The Canadian Transportation Agency says Flair Airlines is Canadian.
The ruling means the Edmonton-based upstart carrier can keep its operating licence.
Canadian legislation allows no more than 49 per cent ownership of a Canadian airline by foreign entities.
The CTA had been investigating Flair’s ownership to determine whether its relationship with Miami-based investor 777 Partners violated those rules.
Flair has made a number of changes as a result of the investigation, including a promise to increase the number of Canadians on its board.
Flair has faced opposition from larger rivals Air Canada, WestJet and 30-odd other carriers who have publicly called for the regulator to rule against it.