NewLeaf Travel Company, the new Canadian discount airline that launched Jan. 6, has had to postpone its plans to begin operations in February and will refund any reservations while its licensing is reviewed.
In a release today, the new air service said its position was “ambiguous,” while the Canadian Transportation Agency reviews licensing of indirect air service carriers.
NewLeaf had a charter arrangement with Kelowna, B.C.-based Flair Airlines Ltd., with Flair holding the CTA operating license, while NewLeaf sold the seats.
The transportation agency is reviewing whether persons who do not operate any aircraft, but market and sell air services to the public, should be required to hold a license directly.
“Now, there is ambiguity in the air as to whether we need to amend the relationship with our air service provider, or whether we need to have a license ourselves. While Canada has many other indirect air service providers, NewLeaf is in a unique position as we are the first large-scale [indirect provider],” said NewLeaf CEO Jim Young. “We welcome a regulatory system in which businesses like ours can thrive in Canada as they do in other countries.”
He said the airline aims to resume taking reservations in the spring, but would refund all credit card charges so customers could make alternative travel arrangements.
Young said the fledgling airline was seeing huge demand. It was offering flights to seven Canadian cities, starting Feb. 12:
- Abbotsford, B.C.
- Kelowna, B.C.
The Canadian Transportation Authority, which describes itself as an “independent, quasi-judicial tribunal and economic regulator,” had previously given an all-clear to NewLeaf’s proposed business model before the airline had a splashy launch and started taking reservations in January.
But it has never before agreed to allow a carrier to operate under an indirect license held by another party. That provoked complaints from competing airlines and from consumer advocates.
Jack Branswell, a spokesman for the Canadian Transportation Agency, said it would be acceptable for Flair to set air carrier rates and offer seats for sale as it is “the licensed carrier in this situation.”
It is calling for comments on a review that could set new terms for NewLeaf.
“As business models in the airline industry are rapidly evolving, the agency is currently reviewing whether companies who bulk purchase all seats on planes and then resell those seats to the public, but do not operate any aircraft, such as NewLeaf, should be required to hold a license,” Branswell said.
Jetlines and Jet Naked, two other discount carriers hoping to launch in Canada, are both in the process of applying for a carrier license, something that requires a lot of up-front capital. CBC