Porter Airlines

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Old Mar 1, 06, 2:41 pm
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Porter Airlines

It appears Porter will get ugly fast.

If you model 7 destinations, (YYZ, YOW, YUL, DCA, LGA, ORD and BOS), with about 130 r/t's a week, which is the mininum sort of frequency they'll need to be in these markets, the outlook is horrible.

First of all, ACE will never let Porter get the sorts of fares they think they'll get in their business plan. If they did, they could get some traction in the market place, so watch for fares to plunge and points offerings on these routes for anything approaching a premium fare, to be nothing short of magnificent.

Second of all, I'd be surprised to see Porters domestic route l/f's above 50%, and the transborder much above 35%. It's going to take a long time to convince people to change buying habits, switch to the Island and wean them off points.

My guess is they may indeed see an average fare of around $200, but with casm around 23 cents and all inclusive rasm around 20 cents on this short haul, (336 mile asl), stuff, Porter may lose about 3 cents an asm, or about $130K a week in the marketplace.

The fare war will be short and particularly vicious for two reasons.

1. Ego's have been bruised at ACE. It's personal now.

2. The reduction of yield on these roots for ACE will be quite painful. If Porter starts with meaningful frequency, ACE will have to blanket the fare reductions over all their flights. All it takes is one competitor with one flight a day to meaningfully mess with yields in the marketplace. ACE will want this yield erosion to be over asap, so they won't pussy foot around with their competitive response.

This will be fun to watch.
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Old Mar 1, 06, 2:50 pm
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Not sure of allure of Island Airport anyway

Originally Posted by Coffeebean
.....
If you model 7 destinations, (YYZ, YOW, YUL, DCA, LGA, ORD and BOS), with about 130 r/t's a week, which is the mininum sort of frequency they'll need to be in these markets, the outlook is horrible.....
Please correct me all you travelling executrons if need be, BUT:

How many of you really live downtown or else go to the airport from your downtown office? If you are business travelling, wouldn't you tend to leave from home and head to the airport? If so, why would you take a limo downtown (in rush hour?), wait for a ferry, then get on a puddle jumper to get to one of the above??

I wouldn't do it myself. Easier and quicker for me to get to YYZ.

There was a reason that Jazz didn't have a lot of flights off the island. Likely demand is low.
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Old Mar 1, 06, 3:04 pm
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Before the confirmed upgrades on the passes I use to use the island to go to Ottawa if I was leaving form work downtown. I live in the east end and am only about 30 minutes to Pearson. There will certainly be demand for business travellers flying into the city for the daily meetings from YUL, YOW, NYC, etc. There are many people who fly in and out same day. I would think this would be convenient for them. Much quicker to land on the island and get downtown first thing in the morning than Pearson. Same getting out if you are going from downtown. Just my 2 cents worth. I would like to see them succeed since I hate the tree huggers on the island who think they should run everything even though they pay little in taxes or leases for their land.

And Miller is a moron who keeps beating this thing to death. I guess it was time for another round since municipal elections are pending in the fall. He can't do anything else he has to find a fairy tale war against Deluce. Much the same strategy as the Martin government. Eventually, people start to catch on, eventually I hope Torontonians catch on. Not likely though, look how many are still leaf fans.
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Old Mar 1, 06, 4:15 pm
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Looks like CoffeeBean agrees with my analysis on this matter from two or three weeks ago that I posted in the ongoing Toronto Island thread on this same topic. Only difference, I was suggesting JAZZ has been holding off on upgrading its DASH fleet until this got played out so it could pick up a bunch of new Q400s real cheap. (Though at 70 passengers these are much larger than JAZZ's routes would really be able to use viably, save for a few shuttles a day across to YYJ from YVR, or between YEG and YYC.)

He's also right about this now being personal. Heard Duncan Dee on the Ontario CBC noonhour show and he was questioning where Ottawa was in permitting the Ports Commission to create a monopoly at a publicly-owned airport. Not to mention the only scheduled airline to continuously use the airport. (And when will CBC get some editors and reporters who know something about their subject? Yesterday's local news stories all tagged JAZZ as "AC's discount airline"!)

I would see PORTER trying to get lots of weekend tour packages between US cities and Toronto hotels going. But the biggest draw -- LOTR -- is going to be off-limits in these packages. (Maybe that's why AC locked into its sponsorship with the Mirvish's, to head off this package option.)

BTW, I see WS plans to set up its own tour company, offering packages directly to the public on its enhanced website.

Last edited by Shareholder; Mar 1, 06 at 4:25 pm
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Old Mar 1, 06, 4:52 pm
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I give Regco less than a year before it goes belly up, that's if it even gets off the ground....I get a feeling that the downtown tree huggers (if that's not an oxymoron!!) will not let this thing flourish at TCCA and I don't think the City will make it too easy either. Also Rego won't be able to operate there as the monopoly they want to be either and Jazz will give them a run for thier money.

The travel times from downtown given in a previous post are way off too...you can get from/to YYZ - downtown easily within 20-30 mins and when the traffics slow on the Gardiner it will be slow for the harbourfront too.

In the end I just don't think there's enough business types interested in going to the island....it will just take a few major flight delays or cancellations with none of the other alternatives that a major hub offers before they jump ship again......Just the thoughts of an amused dbystander.
Above from another thread earlier this week.

Still think as mentioned in this thread that it's going to be a bumpy but very interesting ride!! This Deluce guy is one cocky piece of work!!
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Old Mar 1, 06, 6:55 pm
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Casm of 23 seems way high to me. IIRC CoffeeBean quotes casm for Jazz of something like 28 cents with Jazz operating a fleet of far less efficent aircraft than the Q400. My guess is that Porter will be operating with far less overhead than Jazz and possibly less than WJ. Factor in presumably far lower landing fees at the Island than YYZ and Porter will almost certainly be the lowest cost carrier by a country mile.

If Bombardier's web site is to be believed, break-even load factor for a 300 NM trip (roughly YTO - YUL) charging an average $100 (US?) per seat is 35%. See http://www.q400.com/q400/en/turbo.jsp

If these numbers are to be believed, don't count them out too soon.
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Old Mar 1, 06, 7:41 pm
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Originally Posted by The Lev
If these numbers are to be believed, don't count them out too soon.
Don't forget Jazz can sustain a loss factor for a very long time in a fare war to make them suffer.
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Old Mar 1, 06, 9:24 pm
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Originally Posted by Ford Prefect
Please correct me all you travelling executrons if need be, BUT:

How many of you really live downtown or else go to the airport from your downtown office? If you are business travelling, wouldn't you tend to leave from home and head to the airport? If so, why would you take a limo downtown (in rush hour?), wait for a ferry, then get on a puddle jumper to get to one of the above??

I wouldn't do it myself. Easier and quicker for me to get to YYZ.

There was a reason that Jazz didn't have a lot of flights off the island. Likely demand is low.
You'd be surprised.

The YOW-YTZ run is filled with public servants, not just business folks. It's the airport that makes most sense to get to if you're going to a downtown meeting.

In fact, I would argue that the government itself should operate its own Transport Canada / DND jets there -- they would save a fortune!
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Old Mar 2, 06, 3:09 am
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I'll miss Jazz on the YOW-YTZ route, which I found extremely convenient. If I was down in Toronto for work and decided to return on the weekend when Jazz wasn't flying, I would take VIA instead (but never bother with the trek out to Pearson).

If the airport allowed it, I think that Jazz could profitably build up to a more frequent schedule on larger aircraft.

The biggest thing the route had against it, though, was lack of promotion by AC and the fact that the standard rail COS for government employees is VIA1.
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Old Mar 2, 06, 4:31 am
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Originally Posted by YOWkid
...the government itself should operate its own Transport Canada / DND jets there ...
No jets. Jets would require a "fixed link." We don't want to encourage that!
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Old Mar 2, 06, 5:22 am
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Jazz will be back there soon enough. They just need to rent another facility on the airport property which is possible. Deluce can't stop them from flying out of there but he does have a lease on the building they have been evicted from.
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Old Mar 2, 06, 8:14 am
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Originally Posted by makin'miles
The biggest thing the route had against it, though, was lack of promotion by AC and the fact that the standard rail COS for government employees is VIA1.
But you'd be surprised how many federal employees don't know about that!

Also, I still most federal employees end up flying to YTZ because it saves a lot of time.
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Old Mar 2, 06, 8:25 am
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Originally Posted by makin'miles
The biggest thing the route had against it, though, was lack of promotion by AC and the fact that the standard rail COS for government employees is VIA1.
I thought another issue was weather (i.e. fog, mist etc.), and that was one of the reasons Malton was opened. Anyone know the stats WRT number of bad visibility days at Pearson vs the Island?
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Old Mar 2, 06, 9:20 am
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Originally Posted by parnel
Jazz will be back there soon enough. They just need to rent another facility on the airport property which is possible. Deluce can't stop them from flying out of there but he does have a lease on the building they have been evicted from.
Why do they need to be on-airport? They can be off airport and bus passengers right to the plane. This will certainly work when the ferry service is improved.
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Old Mar 2, 06, 11:13 am
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Originally Posted by The Lev
Casm of 23 seems way high to me. IIRC CoffeeBean quotes casm for Jazz of something like 28 cents with Jazz operating a fleet of far less efficent aircraft than the Q400. My guess is that Porter will be operating with far less overhead than Jazz and possibly less than WJ. Factor in presumably far lower landing fees at the Island than YYZ and Porter will almost certainly be the lowest cost carrier by a country mile.

If Bombardier's web site is to be believed, break-even load factor for a 300 NM trip (roughly YTO - YUL) charging an average $100 (US?) per seat is 35%. See http://www.q400.com/q400/en/turbo.jsp

If these numbers are to be believed, don't count them out too soon.
I guess the question to be asked is, if Q400's are so "low cost", how many have been ordered by low cost carriers? The answer is zero. Nada. Zilch. Not a sausage.

There appears to be a small, but consistent market for 100 to 150 passengers a day at economic fares, each way on this route.

Enter Porter with 70 seats. In order to be a competitive service, they'll need at least 5x daily roundtrips, or 350 seats a day, up from 185 seats a day. Seven a day would be better.

If they capture every single Jazz passenger, (they won't, many are hooked on points and status on AC and will use YYZ), that translates to a 37% l/f with 5x daily.

It's a mortal lock that Jazz will be back on the Island in one way, shape or form, and anything Porter does, Jazz will match, bankrolled by ACE shareholders.

Jazz offers $57 fares from YYC-YLW, 20 miles more than the distance from the Island to YOW. Jazz has 1 day advance $67 fares for a 399 mile sector from YYC-YXX, and YXX has fewer daily departures than the Island had. Has Porter figured out what will happen when those sort of fares hit the Island?

Ugly doesn't quite cover it. However, it'll also be quite ugly for ACE for as long as it lasts. It is also a marketing nightmare for the legacy carriers to cut fares to $67 one way on some 400 mile routes where there is competition, but charge $150 for 200 mile routes where there is no competition.

Consumers hate to feel like they ae being ripped off, and does nothing to instill loyalty, other than inspiring loyalty by bribing customers with their own money.

Never a dull moment in this business.
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