Final y transformation is the transformation of a final y to i which occurs in English after suffixation with two main rules (1) the final y follows a consonant and (2) the suffix doesn't begin with I.
This doesn't apply to suffixes beginning with I, e.g. -ing, which retain the Y, e.g. so that fly -> flying.
This also doesn't apply to roots that have a vowel before the y, e.g. play -> plays (not *plaies).