YYZatcboy
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Porter Increases YTZ Rents Up To 300%

Wed Jan 11, 2012 8:34 pm

http://www.thestar.com/news/article/...-billy-bishop-airport-by-up-to-300

According to the article Porter is increasing the rent at YTZ from 30-300% and what is worse is evicting the two flight schools that rent hangar space on the island. With Buttonville closing this means that there will no longer be a flight school in Toronto which is a real shame. I wonder if ORNGE will also be kicked out?

Quote:

No monetary figures were provided by Porter, but several tenants contacted by the Toronto Star — all of whom did not want to be identified in case the hike could be renegotiated — said the increase ranged from 30 to 300 per cent. They say the amount could jeopardize business and force them out of the airport.

While Deluce acknowledged that the flight schools “could not be accommodated in their current form,” he said arrangements are still in the process of being made for the schools to either move to another airport or another space, still at Billy Bishop, with a new landlord.

Representatives from both flight schools declined to comment Tuesday.

Deluce said Porter recognizes the price may now be too high for some tenants and is aiming to help some who wish to move with the transition to another airport, naming alternatives in Brampton, Oshawa, Tillsonburg and Barrie.
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ac033
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Porter Increases YTZ Rents Up To 300%

Wed Jan 11, 2012 10:15 pm

30% is for the flight school

300% is for Air Canada Express

I guess that is another way to kick Air Canada out of the YTZ
 
bennett123
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Porter Increases YTZ Rents Up To 300%

Wed Jan 11, 2012 10:30 pm

If the flight school leaves, does Porter have new tenants ready to move in?.
 
YYZatcboy
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Porter Increases YTZ Rents Up To 300%

Wed Jan 11, 2012 11:30 pm

My guess is they want the space for themselves, plus they would have more ramp space with the flight school planes out of the way.
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JoeCanuck
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 12:36 am

Quoting YYZatcboy (Reply 3):

I wonder if Porter can get into anti trust problems by using their monopoly status at YTZ to drive out competition.

They don't actually own the airport, do they?
What the...?
 
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longhauler
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 12:43 am

They have just generated a lot of ill will and bad press in Toronto. Not a good thing. There was a news clip on AM680 in Toronto, and the word of 'average Joe' on the street was not flattering.

I have always maintained that as long as Porter does not abuse their monopoly, they should be allowed to grow and survive without competition. It appears the honeymoon is over.

Once Air Canada leaves, and they likely will, and with a stronghold on YTZ, I wonder how much longer the $45 tickets to YUL will be around?
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WestJet747
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 12:44 am

Quoting YYZatcboy (Thread starter):
According to the article Porter is increasing the rent at YTZ from 30-300%

Numbers aren't made public, but apparently this hike is to put YTZ rent in line with costs at similar airports.

Quoting YYZatcboy (Thread starter):
I wonder if ORNGE will also be kicked out?

ORNGE is doing enough to kick themselves out at the moment. That company is up to their neck in government heat right now and their CEO and founder just took an indefinite leave.

Quoting ac033 (Reply 1):
I guess that is another way to kick Air Canada out of the YTZ

AC is going to pay. Their head is too far up their own you-know-what to gracefully exit. Just wait for the lawsuit.....

Quoting ac033 (Reply 1):
If the flight school leaves, does Porter have new tenants ready to move in?.

Yep, themselves.

Quoting YYZatcboy (Reply 3):
they would have more ramp space with the flight school planes out of the way.

   If there's one thing they need it's space. If the flight schools leave then I could see the Island Air hangar being demolished in favour of a couple more gates.
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krisyyz
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 2:20 am

Quoting YYZatcboy (Thread starter):
I wonder if ORNGE will also be kicked out?

I thought they were already planning on moving their base to YHM. Apparently they will have an easier time responding to calls from YHM, but I'm sure the cost issue played into that decision as well.


I'm a big fan of Porter, but they seem more set on winning this "fight" with AC than public relations. Porter has a great reputation in Toronto, AC not so much. I'm also not too impressed with seeing flight school having to abandon YTZ as it's a great place to practice a steep approach.

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aamd11
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 2:35 am

Has it been confirmed at all which tenants exactly are paying the increased rents?

The flight schools are all but confirmed based on what Deluce has said... however, is AC one of the tenants that is subject to a rate hike? The story seems to indicate that the focus is more on the other properties (hangar space and the offices within), rather than the terminal itself where Sky Regional's operations are concentrated.
 
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yyz717
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Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 8:22 am

Quoting longhauler (Reply 5):
I wonder how much longer the $45 tickets to YUL will be around?

Porter must remain competitive with AC and WS out of YYZ so fares will remain low even without YTZ competition

Quoting WestJet747 (Reply 6):
Numbers aren't made public, but apparently this hike is to put YTZ rent in line with costs at similar airports.

Then it sounds reasonble.

Quoting WestJet747 (Reply 6):
If the flight schools leave then I could see the Island Air hangar being demolished in favour of a couple more gates.

Flights schools dont really have a place at growing commercial airports. That Porter grew like a phoenix and has displaced flight schools quickly is just a fact of business. DT Toronto benefits far more from Porter than flight schools anyway so its good for the DT community.
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longhauler
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 2:58 pm

Quoting yyz717 (Reply 9):
Porter must remain competitive with AC and WS out of YYZ so fares will remain low even without YTZ competition

That hasn't happened in the past. Maybe thinking "the world" is watching them, and with recent bad press, they will not abuse the monopoly.

Recently Deluce announced that Porter is making money. Now, not being a public corporation there is no way to verify that, however, if it is true .... then Porter has been able to show that it is possible to provide a high level of service for a competitive price, and still make money. (Again, that hasn't happened in the past).
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FighterPilot
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 4:11 pm

Quoting krisyyz (Reply 7):
I thought they were already planning on moving their base to YHM. Apparently they will have an easier time responding to calls from YHM, but I'm sure the cost issue played into that decision as well.

The ORNGE base in YHM is on "hold" for now.

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flyguy89
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 4:43 pm

Quoting YYZatcboy (Thread starter):
http://www.thestar.com/news/article/...-billy-bishop-airport-by-up-to-300

According to the article Porter is increasing the rent at YTZ from 30-300% and what is worse is evicting the two flight schools that rent hangar space on the island. With Buttonville closing this means that there will no longer be a flight school in Toronto which is a real shame. I wonder if ORNGE will also be kicked out?

I say good for them. As long as it's all done legally, they should be allowed to make as much money as they possibly can from YTZ. The airport was underdeveloped and virtually unused until Porter came into the picture, and even then, Porter is the only reason AC is back at YTZ.
 
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longhauler
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 5:14 pm

Quoting flyguy89 (Reply 12):
Porter is the only reason AC is back at YTZ.

Technically ... Porter is the reason AC was kicked out of YTZ. Legally.
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yyz717
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 6:24 pm

Quoting longhauler (Reply 13):
Technically ... Porter is the reason AC was kicked out of YTZ. Legally.

Technically, AC kicked itself out of the market by reducing daily flights from 29 to just 5 and not investing in any terminal capacity to ensure a long term presence, making themselves vulnerable to any landlord wanting change.

Quoting longhauler (Reply 10):
Quoting yyz717 (Reply 9):
Porter must remain competitive with AC and WS out of YYZ so fares will remain low even without YTZ competition

That hasn't happened in the past.

Yes it has. Ever since Porter started, its fares have been competitive with YYZ fares to the same cities.

Quoting longhauler (Reply 10):
Maybe thinking "the world" is watching them, and with recent bad press, they will not abuse the monopoly.

There is no such thing as a monopoly at YTZ even if Porter was/becomes the only carrier. YTZ is not an isolated airport....Porter competes with AC mainline and Westjet everyday, just from adjacent airports.
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AirCanada787
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 7:03 pm

Quoting WestJet747 (Reply 6):
Numbers aren't made public, but apparently this hike is to put YTZ rent in line with costs at similar airports.

When I read that I wondered if they really meant that they were increasing costs to match other airports in the Toronto area. Its often mentioned that Pearson is one of the more expensive airports to operate in and out of, so are they trying to match the fees that Pearson can command? If so I think that its a pipe dream since the two airports really can't even be compared.

Quoting longhauler (Reply 13):
Quoting flyguy89 (Reply 12):
Porter is the only reason AC is back at YTZ.

Technically ... Porter is the reason AC was kicked out of YTZ. Legally.

  
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WestJet747
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 7:08 pm

Quoting longhauler (Reply 10):
Maybe thinking "the world" is watching them, and with recent bad press, they will not abuse the monopoly.

That is a non-issue, the "godd press" has far outweighed the "bad press".

Quoting yyz717 (Reply 14):
There is no such thing as a monopoly at YTZ even if Porter was/becomes the only carrier. YTZ is not an isolated airport....Porter competes with AC mainline and Westjet everyday, just from adjacent airports

Not to mention that if AC leaves (and that's a big if), those slots will have to go to someone. Since the TPA, not REGCO, make that decision, there's no guarantee they will go to PD. There could be an American carrier, or even Pascan or WS (assuming current fleet rumours are true) in there this time next year.

Quoting AirCanada787 (Reply 15):
When I read that I wondered if they really meant that they were increasing costs to match other airports in the Toronto area. Its often mentioned that Pearson is one of the more expensive airports to operate in and out of, so are they trying to match the fees that Pearson can command? If so I think that its a pipe dream since the two airports really can't even be compared.

I assume by "similar airports" that they don't mean geographically, but rather airports with similar levels of traffic and service.
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Whiteguy
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 7:27 pm

Quoting yyz717 (Reply 14):
Technically, AC kicked itself out of the market by reducing daily flights from 29 to just 5 and not investing in any terminal capacity to ensure a long term presence, making themselves vulnerable to any landlord wanting change.

At a time when the industry was still recovering from 9/11 and business travel was way down. If they would've kept their 29 flights a day they would have been bleeding even worse. There obviously was no market at the time fir that many flights. By the time the market had started to recover AC/Jazz was kicked out by Porter ownership!
 
polaris
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 8:19 pm

It amazes me what Porter and Deluce are allowed to get away with at that airport.
 
PlymSpotter
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 8:51 pm

A few questions on a similar theme;

- Is Porter profitable?
- Is there a link between airline owner and airport owner?
- How dependant will the airport be on Porter for profitability?
- How much is the airport site worth if redeveloped?

Not wishing to be alarmist, but rent (and fuel) increases are a mechanism used to drive business away from sites so they are no longer viable and can be redeveloped.


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Airontario
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 9:19 pm

Quoting PlymSpotter (Reply 19):
- Is Porter profitable?
- Is there a link between airline owner and airport owner?
- How dependant will the airport be on Porter for profitability?
- How much is the airport site worth if redeveloped?

1. Porter says they're profitable. Are they actually? We don't know. They are growing, and people seem to be happy with the product...but their load factors are worrisome.

2. The CEO of Porter bought the airport before Porter started, and evicted Air Canada/Jazz before starting Porter

3. Porter is responsible for more than 3/4 of the traffic at the airport. The rest is split between AC/Sky Regional, Air Ambulances and general aviation.

4. A lot. Real Estate in Toronto is going up and up, and has no sign of stopping. I can't imagine what a piece of land that size would be worth.
 
pnwtraveler
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 9:23 pm

Quoting whiteguy (Reply 17):
Quoting yyz717 (Reply 14):Technically, AC kicked itself out of the market by reducing daily flights from 29 to just 5 and not investing in any terminal capacity to ensure a long term presence, making themselves vulnerable to any landlord wanting change.
At a time when the industry was still recovering from 9/11 and business travel was way down. If they would've kept their 29 flights a day they would have been bleeding even worse. There obviously was no market at the time fir that many flights. By the time the market had started to recover AC/Jazz was kicked out by Porter ownership!

First of all I am an Aeroplan junkie and choose AC over any other carrier, especially US airlines when doing cross border trips especially for service as much as point. However, AC ticked me off by reducing flights to YTZ. On one trip when I wanted to switch my return segement to a YYZ flight rather than sit and wait for the next highly inconvenient YTZ flight, they would only do so if I paid a change fee. I called over the AC concierge and told him I would never fly in or out of YTZ with AC or one of its partners ever again. The sole purpose in using YTZ is to save time and if they weren't going to offer enough volume of flights it made the airport useless for me. Off the record an AC employee present had to admit that there was no competition so they were ignoring the airport potential because regardless it was cheaper and more cost effective for them to have as much volume fly out of YYZ. The wanted people to do exactly what I was doing, as long as I didn't get so mad I switched to WestJet or Jetsgo at the time. They were right I wasn't about to do either. The Concierge overroad the policy and put me on a YYZ flight. But the point is that North America is all about frequency and AC knew that clearly. I have never flown out of YTZ again. I am looking forward to trying Porter but just haven't had an opportunity yet.

Sorry but the reduction was well underway before 9/11 so that just exasperated the situation and gave AC an excuse. 9/11 and the security changes it caused, actually strengthened the case for using YTZ more but AC still went the other way. I am sorry AC deserved and deserves what it gets out of YTZ simply for ignoring customers and putting the lack of competition ahead of them. They could have easily marketed YTZ much stronger but clearly chose to mimimize it.
 
Viscount724
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 9:27 pm

Quoting airontario (Reply 20):
2. The CEO of Porter bought the airport before Porter started, and evicted Air Canada/Jazz before starting Porter

Porter owns the terminal building, not the airport. The airport is owned by the Toronto Port Authority, a Federal government agency.
 
PlymSpotter
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 9:36 pm

Quoting airontario (Reply 20):
1. Porter says they're profitable. Are they actually? We don't know. They are growing, and people seem to be happy with the product...but their load factors are worrisome.

2. The CEO of Porter bought the airport before Porter started, and evicted Air Canada/Jazz before starting Porter

3. Porter is responsible for more than 3/4 of the traffic at the airport. The rest is split between AC/Sky Regional, Air Ambulances and general aviation.

4. A lot. Real Estate in Toronto is going up and up, and has no sign of stopping. I can't imagine what a piece of land that size would be worth.

Thanks for the quick reply - to be honest they are concerning answers. The only good thing I can see is that he (Deluce) comes from an airline background - if he's got jet fuel running in his blood then hopefully he's just out to 'get' AC and maintain his airline's domination.


Dan  
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Bureaucromancer
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 10:46 pm

Quoting airontario (Reply 20):
4. A lot. Real Estate in Toronto is going up and up, and has no sign of stopping. I can't imagine what a piece of land that size would be worth.

Well, yes and no. The airport is also on an island which is (apart from some very heavily regulated residences on the other end) otherwise a city park. The chances that any kind of commercial redevelopment of the airport lands would be allowed are virtually nil. In the real world that land is either an airport (and one of about the same size as currently) or getting turned into a park.

I have to agree that the company is getting worryingly monopolistic in terms of Air Canada, but really I cant fault them for wanting the flight schools gone. The island is turning very quickly into a fairly significant commercial airport, was never able to support itself on GA alone and really was never that well positioned for flight training anyway. There is a real problem with a lack of flight training capacity in the GTA once the Island schools go and Buttonville shuts down, but the Pickering site is still on the table and as time goes on I'm thinking a GA facility out there makes a lot of sense.
 
flyguy89
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RE: Porter Increases YTZ Rents Up To 300%

Thu Jan 12, 2012 11:07 pm

Quoting PlymSpotter (Reply 23):
to be honest they are concerning answers.

Why are they concerning? Correct me if I'm wrong, but Deluce doesn't own YTZ, but just the terminal facilities, so other than selling facilities to the government or some other carriers, there's no way Deluce could "sell out" YTZ for redevelopment. Also, wasn't YTZ being considered for closing or demolition at some point recently before Porter?

Quoting polaris (Reply 18):
It amazes me what Porter and Deluce are allowed to get away with at that airport.

Get away with what? They're the ones who realized the potential of YTZ, which was languishing before Deluce and Co. invested, they should be able to enjoy the rewards of what they've built and developed.

Quoting Bureaucromancer (Reply 24):
I have to agree that the company is getting worryingly monopolistic

I'm sorry but they're not monopolistic in anyway. Even if Porter eventually drives AC/SkyRegional away, it's not like YTZ is the sole airport in the area. It's really because of Porter that YTZ has developed into a serious option for travelers to or from Toronto, so how is it monopolistic when they're in fact just offering an alternative, competing service?
 
Bureaucromancer
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RE: Porter Increases YTZ Rents Up To 300%

Fri Jan 13, 2012 12:12 am

Does anyone know if there would be any legal problems with an airline directly owning and operating a private field for its exclusive use? Would it actually be a problem if the Port Authority were to hand the field over to Porter and close it to other traffic? My understanding is that that is more or less the situation with HeliJet in Vancouver and Victoria...

As far as flyguy's comment, what I find concerning is that we have an airfield that IS publicly owned and operated but which a single airline exercises almost complete control of through its ownership of the terminals. I have yet to make a decision as to whether the new rates for terminal are reasonable, but it would certainly be problematic if Porter were to use its ownership to effectively expel competition (as to the legitimacy of the previous eviction of Jazz... well, I go back and forth on that).

Fundamentally it is true that Porter built and paid for the terminal, but it is equally true that there is no possibility for another airline to build its own terminal at this field, nor does the airline own or control the field itself. Really I would like to see Porter either give up control of the terminal or assume full responsibility for the airfield. As of now they are in effective control but are not directly responsible for operating the facility, and that to me is a serious concern. If they DO start abusing this control its a big problem.
 
PlymSpotter
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RE: Porter Increases YTZ Rents Up To 300%

Fri Jan 13, 2012 12:59 am

Quoting flyguy89 (Reply 25):
Why are they concerning? Correct me if I'm wrong, but Deluce doesn't own YTZ, but just the terminal facilities, so other than selling facilities to the government or some other carriers, there's no way Deluce could "sell out" YTZ for redevelopment. Also, wasn't YTZ being considered for closing or demolition at some point recently before Porter?

They aren't if he doesn't physically own the airport land. The first reply said he did, which made me suspicious that a situation was being engineered to claim the airline is not profitable (as is rumored) and, on the back of which, neither is the airport. I've seen just that done to my local airport so it flashed up all the warning signs.


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WestJet747
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RE: Porter Increases YTZ Rents Up To 300%

Fri Jan 13, 2012 1:46 am

Quoting flyguy89 (Reply 25):
Quoting Bureaucromancer (Reply 24):
I have to agree that the company is getting worryingly monopolistic

I'm sorry but they're not monopolistic in anyway. Even if Porter eventually drives AC/SkyRegional away, it's not like YTZ is the sole airport in the area. It's really because of Porter that YTZ has developed into a serious option for travelers to or from Toronto, so how is it monopolistic when they're in fact just offering an alternative, competing service?

I agree. too many people look at the dictionary definition of monopoly at not the real-world free market interpretation of it. Even if PD is the only carrier serving YTZ, it is FAR from a monopoly. It's oly a monopoly in the most micro sense of the word.

Quoting Bureaucromancer (Reply 26):
Does anyone know if there would be any legal problems with an airline directly owning and operating a private field for its exclusive use?

So long as they aren't infringing on any airline regulations then I honestly can't think of any laws they would be breaking. There are plenty of well-off communities in Florida and other southern states that operate private airfields exclusive to people that live in the neighbourhood.

Quoting Bureaucromancer (Reply 26):
Fundamentally it is true that Porter built and paid for the terminal, but it is equally true that there is no possibility for another airline to build its own terminal at this field, nor does the airline own or control the field itself. Really I would like to see Porter either give up control of the terminal or assume full responsibility for the airfield. As of now they are in effective control but are not directly responsible for operating the facility, and that to me is a serious concern. If they DO start abusing this control its a big problem.

Why? Porter is making buckets of money for the TPA, which is a public entity.
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Bureaucromancer
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RE: Porter Increases YTZ Rents Up To 300%

Fri Jan 13, 2012 2:09 am

Quoting WestJet747 (Reply 28):
Why? Porter is making buckets of money for the TPA, which is a public entity.

The TPA is spending significant amounts of public funds to keep the field open (actually, it looks like for the last year or two they have broken even on the field, but over the lifespan of Porter the point stands) while Porter makes that money. As things stand we are spending public funds to maintain an airfield which Porter has the ability to deny access to. Should that happen, any public funds invested in the airport become, in effect, a direct subsidy to Porter rather than any kind of infrastructure investment. If this is a public airport we need some mechanism to avoid anti competitive behaviour, if its a private field for Porter they really shouldn't be getting public funds to maintain it.
 
YYZYYT
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RE: Porter Increases YTZ Rents Up To 300%

Fri Jan 13, 2012 5:20 pm

Quoting ac033 (Reply 1):
30% is for the flight school

300% is for Air Canada Express

I guess that is another way to kick Air Canada out of the YTZ
Quoting aamd11 (Reply 8):
The flight schools are all but confirmed based on what Deluce has said... however, is AC one of the tenants that is subject to a rate hike? The story seems to indicate that the focus is more on the other properties (hangar space and the offices within), rather than the terminal itself where Sky Regional's operations are concentrated.

Not necessarily.

The leases to the flight schools and GA tenants are probably older and may well be well - WELL - below market value. I have seen other crown leases where this is the case, and it would be consistent with leases given at a time when the airport was under-utilized. Also, these leases may be quite old, working on year-to year renewals, etc... therefore Porter CAN raise the rent.

AC, on the other hand, leased space from Porter recently, in the modern terminal which had been constructed. It is almost certainly paying market rent already (why would Porter have given AC a sweet rent deal only last year??). Not only that, they are at the front end of the lease, which will probably have fixed term and fixed rent. Porter cannot just decide to up the rent.

This is consistent with the article: it refers to 25-30 "small tenants" being affected, and leases which are being renewed "for the first time in five years". Clearly not AC.


So, IMHO this is not about Porter trying to give AC the finger (much as they would probably like to), but as others have said it is likely about Porter bringing rents into line with the actual worth of the airport, as it is now used.

Quoting PlymSpotter (Reply 19):
- How much is the airport site worth if redeveloped?
Quoting airontario (Reply 20):
4. A lot. Real Estate in Toronto is going up and up, and has no sign of stopping. I can't imagine what a piece of land that size would be worth.

Again, not necessarily so. The airport is on the island, and that land is not for sale. The islands are all park land, except for some homes which are leased from the City by way of long term leases. If the airport was mnot there, the land would likely be used as a park.