Porter seeks injunction against Air Canada, Jazz

Anonymous1 · Post by **Anonymous1** » Sun Nov 04, 2007 7:23 am

I think AC would be really smart to purchase capacity through Porter. Porter's product is far better than what Jazz is offering and customers love the lounge and Porter's in flight service. Also, AC wouldn't have to pay near as much money as they do to buy Jazz seats currently. I think there is more here than meets the eye as egos are getting in the way of sound business decision making.

prop2jet · Post by **prop2jet** » Sun Nov 04, 2007 12:43 pm

The service provided by Jazz is dictated by AC plain and simple. Lets not make this more complicated than it needs to be. The arguments that Deluce is making regarding the business relationship between AC and Jazz miss the point. AC tells Jazz where to fly and when to fly. Marketing has nothing to do with Jazz.

jayjact · Post by **jayjact** » Wed Nov 07, 2007 11:51 am

I guess most people just don't know the facts. #1 this is a COUNTER suit from Porter, which means it is in response to a suit from jazz/air canada. One of MANY, as it was stated in another post, a/c/jazz has taken Porter to court over a dozen times...and LOST. #2 it is not that ac and jazz are the same company, working together to benefit themselves...a/c now owns only 21% of jazz....making them 2 separate companies. Not a main line and regional carrier. SEPARATE entities...in bed together, trying to stomp competition, as they always have tried to do. That is unfair business practices, and THAT is what Porter is taking a/c/jazz to court over. And also, jazz, a/c any carrier is more than welcome to fly out of the island. Porter does not own the island, they CAN NOT dictate who does and does not fly out of the island. The Toronto Port Authority does. Porter got the lease on the facilities (hangars and whatnot) a lease that jazz was taking on a month to month basis, Porter went to the TPA with a solid plan to use the airport as an airport, to make improvements, and to commit to a long term lease. What is the TPA going to do, keep a month to month lease with jazz going, or to go with Porter, who is going to commit to the island. Porter just refused to lease the facilities to jazz because they are using them now. THAT is when a/c started whining like the spoiled baby it is. They all of a sudden NOW want to commit to the island...why? Because a smaller kid wants to play with the toy it no longer has an interest in and it is crying about it. The TPA told a/c/jazz to sign a long term operators agreement, and they would be glad to have them back on the island....jazz/a/c said no. OBVIOUSLY they have no interest in the island, just an interest in not letting anyone else have it.

Four1oh · Post by **Four1oh** » Wed Nov 07, 2007 12:23 pm

thanks Jayjact, finally, what looks like GOOD information. So, what percentage would AC have to own of Jazz to be considered 1 entity? 51%?

hmm, looks like maybe AC has shot itself in the foot with all the sell-offs, and if what you're saying is true, Porter may have a legit case.

bcflyer · Post by **bcflyer** » Wed Nov 07, 2007 3:25 pm

I'll be the first to admit I'm not up to date on all the legal wranglings of these things so can someone please explain to me why one company undercutting or coming up with ways to take away anothers customers is wrong. I always thought it was called business. I was under the impression that this is a free country. If I run a grocery store and want to sell my products for %50 less than my competitor isn't that my business? As well if I want to join forces with my friend who owns a grocery store and both sell our products for less than our competitors is that illegal? If not then why is aviation any different? Seems like if anyone other than AirCanada runs a dirt cheap seat sale its called competition, if A/C does it, then its predatory. Someone please explain this to me!!!

WJ700 · Post by **WJ700** » Wed Nov 07, 2007 3:29 pm

Looking from the outside in, it's pretty funny to see Jazz getting so annoyed at Porter winning. When you visualize Joe Randall getting a facial tick and a growing ulcer from getting 'voted off the Island' it makes me laugh. I hope they get up to year round daily service with Halifax just to taxi by Joe's corner office.

Bravo1Six · Post by **Bravo1Six** » Wed Nov 07, 2007 7:19 pm

bcflyer wrote:As well if I want to join forces with my friend who owns a grocery store and both sell our products for less than our competitors is that illegal?

Depending on the market share that you and your friend have, yes, it would be illegal. It's called price fixing.

I'm not up to speed on what Porter's counterclaim is precisely about, but as someone mentioned above it may be a tactic to get AC to back off. AC and Jazz would loathe to have the Competition Bureau snooping around (as would any other business).

Valhalla · Post by **Valhalla** » Wed Nov 07, 2007 7:38 pm

bcflyer wrote:I'll be the first to admit I'm not up to date on all the legal wranglings of these things so can someone please explain to me why one company undercutting or coming up with ways to take away anothers customers is wrong. I always thought it was called business. I was under the impression that this is a free country. If I run a grocery store and want to sell my products for %50 less than my competitor isn't that my business? As well if I want to join forces with my friend who owns a grocery store and both sell our products for less than our competitors is that illegal? If not then why is aviation any different? Seems like if anyone other than AirCanada runs a dirt cheap seat sale its called competition, if A/C does it, then its predatory. Someone please explain this to me!!!

Collusion - when two seperate companies agree to fix prices or work together agains the competition. This is illegal in Canada and everywhere else in the world. For example, British Airways recently got fined several million euros from trying to collude with Virgin.

Predatory Pricing (from the Canada Competition Bureau website) -

In general terms, predatory pricing is a situation where a dominant firm charges low prices over a long enough period of time so as to drive a competitor from the market or deter others from entering and then raises prices to recoup its losses. While predatory pricing is frequently alleged, relatively few matters have led to formal inquiries by the Director or referral to the Attorney General for prosecution.

The reason Air Canada gets accused of predatory pricing is because they are the dominant carrier. If you want to sell apples in your grocery store at 50% less than your competition, that is called a "loss leader" which is a legitemate and legal business strategy to get customers in the door who will spend dollars on everything else. Predatory pricing, however, rarely gets procecuted, which is why it happens all the time.

bmc · Post by **bmc** » Thu Nov 08, 2007 8:22 am

Although not mentioned, but taken into consideration, is abuse of dominant position. The triangle has been a bread and butter route for decades. The island operation diverts traffic, which is not good for AC.

I believe that there is too little competition in Canada, in that AC is too quickly tarred the bad guy. They compete as they should, and I think given all the negative scrutiny they face as the big bad guy, they do their best to keep clean. If there were 4-5 bug airlines slugging it out, no single player would face the accusations AC gets on a regular basis.

V1RotateV2 · Post by **V1RotateV2** » Thu Nov 08, 2007 8:36 am

bcflyer

I was under the impression that this is a free country. If I run a grocery store and want to sell my products for %50 less than my competitor isn't that my business? As well if I want to join forces with my friend who owns a grocery store and both sell our products for less than our competitors is that illegal? If not then why is aviation any different?

When you are big enough that you dominate the market and have several sources of income, you can abuse that position to squash competition. This is called cross-subsidizing. Walmart rings a bell?

If you are in A/C's position you can basically give away tickets for the segments where your new competitor operates (remember $11 to YOW or YUL?) and then charge the poor guys in YAM, YTS or YQT $600 to recoup the losses. At the end of the day your competitor is out of business, you did not loose too much money and now you can charge YOW and YUL passengers $600 as well.

Regulators usually don't like these practices and (not very often) act to prevent these predatory conducts. Usually courts are a quicker way to settle issues and force companies to negotiate a solution. That may be the reason why Porter is suing.

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 9:26 am

Having Jazz return to YTZ would be good for consumers, industry (including ours) and competition. All these are things that we as a free, democratic, capitalistic society usually encourage with great enthusiasm. I have yet to read anything on this forum that supports those ideas. What's more troubling is that if DeLuce gets his way in the courts, it sets a very dangerous precedence. YTZ will not be an airport exclusive to Porter forever. If Jazz doesn't succeed, someone else will. Mr. DeLuce would be better off spending his time building a better company within rather than keeping others out.

Ali G · Post by **Ali G** » Thu Nov 08, 2007 11:08 am

Bwahahahahaa......

That was a funny post Tony.

Thanks for the laughs.

Valhalla · Post by **Valhalla** » Thu Nov 08, 2007 11:13 am

tonysoprano wrote:Having Jazz return to YTZ would be good for consumers, industry (including ours) and competition.

Competiton is good for consumers, but Jazz has no plans to stay at the island once they've gotten rid of Porter. If they did, they would sign a long term agreement with the airport like they are welcome to do.

tonysoprano wrote:YTZ will not be an airport exclusive to Porter forever.

The airport is public and open for competition. If Jazz or anyone else wants in, all they have to do is show the airport authority that they are interested in its long term viability - not done by gradually reducing schedules and neglecting infrastructure like Jazz did before Porter showed up. You should come check it out. The island looks like a real airport now as opposed to the 40's era terminal and ferry Jazz was using.

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 11:36 am

Valhalla.
You should be very carefull in coming up with your foregone conclusions. Who says Jazz will get rid of Porter? You see, you're thinking the way DeLuce is. Afraid of competition to the point you don't want any. Secondly, why should Jazz sign anything long term? Jazz has been there, done that before. When business goes down (and it will) the last thing you want is to be stuck there. The island looks like a real airport alright. You seem to forget tat jazz had some very nice facilities too. Bus service from downtown etc. Mr. DeLuce has taken much from the Jazz playbook only he is doing it when times are good. I'd like to see him survive another 9/11 or the likes of it. Anyway, ultimately we probably will see a return by Jazz at YTZ. Even if it's just a couple of flts a day. Just a matter of time.

Ali G · Post by **Ali G** » Thu Nov 08, 2007 11:55 am

I'd don't think many companies would survive another 9/11. And, I wouldn't like to see anyone have to try.

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 12:31 pm

Ali G wrote:I'd don't think many companies would survive another 9/11. And, I wouldn't like to see anyone have to try.

Geeze Ali. What happened to the laughter?

Valhalla · Post by **Valhalla** » Thu Nov 08, 2007 1:30 pm

tonysoprano wrote:Valhalla.
You see, you're thinking the way DeLuce is. Afraid of competition to the point you don't want any.

The Deluce business plan from the beginning had Jazz at the island as a competitor. As I've mentioned before, they are welcome to come back, and I would welcome them as well. I'd love for them to execute their plan to run their sched out of Pappalardo's trailer. And I'm sure the average business traveller that enjoys Porter's lounge and full service would love to fly on a clapped out -100.

tonysoprano wrote:Secondly, why should Jazz sign anything long term? Jazz has been there, done that before. When business goes down (and it will) the last thing you want is to be stuck there.

Yes, they have been there and done that... And AC/Jazz had no intention of being there before Porter showed up. If you don't believe me, remember the leaked memo for Jazz to put jets on the island on the eve of David Millers first election? Kind of became the election springboard issue to have the bridge to the island airport cancelled, didn't it?

Bottom line is that the island airport makes no sense for Air Canada. That's why they will never commit long term to the island. Their Toronto hub is Pearson, and they should focus their attention on that instead of trying to get the very small percentage of Southern Ontario passengers who would ever fly out of downtown Toronto.[/quote]

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 2:18 pm

[

quote="Valhalla
I'd love for them to execute their plan to run their sched out of Pappalardo's trailer.

Bottom line is that the island airport makes no sense for Air Canada. That's why they will never commit long term to the island. Their Toronto hub is Pearson, and they should focus their attention on that instead of trying to get the very small percentage of Southern Ontario passengers who would ever fly out of downtown Toronto.

[/quote]

This has nothing to do with AC. The two companies have their own agendas. In fact, Jazz would be taking pax away from the AC hub at YYZ. Jazz enjoyed some pretty good times out of YTZ. It appears that those days are back. Jazz may want to set up shop there for long term or short. The whole thing about this lawsuit has the aura that no competition will be tolerated. I'm siding with the one trying to make a go of it. If Porter was in Jazz's shoes, I would be supporting Porter. You know something? I hope it's not Jazz that becomes your competition. I hope someone else sees the potential at YTZ. I don't care who does it as long as they are allowed to do it without any lawsuit or other intervention. That's where I stand.

Four1oh · Post by **Four1oh** » Thu Nov 08, 2007 2:55 pm

Tony, come ON! Do you really believe what you're typing? AC's history is enough convincing for me that they aren't interested in doing business off the island. It is cheaper and more efficient for AC to have everything out of Pearson, which is why they were cutting back on the island service, and probably would have pulled out completely soon enough if it wasn't for Porter.

bmc · Post by **bmc** » Thu Nov 08, 2007 3:14 pm

I'm going to chime in and challenge you Tony. I very much believe YTZ is a thorn for the whole AC group. In an ideal world, there is only one airport for Toronto. I don't believe YTZ is actually growing the market. I believe, and could be wrong, that the island diverts existing business.

I have no knowledge of Porter's quality of product, but if it is marginally better than AC and Jazz, it would be an even bigger thorn. Ideally, from an AC perspective, Porter is just not something you want in your life.

So.....if you can't eliminate Porter, the next best thing is to offer head to head out of the island and hope you can withstand the fight.

I could be wrong. I live far away.

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 3:22 pm

Four1oh. If memory serves me correct it was low load factors that helped Jazz quit YTZ.

Bmc. Your point would be valid if Porter had high load factors. Personally, I don't think they are a thorn to AC or WJ just yet. Even at its hayday, Air Ontario was not a threat to AC out of YTZ.

bmc · Post by **bmc** » Thu Nov 08, 2007 3:28 pm

Hi Tony.

The downside with single carrier in a lone airport is what is a passenger to do when his flight is cancelled and he can't get back to the island? CP faced it when they flew to Midway. Kind of inconvenient to reprotect a passenger back to O'Hare.

What are Porter's loads and more importantly, what is their breakeven LF?

Four1oh · Post by **Four1oh** » Thu Nov 08, 2007 5:21 pm

bmc wrote:What are Porter's loads and more importantly, what is their breakeven LF?

well, ain't dat da meeleeon dollar question?

Ali G · Post by **Ali G** » Thu Nov 08, 2007 6:22 pm

If memory serves me correct it was low load factors that helped Jazz quit YTZ.

Then why does Jazz want back in, with low load factors and now a competitor? It is definitely not to make money. Jazz only flies where AC tells it to, and AC just wants to use predatory pricing to try and stick it to Porter. AC has no interest in making money there or competing. I would imagine the A/C would be far better utilized elsewhere to actually make money.

This has nothing to do with AC

Are you kidding me? As I said, Jazz doesn't build the schedule, AC does.

tonysoprano · Post by **tonysoprano** » Thu Nov 08, 2007 7:13 pm

Ali G wrote:
If memory serves me correct it was low load factors that helped Jazz quit YTZ.
Then why does Jazz want back in, with low load factors and now a competitor? It is definitely not to make money. Jazz only flies where AC tells it to, and AC just wants to use predatory pricing to try and stick it to Porter. AC has no interest in making money there or competing. I would imagine the A/C would be far better utilized elsewhere to actually make money.

Wow buddy, you're making me work too hard. The low load factors I am refering to was years ago. I think that's why they left. Of course they want back in now. Things have changed for the better so why not go back in there. Are you not being a little premature with the predatory comment. Geeze, they're not even in there yet. AC has no interest in making money??? Yikes! Again though, it's not AC making the money, it would be Jazz. We are two different companies now. AC and Jazz are a hub and spoke system. If Jazz wants to fly other routes outside that system, AC has no say in it.