Rovinescu "sees open skies"

If you don’t read the Financial Post, you’ll have missed an interesting Q&A session between journo Scott Deveau and Air Canada CEO Calin Rovinescu. Here’s an excerpt:

Q You have a lawsuit now challenging the way the Toronto Port Authority [TPA] plans to allocate additional slots at the Toronto Island airport. The TPA has said they will award half of the 90 additional slots at the airport to incumbents and the rest to newcomers. In the case of the Island airport, that means 45 for Porter Airlines and 45 for newcomers, adhering to IATA [International Air Transport Association] guidelines. What are your primary concerns with the way the slots are being allocated as proposed?

A Our issue is that it is patently unfair and is largely a farce.

Q Is it an issue with the TPA or with the IATA standards?

A No, it starts with the fact that, to my knowledge, and I did attend law school some years ago, I don’t know that you can have a public authority that grants an exclusive fiat to a private sector company for a large number of years. It starts with that. Is that fair? Is that appropriate? Someone is going to determine that at some stage. I think it starts with the patent unfairness of a public authority granting an exclusive fiat to a private-sector company. That does not happen in Canada. Now, once that has occurred, and you say assuming it can’t be undone, maybe it ought to be undone. Maybe there ought to be damages attached to that having occurred. What then happens to the remaining slots? What then happens with the percentage of remaining slots? And that is the debate that the court will hear.

Q If you are unsuccessful in those efforts, is 45 slots enough for you to return to the Toronto Island airport?

A We haven’t made that determination yet. We’ll see where we go after that. We need to operate from that airport. It’s patently inappropriate and unfair that we’ve been frozen out through their agreement and we’ll look to introduce service as soon as we can. Our customers are asking for it and are asking for it quite vociferously for it and are not amused with what has gone on with the Port Authority.

Given Mr. Rovinescu’s short tenure as Air Canada’s CEO, the Toronto Port Authority wrote to him on Friday to provide some of the history of the situation he complains of. The essence of the history is below, although the complete letter can be found here:

If I may, given your short tenure at Air Canada, let me take the opportunity to highlight a few key milestones that are relevant to Air Canada’s history at the BBTCA:

• During the 1980s, the BBTCA was a thriving airport servicing the City of Toronto and its surrounding area with flights to destinations in Canada and the United States. At its peak, the BBTCA served almost 400,000 passengers per annum. Scheduled carrier passenger service was delivered from Toronto to Ottawa, Montreal and Newark by City Express.

• In 1990, Air Ontario, an Air Canada subsidiary, commenced flying out of the BBTCA to Ottawa, Montreal and London. Soon afterwards, Air Ontario added flights to Newark and Windsor.

• Between 1990 and 2006, Air Canada or its related entities, provided air services from the BBTCA. Following the failure of City Express in 1991, passenger volumes at the BBTCA declined precipitously.

• By 1995, passenger totals at the BBTCA had declined to less than half of the peak volume realized by City Express. By 2002, passenger levels were below 80,000 and decreased to less than 30,000 by 2005. During this period, all commercial passenger traffic was carried by Air Canada or its related entities.

• Between 1994 and 2003, BBTCA service to Windsor, Newark, London and Montreal was cancelled by Air Canada, although it maintained most of these routes from its base of operations at Toronto’s Pearson International Airport.

• By 2002, Air Canada Jazz was utilizing only 11 outbound slots per day. By the end of 2005, Air Canada Jazz had cancelled all weekend service at the BBTCA and utilizing no more than five outbound slots per day during the week, and averaged just three outbound slots per day.

• During this period, Air Canada made no significant investment in its passenger facilities, and cancelled its shuttle bus service to the Royal York Hotel.

• On October 4, 2002, the TPA publicly announced its four-point plan for the future of the BBTCA. The TPA’s Chairman at the time stated, “The key to assuring the airport’s future is [Porter Airlines] and the 17 city network they’re preparing to serve, as well as Air Canada which has been at the airport for 10 years and currently serving Ottawa, Montreal and London.”

• In 2004, Air Canada Jazz allowed its lease at the BBTCA to expire and moved to a month-to-month tenancy.

• On May 3, 2005, the TPA entered into a Commercial Carrier Operating Agreement with REGCO, now Porter Airlines.

• In 2008, and again in 2009, the TPA publicly called for additional carriers to utilize the BBTCA.

• In October 2009, the TPA launched a process to improve the utilization of the BBTCA, including the addition of new commercial airline carriers.

MRM
(disclosure – this post is for information purposes only and does not reflect any position whatsoever on matters before the Courts)