NewLeaf re-launches, hopes to break legacy of ultra low cost airline failure

NewLeaf Travel, Canada’s latest entrant into the discount airfare seller market is back to wooing travellers with their $79 one-way base-level flights, after a turbulent few months.

“We’ve worked long and hard to get to this point and it looks like the Canadian public was patiently waiting for us,” NewLeaf CEO and president Jim Young told Yahoo Canada Finance. “We’re selling tickets as we speak, in fact the demand is above expectations as of this moment and we’re only about two hours into it.”

The Winnipeg-based company, which sells flights operated by partner Flair Airlines to Halifax, Moncton, Hamilton, Winnipeg, Regina, Saskatoon, Edmonton, Kelowna, Kamloops, Fort St. John, Abbotsford and Victoria, is planning to be sky-bound on July 25.

NewLeaf hit its first snag in January this year when it started selling flights scheduled for mid-February. About ten days later, passenger rights advocate Gabor Lukacs expressed some concerns over whether or not NewLeaf needed a license to operate flights. The Canadian Transportation Agency had yet to rule on whether or not NewLeaf – which was considered an “indirect air service provider” at the time needed a license.

“This entire controversy was creating a lot of fear, uncertainty and doubt in the marketplace and we did not want to leave our customers in any kind of ambiguous situation,” says Young. So the company suspended sales and refunded customers.

By the end of March, the CTA decided NewLeaf was a travel company and didn’t need a license given that Flair was the licensed airline.

This week, NewLeaf re-entered the market as a travel company, a new spin on the ultra low cost carrier model that has a well-documented history of failure in Canada. In principal, past and now-defunct players like JetsGo, Zoom Airways and Roots Air have all used similar strategies to snatch market share away from dominant players Air Canada and WestJet by offering no frills service – a seat and a seatbelt – with travellers paying for add-ons like luggage and meals.

But NewLeaf is hoping to break what Young calls an airline “duopoly” by flying out of airports outside of big international centres where rent and fees are a less expensive and driving more competitive pricing in the airfare marketplace.

“You’ve got absolute price coordination, you’ve got absolute schedule coordination – you need a third player in the marketplace to bring competition, meaningful competition,” he says. “We’ve given a lot of thought to our business plan and we believe there’s room in the market for someone like us.”

When pressed about the legacy of failure, Young says he’s not too concerned.

“I have no fear of failure, this is a model that’s well-tested in the marketplace,” says Young. “We’re the only G20 country without an ultra low cost airline or airline model.”