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Want more low-cost flight options in Canada? Flair’s outgoing CEO says the rules need to change

Budget airlines have a hard time staying in business in Canada, an issue the Competition Bureau is looking into. As the CEO of the country’s remaining ultra-low-cost domestic airline prepares to step down, Stephen Jones talks about what he thinks needs to change.

Stephen Jones tells CBC’s Ian Hanomansing why the budget airline industry has such a hard time in Canada

A white large-body plane with a black tail and green accents sits on the runway.

Stephen Jones, the outgoing CEO of Flair Airlines, has a message for Canadian air travelers: the country needs viable low-cost carriers. But Jones warns under the current rules, trying to compete with what he calls the Big Two — Air Canada and WestJet — is "a really tough game."

The 63-year-old airline executive, who's stepping down at the end of the month, dropped by CBC's Vancouver newsroom for a candid conversation about the future of Flair and the airline business in this country.

"It's a tough industry globally, but certainly here in Canada, the industry has been dominated by the two big players for decades now," said Jones.

"We think that Canadians were paying too much for too long and so we needed to come in and disrupt it. And I think we've done that."

Flair promises customers "unbeatable fares every day." The Edmonton-based company says it operates 20 aircraft, serving 36 destinations operating, on average, 450 flights a week.

But with the demise of Lynx Air earlier this year — joining the list of Canadian discount airlines that couldn't stay in business, Flair remains the only ultra-low cost airline flying within Canada.

WATCH | Outgoing Flair CEO on why it's hard for budget airlines in Canada:

Flair CEO calls the airline industry a tough game in Canada

48 minutes ago

Duration 0:44

Outgoing Flair CEO Stephen Jones says disrupting the airline industry in Canada is a difficult game, due to long-term domination by the two big players: Air Canada and WestJet.

The problem has been flagged by Competition Bureau Canada, which said last month that low-cost carriers do lead to reduced fares, but "seem to face more difficulties in Canada compared to other countries."

The bureau is doing what it calls a market study. One of the things it's looking at is the state of competition among airlines, and it will be taking public input until Monday.

As Jones prepares to leave Flair, he shared what he says needs to change in order for smaller airlines to provide low cost flights to Canadians and push the bigger carriers to lower their prices.

Allegations of predatory pricing

One of the problems, says Jones, is what he considers predatory business practices by bigger airlines. He cites WestJet's now discontinued discount airline, Swoop, which the company shut down in 2023.

In Jones's view: "Swoop wasn't created to foster competition. Swoop was created to quell competition. It was a deliberate tool in the WestJet portfolio that they used to chase us around the market."

Jones said an example of that is what happened with service between Edmonton and Comox, B.C., on Vancouver Island, which Flair started offering in 2022.

"We started that route and within a month Swoop had started that same route on the same days at the same time as us. We ultimately couldn't survive there. We left and then Swoop left."

CBC News asked WestJet about Jones's allegation. Madison Kruger, speaking for the airline, didn't directly address it, but wrote in a statement, "Historically we have never gone on record to refute the commentary of a competitor."

The Competition Bureau says it did investigate "allegations of predatory pricing" by WestJet and Swoop, but won't say what it found.

"As the bureau is required by law to conduct its work confidentially, I am unable to comment on any findings, nor would it be appropriate to comment on the bureau's reasons for closing this investigation," said spokesperson Yves Chartrand.

Faster investigations required

Stephen Jones says if the bureau or the federal government truly wants more competition and lower prices, it has to handle complaints more efficiently.

"I think we need a mechanism somehow that acts faster because by the time we've lodged a complaint and gone through and gathered evidence, the game's over … we've come out of that route," he said.

"We need some faster feedback on the predatory behaviour."

John Gradek agrees. The lecturer at McGill University's Aviation Management Program says he's familiar with the Edmonton-Comox example, and the current bureaucratic process can take months if not years.

"The level of proof to convict someone of predatory pricing is onerous," he said.

In his view, the government or the Competition Bureau would have to basically say, "We don't need to spend months investigating. We just need the data. You show me the data Flair, you show me the data Swoop and we'll make an administrative decision very quickly."

WATCH | Flair CEO Stephen Jones speaks with Ian Hanomansing on The National:

Outgoing Flair CEO says Canada’s airline rules need to change

48 minutes ago

Duration 9:17

Outgoing Flair CEO Stephen Jones tells The National’s Ian Hanomansing why the budget airline industry has such a tough time in Canada and what needs to change to get more competition in the skies.

User fees out of hand, says Flair CEO

Another problem for airlines, Jones says, is Canada's user-pay approach.

Most airports charge an Airport Improvement Fee. It's different from airport to airport; $25, for example, at Vancouver International Airport, $35 at Toronto's Pearson, and in St. John's, it's $42.

Then there's the Air Travellers Security Charge, which ranges from just under $10 for domestic flights and almost $35 for some international travel.

Flair advertises some limited, attention grabbing super-low fares on its website, like $46 from Vancouver to Calgary, with optional extra charges for a checked bag or even a carry-on. Jones says user-pay fees, which are included in that fare, have a disproportionate impact on low-cost carriers.

"We operate in the leisure part of the market and so that's really price sensitive," he said. "We put up our prices by a dollar and someone else sits on the couch."His point is underscored by a 2018 research paper from the Library of Parliament, which concluded "various fees and taxes paid on Canadian airfares" may make it more difficult for ultra-low-cost carriers to replicate what's happened in Europe and the U.S.

Gradek agrees the Canadian user-pay model makes the discount airline market different from many other countries, but he doesn't advocate changing that.

Making passengers and airlines pay for airports and other services is "who we are in Canada," he said. "It's the way we do business in Canada."

The McGill analyst maintains that low fares and low-cost airlines are still possible. "They may not be to the same extent as the U.S. or Europe but it's still a market that has some viability."

The future of Flair

Speaking of viability, some have raised concerns about the future of Flair.

Earlier this year, the Canadian Press reported Flair Airlines owes about $67.2 million in unpaid taxes. In a separate matter in March, four of its jets were repossessed by leasing companies. Flair is suing those companies, alleging the seizures were illegal.

Jones says he is confident about the health of the airline.

"I think Flair is in the best shape it's ever been in. I think we're going into a summer where we're going to have really strong loads."

It was just a few months ago that Lynx shut down suddenly, declaring bankruptcy, leaving some ticketholders stranded. But Jones says Flair passengers can be confident that won't happen to them.

"Lynx was a good airline," said Jones.

"They had the same purpose as us, to make travel affordable to all Canadians. They were a little bit smaller than us and a little bit later to the game. And so unfortunately they didn't make it.

"This is a tough game. It's a tough, tough game. There's a lot of airlines that start and fail, but Flair's not going to."

ABOUT THE AUTHOR

Ian Hanomansing is the co-host of The National. Since 1986, he has had a wide variety of assignments for CBC as a reporter, anchor and interviewer. He also has a law degree from Dalhousie University in Halifax.

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    Credit belongs to : www.cbc.ca

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