### Finamore , Rober t (OST ) From : Sent : To : Cc :

Subject : Attachments : Bria n Her[biler@ilercampbeil.com ] Tuesday , Jul y26 , 201 1 11:5 3 A M Finamore , Robert (OST ) Davi d M
. Endersbee ; Joh n Palo ; charters@evergreenairlines.com ; Malcol m LBenge ; Angl e Garbuzinski ; pmurphy@lopmurphy.com ; To m Fosko ; Kass , Howard ; Aaro n A
. Goerlich ; Cohn , Robert E. ; Robert Silverberg ; 'Kath yLuhrman' ; steve.morrissey@united.com ; lhalloway@crowell.com ; Weiss , Dan ; Anita.Mosner@hklaw.com ; jennifer.nowak@hklaw.com ; sascha.vanderbellen@delta.com ; Barnett , Samett a C ; Morgan , Jeff ; Neison , Carl ; Joh n Richardson ; jjohnson@sgbdc.com ; Sinick , Marshal l S. ; Stephe n Lachter ; rpommer@atlasair.com ; Atwood , Mark ; Hill , Jonathan ; Joh n Fredehcksen ; Joann e Young ; Bil l Evans ; Joh n Mietus ; Lis a Dunn ; Cargoair@aol.com ; Echristensen@skywest.com ; Montgomery , Kevin ; peter.beckett@polaraircargo.com ; To m Gillies ; Hobbs
. Tim ; john.allen@faa.gov ; Keine rJr. , R
. Bruce ; Blank , Jonatha n RE : Respons e o fCommunityAI R t o Porter' s Repl y- You rDocke t OST-2007-2740 2 Respons e t o Porte rrepl yJul y201 1 .pd f Dea rMr
. Finnamore , W e have prepare d th e attache d Respons e o fCommunityAI R bu t d o no t se e a n opportunit yo n th e regulations.go vsit e fo ru s t o pos t it
. Coul d yo u ensur e i t i s poste d an d considered ? Tha t woul d b e appreciated
. Yo u wil l se e w e hav e copie d al l relevan t parties
.



### Bria nHe r Chair , CommunityAI R Suit e 700 , 890 Yong e Stree t Toront o M4W3P 4 Work : (416)598-010 3 xll 4 Cell : (416)835-438 4 Fax : (416)598-348 4 http://www.communitvair.orE / 

# AI R '"•" i

### CommunityAI R- workin g toward s adean , gree nwaterfron t

^ - - Jul y26,201 1 

# Ccmtnumittf 

# AI R

AIRPOR ThupAC

TREVIE W Offic e O fTh e Secretar y Departmen t O fTransportatio n Washington , D.C
. R e Applicatio n o fPORTE R AIRLINE S INC
. Docke tDOT-OST-2007-2740 2 CommunityAI R Respons e t o th e Porte rAirline s Repl ydate d Jul y18
. 2011
. W e ar e a community-base d voluntee rorganizatio n deepl yconcerne d wit h th e impac t Porter' s massiv e expansio n o fit s ai rtraffi ca t th e Toront o Islan d Airpor t i s havin g o n Toronto' s prim e recreationa l area . I n it s reply , Porte rAirline s attempt s t o mak e muc h o fCommunityAIR' s standin g an d motive s i n ou robjectio n t o bot h Porte rAirline' s reques tfo rrenevi/a l o fit s exemptio n fro m th e requiremen t fo ra foreig n ai rcarrie roperato rcertificat e an d it s reques t fo ra certificate
. W e d o not e tha t Porte rha s chose n no t t o respon d t o th e question s w e raised
. Porte rAirtine s advance s severa l reason s wh yth e Departmen t o fTranspor t shoul d expedit e it s exemptio n renewa l an d permanen tcarrie rpermit
. Wit h regar d t o Porte rAirline s comment s o n ou rstandin g an d motives , w e wer e no t awar e tha t ther e wer e an ymembershi p qualification s o rstandard s t o tak e par t i n publi cdiscours e i n a fre e an d democrati cprocess . Howeve rinconvenien t Porte rAirline s ma yfin d a thir d part yexpressin g it s view , it shoul d realiz e b yno w tha t th e Departmen t o fTranspor t welcome s ou rinput
. W e ar e disappointe d tha t Porte rAirtine s ha s no tnotice d thi s self-eviden t fac tbefor e attemptin g t o shoo t th e messenger . CommunityAI R responds
. Porte rallege s Communit yAIR' s objection s ar e base d o n incorrec tfact s Porte rAirtine s argue s tha t ou rcontentio n tha tth e Toront o Porte rAuthorit y(TPA ) coul d no t hav e offere d U.S
. Airway s acces s t o it s airpor tfo ra Philadelphia Toronto-Philadelphi a rout e becaus e o frestriction s i n th e TPA' s 200 5 Commercia l Carrie rOperato rAgreemen t (CCOA ) wit h Porte rAirtine s i s wrong , regardles s o f 

### 1testimon yreporte d b yBloomber g News
. Porte rAirtine s base s it s rebutta l o n th e

clai m tha t th e restriction s di d no t appl yt o U.S
. carriers
. O fcourse , w e ar e no t priv yt o th e 200 5 CCO At o examin e tha t claim
. W e ar e dependen t upo n th e publi crecord
. You rDepartmen tcan , an d should , examin e tha t document
. Yo u ma yals o fin d relevanc yi n th e finding s i n th e Canadia n Federa l Cour tcas e betwee n AI R CANADA , Applicant , an d TORONT O POR TAUTHORIT Yan d PORTE R AIRLINE S INC
. Respondents , Dockets ; T-488-10 , T-692-10 , Citation : 201 0 P C 774 , Toronto , Ontario , Jul y21 , 201 0 b yTh e Honourabl e Mr
. Justic e Hughes
. Accordin g t o th e findings , th e Competitio n Burea u o fCanad a sen t a lette rt o Regiona l Aviatio n Holding s (REGCO) , th e Porte rAviatio n Holding s predecessor
. Th e lette routline d th e Competitio n Bureau' s understandin g o fa Memorandu m o fUnderstandin g betwee n REGC O an d th e TP Aa s follows
. Th e Propose d Agreemen t W e understan d tha t Regiona l Airline s Holding s Inc
. ("Regco" ) an d th e Toront o Por t Authorit y("TPA" ) entere d int o a Memorandu m o f Understandin g ("MOU ) o n Septembe r6 , 2002
. Th e followin g I s ou r understandin g o fth e relevan tfact s relate d t o th e MOU :

•Al l restrictio n (sic ) identifie d i n th e MO U ar e limite d i n tim e fo ra tota l perio d o f3 0 month s followin g completio n o fPerio d 2 a s outline d i n Schedul e Ao fth e MO U an d define d a s th e dat e o fcompletio n o fth e bridg e /inkin g th e Toront o Cit yCentr e Islan d an d th e mai n lan d ("th e Bridge")
. Ou runderstandin g i s tha tth e presen ttarge tdat e fo rcompletio n o fth e Bridg e i s Ma y2004
.
•TP Ashal l gran tt o Regc o a n irrevocabl e optio n exercisabl e o n o rbefor e Februar y26 , 200 3 t o acquir e fro m th e TP Ath e exclusiv e righ tt o utiliz e 11 5 larg e turb o pro p dail ymovemen t slot s (a s tha t ter m I s define d I n Schedul e Ao fth e MOU ) a tth e TCC Ao n a "tak e o rpay " basis
.
•Regc o shal l commenc e operatin g a regiona l airlin e base d a tth e Toront o Cit yCentr e Airpor t ("TCCA" ) upo n completio n o fth e Bridge
.
•TP Ashal l onl ymak e availabl e t o Ai rCanad a an d Ai rCanad a Associate s (a s define d i n th e MOU ) betwee n 2 2 an d 3 2 larg e turb o pro p movemen t slots
.
•TP Ashal l onl yleas e t o Ai rCanad a o rAi rCanad a Associate s spac e I n th e ne wtermina l i fAi rCanad a o rAi rCanad a Associate s canno trene w thei rexistin g lease s a tthei rcurren tlocation
.
•TP Ashal l limi t Ai rCanad a an d Ai rCanad a Associate s t o destination s currentl yserve d b ythe m collectivel yfro m th e TCCA
.•TP Ashal l hol d I n reserv e 2 0 t o 3 0 larg e turbo-pro p slots
. TP Ashal l no t mak e availabl e o rallocat e t o an yothe rcarrie ran yo fth e 20-3 0 movemen t slot s hel d i n reserv e t o Ai rCanad a an d Ai rCanad a Associates , o ran y othe rcarrie rt o enabl e suc h carrier(s ) t o provid e servic e t o o rfro m th e sam e destinatio n a s Regco
.
•I n th e even t tha tbefor e th e expiratio n o fth e roll-ou tperiod , eithe rth e TP Aincrease s th e movemen tslot s availabl e fo rlarg e turbo-pro p aircraf ta t th e TCC Abeyon d 167 , o ran yo fth e 22-3 2 larg e turbo-pro p slot s allocate d o rt o b e allocate d t o Ai rCanad a o rAi rCanad a Associate s becom e available , TP Ashal l no t gran t suc h additiona l slot s t o an ypart ywithou t firs t offerin g suc h movemen tslot s t o Regco
.
•Th e slot s allocate d fo rus e b ysmal l turbo-pro p aircraft s ar e no trestricte d fo rroute s no t serve d b yRegco
.
•Th e Agreemen tdoe s no t appea rt o affec t th e TPA' s abilit yt o respon d t o demand s o fcross-borde rcarriers
. I n comparin g th e Competitio n Bureau' s understandin g o fth e MO U t o Articl e 5 , Paragraph s 1 an d 2 o fth e Canad a - U.S
. Ope n Skie s Agreement , w e fee l tha t ther e ar e matter s tha tnee d elucidation , especiall ya s the yconcer n Paragrap h 2
. ARTICL E 5 Fai rCompetitio n 1
. Eac h Part yshal l allo wa fai ran d equa l opportunit yfo rth e designate d airline s o fbot h Partie s t o compet e i n providin g th e internationa l ai r transportatio n governe d b ythi s Agreement
. 2
. Neithe rPart yshal l unilaterall ylimi tth e volum e o ftraffic , frequenc yo r regularit yo fservice , o rth e aircraf t typ e o rtype s operate d b yth e designate d airline s o fth e othe rParty , excep t a s ma yb e require d fo r custom s an d othe rgovernmen t inspectio n services , technical , operational , o renvironmenta l reason s unde runifor m an d non-discriminator ycondition s consisten t wit h Articl e 1 5 o fth e Convention
. First , th e Competitio n Burea u state s tha t th e MO U doe s no t appea r(ou r emphasis ) t o affec t cross-borde rcarriers
. I ti s difficul tt o se e ho wthi s i s th e case . Th e TP Ai s restricte d t o 16 7 slots
. Th e agreemen tgive s REGC O 11 5 larg e turb o pro p slot s an d reserve s betwee n 2 2 an d 3 2 larg e turb o pro p slot s fo r Ai rCanada
.I n essence , th e tw o carrier s shar e betwee n 13 7 an d 14 7 o fth e 16 7 larg e turb o

pro p slots
. Th e remainin g 2 0 t o 3 0 slot s ar e furthe rrestricted
. Fro m th e Competitio n Bureau' s interpretatio n above , i t seem s tha tthes e slot s ar e no t availabl e t o carrier s wishin g t o compet e o n route s service d b yREGCO
. Furthermore , i fmor e tha n th e 16 7 slot s com e availabl e o ri fAi rCanada' s reserve d slot s ar e u p fo rgrabs , REGC O get s firs t righ to frefusal
. I t i s difficul t t o understan d ho wthi s MO U appear s t o no taffec tcross-borde r carrier s i n ligh t o fth e Ope n Skie s Agreemen t tha t states , "Neithe rPart yshal l unilaterall ylimi t th e volum e o ftraffic , frequenc yo rregularit yo fservice , o rth e aircraf t typ e o rtype s operate d b yth e designate d airiine s o fth e othe rParty , excep t a s ma yb e require d fo rcustom s an d othe rgovernmen t inspectio n services , technical , operational , o renvironmenta l reason s unde runifor m an d non-discriminator ycondition s consisten t wit h Articl e 1 5 o fth e Convention. " Fo rexample , i fREGC O receive d permissio n unde rOpe n Skie s t o provid e a cross-borde rservic e t o Newark , thi s MO U woul d mea n tha tothe rcarrier s flyin g th e sam e typ e o faircraf t coul d no t compete . I n anothe rexample , i fa U.S
. carrie r applie d fo ral l o rsom e o fth e 2 0 t o 3 0 availabl e slot s ope n fo rlarg e turb o prop , REGCO , wit h right o ffirs trefusal , woul d b e callin g th e shot s an d coul d simpl y den yth e reques t b yclaimin g th e slot s fo ritself
. Indeed , th e inclusio n o fth e descripto r'larg e turb o pro p slots ' limits , contrar yt o Ope n Skies , th e aircraf t typ e o rtype s operate d b yU.S
. carrier s i fthe ywis h t o acces s th e TPA' s airport
. Whil e th e argumen t w e pu t forwar d i s base d o n a n MO U betwee n th e TP Aan d Porte rAiriines ' predecesso rREGCO , ther e i s n o guarante e tha tth e sam e restriction s foun d thei rwa yint o th e 200 5 CCO Abetwee n th e TP Aan d Porte r Airiines
. However , Roge rTass e i n hi s report . Revie wo fToront o Por tAuthorit y Report , Octobe r2006 , commissione d b yth e federa l government , reference s o n Pag e 60 , a thir d MO U betwee n th e TP Aan d REGC O tha twa s converte d int o a CCO Ao n Ma y3 , 200 5 an d states ,

"Th e CCO Adoes , fo rexample , provid e fo rcertai n guarantee s regardin g th e us e o fth e airpor t b yRegC o (sic) , fo ra rollou t perio d o ftime , t o assis t RegC o (sic ) t o establis h itsel fa s a carrier. " Onl ya n examinatio n o fth e 200 5 CCO Awil l tel l i fth e TP Ai n grantin g Porte r Airiines ' predecesso rREGC O 'certai n guarantee s regardin g th e us e o fth e airport ' contravene d Articl e 5 o fth e Ope n Skie s Agreemen tan d i fPorte rAiriine s too k par t i n th e contravention
. Porte rAiriine s i n it s repl ypoint s ou t tha t th e 200 5 agreemen tha s bee n amended
. Therefore , w e se e n o reaso n tha t i t no t b e poste d s o tha tw e an d th e Departmen to fTranspor t ma yexamin e i t i n orde rt o confir m tha t th e TP Aan d Porte rAiriine s

di d no t contraven e Ope n Skies
. I fth e origina l permission s grante d t o Porte rwer e i n fac tbase d o n fact s tha twer e no t true , the n tha t mus t affec t ho wyou rDepartmen t regard s th e presen t applications
. A s fo rPorte rAiriine' s contentio n tha t th e 201 0 Amende d an d Restate d Commercia l Carrie rOperatin g Agreemen t ha s n o restriction s o n rout e competition , i t i s curiou s t o not e tha talthoug h th e TP Awen tthroug h a n exercis e t o allegedl yt o assur e fairnes s i n awardin g newl yopene d slots , o fth e tota l 20 2 no wavailable , Ai rCanad a wa s awarde d 3 0 an d Continenta l 16 , th e sam e o r fewe rnumber s availabl e t o th e competitio n unde rth e origina l MOU
. Se e attache d documen tPorte rt o remai n dominan t playe ra tIslan d airport
. Porte rallege s neithe rCommunityAI R no ran vothe rpart yobjecte d t o Porter' s applicatio n o n fitnes s ground s Communit yAI R ha s no t objected , u p t o now , t o Porte rAiriine' s applicatio n o n fitnes s ground s primaril ybecaus e th e dat a wa s no t availabl e t o d o so . Afte r severa l year s o fcross-borde roperation s an d tw o unsuccessfu l attempts , Apri l 16 , 201 0 an d Ma y21 , 2010 , t o launc h a n Initia l Publi cOffering , (Se e attached ) w e no wfee l tha t ther e ar e fact s tha tma yb e brough tt o th e Departmen t o f Transport' s attention
. I n th e introductio n t o it s reply
. Porte rAiriine s describe s itsel fa s popula ran d successfu l transborde rservices
. Wit h th e exceptio n o fit s seasona l flight s t o Myrtl e Beach , th e Burea u o fTransportatio n statistica l dat a fo r201 0 seem s t o pain t a differen tpicture
. Accordin g t o Transportatio n Burea u o fStatistic s publishe d information , th e loa d factor s fo rth e yea rfo rPorte rAiriine s thre e regularl yschedul e U.S
. destination s ar e a s follows : Bosto n 40.28% ; Chicag o 38.85% ; Newar k

54.11%
. Aircraf tflyin g hal fful l o rless , o n average , i s a curiou s measur e o fpopularit yan d success . Porte rAirtine s describe s itsel ffinanciall yfit
. Th e followin g wa s attribute d t o Rober t Deluce , Porte rAiriine s Presiden t an d CEO , i n a n intervie wpublishe d i n th e Glob e an d Mai l o n Novembe r21 , 2009 , Porte r- Th e Littl e Airlin e Tha tCould
.

Mr
. Deluc e say s Porte rha s bee n profitabl e sinc e mid-200 7 o n a "full yallocated " basis , thoug h h e decline s t o giv e accountin g detail s - informatio n tha t woul d onl ybecom e publi ci fth e carrie rdecide s t o rais e equit yfinancin g throug h a n initia l publi coffering
. Fiv e month s later , it s Apri l 16 , 201 0 preliminar yprospectu s showe d tha t Porte r los t•$11,486,00 0 i n 2007 , •$3,317,00 0 i n 2008 , 

### • $4,609,00 0 i

n2009 , •$5,972,00 0 i n th e firs t quarte ro f2010
. B yMarc h 31 , 2010 , Porte rha d accumulate d overal l losse s o f$44,505,000
. Porte rAiriine s claime d i n it s Ma y21 , 201 0 prospectu s [foun d a twww.sedar.com] , Pag e 6 , a breakeve n loa d facto r(BELF ) o fapproximatel y49 % i n 200 9 compare d t o low-cos t carrier s Southwes t an d JetBlu e wit h BELF s a t 74 % an d 73 % respectively
. Give n tha t Porte rAiriines ' 200 9 BEL F wa s 49 % an d th e loa d facto r o n tw o o fthre e o fit s U.S
. route s wer e belo wtha t a yea rlate r(2010) , whe n normall ycost s woul d hav e risen, i t i s difficul t t o se e ho wit s U.S
. operation s contribut e t o i tfinancia l fitness
. Finally , th e Ma y21 , 201 0 prospectu s reveal s anothe rinterestin g fact
. I n th e NOTE S T O CONSOLIDATE D FINANCIA LSTATEMENTS , Not e [i ] Pag e F-1 6 state s i n part , "Th e lende r[a n ar m o fth e Canadia n Government ] wil l als o requir e tha t th e aircraf t an d engin e i t finance s b e use d a t leas t60 % o n cros s borde r route s an d tha t a t leas t 80 % o fthei rdeparture s originat e fro m o rar e destine d t o BBTCA. " A t tha t time
. Porte rAiriine.s ' flee tnr^mnrise d ? 0 0-40 0 airr^raft1f i n fwhir. h wpr p financed
. ACommunit yAI R analysi s base d o n th e concurren ttimetable s showe d tha t approximatel y30 % o fit s flight s wer e cros s border
. Mathematically , an d presumabl yoperationally , i twa s no t possibl e a ttha ttim e fo rth e 1 6 finance d aircraf t fo ra 60 % cros s borde rutilization
. Thi s bein g th e case . Porte rAirline s was , an d perhap s stil l is , unles s lendin g requirement s hav e changed , i n contraventio n o fth e lender' s requirement
. Th e prospectu s doe s no tgiv e th e penalt yfo rth e contravention
. I ffailur e t o mee tth e 60 % requiremen ttrigger s a default , thi s i s indee d a disclosur e tha tth e Departmen to fTranspor tshoul d tak e int o account . Conclusio n Communit yAI R ha s raise d wha t w e believ e ar e substantia l issues , fro m th e effec t o n Ope n Sk yacces s o fth e Porte rAiriine s an d TPA' s 200 5 CCO At o th e curren tavailabilit yo fslot s a t th e airpor t t o Porte rAirtines ' financia l fitness , tha t th e Departmen tshoul d conside rbefor e expeditin g Porte rAiriines ' requeste d approvals
.Your s truly
.

Bria n Her , Chai r 

## Attachmen t Fro m Glob e an d Mai l Monday , Mar
. 07 , 201 1

Porte rt o remai n dominan t playe ra tIslan d airpor t BREN TJAN G Updat e Publishe d 5:00P M ES T Las t update d Monday , Mar
. 07 , 201 1 6:54P M ES T Porte rAviatio n Holding s Inc
. wil l remai n th e dominan tplaye ra tBill yBisho p Toront o Cit yAirport , controllin g 7 7 pe rcen to fth e takeof fan d landin g slot s whil e Ai rCanad a (AC.B-T2.62-0.03-1.13% ) wil l hav e onl y1 5 pe rcen twhe n itstart s Toronto-Montrea l flight s i n May , say s Porte rchie fexecutiv e office rRober t Deluce
. Fa rfro m retrenching
. Porte ri s i n a stron g positio n wit h it s 15 6 slots , Mr
. Deluc e sai d i n a n intervie wMonday
. Porte rown s th e regiona l airiin e an d Cit yCentr e Termina l Corp. , whic h wil l collec t leas e payment s fro m Ai rCanada
. Mr
. Deluc e sai d som e Ai rCanad a customer s wil l shif tfro m Toronto' s Pearso n Internationa l Airpor tt o Bill yBishop
. "I ti s a cannibalizatio n o fAi rCanada' s ow n product, " h e said
. Wit h ne wslot s a tBill yBisho p likel yt o b e awarde d i n 2013 , Porte rstand s t o benefit , h e asserted
. Nin a Slawek , co-founde ro fconsume rtrave l websit e TakeOffEh.com , sai d traveller s wh o avidl ycollec t Aeropla n point s wil l appreciat e havin g th e optio n o f catchin g Ai rCanad a flight s a t Bill yBishop
. Ai rCanada , whic h wil l b e deployin g Bombardie rQ40 0 turboprop s operate d b ySk yRegiona l Airiine s Inc. , wil l onl y offe rth e Toronto-Montrea l rout e a t first , fo r1 5 dail yround-trips , o r3 0 slots
. Las t summer , Houston-base d Continenta l Airiine s Corp
. (UAL-N24.781.476.31% ) garnere d th e rights t o th e remainin g 1 6 slots , bu t i t hasn' t se t an ylaunc h dat e ye t fo rpossibl e transborde rflight s t o Newark , N.J
.Porte rha s a flee t o fQ400 s an d it s networ k include s 1 6 destinations
. Ms
. Slawe k

sai d Mr
. Deluc e ha s carefull ycrafte d hi s move s a tth e Toront o islan d airport , devisin g a strateg ytha t allow s hi m t o overse e a regiona l airiin e whil e h e als o play s th e rol e o fairpor ttermina l landlord
. "H e ha s se t himsel fu p nicel y there, " sh e said
. Porte rha s enjoye d a monopol yo n commercia l flight s a tBill yBisho p sinc e October , 2006 , whe n th e Toronto-base d carrie rbega n operations
. Atermina l compan yheade d b yMr
. Deluc e ouste d Ai rCanad a Jaz z fro m th e airpor ti n February , 2006
. O n Monday , Ai rCanad a bega n sellin g ticket s fo rflight s betwee n Bill yBisho p an d Montreal , offerin g one-wa yfare s a s lo wa s $149 , effectiv e fo rselecte d Ma y flights
. Trave l agent s cautio n tha t airfare s chang e frequently , an d whil e Porte r ha s bas e fare s a s lo wa s $11 9 one-wa yo n it s Toronto-Montrea l rout e fo rMa y flights , consumer s nee d t o rea d th e fin e prin tfo rrestrictions
. Wit h WestJe t Airiine s Ltd
. (WJA-T15.050.040.27% ) preparin g t o ste p u p it s servic e a t Pearso n wit h discounte d ticke t prices
. Ai rCanad a i s offerin g one-wa y fare s a s lo wa s $6 9 o n th e Pearson-Montrea l rout e fo rtrave l i n May
.