INDUSTRY REVIEW
Page 7
Regina International Market Intelligence Report
WHERE ARE FUEL PRICES GOING? Current crude oil prices are high for two reasons… Crude oil prices have risen steadily in the past few months mainly due to two factors in the global market. Threat of War with Iraq The threat of war in the Middle East has been growing in recent weeks with the U.S. and Britain building a military presence in the Middle East. This war threat in the world’s largest oil producing region is creating uncertainty regarding short-term supplies, driving prices up. General Strike in Venezuela Venezuela is the world’s 3 rd largest oil producer. Currently, 13% of all crude oil imports to the U.S. are from Venezuela. A general strike began in Venezuela on December 2, 2002 with oil workers joining in 2 days later. This is the fourth general strike for the country in the past year due to the ongoing political conflict between President Hugo Chavez and the country’s business elite. The lack of oil production in Venezuela has constrained global oil supplies, impacting prices.
…But the outlook is for lower prices Crude Oil Futures Prices As of January 10, 2003 $33 $31 $29 $27 $25 $23 $21 $19 $17 $15
Spot prices are high.
But the market expects prices to fall.
Oc t-2 00 4 Fe b-2 00 5 Ap r-2 00 5 Ju n-2 00 5 De c-2 00 6 De c-2 00 8
OPEC Action Spot oil prices closed January 10 at $31.68USD, a two-year high. On January 12, the Organization of Petroleum Exporting Countries (OPEC) announced an increase in oil production of 1.5 million barrels per day to 24.5 million barrels. OPEC has done this in an attempt to stabilize and bring down oil prices.
Price Per Barrel
Senior Market Analyst
Fe b20 03 Ap r-2 00 3 Ju n-2 00 3 Au g-2 00 3 Oc t-2 00 3 De c-2 00 3 Ap r-2 00 4
Doris Mak
Month of Delivery
Prices Expected to Decline Below $25 per Barrel by Year End The futures market shows the price of crude oil falling to below $25 per barrel by the end of the year. The market expects that the two current issues affecting the price of oil will not permanently shift the price of oil to higher levels. On January 10, 2003, the futures price for a barrel of crude oil for delivery in January 2004 is $24.78, 22% lower than the spot price per barrel.
Page 1
January 2003
AIRLINE PERFORMANCE Traffic and Load Factors on Canada’s Major Air Carriers – December 2002 Air Carrier
Jetsgo: Zip:
78.0% not reported
CanJet:
not reported
Load Factor
% Change over 2000
% Change over 2001
% Change over 2000
% Change over 2001
% Change over 2000
-0.6%
-3.0%
+2.5%
-7.9%
-2.1 pts (to 70.0%)
+3.5 pts
Domestic
-8.9%
-6.8%
+0.6%
-3.0%
-7.1 pts (to 67.4%)
-2.8 pts
International & Charter
+3.5%
-1.4%
+3.4%
-9.9%
+0.1 pts (to 71.1%)
+6.1 pts
+57.5%
136.0%
-3.2 pts (to 72.1%)
-0.8 pts
+50.9%
WestJet
+133.5%
The following graphs highlight the year-over-year change in Air Canada’s mainline domestic and international passenger traffic and capacity.
US MAJORS LOAD FACTORS
Air Canada International International
Air Air Canada Canada Domestic Domestic
25%
US Airways: 72.4% Northwest Airlines: 76.9% Delta Airlines: 74.3% American Airlines: 63.0% United Airlines: 75.9% Southwest Airlines: 66.0% JetBlue Airways: 84.8%
Capacity Available Seat Kilometres
% Change over 2001
Air Canada 1
NEW CARRIERS: LOAD FACTORS
Passenger Traffic Revenue Passenger Kilometres
25%
20%
20%
15%
15% 10%
10% Dom RPK
5%
Dom ASK
0%
Int'l RPK
5%
Int'l ASK
0% -5%
-5% -10% -15% J a n - Feb Mar 02
A p r May
Jun
Jul
Aug
Sep
Oct
December 2002 RPKs are 1.4% below December 2000 levels
-10%
December 2002 RPKs are 6.8% below December 2000 levels
-15% Nov
Dec
Jan- Feb 02
Mar
A p r May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Air Canada’s domestic traffic continues to weaken relative to a year ago. Because capacity grew slightly during December, this resulted in a huge drop in its load factor, from 74.5% in 2001 to 67.4% in 2002. Things were better on the transborder sector, with traffic up 6.2%. But with too much capacity deployed, load factors were 64.4%, even worse than on the domestic sector. WestJet continues to experience strong WestJet 80% traffic growth as it adds aircraft to its fleet. 70% 60% However, in 10 of the 12 months in 2002, 50% growth in demand was several percentage 40% points less than capacity growth, bringing 30% 20% its load factors down. This is consistent 10% with having exploited the most lucrative 0% markets in the past. Adding new aircraft today will be increasingly challenging, especially as it faces more aggressive competition from Zip, Tango and Jazz. Jan02
1
Feb
Mar
A p r May
Jun
Jul
Aug
Sep
Oct
RPK ASK
Nov
Dec
Air Canada Mainline consists of all Air Canada with the exception of Jazz.
Page 2
January 2003
AIR CANADA’S TRAFFIC NUMBERS 13 January 2003 With Air Canada’s introduction of Zip, Jazz, Tango and Jetz, it is often confusing as to which brands and subsidiaries are included in Air Canada’s traffic statistics. To add to the confusion, Air Canada’s traffic results are reported in two different publications. On a monthly basis, Air Canada reports its “mainline” traffic results, which include Air Canada’s trunk routes, as well as Tango, Zip and Jetz. The mainline results do not include Jazz, which comprises roughly 5% of Air Canada’s total capacity in third quarter 2002. In its quarterly financial results, Air Canada reports both its “mainline” and consolidated traffic statistics. Air Canada’s “consolidated” results consist of the entire Air Canada family, including Jazz. Air Canada Traffic Comparison - Third Quarter 2002
Jane Ha Senior Marketing Analyst
“Mainline”
Consolidated
Timing
Monthly, Quarterly
Quarterly
Source
Traffic press releases
Financial reports
Inclusion
Trunk plus Tango, Zip, Jetz Excludes Jazz
All Air Canada
In its third quarter 2002 financial report, Air Canada reports a 3.8% increase in consolidated passenger traffic. This compares to a 4.9% increase in Air Canada’s mainline traffic during the third quarter of 2002. The discrepancy can be attributed to a substantial (and hidden) 22.5% decrease in passenger traffic on Air Canada’s subsidiary, Jazz. Jazz’ substantial traffic decline is in line with Air Canada’s service reductions to small communities that are no longer profitable. Air Canada Traffic Comparison - Third Quarter 2002 Mainline Air Canada Monthly, Quarterly Jul-02
Aug-02
Sep-02
Q3-02
-0.8%
+0.5%
+19.0%
+4.9%
Consolidated Air Canada Quarterly Q3-02 +3.8%
Note: Passenger traffic is measured in Revenue Passenger Kilometres (RPKs). Air Canada representatives claim that Air Canada is investigating a more clear and concise means of reporting its traffic results.
Page 3
January 2003
AIRPORT TRAFFIC Summary of Total Passenger Traffic Performance at Selected Airports – 2002* Edmonton
Calgary
Vancouver
MontrealDorval
-20.1%
-11.8%
-4.3%
-10.3%
-15.2%
-5.6%
-12.1%
-4.4%
-11.4%
-3.0%
-8.5%
-17.2%
-12.0%
+1.1%
-9.2%
-12.4%
-16.4%
-6.8%
-9.1%
-10.1%
-0.1%
-7.8%
-7.6%
-12.4%
-11.4%
-2.0%
-7.0%
-13.1%
-17.2%
-6.5%
+16.5%
-12.9%
-3.0%
-7.5%
-6.7%
-16.5%
-11.7%
-1.8%
-8.8%
-13.6%
-13.6%
-8.4%
-10.3%
-11.5%
-2.1%
April
-12.6%
-13.4%
-9.3%
-8.1%
-5.2%
-9.2%
-13.5%
-12.3%
-6.4%
+7.9%
-13.1%
-5.7%
May
-7.2%
-3.0%
-5.7%
-4.9%
-2.3%
-9.3%
-9.5%
-4.7%
-5.1%
+9.7%
-11.4%
-3.8%
June
-13.2%
-9.7%
-6.0%
-7.0%
-4.0%
-7.4%
-9.8%
-1.2%
-7.4%
-1.8%
-12.3%
-8.8%
2nd
-11.1%
-8.7%
-6.9%
-6.7%
-3.8%
-8.6%
-10.9%
-6.0%
-6.3%
-11.9%
-12.3%
-6.1%
July
-13.0%
-9.5%
-5.1%
-9.4%
-3.6%
-7.2%
-8.3%
+4.4%
-13.1%
+22.1%
-6.6%
-6.3%
August
-10.5%
-13.6%
-2.8%
-7.5%
-2.3%
-7.7%
-7.9%
+7.5%
-8.8%
+3.9%
-8.8%
-1.7%
September
+10.5%
+12.6%
+16.4%
+7.6%
+20.1%
+12.6%
+22.4%
+26.1%
-13.2%
-17.4%
+23.7%
+11.8%
-5.8%
-5.4%
+1.2%
-4.4%
+2.9%
-2.5%
-0.2%
+11.2%
-4.8%
-0.8%
+23.7%
+0.2%
October
+4.4%
+1.7%
+5.9%
-0.1%
+14.3%
+12.5%
n/a
+7.9%
+0.1%
-1.9%
+6.4%
+5.7%
November
+1.2%
+0.2%
+5.7%
+9.4%
+0.6%
n/a
n/a
+5.7%
+0.1%
-16.7%
+3.0%
-1.4%
December
+3.2%
+1.5%
+15.2%
n/a
n/a
n/a
n/a
+8.1%
n/a
n/a
n/a
+4.3%
4th Quarter
+3.0%
+1.1%
n/a
n/a
n/a
n/a
+7.3%
n/a
n/a
n/a
+3.0%
2002
Regina
Saskatoon
January
-8.4%
-4.0%
February
-6.2%
March 1st
3rd
Quarter
Quarter
Quarter
Winnipeg
n/a
Halifax
Victoria
St. John’s
Ottawa
Kelowna
* Toronto does not report monthly or quarterly traffic levels. Page 4
January 2003
ECONOMIC OUTLOOK 10 January 2003
Canada: higher interest rates? Canada's economy remains the strongest performer of the G7 economies and indeed in the industrialized world. Inflation is catching up with us though. The Bank of Canada’s current measure of core inflation accelerated to 3.1% – a rate just outside of the target range of one to three percent. The traditional response to an increase in inflation is to increase the interest rate. While the Bank of Canada held the overnight lending rate steady at 2.75% in December, there is a good chance we will see a rate hike in the next announcement (set to take place on January 21st). Some analysts now claim that Canadian GDP growth will weaken slightly from its current 3.5% pace to 3% growth in 2003. We will have to wait and see what the forecasters say after the fourth quarter 2002 GDP growth announcement is made on February 28th. The U.S.: respectable growth. Popular indicators of the current health and future prospects in the U.S. economy in December were encouraging. Automobile sales were unexpectedly strong, consumer confidence was up and the manufacturing economy seemed to rally. The growth forecast for the U.S. economy is for a respectable 3% rate of growth for 2003.
Allison Padova Manager Economic Services
Further improvement in the University of Michigan Consumer Sentiment Index (www.sca.isr.umich.edu) suggests that in spite of impending war with Iraq, consumers are optimistic about the state of the economy. Also in December, the Institute for Supply Management’s US Production Index (www.ism.ws) posted a 5.5 100 60 percentage point increase over November. This 95 55 indicates that the manufacturing economy 90 50 finally showed signs of an increase in activity after the decline which began in the 85 45 summer. The Institute for Supply Management 80 40 concluded that the manufacturing economy 75 35 had turned the corner, from t l 2 Oct Nov Dec n-02 Feb Mar Apl May Jun Ju Aug Sep Oc Nov c-02 contraction into expansion, pt-0 Ja De 'Se in December 2002. Consumer Confidence
It looks like the U.S. will avoid a double-dip recession.
Page 5
Production Index
Sources: University of Michigan and The Institute of Supply Management
January 2003
NEWS ARTICLES AIR CANADA UPDATE AIR CANADA FLIGHT ATTENDANTS REACH NEW DEAL
After a year of mediated negotiations, Air Canada’s 8,500 flight attendants have accepted a contract that will give them better pay, improved pensions and increased job security. This is the first collective agreement to cover all Air Canada flight attendants since the merger with Canadian Airlines two years ago.
AIR CANADA GAINS $300M FROM LOWER INTEREST RATES
Air Canada has completed two financial transactions that will result in a $300 million gain. The first replaces perpetual debt of 20 billion yen (C$265 million) with debt that carries a 25-year term at a lower interest rate saving Air Canada C$150 million. The second involves leases on 16 planes which will allow the carrier to realize C$150 million in additional cash.
AIR CANADA SEAT SALE
Air Canada and Air Canada Jazz have announced a system-wide seat sale with fare reductions of up to 30% for the New Year. The seat sale is in effect January 3-20, 2003 for travel as late as April 30, 2003.
AIR CANADA ISSUES INTERNET FARES
Air Canada will offer reduced regular Internet fares of up to 70% under an agreement reached with the Quebec government for the continuation of service by Jazz throughout Quebec.
OTHER CANADIAN AIRLINES JETSGO BOXING WEEK SALE Jetsgo announced a 2-for-1 Boxing Week promotion where the second person flies for only the cost of taxes and surcharges. The sale was in effect December 24-31, 2002 for travel between January 8 and February 28, 2003. Jetsgo officials were adamant that this was merely to Page 6
stimulate traffic and did not signal liquidity problems.
JETSGO BOOSTS CAPACITY
Effective January 13, Jetsgo will offer 20 weekly flights, up from 14 on its TorontoWinnipeg route.
ZIP EXPANDS SERVICE
Effective February 2, 2003, Zip will expand service to Ottawa, Montreal, Victoria and Abbotsford. The carrier will add three aircraft to its current fleet of seven to operate new nonstop flights between: • Winnipeg-Montreal, • Winnipeg-Ottawa, • Calgary-Abbotsford, and • Calgary-Victoria.
AIRLINES IMPOSE FUEL SURCHARGE
On January 10, 2003, WestJet Airlines and Zip Air imposed temporary fuel surcharges on airfares due to the significant increases in oil prices. The surcharge will be based on the distance travelled by a passenger. • Trips under 300 miles - $5 • Trips 301 to 1000 miles - $7 • Trips over 1000 miles - $10 On the same day Air Canada introduced a fuel surcharge of $14.51 on transborder flights.
AIR TRANSAT ATTENDANTS RATIFY CONTRACT
On December 29, 2002, Air Transat flight attendants ratified a new collective agreement. The contract takes effect immediately and expires on October 31, 2005.
CANJET FLEET EXPANDS 25%
CanJet acquired its fifth Boeing 737-200 aircraft, configured for 120 seats, and equipped with the same engines as the other four CanJet planes.
January 2003
NEWS ARTICLES AIRLINES US & INTERNATIONAL UNITED FARES
United Airlines announced that it will reduce its leisure fares on nearly all of its 1,800 daily flights to both domestic and international destinations. Tickets will be available for US domestic flights beginning January 1 and for international services from January 13. Additionally, discounts of up to 40% are expected on business fares for one-way travel in markets to and from Chicago and Denver.
UNITED CUTS MANAGEMENT JOBS AND OFFICES
Effective January 7, United Airlines will close its stations in Caracas, Santiago and Duesseldorf. In addition it will end its mainline flights and convert to United Express service at five stations: • Eugene and Medford Oregon; • Cedar Rapids, Iowa; and • White Plains and Syracuse, New York. Beginning January 28 United will: • furlough nearly 1,500 management and salaried employees • close 32 city ticket offices affecting an additional 188 employees
US AIRWAYS WINS $120M EMERGENCY FINANCING
US Airways has completed a deal with GE Capital Electric Corp. that will give the carrier another infusion of emergency financing. GE will provide US Airways with a US$120 million (C$185 million) loan and will receive a stake in the airline after it emerges from bankruptcy.
US AIRWAYS DROPS FUEL SURCHARGE
On January 3, 2003 US Airways eliminated a US$15 (C$23) one-way fuel surcharge.
Page 7
DELTA UNVEILS STANDBY CHARGE
Effective March 1, 2003, Delta Airlines will offer customers travelling on most restricted fares the opportunity to confirm travel for different flights, including connecting flights, on the same day of their originally ticketed flight. Customers will be charged US$25 (C$39).
NORTHWEST RETIRES 727 FLEET
Northwest Airlines retired its last Boeing 727 aircraft from its fleet on January 7, 2003. The Airbus 319/320 family will replace the Boeing 727.
RYANAIR ANGRY OVER AIRPORT CHARGES
Ryanair has launched attacks on Manchester and Dublin Airports over fees and charges. The carrier has announced fare increases and service reductions to Manchester Airport as a result of a proposed increase in airport charges. In a separate development, the carrier has also attacked Irish airports operator Aer Rianta over plans to impose a range of charges for airport users at Dublin Airport.
AIRPORTS AÉROPORTS DE MONTRÉAL: AIF ON TICKET
Aéroports de Montréal has announced that it will now include the Airport Improvement Fee (AIF) in the cost of the airline ticket. The new collection method starts January 15.
GTAA PURCHASES AIR CANADA CARGO BUILDING
The Greater Toronto Airports Authority (GTAA) completed a sale-leaseback agreement with Air Canada for the purchase of Air Canada’s cargo building, ground service equipment building and the automated cargo handling equipment within the cargo building. The GTAA paid C$100 million for the buildings.
January 2003
NEWS ARTICLES YVR DEFERS AIRLINE FEE INCREASES
Vancouver International Airport will delay the 7% increase in the fees it charges to airlines until July 1.
CARGO US CARGO GROWS
FUEL PRICES January 3, 2003 CRUDE OIL PRICES RISING Crude Oil Price: • Spot – US$33.26 Increasing (up 26% from November) • Future – US$27.48 for delivery in January 2004
The latest US Air Transport Association (ATA) cargo figures for November show a 8.9% increase in revenue ton miles for total domestic cargo from the year before. Total international cargo increased by 19.6%. Overall cargo increased 14.2%.
FEDEX SECOND QUARTER INCOME UNCHANGED
FedEx Corp. reported a net income of US$245 million for its fiscal second quarter ended November 30, consistent with last year. Revenues for the quarter reached US$5.7 billion.
DHL INCREASES RATES
Effective February 2, 2003, DHL Worldwide Express will increase most of its US domestic and US outbound service rates by 3.5%.
CARGO COMPLEX TO OPEN AT BUSH AIRPORT
A US$125 million cargo facility is slated to open at Bush Intercontinental Airport. The facility offers ramp space for 20 wide-body aircraft and three warehouses that include more than 550,000 sq. ft.
LUFTHANSA 2002 CARGO DOWN
Lufthansa Cargo December traffic dropped 1.6% to 128,000 with load factor falling 2.7 percentage points to 65.2%. Annual traffic declined 1.9% in 2002. Load factor increased to 66.6% from 62.8%.
somewhat in the next budget. He indicated that a switch to accrual accounting, advocated by airlines and the tourism industry, could result in somewhat lower charges. However, he said that he still expects air travellers to pay the full costs of aviation security.
NAV CANADA INCREASE SERVICE CHARGES
On January 1, 2003 NAV Canada’s charges increased 3%. Other charges will increase by the same percentage on March 1.
CATSA Takes Over Pre-Boarding Security
On January 1, 2003, the Canadian Air Transport Security Authority (CATSA) took over pre-boarding security at all Canadian airports.
PEOPLE IN THE NEWS ATA APPOINTS NEW PRESIDENT & CEO
James May has been named the new President and CEO of the U.S. Air Transport Association. May has extensive experience in regulated industry trade associations and corporations, but no aviation experience. He was previously the executive VP for the National Association of Broadcasters.
EDMONTON AIRPORTS APPOINTS NEW CFO
Ralph Peterson, CA has been appointed the new Vice President Finance and Chief Financial Officer of Edmonton Airports. Peterson was a former partner of PricewaterhouseCoopers and has experience in internal processes, operations, finance, sales and marketing, and customer service and support.
GOVERNMENT/REGULATORY ATSC MAY BE REDUCED
Finance Minister John Manley indicated his department is reviewing the Air Traveller's Security Charge and may reduce the fee Page 8
January 2003
WHAT’S HAPPENING 9 January 2003 A frank lesson on WestJet’s expectations for route performance. Last month, the Competition Tribunal resumed hearings on the predation case brought by the Commissioner of Competition against Air Canada. The hearings, originally scheduled for last year, were suspended on Sep. 11, 2001. The first witness called by the Commissioner was Clive Beddoe, CEO of WestJet. The public parts of his testimony reveal some interesting aspects of WestJet’s approach to business.
Michael Tretheway Vice President & Chief Economist
Most important is that WestJet expects a 20% profit on virtually every one of its flights. It is not content with break-even operations. This fact should be kept in mind by airports soliciting WestJet for service. Presentations need to deal not merely with growth in the local economy, but must also present evidence on the yield WestJet would receive in the market, including information on the size of market, WJ potential market share, average fare, etc. Another important point he made was that WJ expects this return on fully allocated costs. It does not tolerate flights which merely cover variable flights costs. In his opinion, businesses which get themselves into trouble do so because they are fooling themselves as to what their costs really are. Justifying business decisions based on contribution to EBITDA is a recipe for disaster. ‘You are either profitable at what you do or you are not.’ He stated that in every organisation he has been in, he has fought against using terminology such as contribution margin. What WJ wants is hard research that your market will earn it a profit on its total cost. Don’t talk about contribution and building the market, talk about profit and success out of the starting gate. Mr. Beddoe also indicated that WestJet expects every flight and route to stand on its own. With rare exceptions, they will not maintain a flight which makes a loss, even if some passengers connect onto other WJ flights. He gave a specific example of the Winnipeg to Thompson route. Some of the passengers on that route segment originated in places such as Vancouver. When WJ dropped service on Winnipeg-Thompson, they did not lose the Vancouver originating passengers. These folks continued to use WestJet as far as Winnipeg, and then simply connected to Thompson on another carrier. WestJet was unwilling to attribute any of the Vancouver-Winnipeg revenue from these passengers to maintaining the Winnipeg-Thompson flight. Winnipeg-Thompson, like every route segment and flight must stand on its own. There are some hard and painful lessons from Mr. Beddoe’s statements (made under oath) to the Competition Tribunal. WJ has a drawn line in the sand which a potential service must cross. They are not willing to move the line. They want hard evidence on the potential profit performance of the route, and that evidence must go beyond traffic levels to comment on the yield WestJet will get from the route or flight. They play hard ball, so better bring an experienced major league batter when you go visit them.
Page 9
January 2003
Solomon Wong Director Security & Planning
New Information Transmission Mandated for January 1, 2003
GAO and G8 Issue Reports on Biometric Technologies
As of January 1, 2003, all airlines, cargo flights, cruise ships and other vessels, except for ferries operating to the U.S., are required to pre-transmit information about crew and passengers to U.S. authorities. Past practice exempted U.S. and Canadian citizens. All carriers will be required to submit this information prior to departure/arrival into the U.S.
The U.S. General Accounting Office (GAO) reported its review of biometric technologies to enhance border security in November. The findings identified four biometric technologies as being suitable for border security:
In addition to the standard Advanced Passenger Information fields (APIS) for name, date of birth, citizenship, gender and document number, the new U.S. INS regulations will also collect the address of residence/visit in the United States upon arrival. The May 2002 legislation that prompted this change also allows for Passenger Name Records (PNR) to be collected in the future. PNR's include over 20 fields with detail such as method of payment and routing information. M Y COMMENTARY : The U.S. INS and Customs have long coordinated collection of this data at PreClearance facilities in Canada. As well, the Canada Customs and Revenue Agency has begun the collection and exchange of this data. As the volume of this data increases, its sharing and coordination between other agencies (e.g. TSA, CATSA) will be important into to allow for quick identification and interdiction of passengers that appear on intelligence reports. An integrated information system for both Canada and U.S. is needed to provide for this multiagency and data sharing platform, as outlined in the U.S.-Canada 30-point Smart Border Action Plan.
Page 10
ยง ยง ยง ยง
facial recognition; fingerprint recognition; hand geometry; and iris recognition.
Other biometric technologies were tested but deemed unsuitable, including retina, signature and speaker recognition. The report recommended that financial and non-financial costs be considered before any full scale biometric technology is implemented. The report also warned that biometric technology is not a universal remedy, rather, it is just one part of the decision support systems which determine who will/will not enter into the United States. The Immigration section of the G8 issued a report in December with similar recommendations, stressing "complete, common technical interoperability standard," as the basis upon which all nations of this world are to introduce the machine-reading of identity papers with biometric features. M Y COMMENTARY : Hand geometry technology was used in CANPASS and INSPASS applications through the 1990's; however this proved difficult for passengers to use. Current technological developments have allowed more widespread use of iris scanning for authentication in the new CANPASS airport program. Greater efforts for integration of border programs will be required. During the 15-minute interview process for Nexus-Land, for example, fingerprint, facial and signature information is collected, but no iris scanning. Should the airport version of Nexus be developed with iris scanning for Canadian airports, re-registration of Nexus participants will be required. Future integration of modal initiatives should be of paramount importance in order to enhance customer satisfaction, reduce administrative burden, and increase participation in such expedited programs. January 2003
THE OTTAWA SCENE 14 January 2003 Parliament has returned from its six week Winter break. High on Minister Collenette's agenda will be the tabling of the new Canada Airports Act, perhaps as early as next month. The new Act is expected to provide guidelines and controls for Airport Authorities in a variety of areas, including Board governance, public consultation and accountability, airport fees and charging practices, scope of business activities permitted to subsidiaries, and borrowing limits. After second reading, the legislation will be referred to the Standing Committee on Transport which is expected to hold public consultations, perhaps as early as this Spring. Still awaiting public release after Cabinet approval is Transport Canada's Blueprint visioning exercise in which the Department will identify and address the key issues that the Department anticipates it will need to contend with for the next few years. The Blueprint will include the Department's response to the recommendations of the Canada Transportation Act Review Panel and is also expected to address to some degree the recommendations Transport Canada received in its public consultations on the review of the International Air Policy.
Roland Dorsay Regional Vice President Ottawa
Finance Minister John Manley recently confirmed to the London Chamber of Commerce that the Government may change its accounting procedures so as to allow the Government's costs to be recovered on an accrual basis. The effect of this change would be to reduce the costs that the Government would need to recover annually from the Air Travellers Security Charge. The results of the Government's current review of the $24 Security Charge is expected to be announced at the time of the upcoming Spring 2003 Budget. New Cross Border Currency and Instrument Reporting Regulations took effect on January 6th. The new regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act require that all persons and entities report the importing and exporting of currency and monetary instruments of $10,000 or more to the CCRA. The regulations require that the written currency report be signed and given to a Customs officer for assessment at the Financial Transactions and Reports Analysis Centre. Earlier this month, two Customs officers at Vancouver Airport, using information obtained through the Advance Passenger Information data system (APIS) , recovered a child who had been kidnapped by a non-custodial parent in the United States. The APIS information alerts customs officers in Canada and the US to air passengers that may warrant additional security before they arrive in either country. At the same time, but unrelated to this specific incident, the Privacy Commissioner, George Radwanski released a letter he wrote to Revenue Minister Elinor Caplan to express his concern that the CCRA's new Advance Passenger Information System/Passenger Name Record (APIS/PNR) database is in violation of the Canadian Charter of Rights and Freedoms. The Commissioner's main concerns are that the data is keep for six years and can be used for many different government purposes. This is a collection of information gathered from public sources, such as press releases, media articles, etc., information from Confidential sources, and items heard on the street. Thus some of the information is speculative and may not materialize. Information contained herein is provided for the use of TradePort International Corporation only, and may not be distributed beyond the Corporation. Prepared by InterVISTAS Consulting Inc.
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January 2003