Canadian upstart NewLeaf was hoping to launch service between seven secondary Canadian airports in February, just weeks after putting tickets on sale. That plan has come to an abrupt halt, with the company blaming regulators and “ambiguous” licensing conditions. The Canadian Transportation Agency (CTA) denies it is at fault, suggesting that the review it is conducting of the company’s license has been ongoing for months and that it would allow NewLeaf to operate while the study continues. Despite having sold “thousands of tickets” the company is refunding the purchases while awaiting a final ruling rather than proceeding under the temporary allowance.
But, recent questions about licensing and regulation for Indirect Air Service Providers, like NewLeaf, have caused confusion and ambiguity in the market, which amplifies the need for a clear articulation of the regulations from the Canadian government.
The company talks in its release of not wanting “to put anyone with existing bookings at risk, and we wanted to give customers time to make other travel arrangements” but without explanation of how today’s risk profile differs from that two weeks ago when seats initially were offered.
When the service was first launched I questioned the charter operator relationship and the risks it presented but this was not an aspect I considered. Announcing service without securing the regulatory authority first was a bold, and likely foolish, move. Especially given that last time a company tried this on a similar scale it was rejected by Transport Canada. Oops. And given that CTA hasn’t changed its position, at least publicly, it is unclear why this need to suspend sales and refund purchases came so urgently.
Also, even with the limited schedule and flight frequencies the thousands of seats sold likely does not represent a significant load factor for the company. It would not surprise me if this contributed to the decision to delay service.
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Air Canada is very well connected politically. Bet you dollars to doughnuts that Mr. Garneau asked his bureaucrats to ‘review’ the application.
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