In the two weeks since discount airline NewLeaf had accepted bookings from new markets in Winnipeg, Regina and Hamilton the flood-gates had opened with bookings of people wanting to come to Kelowna.
Big White Ski Resort had confirmed 74 new bookings into its resort while NewLeaf overall booked thousands of flights into previously untapped markets.
But as of noon on Monday, the flow of bookings had been stemmed with an announcement from NewLeaf that they would be suspending reservations and offering refunds after an issue arose regarding the proper licensing for the airline.
“It’s been a bit of a nightmare to say the least,” said Michael J. Ballingall, Big White’s sales and marketing manager and the past president of the Thompson Okanagan Tourism Association. “We had huge call volumes. Last week we had one of our busiest call days in our history. This was changing the game for people in Regina, Hamilton, Winnipeg and people that live around those areas. You could fly non-stop and direct to Kelowna. It just proved there is room for a low-cost carrier in this market.”
The ripple effect of NewLeaf’s announcement of discount flights as low as $89 one way was also felt in prices on Canada’s two major airlines as both Westjet and Air Canada almost immediately moved to offer deals after the original NewLeaf announcement.
But less than a full two weeks after NewLeaf’s announcement, the company suspended bookings while the Canadian Transportation Agency—the federal body that regulates the airline industry—looks into whether a company that does not operate any aircraft, but market and sell air services to the public, should be required to hold CTA licences.
“The reason why we launched on January 6 is because it was confirmed that we were in full compliance of CTA licensing regulations,” said NewLeaf chief executive officer Jim Young. “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. We welcome a regulatory system in which businesses like ours can thrive in Canada as they do in other countries. As with any success that threatens to change the status quo, there are those that will resist that change and take any measures necessary to maintain the existing playing field, even if it is to the detriment of the vast majority and the benefit of the very few.”
NewLeaf’s business model had their company in charge of all marketing and sales and they would contract airplane service from Kelowna-based Flair Airlines, a company that operates five Boeing 737 airplanes as a charter business. In the NewLeaf model, Flair would use two its 737’s for NewLeaf with its pilots and flight attendants operating the flight portion of the service. Flair has held the proper licensing for its planes for more than 10 years but this is the first time it had an agreement with a company like NewLeaf.
“We think this is a good decision at this point in time,” said Chris Lapointe, Flair’s vice president of commercial operations. “The barriers to entry in the commercial travel business are huge. I think it was pragmatic of them to say ‘let’s get this in order now.’ It’s not good news but it’s by no means bad news. We would rather have them get their regulatory issues resolved and clean now rather than starting something and having to stop it partway down the road.”
Both Lapointe and Ballingall expect the service to at some point receive proper licensing and the previously announced discount flights to be available to the flying public. It’s just a matter of when and if the NewLeaf model will be one that emerges from a few different proposals that are currently out there.
“There are three or four different entities trying to get a third airline launched in Canada,” said Lapointe. “Finally someone announced it and that made people stand up and pay attention. You can be sure the regulator started receiving calls. I’m sure the competitors are asking questions. I think it’s going to be tough sledding. The competition is fat and happy and are making lots of money. Gasoline (prices) basically went in half and they didn’t reduce their pricing. Both Westjet and Air Canada do a great job, it’s just their pricing scheme.”
For Ballingall at Big White, the frustration of having to refund packages—about 40 per cent of the new bookings were cancelled while more than half of the people found alternate air fare to Kelowna—has been offset with the positives of opening up new markets of tourists who were able to come directly to Kelowna.
“All this has done is delay the inevitable,” said Ballingall. “There will be a low cost airline and places like Kelowna that have the infrastructure are going to benefit. At the end of the day when they re-launch and you can buy a ticket again the market is going to go again.”
The CTA is holding consultations with stakeholders until Jan. 22 before making a decision. Anyone wishing to express their opinion is encouraged to do so through the CTA’s consultation: https://www.otc-cta.gc.ca/eng/consultation/consultation-requirement-hold-a-licence