NewLeaf puts bookings on hold, issues refunds

Less than two weeks after launching as Canada’s newest ultra-low cost carrier, NewLeaf Travel Company said that it will be postponing sales of airline tickets pending a Canadian Transportation Agency (CTA) review of licensing regulations for Indirect Air Service Providers.

NewLeaf will also refund all credit card transactions for reservations that were scheduled to begin on Feb. 12. According to NewLeaf CEO Jim Young, thousands of bookings have been made since sales began on Jan. 6 to seven Canadian cities, adding that NewLeaf plans to resume taking reservations in the spring.

While NewLeaf previously contended that it was covered under the CTA operating licence held by Flair Airlines (on which NewLeaf flights are booked), Young cited “ambiguity” regarding the licence requirements pending the CTA review. NewLeaf was exempted from holding a licence while the review was taking place.

“During this uncertain time, we didn’t want to put anyone with existing bookings at risk, and we wanted to give customers time to make other travel arrangements,” Young said. “The reason why we launched on January 6 is because it was confirmed that we were in full compliance of CTA licensing regulations…The CTA gave us an exemption from holding a licence directly while it reviews its legislation…. 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 IASP.”

During a press conference at NewLeaf’s Winnipeg headquarters yesterday, Young told media that he isn’t concerned that the postponement will negatively affect the company’s reputation when it begins selling flights again. He explained that the move to delay and refund airfare was a precautionary measure related to the lack of clarity on the licence issue and not indicative of other problems, adding that he’s "not concerned" about the outcome of the CTA review.

“As far as our reputation is concerned, I hope our customers see that we’re being very upfront and honest with them,” Young said. “We’re building a business for the long haul.”

The CTA is reviewing whether persons who do not operate any aircraft, but market and sell air services to the public, should be required to hold Agency licences. The review applies to all persons operating in this manner. As part of its review, the Agency is consulting with, and seeking comments from, stakeholders before finalizing its approach. The consultations end this Friday (Jan. 22).

Passenger rights advocate Gabor Lukacs, who raised the issue of the CTA’s licence requirements for NewLeaf shortly after the company's launch, told PAX that he applauded the announcement.

“It would be the same as if I borrowed my neighbour’s car and I used his licence,” Lukacs said of NewLeaf's proposed arrangement with Flair. “It’s not about who operates the flights but who’s really running the show.”

“More airlines in Canada are a blessing but we need rules to ensure a level playing field – there were different conditions posted on NewLeaf’s website from those on Flair’s. It leaves passengers in limbo and requirements are needed to protect them.”