Ontario Securities Commission
20 Queen Street West, Suite 1903
Toronto, ON M5H 3S8

CommunityAIR’s Analysis of the

Porter Airlines Preliminary Prospectus

Porter Airlines operates out of the Billy Bishop Toronto City Centre Airport (called the Island Airport in this report).  In October 2006 the company launched its maiden flight and today Porter flies twenty Bombardier Q400 turboprop aircraft out of the Island to destinations in eastern Canada and north-eastern United States.  The company recently announced that another six aircraft will be purchased to bring the total number of planes in its fleet to twenty-six.

Violations of the Tripartite Agreement

The operations of the Island Airport are governed by a Tripartite Agreement which was signed in 1983 and amended in 1985 and 2003.  The signatories of that agreement are the City of Toronto, the Canadian government and the Toronto Harbour Commission, now replaced by the Toronto Port Authority.  One of the purposes of this agreement is to provide protection to the communities along the Waterfront and the people of Toronto from the impact of the Island Airport.

The Tripartite Agreement has a number of specific requirements and regulations governing the airport.  In our view, the aircraft used by Porter Airlines and the operations of Porter Airlines violate the terms of the agreement in certain specific ways.  These violations are material to the operations of Porter, and have not been disclosed by the Porter Preliminary Prospectus.

1. Q400 is not STOL

The Tripartite Agreement prohibits use of the airport for any purpose except “general aviation” and “limited commercial STOL (Short Take-Off and Landing) service operations”, and operations ancillary to those uses.

This stipulation was put into the agreement to ensure that only limited commercial operations are permitted to use the Island Airport.

The Q400 is not STOL –that has been confirmed by the Minister of Transport -see Appendix 1.

The TPA has attempted to justify Porter’s use of the non-STOL Q400 at the Island Airport as follows (from its “Myths” Letter[1])

Fact: Non-STOL aircraft can use the BBTCA, according to amendment of the Tripartite Agreement in 1985, provided they are approved by Transport Canada and the Canadian Transportation Agency.

This attempt is in error.

There is nothing in the Tripartite Agreement that permits aircraft to use the Island Airport “providing they are approved by Transport Canada and the Canadian Transportation Agency”.

The TPA (and Porter) are left with “general aviation”.

"General aviation" is defined, by the 1985 amendment of the Agreement to include the Dash-8 aircraft.

The Q400 is not in the list of permitted planes included in the definition of “general aviation”.

What the TPA attempts to do is suggest that as the Q400 is classified by Transport Canada “aeronautically” as part of the Dash-8 family of aircraft, it is therefore a Dash-8 for the purposes of the Agreement.

This is patently wrong.

When the Dash 8 was added to the Agreement as a permitted aircraft for “general aviation” purposes in 1985, the only Dash 8 plane that could have been in the contemplation of the parties was the Series 100/200 – a 37 to 40 passenger plane – about half the capacity, and about 60% of the weight of the Q400, which was developed in the 1990s .

The understanding of the parties at the time the amendment was made, as to what they considered to be a Dash-8, is determinative, in law.

Would the parties at that time have considered a plane (the Q400) with twice the capacity and almost twice the weight to be a Dash-8? Not likely.

The fact that the aircraft industry, and Transport Canada, consider the Q400 a derivative of the earlier Dash-8 models (and therefore within the “family” of Dash-8s) is strictly an administrative designation and quite irrelevant to the correct interpretation of the Tripartite Agreement.

The ability to use the Q400 from the Island Airport is therefore at some significant risk.

Should any of the signatories of the Tripartite Agreement decide to enforce that requirement, Porter would not be allowed to operate the Q400 out of the Island Airport.

As the entire business plan of Porter, as set out in the Preliminary Prospectus, is based upon its use of that airport as its hub of operations, disclosure of that risk is essential.

1. The Q400 Violates Noise Constraints in the Tripartite Agreement

The Tripartite Agreement contains clauses on noise because the signatories were concerned that excessive noise would disturb the waterfront and its increasing number of residents. Since that time, thousands more people have moved to the waterfront.

The prohibition of aircraft generating excessive noise is contained in paragraph 14(1)(e) of the Agreement.

Paragraph 14(2)(b) define aircraft generating excessive noise, as those creating a noise level more than 92 EPNdB on approach and 83.5 lateral. 

To avoid any ambiguity as to what standard is to be used for this noise limit, the Tripartite Agreement specifically states that data issued by the International Civil Aviation Organization, the UN-affiliated world body governing civil aviation, are to be used.

The ICAO noise data for the Porter Q400 establishes a clear violation: It certifies that the approach noise level is 93.1 on approach and 84 lateral, in excess of the permitted maximums.

Based on the ICAO data, therefore, the Q400 is an aircraft generating excessive noise and is prohibited from using the Island Airport.

Here is the TPA consultant’s February 2009 admission of this:

While the TPA consultant has stated that the ICAO permits averaging of the noise readings is permitted to bring them into compliance, such averaging is permitted only in calculating compliance with ICAO noise limits, and is not included in the tripartite agreement.

The conclusion is that the tripartite agreement is violated every time a Porter Q400 lands or takes off.

Section 15 states that a penalty of $5,000 (in June 1981 dollars) is to be charged for each violation.

Each of Porter’s landings and takeoffs should result in that penalty being charged.

Such violations of the Tripartite Agreement represent a significant risk for Porter Airlines and as such should be disclosed to the prospective shareholders of the company.

1. Noise Exposure Forecast (NEF) Contour Limits in the Tripartite Agreement

NEF contours places limits on the Island Airport expansion.  The Toronto Port Authority has recently taken the view that NEF contour study will allow up to 212 slots a day, but this is challenged by other experts. 

Based on information obtained by CommunityAIR, the slots available for large turboprops, such as the Q400, are either:

• 97 per Transport Canada on July 21, 1998: - based on the use of the Dash 100, not the Q400, which is a much larger aircraft, or

• 112 per consultant Sypher Mueller’s December 2001 report to the TPA – but states that even at that level, the NEF Contour would be breached, or

• 120 per City of Toronto in 2003 and the 2006 Tassé Report, or

• 167 per airport consultant Pryde Schropp McComb in a 2005 report to Porter’s investors.

What is known is that the last official Transport Canada study of the slots available said 97 was the limit. That included a strategic reserve of 15%, to ensure that the NEF contour is not exceeded.

While the TPA recently released its report on capacity, it has not yet been peer-reviewed and should not be relied upon until that has occurred to ensure that its projections are compliant with the NEF Contour limit.  The TPA should not be marketing slots it may well not have.

Porter’s Preliminary Prospectus relies heavily on slots well in excess of the 97 slot limit contained in the last official NEF contour stated by Transport Canada in 1998.

The Tripartite Agreement NEF Contour rules places strict limits on the number of slots that can be granted to airlines operating out of the Island Airport.  Should the actual mummer be closer to the 97 set out in the last official study, this represents a significant risk for Porter Airlines and full true and plain disclosure of all the facts on the NEF limits should have been included.

1. Curfew violations

For the protection of residents living nearby, the Tripartite Agreement stipulates that flights can only take-off or land at the Island Airport between 6:45 a.m. and 11:00 p.m. 

Porter Airlines has violated that curfew regularly. 

This is a sample list of early morning breaches of the Porter flight POE 121 leaving from the Island Airport to Newark, N.J. from February to May of 2010, based on data publicly available.

February 17^th, 6:44 a.m.
February 24^th, 6:41 a.m.

March 1^st, 6:44 a.m.

March 3^rd, 6:40 a.m.

March 9^th, 6:43 a.m.

March 29^th, 6:44 a.m.

April 12^th, 6:40 a.m.

April 16^th, 6:40 a.m.

April 23^rd, 6:43 a.m.

April 29^th, 6:42 a.m.

May 3^rd, 6:44 a.m.

May 4^th, 6:41 a.m.

As recently as Friday May 7^th, a Porter aircraft took off at 11:07p.m..

 To date the Toronto Port Authority has been very lax in the enforcement of the curfew rules. There is increasing pressure from the public and Toronto city councillors to enforce this rule.  If it is enforced it will mean that all Porter flights arriving later than curfew must be diverted to Pearson International Airport.

Brach of curfew, like breach of noise restrictions and use of prohibited aircraft, is a breach of the Tripartite Agreement and could result in termination of that agreement, which closes the airport.

The breaches of curfew by Porter Airlines represent a significant risk for Porter Airlines and should be disclosed to the prospective shareholders of the company.

Competition and Profitability

The airline industry is very competitive and the risk faced by investors is considerable.  The Porter Airlines Preliminary Prospectus outlines some of the risks faced by the company but ignores others.  What follows is a list of significant business risks to Porter that should be disclosed to prospective shareholders in the Prospectus.

1. Porter’s right to fly into the United States ends July 10, 2011

Porter Airlines requires a foreign air carrier permit from the United States Department of Transportation to fly to U.S. destinations, or an exemption from that requirement.  On March 14, 2007 Porter applied for a Foreign Air Carrier Permit and currently flies to U.S. destinations on a temporary permit.  The decision has yet to be made final and the temporary permit expires on July 10, 2011.

One might anticipate that a further exemption would in the ordinary course be given. However, given that the factual basis on which the initial exemption was, in part, obtained now is established to be wrong may well lead to a different result. Regulatory authorities do not appreciate being misled.

Porter’s current exemption was granted in part on the strength of a May 10, 2007 letter from (then) Toronto Port Authority CEO Lisa Raitt (see Appendix 2).  Her correspondence enclosed correspondence with U.S. Airways agreeing to permit it to fly between the Toronto Island Airport and Philadelphia.  The letter stated the Toronto Port Authority has never denied a U.S. carrier access to Toronto City Centre Airport.

But this is contradicted by other evidence:  Bloomberg News on October 20, 2009, reported that Porter’s 2005 Commercial Carrier Operating Agreement with the Toronto Port Authority barred regional carriers, including Jazz Air, from flying between the airport and New York, Chicago, Boston, Washington, Philadelphia [our emphasis], Cincinnati, Detroit and Cleveland.  An offer by U.S. Air to fly into the Toronto City Centre Airport could not have been consummated as it contravened the exclusivity already held by Porter.

All of the documents related to Porter’s applications are on the public file, at http://www.regulations.gov/search/Regs/home.html#docketDetail?R=DOT-OST-2007-27402

This restriction of the right of U.S. airlines to fly into the Island Airport violates international rules on reciprocal rights.  The violation has been brought to the attention of the United States Department of Transportation and could be a contributing reason why Porter Airlines has not received a foreign air carrier permit.

This has not been disclosed in the Porter Preliminary Prospectus and represents a significant risk to the company.

1. Rail link to Pearson International Airport

The Canadian government, in co-operation with the province and GO Transit, is in the late stages of plans to build a rail link between Union Station and Pearson International Airport.  The $875-million link, which will whisk passengers to Pearson in 25 minutes for about $20, is expected to be completed by 2015.  This will make Pearson much more accessible to Toronto's downtown, eliminating some of the advantages of Porter's location at the Island Airport.

The full impact of the rail link to Pearson International Airport on Porter Airlines has not been disclosed in the Porter Preliminary Prospectus.

1. Load factors of Porter are significantly lower than their competitors

Porter has very low load factors (percentage of seats filled with paying customers) on all of its routes, and the number of paying customers on U.S. routes is lower than on the Canadian routes. 

In the first quarter of 2010 the load factor for Porter was 47%.  This compares with much higher load factors of other airlines.   Air Canada’s load factor for 2009 was 78.6% and Westjet’s was 78.7%.  Air Canada and Westjet fly larger planes that can carry more passengers than Porter and yet the percentage of passengers carried by these two airlines is still much higher than Porter.

The load factor of flights into the United States was particularly low.  The U.S. Bureau of Transportation Statistics shows that the following 2009 load factors for Porter:  Chicago – 22%; Boston – 39%. All load factors for 2009 are not available publicly – the U.S. Government delays disclosure for six months, and Porter’s filings for several months prior to that period do not appear to have been made. 

There is no disclosure of route-specific data for domestic routes, nor more recent U.S. load factors.

The available data suggests that Porter may have already reached the market saturation point for flights out of the Island Airport. 

The low load factors of Porter flights compared with their competitors have not been fully disclosed or analysed in the Porter Preliminary Prospectus.

1. The Fuel Consumption of the Q400

Porter’s Preliminary Prospectus refers repeatedly to the fuel efficiency of the Q400, the only aircraft the company flies, as a material competitive advantage. But when a proper comparison is made it is clear that the fuel costs to move passengers by Porter are higher than its competitors.

Bombardier, the Q400 manufacturer, on its website “Q400 Green Machine” http://www.q400.com/q400/en/green.jsp claims 30-40% less emissions for the aircraft.  This is presumably the source for the declarations in the Preliminary Prospectus.  The document says “Each Bombardier Q400 aircraft produces 30-40% less emissions on routes where it has replaced similar capacity older generation and/or 50-seat jet aircraft [our emphasis].”

In other words, the efficiency Porter is claiming is in comparison to than older and smaller aircraft than its competitors use.  (The actual data is not available on the Bombardier website.) 

But that is not the proper comparison.  Porter is in competition with airlines that use jets and the proper comparison should be between the fuel consumption of moving passengers by the Q400, used by Porter, compared to the fuel consumption of the jets used by its competitors. 

When this comparison is made a much different picture emerges.

The UK airline Flybe’s calculations, using International Civil Aviation Organization data, show there is no material difference in fuel consumption on a passenger/kilometre basis between a 78-passenger Q400 and the jets used by Porter’s competitors.

But given the reduced number of seats in Porter’s 70-seat Q400 (owing to the short runway at the Island Airport[i]), as compared to the standard 78-passenger Q400. Porter’s aircraft are, in fact, LESS efficient, on a per passenger basis.

And as the Preliminary Prospectus makes clear, Porter’s planes are on average less than half full, 47%, compared to its competitors who have load factors of approximately 78%. Porter’s Q400 greenhouse gas emissions per passenger-kilometre (and therefore its fuel consumption) are, therefore, far greater than its Pearson-based competition.

These statements in the Preliminary Prospectus are, therefore, misleading, and do not, in our view, meet the standard required by the Securities Act for “full, true and plain disclosure” and should be removed:

• At Page 7: “The Q400 is estimated to use as much as 23% less fuel than comparable jet aircraft currently in operation ...”

• At Page 14: “In an effort to manage operating costs, airlines have increasingly focused on the fuel efficiency of their aircraft and are continually looking at cost effective opportunities to refurbish their fleet with more economical aircraft. Manufacturers have responded to this demand by developing more fuel efficient aircraft such as the Bombardier Q400 turboprop aircraft (the “Q400”). Optimized for short-haul airline operations, the Q400 offers lower costs relative to similarly sized mainline jets through reduced fuel burns (attributed to the new Pratt & Whitney PW150A turboprop engine)…”

• At Page 26: “Of particular importance in management’s selection of the 70-seat Q400 was the aircraft’s low operating costs when compared to regional and mainline jets for short-haul flights. The Q400 uses as much as 23% less fuel than 70-seat jet competitors currently in operation.” [None of Porter’s competitors in its key Toronto/Montreal/ Ottawa market use 70 seat jets: Air Canada primarily uses Airbus 319 and Airbus 320 aircraft and Westjet uses Boeing 737 and Airbus 320 aircraft.]

1. Porter’s CEO has misled the public on the financial profitability of Porter

On a number of occasions Mr. Robert Deluce, the CEO of Porter Airlines, has misled the public by claiming the company was profitable while in fact it was incurring substantial losses.

The financial data in the Preliminary Prospectus disclose that Porter lost $11,486,000 in 2007, $3,317,000 in 2008, and $4,609,000 in 2009 (see page 10 of the document). Total losses over the last three years: $19,412,000.

As CEO, he must have known the true financial situation of Porter Airlines, and yet he has made a number of statements that have been reported in the press that conflict with the true financial position of the company:

• Mr. Deluce says Porter has been profitable since mid-2007 on a “fully allocated” basis, though he declines to give accounting details …. Globe and Mail, Nov. 20, 2009

• “I can tell you that last June -he means June, 2007- was the first profitable month for Porter,” Deluce says of the 8% net income margin the company recorded. “I can tell you that in June, 2008, we've done appreciably better than June, 2007.” Airport Business, Oct. 31, 2008

• Mr Deluce, a licensed pilot, says Porter has been profitable since mid-2007... Financial Times, September 29, 2009

• At a time when soaring oil prices are eroding North American carriers' earnings, Porter Airlines Inc. is expecting its first full-year profit this summer, CEO Robert Deluce said. … But Deluce said the company has maintained a steady level of profitability since June 2007, when it recorded an eight-per-cent net-income margin. Montreal Gazette, June 4, 2008
• Because Porter is privately held, it does not report financial results. But Deluce said the airline turned a profit this year. Toronto Star, Dec. 31, 2009

• Closely held Porter, which does not release financial statements, has turned a profit since June 2007 …, Chief Executive Robert Deluce said in an interview. Reuters, Feb.12, 2009
• … in June, we achieved an eight per cent net income margin, which is among the strongest in the North American airline industry. To put this into perspective, Southwest Airlines took three years to achieve profitability – we did it in eight months.” Remarks made to the Board of Trade of Metropolitan Montreal, October 25, 2007 by Robert Deluce President and CEO, Porter Airlines

All of theses statements were designed to create the distinct impression that Porter’s business is profitable. As we now know, that impression was wrong.

We submit that that impression needs to be fully, strenuously and effectively rebutted, as without that, the impression created by Mr. Deluce will tend to overwhelm the details contained in this Preliminary Prospectus for many prospective investors – particularly the less sophisticated investors that the OSC is obliged to take appropriate measures to protect.

Mounting Community Opposition to the Island Airport Expansion

The Island Airport has been a major political issue in Toronto since the 1980s when it was announced that there would be commercial airline service out of the facility.  Since Porter Airlines began operations in 2006 the opposition to the airport operations and particularly to airport expansion has been growing among residents of Bathurst Quay, the condo owners along Queen’s Quay West and other residents of the Waterfront.

The Island Airport will remain open only as long as it has support of the signatories of the Tripartite Agreement: the Canadian Government, the Toronto Port Authority and the City of Toronto.  If support is withdrawn by all or even one of these governments or agencies then the airport will ultimately close and Porter Airlines will be forced either to shut down or to relocate to Pearson International Airport.  This is a real risk to Porter and must be disclosed in the Preliminary Prospectus. 

What follows is a review of the issues that residents have expressed concerns about that must be disclosed.

1. Waterfront Parks, Lake Ontario and Toronto Harbour

The people of Toronto are deeply attached to their parks and the city has spent considerable money and committed other resources to build one of the finest city park systems in North America if not in the world.  Lake Ontario and the harbour is one of the city’s prime recreation centres used by thousands of people with sailboats, powerboats, canoes and kayaks.  All of these facilities are threatened by an expanded Island Airport that is noisy, polluting and unsafe.

People love to walk, run, rollerblade and cycle along the shore, enjoying the view, the fresh air and sunshine. More and more people are coming to live in Toronto, and increasing numbers flock to the beautiful waterfront park system.  Parks now stretch along the water’s edge from Etobicoke’s lakefront in the west to Bluffer’s Park in Scarborough. Linking them is the Lake Ontario Waterfront Trail. Tommy Thompson Park on the Leslie Street Spit and the 500-acre proposed park in the Port Lands skirt the shores of the outer harbour. 

The inner harbour is surrounded by parks that are either completed or in the planning stages. The Toronto Music Garden is like a jewel box. HTO Park opened in 2007 to acclaim. Harbourfront and its facilities provide leading cultural attractions for the city. Ireland Park is located on the Western Gap in a spectacular but hidden location tucked behind the Canada Malting silos overlooking the airport.

Across the bay, Toronto Island Park has long been considered the “jewel in the crown” of Toronto’s park system. It is 569 acres of grass, trees and public facilities. The park is surrounded by water and beautiful views.  The Island Park has 1.5 million visitors a year.  Most of those visitors are people of modest means who cannot afford to go to cottages in Muskoka so they bring their families to the Island in order to enjoy the park, the lake and fresh air the park provides.

And yet adjacent to the park, behind a ten-foot high chain-link fence, is the Island Airport, occupying 215 acres, about one-third of the island. The airport sits in the centre of the city’s waterfront park system, polluting the air, creating traffic and destroying the calm, natural environment along the shores of Lake Ontario.

This reality is not missed by most of the visitors.  The Island Airport is destroying many people’s enjoyment of the city’s park system and they want it stopped. 

For full, true and plain disclosure this must be disclosed in the Porter prospectus.

1. Waterfront Redevelopment

The redevelopment of Toronto’s Waterfront, co-ordinated by Waterfront Toronto on behalf of the Canadian and Ontario governments and the City of Toronto, is the largest redevelopment project in North America.  By the time it is completed 100,000 people will live along the Waterfront and another 100,000 will work in the area.

The Waterfront is now Toronto’s most important tourist destination and millions of people visit every year providing employment and supporting the cultural facilities, restaurants and stores in the area.  Tourism is the largest employer in the city and the rejuvenated Waterfront is now the prime attraction of visitors to Toronto. 

Waterfront redevelopment is now well underway but it is still in its earliest phases.  Much of Queen’s Quay West has been redeveloped but there is still work to be completed on the streetscape.  The attention now is shifting to the West Donlands Project and Queen’s Quay East.  Once that is completed hundreds of acres will be redeveloped in the Portlands.

The Island Airport is incompatible with Waterfront redevelopment.  The most basic rule of planning is that industry and residential land uses are incompatible and must be kept separate.  This rule is followed everywhere in developed countries and yet on Toronto’s Waterfront the Island Airport – an industrial use – is allowed to operate.

How much longer will the new residents of the Waterfront tolerate the Island Airport?  That is difficult to predict but the time is coming when the incompatibility of land use will be obvious and politicians will make the decision to close the airport.  That will have a serious impact on the operations of Porter Airlines.  This risk must be disclosed to prospective investors.

1. Airport Noise

The Q400 aircraft flying out of the Island airport generate unacceptable levels of noise for the residents of Bathurst Quay, the waterfront, the railway lands, the Island and the condos surrounding Fort York.  The main runway of the airport is less than 200 metres from the nearest residences on Bathurst Quay.  There are two schools, a day care centre and Harbourfront Community Centre in close proximity.  Noise disruptions for planes are very common at waterfront cultural and entertainment events at Harbourfront, the Music Garden, HTO Park, and the Molson Amphitheatre.

Larry West, the author of “Environmental Issues,” an Internet newsletter on the environment, writes in the May 2007 issue:  “Researchers have known for years that exposure to excessively-loud noise can cause changes in blood pressure as well as changes in sleep and digestive patterns -- all signs of stress on the human body. The very word ‘noise’ itself derives from the Latin word ‘noxia,’ which means injury or hurt.”

Perhaps even more alarming, the European Commission, which governs the European Union (E.U.), considers living near an airport to be a risk factor for coronary heart disease and stroke, as increased blood pressure from noise pollution can trigger these more serious maladies.

Airport noise can also have negative effects on children’s health and development. A 1980 study examining the impact of airport noise on children’s health found higher blood pressure in kids living near Los Angeles’ LAX airport than in those living farther away.

A 1995 German study found a link between chronic noise exposure at Munich’s International Airport and elevated nervous system activity and cardiovascular levels in children living nearby. And a 2005 study published in the prestigious British medical journal, The Lancet, found that children living near airports in Britain, Holland and Spain lagged behind their classmates in reading by two months for every five decibel increase above average noise levels in their surroundings. The study also associated aircraft noise with lowered reading comprehension, even after socio-economic differences were considered.”

A recent study of the impact of noise pollution at Heathrow Airport in London, England found that it was much worse than was previously admitted.  The study found the noise affects millions of people and households living under busy flight paths. The study concludes that noise levels have worsened dramatically since the previous study was done in 1985. 

The Federal Aviation Administration (FAA) in the United States considers airport noise so serious that they have spent $1.6 billion to help people sound proof their homes between 1996 and 2003 and expect to spend another $1.3 billion in soundproofing construction between 2004 and 2009. 

Airport noise and the risk that this noise poses to the health of all people, particularly children, are creating increasing opposition to the Island Airport and Porter Airlines.  Demands to stop the expansion of the airport are growing in intensity.  This must be reported in the Porter prospectus for full, true and plain disclosure because it represents a real risk to the company and investors.

1. Air Pollution

Air pollution is the most serious environmental problem faced by the City of Toronto.  Dr. David McKeown, Toronto's Medical Officer of Health, released a report stating that traffic related air pollution contributes to about 440 premature deaths and 1,700 hospitalizations per year in Toronto.  Air pollution is the cause of global warming and is one of the chief reasons for the deterioration of the quality of life in the city. 

There have been many studies in the United States and Europe that demonstrate conclusively that air pollution is a major health risk to people living in close proximity to airports.  A study of the Seattle Airport, for example, found more than 50% higher asthma rates, 36% higher cancer rates and a substantially lower life expectancy than the Seattle average for people living close to the city airport.

Because the Island Airport is near the centre of the city, only 3 kilometres from the business heart of downtown, pollution from Porter Airlines and other aircraft using the airport has an impact on hundreds of thousands of people.  Porter Airlines flies the Q400, a turboprop aircraft that uses jet fuel. The smell of jet fuel is now pervasive in the Bathurst Quay neighbourhood.  There has been no health study of the impact of the Island Airport on people living in the immediate neighbourhoods but there is no reason to believe that the results of a study would be any different than Seattle or any other centre with similar conditions.

Air pollution from aircraft is measured by the amount of pollution emitted by the plane per kilometre traveled per passenger.  Using that measurement the air pollution emitted by the Porter Q400 aircraft is very considerable.  The air pollution from aircraft at the Island Airport affects more people than from any other airport in the country.

Short haul flights create more pollution than long haul flights because most of the fuel is burned in getting the aircraft up to cruising altitudes.  Porter Airlines specializes in short-haul flights to centres such as Ottawa, Montreal and Newark, N.J.  The plans of Porter are to expand its service to a number of Canadian and American cities within 1,000 km. Its target is 35,000 flights a year.  The estimate of CommunityAIR researchers is that every Porter flight from Toronto to Ottawa releases 2,865 kilograms of CO2 into the air.

An additional reason why Porter flights produce more pollution than other airlines is that they are flying at an estimated 47% occupancy rate while competing airlines fly with an occupancy rate of approximately 78%. That is the reason why the pollution per-passenger kilometre travelled from planes using the Island Airport is higher than that of flights out of Pearson, which have much higher occupancy rates.

Torontonians are looking for ways to reduce air pollution in the central part of the city.  Porter’s use of the Island Airport which is in close proximity to the city centre, and the high levels of air pollution produced by their Q400 aircraft leave the company very vulnerable because politicians can decide that the airport must close at any time. 

For full, true and plain disclosure this risk must be revealed to potential investors in the Porter Preliminary Prospectus.

Airport Safety Risks

The mixture of aircraft at the Island Airport creates special problems at the Island Airport. Not only will there be many Q400s, but the island flight school trains people to become pilots. Trainees perform many flights in small aircraft, day and night. A number of small private planes also use the airport and there have been accidents with these aircraft. Two helicopter companies based at the Island Airport run tours and air ambulances and medevac planes fly in and out.

This is a huge mix of different types of aircraft with different levels of skills of the pilots. As Porter Airlines multiplies its number of flights at its Island Airport hub, it can become a more dangerous place.

Not only will there be increased safety problems with the increase in traffic, there are also a number of other potential safety problems at the airport.

1. Short Runway

The Island Airport has 3 runways. The main runway, 08/26, is aligned east/west. It has three published lengths: 1220 metres, 1218 metres, and 1160 metres. It is the only runway that can be used by the Q400. This runway cannot be lengthened because there is a prohibition against doing so in the Tripartite Agreement.

Bombardier, the aircraft manufacturer, states its Q400 requires 1402 metres for take off and landing, almost 200 metres more than the longest runway. 

Because of this safety risk Porter has reduced the number of passengers it carries to 70 from 78, and fewer – or less baggage - for destinations beyond 500nm. These limitations on the use of Porter’s hub are not disclosed in the Preliminary Prospectus.

Other jurisdictions have considered what an acceptable runway length is:

• The designers of the Eureka-Humboldt Airport in California state that a minimum landing distance of 1828 metres is recommended to support regular operations by the Q400. This is one third longer than the Island Airport’s main runway.
• Proponents of an upgrade to the Friedman Memorial Airport in Sun Valley, Idaho, state that the airport’s current runway length of 2012 metres does not meet FAA recommendations for the types of aircraft, including the Q400s.
• Airport officials at Plymouth, England, say that the Q400 is too large to use on their runway which is 1161 metres.
• Transport Canada’s own Canadian Runway Friction Index recommends that a safe landing distance of 1741 metres is required for a turboprop. This is 521 metres longer than the Island Airport main runway.

Clearly the length of the runway at the Island Airport heightens safety concerns about the use of the Q400, but there are other issues that illustrate that this airport is inappropriate for aircraft as large as the Q400.

When there is a strong crosswind, there is no alternative runway, and flights will have to divert to Pearson.

Bombardier engineers, in a paper titled “Attributes of the Dash8 Q400 in the Patrol Role,” state that with temperatures at 30+C, a 1829 metre runway is necessary to meet maximum weight take-off requirements of the Q400. That is 609 metres longer than the main runway. During July 2005, there were six days when temperatures reached 29C and six days when it reached 30+C.

1. Inadequate Runway Safety Areas

The runway safety areas for the runway used by Porter are only 91 metres in the east and only 85 metres in the west.  They cannot be expanded.

The Air France flight 358 crash at Pearson in 2005 departed the end of the runway at a groundspeed of approximately 80 knots and came to rest in a ravine.

If that had occurred at the Island Airport, the aircraft would have plunged into water deep enough to result in numerous fatalities.

As noted by a March 17, 2010 Globe report,

Major runways at Canadian airports are still too short – increasing the risk of planes overshooting the runway like the Air France jet that crashed and burned five years ago at Toronto's Pearson International Airport, the Transportation Safety Board is warning.

In a blast against government inaction, the independent federal body said its recommendation for the creation of 300-metre safety areas at the end of major runways has been ignored by Ottawa and the country's big airports.

Even worse, the board said, the government is only consulting the aviation industry on the addition of a 150-metre safety area, or half of the length determined to be necessary after the 2005 Air France crash in Toronto.

In an interview, Transportation Safety Board chair Wendy Tadros said the process is “taking too long” seeing as how planes that overshoot runways represent one of the biggest problems facing the aviation industry.

“Somewhere in the world, about once a month, a large aircraft will run off the end of a runway in bad weather. It's a persistent problem,” Ms. Tadros said.

Specific disclosure of the Island Airport’s inadequate runway safety areas is missing from the Preliminary Prospectus.

1. Bird strikes

Transport Canada regards all wildlife in and around airports as a potential hazard to aviation safety. The Toronto Island Airport is on the shore of Lake Ontario and has an estimated bird population of 100,000 shore birds, most of which are gulls or other large water fowl, such as geese, swans and ducks.

The end of the main runway of the Island Airport is about 100 metres from a large bird sanctuary. Toronto Island is also a major migratory route for birds similar to Point Pelee. Birds are in abundance in and around the island and the Island Airport.

Transport Canada statistics show that shore birds and gulls in particular account for the greatest number of bird strikes, and eighty percent of bird strikes occur during takeoff and landing. The CADORS bird-strike report shows that Porter aircraft had six bird strikes at the Island Airport in the summer of 2009.  The company has more aircraft in 2010 and we can expect more bird strikes.

Bird strikes can be so serious that the damaged aircraft may require new leading edge panels, prop blades or whole new propellers or even an engine change. One bird strike shattered a wing leading edge panel of a Q400 and left a hole big enough that a hand could fit through.

Bird strikes at the Island Airport presents a potentially serious risk to Porter Airlines and should be specifically disclosed in the Preliminary Prospectus.

Island Airport Capacity Issues

According to the document, Billy Bishop Toronto City Airport Capacity Report, February 2010, produced by TPA consultants Jacobs Consultancy, service,  especially from the island airport to the mainland, will be greatly curtailed by ferry capacity should Porter reach its operating goals.

The TPA as announced plans to build a tunnel to solve the passenger traffic congestion problem.  However, the TPA’s Financial Statements, and the recent Supreme Court of Canada decision on payments in lieu of taxes, make it clear that it is in no shape fiscally to take on a tunnel.

The Capacity Report, P.15, makes clear the importance of overcoming the ferry’s capacity problem.

 “The need to keep a high level of service cannot be emphasized enough. The Airport’s business model is working precisely because the level of service is high  in terms of travel time, hassle and congestion. If this model is allowed to break down, the consequences could damage the viability of the entire concept.”

The Preliminary Prospectus does not disclose any contingency planning to avoid Porter or the TPA having to keep passengers stranded on the island waiting for the ferry because too many planes are disgorging their loads too quickly.

Prepared by CommunityAIR

May 10, 2010