Flair Airlines purchase of NewLeaf could lead to cheaper flights, better service for Canadian travellers

Flair Airlines has bought deep discount flight seller NewLeaf Travel Company in a move one analyst says will lead to greater competition and lower airfares for Canadian travellers, at least initially.

"I think it's a great move, particularly for the travelling public," said Ken Beleshko, of Avacon Aviation and Aerospace consulting.

Kelowna, B.C.-based Flair said in a release Wednesday that it has boughtNewLeaf Travel Company's assets, including its "marketing, selling and distribution engine." The purchase means Flair Air immediately moves from a charter company to a full-fledged, scheduled airline with its own reservation department, airport passenger services facilities, and full control over the operations side of the business.

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Both Flair and NewLeaf have been linked since NewLeaflaunched last summer, offering flights for as little as $59 one way between Canadian cities such asAbbotsford, Halifax, Edmonton, Hamilton and Winnipeg.

The company has completed more than 2,200 such flights and moved more than a quarter of a million passengers in the process.

Although it marketed itself as an airline, NewLeaf was just a ticket seller, while Flair Airlines owned the planes and operated the flights.

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"Expansion is planned for new destinations beginning this year, plus the fall and winter domestic schedule will be released shortly," Flair said in a release.

It also said the acquisition of NewLeaf establishes it "as Canada's third national airline, providing service coast to coast."

That may be overreaching a bit considering Flair has just five Boeing 737-400s, all with relatively limited range.

The company has also been at the centre of controversy recently as one of the operators involved in "The Mexican Game".

A CBC News investigation discovered Air Transat directed Flair and Flair agreed to mislead aviation authorities and passengers about unscheduled stops on flights from Mexico. Flair was operating those flights on behalf of Air Transat, but its aircraft could not make it all the way back to Canada in some cases without stopping to refuel.

Passengers on those flights also complained about Flair's aircraft, saying the planes which range in age from 24 to 27 years old were dirty, had rickety seats, lacked modern amenities such as seat-back entertainment, and even the toilets malfunctioned.

'Third national airline or not, the mere presence of Flair Air as a full-fledged airline will mean more available flights and lower prices, according to Beleshko.

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"If they're going to make this a successful venture, they're going to have to offer frequent service between major city pairings such as Vancouver-Toronto, Edmonton-Calgary, Montreal-Toronto and so forth to tap into that lucrative market."

Beleshko also expects Flair to attempt to compete with both WestJet and Air Canada on regional short-haul service between cities like Winnipeg and Saskatoon.

That will prompt both WestJet and Air Canada to lower their prices and offer more flights and more amenities, he says.

"You can rest assured that the two major airline carriers, Air Canada and Westjet, are going to be very protective of their market share and they will go head to head with Flair or any other deep discount carrier that wants to enter the market."

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Canada's aviation history is littered with airlines that either went out of business or failed to get off the ground. Flair's owners actually tried this once before with Greyhound Air.

"And it was a short-lived proposition because they weren't getting the ridership and it was a losing proposition financially." said Beleshko, adding Flair/NewLeaf will face many of the same challenges.

"I would suggest that unless they [Flair] have very deep pockets and investors that are willing and have staying power. It's going to be a tough haul."