NewLeaf ’s cash woes in spotlight
Seat reseller’s financial problems centre stage as first flight takes off
HAMILTON, Ont. — After a fiveand-a-half month delay, NewLeaf Travel Co. Inc. launched its first flights Monday amid an ongoing court battle that still has the potential to foil the latest addition to Canada’s airspace.
The travel company held a ribbon-cutting ceremony at the Hamilton International Airport to inaugurate its first flight, which took off around 10 a.m. ET for Winnipeg despite a morning of severe thunderstorms. Chief commercial officer Dean Dacko said all but two seats on the 156-seat aircraft were sold and other routes this week are “well exceeding” sales expectations.
NewLeaf styles itself as an ultralow-cost option that will undercut Air Canada and WestJet Airlines Ltd. on price. The company is focusing on smaller airports such as Hamilton and Abbotsford, B.C., and will charge for extras like carry-on baggage to keep its base fares as cheap as possible. A sign at the check-in counter informed Hamilton passengers that carryon bags cost $40 while the first checked bag costs $35.
NewLeaf is not actually an airline but rather a reseller of seats. It has partnered with Flair Airlines, a B.C.-based charter service, to provide its aircraft and crews.
It’s that status as a reseller that has created many of NewLeaf’s woes. The Canadian Transportation Agency (CTA) ruled in March that it doesn’t have to hold an air licence, meaning that, unlike other startup airlines, it isn’t required to have 90 days worth of funding in its back pocket to protect passengers if it goes under.
NewLeaf originally planned to launch in February and has blamed the CTA’s review of its status for the five-and-a-half month delay. However, emails filed in court indicate that it actually suspended sales because of a lack of funding.
Gabor Lukacs, an air passenger rights advocate who devotes much of his time to battling with Canada’s airlines, has filed an appeal of the CTA’s decision with the Federal Court of Appeal, arguing that NewLeaf’s current status as a reseller could leave its passengers high and dry if it runs out of funds.
Last week, Lukacs took his challenge one step further and asked the court to shut down NewLeaf unless it can post a $3.74 million performance bond to compensate passengers in the event it folds, calling it a “shell company without significant assets.”
The court is reviewing Lukacs’s motion but has not yet made a decision.
“All I would like to achieve is that people are protected,” Lukacs said in an interview. “If there can be other arrangements I would agree to anything, even a lesser amount that has the same effect. I’m just trying to bend backwards to make sure that they can still fly but passengers are safe.”
NewLeaf will not release its financials, but Dacko said its “financial health is amazing.”
“(Passengers) should travel with confidence knowing that every aspect of their consideration, every aspect of their safety, every aspect of their financial investment is protected and that is 100 per cent assured,” Dacko said in an interview.
Despite the legal and financial uncertainties, Dacko said NewLeaf plans to “grow rapidly.” The company will launch its fall schedule next week and will roll out its winter schedule, including sun destinations in the United States, in early January.
NewLeaf is facing fierce price competition from the incumbents, including new competition from WestJet on its Hamilton-Edmonton and Winnipeg-Kelowna routes, but Dacko said he’s just happy to be lowering fares across the board.
“We said back in January that we were going to bring ultralow fares to Canadians because they deserve them and they’ve been looking for them for a very long time,” he said. “Lo and behold, we’ve done that. Others have joined the party and we’re thrilled about that.”