Flair Airlines (F8, Kelowna) is facing a possible suspension or even cancellation of its operating license after the Canadian Transport Agency issued a preliminary finding that the budget carrier may not be controlled by Canadians, and therefore not “Canadian” as required by law.

If the agency determines that the airline does not meet Canadian ownership requirements, its license will be suspended or cancelled, the agency’s guide to Canadian ownership rules reads. Foreign entities can own up to 49% of a Canadian commercial carrier but with no single entity owning more than 25%. In addition, effective control of the airline must rest in Canadian hands.

Flair Airlines is disputing the preliminary finding and insists that it meets all federal requirements.

“Flair Airlines is a Canadian airline and is controlled by Canadians both in law and in fact. Flair Airlines, at all times, operates its business in compliance with the laws and regulations governing air transportation in Canada. Flair Airlines will fully cooperate with the Canadian Transportation Agency review and will respond to the Canadian Transportation Agency in a timely manner," Chief Executive Officer Stephen Jones said in a statement.

On March 3, the Canadian Transportation Agency issued its preliminary determination as defined in the Canada Transportation Act. It declined to comment on its determination, except that the airline had 60 days to respond, whereafter the agency would make a final determination disclosing its reasons and conclusions.

Flair holds licenses authorising domestic, scheduled international, and non-scheduled international air services. Miami-based investment firm 777 Partners has a 25% equity stake in the airline, an investment the carrier has used to scale its operations. (777 Partners are also backing Australian startup Bonza (BNZ, Sunshine Coast).)

Under the Canada Transportation Act, an airline operating in the country must be incorporated in the country and owned and controlled "in fact" by Canadians.

Originally founded as a charter airline in 2005, Flair Airlines transitioned to a full commercial operation in 2017.