Low-cost airline NewLeaf Travel to resume operation

Discount air carrier NewLeaf Travel will resume selling low-cost seats in the next few weeks now that it has received the go-ahead from Ottawa to continue operations.

Chief executive Jim Young said Wednesday that the company expects its first flight to take off by late spring or early summer. In the meantime, it will work on reintroducing itself to consumers.

“This is a second relaunch for the company,” he said. “It’s our opportunity to make a second good impression.”

Late Tuesday, the Canadian Transportation Agency ruled that indirect air service carriers like Winnipeg-based NewLeaf are not required to hold an air licence, as long as they do not portray themselves to the public as the ones operating the flight or the aircraft.

NewLeaf purchases seats from Kelowna, B.C.,-based Flair Airlines and resells then to the public. Flair Airlines, which owns and operates a fleet of Boeing 737-400 jets, is licensed under the CTA.

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“This is an important determination that will help create clarity and predictability for the air industry and travellers,” Scott Streiner, chair and CEO of the Canadian Transportation Agency, said in a statement.

“The determination recognizes the evolution of business models, encourages innovation and consumer choice in the market and ensures continued protection for passengers.”

Young said the company never described itself as an airline, even though he concedes there may have been some initial confusion. He likened NewLeaf’s role to that of a cellular carrier like Fido Solutions, which resells mobile packages but is owned by parent company Rogers Communications (TSX:RCI.B).

Moving forward, he said NewLeaf will ensure that all its marketing and branding reflects that it is only a reseller, which complies with the CTA decision.

NewLeaf had originally planned to begin flying last month, but suspended operations in January after just a week pending the CTA’s decision. In that week, it said it sold more than 4,000 tickets, which were subsequently refunded.

At its original launch, NewLeaf said it would offer “no frills” flights from Kelowna International Airport and John C. Munro Hamilton International Airport in Hamilton, Ont., to Abbotsford, B.C., Halifax, Regina, Saskatoon and Winnipeg. It advertised one-way fares from as low as $89, which included all fees and taxes. Extra charges would apply for snacks, drinks and checked baggage.

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Not everyone was happy with the decision. In a submission to the CTA, Air Canada (TSX:AC) cited the danger of the CTA taking a “hands-off” approach with flight resellers like NewLeaf.

“Air Canada believes that the person having commercial control and selling the air service should hold a licence and comply with the usual requirements with which ‘airlines’ are expected to comply,” it said in the letter.

Air passenger advocate Gabor Lukacs also criticized the ruling, which did not specifically address passengers’ rights when it comes to damaged baggage and cancelled flights.

NewLeaf said passengers sign an agreement with them, but ultimately, reimbursements for delays and damages will come from Flair Airlines.

“It’s a very, very awkward situation,” Lukacs said from Halifax. “I don’t think they (the CTA) even realize that they’re turning a blind eye or what kind of can of worms they are opening.”

Ontario’s travel regulator, the Travel Industry Council of Ontario, said it was also “concerned” that the CTA does not see the need for more regulations over indirect air service carriers.

“I’m always concerned when consumer protection is lessened in general but I understand the environment we operate under and that balance is always a fine balance,” said Richard Smart, TICO’s president and chief executive.