Looking for a new LCC in Canada? NewLeaf aims to fill that role, announcing new service starting just five weeks hence. The “airline” will launch at seven airports with fares of $89-149, plus fees for just about everything. Taxes and passenger facility charges are high in Canada meaning that these fares actually are very cheap by local standards, but they are a far cry from the LCC numbers seen in Asia, Europe or even US markets. And that’s just one of the factors the company will battle as it seeks to gain a toe hold in the market.
NewLeaf is only slightly an airline. It will be leasing planes, crew, maintenance and other operations from Flair Air rather than setting up its own shop. This is similar to what PEOPLExpress did in the US market just a couple years ago to relatively disastrous results. That means it is quicker to get flying – launching service 5 weeks after announcing is spectacularly fast – and comes with fewer liabilities. But not having control over the fleet and operations is a significant risk as well.
The company is also choosing to operate out of smaller airports. This means lower landing fees and even potentially airport subsidy money to commence service. But is also means smaller catchment populations and reduced convenience for travelers in many cases. Allegiant has made a business of such in the US but mostly by feeding in to specific leisure destinations (e.g. Las Vegas & Orlando) rather than carrying passengers amongst the smaller cities. Flights operate once or twice weekly on the routes meaning the appeal is strictly a leisure market play. And while low fares do induce more travel it is unclear that these rates will be low enough to make that happen.
Fleet utilization is relatively low and the company doesn’t fly at all on Tuesdays. A typical round trip fare will see $60 or more eaten up by airport fees and then a bit more on taxes; on a max $300 fare that’s a huge chunk to sacrifice, even with a $25 carry-on bag fee looming over passengers. On the plus side, the company potentially will benefit from lower fuel costs right now, though it is unclear how much of that savings the aircraft operator will be passing through.
So, yeah, this is a fun story. There are great lines to be flown and a chance for some interesting experiences. But with old planes, unclear demand and not-so-cheap fares I’m not betting on this one lasting too long.
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