Big changes will be needed at Porter's Toronto hub to guarantee the airline's CS100 deal
Signing up a Canadian launch customer barred by existing rules from operating the aircraft at its hub airport may do little to quell critics of the slow-selling , but could bolster 's claims that it can penetrate new markets with its clean-sheet narrowbody.
Porter Airlines has placed a firm order for 12 CS100s, plus options for 18, for delivery beginning in 2016. But the order, worth $2.08 billion at list price, depends on the privately held airline persuading local and federal officials the CSeries is clean and quiet enough to justify lifting the ban—in place since 1983 and set to last to 2033—on operating jets from its lucrative hub at Toronto's downtown airport.
Billy Bishop Toronto City Airport is on an island in Lake Ontario, and the deal also depends on its runway being extended—also prohibited by the 1983 agreement—enough to enable the 107-seat CSeries to fly transcontinental distances and open new routes to the U.S. and Caribbean. Porter has until year-end to have both barriers rescinded, or the order will lapse.
When news of the CSeries deal broke a day before the official announcement on April 9, industry analysts were surprised and baffled by the move, given Porter's dependence on a hub that bars jets. “This came completely out of left field,” says Canadian aviation consultant Rick Erickson. Analysts speculated about a change in business model and the possibility of Porter opening a second hub at Toronto's main Pearson International Airport or, more likely, in Montreal.
But that would have placed Porter in direct competition withand WestJet, both with larger networks, better frequencies and billion-dollar war chests with which to kill off an upstart competitor. And a price war would not fit Porter's brand, built on offering a premium service targeting business travelers. “[The airline] has a recognized brand that people associate with the convenience of the island airport,” says Cameron Doerksen, an financial analyst with Canada's RBC Capital Markets.
Instead, Porter will attempt what some believe is impossible: to persuade the signatories of the 1983 “tripartite agreement”—the Toronto City Council, federal government and Toronto Port Authority—to lift the ban on jets and extend the runway. “They can lobby to get the rule restricting jet operations removed, but I would expect pretty fierce opposition,” says Doerksen.
“As an independent operation, it is up to Porter to pursue its own business plan for the benefit of its customers, shareholders and employees,” states the Toronto Port Authority. The airport operator says it will not consider any change “until a determination is first made by the elected representatives on Toronto City Council regarding Porter's proposed changes to the 1983 Tripartite Agreement.”
Porter says it needs the agreement amended to allow the runway to be extended by 168 meters (550 ft.) into the water at each end. This would still be “within the current marine boundary,” says an airline spokesman, and would extend the runway from its current 4,000 ft. to around 5,000 ft. This would better suit the smallest CSeries, which Bombardier already plans to certify to fly steep approaches into, which has a 4,950-ft. runway.
Porter says it will also require specific regulations to allow use of the CSeries at Billy Bishop. The noise abatement regulations were modified once, in 1985, to allow the operation of de Havilland Canada Dash 8 regional turboprops. This paved the way for Porter to begin operations there in 1996 with the quieter70-seat turboprop.
The noise footprint of the CS100 will be “very comparable to the Q400,” says the Porter spokesman, adding the average of the twin-turboprop's takeoff, sideline and approach noise is 85 db. Powered by two Pratt & Whitneygeared turbofans, the CS100 will average 85.7 db, he says, “which is 6% below the [noise limit set by] the tripartite agreement.”
Approval to operate the CSeries from Billy Bishop is crucial to Porter, which has grown by virtue of its near-monopoly on access to the downtown airport. In 2010, Air Canada was awarded 30 slots and Continental (now United) Airlines 16, but Porter has almost 160 and last year carried 2.45 million passengers and averaged a 64.3% load factor on its fleet of 26 Q400s.
The airline seems to have no Plan B to open a CSeries hub elsewhere if Toronto's downtown airport remains stubbornly closed to jets. “It is our hub. We have made a significant investment in Toronto City Airport and that is what our focus is on right now,” the airline's spokesman says. Flying from the same airports on the same routes as Air Canada and WestJet would expose Porter to brutal competition “with only flying an advanced aircraft like the CSeries to differentiate them,” says Doerksen.
AW&ST Editor-in-Chief Joseph C. Anselmo saw a CSeries model in Porter Airlines livery in CEO Robert Deluce's office in 2010 and asked him about it.
Tap the icon in the digital edition of AW&ST to read Deluce's response in Anselmo's profile of the airline, or go to AviationWeek.com/porter