Canada’s incumbent airlines have little to fear from a new, ultra-cheap competitor that will begin flying next month, according to an analysis by National Bank.
NewLeaf Travel Company Inc. on Wednesday opened its website for bookings, with its first flight planned for February 12.
To keep prices low, the airline’s fares include only the cost of a seat. Everything else, including carry-on bags, will cost extra. For now, NewLeaf will focus on serving secondary airports such as Abbotsford, B.C., and Hamilton, Ont., but it plans to launch service to some sun destinations later this year.
National Bank analyst Cameron Doerksen said NewLeaf’s initial fares are “much cheaper” than those offered by Air Canada and WestJet Airlines Ltd., but the big guys probably aren’t quaking in their boots.
“Other than Porter Airlines, which started with the advantage of having a monopoly position at an attractive airport (in downtown Toronto) and a niche business model, there have been very few successful new startups in Canada,” Doerksen said in a note to clients. “NewLeaf will have two large, financially strong competitors with huge networks to contend with.”
Although Air Canada and WestJet will probably respond with aggressive fare discounts, NewLeaf’s initial capacity — five Boeing 737-400s — is so small that it will be “immaterial” to the incumbents, Doerksen said.