Porter embarked on an ambitious expansion plan just as the industry hit massive turbulence, including a pilot shortage that could be its single biggest challenge
In September, two dozen pilots hired by Porter Airlines to fly its expanding fleet of jet aircraft filed into a classroom in Hangar 5 at Billy Bishop Toronto Island Airport—the downtown hub that has become synonymous with the 17-year-old carrier—to start their training. At a time when nearly every industry complains about the struggle to find workers, airlines face one of the most acute shortages of all, with the global shortfall of aviators predicted to widen to 35,000 in two years.
For Deluce, who replaced his father, company founder Robert Deluce, as CEO in 2019, the ride since announcing Porter’s transformation into a transcontinental carrier two years ago has been exhilarating. “This year, we’re adding capacity at a pace that has never been added in Canada on a sustained basis,” says Deluce, 45. “There are times you go, Wow, what are we doing? But it’s working. Sometimes it’s hard to sleep at night—not from fear but excitement.
As Deluce rhymes off Porter’s trajectory for the coming months and years—to grow its employee count from 1,500 before the pandemic to as many as 8,000, extend its network of destinations right to the U.S. west coast, overtake WestJet in the number of flights out of Pearson, become the largest carrier serving Ottawa—there’s a self-assurance, almost an inevitability, in his tone.
Yet, Canada’s airline history—littered with defunct carriers like Roots Air, JetsGo, Greyhound Air, Canada 3000 and Wardair—offers too many examples of overreach gone wrong to ignore. For now, though, Porter has the wind at its back, and the worn-down Canadian economy traveller stands to benefit. Michael Deluce is not a pilot, nor a natural extrovert. Taller and stockier than his father, Deluce had operated in the background at Porter since day one as chief commercial officer. He’s a self-professed “avgeek,” a term for extreme airplane enthusiasts. Rather than watch TV, Deluce, a married father of two boys, spends his time lurking on online forums like AvCanada.ca and Airliners.net, ingesting data and information about the latest aircraft, rival capacity changes and pilot gossip.
The list price for Porter’s jet purchase was US$5.8 billion. That’s not what Porter paid, however. Deluce won’t divulge the actual price, saying only that he got a “once-in-a-generation” discount. To shore up its balance sheet ahead of the expansion plan, Porter tapped its existing shareholders for new capital. Deluce won’t say exactly how much its shareholders—which include the Ontario Municipal Employees Retirement System pension fund, his family’s Regco Capital and private equity firm EdgeStone Capital Partners—invested, but he describes it as a nine-figure equity transaction.
Deluce says he doesn’t know if Porter’s expansion plans had any influence on WestJet’s new strategy, but it’s obvious he’s tickled that it might have. “They had the data, they knew they’d already lost in the East, but I like to think that had an impact,” he says. Either way, WestJet’s move opened up gate space at Pearson and gave Porter even more room to grow. “It was a gift from god on the eve of our expansion plans,” says Deluce.
Not everyone is convinced. Chris Murray, an analyst at ATB Capital Markets who covers the airline sector, says a lack of connections to other destinations can limit the growth of secondary airports. “It’s nice in theory, but we’ve heard this argument before.” Flyers certainly have a range of fare options to choose from. According to Cirium, the average economy fare offered by Porter in the second quarter was $138, compared to $227 for Air Canada and $184 for WestJet. At the other end of the spectrum, Flair’s average fare was $63.
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