Don't reward rulebreakers: WestJet's perspective on possible Flair Shutdown

  • National Newswatch

For 26 years, WestJet has operated based on the rules and regulations of Canada's aviation industry set out by Transport Canada and the Canadian Transportation Agency.  Airline regulations in Canada exist to provide clear and consistent operating rules that ensure fair competition, transparency, safety, and choice for Canadian travelers.  The expectation is simple: if you want to operate a commercial airline in Canada, you have to follow the rules.  Always.  You can't pick and choose, or simply ignore some rules and ask for forgiveness when you are caught.In March, Canadian travellers learned that Flair Airlines has been operating outside of those rules.  The Canadian Transportation Agency (CTA) issued a preliminary determination that Flair may not be controlled-in-fact by Canadians.  Canadian ownership and control is one of those long-standing rules in the airline sector.  Canadians have since learned that Flair is seeking an 18-month exemption to this rule from the Minister of Transport, confirming that Flair has been brazenly ignoring the rules for some time.On June 1, the Canadian Transportation Agency will determine whether Flair has fixed the problem they created for themselves, and the Minister of Transport may have to decide whether to exempt Flair Airlines from the Canadian ownership rules.WestJet, in addition to nearly every aviation industry group and consumer advocacy groups, has expressed significant concerns towards this situation and the exemption request in particular.As the company who democratized air travel in Canada and took on the dominant carrier, WestJet's perspective on Flair's request to operate outside of Canadian law is unique and unrivalled.  Frankly, the path to success for any airline in Canada is to operate responsibly, not with an attitude of seeking-forgiveness-not-permission.  Flair's choices have put consumers at risk as travellers face the real possibility that Flair will suddenly no longer comply with their operating license.  The policy solution to this problem should not be to allow them to expose even more Canadians to the same risk.Since Flair's request to the Minister of Transport to grant an 18-month exemption from the rules was first reported publicly, we have witnessed near universal opposition to it from industry, consumer advocates and industry experts.  Canada is known as a country that deeply values fairness and the request runs counter to the basic standards we all abide by in the sector.  Flair has tried to frame the debate as being over foreign ownership rules, post-pandemic recovery, or airfares.  Those topics are worthy of debate, to be sure.  But this request is not about those topics; it is about whether a company that has been caught ignoring the rules should be granted special privilege.  The response from the government should be “No”.As it related to the aviation sector, the Canada Transportation Act is written to protect consumers, to foster growth of a critical sector, and to provide a transparent, rules-based system.  It is not an à la carte menu.   WestJet launched, grew, and succeeded under this Act, brought Canadian travellers new choice and low fares under this Act, and established its own successful Ultra Low Cost Carrier (ULCC) under this Act.  The rules are not a barrier to success, and Canada has seen other new ULCC's launch this year to compete with Flair.  While exemptions to this Act are allowed and can be sought proactively by companies acting in good faith, Flair purposely made choices that created the non-compliance problem they now face.We understand, and accept, that the federal government may choose to grant a brief administrative period (90 days or less) to allow Flair to fix their non-compliance.  At the same time, we are aligned with consumer advocacy groups in asking that the government ensure any exemption is time limited, administrative in nature and takes concrete steps to protects consumers.  The measures we, and others,  have requested include:
  • Flair must be required to terminate their anti-competitive monopoly agreements in Kitchener-Waterloo.  Monopolies on flight routes are clearly not in the public interest.
  • Federal government subsidies awarded to Flair from FEDDEV and PrairieCan should be repaid immediately and the funding agreements cancelled.  Operating outside federal rules such that you have to ask a Minister to exempt you from them should make you ineligible from receiving federal subsidies.
  • Flair must not be permitted to accept additional foreign capital andforeign controlled aircraft for the duration of any exemption.
  • Since, in the event Flair is granted an exemption, the risk of shutdown remains for consumers, ticket sales should be restricted until compliance is achieved.  While the WestJet Group will be there to support travelers in the event of a shutdown, consumer groups have rightly advocated for restrictions on tickets sales as a reasonable measure to ensure additional consumers are not exposed to risk.
Consumers win when competitors comply with the rules to give them greater choice in travel.  Granting special privilege to an airline that chose to flout their obligation is not in the public interest.Andrew Gibbons, WestJet Vice President of Government & Regulatory Affairs.