Discount travel company NewLeaf not paying bills, say consultants owed $130K

A new discount travel company hoping to launch later this month is facing a new controversy. Two consultants say they're owed tens of thousands of dollars and one says NewLeaf's CEO is not returning her phone calls.
Dean Dacko says Canadians have overwhelmingly supported the company, and he's seeing strong demand for tickets. (Peter Power/Canadian Press)

In yet another controversy for a company already beset by setbacks, discount travel operator NewLeaf is being accused of not paying its bills by two consultants who say they're owed tens of thousands of dollars.

"Jim Young [NewLeaf CEO] used to return all my phone calls and he used to respond to my emails, but over time he just went radio silent on me," said Hessie Jones, who says her firm ARCompany was contracted to do marketing and research for NewLeaf and had been with the company "from the ground up."

"We had done a lot of research for them on them, on their competitors, [we did] a full go-to-market plan on how they should integrate with specific technologies and reservation systems," Jones said.

She provided CBC News with documents including an invoice for $76,485.12, an outline of the work performed, and what she says is a copy of an email from NewLeaf acknowledging the work done and the invoice.  

She said she's actually out of pocket much more than she billed. 

"The hit is to me. I have paid for resources that worked on the business that came out of my pocket. It's fairly significant. I am running my business now at a loss. And I'm the only consultant left on the business because people that were resourced to be a part to actually work on the NewLeaf business had to be let go."

'A bad sign'

Critics suggest unpaid invoices could be "a bad sign" and may raise questions about NewLeaf's financial viability. 

"I am concerned that passengers will lose money," said Gabor Lukacs, the airline consumer advocate whose court challenge stalled NewLeaf's original takeoff. 

NewLeaf said the reason the invoices were not paid is due to a business dispute over services performed.  

"It's standard business activity that goes on I'm sure with every business in Canada and worldwide as you deal with a number of vendors and suppliers" said Dean Dacko, NewLeaf's chief commercial officer. "There's always discussions and negotiations.

"There was some question regarding what was quoted [versus] what was specifically provided. And those discussions need to be had just like every negotiation where there is a difference between say, an estimate and [an] actual and the givens that were provided."

Dacko vigorously disagrees this has anything to do with financial issues. 

"The thing that seems outrageous is that there's some sort of correlation between [the accusation of unpaid invoices] and the success of our business. Canadians from coast to coast have absolutely, overwhelmingly supported [NewLeaf] and purchased our tickets," Dacko said.

But another source who said he is owed more than $55,000 by NewLeaf for business management and business strategy consulting said NewLeaf never questioned his invoice.

"The response was basically we're waiting for the money to come in. As soon as the money comes in you'll be paid." says the source, who says he has emails to that effect from NewLeaf CEO Jim Young.

"I feel deceived."

"I never got notified they were disputing." says the source. 

"I honestly don't think they have the money."

Rocky start

This is the latest in a series of stumbling blocks for NewLeaf.

The company announced last year that it would offer tickets at rock bottom prices for flights between seven smaller Canadian airports such as Hamilton, Abbotsford, B.C., Halifax and Saskatoon. 

The first flights were set to take off Jan. 6, but that was delayed until February.  The company then cancelled its scheduled flights and refunded tickets, amid a Canadian Transportation Agency (CTA) review of the operating licences for indirect air service carriers such as NewLeaf.

NewLeaf Travel, the Winnipeg-based discount travel company that launched in January and then abruptly put its operations on hold, says it will start flying on July 25. 1:37

NewLeaf started referring to itself as a ticket reseller instead of an airline.

That got NewLeaf around CTA rules that would require the company to hold its own operating licence as an airline.

The Canadian Transportation Agency signed off on NewLeaf's business model in March, and last month the company said it was ready for takeoff with flights starting July 25 between 12 Canadian cities. 

This despite the fact the CTA decision to grant that permission could still be appealed in Federal Court of Appeal.

Meanwhile, Hessie Jones said she's consulted a lawyer.

"And he's told me we will probably proceed with legal action," she said. 

"But at the end of the day, I'm a small business, I can't necessarily afford to sue a big company like that. So I want to be able to settle this amicably if we can."

The other consultant said he has no qualms about taking legal action.

"If anything, they owe me more than what I've claimed. So I will take a stronger course of action if they keep going that way," he said. 

About the Author

Aaron Saltzman

Senior Reporter, Consumer Affairs

Aaron Saltzman is CBC's Senior Reporter for Consumer Affairs. Tips/Story ideas always welcome. aaron.saltzman@cbc.ca twitter.com/cbcsaltzman

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