M
mpolo2
Guest
New island airline faces turbulent takeoff
By JEFF GRAY
Friday, February 3, 2006 Page A11
With reports from Bill Curry and Brent Jang
Opponents of the Toronto island airport yesterday attacked controversial plans for a new regional airline based there, but Mayor David Miller acknowledged there is little the municipal government can do on its own to stop the increased flights.
"The fact is that the City of Toronto doesn't have very many tools to fight this," Mr. Miller said, hours after businessman Robert Deluce told a news conference at Bombardier Aerospace's Downsview hangar that he is buying 10 70-seat planes, at a cost of $250-million, for his new venture, called Porter Airlines Inc.
Mr. Miller, who thwarted Mr. Deluce's last round of plans and made good on a 2003 campaign pledge to kill a proposed bridge to the island airport, said anything other than a "sleepy commuter airport" conflicts with Toronto's hopes for a revitalized waterfront.
The hopes of Mr. Miller and waterfront community groups to stop this move appear to hinge on the new Conservative federal government, which now oversees the Toronto Port Authority, the agency that runs the airport.
At a news conference with anti-airport community activists, Olivia Chow, the former city councillor who was elected NDP MP for Trinity-Spadina last week, told reporters the port authority is acting like a "rogue agency" in seeking more business for the airport.
She and husband Jack Layton, the NDP Leader, were asking the Conservative government to freeze plans to expand the airport and to hand control of the port authority over to the city, Ms. Chow said.
Mr. Layton's chief of staff placed a call Wednesday to the office of prime-minister-designate Stephen Harper, but a firm response was not expected this week, as the Tory cabinet has yet to be announced.
Mr. Deluce officially unveiled his plans yesterday to launch an airline this fall, flanked by Bombardier executives, Canadian Auto Workers president Buzz Hargrove -- whose union members will be building the new planes at the Toronto plant -- and by former American Airlines chief executive Don Carty, who will lead the airline's board of directors.
Mr. Deluce provided few concrete details about his plans, which include an option to buy another 10 of Bombardier's turboprop Q400s. He said the airline will run "significantly fewer" than the maximum 167 takeoffs and landings a day allowed at the airport, but he wouldn't say how many. (Currently, there are eight to 10 commercial landings a day, the port authority says.) Mr. Deluce also wouldn't say how many passengers his airline would add to the 25,000-a-year the airport handles now.
Mr. Deluce also wouldn't specify destinations, saying only that they would be U.S. and Canadian cities within 500 nautical miles.
He trumpeted the financial support that his firm, Regional Airlines Co. Holdings Inc., had been able to attract: $125-million in equity financing from backers including EdgeStone Capital Partners and Borealis Infrastructure, which invest on behalf of the Ontario Municipal Employees Retirement System (OMERS). He said the airline would create 500 jobs and pump $800-million into Toronto's economy.
The port authority announced yesterday that it made a deal with Mr. Deluce on rents and landing fees, and planned to spend $15-million on new ferry facilities to handle the increased passengers. A new, 100-passenger ferry is expected to be ready in July.
Port authority president Lisa Raitt said her agency has followed all of the rules of its 23-year-old deal -- which runs until 2033 -- signed by Ottawa and the city that limits the airport's size.
She said the Toronto City Centre Airport lost $1.7-million last year, and needs more flights to become self-sustaining. She said it was important to keep the airport open for medical flights for Toronto's downtown hospitals.
If opponents of airport expansion -- whose concerns run the gamut from noise to safety -- try to stop Mr. Deluce's plans, the spectre of a lawsuit over lost profits, which he raised when the island bridge was cancelled, still lingers.
Last May, the federal government gave the port authority $35-million to compensate for the lost business in the wake of the cancellation of the island airport bridge. The authority got to keep $7.8-million, but the rest went to "third parties" believed to include Mr. Deluce's firm, although the details of the settlement have been kept secret.
Mr. Deluce is not the only one thinking of flying more planes around Toronto's waterfront.
On the heels of yesterday's announcement, Air Canada said it intends to boost its service at Toronto City Centre Airport, even though it has received an eviction notice to leave a terminal building owned by a firm controlled by Mr. Deluce.
With ferry service being improved, the airline's Jazz subsidiary is considering doubling the number of daily flights on the Toronto-Ottawa route to eight, and also starting Toronto-Montreal service.
Mr. Deluce "can't just vote us off the island," an Air Canada source said.
Industry analysts say that airlines in general run the risk of underestimating expenses and being overly optimistic about revenue from passengers, especially with fierce fare wars that often break out.
Robert Kokonis, president of AirTrav Inc., an airline and travel management consulting firm, expressed skepticism about the chances for success for Mr. Deluce's Porter Airlines Inc. He said some consumers will be reluctant to forgo Air Canada's Aeroplan points.
But Joseph D'Cruz, a professor at the University of Toronto's Rotman School of Management, said Porter appears to be in good shape to launch its service, and it helps to have Mr. Carty, the airline industry veteran, as Porter's chairman.
"This business plan has a great chance of flying," Prof. D'Cruz said.
However, he said there will be challenges for the upstart airline amid high fuel prices and opposition from Toronto's mayor.
By JEFF GRAY
Friday, February 3, 2006 Page A11
With reports from Bill Curry and Brent Jang
Opponents of the Toronto island airport yesterday attacked controversial plans for a new regional airline based there, but Mayor David Miller acknowledged there is little the municipal government can do on its own to stop the increased flights.
"The fact is that the City of Toronto doesn't have very many tools to fight this," Mr. Miller said, hours after businessman Robert Deluce told a news conference at Bombardier Aerospace's Downsview hangar that he is buying 10 70-seat planes, at a cost of $250-million, for his new venture, called Porter Airlines Inc.
Mr. Miller, who thwarted Mr. Deluce's last round of plans and made good on a 2003 campaign pledge to kill a proposed bridge to the island airport, said anything other than a "sleepy commuter airport" conflicts with Toronto's hopes for a revitalized waterfront.
The hopes of Mr. Miller and waterfront community groups to stop this move appear to hinge on the new Conservative federal government, which now oversees the Toronto Port Authority, the agency that runs the airport.
At a news conference with anti-airport community activists, Olivia Chow, the former city councillor who was elected NDP MP for Trinity-Spadina last week, told reporters the port authority is acting like a "rogue agency" in seeking more business for the airport.
She and husband Jack Layton, the NDP Leader, were asking the Conservative government to freeze plans to expand the airport and to hand control of the port authority over to the city, Ms. Chow said.
Mr. Layton's chief of staff placed a call Wednesday to the office of prime-minister-designate Stephen Harper, but a firm response was not expected this week, as the Tory cabinet has yet to be announced.
Mr. Deluce officially unveiled his plans yesterday to launch an airline this fall, flanked by Bombardier executives, Canadian Auto Workers president Buzz Hargrove -- whose union members will be building the new planes at the Toronto plant -- and by former American Airlines chief executive Don Carty, who will lead the airline's board of directors.
Mr. Deluce provided few concrete details about his plans, which include an option to buy another 10 of Bombardier's turboprop Q400s. He said the airline will run "significantly fewer" than the maximum 167 takeoffs and landings a day allowed at the airport, but he wouldn't say how many. (Currently, there are eight to 10 commercial landings a day, the port authority says.) Mr. Deluce also wouldn't say how many passengers his airline would add to the 25,000-a-year the airport handles now.
Mr. Deluce also wouldn't specify destinations, saying only that they would be U.S. and Canadian cities within 500 nautical miles.
He trumpeted the financial support that his firm, Regional Airlines Co. Holdings Inc., had been able to attract: $125-million in equity financing from backers including EdgeStone Capital Partners and Borealis Infrastructure, which invest on behalf of the Ontario Municipal Employees Retirement System (OMERS). He said the airline would create 500 jobs and pump $800-million into Toronto's economy.
The port authority announced yesterday that it made a deal with Mr. Deluce on rents and landing fees, and planned to spend $15-million on new ferry facilities to handle the increased passengers. A new, 100-passenger ferry is expected to be ready in July.
Port authority president Lisa Raitt said her agency has followed all of the rules of its 23-year-old deal -- which runs until 2033 -- signed by Ottawa and the city that limits the airport's size.
She said the Toronto City Centre Airport lost $1.7-million last year, and needs more flights to become self-sustaining. She said it was important to keep the airport open for medical flights for Toronto's downtown hospitals.
If opponents of airport expansion -- whose concerns run the gamut from noise to safety -- try to stop Mr. Deluce's plans, the spectre of a lawsuit over lost profits, which he raised when the island bridge was cancelled, still lingers.
Last May, the federal government gave the port authority $35-million to compensate for the lost business in the wake of the cancellation of the island airport bridge. The authority got to keep $7.8-million, but the rest went to "third parties" believed to include Mr. Deluce's firm, although the details of the settlement have been kept secret.
Mr. Deluce is not the only one thinking of flying more planes around Toronto's waterfront.
On the heels of yesterday's announcement, Air Canada said it intends to boost its service at Toronto City Centre Airport, even though it has received an eviction notice to leave a terminal building owned by a firm controlled by Mr. Deluce.
With ferry service being improved, the airline's Jazz subsidiary is considering doubling the number of daily flights on the Toronto-Ottawa route to eight, and also starting Toronto-Montreal service.
Mr. Deluce "can't just vote us off the island," an Air Canada source said.
Industry analysts say that airlines in general run the risk of underestimating expenses and being overly optimistic about revenue from passengers, especially with fierce fare wars that often break out.
Robert Kokonis, president of AirTrav Inc., an airline and travel management consulting firm, expressed skepticism about the chances for success for Mr. Deluce's Porter Airlines Inc. He said some consumers will be reluctant to forgo Air Canada's Aeroplan points.
But Joseph D'Cruz, a professor at the University of Toronto's Rotman School of Management, said Porter appears to be in good shape to launch its service, and it helps to have Mr. Carty, the airline industry veteran, as Porter's chairman.
"This business plan has a great chance of flying," Prof. D'Cruz said.
However, he said there will be challenges for the upstart airline amid high fuel prices and opposition from Toronto's mayor.