- Listed: April 16, 2013 9:43 am
Porter Airlines set to unveil expansion that could heat up Canadian competition
Competition could heat up in Canada’s airline industry as Porter Airlines is set to announce an expansion to its service based from a downtown Toronto airport.
“Porter Airlines to spread its wings,” the airline said as it announced a news conference Wednesday to outline its growth plans at Billy Bishop Toronto City Airport.
The event comes as the Wall Street Journal, citing two people familiar with the deal, reported Tuesday that Porter signed a letter of intent with Montreal-based Bombardier in December for the CSeries jets.
The addition of the CSeries jets would be a major shift for Porter, which uses only the smaller Bombardier Q400 turboprop planes in its fleet.
Bombardier announced in December that an unidentified customer in the Americas had expressed interest in a dozen, 110- to 125-seat CS100 jets with an option on 18 more.
It valued the 30 planes at $2.08 billion US before discounts.
Bombardier CEO Pierre Beaudoin wouldn’t confirm the report, but said the airport’s 4,000-foot runway is too short for the CSeries and jets are barred from the airport.
Beaudoin was asked about the possibility of those limitations changing.
“I build airplanes, not airports,” he told reporters in Montreal after speaking to the Montreal Council on International Relations.
Beaudoin said it’s up to customers to announce contracts and wouldn’t indicate if a Bombardier official will attend the event.
Porter competes with Air Canada and WestJet Airlines Ltd. and has differentiated itself by using the small island airport near downtown Toronto as its main base.
Adding longer range CSeries wouldn’t mean transcontinental flights, but would put Winnipeg and Florida within range, said analyst Cameron Doerksen of National Bank Financial.
The analyst said Porter would face “fierce opposition” from its larger rivals. Adding another hub elsewhere in the country would provoke a war.
“This may lead to yield erosion in the short- to medium-term, but will make it difficult for Porter to establish a presence outside its current area of operations without incurring significant costs,” he wrote in a report.
Operating the CSeries from its Toronto hub would eat into its rivals’ traffic and reduce yields on longer routes to the United States and elsewhere.
However, Porter won’t be a near-term competitive threat because the initial fleet of only 12 planes would only begin to be delivered until late 2014 or ’15, Doerksen added.
He said the country’s top two airlines would continue to benefit from the size of their networks, frequency advantages and the fact that most Toronto travellers fly from Pearson International Airport.
Flying high with Porter Airlines
Robert Deluce, president and CEO of Porter Airlines, will be the keynote speaker at The Canadian Club of Hamilton. His topic is: Flying high with Porter Airlines.
When: Thursday, April 18. Registration: 11:30 a.m. Luncheon: noon.
Where: Waterfront Banquet Centre, 555 Bay St. N., Hamilton.
Tickets: $30 for members, $45 for nonmembers. Advance registration required. Go to: www.canadianclubofhamilton.ca or call 905-521-8832.
The Canadian Press
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