INTERVISTAS MARKET INTELLIGENCE REPORT
CANADA APPROVED AS TRAVEL DESTINATION BY CHINA 15 April 2005
In January 2005, the government of the People’s Republic of China (PRC) completed a memorandum of understanding (MOU) to grant Canada approved destination status (ADS), the first step towards officially recognising Canada as an approved travel destination. The PRC and Canada are currently in discussions to finalise the operational details before an official agreement is signed.
Eugene Chu Project Analyst
Background of ADS. Approved destination status is a Chinese policy on tourism administered by the China National Tourism Administration (CNTA), a branch of the PRC government. The ADS allows mainland Chinese residents from select cities (usually this includes Beijing, Shanghai and Guangzhou) to travel to approved countries using a tourist exit visa. Mainland Chinese residents are not allowed to travel to countries that lack ADS designation except for business/academic study. ADS was first introduced in 1995, when Hong Kong and Macau were officially recognised as travel destinations by the government of the PRC. As of this year, over 60 countries have been granted ADS. Each country’s ADS designation with China is unique, and sets the guidelines, procedures and quotas for Chinese travel to the designated country. China’s Outbound Travel Market. In 2003, there were approximately 20 million outbound travellers from China, a fourfold increase from 5.1 million in 1996. The World Tourism Organisation forecasts that by 2020, China will be the fourth largest outbound travel market worldwide (after Germany, Japan and the U.S.) with 100 million tourists. 1 Implications for Canada. ADS allows Canada to receive Chinese tourist groups through
outbound travel agents that have been authorised by the CNTA. The designation also enables Canada to market its tourism products in CNTA approved geographic regions of China. However, it is important to note that China has only completed a memorandum of understanding (MOU) for Canada’s ADS designation. It could be one-year before an official agreement is signed and the ADS becomes operational. 2
Challenges. Although ADS will facilitate the travel of mainland
Chinese tourists to Canada, it will be a challenge to maximise the potential of this market opportunity. ADS can be viewed as controlled tourism on China’s terms as the CNTA makes the final decision on the selection of tour operators that could market travel services from China to Canada, and may also include quotas on the number of travellers that could visit Canada under ADS. Furthermore, past surveys show that currently Canada is not a top destination that mainland Chinese want to visit. 3 A lot of work will need to be done to strengthen the Canadian brand in China and ensure that the Canadian tourism industry benefits from this ADS designation.
China Program Update: Towards Tourism Growth from China, Canadian Tourism Commission. China: Emerging Market, Emerging Opportunity, Tourism Vancouver Forum (Judd Buchanan, P.C., O.C.). 3 Top three destinations include France, U.S., Italy. Sourced from Tourism Vancouver presentation. Page 1 InterVISTAS Consulting Inc. Market Intelligence Report April 2005 ©InterVISTAS Consulting Inc. 1
2
RECORD HIGH FUEL PRICES 11 April 2005
The price of crude oil hits a record high of $58 per barrel in April 2005… The price of crude oil hit a record high of US$58 per barrel in early April 2005 before settling to below US$51 on 12 April 2005. The International Monetary Fund commented in its biannual assessment of global economic projects that the volatility of world oil prices could impact global economic growth. Goldman Sachs, a global investment bank, recently released a research report stating that oil prices could reach US$105 per barrel in the next few years, although current prices have cooled to the US$50 range.
Doris Mak Senior Project Manager
OPEC. On 16 March 2005, OPEC, Organization of the Petroleum Exporting Countries, agreed to increase output by 500,000 barrels per day (bpd) in May 2005, the cartel also left room for another production increase of 500,000 bpd, if the price per barrel does not drop below $55. OPEC countries supply over 40% of the world’s crude oil. Saudi Arabia, the world’s largest oil exporter, may boost its production capacity by 33% over the next 15 years in an effort to avert shortages and to lower prices. The country’s current production capacity is 11 million barrels per day and could increase to 15 million barrels per day.
…. Continued higher futures prices Futures prices have continued to climb through the first quarter of 2005. The price of a barrel of crude oil contracted in April 2004 for delivery in December 2008 was US$29. If that same contract were purchased today, it would cost US$48, an increase of 67% compared to a year ago. As the graph below shows, the market has been creeping toward a permanent expectation of higher fuel prices.
Airline Profitability. Recent comments by IATA’s Director General, Giovanni Bisignani , at the AirFinance Conference in New York, stated that the global airline industry could lose US$5.5 billion in 2005 if crude oil prices average US$43 per barrel.
Page 2 April 2005
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ECONOMIC OUTLOOK 11 April 2005
Canada: slowing growth. After four
Historical Data
5%
Forecast Data
4% 3% 2% 1% 0%
Q1 2005
Q1 2004
Q1 2003
Q1 2002
Q1 2001
-1%
Economic growth for 2005 is Source: Statistics Canada for Historical Data; TD Economics for Forecast Data expected to be lower than previously predicted. Most forecasts now predict growth to be somewhat below 3% for the year, as a result of the high dollar. The Economist now forecasts 2005 growth will be 2.8%, down from its previous estimate of 3.0%. The Conference Board of Canada recently released an even more pessimistic projection of only 2.3% annual growth. However, these estimates largely reflect lower growth in the first half of the year, with growth recovering in the second half of 2005 and continuing into 2006.
The Canadian dollar: levelling off, but slowing exports. After a substantial Imports, Exports, and Trade Balance ($ Billions, Seasonally Adjusted) 40
Exports declining with stronger dollar
Imports
38
Exports
14 12
Jan-05
0 Dec-04
26 Nov-04
2 Oct-04
28 Sep-04
4
Aug-04
30
Jul-04
6
Jun-04
32
May-04
8
Apr-04
34
Mar-04
10
Feb-04
36
Trade Balance
Trade Balance
Jan-04
Transportation Analyst
6%
quarters of annualised growth near or above 3%, the Canadian economy slowed in the fourth quarter of 2004. Growth on an annualised basis was only 1.7%. This larger than expected decline in growth has been credited largely to the impact of the high Canadian dollar, which now appears to be causing declining exports and rising inventories.
Exports and Imports
Josh Drury
Real Canadian GDP (Annualised Quarterly %)
increase in the second half of 2004, the dollar has declined slightly from its peak of nearly 85 cents U.S. in November. It now appears to have settled in the range of 80-83 cents and most forecasts do not have it appreciating significantly in the near future. The weaker than expected economic growth, and expectations that the Bank of Canada will not raise interest rates in early 2005 (even as rates rise in the U.S.), have for the time being relieved upward pressure on the dollar.
Source: Statistics Canada
Page 3 April 2005
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ECONOMIC OUTLOOK – CON’T
Q1 2005
Q1 2004
Q1 2003
Q1 2002
Q1 2001
Nevertheless, the effects of the Real U.S. GDP (Annualised Quarterly % Change) high dollar on trade are finally becoming evident. On a 8% seasonally adjusted basis, Historical Forecast 7% Data Data exports continued to grow 6% through mid-2004 despite the 5% higher dollar but have since 4% declined, while imports have 3% risen. The merchandise trade 2% surplus has fallen from a peak of 1% $7.6 billion in June 2004, to $4.0 0% billion in January 2005, -1% representing the most significant -2% decline in the trade balance since 2001, when a weak U.S. economy reduced Canadian exports. As a result of the decline in Source: U.S. Bureau of Economic Analysis for historical data; TD Economics for exports, inventories have risen, forecast data. decreasing the demand for new 1 production.
The U.S. economy remains strong. While Canada’s economy slipped in the fourth quarter, the
U.S. economy has remained on track for solid growth. On an annualised basis, quarterly growth has averaged just under 4% through 2004, and should remain slightly below this pace for 2005. Investment and housing demand are expected to maintain momentum, though the effects of increasing interest rates and high oil prices will have a cooling effect, with growth slowing to around 3% in 2006. A healthy U.S. economy will be key to the Canadian economy recovering to the levels of growth it enjoyed in 2004.
Risks to recovery. The impact of the Canadian dollar will continue to keep Canadian growth lower, even as its value remains relatively stable. As growth resumes, the Bank of Canada will eventually start to raise interest rates, and dollar appreciation may again be a concern. Some analysts are still predicting parity with the US dollar in the next few years, citing the U.S.’ large trade and fiscal deficits which will devalue their currency, and the increasing demands for Canada’s natural resources, particularly from China. Rising oil prices are also a concern for the economy as a whole as well as for the transportation industry. The U.S. Energy Information Administration has stated that they expect oil prices to remain above US$50 per barrel through 2005 and 2006. If oil prices spike as some analysts fear, the U.S. will feel the impact in slower growth. Canada would see a tradeoff between higher revenues from oil exports and negative impacts both from higher oil prices domestically and from the indirect effects of a slowdown in the U.S.
The Ivey Purchasing Manager Index (jointly sponsored by the Purchasing Management Association of Canada (PMAC) and the Richard Ivey School of Business) for inventories was 57.2 in March, up from 52 in February. An index of over 50 indicates inventories are rising. Page 4 InterVISTAS Consulting Inc. Market Intelligence Report April 2005 ©InterVISTAS Consulting Inc. 1
AIRLINE DATA – CANADA TRAFFIC AND LOAD FACTORS ON CANADA’S MAJOR AIR CARRIERS MARCH 2005 Passenger Traffic
Air Carrier
% Change from 2003
% Change over 2004
% Change from 2003
+6.4%
+13.3%
+1.7%
+5.5%
+3.3%
+10.5%
-1.1%
+11.8%
+21.1%
+7.6%
WestJet Jetsgo2
Domestic (Mainline) Jazz
LOAD FACTORS CanJet: not reported
International & Charter
Change over 2004 +3.5 pts (to 79.8%)
Change from 2003
+0.6%
+3.4 pts
+7.1 pts
-3.0%
+2.3%
+9.4 pts
+11.0 pts
+14.5%
+2.8%
+7.6%
+3.5 pts
+4.8 pts
+54.7%
+103.5%
+34.7%
+74.8%
N/A
N/A
N/A
N/A
Analysis: •
•
•
•
Load Factor
Available Seat Kilometres
% Change over 2004
Air Canada1
OTHER CARRIERS:
Capacity
Revenue Passenger Kilometres
The strong growth in domestic load factors of WestJet and Air Canada is due to the cessation of operations by Jetsgo on 11 March 2005. Air Canada reported one full year of record domestic and system load factors in March 2005. Following an earlier pattern, the carrier continues to reduce domestic capacity. In March 2005, Air Canada’s growth in international traffic outpaced the addition of capacity, resulting in an improved load factor. Traffic to/from the U.S., Atlantic and Pacific regions all increased, with Pacific traffic posting double digit growth. WestJet posted an increased load factor in March 2005 as traffic continues to grow faster than the carrier’s addition of capacity. The carrier continues to increase U.S. services, adding 42 Toronto-Florida flights in March 2005.
+10.1 pts (to 77.8%) N/A
+5.5 pts
+11.0 pts N/A
Air Canada Domestic Mainline 20% 15% 10% 5% 0% -5% -10% -15%
Jazz data is not included in this graph
Mar- April May Jun July 04
Aug
Dom RPK
Sep
Oct
Nov
Dec Jan05
Feb
Mar
Dec Jan- Feb 05
Mar
Dom ASK
Air Canada International 40% 30% 20% 10% 0% -10% Mar- April May 04
Jun July
Aug Sep
Int'l RPK
Oct
Nov
Int'l ASK
WestJet 60% 50% 40% 30% 20% 10% 0% Mar- April May Jun July Aug Sep Oct Nov Dec Jan- Feb Mar 04 05
RPK 1 Air
ASK
Canada Mainline consists of all Air Canada with the exception of Jazz. Jetsgo ceased operations on 11 March 2005. February 2005 data not published. Page 5 InterVISTAS Consulting Inc. Market Intelligence Report April 2005 ©InterVISTAS Consulting Inc. 2
AIRLINE DATA – U.S. U.S. Airlines Release March 2005 Traffic Figures Traffic Data – March 2005 Airline
1
2
2
Load Factor
Traffic (RPMs – millions)
(ASMs – millions )
80.2%
12,074
15,042
á5.1 pts
á9.1%
á2.1%
69.8%
647
927
á2.0 pts
á28.6%
á24.9%
74.5%
681
914
á0.4 pts
â40.8%
â41.0%
81.3%
6,171
7,591
á5.5 pts
á13.5%
á5.8%
80.1%
10,358
12,927
á4.6pts
á14.4%
á7.8%
90.0%
1,657
1,842
á6.6pts
á33.7%
á24.1%
84.6%
6,850
8,096
á3.0 pts
á8.6%
á4.7%
73.7%
5,236
7,105
á0.1 pts
á12.0%
á11.9%
83.1%
9,813
11,807
á3.0 pts
á2.4%
â1.3%
80.7%
3,807
4,719
á3.2 pts
á9.6%
á5.2%
Notes:
1. 2.
Sources:
Carrier traffic reports.
Page 6 April 2005
Capacity
Mainline Load factor includes scheduled service only
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Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports
2004
Calgary
Edmonton
Ottawa
Winnipeg
Halifax
Victoria
Kelowna
+7.9%
MontréalTrudeau +19.6%
+5.3%
+10.7%
+13.9%
+11.7%
+5.6%
+11.4%
+11.6%
+7.8%
+2.8%
St. John’s +19.8%
+9.3%
+5.2%
+21.4%
+2.0%
+8.0%
+11.4%
+11.4%
+9.0%
+8.2%
+2.6%
+10.8%
+3.9%
+21.3%
1st Quarter
+6.8%
+4.8%
+17.1%
+3.7%
+8.8%
+9.7%
+9.9%
+6.1%
+10.5%
+ 6.5%
+5.3%
+5.0%
+18.0%
April
+30.6%
+20.5%
+31.7%
+11.5%
+8.6%
+20.8%
+11.2%
+16.9%
+12.7%
-0.3%
+10.9%
+2.6%
+20.1%
May
+30.8%
+20.4%
+26.3%
+5.5%
+7.5%
+7.6%
+9.0%
+19.4%
+8.0%
-1.3%
-0.3%
-5.5%
+15.2%
June
+18.5%
+16.1%
+18.1%
+8.0%
+2.8%
+12.1%
+9.2%
+7.8%
+8.6%
+3.0%
+1.7%
-4.3%
+15.9%
2nd Quarter
+26.2%
+18.8%
+24.9%
+8.3%
+6.2%
+13.2%
+9.7%
+14.5%
+9.7%
+0.5%
+3.8%
-2.5%
+16.9%
July
+17.1%
+10.4%
+18.7%
+5.0%
+0.8%
+5.7%
+8.6%
+10.5%
+4.7%
-0.5%
+5.5%
+1.4%
+10.6%
Toronto
Vancouver
February
+8.6%
March
Saskatoon
Regina
2005
August
+16.0%
+4.9%
+18.1%
+1.9%
+2.2%
+6.2%
+7.4%
+6.9%
-2.0%
-5.9%
+5.4%
+1.5%
+10.1%
September
+16.1%
+11.5%
+13.2%
+13.0%
+6.3%
+7.9%
+8.8%
+8.6%
+8.3%
+12.1%
+5.3%
-0.6%
+13.4%
3rd Quarter
+16.4%
+8.7%
+16.7%
+6.2%
+2.9%
+6.6%
+8.2%
+8.6%
+3.3%
+1.1%
+5.4%
+0.8%
+11.2%
October
+14.3%
+7.0%
+10.7%
+10.7%
-4.0%
+11.9%
+1.1%
+3.7%
-1.4%
+9.1%
+7.9%
+1.9%
+18.2%
November
+13.3%
+6.2%
+17.6%
+9.6
+4.7%
+11.4%
+4.4%
+8.3%
+0.3
+5.1%
+8.0%
-11.1%
+9.9%
December
+14.2%
+6.8%
+20.9%
+8.9%
+8.4%
+11.0%
+5.1%
+8.0%
+2.1%
+3.9%
+8.1%
+3.6%
+6.8%
4th
+14.0%
+6.7%
+16.1%
+9.7%
+3.1%
+11.4%
+3.5%
+6.4%
+0.3%
+5.9%
+8.0%
-2.1%
+11.9%
Full Year
+15.7%
+9.6%
+18.6%
+7.0%
+5.1%
+10.2%
+7.7%
+9.1%
+5.7%
+3.6%
+5.6%
+0.3%
+14.0%
January
+15.0%
+9.8%
+14.4%
+13.2%
+9.6%
+12.9%
+13.6%
+6.6%
+4.7%
+12.4%
+17.7%
+9.7%
+11.9%
February
+8.7%
+4.5%
+4.0%
+10.2%
+7.8%
+5.5%
+7.0%
+4.5%
+7.1%
+15.8%
+10.4%
+8.5%
+1.5%
Quarter
Source: Transport Canada and individual airports’ traffic reports.
Page 7 April 2005
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NEWS ARTICLES AIR CANADA NEWS ACE AVIATION HOLDINGS COMPLETES CDN$792M EQUITY AND CONVERTIBLE SENIOR NOTES OFFERING, REPAYS GE EXIT CREDIT FACILITY DEBT ACE Aviation Holdings Inc., parent company of Air Canada, has completed the public offering of 11.4 million Class A Variable Voting and Class B Voting Shares for proceeds of about CDN$420 million, along with CDN$300 million of 4.25% Convertible Senior Notes. In addition, underwriters exercised their overallotment options in full, purchasing an additional 1.1 million shares and $30 million of convertible senior notes, adding $72 million to the proceeds. ACE used CDN$553 million of the proceeds to repay all of its outstanding debt under the exit credit facility with GE Capital Corporation.
AIR CANADA TO RE-LAUNCH TORONTO-ROME SERVICES Air Canada has started daily services between Toronto and Rome with B767-300ER aircraft. The carrier will also offer code-share services via Rome to Lamezia Terme, Catania, Palermo, Turin and Venice in cooperation with Air One, a Lufthansa partner.
AIR CANADA TO ADD NEW PASSENGER AND CARGO SERVICES TO CHINA Air Canada plans to increase its passenger and cargo services to China under the new CanadaChina bilateral air services agreement. This includes increasing its Toronto-Beijing service to daily flights by 2006, and the launch of daily non-stop Toronto-Shanghai and VancouverGuangzhou service in the summer of 2006 and 2007 respectively. Air Canada’s new cargo service between Toronto and Shanghai will be increased to daily services by 2006, along with the addition of a second daily flight (via Vancouver) on the route. Daily freighter services between Toronto-Guangzhou will begin in 2007. Air Canada also plans to serve Tianjin (northern China) with cargo flights in the future. Page 8 April 2005
AIR CANADA TECHNICAL SERVICES REACHES USD$300 MAINTENANCE AGREEMENT WITH DELTA AIR LINES Air Canada Technical Services (ACTS), a limited partnership of ACE Aviation Holdings Inc., has secured an agreement for the maintenance, repair and overhaul (MRO) of Delta Air Lines’ fleet of Boeing 757-200, 767300 and 767-300ER aircraft. The contract covers a period of five years, representing potential revenue of USD$300 million for ACTS.
MENZIES AWARDED AIR CANADA CONTRACT Talma Menzies, a Menzies Aviation partner, has been awarded a contract to handle import and export cargo for Air Canada in Lima, Peru. Air Canada operates three flights per day between Toronto and Lima using Boeing 767-300 aircraft.
OTHER CANADIAN AIRLINE NEWS WESTJET ACCEPTS B737-800 AIRCRAFT DELIVERY, CONVERTS B737600 OPTIONS INTO FIRM ORDERS WestJet has taken delivery of its first B737-800 aircraft. The carrier will receive a total of five B737-800s, seven B737-700s (three have already been delivered to date), and three B737600s in 2005. WestJet has also converted three B737-600 purchase options into firm deliveries for 2006.
WESTJET STARTS WEB CHECK-IN SERVICE WestJet has launched web check-in services on its website at www.westjet.com. The service will allow travellers to check-in for the carrier' s domestic flights via the website up to 12 hours prior to departure time. WestJet currently has self-serve check-in kiosks at Calgary, Edmonton, Montreal, Ottawa, Toronto, Vancouver, and Winnipeg airports.
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NEWS ARTICLES OTHER CANADIAN AIRLINE NEWS – CON’T CANJET LAUNCHES IN-FLIGHT ENTERTAINMENT SYSTEM CanJet Airlines announced that it will introduce the digEplayer portable audio/video entertainment systems on select long-haul and Florida flights. The digEplayer entertainment system will be offered on a rental basis to customers.
OTHER NEWS CANADA AND CHINA REACHES NEW BILATERAL AIR SERVICES AGREEMENT Canada and the People’s Republic of China have reached a new bilateral air services agreement. The new agreement increases the number of permitted passenger/cargo flights between the countries by threefold, includes new city pairs and additional airlines that could operate between the two countries, and also aviation safety and security provisions.
AIRPORT NEWS GTAA EXPENSES EXCEED REVENUES BY CDN$112M IN 2004 The Greater Toronto Airports Authority (GTAA), operator of the Toronto Pearson International Airport, reported total revenues of CDN$832 million for the fiscal year ended 31 December 2004. Total operating expenses were CDN$488 million, including CDN$130 million in ground rent paid to the Federal Government. After interest/financing costs and amortisation, the airport’s total expenses exceeded revenues by CDN$112 million.
VANCOUVER AIRPORT INSTALLS CISCO IP SYSTEM The Vancouver International Airport has completed the installation of Cisco Internet Protocol (IP) Communications System throughout the airport. The system is designed to accommodate passenger needs, increase operational efficiency and create new revenue opportunities. Some of the new features include common-use check-in kiosks, WiFi access for business travellers, and wireless baggage reconciliation for post-X-ray baggage searches. The Airport has also planned to install check-in kiosks at Olympic Games sites to ease congestion during and after the 2010 Olympic Winter Games.
Page 9 April 2005
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CARGO CAPERS 4 April 2005
Air Cargo Aircraft developments. A while back, we looked at the implications for
Canadian airports of A380 bellyhold capacity, the resumption of AN-124 construction and IL-76 reengining. This month we look at developments at Boeing.
The 747 “Large Cargo Freighter.” In
Robert Andriulaitis Director Transportation & Logistics Studies
February, Boeing gave the go-ahead for its “747 Large Cargo Freighter.” Now most would agree that any 747F is a large cargo freighter. So what does Boeing mean by this? Simply a specialised version of the 747-400F that will have an enlarged upper and rear fuselage to accommodate movement of large composite structures of the 787 Source: Boeing Website. Dreamliner for assembly. This will be Boeing’s variation of Airbus’ “Beluga” which the European aerospace manufacturer uses in its production process. With a capacity of 1,840 m 3, the Boeing aircraft will dwarf the volumetric capacity of the standard 747-400F, which has a little over 600 m 3 of main deck capacity. It will also offer considerably more space than the Beluga, which is built on the frame of the A300-600 and provides about 1,500 m 3 of capacity. At present, Boeing states that its focus is strictly on the aircraft from the perspective of its role in the production of the 787. It should be recalled, however, that the Beluga was developed to support the Airbus production process, but has been, and continues to be, utilised for commercial use. Boeing’s plans call for the conversion of three aircraft (two at the outset), which would suggest limited opportunity for commercial service (Airbus has five Belugas), but this may change. The performance characteristics of this aircraft are not yet known, but if the performance of the Beluga is any indication (900 nm fully loaded, and only a bit over 2,500 nm with a 26 tonne load) this bodes well for potential Canadian tech stop activity for services between Europe/Asia and the U.S. We’ll keep an eye on this one. Source: Airbus Website.
The 777F. Boeing is touting its new twinengined 777F as the world’s longest-range freighter. With a full payload of about 100 tonnes (about 20 tonnes less than the 747-400F), this aircraft will have a range of 5,200 nautical miles (about 900 nm further than the 747-400F). Not only does that put much of Asia within non-stop range of North America’s west coast (VancouverTaipei is 5,189 nm), it puts all of Europe in range as well! From the east coast, the 777F Source: Great Circle Mapper. could reach most of Africa, all of Europe and the Middle East, and even into Asia. From an interior North American point such as Winnipeg, the 777F will be able to reach Japan, Europe, parts of the Middle East, and most of South America nonstop as the map shows.
Page 10 April 2005
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CARGO CAPERS - CON’T With its superior operating economics and range, this aircraft will continue the trend towards declining freighter tech stop activity. More than ever, Canada needs to make air cargo policy changes to open up 5th and 7th freedom cargo traffic rights to provide air carriers with revenue opportunities in Canada and enable Canadian airports to further develop their role as gateways to the NAFTA marketplace. With the House of Commons Standing Committee on Transport currently in consultation with stakeholders, now is a good time for all those with a stake in facilitating international freighter services via Canada to make their views known.
Page 11 April 2005
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THE WASHINGTON REPORT April 2005
Passports To Be Required for Entering U.S. From Canada In its continued effort to reduce the threat of terrorism, the U.S. is requiring that all American, Canadian and Mexican citizens present a passport at U.S. entry points by 2008. The U.S. currently only requires citizens from these countries to present valid ID such as a driver’s license. The new rule will be introduced in stages. By the end of 2005, all U.S. citizens travelling by air or sea to or from the Caribbean, Central or South America will be required to present passports upon re-entering the United States. By the end of 2006, the same will be required for those returning from Canada and Mexico. Lastly, the requirement will apply to all land, air and sea border crossings with Mexico and Canada by 31 December 2007.
Charles Chambers Senior Vice President InterVISTAS-ga2 Consulting Inc. Washington, D.C.
TSA Director Stone to Resign in June David Stone, Head of the Transportation Security Administration (TSA) and Assistant Secretary of Homeland Security, has announced his resignation. The TSA has asked that he extend his term until June and assist with the transition of his successor. Stone is the third director in three years to resign from the post. Rear Admiral Stone had served as Acting Administrator of TSA since 4 December 2003 and was unanimously confirmed by the United States Senate on 22 July 2004.
Boeing-Airbus Dispute Deadline Passes Without Resolution The deadline for the U.S. and the European Union agreement in the Boeing and Airbus dispute passed on 11 April without resolution, but both governments are still interested in continuing negotiations. The deadline also marked the end of a three-month standstill on fresh aid to the aircraft companies. The U.S. has stated that it would not return to the World Trade Organization (WTO) dispute settlement as long as Europe does not go forward with new subsidies to Airbus. Both the U.S. and the E.U. have indicated interest in continuing the negotiations in the subsidy dispute.
DOT Reports Decrease in January 2005 Airline Performance The DOT Air Travel Consumer Report shows that airline performance is down in all areas for January 2005 compared to January 2004. The on-time arrival rate decreased by 3.5 points to 71.4%, cancellations increased by 1.2 points to 4.2%, and mishandled baggage increased to by 7.9 reports per 1,000 passengers. Consumer complaints doubled between 2004 and 2005, with the majority (96%) related to airline service.
FAA Proposes Aircraft Insulation Safety Upgrade The Federal Aviation Administration (FAA) has proposed that the insulation blankets in over 800 U.S. registered Boeing aircraft be replaced or modified to meet fire-protection standards. Testing has shown that the material currently in use impedes the spread of fire, but does not meet safety requirements in a consistent manner. An alternative to replacing the blankets is being developed by Boeing as a spray-on barrier that should cost one third less than replacing the blankets. Affected aircraft types include the 727, 737, 747, 757 and 767.
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THE OTTAWA REPORT 8 April 2005
Amendments to the Canada Transportation Act Tabled in Parliament On 24 March 2005, Minister of Transport, Jean Lapierre, tabled amendments to the Canada Transportation Act, which came into effect in 1996 in the House of Commons. The Minister commented that the amendments would address key transportation issues for Canada. The proposed amendments include the following: •
A new and simplified National Transportation Policy Statement.
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A new provision that authorises the Canadian Transportation Agency (CTA) , on the recommendation of the Minister, to require greater transparency in advertisement of airfares.
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A reduction in the size of the CTA, and the integration of the air travel complaint functions into business practices.
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The addition of security to the list of purposes for which transportation data can be collected, the identification of transportation stakeholders and parties from whom data can be collected.
Sam Barone Regional Vice President Ottawa, ON
Airport Divestiture Program Extended On 31 March 2005, the Minister of Transport announced the extension of the Regional and Small Airport Divestiture Program until 31 March 2007. Eight airports remain to be divested from Transport Canada to local airport authorities. The remaining airports are at various stages of the transfer process which include two airports in British Columbia (Penticton and Port Hardy), one airport in Ontario (Bonnechere), three airports in Quebec (Havre Saint-Pierre, Natashquan and Sept Illes) and two airports in Newfoundland and Labrador (St. Anthony and Wabush).
Projects Announced for the 2005/2006 Airports Capital Assistance Program (ACAP) On 7 April 2005, the Transport Minister announced 61 projects for 2005/2006 to enhance safety at Canadian Airports. The total proposed program funding for the new projects is estimated to be CDN$51.4 million. Between April 2005 and March 2010, the total ACAP program funding will be CDN$190 million (or an average of CDN$38 million per year).
NAV CANADA Reports January Traffic Results NAV CANADA announced traffic figures for January 2005. Traffic for January was 6.7% higher than the same month last year. Fiscal year-to-date, traffic increased 5.7% compared to the same period last year. NAV CANADA’s fiscal year runs from September 1 to August 31. 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 materialise. Prepared by InterVISTAS Consulting Inc.
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