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>MRPOAT IMPACT REVIEW 

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Office Of The Secretar)' 

Department Of Transportation 

Washington, D.C. 

Re Application of PORTER AIRLINES INC. Docket DOT-OST-2007-27402 

Community' Airport Impact Review (CAIR) submits that it is not in the public interest to 

issue the applicant a foreign air carrier permit in the form as attached in the original order. 

In its Tentative Findings and Conclusions—Foreign Air Carrier Permit Application, the 

Department of Transport (Department) has not revisited the quesdon of equitable access to 

Porter Airline's hub at the Toronto C'\xy Centre Airport (TCCA) first raised by a number of 

airlines at the time of Porter Airline's original applicadon. We submit that in the interest of 

fair and open conipetidon, it is incumbent upon the Department to do so now. 

1. Introducdon 

CAIR questions the preferendal treatment afforded Porter Airlines in its use of the Toronto 

Cit)' Centre Airport (TCCA) and urges the Department of Transportation to do the same 

before granung Porter Airlines its permit. It is in the public interest that the Department of 

Transportadon ensures that all carriers, American and Canadian, have the same access as 

Porter Airlines does to this facility. 

On June 20, 2007, the Department of Transportadon issued NOTICE:: O F ACTION 

TAKEN -- DOCKET OST-2007-27402. In response to filings by several airlines about 

equitable access to the TCCA, the Department cited a single letter (OST-2007-2402-] 9) 

from Lisa Raitt, CEO of the airport's operator, the Toronto Port Authority' (TPA), as a 

refutation of the airlines' claims. Ms Raitt's letter contained six-month old correspondence 

between the TPA and US Airways about six daily flights. Now, more than two years later, we 

trust that the Department will revisit the question of fair and equitable access to the TCCA 

and base its analysis and decision on Porter Airline's permit on more than one out-of- date 

example of the TCCA's accessibilit}'^ 

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2. The TPA-TCCA Porter Record of Accessibilit\' at die Toronto Island Airport 

According to tlie Renew Of Toronto Port Authority Kepoti 

(lirrp://\\'\vw.tc.gc.ca/pril/en/Report/rorontoPortAuthoi'ir\ /tpa.pdO, conducted on behalf 

of the Canadian government. Porter Airlines' precursor, RegCo, and the TPA signed a 

Commercial Carrier Operating Agreement (CCOA) on May 3, 2005. On February 28, 2006, 

the TPA's cancellation of its lease with Air Canada forced the airline to quit its service 

leaving Porter Airlines as the sole carrier at the TCCA. (Jazz airline asks judge to set aside 

flying prohibition: 'Undue preference', National Post. August 17, 2006). It has remained so 

for the three years up until the present in spite of Air Canada's attempts to find a legal 

means to return on an equitable basis. 

As mentioned above, on May 10, 2007, the TPA's CEO, Ms Raitt, wrote that, in effect, the 

TCCA was open for business. Two and a half years after the claim, Porter is still the only 

airline in service at the TCCA. 

While Ms Raitt's submission cited operating restrictions under the Tripartite Agreement and 

mentioned the need to sign a CCOA, it understandablv did not mention the CCOA between 

the TPA and RegCo, Porter Airline's major investor. However, the CCOA is cited in the 

Rfview Of Toronto Port Authority Report. While the author of the Report does not question the 

legalit}' of the CCOA, he does state, P.61, that Porter Airlines has "exclusivit)' of certain 

destinations and guarantees ot a minimum of movements". 

It is the question of exclusivit}' of certain destinations and guarantees of a minimum of 

movements that should be of primarj' concern to the Deparmient. In order to satisfy' itself 

that any airline, U.S. or Canadian, flving to and from Porter Airline's hub at the TCCA, 

receives equitable treatment, CAIR urges the Department to seek guarantees tliat any 

competitor signing a CCOA with the TPA will have the same routes available based on 

reasonable and non-discriminatory scheduling. 

According to a report published today b\ Bloomberg 

(http://wwwbloomberg.com/apps/news?pid-206010K2&sid"at 18 Su4K^aZM): 

Porter's agreement with the authorit\' barred regional carriers, includingjazz Air, 

from flNHng between the airport and New York, Chicago, Boston, Washington, 

Philadelphia, Cincinnati, Detroit and Cleveland, Jazz Air's lawj'er Earl Cherniak said 

last vear at a hearing. 

Exclusivit}'^ of certain destinations, including many if not all of its existing and potential U.S. 

destinations has no place in an open and competitive market and is not in the public interest. 

Toronto has two main airports serving the fiv'ing public: Lester B Pearson International 

Airport (Pearson) and the Toronto Cit}' Center Airport. Some may argue that for the airline 

industry, Toronto is one market. On this basis, it may then be said that exclusivit}' of certain 

destinations is not anti-competitive since any destinations that Porter Airlines has exclusive 

rights to out of the TCCA can be accessed at Pearson. 

In other words, if an applicant for access to the TCCA doesn't like the condition that 

prevents it from flying, for example, New York-TCCA-New York because that route is 

Working towards a clean, green waterfront 

890 Yonge St, Suite 700, Toronto, Ontario, Canada M4W 3P4 
reserved exclusively for Porter Airlines, the TPA may argue that under the one-market 

scenario the applicant isn't disadvantaged since it can fly out of Pearson. However, based on 

Porter Airline's advertising, indeed their raison d'etre, there are two markets: the Greater 

Toronto Area and Downtown Toronto. As evidenced by statements on its website such as 

"Gone are the hassles of getting to and from Pearson"; "The next time you fly into Toronto, 

you can actually fly into Toronto" ; and "That's right, avoid the additional expense and 

unpredictabilit}' of trips to Pearson. Porter Airlines flies our of Toronto Ciw Centre Airport 

(TCCA), just minutes from downtown", Porter Airlines has made it clear that it is serving 

the Downtown Toronto market. 

In serving the Downtown Toronto market from the TCCA, Porter Airlines is at a significant 

cost advantage. Based on airport rates published respectively on Pearson and TCCA 

websites, a full 70-seat Q400 turboprop costs 4/5ths less to operate, take-off and landing, 

out of the TCCA - $801.08 vs S 2,509.70 for Pearson. (See Appendix A) It is clear to see 

that Porter Airlines has a significant cost advantage over competitors required to tly out of 

Pearson. What is not clear is how the TPA plans on allowing other airlines into the Porter 

Airlines' hub to provide competition. 

3. Porter's Complaints regarding Access to Newark International Airport 

Although fair and equal access by any other airline to the Toronto Island vVirport is 

demonstrably not possible, as the above indicates, Porter has relied on the right to fair and 

equal treatment when it comes to arguing for more access to Newark International Airport. 

In a submission to die Federal Amtion Agency (Docket Ko. FAA-2008-0221) dated April 1, 

2008, at page 7, its counsel states: 

The combined effect of these changes is to reduce Porter's daily roundtrips Monday 

through Friday from seven to five, or a 30% reduction in the number of Porter's 

operations and to disrupt Porter's Saturday/Sunday operations. This is not a "fair 

and equal opportunit}' to compete" as promised by the U.S. in the Open Skies 

Agreement with Canada and unfairly and discriminatorily penalizes Porter despite its 

attentive and meaningful engagement in the scheduling process since last summer. 

4. The Present 

On October 13, 2009, the Department issued its Order to Show Cause notice regarding the 

Porter Airline's permit. 

In a remarkable coincidence, three days later, on October 16, 2009, the TPA posted a 

bulletin tided 'Toronto Port Authorit}' accepting expressions of interest regarding Toronto 

Cit}' Centre Airport" on its website. We trust that the Department will not regard the issue 

of this bulletin as evidence that the Porter Airline's hub is open for fair, competitive ser\'ice 

to any and all comers. One reason is the condition cited in Ms Raitt's correspondence with 

US Airways, the Tripartite Agreement. 

Wliile seemingly open for business, the bulletin makes clear with the paragraph that follows, 

there are conditions. It states, 

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890 Yonge St, Suite 700, Toronto, Ontario, Canada M4W 3P4 
"The Tripartite Agreement, in conjunction with an NEF Contour study that is 

currentiy underwa}', limits the number of daily commercial flights that can be 

operated at the TCCA". The bulletin goes on to say that the TPA won't be in a 

position to respond to the aviation community until the study is under way." 

The bulletin, however, ignores an important comment from the Renew Of Toronto Port 

Authority Report on Page 60. "In June 2003, RegCo would have understood that the total 

ceiling for large turboprop movements (number of departures and landings) would be 167 in 

and out of the airport each day. Under die 2006 CCOA with RegCo, the number of 

movements is far lower than the number contemplated in 2003, as the ceiling for total flights 

is now 120 movements." The figure is from an authoritative source citing the TPA's CCOA 

with Porter Airlines' holding company. 

As recentiy as October 17, Mr. Robert Deluce, CEO Porter Airlines, cited in an article in the 

Globe and Mail, ja: ^ wants a piece of Porters monopoly., stated that Porter Airlines had about 100 

daily flights. This figure may be confirmed by an analysis of Porter Airlines' current 

schedule published on its website. 

The same article,/d^::;;; wants apiece of Porter's monopoly, refers to Porter Airlines' planned 

expansion by adding five more aircraft and Philadelphia and \X'ashington D.C. as 

destinations. The article goes on to cite Mr. Deluce's claim that, "By next April, it forecasts 

that it will be using 120 slots a day ... ". 

Thus, the Rei-ieii' Of Toronto Port Authority Report states that the total number of flights is 120 

and Mr. Deluce is claiming those 120 flights. The Globe and Mail article also cites a CAIR 

analysis that puts the number of daily flights between 120 and 167. The 167 is also referred 

to above in conjunction with the Ret'iew Of Toronto Port Authority Report. Even at the greater 

number, the competition will have only 47 or 28yo of the daily slots available. Offering less 

than 1/3^ of the TCCA's capacit}' to competitors is not in the public interest. 

5. Summary and Conclusion 

The record shows that in the four years since the TPA and RegCo first signed their CCOA 

no other airline has arrived at the TCCA. In fact, since the signing, the one resident 

competitive airline was torced out. 

While constraining other airlines' access to the Toronto Island Airport, Porter has exercised 

its right to fair and equal treatment in its efforts to expand its operation s in Newark. What 

benefits Porter in Newark should also benefit other airlines in Toronto. 

The Toronto market has been fragmented into a Greater Toronto Area market served by 

Pearson and a Downtown Toronto market served by Porter and Porter Airlines has a lock on 

the Downtown Toronto market. 

The operating costs are 1/5'^ for the Downtown Toronto Market at the TCCA over those at 

Pearson giving Porter Airlines a significant competitive advantage. 

A simple mathematical analysis shows that less than 30% of the TCCA's capacit}- could 

become available to the competition. 

Working towards a clean, green waterfront 

890 Yonge St, Suite 700, Toronto, Ontario, Canada M4W 3P4 
The TPA's bulletin, 'Toronto Port Authorit}- accepting expressions of interest regarding 

Toronto Cit}' Centre Airport' offers no proof that the TCCA is open for competition. 

CAIR submits it is incumbent upon the Department for the sake of the public interest in 

terms of competition and the marketplace to ensure that the TCCA is truly open for 

business before agreeing to issue Porter Airlines a foreign air carrier permit. 

All of which is respectfully submitted. 

Brian Her, Chair, 

Work: (416)598-0103x114 

Cell: (416)835-4384 

Fax:(416)598-3484 

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890 Yonge St, Suite 700, Toronto, Ontario, Canada M4W 3P4 
Appendix A 

Comparative Airport Charges — Pearson & TCCA 

Calculations are based on the following. 

o Both landing and take-off charges are included. 

o Peak period rates apply. 

o The aircraft in question is the 70-seat Q400 turboprop. 

o The aircraft is fullv occupied. 

o The aircraft weight used is the operating weight empt\' as determined by the aircraft's 

manufacturer Bombardier. 

o Domestic flight charges apply. 

o Although shown separately on the ticket, the Airport Improvement Fee is included 

since it is a cost that an airline must either recover or absorb. 

o All calculations are based on publicly available information as of 10/19/2009 

Charge 

Terminal Charge per domestic 

passenger per Q400 (S6.71 X 70) 

Landing fee based on: 

o Q400@ 17,185 kg. 

o Domestic rates 

Airport Improvement Fee X 70 

Passengers 

Totals 

Pearson 

$469.70 

$145 

$1,750 

$2,509.70 

TCCA 

$0 

$101.08 

$700 

$801.08 

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Sources: 

Q400 Specifications 

http://\\A\'w2.bombardicr.con-i/q4UO/en/spt.'cihc;ui()ns.isp 

Pearson Costs 

h I tp://www.gtaa.com/local/hies/en/Business/AirlineR,iies(^harges2l'Ul.pdt 

TCCA Costs 

http://t(>r(>ntf>pon.coETi/PortAuthiirity/i.UTport contcnt.aspr'id-21&:SfiircliTypc=^l^.x.ictPhr.i 

se&terms-landing" •.i20fL-es 

Working towards a clean, green waterfront 

890 Yonge St, Suite 700, Toronto, Ontario, Canada M4W 3P4