Porter Airlines and Transat A.T. Inc. TRZ-T are forming a joint venture aimed at boosting seat sales by using each other’s networks as feeder lines.
The agreement, announced Tuesday, builds on a cross-selling arrangement the two carriers began last year as the industry struggled to emerge from the pandemic.
Top executives at the airlines said in a joint interview that the arrangement, to be phased in next year, will allow the carriers to better co-ordinate schedules, offer more competitive fares and share revenues at a time of intense competition. Jobs and fleet sizes are expected to increase as the partnership drives growth, they said. The marketing alliance does not include any change in ownership nor any investment between the partners.
“We will be able to provide Canadians with increased options through the combination of both networks,” said Annick Guérard, the chief executive officer of Transat. “It’s going to make us more robust and solid in the Canadian market.”
Michael Deluce, the CEO of Porter, said the partnership will offer “seamless” flight bookings with more assurance of connection timing on either carrier.
He described the arrangement as “pro-competitive” with zero route overlaps.
Marianne Blondin, a spokeswoman for the Competition Bureau, said the antitrust watchdog will review the proposed partnership to determine if it is “likely to result in a substantial lessening or prevention of competition.”
Porter, with an extensive domestic and cross-border network, will feed into Transat’s sun destination and transatlantic routes.
“The feeder network strategy accelerates both airlines’ expansion in their respective markets,” said Walter Spracklin, a stock analyst at Royal Bank of Canada. “This allows Porter to enter into more markets through a hub and spoke model.” Mr. Spracklin said the joint venture will heighten competition in domestic and transatlantic travel, putting pressure on Air Canada, the dominant airline.
Chris Murray, an analyst at ATB Financial, said the joint venture is a positive step for both airlines. Porter and its Canadian and U.S. customers will be able to reach European markets through Transat. Conversely, Transat’s overseas customers will be able to get to the smaller North American destinations served by Porter, Mr. Murray said by phone.
Porter, in the midst of expanding its fleet, needs a larger flow of passengers to fill the planes, while Transat has coveted a larger domestic network to feed its holiday flights, he said.
Transat’s share price on the Toronto Stock Exchange was little changed Tuesday, trading at about $3 after rising 4 per cent this year.
Transat, founded in 1986 and based in Montreal, flies 39 planes with a work force of 5,000.
Porter, launched in 2006 by Mr. Deluce’s father, Robert, has a fleet of 52 and 3,000 employees. Porter began as a short-haul airline flying De Havilland Dash 8s from Billy Bishop Toronto City Airport. It recently added Embraer E195 jets and began flying cross-country.
The joint venture will allow the Toronto-based airline to accelerate the delivery of the Embraer aircraft, Mr. Deluce said. Porter has an order for as many as 100 of the jets and will have 50 by the end of next year, he said.
Transat was losing money even before the pandemic sent the global airline sector into financial straits. It lost a total of $1.45-billion from 2019 through the first half of this year but posted a profit of $57-million in the third quarter of 2023.
Privately held Porter does not report financial results.
Desjardins Group analyst Benoit Poirier said the partnership could boost Transat’s passenger count by as much as 18 per cent and bring in a “few hundred million” in new revenue. He said the initial cross-selling arrangement that began in October, 2022, generated more than 60,000 additional Transat passengers. Reciprocal loyalty programs could boost this number, he said.
“We view the announcement as a positive step for the Transat turnaround story,” Mr. Poirier said. “Given its debt level and small fleet, it would have been extremely difficult to gain exposure to the broader domestic market.”
Eric Atkins