NewLeaf Travel suspends ticket sales, issues refunds while licensing rules reviewed

In an abrupt about face, New Leaf Travel Co., which began sales of ultra-low-cost airfares on Jan. 6, is temporarily halting sales although it waits for that country’s airline regulator to complete its overview of licensing procedures.

In a statement late Monday afternoon, the Winnipeg-based upstart carrier with destinations to seven secondary Canadian cities on its route map, said hello would refund all bookings within 3 days. Its first scheduled flight was designed to take place on Feb. 12. NewLeaf said it planned to resume ticket sales between the spring.

“During this uncertain time, we didn’t wish to put a person with existing bookings at risk, and that we wanted to give customers time to make other routes,” said NewLeaf ceo Jim Young in a statement, saying that “thousands” of customers had already reserved seats.

Last week Young told the Financial Post that NewLeaf was complying with rules from the Canadian Transportation Agency (CTA), which is holding a public consultation until Friday on how it should evaluate licence requirements. The CTA also confirmed that NewLeaf wouldn’t require a domestic carrier licence, but that the situation might change following the review was complete.

NewLeaf hadn’t planned to function flights itself, but was outsourcing the flights via a “wet lease” arrangement to corporate-charter provider Flair Airlines Ltd.

“Now, there’s ambiguity in the air whether we have to amend the relationship with our air company, or whether we have to possess a licence ourselves,” said Young.

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The agency’s licensing review focuses on what it really classifies as “indirect air providers,” like NewLeaf. At the end of the consultation, the CTA said hello would adjust rules if needed for businesses that fit in this category, although it did not say when that would happen.

On Monday, a CTA spokesperson said, “Since the launch of its review process in the fall, the Agency has clearly explained that although the review of companies who bulk purchase all seats on planes and then resell those seats towards the public, for example NewLeaf, was ongoing, such companies would not be required to seek air licenses.”



While many purchasers will probably be disappointed that the opportunity for steeply discounted fares has been lost, a minimum of for the moment, one consumer advocate is pleased.

“This fully vindicates my position: the rule of law prevailed over the narrow and private interests from the owners of NewLeaf,” said Gabor Lukacs, head of the advocacy group Air Passenger Rights, who had publicly warned that NewLeaf’s insufficient a licence could leave passengers without recourse if they needed to make a cost claim against the carrier.

At a press scrum in Winnipeg, Young said he was confident that his decision won’t tarnish NewLeaf’s reputation.

“I hope our customers and individuals which are considering flying on us notice we’re actually attempting to be very upfront and honest and open together,” he explained, adding that no NewLeaf employees is going to be affected.

However, Raymond James analyst Ben Cherniavsky doubts NewLeaf will require reservations again. “NewLeaf appeared as if an extremely bad idea from the beginning. Now we’re pretty certain it will never leave the floor,” Cherniavsky wrote in a note.

Airline industry consultant Robert Kokonis sees NewLeaf’s move like a temporary setback and dismisses any concerns that consumers will be unwilling to book again with NewLeaf.

“I believe NewLeaf does the right thing by suspending (sales),” said Kokonis.

However, now that the issue of licensing requirements has come in to the public eye, Kokonis believes it needs to be escalated past the agency level into the hands of the authorities.