Canada's ULCCs need a clear path to launch if they are to establish market place credibility

The beginning of 2016 held much promise for aspiring ULCCs in Canada as NewLeaf Travel unveiled its routes for a Feb-2016 debut. But the company postponed its launch while Canadian regulators review certain licensing procedures. The ULCC movement in Canada began with much fanfare in late 2013, but then quietened down until a third new entrant - Enerjet- outlined its plans to adopt the model in Canada, in mid-2015.

After NewLeaf delayed its debut, the first company to emerge as a ULCC contender in Canada, Jetlines, firmed a deal to engage in a second reverse takeover with a company listed on the Toronto Stock Exchange. The proposed transaction is designed to raise the necessary funds for launch. Jetlines' first attempt at a similar transaction resulted in litigation that was later settled out of court.

All the fits and starts among the pool of upstart Canadian ULCCs are creating some scepticism about their tenure in the country's duopolistic airline industry, and they will need customer confidence. In parallel, the current Canadian economic environment may not prove to be the most fertile ground for new entrant airlines.