NewLeaf launch could start new chapter for Edmonton flyers

Canada's distinction as the only major air market without an ultra-low cost carrier ends Monday with the launch of NewLeaf. The company offers discounted prices to 11 Canadian destinations, including Edmonton. But some analysts say its chances for survival are slim.

A new flight option for travellers faces big hurdles as it takes to the skies

NewLeaf launched its inaugural flight in Canada on Monday, after a rocky business start. (NewLeaf)

A new Canadian air carrier will make its inaugural flight from Edmonton this week, when a Boeing 737-400 with enough room for 156 passengers takes off for Hamilton on Friday.

The starting cost for a one-way ticket if you book today? $379.

The flight is offered by NewLeaf Travel, an ultra-low cost carrier that is launching flights to 11 Canadian cities, starting on Monday. The Friday flight to Hamilton is the first NewLeaf flight scheduled for the Edmonton International Airport.

In comparison, the same flight is offered by WestJet for $150 more, while Air Canada doesn't offer the option.

Winnipeg-based NewLeaf could end Canada's distinction as the world's only major air market without an ultra-low cost carrier, if it manages to survive. Other startups such Canada 3000, Jetsgo, and Greyhound Air have tanked — sometimes after incredibly short runs — in the last 20 years.

Part of the NewLeaf strategy is to offer no frills — expect to pay for everything from carry-on baggage to water bottles — but it has also targeted airports with lower landing fees, including Edmonton, Kelowna, Saskatoon, and Regina.

I put the odds of success at no more 10 per cent. In the last 25 years, we've had 20 airlines launched and only two are still with us.- Marvin Ryder, McMaster University

"We do have very competitive landing fees, but that's part of what we do on purpose in order to attract new airlines," said Heather Hamilton, director of public affairs for EIA.

The airport sees much of its future revenues coming not just from airlines and their landing fees, but from other services such as retail leases and parking as it develops an "aerotropolis" around the airport. The strategy ensures that landing fees remain low.

While NewLeaf is a tiny outfit compared to some of the airline giants that have recently started flying out of EIA such as KLM and American Airlines, it could still contribute significantly to the roster of flights at the airport.

"The short-haul flights feed the long-haul flights," Hamilton said. "We take a Q400 from Grande Prairie with 75 people and another from Saskatoon — between them you have enough to fill a bigger flight from Iceland Air that is a 767 that needs maybe 300 people to be profitable."

A tough market for new airlines

Whether NewLeaf will be a profitable operation is yet to be seen.

"I put the odds of success at no more 10 per cent. In the last 25 years, we've had 20 airlines launched and only two are still with us, Porter and WestJet," Marvin Ryder, a business professor at McMaster University, told Edmonton AM on Monday morning.

There are three factors that could determine NewLeaf's success, Ryder said: The company can't have any safety infractions in its first week, it must be reliable, and it must prove to customers that it is worth it.

"The hardest question is the question of value," he said. "If I got a flight for $79, do I feel good about this? Social media will tell us instantly," Ryder said.

"In the case of failed airlines in the past, people got off and said, 'I'm never flying with these guys again.' If we hear that this week, that's not good news for NewLeaf."

Turbulent takeoff before hitting the skies

By all accounts, NewLeaf's launch on Monday came after a rocky start. 

The company's original launch date in January 2016 was delayed amid a Canadian Transportation Agency review of the operating licences for indirect air service carriers, like NewLeaf. It leases its airplanes from a Kelowna-based charter company, which means NewLeaf doesn't actually classify as an airline.

The move cut costs for the carrier so it didn't have to invest millions in airplanes, Ryder said. This is an especially important factor in the Canadian market, which restricts foreign investment in airlines, therefore limiting the funding options for start-ups.

The CTA signed off on NewLeaf's business model in March.

Then, last week, an airline consumer advocate challenged the CTA's decision, and filed an injunction in the Federal Court of Appeal, demanding that NewLeaf post a performance bond.

Still, NewLeaf took the skies on Monday morning with an inaugural flight from Hamilton to Winnipeg.