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 licence, while NewLeaf sold the seats.
NewLeaf planned to start service in February, but has postponed that plan and will refund tickets. (NewLeaf)
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 licence 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 licence 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.
- Halifax
- Hamilton
- Kelowna, B.C.
- Regina
- Saskatoon
- Winnipeg.
The federal tribunal that regulates air carriers had 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 licence 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 licence," 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 licence, something that requires a lot of up-front capital.
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