BRENT JANG

From Tuesday's Globe and Mail

May 20, 2008 at 2:00 AM EDT

The U.S. Federal Aviation Administration is ordering Porter Airlines to scrap four of its 14 daily flights between Toronto and Newark, N.J., rejecting the upstart's argument that a scaled-down schedule would violate the U.S.-Canada open skies pact.

“The U.S.-Canada open skies agreement requires the FAA to accord fair and equal, not preferential, treatment,” the U.S. regulator said in its ruling.

It's crucial for the FAA to take steps to help reduce “persistent congestion and delays” this summer at Newark Liberty International Airport, according to the ruling.

Porter, with home base at Toronto City Centre Airport, said this month that the U.S.-Canada open skies pact stresses the importance of allowing more aircraft to fly to new destinations, and that the marketplace should dictate “the level of service, fares and competition in the U.S.-Canada markets.”

But the FAA said its “final order” on Newark will take effect this summer, with Porter cancelling 29 per cent of its daily slots on weekdays, as well as shaving its already slimmed-down Sunday schedule. Porter previously said the new rules could effectively restrict it to operating at Newark between 7 a.m. and 5 p.m.

Toronto's island airport has an 11 p.m. curfew, making it unworkable to fly out of New Jersey late at night, the carrier emphasized.

Porter launched operations in October, 2006, by flying between Toronto and Ottawa. The carrier has expanded since then, including starting its Toronto-Newark service on March 31 this year, triggering a price war with Air Canada on the route.

Porter president Robert Deluce had been seeking permission for prime slots this summer to land at Newark at 5:30 p.m. and depart at 6:30 p.m. But the FAA said it is keen to avoid summer travelling chaos in the New York area, and is concerned that delays at three major airports in the region would send ripples across the United States.

Briefing notes by Porter indicate that it budgeted about $3-million for an advertising campaign, promoting the Toronto-Newark service to “time-sensitive business travellers,” in major daily newspapers in Canada and the United States.

“Porter's reputation is at stake in this decision as we have advertised this service and created an expectation which we must now fulfill,” the airline said in the notes, prepared for the FAA to consider before it made its ruling. “The result of any reduction to the previously approved schedule will have a very serious financial impact on Porter” during “a critical stage in its development.”

Air Canada and Houston-based Continental Airlines compete on the route between Toronto and Newark, but the larger rivals do not stand to lose any of their slots during “oversubscribed” peak travelling hours, Porter complained.

Montreal-based Air Canada, which is slated to enjoy grandfathering provisions protecting its New Jersey slots, said it “generally supports” the FAA's efforts to control delays at Newark.

Privately owned Porter, which operates Bombardier Q400 turboprops, estimates that it has sold 25,000 seats on the Toronto-Newark route.