CAIR Issue No. 32 - August 2005 by Leah Dupuis

INTERVISTAS ’ CANADIAN AVIATION INTELLIGENCE R EPORT

In this issue… Features Columns: • New IVC Online Intelligence Resource (p.1) • Transborder Air Services Since 1994 (p.2) • China’s Outbound Travel Market (p.3)

Regular Reports: • Airport & Airline Data (p.4) • Industry News (p.7) • Airport Best Practices (p.12) • Ottawa Report (p.13) • Washington Report (p.14) • InterVISTAS’ News (p.15)

NEW INTERVISTAS ONLINE INTELLIGENCE R ESOURCE 16 August 2005

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

Doris Mak Senior Project Manager

The new website is very functional and user-friendly containing a wealth of information including briefing notes, reports, publications, and presentations prepared by InterVISTAS that are available for printing and downloading.

New Online Resource: Canadian Aviation Intelligence Report

A page within the InterVISTAS website is specifically dedicated to the Canadian Aviation Intelligence Report (CAIR) (www.intervistas.com/4/cair.asp). There are several interesting features to the CAIR webpage: •

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

•

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

•

Easy to subscribe: The CAIR is available for download from www.intervistas.com or can be delivered directly to your personal e-mail box each month. To sign up, simply send a blank e-mail to subscribe@intervistas.com to be added to our e-mail list.

Page 1 August 2005

TRANSBORDER AIR SERVICES SINCE 1994 12 August 2005

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

Canada – U.S. Open Skies Agreement

Doris Mak Senior Project Manager

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

Immense Growth in Transborder Services Since 1994

However, even though the U.S. no longer considers this agreement true Open Skies, Canada has still experienced immense growth in transborder operations over the past eleven years. Just prior to the Canada-U.S. air agreement, 21 Canadian cities had air services to U.S. destinations. In 2005, 27 Canadian cities have services to the U.S. with many smaller Canadian cities gaining service since 1994. Ten Canadian cities gained service to the U.S. after 1994, Campbell River, Ganges Harbour, Kamloops, Kelowna, Kitchener, Nanaimo, Old Crow, Port McNiell, St. John’s and Saskatoon. However, four cities that had air service to the U.S. prior to 1994 had lost their non-stop service by 2005 (Dawson City, Moncton, Saint John, and Yarmouth). The number of U.S. destinations served has nearly doubled at Calgary, Montréal, Ottawa, Quebec, Toronto, Victoria and Winnipeg, and the number of destinations has tripled at Edmonton, Halifax and Vancouver compared to U.S. destinations served in 1994. In addition to Air Canada, Air Transat, WestJet, Harmony Airways and CanJet are now offering transborder flights. The following table illustrates the impact of the 1995 Open Skies air agreement on Canada. 1994

2005

% Change

Number of Canadian Cities with Transborder Services

+29%

Number of Transborder Destinations from Canada

+55%

Number of Transborder Routes from Canadian Cities

171

+90%

Number of Carriers Offering Transborder Services

+73%

28,217

41,968

+49%

Average One-Way Transborder Seat Capacity per Day Source: PLANET OAG and BACK OAG data.

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

Page 2 August 2005

CHINA’S OUTBOUND TRAVEL MARKET 18 August 2005

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

Growth of Outbound Travel from China. Outbound travel from China has been

Project Analyst

China Travel Market Characteristics . The peak travel

25,000

season for outbound leisure travel in China is during the Spring Festival (first week of February), Labour Week (first week of May) and National Week (first week of October). According to a recent WTO report, over 90% of outbound travellers from China originate from the province of Guangdong, and the municipalities of Shanghai and Beijing. Popular outbound destinations include Thailand, Russia, Japan, the U.S. and Europe.

Number of Travellers ('000s)

Eugene Chu

increasing in recent years as a result of economic growth and more liberal travel policies (please see chart). The World Tourism Organisation (WTO) forecasts that outbound travel from China will make up 6.4% of the world outbound market by 2020, or 100 million travellers, becoming the fourth largest outbound market after Germany, Japan and Outbound Travel from China the U.S. Quota system for travel to Hong Kong and Macau removed in December 2001

20,000

20,220 16,600

15,000 10,000 5,000

State Council of China approves measures for administration of outbound Chinese travel at their own expense

3,740 3,734

Australia and New Zealand receives ADS

8,426

9,232

12,133 10,473

5,324 4,521 5,061

0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: China Statistical Yearbook 2004 - National Bureau of Statistics of China, Chinese Outbound Tourism - WTO Report 2003

Australia ADS Experience and Lessons for Canada. Australia received ADS in

1999, and the agreement has been operating for the last six years. Tourism Australia data shows that the number of Chinese visitors to Australia has increased by nearly three-fold during this time, to 251,000 travellers in 2004. As a comparison, Statistics Canada data indicates that Canada received about 105,000 Chinese travellers in the same year. Because of the similarity in travel products offered, Australia makes a good case study for Canada. However, it should be noted that Australia was one of the first countries to receive the ADS designation. Today, there are over 70 countries that have or will receive ADS. So even though Canada’s ADS designation has the potential to increase the number of travellers from China, the growth may be moderated by increased competition.

Implications. The Chinese travel market has some common characteristics. Most Chinese

travellers have a limited knowledge of English, preferring services in Chinese, and also have a preference for Chinese food. This has service implications for firms that are targeting this market. Next month: Inbound travel market to China and review of the air services between Canada and China. Page 3 August 2005

AIRLINE DATA – CANADA T RAFFIC AND LOAD F ACTORS ON CANADA’S M AJOR AIR CARRIERS JULY 2005 Passenger Traffic Capacity

Air Carrier

OTHER CARRIERS:

Revenue Passenger Kilometres

Load Factor

Available Seat Kilometres

% Change over 2004

% Change from 2003

% Change over 2004

% Change from 2003

Change over 2004

Change from 2003

Air Canada1

+6.8%

+20.5%

+2.8%

+12.6%

+3.2 pts (to 83.6%)

+5.5 pts (78.1%)

Domestic (Mainline)

+4.6%

-1.9%

-6.3%

+5.2 pts

+8.7 pts

Jazz

+54.4%

+66.0%

+39.7%

+40.3%

+7.0 pts

+11.4 pts

International & Charter

+7.8%

+29.0%

+5.0%

+23.5%

+2.2 pts

+3.6 pts

+19.9%

+54.8%

+15.9%

+47.9%

+2.7 pts (to 81.3%)

+3.6pts (77.7%)

LOAD FACTORS CanJet: not reported

WestJet Analysis: •

•

Air Canada reported a system load factor of almost 84% in July 2005, the highest ever for any month. Although mainline domestic traffic increased for a fifth consecutive month, Jazz traffic has been growing at a much more rapid rate, recording double-digit increases every month since the beginning of the year. Air Canada’s international traffic continued to post strong gains in July 2005. International capacity increased in all regions with the exception of services to the U.S. Although capacity was added, load factor on international services improved as traffic increases outpaced the addition of capacity. Following a previous trend, WestJet’s growth in traffic outpaced the addition of capacity, resulting in an improved load factor.

Air Canada Domestic Mainline Mainline 10% 5% 0% -5% -10% -15%

Jazz data is not included in this graph

Jul04

Aug

Sep

Oct

Nov

Dec Jan05

Dom RPK

Feb

Mar

Apr May

Jun

Jul

May Jun

Jul

Dom ASK

Air Canada International International 25% 20% 15% 10% 5% 0% -5% -10%

Jul04

Aug

Sep

Oct

Nov

Dec Jan05

Int'l RPK

Feb

Mar

Apr

Mar

Apr May

Int'l ASK

WestJet WestJet 60% 50% 40% 30% 20% 10% 0%

Jul04

Aug Sep

Oct

Nov

Dec Jan- Feb 05

RPK

Jun

Jul

ASK

1Air

Canada consists of all Air Canada operations with the exception of Jazz. Page 4 August 2005

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

Load Factor

Traffic ( RPMs – millions)

(ASMs – millions)

85.1%

13,621

16,002

á 4.1 pts

á 8.1%

á 3.0%

74.9%

748

999

á 1.7 pts

á 22.8%

á 20.0%

82.7%

707

855

â 2.5 pts

â 46.1%

â 44.5%

86.4%

3,797

4,392

â 0.1pts

á 2.4%

á 2.5%

84.1%

11,828

14,068

á 0.8 pts

á 6.1%

á 5.0%

91.1%

1,978

2,171

á 3.2 pts

á 31.6%

á 27.0%

87.5%

7,474

8,544

á 1.7pts

á 5.4%

á 3.4%

80.8%

5,959

7,378

á 1.4pts

á 14.7%

á 12.7%

86.4%

10,703

12,384

á 1.6 pts

â 2.4%

â 4.2%

81.9%

3,849

4,697

â 0.8pts

â 1.7%

â 0.7%

Notes:

1. 2.

Sources:

Carrier traffic reports.

Page 5 August 2005

Capacity

Mainline operations only. Load factor includes scheduled service only.

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

2004 2005

Calgary

Edmonton

Ottawa

Winnipeg

Halifax

Victoria

Kelowna

Saskatoon

Regina

+16.1%

MontréalTrudeau +18.1%

+8.0%

+2.8%

+12.1%

+9.2%

+7.8%

+8.6%

+3.0%

+1.7%

-4.3%

St. John’s +15.9%

+26.2%

+18.8%

+24.9%

+8.3%

+6.2%

+13.2%

+9.7%

+14.5%

+9.7%

+0.5%

+3.8%

-2.5%

+16.9%

July

+17.1%

+10.4%

+18.7%

+5.0%

+0.8%

+5.7%

+8.6%

+10.5%

+4.7%

-0.5%

+5.5%

+1.4%

+10.6%

August

+16.0%

+4.9%

+18.1%

+1.9%

+2.2%

+6.2%

+7.4%

+6.9%

-2.0%

-5.9%

+5.4%

+1.5%

+10.1%

September

+16.1%

+11.5%

+13.2%

+13.0%

+6.3%

+7.9%

+8.8%

+8.6%

+8.3%

+12.1%

+5.3%

-0.6%

+13.4%

3rd Quarter

+16.4%

+8.7%

+16.7%

+6.2%

+2.9%

+6.6%

+8.2%

+8.6%

+3.3%

+1.1%

+5.4%

+0.8%

+11.2%

October

+14.3%

+7.0%

+10.7%

-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%

March

+10.9%

+8.2%

+5.1%

+17.5%

+12.5%

+7.3%

+9.7%

+6.6%

+15.4%

+19.5%

+19.1%

+22.2%

+19.6%

1st Quarter

+11.5%

+7.5%

+7.6%

+13.7%

+10.0%

+8.4%

+10.0%

+5.9%

+9.3%

+16.0%

+15.6%

+13.3%

+11.5%

April

+4.0%

+3.9%

+5.7%

+3.5%

+5.5%

+0.1%

+4.3%

-0.2%

+2.6%

+18.8%

+5.9%

+3.8%

+9.8%

May

+6.7%

+5.5%

+3.7%

+12.2%

+12.0%

+5.5%

+8.0%

-4.5%

+5.8%

+26.3%

+12.6%

+5.7%

+8.5%

June

+6.3%

+4.0%

+7.5%

+10.1%

+13.9%

+3.4%

+2.9%

-0.5%

+6.8%

+22.7%

N/A

+12.4%

+5.7% +4.5% +5.7% +8.6% +10.4% Source: Transport Canada and individual airports’ traffic reports.

+3.1%

+5.0%

-1.8%

+5.1%

+22.6%

+10.2%

+7.3%

+10.3%

Toronto

Vancouver

June

+18.5%

2nd Quarter

Quarter

2nd Quarter

If your airport is interested in providing InterVISTAS Consulting Inc. with its monthly passenger statistics, please email Doris Mak at doris_mak@intervistas.com Page 6 August 2005

NEWS ARTICLES AIR CANADA UPDATE AIR CANADA ANNOUNCES MAJOR SCHEDULE ENHANCEMENTS

AIR CANADA CANCELS WINTER SERVICE FROM TORONTO TO CHARLOTTETOWN

On July 18, Air Canada announced major schedule enhancements including new routes and additional flights throughout North America. New non-stop routes include Vancouver-San Diego, AbbotsfordToronto, Abbotsford- Calgary, Calgary-Newark, and Calgary-Orlando, all commencing in December 2005.

Air Canada plans to cease its winter service between Toronto and Charlottetown due to a dispute over subsidies. The decision follows launches of new direct services to Charlottetown by WestJet Airlines and Northwest Airlines, secured in part by revenue guarantees and marketing support provided by the PEI government. Direct year-round service from Charlottetown to Montréal and Halifax will not be affected.

AIR CANADA UNVEILS NEW EMBRAER REGIONAL JETS

OTHER CANADIAN AIRLINE NEWS

Air Canada introduced its new Embraer 175 aircraft on August 4. The 73-seat regional jets will be used mainly on transborder routes from Toronto and Montréal, as well as flights between Toronto and Montréal. Air Canada will be taking delivery of 15 Embraer 175 aircraft by the end of the year. In addition, the carrier will begin taking delivery of the 93-seat Embraer 190 regional jets in November 2005.

AIR CANADA INCREASES BASE FARES DUE TO FUEL COSTS Air Canada increased its base fares on domestic and transborder flights in response to rising fuel prices effective August 12. Base fares on flights under 300 miles (483 km) increase by $5 each way, flights between 301 miles (484 km) and 999 miles (1,608 km) increase $10 each way, and flights over 1,000 miles (1,609 km) increase by $12 each way.

ACE REPORTS 2ND QUARTER PROFIT OF $168 MILLION

ACE Aviation Holdings, parent company of Air Canada, reported second quarter net income of $168 million. This represents a substantial improvement over the $510 million loss recorded in the same quarter of 2004.

Page 7 August 2005

WESTJET RETURNS TO PROFITABILITY IN 2ND QUARTER

WestJet announced its 2 nd quarter results, returning to profitability with net earnings of $2.3 million for the quarter. This represents an improvement from a loss in the first quarter, but the carrier is still reporting a net loss for the first half of 2005 of $7.3 million, compared to net earnings of $8.0 million in the first half of 2004.

WESTJET ACCEPTS FIRST 737-600

WestJet accepted delivery of its first Boeing 737-600 aircraft on August 8. The nextgeneration aircraft will seat 119 passengers, slightly less than the 737-200 aircraft which the carrier will phase out by March 2006.

WESTJET INCREASES BASE FARES DUE TO FUEL COSTS

Following Air Canada’s lead, WestJet has also increased its base fares on all flights in response to rising fuel prices effective August 15. Base fares on flights under 300 miles (483 km) increase by $5 each way, base fares on flights between 301 miles (484 km) and 1,000 miles (1,609 km) increase $10 each way, and flights over 1,000 miles (1,609 km) increase by $12 each way. These base fare increases follow surcharges on domestic flights introduced in June, which increased fares by $8 to $15 each way depending on distance.

NEWS ARTICLES OTHER CANADIAN AIRLINE NEWS – CON’T CANJET ANNOUNCES SEASONAL MONCTON-SARASOTA SERVICE

CanJet announced plans to offer seasonal service to Sarasota, Florida from Moncton starting in February 2006. The flight will operate once weekly on Thursdays from February 9 to May 4 using B737-500 aircraft.

CANJET TO INCREASE LEGROOM

CanJet announced that it will be increasing the amount of legroom on all of its B737-500 aircraft. Two seats will be removed from each aircraft and seats reconfigured to increase the average seat pitch by 2 inches.

HARMONY AIRWAYS RAISES FARES

Following the lead of Air Canada and WestJet, Harmony Airways has announced fare increases due to rising fuel costs. Effective August 23, tickets will increase by $12 per oneway ticket.

CANADIAN AIRPORTS WAA REPORTS INCOME OF $700,000

The Winnipeg Airports Authority released its second quarter results, with revenues exceeding expenses by $697,000. Excess revenues over expenses, as well as the airport’s Airport Improvement Fee (AIF) will be used exclusively for required airport infrastructure. Passenger traffic at the airport is up 5.0% over the second quarter of 2004.

Page 8 August 2005

CANADA INVESTING IN NEW TERMINAL AT KUUJJUAQ AIRPORT Transport Minister Jean Lapierre announced plans to build a new terminal and expand the apron at Kuujjuaq Airport in Northern Quebec. Funding for the $14 million investment was allocated in the February 2005 Federal budget. Work will commence in the spring of 2006.

CARGO NEWS FEDEX TO BUILD NEW ASIA-PACIFIC HUB AT GUANGZHOU

FedEx confirmed plans to build a new Asia-Pacific hub in Guangzhou, China, and close its existing hub of Subic Bay, Philippines. The new facility will open in 2008 and operations will be transferred there by the end of the year.

UPS PLANS HUB IN SHANGHAI

UPS has signed an agreement with the Shanghai Airport Group to create an international cargo hub at Pudong International Airport. The hub is to have a capacity of 200,000 tonnes per year and begin operating in 2007. The investment is part of $500 million the integrator plans to spend in China over the next two years.

KITTY HAWK POSTS 2ND QUARTER LOSSES

Kitty Hawk posted losses of $2.2 million in the second quarter of 2005, compared to a profit of $600,000 for the same period in 2004. The losses are largely related to introduction costs of its new B737-700SF aircraft. Six aircraft have been delivered of which five are in revenue service; the seventh and final aircraft is expected to be delivered in September 2005.

NEWS ARTICLES ATLAS AND POLAR TO MERGE OPERATIONS IN 2006

CARGO NEWS – CON’T UPS ORDERS 8 B747-400 FREIGHTERS

UPS has placed an order for 8 B747-400F, with the first to be delivered in June 2007, two more at the end of 2007 and the remaining five freighter aircraft to be delivered in 2008. This is the first order of the B747-400F by UPS. Its B747-100s and 200s will be phased out in the next few years; however, this new order is considered replacement for UPS's MD-11 aircraft.

Atlas Air Worldwide Holdings will merge the operations of its subsidiaries Atlas Air and Polar Air Cargo under Polar while maintaining the two separate brands. This is a part of the company's reorganisation plan laid out when it emerged from bankruptcy protection last year. The operational consolidation is expected to take place in January 2006.

CALGARY CARGO STOP NOT PERMITTED FOR AIR CANADA

CARGOJET AWARDED SHIPPER'S CHOICE AWARD

Transport Canada has denied Air Canada's application to use and offer domestic cargo service on a wet lease basis from U.S.-based air cargo operators Gemini Air Cargo and World Airways. Air Canada wet-leased MD-11 freighters from the two U.S. airlines for a Toronto-Shanghai service earlier this year and applied to the ministry to operate the service through Calgary in one direction.

The Canadian Transportation and Logistics Magazine, in conjunction with the federal government and research firm G. Bramm & Associates, surveys 1,200 Canadian shipping companies each year and asks them to rate their airlines against benchmarks that the shippers themselves set. This year, Cargojet was awarded the Shipper's Choice Award for the third year in a row.

TRANSPORT CANADA TO REVIEW AIR CARGO SECURITY WITH INDUSTRY STAKEHOLDERS

Transport Canada plans to introduce a comprehensive program for air-cargo security in spring 2006. The ministry has begun informal meetings with government and industry groups to review air cargo security measures and make recommendations. The goal is to improve security but not impede the flow of cargo in the domestic and international sectors. Among the proposals is a "known shipper/known cargo" certification program for freight that is to be carried on passenger aircraft. Shippers would have to meet specified criteria to qualify.

Page 9 August 2005

NEWS ARTICLES CHINA READY TO NEGOTIATE AVIATION AGREEMENT WITH EU

PEOPLE IN THE NEWS On July 1, Gregory Principato became President of Airports Council International - North America (ACI-NA). Principato has held positions in aviation and transportation for more than 25 Gregory Principato years. He succeeds David Plavin, who previously held the position.

ACE AVIATION HOLDINGS HIRES NEW EXECUTIVES FOR FINANCE TEAM

ACE Aviation Holdings, parent company of Air Canada, has hired ex-Aer Lingus executive, Brian Dunne as CFO who will report directly to Robert Milton. Dunne replaces Rob Peterson, who will become VP and CFO of Aeroplan. Greg Cote was named Senior VP, Corporate Finance and Strategy. Cote was previously Senior VP and Partner at Ernst & Young Corporate Finance.

George Mikelsons

Founder of low cost carrier ATA, George Mikelsons, announced his retirement as CEO. John Denison, will assume the position of CEO.

OTHER QANTAS TO RETURN TO VANCOUVER

As part of an increase in service to North America, Qantas will be returning service from Sydney to Vancouver in June 2006. Service would be via San Francisco, itself a new route for the carrier.

Page 10 August 2005

China has indicated that it is ready to start talks with the European Union on developing a union-wide aviation agreement. It first needs to complete its own study on removing nationality clauses from bilateral agreements, which were banned in a ruling by the European Court of Justice in 2002. China currently has bilateral agreements with 22 of the 25 EU members.

BOMBARDIER EXPANDS IN ASIAPACIFIC

Bombardier Aerospace announced plans to significantly expand its presence in the AsiaPacific region by opening new sales offices in Singapore and New Delhi, and two new maintenance facilities in India and China within the next 12 months. This part world region has been showing an increasing amount of interest in Bombardier products.

EUROPEAN TRADE ASSOCIATIONS UNVEIL PLAN TO CURB EMISSIONS

Six European trade associations, including the Association of European Airlines (AEA), jointly unveiled an Emissions Containment Policy to curb greenhouse gas emissions. The policy has targets of reducing noise and CO2 emissions per seat-kilometre by 50% by 2020, with other emissions reduced by 80%.

BOEING LAUNCHES 737-900ER

Boeing launched its new 737900ER program in July 2005 following a deal with Lion Air of Indonesia for 30 aircraft and 30 options. The new aircraft will offer up to 215 seats in single class configuration, more than any other 737 derivative, and will have a maximum range of 3,200 nautical miles. It is expected to compete directly with the Airbus A321.

AIRPORT BEST PRACTICES August 2005

Regina and Saskatoon Airports

Typically, Canadian municipalities appear to think that they are in a death struggle with the communities in their vicinity. Mayors and city councils struggle for businesses, residents, provincial and federal funding, hospitals, and educational facilities. The trend is true for large cities through villages. The approach is consistent even when issues are regional rather than municipality-specific. Reducing Expenses. However, Saskatoon and Regina International Airports have adopted a contrary approach. The two airports work together to reduce expenses and increase value whenever possible. In the last year, cooperative initiatives have included:

Rob Beynon Director, Airport Marketing

•

Security initiatives;

•

Safety Management System (SMS) development;

•

Peer review of construction projects; and even

•

Air service development.

The two airports have worked on joint air service presentations to a number of U.S. air carriers. These were not their first joint marketing efforts. Where most observers would see competition and conflict of interest, the two have developed an opportunity that would benefit both communities. As Saskatoon Airport Authority President & CEO, Bill Restall, put it, the contact is ongoing between the two airports which leads to new opportunities for interaction. “It is extremely valuable to have another professional review your capital plans informally and comment,” he added. In the end, the relationship has saved both airports significant money and added value for stakeholders. While competition between airports is a reality, Saskatoon and Regina show that there is often significant room for increased cooperation as well.

Page 12 August 2005

OTTAWA REPORT 15 August 2005

Government of Canada to Conduct Stakeholder Consultations on Air Passenger Assessment

Minister of Public Safety and Emergency Preparedness, Anne McLellan, together with Transport Minister, Jean Lapierre announced that the Government of Canada will conduct stakeholder consultations on the implementation of air passenger assessment. The consultations will begin in August and continue into the fall, and will concern the development of a passenger assessment program to be known as Passenger Protect. The program will entail the development of a list of individuals considered a threat to aviation security and who will be prevented from boarding aircraft, analogous to the ‘No-Fly’ list maintained by the U.S. Transportation Security Administration. In addition, a feasibility study will be commissioned to examine the use of new technologies to enhance passenger assessment.

Sam Barone Regional Vice President Ottawa, ON

Federal and Provincial Governments to Fund Development of Intelligent Transport Systems in Newfoundland and Labrador

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

Government of Canada Announces Investment in Strategic Plan and Economic Impact Study for Atlantic Gateway

Transport Minister Jean Lapierre announced that the Government of Canada will contribute $125,000 towards developing Halifax as a transportation hub and North American Gateway. The contribution consists of $50,000 from Transport Canada towards the development of a strategic plan, and $75,000 from the Atlantic Canada Opportunities Agency (ACOA) for an economic impact study. The funding is being provided to the Halifax Gateway Council, an association of transportation stakeholders in the Halifax area, including Halifax International Airport and the Port of Halifax.

NAV CANADA Releases May and June Traffic Figures

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

Canadian Transport Minister Leads Mission to China

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

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WASHINGTON REPORT 12 August 2005

U.S. Domestic Traffic Rose 5.5% Through April

The U.S. Department of Transportation (DOT) reports that U.S. domestic flights handled 5.5% more passengers through the first four months of the year compared to the same time period in 2004. Southwest Airlines carried the most passengers with 26.9 million and Atlanta Hartsfield Airport was the busiest airport for domestic traffic handling 12.7 million enplanements. Revenue passenger miles rose by 5.6%, available seat miles were up 1.2% and load factor was up 3.1% overall.

Charles Chambers Senior Vice President InterVISTAS-ga 2 Consulting Inc. Washington, D.C.

U.S. Airport Capital Development Costs Expected to be $72 Billion from 2005 to 2009

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

Airport Consortium to Expedite Registered Traveller Program

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

Senate Approves Homeland Security Funding

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

House, Senate Approve Daylight-Savings Time Extension

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

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INTERVISTAS NEWS August 2005

New Reports Available at www.intervistas.com

Enabling Canada’s Economic Potential: ICT and National Economic Performance

A report on the Economic Impact of the Information – Communications Technology Sector on Achieving Canada Economic Potential prepared by Dr. Mike Tretheway and Mr. Ian Kincaid is available at www.intervistas.com. Click on the Publications and Presentations button on the top right menu bar, and go to Reports. Open Skies Reports. In June 2005, Aéroports de Montréal, the Greater Toronto Airports Authority and the Vancouver International Airport Authority commissioned InterVISTAS Consulting to examine the following: §

Transborder Air Services Since 1994

Economic Impact of Open Skies: Past and Future

Economics of Cargo Co-Terminalisation

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

InterVISTAS’ Canadian Aviation Intelligence Report is a collection of information gathered from public sources, such as press releases, media articles, etc., information from confidential sources, and items heard on the street. Thus some of the information is speculative and may not materialise. To inquire about advertising opportunities or to provide comments/feedback on the InterVISTAS’ Canadian Aviation Intelligence Report, please contact Rob Beynon at rob_beynon@InterVISTAS.com or 1-604-717-1864. To subscribe, please send an email to subscribe@InterVISTAS.com To unsubscribe, please send an email to unsubscribe@InterVISTAS.com. Prepared by InterVISTAS Consulting Inc.

Page 15 August 2005