Island airline gets cash from GE

[ganjavih]

Island airline gets cash from GE

Porter adds two new investors
Opponents fear airport plan
Jun. 20, 2006. 06:28 AM
MADHAVI ACHARYA-TOM YEW
BUSINESS REPORTER


Robert Deluce has gained a big financial ally in his bid to launch Porter Airlines from the Toronto Island airport.

Two new investors, including the private equity arm of behemoth General Electric Co., have joined a group that has raised $125.7 million for the controversial venture.

The investment from GE Asset Management's international private equity group and a Canadian firm, Dancap Private Equity Inc., is a vote of confidence in the business model for Porter Airlines, Deluce said in an interview yesterday.

He declined to give details on each firm's investment, but said the total is more than enough to get the airline off the ground. "It's a good, strong equity raise, which will see us up and running with a strong balance sheet," the entrepreneur said.

The regional carrier is expected to launch in September or October.

"Robert Deluce and his management team have done a terrific job of pulling this opportunity together and we look forward to a successful launch later this year," Kishan Pandey, vice-president of GE Asset Management's international private equity group, said in a release yesterday.

The group's international private equity fund is a $436 million (U.S.) limited partnership sponsored by GE Asset Management to make non-U.S. private equity investments.

"We expect this to be a great investment as well as an opportunity to boost Toronto's economy and facilitate business and tourist travel to Toronto," said Aubrey Dan, president of Dancap.

Dancap Private Equity Inc., a private firm founded in 2002, invests in small and medium-sized Canadian businesses in a wide range of industries.

Porter's other investors include EdgeStone Capital Partners, Borealis Infrastructure and REGCO Capital Corp.

Jazz, Air Canada's regional carrier, was the only airline to offer continuous service from Toronto Island in recent years.

Its month-to-month lease was held by City Centre Aviation, which is owned by Deluce's holding company. Jazz was evicted from its offices in March.

Jazz is pursuing the matter in Federal Court, where the case is scheduled to be heard in early September, said Debra Williams, a spokesperson for the airline.

"We're still optimistic we will return to service at Toronto Island airport."

The start-up airline still faces strong opposition from community groups concerned that noise from a busy island airport will disturb downtown residents and tourists.

 

[billonlogan]

Link to article and picture

Canadian fashion label Pink Tartan will design uniforms for the staff of new Porter Airlines. The Toronto- and New York-based luxury brand founded by Kim Newport and Joseph Mimran will create uniforms for airline's pilots, flight attendants and sales personnel.

"Pink Tartan is a perfect fit for us," said Robert Deluce, Porter's President and CEO, "The style, sophistication and elegance for which Kimberley and Pink Tartan are renowned will bring a fresh look to airline's terminal and in-flight experience."

"The opportunity to design a complete look for a new and unique airline is exciting," said Kimberley Newport, "I have a vision of air travel as glamorous experience, in which flight attendants make a real style statement and are a true expression of Porter's brand image."

"We are striving to create a unique and memorable passenger journey," added Robert Deluce.

"Creating the right first impression is very important in this."

Porter Airlines Inc. is a regional passenger carrier that will operate out of Toronto City Centre Airport. The airline will begin scheduled service in 2006 to short-haul Canadian and U.S. destinations within a 500-nm radius of the Greater Toronto Area.

 

[livesquid]

short-haul Canadian and U.S. destinations within a 500-nm radius of the Greater Toronto Area.

500 nm! That *is* short-haul.

 

[billonlogan]

Regional carrier to begin service this fall with 10 weekday Ottawa - Toronto round-trips

OTTAWA (Reuters) - A new airline set to start operating out of Toronto's city center island airport later this year announced its first route on Tuesday, dismissing protests from opponents who say the carrier will cause excessive noise and should be denied permission to fly.

Porter Airlines President Robert Deluce said service would begin with 10 round trips a day to Ottawa from the island, which is close to Toronto's downtown financial hub.

The carrier -- which has ordered ten 70-seat turboprop planes from Bombardier Inc. and has options for another 10 -- eventually plans to fly to 17 cities in the United States and Canada, including Boston, Chicago, Washington, New York, Philadelphia, Detroit and Montreal.

"(Flights will) start from relatively early in the morning until nine or 10 o'clock at night," he told a news conference in Ottawa.

This prompted an immediate cry of "Shame!" from protester Helen Kennedy, who has long opposed plans to expand operations at the airport.

Kennedy says increased air traffic was potentially dangerous and would cause more pollution and noise, which could ruin Toronto's plans to revitalize its dilapidated waterfront. The airport's only scheduled carrier is Air Canada Jazz, which flies a few turboprop flights a day.

Deluce brushed off the criticism, saying: "We know that we have a lot of supporters in Toronto ... we believe that the Toronto city center airport can coexist very nicely in an urban environment and bring real economic benefits."

The airport is run by the Toronto Port Authority, which is under investigation by the federal government over allegations it owes millions of dollars in property taxes.

"We're very encouraged by the fact that none of what is being looked at directly affects Porter. We are moving forward with our start-up," said Deluce.

The airport is in the parliamentary constituency of Olivia Chow, a federal legislator from the left-leaning opposition New Democratic Party who wants to bar Porter from flying.

"It serves no public interest and should not receive a certificate to operate," she said in a statement.

The only link to the airport is a small ferry service. The Toronto Port Authority is promising a new updated ferry, which Deluce said would allay his earlier concerns about the need for better access to the airport.

He declined to discuss air fares or the number of passengers the new airline would need to break even.

© Reuters 2006.

 

[Darkstar416]

Downtown Bulletin: Can Porker Air Really Fly?

Can Porker Air really fly?

Airline expert Mark Hill, who wrote WestJet's business plan, says Robert Deluce's Porter Air can't possibly succeed

By Frank Touby

It seems you can mix your Ts and Ks when dealing with the Toronto Port Authority…and with Porter Air. The Bulletin has learned that a proven expert in the airline industry says Robert Deluce’s planned Porter Air service at the Island airport—if the federal Tories permit it to continue existing—isn’t even a pipe dream but perhaps a pipe wrench to screw more money from taxpayers, or from deep-pocketed investors.
What is he talking about?

Mark Hill, a co-founder of WestJet and the man who wrote that 10-year-old successful air carrier’s business plan, and consulted for jetBlue and Virgin Blue, says in emails to local citizens interested in the Island airport issue: “Porter has no hope of success. He’s trying to bamboozle folks so they’ll pay him not to do it…Porter’s business plan is a stupid one, written by Deluce’s MBA son who hasn’t a clue how the industry works. 99% of [airline] startups fail within 14 months and this will be one of them.â€

Hill also comments: “I have nothing against Porter or Deluce per se, nor do I have any particular feelings about the Island… I’ve done enough start ups to see he’s full of fertilizer.†He told The Bulletin that it’s only the obvious deficiencies in the Porter plan that has prompted him to speak.
Being paid taxpayers’ money for not performing is a tradition at the Toronto Port Authority, known by many locally as the Toronto Pork Authority because it is widely viewed in Toronto to be a Liberal pork barrel imposed on us by failed MP Dennis Mills and the Jean Chretien government, then perpetuated by Paul Martin and local Grit MPs.

Funded by lawsuits against taxpayers—or just threats of lawsuits—the TPA soaks up millions of dollars per year from Toronto taxpayers in subsidies and by failing to pay the estimated $35 million in municipal taxes (technically termed PILT) it owes.

The Stephen Harper government has launched an investigation into TPA operations, headed by federal bureaucrat Robert Tassé.

An example of TPA extracting money for not doing something is the $35 million the federal Liberals paid the TPA (with some going to Deluce) for not being allowed to build a $22-million bridge. Mayor David Miller was elected in large part because he vowed to oppose a bridge to the Island airport, a bridge without which TPA said the airport would die. Miller kept that promise, though many believe he failed on his main pledge to take a cleansing broom to city hall.

Although Martin’s Liberals weren’t threatened with a lawsuit over the bridge cancellation, they said they anticipated one and made the payout from taxpayer funds to save the city from such an action.

Hill told The Bulletin that the business plan which was put together by Deluce’s son Michael (“a 25-year-old marvel out of MBA schoolâ€) is at best naïve. Hill, a Victoria, B.C. resident, is no longer with WestJet and works as an airlines consultant. He has just helped launch the start-up Volaris air line in Mexico.

Hill—and others—speculate that Deluce could be pushing forward with grand plans for an airline that won’t fly—or won’t fly for long—in order to capture more tax money in reparations when it is grounded. Did some of that no-bridge money to Deluce go into this exercise?

But it might not be tax funds as a target says Hill, noting that there’s a reported $125 million war chest Porter claims is developed with money from OMERS, the pension fund for city workers in Ontario, and General Electric.

“There’s lots of money out there that’s looking for the flyer…they [venture capital funds] have so much money to place these days. Throwing $20 million or $10 million at something when they’re told it’s a 10-banger…they’re looking for a 10-times multiple [invested funds] on this stuff. Put in $100 million in 10 different things and some of them fly and some don’t. Some very sophisticated investors have invested in some pretty dumb airlines. Big pension funds went into U.S. Airways in the States and lost it all about three or four years ago. And Fidelity out of Boston is huge, huge…they put $25 million in JetsGo and everybody knew JetsGo was going down. It’s a gamble, like going to Vegas.â€

He says the gaping flaws in Deluce’s Porter Air plan are:

1, Air Canada (and U.S. air carriers) won’t sit back and let Porter take their high-end business travelers. They’ll offer better incentives such as frequent-flyer miles, luxury waiting rooms and other perks Porter can’t offer.

2. Porter Air’s large competitors will undercut his prices, along with offering more perks, and deny him customers. Besides, his business plan calls for serving the high-end market, which would vanish with competitors slashing prices.

3. Porter Air can’t link with any major carriers from the Island airport and it’s not likely Toronto-bound passengers would land at the Island and then go to Pearson to continue their flights.

4. Porter Air has pledged to buy 10 of Bombardier’s 70-seat A400 turboprop planes that need to fly 10 hours a day, seven days a week to turn a profit. “There is no demand for that on a regional air line,†says Hill.

5. The range of airports Porter plans to serve is 500 nautical miles from Toronto, a practical maximum limit for turboprops, and there’s not enough demand for regional flights from those few airports.

Through a spokesman, Porter Air declined to comment on Hill’s remarks to The Bulletin or his emails to the community.

2006-06-27 14:38:42

 

[jeicow]

Re: Downtown Bulletin: Can Porker Air Really Fly?

1, Air Canada (and U.S. air carriers) won’t sit back and let Porter take their high-end business travelers. They’ll offer better incentives such as frequent-flyer miles, luxury waiting rooms and other perks Porter can’t offer.

2. Porter Air’s large competitors will undercut his prices, along with offering more perks, and deny him customers. Besides, his business plan calls for serving the high-end market, which would vanish with competitors slashing prices.

So even if the airport fails then the business community still benefits with the lower costs/better incentives. It'd cut down on the gouging airlines already do, and it'd make flying cheaper for the rest of us who'd otherwise end up driving/VIA.

 

[spmarshall]

Re: Downtown Bulletin: Can Porker Air Really Fly?

But the taxpayers pay the price. I'm not happy about that.

Deluce is a douche. Plain and simple.

 

[Suicidal Gingerbread Man]

Re: Downtown Bulletin: Can Porker Air Really Fly?

As for Chow, she can love me long time.

Please stop your racist ramblings.

 

[bizorky]

Re: Downtown Bulletin: Can Porker Air Really Fly?

It's an airport. It's supposed to be noisy.

Then why is Bomardier marketing it's aircraft on the basis of how quiet they are?

 

[nassauone]

Re: Downtown Bulletin: Can Porker Air Really Fly?

As for Chow, she can love me long time

Grow up

 

[EnviroTO]

Re: Downtown Bulletin: Can Porker Air Really Fly?

I think having an airport in Toronto makes great sense, as it's good for business, and good for Toronto's work to promote the city as a business powerhouse.

It's downtown right now and barely used. Air Ontario and City Express used to fly way more flights to the airport than is done now. It isn't even self-sufficient and requires federal infusions of cash. How does a propeller only, incredibly small, almost completely unused, unsustainable airport make sense for business and promote Toronto as a powerhouse? I think walking into a gigantic T1 with flights to places all over the world at Pearson promotes the city better than some rinky-dink Island Airport ever will.

If your meeting is downtown Toronto, why would you want to sit in traffic for hours to get to your flight in Mississauga.

You wouldn't hence the reason there is some effort to get a quick link to the airport. The same question could be asked by a company a Yonge and Eglinton but it doesn't necessarily justify an airport be built at Yonge and Eglinton. All Toronto really needs is airport capacity significant enough to handle demand and a way to get there.

Unless we're willing to build a direct-line rail from Union to Pearson that does not utilise existing CN/CP diesel infrastucture, thus ensuring on-time, modern high-speed rail connections, I say keep the Island Airport.

I say get rid of it. It is a waste of space on a waterfront currently being redeveloped with parks and enjoyment of the water in mind and an airport is not a good match with the overall plans. I support a quick connection to the airport and don't care it it uses diesel... diesel engines are largely diesel electrics and can pump out more than enough power to tow passenger cars to the airport quickly. Electric would be ideal but does not make or break the service in my opinion.

 

[scarberiankhatru]

"If your meeting is downtown Toronto, why would you want to sit in traffic for hours to get to your flight in Mississauga."

Sorry, but that argument is absolute rubbish...it does not take hours by car.

 

[Abeja de Almirante]

Re: Downtown Bulletin: Can Porker Air Really Fly?

So even if the airport fails then the business community still benefits with the lower costs/better incentives. It'd cut down on the gouging airlines already do, and it'd make flying cheaper for the rest of us who'd otherwise end up driving/VIA.

That's what competition is all about, and explains why Air Canada has become such a horrible airline, as they have little competition, with the exception of West Jet and Can Jet.

 

[Abeja de Almirante]

Re: Downtown Bulletin: Can Porker Air Really Fly?

Then why is Bomardier marketing it's aircraft on the basis of how quiet they are?

To keep complainers at bay.

 

[Abeja de Almirante]

Re: Downtown Bulletin: Can Porker Air Really Fly?

It's downtown right now and barely used.

Because it doesn't go anywhere but Ottawa. Where are the flights to New York, Montreal, Chicago, and other short to medium range business destinations. Drop the prop planes in place of jets, can't be any noiser than the GEP. Or have a shuttle service to Pearson to connect to international flights.