halifax stanfield international 2011 airport economic impact...generator for halifax regional...

Halifax Stanfield International 2011

Airport Economic Impact Report

Prepared For: Halifax International Airport Authority Prepared By: Chris Lowe Planning & Management Group

September 2012

Halifax Stanfield International Airport 2011 Economic Impact Report

1

Table of Contents

Executive Summary ............................................................................... 3

1 Introduction ...................................................................................... 7 1.1 Context ........................................................................................ 7 1.2 Airport Overview ........................................................................ 7 1.3 Highlights of 2011 .................................................................... 11 1.4 Operations ................................................................................. 13 1.5 The Airport Setting .................................................................. 20 1.6 Airport Facilities ........................................................................ 20 1.7 Regional Economy ................................................................... 27

2 Study Approach .............................................................................. 28 2.1 Introduction .............................................................................. 28 2.2 Economic Impact ..................................................................... 28 2.3 Study Area ................................................................................ 30 2.4 Economic Impacts Measured and Methods of

Measurement ............................................................................ 30 2.5 Fiscal Impact ............................................................................. 31

3 Economic Impacts ......................................................................... 32 3.1 Introduction .............................................................................. 32 3.2 Economic Output ...................................................................... 32 3.3 Employment .............................................................................. 33 3.4 Wages and Salaries ................................................................. 34 3.5 Renovation and New Construction Impact .......................... 35 3.6 Tourist/Visitors Impacts .......................................................... 36 3.7 ATB Retail Sales Impacts ........................................................ 37 3.8 Aerospace Cluster Impacts ..................................................... 37

4 Fiscal Impacts ................................................................................. 39 4.1 Introduction .............................................................................. 39 4.2 Personal and Consumption Taxes (Provincial) .................... 39 4.3 Retail Sales Tax (HST) ............................................................ 40 4.4 Commercial Property and Business Occupancy Taxes ....... 40

5 Conclusions ..................................................................................... 41


2

List of Exhibits

Exhibit 1.1 REGIONAL SETTING Exhibit 1.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - SCHEDULED AND CHARTER PASSENGER SERVICE Exhibit 1.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WEEKLY ACTIVITY AUGUST 2002 to

2011 Exhibit 1.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2011 Exhibit 1.5 HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to

2011 Exhibit 1.6 HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2011 Exhibit 1.7 LAND USE PLAN Exhibit 1.8 AIRSIDE SUBDIVISION LOTS Exhibit 1.9 ATLANTIC CANADA POPULATION - 1996 to 2011 Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA KEY INDICATORS - 1996 and 2011 Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - GROSS OUTPUT (MILLIONS) IN 2011 Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2011 Exhibit 3.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2011 Exhibit 3.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR

TRAVELERS ENTERING NOVA SCOTIA IN 2011 Exhibit 3.5 AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011 ECONOMIC IMPACTS Exhibit 4.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2011 Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES

(MILLIONS) IN 2011 Exhibit 5.1 COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011


3

Executive Summary Halifax Stanfield International Airport (HSIA) is one of 26 airports in

Canada’s National Airports System and ranks as one of the world’s

premier airports. HSIA is operated by Halifax International Airport

Authority (HIAA) pursuant to the terms of a ground lease agreement

between HIAA and the Federal Government.

In 2011, HSIA served a record 3,594,164 passengers or over half of all

air travel passengers in Atlantic Canada. It has a multi-province

catchment area and functions as a major economic and employment

generator for Halifax Regional Municipality (HRM) and Nova Scotia. In

2011, HSIA provided direct and connecting passenger and cargo service

for 18 passenger carriers and 12 cargo carriers to destinations in

Canada, the United States, the Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe

with operating cash flows not returning to pre-recession levels until late

2010. Although Nova Scotia’s economy is 75% based upon service

industries that did not experience the same economic downturn as other

regions, the recovery has been slow. In 2011, Nova Scotia’s gross

domestic product (GDP) increased by 0.3% following growth of 1.6% in

2010. The slowing growth is attributed mostly to the goods producing

sectors that declined by 4%, and less construction as government

stimulus spending was ending and construction on the Deep Panuke

offshore project was nearing completion. The impact on the

transportation and warehousing sector was growth of 0.9%. In

comparison to the rest of Atlantic Canada, GDP growth in 2011 was

2.8% in Newfoundland and Labrador, 1.1% in Prince Edward Island and

0.1% in New Brunswick.

Against this economic setting, 2011 was a year of achievements at HSIA

that included a major international award; record setting passenger

levels; the funding and commencing of construction of a runway

extension program that will diversify and expand passenger and cargo

traffic; and an updated Master Plan to 2030. HSIA has been rated the best airport in its class for seven of the past

nine years. In total, it has earned 28 awards over the same time period.

In November 2011, HSIA was inducted into the Airport Council

International’s (ACI) Director General’s Roll of Excellence. The Roll of

Excellence is exclusively reserved for airports that have ranked among

the top five in the world for five consecutive years based upon the Airport

Service Quality rankings.


4

In February 2011, the Federal Government and the Province of Nova

Scotia announced a joint investment of up to $14 million towards an

estimated cost of $28 million to extend its main runway from 8,800 feet to

10,500 feet to accommodate larger wide bodied and heavy weight

aircraft. Construction work started in late 2011 and will be completed in

2013. An estimated average of 15,000 people pass through the Air Terminal

Building (ATB) per day. In October 2011, Groupe Germain Hospitality

announced plans to build a $27 million onsite boutique hotel. It is

scheduled to open in 2013 and will use the ATL Hotel brand. The facility

will include 169 rooms, a restaurant and 10,000 square feet for business

meetings and gatherings. The ATB also added four new food service

concessions in 2011: a second Starbucks, a Clearwater Seafood kiosk

on the departure level, Booster Juice and The Chickenburger, an iconic

1950’s style diner. HIAA completed a Master Plan update in 2011 that outlines the

development program for the airport terminal, airfield, and surrounding

properties in response to growing passenger traffic and commercial

opportunities.

Cargo operations benefitted from the opening of a 40,000 square foot

multi-tenant cargo facility in June 2010 and will further benefit from the

extension of Runway 05/23. The $15 million facility is operated by

Gateway Facilities ULC and contains 7,000 square feet of climate

controlled space that allows for fresh seafood to be directly shipped to

Europe and beyond. It is the largest refrigerated space with direct

airside access north of Miami, Florida. In 2011, 29,263 metric tonnes of

cargo was processed through HSIA representing a 2.9% increase over

2010.

HSIA’s diversified tenant base and head office functions of IMP Group

Aerospace and Air Canada Jazz has allowed overall airport-related

employment to remain stable in recent years. The major contributor to

the airport’s economic base is IMP Group with many of this firm’s

employees involved in multi-year civilian or military service contracts.

This operating environment also exists for Pratt & Whitney Canada and

L-3 Communications Electronic Systems in the adjacent AeroTech

Business Park. These multi-year service contracts resulted in some staff

reductions or re-deployments in 2011, while most other airport

operations either retained or increased employment levels. In 2011, HSIA contributed $1.26 billion to the Nova Scotia economy and

provided 12,040 full-time equivalent (FTE) jobs with wages and salaries

of $480.6 million. These employees contributed


5

$57.7 million to the Province of Nova Scotia in terms of personal and

consumption taxes and $25.3 million in retail sales taxes. Beyond the economic and fiscal impacts listed in the following exhibit,

renovation and new construction projects, tourists entering Nova Scotia

at HSIA and a cluster of aerospace businesses that includes the

adjacent AeroTech Business Park provide further positive local and

provincial spinoffs. From 2000 to 2011, HIAA and tenants have invested approximately $450

million in new capital (development) projects and the maintenance of

capital. These projects represent over 70% of the total capital

improvements at all airports in Atlantic Canada and created 7,565 FTE

jobs and contributed $284 million in wages and salaries. HIAA’s Capital

Plan to 2016, the new 169 room boutique hotel and other expected

future tenant projects, will require an additional $300 million in

investments. These planned projects will require 4,220 FTE jobs and

generate $190 million in wages and salaries. Tourism is a $1.82 billion industry in Nova Scotia based upon the most

recent provincial government statistics. There were 1.954 million visitors

to Nova Scotia in 2011 with 34% arriving via air at HSIA. Air visitation

increased by 9% from 2010 while total visitation to Nova Scotia was

down slightly. Tourists entering Nova Scotia at HSIA tend to stay longer

and spend more money. They contributed an estimated $675 million to

the Nova Scotia economy (37% of all tourism-related activity) generating

an estimated 11,775 jobs (direct and spinoff), $120 million in total taxes

and $295 million in payroll. IMP Aerospace and tenants at the adjacent AeroTech Business Park are

an aerospace cluster with 1,360 employees in 2011. This cluster has

estimated direct and spinoff expenditures of $397 million. The direct and

spinoff jobs are 2,720 and wages and salaries are over $150 million.


6

COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011

Impact

2000

2005

2011

% Change:

2005 to 2011

Total Gross Output Halifax Area Nova Scotia

(Millions)

$614.1 $1,035.1

(Millions)

$683.3 $1,152.8

(Millions)

$746.0 $1,260.0

+9.2% +9.3%

Total Employment Halifax Area Nova Scotia

7,495 11,000

7,870 11,625

8,100 12,040

+2.9% +3.6%

Wages and Salaries Halifax Area Nova Scotia

(Millions)

$196.7 $289.2

(Millions)

$260.3 $384.6

(Millions)

$323.3 $480.6

+24.2% +25.0%

Personal and Consumption Taxes (NS) Halifax Area Nova Scotia

(Millions)

$29.7 $43.7

(Millions)

$35.1 $53.5

(Millions)

$38.8 $57.7

+10.5% +7.9%

Retail Sales Tax Halifax Area Nova Scotia

(Millions)

$10.2 $15.0

(Millions)

$13.7 $20.2

(Millions)

$16.9 $25.3

See Note

Note: Comparisons cannot be made because of changing tax definitions and rates.


7

1 Introduction 1.1 Context

The Chris Lowe Group was retained by Halifax International Airport

Authority (HIAA) to determine the 2011 economic impacts of the facility

on Halifax Regional Municipality (HRM) and the Province of Nova Scotia.

The study uses the same approach as previous economic impact studies

at Halifax Stanfield International Airport (HSIA) initially prepared in 1990

and updated from 1992 to 2010. The approach for the 2011 update

focuses on incremental changes from previous studies. A survey of

major airport tenants, operating and financial data from HIAA and other

data sources are the basis for the 2011 study findings.

The report contains five sections. Section 1, Introduction, is an overview

of the airport and the regional economy. Section 2, Study Approach,

outlines how economic and fiscal impacts are measured. Section 3,

Economic Impacts, presents the findings of the facility’s economic

impacts on HRM and Nova Scotia. Section 4, Fiscal Impacts,

categorizes the personal and consumption taxes, and retail sales tax

impacts. Section 5, Conclusions, is a summary of the 2011 update and

comparisons to previous years.

1.2 Airport Overview

HSIA is one of 26 airports in Canada’s National Airports System and

ranks as one of the world’s premier airports. In 2011, HSIA served a

record 3,594,164 passengers or over half of all passengers in Atlantic

Canada. HSIA is located 35 kilometres northwest of HRM’s urbanized

core on Highway 102 which is the direct link to New Brunswick, Prince

Edward Island and points west and south. Land uses around the facility

are rural and commercial development that includes the AeroTech

Business Park along Highway 102.

The airport was opened by Transport Canada in 1960 with Instrument

Flight Rule (IFR) operations and a 16,900 square metre ATB. In 1960,

180,000 passengers were processed or 5.0% of the 2011 level. From

1960 until early 2000, the facility was managed by Transport Canada. In

February 2000, management, operation and development of the facility

were transferred from Transport Canada to HIAA. The airport has two

runways (05/23 at 8,800 feet and 14/32 at 7,700 feet) with 29 operating

gates and 13 loading bridge positions in the ATB. Jets up to and

including the Boeing 747 can be accommodated.


8

Exhibit 1.1

REGIONAL SETTING

Halifax Stanfield International Airport

AeroTech Business Park

HWY 102

Downtown Halifax


9

For half a century, HSIA has been the largest airport in Atlantic Canada

with a multi-province catchment area. It now provides direct and

connecting passenger and cargo service across Canada, into the U.S.,

the Caribbean, Europe and Asia. This service is provided by 18

passenger carriers and 12 cargo carriers. The international catchment

area is Atlantic Canada while the domestic passenger catchment area

covers Nova Scotia, Southern New Brunswick and Prince Edward Island.

HSIA is unique in Canada’s airport system as it serves four provinces

(Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland

and Labrador) because of the dominance of Halifax as the East Coast’s

major service centre, and the population distribution and geography of

Atlantic Canada.

The facility’s regional dominance was enhanced in October 2006 when

U.S. Customs and Border Protection Services initiated preclearance for

passengers destined to the U.S. on non-stop flights. In 2011, HSIA

remains the only airport in Atlantic Canada to enable transborder

passengers to be processed by U.S. Customs and Border Protection

Services prior to departure. The benefit of preclearance is passengers

now arrive at domestic gates in U.S. destination airports and have faster

connection options for their final destination.

Exhibit 1.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT -

SCHEDULED AND CHARTER PASSENGER SERVICE

15 Domestic

Destinations

13 Transborder

(USA) Destinations

15 International

Destinations

Calgary, AB

Charlottetown, PEI

Deer Lake, NL

Edmonton, AB

Fredericton, NB

Gander, NL

Goose Bay, NL

Hamilton, ONT

Moncton, NB

Montreal, PQ

Ottawa, ONT

Saint John, NB

St. John’s, NL

Sydney, NS

Toronto, ONT

Atlanta, Georgia

Boston, Mass.

Chigago, Illinois

Detroit, Michigan

Ft. Lauderdale, Florida

Newark, New Jersey

New York (JFK)

Orlando, Florida

Philidelphia, Penn.

St. Petersburg, Florida

Tampa, Florida

Washington (Dulles)

Washington (National)

Bermuda – Hamilton

Cuba – Cayo Coco,

Holguin, Santa Clara,

Varadero

Dominican Republic –

Puerto Plata, Punta

Cana, Samana

Germany – Frankfurt

Iceland – Reykjavik

Jamaica – Montego

Bay

Mexico – Cancun

St. Pierre et Miquelon

United Kingdom –

London (Gatwick),

London (Heathrow)

Source: Halifax International Airport Authority (as of December 2011).

HSIA offers 24 hour

operations without curfew or

noise abatement restrictions.

It functions as a major trans-

border and international

gateway airport with flights

connecting Atlantic Canada

to major centres in Canada,

the U.S. and internationally.


10

Since the transfer from Transport Canada in 2000, economic cycles and

geopolitical events have reshaped the airline industry and the role of

airports. The Canadian airline industry has witnessed the demise or

merger of several airlines, the launch of new carriers, global economic

downturns and recoveries, higher energy costs, pandemics and geo-

political events like September 11, 2001 that created the need for

heightened airport security.

During this period, HIAA has followed a four-tier business planning

process that includes a 20-year Master Plan, a 10-year Capital and

Financial Plan, a 5-year Strategic Plan and annual business plans.

The Authority’s mission is to connect Nova Scotia to the world through

flight. A Master Plan update to 2030 was completed in 2011 that aligns

the mission with market-driven changes to the airfield, terminal area,

highway commercial development, multi-modal and logistics

development and land acquisition.


11

1.3 Highlights of 2011

2011 was a year of achievements that included a major international

award, record setting passenger levels, the funding and commencing of

construction of a runway extension program that will diversify and

expand passenger and cargo traffic, and an updated master plan to

2030.

HSIA has been rated the best airport in its class for seven of the past

nine years. In total, it has earned 28 awards during the same time

period. In November 2011, HSIA was inducted into the Airport Council

International’s (ACI) Director General’s Roll of Excellence. The Roll of

Excellence is exclusively reserved for airports that have ranked among

the top five in the world for five consecutive years based upon the Airport

Service Quality rankings.

In February 2011, the Federal Government and the Province of Nova

Scotia announced a joint investment of up to $14 million towards an

estimated cost of $28 million to extend the main Runway (05/23) from

8,800 feet to 10,500 feet to accommodate larger wide bodied and heavy

weight aircraft with the remaining $14 million being invested by HIAA.

Construction work started in late 2011 and will be complete in 2013.

Cargo growth is a key strategy of HSIA and this runway extension will

allow wide-body cargo freighters to operate at full capacity with the

resulting benefits to all exporters; particularly seafood exporters who

currently truck product to Boston or New York for export to international

markets. In June 2010, Gateway Facilities ULC in partnership with HIAA

opened a $15 million, 40,000 square foot state-of-the-art cargo facility

that includes 7,000 square feet of climate controlled space. It is the

largest airside refrigerated space north of Miami and will allow for the

efficient export of high-value seafood products. Over the next decade,

air cargo is forecast to grow between 85% to 100%. The growth is

reflected in the decision by Icelandair Cargo in November 2011 to restart

scheduled weekly air cargo service from HSIA to Reykjavik and onto the

major European cargo hub at Liege, Belgium.


12

2011 was the final year of the Airfield Restoration Program to improve

safety and reliability. The construction schedule was timed to minimize

flight delays based upon historic weather conditions. Major work

completed in 2011 included Taxiways Foxtrot and Delta, and Gate 24’s

Aircraft Parking Apron.

An estimated average of 15,000 people pass through the ATB per day.

In October, Groupe Germain Hospitality announced plans to build a $27

million onsite boutique hotel. It is scheduled to open in 2013 and will use

the ATL Hotel brand. The facility will include 169 rooms, a restaurant

and 10,000 square feet for business meetings and gatherings.

The ATB also added four new food service concessions in 2011. A

second Starbucks location opened in the domestic arrivals area.

Clearwater Seafood opened a kiosk on the departure level where

passengers can place an order for lobster or seafood after clearing

security. Booster Juice also opened an outlet on the departure level. In

November, The Chickenburger, a 1950’s style

diner, opened in the Airport Square. The

Bedford, Nova Scotia based Chickenburger has

been a Halifax Region icon for more than 70

years.

HIAA completed a Master Plan update in 2011

that outlines the development program for the airport terminal, airfield,

and surrounding properties in response to growing passenger traffic and

commercial opportunities. A key element of the plan is the planning and

development of an ‘Airport City’ that will transform HSIA’s highway

showcase location and regional air hub amenities. The vision contains

five development clusters focusing on aviation, logistics, aviation reserve

(airfield access), multi-modal and highway commercial development.

HIAA retained an A+ credit rating from Standard & Poor’s (second

highest among Canadian airport authorities) in 2011. In the fiscal year,

HIAA generated $51.1 million in operating and interest revenues, and

collected $26.8 million in airport improvement fees for total revenues of

$77.9 million ($67 million in 2010). Total expenses for 2011 were $74.4

million ($65.4 million in 2010). Overall in 2011, revenues exceeded

expenses by $3.44 million ($1.6 million in 2010). The surplus revenue

was retained and reinvested in operations and development. HIAA also

invested $21.8 million ($22.7 million in 2010) in its capital improvement

program.


13

1.4 Operations

HSIA had 3,594,164 enplaned/deplaned passengers in 2011. This

volume of activity was an increase of 2.5% from 2010, and represents

the airport’s busiest year in its 51-year history.

Thirty passenger and cargo carriers operated from the airport in 2011.

The carriers are:

Air Canada Air Canada Jazz Air Georgian

CanJet Airlines Skylink Express Delta Air Lines

WestJet Airlines Air Saint-Pierre Air Transat

US Airways Cubana CargoJet

Icelandair Sunwing Airlines Thomas Cook (UK)

Condor Flugdienst Porter Airlines Continental Airlines

American Airlines United Airlines Air North

Canadian North Provincial Airlines ABX / TNT

Cougar Helicopters Kelowna Flightcraft (Purolator)

Execaire Morningstar Express (FedEx)

Canadian Helicopters Maritime Air Charters

Air Canada/Jazz/Georgian has the largest market share. These carriers’

share of total weekly departing flights went from 83% in August 2002 to

61% during August 2011.

Exhibit 1.3 lists the August 2011

destinations of flights from HSIA. There

were 561 flights to Canadian destinations,

119 to transborder (U.S.) destinations and

19 to international destinations per week

in August, 2011. In comparison to 2002,

weekly transborder flights increased 53%

and total flights by 26%.

The scheduled and charter

passenger service in 2011

included 15 domestic

destinations, 13 transborder

(U.S.) destinations and 15

international destinations. International destinations

included England, Germany,

Iceland, Bermuda, Mexico

and several Caribbean

islands.


14


WEEKLY ACTIVITY AUGUST 2002 to 2011

Air Carrier – Domestic Service

2002 Flights

Per Week

2011 Flights

Per Week

2011 Destinations

Air Canada/ Air Canada Jazz/Georgian

415 400 Deer Lake, Fredericton, Ottawa, Moncton, Sydney, Saint John, St. John’s, Montreal, Gander, Calgary, Charlottetown, Goose Bay, Toronto

Porter Airlines 0 70 Ottawa, Montreal, St. John’s

WestJet 0 91 Hamilton, St. John’s, Toronto, Edmonton, Calgary, Montreal, Ottawa, Vancouver

Subtotal 466 561

Air Carrier – Transborder Service

Air Canada/Air Canada Jazz

42 19 Boston

Continental Airlines 15 28 Newark Delta Air Lines 21 22 Boston, New York (JFK), Atlanta American Airlines 0 14 New York (JFK) US Airways 0 22 Philadelphia, Washington National (DCA) United Airlines 0 14 Washington, DC (IAD), Chicago

Subtotal 78 119

Air Carrier – International Service

Air Canada 8 8 London (Heathrow), Bermuda Air Saint-Pierre 4 3 St. Pierre Icelandair 0 3 Reykjavik Thomas Cook (UK) 0 1 London (Gatwick) Condor 0 3 Frankfurt Cubana 0 1 Santa Clara Subtotal 13 19

Total 557 699

Source: Halifax International Airport Authority.


15

HSIA will have the necessary

support services to handle

increases in air cargo volumes

after the extension to Runway

05/23 is completed in 2013. Cargo

activity is supported by carriers,

freight forwarders, customs

brokers and cargo specialists.

These facilities handled 29,263

metric tonnes in 2011 compared to 28,450 metric tonnes in 2010 and

26,910 metric tonnes in 2009. The 2011 cargo volume is a 2.9%

increase over 2010. Longer-term baseline forecasts by Transport

Canada without the extension of Runway 05/23 have cargo activity

reaching 43,400 metric tonnes in 2019 and 49,000 metric tonnes by

2024. The 2024 Transport Canada forecast has 4.0% average annual

growth from 2010.

Key building blocks for air cargo growth are the new multi-tenant cargo

facility and HSIA’s participation in the international air cargo

transshipment program that was granted by Transport Canada. This

program allows air cargo to fly into Halifax for shipment to third countries.

For example, cargo can fly into Halifax from the U.S., be stored

temporarily and then move to an Asian destination, or international air

cargo can arrive from overseas destinations and then be shipped by rail

or road from Halifax to the U.S. under NAFTA.

Liège, Belgium-based TNT Airways and Icelandair provide regular

scheduled international cargo service and the Airport Authority will

pursue other wide-body freighter operations as part of the Runway 05/23

extension program. Supporting operators for air cargo are listed below.

Freight Forwarders Integrated Couriers Connexion World Cargo (Canada) Ltd. Federal Express DSV Air & Sea Inc. Purolator Courier

Kintetsu World Express Inc. Cargojet Kuehne & Nagel International Ltd. Cargo Handlers

Leisure Cargo Worldwide Flight Services MOL Logistics Air Canada Cargo PF Collins Customs Broker Ltd. Servisair UPS Supply Chain Solution Worldwide Perishables Canada Worldwide Perishables Canada


16

Customs Brokers Other Cargo Services Atlantic Customs Brokers Armour Transport Inc. KN Customs Brokers Canadian Gold Seafood Ltd. DB Schenker Cape Nova Express EDI Custom Brokers Halifax Marine Agencies Ltd. Kintetsu World Express Inc. Monts Transfer Ltd. Livingston International Inc. Pole Star Transport Inc. PBB Global Logistics Summit Transportation Group PF Collins Customs Broker Ltd. Network Cargo Systems

Passenger carriers that fly from Halifax operate in markets where most

domestic routes are mature and passenger volumes generally increase

or decline in parallel with changes in the regional economy. In 2009, a

global recession negatively impacted the international air transport sector

as passenger traffic fell 2.1% and cargo volume dropped 9.8% (source:

IATA). The cyclical downturn from the 2008 peak to the 2009 trough was

the deepest experienced by the commercial airline industry since the

1930s. By mid-2009, air travel markets began to turn upward, assisted

by fiscal and monetary stimulus measures taken by governments and

this growth continued during 2011. The two major carriers at HSIA are Air Canada Jazz and Air Canada. Air Canada Jazz had 720 full-time equivalent (FTE) jobs based at HSIA

in 2011. This represents a 3.7% increase from 2010. Air Canada

reduced its workforce by 9% from 367 in 2009 to 334 during 2010.


Aerospace and Air Canada Jazz have allowed overall employment to

grow in recent years. The largest contributor to the airport’s economic

base is IMP Group which had 1,015 FTE employees in 2011, with many

of these workers involved in multi-year service contracts with the U.S.

Navy and the Department of National Defence. This operating

environment also exists for Pratt & Whitney Canada and L-3

Communications Electronic Systems located in the adjacent AeroTech

Business Park with a combined 500 FTE employees in 2011.


17

Air security requirements have generated job growth over the past

decade. The largest security employer is Canadian Air Transport

Security Authority (CATSA) with an employee base that has increased

from 30 in 2002 to 238 in 2011. Diversification of core business activities or major new service contracts

allowed many of the key tenants to maintain or modestly increase

employment levels in 2011 from 2010. As an example, four major

employers (Host International, Servisair, FedEx, Hudson Group)

increased their employment by 10%.

Exhibit 1.4 presents a list of the major employers in 2011. Beyond this

list, there are many smaller firms that collectively retained employment

during 2011 at 2010 levels. One sector that relies upon

commercial aviation is ground

transportation. There are

approximately 207 active and

licensed taxis and limousines,

and a further 294 non-

registered taxis/limousines and

46 shuttles through the

MACPass system that operate

regularly at HSIA. These operators made close to 137,000 pickups (curb

tickets collected) in 2011. Based upon the level of activity, the airport

created approximately 160 FTE taxi and limousine driver positions.


18

Exhibit 1.5 lists passenger and aircraft movement activity at the airport

between 2007 and 2011. Over this period, total enplaned and deplaned

passengers increased by 3.6% from 3,469,062 to 3,594,164. Over the

same period, total aircraft movements declined by 2.7% from 89,251 to

86,874. The decline is due to fewer piston and local aircraft movements

while itinerant movements have increased. In 2011, the average number

of passengers per aircraft movement was a record high of 41.4 or an

increase of 6.4% from 2007.

Exhibit 1.6 outlines the 2011

concession sales at HSIA in

comparison to selective previous

years. Total sales in 2011 were

over $80.5 million or $22.42 per

passenger (second highest annual

total). Car rental concessions

totalled $39,976,260 or $11.12 per passenger.

This total sales value is similar to the average for the previous five years.

Exhibit 1.4

HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2011

Employer Full-Time

Equivalent (FTE) Employees

IMP 1,015 Air Canada Jazz 720 Air Canada/ Air Canada Cargo 361 CATSA 238 HIAA 162 Host International 121 Avis/Budget 95 Servisair 95 Gate Gourmet 78 FedEx 74 Tim Hortons 73 PAL 71 Hudson Group 57 NavCanada 51 Cougar Helicopters 45 National/Enterprise/Alamo (ANC) 33 Source: Chris Lowe Group and Halifax International Airport Authority (as of June 2012).


19

Exhibit 1.5

HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to 2011

Enplaned / Deplaned Passengers: Total Aircraft

Movements: Passenger Average Per

Movement: 2007 3,469,062 89,251 38.9 2008 3,578,931 89,033 40.2 2009 3,417,164 88,477 38.6 2010 3,508,153 87,021 40.3 2011 3,594,164 86,874 41.4


Exhibit 1.6

HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2011

Year Enplaned / Deplaned

Passengers

Total Concession Sales

Sales Per Passenger

2007 3,469,062 $80,351,150 $23.16 2008 3,578,931 $81,071,915 $22.65 2009 3,417,164 $78,739,225 $23.04 2010 3,508,153 $79, 711,056 $22.72 2011 3,594,164 $80,570,892 $22.42

Car Rental Concession Portion

2007 3,469,062 $40,665,786 $11.72

2008 3,578,931 $40,675,586 $11.37

2009 3,417,164 $40,385,453 $11.82

2010 3,508,153 $40,019,450 $11.41

2011 3,594,164 $39,976,260 $11.12



20

1.5 The Airport Setting

Adjacent to HSIA is the 970 hectare AeroTech Business Park operated

by HRM. During 2011, there were no lots available for sale. Two major

tenants in the aerospace field are located in AeroTech. They are Pratt

and Whitney Canada and L-3 Electronic Systems Inc. Combined with

tenants at the airport, the aerospace cluster had 1,360 employees in

2011.

Hilton Garden Inn opened a 145

room hotel in AeroTech during

2005 and Holiday Inn Express

opened a 119 room hotel on the

same site in 2008. Another nearby

operation is a Quality Inn (former

Airport Hotel Halifax), which has

156 rooms. Combined, the three

properties have over 100 FTE

employees. In 2013, the close

proximity room total will increase by

169 rooms or 40% to 589 rooms when the new ALT Hotel opens

connected to the ATB.

1.6 Airport Facilities

The 20-year Master Plan provides HIAA with a longer-term framework for

land uses, infrastructure, services and development projects. The Land

Use Plan for HSIA is shown in Exhibit 1.7. It was originally prepared in

1996 and amended (with associated drawings) in 2002. An updated

Master Plan was completed in 2011.

The airport's various land uses are classified as:

Airfield District

Future Airfield District

Operational Services

Air Terminal District

Aviation Services

Airport Industrial

Airport Commercial

Airport Reserve

Future Roads / Runways / Taxiways

The major features of the airport are the airfield, commercial

development and terminal complex.


21

Airfield

HSIA has simultaneous intersecting runway operations that allow for

increased traffic capacity with fewer delays and lower fuel costs.

Runway 05/23 is 8,800 feet by 200 feet with an asphalt/concrete base

and Runway 14/32 is 7,700 feet by 200 feet with an asphalt base.

Runway 05/23 is currently being extended to accommodate fully loaded

wide body cargo freighters. Taxiways A to H have an average width of

75 feet. There are six aprons with an average area ranging from 67,713

square feet to 597,070 square feet.

NavCanada operates the Air Navigation System across Canada and has

51 FTE employees at the airport. The Instrument Landing System (ILS)

navigational aids are Category II while Raytheon Canada Radar provides

primary and secondary coverage on Runway 05/23.

Commercial Development

Commercial land at the airport is leased and not sold. In 2011, there

were over 20 major commercial and industrial tenants. Airside taxiway

access land is leased to companies involved in aircraft overhaul and

repair, air cargo and courier, helicopter transport and aircraft servicing.

Non-taxiway access land is leased to firms involved in flight food service,

brokering, airport services and car rentals. A service station (Petro

Canada) and fast food outlet (Tim Hortons) are also present.

A commercial development initiative is the Airside Subdivision Project

which contains 17 parcels with airside access. Exhibit 1.8 shows that

these lots are designed for aircraft maintenance facilities, air cargo

transshipment areas, offshore oil and gas supply centres, and aircraft

servicing and maintenance activities.

In 2002, CHC Helicopters International leased one of the lots for a new

$3.5 million passenger terminal and helicopter facility. During 2003,

Inland Technologies opened a $1.5 million glycol recovery operation for

the fluid used to de-ice airplanes. IMP completed a new $15 million

aerospace hangar in 2006.

During 2008, a lease was signed

with Gateway Facilities ULC to build

and manage a $15 million multi-

tenant cargo facility that contains

40,000 square feet. This facility

became operational in 2010.


22

In 2010, Cougar Helicopters commenced construction on a 22,000

square foot hangar that opened in 2011 to service the offshore oil and

gas sector.

In January 2011, HIAA submitted an updated Master Plan to Transport

Canada as a requirement of the Ground Lease. The updated plan seeks

to maximize the use of current airport land holdings over the 2011-2020

and 2020-2030 planning horizons. It states that the airfield has sufficient

capacity to meet future hourly and annual aircraft movements up to

2030. The ATB is anticipated to require expansion if increased

passenger traffic both before and after 2020 meets projections. A major

element of the updated plan is the Airport City Development Plan. It

contains the following features:

An Aviation Precinct with facilities for passenger air service

support, general aviation fixed base operators, refueling and

aircraft maintenance.

A Logistics Precinct that is intended to become a key

transshipment centre for North America.

An Aviation Reserve that is for commercial activities requiring

airfield access.

A Multi-Purpose Precinct that is accessed by the terminal roadway

system and will contain businesses that meet the commercial

needs of passengers, and meeters and greeters.

A Highway Commercial Precinct for aeronautical and other

businesses with showcase visibility from Highway 102.


23

Exhibit 1.7

LAND USE PLAN


24

Exhibit 1.8 AIRSIDE SUBDIVISION LOTS


25

Terminal Complex

The ATB (opened in 1960) has been expanded and upgraded numerous

times by Transport Canada prior to 2000 and subsequently by HIAA. In

1976, it was enlarged to accommodate three million annual passengers.

This level was surpassed in 2004. The international arrival area was

expanded and upgraded in 1987 and has since received additional work.

Also, a major upgrade was completed for the G7 Summit held in Halifax

during 1995.

With the facility’s transfer from Transport Canada to HIAA in 2000, a $25

million development program started at the ATB’s north end to address

congestion and overcrowding in the domestic and international arrival

areas. Completed in 2002, the project improved capacity and service

level by adding:

an expanded international arrivals area approximately three times

larger than the previous size;

a domestic arrivals area quadruple the former size;

space for U.S. preclearance;

a separate and expanded international greeting area;

new Customs, Immigration and Canadian Food Inspection Agency

facilities; and

additional retail space.

In 2003, Airport Square was opened with new retail and food service

tenants. This $12 million project increased retail space by 70%. Retail

tenants are located on the main and departure levels of the ATB.

By 2008, the $93 million ATB expansion, which began in 2004, was

mostly complete. The project focused on an expansion to the north and

south ends of the terminal to meet Federal Government requirements, as

well as to accommodate the U.S. preclearance facility.

Subsequently, during 2008, major terminal modifications were made as

part of the ATB Groundside Redevelopment Program. This work

included redevelopment of the centre core to efficiently move

passengers from the new parking structure through the ATB by four new

escalators, two elevators and an updated exterior façade.

As of 2011, the ATB has 29 operational gates and 13 aircraft loading

bridge positions that can accommodate jets up to the size of Boeing

747s. There are also two covered walkways. Passenger services and

amenities include a tourism visitor information centre, first aid facility,

flight information display system, baggage carts, lounges, duty free

shops, retail outlets and restaurants.


26

Main Level Domestic/International Departure

Level Atlantic Sweet Shoppe AerRianta Duty Free Brisket Boardwalk Deli Beaches Burger King Booster Juice Central Amusements Brisket Boardwalk Deli The Chickenburger The Classic Backrub Clearwater Seafoods Clearwater Seafoods Everything Under $20 Hudson News (4 locations) Hudson Aeromart Legends Nova Scotia Lounge Hudson News Starbucks Kids Works Tech on the Go Maritime Ale House Tim Hortons Nova Scotia Store Relay Books US Preclearance Departure Level Roots AerRianta Duty Free Starbucks Hudson News Tim Hortons Spirit of the Maritimes TravelEx Travel & Leisure Travel Store


27

1.7 Regional Economy

Demand for air passenger and cargo transportation is a function of

economic activity. The overall trend for Atlantic Canada’s economy is a

stable population base with declining unemployment and real economic

growth driven by resource development and the service sector. From

1996 to 2011, the region’s population declined by less than 1.0% from

2,381,002 to 2,357,400. Most of this decline occurred in Newfoundland

and Labrador as Nova Scotia’s population increased from 931,235 to

945,400. The population of New Brunswick and Prince Edward Island

also increased.

Halifax Regional Municipality (HRM) is the largest population and service

centre in Atlantic Canada. HRM has produced strong economic

performance and is the major contributor to Nova Scotia’s economy.

Between 1996 and 2011, the number of people employed in HRM

increased by 65,800 or 38% from 172,100 to 237,900 and

unemployment declined from 8.6% to 6.3%. Provincially, total

employment increased by 67,800 or 18% from 385,000 to 452,800 while

unemployment declined from 12.6% to 8.8%.

Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA

KEY INDICATORS - 1996 and 2011

Halifax Regional Municipality Nova Scotia

1996 2011 1996 2011

Total Population 341,500 408,198 931,200 945,400

Employed Labour Force 172,100 237,900 385,000 452,800

Unemployment Rate 8.6% 6.3% 12.6% 8.8%

Labour Force Participation Rate

67.5%

70.3%

59.8%

63.7%

Sources: Nova Scotia Department of Finance – Economics Indicators (May 2012); Greater Halifax Partnership (July 2012); Statistics Canada CANSIM Tables 051-0046 (July 2012).

Exhibit 1.9

ATLANTIC CANADA POPULATION - 1996 to 2011

Province 1996 2011 Change Newfoundland & Labrador 560,584 510,600 -49,984PEI 136,188 145,900 +9,712 Nova Scotia 931,235 945,400 +14,165 New Brunswick 752,995 755,500 +2,505 TOTAL 2,381,002 2,357,400 - 23,602 Source: Statistics Canada, Population Estimates & Projections, CANSIM Table 051-0001 (September 2011).

A key factor influencing air

traffic demand, and hence

economic impacts, is the

strength of the Nova Scotia

and Atlantic Canada

economies. In 2011, GDP

growth was 0.3% in Nova

Scotia, 2.8% in

Newfoundland and Labrador,

1.1% on PEI and 0.1% in

New Brunswick.


28

2 Study Approach 2.1 Introduction

This section presents the approach used to calculate the impacts of

HSIA on HRM and Nova Scotia. These methods, and the terminology

used in the 1992 report and updates, are also summarized in this

section.

2.2 Economic Impact

To establish a framework for measuring the economic impacts of HSIA,

the following were defined:

The types of economic activity being considered.

The study area.

The units of measurement of economic impact used.

The methods used to measure or estimate economic impact.

The types of economic activity related to HSIA are classified into three

categories: direct, indirect and induced.

Direct Economic Activity

This activity refers to airport-related activity of those firms or industries

for which aviation or airport activity is a portion of total business activity.

These businesses can be divided into three groups: those with primary

linkage to the airport (generally aviation-related); those with a secondary

linkage (generally not aviation-related); and the aerospace sector.

Primary linkage businesses or organizations include those listed below.

Many of the primary linkage businesses are located at the airport.

Air Carriers: This refers to companies offering scheduled air

service within Nova Scotia (local), scheduled or charter air

service to other points in Atlantic Canada and Canada (regional

or national) or to transborder (U.S.) or international

destinations.

General Aviation: This refers to companies engaged in charter

air operations, corporate aviation operations and aviation-

related organizations or educational institutions.

The economic activity at HSIA is calculated by direct, indirect and induced impacts.


29

Air Support Services: This refers to companies whose business is

primarily or wholly aviation-related, or who provide direct support to air

carriers or general aviation businesses. Air support services include:

Customs brokers, couriers or freight forwarders (i.e., cargo

operations)

Flight catering services

Fuelling services

Sales, rentals or aircraft leasing businesses

Parts and maintenance services

General services (such as fixed base operators)

Airport Operations and Administration: This category includes HIAA,

NavCanada, CATSA, Canada Border Services Agency, Public Health

Agency of Canada, RCMP (Airport Detachment), U.S. Customs and

Border Protection Services and other government functions that are

involved in the direct operation of the airport or which provide support

services at the airport. Excluded from the impact analysis are volunteers

at the Air Terminal Building.

Secondary linkage businesses include:

Commercial Services: These include aviation-related retail and personal

service businesses operating at the airport.

Ground Transportation: These include car rental, taxi and limousine

service, and bus transportation operations that service the airport. The

main offices for these businesses are both on-site and off-site.

Tourist/Travel/Hotel Industry: This group of secondary

linkage businesses includes travel agencies, tour operators,

hotels/motels, and other food and beverage operators who

provide service to passengers travelling by air for business

or pleasure.

Indirect Economic Activity

Direct economic activity is accompanied by indirect and

induced economic activity. Indirect economic activity refers

to activity generated in a sector that supplies raw materials

and other inputs to businesses associated with direct

economic activity (as listed above). Indirect activity occurs

as a result of direct activity. The terms "direct" and "indirect"

depend on the chosen reference point. Any inter-relationships between

the businesses included under the heading Direct Economic Activity and

those included under Indirect Economic Activity were taken into

consideration in the 1992 impact analysis and the updates.


30

Induced Economic Activity

Induced economic activity refers to that economic activity generated by

individuals employed in the direct or indirect activity sectors who spend a

portion of their household income on consumer goods.

Measures of indirect and induced activity show the effect that the direct

expenditures have as they “ripple” through the economy. The measure is

referred to as the multiplier effect.

2.3 Study Area

The total economic activity and impacts are defined for a specific

geographic area or regions. For the 2011 update, economic activity and

impacts are analyzed for the following regions:

Local Economy (Halifax Regional Municipality)

Regional Economy (Province of Nova Scotia)

2.4 Economic Impacts Measured and Methods of Measurement

Three measures of the airport’s economic impact on HRM and Nova

Scotia are defined as follows:

Economic Output or Gross Revenue: This measure is determined in

terms of total gross revenue from all airport-related activity, and those

same total gross revenues, less any revenue transferred from one

airport-related activity (primary or secondary) to another airport-related

activity.

Employment: This measure is defined as the total amount of full-time

equivalent (FTE) employment created by airport activity (excluding

volunteers).

Wages and Salaries: This measure is defined as the total amount of

wages and salaries created due to airport activity.

Direct, indirect and induced economic impacts associated with the above

three measures of economic activity were calculated as follows:

Direct Economic Impact: In terms of economic output, employment,

wages and salaries were obtained by means of surveys of airport

tenants. Current and past survey results and other data sources were

used to arrive at the final economic impact values.

Positive economic impacts are defined under economic output or gross revenue, employment, wages and salaries, retail sales, the aerospace cluster, construction activity and tourist expenditures.


31

Indirect and Induced Economic Impact: In terms of economic output,

employment, wages and salaries were estimated by means of economic

multipliers. The multipliers used in this report are the same as previous

updates.

In addition to the three measures, other economic impacts were

determined. ATB retail and concession sales, the aerospace cluster at

HSIA and the adjacent AeroTech Business Park, construction activity

and tourists accessing Nova Scotia at the airport were also identified.

These impacts are assessed separately and represent major

contributions to the economy of Nova Scotia.

The research methodology used by Nova Scotia Economic and Rural

Development and Tourism was applied to determine the jobs and payroll

impacts (direct and spin off) of tourists entering Nova Scotia through the

airport. This model also isolated government taxes from these tourist

expenditures. For the aerospace cluster, the economic impact

approaches used at other aerospace concentrations in Canada and the

U.S. were applied. This approach provides a general indication of

expected impacts and maintains the confidentiality of the few large

aerospace firms operating around the airport.

2.5 Fiscal Impact

The fiscal impact measures include the following:

Personal Income Taxes: This measure refers to the personal income

taxes paid to the Province of Nova Scotia by individuals employed due to

airport activity. This impact was calculated from sources like Statistics

Canada’s financial management system.

Retail Sales Taxes: This measure refers

to retail sales taxes created by

purchases of retail goods and services

by individuals who earn wages and

salaries due to their employment

stemming from airport activity. In 2011,

the HST rate in Nova Scotia was 15%

(5% federal part and 10% provincial

part).

Fiscal impacts are measured for the same study area and in a similar

fashion as economic impacts in terms of direct, indirect and induced

activity.

Fiscal impacts are defined under personal income taxes, retail sales taxes and municipal taxes. No impact multipliers (spinoffs) are applied to municipal taxes.


32

3 Economic Impacts 3.1 Introduction

The data gathered from the survey were combined with other sources, as

outlined in Section 2, to develop updated estimates of total economic

impacts in terms of:

Economic Output

Employment

Wages and Salaries

For each type of economic impact indicator listed above, the data have been

used to estimate the economic impacts attributed to HRM and Nova Scotia.

At the time of the survey program in mid-2011, over 100 firms were located

at HSIA. For each indicator of economic impact in the 1992 study, a sample

of organizations by type were surveyed. The resultant figures derived from

the surveys (and used for this update) were scaled up to represent the full

population at the airport.

3.2 Economic Output

The first measure of

economic impact is

total economic output.

This measure is also

referred to as gross

revenue. Economic

impacts related to the

airport, in terms of

economic output for

HRM and Nova

Scotia, are

summarized in Exhibit

3.1. The economic impact is separated into direct, indirect and induced. The

direct effects are the same for both HRM and Nova Scotia because all direct

economic output takes place at the airport which is located in HRM.

Exhibit 3.1 shows that HSIA's total economic output for the economy of HRM

is $746 million. This is composed of $410 million of direct output, $110

million of indirect output and $226 million of induced output.

Exhibit 3.1 further shows that the airport's total economic output for the Nova

Scotia economy is $1.26 billion. This is composed of $410 million of direct

output, $258 million of indirect output and $592 million of induced output.

HSIA is a major economic engine for HRM and Nova Scotia that continues to grow and provide high value employment.


33

Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT –

GROSS OUTPUT (MILLIONS) IN 2011

Direct Indirect Induced Total Halifax Regional Municipality

$410.0

$110.0

$226.0

$746.0

Province of Nova Scotia

$410.0

$258.0

$592.0

$1,260.0

3.3 Employment

Employment is another measure of economic impact and is presented as

full-time equivalent (FTE) jobs. The figures shown in Exhibit 3.2 are year-

end averages and not peaks, and they include estimated off-site and on-site

employment related to the airport.

Exhibit 3.2 presents the

estimated total employment

impact of the airport on HRM.

For 2011, 8,100 full-time

equivalent direct and spinoff

jobs were created in HRM due

to airport activity. There were

237,900 FTE employed people

in HRM during 2011 so the

airport accounted for 3.4% of

the total. Direct employment from airport activity is estimated at 5,260 FTE

jobs, indirect employment represents 1,260 FTE jobs and induced

employment accounts for another 1,580 FTE jobs. Total employment was

slightly lower than 2010 levels because of adjustments in the aerospace

sector and some smaller service providers. The result is direct and spinoff

employment declined by 215 FTE jobs.

Exhibit 3.2 also shows that the Nova Scotia employment impact from airport

activity is estimated at 12,040 FTE jobs. The number of FTE employed

people in Nova Scotia in 2011 was 452,800 with the result being airport

activity accounted for 2.7% of the employment in Nova Scotia. The direct

employment created by the airport in Nova Scotia was 5,260 FTE jobs,

indirect employment was 2,890 FTE jobs, and induced employment was

3,890 FTE jobs.


34

Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2011


5,260 1,260

1,580 8,100

Province of Nova Scotia 5,260 2,890

3,890 12,040

3.4 Wages and Salaries

Wages and salaries are another measure of economic impact. The direct

wages and salaries are based on the 1992 study and update results.

Indirect and induced wages and salaries were determined by multiplying the

number of jobs in each category by the average annual Nova Scotia wage in

2011 ($39,913).

Exhibit 3.3 contains the wage and salary impact of the airport on HRM and

Nova Scotia in 2011. The total wages and salaries created by airport activity

in HRM amounts to $323.3 million. The direct wage and salary portion is

$209.9 million, the indirect impact is $50.3 million, and the induced impact is

$63.1 million.

Exhibit 3.3 also presents the total wage and salary impact of HSIA on Nova

Scotia for 2011. This impact is $480.6 million.

Exhibit 3.3

HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2011


$209.9

$50.3

$63.1

$323.3


$209.9

$115.4

$155.3

$480.6


35

3.5 Renovation and New Construction Impact

Capital Improvements Since 2000

After the 2000 transfer of the facility from Transport Canada, HIAA and

tenants have invested approximately $450 million in new capital

(development) projects and the maintenance of capital. These projects

represent over 70% of the total capital improvements at airports in Atlantic

Canada, and confirm HSIA’s dominant position in both the air passenger and

air cargo segments.

Using an average annual Nova Scotia construction wage of $39,030 for this

period, these projects generated 7,565 FTE jobs. The direct job portion of

this total is 4,610 FTE jobs. They also contributed $284 million in wages and

salaries with the direct portion being $180 million.

To prepare for the next phase of capital development, HIAA completed an

updated Master Plan in 2011. HIAA budgeted capital projects for 2011 and

planned future spending to 2016 are listed below.

2011 - $21.8 million

2012 - $81.6 million

2013 - $44.6 million

2014 - $12.9 million

2015 - $39.1 million

2016 - $31.1 million

From 2011 and future years, an additional $300 million is expected to be

spent on capital projects by HIAA and tenants. This level of investment does

not include the ‘Airport City’ element of the Updated Master Plan that could

result in significantly more capital projects. Applying the 2011 average Nova

Scotia construction wage of $46,640, future expenditures of $300 million will

provide 4,220 FTE jobs and $190 million in wages and salaries.


36

3.6 Tourist/Visitors Impacts

Tourism plays a significant role in Nova Scotia. Nova Scotia Economic and

Rural Development and Tourism has an economic impact model that

calculates the impacts of the sector on the provincial economy. Outputs from

this model for 2008 (most recent data) show that tourism is a $1.82 billion

industry that generates 31,700 direct and spinoff jobs and provides $795

million in household income.

From 2008 to 2011, the number of visitors to Nova Scotia decreased by

6.1% from 2,079,800 to 1,953,600. This indicates that the findings of the

2008 tourism economic impact model are a reasonable indicator of

conditions in 2011 when shifts between modes of transportation and inflation

are considered.

Between 2010 and 2011, tourism visitation to Nova Scotia increased slightly

year-over-year. Growth occurred in the air visitors segment (up 9% to

655,900) and motorcoach visitor segment (up 35% to 65,000) while declines

occurred in the automotive segment (down 5% to 1,184,000) and recreation

vehicle segment (down 14% to 49,000).

Between 2010 and 2011, domestic volume was up 10%, transborder 3% and

overseas 12%. The air segment in 2011 represents 34% of all visitors.

Visitors who enter Nova Scotia at HSIA tend to stay longer and spend more

money than other segments. The result is air visitors to Nova Scotia account

for 37% of the sector impacts. Exhibit 3.4 shows that tourists accessing

Nova Scotia at the airport contributed an estimated $675 million towards

tourism revenues in 2011. They also generated an estimated 11,775 jobs

(direct and indirect), $120 million in total taxes and $295 million in payroll.

Exhibit 3.4

HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR TRAVELERS ENTERING NOVA SCOTIA IN 2011

Indicator

Total – All Tourists

Tourists Entering Nova Scotia At HSIA

Tourism Revenues

$1.82 billion

$675 million

Jobs: Direct and Spinoff

31,700

11, 775

Payroll: Direct and Spinoff

$795 million

$295 million

Total Taxes: Provincial and Federal

$324 million

$120 million

Sources – Chris Lowe Group estimates based upon 2008 to 2011 tourism industry data, and Tourism Economic Impact Model, Nova Scotia Economic and Rural Development and Tourism.


37

3.7 ATB Retail Sales Impacts

HIAA collects data on gross sales for

retailers in the ATB and other

concessions. As outlined in Exhibit 1.6,

these sales in 2011 exceeded $80.57

million. Sales have increased over the

past decade due to increased visitor

traffic and the ATB Centre Core Retail

Expansion Project (Airport Square),

which added to the retail base.

3.8 Aerospace Cluster Impacts

IMP Aerospace and tenants at the adjacent AeroTech Business Park

comprise an aerospace cluster with 1,360 employees in 2011. The major

aerospace tenant at AeroTech is Pratt & Whitney Canada with 350

employees.

According to the Aerospace Industries Association of Canada (AIAC), in

2011 this sector had $22.4 billion in revenues and created 87,230 direct jobs

nation-wide. Exports make up 73% of revenues with 77% of total sales

generated from the civil aviation sector and the remainder from military

contracts. The sector has a positive impact with high paying jobs and

investments in capital, and research and development. During 2011,

investments in capital totaled $1.4 billion while research and development

expenditures were $2.0 billion.

Applying the approaches used by AIAC, the U.S. Department of Commerce,

the U.S. Aerospace Industries Association and the University of Manitoba’s

Transport Institute, general impacts of the local aerospace cluster were

estimated. These estimates rely upon secondary sources and industry-wide

norms to maintain confidentiality of local firms.

Applying the above sources and information on local aerospace firms, the

local sector had expenditures of $397 million in 2011. The direct and spinoff

jobs are 2,720, and wages and salaries are $153 million. A portion of these

positive impacts is included in the economic and fiscal impacts for the airport.


38

Exhibit 3.5 AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011 ECONOMIC IMPACTS

Indicator Direct Total (Direct & Spinoff) Expenditures

$218 million

$397 million

Employment (FTE)

1,360

2,720

Labour Income

$87 million

$153 million

Sources – Chris Lowe Group estimates based upon Canadian Aerospace Industry Performance 2011, Aerospace Industries Association of Canada; U.S. Bureau of Labor Statistics; U.S. Aerospace Industries Association estimates (2007); Economic Impact Study of Southport Aerospace, The University of Manitoba Transport Institute, 2006.


39

4 Fiscal Impacts 4.1 Introduction

The 1992 survey and updates are the primary sources for estimating the

fiscal impact of the airport on HRM and Nova Scotia during 2011. Statistics

Canada and Nova Scotia Department of Finance data were also used.

These sources were drawn upon to estimate total fiscal impacts in terms of:

Personal and Consumption Taxes (Provincial)

Retail Sales Taxes

4.2 Personal and Consumption Taxes (Provincial)

The percentage of wages and salaries paid to the Province of Nova Scotia

was calculated using estimates of the personal income and consumption

taxes (provincial) created due to airport activity. According to the Nova

Scotia Department of Finance, in the range of 12% of total Nova Scotia

personal income went towards personal income and consumption taxes in

2011. By multiplying this average personal income tax rate by the wages

and salaries specified in Section 3, the personal income tax impacts on the

Province can be determined.

Exhibit 4.1 summarizes the 2011 personal income and consumption tax

impacts of HSIA activity on HRM and the Province of Nova Scotia. The total

personal income and consumption taxes resulting from airport activity in

HRM amounts to $38.8 million. This consists of $25.2 million in direct

personal income and consumption taxes, $6.0 million in indirect taxes and

$7.6 million in induced taxes. The exhibit also shows that the total personal

income and consumption taxes created by airport activity on the Province of

Nova Scotia amounted to over $57 million.


PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2011

Direct Indirect Induced Total

Halifax Regional Municipality

$25.2

$6.0

$7.6

$38.8


$25.2

$13.9

$18.6

$57.7


40

4.3 Retail Sales Tax (HST)

Another fiscal impact measure of HSIA activity is sales taxes generated by

the purchase of retail goods by those who are employed due to airport

activity.

In the range of 35% of personal income is spent on retail trade goods and

services. By multiplying the wages and salaries from Section 3 times this

value, the amount of retail sales generated by airport activity is determined.

By multiplying this figure by the HST rate, the retail sales tax impact of airport

activity can be isolated. The 2011 rate in Nova Scotia was 15% (5% federal

part and 10% provincial part).

Exhibit 4.2 reveals the retail sales tax impact of airport activity on HRM and

Nova Scotia. This exhibit shows that $16.9 million in retail sales taxes were

created due to airport activity in HRM. Province-wide, $25.3 million in retail

sales taxes were generated due to airport activities.

Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES (MILLIONS) IN 2011


$11.0

$2.6

$3.3

$16.9


$11.0

$6.1

$8.2

$25.3

4.4 Commercial Property and Business Occupancy Taxes

In 2011, the total value of taxes paid to HRM was $3,838,408 or an increase

of 6.6% from 2010. Of this total, $2,448,984 was paid by tenants and the

remaining $1,389,424 by the Authority.


41

5 Conclusions Halifax Stanfield International Airport (HSIA) is one of 26 airports in Canada’s

National Airports System and ranks as one of the world’s premier airports. In

2011, HSIA accommodated a record 3,594,164 passengers or over half of all

passengers in Atlantic Canada. It has a multi-province catchment area and

functions as a major economic and employment generator, and aerospace

cluster, for Halifax Regional Municipality and Nova Scotia. In 2011, HSIA

provided direct and connecting passenger and cargo service by 18

passenger carriers and 12 cargo carriers to destinations in Canada, the

United States, the Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe with

operating cash flows not returning to pre-recession levels until late 2010.

Although Nova Scotia’s economy is 75% based upon service industries that

did not experience the same economic downturn as other regions, the

recovery has been slow. In 2011, Nova Scotia’s gross domestic product

(GDP) increased by 0.3% after growth of 1.6% in 2010. The slowing growth

is attributed mostly to the goods producing sectors that declined by 4%, and

less construction as government stimulus spending was ending and

construction on the Deep Panuke offshore project was nearing completion.

The result on the transportation and warehousing sector was growth of 0.9%.

In comparison to the rest of Atlantic Canada, GDP growth in 2011 was 2.8%

in Newfoundland and Labrador, 1.1% on Prince Edward Island and 0.1% in

New Brunswick.

Against this economic setting, 2011 was a year of achievements at HSIA that

included:

a major international award;

record setting passenger levels;

the funding and commencing of construction of a runway extension

program that will diversify and expand passenger and cargo traffic; and

an updated Master Plan to 2030.

Cargo operations benefitted from the opening of a 40,000 square foot multi-

tenant cargo facility in June 2010 and will further benefit from the extension

of Runway 05/23. The $15 million facility is operated by Gateway Facilities

ULC and contains 7,000 square feet of climate controlled space that allows

for fresh seafood to be directly shipped to Europe and beyond. It is the

largest refrigerated space with direct airside access north of Miami, Florida.

In 2011, 29,263 metric tonnes of cargo was processed through HSIA

representing a 2.9% increase from 2010.


42


Aerospace and Air Canada Jazz has allowed overall airport-related

employment to remain stable in recent years. The major contributor to the

airport’s economic base is IMP Group with many of this firm’s employees

involved in multi-year civilian or military service contracts. This operating

environment also exists for Pratt & Whitney Canada and L-3

Communications Electronic Systems in the adjacent AeroTech Business

Park. These multi-year service contracts resulted in some staff reductions or

re-deployments in 2011 while most other airport operations either retained or

increased employment levels.

In 2011, HSIA contributed $1.26 billion to the Nova Scotia economy and

provided 12,040 full-time equivalent (FTE) jobs with wages and salaries of

$480.6 million. These employees contributed $57.7 million to the Province of

Nova Scotia in terms of personal and consumption taxes and $25.3 million in

retail sales taxes. Beyond the economic and fiscal impacts listed in the following exhibit,

renovation and new construction projects, tourists entering Nova Scotia at

HSIA and a cluster of aerospace businesses that includes the adjacent

AeroTech Business Park provide further positive local and provincial

spinoffs. From 2000 to 2011, over $450 million was spent at the airport on new capital

(development) projects and the maintenance of capital. These projects

represent over 70% of the total capital improvements at all airports in Atlantic

Canada and created 7,565 FTE jobs and contributed $284 million in wages

and salaries. HIAA’s Capital Plan to 2017, the new 169 room boutique hotel

and other expected future tenant projects, will require an additional $300

million to be spent. These planned projects will require 4,220 FTE jobs and

generate $190 million in wages and salaries. Tourism is a $1.82 billion industry in Nova Scotia based upon the most

recent provincial government statistics. There were 1.954 million visitors to

Nova Scotia in 2011 with 34% arriving via air at HSIA. Air visitation

increased by 9% from 2010 while total visitation to Nova Scotia was down

slightly. Tourists entering Nova Scotia at HSIA tend to stay longer and

spend more money as they contributed an estimated $675 million to the

Nova Scotia economy or 37% of all tourism-related activity. Tourists arriving

by air at HSIA generated an estimated 11,775 jobs (direct and spinoff), $120

million in total taxes and $295 million in payroll. IMP Aerospace and tenants at the adjacent AeroTech Business Park are an

aerospace cluster with 1,360 employees in 2011. This cluster has estimated

direct and spinoff expenditures of $397 million. The direct and spinoff jobs

are 2,720 and wages and salaries are over $150 million.


43

Exhibit 5.1

COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011

Impact

2000

2005

2011

% Change:

2005 to 2011

Total Gross Output Halifax Area Nova Scotia

(Millions)

$614.1 $1,035.1

(Millions)

$683.3 $1,152.8

(Millions)

$746.0 $1,260.0

+9.2% +9.3%

Total Employment Halifax Area Nova Scotia

7,495 11,000

7,870 11,625

8,100 12,040

+2.9% +3.6%

Wages and Salaries Halifax Area Nova Scotia

(Millions)

$196.7 $289.2

(Millions)

$260.3 $384.6

(Millions)

$323.3 $480.6

+24.2% +25.0%

Personal and Consumption Taxes (NS) Halifax Area Nova Scotia

(Millions)

$29.7 $43.7

(Millions)

$35.1 $53.5

(Millions)

$38.8 $57.7

+10.5% +7.9%

Retail Sales Tax Halifax Area Nova Scotia

(Millions)

$10.2 $15.0

(Millions)

$13.7 $20.2

(Millions)

$16.9 $25.3

See Note

Note: Comparisons cannot be made because of changing tax definitions and rates.

Halifax Stanfield International 2011 Airport Economic Impact Report

halifax stanfield international 2011 airport economic impact...generator for halifax regional...

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