Discount travel operator NewLeaf clears regulatory runway for flight sales

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Discount air carrier NewLeaf Travel will start 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.”

NewLeaf had originally planned to begin flying last month, but suspended operations in January after just a week, pending a decision by the Canadian Transportation Agency.

Late Tuesday, the regulator ruled that indirect air service carriers like Winnipeg-based NewLeaf do not need 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.

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.

A spokesman said the decision will require resellers like NewLeaf to “clearly disclose” which licenced carrier is operating the flight, adding that the CTA will be monitoring to ensure that carriers comply with consumer protection requirements.

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.

It said it sold more than 4,000 tickets in one week, all of which were subsequently refunded due to the suspension.

But not everyone was happy with the situation.

In a submission to the CTA prior to the decision, 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.

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.