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 1,500 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.”
With files from Andrew Willis
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