InterVISTAS Aviation Intelligence Report March 2013 by Leah Dupuis

MARCH 2013

IN THIS ISSUE:

Airport Planning – P. 3

CEO’s Message – p 2 Feature Articles – p 3

Sequestration Impact – P. 5

Regional Updates – p 10 United States  Europe  Latin America Canada  Asia Pacific

2012 Aircraft Deliveries – P. 7

Aviation News – p 15 Traffic Updates – p 20 InterVISTAS News – p 24

Airline Market Caps – P. 9

CEO’S MESSAGE Hello and welcome to the March edition of the Aviation Intelligence Report. This being my first CEO’s Message, I’d like to say that I am proud to be associated with this team of global aviation, transportation and tourism experts and am looking forward to leading our company to achieve even greater heights.

Deborah Meehan Group Chief Executive Officer

As some of you know, I have been in the aviation industry for thirty years and here at InterVISTAS I have found a great group of people with a broad range of skills and expertise. As such, I am pleased to introduce this edition of the Aviation Intelligence Report. This month, Mick Werson writes on the need for airports to adapt to ever-changing market dynamics when preparing their master plans, Solomon provides an update on the borders and security impacts of U.S. sequestration, Julia Green provides a review of 2012 aircraft deliveries for the big three manufacturers, and our newest team member, Noel Szelewski, provides an update on airline market capitalizations. Our Regional Reports this month include:     

A second airport for Beijing and the grounding of ANA’s and JAL’s Boeing 787s Regulations in Canada for full-fare ticket price advertising and other updates from Parliament Hill Further delays for the new Berlin Airport JetBlue and Copa expansion in Latin America The Boeing 787 Dreamliner grounding and review by the FAA

We hope you enjoy this month’s edition!

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TOWARDS FLEXIBLE, VALUE BASED AIRPORT PLANNING In a free market regime, where investments in airport capacity become riskier due to market uncertainties, sound economic airport development and performance begins with airport planning. For this, airport planning must adapt to the new market dynamics and evolve from urban planning to enterprise capacity planning. In the literature, it has already been recognised that airport planning must become more adaptive, and in practice at least the simpler forms of flexible planning approaches seem to have become more common. Mick Werson Vice President, Finance & Privatization

But flexibility and planning for uncertainty is in fact only part of the requirement. In airport physical planning, many economic and strategic choices are embedded that can substantially affect the airport’s future performance. These should be addressed in an explicit way, rather than in an implicit way as often seen in today’s practice. Therefore, in order to become a truly business-driven planning exercise, airport planning must move away from being a stand-alone technology-driven planning task and become more integrated in the corporate planning cycle. In other words: airport strategic, financial and master planning processes should be knit tightly together, acknowledging the interdependencies between the three planning disciplines:

In this vision, airport planning is a multidisciplinary exercise that within the airport context/market environment has strategic, financial and physical aspects. The boundaries between these planning aspects are not rigid and fixed and the planning aspects complement and cross-fertilise each other. Even more emphasis must be placed on further sophistication of planning tools that actually aim at exploiting flexibility and that will enable planners to deal with the combination of a long planning horizon and market uncertainties, and that can help to mitigate the risk of major under- or overinvestment in capacity. Scenario thinking and the creation of real options are important instruments in this respect. Such planning techniques facilitate the “crossover” to strategic planning and help to deal with the widened range of strategic choices – and as a consequence a wider range of physical development alternatives – that airport managers face in a more turbulent market. Financial analysis must no longer be limited to an ex post exercise, but must be extended in such way that key economic opportunities, choices and trade-offs embedded in the airport physical planning process are made transparent and addressed properly. This will ensure that the airport master plan will be value-based, Page 3 March 2013

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meaning that all planning actions and decisions are aimed at creating economic value and airport efficiency. In the table below, the key differences between “traditional” airport planning and “free market regime” airport planning are summarised: Traditional airport planning

Airport planning for free market regimes

Technology driven

Business driven, value based

Physical infrastructure plan

Physical translation of intended strategy

Reactive

Proactive

Stand-alone

Integrated with strategic and financial planning

Based on traditional (high, low) forecast

Based on market scenarios

Market uncertainty is a risk factor

Market uncertainty provides opportunities

Developed or reviewed once every few years

Continuous review as a part of the business planning cycle

All in all, the proposed paradigm shift is significant, and may require some time for it to become common practice. As we are coming up with answers about how airport planning should adapt to changing market conditions, new questions arise. Real options may be applied. Although gaining momentum in other industries (e.g., oil and gas), there are currently limitations on advanced option techniques for airport capacity development. For example, there is a tendency to move ahead quickly to new capacity development without consideration for optimization or capacity enhancement programs. Another question relates to an integrated airport planning process: how to organise this, how exactly should the physical planning of airport capacity be intertwined with strategy and financial planning? Airport planning may need to become more business driven and value based, but how is that to be combined with the public interests and stakeholders that are typically included in the planning process? These are topics and suggestions for further research. The stakes are significant enough. Successful airport planning may be paramount for individual airports to not only survive in a commercial environment, but also for the airport industry as a whole to contribute to an efficient air transport value chain and accommodate future growth. .

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IMPACT OF SEQUESTRATION ON TSA AND CBP The U.S. federal budget sequestration took effect on March 1, resulting in of $85 billion in federal cutbacks. Impacts on aviation are expected to both be pronounced and prolonged as the political impasse continues. At the same time, sequestration is only one of several major budget deadlines, including the expiration of short-term discretionary spending (March 27), fiscal year 2014 budget deadline (April 25), and potential breach of debt limits (May).

Solomon Wong Executive Vice President

Sequestration has a direct impact on aviation, as part of $1 billion in cuts on core services provided for border/security processing:  

CBP is losing nearly $600 million. TSA is losing $396 million, with most of that from frontline aviation security workers.

Up to Four Hours Wait Time for Border Processing CBP Field Operations issued guidance on maintaining operations that will follow these key principles:   

Security remains highest priority to meet CBP’s anti-terrorism mandate; CBP will prioritize core processing and facilitation operations for both travelers and cargo; and All trusted traveler and trader programs will be maintained

Addressing delegates at a global conference on security in New York, Department of Homeland Security Secretary Napolitano indicated that passengers should expect waits during peak periods of up to four hours due to sequestration cutbacks. Sequestration is causing significant angst for international airports. The growth of international air traffic already presented a major challenge to limited CBP resources. At times, some major hubs have reported queues of two hours during peak periods. The economic impact of delays on international tourism, business and cargo movement could pose serious damage to connections. Secretary Napolitano further highlighted that the impacts from sequestration could impact connecting flight schedules.

Some ways to reduce impacts from sequestration could include greater dependency on automation. Global Entry and NEXUS, for example, use kiosk technologies to virtually eliminate line-ups for participating members. While Global Entry and NEXUS deal with pre-registered low-risk passengers, the balance of passengers (high/unknown risk) depend on CBP officers processing passengers through a traditional booth model. CBP’s proposed partnership with industry through investments in Automated Passport Control kiosks or mobile technologies could offer significant benefits to improve processing at airports. Page 5 March 2013

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Doubling of Wait Time for TSA Security Screening TSA has also reported on increased wait times for processing. A statement was released on sequestration: “Travelers will likely not see immediate impacts at airport security checkpoints on March 1, but lines and wait times will increase as reductions to overtime and the inability to backfill positions for attrition occur. While wait times can vary on a number of factors, if sequestration goes into effect, TSA will put in place a hiring freeze, which will result in up to an additional 1,000 TSA vacancies by Memorial Day Weekend and up to 2,600 vacancies by the end of the fiscal year. With TSA staffing levels decreasing over time, we expect that during busy travel periods wait times exceeding 30-40 minutes could double at nearly all of the largest airports. In addition, passengers who schedule their travel outside of peak flight schedules and plan to arrive close to their scheduled flight time may see their wait times now reach 30 minutes or more.” There are limited options for relief for TSA. While the use of programs such as Precheck can help alleviate some resourcing demands, there are still a core number of security screeners needed to staff a line to operate x-ray and other scanning devices. Nonetheless, there is a higher throughput rate for passengers that could help to ensure the fastest experience possible for eligible participants.

Other impacts Sequestration impacts not only CBP and TSA. Additionally, FAA is losing $637 million and it has declared that travelers should expect delays because of reduced staffing and equipment outages. As air travel on commercial aircraft is an inter-related system, any delays for landing aircraft can have a cascading set of delays on other processes, such as security screening and border control. All affected agencies and departments have established communications mechanisms with the aviation industry for the latest set of impacts due to sequestration. In the weeks ahead, continued monitoring is needed on the specific impacts of sequestration as well as budgetary negotiations in Congress and the Administration.

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COMMERCIAL AIRCRAFT NET ORDER & DELIVERY SUMMARY FOR 2012 The year 2012 was a banner year for the world’s top three commercial aircraft manufacturers. Airbus and Boeing continued to compete for market share in the large jet airliner market, while Bombardier made an impact in the regional jet market with its successful Q400 program. Below is a summary of the 2012 aircraft net orders (less cancellations), deliveries and back-log by major aircraft manufacturer.

Airbus

Julia Green

Project Analyst

Airbus delivered 588 jetliners in 2012, which was 10% higher than the previous year’s record of 534 jetliner deliveries. 2012 marked the company’s 11th consecutive year of increased production, as new records in output were reported for all the company’s product lines. Airbus collected 833 net orders in 2012, comfortably exceeding its sales target of 650 aircraft orders. At the end of 2012, the Airbus back-log stood at 4,682 jets (valued at more than $638 billion USD based on list prices), setting a new industry record and providing more than seven years of production. In addition, Airbus had 89 customers in 2012, 17 of which were new customers. A summary of the 2012 Airbus results by aircraft family is provided in Table 1 below. Table 1: Airbus 2012 Deliveries, Net Orders and Back-log by Aircraft Family Aircraft Family Deliveries Net Orders A320 – single aisle 455 739 A330/A340 – widebody 103 58 A350 – widebody 0 27 A380 – widebody 30 9 Total 588 833

Back-log 3,629 306 582 165 4,628

Source: Airbus net orders and deliveries until January 31, 2013 pulled from Airbus’ website.

Boeing Boeing booked 1,203 net commercial airplane orders in 2012, the second largest number in the company’s history (Boeing reported a high of 1,413 net orders in 2007). Boeing delivered 601 aircraft in 2012, which represents a 26% increase from its delivery of 477 aircraft in 2011. This aircraft delivery number is the largest the company has seen since 1999, when Boeing delivered 620 aircraft. Boeing’s unfilled commercial airplane orders at the end of 2012 stood at 4,373, the most in the company’s history. Boeing’s back-log is valued at $390 billion, with $114 billion worth of orders added during 2012 alone. These strong results were driven by the 737 program, which broke industry records for orders and deliveries in a single year (Boeing processed 1,124 737 orders in 2012). A summary of the 2012 Boeing results by aircraft type (family) is provided in Table 2. Table 2: Boeing 2012 Deliveries, Net Orders and Back-log by Aircraft Family Aircraft Family Deliveries Net Orders 737 – single aisle 415 1,124 767 - widebody 26 22 777 - widebody 83 68 787 - widebody 46 -12 747 – widebody 31 1 Total 601 1,203

Back-log 3,074 68 365 799 67 4,373

Source: Boeing net orders until February 13, 2013 & Boeing deliveries until January 31, 2013 pulled from Boeing’s website.

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Bombardier In total, Bombardier Aerospace delivered 233 aircraft and received orders for 481 aircraft (net of cancellations) in 2012. The 2012 delivery totals dropped slightly compared to the 2011 total of 245, while the net orders increased substantially from 249 in 2011 to 481 in 2012. Bombardier’s aircraft deliveries and net orders can be further broken out into business jets and commercial airliners;  

Bombardier delivered 179 business jets (compared to 163 in 2011) and received 343 net orders, (compared to 191 in 2011). Bombardier delivered 50 commercial aircraft (compared to 78 for 2011) and received 138 net orders (compared to 54 net orders in 2011).

Bombardier’s Q400 and Q400 Next Gen Aircraft Program contributed to the aircraft manufacturer’s strong 2012 year. The company booked $2.7 billion USD in orders, including 51 firm orders and 31 option aircraft orders. Bombardier also welcomed seven new customers, operators and leasing companies in 2012. Bombardier had orders from first time customers like WestJet and Eurolot, as well as several repeat customers. Bombardier’s successful order intake was supported by a number of volume orders for both business and commercial aircraft, including those placed by Delta Air Lines, NetJets Inc., Nordic Aviation Capital, VistaJet and WestJet. A summary of the 2012 Bombardier commercial aircraft results by aircraft family is provided in Table 3 below. Table 3: Bombardier Commercial Aircraft 2012 Deliveries and Net Orders Aircraft Family Deliveries Net Orders CRJ Series 14 73 Q Series (Q400) 36 50 C Series 0 15 Total 50 138 Source: Bombardier Press Release – January 8, 2013

Conclusion While Airbus’ back-log contained 255 more aircraft than Boeing’s back-log, 2012 was a highly successful year for Boeing from an aircraft order and delivery stand-point. Boeing’s 737 set the precedent with 1,124 net orders and 415 deliveries in 2012

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YEAR-END AIRLINE MARKET CAPITALISATIONS FOR 2012 Although 2012 was marked by slow economic growth and high fuel prices, increases in market capitalisations can be seen across a number of airlines. Additionally, financial performance has been better than expected for many carriers due to an increase in their efficiency measures and changes in industry structure.

Noel Szelewski Project Analyst

In the U.S., a large change in market cap for American Airlines (AMR) could be explained by major organizational and financial restructuring. Delta and AirTran saw both their market caps grow by 47%. Southwest’s market cap increased by 20% after posting strong third quarter results, while JetBlue and Alaska Air observed small but similar increases in their capitalization shares. Alaska Air saw an increase to both its market capitalization and net income this year in part due to internal restructuring. In Canada, WestJet managed a 68% increase to its market cap, having observed growing quarterly profits throughout the year. Air Canada experienced a similar increase in its market cap after a more volatile year. In April of 2012, the company’s shares fell over 10% after receiving a downgrade of their debt rating. The airline has since posted strong net profit earnings for the third quarter of last year. In Europe and Asia, market cap increases have been small but positive. The Eurozone crisis has created a tough environment for airlines to compete in, with many low cost carriers having to leave the industry. After merging with Iberia, British Airways boosted its market cap by 22%. EasyJet experienced a similar rise in its market cap. Cathay Pacific and Qantas both saw their market caps increase by 8% and 4% respectively. The Asia-Pacific region’s cargo market has struggled and experienced slow economic growth. Figure 1: Airline Market Capitalization as of December 31, 2012

SOURCES: All market cap figures are calculated through shares outstanding. All finance data retrieved from http://ca.finance.yahoo.com/. All figures are in USD with the exception of Air Canada and WestJet, which are in CAD. Note1: Includes Continental Airlines. Note2: The International Airlines Group (IAG) includes British Airways and Iberia.

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UNITED STATES REPORT Dreamliner Grounded After a number of incidents, the FAA ordered the immediate grounding of all Boeing 787s, saying it requires a "corrective action plan" before flights can resume. The European Aviation Safety Agency followed suit. The Japanese also have grounded the 787s; ANA and JAL together operate nearly half of the 50 787s in service so far world-wide. Boeing has formed teams consisting of hundreds of engineering and technical experts who are working around the clock to resolve the issue and return the 787 fleet to flight status.

Steve Martin Senior Vice President

United Airlines, the first U.S. customer, has six 787s, but it has been flying only one domestically. The airline said that it will accommodate customers on other aircraft. The domestic 787 flights were to end in late March, when United's first 787s were to begin serving international routes. The battery failures on the ANA and JAL aircraft both resulted in the release of flammable materials, heat damage, smoke and the potential for fire in the electrical compartments. According to ANA, instruments indicated a battery error, triggering emergency warnings to the pilots. A second warning light indicated smoke. The incident occurred about 15 minutes into a 90-minute domestic flight. Soon after, a "burning-like smell" began in the cabin and cockpit. The plane made an emergency landing 400 miles from its destination. Passengers deplaned using seven of the emergency-evacuation slides.

U.S. Safety Board Investigates Battery Fires In discussing the results of its investigation so far, the U.S. National Transportation Safety Board (NTSB) reported that the lithium ion battery showed evidence of short-circuiting and a chemical reaction known as “thermal runaway,” in which an increase in temperature causes progressively hotter temperatures. It is not yet clear to NTSB which occurred first or what caused either. “The expectation in aviation is to never experience a fire on board an aircraft, said NTSB Chairman Deborah Hersman, "One of these events alone is serious; two of them in close proximity, especially in an airplane model with only about 100,000 flight hours, underscores the importance of getting to the root cause of these incidents." The batteries were manufactured by GS Yuasa and are unique to the Boeing 787. The same model is used for the main airplane battery and for the one that is used to start the auxiliary power unit. NTSB examined the battery that powered the auxiliary power unit in the JAL 787 that suffered a fire in Boston. It was x-rayed and CT scans were generated. The investigative team disassembled the APU battery into its eight individual cells for detailed examination. Three of the cells were selected for more detailed radiographic examination to view the interior of the cells prior to their disassembly. Investigators also examined several other components, including wire bundles and battery management circuit boards. The team has developed test plans for the various components. NTSB’s examination of the flight recorder data from the JAL 787 indicated that the APU battery did not exceed its designed voltage of 32 volts. That finding, however, did not eliminate the possibility of charging problems. Experts in lithium-ion batteries said the batteries may have been charged too quickly, a possibility cited last week by an investigator for aircraft accidents in Japan. In Japan, officials said that air safety investigators had asked the national space agency, JAXA, to examine the battery from the ANA 787 that made the emergency landing. JAXA will conduct a scan of the battery. Experts from the company that built it, GS Yuasa, intend to take it apart afterward and examine each cell. Page 10 March 2013

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LATIN AMERICA REPORT JetBlue Airways Expansion in the Caribbean and Latin America JetBlue Airways continues to increase its presence in the Caribbean and Latin America. JetBlue is already the largest airline in Puerto Rico and the Dominican Republic, and plans to add more destinations to its existing network in the Caribbean, Mexico, Central America, and northern South America. JetBlue operates the newest of its six focus cities at San Juan’s Luiz Muñoz Marín International Airport, where it recently became the largest airline by passenger enplanements.

Kenneth Currie Executive Vice President, Finance and Privatization

In 2013, JetBlue will serve 27 destinations in Latin America and the Caribbean, and will offer 10% more capacity year-over-year. In November 2012, JetBlue inaugurated new routes to Cartagena, Colombia, Samana, Dominican Republic, and Grand Cayman Island. In June 2013, JetBlue will inaugurate service to Medellin, Colombia, and San Jose, Costa Rica from Fort Lauderdale. JetBlue is studying the launch of more flights to the Caribbean and Latin America from the United States. JetBlue sees the greatest potential for new flights to the Caribbean and Latin America from Florida, where the airline operates focus cities at Fort Lauderdale/Hollywood and Orlando international airports, the likely gateways. Some of the new markets under consideration include Brazil, Guatemala, Peru, and Panama that are within the operational range of the airline’s Airbus 320’s. In addition, JetBlue is evaluating new routes from its San Juan focus city. New routes to the United States under study include Baltimore, Chicago, and Philadelphia. Potential inter-island flying from San Juan includes any market not now served by JetBlue that has the economics to support jet service. JetBlue has aggressively back-filled the recent reductions in service by American Airlines in San Juan, and by Spirit Airlines in Fort Lauderdale. JetBlue is confident that its product will allow it to compete for and win customers from its competitors in both markets and throughout the region.

COPA Names Boston as its Ninth North American Gateway COPA named Boston’s Logan International Airport its newest North American gateway. COPA already serves Chicago O’Hare Las Vegas McCarran, Los Angeles, Miami, New York John F. Kennedy, Orlando, Toronto Pearson, and Washington Dulles international airports. The airline plans to inaugurate one daily round-trip flight between its Panama City’s Tocumen International Airport and Boston in July 2013 on Boeing 737 aircraft. COPA's new flight will be the first ever regularly scheduled non-stop service between Boston and Panama City. The new flight will also be the only non-stop service from Boston to Latin America. COPA’s, “Hub of the Americas,” at Panama City will provide Boston-area business and leisure travelers convenient connections to 57 other destinations in Latin America, including Brazil; Colombia; San José, Costa Rica; Lima, Peru; and Santiago, Chile. In-transit passengers connecting in Panama City to another international destination will not be required to wait in customs and immigration lines. As such, it will provide a competitive alternative to other Latin American gateways in the United States such as American Airlines’ hub at Miami International Airport and Delta Air Lines’ hub at Atlanta Hartsfield Jackson International Airport.

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EUROPE REPORT Berlin’s new airport opening delayed for the fourth time Germany, a country praised for its planning and engineering efficiency, announced another embarrassing delay of the opening of its newest airport. The Willy Brandt airport, originally scheduled to open in 2011, has been delayed for the fourth time. Berlin’s Mayor, Klaus Wowereit, announced that it is no longer possible to open the airport in fall 2013. Instead, the new airport will not open until 2014 at the earliest.

Ian Kincaid Vice President, Economic Analysis

The airport, one of the country’s largest infrastructure projects, has been riddled with setbacks since construction began in 2006. The most recent setbacks include reported issues with the project’s fire safety system and other technical components. The project development costs have already more than doubled to $5.8 billion USD and may continue to rise with additional delays. The setbacks have caused political unrest in the country, with Berlin Mayor Klaus Wowereit’s opposition calling the incident a national embarrassment and insisting he step down. Heeding to the pressure, Klaus Wowereit did step down as chair of the airport’s supervisory board. The chair seat was subsequently filled by Brandenburg State Premier Matthias Platzeck. In turn, the airport’s supervisory board also dismissed the airport operator’s CEO, Rainer Schwarz, over the delay. The Willy Brandt airport will replace the city’s two existing international airports. However, this new airport will reportedly be able to handle 27 million passengers annually, while the city’s two current airports handled 25 million passengers last year alone, leading to concerns that the new airport could be too small once it opens.

ACI Europe reports airport traffic growth declined in 2012, with a stark divide between EU and non-EU countries Airports Council International (ACI) Europe has recently released the 2012 European airport traffic results. According to the European airport trade body, 2012 was a year marked by slow growth in passenger traffic and a continued decline in freight traffic. The overall passenger traffic at Europe’s airports saw an increase of 1.8% year-over-year in 2012 compared to 2011. The most interesting aspect of the results was the clear divide between European Union (EU) market airports and those airports in non-EU member markets. Passenger traffic at EU airports has been in decline since October 2012, growing by 0.2% on a yearly basis. Meanwhile, non-EU airports, led by Turkey, Russia, Georgia, Iceland and Moldova posted strong growth for the year of 8.8%. Since 2008, passenger traffic at EU airports has grown by less than 2.5%, while passenger traffic at non-EU airports has grown by more than 38%. In terms of outlook for 2013, Olivier Jankovec, Director General ACI Europe, had this to say: “While there are a few green shoots with air traffic now picking up in Ireland and Portugal, the outlook for 2013 remains grim for EU airports - and still very dynamic for most other ones. Based on the prevailing trading conditions, our best estimate is for nearly flat growth (+0.5%) in passenger traffic at Europe’s airports for the year ahead. Many airports are now facing a new reality of slower and more contrasted traffic growth. Given our industry’s traditional reliance on dynamic traffic growth to sustain its capital intensive-nature and high proportion of fixed costs, this is a significant business challenge. In all probability, things are going to get worse before they get better.”

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CANADA REPORT Air Canada and WestJet expansions increase consumer choice, add destinations Airline competition will be heating up in western Canada, with Air Canada and WestJet lining up new routes or increased capacity using Bombardier Q-400 Next Generation turboprops. Air Canada’s initial announcement included using the Q400s on Air Canada Express (operated by Jazz Aviation LP) on Calgary-Fort McMurray, Calgary-Saskatoon and Calgary-Regina with more flights to be announced to and from BC, Alberta and the Northwest Territories this spring.

Debra Ward Executive Consultant

WestJet’s Q400s operating as WestJet Encore will launch in June with Calgary-Fort St. John and Nanaimo, BC as well as routes between Vancouver and Victoria, with more destinations to be rolled out. This is a significant move for both airlines, but even more so for WestJet, which has stepped away from the one-aircraft type business model for the first time. Until the launch of Encore, WestJet has flown only Boeing 737s series aircraft. More changes are on the horizon for both carriers, with WestJet’s expansion to more U.S. destinations and Air Canada’s July launch of its low cost carrier, Rouge, both aimed at the leisure market.

Sam Barone Named Vice-Chair, Canadian Transportation Agency Sam Barone has been appointed to a five year term as Vice-Chair of the Canadian Transportation Agency. Sam will be leaving his position as President and CEO of the Canadian Business Aviation Association as of March 2013. Sam also served as CEO and President of ATAC and was Regional Vice President of InterVISTAS Consulting from 2003 – 2006.

Transport Canada has announced the retirement of Brigita GravitisBeck, Director General, Air Policy. Serving in that position for over eight years, Ms. Gravitis-Beck was well respected within the transportation community for her professionalism and expertise. Her replacement has not yet been announced. This is the third major change in senior staff announced by Transport Canada, with new people assuming the positions of Deputy Minister and Assistant Deputy Minister, Policy in recent months.

All-in advertised air ticket prices a fait accompli. Canadian carriers now have to include all charges, fees and taxes in their advertised ticket prices for flights originating in Canada. The draft regulations, released in 2011, launch a comprehensive consultation process to ensure not only transparency for consumers, but fairness for the airlines, with the final regulations having come into effect at the end of 2012. While consumers now have a better sense of what their total airline ticket cost will be, optional services, such as in-flight entertainment are not included. As well, certain types of flights, such as charter or packages, as well as flights originating outside Canada, are not subject to the new regulation.

Latest version of a passenger bill of rights likely to fail in the House of Commons. Although debate will continue in the House of Commons, a private member’s bill intended to provide passengers with compensation from airlines for cancelled or delayed flights will likely never see passage. A similar bill introduced in 2009 also failed. Passenger compensation measures are already included in the tariffs/terms and conditions of carriage. Consumers have recourse to the Canadian Transportation Agency, which works to resolve disputes between passengers and carriers. Page 13 March 2013

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ASIA-PACIFIC REPORT Beijing approves the development of a second international airport

Doris Mak Director, Special Projects

According to local media reports, China’s State Council (Cabinet) has approved plans to build a new $11.2 billion USD airport in Beijing. The much needed second international airport will help alleviate congestion at the Beijing Capital International Airport, which is currently the world’s second busiest airport after Atlanta’s Hartsfield-Jackson International Airport. In 2012, the Beijing Capital International Airport handled roughly 81.8 million passenger movements. As the number of passengers traveling through China’s capital continues to grow, congestion and delays at the current airport site have proven problematic. Reports on the specifics of Beijing’s second airport have been varied. According to CAAC News, a newspaper affiliated with the aviation administration, the second airport will be built south of the capital, and will have six civilian use runways and a seventh runway for military use. Furthermore, several reports indicate that the airport is scheduled to open by the end of 2018 and is projected to handle upwards of 70 million passengers a year. While details have not been officially confirmed by either the Aviation Authority or State Council in China, Li Shengbo, a Beijing Airport spokesperson confirmed that a second airport has been approved by State Council. The development of a second airport would put Beijing alongside major economy-driving cities like New York, London, Paris and Tokyo as cities with more than one international airport.

Japan’s major airlines ground fleet of Boeing 787 Dreamliner aircraft Japan Airlines and All Nippon Airways (ANA), two of the country’s main airlines, grounded their fleets of Boeing 787 Dreamliners on January 16th. The move came after an ANA Dreamliner flight from Ube to Tokyo had to be diverted after a battery problem was detected by pilots in the cockpit. After the emergency landing, reports of smoke in the cockpit and the cabin further heightened concerns about the aircraft’s safety. The crew and passengers were quickly evacuated from the plane via emergency slides. Following the incident, both ANA and Japan Airlines immediately ordered the grounding of all Dreamliner aircraft operations. The two Japanese carriers between them operate 24 of the 50 Dreamliners in service, and ANA was the first airline to fly the plane when it entered service in 2011. This was not an isolated incident, as various technical issues with Boeing’s 787 Dreamliners have been making news all over the world recently (as indicated in the United States Report).

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AVIATION NEWS UNITED STATES UPDATE PHILADELPHIA TO GAIN DIRECT SERVICE TO BRAZIL US Airways has filed for rights with the DOT to operate services from each of Philadelphia and Charlotte to Sao Paulo Brazil. The direct services will each operate daily, year round. US Airways has leased frequencies from another carrier for the Charlotte service, which will commence on June 8th of this year. The Philadelphia service is currently planned to commence in October 2014. US AIRWAYS AND AMERICAN AIRLINES TO MERGE

The world’s biggest airline will be created upon the merger of American Airlines and US Airways, subject to court and antitrust regulation approval. The consolidation was approved by the boards of both companies early in February. The new entity will keep the American Airlines name but will be headed by US Airways’ CEO, Tom Horton, who will serve as chairman. The resulting airline will have around 95,000 employees, 3,200 daily flights and a fleet of over 900 planes. The U.S. airline industry will now have three-quarters of the U.S. airline traffic controlled by four carriers: Delta, United, Southwest and American. ATLANTA REMAINS THE WORLD’S BUSIEST AIRPORT Passenger figures gave Atlanta International Airport its busiest year ever in 2012. A total of 95.5 million passengers moved through the airport last year marking a 3.4 percent increase from 2011. Annual air cargo, however, decreased by around 2.5 percent. Officials at the airport cited a decrease in global consumer purchases as contributing to the slowing of cargo operations.

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SOUTHWEST OPENING OPERATIONS AT MEMPHIS Current AirTran operations in Memphis will be converted to Southwest operations by August of this year. The airline expects passengers to observe lower airfares upon entry into the market. Southwest Airlines director of sales, Wally Devereaux, expects the flights to be profitable but encourages Memphians to use the flights currently being offered before expecting further services. UPS TO INCREASE SHIPPING COVERAGE United Parcel Service has expanded its coverage area for their UPS Worldwide Expedited service. This particular service includes the company’s international air shipments for customers seeking an economical and time insensitive method of shipping. The coverage area has tripled and results in the delivery of goods in two to five business days to over 220 countries and territories. DETROIT AIRPOIRT SEES INCREASED CARGO TRAFFIC In 2012, Detroit Metro Airport saw an increase in its cargo traffic figures. The total volume moved that year amounted to 483 million pounds, a 6 percent increase over the previous year. This growth marks a departure from the global air freight trend, which saw a 1.5% decrease for 2012. Total passenger figures for the airport remained the same, though the proportion of those that were travelling internationally increased.

Realizing the vision together

MIDDLE EAST / AFRICA UPDATE ERBIL INTERNATIONAL AIRPORT AWARDED BEST EMERGING MARKET Erbil International Airport was voted best airport amongst emerging market airports by an international jury in Dubai. Erbil International observed exceptional growth in 2012 with passenger numbers increasing by 53 percent and cargo tonnage growing by roughly the same amount. The jury took special notice of the positive feedback received from passengers. The airport opened in September 2010 and is set to be one of the fastest growing airports in the Middle East. EMIRATES EXPECTING TO SEE INCOME GROWTH Emirates recently announced expectations of increased income for the end of the current fiscal year. The carrier has already seen a 104% increase in its net profit over the first six months of the current fiscal year. The president of Emirates expects the airline’s fleet to reach 210 by the beginning of 2014. The carrier is looking to purchase additional A380s but a capacity constraint exists at the current hub. ETIHAD ENJOYING HIGH PROFITS A 23 percent increase in passenger numbers from 2011 contributed to Etihad’s $42 million USD profit for 2012. Codeshares and partnerships boosted the carrier’s revenue by upwards of $600 million USD. Etihad is looking to purchase a 24 percent stake in Jet Airways – a move that adds to an existing portfolio of airline equity stakes. The airline is looking to expand its fleet by 14 planes this year.

Page 16 March 2013

LATIN AMERICA UPDATE LATAM AIRLINES EXPERIENCES PASSENGER GROWTH LATAM Airlines announced in January that its passenger traffic grew by 10 percent in December and by 7.8% for the 2012 year. Brazilian and non-Brazilian passenger traffic grew by roughly 10.5 percent each during December. International passenger traffic grew slightly less over the same time period.

EUROPE UPDATE RYANAIR AND FLYBE TO CREATE NEW IRISH AIRLINE A new carrier, Flybe Ireland, has been created after receiving 100 million euros and 9 aircraft from Ryanair. The new airline will operate on 43 routes for over 3 years, assuming Ryanair’s bid for Aer Lingus is successful. Flybe is expected to pay Ryanair a total of 1 million euros for the new carrier. STRIKES CONTINUE FOR IBERIA Spanish airline Iberia is set to undergo further strikes in February and March. Cabin crew and ground staff trade unions are striking with hopes to halt impending wage and job cuts. Talks have commenced between the airlines’ management and union representatives. HEATHROW EXPERIENCES RECORD NUMBERS FOR 2012 Heathrow announced a record of 70 million passenger movements during 2012. Already operating at capacity, Heathrow’s owner is concerned the airport will lose out to rivals if it fails to expand. Although an 8 percent rise in revenue was observed for the 2012 year, net losses amounted to $63.3 million USD for the same period. Owners hope to see a third runway built but pressure exists from opposing parties. A Government-backed report of Britain’s airport capacity is expected to be completed in 2015.

Realizing the vision together

THOMAS COOK TO MERGE EUROPEAN AIRLINE OPERATIONS Thomas Cook Group PLC has plans to consolidate its British, Belgian and German airline operations. A new airline management board will be appointed to run the business. The company’s financial strength has improved since a last-ditch effort by lenders took place last year and the airline hopes it will continue to grow as one integrated business. POLISH AIRLINE LOT APPOINTS NEW CEO The supervisory board of LOT has chosen Sebastian Mikosz to replace Marcin Pirog as the airlines new chief executive. The airline is experiencing troubles after 2012 losses amounted to 115 million zloty (27.6 million euros. The Polish Government had to spend 240 million euros in an effort to cover LOT’s debts. Further to its losses, the airline has had its 787s grounded amidst reported battery malfunctions. AIR FRANCE-KLM EXPERIENCES NET LOSS The Air France-KLM Group reported a 2012 net loss of $1.9 billion USD. This marks an increase in losses from the year before which amounted to just over $1 billion USD. The airline notes that a big contributor to the loss was a restructuring provision which totaled just less than half a billion U.S. dollars. Several other exceptional items contributed to the losses, as well as rising operating expenses which increased by 4.9% last year.

CANADA UPDATE ST. JOHN’S INTERNATIONAL OBSERVES GROWTH IN TRAFFIC In 2012, St. John’s International Airport reached 1.5 million in passenger traffic. This number represents a 6 percent increase in traffic seen a year earlier. The airport authority released the figures in early February, confirming that St. John’s airport is now the 10th busiest in the country. This growth was boosted by a Page 17 March 2013

particularly strong fourth quarter, with 330,000 passengers moving through, marking a 4 percent growth from the year prior. WESTJET TO CUT COSTS AMIDST HIGH PROFITS WestJet Airlines managed a strong fourth quarter despite high costs from the delays and cancellations associated with bad weather. The reported net profit of $60.9 million marks a 71% increase from the carrier’s 2011 fourth quarter results. Even with the positive figures, the company looks to cut costs over the next 36 months. WestJet CEO Greg Saretsky cites the need for the carrier to maintain its low-cost structure amidst rising legacy costs due to the airline’s age. HIGH PASSENGER TRAFFIC IN HALIFAX Halifax Stanfield International Airport recorded its busiest year in 2012 with over 3.5 million passengers passing through the airport. At an average of 170 flights per day, passenger movement increased by half a percent from 2011. The CEO and President of the Halifax International Airport Authority, Tom Ruth, attributes the growth to a strong first half. The airport handles more than half of all Atlantic Canada passenger traffic. WESJET COMMENCES REGIONAL SERVICE TO FORT ST. JOHN WestJet is soon to take delivery of its first two 78-seat Q400 turboprop planes. They will lay the foundation for the launch of the airline’s regional service named Encore. Operations will begin in June with service commencing from Vancouver to Fort St. John and Calgary to Fort St. John. More routes are to be added as the company currently has firm orders for 20 Q400s.

Realizing the vision together

CALGARY AIRPORT AUTHORITY NAMED TOP EMPLOYER Mediacorp Canada has once again named the Calgary Airport Authority a top employer in Alberta. This particular designation celebrates employers who offer exceptional workplaces for employees. The airport has won in previous years including 2009 and 2011. The Airport notes that a key element to its success is the feedback it receives from employees.

ASIA-PACIFIC UPDATE JAPAN AIRLINES SEEKING COMPENSATION FOR 787 GROUNDING Japan Airlines is currently in talks with Boeing about compensation for the grounding of the 787 Dreamliner. The airline is expecting to lose around $8 million through to the end of March as a result of the grounding. Despite this, strong demand on routes to North America, Southeast Asia and Europe has boosted the company’s operating forecast by 13 percent. Progress is being made on the investigation but no time frame has been given on the 787’s return.

SINGAPORE TO ADD A 4TH TERMINAL AT ITS INTERNATIONAL AIRPORT An increase in the number of low-cost carriers in the region has Changi International Airport looking to add a 4th terminal. Large passenger numbers are attributed to rising incomes and a higher demand for budget travelling. The new terminal will cost around $485 million USD and allow the airport to facilitate 82 million passengers a year.

MALAYSIAN CARRIER AIRASIA TO INVEST IN PROPOSED INDIAN AIRLINE Budget carrier AirAsia is to invest $50 million USD into the launch of a new Indian airline. The new carrier is expected to be a no-frills, low-cost model and launch operations around the 4th quarter of this year. AirAsia CEO, Tony Fernandes, expects the new company to start with a fleet of three to four A320’s, with ambitions to grow it quickly thereafter.

FAA SET TO REVIEW 787 BATTERY FIX Boeing’s battery fix proposal for the 787 is currently under review with U.S. air-safety regulators. The Dreamliner has been grounded across the globe since mid-January. International and U.S. investigators have yet to determine the exact cause of the Lithium-Ion battery issues. Federal and industry officials have cited that Boeing has concluded that the batteries will be safe to use after changes have been made, such as the addition of insulation between battery cells.

GARUDA TO OPERATE INTO LONDON GATWICK Indonesian carrier Garuda Indonesia is set to resume non-stop flights into the UK this October. A 777-300 will be placed on the route from Jakarta to London Gatwick with a frequency of 6 times a week. Due to the size of Indonesia’s economy, it is thought to be an underserved market with potential growth implications for the UK. Page 18 March 2013

MANILA AIRPORT TO RECEIVE $45 MILLION FOR TERMINAL DEVELOPMENT The Philippine government has spent $45 million at the Ninoy Aquino International Airport. The expenditure is an attempt to boost tourism in both the country and city. The newest terminal at the airport is already due for an upgrade after being built in 2008. After the new work is completed, more international flights will be received and this will reduce the pressure on Terminal 1, which is used only for international arrivals and departures.

OTHER NEWS

Realizing the vision together

A350 WILL NOT USE LITHIUM-ION BATTERIES The A350 passenger jet, in development by Airbus SAS, will no longer implement Lithium-Ion batteries. Instead, the company has opted to revert to traditional nickel-cadmium batteries. The decision has been made in light of Boeing’s recent troubles with the 787 Dreamliner. Airbus hopes the move will limit existing development risks and maintain the A350’s service schedule entry. The airliner is expected to enter service in the second half of 2014. ICAO TO ADOPT NEW NOISE STANDARDS A new noise stringency level has been accepted by The International Civil Aviation Organization (ICAO) Committee on Aviation Environmental Protection (CAEP). The new decision results in a total reduction of 7 decibels and is subject to final approval by ICAO later this year. Airbus president and CEO, Fabrice Bregier, noted that this new standard is an example of how the aviation industry is addressing environmental protection. IATA APPOINTS NEW GENERAL COUNSEL The International Air Transport Association (IATA) recently announced the appointment of Jeffrey N. Shane as General Counsel. Mr. Shane will begin his duties as General Counsel to IATA on April 2, 2013. He has been a partner with Hogan Lovells US LLP since 2008, and before that served as the U.S. Undersecretary of Transportation for Policy, U.S. Department of Transportation (DOT), from 2003 to 2008. Mr. Shane has had a long, distinguished career, with more than 25 years spent working in public service, primarily focusing on international aviation. In addition, Mr. Shane received the L. Welch Pogue Award for Lifetime Achievement in Commercial Aviation, presented by Aviation Week & Space Technology magazine. Mr. Shane succeeds Gary Doernhoefer, who is leaving IATA.

Page 19 March 2013

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

Airline

Traffic (RPKs – millions)

Capacity (ASKs – millions)

Load Factor

9,986 2.4%

12,164 2.3%

82.1% 0.1 pts

7,940 3.4%

10,140 1.7%

78.3% 1.3 pts

4,515 4.0%

6,823 0.3%

66.1% 2.4 pts

8,407 10.2%

10,711 6.3%

78.5% 3.4 pts

1, 2

Notes:

1. Includes Qantas Domestic, QantasLink, Jetstar Domestic, Qantas International, Jetstar International, and Jetstar Asia. 2. Results are from December 2012 as January 2013 not available at the time of report issue. 3. Includes Cathay Pacific and Dragonair.

Source:

Carrier traffic reports

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

Capacity (ASKs – millions)

Load Factor

17,557 0.0%

21,582 0.4%

81.4% 0.3 pts

14,334 2.9%

19,214 4.1%

74.6% 0.9 pts

13,182 0.7%

17,122 1.0%

77.0% 1.3 pts

Airline

Page 20 March 2013

Notes:

1. Includes Martinair. 2. Includes Lufthansa Passenger Airlines, SWISS, Austrian Airlines. 3. Performance comprises 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 January 2013 Traffic (RPMs – millions)

Airline

Capacity (ASMs – millions)

Load Factor

CANADA 4,368 0.3%

5,499 0.1%

79.4% 0.3 pts

1,650 7.7%

2,041 6.4%

80.9% 1.0 pts

62.7 0.8%

116 4.7%

53.6% 2.1 pts

2,788 11.2%

3,414 9.9%

81.7% 1.0 pts

15,470 0.9%

19,373 1.9%

79.9% 2.2 pts

10,967 1.8%

13,906 0.2%

78.9% 1.3 pts

13,905 0.0%

17,522 2.4%

79.4% 1.9 pts

4,854 4.8%

5,983 1.8%

81.1% 2.3 pts

7,254 1.7%

9.982 0.5%

72.7% 1.6 pts

UNITED STATES

Page 21 March 2013

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.

Source:

Carrier traffic reports.

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Page 22

March 2013

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

2012

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

Vancouver

Montréal

Calgary

Edmonton

Ottawa

Winnipeg

Halifax

Victoria

Kelowna

Saskatoon

Regina

January February March

+5.2% +16.2% +5.2%

+5.6% +6.9% +2.9%

-0.4% +4.9% +5.6%

+7.7% +8.1% +4.1%

+8.7% +10.1% +5.7%

+7.8% +9.4% +6.3%

+3.1% +2.0% +5.8%

-0.7% +4.2% +0.0%

+1.5% +6.8% +6.3%

+7.1% +8.4% +6.8%

+2.2% +5.3% +3.8%

1st Quarter April May June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Full Year

+8.6% +5.3% +1.8% +3.8% +3.6% +1.8% +4.9% +3.7% +3.5% +5.4% +6.0% +4.5% +5.3% +5.1%

+5.1% +4.8% +2.8% +2.2% +3.2% +2.7% +3.6% +2.8% +3.0% +3.5% +3.8% -0.7% +2.1% +3.3%

+3.4% +2.3% -1.9% +0.0% +0.1% -3.0% +0.7% +0.0% -0.8% -0.2% +1.7% +3.2% +1.5% +1.0%

+6.5% +6.8% +3.7% +5.3% +5.3% +4.8% +6.5% +4.2% +5.2% +7.6% +7.5% +6.5% +7.2% +6.0%

+8.1% +6.6% +5.8% +3.8% +5.4% +5.5% +8.0% +5.2% +6.3% +6.6% +7.1% +3.6% +5.7% +6.4%

+7.8% +6.0% +0.1% +0.3% +2.1% -1.3% +3.1% -4.0% -0.7% -3.2% -4.3% -4.0% -3.8% +1.3%

+8.5% +9.9% +5.5% +7.9% +6.4% +4.9% +4.1% +5.1% +2.5% +4.6% +1.9% +3.0% +4.6% +2.8% -2.4% +1.6% +4.4%

+3.8% +5.2%

+1.0% +2.1% -1.9% +0.6% +0.2% -2.1% +2.4% +0.4% +0.3% +0.8% +0.7% -0.3% +0.4% +0.5%

+4.8% +3.3% +1.3% +3.0% +2.5% +3.2% +5.9% +2.4% +3.9% +4.5% +6.3% -0.6% +3.1% +3.7%

+7.4% +9.6% +5.8% +7.2% +7.5% +3.7% +8.7% +6.5% +6.3% +4.1% +5.4% +4.7% +4.8% +6.5%

+3.8% +2.9% +1.5% +7.4% +3.9% +3.8% +6.8% -0.1% +3.5% +5.6% +3.7% +3.9% +4.4% +3.9%

-1.2% -2.5% +0.6% -2.7% +1.3% -2.2% -1.1% +0.0% +0.8% -5.3% -1.5% +0.3%

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Page 23

March 2013

Summary of Total Year-Over-Year Passenger Traffic Performance at Selected U.S. & International Airports Source: Individual airportsâ&#x20AC;&#x2122; traffic reports. Note: Subject to revision.

2012

United States

January February March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter October November December 4th Quarter Full Year

Atlanta

Chicago

+7.1% +7.6% +3.8% +6.0% +4.1% +1.4% +3.3% +2.9% +0.4% +2.1% +1.5% +1.3% +2.7% +3.7% +3.2% +3.2% +3.2%

+1.0% +11.3% +0.6% +3.8% +1.2% +0.6% +0.9% +0.9% -1.7% -0.2% -2.9% -1.6% -2.4% -0.9% -3.7% -2.3% +0.1%

Los Angeles +5.4% +8.2% +6.1% +6.5% +2.6% -1.2% +2.0% +1.1% +2.0% +3.0% +1.5% +2.2% +1.3% +1.6% +5.0% +2.6% +3.0%

International

Dallas

Denver

+0.4% +9.7% +2.6% +4.0% +0.3% +6.2% -0.8% +1.8% -2.1% +1.0% -3.9% -1.6% -0.7% +2.5% +4.2% +1.9% +1.4%

-0.6% +2.5% -1.0% +0.2% +0.4% -0.1% -0.9% -0.3% -0.2% +0.9% +0.8% +0.5% +3.3% +2.2% +0.3% +1.9% +0.6%

New York JFK +7.2% +12.5% +8.5% +9.2% +7.3% +3.5% +6.6% +5.8% +4.3% +12.8% +6.2% +7.7% -1.0% +4.1% +7.3% +3.4% +6.5%

London Heathrow +2.3% +3.8% +6.9% +4.4% +0.0% -0.6% +1.6% +0.4% -4.4% -1.9% +0.6% -2.0% -0.1% +3.1% +2.0% +1.6% +0.9%

Paris CDG +3.3% +3.6% +5.9% +4.3% +2.9% -0.1% +2.3% +1.7% -0.8% +0.3% -0.4% -0.3% -2.1% +1.1% -1.4% -0.9% +1.1%

Frankfurt

Beijing

+5.5% +0.7% +4.1% +3.5% +2.8% +1.4% +5.4% +3.2% +3.7% +4.6% +1.0% +3.1% +1.4% -2.7% -6.3% -2.3% +1.9%

+5.0% +8.2% +4.2% +5.7% +1.6% +1.8% +4.5% +2.6% +6.2% +4.8% +4.3% +5.1% +1.2% +3.1% +7.2% +3.7% +4.3%

Tokyo Narita +1.4% +3.8% +30.3% +11.1% +51.3% +29.4% +23.1% +33.4% +17.2% +17.3% +12.7% +15.7% +8.9% +11.2% +10.9% +10.3% +16.8%

Mexico City +22.5% +24.0% +19.7% +21.9% +12.2% +6.9% +13.3% +10.7% +10.9% +9.9% +8.3% +9.7% +7.7% +7.7% +6.1% +7.1% +11.8%

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:

Cross Functional Airline Revenue Management Processes for Amadeus 

Develop airline commercial processes towards improving airline revenues. The scope of the project includes all commercial processes, network design, alliances and joint ventures, pricing and revenue management, distribution, sales, frequent flyer program and customer relations management.

Comox Airport Support 

The scope of the contract extension will include air service development work, a customer satisfaction survey, a market study update and strategic support.

Taiwan Taoyuan International Airport 

Provide passenger traffic forecasts and commercial planning expertise in support of the airport’s Terminal 3 master plan development.

2012 YVR Noise Complaint Maps 

Create the 2012 Noise Complaint Maps for Vancouver International Airport.

SPEAKING ENGAGEMENTS AND EVENTS Mike Tretheway, Chief Economist & Executive Vice President 

Pre-Conference Symposium to the ICAO's Sixth Worldwide Air Transport Conference: Montréal, Québec – March 17, 2013.

Dr. Tretheway will participate on a panel focusing on Air Transport Customers, Air Transport: Freedom to do Business, Taxation and Other Levies and Modernizing the Regulatory Framework. Ian Kincaid, Vice President, Economic Analysis Mike Tretheway, Chief Economist & Executive Vice President, and 

Air Traffic Forecasting Workshop 2013: Montréal, Québec – April 10, 2013.

Dr. Tretheway and Mr. Kincaid will host this workshop and roundtable discussion on air traffic forecasting for the Canadian Market. The workshop will precede the registration for the Airports Canada Conference and Exhibition. Registration information available following the IVC News section

Page 24 March 2013

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

Noel Szelewski joins InterVISTAS as Project Analyst We are pleased to announce that Noel Szelewski has joined our Economics and Strategic Services Practice Group as Project Analyst in the Vancouver office. With a strong passion for aviation, Noel brings a high level of enthusiasm to his position as Project Analyst. He helps with a variety of projects for InterVISTAS with the goal of providing innovative and quality solutions for clients. As a Private Pilot and recent Economics graduate, he brings a unique multidisciplinary approach to his work. Noel holds a Bachelor of Science in Economics with a minor in Business from the University of Victoria. Welcome to the team, Noel!

Zoe Lindemuth joins InterVISTAS as Project Analyst We are pleased to announce that Zoe Lindemuth has joined our Air Service Development Practice Group as Project Analyst in the Bethesda office. As a motivated and energetic individual, Zoe works hard to deliver analytical work that is valuable to the InterVISTAS team and the client. She is dedicated to making a difference. With two years of analytical and market research experience, Zoe is a key component to the project team. Her focus is on airline strategies at airports where she is able to estimate the impacts on airports of the changing aviation environment. Zoe holds a Bachelor of Science in Finance from Villanova University and a Master Degree in Education from Rosemont College. Welcome to the team, Zoe!

Page 25 March 2013

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AIR TRAFFIC FORECASTING WORKSHOP 2013

Wednesday, 10th April 2013 Hilton Montréal Bonaventure, Montréal, Canada (Before registration for the Airports Canada Conference and Exhibition)

Join InterVISTAS Consulting for a workshop and roundtable discussion on air traffic forecasting for the Canadian market. As you may be aware, Transport Canada is terminating its Aviation Forecasting Program at the end of March 2013. This program has produced traffic forecasts for individual airports for several decades. The end of the Transport Canada forecast program leaves a major gap in the aviationactivity forecast information available to Canadian airports and other stakeholders. As part of the forecasting program, only Transport Canada had access to the confidential origin-destination data needed for the PODM/PTAM models which it used. That data is still confidential and now airports will have to find other alternatives to obtaining the underlying forecast data. The approach to air traffic forecasting is also changing. New approaches recognise the inherent uncertainty in the development of air traffic. Risk analysis, Monte Carlo simulation and other techniques are increasingly being used to develop a greater understanding of the risk and uncertainty in the market. The focus is less on determining a single set of forecasts and more on assessing the probabilities of different outcomes. This workshop is an opportunity to discuss some of the issues around air traffic forecasts with forecasting specialists, airport managers and planners and other interested stakeholders. Unlike large conferences, this workshop is designed to give participants an opportunity to engage in discussion in an open and casual environment. While there will be presentations by InterVISTAS staff, each session will encourage considerable dialogue between participants. Even if you cannot attend the entire programme, feel free to drop in for some of it.

About Your Workshop Leaders DR. MICHAEL TRETHEWAY Chief Economist, InterVISTAS Consulting Group Mike is considered one of the leading transportation economists in the world. He serves as an expert witness and advisor to governments, airlines, airports, ports and railways. He has done work throughout Canada, the United States, Australia, New Zealand, Asia, Africa and Europe. Mike is a frequent speaker at industry events and organization planning sessions. Dr. Tretheway earned a PhD in economics from the University of Wisconsin and served for 14 years as Associate Professor of Transportation & Logistics at the University of British Columbia.

WORKSHOP PROGRAMME 10:30-11:00

Registration

11:00-12:30

Replacing the Transport Canada Forecasts  How were the Transport Canada forecasts produced?  What data did the Transport Canada forecasts use and how was it obtained?  What alternative data sources are available and at what cost?  What alternative forecasting methods are available? Lunch Advances in Air Traffic Forecasting  Risk analysis and risk registers  Assessing risk factors and probabilities  Probabilistic approaches to forecasting – Monte Carlo simulation

12:30-13:30 13:30-14:45

14:45-15:15

Coffee Break

15:15-16:30

Presenting and Using the Forecasts  Presentation of forecasts  Making the most of use of the forecasting output  How the forecasts can feed into the planning process

Registration for Airports Canada Conference and Exhibition starts at 17:00

IAN KINCAID

Vice President, Economic Analysis, InterVISTAS Consulting Group

Ian is a transportation economist with over fifteen years experience helping clients by developing innovative solutions in forecasting, economics and strategic planning. Ian’s areas of specialization include demand forecasting, economic impact studies, policy analysis, econometric analysis and risk analysis. He has worked on projects in North and South America, Europe, Asia, Africa, Australia and New Zealand. Prior to joining InterVISTAS, Ian was a Senior Consultant at a major multi-modal transportation consultancy in London, UK. He holds a Master in Operational Research from the London School of Economics.

AIR TRAFFIC FORECASTING WORKSHOP 2013 Wednesday, 10th April 2013 Hilton Montréal Bonaventure, Montréal, Canada (Before registration for the Airports Canada Conference and Exhibition)

Contact:

KELLY COUPER InterVISTAS Consulting Group

REGISTRATION FORM Please complete this form and return by fax or email to Kelly Couper

Tel: 604-717-1800 Fax: 604-717-1818 Email: kelly.couper@intervistas.com

First Name: Last Name: Job Title: Organisation: Number of delegates: Telephone Number (Daytime): Mobile Number: Email Address:

Please note that space for this event is limited. Cost per delegate: $85 CDN Please select a payment option below: Cheque payable to InterVISTAS Consulting Inc. Airport Square – Suite 550, 1200 West 73rd Ave. Vancouver, BC Canada V6P 6G5

Bank Transfer to InterVISTAS Consulting Inc. Account# 1073097 IBAN Not Applicable Branch Number #04800 Royal Bank of Canada, 6400 No 3 Rd, Richmond BC, Canada, V6Y 2C2 SWIFT# ROYCCAT2

I have read the terms and conditions of this booking below. Signature

Date

Terms & Conditions: Cancellations are non-refundable. Registration may be transferred to another person at the same organisation subject to approval by the Organisers. Liability to the Organisers for cancelling the event for any reason shall be limited to refunding delegate registration fees. Organisers reserve the right to substitute speakers in exceptional circumstances.

OUR OFFICES UNITED STATES

CANADA

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

Ottawa, Ontario 55 Metcalfe Street, Suite 1100 Ottawa, ON K1P 6L5 Tel: +1-613-288-1577 Fax: +1-613-288-1578

*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