tcook052

http://business.financialpost.com/20...minate-porter/

Using Raymond James’ database of domestic airfares, he found that the price of an advance ticket from Vancouver to Fort St. John has fallen by as much as 70% in the two years since Encore entered the market. At the same time, traffic on this route has risen 400%.

Despite the surge in traffic and capacity, Mr. Cherniavsky noted Air Canada’s post-Encore revenue on that particular route has declined by approximately $8-million, or 17%.

The analyst estimates Air Canada could lose more than $150-million in revenues on seven new destinations that he believes Encore will eventually serve out of Toronto.

Mr. Cherniavsky also suggested Porter stands to lose about $65-million in annual revenue on those seven routes.

As a result, the analyst believes it will be far more challenging for Porter to withstand Encore’s impact on pricing in the east due to its smaller size.

Shareholder

Porter will hardly be impacted by Encore because PD's market is city-centre based and WS has no access to YTZ and would only be limited to a few flights a day if it were granted slots. Encore's fares would have to be very, very low to beat PD's almost weekly seat sales and attract people out to YYZ. It will suck customers from AC Express but hardly dent PD. Of course, PD has other issues to deal with and continues to put off its IPO because its numbers are obviously not as great as it'd like competitors to know.

SFO777

Analyst schmanalyst. Some analysts believe Jeff Smisek is a brilliant CEO.

HangTen

If you read the report, you would have noticed that WJ's entrance into LaGuardia Airport caused Porter's fares into Newark to drop to WestJet's levels and the damage was mostly done as fares booked within 5 days of departure dropped from $700+ one way down to a under $300 one way.

It also provided the US DoT traffic numbers that showed that traffic increases due to lower fares could not have made up for the revenue decline.

The report says that given that this has already occurred in NYC, there is no reason to believe the same would not happen in a number of other Porter markets that WJ will enter and it actually quantifies the number at $65m per year, excluding the damage already done in NYC.

It is only natural for Porter to say it will not occur, but it already has in NYC and it is not hard to imagine that it will happen again in other markets.

Airline never acknowledge they are in trouble. Does anyone remember what happened to Canadian Airlines when Mr. Benson let it slip in Nov 1999 that they were in trouble?

Bulldog83

The problem with New York is that LGA is a much more convenient airport for business travelers than EWR, but as long as Porter is flying out of YTZ they can't serve LGA. The same would be true for IAD/DCA, but I'm not sure this is an issue in any other markets - not to say that WestJet won't affect Porter, but I think New York is something of a special case.

M60_to_LGA

Not true at all. EWR has a train link to Penn Station; you can be in the heart of Midtown in about half an hour (give or take.) LGA is in a pretty distant part of Queens, not near a subway line, and if you're trying to get into the city during rush hour the traffic can be horrendous.

makin'miles

Any thoughts on Westjet purchasing Porter? They have fleet commonality and would benefit from Porter's existing network in Eastern Canada and the US Northeast (a relatively weaker spot in their own network), but of course the YTZ Porter hub wouldn't allow for connections from WS' network at YYZ.

Heffeh41

I wouldn't like it. Less competition equals higher prices.

capebretonboy

Wow! Fares down by 70% on some routes once served only by AC. Such overpriced, greedy, monopolistic pricks. Long live competition in Canada because we can't trust Air Canada to be at least a little bit reasonable when operating in their own.

HangTen

Porter has basically no competition at YTZ. How do you feel about that?

Heffeh41

Porter DOES have competition in eastern Canada and northeast USA.

HangTen

I would like to fly from Newark to YTZ on Air Canada. How do I do that?

sokolov

I've tried JFK, LGA and EWR. I prefer LGA for flying out from NYC. For flying in, LGA is fine, too, but it can have loooong waiting times for cabs, and there is no rail, which is a point for EWR.

YYCguy

While I understand the reasoning behind Westjet's shift from EWR to JFK, I, too, liked flying into EWR so I could take advantage of the Amtrak to Washington DC directly from EWR. Now I don't know how I will accomplish this without a lot of hassle, unless Westjet starts flying to Washington, which I don't think will happen anytime soon.

Heffeh41

Lolz EWR-YUL-YTZ