Toronto Billy Bishop Toronto City Airport | ?m | ?s | Ports Toronto | Arup

[sjc]

>>>business models based on serving someone that other people do not currently serve often find out why they were not served in the first place.<<<

While lack of potential traffic is one likely scenario, this being Canada I wouldn't rule out poor business models/decisions by the existing airlines.

A perfect example is YTZ -- Air Canada Jazz had decided that it couldn't support more than a single DH8-100 going back and forth to Ottawa at YTZ. Porter has come in and shown that there is lots of potential traffic to/from YTZ to lots of places.

EDIT: Obviously some market research would be required.

Also Air Canada and Westjet have an interest in having routes that travel through their hubs. They are less interested in non-hub to non-hub routes. While there is some of that being done by regionals, there are certainly gaps (YQB-YHZ for example).

 

[jn_12]

Just some quick points

First, you need to have the infrastructure available in ottawa or Montreal to house planes if the planes aren't going to be coming back to the hub in YTZ. An Ottawa-Washington route would require a permanent maintenance staff in Ottawa, and hangar space. Right now maintenance staff is stationed in Toronto and is shipped out if necessary and aircraft stay at the gate overnight. You also need to hire crews that are based in other places than Toronto, and that is a pretty significant cost. That's why I think they will maximize YTZ's potential before adding routes elsewhere.

Halifax is year round on weekends and daily in the summer and around x-mas. Last year there were connections through Quebec and Ottawa, as well as direct flights (which were a nightmare due to weight restrictions). Halifax is actually a really strong market for Porter

Gotta cut this short, will touch on some other things later.

 

[ShonTron]

I would think that there might be opportunities for several non-YTZ routes:
YOW-DCA
YOW-EWR
YOW-MDW (no idea if there is a market there or not)
YHZ-BOS (what sort of planes are doing that now?)

Or add some more long distance destinations via intermediate sites (creating a new non-YTZ leg) to places noone currently serves.

Perhaps something like YTZ--YZX, maybe via YTR or YGK or YOW. There could possibly be some military traffic that could help to subsidize that route.

EDIT: when they add new US destinations (such as BOS or DCA) and put staff into those destinations to support the YTZ flights, it wouldn't be much trouble to add YOW and YUL (or YQB or YHZ) flights to/from those destinations. It is looking likely that sooner or later they are going to end up with more planes than they have slots at YTZ to use. Too bad they can't do YHZ-BOS-YTZ.

For information:
YHZ - Halifax
YQB - Quebec City

YGK - Kingston
YTR - CFB Trenton
YZX - CFB Greenwood (in Annapolis Valley)

I can't see any market for YZX or YTR. Trenton isn't a worthwhile air route. Kingston has Jazz service, but that's mostly to feed into AC's network. YZX is crazy.

 

[sjc]

The failure of Canjet left Halifax in a bit of a low-service situation, which is why Porter jumped in there I believe (it wasn't on their original list of cities).

With all the new planes arriving, perhaps a secondary base might be in the cards in the future.

Air Canada Jazz has a base in Halifax. Maybe Porter could buy ACJ and pick up that.

 

[EnviroTO]

I think that they do compete on more than "we have the island" now.

- Check-in lines are usually much shorter for Porter than Air Canada/Westjet in most airports
- Porter's inflight service is better (compared with non-business class Air Canada). I like the Westjet TVs though.
- Fewer people on the plane means fewer people between you and the door getting in your way.

Check-in lines are shorter because Porter doesn't have that many passengers and there are fewer people on the plane because the plane is smaller. Both are limiting factors towards future growth I would think. How small could Porters planes be and how small would their line-ups be if they carried as many passengers as WestJet? There is a point at which Porter will be constrained by the size of the airport and the size of their aircraft with no way to give its owners growth without becoming more like WestJet and Air Canada. I suspect that we will reach that point rather quickly... probably by 2012.

 

[kEiThZ]

At that point they could well move off the island. But they seem to be doing okay right now.

 

[jn_12]

They won't be moving off the island... ever.
Why would they move beyond being a regional airline? The problems start for most airlines when you start to go longer distances on bigger and less fuel-efficient aircraft. The keys to Porter's profitability are in the Q400 and the Island.


Porter is more likely to establish a Hub elsewhere before they move to bigger planes or taking up shop at Pearson. In fact, I can never see a day when Porter has regular flights from Pearson.

 

[kEiThZ]

^ I'd second that. It was the same mistake Canjet and Jetsgo made. Another hub in say Montreal for example could work well for Porter. Most of Porter's client would probably not have a problem with a stopover in Montreal for example, on the way to Halifax....particularly if Porter builds a lounge there.

Porter also has a great growth strategy that focuses on under-serviced communities....ie Northern Ontario.

There is room for them as long as they remain a regional airline and avoid the temptation to grow too quickly. At 18 aircraft by year's end, I'd anticipate that they are probably already considering a secondary hub somewhere else. And that'd already be plenty ambitious.

 

[TOareaFan]

^ I'd second that. It was the same mistake Canjet and Jetsgo made.

I thought the problem that they had was that they attacked Air Canada on its home turf (the Toronto/Montreal/Ottawa triangle) with the only battle ground being price......something that AC can always match on a short term basis to thwart competition.

Compare that to, say, WestJet who resisted coming east to compete in that triangle (as they now do) until they too had other trips/routes/revenues to help them withstand any price wars that might happen.

To some extent, Porter is much farther down the line than CanJet or Jetsgo ever got because their value proposition is not solely based on price.

Porter also has a great growth strategy that focuses on under-serviced communities....ie Northern Ontario.

This part scares me a bit....I just don't see the sort of traffic volumes developing to support service to "underserved" communities....the Canadian traveller has always proven to be a bit price sensitive and I doubt they would be able to charge the sort of fares that would warrant regular frequencies to the sort of communities that I think you are talking about.......do they have any plans to use, for example, smaller planes or is it the Q400 all the way?

 

[jn_12]

I have to agree. If Porter has a short-fall in their business plan, it's that they plan to service cities where there might not be a market. I always thought they would do a Toronto-Thunder bay run, with alternating stops in Sault-Ste Marie and Sudbury. So you'd end up with 4-6 flights to Thunder Bay but you'd also have 2-3 flights to the smaller cities. That way you only really need 35 people in each city to fill a plane.

The other concern I have (as mentioned) is that a lot of their business plan involves going to the US where they've already tapped the busiest routes and only New York has had some success. But, the thing is, every airline has success with their New York route. Ultimately what Porter should do is look at places like Myrtle Beach and Vegas (with a fuel stop somewhere along the line) rather than somewhere like Cincinnati or Cleveland, because they'd be far more successful, despite catering to a more leisure crowd (which is essentially what Halifax is as well, so it's not abnormal, plus they have a record of going to high-end tourist destinations like Tremblant)

 

[TOareaFan]

I have to agree. If Porter has a short-fall in their business plan, it's that they plan to service cities where there might not be a market. I always thought they would do a Toronto-Thunder bay run, with alternating stops in Sault-Ste Marie and Sudbury. So you'd end up with 4-6 flights to Thunder Bay but you'd also have 2-3 flights to the smaller cities. That way you only really need 35 people in each city to fill a plane.

The other concern I have (as mentioned) is that a lot of their business plan involves going to the US where they've already tapped the busiest routes and only New York has had some success. But, the thing is, every airline has success with their New York route. Ultimately what Porter should do is look at places like Myrtle Beach and Vegas (with a fuel stop somewhere along the line) rather than somewhere like Cincinnati or Cleveland, because they'd be far more successful, despite catering to a more leisure crowd (which is essentially what Halifax is as well, so it's not abnormal, plus they have a record of going to high-end tourist destinations like Tremblant)

I am not a golfer but just about all of the suits I work with are nutso crazy golfamaniacs (I call them my winter friends....cause I don't see them all summer).......anyway, if Porter could get to those spring golf destinations with direct flights I think they would be hugely successful...not sure about Vegas.....lots of choices for getting there now and if you can't do it direct, it will be tough to compete.

 

[kEiThZ]

This part scares me a bit....I just don't see the sort of traffic volumes developing to support service to "underserved" communities....the Canadian traveller has always proven to be a bit price sensitive and I doubt they would be able to charge the sort of fares that would warrant regular frequencies to the sort of communities that I think you are talking about.......do they have any plans to use, for example, smaller planes or is it the Q400 all the way?

The remarkable thing about the Q400 is that depending on business structure, the airline only needs a third to a half of the plane full to break even. Given that Porter is a young airline with no legacy costs, if they can have about 25 passengers per trip they are probably breaking even. And from all that I've heard so far they are doing far better than that.

Compare that to Air Canada operating CRJs and Airbus narrowbodies, and having some serious legacy costs, they probably need load factors in the 60-70% range just to break even.

I am willing to bet that Deluce can make money on routes to Northern Ontario where Air Canada could never dream of doing so. Someday AC Jazz will come to its senses and go to an all prop fleet. Till then Porter will be having their breakfast, lunch, dinner and desert.

 

[Automation Gallery]

I am not a golfer but just about all of the suits I work with are nutso crazy golfamaniacs (I call them my winter friends....cause I don't see them all summer).......anyway, if Porter could get to those spring golf destinations with direct flights I think they would be hugely successful...not sure about Vegas.....lots of choices for getting there now and if you can't do it direct, it will be tough to compete.

Myrtle Beach is aprox 650 miles south of Toronto Bombardier Q500 planes can travel 1100 miles with out refueling, so Porter would have no problem having a direct flight to this destination. Atlanta at 950 miles would probably be the most southern city that this aircraft would fly on non-stop. Vegas with a distance of over 2200 miles would be out of the question with most likely two stop overs.

 

[TOareaFan]

Myrtle Beach is aprox 650 miles south of Toronto Bombardier Q500 planes can travel 1100 miles with out refueling, so Porter would have no problem having a direct flight to this destination. Atlanta at 950 miles would probably be the most southern city that this aircraft would fly on non-stop. Vegas with a distance of over 2200 miles would be out of the question with most likely two stop overs.

Many people going to Vegas now connect in Chicago......but at O'hare.....wonder if it would not make sense for Porter to link to an airline going to Vegas from Midway and getting people there that way.

 

[kEiThZ]

Many people going to Vegas now connect in Chicago......but at O'hare.....wonder if it would not make sense for Porter to link to an airline going to Vegas from Midway and getting people there that way.

Porter could eventually get a tie in to an American discount airline as a way of expanding their network. Alternatively, they could always open their own hub in the US following the current business model. The only airline that comes close to what Porter is doing now is Colgan Air, a regional subsidiary for a bunch of major airlines, and Horizon Air (a sister airline to Alaska Airlines). There could well be room for a Porter expansion into the US well down the line. Would be similar to the Flybe model in Europe.