Joe,

Thank you for your comments on TPA, the community and load figures.

While your suggestions on how the TPA might want to improve community relations are welcome, if they are directed to the TPA, they are likely to fall on deaf ears.  After all, Roger Tasse, in his report over three years ago, recommended much the same and the TPA has continued to operate in a non-co-operative way, confusing presentations on what course of action they intend to take with community consultation.

On the matter of Porter loads, if I understand your explanation of yields correctly and apply it to public information at hand, I come up with the following.

According to Bombardier’s website on the Q400’s economics, http://www2.bombardier.com/q400/en/turbo.jsp, a 70 seat Q400 breaks even at 25 passengers at $100 U.S. a seat for a 300 nautical mile (nm) flight with fuel at $2.50 a gallon.  That puts the cost of the flight at $2,500 U.S.  I believe that covers direct costs only and does not account for overheads like advertising, debt charges, head office, etc.

The distance Toronto to Chicago is 380 nautical miles, 80 nm further.  However, the extra nm is likely offset with presnt-day lower cost of fuel.

Porter’s highest Toronto-Chicago seat price is $239 CDN or with a frequently advertised 20% discount, $191.20 CDN.  An average 18% load to Chicago amounts to 13 passengers.  At 13 passengers paying the highest fare with a 20% discount, $191.20, yields $2,485.60 a few dollars less than the breakeven for direct costs.

It is unlikely that all 13 passengers are paying the highest cost, so for every one who isn’t, the $2,485.60 income is reduced and when the indirect costs are added in, it is difficult to argue that the yield, in this case, is profitable.

What about the yields on the other routes?  As Mr. Iler points out, Porter is not flying the predicted number of flights to the bread and butter destinations: Ottawa and Montreal.  If this is because there is not enough business or growth on these routes, then why the need for more planes and an expanded terminal? 

If more planes are needed for future routes, how viable are these routes?  For example, Philadelphia is touted as a possible future U.S. destination.  The first six months of 2009 saw about 120,000 passengers fly from Philadelphia to Toronto.  The number of passengers on the Chicago-Toronto route was 443,000 over the same six months.  The Philadelphia-Toronto market is a little over ¼ the size of the Chicago-Toronto market.  It is difficult to see how a new airline taking on existing competition will win sufficient loads or yields in the foreseeable future to capture all its costs let alone turn a profit.

You qualify Porter as wildly successful.  There is no argument that Porter is wildly successful in the eyes of its proponents and in the marketing world.  Is it wildly successful economically?  Robert Deluce, President and CEO, claims profitability practically since Porter started operating.  Maybe so, but how long before expansion costs, low yields, and increased competition eat into that profitability?  We won’t know for sure until Porter opens its books when Initial Public Offering time comes knocking.  In the meantime, indicators like low loads and non-weather related flight cancellations must mean something.

Bob Kotyk