Ultra low-cost carrier turns new leaf

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This article was published 15/01/2018 (2292 days ago), so information in it may no longer be current.

NewLeaf Travel Company — the ultra low-cost carrier (ULCC) that began life in Winnipeg in 2016 — is under new management that is determined to see the airline soar to new heights.

On Tuesday, it was announced that Vancouver businessman Jerry Presely, the owner of a Vancouver manufacturing company called Manterra Technologies Inc., acquired a controlling interest in the Kelowna-based airline that changed its name to Flair Airlines in June after Flair bought NewLeaf’s assets. Jim Scott, the former CEO of potential rival Canada Jetlines, will run the airline.

No details of the deal were disclosed, but Scott said one of the conditions was that Flair would get an immediate injection of $10 million in working capital.

Scott, a former pilot, said, “It needs a turnaround. Staff needs to know where they are. We are really going to focus on customer service, especially now that we know 70 per cent of our passengers are millennials and how that works as compared to customer service for baby boomers.”

NewLeaf/Flair has faced plenty of turbulence in its brief history. Its initial launch was delayed for several months, following a dispute over whether or not it needed a licence. NewLeaf argued it was a marketing agency for Flair that was operating the planes and had its own operating licence with the Canadian Transportation Agency.

Then early last year, it was caught in a high-profile dispute with the Consumers’ Association of Canada over the way passengers, who had bought tickets on routes that were subsequently cancelled, were treated.

But Scott said he flew on Flair and did his due diligence and is bullish on being able to turn the airline around.

“The issues have been identified and I think it will be easy to do,” he said in a telephone interview from Toronto on Tuesday morning.

“We are going to have to bring costs down by 20 per cent by the summer. That is our biggest thing.”

Julie Rempel, the Winnipeg-based communications manager for the airline, said there are also plans for a significant emphasis on marketing.

“We definitely have some work ahead of us on the branding and market positioning,” she said. “That alone will start to drive traffic.”

Flair Airlines currently flies from seven Canadian cities: Toronto, Hamilton, Winnipeg, Edmonton, Abbotsford, Kelowna and Vancouver.

It has plans to soon announce an expansion of its fleet and route network.

The airline faces the prospect of competition, with the launch of WestJet’s discount Swoop airline next summer and Canada Jetlines.

Flair operates seven aircraft and plans to add two Boeing 737-800 aircraft later in 2018. Four more planes are slated to be added to the fleet in 2019 to accommodate nearly 1.5 million passengers.

When NewLeaf took its first flight in the summer of 2016, it was based in Winnipeg with the idea that it would use Winnipeg as its flight operations hub.

The hub has not materialized, but the company still has seven staff in Winnipeg.

The trick in the ULCC business is keeping cost per available seat mile (CASM) down.

Mark Morabito, executive chairman of Canada Jetlines, said he wishes Scott well at Flair, but does not believe the airline has been able to successfully operate as a ULCC.

Among his criticisms are: he believes it is a mistake for Flair to offer unprofitable $39 flights (which it is doing on its Vancouver to Kelowna route) and a Canadian airline can’t survive in the winters without offering sun destinations.

Canada Jetlines has been in the market trying to raise money for almost two years, but Morabito said he will be able to announce its financing before the end of this quarter.

Scott said additional funding is in place for future expansion at Flair, including bringing on two new planes in the next six months.

He said that will mean additional destinations will be added. He said consolidating operations in one yet-to-be-determined location is also another early task.

The airline has always had a close relationship with the Winnipeg James Armstrong Richardson International Airport. Tyler MacAfee, airport spokesman, said the news of the revamped corporate structure is good news for the travelling public.

“It is good news in that it is a signal there is a strong ownership group behind the airline,” he said.

“From our perspective, that they are going to add aircraft and are looking to expand and increase its presence in the market, it means more options for travellers and that is only good news.”

— with files from The Canadian Press

martin.cash@freepress.mb.ca