Air Canada to challenge Toronto Port Authority
Scott Deveau, Financial Post
The Toronto Port Authority has entrenched Porter Airlines’ dominant position at the Billy Bishop Toronto City Airport by refusing to explore alternatives that would grant greater access to its competitors at the Toronto Island airport, Air Canada will argue before the Federal Court next week.
The country’s largest carrier will also charge that the TPA, which oversees the airport’s operations, has adopted a framework for allocating the additional landing slots this month that is without precedent, and does little more than limit competition on the island.
For the past five years, the TPA has held an exclusive arrangement with Porter Airlines that, while sanctioned by the federal Competition Bureau, has prevented other commercial carriers from offering service to Billy Bishop, a federal facility.
That agreement expired this spring and the TPA undertook a process that resulted in the allocation of 90 new landing slots at the airport last week.
The TPA said it would grant 44 of those slots to Porter, which already has 112 at the airport, 30 to Air Canada, and 16 to Continental Airlines.
But even before the additional slots were allocated, Air Canada cried foul of the process and sought an injunction in the federal court in the matter.
Its case will now be heard in Vancouver July 6 to 8.
Air Canada’s arguments centre on the fact that the TPA determined for itself in December that it was a capacity-constrained airport akin to Toronto’s Pearson International Airport or New York’s JFK, because it had more informal expressions of interest than landing slots available.
As such, it determined it would follow the International Air Transport Association’s guidelines for allocating additional slots at such airports, whereby half of the new slots would be granted to incumbents with the remainder to be split by new entrants.
Steve Lott, IATA spokesman, said while the TPA has not undergone the formal process by which an airport would receive a designation as “capacity-constrained,” ultimately it is up to the TPA to determine how the slots are allocated. He noted, however, that he was unaware of any case where half the slots were allocated to incumbents when there was only one incumbent, like there is with Porter at Billy Bishop.
Air Canada intends to challenge the TPA on its self-designated status as a capacity contrained airport, but also on the fact that it allegedly ignored alternatives that may free up additional landing slots at the airport.
For example, it will note that Billy Bishop requires that any carrier wishing to fly before 7 a.m. and after 10 p.m. forfeit 16 of its landing slots for each flight in or out of the airport as a deterrent to flying out at those times. Porter currently has seven flights in those periods of time, which Air Canada argues could simply be bumped into normal hours of operation, freeing up dozens of landing slots for competitors in the meantime.
Air Canada has also offered to build its own terminal, a move that has been blocked by the TPA after it forged an exclusive arrangement with the City Centre Terminal Corp., which is owned by Robert Deluce, Porter chief executive, that forces any new entrants to use new $50-million terminal at Billy Bishop rather than establish their own.
The TPA has maintained that it has adhered to the best international practises throughout the slot allocation process. Geoffrey Wilson, TPA chief executive, would not comment on Air Canada’s allegations Monday.
Porter's Mr. Deluce said the slot allocation process selected by the TPA has suited Air Canada just fine at places like Toronto’s Pearson International Airport, where it has reaped the benefits in the past as an incumbent.
“But when they’re applied at places like [Billy Bishop], they seem to have a problem with it,” he added.
While he conceded that Pearson has an official IATA designation as being a capacity-constrained airport, he noted there are several airports around the world that don't operate by the industry group's designations.
He added that Air Canada had a virtual monopoly at the Island airport for 16 years before Porter landed on the Island. At the time that Air Canada was evicted in 2006, the airport served 21,000 passengers. This year, Mr. Deluce expects the airport will see more than 1.3 million passengers pass through its gates.
Neil Raynor, director of Jacobs Consultancy, which advised the TPA on how many additional slots would be allocated, said there is little doubt that the airport is capacity constrained due to a number of factors, including its adherence to noise guidelines, operation hours, and other limitations from its terminal, runway and parking space.
The Airport Coordination Ltd., a UK-based consultancy group, which has advised on slot allocations at London’s Heathrow, Gatwick and City airport and advised the TPA on its process, stood by its position to use the IATA standards.
“The idea was to base it on the established best practices used elsewhere. I don’t know another way of doing it that would have been more fair,” said James Cole, ACL director of coordination.
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