Stillborn REGCO Sues Toronto

 - February 2, 2007, 4:32 AM

Would-be Toronto City Center Airport tenant Regional Airlines Holding Co. (REGCO) has filed a C$500 million ($385 million) lawsuit against the city after it reversed an earlier decision to allow construction of a bridge across Toronto Harbor to the island airport. Chief executive Robert Deluce’s proposal for the new airline, slated for launch this fall with new Bombardier Q400 turboprops, hinged on a fixed road link to the airport. But the city council’s 28-16 vote to revoke its previous approval for the bridge has all but wrecked the plan.

Recently elected Toronto mayor David Miller ran on a promise to stop the construction, on which the Toronto Port Authority received federal permits and already spent at least C$6 million of the C$48 million needed to complete the project. The lawsuit accuses the mayor of coercing council members to reverse their positions by threatening to exclude them from key council committees and other posts.

“The fact that REGCO’s interests were clearly in the city’s contemplation when it agreed that the bridge could be built, and the fact that the city even went so far as to require that REGCO acquire a particular type of aircraft built in Toronto, demonstrate that REGCO is a party with vested rights entitled to damages, having acted in good faith in reliance upon the actions of the city,” said Deluce.

Last April REGCO signed a letter of intent with Bombardier to acquire ten 68- to 78-seat Q400s and take options on another 15. The airline planned to serve 17 cities within 90 minutes flying time of City Center Airport.