A court mandate requires Kelowna Flightcraft to continue its contract with Flair air for the time being. (File)

Kelowna Flightcraft nearly plunges Flair Airlines in contract dispute

A court mandate saved the budget airline from going out of business in “approximately 10 days”

Flair Airlines was saved by a Supreme Court mandate earlier this month that will see Kelowna Flightcraft carry on its business with the airline, at least for the time being.

An Oct. 10 court decision shows that the budget airline contracted Kelowna Flightcraft to provide dispatch services in August 2015. On June 24, 2019, Kelowna Flightcraft gave three-months notice, as per the termination provision in the contract, to end business with Flair due to an outstanding debt of $204,750. The letter demanded payment within five days.

For “reasons that are not explained,” Flair did not receive the letter until July 9. Upon receipt of the notice letter, it was construed as a demand for payment, submitted to Flair’s accounts department and subsequently paid.

The notice letter did not come to the attention of senior executives at Flair until Aug. 13.

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On Oct. 9, the termination date of the contract, Flair brought the matter to the court on an “urgent basis” for an interim injunction to extend the life of the deal — and their business — a little further. Flair was granted the order, despite claims from Flightcraft stating they will be unable to seek out new customers and will remain “stuck at least for another 90 days providing dispatch services for a company that owes it approximately $4 million in respect of airline leases.” Flair disputes the $4 million figure.

Flightcraft made its intentions clear that it would send another termination notice, effective the date of the court’s decision. Flair has secured $150,000 to pay the contract for the next three months.

Among the judge’s considerations were the fact that without the injunction, Flair would not be able to meet commitments to approximately 120,000 customers who have purchased tickets for flights, including some 15,000 who have pre-purchased tickets for travel within the next week. It would also cause layoffs for 200-300 individuals employed by Flair.

“If the injunction is not granted, the services provided by Kelowna Flightcraft under the contract will terminate immediately, Flair Airlines will not be able to carry on business until it obtains a new dispatch contract from a new provider,” read the decision from Justice Walker.

“Flair Airlines will likely put out of business within a short period of time (it estimates in approximately ten days).”

The judge also noted that communications from Flightcraft suggest its intention to continue providing services to Flair under the contract well into 2020, in spite of the notice letter.

“It is arguable that Flair Airlines need not show a change in position if it reasonably relied on Kelowna Flightcraft’s representations and conduct to assume the status quo would not be effective, and in that sense, it could argue that it acted to its detriment.”


@michaelrdrguez
michael.rodriguez@kelownacapnews.com

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