NewLeaf Gets OK For Ultra-Low-Cost Service In Canada

by Michele McDonald March 30, 2016

NewLeaf Travel Co., which planned to introduce ultra-low-cost air service to Canada, got the go-ahead from the Canadian Transportation Agency to proceed with its launch without an air license.

The agency has been weighing the issue for more than two months, and finally determined that resellers—companies that purchase seats from an air carrier and resell them to the public—will not be required to hold an air license as long as they do not hold themselves out to the public as being an airline that is operating an air service.

NewLeaf had planned to launch service on Feb. 12 using the aircraft and crews of Flair Airlines, a 10-year-old Canadian charter carrier. But it ran into a snag when Gabor Lukacs, a self-styled “consumer advocate” who has targeted Canadian airlines, prompted the CTA’s probe by questioning the legality of the arrangement. NewLeaf, guessing that the CTA would still be deliberating by Feb. 12, postponed its launch and refunded all tickets.

In its decision todaty, the CTA determined that should NewLeaf proceed “in a manner consistent with its proposed business model,” it would be a reseller that is not operating an air service, and therefore would not be required to hold an air license.

But the company must rethink its marketing materials. The CTA noted that “during the brief period in January 2016 when NewLeaf actively promoted its services through its website, it included images of aircraft painted in its livery.”

NewLeaf has since removed the images from its site. The CTA said “the use of similar images in the future would suggest that NewLeaf would be holding itself out as an air carrier operating an air service.”

In a statement, NewLeaf said it will resume booking “in the very near future,” and thanked the “thousands of Canadians across the country” who signed a petition or wrote letters to the Transport Minister in support of NewLeaf.

NewLeaf’s chief executive officer is Jim Young, who headed distribution at Frontier and Continental airlines. He also was CEO of Canada Jetlines, another company vying to be the first in Canada to introduce ultra-low-cost carrier service. Young left Jetlines in 2014 because it was taking too long to get off the ground.

A third company, charter airline Enerjet, plans to launch a ULCC as soon as it is adequately capitalized. The project originally was dubbed Jet Naked, but Enerjet recently renamed it FlyToo.