserve to have hospitals and roads without having to pay American companies to use them, or worse still, having those American companies shut down the hospitals and roads so they can use the equipment on more profitable locations in the US.

I completely agree. This is a very important point that's quite easy to dismiss when it has pretty bad consequences.

No Canadian airline is forced to fly any routes. They fly routes on the basis of market forces. Which is why we don’t see AC in the North.

As is often the case with this type of poorly thought out economic nationalism, the argument doesn’t have a leg to stand on. If there’s money to be made, airlines will fly the route. If there isn’t, they wont. Witness Kitchener.

Carry on with that logic and we’re in a world where we might as well nationalize (or provincialize) airlines. Like highways and hospitals.

The rules have to be applied equally to all.

If Flair can be controlled by foreign interests and capital, then all players in the market should have equal access to said investors and foreign capital.

If Southwest or Delta wanted to buy 51% of WestJet, likely less than 777’s defacto control over Flair, then so be it.

Same if Lufthansa and UAL decided to buy 51% of Air Canada.

Be careful what you wish for.

aklak wrote:

ElPistolero wrote:

We wouldn’t be appalled, however, if TC recommended changes to the law to advance the public interest.

That's irrelevant. Changing the rules after Flair broke those rules wouldn't change whether Flair is currently in violation of those rules.

ElPistolero wrote:

Why they take the position they take is irrelevant to the public interest. They’ve both got a track record of breaking rules when it suits them.

In the case of the corporate espionage incident, WestJet was punished and fined for breaking the rules. Yet now, when Flair potentially breaks the rules, they're cheered on with the justification that WestJet has also broken rules. Since WestJet broke the rules, even though they were punished, that grants smaller operators free rein to do as they please?

aklak wrote:

people are applauding Flair for breaking the rules and cheating the system in order to get the money they need to cut costs for consumers, so which is it?

ElPistolero wrote:

No. People are applauding F8 for being a disrupter in a rent-seeking market. There is a possibility that they are breaking the rules. No one is cheering them on breaking the rules. A subtle, but important, difference.

No? Statements like this don't sound to you like the encouragement of rule-breaking in order to shake up the system?

ElPistolero wrote:

What’s “dangerous” here? That F8 has built “political clout” (read public support) by “enamouring” itself to consumers and underserved airports/populations, to the extent that it might actually force a review of existing ownership laws because they may not serve the public interest?

Nor this?

ElPistolero wrote:

Whatever it’s flaws (and there are many), F8 certainly has an uncanny ability to make the mask slip.

That doesn't sound to you like the cheering on of a violation of the regulations in order to "disrupt" the market?

ElPistolero wrote:

Furthermore, there is nothing wrong with questioning the rules if they self-evidently go against the public interest. Put another way, it would be rather silly to deprive the Canadian market/public of competition based on some arbitrary limit or requirement that no one can coherently explain beyond flag waving and economic nationalisms.

The reason they go against the public interest is because aviation is a crucial part of Canada's infrastructure. It's the same reason we don't sell our highways and railways to foreign companies: allowing outside interests to control vital infrastructure would absolutely not be in the interest of Canadians. If all ownership restrictions were eliminated and DL bought WS, or UA bought AC, do you think the Canadian market would get better served? Airlines don't have unlimited resources, and if an aircraft can be better utilized on a more-profitable route then it will be taken elsewhere, as seen by recent issues in the US with small markets losing airline service and EAS contracts being abandoned. Do you really think DL would maintain jet service to YXE or YQR when they could send multiple flights to SLC or MSP daily to feed the rest of their network? Do you think UA would keep CRJs going to YZF when they could send them to DEN? You'd be very naive to think that giving Flair a monopoly on domestic routes, or I suppose an oligopoly of Flair and Lynx, wouldn't immediately result in an increase in fares.
If that's nationalism, then it's nationalism in the same way that I think Canadians deserve to have hospitals and roads without having to pay American companies to use them, or worse still, having those American companies shut down the hospitals and roads so they can use the equipment on more profitable locations in the US.

ElPistolero wrote:

I suggest you look at their “record profits” annual reports from 2015-2019 to figure out how oligopolies work. If you end up in a market that pairs ULCC configurations with prices that are multiples of other developed markets, it’s pretty clear that the issue isn’t a lack of foreign investment in AC/WS; it’s a lack of competition.

Yes, that's precisely the point! If foreign investment doesn't matter, then why does Flair need an exemption to the rules about foreign control? If it's just a lack of competition, and Flair offers that competition, then they should be able to stand on their own feet, no? If that's the case, then what does it matter if they "make the mask slip"? What does it matter if the foreign-ownership rules change?

ElPistolero wrote:

But they did change. And someone recommended them - Industry Canada or CRTC.

Yes, and until they did no one set up shop in violation of the rules. No one started a telecom that was under the control of foreign investors, and then tried to get an exemption for it after being caught. If the rules change in the future, Flair can operate under those rules, but those rules aren't in effect now.

ElPistolero wrote:

If and when it does, we can assess what it means for the market. As it stands, the rules don’t appear to serve the public interest. Rules stopping hacking and anti-competitive practices do serve the public interest, so not a good comparison.

That's a completely subjective determination, and you certainly don't speak on behalf of all Canadians. I dare say that you probably speak for a minority of Canadians, and if Canadians wanted the rules to change it would become an election issue. The fact that it isn't one indicates that they're satisfied with the status quo. With all the issues over aviation in the last two years, I don't see anyone raising a stink about opening up ownership laws except supporters of an airline that's potentially been breaking those laws.

There are so many half-truths and non-truths there that I don’t even know where to begin.

- We haven’t reached the point where anyone can conclude that F8 has broken the rules. We’ll be there on 3 May. So no, I am not cheering F8 breaking rules. I am cheering F8 for being a disrupter.

- Worth pointing out that unlike WS, F8 haven’t gone through a transparent court process. They’re being regulated by an organization whose independence/lack of bias is being questioned by Parliamentarians. When F8 goes through the court process, I’ll accept your argument. Till then, we’ll, CTA’s independence is being questioned - so “no smoke without fire” etc.

- The “you’re in a minority” argument is neither here or there. The minority has been right on a number of issues, and the majority has eventually gotten there. Witness Canadian history on race relations for a start. In any event, the Competition Bureau agrees with me.

- I’m sure you’ve figured out how daft it is to question whether foreign-owned carriers will serve smaller cities when, by your own account, allegedly foreign-owned F8 is doing exactly that. What was Kitchener before F8?

- The rest of your argument is equally half-baked. Al poster after poster here have noted that AC and WS have deep pockets - the corollary being that only deep pockets can withstand them. That does not, by any leap of logic, mean that there is no need for foreign investment in Canada.

Anyway, the bizarre comparison to highways and hospitals leads us into a world of nationalization that doesn’t make much sense. Granted, it might be better for consumers than this oligopoly, so you may have a point there.

jimbo737 wrote:

The rules have to be applied equally to all.

If Flair can be controlled by foreign interests and capital, then all players in the market should have equal access to said investors and foreign capital.

If Southwest or Delta wanted to buy 51% of WestJet, likely less than 777’s defacto control over Flair, then so be it.

Same if Lufthansa and UAL decided to buy 51% of Air Canada.

Be careful what you wish for.

Why? Will a foreign owned AC or WS finally begin flying to/ providing links to smaller airports in the north, like their hacks here like to pretend they do. Or Kitchener, for that matter?

And ACPPA demonstrates otherwise - re rules applying equally. Just saying

jimbo737 wrote:

The rules have to be applied equally to all.

If Flair can be controlled by foreign interests and capital, then all players in the market should have equal access to said investors and foreign capital.

If Southwest or Delta wanted to buy 51% of WestJet, likely less than 777’s defacto control over Flair, then so be it.

Same if Lufthansa and UAL decided to buy 51% of Air Canada.

Be careful what you wish for.

Every leased airplane at Air Canada and WestJet (nearly the entire fleet) is controlled by foreign interests and capital. Most of these airlines’ debt is also provided by foreign banks and investors since Canadian banks, outside of Export Development Canada, don’t fund aviation.

What’s unique with Flair is 777 Partners owns a minority interest in the airline, lent them money AND is a lessor. None of these actions in and of themselves are illegal. The question is taken all together, would it allow 777 Partners to control the airline. If they can, I would think the Canadian shareholders are doing a pretty crappy job because corporate governance principles would say that the majority should still have all decision making power on the board and retain control.

ElPistolero wrote:

And ACPPA demonstrates otherwise - re rules applying equally. Just saying

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

CrewBunk wrote:

ElPistolero wrote:

And ACPPA demonstrates otherwise - re rules applying equally. Just saying

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

How would Flair have an advantage?

sxf24 wrote:

CrewBunk wrote:

ElPistolero wrote:

And ACPPA demonstrates otherwise - re rules applying equally. Just saying

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

How would Flair have an advantage?

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

Air Canada is also subject to the federal Official Languages Act, and thus is required to have bilingual flight attendants on all flights, and thus must staff their flights accordingly to ensure that a bilingual flight attendant is onboard. All services, announcements that deal with the public must be available in both English and French at the same time.

There is also a much stricter foreign ownership limit for Air Canada; up to 25% of the voting interests can be held by non-Canadians.

ThePointblank wrote:

sxf24 wrote:

CrewBunk wrote:

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

How would Flair have an advantage?

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

Air Canada is also subject to the federal Official Languages Act, and thus is required to have bilingual flight attendants on all flights, and thus must staff their flights accordingly to ensure that a bilingual flight attendant is onboard. All services, announcements that deal with the public must be available in both English and French at the same time.

There is also a much stricter foreign ownership limit for Air Canada; up to 25% of the voting interests can be held by non-Canadians.

I don’t think anyone disputes that, but that law doesn’t apply to Flair no matter it’s ownership. CrewBunk’s last sentence implies an advantage over other (non-AC) Canadian airlines.

sxf24 wrote:

CrewBunk wrote:

ElPistolero wrote:

And ACPPA demonstrates otherwise - re rules applying equally. Just saying

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

How would Flair have an advantage?

If ownership and control restrictions were relaxed for Flair and no one else, it might give them capital input opportunities not available to others.

The point I was making though, is that the ACCPA isn’t really a good example of rules not being applied equally as it puts its target (namely AC) at a disadvantage by design, where allowing Flair to relax ownership/control restrictions gives them an advantage.

ThePointblank wrote:

sxf24 wrote:

CrewBunk wrote:

The big difference is that the ACPPA is applied to the detriment of Air Canada, giving all other airlines an advantage. Not the other way around, which in this case would give an advantage to Flair and possibly a disadvantage to all other airlines in Canada.

How would Flair have an advantage?

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

Air Canada is also subject to the federal Official Languages Act, and thus is required to have bilingual flight attendants on all flights, and thus must staff their flights accordingly to ensure that a bilingual flight attendant is onboard. All services, announcements that deal with the public must be available in both English and French at the same time.

There is also a much stricter foreign ownership limit for Air Canada; up to 25% of the voting interests can be held by non-Canadians.

In exchange, Air Canada received cheap financing and other preferential support from the government.

sxf24 wrote:

ThePointblank wrote:

sxf24 wrote:

How would Flair have an advantage?

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

Air Canada is also subject to the federal Official Languages Act, and thus is required to have bilingual flight attendants on all flights, and thus must staff their flights accordingly to ensure that a bilingual flight attendant is onboard. All services, announcements that deal with the public must be available in both English and French at the same time.

There is also a much stricter foreign ownership limit for Air Canada; up to 25% of the voting interests can be held by non-Canadians.

In exchange, Air Canada received cheap financing and other preferential support from the government.

No, the act was the condition upon Air Canada becoming a private corporation, as before, it was a crown corporation. Enacting the ACPPA was a ways of controlling Air Canada even after it went private.

sxf24 wrote:

In exchange, Air Canada received cheap financing and other preferential support from the government.

In my opinion, the ACPPA was enacted to make the privatization of Air Canada more palatable to French Canada during separatist murmurs.

One will note that not only is HQ to remain in Quebec, but all documentation, all communication and all manuals are to be offered in both official languages. And, as noted, there must be a bilingual Flight Attendant on every Air Canada flight regardless of origin/destination and all announcements both airport and aircraft must be in both languages.

Air Canada accepted this during privatization and maintains it today.

ThePointblank wrote:

sxf24 wrote:

ThePointblank wrote:

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

Air Canada is also subject to the federal Official Languages Act, and thus is required to have bilingual flight attendants on all flights, and thus must staff their flights accordingly to ensure that a bilingual flight attendant is onboard. All services, announcements that deal with the public must be available in both English and French at the same time.

There is also a much stricter foreign ownership limit for Air Canada; up to 25% of the voting interests can be held by non-Canadians.

In exchange, Air Canada received cheap financing and other preferential support from the government.

No, the act was the condition upon Air Canada becoming a private corporation, as before, it was a crown corporation. Enacting the ACPPA was a ways of controlling Air Canada even after it went private.

I’m of the opinion Air Canada continues to be protected from international competition and received government support during COVID because of ACPPA.

Regardless, this is getting off topic. I would say that Flair has no competitive advantage from its relationship with 777 Partners and the only parties that are suffering are its competitors that are faced with new competition. Employees and communities benefit from the current competition in Canada.

sxf24 wrote:

ThePointblank wrote:

sxf24 wrote:

In exchange, Air Canada received cheap financing and other preferential support from the government.

No, the act was the condition upon Air Canada becoming a private corporation, as before, it was a crown corporation. Enacting the ACPPA was a ways of controlling Air Canada even after it went private.

I’m of the opinion Air Canada continues to be protected from international competition and received government support during COVID because of ACPPA.

Regardless, this is getting off topic. I would say that Flair has no competitive advantage from its relationship with 777 Partners and the only parties that are suffering are its competitors that are faced with new competition. Employees and communities benefit from the current competition in Canada.

That is incorrect, all Canadian airlines were offered aid from the Canadian Government during covid, not all chose to take the assistance.

https://torontosun.com/news/provincial/ ... a1dd2/amp/

If anything the USA carriers were given a competitive transborder advantage over Canadian carriers by the much more substantial US governments financial grants and loans given to those american carriers.

cirrusdragoon wrote:

sxf24 wrote:

ThePointblank wrote:

No, the act was the condition upon Air Canada becoming a private corporation, as before, it was a crown corporation. Enacting the ACPPA was a ways of controlling Air Canada even after it went private.

I’m of the opinion Air Canada continues to be protected from international competition and received government support during COVID because of ACPPA.

Regardless, this is getting off topic. I would say that Flair has no competitive advantage from its relationship with 777 Partners and the only parties that are suffering are its competitors that are faced with new competition. Employees and communities benefit from the current competition in Canada.

That is incorrect, all Canadian airlines were offered aid from the Canadian Government during covid, not all chose to take the assistance.

https://torontosun.com/news/provincial/ ... a1dd2/amp/

If anything the USA carriers were given a competitive transborder advantage over Canadian carriers by the much more substantial US governments financial grants and loans given to those american carriers.

The government listened to, and structured the support package for, one airline above all others.

sxf24 wrote:

cirrusdragoon wrote:

sxf24 wrote:

I’m of the opinion Air Canada continues to be protected from international competition and received government support during COVID because of ACPPA.

Regardless, this is getting off topic. I would say that Flair has no competitive advantage from its relationship with 777 Partners and the only parties that are suffering are its competitors that are faced with new competition. Employees and communities benefit from the current competition in Canada.

That is incorrect, all Canadian airlines were offered aid from the Canadian Government during covid, not all chose to take the assistance.

https://torontosun.com/news/provincial/ ... a1dd2/amp/

If anything the USA carriers were given a competitive transborder advantage over Canadian carriers by the much more substantial US governments financial grants and loans given to those american carriers.

The government listened to, and structured the support package for, one airline above all others.

To which the government also tailored for other airlines as well. Air Canada happened to have been negotiated first as it does happen to be the country’s largest airline.

Air Transats: https://www.cbc.ca/amp/1.6006792

aklak wrote:

The CTA has very clear guidelines regarding what factors are involved in determining if a company is Canadian-controlled in fact. https://otc-cta.gc.ca/eng/publication/g ... sportation

...

I would like to emphasize "Power to wind up the company", "Debt" and "Lease of assets". Flair is being kept alive using 777's investment money, almost all of their debt is owed to 777, and a large amount of their fleet is leased from 777, an amount that they intend to continue growing. It's very black-and-white what the interpretation will be here. Then there's "Corporate governance factors" and "Management agreements", which haven't been made public, but if, as I suspect, Prescott signed over 3/5 board seats to 777 in order to keep the lights on then it'll be even more cut-and-dry.
The CTA has no authority to change the ownership rules; those are established by law. The CTA may think it's in the public interest to keep as many operators in business as possible, but if their investigation finds that Flair is controlled in fact by 777 then they are required by law to take corrective action. They can't just decide that the ownership and control rules are no longer applicable, any more than the police can decide that DUI is now legal because they like drinking and driving.

The factors might be clear, but how those factors are measured and their weighting in the decision is not. This is what the other poster seems to be alluding to.

For example, if one were to simply weigh debt and lease of assets as two crucial factors to determine 'control in fact', every airline in Canada might have their 'control in fact' questioned. Take a look at AC's most recent balance sheet, $7bn+ of long-term debt and leased assets are denominated in foreign currency and thus not likely to have come from Canadian controlled sources. With share capital of $2.7bn, foreign debt is at least 2.5x equity, if all equity were in fact Canadian controlled. Who is to say what constitutes too much foreign debt to deem Flair foreign-controlled?

jimbo737 wrote:

If Flair can be controlled by foreign interests and capital, then all players in the market should have equal access to said investors and foreign capital.

Other 'control in fact' factors aside, is there a reason 777 Partners' interest can't simply be diluted to the 24.99% allowed?

ThePointblank wrote:

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

As an aside, I'm not exactly sure that's a burden. Every company I've been involved with has always maintained a lower cost basis in their Montreal operations than the similarly sized city counterparts. Other than higher property taxes, all key inputs were cheaper and there is/was a great availability of skilled (cheaper) labour.

If anything, the only other logical location for AC to have moved their HQ is the Toronto area, where costs are certainly not cheaper and labour is even more expensive.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

They do? Isn't Aveos extinct now?

sxf24 wrote:

cirrusdragoon wrote:

sxf24 wrote:

I’m of the opinion Air Canada continues to be protected from international competition and received government support during COVID because of ACPPA.

Regardless, this is getting off topic. I would say that Flair has no competitive advantage from its relationship with 777 Partners and the only parties that are suffering are its competitors that are faced with new competition. Employees and communities benefit from the current competition in Canada.

That is incorrect, all Canadian airlines were offered aid from the Canadian Government during covid, not all chose to take the assistance.

https://torontosun.com/news/provincial/ ... a1dd2/amp/

If anything the USA carriers were given a competitive transborder advantage over Canadian carriers by the much more substantial US governments financial grants and loans given to those american carriers.

The government listened to, and structured the support package for, one airline above all others.

FALSE

Airlinerdude wrote:

aklak wrote:

The CTA has very clear guidelines regarding what factors are involved in determining if a company is Canadian-controlled in fact. https://otc-cta.gc.ca/eng/publication/g ... sportation

...

I would like to emphasize "Power to wind up the company", "Debt" and "Lease of assets". Flair is being kept alive using 777's investment money, almost all of their debt is owed to 777, and a large amount of their fleet is leased from 777, an amount that they intend to continue growing. It's very black-and-white what the interpretation will be here. Then there's "Corporate governance factors" and "Management agreements", which haven't been made public, but if, as I suspect, Prescott signed over 3/5 board seats to 777 in order to keep the lights on then it'll be even more cut-and-dry.
The CTA has no authority to change the ownership rules; those are established by law. The CTA may think it's in the public interest to keep as many operators in business as possible, but if their investigation finds that Flair is controlled in fact by 777 then they are required by law to take corrective action. They can't just decide that the ownership and control rules are no longer applicable, any more than the police can decide that DUI is now legal because they like drinking and driving.

The factors might be clear, but how those factors are measured and their weighting in the decision is not. This is what the other poster seems to be alluding to.

For example, if one were to simply weigh debt and lease of assets as two crucial factors to determine 'control in fact', every airline in Canada might have their 'control in fact' questioned. Take a look at AC's most recent balance sheet, $7bn+ of long-term debt and leased assets are denominated in foreign currency and thus not likely to have come from Canadian controlled sources. With share capital of $2.7bn, foreign debt is at least 2.5x equity, if all equity were in fact Canadian controlled. Who is to say what constitutes too much foreign debt to deem Flair foreign-controlled?

jimbo737 wrote:

If Flair can be controlled by foreign interests and capital, then all players in the market should have equal access to said investors and foreign capital.

Other 'control in fact' factors aside, is there a reason 777 Partners' interest can't simply be diluted to the 24.99% allowed?

ThePointblank wrote:

ACPPA imposes on Air Canada a number of requirements that increase costs for Air Canada, that does not apply to other airlines.

For example, Air Canada is mandated under the law to maintain it's HQ in Montreal, but it's main hub and operations centre is in Mississauga, Ontario.

As an aside, I'm not exactly sure that's a burden. Every company I've been involved with has always maintained a lower cost basis in their Montreal operations than the similarly sized city counterparts. Other than higher property taxes, all key inputs were cheaper and there is/was a great availability of skilled (cheaper) labour.

If anything, the only other logical location for AC to have moved their HQ is the Toronto area, where costs are certainly not cheaper and labour is even more expensive.

Air Canada is also required to maintain aircraft maintenance facilities in Winnipeg, Montreal, and Mississauga.

They do? Isn't Aveos extinct now?

Per Aveos being closed, it has nothing to do with the fact that AC is required to have maintenance facilities in those cities. It's written in the ACPPA. It's law. Believe it or not

Per Flair CEO "we already have resolutions in place for the majority of the concerns they've [CTA] raised" (emphasis mine)

I think "control in fact" is by nature, a subjective determination. CTA's online interpretations of "control in fact" seem to me to raise more questions, and more uncertainties about how this test could be applied. Here's hoping for a prompt and final resolution, but Flair might just be the luckiest airline startup out there - airfares are skyrocketing right now and there is a massive lack of capacity in the market - I would imagine F8 flights are performing well despite the uncertainty.

They have a press conference starting in an hour.

I wonder what they'll say-good or bad?

The CEO said they will have a new board with nine total members - 2 being non-canadians. 777 partners agreed last week to lose their veto power on the board and have only 2 seats down from 3.

IceCream wrote:

I wonder what they'll say-good or bad?

Where it’s good or bad depends on the outcome that one wants.

But broadly speaking, they’ve changed the board with the support of an overwhelming number of shareholders (presumably includes Prescott as the 58% shareholder).

Going to be increased from 5 to 9, with only 2 going to 777. Effective immediately. 777 has also given up veto rights.

https://globalnews.ca/video/8775880/fla ... s-ceo/amp/

Separately, on the foreign ownership issue, since the bag and forth has introduced some mud to the water, I’m all in support for foreign ownership restrictions being lifted for all airlines.

The Competition Bureau has been recommending this for years now.

“As discussed above, higher foreign ownership levels would provide Canadian carriers with greater access to international capital. This, in turn, may lower the barrier to entry that results from limited accessibility to capital.”

https://www.competitionbureau.gc.ca/eic ... ction3_b_3

Also worth noting:

“In a statement prior to the press conference, Jones said:

"Air Canada deployed anticompetitive practices against WestJet and WestJet borrowed from Air Canada's playbook to launch anticompetitive practices against Flair Airlines. Today, they are teaming up to protect their high fares, which is great for them but not for Canadian families. Without Flair, Canada has some of the highest airfare in the world."”

https://edmonton.ctvnews.ca/edmonton-ba ... -1.5870478

But yeah, NAC, which is dominated by these two carriers, is all in favour of “competition” lol. Makes one wonder how anybody can keep a straight face while working there.

ElPistolero wrote:

IceCream wrote:

I wonder what they'll say-good or bad?

Where it’s good or bad depends on the outcome that one wants.

But broadly speaking, they’ve changed the board with the support of an overwhelming number of shareholders (presumably includes Prescott as the 58% shareholder).

Going to be increased from 5 to 9, with only 2 going to 777. Effective immediately. 777 has also given up veto rights.

https://globalnews.ca/video/8775880/fla ... s-ceo/amp/

Separately, on the foreign ownership issue, since the bag and forth has introduced some mud to the water, I’m all in support for foreign ownership restrictions being lifted for all airlines.

The Competition Bureau has been recommending this for years now.

“As discussed above, higher foreign ownership levels would provide Canadian carriers with greater access to international capital. This, in turn, may lower the barrier to entry that results from limited accessibility to capital.”

https://www.competitionbureau.gc.ca/eic ... ction3_b_3

Also worth noting:

“In a statement prior to the press conference, Jones said:

"Air Canada deployed anticompetitive practices against WestJet and WestJet borrowed from Air Canada's playbook to launch anticompetitive practices against Flair Airlines. Today, they are teaming up to protect their high fares, which is great for them but not for Canadian families. Without Flair, Canada has some of the highest airfare in the world."”

https://edmonton.ctvnews.ca/edmonton-ba ... -1.5870478

But yeah, NAC, which is dominated by these two carriers, is all in favour of “competition” lol. Makes one wonder how anybody can keep a straight face while working there.

Good to see them making the necessary adjustments.

Per Stephen Jones - In consultation with the CTA, Flair has made amendements to the unanimous shareholders agreements. Shareholders have overwhelmingly voted to ratify the new agreement, which is effective immediately. The CTA has confirmed to Flair that these amendements address all of the corporate governance concerns that it has raised.

Juju2004 wrote:

Per Stephen Jones - In consultation with the CTA, Flair has made amendements to the unanimous shareholders agreements. Shareholders have overwhelmingly voted to ratify the new agreement, which is effective immediately. The CTA has confirmed to Flair that these amendements address all of the corporate governance concerns that it has raised.

So now it is just a waiting game to see if they will be given the 18 month exemption to refinance their debt to 777 Partners.

https://www.theglobeandmail.com/busines ... ip-review/

They've already refinanced 18 million - in what, a month's time? Those financial results must not be so terrible after all... So much FUD here. Everyone needs to support Flair. If this episode hasn't convinced you of the duopolistic nature of the current marketplace, nothing will.

YEGFlyer wrote:

They've already refinanced 18 million - in what, a month's time? Those financial results must not be so terrible after all... So much FUD here. Everyone needs to support Flair. If this episode hasn't convinced you of the duopolistic nature of the current marketplace, nothing will.

Hmm, I think people are entitled to their opinion, and it isn't "FUD", but I am pleasantly surprised by Flair's ability to turn around the corporate governance problems!