cair issue no. 32 - august 2005

INTERVISTAS ’CANADIAN AVIATIONINTELLIGENCE REPORT

In this issue…

Features Columns: Regular Reports:• New IVC Online Intelligence Resource (p.1) • Airport & Airline Data (p.4)• Transborder Air Services Since 1994 (p.2) • Industry News (p.7)• China’s Outbound Travel Market (p.3) • Airport Best Practices (p.12)

• Ottawa Report (p.13)• Washington Report (p.14)• InterVISTAS’ News (p.15)

InterVISTAS’ Canadian Aviation Intelligence ReportAugust 2005 Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.Page 1

NEW INTERVISTAS ONLINEINTELLIGENCE RESOURCE16 August 2005

Newly Redesigned InterVISTAS Website LaunchedIn early August, InterVISTAS launched its newlyredesigned corporate website (www.intervistas.com )for its three companies - InterVISTAS Consulting(Canadian Office), InterVISTAS-ga2 Consulting(U.S. office), and InterVISTAS AdMedia(Advertising).

The new website is very functional and user-friendlycontaining a wealth of information including briefingnotes, reports, publications, and presentationsprepared by InterVISTAS that are available forprinting and downloading.

New Online Resource: Canadian Aviation Intelligence ReportA page within the InterVISTAS website is specifically dedicated to the Canadian Aviation IntelligenceReport (CAIR) (www.intervistas.com/4/cair.asp).

There are several interesting features to the CAIR webpage:

• Comprehensive database of past issues: Visitors to thewebpage are free to browse and download current andpast issues of CAIR for January 2003 publication up to thecurrent month’s issue.

• Searchable index: A searchable index of individualarticles by topic is available to users for key wordsearches of the CAIR publication database. For example,for commentary on fuel trends, simply type-in the keyword“fuel” and the search index will list the many current andpast articles that are written on the subject of fuel.

• Easy to subscribe: The CAIR is available for download from www.intervistas.com or can bedelivered directly to your personal e-mail box each month. To sign up, simply send a blanke-mail to [email protected] to be added to our e-mail list.

Doris MakSenior Project Manager


TRANSBORDER AIR SERVICESSINCE 199412 August 2005

In June 2005, Aéroports de Montréal, the Greater Toronto Airports Authority and the VancouverInternational Airport Authority commissioned InterVISTAS Consulting to examine transborder airservices from Canada since 1994.

Canada – U.S. Open Skies AgreementIn February 1995, Canada and the U.S. signed an “Open Skies” air agreement. However, since thesigning of this agreement, the U.S. has more clearly defined Open Skies, and perhaps “OpenTransborder” is a better term for the 1995 agreement. The 1995 agreement is no longer consideredan Open Skies agreement by the U.S. as the agreement contains a number of restrictions on aircargo services (see the July 2005 Canadian Aviation Intelligence Report for an in-depth discussion onCargo Co-Terminalisation) and on 5 th and 6 th freedom passenger services.

Immense Growth in Transborder Services Since 1994However, even though the U.S. no longer considers this agreement true Open Skies, Canada has stillexperienced immense growth in transborder operations over the past eleven years. Just prior to theCanada-U.S. air agreement, 21 Canadian cities had air services to U.S. destinations. In 2005, 27Canadian cities have services to the U.S. with many smaller Canadian cities gaining service since1994. Ten Canadian cities gained service to the U.S. after 1994, Campbell River, Ganges Harbour,Kamloops, Kelowna, Kitchener, Nanaimo, Old Crow, Port McNiell, St. John’s and Saskatoon.However, four cities that had air service to the U.S. prior to 1994 had lost their non-stop service by2005 (Dawson City, Moncton, Saint John, and Yarmouth).

The number of U.S. destinations served has nearly doubled at Calgary, Montréal, Ottawa, Quebec,Toronto, Victoria and Winnipeg, and the number of destinations has tripled at Edmonton, Halifax andVancouver compared to U.S. destinations served in 1994. In addition to Air Canada, Air Transat,WestJet, Harmony Airways and CanJet are now offering transborder flights.

The following table illustrates the impact of the 1995 Open Skies air agreement on Canada.

1994 2005 % Change

Number of Canadian Cities with Transborder Services 21 27 +29%

Number of Transborder Destinations from Canada 38 59 +55%

Number of Transborder Routes from Canadian Cities 90 171 +90%

Number of Carriers Offering Transborder Services 11 19 +73%

Average One-Way Transborder Seat Capacity per Day 28,217 41,968 +49%Source: PLANET OAG and BACK OAG data.

The full report is available at www.OpenSkies.ca.

Doris MakSenior Project Manager


3,740 3,7344,521 5,061 5,324

8,4269,232

10,47312,133

16,600

20,220

0

5,000

10,000

15,000

20,000

25,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Num

ber o

f Tra

velle

rs ('

000s

)

Outbound Travel from China

Source: China Statistical Yearbook 2004 - National Bureau of Statistics of China,Chinese Outbound Tourism - WTO Report 2003

Australia and NewZealand receives ADS

Quota system for travel toHong Kong and Macauremoved in December 2001

State Council of Chinaapproves measuresfor administration ofoutbound Chinesetravel at their ownexpense

CHINA’S OUTBOUND TRAVELMARKET18 August 2005

Earlier this year, the governments of Canada and the People’s Republic of China reached amemorandum of understanding to grant Canada Approved Destination Status (ADS), the first step infacilitating the travel of outbound tour groups from China to Canada. This column, Part 1 of a two partseries, examines the outbound travel market from China. Next month, the inbound travel market toChina will be reviewed in Part 2.

Growth of Outbound Travel from China. Outbound travel from China has beenincreasing in recent years as a result of economic growth and more liberal travel policies (please seechart). The World Tourism Organisation (WTO) forecasts that outbound travel from China will makeup 6.4% of the world outbound market by 2020, or 100 million travellers, becoming the fourth largestoutbound market after Germany, Japan andthe U.S.

China Travel MarketCharacteristics. The peak travelseason for outbound leisure travel in Chinais during the Spring Festival (first week ofFebruary), Labour Week (first week of May)and National Week (first week of October).According to a recent WTO report, over 90%of outbound travellers from China originatefrom the province of Guangdong, and themunicipalities of Shanghai and Beijing.Popular outbound destinations includeThailand, Russia, Japan, the U.S. andEurope.

Australia ADS Experience and Lessons for Canada. Australia received ADS in1999, and the agreement has been operating for the last six years. Tourism Australia data shows thatthe number of Chinese visitors to Australia has increased by nearly three-fold during this time, to251,000 travellers in 2004. As a comparison, Statistics Canada data indicates that Canada receivedabout 105,000 Chinese travellers in the same year. Because of the similarity in travel productsoffered, Australia makes a good case study for Canada. However, it should be noted that Australiawas one of the first countries to receive the ADS designation. Today, there are over 70 countries thathave or will receive ADS. So even though Canada’s ADS designation has the potential to increasethe number of travellers from China, the growth may be moderated by increased competition.

Implications. The Chinese travel market has some common characteristics. Most Chinesetravellers have a limited knowledge of English, preferring services in Chinese, and also have apreference for Chinese food. This has service implications for firms that are targeting this market.

Next month: Inbound travel market to China and review of the air services between Canada andChina.

Eugene Chu

Project Analyst


0%

10%

20%

30%

40%

50%

60%

Jul-0 4

Aug Sep Oct Nov Dec Jan-05

Feb Mar Apr May Jun Jul

RPK ASK

WestJetWestJet

Air Canada Domestic Mainline Air Canada Domestic Mainline

-15%

-10%

-5%

0%

5%

10%

Jul-04



Dom RPK Dom ASK

Jazz data is not includedin this graph

AIRLINE DATA – CANADATRAFFIC AND LOAD FACTORS ON CANADA’S MAJOR AIR CARRIERSJULY 2005

Passenger TrafficRevenue Passenger Kilometres

CapacityAvailable Seat Kilometres

Load FactorAir Carrier % Change

over 2004% Changefrom 2003

% Changeover 2004

% Changefrom 2003

Changeover 2004

Change from2003

Air Canada1 +6.8% +20.5% +2.8% +12.6% +3.2 pts(to 83.6%)

+5.5 pts(78.1%)

Domestic(Mainline) +4.6% +4.6% -1.9% -6.3% +5.2 pts +8.7 pts

Jazz +54.4% +66.0% +39.7% +40.3% +7.0 pts +11.4 pts

International& Charter +7.8% +29.0% +5.0% +23.5% +2.2 pts +3.6 pts

WestJet +19.9% +54.8% +15.9% +47.9% +2.7 pts(to 81.3%)

+3.6pts(77.7%)

Analysis:

• Air Canada reported a system load factor ofalmost 84% in July 2005, the highest ever forany month. Although mainline domestictraffic increased for a fifth consecutive month,Jazz traffic has been growing at a muchmore rapid rate, recording double-digitincreases every month since the beginning ofthe year.

• Air Canada’s international traffic continued topost strong gains in July 2005. Internationalcapacity increased in all regions with theexception of services to the U.S. Althoughcapacity was added, load factor oninternational services improved as trafficincreases outpaced the addition of capacity.

• Following a previous trend, WestJet’s growthin traffic outpaced the addition of capacity,resulting in an improved load factor.

1Air Canada consists of all Air Canada operations withthe exception of Jazz.

OTHER CARRIERS:

LOAD FACTORS

CanJet: not reported

-10%-5%0%5%

10%15%20%25%

Jul-04



Int'l RPK Int'l ASK

Air Canada InternationalAir Canada International


AIRLINE DATA – U.S.U.S. Airlines Release July 2005 Traffic Figures

Traffic Data – July 2005

Airline Load FactorTraffic

(RPMs – millions)Capacity

(ASMs – millions)

85.1%

á4.1 pts

13,621

á8.1%

16,002

á3.0%

74.9%

á1.7 pts

748

á22.8%

999

á20.0%

82.7%

â2.5 pts

707

â46.1%

855

â44.5%

186.4%

â0.1pts

3,797

á2.4%

4,392

á2.5%

84.1%

á0.8 pts

11,828

á6.1%

14,068

á5.0%

91.1%

á3.2 pts

1,978

á31.6%

2,171

á27.0%

87.5%

á1.7pts

7,474

á5.4%

8,544

á3.4%

80.8%

á1.4pts

5,959

á14.7%

7,378

á12.7%

286.4%

á1.6 pts

10,703

â2.4%

12,384

â4.2%

281.9%

â0.8pts

3,849

â1.7%

4,697

â0.7%

Notes: 1. Mainline operations only.2. Load factor includes scheduled service only.

Sources: Carrier traffic reports.


Toronto Vancouver Montréal-Trudeau

Calgary Edmonton Ottawa Winnipeg Halifax Victoria Kelowna Saskatoon Regina St.John’s

June +18.5% +16.1% +18.1% +8.0% +2.8% +12.1% +9.2% +7.8% +8.6% +3.0% +1.7% -4.3% +15.9%

2nd Quarter +26.2% +18.8% +24.9% +8.3% +6.2% +13.2% +9.7% +14.5% +9.7% +0.5% +3.8% -2.5% +16.9%

July +17.1% +10.4% +18.7% +5.0% +0.8% +5.7% +8.6% +10.5% +4.7% -0.5% +5.5% +1.4% +10.6%

August +16.0% +4.9% +18.1% +1.9% +2.2% +6.2% +7.4% +6.9% -2.0% -5.9% +5.4% +1.5% +10.1%

September +16.1% +11.5% +13.2% +13.0% +6.3% +7.9% +8.8% +8.6% +8.3% +12.1% +5.3% -0.6% +13.4%

3rd Quarter +16.4% +8.7% +16.7% +6.2% +2.9% +6.6% +8.2% +8.6% +3.3% +1.1% +5.4% +0.8% +11.2%

October +14.3% +7.0% +10.7% +10.7% -4.0% +11.9% +1.1% +3.7% -1.4% +9.1% +7.9% +1.9% +18.2%

November +13.3% +6.2% +17.6% +9.6 +4.7% +11.4% +4.4% +8.3% +0.3 +5.1% +8.0% -11.1% +9.9%

December +14.2% +6.8% +20.9% +8.9% +8.4% +11.0% +5.1% +8.0% +2.1% +3.9% +8.1% +3.6% +6.8%

4th Quarter +14.0% +6.7% +16.1% +9.7% +3.1% +11.4% +3.5% +6.4% +0.3% +5.9% +8.0% -2.1% +11.9%

2004

Full Year +15.7% +9.6% +18.6% +7.0% +5.1% +10.2% +7.7% +9.1% +5.7% +3.6% +5.6% +0.3% +14.0%

January +15.0% +9.8% +14.4% +13.2% +9.6% +12.9% +13.6% +6.6% +4.7% +12.4% +17.7% +9.7% +11.9%

February +8.7% +4.5% +4.0% +10.2% +7.8% +5.5% +7.0% +4.5% +7.1% +15.8% +10.4% +8.5% +1.5%

March +10.9% +8.2% +5.1% +17.5% +12.5% +7.3% +9.7% +6.6% +15.4% +19.5% +19.1% +22.2% +19.6%

1st Quarter +11.5% +7.5% +7.6% +13.7% +10.0% +8.4% +10.0% +5.9% +9.3% +16.0% +15.6% +13.3% +11.5%

April +4.0% +3.9% +5.7% +3.5% +5.5% +0.1% +4.3% -0.2% +2.6% +18.8% +5.9% +3.8% +9.8%

May +6.7% +5.5% +3.7% +12.2% +12.0% +5.5% +8.0% -4.5% +5.8% +26.3% +12.6% +5.7% +8.5%

June +6.3% +4.0% +7.5% +10.1% +13.9% +3.4% +2.9% -0.5% +6.8% +22.7% N/A +12.4% +12.4%

2005

2nd Quarter +5.7% +4.5% +5.7% +8.6% +10.4% +3.1% +5.0% -1.8% +5.1% +22.6% +10.2% +7.3% +10.3%Source: Transport Canada and individual airports’ traffic reports.

If your airport is interested in providing InterVISTAS Consulting Inc. with its monthly passenger statistics, please email Doris Mak at [email protected]

Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports


NEWS ARTICLESAIR CANADA UPDATEAIR CANADA ANNOUNCES MAJORSCHEDULE ENHANCEMENTS

On July 18, AirCanada

announced major schedule enhancementsincluding new routes and additional flightsthroughout North America. New non-stop routesinclude Vancouver-San Diego, Abbotsford-Toronto, Abbotsford- Calgary, Calgary-Newark,and Calgary-Orlando, all commencing inDecember 2005.

AIR CANADA UNVEILS NEW EMBRAERREGIONAL JETSAir Canada introduced its new Embraer 175aircraft on August 4. The 73-seat regional jetswill be used mainly on transborder routes fromToronto and Montréal, as well as flights betweenToronto and Montréal. Air Canada will be takingdelivery of 15 Embraer 175 aircraft by the end ofthe year. In addition, the carrier will begin takingdelivery of the 93-seat Embraer 190 regionaljets in November 2005.

AIR CANADA INCREASES BASE FARESDUE TO FUEL COSTSAir Canada increased its base fares ondomestic and transborder flights in response torising fuel prices effective August 12. Basefares on flights under 300 miles (483 km)increase by $5 each way, flights between 301miles (484 km) and 999 miles (1,608 km)increase $10 each way, and flights over 1,000miles (1,609 km) increase by $12 each way.

ACE REPORTS 2ND QUARTER PROFITOF $168 MILLIONACE Aviation Holdings, parent company of AirCanada, reported second quarter net income of$168 million. This represents a substantialimprovement over the $510 million lossrecorded in the same quarter of 2004.

AIR CANADA CANCELS WINTERSERVICE FROM TORONTO TOCHARLOTTETOWNAir Canada plans to cease its winter servicebetween Toronto and Charlottetown due to adispute over subsidies. The decision followslaunches of new direct services to Charlottetownby WestJet Airlines and Northwest Airlines,secured in part by revenue guarantees andmarketing support provided by the PEIgovernment. Direct year-round service fromCharlottetown to Montréal and Halifax will not beaffected.

OTHER CANADIAN AIRLINENEWSWESTJET RETURNS TO PROFITABILITYIN 2ND QUARTERWestJet announced its 2nd quarter results,returning to profitability with net earnings of $2.3million for the quarter. This represents animprovement from a loss in the first quarter, butthe carrier is still reporting a net loss for the firsthalf of 2005 of $7.3 million, compared to netearnings of $8.0 million in the first half of 2004.

WESTJET ACCEPTS FIRST 737-600WestJet accepted delivery of its first Boeing737-600 aircraft on August 8. The next-generation aircraft will seat 119 passengers,slightly less than the 737-200 aircraft which thecarrier will phase out by March 2006.

WESTJET INCREASES BASE FARESDUE TO FUEL COSTSFollowing Air Canada’s lead, WestJet has alsoincreased its base fares on all flights inresponse to rising fuel prices effective August15. Base fares on flights under 300 miles (483km) increase by $5 each way, base fares onflights between 301 miles (484 km) and 1,000miles (1,609 km) increase $10 each way, andflights over 1,000 miles (1,609 km) increase by$12 each way. These base fare increasesfollow surcharges on domestic flights introducedin June, which increased fares by $8 to $15each way depending on distance.


NEWS ARTICLESOTHER CANADIAN AIRLINENEWS – CON’T

CANJET ANNOUNCES SEASONALMONCTON-SARASOTA SERVICE

CanJet announcedplans to offer seasonalservice to Sarasota,

Florida from Moncton starting in February 2006.The flight will operate once weekly onThursdays from February 9 to May 4 usingB737-500 aircraft.

CANJET TO INCREASE LEGROOMCanJet announced that it will be increasing theamount of legroom on all of its B737-500aircraft. Two seats will be removed from eachaircraft and seats reconfigured to increase theaverage seat pitch by 2 inches.

HARMONY AIRWAYS RAISES FARESFollowing the lead of AirCanada and WestJet,Harmony Airways has

announced fare increases due to rising fuelcosts. Effective August 23, tickets will increaseby $12 per oneway ticket.

CANADIAN AIRPORTSWAA REPORTS INCOME OF $700,000

The Winnipeg AirportsAuthority released its secondquarter results, with revenuesexceeding expenses by

$697,000. Excess revenues over expenses, aswell as the airport’s Airport Improvement Fee(AIF) will be used exclusively for required airportinfrastructure. Passenger traffic at the airport isup 5.0% over the second quarter of 2004.

CANADA INVESTING IN NEW TERMINALAT KUUJJUAQ AIRPORT

Transport Minister JeanLapierre announced plans tobuild a new terminal and

expand the apron at Kuujjuaq Airport inNorthern Quebec. Funding for the $14 millioninvestment was allocated in the February 2005Federal budget. Work will commence in thespring of 2006.

CARGO NEWSFEDEX TO BUILD NEW ASIA-PACIFICHUB AT GUANGZHOU

FedEx confirmed plans tobuild a new Asia-Pacific hub

in Guangzhou, China, and close its existing hubof Subic Bay, Philippines. The new facility willopen in 2008 and operations will be transferredthere by the end of the year.

UPS PLANS HUB IN SHANGHAIUPS has signed an agreement withthe Shanghai Airport Group to createan international cargo hub at PudongInternational Airport. The hub is tohave a capacity of 200,000 tonnes

per year and begin operating in 2007. Theinvestment is part of $500 million the integratorplans to spend in China over the next two years.

KITTY HAWK POSTS 2ND QUARTERLOSSESKitty Hawk posted losses of $2.2 million in thesecond quarter of 2005, compared to a profit of$600,000 for the same period in 2004. Thelosses are largely related to introduction costs ofits new B737-700SF aircraft. Six aircraft havebeen delivered of which five are in revenueservice; the seventh and final aircraft isexpected to be delivered in September 2005.


NEWS ARTICLESCARGO NEWS – CON’T

UPS ORDERS 8 B747-400 FREIGHTERSUPS has placed an order for 8 B747-400F, with

the first to be delivered in June 2007,two more at the end of 2007 and theremaining five freighter aircraft to bedelivered in 2008. This is the first

order of the B747-400F by UPS. Its B747-100sand 200s will be phased out in the next fewyears; however, this new order is consideredreplacement for UPS's MD-11 aircraft.

CALGARY CARGO STOP NOTPERMITTED FOR AIR CANADATransport Canada has denied Air Canada'sapplication to use and offer domestic cargoservice on a wet lease basis from U.S.-based aircargo operators Gemini Air Cargo and WorldAirways. Air Canada wet-leased MD-11freighters from the two U.S. airlines for aToronto-Shanghai service earlier this year andapplied to the ministry to operate the servicethrough Calgary in one direction.

TRANSPORT CANADA TO REVIEW AIRCARGO SECURITY WITH INDUSTRYSTAKEHOLDERSTransport Canada plans to introduce acomprehensive program for air-cargo security inspring 2006. The ministry has begun informalmeetings with government and industry groupsto review air cargo security measures and makerecommendations. The goal is to improvesecurity but not impede the flow of cargo in thedomestic and international sectors. Among theproposals is a "known shipper/known cargo"certification program for freight that is to becarried on passenger aircraft. Shippers wouldhave to meet specified criteria to qualify.

ATLAS AND POLAR TO MERGEOPERATIONS IN 2006

Atlas Air WorldwideHoldings will mergethe operations of its

subsidiaries Atlas Air and Polar Air Cargo underPolar while maintaining the two separatebrands. This is a part of the company'sreorganisation plan laid out when it emergedfrom bankruptcy protection last year. Theoperational consolidation is expected to takeplace in January 2006.

CARGOJET AWARDED SHIPPER'SCHOICE AWARD

The CanadianTransportation andLogistics Magazine, in

conjunction with the federal government andresearch firm G. Bramm & Associates, surveys1,200 Canadian shipping companies each yearand asks them to rate their airlines againstbenchmarks that the shippers themselves set.This year, Cargojet was awarded the Shipper'sChoice Award for the third year in a row.


George Mikelsons

Gregory Principato

NEWS ARTICLESPEOPLE IN THE NEWS

On July 1, Gregory Principatobecame President of AirportsCouncil International - NorthAmerica (ACI-NA). Principatohas held positions in aviation andtransportation for more than 25years. He succeeds David

Plavin, who previously held the position.

ACE AVIATION HOLDINGS HIRES NEWEXECUTIVES FOR FINANCE TEAM

ACE AviationHoldings, parent

company of Air Canada, has hired ex-AerLingus executive, Brian Dunne as CFO who willreport directly to Robert Milton. Dunne replacesRob Peterson, who will become VP and CFO ofAeroplan. Greg Cote was named Senior VP,Corporate Finance and Strategy. Cote waspreviously Senior VP and Partner at Ernst &Young Corporate Finance.

Founder of low cost carrierATA, George Mikelsons,announced his retirement asCEO. John Denison, willassume the position of CEO.

OTHERQANTAS TO RETURN TO VANCOUVER

As part of an increase inservice to North America,Qantas will be returning

service from Sydney to Vancouver in June 2006.Service would be via San Francisco, itself a newroute for the carrier.

CHINA READY TO NEGOTIATEAVIATION AGREEMENT WITH EU

China has indicated that it isready to start talks with theEuropean Union on developing a

union-wide aviation agreement. It first needs tocomplete its own study on removing nationalityclauses from bilateral agreements, which werebanned in a ruling by the European Court ofJustice in 2002. China currently has bilateralagreements with 22 of the 25 EU members.

BOMBARDIER EXPANDS IN ASIA-PACIFIC

BombardierAerospaceannounced plans

to significantly expand its presence in the Asia-Pacific region by opening new sales offices inSingapore and New Delhi, and two newmaintenance facilities in India and China withinthe next 12 months. This part world region hasbeen showing an increasing amount of interestin Bombardier products.

EUROPEAN TRADE ASSOCIATIONSUNVEIL PLAN TO CURB EMISSIONS

Six European tradeassociations, including theAssociation of European Airlines

(AEA), jointly unveiled an EmissionsContainment Policy to curb greenhouse gasemissions. The policy has targets of reducingnoise and CO2 emissions per seat-kilometre by50% by 2020, with other emissions reduced by80%.

BOEING LAUNCHES 737-900ERBoeing launched its new 737-900ER program in July 2005following a deal with Lion Air of

Indonesia for 30 aircraft and 30 options. Thenew aircraft will offer up to 215 seats in singleclass configuration, more than any other 737derivative, and will have a maximum range of3,200 nautical miles. It is expected to competedirectly with the Airbus A321.


Rob BeynonDirector, Airport Marketing

AIRPORT BEST PRACTICESAugust 2005

Regina and Saskatoon AirportsTypically, Canadian municipalities appear to think that they are in a death struggle with thecommunities in their vicinity. Mayors and city councils struggle for businesses, residents, provincialand federal funding, hospitals, and educational facilities. The trend is true for large cities throughvillages. The approach is consistent even when issues are regional rather than municipality-specific.

Reducing Expenses. However, Saskatoon and Regina InternationalAirports have adopted a contrary approach. The two airports worktogether to reduce expenses and increase value whenever possible. Inthe last year, cooperative initiatives have included:

• Security initiatives;

• Safety Management System (SMS) development;

• Peer review of construction projects; and even

• Air service development.

The two airports have worked on joint air servicepresentations to a number of U.S. air carriers. These were nottheir first joint marketing efforts. Where most observers wouldsee competition and conflict of interest, the two havedeveloped an opportunity that would benefit bothcommunities.

As Saskatoon Airport Authority President & CEO, Bill Restall, put it, the contact is ongoing betweenthe two airports which leads to new opportunities for interaction. “It is extremely valuable to haveanother professional review your capital plans informally and comment,” he added.

In the end, the relationship has saved bothairports significant money and added value forstakeholders. While competition betweenairports is a reality, Saskatoon and Regina showthat there is often significant room for increasedcooperation as well.


OTTAWA REPORT15 August 2005

Government of Canada to Conduct Stakeholder Consultations on AirPassenger AssessmentMinister of Public Safety and Emergency Preparedness, Anne McLellan, together with TransportMinister, Jean Lapierre announced that the Government of Canada will conduct stakeholderconsultations on the implementation of air passenger assessment. The consultations will begin inAugust and continue into the fall, and will concern the development of a passenger assessmentprogram to be known as Passenger Protect. The program will entail the development of a list ofindividuals considered a threat to aviation security and who will be prevented from boarding aircraft,analogous to the ‘No-Fly’ list maintained by the U.S. Transportation Security Administration. Inaddition, a feasibility study will be commissioned to examine the use of new technologies to enhancepassenger assessment.

Federal and Provincial Governments to Fund Development ofIntelligent Transport Systems in Newfoundland and LabradorNatural Resources Minister and senior cabinet minister representing Newfoundland and Labrador,John Efford, and Newfoundland and Labrador ‘s Transportation and Government Works Minister,Tom Rideout, announced an agreement to fund the development of intelligent transportation systems(ITS) in the province. Under the agreement, $1.1 million will be invested in a 50-50 cost-shared basisfor the installation of 18 road weather information systems along the National Highway System in theprovince. The installation, to be completed by the end of March 2006, is expected to make highwaytravel safer and more efficient while increasing economic productivity.

Government of Canada Announces Investment in Strategic Plan andEconomic Impact Study for Atlantic GatewayTransport Minister Jean Lapierre announced that the Government of Canada will contribute $125,000towards developing Halifax as a transportation hub and North American Gateway. The contributionconsists of $50,000 from Transport Canada towards the development of a strategic plan, and $75,000from the Atlantic Canada Opportunities Agency (ACOA) for an economic impact study. The funding isbeing provided to the Halifax Gateway Council, an association of transportation stakeholders in theHalifax area, including Halifax International Airport and the Port of Halifax.

NAV CANADA Releases May and June Traffic FiguresNAV CANADA announced its traffic figures for May and June 2005, as measured in weightedcharging units. Traffic in May was up 4.5% over May 2004, while June traffic was up 6.3% over theprevious year. Fiscal year-to-date traffic was up 5.2% over the same period in 2003-04. NAVCANADA’s fiscal year ends August 31. The weighted charging units reflect the number of flights, sizeof aircraft, and distance flown in Canadian airspace.

Canadian Transport Minister Leads Mission to ChinaTransport Minister Jean-C. Lapierre will lead a transportation mission to the People’s Republic ofChina (PRC) September 1-7, 2005. The mission will include stops in Beijing, Shanghai and HongKong to promote Canada as a gateway to North America, and to encourage bilateral exchangesbetween Canada and the PRC in aviation, marine and intermodal transportation issues andopportunities. Mr. Lapierre will be accompanied by a business delegation that includes more than 30executives representing Canadian airports, passenger/cargo carriers, ports, railways andtransportation associations.

Sam BaroneRegional Vice President

Ottawa, ON


WASHINGTON REPORT12 August 2005

U.S. Domestic Traffic Rose 5.5% ThroughAprilThe U.S. Department of Transportation (DOT) reports thatU.S. domestic flights handled 5.5% more passengers throughthe first four months of the year compared to the same timeperiod in 2004. Southwest Airlines carried the mostpassengers with 26.9 million and Atlanta Hartsfield Airport wasthe busiest airport for domestic traffic handling 12.7 millionenplanements. Revenue passenger miles rose by 5.6%,available seat miles were up 1.2% and load factor was up 3.1% overall.

U.S. Airport Capital Development Costs Expected to be $72 Billionfrom 2005 to 2009Based on a survey of 81 U.S. airports by Airports Council International – North America (ACI-NA), it isestimated that airport development costs of the next four years will top $72 billion or an average of$14 billion a year. The 81 airports surveyed represent over 80% of total industry passenger trafficvolumes. The ACI-NA survey queried airports on the expected cost of all airside, terminal andgroundside capital projects. Total air passengers for 2005 are expected to be 718 million andpassenger enplanements are expected to surpass 1 billion over the next 10 years.

Airport Consortium to Expedite Registered Traveller ProgramAirports have been working collaboratively with the American Association of Airport Executives(AAAE) to form the Registered Traveller Interoperability Consortium. The goal of the group is todevelop common business rules and technical standards for the Registered Traveller Program. It ishoped that the program will bring screening consistency and improved security procedures to airtravellers in the U.S. and allow airports and airlines the flexibility to tailor solutions to their localenvironment.

Senate Approves Homeland Security FundingThe Senate approved $31.8 billion to fund the Department of Homeland Security (DHS) for the fiscalyear, beginning 1 October 2005. The total cost matches spending levels for the House which wereapproved in May 2005 and eliminates the need for a White House proposal to raise airline passengerfees by $3 per ticket in order to cover the cost of security enhancements.

House, Senate Approve Daylight-Savings Time ExtensionHouse and Senate negotiators agreed to an energy bill that will begin daylight savings time a weekearlier (second Sunday in March) and extend it by three weeks (first Sunday in November), beginningin November 2007. An earlier draft of the bill considered adding a month in the spring and a month inthe fall; however, this version of the bill was vigorously opposed by airlines and other groups as therewould be serious harmonisation problems for the transportation industry. Airlines could potentiallyhave lost millions of dollars due to schedule disruptions that would impact U.S. arrivals at foreignairports being out of sync with European flight schedules.

Charles Chambers

Senior Vice PresidentInterVISTAS-ga2 Consulting Inc.

Washington, D.C.


INTERVISTAS NEWSAugust 2005

New Reports Available at www.intervistas.com

Enabling Canada’s Economic Potential: ICT andNational Economic PerformanceA report on the Economic Impact of the Information –Communications Technology Sector on Achieving CanadaEconomic Potential prepared by Dr. Mike Tretheway and Mr.Ian Kincaid is available at www.intervistas.com. Click on thePublications and Presentations button on the top right menubar, and go to Reports.

Open Skies Reports. In June 2005, Aéroports de Montréal,the Greater Toronto Airports Authority and the VancouverInternational Airport Authority commissioned InterVISTASConsulting to examine the following:

§ Transborder Air Services Since 1994

§ Economic Impact of Open Skies: Past and Future

§ Economics of Cargo Co-Terminalisation

All three reports are available at or www.openskies.ca.

InterVISTAS’ Canadian Aviation Intelligence Report is a collection of information gathered from public sources,such as press releases, media articles, etc., information from confidential sources, and items heard on thestreet. Thus some of the information is speculative and may not materialise.

To inquire about advertising opportunities or to provide comments/feedback on the InterVISTAS’ CanadianAviation Intelligence Report, please contact Rob Beynon at [email protected] or 1-604-717-1864.

To subscribe, please send an email to [email protected] unsubscribe, please send an email to [email protected].

Prepared by InterVISTAS Consulting Inc.

cair issue no. 32 - august 2005

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