Flair Airlines Faces Financial Dispute with Peoples Trust Over CAD25 Million

Flair Airlines, based in Kelowna, Canada, is embroiled in a financial disagreement with Peoples Trust, a Canadian financial services company, over approximately CAD25 million (USD18.5 million) in funds. The budget airline alleges that Peoples Trust stopped regular financial transfers in February 2024 and is now preparing to resolve the dispute through legal action, citing a lack of valid reasons from Peoples Trust for retaining the funds.

In response to the halted transfers, Flair Airlines’ CEO, Stephen Jones, announced the airline has activated an alternative payment processing system to ensure its operations remain unaffected. This move underscores the airline’s commitment to maintaining service continuity amidst the financial disagreement.

Peoples Trust, part of the Peoples Group which boasts over 35 years of experience in delivering financial services in Canada, defended its practices to ch-aviation. The company emphasized its adherence to industry standards for managing card transaction reserves. This approach aims to protect consumers who have prepaid for services, such as airline tickets, which they have yet to receive, suggesting a cautionary measure against potential service failures.

This dispute emerges amidst a turbulent period for Flair Airlines, which includes ongoing litigation against aircraft lessors over the seizure and repossession of four Boeing aircraft. The airline also recently navigated a tax dispute, agreeing to a CAD67 million (USD49.5 million) settlement with the Canada Revenue Agency. Additionally, Flair Airlines expressed interest in expanding its fleet through the acquisition of assets from the bankrupt Lynx Air, specifically targeting the latter’s B737 MAX aircraft and pending orders.

Flair Airlines operates a fleet of 20 aircraft, according to ch-aviation fleets data, comprising eighteen B737-8s and two B737-800s, alongside an A320-200 wet-leased from Canada Jetlines. This legal dispute with Peoples Trust adds a financial dimension to the challenges faced by the airline, highlighting the complexities of managing prepaid consumer funds in the aviation industry.