Porter Makes Counterclaim Against Air Canada, Jazz

Porter Airlines Inc., a Toronto- based start-up, is seeking C$850 million ($884 million) in a suit alleging Air Canada (AC/A) is using a partnership with regional carrier Jazz Air to collude on prices and impede competition.

``Air Canada and Jazz have coordinated their activities in a common attempt to destroy or disable Porter Airlines' business,'' Porter claimed today in a statement.

The allegations were filed as part of a counterclaim in existing litigation between the carriers in Ontario Superior Court, according to the statement. Jazz is trying to regain access to Toronto City Centre Airport, from which it stopped flying in February 2006 after cancellation of a lease.

``We would not file a counterclaim if we didn't feel it had merit,'' Porter Chief Executive Officer Robert Deluce said in an interview.

Closely held Porter began flying a year ago from the City Centre Airport, which sits on an island in Toronto harbor located a few minutes by car from the city's financial district.

The allegations are ``completely without merit and will be vigorously contested in court,'' Jazz Air said in a Canada Newswire statement. Jazz said Porter is trying to ``prevent competition'' at the Toronto airport.

`Frivolous'

Air Canada, the country's largest airline, said in a statement the complaint is ``frivolous, without merit.'' The relationship with Jazz is ``similar'' to others between mainline and regional carriers in North America, Air Canada said.

ACE Aviation Holdings Inc. (ACE/H), Air Canada's parent company, holds a 20.1 percent stake in Halifax, Nova Scotia-based Jazz Air Income Fund. The two carriers have an agreement by which Jazz operates flights on behalf of Montreal-based Air Canada.

The Toronto Port Authority, which operates the airport, has a mandate to ``ensure that these transportation assets are well- maintained, safe, efficient and properly marketed and utilized,'' CEO Lisa Raitt said in a Canada Newswire statement.

She declined to comment on the specifics of the case, citing outstanding legal issues between the port operator and Jazz tied to the Porter dispute.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Dave Versical at dversical@bloomberg.net

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