Porter To Get C Series

[IFG]

.... What is it about Porter that makes it so weak, so fragile, so tentative that it needs protection from direct head to head competition in Canada's largest aviation market? If anything, perhaps it illustrates the regulators understanding of just how weak Porter's business plan really is ....

Hello, 'bean - it may indeed so indicate, I know their minds no more than you do. OTOH, maybe the prior history at YTZ weighs a tad on their thinking, more than whatever history there is at YXX etc. Most likely, they are just trying to protect the continuing future of their little airport, more that Porter Airlines per se. I don't know, and like Kip, got no dog in this fight. However, your willful ignorance of the entire story, conflating a right to compete, with a demonstrated proclivity to prey ... over and over ... ad nauseum, spurred a response, but only because one of your adversaries in this discussion was ironically accused of doing what you yourself do much more often.

.... Yes, AC may want on the field, WJ may be playing the cards very close to the vest, perhaps WJ will see if Porter can swing the deal and then "merge" the two companies, or perhaps AC will try the same thing........I think most of us have been around long enough to understand that what is "spoken to the masses" with a straight face, is not what has, or is going to happen......

Hi again, Kip - I think the problem is not that AC wants on the field in any sense of serving the public, quite the contrary - AC likely would like to see YTZ (& Porter of course) disappear. I'd be shocked if either AC or WS has any notions of merger/acquisition of Porter (or its survival in any sense).

Have a great weekend, both of you - IFG

[MD2]

It is very amusing when people speak with such presumption and authority about buying Porter, as if Porter itself, a private company, has no say in the matter! Regardless, if Air Canada has money to "buy" things, maybe it should buy some of its own shares to boost some investor confidence and send a strong message about Air Canada and its business plans to consumers?

[Kip Powick]

It is very amusing when people speak with such presumption and authority about buying Porter, as if Porter itself, a private company, has no say in the matter! Regardless, if Air Canada has money to "buy" things, maybe it should buy some of its own shares to boost some investor confidence and send a strong message about Air Canada and its business plans to consumers?

Best to remember that "everything and anything " can be bought for a price.......just ask MAX...or KEVIN.

A lot of what happens behind closed doors during a large acquisition may never be known to the general public.......and so it goes.

[boestar]

Where were you when Porter issued an IPO and EVERYONE ran the other way. Proof positive that things were not good. I know that was a couple of years ago now but I have not seen any significant changes since then which would prove otherwise.

[Super 80]

Puleeeese..... can you move on ???...................reading the constant theme that you keep regurgitating tends to illuminate you as a person who is very bitter about an issue, which has run its course, and one where you stated that you seem to have garnered personal satisfaction..

If you want to negotiate a truce with regards to the discussion of the allocation of slots at YTZ, I would be all for that. But as long as Bean is running with his alternative history in which an oppressive government agency has its jackboot on the neck of a scrappy upstart national airline... I think myself and MD2 can speak to that.

[props2you]

I just noticed "Pig at the Trough" Pamela Wallin, is on the PD board:

http://www.theglobeandmail.com/news/politics/how-duffy-and-wallin-helped-harper-win/article12155366/

Gee, between that and the Rob Ford support, Deluce must be in hog heaven!

[Thebean]

If you want to negotiate a truce with regards to the discussion of the allocation of slots at YTZ, I would be all for that. But as long as Bean is running with his alternative history in which an oppressive government agency has its jackboot on the neck of a scrappy upstart national airline... I think myself and MD2 can speak to that.

When it was all said and done, all the Feds could dream up were total fines under $2,500, with the largest single fine, as I recall, being $300. It's a matter of public record. As is the case with many episodes in WJ's early history, there was far far more going on behind the scenes than most folks could even begin to imagine.

All the song and dance about how great Porter is means nothing if the business can't generate any sort of profit. There is not a scrap of evidence a profit, as defined by typical industry standards, has ever been generated. The sudden clamming up about the only metric that gives consumers an insight into the goings on at Porter, and the liklihood of their being in business down the road doesn't exactly instill much confidence either.

You can spin it anyway you want. I'd venture to guess there is a 100% corrrelation between privately held airlines deciding to no longer issue any sort of metrics to the traveling public and airlines that go banco. There is absolutely no good reason to not provide the info after doing so for a couple of years unless the info is threatening the ability of the airline to generate much needed cash via advance bookings.

Going into business to put other people out of business is a pretty stupid businessplan. It never happened on my watch at WJ and I've seen no evidence of it happening since. If there's money to be made in a market, WJ's going to take a run at it. It's not WestJet's problem if others can't make money operating flights on identical routes with their costs.

High cost operators tend to hate it when lower cost operators enter the market and lets face it: that's the root cause of Porter's deep seated fear of WJ.

As I've said time and time again, I haven't a clue whether or not WJ is even remotely interested in YTZ. If there's a good business case to be there, and that means creating shareholder value, (a term that must be difficult for Porterites to comprehend), WJ would likely look seriously at it.

My issue is with YTZ is a simple one. I like open, free markets. I hate monopolies or defacto monopolies. I've never met a Canadian who thought having limited consumer choices resulted in obtaining the best possible price for a product or services. If you don't think Canadians are price sensitive when it comes to air travel, take a drive through the parking lot at Bellingham, Grand Forks, Buffalo, Plattsburgh or any other border airport.

It'd be very interesting to see what WJ's stage length adjusted average fare was compared to Porter's over its current asl of roughly 400 miles. I'll bet Porter's is about 20% higher.

I wonder how Torontonians would feel about that sort of price differential were it publicized? I suspect it'd be about the same reaction if Petro Canada were given an 85% share of the retail gasoline market in the GTA and they charged 20% more for gas than outside their monopoly area.

I suspect most people could live with YTZ status quo. No one is making any money there so it'll eventually sort itself out. It has to. Someone will cry uncle.

Expanding it to allow longer haul flights is an altogether different story. The publicly owned airport can't remain the near exclusive playground for a privately held company and create a rule book that accidently on purpose favored one competitor over another. I can't think of an airport in North America that, with the exception of Stage 3 trquirements, limits operations to those aircraft assembled by one particular company. It'd be like the 401 being limited to vehicles assembled in Canada only. It's absurd.

If competition is good for the goose, then it's good for the gander.

Oh, and by the way, I am enjoying the weather. I'm still getting used to leaving the arena 3-4 a week when the sun is still blazing away and the temp is in the mid to upper 90's. No cold skates and clammy equipment for this dude!

[MD2]

Thebean, there's not really much new to discuss so briefly it is very interesting that you talk about Porter's fear, which by the way should be natural for a smaller upstart to "fear" such a successful airline that WestJet has become; but isn't it ironic that WestJet is the one copying Porter and after all the years of talking about single type and props being for boats, it is adding the Q400 to its fleet? Although being as rich as it is, one would have hoped it could afford to pay its staff industry wages. As well, contrary to your repeated assertions independent sources seem to report it the opposite of what you claim, in that wherever Porter is present, the prices are lower by over $100, and consumer satisfaction is higher. Perhaps this is why consumers out West are looking forward to Porter's arrival!

[IFG]

.... Going into business to put other people out of business is a pretty stupid businessplan. It never happened on my watch at WJ and I've seen no evidence of it happening since. If there's money to be made in a market, WJ's going to take a run at it. It's not WestJet's problem if others can't make money operating flights on identical routes with their costs ....

.... My issue is with YTZ is a simple one. I like open, free markets. I hate monopolies or defacto monopolies. I've never met a Canadian who thought having limited consumer choices resulted in obtaining the best possible price for a product or services. If you don't think Canadians are price sensitive when it comes to air travel, take a drive through the parking lot at Bellingham, Grand Forks, Buffalo, Plattsburgh or any other border airport ....

Hello again. 'bean - You do focus like a laser beam on your specific point. Let's try another tack.

There is little to disagree with in your tribute to freedom of competition, but sometimes there are competing truths. If there was a competitor on the horizon that truly wished to provide service at YTZ, and was truly being prevented from doing so, I don't think anybody could reasonably support that.

There is no such credible potential competitor to Porter, unless you believe that AC has had a total change of heart and mind. History indicates that they would likely place enough of a presence on YTZ to extinguish Porter, and then largely (or totally) abandon it. Nobody can prove this intent, but nothing in AC's actions contra-indicates the past being repeated.

I have no idea if the authorities that run YTZ care directly about Porter, but they have there own interest to tend to (at least a self-perceived one, anyway) in attempting to avoid a repeat of history, where a resident operator was squelched and then YTZ was abandoned. Since the protections against predatory business practice in Canada are largely illusory, particularly in the aviation industry, it is rational for YTZ to attempt a structure that maintains a committed operator. The freedom to compete would consist of an equal opportunity to all comers, to undertake any commitments that YTZ puts up. There does not seem to have been any such potential competitor to Porter. Maybe WS's new venture, but I'd be surprised if they were eyeing YTZ; time will tell.

It is notoriously difficult to differentiate between predatory and honest competition, but I certainly know of no instance in which I'd suggest that WS engages in it. They have clearly entered their markets with uber-competitive costs and prices, and I don't think they have ever left a market for any other reason than insufficient demand - I know of no case in which they left after dispatching a nuisance competitor. OTOH, AC's history is a bit murkier in that regard.

As you say, this will play out anyway. I'm not sure if your thesis is that there is no viable business model for YTZ (would Encore's costs there be any lower over similar stage-length?), or that there is one belonging to such an as -yet undeclared competitor (unless you accept at face value any assertion that AC believes in a long-term YTZ service).

IAC, it may be that attempting to pre-empt predatory practice is just a fool's errand nowadays. I attribute the unique vibrancy of the US economy very much to their historically careful preservation of competition through rigorous anti-trust law etc. - and much of their current woe to the slackening of those efforts in the last 20-odd years.

Cheers, IFG

[MD2]

Aside from all the song and dance that we all do - to borrow a term from Thebean - it all comes down to one point which really reveals the wisdom in declaring Pearson and City airports a common market. It is evident that people of Toronto do have a choice and all interested airlines, including Air Canada, WestJet, Porter, Transat, Sunwing, etc. can serve this city and its people. It is also evident, by witnessing recent history, that other airlines including Air Canada and WestJet, have gravitated towards Pearson because it makes more sense for them as their operating cost is reduced by focusing on one airport in the GTA, that common market. It is also evident that Porter has demonstrated commitment to City airport to make it its main hub, and Air Canada and other airlines have only shown interest in it after Porter's arrival, otherwise they have attempted to slow the progress of City airport; for instance by objecting to its application for US customs, or in the case of Air Canada/Jazz also by reducing flights to a meager 5 daily flights to Ottawa before Porter's arrival.

Therefore, it would be timely and wise to acknowledge these facts and accept that it is OK for airlines to have different focus airports in large cities such as Toronto. This of course is already seen in other large cities such as London where various airlines have a different focus and hub which they use to serve the people of London and others that transit through these main hubs. Similar models also exist in New York and other large cities. This will be the model in Canada's largest city as well, and in time there may be other cities that join this rank. This is the exigencies of our times and we have to move with them while being mindful of the environmental impact. For instance, it may be time to move towards stage IV for busy airports and even beyond for urban airports to minimize the noise impact.

Rich Pulman, no need to be sorry, that was my point too!

[Thebean]

Aside from all the song and dance that we all do - to borrow a term from Thebean - it all comes down to one point which really reveals the wisdom in declaring Pearson and City airports a common market. It is evident that people of Toronto do have a choice and all interested airlines, including Air Canada, WestJet, Porter, Transat, Sunwing, etc. can serve this city and its people. It is also evident, by witnessing recent history, that other airlines including Air Canada and WestJet, have gravitated towards Pearson because it makes more sense for them as their operating cost is reduced by focusing on one airport in the GTA, that common market. It is also evident that Porter has demonstrated commitment to City airport to make it its main hub, and Air Canada and other airlines have only shown interest in it after Porter's arrival, otherwise they have attempted to slow the progress of City airport; for instance by objecting to its application for US customs, or in the case of Air Canada/Jazz also by reducing flights to a meager 5 daily flights to Ottawa before Porter's arrival.

Therefore, it would be timely and wise to acknowledge these facts and accept that it is OK for airlines to have different focus airports in large cities such as Toronto. This of course is already seen in other large cities such as London where various airlines have a different focus and hub which they use to serve the people of London and others that transit through these main hubs. Similar models also exist in New York and other large cities. This will be the model in Canada's largest city as well, and in time there may be other cities that join this rank. This is the exigencies of our times and we have to move with them while being mindful of the environmental impact. For instance, it may be time to move towards stage IV for busy airports and even beyond for urban airports to minimize the noise impact.

Rich Pulman, no need to be sorry, that was my point too!

That would explain why jetBlue operates out of LGA, EWR and JFK, not to mention SWF in the NYC area. You think jetBlue wouldn't love to have another 30 slots at LGA, (where slots are, at least in this era, are purchased on the open market, and not handed out as freebees by secretive organizations who share Board Members)? Talk about stink a rooo......

I won't speak to others, but WJ has a successful history of profitably segmenting larger markets in Canada. Toronto, (YYZ, YHM, YKF and had the Feds played along, YTR, which would be a great option for anyone in the Oshawa area).

The same with Vancouver and Abbotsford. Vancouver Island will, for the first time ever, have n/s service from three points on the Island to Alberta. There are countless examples of this sort of activity in larger US cities, yet none where service to one airport is essentially a monopoly.

Should WJ show interest in YTZ, and focus on the word "should" as I haven't a clue whether not that is the case, it would be entirely consistent with their business practice since 1997 when they entered YXX.

Am I getting the sense that Porter is now taking credit for other operators chosing the Q400 in Canada? I don't recall WJ taking credit for the dozens of 737NG operations that have popped up since 2000 ......

What other choices were there? Had the ATR had better mountain performance and an empty order book, an extremely strong case could have been made for that aircraft. After that? The list gets pretty short.

In hindsight, WJ's future direction was made pretty obvious in April 2010, and there was a group that included some founding WJ'rs who were proponents of the "TurboJet" option about six months prior to that.

Then again, there are some that actually believed WJ's business plan entailed staying exclusively in Western Canada, that Wal Mart would never get into the grocery market business and that Mercedes Benz would never manufacture or sell and econobox version of their brand.

Business's that sit still die. You can very safely assume that everything will inevitably evolve and it is rarely by accident.

[MD2]

As you say, the Toronto City airport is also not standing still waiting for the day that WestJet "should" become interested. It is continuing its business as per its mandate and thanks to Porter for the first time is very successful and profitable. As others too have pointed out, there is a track record and history at YTZ with its own uniqueness and challenges which you continue to deny or discount, but until and unless there are new arguments there is really no point to continue around the circle...

[Thebean]

As you say, the Toronto City airport is also not standing still waiting for the day that WestJet "should" become interested. It is continuing its business as per its mandate and thanks to Porter for the first time is very successful and profitable. As others too have pointed out, there is a track record and history at YTZ with its own uniqueness and challenges which you continue to deny or discount, but until and unless there are new arguments there is really no point to continue around the circle...

Well, at least someone's making money at YTZ. As usual, it's the airport authorities....

[Maverick]

For airlines, real estate is key to their business. The best routes, the best planes, and the best times, together create the flights most in demand by travelers and are essential to the performance of the airline. Recently, Delta Air Lines made headlines when it purchased a 49% stake in Virgin Atlantic. No, the $360 million investment wasnt so Delta could invest in the future of a loss making airline, it was to set up a joint venture that would allow more Delta flights to use Virgins London Heathrow airport slots. While the battle for slots across the pond will continue for some time, investors only need to look north to Torontos Billy Bishop airport to see another airline dogfight over serving the air travel needs of Canadas largest city.

Why the city airport matters

There are three airports that offer passenger service for the Toronto area. However, if you are booking a flight to Toronto, chances are that you will be flying into the Lester B. Pearson International Airport. This is Canadas busiest airport, by far the largest Toronto airport, and a major hub to Canadas largest airline, Air Canada (TSX: AC.A) (TSX: AC.. Pearson handles most international flights to Toronto and serves as a destination for many U.S. based airlines as well.

But the Pearson airport is located well away from the city center taking more time out of the schedule of business travelers. The John C. Munro International Airport is no better as it is located in Hamilton, Ontario. For travelers looking to land as close to Torontos city center as possible, the Billy Bishop airport has their location demands met.

Often known as the Toronto Island Airport or the Toronto City Center Airport, Billy Bishop is located on an island just offshore from downtown Toronto. Deplaning passengers can literally walk into downtown Toronto and conduct whatever business they arrived to do without waiting for taxi transport as would be required from the Pearson Airport.

Current problems

While most airlines would like to offer some sort of flight to Torontos more desirable airport, current rules stipulate that jet aircraft are not allowed to land or take off from the Billy Bishop airport. Despite this restriction, privately-held Porter Airlines has made heavy investments in the airport and now operates turboprop flights to many Canadian and northern U.S. destinations.

Comparatively, Air Canada and WestJet (TSX: WJA) have much smaller presences at the airport. Air Canada only operates flights to Montreal and WestJet does not even operate from Billy Bishop. But since Porter has been making the investments to improve the airports itself, the airport is largely in Porters hands making it a thorn in the side of both Canadian and American carriers that operate out of the Pearson airport.

Bring on the jets

In a new move of expansion by Porter, the airline is trying to convince regulators to allow it to fly the lower noise Bombardier C-Series aircraft into the Billy Bishop airport. Naturally, both Air Canada and WestJet are irked by this move as it would add competition to their Pearson operations. Even U.S. based United Continental (NYSE: UAL) would face threats in its Canadian operations as it runs frequent codeshares with Air Canada and relies on Canadas largest airline to serve much of its Canadian network. Despite a joint venture between United Continental and Air Canada largely being blocked in Oct. 2012, the two carriers remain close with United able to benefit from Air Canadas airport slots and vice versa.

With United Continental leaving much of its fight for Canadian skies in the hands of Air Canada, Air Canada is pressing ahead to get a piece of the expansion of the Billy Bishop airport for itself, and hence for the codeshare. The airline is considering purchasing C-Series aircraft itself should jets be allowed to land at the airport. Canadian rival WestJet is also trying to get in on the action by demanding a piece of the expanded airport as well. However WestJet would rather fly Boeing 737 aircraft, which currently make up the airlines jet fleet, into the airport adding the complication of landing noisier aircraft at a noise restricted airport.

Politics and planes

The game of deciding who gets what part of a government airport is as much a strategy of the aviation business as it is a political game. Air Canada, WestJet, and United Continental would be perfectly happy if the expansion at the Billy Bishop airport did not happen as it would preserve their Toronto area dominance at the Pearson airport. However, all three need to hedge their bets against Porters potential success in expanding the Billy Bishop airport to allow jet aircraft. Air Canada, acting for itself and United Continental, and WestJet have both indicated their intention to grab a piece of the Billy Bishop airport pie to prevent Porter from being the only airline to offer a significant number of flights to the airport. In the end, United Continental is letting another airline act on its part as United itself has a lot less to lose. But for Air Canada and WestJet, the next several months should decide how much competition they can expect to receive from the Toronto City Airport and what their stake in this prime location will be.

[Maverick]

http://beta.fool.com/tulipspeculator1/2013/05/31/a-dogfight-over-the-toronto-city-airport/35689/?source=eogyholnk0000001

Link for above. I wonder if there is a short field performance profile for a B736?

[Mitch Cronin]

I'd love to buzz the island a few times right about now.... in one of these:

...just to remind folks what a "whisper" can sound like.

Then again..... I suppose if they manage this stunt, the Island will soon enough be expanded to allow all manner of aircraft... (why exclude widebodies, after all, when it only takes some more fill?) ...So there'd be no need for the Pickering airport, and my property value would soar!

[Thebean]

http://beta.fool.com/tulipspeculator1/2013/05/31/a-dogfight-over-the-toronto-city-airport/35689/?source=eogyholnk0000001

Link for above. I wonder if there is a short field performance profile for a B736?

Santos Dumont airport in Rio

4,341 feet at sea level

Gol's 737-800's have 187 seats, 13 more than WestJet's.

I am told that at least the last half dozen -800 deliveries to WJ have the same short field performance as Gol's -800 fleet.

http://www.boeing.com/news/releases/2006/q3/060729a_nr.html

Gol Short Field Performance

Gol 737 departure at 7:10 into the clip.

Gol 737 arrival from the jumpseat.

[Maverick]

I am told that at least the last half dozen -800 deliveries to WJ have the same short field performance as Gol's -800 fleet.

Yup, the last 7 -800's are SFP.

[Specs]

Toronto should just sell the part of the islands it does own - the cottages and the parkland - let the TPA or another airline own or lease it all. The proceeds might pay some of the bill for the new Transit system Toronto wants and you could probably get a 777 in the paved over filled in parkland.

[blues deville]

Some Toronto city councillors are saying if the runway is extended at YTZ, it will give airlines with larger aircraft an option to use it. However, unless the runway and taxi surfaces are designed to carry the weight of a B736 or similar type, I don't think its an issue. Ramp space is also a problem.

Here's a new one that might make an appearance sometime soon. This is going to be a nice looking Canadian built aircraft.

[mrlupin]

Good looking bird! Once Bombardier gives it a stretch or two, it should compete directly with the B737 or smaller baby busses.

[Briler]

." This is NOT a request for an indiscriminate lift of ban on all jets. This is clearly stated. Rather it is a request to carefully consider the noise standard and allow the aircraft that meet that restriction, meaning they are quiet, but have a stigma of being a jet, and therefore the wrong impression of being noisy, attached to them. This is quite reasonable and also the reason why I said earlier Porter will set the trend for the C series just as it did for the Q400. This is the age of quiet aircraft, especially in urban airports."

[Briler]

Quiet? The Q400 breaches two of the three noise maximums, any one of which puts it into the definition of a prohibited aircraft for generating excessive noise. Per TPA consultant: Lateral: 83.5 max - Q400 at 84/approach 92 max - Q400 93.1. Porter says the CS100 wil lbe similar. Both are too noisy - that's certainly the experience of the Q400 by those on the waterfront.

[Seeker]

Quiet? The Q400 breaches two of the three noise maximums, any one of which puts it into the definition of a prohibited aircraft for generating excessive noise. Per TPA consultant: Lateral: 83.5 max - Q400 at 84/approach 92 max - Q400 93.1. Porter says the CS100 wil lbe similar. Both are too noisy - that's certainly the experience of the Q400 by those on the waterfront.

Again you mention that the Q exceeds the noise limit - by .5 of a decibel and 1.1 decibel. The graph you posted earlier shows that your time would be better spent on trying to eliminate motorcycles from the QEW since they exceed the limit by a considerable margin. Decimal 5 of a decibel is likely within the calibration error for the measuring device anyway.

[MD2]

Quiet? The Q400 breaches two of the three noise maximums, any one of which puts it into the definition of a prohibited aircraft for generating excessive noise. Per TPA consultant: Lateral: 83.5 max - Q400 at 84/approach 92 max - Q400 93.1. Porter says the CS100 wil lbe similar. Both are too noisy - that's certainly the experience of the Q400 by those on the waterfront.

Honestly Brian, is this the best you could argue after 2 months? The noisiest things on the waterfront are likely the loud speakers of the boats, or the float planes, not the Q400 that can't even be heard standing on Island side ferry docks! Your argument is the example of a person living in a nice mansion with manicured lawn and beautiful flowers complaining about a little dust in the driveway wanting to sweep it and take it to the neighbour's yard full of dirt and garbage! This is the comparison of the "noise" at City airport to Pearson which has lots more people living around it. If you want real noise, take a trip to Pearson to better appreciate City airport. All approaches and departures of much noisier planes around Pearson fly entirely over homes, whereas at City airport they are over water. You are not likely to get much sympathy for 0.5 decibel of noise, while there are many sources with much higher decibel levels downtown! Isn't it better to become a real partner of the airport and invest the time in reducing and mitigating noise in a practical way? ALL noise!