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July-August 2009

Canada Initiates Visa Requirement for Mexican, Czech Citizens

The federal government on July 13 initiated a visa requirement for citizens of Mexico and the Czech republic -- leading thousands of travellers to scramble for visas or cancel Canadian trips.

The visa requirements were initiated due to a high number of refugee claims from each country. According to the Department of Citizenship and Immigration, refugee claims from Mexico have almost tripled since 2005, making it the number one source country for claims. Only 11% of refugee applicants last year were accepted.

In 2008, however, Mexico also was Canada's fifth biggest source of overseas tourists with 250,000 overnight trips in 2008 according to the Canadian Tourism Commission (CTC) - an 8.9% jump over 2007. Mexico also is one of the CTC's priority growth markets.

With some 15,000 visitors to Canada a year, the Czech Republic was the second biggest source of refugee claims. Since the visa requirement was lifted in 2007, nearly 3,000 claims have been filed by Czech nationals, compared with less than five in 2006.

Mexican, Czech and European Union officials expressed regret over the new visa requirements. The Czech Republic recalled its ambassador to Canada.

Minister of Citizenship and Immigration Jason Kenney told the Globe and Mail that he is working on reforms to Canada's asylum procedures to speed up the acceptance/rejection of procedures.

""When we raise with our partners in foreign countries the issue of false asylum claims, or large flows like we've seen from Mexico and Czech Republic, they turn the discussion back on us, and say, 'Your system is inviting this kind of abuse. And you need to fix your system,' " Mr. Kenney reportedly said.

AIRPORTS IN THE NEWS
Globe Editorial Highlights High Canadian Aviation Taxation

A recent editorial from the Globe and Mail's Derek DeCloet (Ottawa's Tax Missiles Shooting Down Airlines, June 27, 2009) took a look at the high level of taxation on airlines in Canada.

Entitled "Ottawa's tax missiles shooting down airlines," the commentary contends that "It is time for the government to rethink its airline tax regime.

"The C.D. Howe Institute studied the issue two years ago and found that Canadian airlines face higher rates of tax than their U.S. competitors - significantly so in the case of domestic flights," De Cloet writes. "For passengers, this shows up most starkly on short flights: a 50-minute jaunt from Kelowna, B.C., to Vancouver on WestJet, priced at $79, balloons to $111 once fees and GST are tacked on."

"How many consumer products carry a 40 per cent tax burden?" he asks.

The Canadian Airports Council couldn't agree more, and the $300 million in annual rent paid by Canada's 25 National Airports System airport authorities would be a good place to start. This cost is the biggest tax on aviation of all. It doesn't exist in the U.S. or practically anywhere else in the world for that matter and Canada's airports have sought its elimination for years.

The results of Canada's aviation tax policy are plain to see. As the Hamilton Spectator covered recently (It's a bird, it's a plane, it's a Canadian, July 4, 2009), millions of Canadians are flying out of border airports in the U.S. because flights are simply a lot cheaper.

A third of passengers at Buffalo-Niagara International Airport are Canadian. More than two million Canadians, in fact, may be flying out of border airports that also include Burlington, Vt.; Plattsburgh, N.Y., Grand Forks, N.D., and Bellingham, Wash. While other U.S. airports have seen traffic decreases, these airports are all still in growth mode.

"It's a concern to all Canadian airports in terms of our competitiveness with U.S. airports," Richard Koroscil, president and CEO of John C. Munro Hamilton International Airport told the Spectator. "We have an uncompetitive fee and tax structure in Canada that makes it more difficult for any Canadian airport."

In other news...

Profit Takes Off at Island Airport
(Toronto Star, July 23, 2009)

Everyone Flies in to the Sault Airport
(North Bay Nugget, July 23, 2009)

New Airport Manager Looks to the Skies
(Prince George Citizen, July 17, 2009)

New Airport Terminal Goes Big on Manitoba
(Winnipeg Free Press, July 8, 2009)

Dealing with Disaster; Airport Exercise
Perfect Training Opportunity: RCMP
(Western Star, June 24, 2009)

Airport Tunnel Just the Ticket
(Calgary Sun, June 23, 2009)

A gateway to our future
(London Free Press, June 18, 2009)

Off-grid Light Displayed at Vancouver International Airport
(Vancouver Province, June 9, 2009)

Calgary Mayor, Federal Environment Minister Back Emirates Bid

2008 Global Airport Duty Free a $21.8 Billion Industry in 2008

Sales data from Generation Research announced recently by the European Travel Retail Council (ERTC)'s Trend News show that the industry generated some USD $21.8 billion in 2008 -- a 10.6% increase over 2007.

Airport sales were the biggest component of the overall duty free and travel retail sector at just under 60%. System-wide, Europe was the biggest market with 41% of sales, followed by Asia-Pacific (27%), the Americas (23.7%) and the Middle East-Africa (8%).

Top 25 Duty Free and Travel Retail Markets
Rank	Country
> $3 Billion (USD)
1	United Kingdom
2	South Korea
> $2 Billion (USD)
3	United States
> $1 Billion (USD)
4	United Arab Emirates
5	France
6	Germany
7	Hong Kong
8	Singapore
9	U.S. Virgin Islands
10	Spain
11	P.R. China
12	Japan
13	Norway
14	Italy
15	Netherlands
16	Estonia
17	Russia
18	Finland
19	Denmark
20	Thailand
21	Turkey
22	Brazil
23	Sweden
24	Australia
25	Puerto Rico
Sources: Generation Research (data)

Top 15 Airport Duty Free Operations
Rank		Airport
> $1 Billion (USD)
1	Dubai International Airport
2	London Heathrow Airport
3	Seoul Incheon Airport
> $500 Million (USD)
4	Singapore Changi Airport
5	Paris Charles de Gaulle Airport
6	Amsterdam Schiphol Airport
7	Hong Kong International Airport
> $100 Million (USD)
8	Bangkok Suvarnabhumi Airport
9	Frankfurt am Main Airport
10	Oslo Gardermoen Airport
11	London Gatwick Airport
12	Manchester International Airport
13	Tel Aviv Ben Gurion Interational Airprot
14	Rome Fiumicino Leonardo da Vinci Airport
15	Istanbul Ataturk Airport
Source: Generation Research

World Airport Traffic Remains Low in May

Airports Council International recently released airport traffic stats for May, indicating traffic for the month remained markedly lower than traffic levels of May 2008.

Persistent economic uncertainty and the H1N1 virus have taken a toll on demand. Airports participating in the passenger and freight "flash" reports recorded an overall 8% decrease in passenger traffic as compared to May 2008, with international traffic declining by 9% and domestic traffic by 7%.

Total freight handled worldwide fell by 16% compared to May 2008, with international freight down by 19% and domestic by 10%. However, May performance has added to stabilization of global freight volumes, in part as a result of further softening declines of international freight even though domestic freight has stagnated for three months now.

"In May, freight results point to a small but hopeful indication that the downward trend is slowly reversing its steep drop," said

ACI Director General Angela Gittens. "On the passenger side, international results took a direct hit from the H1N1 virus, although it is hard to calculate the exact degree to which travel plans were delayed or cancelled due to health concerns."

Mexico was the market most strongly affected by the virus. Combined results from three major tourist destinations - Mexico City, Guadalajara and Cancun - show a dramatic drop in traffic (-40.2). H1N1 also likely had a dampening effect on international travel in the particularly health-sensitive Asia Pacific region where the major hubs' international traffic declined more than expected (Hong Kong -12%, Bangkok -23%, Singapore -10%, Narita -14%).

Worldwide domestic traffic remained depressed with below average data from major markets: USA, Mexico, Brazil, Spain and Japan. The overall fall in global domestic traffic is softened by continued strong performance in China (Beijing +23%).

Worldwide Airport Traffic Loss - May 2009
	May	Year to May	Rolling 12 months to May
Passenger Traffic
International	- 9.3%	- 8.1%	- 4.1%
Domestic	- 6.8%	- 7.0%	- 5.7%
Total	- 8.0%	- 7.5%	- 5.0%
Freight Traffic
International	- 18.5%	- 22.2%	- 14.1%
Domestic	- 10.4%	- 11.7%	- 9.7%
Total	- 16.0%	- 18.8%	-12.6%
Source: ACI

World Second Half Seat Capacity at 2005 Levels

OAG has released its capacity outlook for the second half of 2009, indicating capacity will be down to levels last seen in 2005.

The world's airlines will offer 3.67% fewer flights and 2.76% fewer seats than they did a year ago. The total number of flights (14,191,263) will be at the lowest level since the second half of 2005. The numbers reflect the airline industry's attempts to adjust to a weak economic climate, but capacity nevertheless remains almost 20% higher than the levels of the early 2000s.

Intra-North America will account for more than a third of all operations but just over a quarter of the capacity. The declines reflect not only carriers' adjustments to the economic climate, but also consolidation in the U.S. industry with the integration of Northwest Airlines into Delta.

Capacity to/from Europe is mostly unchanged, but with frequencies down more than 2%. Within Europe, departures will be down 7.3% and capacity off by more than 6%. The bulk of the decline has been in Eastern Europe (excluding Russia) where carriers have had to pull back on various expansion plans, particularly in the low cost sector.

Asia/Pacific is the other region with some notable declines. Flights to/from the region will be down 3.1%, but the introduction of larger equipment, notably the A380 at Emirates, Qantas and Singapore Airlines has limited the decline in seat capacity to under a percentage point.

South America is experiencing a significant increase in service. The northern part of the continent will have an 11.2% increase in seats within the region while the south will have a 9.6% increase, To and from the region, capacity and frequencies are up, in part, due to a more liberalized agreement between the U.S. and Brazil.

OAG analysis takes into account all future schedules filed by the airlines to date, to provide a comprehensive snapshot of planned airline activity for July to December 2009 with comparisons tracking back to 2001.

Paris Report

Every two years, anybody who is anybody in aerospace heads to Paris for the biennial Paris Air Show. A flurry of high-profile civil aircraft orders usually ensues. This year, not so much.

Below is a chart of aircraft orders announced during Paris. In the 2008 Farnborough Air Show, for comparison, 186 firm orders were announced and the 2007 Paris Air Show was one of the biggest on record for orders.

Paris Air Show 2009 - Firm Orders
Manufacturer	Carrier	Region	Aircraft Ordered
Airbus	Aigle Azur	Europe	1 A319
	Air Asia	Asia-Pacific	10 A350-900
	Cebu Pacific	Asia-Pacific	5 A320
	Qatar Airways	Middle East	24 A320
	Turkish Airlines	Europe	7 A330
	Vietnam Airlines	Asia-Pacific	16 A321
	Wizz Air	Europe	50 A320
	Zest Airways	Asia-Pacific	1 A320
ATR	Afrijet Airlines	Africa	4 ATR-72-500
	Air Nostrum	Europe	10 ATR-72-600
	Royal Air Maroc	Africa	4 ATR-72-600 2 ATR-42-600
	Vietnam Airliner	Asia-Pacific	2 ATR-72-500
Boeing	MCAP/Skymark	Asia-Pacific	2 737-800
Boeing	Turkish Airlines	Europe	7 777-300ER
Bombardier	Air Nostrum	Europe	15 CRJ-1000*
Bombardier	Pantheon/Olympic	Europe	8 Q400
Embraer	Fuji Dream Airlines	Asia-Pacific	1 Embraer 175
Embraer	KLM City Hopper	Europe	7 Embraer 190s*
Sukhoi	Avia Leasing	Europe	24 Superjet 100*
Sukhoi	Malev	Europe	30 Superjet 100
* Conversion from options to firm order

Boeing reportedly is not particularly concerned as its order backlog of approximately 3,700 aircraft represents nearly eight years of production.

Bombardier also released its latest market forecast in Paris.

The manufacturers also unveiled their market forecasts in Paris. In its size class, Bombardier anticipates 12,400 aircraft orders over the next 30 years. This includes just 300 aircraft in the 20-59 seat range, but a healthy 5,800 aircraft in the 60-99-seat range and 6,300 aircraft in the 100-149-seat range. This latter market is the focus for Bombardier's C-Series, currently under development with Lufthansa as the launch customer.

CANADIAN NEWS
New Deputy Minister for Transport Canada

The Prime Minister's Office recently announced that Yaprak Baltacioğlu, currently deputy minister of the Department of Agriculture and Agri-food would become deputy minister of the Department of Transport, Infrastructure and Communities, effective July 1. She replaces Louis Ranger, who has retired.

Ms. Baltacioğlu has served in the public service since 1989. She assumed her most recent position -- her first as a deputy minister -- in 2007. She previously was deputy secretary to the cabinet (operations), in the Privy Council Office. While most of her time was spent at Agriculture, whe also has served in positions for Environment Canada and for the Public Service Commission.

Ms. Baltacioğlu has a master of arts from Carleton University's School of Public Information and a bachelor of law from Istanbul University.

Pearson Unveils Olympic Mural

Driving along the approach road to Terminal 1, it becomes clear that the Olympic spirit has arrived at Toronto's Pearson International Airport.

Last month, to commemorate its sponsorship of the 2010 Vancouver Olympics, Air Canada installed a 258' x 51' Olympic mural along the entire glass wall of Terminal 1's grand hall. The
mural features Olympic and Paralympic athletes in action.

"The 2010 games in Vancouver will be Canada's games and we're excited here in Toronto about helping to spread the Olympic fever and welcome the world," said Lloyd McCoomb, president
and CEO of the GTAA. "We hope that the thousands of people that drive by this mural every day will take with them the knowledge that Toronto Pearson supports our Canadian athletes
and wishes them much success in Vancouver."

Air Canada's mural is one of the largest in Canada covering approximately 12,489 square feet.

"As the Official Airline of the Vancouver 2010 Olympic and Paralympic Winter Games, Air Canada is showing its passion for the games to travellers across Canada and the world with
this football-field-sized mural at Toronto Pearson International Airport, the largest hub in our global network," said Ben
Smith, executive vice president and chief commercial officer at Air Canada.

The mural was installed in 12 days over a period of 200 hours. Installation and production was executed by Clear Channel Outdoor.

INTERNATIONAL NEWS
North American Airports Adopt Formal Position on Climate Change

The Airports Council International- North America (ACI-NA) Board of Directors has adopted the following position statement on climate change and greenhouse gas (GHG) emissions:

ACI-NA members are taking aggressive action to reduce emissions associated with sources under their control. In addition, ACI-NA and its members believe that it is necessary to reduce GHG emissions from aircraft sources. Aircraft GHG emissions are best reduced through a multi-faceted approach that includes operational advances, technology improvements, infrastructure investments, alternative fuels, and economic measures."

The ACI-NA position statement also addresses the specific need for economic measures, encouraging the U.S. and Canada to work with governments throughout the world to "incorporate the true environmental and economic costs of GHG emissions into the price of energy through the development of appropriate economic measures." Further, any revenues from economic measures "should be invested in a manner that will have the greatest impact on long-term GHG emission reductions within the aviation industry."

In February, ACI-NA's Board of Directors voted to adopt a slate of ambitious airport environmental goals to be achieved in the coming years. Several of the goals specifically address measures to reduce aviation's GHG emissions. However, given the discussion on the issue-not only in the United States and Canada but also at the International Civil Aviation Organization (ICAO)-it was recognized that ACI-NA should develop a more detailed and specific position on climate change.

"ACI-NA undertook this initiative to build on goals adopted by our Board earlier this year, and to further the industry's proactive commitment to improving the overall environmental performance of airports," said ACI-NA President Greg Principato. "These goals are a reflection of programs that have proved to be successful at reducing environmental impacts at many of our member airports and seen as an opportunity to mirror those achievements across the industry."

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 45 members represent more than 200 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.