Who is Losing Money at the Island Airport? Answer: Everyone
- Parks not Planes
- 2 days ago
- 14 min read
A Parks not Planes Report, September 2026
by Brian Iler
1: Introduction
There are three enterprises operating at Toronto’s Island Airport:
The Toronto Port Authority (TPA), which operates the Airport and owns about 80% of the 210 acre Airport lands,
Porter Airlines, which is the primary user of the Airport, and
Nieuport Aviation (managed and controlled by the US investment banker JP Morgan) which bought the Airport terminal from Porter in December 2014.
How are they faring?
On the evidence publicly available, they are all losing money.
TPA and Porter are propped up in various ways by public funds and public assets. Nieuport is not but has been intensely lobbying all three levels of government for Airport expansion to achieve profitability.
Their finances should be known by all who are considering the Airport’s future, particularly now, as jets are off the table (again), and the hopes all three enterprises placed on jets as the solution to their money problems, are dashed.
This is what we know:
2: Toronto Port Authority
Background and Governance
Established by the 1999 Canada Marine Act, the TPA was handed all of the land of the Toronto Harbour Commission (THC) without charge – that land, including the Island Airport lands, had been given by the City of Toronto to the THC, mostly in 1911.
Unlike the THC, which had a majority of its board members appointed by the City, the TPA is governed by a nine-person board (until 2008, seven: the additional two were added by the Harper government to resolve a nasty 4-3 split).
One director is appointed by each of the three governments, and the remainder are supposed to be representative of port user groups appointed by the federal government.
They are not. In fact, five of the nine positions are currently unfilled.
The TPA operates three businesses: the port itself, the Outer Harbour Marina, and the Island Airport. The Airport generated 67% of the TPA’s revenues in 2025.
The THC had operated Toronto’s port since 1911, and the Island Airport since it was opened in 1938.
TEDCO Land Dispute
As a result of the decline of shipping into Toronto’s port, the THC had ample surplus land and decided to transfer 635 acres of Toronto’s port lands in 1994 to the City controlled Toronto Economic Development Corporation (TEDCO).
Years later, the new TPA commenced a lawsuit against the City and TEDCO claiming that that land transfer to TEDCO was wrong – the TPA described it as the de facto expropriation of 600 acres of land valued at more than $1B [1].
While some Councillors argued the lawsuit was without merit, and should be vigorously defended, a majority of Councillors, in June 2003, opted to both approve a bridge to the Island Airport (essential for emergency access for expanding commercial airport operations, the TPA said ) and enter into an expensive settlement with the TPA [2].
That settlement allowed TEDCO to keep the land transferred to it but required the City pay cash to the TPA over a 10-year period, totalling $60.257M [3].
The City for some years refused to pay. But after the TPA proposed massive port user fees on the City’s Island ferries $10 per crossing (over $400K per year), a settlement was reached in which they were dropped in return for the City’s payment of the TEDCO settlement.
Most of the City’s payments were categorized as revenue by TPA, camouflaging the losses it was incurring.
Airport Expansion
In addition to it aggressive lawsuit against the City and TEDCO, the new TPA, a chronic money loser, opted to expand the Island Airport, a chronic money loser, by identifying (and supporting) a brand new commercial carrier – Porter that would commit to the Airport as its base of operations.
The Airport loses money most of the time
The TPA’s Annual Financial Statements are public. They reveal that the TPA, and the Airport, lose money and have almost every year the Airport has operated:
Per this calculation from 2004 to 2015, even though the TPA applied the City settlement in part to subsidize its operations, it was a money loser every year.
An analysis of the TPA’s 2016 25 financial statements reveals that, after deducting Airport Improvement Fees (see below) and an appropriate allocation of head office (“Corporate”) costs from the Airport’s net income, the Airport lost money in six of the last ten years – only two of which can be ascribed to COVID.
The TPA camouflages these losses by counting Airport Improvement Fees as operating income even though they can only be applied to finance the Airport’s capital program and cannot be used to cover Airport operating costs.
What causes these losses?
We know, from the Operating Agreement signed by the TPA with Porter in 2010, that the Airport is supposed to break even on revenues from its users after the addition of 25% of Airport operating costs, to be applied to the Port Authority’s head office costs.
That’s not happening.
Instead, the TPA is charging Porter, and other airport users, an amount less than its airport’s operating costs, instead drawing down on its capital assets to, in effect, subsidize Porter. [4]
These capital assets are, essentially, the remaining property given to the THC by the City many years ago. By not passing on to its users all its operating costs, let alone any charge for the use of its valuable lands, the TPA subsidizes Porter and the other Airport users.
Continuing City Subsidies
These losses are incurred even though the TPA continues to be subsidized by the City:
The City receives no rent from the TPA for its use of the 20% portion of the Island Airport land that was (until the recent seizure by the Province) City owned, and none for the use of the Stadium Road parking lot on the city side, or the queuing lanes along Eireann Quay, that are owned by the City. All these City properties are on long term leases that are only terminable in the event the Island Airport ceases to operate.
The Airport’s 215 acres are some of the most valuable land in Toronto. MPAC reports that, for 2016, the assessed value of the Island Airport lands was $172,870,000. At the commercial tax rate of about 2.5 percent, property taxes payable on the Island Airport lands should have been $4,321,750 for 2012. Instead, the TPA pays the City property taxes of $0.94 per Airport passenger. These per passenger payments do not increase with time, or with changes in property value or tax rates. Other property owners in Toronto pay based upon a fair market valuation of the property.
Given its lack of financial success, and unclear future prospects, it was bewildering to many that the federal government gave the TPA $30M to fund its US Customs Pre clearance program.
Now, with jets off the table, where is the solution to the TPA’s money problems? What are their plans? And how prudent is it to spend $95M to build runway end safety areas if there is no plan for financial survival?
3: Porter Airlines
By 2003, the Island Airport had been all but abandoned by Air Canada. Losing a lot of money and facing a choice of closing it down or finding a way to profitably expand its use, the TPA latched onto Porter, that had no track record, as its Island Airport saviour.
That put Porter in a very strong bargaining position – that it used, and continues to use, with vigour.
TPA Support
TPA did everything it could to support the brand-new Porter enterprise, including;
Evicting Air Canada from its hangar at the Airport
Purchasing two new ferries and building new ferry terminals; contrary to legal advice that he had a conflict of interest, Porter CEO’s friend Colin Watson cast the deciding vote on a Port Authority Board decision to buy a new $5M ferry for the Island Airport.
Handing Porter $20M of the $35M received in 2004 as “compensation” for the cancellation of the proposed bridge, in response to the mere threat of a lawsuit. It was based upon an assumption that Porter would only be permitted to make 120 daily movements (landings and take offs) without a bridge, and 167 with a bridge [5]. Ultimately, Porter was permitted 172 daily movements.
Initially granting all available landing and take off “slots” to Porter [6]
Giving Porter the right to build and own a terminal, and then sell it, allowing Porter to pocket >$700M from the sale proceeds [7]. The TPA readily agreed to extend its lease of the terminal lands past the (then) expiry of the tripartite agreement on June 30, 2033, without any apparent public benefit in return, and no public consultation, solely to facilitate Porter's sale of its terminal [8].
After giving Porter exclusivity for the first five years, Air Canada got 30 slots in 2010 – restricted to flights to Montreal of the 202 then authorized by the TPA.
Porter Claims Profitability
As a private company, Porter does not normally disclose its financial situation. In the absence of such disclosure, Porter’s CEO was able to make statements such as these:
Mr. Deluce says Porter has been profitable since mid-2007 on a “fully allocated” basis, though he declines to give accounting details …. Globe and Mail Nov. 20, 2009
"I can tell you that last June"- he means June 2007-"was the first profitable month for Porter," Deluce says of the 8% net income margin the company recorded. "I can tell you that in June 2008, we've done appreciably better than June 2007." Airport Business Oct. 31, 2008
Mr Deluce, a licensed pilot, says Porter has been profitable since mid-2007... Financial Times September 29, 2009
The Reality
There are two occasions where Porter disclosed its finances:
Its 2010 IPO
In its initial public offering, in April 2010, Porter’s Preliminary Prospectus disclosed that it lost $11,486,000 in 2007, $3,317,000 in 2008, and $4,609,000 in 2009. Total losses over those three years: $19,412,000.
And then, in its May 21, 2010 revised prospectus, it disclosed that, comparing Porter’s last two consecutive quarters, Q4 2009 and Q1 2010,
Revenues dropped by $4,300,000.
Operating expenses increased by $2,164,000.
Cost per available seat mile increased almost 10% - from 22 cents to 24 cents.
Net income of $455,000 in Q4, 2009, slid in Q1 2010 to an operating loss of $5,972,000 in Q1 2010. That loss over three months is $1,363,000 greater than the total loss for all of 2009.
The Initial Public Offering was withdrawn, and Porter remains a private company.
Litigation with Nieuport
Having built a new terminal at the Island Airport for $50 million, Porter found a buyer, Nieuport, operated and controlled by JP Morgan, who agreed to pay more than $700M.
When Porter refused to pay fees for use of the Terminal that Nieuport charged, Nieuport sued; court documents revealed admissions that Porter had lost $18,910,000 in 2017, a projected $40M in 2018, and $30M in 2019.
In those documents, it was stated that [9]
between December 2018 and May 2019 … Porter Airlines disclosed that it was having liquidity issues and would be insolvent without immediate relief.
And that [10]
Porter Airlines repeatedly threatened to cease operating at the Airport altogether by mid-2020.
Porter’s Business Declines
Since then, Porter has significantly reduced its flights out of the Island Airport and now operates 56 Embraer jets out of Pearson and other airports that can accommodate jets. It continues to use its 29 aging Q400 aircraft out of the Island Airport.
TPA data reveal that the number of Island Airport commercial flights has dropped from a peak of 59,469 (in 2016) to just 35,916 in 2025 – a drop of 40%.
And that data indicate that total air traffic at BBTCA in April 2026 was down 28 percent compared to April 2025 [11].
Porter has blamed its decline in business at the Island airport on the Union Pearson Express, that makes access to Pearson as easy as getting to the Island Airport, and its 2015 failure to get approval to fly jets out of the Island Airport. This is from a Porter statement in the litigation:
84. Following the sale of the Terminal, number of events have affected the competitiveness of airline operations from [the Island Airport], including:
the opening of the Union-Pearson Express,
the cancellation of the initiative to just to operate from [the Island Airport],
delays to the planned expansion of the Terminal and
overall declines in service at the Terminal, including the elimination of complimentary amenities
Massive Government Loans
Porter has received huge loans from the federal government:
Porter Airlines received $135 million in a loan from the federal government’s Export Development Corporation in March 2020. EDC has rejected our request for information on the status of this loan, citing a recent court decision [12].
in 2021 it borrowed $270.5 million from the COVID relief LEEF Program and
under the Liquidity for Airline Sector Resilience (LASR) Facility in 2026 it borrowed another $125 Million.
These loans, totalling $530.5M, remain outstanding to the best of our knowledge.
4: Nieuport Aviation
A company set up solely to own and operate the Island Airport terminal, its finances are private. It purchased the Island Airport terminal on December 23, 2014 for “for well over $700 million” [13].
The price assumed that approval for jets at the Airport was assured. Here’s Michael Deluce, current CEO of Porter:
86. By 2014, Momentum was building to amend the Tripartite Agreement to allow for jet traffic at the [Island Airport]. The plan for jets had significant political support and advanced discussions have taken place.
87. The jet initiative was extremely valuable to the Island Airport in Porter Airlines as it would have allowed for extended service to key destinations such as Florida, Las Vegas, Vancouver, Calgary, among others. However, by the fall of 2015, the efforts to introduce jet traffic to BBTCA had collapsed.
It seems the ultimate cancellation of Porter’s jets proposal in the fall of 2015 came as a surprise to both Porter and Nieuport.
The investment is highly leveraged – Scotiabank has registered a mortgage on Nieuport’s interest in the terminal for $650M.
It is an investment vehicle controlled and managed by JP Morgan, the American investment banker.
Why invest in an airport?
The allure of airports for the pensions is twofold. On one hand, there are the healthy fees collected each time an airplane takes off and lands, not to mention a surrounding near-monopoly constellation of amenities — such as parking and rental cars — that offer steady earnings potential and growth opportunities.
They also help the retirement funds satisfy long-term obligations to pensioners. Airports are infrastructure investments, an asset class whose steady returns keep up with inflation and help pensions match their liabilities over the long term.
No steady earnings or growth
Documents made public in its litigation with Porter include this, from Nieuport [14]:
This application arises because Porter has unilaterally decided that it will no longer pay the fees that it owes during the COVID Period; fees that Porter itself set in 2015 in order to maximize the purchase price that it would earn from selling the Terminal.
In 2014, Porter canvassed a potential sale of the Terminal. Porter structured and promoted the transaction to generate the highest possible purchase price. The Terminal was marketed as an opportunity to acquire a core infrastructure asset with steady, highly stable and clearly visible revenues, generated by virtue of the primary agreements governing the business (allocated to carriers, regardless of utilization, for all 365 days of the year.
As it turned out, there was no steady return, nor was there growth, as the Airport’s business has tanked and Porter began drastically cutting back on its flights effective early in 2020, several months before COVID hit.
Porter gave a number of notices in 2019 to Nieuport that it was cutting back flights and refusing to pay for slots it was not using.
It is not surprising that the Nieuport Aviation was seeking a solution to its shrinking business – and calm its anxious banker. Here’s Porter CEO Michael Deluce, in an affidavit filed in the court proceedings:
(para. 118) Nieuport wanted Porter Airlines to retain more slots (in other words, relinquish fewer slots) because of certain commitments that Nieuport had made to its lenders. The number of slots Porter had relinquished would trigger defaults under one or more of Newport’s lending agreements
We don’t know how those defaults were addressed.
We do know that Nieuport has been very actively lobbying for jets, as its apparent solution to its business decline. Nieuport’s lobbying for Runway End Safety Areas in 2024 was intense – without soon to be required RESAs, the Airport must close.
We also know that Nieuport and TPA have been trying to find other users for the Airport. This is from the affidavit of Porter CEO Michael Deluce:
136. I understand that by the summer of 2019, [the TPA] had been marketing the slots that Porter Airlines relinquished to other airlines. Nieuport was actively pushing for and involved in this marketing effort. In addition, I understood from discussions with Mr. Pakey [then Nieuport CEO] that Nieuport was carrying out its own independent effort to market the relinquished slots.
143. I firmly believe that Nieuport’s decision to change its position was tactical and resulted from its inability to find another carrier to take over Porter Airlines’ relinquished slots.
5: The Impact of Alto
Alto, a high speed train planned to run between Toronto, Montreal and Ottawa, is anticipated to be fully operational by 2041–2044. It is a federal government funded project and is designated for consideration by the Major Projects Office.
The experience in Europe and in China, is that high speed trains attract many of those who would otherwise have flown on short haul flights, like those to or from Ottawa (452km) or Montreal (544km), that are the Airport’s prime business: two thirds of the flights out of the Airport are to or from those two destinations.
This, from a presentation by European train manufacturer Alstom, illustrates the impact fast trains have on short haul flights:
The faster the train is, the more passengers will opt for the train. While Alto is currently planned to operate at speeds of up to 300km/h, China is now building a 400km/h rail line.
To the extent the electricity grid is carbon free, Alto trains will have no climate impact. Short haul fights, by contrast, have immense climate impact.
Future plans for the Airport must account for the impact Alto will have on its business. It is potentially significant.
Conclusion
Any discussion of the future of the Island Airport must be based on the reality that
The TPA has not found a path to financial success for the Island Airport, and is unlikely to
Porter’s business at the Island Airport is in decline, and, from the evidence available, has never been profitable. Its commitment to continuing operations at the Airport is uncertain.
Nieuport, having invested millions in the Airport on the lure of steady income and growth, has found neither. As it is a sophisticated investor, no one should feel sorry for its predicament.
Enough is enough.
It is time to stop their uneconomic use of those spectacular 210 acres, and dedicate those lands to public, and not private, benefit.
REFERENCES
[1] Letter written to Councillors dated June 17, 2009.
[2] Adoption of Clauses Nos. 1 and 2 of Report No. 6 of The Policy and Finance Committee, as amended:
In Favour: 28: Lastman, Ashton, Augimeri, Balkissoon, Berardinetti, Cho, Di Giorgio, Dominelli, Duguid, Feldman, Flint, Ford, Hall, Holyday, Kelly, Korwin-Kuczynski, Li Preti, Lindsay Luby, Milczyn, Minnan-Wong, Moscoe, Nunziata, Ootes, Shaw, Shiner, Silva, Soknacki, Sutherland Opposed: 12: Councillors: Altobello, Bussin, Chow, Johnston, I. Jones, L. Jones, McConnell, Mihevc, Miller, Pantalone, Pitfield, Rae
[3] In addition, the settlement required that the City give:
Lease concessions to the Port Authority for 49 years on about 25-acres of city land, with a net present value of $5.8-million. The payment of rent on the “Leased Lands” by the TPA to TEDCO will be phased in it at 50 percent of fair market value (FMV) for the first 15 years of lease extensions, beyond the initial 20-years where these lands are provided at $1/year, and at 75 percent of FMV for all subsequent years to a maximum of 49 years.
Access to another 26.8 acres of City land for 20 years for $1 per year
[4] For details, see CommunityAIR’s The Toronto Port Authority’s Sweetheart Deal with Porter: A CommunityAIR Report
[6] Lisa Raitt, then the Port Authority’s CEO, provided a letter to the US government stating the opposite – that the Island Airport was open to US carriers – which letter formed the sole basis for Porter’s licence to fly into the US.
[7] See the 2015 CommunityAIR letter (The Island Airport Terminal Sale – Windfall Profits for Porter, But Where is the Public Benefit? )to (then) PM Stephen Harper.
[8] Is this being repeated at the St.-Hubert airport in Montreal? Porter built a $200 million terminal there, backed by Macquarie Asset Management and a $90 million Canada Infrastructure Bank loan.
[11] See Report to City Council at page 7.
[13] See Nieuport Application text.docx.
[14] See Nieuport Application text.docx.
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