Monday, December 28, 2015

Best of Airways: Porter Airlines

By: Andreas Spaeth / Published: December 28, 2015


Editor's Note: This article first appeared in the July 2014 issue of Airways magazine.


Canadian regional carrier Porter Airlines, based opposite the Toronto skyline, is probably North America's most unusual scheduled airline.

C-GKQD_Dash_DH.8-400_Porter_(7637272300)For Robert Deluce and his company, Porter Airlines (IATA: PD / ICAO: POE), 2015 was a crucial year. The 61 year-old aviation entrepreneur from Toronto, whose family founded other now-defunct Canadian carriers such as Air Ontario and Canada 3000, bet his company's fortune on two major developments concreted this year, which means that his airline, founded in 2006, will well advance in maturity.

The first development happened in March, when the carrier's unique home airport will have a fixed lifeline to the mainland with the opening of a long-delayed pedestrian tunnel. Proposed back in 1935, the tunnel project was made obsolete with a ferry service established in 1938, and running until this day. Decades later, a bridge approved in 1997 and cancelled in 2003, further delaying the tunnel project.

This 240-meter-long tunnel certainly has had a chequered history. "The tunnel will be a game changer," enthused Robert Deluce said to Airways from his small, cluttered office. In mid-2015, the crucial decision by the city of Toronto is due on whether it approves of Robert Deluce's demand to lengthen the main runway of the airport. This is needed to enable Porter Airlines to operate the new Bombardier CSeries regional jets, which has placed 12 firm orders, under the condition of a runway expansion. Taking the jets would finally give Porter a grip on all of North America, as well as enable the airline to more than double its current size. Interesting days are ahead for Porter's airline operations.

Toronto City Airport

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Porter handles about 2.5 million passengers a year. It is unique in many aspects for North America's airline industry, but the most unusual one may well be its base, officially called Billy Bishop Toronto City Airport (YTZ/CYTZ), honoring a Canadian World War I flying ace. Before being named for this veteran in 2009, it was simply called Toronto Island Airport. This aptly describes its unique location on the Toronto Islands in Lake Ontario, vis-à-vis and even within walking distance to downtown Toronto, which is unheard of at any other major city airport in North America.

Conceived in the 1930s as Toronto's main airport, it was completed in 1939. But today, Toronto Pearson International Airport (YYZ/ CYYZ)—Canada's biggest, located about 12m (23km) northwest of downtown—became the city's main airport instead, leaving the island airport for general aviation and military operations. In 1962, the island airport was expanded and improved, resulting in an all-time peak in aircraft movements in 1967, when 240,000 were handled. In 1967, a study was initiated to evaluate how and if to make the airport suitable for jets of the day like the DC-8, but the government of Canada ruled out a waterfront site for a major airport in 1970, instead opting to use the facility for short-hop, inter-city, regional flights.

YTZ was instrumental in the construction of the iconic CN Tower. The 553-meter-high communications and observation tower, completed in 1976, was the world's tallest freestanding structure and the world's tallest tower for 34 years, being surpassed by Burj Khalifa in Dubai. In 1975, the nearby airport was the base for Olga, a Sikorsky S-64 Skycrane helicopter, which helped to dismantle the crane of the growing tower and finally hoist sections of its antenna into place at its top. But the island airport dwindled in importance, peaking at 400,000 passengers in 1987.

In 1983, a 50-year Tripartite Agreement between Canada, Toronto and the Harbour Commission was signed to enable the airport to continue operating. It capped the noise aircraft could emit, for example, at 85.0m EPNdB at take-off. It also ruled that no jets could operate at the island airport, with the exception of medevac flights of ambulance jets. The only known commercial jet that has touched down here was a demo flight of the BAe 146 decades ago.

In 1990, Air Ontario (partially owned by the Deluce family) started operations; the regional airline later became Air Canada Jazz. It built a new terminal in 1994, moving out of trailers. By that time, passenger volumes had declined to 140,000 annually. In 2005, there were a mere 68,000 flights, as the only carrier operating was Air Canada Jazz flying to Ottawa. That was the time when Robert Deluce came into the game. Interestingly, he brought the city of Toronto and the federal Canadian government to court over the bridge project cancelled in 2003, and launched a $505 million lawsuit. He received an unspecified amount of compensation from the airport operator—the Toronto Port Authority—to settle the suit, enabling his company, REGCO Holdings, to take over ownership of the terminal that Jazz used at the airport.

In January 2006, it issued Jazz a 30-day termination notice, with the airline ultimately suspending flights in March 2006. At the same time, Deluce announced his intention to start up Porter Airlines from the YTZ. The launch was controversial; as neighbours feared the noise a major airline operation would create. When initial flights began with Bombardier Q400 turboprops to Ottawa on October 23, 2006, protesters at the ferry dock blocked passengers, urging a boycott of the service. The protests dissolved quickly, and Porter Airlines became a success story of its own.

"Today, we are the ninth-busiest airport in Canada," boasts Robert Deluce. The vast majority of passengers are Porter customers, as Air Canada Express—having returned to the island airport in 2011—serves only Montréal. "Air Canada actively discourages passengers to fly from here," claimed Deluce, citing their desire to funnel Toronto-bound passengers through their main hub at YYZ.

Porter, to the contrary, is blooming, serving 20 destinations in Canada and the US from Billy Bishop airport with its current fleet of 26 Q400s, including eight more recent Q400 NextGen models (Porter holds ten on option), all locally built at the Bombardier factory in Toronto's Downsview suburb. Even achieving this level of route network wasn't easy, due to the restricted infrastructure. The one main runway, 08/26, is just 3,988ft (1,216m) long—even 600ft (180m) shorter than Bombardier's specifications for a fully loaded Q400.

A Porter Q400 lands at Billy Bishop Airport. Photo courtesy BRIYYZ, flickr creative commons.

A Porter Q400 lands at Billy Bishop Airport. Photo courtesy BRIYYZ, flickr creative commons.

Porter solved this initially by fitting only 70 seats in the cabin, instead of the maximum of 78. In late 2013, however, Porter added a full row of seats, increasing their number to 74. "We realized that people take a lot less luggage than we originally thought," explained Deluce. "But we wouldn't take on 78 seats, for operational reasons and because we want to offer an upscale product," argued the president. His airline's fleet is still able to make do with the current runway at its home airport and also use the shorter 11/29 runway at Newark Airport (EWR). Flying into Toronto's Island airport is still more challenging than approaching other airfields. The airport's flight path requires an approach offset from the runway's centerline in order to avoid nearby hazards such as tall chimneys and buildings. Pilots also have to be aware of boat masts, a nearby wind turbine and no-fly areas in the city center.

"All these restrictions mean the number of available slots here is restricted to 202 a day, meaning 101 return flights, of which 85% belong to Porter and 15% to Air Canada," explained Deluce. "The Q400 is the perfect aircraft for us; with its high speed on the ground it gives us shorter taxi times here." But, of course, one major restriction remains—its limited range of just about 1,500 miles (2,500km), which precludes it from serving transcontinental flights. "We even face weight penalties to Halifax in the summer and can offer non-stop service only in winter," complained Deluce, "while Winnipeg or Atlanta can't be served nonstop from here in the Q400." So far, Thunder Bay, Chicago-Midway and Myrtle Beach are the most far-flung places Porter can fly its turboprops into nonstop.

Placing a bet on Bombardier's CSeries

That's the main reason the airline is betting big-time on a leap forward with an order for 12 aircraft of the new Bombardier CSeries CS100, boasting a range of almost 2,900 miles (5,500km) more than double of what the Q400 can do. "Our airline will more than double in size with the CSeries aircraft," announced Deluce. He has already earmarked a dozen destinations in North America that Porter would serve with the regional jet. From its home airport in Toronto, it wants to fly the 107-seaters nonstop to anywhere from St. John's in Newfoundland to Nassau in the Bahamas, and from Edmonton, Calgary and Vancouver in Canada's West to the US west coast hubs San Francisco, Los Angeles and also Las Vegas. Porter wants to take up to 30 CSeries jets, with another 18 on option. Since he personally witnessed the first flight of the new Bombardier jet, he doesn't think there will be a noise problem at his base airport. "The aircraft is almost silent; the chase aircraft was noisier than the CS100," observed Deluce. "People here are afraid of the unknown; but the jet is a game changer, well advanced from the Q400, with the noise profile of the entire flight being less, equal or better than the Q400."

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CS100 test data show in fact that the Bombardier jet is significantly below the levels set in the tripartite agreement, overall 6% below the agreement's caps, whereas the Q400 is 10% below. But it still won't work without lengthening the runway, adding a 200-meter extension into the water on each end. "That can be accomplished without affecting marine traffic," insisted Deluce. Construction would take about 18 months but it faces fierce opposition. "The enlargement, in New York terms, would be like proposing to land jets in Central Park," said Adam Vaughan, a city councillor. "The Toronto Islands are an emerald, one of the most beautiful and revered parks in the city. The issue is, 'Are we going to pave half a kilometer of Lake Ontario for one man's private interest?'" This man, Robert Deluce, in fact took on a gamble when he ordered the jets without prior consultation of the city in April 2013. "It was important to have an order which pinned down a performance guarantee; why would we put the city through this if it wasn't guaranteed?" Deluce asked. He is not the least worried by the delays the aircraft program experienced so far. "Versus the A380 or the Boeing 787, they are well on track with a delay of between one and a half to two years. They have all the time that's needed," according to Porter's president.

The Porter Experience

With or without the big bang an introduction of jets would mean for the evolution of Porter, the airline has found an unusual and successful niche in offering a high-class product as a regional carrier, but at low fares. Its fares are generally cheaper than those of Air Canada, its chief rival on flights to Montréal or Newark. It operates under a quite unique, high-service, low-cost formula.

The Porter customer experience starts in downtown Toronto, from where the airline operates a free shuttle bus to the airport's ferry terminal (and soon, the tunnel entrance). Porter built its own terminal in 2009, boasting 150,000 square feet (14,000sq. m) of floor space, the final stage of which opened in 2011. During 2015, Porter hopes to open up a US preclearance facility, easing travel to the US. Unique again is a lounge area that every passenger can use prior to boarding, where free espresso from china cups is offered, as well as soft drinks, snacks, newspapers—and great views of the ramp and skyline beneath. The same common lounge features are offered at Ottawa and Newark. Boarding itself is an experience, with Porter having pioneered something for which the airline created its own verb- "to gate-porter." Before entering the aircraft, passengers place their carry-on bag on a rack on wheels, which is then rolled by staff to the back of the aircraft and put into the hold, to be delivered likewise at destination.

Unusual again, passengers board the Q400 turboprops through a covered walkway, kind of a rubber curtain, protecting them from the elements, which can be harsh in winter. "We were first to adapt normal boarding bridges; now everybody is copying that," said Robert Deluce. On board, passengers are met by flight attendants in stylish uniforms, including pillbox hats. During flight, free drinks are on offer, including Canadian wines from the Niagara peninsula, as well as local beers. The inflight magazine, Re:porter, is equally and unusually stylish, designed by Tyler Brule, famed style consultant and magazine maker of Wallpaper and Monocle. Even the airline's mascot, a stylized racoon named "Mr. Porter," has certain elegance to it, with some people regretting that it doesn't adorn the aircraft instead of the rather bland, business-like livery. "We have a good value proposition. It's the attention to detail that sets us aside," explained Porter's president. "We deliberately try to take you back a little bit in time to when travel was more fun," said Deluce.

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But can this work commercially? As a privately held company, Porter doesn't publish results. "We are profitable since 2011," revealed Robert Deluce. "And 2014 was again a good year for us, with passenger numbers and revenues growing even without more slots and aircraft." Porter's founder insisted, "We are not a low-cost carrier, but we have low costs and it will be hard to find any other carrier with a lower breakeven-load factor." That lies somewhere between 55-59%, according to Deluce, with the actual loads hovering around 72-75%. "Our location at a secondary airport with lower fees and our aircraft with low operating costs are the major factors enabling this," stated Deluce. "We are a sustainable and profitable airline." As such, Porter gains more and more international exposure through code sharing agreements with international carriers through US hubs such as Washington-Dulles (with South African Airways and Qatar Airways) or Newark Liberty International (Singapore Airlines). Since July 2013, Porter has had its first interline agreement in place with Icelandair, allowing customers to book a single e-ticket for connecting flights on both airlines and checking bags through to the final destination. Both carriers provide flights from ten Canadian airports via Halifax (seasonally), Boston, Washington-Dulles and Newark via Iceland and then on to Europe.

Porter's main bread-and-butter routes are services from Billy Bishop Toronto City Airport to Ottawa and Montréal (both served up to 17 times daily), Newark (13x), Boston (8x) and Chicago-Midway (7x). Even at Porter's home airport, there is an average of 30% transfer traffic between Porter flights. "On some routes it's even 40- 50% transfers," reported Deluce, who seems to be at ease about the company's ways. "If you've enjoyed some success at something, then you keep doing it," he said in describing his formula.


Editor's note: Check our recent news related to Porter Airlines:

ANALYSIS: Porter Airlines Future is Uncertain Without Toronto City Runway Extension

RELATED: Porter Airlines is Entering the Florida Market

RELATED: Is Porter Airlines Coming to Florida?

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Contact the editor at roberto.leiro@airwaysnews.com

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