Home / Low-cost upstart NewLeaf Travel Company can fly without licence for now: regulator
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Low-cost upstart NewLeaf Travel Company can fly without licence for now: regulator

Dean Dacko, Chief Commercial Officer of NewLeaf Travel speaks at a press conference in the arrivals area of the John C. Munro Hamilton International Airport, on Wednesday, Jan. 6, 2016. NewLeaf is within legal bounds in operating without a domestic service license, regulators confirm.

NewLeaf Travel Company, the first of a new wave of ultra-low-cost airlines, which launched last week, is within legal bounds in operating without a domestic service license, regulators confirm. And the company maintains that it is not taking any chances by not having one — although, the government agency that oversees the airline industry may decide the company will need one after the conclusion of a regulatory review.

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Citing “rapidly evolving” business models in the airline space, the Canadian Transportation Agency (CTA) is consulting with the public to determine what changes need to be made, if any, to the criteria used to evaluate licence requirements.

Specifically, the agency is focusing on companies like NewLeaf that “bulk purchase all seats on planes and then resell those seats to the public, but do not operate any aircraft.” NewLeaf sells tickets, but its flights, which begin in February, will be run initially by private charter company Flair Airlines Ltd., which provides aircraft, crew and the plane’s maintenance and insurance — known as a “wet lease.”

While the review is underway, the CTA said it would not require NewLeaf to obtain a licence. Under current rules, an “indirect air service provider” like NewLeaf, which contracts out the full operation of the aircraft, does not need a licence.

“I’ve never understood that to be in contravention of CTA’s regulation,” said airline industry consultant Robert Kokonis of the wet lease arrangement. “I think that it’s ludicrous that (NewLeaf) would be required to hold a licence.”

In an interview from Winnipeg, NewLeaf president and CEO Jim Young said a wet lease is ideal for a startup like his. “It’s the easiest way to apportion costs. If you did anything more complicated, it’s difficult to understand what it’s costing me to fly the airplane from A to B.”

Young said NewLeaf would apply for a licence if the CTA determines that it needs one.

There is no firm timeline for the CTA to make a decision. The agency said it depends on what kind of feedback it gets from the consultation, which ends on January 22, and the volume of responses.

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