Porter launches Pearson expansion, with more routes to come

The airline begins flying out of Toronto Pearson International Airport starting Feb. 1

Porter Airlines will begin flying the Embraer E195-E2 jet from Toronto Pearson International Airport starting on Feb. 1.
Porter Airlines begins flying the Embraer E195-E2 jet from Toronto Pearson International Airport starting on Feb. 1.

In September 2020, with Porter Airlines' entire fleet of aircraft grounded due to the COVID-19 pandemic, CEO Michael Deluce called up one of his executives.

“I have a crazy idea,” Deluce recalls telling chief commercial officer Kevin Jackson at the time.

That crazy idea was an aggressive growth strategy that could transform the airline. The ambitious plan will expand the airline’s fleet by up to 100 jets as it spreads beyond the confines of Toronto’s downtown Billy Bishop airport and starts flying out of the busiest hub in the country.

The plan officially kicks off Wednesday, with the airline’s first Embraer E195-E2 jets going into service with flights from Toronto Pearson International Airport to Ottawa and Montreal. The airline will continue to expand its service out of Pearson, with flights to Vancouver starting on Feb. 7, followed by Edmonton on Feb. 14, Calgary on Feb. 22 and Halifax starting on Feb. 23.

“We needed to expand beyond our current structure. It’s something we’ve been looking at for a while,” Deluce said in an interview with Yahoo Finance Canada aboard the airline’s first test flight with passengers on the E195-E2.

“The COVID-19 pandemic was a crisis and a challenge, but it also created an opportunity for us to grow.”

That opportunity, he said, came in the form of new aircraft available for order and quick delivery, open airport slots at the country’s biggest airport, and a market segment ripe for the picking.

Porter Airlines has a firm order of 50 E195 jets, with the purchase rights for an additional 50 aircraft. It has received 5 planes so far, and expects an additional 25 to be delivered by the end of the year. It will use those planes to fly out Pearson’s Terminal 3, where WestJet is also located, before expanding to different destinations across Canada and the United States. (Porter has yet to announce additional routes, although it has signalled that major cities in North America are potential destinations, including Los Angeles, Las Vegas, Phoenix, Dallas, Nashville, Atlanta, Tampa, Orlanda and Miami.)

Canadian airline competition heats up

The Canadian airline industry has seen competition ramp up in recent years, with the launch of several new low-cost carriers such as Flair Airlines, Lynx Airlines, and Canada Jetlines. Deluce says that economy travellers will be Porter’s primary focus. It’s a segment he says accounts for 90 per cent of the market, and has been neglected by other airlines.

“Over the last two decades, the entire industry has chipped away at the economy experience. Today it has become very painful, stressful and in many cases dehumanizing for most people. No carrier has removed the pain points for economy travellers,” Deluce told stakeholders gathered ahead of the inaugural test flight last week.

“That’s exactly what we’re going to do.”

Deluce says Porter plans to capture that economy market segment by offering competitive pricing and a superior travel experience. The airline will continue to offer free snacks, beer and wine on every flight, as they do on routes from Billy Bishop airport. Each flight will also include complimentary Wi-Fi.

Porter's new E195 jets feature four seats across.
Porter's new E195 jets feature four seats across.

Porter also bets that people want to avoid sitting in the middle seat on an airplane. Part of the reason the airline opted for the E195 over alternatives such as the A220 (formerly known as the CSeries jet) was that the seat configuration would include four seats in each row. Market research showed that having no middle seat was a major selling point among Porter customers.

“What Porter offers is a completely different level of service. We are strengthening the product even further than it is today,” Deluce said.

But whether Porter will be able to carry that brand strength from Billy Bishop airport to Pearson remains to be seen, says John Gradek, a professor of aviation management at McGill University. Until now, Porter has operated out of Toronto’s Billy Bishop, a smaller city airport limited to turboprop aircraft.

The question is, how will Porter mitigate any potential failures in Pearson’s infrastructure and minimize the effect it has on the service they offer?”John Gradek, McGill University

“If Michael Deluce can transfer the brand from Billy Bishop to Pearson, that’s a significant advantage for Porter,” Gradek said in an interview with Yahoo Finance Canada.

“But the thing that concerns me is the infrastructure Pearson uses for security and to move baggage… you might end up with a baggage belt freeze-up that we had over the holidays. The question is, how will Porter mitigate any potential failures in Pearson’s infrastructure and minimize the effect it has on the service they offer?”

Deluce said that the airline will launch new apps to help streamline travel for passengers at Pearson airport. But he added that “a lot of the blame” for the issues seen at Pearson airport throughout the summer and winter travel seasons lays with the airlines themselves.

“We have gotten way ahead of our hiring to make sure we have a smooth rollout of operations,” Deluce said.

Still, competition will be stiff. Gradek said the economy market is still below pre-pandemic capacity levels, and that WestJet and Air Canada will likely respond to Porter’s expansion.

“Leisure travel is going gangbusters with cheap fares and carriers playing in that marketplace. Full-fare economy travel is lagging significantly behind the growth we see in leisure,” Gradek said.

“We’ve got a ways to go in terms of getting back to the market size we saw pre-pandemic, and that willingness to pay those fares.”

He also expects WestJet and Air Canada to respond to Porter’s expansion, lowering prices and upgrading their service offering. Nonetheless, “it’s good news for Canadians to have this carrier show up in the marketplace and provide additional competition,” Gradek said.

“I don't think Canada can support six carriers in the market,” he added.

“But for Canadians that have been clamouring for more competition, it’s a good thing.”

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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