In 2006, the port authority took in $1,182,000 on their airport operations and spent $4,686,000 to generate that revenue.  Their loss on the airport that year was $3,504,000.

In 2007, airport revenues reached $5,119,000.  That year the port authority spent $6,478,000 to end up with another loss.  The 2007 loss was $1,359,000.

But the airport wasn’t supposed to lose money once the new improved passenger infrastructure was in place and new tenant, Porter Airlines, started its refined flying service.

Why not?

The federal government’s liability settlement over the fixed link cancellation in 2004, stated that REGCO, Porter Airline’s parent company, was to cover the airport’s losses plus 25% of the airport’s operating costs or approximately $1.2 million a year. 

John Barber’s column, "Ottawa handed out $20-million to Island airline boss" posted 27/09/06 in the Globe and Mail, cites a confidential Ministry of Public Works memo that confirms the obligation.  His column states, “The memo reveals that the agency expected Mr. Deluce to pay landing fees sufficient to cover the airport's annual operating losses as well as 25 per cent of the TPA's administrative costs.” 

Yet, the airport lost money last year even with Porter covering the annual operating loss and paying 25% of the administrative costs.

How is that possible under the terms of the federal government’s liability settlement agreement?

The probability that Porter did not meet its obligations is highly unlikely since the airline claims it is doing remarkably well.

On June 9, 2007, Robert Deluce, Porter Airlines president was cited in the Globe and Mail claiming that the company turned a profit in May, 2007.

Then a year later, on June 25, 2008, an article on www.Carrentals.co.uk stated that the airline “is reportedly close to becoming profitable” and “that Porter will turn its first profits later this summer.”

Clearly, a company that turns a profit for the first time for two years in a row is able to meet its obligations.

While the Toronto Port Authority’s 2007 Financial Statements don’t record the Porter payments as separate entities, Note 14 of the TPA 2007 Financial Statements do say that the airport collected $1,983,000 in airport improvement fees.

At $15 per departing passenger, the total represents a passenger count of 132,200 passengers departing the airport in 2007.

Assuming that the lion’s share flew on Porter planes and Porter flew approximately 5,000 outbound flights to Ottawa and Montreal in 2007 based on its December schedule for both destinations, Porter flights averaged about 27 passengers or about a 38% average load.

As Mr. Deluce noted in the Globe’s June 9, 2007 article, it is possible to make a profit if Porter fills 30% of its seats. 

Bombardier, the manufacturer of Porter’s Q400 planes, claims that an airline will break even on direct costs with a 35% load with an average seat price at $100 U.S. and fuel at $2.50 U.S. a gallon.

Last week fuel went for $4.30 a gallon and this week Porter was still offering sub-$100 seat prices from Toronto to Ottawa, Montreal and Newark.

Nevertheless, we have Porter’s word that it is making a profit.  It’s just that its payments to the port authority aren’t showing up on the financial statements.  Why is that?

Bob Kotyk