InterVISTAS Aviation Intelligence Report - September 2013 by Leah Dupuis

SEPTEMBER 2013

IN THIS ISSUE: CEO’s Message – p 2 Feature Article – p 3 Special Report from WCAF – P.3

Regional Updates – p 5 United States  Europe  Latin America Canada  Asia Pacific

Aviation News – p 14 Traffic Updates – p 19 U.S. Immigration Bill Impacts on Aviation – P.5

InterVISTAS News – p 23

CEO’S MESSAGE Hello and welcome to the September edition of the Aviation Intelligence Report. Many strategically significant actions occurred in aviation—especially in the United States, where members of the current and recent Obama Cabinet played important roles in determining the outlook for U.S. aviation. First, Attorney General Eric Holder of the United States Department of Justice unexpectedly halted the merger of American Airlines and US Airways. DOJ found the merger to be anti-competitive and cited language from email correspondence and speeches from US Airways’ management that indicated that gaining pricing power was at least one goal of the merger, and one that DOJ could not condone. A court date is set for November and all of aviation will be watching. Deborah Meehan President and CEO

Second, Chicago’s Mayor Rahm Emmanuel (former Obama Chief of Staff) halted the Midway Airport privatization. This is the second time this process has been stopped and may have hit the reset button on airport privatization in the U.S. Finally, Secretary of State John Kerry condemned Syria’s use of chemical weapons and indicated that Syria had crossed the “red line” warranting targeted action from the United States. While it is unclear what will happen here (Putin seems to be offering a solution), the consequences may have a dampening effect on travel to the Middle East until this is resolved. In this month’s edition, Paul Ouimet presents excerpts from the Winnipeg Aviation Consensus, a special report prepared following the Western Canadian Aviation Forum held in May of this year. Following the Canada Report, we have a special feature by Rob Andriulaitis in which he reviews the recent improvements to and pitfalls of Canada’s Foreign Trade Zone program. Our Regional Reports include:  A look at the aviation impacts of the U.S. Senate’s immigration bill in the United States Report by Steve Martin,  Peru’s plans for airport expansion in the Latin America Report by Kenneth Currie,  Ryanair’s profit warning in the Europe Report by Ian Kincaid,  A review of the summer activity on Parliament Hill in the Canada Report by Debra Ward, and  India’s concern over the increasing price of aviation turbine fuel in the Asia-Pacific Report by Doris Mak. I am pleased to announce the staffing of InterVISTAS’ office in Brazil. While we have long served the Latin American market, we now have a permanent in-market presence. Brazil is one of the ‘tiger economies’, with a fast growing aviation sector. As well, Brazil is home to one of the world’s largest aircraft manufacturers, Embraer. I am especially excited to announce this month the addition of two new senior members of our growing airline strategy team. Sabine Reim joins InterVISTAS after a 17 year career with British Airways where she had worked in strategy, revenue management, customer service and network development. She is well known to many of our airport clients in her network planning role for BA’s all important emerging markets. Arik De moves from his network management position at profitable low-cost carrier WestJet. He has also worked for two other airlines where he had roles in fleet planning, as well as network strategy. Our ever-expanding team of experienced airline strategy and network experts, combined with our in-house route and network evaluation tools allows InterVISTAS to provide value-enhancing solutions to airline clients and marketing effectiveness for airports. We hope you enjoy this month’s edition.

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WESTERN CANADIAN AVIATION FORUM This month, we focus on air policy issues in Canada. While the U.S., Europe and a number of other nations have relatively liberal policies for commercial air transport, Canada has followed a more restrictive policy. On May 2nd and 3rd, delegates from across Canada gathered in Winnipeg to consider Canada’s aviation policies and the impact on various sectors of the aviation industry. The Forum was hosted by the Winnipeg Airports Authority and facilitated by InterVISTAS.

Paul Ouimet Executive Vice President

Those attending the Forum identified a number of priorities to ensure Canadian Aviation achieves its potential as a facilitator of economic growth. These priorities are reflected in the Winnipeg Aviation Consensus, presented below.

MAXIMUM VELOCITY UNLEASHING THE POWER OF AVIATION; THE AVIATION STAKEHOLDERS CONSENSUS Canada’s future participation in the global market will be determined by its ability to connect with established and emerging markets. The Canadian economy and by extension its people require greater connectivity to realize our economic potential as a trading nation. The aviation industry is of critical importance, enabling the economic and social development of all regions of Canada. A safe, secure and competitive aviation industry which underpins a range of business, trade and tourism activities is essential.

Fundamentals of Canada’s National Aviation Policy There is consensus among industry, scholars, and government officials on the requirements for a new, proactive policy framework which:    

Promotes competitiveness and viability of the aviation industry, Prioritizes policy based on the needs of consumers and economic development, Focuses access on the greater benefits of liberalization in the aviation sector, and Reduces foreign ownership restrictions.

1. Air Service Policy a. The Government of Canada should take steps to enhance and make transparent the implementation of the Blue Sky Policy by: i. Negotiating open skies agreements with more countries; ii. Making public all commercial text concluded at the negotiations; iii. Where it is determined that an agreement is not in the public interest the reasons should be made public;

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(Continued) iv. Including representatives of Canadian airports in negotiations; v. Pursuing Open Skies-type agreements for all cargo services; and vi. Requiring Transport Canada to provide market data critical to the understanding of market viability or attraction of new services. b. The Blue Skies Policy should be revised to provide that where carriers have exclusive route authorities, they be required to exercise those rights or the routes should be open to other carriers. 2. Improving the Competitive Position of Canada’s Aviation Industry a. Eliminate the transport security charges as currently applied solely to air travelers. b. Eliminate Airport Rent i. Start by excluding Airport Improvement Fees from the ground lease rent calculation. c. Reduce foreign ownership restrictions to ensure that Canada’s airline industry is adequately capitalized. 3. Improving the Viability of Canada’s Airports a. The Government should update the current leasehold policy to: i. Include “end of lease” provisions to ensure airports have a minimum 40 years remaining for the establishment of long term subleases. ii. Provide a payment for capital assets at end of lease to allow airport authorities to extinguish debt, and iii. Reflect the needs of different sizes and classes of airports. b. The ACAP (small airport capital assistance program) should be modified by expanding criteria and increasing funding levels. 4. Seamless and Efficient Borders a. The Beyond Borders initiative should be expanded to include common standards for screening of both passenger and freight, using technology to eliminate border wait times. b. Expand and promote multi-year visas for frequent business travelers. c. Expand the “transit without visa” program to include South America to Asia transit. d. Establish a working group to review best practices in border facilitation. i. A cross-border private sector advisory council should be established for Nexus.

To see presentations and speakers’ notes from the Western Canadian Aviation Forum, visit http://www.wcaf.ca/

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UNITED STATES REPORT Senate Immigration Bill Would Impact Airports and Airlines The Senate passed a comprehensive immigration reform bill. Most of the public attention has been focused on the process that the bill would allow for changing the legal status of those in the U.S. illegally. However, the bill also includes enormous increases in CBP resources, and has new requirements for processing passengers at airports.

Steve Martin Senior Vice President

Since 1993, when the current strategy of concentrated border enforcement was first implemented, the annual budget of the U.S. Border Patrol has increased from $363 million to more than $3.5 billion. The Senate bill would lead to an unprecedented level of spending on border security. The bill would require:      

deploying at least 38,405 full-time Border Patrol agents along the southern border (including an additional 19,200 more than currently in place); mandating an electronic exit system at all ports where CBP agents are deployed; constructing at least 700 miles of fencing; deploying aircraft and radio communications; hiring additional prosecutors, judges, and staff; and increasing prosecutions of illegal border crossings.

Non-citizens entering the country are already required to submit fingerprints, but federal officials currently rely on a combination of flight records and databases to determine who has left. The amended bill would require the so-called "biometric" entry/exit system to be put into place at the ten U.S. airports with the highest volume of international air travel within two years of the bill's passage. After six years, the system would be expanded to 30 airports, pending a study of the system's effectiveness. Other provisions require the Secretary of Homeland Security to reduce average primary processing wait times at high-volume international airports and land entry checkpoints by 50 percent by the end of fiscal year 2014. The bill establishes the goal of screening all air passengers being processed at high-volume international airports within 30 minutes under normal operating circumstances by the end of fiscal year 2016. The legislation also requires CBP to examine the use of non-law enforcement personnel for administrative duties to reduce agency costs and free up CBP officer time for passenger processing. The bill also included reforms to the highly successful Visa Waiver Program (VWP) that will allow additional countries like Brazil and Poland to apply for admission, enhancing U.S. security while welcoming more visitors to the U.S.; expansion of the tested and proven Global Entry Program that allows preapproved, low-risk international travelers the ability to utilize an expedited clearance process upon entry into the U.S.; and authorization to make Hong Kong eligible to apply for membership into the VWP, putting the U.S. one step closer toward preferred access to the valuable Hong Kong travel market. The leadership of the House of Representatives announced that the Senate bill has no chance of passage in the House. “We are not going to do the Senate bill,” said House Speaker John Boehner. “I have said this since May the 23rd.” House Republicans reaffirmed their plan to handle immigration Page 5 September 2013

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legislation through individual bills, acting first to strengthen border security before addressing other issues. Democrats say that if Congress doesn’t agree on legislation by the end of the year, any change in immigration law is unlikely.

Congress Showing Signs of Interest in Ancillary Revenue With Congress searching for ways to address the long-standing budget mess, members are taking notice of the increasing amount of revenue that carriers are generating from ancillary fees that escape the federal tax man. Nick Rahall, top Democrat on the House Transportation Committee, says the airlines are "playing pretty fancy-free and footloose with raising the various fees." House Ways and Means member Earl Blumenauer said he's "confident" that the committee will look at the issue. According to the Bureau of Transportation Statistics, revenue from fares as a percentage of total passenger airline revenue has slowly been dropping. In 2007, the year airlines began charging for checked baggage, BTS recorded U.S. airlines as receiving 74.3 percent of revenues from fares. For the first three quarters of 2012, the most recent data available, airlines received 70.7 percent of revenue from fares. Meanwhile, airline revenues from ancillary fees continue to grow. According to BTS, U.S. airlines collected nearly $3.5 billion in baggage fees alone in 2012. That is nearly three times the $1.2 billion income from bag fees the airlines collected in 2008. Delta collected the most – over $865 million. For the first quarter of 2013, revenue from baggage fees are up $15 million over the same period in 2012. Revenue from reservation cancellation and change totaled over $2.5 billion in 2012, and is up $55 million in the first quarter of 2013 over 2012. BTS further reported that the net operating profit for the ten largest U.S. airlines in 2012 was $5.3 billion. Total net income was $201 million. (Net Income or Loss may include non-operating income and expenses, nonrecurring items or income taxes.) In other words, ancillary revenue accounted for most, if not all, of the airline’s operating profit. The airports community, reinforcing the schism with the carriers, not only argued that the ancillary fees should be subject to taxation, but suggested that these tax revenues be devoted to airport capital improvement. The American Association of Airport Executives’ Todd Hauptli wrote, "The diversion of funding from the aviation trust fund through the ancillary fee loophole adds to the already daunting challenges facing the nation's airports as they struggle to fund more than $10 billion in annual needs."

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LATIN AMERICA REPORT Cusco’s Velasco Astete International Airport Faces Capacity Constraints Cusco is the leading tourist destination in Peru, but its only international airport, Velasco Astete, has nearly reached its capacity. Peruvian Airport and Aviation Corporation statistics reveal that 954,586 visitors arrived and departed Cusco through the airport in 2012. Local and national businessmen are concerned about the future of the Imperial City of Peru given its stated goal of reaching 2 million tourists.

Kenneth Currie Executive Vice President, Finance and Privatization

According to Roger Valencia, the president of the Cusco Regional Chamber of Tourism, the region’s airport only has the room to increase by another 30 percent, and that’s if everyone involved works together to utilize every bit of the airport’s current infrastructure by coordinating flight schedules, baggage systems, and passenger service areas. Even with such an effort, Valencia’s projections indicate that the terminal in Cusco could only reach a maximum of 1.2 million arrivals in part because Cusco’s airport has a curfew at 6 p.m. Flights after that curfew are not being considered because the location of the airport is so close to populated areas of the city and neighbors have already protested against noise pollution in the area.

PERU

LIMA

Chinchero

Cusco

Two potential alternatives to Velasco Astete International Airport are available. First, neighboring Arequipa’s Alfredo Rodríguez Ballón Airport accommodates 561,210 passengers annually, and it has capacity to accommodate significantly more. In addition, Arequipa allows nighttime operations, and is nearer to sea level, which allows planes to depart without a payload penalty. Second, a new airport for Cusco has been planned, “Chinchero International Airport,” which could begin construction next year. The new airport would is planned to accommodate 2.5 million passengers, which is nearly double the traffic that Velasco Astete could accommodate at full capacity.

The problem is that the new airport won’t be ready until 2020, at the earliest, and that’s only if they start building Chinchero in 2014. Therefore, some believe that Arequipa will surpass Cusco as the regional “hub” for the southern portion of South America. Being a regional hub is of utmost importance to these cities because it translates to regular flights from Argentina, Bolivia, Brazil, and Chile. Cusco has had service to those markets, while Arequipa only has service to Chile. At the moment, Arequipa might have an advantage if Cusco is unable to commence construction of Chinchero International Airport soon. Arequipa

American Airlines and LAN Colombia Announce Codeshare American Airlines announced a new codeshare agreement with LAN Colombia. The agreement will provide American Airlines customers connecting service on LAN in Colombia, and offer LAN passengers connecting service on American in the United States. The two carriers will codeshare on flights between Colombia and the United States. American Airlines passengers will have access to four new connecting destinations in Colombia: Barranquilla, Bucaramanga, Cartagena, and Pereira. LAN passengers will have access to 12 new connecting destinations in the United States from Miami, including Chicago, Dallas/Fort Worth, Los Angeles, and New York. American Airlines AAdvantage members will be able to earn and redeem miles on flights operated by LAN Colombia. LAN Colombia is expected to join oneworld alliance in the fourth quarter of this year. Page 7 September 2013

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EUROPE REPORT The EU parliament looks to temper congestion at Europe’s busiest airports It is suggested by the European Commission (EC) that half of all flights out of Europe’s busiest airports by 2030 could be delayed, barring any efforts to address congestion issues. To address this problem, the EC launched an “airports package”, which looks to improve airport services to passengers and aircraft.

Ian Kincaid Vice President, Economic Analysis

Three main legislative pieces will form the core of the airports package. The first piece aims to improve ground services at airports, which entails boosting competition between providers of baggage handling, refueling and other airport ground services. The second item looks at the allocation of airport slots, which refer to the permissions needed by airlines to take-off and land. The third and final section of the package looks at improving the process by which local authorities set noise limits. Each legislative piece will be headed by a MEP (Member of the European Parliament) of a different nationality. A discussion about airport slots has already taken place. Experts were invited to a discussion on the topic by the Commission, and a debate took pace as to whether or not secondary slot trading should be promoted. Simon Smith, an air traffic policy and regulation expert, argued that certain airlines holding long term slots may not necessarily be the ones that use them most efficiently. He went on to conclude that permitting secondary slot trading could have the potential to make a significant difference at airports.

Ryanair warns investors that profits for the current fiscal year could be less than expected On September 4th, Ryanair released a warning for the first time since 2004, indicating that profits could be less than expected for the current fiscal year. The announcement led to the carrier’s shares falling by 11%, which in turn negatively affected other European airline stocks. Concern from investors revolved around the state of the airline industry in the EU, which has struggled to recover since the 2008 financial crisis. Specifically, the announcement noted that net income for the end of the 2014 fiscal year is estimated to be at the low end of the $750 million to $790 million range. A deteriorating British pound and possible further weakening of airfares into the winter season could push the carrier’s bottom line figure even lower than the revised forecast range. The airline’s chief executive suggested that a decrease in forward bookings for the coming months of September, October and November added to the cautiousness used in the revised forecast. In response to the lower booking rates, Ryanair reduced fares and grounded an additional 20 to 30 aircraft for the winter season, on top of an existing 50 that are not in service.

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CANADA REPORT Transport Canada gains status and an influential minister in cabinet shuffle Transport Canada has returned to its former position as a stand-alone department, and with the appointment of the influential and well respected Lisa Raitt as the minister of Transport, the department may see a level of prominence it has not had in years.

Debra Ward Executive Consultant

Ms. Raitt has been welcomed to her portfolio by the transportation community, which views her experience in Canadian transportation and her influence in Parliament as a plus for the sector – especially for airports and aviation. Prior to joining the government, Ms. Raitt was President and CEO of the Toronto Port Authority (TPA), which operates the Billy Bishop Toronto City Airport, the Port of Toronto and the Outer Harbour Marina. During her tenure, Porter Airlines launched service from the island airport and the TPA invested $15 million in airport upgrades.

Air Canada ordered to pay more to bumped passengers The Canadian Transportation Agency (CTA) has ordered Air Canada to substantially increase its denied boarding compensation. As of September 18, 2013, the airline will be required to pay between $200 and $800 to each bumped passenger, depending on the length of the delay. It has been 12 years since AC’s compensation rate has increased. This ruling brings AC’s payout requirements closer to both the U.S. and European tariff requirements.

Community Airports Qualify for Infrastructure Funding The government of Canada has expanded its Community Improvement Fund to include local and regional airports and tourism projects for the first time. Financed through Gas Tax Fund payments, the $21.8 billion 10 year program partners with smaller communities to give municipal governments greater flexibility to address their specific infrastructure needs. The Community Improvement Fund announcement was part of a broader re-boot of Canada’s “Building Canada” infrastructure program announced in the last federal budget.

Canada Signs New Air Service Agreement with Bangladesh Canada has signed a first-ever air transport agreement with Bangladesh, allowing direct scheduled air services between the two countries. The agreement provides flexibility for airlines to access all points in Canada and Bangladesh, both for passenger and all-cargo services. Airlines may also choose to offer codesharing. The agreement allows airlines to offer new services immediately.

Foreign Service Strike Impacts Travel to Canada The summer tourism season got off to a shaky start when foreign service workers who process visa applications abroad launched a series of rotating strikes that severely slowed down the visa approval process. In some instances it has ground to a complete halt, with only refugee claimants processed. The Tourism Industry Association of Canada estimates the delays will reduce travel from people who require visas by 30%, costing cost the tourism industry $280 million this summer. As the strike drags through the summer with no end in sight, international students are also being affected by the work action.

Canada tweaks its Foreign Trade Zones program Backed by a $5 million marketing program, the Canadian government intends to make Canadian FTZs more attractive and competitive for exporters by reducing red tape, cutting costs and improving access to existing programs.

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While the initiative introduces a number of cost and time saving measures, such as removing the annual registration fee for the Customs Bonded Warehouse Program, the five programs grouped under the FTZ have not been changed. Each of the five programs grouped under the FTZ provide different benefits, and have different criteria and reporting requirements. As part of the improvements to the program, the government plans to set up “Foreign Trade Zone Points” -- a single point of contact and coordinated service that provide facilitated access to FTZ programming for companies that set up on their site.

Parliament to reboot this fall with a new session, Throne Speech The government hit the “restart” button this summer, proroguing (ending) the current session of Parliament and promising a fresh start in October when they outline their new agenda in a Speech from the Throne. The government is expected to keep its Economic Action Plan front and centre in the new session. However, it still has to deal with unfinished business, including finalizing major free trade agreements with the EU, the multilateral Trans Pacific Partnership and others.

SPECIAL REPORT: CANADA’S RECENT FTZ IMPROVEMENTS On 29 August, the Government of Canada announced “measures that will improve Canada’s marketing of its foreign trade zone (FTZ) programs to attract international investment and will reduce red tape and costs for Canadian businesses, allowing them to compete globally.” The announcement can be found at http://www.fin.gc.ca/n13/13-108-eng.asp. So what do these measures really mean?

Robert Andriulaitis Vice President, Transportation & Logistics Studies

Elimination of Bonded Warehouse Program Registration Fees One of the measures is the elimination of the annual registration fee to participate in the Bonded Warehouse Program as of 1 April of this year. This fee ranged from $100 to $5,000 per year, depending on the amount of security deposited under the Customs Bonded Warehouse Regulations. The government estimates that this will collectively save users of the program $400,000 annually, which should improve the attractiveness of the program. Nothing major, but it does save users money and administrative time. This is a step in the right direction.

Standardized Processing Times and a Marketing Campaign Two of the other measures are also new and constructive. The government introduced service standards for processing times (90 calendar days for Duties Relief applications and Duty Drawback claims and 60 business days for Customs Bonded Warehouse applications). One of the issues in dealing with government often is unknown response times (just ask some overseas tourist applying for a visa). This will increase certainty, and therefore is a positive step. The government also will also launch a five-year $5,000,000 marketing program. Not a great deal of money, but given one of the issues was a general lack of awareness of the Canadian programs, particularly the Export Development Centre (EDC) program, this should help.

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Single-Window for FTZ Programs Finally Coming The remaining two measures, however, only return us to where we were prior to 9/11, when priority shifted away from FTZ development to other pressing issues. The simplified application process and the single window concept for delivery of FTZ programs were part of the initial revamp of the programs that came with the introduction of the EDC program. To get FTZ-like operations in Canada requires combining the EDC program with other programs. Thus while the single window and simplified application will make that process of packaging programs easier, this was intended to be in place long ago. Also, when you look at the online government description of how a program such as the Exporters of Processing Services Program works, you are faced with a rather complicated looking schematic.1 It would thus seem that the common perception of the complexity of the Canadian FTZ program may well remain, particularly when prospective investors realize they will likely have to marry a number of these programs to do what they want to do. There is a danger that the good news of a simplified application and single window approach will be lost when potential users look at how individual programs work.

Limitations on Value-Add Remain The key concern, however, remains the inability of potential investors to do in Canada what they can do in a U.S. FTZ: manufacture and add significant value to the product they are dealing with. This is because the new initiatives do not address the key shortcomings of the Canadian approach, such as minimum thresholds for exports, the prohibition against substantially altering the goods, and restrictions on the amount of value that can be added. These limitations, unfortunately, remain. The key strengths of the Canadian approach, such as use of auditable information systems for controls rather than fences, guards and bonds, and the ability to locate FTZs anywhere there is a business case to be made, have been maintained. But while the “new” measures offer some encouragement, they likely fall well short of what is needed to make Canadian FTZs truly competitive with the alternative just to the south of us.

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http://www.fin.gc.ca/ftz-zf/index-eng.asp

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ASIA-PACIFIC REPORT The 2nd Annual Aviation Training Congress China (ATCC) to be held in October in Xi’An City On October 17th, Xi’An City will play host to the 2nd Annual ATCC. The event serves to promote both industry networking and aviation training market development. Discussions will take place on the opportunities and challenges in the Chinese aviation market, updates, and aviation training market realities.

Doris Mak Director, Special Projects

The event is tied in part to China’s decision to reform its low altitude airspace back in November 2010. The policy addresses the country’s need to promote and encourage aviation education and training. While popularity with business, commercial and private flying training have increased over recent years, there is still a significant shortage of trained personnel in the industry. The ATCC conference will further address the issue this year. With support from the Chinese government, high level speakers and over 500 global participants, the 2013 event is scheduled to be bigger than last year. Some event highlights include:  Over 50 airlines & general aviation companies  Over 100 aviation academies and training schools  Networking sessions  500+ high profile local and global attendees

Higher Aviation Turbine Fuel (ATF) prices create a particular cause for concern in India’s domestic airline market

At the start of September, oil PSUs (Indian state-owned enterprises) raised the cost of aviation turbine fuel (ATF) by 7%. Alongside a weakening rupee, carriers in the Indian airline market are set to suffer, given that ATF accounts for over half of their operating costs. Further adding to the problem is that the months between July and September are typically a low travel season for India. Indian airlines have already dropped fares significantly to attract passengers, and raising fares to offset the fuel price hike may not be a viable option. Airline officials note that airfares can be expected to increase between October and mid-January. In response to the fuel cost increase, the aviation ministry in India is set to meet in mid- September to discuss the possibility of lowering the sales tax placed on ATF. A particular focus will be placed on the cities of Delhi and Mumbai, who impose higher-than-average taxes on the turbine fuel.

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AVIATION NEWS UNITED STATES UPDATE U.S. AIRLINE CO-PILOT FLYING HOUR REQUIREMENTS TO BE INCREASED The U.S. will increase the number of flying hours required by first officers before being eligible to fly for an airline. Specifically, an Airline Transport Pilot certificate will be required upon the completion of 1,500 hours of flight time. This was initially the number of hours required for captains, who have also had their requirements changed. A pilot will need at least 1,500 hours of flight time to be eligible for captaincy; however 1,000 of these hours must be earned on a commercial carrier, as a copilot. This decision is fueled in part by a number of accidents that took place as a result of pilot error. LEADERSHIP GAP CREATED AS HOMELAND SECURITY SECRETARY STEPS DOWN Announced in mid-July, the Department of Homeland Security (DHS) Secretary, Janet Napolitano, stepped down from her position to take a posting at the University of California. Her departure widens the gap of leadership at the DHS, which currently has 15 out of 60 management positions vacant. These unfilled positions have potential to stall and slow the implementation of policy decisions for the country. The president has not yet indicated who Ms. Napolitanoâ&#x20AC;&#x2122;s replacement will be.

once the merger between American and US Airways closes. AIR LINE PILOTS ASSOCIATION UNHAPPY WITH ASIANA NTSB INVESTIGATION The president of the Air Line Pilots Association (ALPA), Capt. Lee Moak, criticized the National Transportation Safety Board (NTSB) for their investigation of the Asiana Boeing 777 crash at San Francisco in early July. Specifically, Capt. Moak suggested that the NTSB was looking for media attention with the release of operational details of the Asiana crash. In response, the NTSB indicated the need for transparency throughout the investigative process. AMERICAN-US AIRWAYS POTENTIAL MERGER CHALLENGED BY U.S. DEPARTMENT OF JUSTICE

Progress of the merger between US Airways and American Airlines halted in light of an antitrust lawsuit filed by the U.S. federal government, along with six states. Due to minimal interference from antitrust regulators on mergers in the past, the move surprised both airlines, who were expecting to finalize the merger on August 15th. Executives of both carriers intend to challenge the decision in court. The court date has been set for November 25th.

AMERICAN AIRLINES TO APPOINT NEW PRESIDENT FOR CARGO OPERATIONS Former American Airlines cargo president, Kenji Hashimoto, received a promotion in July to senior vice president of regional carriers. The new opening for cargo president will be filled by Jim Butler, who is shifting positions from his current role as managing director of commercial planning and performance. The change in staffing will start Page 13 September 2013

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MIDDLE EAST / AFRICA UPDATE PAKISTAN INTERNATIONAL AIRLINES TO ADD NEW PLANES TO FLEET After conducting an analysis of passenger flows over the last five years, and with the use of IATA’s projected passenger figures, Pakistan International Airlines (PIA) decided to add 10 narrowbody next generation aircraft to their current fleet. Pakistan’s advisor to the Prime Minister notes that the biggest challenge in reviving PIA is to make it a profitable business. This move looks to address the carrier’s struggle with domestic routes by providing modern narrowbody aircraft. AIRCRAFT MOVEMENTS IN THE UAE TO DOUBLE OVER THE NEXT DECADE According to the General Civil Aviation Authority (GCAA), aircraft movements over the next 10 years are expected to double in the United Arab Emirates. Last year, aircraft movements increased by 7% to 741,500 million, with 895,500 expected by 2015 and over 1.13 million by 2020. This growth comes at a cost, however, as IATA indicated the congestion in the skies above the Arabian Gulf poses a serious threat to future growth of aircraft movements. The UAE is in the process of easing the congestion problem by executing the UAE airspace enhancement program, alongside airspace proposals that are gradually taking effect this year. EMIRATES IS READY TO LAUNCH DIRECT SERVICE TO STOCKHOLM In an effort to increase its presence in Northern Europe, Emirates is set to offer nonstop service from Dubai to Stockholm. The new service will begin on September 4th and will be operated by a 777300ER aircraft. The airline is hosting events in Sweden to help raise awareness of the carrier and the new route.

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LATIN AMERICA UPDATE INTERJET RECEIVES FIRST SUKHOI SUPERJET 100 Mexico’s LCC, Interjet, took delivery of its first Sukhoi Superjet 100. This is the first of 20 that are currently on order, with options for 10 more. The delivery took place at the Paris Airshow held in Le Bourget and provided an opportunity for the airline to publicize the new plane. While the airline has not confirmed a service-entry date for the plane, it has suggested that the aircraft will be used on high-density, medium-range routes. SEVERAL LATIN AMERICAN CARRIERS HAVE JOINED THE STAR ALLIANCE Star Alliance has affirmed its presence in Latin America with the addition of three new carriers. Avianca, TACA Airlines and Copa Airlines joined in late June, providing members of the Star Alliance five new major hubs located in Latin America.

EUROPE UPDATE ADDITIONAL RUNWAY AT GATWICK PRESENTS ALTERNATIVE TO SOLVE HEATHROW’S CAPACITY ISSUES Gatwick’s chief executive suggested the addition of a second runway at LGW as a means to ease the UK’s hub crunch. This could serve to cut costs relative to a proposed brand new airport in the core of London and reduce noise pollution relative to a third runway at Heathrow. Although Gatwick already has plans to implement a new runway, construction is unable to begin until 2019 due to a historic agreement with the local council. BRITISH AIRWAYS INAUGURAL 787 ROUTE British Airways announced the first destination for its first 787 commercial flight. Starting September 1st, the Dreamliner will fly between Heathrow and Toronto Pearson at a frequency of 10 flights per week, according to industry schedule data.

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EUROPEAN UNION LIFTS PHILLIPINE AIRLINES BAN Starting mid-July, the European Union (EU) lifted its airspace ban on Asia’s oldest carrier, Philippine Airlines. In light of this news, the carrier began planning new routes, which include flights to Rome, Paris, Amsterdam and London by September or October. Other Philippine carriers remain banned from flying into EU airspace, although significant progress is said to have been made in aviation safety as a whole in the country. AIRLINE BUSINESS TECHNOLOGY AWARD WON BY LUFTHANSA GROUP Lufthansa achieved first place in the technology category of the Airline Strategy Awards, as decided on by a panel of industry experts in July of this year. The panel recognized the Lufthansa Group for its fuel saving technology investments, and ability to integrate new technology into their overall corporate strategy. Furthermore, experts cited particular examples, including Lufthansa’s current test case program involving a pilotcontrolled hybrid-electric tow-tractor, and new aircraft paint texture which looks to improve fuel efficiency. IAG CARGO REVENUES DECREASE DURING THE FIRST HALF OF 2013 At the beginning of August, IAG Cargo announced that commercial revenues decreased by 8.3% during the first half of 2013, when compared to the same time period in 2012. Contributing to this drop in revenue was the 8.4% drop in cargo ton kilometers, and a 2.7% drop in cargo capacity. A spokesperson for IAG cargo noted that the results reflect weak market conditions and Iberia’s capacity reduction.

Page 15 September 2013

CANADA UPDATE EDMONTON AND VANCOUVER TO RECEIVE SERVICE FROM ICELANDAIR Starting in the summer of 2014, Icelandair will increase operations out of Keflavik by providing service to Edmonton and Vancouver. The routes will be served by Boeing 757-200s, which grows the carrier’s total fleet size to 21. The new services will first be introduced as seasonal, with future plans to expand them to a year-round operation. Vancouver will receive the new flight twice a week, while Edmonton welcomes the service four times a week. Both routes look to provide support for business and leisure demand, as well as improve connectivity options for Canadians into Europe through the Keflavik hub. WESTJET TO OFFER MORE AMENITIES WITH NEWLY INTRODUCED PLUS PROGRAM Calgary-based WestJet announced the launching of ‘Plus’, a program where customers can pay a premium to receive additional convenience, flexibility and comfort on flights. Some of the perks include the ability to check an additional piece of baggage at no cost, board in advance, priority screening at select airports, complimentary food and alcohol on flights and extra overhead storage bin space. BOMBARDIER BEGINS CONSTRUCTION ON CSERIES ASSEMBLY FACILITY Bombardier started construction on a new factory that will serve as the final assembly plant for the CS100 single-aisle aircraft. The building, located in Mirabel, Québec will be just less than 700,000 square feet and doubles the firm’s current industrial capacity. Several CS100 and CS300 planes are currently under construction in a modified CRJ assembly plant. The new plant is expected to reach completion by mid-2014, and will have the ability to produce 12 aircraft per month at peak output.

Realizing the vision together

AIR CANADA TO RECEIVE BOTH THE-800 AND -900 787 VARIANTS On August 8th, Air Canada announced its decision to split its 787 order by choosing 15 of the 787-800s and 22 of the longer range 787-900s. The carrier expects to receive a total of six 787 deliveries in 2014. Additionally, Air Canada is set to receive four high-density 777-300ERs before year-end 2013. FIRST AIR UPDATES FLEET WITH ADDITION OF THREE 737-400’s First Air, a Canadian operator serving remote communities, acquired three 737-400s in July. These planes were previously owned and operated by KLM Royal Dutch Airlines. Two of the 737s are set to be converted into a combiconfiguration that will house four cargo pallets and 72 passenger seats. The third 737 is configured with a full passenger seat layout and will enter service in late August, operating between Ottawa and Iqaluit. The remaining two aircraft will enter service next year. The airline expects that the new models will help expand capacity and operate at a higher level of efficiency. NORTH PEACE REGIONAL AIRPORT TO RECEIVE $250,000 IN PARKING UPGRADES The board of directors from the Northern Development Initiative Trust approved $250,000 worth of upgrades to the North Peace Regional Airport parking lots. Due to the addition of WestJet flights and high demand at the airport, parking lots are currently operating beyond capacity. The upgrades will consist of 200 additional stalls, half of which will be reserved for rental cars. The snow storage area will be relocated and a new pay parking system is to be implemented.

Page 16 September 2013

CARGOJET RECIEVES CARRIER OF CHOICE AWARD The Canadian Transportation and Logistics magazine awarded Cargojet the Shipper’s Carrier of Choice Award. The carrier performed particularly well on the metrics of: problem solving, sustainable transportation practices, competitive pricing, quality of equipment of operations, customer service and on-time performance. Surpassing shipper expectations assisted Cargojet in receiving the honour for the eleventh year.

ASIA-PACIFIC UPDATE AIR NEW ZEALAND CONTINUES WITH FLEET RENEWAL PLANS Air New Zealand is continuing with its fleet renewal strategy by upgrading its narrowbody and widebody jets. The trend will accelerate in 2014 as the carrier expects to receive a record number of new planes. Alongside the arrival of the 787-9, of which Air New Zealand is the launch customer, 777-300ERs and A320s will be added to the existing fleet. The first 787-9 is scheduled for delivery in July 2014, with another two set to arrive in September of the same year. The airline indicated that the first 787-9 will be placed on the current long-haul routes from Auckland to Shanghai and Tokyo. HAINAN AIRLINES RECEIVES FIRST 787 DREAMLINER Hainan Airlines, China’s fourth largest airline in terms of fleet size, took delivery of its first 787 Dreamliner aircraft at the beginning of July. The carrier indicated it will first be placed on the Beijing-Haikou route. An additional 10 Dreamliners have been ordered, and expectations are that the new planes will allow the airline to open more routes to North America from Beijing. In addition, departures from Beijing to Toronto, Seattle and Chicago will be increased after the 787 is added to these routes.

Realizing the vision together

AIR ASIA LOOKS TO LAUNCH A DOMESTIC INDIAN CARRIER In July, the founder of budget carrier Air Asia Tony Fernandes announced plans to enter the ultra-competitive domestic Indian market in October of 2013. He hopes to make flying affordable with promises of “the lowest possible fares”. Some industry observers note this could be challenging, as 65% of the Indian market share currently belongs to low-cost carriers. The new airline will operate out of Chennai to avoid the significant landing fees at Delhi and Mumbai. GARUDA INDONESIA TAKES DELIVERY OF ITS FIRST 777-300ER Indonesia’s flag carrier, Garuda Indonesia, recently took delivery of its first 777 as part of its fleet revitalization program. The new aircraft will be equipped with in-flight internet and is configured to have 268 seats in economy class, 38 in business class and eight first class suites. BUDGET CARRIER AIRASIA JAPAN TO BE REBRANDED AS VANILLA AIR

Budget airline AirAsia Japan is to be rebranded as ‘Vanilla Air’. This move follows a recent decision to end the joint venture between AirAsia Japan and All Nippon Airways (ANA). The newly named budget carrier will operate under ANA’s ownership. Vanilla Air will begin flights in December 2013, starting operations with two planes to be leased from ANA. Initial routes served will be short-haul, with expansions for longer routes planned, along with a target fleet size of 10 by 2015.

Page 17 September 2013

OTHER NEWS EMBRAER ON TARGET TO HIT 10 YEAR OBJECTIVE In 2005, Embraer set out to be a “major player” in the business aviation sector. The firm’s market share has grown from 4.6% in 2007 to 7.3% today. A spokesperson for Embraer notes that while global business jet sales are expected to be soft in the next few years, there are certain markets such as Turkey, and eventually Africa, which exhibit strong demand. THE AIRBUS A350 HAS COMPLETED ITS FIRST ROUND OF TESTING As of July 15th, Airbus completed all A350 test flights required for the first phase of the aircraft’s evaluation program. A group of 10 pilots flew a total of 92 flight hours on the aircraft, performing tests on components such as engines, landing gear, electrics, braking, fuel, cabin pressurization, autopilot and auto-land. The next step is for the test aircraft, known as MSN1, to go through routine maintenance. Airbus will boast the largest test fleet ever as it prepares a total of five aircraft for testing purposes. The next phase of testing is scheduled for August, with the first delivery shipping at the end of 2014. COMAC C919 DELIVERY DATE TO BE PUSHED BACK TO 2017/18 COMAC (Commercial Aircraft Corporation of China) pushed back the delivery date of their C919 aircraft. This marks the second delay for the program, the first of which pushed back the maiden flight to the second quarter of 2015, from June 2014. The delivery date, originally scheduled to take place in 2016, has now been pushed back to late 2017 or early 2018.The single-aisle plane is intended to compete with the Airbus A320 and Boeing 737.

Realizing the vision together

AIRLINE DATA – ASIA PACIFIC Asia-Pacific Airlines Release Traffic Figures for July 2013

Airline

Traffic (RPKs – millions)

Capacity (ASKs – millions)

Load Factor

N/A

8,446 4.4%

10,447 3.9%

80.8% 0.3 pts

4,714 2.0%

6,924 4.4%

68.0% 1.7 pts

9,374 4.9%

11,025 0.1%

85.0% 3.9 pts

1, 2

Notes:

1. Qantas July figures not yet released 2. Results are not available at time of report issue. 3. Results are for June as July numbers were not available at time of report issue. 4. Includes Cathay Pacific and Dragonair.

Source:

Carrier traffic reports

AIRLINE DATA – EUROPE European Airlines Release Traffic Figures for July 2013 Traffic (RPKs – millions)

Capacity (ASKs – millions)

Load Factor

21,899 1.8%

25,069 1.3%

87.4% 0.4pts

20,913 1.1%

24,691 1.3%

84.7% 0.1pts

18,062 6.6%

21,441 8.5%

84.2% 1.5pts

Airline

Page 18 September 2013

Notes:

1. Includes Martinair. 2. Includes Lufthansa Passenger Airlines, SWISS, Austrian Airlines. 3. Includes British Airways (including bmi Mainline, excluding bmi Regional and bmibaby) and Iberia (including Iberia Express).

Source:

Carrier traffic reports

Realizing the vision together

AIRLINE DATA – NORTH AMERICA North American Carriers Release Traffic Figures for July 2013 Traffic (RPMs – millions)

Airline

Capacity (ASMs – millions)

Load Factor

CANADA 5,654 1.9%

6,603 2.3%

85.6% 0.3 pts

1,755 8.3%

2,110 11.1%

83.1% 2.2 pts

UNITED STATES

Page 19 September 2013

3,521 7.3%

4,020 6.8%

87.6% 0.4 pts

19,692 1.1%

22,581 1.8%

87.2% 0.6 pts

13,143 2.5%

15,120 2.6%

86.9% 0.1 pts

19,417 1.7%

22,326 2.7%

87.0% 0.8 pts

6,424 6.8%

7,294 5.1%

88.1% 1.4 pts

9,977 0.7%

11,948 0.6%

83.5% 1.1 pts

747 15.2%

815 14.1%

91.6% 0.9 pts

Notes:

1. Consolidated results for United Continental Holdings. 2. Results are for American Airlines Inc., and its wholly owned subsidiary AMR Eagle Holding Corporation. 3. Results are for US Airways Group consisting of mainline-operated flights including US Airways Express flights operated by wholly owned subsidiaries PSA Airlines and Piedmont Airlines. 4. Results are combined traffic results for Southwest Airlines and AirTran. 5. Total system includes scheduled service, fixed fee contract and non-revenue flying.

Source:

Carrier traffic reports.

Realizing the vision together

Page 20

September 2013

2013

2012

Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports July August September 3rd Quarter October November December 4th Quarter Full Year January February March st 1 Quarter April May June 2nd Quarter

Toronto

Vancouver

Montréal

Calgary

Edmonton

Ottawa

Winnipeg

Halifax

Victoria

Kelowna

Saskatoon

Regina

+1.8% +4.9% +3.7% +3.5% +5.4% +6.0% +4.5% +5.3% +5.1% +0.6% -9.5% +3.7% -1.7% +2.0% +5.8% +4.1% +4.0%

+2.7% +3.6% +2.8% +3.0% +3.5% +3.8% -0.7% +2.1% +3.3% -1.6% -1.8% -0.9% -1.4% -1.5% +0.4% +4.3% +1.0%

-3.0% +0.7% +0.0% -0.8% -0.2% +1.7% +3.2% +1.5% +1.0% +0.4% -1.8% +2.3% +0.3% -0.5% +3.8% +1.7% +1.7%

+4.8% +6.5% +4.2% +5.2% +7.6% +7.5% +6.5% +7.2% +6.0% +3.7% +2.2% +6.0% +4.0% +3.4% +5.4% +1.9% +3.6%

+5.5% +8.0% +5.2% +6.3% +6.6% +7.1% +3.6% +5.7% +6.4% +3.6% +2.4% +3.8% 3.3% +2.9% +4.5% +5.5% +4.3%

-1.3% +3.1% -4.0% -0.7% -3.2% -4.3% -4.0% -3.8% +1.3% -5.2% -7.2% -2.6% -5.0% -2.2% -2.3% -4.0% -2.8%

+2.5% +4.6% +1.9% +3.0% +4.6% +2.8% -2.4% +1.6% +4.4% -2.1% -4.4% -1.2% -2.6% -4.4% -0.8% -1.1% -2.1%

-2.7% +1.3% -2.2% -1.1% +0.0% +0.8% -5.3% -1.5% +0.3% -0.5% -8.2% -0.6% -3.1% -4.3% -3.1% +1.0% -2.1%

-2.1% +2.4% +0.4% +0.3% +0.8% +0.7% -0.3% +0.4% +0.5% -0.1% -0.4% +2.6% 0.7% +0.9% +3.4% +10.1% +4.8%

+3.2% +5.9% +2.4% +3.9% +4.5% +6.3% -0.6% +3.1% +3.7% +0.6% -0.5% +0.2% 0.1% +0.4% +6.1% +6.2% +4.2%

+3.7% +8.7% +6.5% +6.3% +4.1% +5.4% +4.7% +4.8% +6.5% +3.9% +2.8% +5.3% 4.0% +4.5% +4.5% +1.1% +3.4%

+3.8% +6.8% -0.1% +3.5% +5.6% +3.7% +3.9% +4.4% +3.9% +5.3% +0.9% +5.3% 3.8% +4.8% +2.4% -0.6% +2.2%

Source: Individual airports’ traffic reports. Note: Subject to revision.

Realizing the vision together

Page 21

September 2013

Summary of Total Year-Over-Year Passenger Traffic Performance at Selected U.S. & International Airports

2013

2012

United States Atlanta

Chicago

July

+0.4%

-1.7%

Los Angeles +2.0%

August

+2.1%

-0.2%

September

+1.5%

3rd

Quarter

International

-0.2%

New York JFK +4.3%

London Heathrow -4.4%

Paris CDG -0.8%

+1.0%

+0.9%

+12.8%

-1.9%

+1.5%

-3.9%

+0.8%

+6.2%

Dallas

Denver

-2.1%

+3.0%

-2.9%

+6.2%

Tokyo Narita +17.2%

Mexico City +10.9%

+4.6%

+4.8%

+17.3%

+9.9%

-0.4%

+1.0%

+4.3%

+12.7%

+8.3%

Frankfurt

Beijing

+3.7%

+0.3%

+0.6%

+1.3%

-1.6%

+2.2%

-1.6%

+0.5%

+7.7%

-2.0%

-0.3%

+3.1%

+5.1%

+15.7%

+9.7%

October

+2.7%

-2.4%

+1.3%

-0.7%

+3.3%

-1.0%

-0.1%

-2.1%

+1.4%

+1.2%

+8.9%

+7.7%

November

+3.7%

-0.9%

+1.6%

+2.5%

+2.2%

+4.1%

+3.1%

+1.1%

-2.7%

+3.1%

+11.2%

+7.7%

December

+3.2%

-3.7%

+5.0%

+4.2%

+0.3%

+7.3%

+2.0%

-1.4%

-6.3%

+7.2%

+10.9%

+6.1%

4th

+3.2%

-2.3%

+2.6%

+1.9%

+3.4%

+1.6%

-0.9%

-2.3%

+3.7%

+10.3%

+7.1%

Full Year

Quarter

+3.2%

+0.1%

+3.0%

+1.4%

+0.6%

+6.5%

+0.9%

+1.1%

+1.9%

+4.3%

+16.8%

+11.8%

January

+3.1%

+0.6%

+3.3%

6.8%

+3.1%

+5.4%

+0.3%

-3.0%

-4.9%

-0.3%

+6.2%

+7.7%

February

-0.9%

-5.7%

0.4%

2.9%

-1.6%

-5.2%

1.0%

-1.6%

0.2%

7.3%

8.4%

2.2%

March

-0.1%

-3.4%

5.6%

2.5%

0.0%

-0.3%

3.9%

n/a

-1.1%

7.6%

9.7%

2.7%

1st Quarter

0.7%

-2.8%

3.2%

4.0%

0.5%

0.1%

1.8%

n/a

-2.0%

4.8%

8.2%

4.2%

April

-0.8%

+5.6%

+3.8%

+5.6%

-2.6%

-7.5%

-0.7%

-3.1%

-2.2%

+2.5%

+6.1%

+4.4%

May

-5.6%

+0.7%

+5.6%

+1.5%

-1.4%

-0.1%

+4.7%

+2.5%

+0.4%

+3.4%

+5.4%

+7.3%

June

n/a

-1.2%

+6.5%

+3.7%

-2.1%

-1.0%

+4.6%

0.0%

+3.1%

+1.4%

+9.2%

+8.6%

2nd Quarter

n/a

+1.7%

+5.3%

+3.6%

-2.0%

-2.9%

+2.9%

-0.6%

+0.4%

+2.4%

+6.9%

+6.8%

Source: Individual airportsâ&#x20AC;&#x2122; traffic reports. Note: Subject to revision.

Realizing the vision together

INTERVISTAS NEWS The InterVISTAS Group continues to be active in delivering a diverse range of consulting projects around the world and some of the new projects we are working on are listed below:

Denver International Airport Historic Economic Impact 

Provide a variation on an economic impact study for DEN. September 15, 2013 marks the 15th anniversary of service between Denver and London. The report will provide an estimate of the cumulative economic impact of this service.

Eastern Iowa Airport (Cedar Rapids/CID) Business Case and Route Forecasts 

Prepare a business case and route forecasts for two separate potential start-up routes.

LIAT Network Study 

Support scheduling function as the department is transitioned from Antigua to Barbados; conduct a network planning study to reflect fleet changes; and assist in building internal scheduling and network planning capacity.

Transatlantic Development Strategy for Newcastle International Airport 

Prepare a transatlantic development strategy for NCL.

Osijek Airport Business Development Strategy 

Develop a business development strategy and business plan to establish a cargo logistics centre for Croatia’s Osijek Airport.

Saskatoon Airport Authority Route Development Strategy 

Develop a route development strategy for YXE.

YVR Bluetooth Phase III 

Page 22 September 2013

Deliver Phase III of YVR’s Bluetooth passenger tracking program. This phase will see additional scanners installed at retail stores to allow evaluation of factors that influence passenger’s airport shopping behaviour.

Realizing the vision together

SPEAKING ENGAGEMENTS AND EVENTS Deborah Meehan, Chief Executive Officer Airports Council International – North America Conference, San Jose, California September 22-25 Ms. Meehan will speak on The Evolving Canadian Airline Industry.

Emre Serpen, Executive Vice President Business, Alliances and Partnerships Event, London, England September 24, 2013 Dr. Serpen will participate and facilitate the Alliances keynote address on Complexities of Revenue Sharing.

Paul Ouimet, Executive Vice President ICCA Annual Congress, Shanghai, China November 2 – 6, 2013. Mr. Ouimet will present Convention Bureau Models.

Page 23 September 2013

Realizing the vision together

STAFF ANNOUNCEMENTS The InterVISTAS Group is pleased to announce the following promotions and achievements of InterVISTAS staff members:

Arik De joins InterVISTAS as Vice President, Airline Strategy We are delighted to announce the appointment of Arik De as Vice President, Airline Strategy. In Arik’s 13-year transportation career he has worked in over 75 countries. His most recent position over the past two years was managing the network planning team at WestJet where he evolved the airline’s network to add service to nearly 25 cities and over 80 routes. He also led the development, implementation, and launch of the network for WestJet Encore, WestJet’s wholly owned subsidiary operation. Additionally, Arik was also part of key strategic initiatives including fleet and alliance strategy and expansion of WestJet at business destinations. His diversified transportation experience includes positions in airport finance and airline development at the International Monetary Fund/World Bank, air access and economic impact strategy for The State of New York, and as a manager at SH&E/ICF Aviation. Among other projects at SH&E, Arik was responsible for restructuring the route network of a major Gulf airline, designing the long term strategy for an Indian LCC, and integrating a second fleet type for a large Asian airline. Arik has a Bachelor’s degree in Economics and a Master’s Degree in Public Policy and Finance from The University of Chicago. An avid world traveller and polyglot, Arik has been to over 160 countries and looks forward to completing 200 by 40. Welcome, Arik!

Dr. Sabine Reim joins InterVISTAS as Vice President, Airline Network Strategy We are pleased to announce that Dr. Sabine Reim has joined the InterVISTAS team as Vice President, Airline Network Strategy. Sabine’s 17-year career with British Airways has included positions in Strategy, Customer Services, Revenue Management and Network Development. Most recently she has been in charge of Network Development for British Airways’ African, Middle Eastern and Central Asian routes. As part of that assignment, she led the postacquisition integration of bmi’s long-haul routes into British Airways’ network. She also devised a 5-year growth plan as well as a regional realignment strategy. Previously, Sabine managed route development on British Airways’ transatlantic network where she built deep relationships with airports across North America and beyond. She also played a key role in the joint American Airlines-British Airways-Iberia Network Planning team following granting of anti-trust immunity. Sabine has first-hand experience setting up new air service from visualisation through to implementation, and has a proven track record of realising the value of airlines and airports forging strong partnerships with the view to ensuring long-term success of new and existing routes. She holds a PhD in Economics and Business from the University of Reading, an MSc in International Business from The University of London and a BA (Hons) in Travel and Tourism Management from Newcastle Business School. Welcome to IVC, Sabine!

Page 24 September 2013

Realizing the vision together

Luciano Nunes joins InterVISTAS as Director in Brazil Office We are pleased to announce the appointment of Luciano Nunes as a Director in our newly opened São Paulo office. Luciano brings a wealth of experience in the aviation industry. Recently, he worked with the team at Odebrecht Transport where he analyzed opportunities to increase aeronautical and non-aeronautical revenues as well as cargo activity at six Brazilian airports subject to privatization (concession) as a bidder. In addition, he managed operational and environmental studies at those airports. Prior to joining Odebrecht, Luciano worked for DUFRY, the global duty free operator that operates in Brazilian airports, where he identified opportunities to expand the business and new brands to broaden the portfolio. In addition, he studied domestic and international tourism trends to ensure that the business was closely attenuated to its target market. Luciano began his career in 2002 with Brazil’s original flag carrier, VARIG, in E-Commerce and Sales in the very early days of internet sales to customers. Luciano has an undergraduate degree in Advertising and Marketing from FACHA, and an MBA in Management and Marketing from ESPM. He also successfully completed a graduate program in Distribution and Logistics at FIA. Welcome, Luciano!

Alex Welch is promoted to Director, Route Development We are pleased to announce the promotion of Alex Welch to Director, Route Development. Alex continues to develop analytical innovations and efficiencies that improve project quality and value to the client. He is a key member of the Air Service Development team and this new role will expand Alex’s opportunities to provide strategies, processes and systems for our clients. Congratulations, Alex!

Frank Baas joins InterVISTAS as Project Analyst in The Hague Office We are delighted to announce the appointment of Frank Baas as Project Analyst in The Hague office. Frank is involved in market research and analytical support for air traffic forecasting projects. He has taken on roles involving primary research, data analysis, presentation development and modelling. Frank holds a Master of Science in Aerospace Engineering from the Delft University of Technology, and did an internship at InterVISTAS. Welcome to the team, Frank!

Page 25 September 2013

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OUR OFFICES UNITED STATES

CANADA

Bethesda, Maryland 7200 Wisconsin Avenue, Suite 1103 Bethesda, MD 20814 Tel: +1.301.941.1400 Fax: +1.301.941.1402

Vancouver, British Columbia 1200 West 73rd Avenue, Suite 550 Vancouver, BC V6P 6G5 Tel: +1-604-717-1800 Fax: +1-604-717-1818

Boston, Massachusetts One International Place 100 Oliver Street Boston, MA 02110 Tel: +1.617.535.3205

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UNITED KINGDOM Bath* Suite 10, Regency House 2 Wood Street, Queen Square Bath, UK BA1 2JQ Tel: +44.20.8144.1835 Fax: +44.1225.330.209

NETHERLANDS The Hague 10 Anna van Saksenlaan 2593 HT The Hague Tel: +31 70 344 6449 Fax: +31 70 324 5302

*Registered as a Branch Office under the laws of the Registrar of Companies for England & Wales, Company No. FC027160 Branch No. BR, of InterVISTAS-EU Consulting Inc., a Canadian company incorporated under the laws of the Province of British Columbia Business Corporations Act No. BC0771664. InterVISTAS’ 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 provide comments/feedback on the InterVISTAS’ Aviation Intelligence Report, please contact Paul Ouimet at paul.ouimet@intervistas.com or 1-604-717-1800. To subscribe, please send an email to subscribe@InterVISTAS.com To unsubscribe, please send an email to unsubscribe@InterVISTAS.com