Porter sues YTZ Terminal owners

[Bede]

https://www.theglobeandmail.com/busines ... illion-in/

Porter Airlines Inc. is suing the owner of Toronto’s downtown island airport terminal for $21-million, alleging breach of contract, plus forgiveness of up to $45.3-million in fees in a dispute that highlights the travel industry’s COVID-19-related financial stress.

Porter filed a lawsuit on Wednesday against Nieuport Aviation Infrastructure Partners GP, owner of the terminal at Billy Bishop Toronto City airport. The filing shows both Nieuport and Porter, the dominant airline at Billy Bishop airport, resorting to tough tactics to weather the pandemic. Porter is attempting to avoid paying fees for terminal slots it’s not currently using and alleges its landlord is not doing enough to keep the facility safe for travellers. For its part, Nieuport is trying to seize three Porter planes pledged as collateral by the airline.

Airport executives say the dispute threatens growth plans at Toronto’s downtown airport. The court battle is playing out as the federal Liberals continue working on a bailout package for the country’s airlines.

Before the pandemic, Porter flew to 22 Canadian and U.S. destinations from the island airport and 2.8 million passengers went through the Billy Bishop terminal each year. Porter cancelled all flights in March, and now says it plans to resume flights on Feb. 11 of next year. Porter is owned by Toronto’s Deluce family and private equity funds.

Nieuport, which is controlled by New York-based J.P. Morgan Asset Management, bought the Billy Bishop terminal from Porter in 2015 for an estimated $700-million. According to court documents, Nieuport continues to charge Porter for using slots at the terminal. The airline is asking the Ontario Superior Court of Justice to cancel those fees, which could total $45.8-million.

Porter is also asking the court to settle a dispute that dates back to 2018 over the airline’s request to reduce the number of slots it uses at Billy Bishop. In addition to setting aside fees, Porter is suing Nieuport for $20-million for breach of contract and $1-million in punitive damages.
“Porter’s position is that it expects Nieuport to respect its contractual obligations,” said Brad Cicero, the airline’s spokesman. “We will move ahead with this matter through the courts and do not have further information to share at this time.”

“Nieuport Aviation disagrees with the allegations raised by Porter in its statement of claim of November 18, 2020 and we will defend ourselves against these allegations,” said Neil Pakey, chief executive of Nieuport Aviation, in an e-mail on Friday. He said the company has invested hundreds of millions of dollars to purchase, then improve the Billy Bishop terminal.

“We are now working towards the development of a new U.S. Customs preclearance facility which will enhance the passenger experience even more,” said Mr. Pakey. “Nieuport is committed to the airport’s long-term future and its vital role in serving consumers, businesses and visitors.”
Porter put up a line of credit that Nieuport can access and pledged three of its Dash 8-400 turboprop planes to its landlord as security for its use of the terminal. Porter is asking the courts to return $5.75-million that Nieuport drew from the credit line, and stop the terminal owner from seizing its aircraft. Porter’s total fleet is 29 planes. Porter also wants to be released from fees it pays on advertisements on Nieuport-owned buses that carry passengers from the airport to downtown Toronto, as the shuttle service is currently shut down.

While Nieuport owns the terminal, the federal government owns Billy Bishop airport though the PortsToronto agency. On Friday, PortsToronto declined to comment on the court dispute.

Before the pandemic, Porter accounted for 85 per cent of landing slots at Billy Bishop airport, while Air Canada held the remaining slots.
Separately, airlines are lobbying the federal government to roll back fee increases put in place at many Canadian airports since the pandemic hit North America in March. Carriers are also asking Transport Canada to reduce the airline fees charged by Nav Canada, the national air traffic control system. Airlines estimate that fee increases have added about $100 to the cost of a cross-country flight for a family of four.

[Bede]

The legal battle at Toronto’s island airport is heating up as the terminal’s owner and operator has filed a countersuit against Porter Airlines Inc., alleging the carrier has wrongfully refused to pay fees during its pandemic-related shutdown.

The owner of the passenger terminal at Billy Bishop Toronto City Airport, Nieuport Aviation Infrastructures Partners LP, said in a lawsuit filed in the Ontario Superior Court of Justice that Porter has withheld $38.6-million in charges since March 1, in violation of a contract.

Nieuport, controlled by New York-based J.P. Morgan Asset Management, is asking the court to order Porter to pay the fees for the use of airport slots and ground-handling services, in addition to providing $11-million in credit guarantees.



“Porter has unilaterally decided that it will no longer pay the fees that it owes during the COVID-19 period … fees that Porter itself set in 2015 in order to maximize the purchase price that it would earn from selling the terminal,” Nieuport said in its court filing. “Porter has sought to leverage the COVID pandemic to effectively restructure its business, at Nieuport’s expense.”

The lawsuit follows a move by Porter last week to sue Nieuport for breach of contract, seeking $21-million plus forgiveness of $45.3-million in fees. The airline is also asking the court to prevent Nieuport from seizing three Dash 8-400 turboprop planes put up as collateral. None of the lawsuits’ claims has been proven in court.

Nieuport bought the island airport terminal from Porter in 2015 for more than $700-million. Before the pandemic, Porter accounted for 85 per cent of the traffic at the airport and was Nieuport’s biggest source of revenue, while Air Canada accounted for the rest.

The airport is owned by the Toronto Port Authority, a federal government enterprise that is meant to be self-sufficient of taxpayers’ money and pays a share of revenue generated to Ottawa. In March, the federal government waived this amount, said Port Authority spokeswoman Deborah Wilson, along with that of 21 other airport authorities. The move was a recognition of the impact of the pandemic, which has halted much of Canada’s airline traffic.

Nieuport has lost nearly all its revenue due to Porter’s refusal to pay any fees, even though Nieuport continues to pay rent to Toronto Port Authority, Nieuport said in its statement of claim.

“In consideration of our significant investment in the terminal building, our role at the airport and our long-term commitment, we have asked to be included in any government support that goes to Canadian airports,” Scott Brownrigg, a Nieuport spokesman, said in an e-mail.

Porter has not flown since March 21, and has repeatedly delayed its restart. The carrier said recently it will resume flying on Feb. 11.



Porter spokesman Brad Cicero said the airline stands by its position in the statement of claim and expects Nieuport to respect its contractual obligations. “We will move ahead with this matter through the courts and do not have further information to share at this time,” he said.

To survive the pandemic, privately owned Porter has borrowed $135-million from Export Development Canada, a government agency, and has been in negotiations with Ottawa for more aid. The carrier operates 29 De Havilland Dash-8 aircraft, and employed about 5,000 people before the pandemic.

According to Porter’s own statement of claim, filed last week, the dispute began in late 2018, when the airline told Nieuport of its intention to stop using unprofitable slots at the airport in 2020 in a bid to save $12-million a year in fees. Porter alleges Nieuport refused to accept its move to abandon some slots after being unable to sell them to any other airline.

Since the pandemic began, Porter alleges Nieuport has failed to operate the terminal in a manner that is safe for passengers and employees. It also alleges Nieuport’s demands for terminal fees have hampered the airline’s ability to borrow money and restart operations.

According to Nieuport’s court filing, Porter’s daily fee for one terminal slot, which is a right to land or take off, is about $950, and $85 for ground handling for each flight.

Ms. Wilson of the Port Authority declined to say how much rent Nieuport rent pays for the land its terminal sits on, and said that amount has not been waived. She declined to say if the Port Authority has given breaks on charges to Porter and Air Canada.



“PortsToronto is working closely with both Porter Airlines and Air Canada during this period of shutdown, and will continue to do so in the early stages of a restart which is currently slated for early 2021,” Ms. Wilson said. “The aviation industry has been decimated by the drastic decline in travel and PortsToronto – as owner and operator of Billy Bishop Airport – believes working together to identify approaches to immediate survival and longer-range recovery is in everyone’s best interest.”

[altiplano]

They should seize and auction off the slots that Porter doesn't use and recoup their losses.

I'm pretty sure there's lots of precedent use it or lose it wrt slot restricted airports. What will turn into 12+ months of no flying and no payment would no doubt be seen as reasonable.

I bet those slots would get snapped up and used by a competitor in spite of the current challenges and Bob Deluce.

[fish4life]

They should seize and auction off the slots that Porter doesn't use and recoup their losses.

I'm pretty sure there's lots of precedent use it or lose it wrt slot restricted airports. What will turn into 12+ months of no flying and no payment would no doubt be seen as reasonable.

I bet those slots would get snapped up and used by a competitor in spite of the current challenges and Bob Deluce.

In the article it literally says a few years ago porter tried to get rid of slots and the airport said no, that would tell me much to my surprise they aren’t worth much as slots.
On an unrelated note, this company should get ZERO government aid, we have enough struggling Canadian businesses to give any money to a New York based investment firm.

[photofly]

I bet those slots would get snapped up and used by a competitor in spite of the current challenges and Bob Deluce.

Which competitor do you have in mind?

There are not a lot of airlines looking to fly Q400s with restricted loads out of CYTZ. United were allocated a bunch of slots initially, and turned them down. AC only wanted theirs as a spoiler.

[altiplano]

When United gave up it's slots AC tried to get some of them, but the Port Authority gave them all to Porter.

I don't doubt AC would compete for more slots if there were an opportunity.

WestJet at the time didn't have the capability to fly to YTZ. I'm sure they would look closely at it also.

Even United may want to revisit slots if US pre-clearance comes.

Point is, you have an airline which holds virtually the entire airport/terminal hostage for it's business.

[altiplano]

They should seize and auction off the slots that Porter doesn't use and recoup their losses.

I'm pretty sure there's lots of precedent use it or lose it wrt slot restricted airports. What will turn into 12+ months of no flying and no payment would no doubt be seen as reasonable.

I bet those slots would get snapped up and used by a competitor in spite of the current challenges and Bob Deluce.

In the article it literally says a few years ago porter tried to get rid of slots and the airport said no, that would tell me much to my surprise they aren’t worth much as slots.
On an unrelated note, this company should get ZERO government aid, we have enough struggling Canadian businesses to give any money to a New York based investment firm.

Right, I missed that. Either way, if they can't sell them, open them up for free to any takers that will use it.

[rudder]

AC will take the slots. But they will not be paying Porter (or anyone else) for them. They have no asset value. But they do incur a holders fee.

[PT6onH20]

I bet those slots would get snapped up and used by a competitor in spite of the current challenges and Bob Deluce.

Which competitor do you have in mind?

There are not a lot of airlines looking to fly Q400s with restricted loads out of CYTZ. United were allocated a bunch of slots initially, and turned them down. AC only wanted theirs as a spoiler.

So the c-series isn’t coming after all? . Have they changed the ground school slides yet?

[JohnG]

Just to add a little bit of context to the debate on this one... Nieuport have zero control over slot allocation at CYTZ. It is the Toronto Port Authority that controls slot allocation at that airport. Nieuport owns and controls the terminal building and the gates.

Stay safe everyone!

John

[fish4life]

What aircraft would united even fly in there with? According to their fleet page they don’t even operate a prop airplane.

[Cavalier44]

What aircraft would united even fly in there with? According to their fleet page they don’t even operate a prop airplane.

You have to remember that this was a decade ago. The slots in question were originally allocated to Continental Airlines in 2010, which transferred to United when the United-Continental merger began later that year. At that time, Continental was partnered with several regional carriers that operated turboprop aircraft through the Continental Connection brand, including Colgan Air with Q400s, and CommutAir with Dash-8 200 and 300 series aircraft.