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August-Sept. 2008

CAC Prepares for Airports Canada 2009 Conference and Exhibition

The Canadian Airports Council this week kicked off the formal marketing campaign for its Airports Canada 2009 Conference and Exhbition.

Airports Canada 2009 will be held April 28-30 at the Hilton Lac Leamy Hotel and Casino in Ottawa Gatineau. Patterned after the CAC's successful 2007 conference, Airports Canada now is held just every two years. More than 200 senior airport-sector officials are expected to attend, including top airport executives and senior executives and officials from airport partner organizations and government.

Airports Canada 2007, including host of prominent speakers, including the Minister of Public Safety Stockwell Day, Airports Council International Director General Robert Aaronson, Air Canada President and CEO Montie Brewer, WestJet Co-Founder Don Bell, Porter Airlines Founding President and CEO Robert Deluce and Canada Border Services Agency President Alain Jolicoeur.

While registration is now open for the conference, sponsorship sales are now underway and a formal mailing to potential attendees is scheduled for early next month. Also in September, additional information will be provided on invited and confirmed speakers.

Please see below for the preliminary program/registration package and information on sponsorships. For CAC members, this information also now is all available within the CAC Community on The Airport Link.

Interested in receiving updates on Airports Canada 2009? Update your subscriber preferences for the CAC mailing list.

Preliminary Program and Registration Package For additional information about registrations, please contact Holly Redden at (613) 560-9302 ext 10 or holly@cacairports.ca.

Sponsorship Opportunities For additional information about sponsorships, please contact Debra Ward at (613) 274-0691 or dward@cacairports.ca.

June, Half-Year World Air Traffic Slows

From its June 2008 Flash traffic report (from a sample of 200 airports), Airports Council International says traffic slowed for the month with worldwide growth at a modest 2.1%. High oil and jet fuel prices, stock market turbulences, inflation and an uncertain economic outlook have taken their toll on air traffic in June, also impacting half year figures.

Looking at results for the first half of the year, international traffic grew by 5.8%, whereas domestic traffic shows only a marginal increase of 1.9% for total passenger growth of 3.7%.

In North America, international passengers were up 7.1% for the first half of the year but domestic passenger numbers were stagnant at 0.6% growth for total North America passenger traffic growth of just 1.7%

The Asia Pacific region which has had one of the highest growth rates in recent years, shows tepid growth only 4.3% so far this year. Domestic figures for the first half of the year have stagnated in North America and Europe.

Freight Traffic Slows

Mid-year results for worldwide freight show a 2% improvement, and international freight traffic growth remains at 5%. In June, however, worldwide freight traffic slowed significantly (-3%) compared with June 2007.

North American freight was down 3.6%, most notably because domestic freight was down 5.7%. North American international freight was stagnant at 0.3% growth.

The recent downward trend in air freight is very much linked to the price of oil and fuel. Domestically, air freight cannot compete with other transport modes such as road and rail. In Africa the maritime industry offers an attractive alternative to a large portion of the market, whereas in North America a slowing economy is the main factor behind stagnation.

View the full results

2007 World Performance

ACI's 2007 World Airport Traffic Report is based on input from 1200 airports worldwide. Nearly 4.8 billion passengers arrived and departed the world's airports in 2007, a growth of 6.8% on the previous year.

For 2007, the busiest airports in the world remained in their dominant position. Atlanta staying on top with over 89 million passengers, followed by Chicago O'Hare (76m), London Heathrow (68m), Tokyo Haneda (67m) and Los Angeles (62m). When just international traffic is taken into account, the top five busiest airports are London Heathrow (62m), Paris Charles de Gaulle (55m), Amsterdam (48m), Frankfurt (47m) and Hong Kong (46m).

The report showed that the fastest growth in passengers occurred in the Middle East with an 11.3% increase, followed by Africa (11.2%) and Asia-Pacific (9.1%). The North America region showed the slowest growth at 3.5%. Europe showed growth of 7.4% and, at 31% of world passengers and looks set to overtake North America (32%) as the largest region for air traffic in the next few years if current growth patterns hold.

Regions Pie

While worldwide passenger numbers grew by nearly 7%, the growth in aircraft movements was at 2.4%, showing that the industry worldwide has moved to larger aircraft and are flying with higher load factors. Aircraft movements handled by the world's airports totaled 76.4 million last year. Nine out of the top ten airports with highest aircraft movements are in the U.S., reflecting the large share of domestic and regional traffic in that market.

The growth in cargo traffic slowed slightly to 3.2% over the previous year, with 88.5 million metric tonnes handled in 2007, possibly due to the increase in fuel price pushing cargo traffic to other transport means.

The report also revealed that nine out of the top ten fastest growing airports in 2007 were in Asia-Pacific. The fastest growing market for passengers was India with 24% growth and the largest single market in the world remains the U.S., which handled 1.4 billion passengers last year. The second largest market was China with 350 million passengers and third was the United Kingdom with just under 250 million.

The trend for robust growth at small- and medium-sized airports outpacing growth at large airports continued in 2007 with the 'under 5 million passenger' category growing almost three times faster than more congested and capacity constrained airports in the 'over 40 million passenger' category.

Airports in the News

Edmonton Airport Flying High
Edmonton Sun (Edmonton, Aug. 1, 2008)

Airport Hits New Level
Opinion 250 (Prince George, July 24, 2008)

A Closer Look at Airport Expansion Across Canada
Calgary Herald (Calgary, July 20, 2008)

Airport "Bird Men" Clear Runway
The National Post (July 19, 2008)

Airport Called "Shining Star" of Island Economy
Comox Valley Record (Comox, B.C., July 17, 2008

PEOPLE IN THE NEWS
Executive Changes at Halifax International Airport Authority

The Halifax International Airport Authority recently announced several changes in responsability for its management team, effective July 1.

In addition to her current role as vice president finance and CFO, Joyce Carter will assume the responsibility of chief strategy officer. Ms. Carter, who recently was appointed vice chair of the Halifax Gateway Council, now is the authority's vice president finance, CFO & CSO.

Jerry Staples will continue as vice president marketing & business development with a specific focus on the aeronautical sector.

Peter Spurway will continue as vice president corporate communications and will assume responsibility for retail and airport community development. Mr. Spurway's new title is vice president corporate communications, retail & community development. Cecillia Anderson, marketing & retail specialist, will report to Mr. Spurway.

HIAA's customer relations department, consisting of Kelly Martin and Kim Keeling, will move from corporate communications to operations and will report to Paul Baxter, vice president, operations.

Sam Samaddar Named Kelowna Airport General Manager

The City of Kelowna has announced the appointment of Sam Samaddar as the new airport general manager effective July 23, 2008. He has served as interm manager since the retirement of Roger Sellick earlier this year.

"Sam brings respected leadership and experience to the Kelowna International Airport," says City Manager Ron Mattiussi. "Over the last five months Sam has led the airport, its staff and tenants as the interim General Manager and he has done an excellent job. I am pleased to make his role in this position permanent."

Mr. Samaddar has been with the Kelowna International Airport since 1992 where he assumed the position of superintendent airport operations and has held numerous positions, including assistant general manager jobs for both airport operations and airport development.

Prior to Kelowna he worked with the federal government in external affairs before moving to the Vancouver International Airport for four years.

CANADIAN NEWS
Toronto, Halifax, Prince George Gain Cargo Transshipment Status

Transport Canada recently announced the approval of
Toronto Pearson International Airport, Halifax Robert L. Stanfield International Airport and the Prince George Airport to participate in the international air cargo transshipment program.

The international air cargo transshipment program allows air cargo to be moved through Canada for shipment to third countries. For example, cargo could be flown from the United States into an airport with transshipment, stored temporarily, and then flown to an Asian destination. Similarly, international air cargo could also arrive from overseas and then be shipped by rail or road from an airport with transshipment to the United States.

"We view the transshipment program as a positive step towards a more competitive Toronto Pearson," said Lloyd McCoomb, President and CEO of the Greater Toronto Airports Authority. "These types of programs and continued work towards liberalized air transport agreements with other countries will allow maximum flexibility for cargo operators."

"Participation in this program will greatly enhance Halifax Stanfield International Airport's air cargo program and development of the region's Atlantic Gateway strategy." said Tom Ruth, President and CEO, Halifax International Airport Authority.

"The air cargo transshipment program will support our multi-modal cargo development and will help to ensure that the Prince George Airport runway extension project, targeting air cargo carriers flying trans-Pacific routes, is competitive and capable of growth in the handling of cargo and freight," said Stieg Hoeg, general manager of the Prince George Airport Authority (PGAA).

The program enables the Canadian Transportation Agency to authorize any foreign air carrier to use transshipment airportsto transship international air cargo, even if these rights are not provided in Canada's bilateral air transport agreements. In addition, air carriers will be able to combine such cargo transshipments with other services for which they may be licensed.

The international air cargo transshipment program was introduced in 1982 at Mirabel Airport as part of a larger effort to improve the use of Montréal area airports. It has since been expanded to other airports, including Hamilton (1987), Windsor (1993), Gander (2000), Winnipeg (2004), Edmonton (2006), Calgary (2007), and Abbotsford, Vancouver and Moncton (2008).

Halifax Airport Retires Nova Scotia's First Escalators

After almost half a century of service, Nova Scotia's first escalators are being retired at Halifax Robert L. Stanfield International Airport.

In July 1960, when the airport opened its doors, Nova Scotia welcomed its first set of escalators in the airport main lobby. Halifax International Airport Authority (HIAA) has decommission ed these elevators to make way for a new three-level centre core terminal modification. An unscientific calculation indicates each of the two escalators made over 35 million revolutions in its lifetime.

"Those escalators in our main lobby have served us well over the last 50 years carrying millions of visitors," says Tom Ruth, HIAA's president & CEO. "I'm sure many Nova Scotians will fondly remember that their first escalator ride was at the airport," he says.

Otis Canada installed the original escalators in 1960 and has been awarded the contract to install the new three-level escalators and elevators that will provide second floor terminal access directly to the new parking facility via an over-road pedestrian bridge.

HIAA is in the midst of a multi-million dollar improvement program that will significantly change the look, feel and function of the groundside of the airport, with reconfiguration of the terminal front roadway to improve the flow of passengers and vehicles, construction of a 2,300-space parking facility, and enhancements to the face of the terminal building to create a consistent and modern new facade.

WestJet Add Flights, Reports Quarterly Profit

While much has been written about the capacity cuts in commercial aviation, primarily in the U.S., WestJet recently detailed some of its increase in capacity for fall 2008. The news came on the eve of a second quarter profit announcement of $30.2 million.

WestJet announced seasonal nonstop service to two new destinations in Mexico, Cancun and Puerto Vallarta. These are part of WestJet's winter 2008 schedule, which also includes increased frequencies to Los Angeles, Las Vegas, Phoenix, Palm Springs, Orlando, Honolulu, Maui, Cabo San Lucas and Mazatlan (Mexico), and Nassau (Bahamas). WestJet says its winter schedule represents an increase in capacity.

On July 30, WestJet reported increased second quarter net earnings of $30.2 million. For the quarter and half year, WestJet's fuel cost per available seat mile increased a whopping 46.1% and 38.3% respectively. However, the company's other expenses were largely down on a seat mile basis for an overall cost per available seat mile that was up just 7.3% for the quarter and 7.1% for the half year.

On a seat mile basis, revenue was up 1.9% and 4.8% for the quarter and half year.

INTERNATIONAL NEWS
U.S. Carriers: Costs Up 31%

The Air Transport Association of America (ATA), the industry trade organization for the leading U.S. airlines, last month announced that U.S. passenger airlines saw first-quarter 2008 costs grow at the fastest pace since the second quarter of 1980.

The composite cost index rose to 228.7 in the first quarter, up 31.3% from the first quarter of 2007, easily outpacing the 4.2% increase in the U.S. Consumer Price Index. The three largest components of the index - which includes all operating expenses as well as interest expense - were fuel (28.7%), labor (20.9%) and transport-related expenses* (14.0%). On average, fuel accounted for 29.4% of first-quarter operating costs.

Year-over-year highlights include:

The average price paid for fuel increased 50.8%
Airlines experienced a 19.9% jump in maintenance material costs, offset in part by a 23.9% decline in aircraft insurance costs and a 17.0% decline in other insurance costs
Overall unit operating cost per available seat mile rose 1.51 cents to an all-time high of 13.72 cents
Despite a 2.6% increase in passenger yield, the average break-even load factor rose 6.2 points to 83.5%, well above the average realized load factor of 77.2%

ATA says its ATA Airline Cost Index is the only industry analysis of its kind, tracking quarterly and annual trends in the cost of inputs to airline production for U.S. passenger carriers that report quarterly financial information to the Department of Transportation. The index facilitates comparisons between the components themselves as well as broader economic indicators.

U.S. Forwarders Concerned About Lack of Funding for Cargo Screening

The U.S. Airforwarders Association testified recently that it is concerned that without federal funding for cargo screening, many freight forwarders could opt-out of a proposed U.S. program.

In his testimony, association executive director Brendan Fried said it the association strongly supports the Certified Cargo Screener Program, but that the cost of participating in this voluntary program is cost-prohibitive for nearly half of the U.S. forwarding industry.

With equipment costs that range from $150,000 to $500,000 per facility, Mr. Fried anticipate many members opting not to participate in the program. If this happens he says it will put enormous pressure on the airlines and airports to screen potentially as much as 40% of the cargo put on passenger planes in the U.S.

Mr. Fried urged Congress to provide funding for CCSP, particularly for small to mid-sized forwarders. He also urged the Transportation Security Administration (TSA) to "fulfill its commitment to the current participants in the pilot program by completing the list of approved technology and the other critical needs of the program in a timely fashion."

CAC Reiterates Opposition to Slot Auctions

The CAC recently submitted additional comments to the U.S. Department of Transportation regarding a second Notice of Proposed Rulemaking that would implement a system of slot auctions in New York. This notice, which follows a notice that would introduce auctions at New York's La Guardia Airport, would affect flights into New York's JFK and Newark Liberty airports.

Two-way trade between Canada and New York/New Jersey alone was nearly $60 billion in 2007. The New York City market is the largest U.S. market for flights between Canada and the U.S. with more than 2 million passengers traveling between Canada and New York each year.

As in its earlier submission, the CAC argued that the proposal would disproportionately and negatively impact Canadian communities. Of the 220 weekly flights between Canada and Newark/JFK scheduled this summer, 85% of them are operated by aircraft with fewer than 75 seats

The CAC is largely supportive of Airports Council International- North America's assertion that capacity expansion at the airport and in the U.S. national airspace system is the most effective way to reduce congestion -- not through slot auctions.

"ACI-NA is concerned that the proposal would reduce airline competition and damage service to small communities," said ACI-NA President Greg Principato in a recent press release. "Instead of pursuing its misconceived "slot auction" proposal, we suggest that FAA work collaboratively with the Port Authority of New York and New Jersey, as well as the airlines, in developing and implementing a reasonable and effective program of congestion management for LaGuardia."

Canada's Airports:
Working Together, Moving Forward

The Canadian Airports Council (CAC) is the voice for Canada's airports. Formed in 1991, as the devolution of airports to local control was beginning, the CAC has established itself as the reliable and credible federal representative for airports on a wide range of significant issues and concerns.

Canada's airports are engines for economic development in the communities they serve and one of their most important elements of local infrastructure: Our communities' vital links to intra-provincial, national and international trade and commerce. Our 49 members represent 180 Canadian airports, including all of the National Airports System (NAS) airports and most passenger service airports in every province and territory.

Together, CAC members handle virtually all of the nation's air cargo and international passenger traffic and 95% of domestic passenger traffic. The economic impact of CAC member airports is staggering. They create well in excess of $45 billion in economic activity in the communities they serve. And more than 200,000 jobs are directly associated with CAC member airports, generating a payroll of more than $8 billion annually.