Robert Deluce: Flying backwards to get ahead
-- Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com --
CHICAGO (Reuters.com) -- Robert Deluce knows a little something about details. "There isn't enough attention paid to (them) often," says Deluce, the founder and chief executive of Canada's Porter Airlines.
Just two years after launch, the niche airline that flies routes to eight cities in eastern Canada and the United States remains profitable and is gearing up for expansion at a time when industry rivals are strapped for cash and most business flights have morphed into commoditized drudgery at best.
"Airlines need to be a little more concerned with how airplanes look, how service is performed … whether or not you operate on time, the overall image and the way you treat people," he says, detailing the finer points of air travel during a recent interview from Porter's offices at the government-run Toronto City Center Airport, which is housed on a small island just south of the city's lakefront.
It comes as no surprise that Deluce, 58, would favor a return to air travel's romantic heyday. His family has been involved in the airline industry for some 50 years, owning, financing and restructuring charter airlines, as well as a number of regional Canadian carriers.
Deluce himself got in early, joining White River Air Services, his parents' seasonal charter, after graduating from McGill University in 1971. Beginning in 1974, his family took on a series of buyouts that established them as the leading operators of regional airlines in Canada. Among their investments was a 50 percent stake in Great Lakes Airlines, Air Ontario's forerunner. They eventually sold Air Ontario and related holdings to Air Canada.
"In my case, it was pretty natural to also pursue an aviation career," says Deluce, whose love of air travel stemmed from his father, a fighter pilot during World War II.
Deluce, who learned to fly as a teenager, has also operated many of the commercial planes flown by carriers his family owned. He still flies leisure craft such as Cessnas in his spare time and is also is an avid sailor and bicyclist.
"I can relate to the various facets of an airline that you need to be familiar with in order to drive a successful operation," he says.
PASSION FOR PARTICULARS
The CEO's sharp eye for the details that can make or break a comfortable passenger flight carries through Porter's entire service formula.
In Toronto, it begins when a customer steps off the short ferry ride from the city's financial district and enters Porter's modern airport lounge -- complete with complementary WiFi service, snacks and beverages -- to the moment he settles into a custom leather seat on one of the carrier's eight spaciously appointed Bombardier Q400 turboprop planes.
"My own style is to be fairly involved," says Deluce, who began conceiving of the idea for Porter some five years before its inception. Even so, he maintains that Porter's managers are given ample latitude to make important decisions without bureaucracy.
"It's still very entrepreneurial at this stage," he says. "I think when you launch a new airline, you have the opportunity to put in place a corporate culture that lends itself to service."
Porter's 70-seat planes fly short-haul routes to Ottawa, Halifax, Quebec City, Mont Tremblant, Montreal, New York and Chicago. The airline plans to add to those routes in 2009, with Boston, Philadelphia and Washington, D.C. in its near-term sights. Deluce says there is financing in place to operate 10 additional Q400s by the end of 2009.
His well-established industry expertise allowed him to attract experienced advisors to the venture from the outset, including early stage investor and Porter Chairman Donald J. Carty, the former head of American Airlines parent AMR Corp.
"Don obviously comes from a very good background, in terms of having had access to all the U.S. destinations," says Deluce. "He does bring a good amount of experience to our board."
Deluce raised $125.7 million in initial private equity from the likes of EdgeStone Capital Partners, Borealis Infrastructure, GE Asset Management, and Dancap Private Equity Inc., an amount second only to JetBlue's for an airline startup.
He also overcame early resistance from the city of Toronto, where some residents and community organizers had opposed revitalizing the downtown airport for reasons ranging from added noise to pollution and safety concerns of shorter runways. Porter had pushed for the construction of a bridge from the island to downtown; when the project was canceled, the airline settled for improved ferry service instead.
HEADWINDS
Deluce jokingly credits Porter's success to a spirit of tenacity akin to its corporate mascot, a raccoon.
"The raccoon is an urban animal, he happens to be well-known in terms of being determined and quite feisty; he thrives in spite of a good number of challenges," says Deluce, adding: "I think some of that earlier controversy is behind us. I don't see any major obstacles in that regard."
He says two of the airline's biggest remaining challenges will be continuing to attract and retain service-oriented staff and keep operating costs down at a time when jet fuel prices remain volatile, having risen north of $145 a barrel last summer.
The turboprops deserve much of the credit for allowing Porter to keep margins healthy. The planes are 30 to 40 percent more fuel-efficient than jets, Deluce says, making them ideal for the point-to-point service Porter is establishing on routes of roughly 500 miles or less.
"The economics of the Bombardier Q400 are very strong and that's obviously helping us immensely," he says.
Stepping on board a recent Porter flight at Chicago's Midway Airport on the company's newly added route, passengers were greeted by flight attendants in retro-styled pillbox hats, who hung their coats upright in an on-board closet. Soon after departure, complimentary glasses of wine were served in real stemware.
Smiles were abundant as the predominantly business-oriented passengers appeared to forget that they were on a 21st-century flight. Deluce hopes they get accustomed to paying a little more for the service and added convenience at smaller airports such as Midway.
"It is an experience that sort of heralds back to those earlier days when travel was fun and that's largely what we have been trying to restore," he says.
