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March-April 2009

Double Digit Growth....
and Loss in Key Tourist Markets

Statistics Canada international visit statistics for 2008 show continuation of the ongoing trend for declines in key tourist markets being offset by more Canadians travelling overseas and increased visits from less mature markets.

Visits from U.S. residents for the year were down 12%, but by air down a less pronounced 5.5%. Meanwhile Canadian visits to the U.S. were up 2.3%, with a more pronounced 8% increase by air.

Overseas resident visits to Canada were up a modest 1.8% while Canadians travelling overseas were up 9.7%. While there was a decline in overseas resident visits to Canada during December (down 6.1%), Canadian visits overseas for the month were up 10%.

Growth in foreign visits to Canada was up modestly across all regions in 2008, except for Asia where visits were down 3.2%. The most pronounced declines continued to be Japan, South Korea and Taiwan while healthy growth was recorded from mainland China, Hong Kong and India.

In Europe, visits from the UK -- Canada's top overseas source of tourists -- were down 6% but this was offset by large increases in visits from France (up 12.2%), Germany (up 4.4%) and Spain (up 12.9%).

Mexico (up 8.1%), Australia (up 8.7%) and Brazil (up 8.2%) continued to prove to be promising growth markets.

Former Canadian Ambassador to the U.S. to Open Airports Canada 2009

Former chief of staff to Prime Minister Brian Mulroney and former Canadian ambassador to the U.S. Mr. Derek Burney will open the upcoming Airports Canada 2009 Conference and Exhibition, which will be held in Ottawa-Gatineau April 28-30th.

Mr. Burney will open the conference with a dinner address to delegates April 28th. Currently with law firm Ogilvy-Renault, Mr. Burney has played a central role in Canada's economic and political development during a career that involved senior positions in both the Canadian public and private sectors.

During Mr. Burney's tenure in government he was directly involved in such landmark initiatives as the Canada-U.S. Free Trade Agreement, the North American Free Trade Agreement and the successful conclusion of the Canada-U.S. Acid Rain Agreement.

For more information on Mr. Burney, click here.

Other confirmed speakers and presenters include:

Perrin Beatty - President & CEO of the Canadian Chamber of Commerce
Andy Blackwell - Head of Aviation Security, Virgin Atlantic Airways
Joram Bobasch, EVP, ICTS Europe
Montie Brewer - President and CEO of Air Canada
John Byerly - Deputy Assistant Secretary, Transportation Affairs, U.S. State Department (invited)
Michelle di Leo - Director, Flying Matters (UK)
Jean-Marc Eustache, President & CEO, Transat A.T
Angela Gittens - Director General of Airports Council International
Allan Gregg - Chairman of Harris/Decima
Marc Gregoire - Assistant Deputy Minister, Safety and Security at the Department of Transport, Infrastructure and Communities
Nick Nanos - President and CEO, Nanos Research
Catherine Harmel-Tourneur - Director, DKMA
Tina Kremmidas - Assistant Vice President and Senior Economist of the Canadian Chamber of Commerce
Andrew Lynch - CEO of SSP
Kevin Molloy - Vice President, Simplified Passenger Travel and Chief Information Officer for the Vancouver Airport Authority
Dr. Lloyd McCoomb - President and CEO of the Greater Toronto Airports Authority
Andrew Parker - SVP, Public and Environmental Affairs, Emirates
Guylaine Roy - Associate Assistant Deputy Minister, Policy, Transport Canada
Jeffrey Shane, Partner, Hogan & Hartson LLP; Chair, IATA Agenda for Freedom
Stanis Smith - Senior Vice President, Stantec
Mike Tretheway, Executive Vice President, InterVISTAS
Ajay Virmani, President & Chief Executive Officer, Cargojet

For more information on Airports Canada, including registration information, please visit the CAC Web site.

Government Launches ADF Consultations

Canada's Department of Finance earlier this month launched consultations on the possible introduction of arrivals duty free (ADF) at Canada's international airports.

"During our consultations prior to Budget 2009, we heard suggestions that implementing an arrivals duty-free program could enhance the competitiveness of Canada's international airports and generate new sales and jobs at those airports," said Finance Minister Jim Flaherty in a statement. "To help us determine the feasibility and desirability of implementing this proposal, we would like to hear from those who have views on such an initiative and its likely effects."

Securing ADF has been an objective of Canada's airports for some time, and the Canadian Airports Council will be making a submission. Currently, individuals leaving Canada can only buy goods at duty-free shops upon their departure from the country. With ADF, travellers arriving in Canada on international flights also would be able to buy goods duty free upon arrival.

These goods would be subject to existing limits on the amount of duty and tax free goods that travellers can import into Canada. Canada's airports contend that ADF would primarily repatriate duty free revenue that currently goes to duty free shops at foreign airports, resulting in new jobs and increased tax revenue for the federal goverment.

All other organizations wishing to express their support for ADF at Canada's airports should submit their views in writing by May 5th to:

Arrivals Duty-Free Consultations
Department of Finance Canada
Sales Tax Division, 16th Floor
140 O'Connor Street
Ottawa, ON K1A 0G5

Bleak Canadian Traffic Forecast for 2009

Transport Canada has released its annual March forecast, which anticipates a bleak 5.7% decrease in enplaned/deplaned passengers overall for 2009, and no recovery to 2008 numbers until 2011.

According to the forecast, domestic e/d passenger numbers for 2009 are expected to be down 6%, recovering in 2010 with a 0.8% increase but not until 2012 would traffic be back to 2008 levels. In the U.S. transborder sector -- which already was stagnant in 2008 -- an additional 7.9% decline in e/d passengers is projected, followed by a 1.2% decline in 2010. Not until 2012 would the numbers recover to 2008 levels.

In the overseas sector, Canada's most resillient, TC projects a more modest 2.1% decline in 2009 followed by a 3.8% increase in 2010 and a healthy 7.1% increase in 2011.

In cargo, TC says it believes 2008 tonnage was down 4.8% and projects a deeper 7.3% decline in 2009 but a return to 3.6% and 5.3% growth in 2010 and 2011. The declines are across all market segments, including overseas, which posted 10.4% growth in 2008.

World Airline Traffic for January Down

The International Air Transport Association (IATA) recently announced international scheduled traffic results for January showing a deepening year-on-year demand slump.

International passenger demand fell by 5.6% in January 2009 compared to the same month in 2008. It is also a full percentage point worse than the 4.6% year-on-year drop recorded in December. The January fall in demand is the fifth consecutive month of contraction.

The 5.6% drop in passenger demand outpaced capacity cuts of 2.0% driving the load factor to 72.8% - 2.8% below what was recorded for January 2008.

The alarming collapse in cargo markets in December (-22.6%) worsened in January 2009 with a 23.2% year-on-year demand drop. This is the eighth consecutive month of contraction for freight traffic.

North American carriers -- representing primarily U.S. carriers -- posted the second largest passenger decline at 6.2% led by a decline in trans-Pacific travel. In response, carriers withdrew 2.6% of their international capacity, clawing back some of the expansion of 2008.

Asian carriers led the decline in passenger demand with an 8.4% year-on-year drop in January. While this is slightly better than the 9.7% contraction in December, this is positively skewed by Chinese New Year which fell at the end of January 2009 (and which was in February the year before). Capacity in the region contracted 4.3%. With Japan, the region's largest market for air travel, expected to see its economy contract by an unprecedented 5% in 2009, the prospects for traffic in the region remain dismal.

European carriers offset a 5.7% decline in demand with a 3.6% decrease in capacity. Demand decreased sharply from the 2.7% fall in December as European economies move into deep recession.

Latin American carriers saw a modest decline of 1.4%. Even against a 0.5% increase in capacity, the region turned in the highest load factors at 74.9%.

African carriers saw the demand decline slow from an average 4.0% in 2008 to 2.6% in January.

The Middle East was the only region with a positive traffic growth of 3.1%. This is far below both the double-digit traffic growth in 2008 and the 10.8% expansion in capacity.

Cargo

Asia Pacific carriers, representing 43% of the market, led the cargo decline with a 28.1% year-on-year drop. This was followed closely by the other major market players: European carriers (-23.0%) and North American carriers (-19.3%).

While this cargo drop may appear to be relatively stabilised compared to the precipitous December drop, it is too soon to call a bottom in the air freight market. Manufacturers are still shedding inventory and cutting production which is expected to lead to further falls in freight volumes.

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AIRPORTS IN THE NEWS

Energy Conservation Takes Flight at Pearson
Toronto Star (March 20, 2009)

Airports seek arrival-based duty free
Chronicle Herald (March 17, 2009)

Airport freight centre plan wins backing
London Free Press (March 16, 2009)

Canadian Airports Take Top ASQ Marks

Several Canadian airports once again received top honours in Airports Council International's Airports Service Quality awards program.

Halifax took the top mention in the categories of Best Airport - North America and Best Airport with Fewer than 5 Million Passengers. Ottawa placed number two in these categories. Halifax also took the number two position in Best Domestic Airport and number 3 in Airport People. Vancouver took the number 5 spot in Best Airport - 15-25 Million Passengers.

ASQ results are based on a survey that captures passengers' perceptions of the quality of more than 30 aspects of service that they have experienced at 108 participating airports. Interviewing covers every day of the week and every month of the year to ensure coverage of all seasons and all peaks and troughs.

Calgary Airport the Third Busiest in the Country

Calgary International Airport recently announced it has become the third busiest airport in country, with a passenger increase of 2.0%, to 12.5 million passengers for 2008.

During the year, the airport welcomed Lufthansa and Mexicana Airlines with new scheduled nonstop service to Frankfurt and Mexico City, respectively. Most recently, KLM announced new service to Amsterdam beginning May 2009.

"YYC is Alberta's premier international and cargo gateway. The airport is well positioned to continue to grow and develop as Alberta's economic gateway to the world," said Garth Atkinson, president and CEO of the Calgary Airport Authority. "YYC will continue to move forward with our mandate to focus on growing Calgary International Airport to meet the needs of our growing community and region."

To accommodate YYC's growth, the Calgary Airport Authority began construction on a new 1,900 stall parkade, scheduled to open in the fall of 2009. Several airside and groundside improvements were completed, keeping Calgary International Airport at the ready for the projected double-digit growth over the next ten years.

GTAA Welcomes New Marketing Vice President

The Greater Toronto Airports Authority (GTAA) recently announced the appointment of Pamela Griffith-Jones to the
position of vice president, chief marketing and commercial development officer, effective March 30, 2009.

Ms. Griffith-Jones joins the GTAA to lead her team's efforts in promoting the airport, developing the Toronto Pearson brand and continuing to develop revenue generating programs.

Prior to joining the GTAA, Ms. Griffith-Jones held a variety of senior leadership roles in the retail and consumer goods industries, including Canadian Tire Corporation and Sears Canada. Her strategic marketing, retail and operational experience will be valuable in supporting the GTAA's goals of making Toronto Pearson a more competitive and sustainable airport.

Ms. Griffith-Jones currently is a member of the Sunnybrook Health Science Centre board of directors and also has been a board member with Altruvest Charitable Services and the Richard Ivey Alumni Advisory Board. She holds an honours business administration and a masters of business administration from the Richard Ivey School of Business, University of Western Ontario.

In 2005, Ms. Griffith-Jones was recognized as part of Canada's Top 40 under 40 program.

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 48 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.