A rumored merger between Flair Airlines and Lynx Air is a serious concern for competition in Canada’s airline industry, according to one expert.
Early this month, airline observer We first reported that merger talks are underway between the two low-cost airlines.
The deal reportedly allows Flair to take over the Lynx.
At a press conference in February, Flair CEO Steve Jones declined to comment when asked about a potential acquisition.
Flair Airlines said in a statement to Daily Hive on Tuesday that in line with its policy, it “does not comment on rumors or speculation.”
“We remain focused on delivering value to our customers and stakeholders through our products and services,” they said.
Mergers will hurt competition
John Gradek, a lecturer in aviation management at McGill University, told Daily Hive that he was surprised that the potential merger was not withdrawn, and instead Lynx absorbed Flair.
“We thought there would be a reverse takeover,” he said, noting that Lynx was a “more financially secure airline” with “deeper funds”.
Flair is stuck in a quagmire after he owes the federal government $67.2 million in unpaid taxes. Flair’s outstanding amount was related to import duties on its fleet of 20 Boeing 737s.
Due to the airline’s unpaid taxes, the Canada Revenue Agency (CRA) obtained an order to seize and sell the airline’s assets.
In an earlier interview with Daily Hive, Flair Airlines CEO Stephen Jones said the airline had not paid that amount, but would repay the money in a “regular series of monthly payments.” He acknowledged that there is an agreement with the CRA.
Last March, four Flair leased aircraft were also seized as part of a commercial dispute between Flair and the leasing company.
“If anyone is lax about the regulatory and operating environment for Canadian airlines, it’s Steve Jones and his ilk,” Gradek said.
He added that if the merger were to go through, there would be competition within Canada’s airline industry and Canadians would likely see higher ticket prices.
“[There will be] There is no incentive for Flair to be at the bottom of the market. So what will happen…fares will go up,” Gradek pointed out.
Consumers will be ‘losers’ in Flair Airlines and Lynx merger
Under Canada’s Competition Act, transactions of all sizes are subject to review by the Competition Bureau, an independent law enforcement agency responsible for regulating competition in the country.
The Competition Bureau told Daily Hive that it was aware of the merger rumors but could not provide further details or comment.
“It would be inappropriate for the office to speculate or comment on these hypothetical transactions at this time,” a spokesperson said in an emailed response. “Reaching such a conclusion requires a thorough investigation of the facts.”
Gradek acknowledged that many questions remain to be answered before this potential deal goes through, including what will happen to Lynx’s nine aircraft fleet.
“Lynx is not leaving Canada for no reason,” he explained. For now, Canadians will just have to wait and see if a deal is reached, he added.
If that happens, Gradek believes Canadians and their pocketbooks will suffer.
“There’s no doubt in my mind that Canadian consumers are the losers in this,” he said.
Lynx did not respond to Daily Hive’s request for comment by deadline, but this article will be updated if it does.
