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Air Canada in court over Toronto airport dispute

* Says Toronto Port Authority erred in slots award

* Complains of lack of transparency in award process

* Port authority, Porter to respond Wednesday

* Court ruling could take 3-6 months

By Nicole Mordant

VANCOUVER, British Columbia , July 6 (Reuters) - Air Canada ACb.TO asked a Canadian court on Tuesday to scrap the recent award of take-off and landing slots at Toronto's downtown airport, arguing the allocation process was "fatally flawed."

The Toronto Port Authority (TPA) handed Porter Airlines a “permanent gift” when it gave the lion’s share of the new slots to the tiny upstart, lawyers for Canada’s biggest airline said.

“There was a total failure of the open and transparent process that was promised,” Air Canada lawyer Neil Finkelstein told a federal court in Vancouver.

The TPA, a federal port authority that owns and operates the Billy Bishop Toronto City Airport, last month announced that Porter had secured 44 of the 90 new slots. Air Canada got 30 slots and U.S.-based Continental Airlines Inc CAL.N 16.

The small airport is conveniently located just minutes from Toronto’s city center and has become a hit with business travelers.

Porter, a private, regional airline founded in 2006, currently enjoys a monopoly on flying out of the airport, based on an agreement signed with the TPA in 2005.

Air Canada, through its regional feeder service Jazz Air JAZ_u.TO, flew out of the airport until 2006 when it was evicted by the TPA and Porter. Air Canada and Jazz fly from much bigger Pearson Airport, some 45 minutes by car from downtown Toronto.

Porter’s stranglehold at the island airport is causing “irreparable harm” to Air Canada, the airline said in court documents filed in February, as it is losing out on lucrative business travelers in the busy Toronto-Montreal-Ottawa triangle.

In the documents Air Canada said the TPA, using an independent consultancy, awarded the new slots based on International Air Transport Association (IATA) guidelines that give precedence to an incumbent airline. But in order to use the IATA guidelines, the TPA needed to change the airport’s designation.

Air Canada argues that the federal authority did not do the capacity analysis and extensive public consultation required to be allowed to change the airport’s status.

“The TPA has cherry-picked elements of the IATA guidelines which suit its improper purposes and those of Porter while flouting other provisions of the IATA guidelines, which, as a whole, are designed to assure carriers of equitable access to slots..,” Air Canada said.

Lawyers for the TPA and Porter will respond to Air Canada’s challenge on Wednesday.

Federal rulings typically take between three and six months.