The Big Bad Wolf (Air Canada) Blows Down the Little Piggie's (Porter's) House

Filed in archive Aviation News on March 30, 2010

Earlier today, Canadian national airline Air Canada announced it would launch a legal challenge for the rights to operate flights out of Toronto's City Center Airport (YTZ). The airport is the home base for Porter Airlines, a young carrier that caters mainly to business travelers. The airline, which started operations in 2006, had slowly been bleeding passengers away from Air Canda's much larger operation at Toronto Pearson International (which is about 10 times bigger than YTZ, but much further away). Air Canada's regional subsidiary, Air Canada Jazz, was kicked out from YTZ in 2006, after Porter bought the passenger terminal there and cancelled Jazz's lease.





Porter's business model is based on flying business passengers in Dash 8- Q400 configured with 70 seats. I have never personally flown them, but have heard that their onboard product is quite good. They offer complimentary snacks and alcohol beverages, and there are no fuel surcharges or baggage fees added on to the ticket price. The frequent flyer program could use some work, but is relatively simple; flights earn points, and points can be redeemed as flights.

Now Air Canada claims that the Toronto Port Authority (which doesn't operate Pearson ), improperly awarded slots at YTZ solely to Porter Airlines, giving them an unfair monopoly over what they call "the Island Business Corridor." First off all, there is no such thing as the island business corridor, because the majority of travelers from Toronto's downtown still use Pearson. Secondly, the issue is not that they don't hold slots at YTZ, it's that they were evicted from the only passenger terminal at YTZ, and not given a chance to operate from the airport. The Toronto Port Authority, or TPA said that there were still anywhere from 42-92 additional slots left at the airport. And based on their previous relationship, one would expect those slots to go to Porter. But even if Air Canada did get the slots, they would have nowhere to operate from, as Porter's newly built terminal is the only one around.

Air Canada has put in a plan proposing 15 daily roundtrips to Ottawa and Montreal, with 7 more to Newark. All flights would compete directly with service offered by Porter. My issue is not necessarily that Air Canada wants to operate from YTZ, but rather a fear that once they force Porter out of business, they will leave the airport high and dry with no service...

Why would Porter go down?? Well, Air Canada has the largest frequent flyer base in Toronto, and many downtown- based residents would most likely jump at the chance to earn Aeroplan miles, decimating Porter before it can even get on its feet. And Porter would suffer from the added competition on routes, as flights to places such as Chicago are already precarious. Said flight to Chicago gets only an 18% loadfactor, but comes within a few dollars of profitability due to the high yields on the route. And with Air Canada on the prowl, routes such as those would fall off, plunging the carrier into debt. And once Porter dies, that would leave Air Canada free to jack up fares sky-high, or leave YTZ all together.

The reason I think that Air Canada should be denied is; despite the legal question, the court should also consider what's best for the consumer. And what's best for the consumer is having Porter provide immunized competition to Air Canada. The loss of Porter would once again turn Toronto into a monopoly. And the Porter fellows have history on their side, as Air Canada put City Express out of business when they tried to run a Porter-like airline. Unfortunately though, I believe that the courts will act to protect Air Canada, rather than the consumer; as evidenced by the Emirates in Canada saga.

Of course the airport itself could be shut down by these guys. Already the airport has a curfew of 9pm, and they want more???

This image shows the relative sizes of YVZ and YTZ.





And this image shows the locations of YVZ and YTZ on a map relative to Toronto.





images credit of (aircanada.com, flyporter.com, and Google Maps)