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Thursday,  February 29, 2024 9:34 AM 

Flair Airlines owes more than $67M in unpaid taxes: report


Flair Airlines owes more than $67M in unpaid taxes: report
(Pax Global Media/file photo)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and DailyXtra.ca. Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

Flair’s affairs are making headlines again: a new report says the low-cost carrier is on the hook for more than $67 million dollars in unpaid taxes.

As reported by the Globe and Mail, Ottawa has obtained a court order that allows it to direct the seizure and sale of Flair property in Alberta, where the low-cost carrier is based, to recoup the debt.

The taxes were incurred after Flair imported 20 Boeing 737 Max aircraft, beginning in 2021, the report says.

Edmonton-based Flair apparently owes the Canada Revenue Agency $67,174,123.37 (plus penalties, interest and other fees), according to court documents obtained by The Globe.

Arrangements to pay the amount have been made, a Flair representative told the outlet on Saturday (Jan. 27).

Flair has not commented on whether any of its property has been seized by the courts. But an airline spokesperson told The Globe that flight operations haven’t been impacted.

The airline is partly owned by Miami’s 777 Partners, which has been the airline’s main provider of leased aircraft and financing.

Turbulence 

Flair’s tax troubles are the latest in a string of legal, financial and publicity problems the carrier has faced in recent years.

In 2022, the Canadian Transportation Agency (CTA) launched an investigation into Flair to see if the airline was truly Canadian.

The probe was done to see if Miami-based 777 Partners was controlling the airline, in violation of federal laws (foreign investment in a Canadian airline is limited to 49 per cent, or 25 per cent by one person).

The CTA eventually ruled that Flair was, in fact, Canadian, but only after the airline agreed to reduce its reliance on 777 Partners for financing and leases, and to add more Canadian members to its board of directors.

READ MORE: Flair investor sued by aircraft lessors over missed payments

Flair’s lease agreements have been another pain point.   

Earlier this month, a U.S.-based minority investor with Flair was sued by three aircraft lessors for US$30 million after the Canadian low-cost carrier allegedly missed lease payments on four jets.

"Despite being repeatedly notified of their financial obligations, 777 Partners have continued to ignore calls to settle outstanding payments of almost $30 million. 777 Partners cannot just ignore its financial and contractual obligations. This legal action is a last resort," reads a statement on behalf of the lessors, sent to PAX on Monday (Jan. 29). 

It's the latest in a dispute over aircraft that were leased to Flair, but were repossessed in March last year by Airborne Capital, which managed the planes on behalf of three lessors.

Last year’s repossession led to four grounded airplanes, cancelling several Flair flights, while impacting some 1,900 customers, just as the busy March Break travel period was ramping up.

Flair’s CEO, Stephen Jones, at the time, admitted the carrier had indeed fallen behind on lease payments after a “tough” winter on some routes

The CEO said Flair paid Airborne $4.2 million shortly before the seizures took place, assuring another $1 million was coming before the planes were repossessed.

READ MORE: Flair CEO says "growing pains" haven't gotten in the way of airline improvements

Airborne disputed this account, however, saying that missed payments were common.

Jones later accused two major Canadian airlines (which he did not name) of attempting to poach his company’s aircraft, stating that rivals “want us out.”

According to data analytics company Cirium, Flair has about 10 per cent of the domestic market in Canada.

Customer service woes

Meanwhile, Flair’s customer service has been under a microscope.

The carrier, last year, began releasing monthly operational metrics through its channels to show how its flight completion times were improving.

Last June, CEO Stephen Jones vowed to improve Flair’s customer service by establishing a specialist team in Montreal.

His statement came one week after Flair made headlines for generating the most complaints from customers, according to federal data released that same month.

Near the end of last year, the airline said it flew more than 1,000 scheduled flights in November “with no cancellations.”


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