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February-March 2009

Canadian Traffic Down for December, Up Slightly for the Year

Preliminary airport traffic data from Transport Canada's Top 30 reporting airports suggest that Canadian enplaned/deplaned passengers continued the fall-winter monthly declines in December with a decline of 1.6% over the previous year. For the full year, traffic was virtually stagnant - up 2.5% across all segments.

For December, domestic and trans-border segments reported declines of 3.8% and 1.2% respectively. It was the first time during the year that a domestic decline was bigger than on the transborder market. Meanwhile, overseas numbers were 4.7%.

Perhaps not surprisingly, for the year the overseas sector posted the strongest growth rate at 7.5%. Domestic e/d passenger numbers were up just 1.6% and transborder passenger numbers were stagnant at 0.5%.

Airports Canada
Two More Weeks for Early Bird Registration

There are just two weeks left to enjoy the discounted early bird registration rate for Airports Canada 2009.

Being held April 28-30, 2009 at the Hilton Lac Leamy in Ottawa-Gatineau, Airports Canada will bring together the country's top airport leaders and other industry stakeholders to examine the industry through the prism of "Leadership for Challenging Times."

For more information on registrations, exhibiting and sponsorships, please visit the CAC Web site at www.canadasairports.com

Centennial of Flight Web Site Launched

The coalition of groups recognizing the 100 year anniversary of heavier than air powered flight in Canada has launched a Web site.

The coalition, of which the CAC participates, includes the Canadian Armed Forces and representatives of the airline, aerospace, air navigation sectors and others interested in aviation history.

Among the activities being celebrated under the Centennial of Flight banner is the flight of a replica of the first powered aircraft in Canada, the Silver Dart.

For more information visit www.canadiancentennialofflight.com.

AIRLINE TRAFFIC NUMBERS
Massive December Drop in World Cargo Traffic

The International Air Transport Association (IATA) recently released international scheduled traffic results for both December 2008 and the full-year, showing a massive December decline in cargo traffic and a 4% decline for the year.

Airline traffic stats differ from airport statistics in that they take into account the distance each passenger flies.

In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.

For the full-year 2008, international cargo traffic was down 4.0%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%.

"The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%," said Giovanni Bisignani, IATA's director general and CEO." Air cargo carries 35% of the value of goods traded internationally.

Bolstered by year-end advance-booked leisure travel, the 4.6% decline in December passenger demand was less dramatic than the fall in cargo. A 1.5% cutback in supply could not keep pace with falling demand, resulting in a 2.4% decline in the December load factor to 73.8%.

Passenger Traffic

Full-year traffic results show a 1.6% increase in demand which is dramatically down from the 7.4% recorded in 2007. Capacity grew by 3.5% resulting in a full-year average load factor of 75.9% (down from the 77.3% recorded for 2007)

Asia-Pacific carriers saw the sharpest decline in December international traffic at 9.7%. They also registered the sharpest reduction in capacity, but at 5.6%, this is lagging behind the drop in demand. Load factors sank to 72.6%. The economic turmoil in the region is widespread. December export volumes fell 20% for Singapore and 35% for Japan. Korean GDP showed a 5.5% contraction. While China's economy continues to grow, recently released GDP figures show that it is at a much lower pace. As a result, traffic in the region continues to be the hardest hit.

European carriers saw demand for international travel fall by 2.7% while capacity declined by 1.5%. Load factors stood at the global average of 73.8%. With business confidence indicators pointing to a 10% decline in industrial production and a 20% fall in trade, there is little reason for optimism.

North American airlines saw December demand drop by 4.3%, far outstripping the 0.7% cut in international capacity. While North American carriers had made early cuts in domestic capacity of about 10%, this is the first month registering a cut in international operations. Nonetheless, the region recorded the highest load factor at 78.1%.

African carriers continued to see their traffic fall, despite more robust economies and travel to the continent than other regions. International passenger traffic declined 4.6% in December. The 2.1% reduction in capacity left load factors at 68.5%, the lowest among the regions.

Latin American airlines recorded a 1.1% increase in December demand and a 3.2% increase in capacity. With North American commodities demand and trade falling so sharply, the months ahead are likely to be more difficult for airlines in this region.
Carriers in the Middle East showed a 3.9% increase in demand in December, far below the 10% capacity increase. The region's carriers ended five years of double-digit growth with full-year demand growing by 7.0% (compared to 18.1% recorded for 2007). Growth will continue to slow in 2009 as oil revenues and long-haul hub connection traffic are now both in decline.

Freight Traffic

Full year international air freight traffic contracted 4.0% for the year compared to 4.3% growth in 2007.

The collapse in the airline industry's freight business is a reflection of 20-30% declines in export and import volumes being reported across Asia, North America and Europe as the global recession plumbs new depths in December.

Asia-Pacific carriers, accounting for 45% of international cargo, led the December decline with a 26.0% contraction compared to the previous year. Latin American carriers saw cargo drop 23.7%; North American carriers 22.2% and European carriers 21.2%. Single-digit declines were recorded by Middle Eastern carriers (-9.2%) and African carriers (-8.0%).

Airlines registered a US$5 billion loss in 2008. For 2009 IATA is forecasting a further loss of US$2.5 billion based on a fuel price of US$60 per barrel, a decline of 3.0% in passenger volumes, a drop of 5.0% in cargo traffic and yield deterioration of 3.0%. Industry revenues are expected to contract by US$35 billion (from US$536 billion in 2008 to US$501 billion in 2009).

In the face of this economic crisis, IATA is calling for major structural changes to the industry.

"We don't want bail-outs. But we need to change the ownership rules. Almost every other business has the freedom to access to global capital and the ability to merge across borders where it makes sense. To manage in this crisis, airlines need the same management tools," said Bisignani.

Airports in the News

Fees Won't Rise at Calgary Airport
(Calgary Sun, Feb. 14, 2009)

Airport's A Light in our Economy
(Victoria Times-Colonist, Feb. 10, 2009)

Silver Dart Replica Flies at Hamilton Airport
(CBC, Feb. 6, 2009)

Airport expansion price tag: $672M
(Winnipeg Free Press, Jan. 29, 2009)

Airport security courses take off at Collège Gérald Godin
(West Island Chronicle, Jan. 23, 2009)

CANADIAN NEWS
Kelowna Airport Breaks its own Passenger Record

Kelowna International Airport reached new lengths in 2008 with facility expansions, runway extensions and an increase in passenger numbers and passenger satisfaction results.

For the sixth year in a row, 2008 ended as a record-breaking year in Kelowna. Passenger numbers increased 2% from 1.36 million in 2007 to 1.39 million in 2008.

"2008 has been a year of great achievements for this airport," said Kelowna Airport Director Sam Samaddar. "There have been many improvements made to our facility but still keeping us as a low cost airport which in the end benefits our passengers, airlines and tenants."

Highlights of the year at Kelowna International Airport include extending the runway from 7300 feet to 8900 feet giving the airport capability to provide intercontinental reach; increasing vehicle parking and improving roadway access to the terminal, and expanding food and beverage services. Hours of airport operation were increased to make Kelowna International Airport one of two airports in B.C. with 24-hour coverage. There also was a four lane pre-board security screening area installed and departures area expanded.

Kelowna was chosen in 2008 by Canadian Air Transport Security Authority (CATSA) as the host site for a pilot project on an integrated checkpoint, making it a world's first (in an airport) by integrating one machine using millimetre wave technology with current technology (X-ray and metal detection).

Kelowna also has been participating in an independent national customer satisfaction survey by InterVistas Consulting Inc since 2003. The survey benchmarks YLW against other Canadian airports of similar size.

Increased marks in this year's survey included areas of safety and security, terminal cleanliness, staff courtesy and access for the disabled.

INTERNATIONAL NEWS
ACI-NA Praises U.S. Airport Funding

Airports Council International- North America (ACI-NA) recently praised airport provisions in the final agreement on the U.S. Economic Stimulus bill, saying the $2.1 billion funding will allow U.S. airports to move forward with much-needed infrastructure programs.

The final bill included the following provisions for U.S. airports:

$1.1 billion in Airport Improvement Program (AIP) funding with a requirement that up to 50 percent of the funds be obligated within 120 days and the rest within a year. The bill waives the local match requirement, a provision strongly supported by ACI-NA.
$1 billion to accelerate procurement and installation of baggage screening and checkpoint security equipment at airports.
A two-year exemption for airport private activity bonds (PABs) from the Alternative Minimum Tax (AMT), including the refinancing of bonds issued within the past five years under the exemptions.

"Airports are an economic gateway for their communities, and today's investment by Congress will benefit them today by providing much need jobs and well into the future by ensuring the airports are ready to meet the evolving needs of the traveling public," said ACI-NA President and CEO Greg Principato.

Worldwide Airports Report December Drop in Traffic

Airports Council International preliminary traffic results for 2008 show that for the full year, worldwide passenger traffic remained flat, thanks to strong growth in the first quarter. Year-end results in the freight sector, which did not benefit from any significant surge in traffic during the year, retracted in 2008 (international freight -3%, domestic -7% and the worldwide average -4.5%).

Freight traffic was heavily impacted by the devastating global economic climate in December 2008, with worldwide freight down by 20%, international freight by 25% and domestic by 9%.

For the month of December, global passenger traffic growth fell by 6% compared to December 2007, as did international and domestic traffic. The top 10 international airports all reported declines, led by Bangkok (-42%), London Gatwick (-14%), Incheon (-13%) and Tokyo Narita (-10%). Dubai was the only exception, registering a 5% increase, and the only region on the rise was the Middle East with a 7% increase in international traffic.

Domestic passenger traffic results were buoyed by China where the large airports showed double-digit increases. This was offset by continued weak performance in India and the U.S. where the large airports suffered double-digit reductions.

"December terminated a turbulent and sobering year for the airport industry," said ACI World Director General Angela Gittens. "A very promising first quarter was followed by steadily decreasing demand, resulting in a flat finish for the year.... Further deterioration in the air freight sector can be expected over the next two quarters, reflecting the constricted global trade and commerce environment in which we are operating."

"When we first began planning for this event, the key concern for the industry was the high price of fuel," says ACI World Economics Director Andreas Schimm. "Within six short months the entire focus shifted to the growing world financial crisis and its implications for airport planning, capacity and long-term investments."

ACI says an overall contraction in 2009 is inevitable and could be as strong as -4%. ACI says it hopes to see the bottom of this accelerated downward passenger traffic trend in the first quarter 2009 and a slow stabilisation of traffic figures during the rest of the year.

Gittens concludes, "The aviation industry has experienced and survived economic cycles and crises in the past. The long term forecast for traffic growth remains basically unchanged. We must work closely with our aviation partners, despite current setbacks, to prepare for the resurgence of global markets. We cannot sit back to see what happens next. Our industry must continue to invest now to ensure that tomorrow we are ready to serve the billions of passengers who rely on us for efficient service in an environmentally sustainable manner."

Worldwide Traffic Results, 2008 vs 2007
	December 2008	Full Year 2008
Passengers
International pax	-5.7%	2.1%
Domestic pax	-6.0%	-2.6%
Total pax	-5.8%	-0.6%
Freight
International freight	-24.5%	-3.2%
Domestic freight	-9.2%	-6.7%
Total freight	-19.7%	-4.3%
Source: Airports Council International