Porter seeks injunction against Air Canada, Jazz

Main Gear · Post by **Main Gear** » Fri Oct 26, 2007 12:43 pm

TORONTO (Reuters) - Porter Airlines Inc said on Friday it is seeking C$850 million ($883 million) in damages and an injunction to unwind what it says is an anticompetitive relationship between Air Canada and its regional affiliate, Air Canada Jazz.

Porter, which operates flights connecting Halifax, Ottawa, Montreal and Toronto, alleges Air Canada and Jazz have conspired to hurt its business. For example, it says, the two rivals require large users of travel services to enter exclusive contracts that offer discounts only if Air Canada and Jazz are assured of a big percentage of business.

Porter's action, filed in Ontario Superior Court, involves a statement of defense and counterclaim against Air Canada and Jazz, Canada's two largest airlines. The legal wrangling dates back to February 2006, when Jazz started proceedings against Porter and the Toronto Port Authority.

Jazz, which flew out of the Toronto City Centre Airport until that time, wants to regain access to the island airport, which is just minutes from downtown Toronto. It is now home to Porter, a year-old regional airline that is privately held.

In a statement, Jazz said Porter's action are "completely without merit" and it noted that Jazz is seeking "fair and equal access" to Toronto City Centre Airport.

"Porter Airlines continues to launch unfounded allegations against Jazz in an effort to prevent competition at the Toronto City Centre Airport," Jazz stated.

The facility is coveted because it is much closer to downtown than Pearson International Airport, located west of Toronto.

Air Canada described the Porter counterclaim as "frivolous" and "without merit." Both carriers said they would "vigorously" fight the allegations. ACE Aviation Holdings Inc , the parent company of Air Canada , also owns 20 percent of Jazz Air Income Fund .

Both Air Canada and Jazz said that their relationship -- formally called a capacity purchase agreement - is similar to arrangements in place between other North American mainline and regional carriers. As part of that relationship, Jazz operates flights on behalf of Air Canada.

The agreement came into effect in September 2004, well before Porter was launched in October 2006, Air Canada noted.

Robert Deluce, president and chief executive of Porter Airlines, said: "We feel strongly that what we've put forward has merit and we'll stick with it till we have the matter resolved."

($1=$0.96 Canadian)

http://ca.news.yahoo.com/s/reuters/busi ... awsuit_col

Four1oh · Post by **Four1oh** » Fri Oct 26, 2007 4:12 pm

Rebel's gonna be mad you didn't title it 'Industry News"!

Nightflight · Post by **Nightflight** » Fri Oct 26, 2007 7:19 pm

Why can't we all just get along and be friends? Where is the love people? Where is the love?

Inverted2 · Post by **Inverted2** » Fri Oct 26, 2007 8:08 pm

This obviously means things aren't going well at Porter. Seems a bit "frivilous" ....almost a billion dollars? If you are doing good and filling seats you wouldn't think they'd going to all the effort of suing the competition who don't even fly out of the same airport for undercutting them?

tonysoprano · Post by **tonysoprano** » Sat Oct 27, 2007 6:12 am

That's fine. ACE will have another billion in the bank if they lose to the Porter thumb-sucking, diapper fit. I don't agree with the CPA agreement either but it's too late to change it now. I suppose they will take on US Air and Continental as well. I guess the money to pay the bills has to come from somewhere. On a more serious note, I hope Bobby D has the cash to pay the legal fees for both sides.

Valhalla · Post by **Valhalla** » Sat Oct 27, 2007 10:21 am

tonysoprano wrote:That's fine. ACE will have another billion in the bank if they lose to the Porter thumb-sucking, diapper fit.

Thumb-sucking diapper fit?? Ouch... One question for you - what do you call the unsuccessful legal action that Air Canada and Jazz has brought on Porter for the last year and a half? Appearently, Porter has successfully defended themselves in court against AC/Jazz something like 17 times already.

Not defending the legal action or the $$$'s at stake, but please don't pretend that team red are innocent victims when it comes to screwing with the competition.

tonysoprano · Post by **tonysoprano** » Sat Oct 27, 2007 11:34 am

Valhalla. I'll have to be honest and admit I'm not an expert on the whole deal with the YTZ saga. Having said that, I find it rather strange that Jazz is not allowed back into an airport which they served for years while allowing foreign carriers to do so. What is Porter afraid of? Competition is the essence of this industry. Mr. DeLuce should welcome competition if he is at ease with his business plan. By all accounts he runs a very good airline which is second to none. So what's the problem? Of course his business partner, Mr. Carty is a long time AC basher and competitor. Gee, things are starting to make sense now. AC is screwing with the competion? How about suing your competition before it even competes with you? Pot and kettle thing me thinks. To be quite honest with you, Porter is not a significant factor in ACE's bottom line. But in the interest of competition, Porter should not be able stop Jazz from operating a network it once held. Jazz let go of it at a time when the industry was at its worse ever. Tell me, when US Air and Continental start operating out of YTZ, is he going to sue them as well? He should because they also have CPA agreements with their regionals. The history between the DeLuce family and AC has never been good. If you were around back then. you might have a different feeling about things today. It wasn't pretty. I don't feel at ease with the hidden agenda which Robert DeLuce, the Port Authority and perhaps even local government are involved with. But in the end this doesn't affect me. I'm an outsider looking in.

pointyertoes · Post by **pointyertoes** » Sat Oct 27, 2007 3:40 pm

(from another post of mine, because I'm too lazy to type this all over again)
...some people still don't get it.
The remaining t/o and landing slots at YTZ are up for grabs. US airways for one was offered slots and had already drafted a proposed schedule. They chose not to excercise that schedule.
Jazz is entitled to the same, however they insisted on increasing their flight frequency well beyond anything they ever had before. There are simply not that many slots to be had.
Porter is the ONLY airline which has committed to revitalizing the airport with new facilities.
If other airlines want in, the Port Aurthority has already stated they would welcome it. However, it's up to them to negotiate for the remaining slots and build their own infrastructure.

Rockie · Post by **Rockie** » Sun Oct 28, 2007 6:51 am

tonysoprano wrote:Valhalla. I'll have to be honest and admit I'm not an expert on the whole deal with the YTZ saga. Having said that, I find it rather strange that Jazz is not allowed back into an airport which they served for years while allowing foreign carriers to do so. I don't feel at ease with the hidden agenda which Robert DeLuce, the Port Authority and perhaps even local government are involved with. But in the end this doesn't affect me. I'm an outsider looking in.

Tony

As pointyertoes states, Jazz is not prevented from flying out of YTZ, and your suspicion that local government (David Miller) might somehow be involved in a hidden agenda with Porter betrays your complete lack of knowledge on the history of this saga. I encourage you investigate it throughly and see for yourself who has behaved unethically here.

There is far too much history to go into here, but learn enough about Miller, Community Air (google it) and Jazz and it will disgust you. You might also want to learn a bit about Peter Donolo and his relationship to Air Canada and David Miller, and a very public request by Jazz on the eve of Miller's first election as Mayor to fly jets off the island. It's pretty easy to connect the dots and come up with a lot of slimey muck.

Don't feel sorry for Air Canada or Jazz.

tonysoprano · Post by **tonysoprano** » Sun Oct 28, 2007 8:03 am

I'm not feeling sorry for AC/Jazz. Whatever Jazz did at the local level in YTZ should not stop them from regaining what they had. I don't understand why they are not flying out of there if they are allowed to do so. Are you saying the above article is misleading? No I'm not going to research it. I'm really not that interested in any of this at that level. More to the point here Rockie is not so much that question but the current lawsuit from Porter. DeLuce isn't doing himselfe any good here. He won't like picking up the peices on this one.

Rockie · Post by **Rockie** » Sun Oct 28, 2007 8:52 am

I think the lawsuit is just to get Jazz to STHU anyway. These never go to trial. The reason Jazz isn't operating is because they can't find accomodation on the airfield. They were stupid enough to let Deluce buy everything up and he's not about to take them on as a renter. But if they can find a place to operate out of there's nothing stopping them.

tonysoprano · Post by **tonysoprano** » Sun Oct 28, 2007 9:26 am

I see. Well, I can't see Jazz spending too much money to set up shop there. This whole thing is only good for the lawyers.

Rebel · Post by **Rebel** » Sun Oct 28, 2007 4:21 pm

Hey Folks there’s a whole lot of bad blood between Mr. DeLuce and company with AC. Porter is just a convenient vehicle to snap at AC. With the emotionalism involved anything can happen which doesn’t speak well for the industry.

dashx · Post by **dashx** » Sun Oct 28, 2007 6:22 pm

hmmm....

dashx · Post by **dashx** » Sun Oct 28, 2007 6:25 pm

Rockie wrote:I think the lawsuit is just to get Jazz to STHU anyway. These never go to trial. The reason Jazz isn't operating is because they can't find accomodation on the airfield. They were stupid enough to let Deluce buy everything up and he's not about to take them on as a renter. But if they can find a place to operate out of there's nothing stopping them.

Deluce has not bought out the Pappalardo's.....They are still waiting for Jazz to come back. Hangar 1 is still open for business. It's been a few years since Dash 8's were there but there are still ex City Express AME's at Jazz that remember it well........

Why there is even an ex Trancapital Air captain now at Porter as well...

bmc · Post by **bmc** » Mon Oct 29, 2007 5:29 am

My take is that where there is smoke, there usually is fire.

I would be surprised that Deluce would embark on a costly and lengthy legal battle if a) there were no grounds for such action and b) he couldn't afford it.

I can't see the relationship between a company going out of business and looking for opportunities to accelerate liquidation with a "frivolous" lawsuit.

Competition authorites take a dim view to abuse of dominant position. This won't be the first time some as called AC on it. After the demise of CP, the cost to access the AC network to international airlines went up exponentially, resulting in such complaints.

Just my take on it. I have been wrong before.

tonysoprano · Post by **tonysoprano** » Mon Oct 29, 2007 6:58 am

Competition authorites take a dim view to abuse of dominant position. This won't be the first time some as called AC on it. After the demise of CP, the cost to access the AC network to international airlines went up exponentially, resulting in such complaints

This is interesting. So if I read this properly, it would be ok for "little" Porter to have the YTZ monopoly (Canadian) and to ensure the survival of this little airline we will keep "big" bad AC out of there. I can see where being the nation's largest operator and provider of an essential service can have its disadvantages. I doubt very much that Jazz would ruin DeLuce's little empire in fact it could very well be the other way around. When Air Ontario was flying several flights a day out of YTZ in the hay days it was open to anyone else who wanted to operate out of there as well but no one had the interest in it. In the end, Jazz may not be able to do much at the Island anymore, but I maintain this whole situation still smells.

bmc · Post by **bmc** » Mon Oct 29, 2007 8:14 am

Tony, you're taking an extreme interpretation of my comments. Any company will and should do all possible to protect its market position. If you don't you lose. Both carriers here are doing all possible to do so.

AC will always be regarded as a bully by virtue of size and successes. AC is great airline and has done an admirable job under Milton to reshape itself to be the fit fighting machine that is. I wholeheartedly applaud what AC has gone through and has morfed into. I mean that. Not only as a Canadian success story, but on a global scale, the only other carrier that has gonbe through such a dramatic reshaping, that I can think of, is Aer Lingus.

AC, as long as it continues to be the the strong carrier in Canada, will forever get poked by the underdog, and sadly, Canadians will line up to take a kick at big bad AC.

I mean all of that.

Porter is a pain in the ass to AC. Maintaining two operations in one city is nothing but additional cost and eroding yield from competition. It's the damned if you do and damed if you don't. In an ideal world, Toronto Island wouldn't exist for commercial sched service. It attacks the AC YYZ hub, and you really want to control the impact of that as much as you commercially can. Sadly, for AC's sake, Porter has everything to gain and AC a lot to lose. Measures to protect the integrity of the Pearson hub may be challenged and this may be the gist of this. I really don't know. I'm not close to it. I really don't know the issues here.

I have a little bit of exposure to competition authorities and issues that they investigate: collusion and abuse of dominant position. One has to be really squeaky clean to not invite scrutiny. I admit to making a huge assumption that if Porter was pursing this action, it's costly adventure if there was nothing there to begin with. I'm not saying there is. Porter is. Not me.

I'm long past looking at AC as Big Red. Air Canada has come an awful long way to ever be regarded as such. It's a different company with a very different mindset.

tonysoprano · Post by **tonysoprano** » Mon Oct 29, 2007 8:37 am

bmc.
Thanks for being candid. There's much truth in what you say except that I don't really think YTZ is a big deterrent to the YYZ hub. Not yet anyway. Back to the main point which is the lawsuit. I don't know where DeLuce has come up with such an amount, but I would be shocked if he wins (well, maybe not. This is Canada afterall). If the basis of the lawsuit is the unfair CPA agreement Jazz enjoys from AC, he better include US Air and Continental as well. If I'm not mistaken both these airlines plan to operate there with regional subs with whom they also have CPAs with. Go figure.

bmc · Post by **bmc** » Mon Oct 29, 2007 9:04 am

Porter has done one of two things with their operation. They have either grown the market or have stolen traffic from Pearson. Porter is attacking AC's plum triangle traffic that has historically been AC's stronghold. I guess AC would try to protect that revenue base with points, price, whatever necessary. I would see setting up a flight operation out of the island as the last thing you really want to do. It means additional airplanes flying at the same times as out of Pearson to protect the same traffic. Damned if you do and damned if you don't.

Sadly, there's this bizarre Canadian mentality that believes it is morally unethical for a big company to do well and protect its market. Applauding and taking the under dog usually wins.

Brick Head · Post by **Brick Head** » Wed Oct 31, 2007 10:05 am

Anyone else starting to get the impression that Deluce wants in on the CPA action with AC.

Re read their complaint on anti competitive behavior. These battles quite often have a way of working themselves out, outside of court, in a way that is beneficial to both parties.

Why would AC care who does the flying for them out of the island? Who ever is cheaper. Deluce appears to be positioning himself in such a way that may force AC to deal with him. Or at least make it the logical path of least resistance.

Prospect · Post by **Prospect** » Thu Nov 01, 2007 8:03 pm

Interview with Robert Deluce and this very topic

http://broadband.bnn.ca/bnn/?vid=20994

link will stop working at the end of the weekend

Brick Head · Post by **Brick Head** » Fri Nov 02, 2007 9:13 am

He is arguing that contracting out work (the Jazz AC CPA) is anti competitive because the two companies, the contractor and the contractee, work together???????

Um.....like........yeah. That is what contracting out is all about. You disperse jobs to other companies that you either can not do, don't want to do, or can not do cost effectively. You tell the sub contractor exactly how you want it done, when you want it done and so forth.

On the other hand. I wonder if he may have a point about the exclusivity of the CPA agreement between Jazz and AC. Normally you have sub contractors working for a myriad of different contractors. In this case we do not, in an environment where there is really only one contractor.

Still appears to me, as if he is trying to force himself onto AC for a chunk of the CPA pie. Require AC to spread the wealth around as it were.

With that in mind one would think that amicable discussions on the subject have failed.

I would love to know what has transpired behind closed doors to get to this point.

tonysoprano · Post by **tonysoprano** » Fri Nov 02, 2007 9:21 am

Years ago the Deluces sold an airline to AC. They did pretty good. Maybe Bobby is looking at repeating history to make a quick buck. Sorry Bob, not interested this time.

Four1oh · Post by **Four1oh** » Fri Nov 02, 2007 11:26 am

tonysoprano wrote:Years ago the Deluces sold an airline to AC. They did pretty good. Maybe Bobby is looking at repeating history to make a quick buck. Sorry Bob, not interested this time.

Definitely a reasonable scenario. Didn't work for Jetsgo though, or Canjet 1.5... who knows, maybe Canada's carriers are getting smarter.