Porter aims to become Canada's 3rd national airline

Porter Airlines confirmedtoday it plans to buyup to 30CS100 jets from Montreal-based Bombardier, which wouldexpand the regional carrier's reachfrom coast to coast, and take direct aim at Air Canada and WestJet.

"We believe it is time to spread our wings," president and CEO Bob Deluce said at a news conference at Billy Bishop Toronto City Airport, where Porter is based. "And so I present to you our vision for the future of Porter Airlinesa vision with service to destinations across North America, from Calgary and Vancouver, to Los Angeles, Miami and Orlando."

The move pushes Porter into direct competition with Air Canada and WestJet as a national carrier, while setting up a potential political standoffover expansion ofthe islandairport in downtown Toronto.

'We believe the CS100 is the perfect aircraft for the next stage of our growth for many reasons, not the least of which is that it is the quietest commercial jet in production.' Bob Deluce, Porter CEO

The conditional deal is to buy 12 Bombardier CS100s, with options on18 more.

The deal also includes purchase rights for six of Bombardier's Q400 turboprop aircraft, currently the mainstay of the Porter fleet.

The total purchase could reach $2.29 billion US if all the options and purchase rights are exercised.

Delivery of the first jet, which has seating for 107 passengers,is expected in 2016.

The conditionalpurchase agreementsigned on Tuesdayis a coup for Bombardier, and ushers in a change in Canadian aviation. That's because the CSeries jetscan fly 5,400 km without refuelling, much fartherthan the current fleet of Q400 turboprop planesthat Porterflies to connect 19 cities across Eastern Canada and the U.S.

The airline said the expansion could mean 1,000 new employees, which would bring the total to 2,400.

Potential price war

Joseph D'Cruz, a University of Toronto business professor and aviation expert, said the move could be good news for consumers.

"It's going to be interesting to watch how WestJet and Air Canada react once Porter starts biting into their business," he told CBC News. "They're going to retaliate, and the only way they can retaliate is lower prices."

"This may trigger a vicious price war," D'Cruz said.

Air Canada said that before it takes a position on further investment at the island airport, it wants assurance that takeoff and landing slots will become available for other airlines that have been seeking increased access.

Canada's largest airline currently has only enough landing and takeoff slots to offer service between Montreal and the airport on the Toronto waterfront.

WestJet Airlines did not directly address Porter's plans, but said it remains focused on keeping its own business.

"We expect competition to increase and are preparing accordingly," WestJet spokesman Robert Palmer said in a statement.

Political dispute

The announcement could lead to a political dispute over the airport, which is near residents on theisland andthe city's heavily populated downtown.

The airline will seek permission to fly the long-range jets out of the island airport, where the runway would need to be extended into what is now water by 168 metres at each end.

Jets are currently not allowed to fly out of the waterfront airport except under special circumstances, and anychanges wouldneed to be approvedunder the airport's three-wayagreement between the City of Toronto, thefederal government and Toronto Port Authority.

The Toronto Port Authority said it wouldn't take any position on Porter's business plans.

"The TPA will not consider any change of use to the airport until a determination is first made by the elected representatives on Toronto City Council regarding Porter's proposed changes to the 1983 Tripartite Agreement," it said in a news release.

Deluce said Porter expects to have all the needed approvals within six months.

Politicians who represent the area at the municipal and federal level were quick to say before the announcement thatany plans to expand Toronto's island airport would be out of the question.

"You can't pave the lake," Toronto Coun. Adam Vaughan told CBC News onTuesday.

Porter executives went out of their way Wednesday to underline how quiet the new Bombardier jetswill bedesigned to be.

"We knew that operating from a downtown urban airport would require us to be responsible operators and good neighbours, said Deluce, wholaunched the airline in 2006."We believe that our track record of nearly seven years has shown that Porter has delivered on the promises we made when we announced plans to operate from this airport."

"We believe the CS100 is the perfect aircraft for the next stage of our growth for many reasons, not the least of which is that it is the quietest commercial jet in production."

Robert Kokonis,co-founder ofairline consulting firm AirTrav, noted to CBC Newsthat the thrust reverser required on landingmay be louder than Deluce's promiseof anengine that is "whisper" quiet.

"The runway's not long enough and to get an agreement to lengthen the runway, theyre going to have to go beforethree levels of government, not to mention community opposition, environmental studies, so theres a fair degree of long shot in Bob Deluces plans for Porter today," said Kokonis, who also questioned how the expansion will be financed.

In a separate interview with The Canadian Press, Kokonis noted thatPorter's planes have been flying less full while load factors at WestJet and Air Canada have been improving.

"In a zero sum game where they're all sort of chasing the same passenger, it does give one pause for concern that Porter might be struggling in some areas."

Despite the expansion, Deluce said taking the privately held airline public and raising money through an initial public offering is not a priority right now.

The company had planned to issue shares on the public markets in the past, but shelved them for various reasons.

"We've not thought about an IPO in most recent times," Deluce said. "Sometime in the future it's a possibility."