OTTAWA—A federal court has ruled that passengers who lose luggage or encounter cancelled flights while flying with NewLeaf Travel need to take it up with the flight operator Flair Airlines, not the discount ticket reseller.

In a decision on Dec. 15, the Federal Court of Appeal dismissed a motion by passenger advocate Gabor Lukacs, who had argued that consumers’ rights were unprotected because NewLeaf is permitted to operate without an air licence from the Canadian Transportation Agency.

But the three-judge panel disagreed, ruling that travellers are still protected because the flights are run by Kelowna, B.C.,-based Flair Airlines, which is licensed under the CTA.

Lukacs says the decision clarifies Flair’s responsibilities when it comes to reimbursements for delays and damages.

Last March, the CTA cleared the way for companies like Winnipeg-based NewLeaf to operate without a licence, as long as they do not portray themselves as the ones operating the flight or the aircraft.

NewLeaf, which took to the skies in July, resells “no frills” flights to smaller airports including Kelowna, B.C., Abbotsford, B.C., Edmonton, Calgary, Winnipeg, Hamilton, Moncton, N.B. and Halifax.

The company was pleased with the ruling, which affirmed the regulator’s original decision.

“We have been operating under the original tariff that existed right from Day 1. Nothing has changed” said Jim Young, NewLeaf president and CEO in an email.

A spokeswoman for the company confirmed that a defamation lawsuit launched by NewLeaf in a Manitoba court against Lukacs is still pending.

Note to readers: This is a corrected story. An earlier version incorrectly said NewLeaf offered flights to Saskatchewan.