Ready for Takeoff: Porter Airlines CEO Unveils Plans for Massive Expansion and New Destinations

Michael Deluce, CEO of Porter Airlines and master of understatement, has a word to describe his experience managing an airline during the most disruptive event in the centuries-old history of commercial aviation:

“Different.”

Within months, the Toronto-based airline suspended its flights, laid off nearly all of its workers, lost millions of dollars in customer revenue, received millions in government aid, and fought the airport owner in court for more than $ 45 million in unpaid lease payments.

That is certainly different. A more spirited CEO could have used another term: “stressful,” perhaps. “A real headache,” perhaps.

But Deluce is left with “different”. And there may be a good reason for your composure.

In recent months, the airline has been quietly preparing for an expansion that could shake up the Canadian airline industry.

Porter doubled the size of its fleet over the summer and launched plans to fly to and from Pearson Airport, along with the international airports of Ottawa, Montreal and Halifax. It paid $ 5.82 billion for up to 80 Embraer E195-E2 jets, a huge discount, experts say, which will expand the company’s route catalog to include sunny destinations like Mexico and the Caribbean, starting in 2022.

The services associated with Porter’s space at Billy Bishop Airport – the comfortable lounge, snacks, coffee and alcohol – will accompany the airline to its new locations, Deluce told the Star in an interview describing his plans for the company.

“This is an investment in our future. Some of our biggest competitors have lost billions of ways that will permanently hurt their business in the future, and that leaves us with an opportunity, ”he said.

“We are going to offer a superior product.”

Industry experts say the airline needed to grow to survive the pandemic. When the closures came, Porter, along with smaller airlines such as Sunwing and Air Transat, suspended their services. and laid off most of the employees. The nation’s two largest airlines, Air Canada and WestJet, were dramatically reduced in size, laying off thousands of workers and canceling flight routes almost monthly.

Porter’s flights from Billy Bishop Airport in the Toronto Islands only resumed in September, after an 18-month suspension.

Consumer habits also changed. Business travel sank, while the demand for pleasure flights grew.

During the lockdowns, the federal government distributed more than $ 7.3 billion in ransom money to Canadian airlines. Porter, one of the first to receive financial assistance, received a $ 135 million loan from Export Development Canada in May 2020. He received another $ 270.5 million in repayable loans in July.

In the first months of 2021, while other airlines negotiated the terms of the bailouts with the finance department, Porter bought 30 Embraer airliners with the option to buy another 50.

The price the company paid for those planes was a “good deal” given the product, said John Gradek, a former Air Canada executive who now works as a professor of aviation leadership at McGill University.

Aviation prices fell during the pandemic, while air travel plummeted, allowing capital-based airlines to get a discount on new assets.

“So now they have these wonderfully equipped new jets that they got at a great price. That puts them in a good position, ”Gradek said.

It remains to be seen if Porter can compete alongside mega-airlines that dominate airports like Pearson. But Deluce says his airline can offer competitive prices and better services.

“We have a lot of money to make sure we can expand into a competitive environment,” he told the Star.

While Deluce insists the company will not abandon Billy Bishop Airport, Porter’s expansion to new airports comes as it fights the airport’s owner, Nieuport Aviation, in court over fees associated with aircraft parking.

The disputed companies initiated a series of lawsuits against each other during the pandemic, each claiming that the other had violated its contractual obligations. Nieuport alleges that Porter owes up to $ 45 million in unpaid fees for its aircraft parking spaces. Porter argues that the fees should have been waived during the toughest lockdowns of the pandemic, when the company was unable to operate profitably.

Details of the lawsuits reveal how Porter once threatened to ditch Billy Bishop altogether in 2018 for his terminal fees, predicting a $ 35 million loss in profit if he stayed at the airport.

Deluce says the company resolved those issues with Nieuport and has made Billy Bishop a “long-term part of our network.”

But the legal dispute between the companies continues; their dispute goes to trial in November.

Gradek believes the lawsuit is one of many ways the company is cutting expenses while financing its expansion, a ruthless move by a company struggling to stay profitable.

“It’s an interesting business strategy, more than anything else,” Gradek told the Star. “The airport owners need to be careful, because Porter is their main source of income, and now Porter has money in the bank after not paying the rent at Billy Bishop “.

The legal action has worked to Porter’s benefit before. Deluce co-founded the company with his father, Robert Deluce, in 2006 amid a bitter fight over the island’s airport.

A few years earlier, in 2002, the Toronto Port Authority had announced a plan to improve access to what was then known as the Toronto City Center Airport, a smaller property that houses only Air Canada Jazz flights. to Ottawa, by including a $ 15 million bridge. from the city center to the airport.

When the bridge was abruptly canceled due to political opposition, Robert Deluce, who was supposed to operate an airline at the renovated airport, launched a $ 505 million lawsuit against the city and the federal government. He received an unspecified deal in 2006 and bought the airport building shortly thereafter, quickly canceling Jazz’s lease.

Porter moved to the airport during the year, although restrictions on the size of the plane have prevented him from flying on routes outside of North America.

“Michael builds on this great vision that his father had,” said Robert Kokonis, founder of Toronto-based aviation consulting firm AirTrav.

“To grow, you now have to look at other airports in this country and beyond.”

Kokonis says the company’s expansion is a way to hedge against the decline in business travel, one of Porter’s top offerings at Billy Bishop.

“The impact of virtual calls and remote work will have a hangover effect on business travel,” Kokonis said. “By moving the flights to Pearson, they have the opportunity to reach a broader segment of leisure consumers.”

Deluce knows it. New aircraft and airport locations provide flexibility for the company, allowing it to get away from business trips as needed. “Business travel will be one of the last market segments to rebound, and it is uncertain whether or not it will ever make a full recovery,” he said.

Things will be different, is what you are saying.