Ultra-low-cost travel firm NewLeaf preps for summer takeoff

Canada’s travel industry is getting ready to turn over a NewLeaf.

Stalled by regulatory issues in January, NewLeaf Travel Company is putting the finishing touches on some behind-the-scenes work and will be flying people across the country this summer.

Jim Young, president of the Winnipeg-based ultra-low-cost firm, said his team is testing a new credit card processing system.

"I have the guys working overtime to get things ready. We’re planning to be up and running in the summer with the same low fares and same great destinations," he said.

An announcement of NewLeaf’s official start is expected within the next two weeks.

NewLeaf made a big splash last June when it announced its pending arrival on the Canadian market with seven destination cities — Winnipeg, Halifax, Regina, Saskatoon, Kelowna, Abbotsford and Hamilton.

In January, the Canadian Transportation Agency (CTA) announced a review of licensing regulations for indirect air service providers. NewLeaf, which had partnered with Kelowna-based Flair Airlines to provide the aircraft and crews, immediately suspended sales and refunded money to customers.

The CTA completed its review by the end of March and determined NewLeaf was not required to hold an air licence.

The regulatory environment for air travel is understandably strict, and because NewLeaf is technically a reseller of travel services, Young said the company has to be careful it doesn’t portray itself as an airline on its website or in any promotional material.

"We want to make sure we’re launching a really good service, one that everybody will be proud of," he said.

The on-the-ground turbulence isn’t over, however. The Federal Court of Appeal agreed this week to hear out Gábor Lukács, a Halifax-based air-passenger advocate, who contested the CTA decision. He will be filing a notice of appeal with the goal of having the case go to a hearing.

"I’m very pleased about this. This is a difficult case where the court has to check whether the government isn’t overreaching its powers," he said.

Young said he didn’t want to comment publicly on something before the courts, but he will be working in conjunction with the CTA on the matter.

The court did not say whether NewLeaf would have to put off its relaunch until the hearing.

But Robert Kokonis, president at aerospace consultancy AirTrav Inc., suspects NewLeaf may be trying to beef up investment before they launch again.

"The airline business is a cash-intensive business," he said.

Kokonis said there is demand for discount carriers in Canada where base fares are low, but any add-ons, from luggage to seat selection, are considered extras and come with accompanying fees.

"(Canada) is the only major aviation market in the world that doesn’t have an ultra-low cost carrier," he said, noting a number of factors stand in the way.

"We have a very high cost structure, fees, charges and taxes that scares away ultra-low-cost carriers. The successful ultra-low-cost carriers of the world in the U.S., in continental Europe and Asia, thrive on a very dense geographic area to offer flights. ... Canada is very dispersed with not a huge population."

— with files from The Canadian Press