MIAMI — NewLeaf Travel Company Inc., Canada’s only ultra low-cost carrier (ULCC), announced the release of its November to April schedule a few weeks ago. Before September 15, customers could only book air travel until the month of October. The Winnipeg-based carrier unveiled its domestic core schedule meaning that this is the base of a larger schedule that will be announced soon.

Route Map July 25 To October 2, 2016. (Credits: NewLeaf)
Route Map July 25 To October 2, 2016. (Credits: NewLeaf)

Airlines usually publish their schedule all at once, but NewLeaf is waiting a bit before it unveils more routes and frequencies. As of today, the airline flies to 11 destinations in Canada, mostly in the central and western part of the country.

Recent Cuts

The ULCC said it will temporary cease flights to four Canadian cities between November 1 and mid-December, just before the busy holiday season. Regina, Saskatoon, Victoria and Kamloops will disappear from the airline’s route network for this short period. “Six weeks into operations it was time to take a great look at our routes across Canada and what’s working and where we need to re-evaluate certain things,” said Julie Rempel, Director of Corporate Communications at NewLeaf Travel.

It is common for airlines, especially ULCCs to reevaluate their schedules when they see that with the current bookings, they will not be able to fill a plane. In Canada, the month of November is usually a low travel season compared to the United States, where Thanksgiving is one the busiest period of the year. Many low-cost carriers fly a seasonal schedule to adjust with passenger demand.

Fred Legace, Managing Director of Kamloops Airport said NewLeaf told him that the cuts are due to the lack of available aircraft. The airline does not own or operate a fleet of aircraft. Instead, it partners with Kelowna-based Flair Airlines which provide aircraft, crew and maintenance. Flair operates three Boeing 737-400s for NewLeaf. “They’re just short of airplanes at the moment,” said Legace. Not having enough aircraft resources is an issue for the air carrier.

Where Will NewLeaf Fly Next?

 At the same time the airline unveiled its November to April schedule, NewLeaf said it would release more destinations and more frequencies to its current schedule. It gave a hint that it would serve one or more sun destinations.

“By mid-December we’ll be flying everyday with tons of frequency within the network as well as some sun destinations that we’ll be offering Canadians which is really exciting,” said Rempel. Currently the ULCC does not fly on Tuesday and has a very limited schedule on Thursday. Most of the routes are operated from twice to five times a week. Now the question is from where and to where the airline plans to fly.

The Boeing 737-400 is limited to a range of about 2,500 mi (4,024 km). For flights to Mexico, the Caribbean and Florida, this restricts the number of departure cities across Canada. Abbotsford (YXX) and Edmonton (YEG) are too far for flights to the Caribbean and Florida. The only sun destinations they could fly to is the Pacific coast of Mexico to cities like Puerto Vallarta and San José del Cabo.

Going to the east, the cities of Winnipeg and Hamilton could be likely candidates as they are much closer to sun destinations. In Florida, the cities of Orlando and Fort Lauderdale are popular for tourists and low-cost airlines. In the Caribbean, Cuba and the Dominican Republic are very attractive for their beaches and warm weather. Let’s not forget Cancun, Mexico.

High Airport Fees Limits Growth to Major Airports

Canada is a difficult market to operate a low-cost airline due to a variety of reasons. High airport fees and security fees make Canada as one of the most expensive country in the world to fly. Due to these high costs, it is a challenge for airlines to offer cheap air fares, and at the same time be profitable. NewLeaf has been offering flights as low as $79 on shorter flights and $199 on longer transcontinental flights. The airline also relies on ancillary revenues, such as seat selection and baggage fees.

Higher fees are one of the reasons why no low-cost carrier in the United States has yet to crossed the border with flights to Canada. Wow Air is one of the only few ULCC that flies to Canada offering cheap prices to travelers.

Major Canadian airports like Toronto-Pearson have much higher fees than the average airport in the world. This is why NewLeaf likes to stick with smaller secondary airports in order to be able to sell discounted fares. With lower airport fees, NewLeaf could potentially fly to more congested airports and compete directly with WestJet and Air Canada while offering cheaper fares than its competitors. This is seen in the United States where Frontier and Spirit go up against the legacy carriers. 

Aircraft Fleet

As stated earlier in the story, NewLeaf only flies three aircraft operated by Flair. According to the airline, it will double its number of aircraft by winter. “Currently we operate three aircrafts. Three aircrafts in the market with us but by mid-December we’ll actually ramp up to six,” said Rempel.

Flair has three Boeing 737s dedicated exclusively to NewLeaf. It has two other 737s that it uses for charters. The math is simple. NewLeaf plans to source three aircraft in the next few months. The question is where will it find those three airframes? This summer, the ULCC has used Canadian North’s Boeing 737-300s as backups. Partnering with the

Calgary-based airline could be a good option if the aircraft are available.

Is NewLeaf Here to Stay?

The low-cost model has never been a great success in Canada. We can think of CanJet, Zoom Airlines, Canada 3000, and Jetsgo just to name a few. These airlines went out of business because they were unable to compete against Air Canada and WestJet.

To be successful, NewLeaf will have to stay away from the routes that are already established by its competitors. The airline will have to find routes to smaller cities where there is demand for travel. Only time will determine if NewLeaf is on the market to stay and be profitable.