Canadians will be the "losers" if rumoured Flair Airlines and Lynx Air merger goes through
A rumoured merger between Flair Airlines and Lynx Air is a significant concern for competition within Canada’s airline industry, according to one expert.
Earlier this month, The Airline Observer first reported that merger talks were taking place between the two budget airlines.
The deal would reportedly see Flair take over Lynx.
During a February press conference, Flair CEO Steve Jones was asked about the possible deal but declined to comment.
In a statement to Daily Hive on Tuesday, Flair Airlines said the airline refrains “from commenting on rumours or speculation” per its company policy.
“Our focus remains on delivering value to our customers and stakeholders through our products and services,” they stated.
The merger would mean a hit to competition
John Gradek, an aviation management faculty lecturer at McGill University, told Daily Hive that what surprised him was that the possible merger wasn’t reversed, with Lynx absorbing Flair instead.
“My thinking was there’s going to be a reverse takeover,” he said, noting that Lynx is the “more financially secure airline” with “deeper pockets.”
Flair has landed in hot water for owing $67.2 million in unpaid taxes to the federal government. Flair’s owing amount was connected to import duties on 20 Boeing 737 planes that are part of its fleet.
The airline’s unpaid taxes prompted the Canada Revenue Agency (CRA) to obtain an order to seize and sell the carrier’s property.
In a previous interview with Daily Hive, Flair Airlines’ CEO Stephen Jones confirmed the airline owes that amount but has an agreement with the CRA to pay back the money “on a fixed series of monthly payments.”
Last March, four of Flair’s leased aircraft were also seized as part of a commercial dispute between the airline and its lessor.
“If there’s anybody playing fast and loose with regulations and the operating environment of a Canadian carrier, it’s Steve Jones and company,” remarked Gradek.
If the merger goes through, competition within Canada’s airline industry, he added, meaning Canadians will likely see higher ticket prices.
“[There will be] no incentive for Flair to be at the extreme low end of the market. So what’s going to happen… fares are going to go up,” Gradek noted.
Consumers will be the “losers” in Flair Airlines and Lynx merger
Under Canada’s Competition Act, transactions of all sizes are subject to review by the Competition Bureau — the independent law enforcement agency in charge of regulating competition in the country.
The Competition Bureau told Daily Hive that while it was aware of the rumoured merger, it could not provide further details or comment.
“At this time, it would be inappropriate for the Bureau to speculate, or comment, on such a hypothetical transaction,” stated a spokesperson in an emailed response. “We must conduct a thorough examination of the facts of a matter to reach any such conclusions.”
Gradek acknowledged that there were many questions left to be answered before this potential deal was to go through, including what happens to the nine aircraft in Lynx’s fleet.
“Lynx is not going to walk away from Canada for nothing,” he explained. For now, he added, Canadians will just have to wait and see if the possible deal even goes through.
If it does, Gradek is certain that Canadians and their pocketbooks will take a hit.
“There is no doubt in my mind… that Canadian consumers will come up losers in this one,” he said.
Lynx did not reply to Daily Hive’s request for comment before the deadline, and this story will be updated should they respond.
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