Canada's newest low-cost airline has been temporarily grounded, pending a government review of aviation licensing regulations.

In a statement issued Monday, NewLeaf Travel said the company is temporarily postponing ticket sales, while the Canadian Transporation Agency reviews licensing for Indirect Air Services Providers.

The CTA defines this type of operation as one party having commercial control and the ability to make decisions on routes, scheduling, pricing and aircraft, while charter air carriers operate flights on their behalf.

NewLeaf has an arrangement with Kelowna-based Flair Airlines, in which NewLeaf controls the seat sales, while Flair holds the CTA operating licence.

"The reason why we launched on January 6 is because it was confirmed that we were in full compliance of CTA licensing regulations," Jim Young, CEO of NewLeaf, said in the statement.

"The CTA gave us an exemption from holding a licence directly while it reviews its legislation."

In a statement, Jack Branswell, a spokesman for the CTA, told CTV News that the agency had explained to companies like NewLeaf that they would not be required to seek licences as long as they met the following conditions:

  • They do not operate any aircraft
  • They charter the aircraft's entire capacity for the purpose of resale to the public
  • The air carrier holds the appropriate agency licence to operate the air service

Branswell said that NewLeaf's move to postpone ticket sales was a "corporate decision."

He added that the CTA is reviewing whether companies like NewLeaf that "bulk purchase all seats on planes," but "do not operate any aircraft," should be required to hold a licence.

NewLeaf says it will refund all credit card transactions for reservation that were scheduled to begin on Feb. 12.

"During this uncertain time, we didn't want to put anyone with existing bookings at risk, and we wanted to give customers time to make other travel arrangements," Young said.

NewLeaf planned to run non-stop trips from airports in Nova Scotia, Ontario, B.C., Saskatchewan and Manitoba.

It promised that flights would run customers between $89 and $149.

The company says it hopes to resume bookings in the spring.

"As soon as the review is complete, we will make any required amendments if necessary, and resume sales as soon as possible," said Young.

The CTA's public consultations are scheduled to wrap up on Friday.

Young says there's "ambiguity" in how NewLeaf should proceed, and whether they need to "amend the relationship" with air service providers, or get a licence themselves.

"While Canada has many other Indirect Air Service Providers, NewLeaf is in a unique position as we are the first large-scale IASP," said Young.

"We welcome a regulatory system in which businesses like ours can thrive in Canada as they do in other countries."