Flair Airlines owes feds $67 million in unpaid taxes, prompting seizure order

Court documents reveal that Flair Airlines owes Ottawa $67 million in unpaid taxes, prompting the federal government to obtain an order for the seizure and sale of the carrier's property. A Flair Airlines plane is shown in this undated handout photo at the Fort Lauderdale airport. THE CANADIAN PRESS/HO-Flair Airlines

Court documents show Flair Airlines owes the federal government $67.2 million in unpaid taxes, prompting the Canada Revenue Agency to obtain an order for the seizure and sale of the carrier's property.

The money relates to import duties on the 20 Boeing 737 Max jetliners that make up the budget airline's fleet, said CEO Stephen Jones.

He said the Federal Court order obtained by the tax agency in November has no impact on the carrier's operations, which have expanded over the past year and ramped up competition with rival airlines.

"We have a mutually agreed-upon payment plan with CRA to pay these importation duties, and we are current with that plan," he said in an emailed statement, adding that the terms of the deal are confidential.

The CRA said it cannot comment on specific cases for confidentiality reasons, but that it looks to make arrangements with a company "based on their ability to pay" before it garnishes revenues or goes even further.

"As a last resort, we may take additional legal collection actions such as seizing property or assets to protect the interests of the Crown," said spokeswoman Kim Thiffault in an email.

The court order follows the repossession of four Flair planes last March after aircraft leasing manager Airborne Capital claimed that the company regularly missed rent payments over the preceding five months.

In response, Flair launched a $50-million court action against Airborne Capital and three other leasing firms, arguing that ongoing demands for payment from the four companies were "baseless."

Flair has touted its achievements in recent months, claiming the top flight completion rate in the country at 98 per cent and an on-time performance of 69 per cent -- weak globally, but solid compared with its Canadian competitors. It said it flew 296,000 passengers in December and 4.5 million in 2023, marking big gains from the previous year.

But the ultra-low-cost carrier faces increased competition from WestJet -- newly retrenched in Western Canada even as it wound down low-cost subsidiary Swoop in October -- and from budget rival Lynx Air and Porter Airlines, both of which are expanding swiftly.

A greater focus on sun destinations this winter has also put Flair in direct competition with other airlines that continue to do likewise, including Sunwing and Air Transat.

This report by The Canadian Press was first published Jan. 29, 2024.