Flair Airlines shakes off regulator's scrutiny — but can it survive the market?

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Discount upstart faces steep challenge in airspace dominated by two giants

In the intervening weeks, Flair scrambled to overhaul its shareholder agreement, stripping 777 of unique veto rights and pledging to boost the number of Canadian directors on its board. The Edmonton-based airline also amended a loan agreement with 777 in a bid to decrease the American investor’s ability to exert control over Flair.Article content

“It’s just a market where it’s hard to make money,” said Karl Moore, an associate professor at the Desautels Faculty of Management at McGill University in Montreal. “Particularly against strong competitors like Air Canada or WestJet that can, to some degree, sit on you a bit by running multiple routes and doing things like that.”

The company launched in 2005 in Kelowna, B.C., as an operator of charter and cargo flights, but armed with a modest investment from its original Canadian backers, the carrier made a huge bet it could expand and capture market share with cheap fares and no-frills service to airports in secondary markets.Photo by LARRY WONG/POSTMEDIA

In one email exchange about finding ways to make Flair profitable, a 777 employee said he planned to meet with Edmonton International Airport vice-president Myron Keehn to discuss fuel vendors. The same email also indicated the employee intended to join in discussions between Flair and partner airline Bradley Air Services Ltd. , from which the discount carrier leased aircraft.

Flair declined to comment on 777’s prior involvement in the company, suggesting only that the matter is now closed. Instead, 777 has become known for a high-profile string of investments in professional sports teams, including storied soccer teams such as Sevilla Fútbol Club in Spain and Genoa Cricket and Football Club in Italy. It also recently took a controlling stake in Club de Regatas Vasco da Gama, a second-tier team in Brazil.

 

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