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INTERVISTAS ’ CANADIAN AVIATION INTELLIGENCE REPORT

In this issue… Features Columns: • Bombardier: Returns to Profitability (p.1) • China’s and India’s Growing GDP (p.2) • Air Canada Fleet Plan: 2005-2011 (p.4) • Cargo Capers (p.10)

Regular Reports: • Airline Data-Canada (p.3) • Airline Data-U.S. (p.5) • Airport Data (p.6) • Industry News (p.7) • Washington Report (p.11) • Ottawa Report (p.12) • InterVISTAS News (p.13)


BOMBARDIER: RETURNS TO PROFITABILITY 19 April 2006

Bombardier reports a profit of $249 million in 2006… The world’s third largest civilian aircraft manufacturer and the world’s biggest rail equipment manufacturer has returned to profitability reporting a profit of $249 million in fiscal year 2006. This has followed on three years of financial losses for Bombardier. The firm had reported a profit of $36 million in 2002, but had losses of $615 million in 2003, a loss of $85 million in each of 2004 and 2005.

The post 9/11 action plan…

Senior Project Manager

In December 2002, Bombardier brought in Paul Tellier, former head of CN Rail as the company’s President and CEO to guide Bombardier in the post-9/11 time period. Tellier actioned aggressive cost-cutting measures and instilled a renewed focus on creating shareholder value as the firm’s top priorities. Bombardier divested its recreational products segment and decided to focus equally on the aerospace and other transportation (rail equipment) segments going forward. However, by late 2004, Tellier abruptly stepped down from his top position, as shareholders were growing impatient with the amount of time it was taking for Tellier’s strategies to show positive results.

Aircraft deliveries… Although the company has reported an increasing number of business aircraft deliveries in 2006 and 2007, Bombardier’s regional aircraft deliveries have been in steady decline since hitting its peak in 2004. The total number of aircraft deliveries has remained flat over the past few years as declining commercial deliveries have been offset by increasing business aircraft sales.

Finding the balance… The changes that the company has implemented recently, such as cost-cutting measures and improved process efficiencies have helped the company through a difficult time. The company has identified that one of its keys going forward is to strike a balance between ensuring future growth of the firm while making the necessary adjustments to deal with uncontrollable factors such as 9/11.

Page 1 April 2006

Bombardier Aerospace Deliveries, by Division 250

Number of Aircraft

Doris Mak

Similar to other firms in the aerospace industry, Bombardier was hit hard by the combined events of 9/11, U.S. recession, the erosion of yields, and air carrier bankruptcy. At the time, the firm had readjusted its production levels, delivery objectives and employment levels in response to the economic slowdown in North American coupled with the events of the 9/11 tragedy.

200 150 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Business Aircraft

Regional Aircraft

Note: Data is for Bombardier fiscal year (January to January) Source: Bombardier (Reproduced from Flight International Magazine)

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


CHINA’S AND INDIA’S GROWING GDP April 2006

China

Senior Project Analyst

China - Real GDP 1,000 900 800 billion US$

700 600 500 400 300 200 100 0

1985

India From 1985 to 2005, India’s economy has grown three-fold, from US$127 billion in 1985 to an estimated US$397 billion in 2005 as measured by real GDP. The Indian economy has been averaging an annual average growth rate between 5% and 8% per year over the last several years. The Economist predicts that India will become the world’s third largest economy, as measured by real GDP, by 2026.

1990

1995

2000

2005

In d ia - R e a l G D P 450 400 350 300 billion US$

Sushma Narayan

China’s economy, as measured by real GDP, has expanded substantially over the past 20 years; growing from US$158 billion in 1985 to an estimated US$918 billion in 2005. This represents approximately a six-fold increase in the absolute size of the economy. The World Bank forecasts that China’s economy will continue to grow at approximately 8-9% annually over the next several years, while the Economist estimates that China will be the world’s largest economy as measured by real GDP, by 2026.1

250 200 150 100 50 0

1985

1990

1995

2000

2005

China and India Real GDP Observations: Most Western economies, such as Canada and the U.S., grow at roughly 3% per annum. Such an economy will double in size roughly every 20-25 years. At India’s average 6% growth rate, its economy doubles every 10-15 years, while China’s 8% rate results in doubling every 8-9 years. Both India and China are growing at extraordinary rates. However even the small 2% per annum difference between the two cumulated. While in 1985 China’s economy was 25% larger than India’s, by 2005 it was 125% larger. China’s economy is now larger than Canada’s (US$0.85 trillion).

Economist-The World in 2006. GDP forecast adjusted for purchasing power parity (PPP). InterVISTAS’ Canadian Aviation Intelligence Report Page 2 April 2006 Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved. 1


AIRLINE DATA – CANADA Traffic and Load Factors on Canada’s Major Air Carriers March 2006 Passenger Traffic

Air Carrier

Capacity

Revenue Passenger Kilometres

% Change over 2005

% Change over 2005

% Change from 2004

+10.4%

+1.7%

+3.5%

-4.4%

-1.2%

-5.6%

Jazz

+88.8%

+111.1%

International & Charter

+7.0%

+15.0%

OTHER CARRIERS: LOAD FACTORS

Air Canada1

+3.8%

CanJet: not reported

Domestic (Mainline)

WestJet

% Change from 2004

Change over 2005 +1.6 pts (to 81.4%)

Change from 2004 +5.1 pts (from 76.3%)

-6.6%

+1.0 pts

+4.4 pts

+84.5%

+79.0%

+1.7 pts

+11.1 pts

+15.1%

+4.6%

+7.6%

+1.8 pts

+5.3 pts

+78.0%

+9.2%

+47.1%

+4.1 pts (to 81.9%)

+14.2 pts (from 67.7%)

Analysis: •

Load Factor

Available Seat Kilometres

Air Canada domestic mainline traffic and capacity continued a six-month decline amid a transfer of services to Jazz. Air Canada Jazz traffic and capacity increased 89% and 85% respectively in March 2006. Air Canada’s International & Charter services continued consistent month-over-month growth in March. Overall international capacity increased 5%, despite transpacific capacity falling 2%. International load factor increased 1.8 points over March 2005; transborder load factor managed the largest growth with a 4.5 point increase. For the second straight month WestJet maintained its position as load factor leader over Air Canada, registering a load factor of 81.9%. This is a 4.1 point improvement over March 2005. WestJet traffic during the month managed to increase 15% and capacity increased 9% despite strong growth figures posted during March 2005.

Air Canada Domestic Mainline 6% 4% 2% 0% -2% -4% -6% -8%

Jazz data is not included in this graph

Mar05

Apr

May

Jun

Jul

Aug

Dom RPK

Sep

Oct

Nov

Dec Jan- Feb 06

Mar

Nov

Dec

Jan- Feb 06

Mar

Nov

Dec Jan- Feb 06

Mar

Dom ASK

Air Canada International 12% 10% 8% 6% 4% 2% 0% Mar05

Apr

May

Jun

Jul

Aug

Int'l RPK

Sep

Oct

Int'l ASK

WestJet 60% 50% 40% 30% 20% 10% 0% Mar

Apr

May Jun

Jul

Aug Sep

RPK

ASK

Oct

Air Canada consists of all Air Canada operations with the exception of Jazz. InterVISTAS’ Canadian Aviation Intelligence Report Page 3 April 2006 Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved. 1


AIR CANADA FLEET PLAN: New Aircraft Deliveries

0

Boeing 787900/800

210-290

0

Boeing 767-300

203-222

33

Boeing 767-200

207

12

-12

0

Airbus A340-500

267

2

-2

0

Airbus A340-300

285-286

10

-10

0

Airbus A330-300

274

8

-8

0

Airbus A321

166

10

-3

7

Airbus A320

140

51

-10

41

Airbus A319

120

48

-3

45

Embraer 190

93

3

17

Embraer 175

73

14

1

Bombardier CRJ 100

50

10

Bombardier CRJ 705

75

15

15

Bombardier CRJ 200

50

27

27

Bombardier CRJ 100

50

15

Dash 8-300

50

26

Dash 8-100

37

38

Total

322

2006-2011 Retirements Total Fleet 2011

301-365

2011

Boeing 777300ER/200LR

2010

0

2009

(Freighter)

2008

Boeing 777-200F

2007

No. of Seats

2006

Aircraft Type

Fleet at Dec. 31 2005

AC Jazz

Air Canada

2005-2011

2 7

2

9

16 7

7

14 33

25

45 15 -10

10

0

25 26 -2

36 345

Notes: 1. Includes operating aircraft only. 2. Deliveries noted include firm orders only. 3. Specific retirement dates for AC and Jazz aircraft have not been announced. Additional Jazz retirements may occur before 2011. Sources: Air Canada 2005 Annual Report, Presentation by Brian Dunne (ACE Exec. VP & CFO), March 21, 2006. Page 4 April 2006

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


AIRLINE DATA – U.S. U.S. Airlines Release March 2006 Traffic Figures Traffic Data – March 2006 Airline

1

2

2

Traffic (RPMs – millions)

(ASMs – millions)

2,059

2,379

86.5%

Ç24.2%

Ç29.1%

È3.5 pts

749

1,011

74.1%

Ç15.7%

Ç9.0%

Ç4.1 pts

5,832

7,722

75.5%

Ç11.4%

Ç8.7%

Ç1.8 pts

7,689

9,465

81.2%

Ç11.2%

Ç10.1%

Ç0.7 pts

10,149

12,083

84.0%

Ç3.4 pts

Ç2.3%

Ç0.9 pts

12,100

14,904

81.1%

Ç0.2%

È0.9%

Ç0.9 pts

10,067

12,506

80.5%

È6.1%

È6.7%

Ç0.5 pts

6,432

7,383

87.1%

È6.1%

È8.8%

Ç2.5 pts

5,601

6,917

81.0%

È10.7%

È11.3%

Ç0.6 pts

325

420

77.5%

È52.2%

È54.1%

Ç3.0 pts

Notes:

1. 2.

Sources:

Carrier traffic reports.

Page 5 April 2006

Capacity

Load Factor

Mainline operations only. Load factor includes scheduled service only.

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


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

Edmonton

Ottawa

Winnipeg

Halifax

Victoria

Kelowna

Saskatoon

Regina

+4.5%

MontréalTrudeau +3.8%

+10.2%

+7.8%

+5.5%

+7.0%

+4.8%

+7.1%

+15.8%

+10.5%

+8.5%

St. John’s +1.5%

+10.2%

+8.2%

+5.5%

+17.5%

+12.5%

+7.3%

+9.7%

+7.1%

+15.4%

+19.5%

+19.2%

+22.2%

+19.6%

Quarter

+11.2%

+7.5%

+7.7%

+13.7%

+10.0%

+8.4%

+10.0%

+6.3%

+9.3%

+16.0%

+15.7%

+13.3%

+11.5%

April

+4.0%

+3.9%

+5.7%

+3.5%

+5.5%

+0.1%

+4.3%

-0.2%

+2.6%

+18.8%

+6.0%

+3.8%

+9.8%

Toronto

Vancouver

February

+8.7%

March 1st

2005 2006

May

+6.7%

+5.5%

+3.6%

+12.2%

+12.0%

+5.5%

+8.0%

-4.5%

+5.8%

+26.3%

+13.5%

+5.7%

+8.5%

June

+6.3%

+4.0%

+7.5%

+10.1%

+13.9%

+3.4%

+2.9%

-0.5%

+6.8%

+22.7%

+10.9%

+12.4%

12.4%

2nd Quarter

+5.7%

+4.5%

+5.6%

+8.6%

+10.4%

+3.1%

+5.0%

-1.8%

+5.1%

+22.6%

+10.2%

+7.3%

+10.3%

July

+3.6%

+3.4%

+4.0%

+11.2%

+11.7%

+4.8%

+4.5%

-9.7%

+1.2%

+15.9%

+5.2%

+10.9%

+14.0%

August

-1.1%

+2.7%

+1.5%

+12.7%

+8.8%

+4.4%

+4.6%

-6.4%

+5.2%

+26.4%

+10.3%

+2.4%

+8.9%

September

+4.5%

+2.6%

+7.4%

+7.9%

+13.5%

+7.1%

+6.6%

+0.3%

+2.9%

+16.1%

+12.9%

+13.9%

+8.9%

3rd

+2.2%

+2.9%

+4.1%

+10.7%

+11.2%

+5.4%

+5.1%

-5.6%

+3.1%

+19.6%

+9.3%

+8.8%

+8.0%

October

-0.1%

+4.3%

+3.7%

+7.1%

+16.7%

-0.7%

+6.4%

-0.7%

+3.1%

+16.1%

+11.8%

+12.8%

-0.9%

November

+0.6%

+5.2%

+4.1%

+12.1%

+10.7%

-2.5%

+6.2%

+3.0%

+8.5%

+24.0%

+18.0%

+15.6%

+5.0%

December

-0.6%

+0.5%

+4.3%

+10.3%

+4.9%

-3.5%

+5.4%

+5.6%

+3.8%

+19.1%

+12.2%

+9.5%

+7.9%

4th Quarter

+0.0%

+3.2%

+4.0%

+9.8%

+10.4%

-2.2%

+6.0%

+2.4%

+4.9%

+19.6%

+13.9%

+12.5%

+3.6%

Full Year

+4.6%

+4.4%

+5.4%

+10.6%

+10.5%

+3.6%

+6.5%

-0.4%

+5.5%

+19.3%

+12.3%

+10.6%

+8.2%

January

+1.1%

-1.7%

+1.4%

+9.1%

+10.7%

+1.0%

+2.8%

+5.4%

+6.2%

+20.3%

N/A

+4.4%

+9.7%

February -0.5% +1.5% +2.1% +8.7% Source: Transport Canada and individual airports’ traffic reports.

+10.5%

+0.2%

-0.6%

+1.2%

+1.4%

+11.0%

N/A

-2.8%

+7.0%

Quarter

If your airport is interested in providing InterVISTAS Consulting Inc. with its monthly passenger statistics, please email Doris Mak at doris_mak@intervistas.com. Page 6 April 2006

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


NEWS ARTICLES AIR CANADA UPDATE JAZZ ADDS SERVICES TO YELLOWKNIFE, WESTERN CANADA Air Canada announced on 22 March that it will add two daily, non-stop services to Yellowknife beginning in July. The flights, operating on Air Canada Jazz CRJ-200 aircraft, will begin from Edmonton on 3 July and Calgary on 4 July. The carrier is also introducing daily non-stop services on 1 August for Edmonton-Kelowna, EdmontonVictoria, and Calgary-Comox.

JAZZ TO ADD WINNIPEG-LONDON, ON SERVICE

Air Canada has announced that it will launch daily, non-stop service connecting Winnipeg and London, Ontario. The flights are scheduled to begin in August and will be operated by 50-seat Bombardier regional jets.

AIR CANADA ENDS MEXICANA CODESHARE

Effective 31 March, Air Canada and Mexicana have ended their code share agreement on Canada-U.S.-Mexico routings. The agreement had remained in place for two years after Mexicana left the Star Alliance (of which Air Canada remains a member) on 31 March 2004.

AIR CANADA INCREASES CAPACITY IN ATLANTIC CANADA

On 23 March, Air Canada announced capacity enhancements and new services to be operated by Air Canada and Air Canada Jazz in summer 2006. The carrier will add capacity and new flights to St. John’s, Deer Lake, Goose Bay, Moncton, Saint John, Fredericton, Halifax and Sydney, including new fights within the region and non-stop flights to Toronto and Montréal. St. John’s will also receive new daily direct service to Fort McMurray.

Page 7 April 2006

AIR CANADA RESUMES TORONTOCHARLOTTETOWN FLIGHTS Air Canada announced on 23 March that it will resume its seasonal Toronto-Charlottetown service. Canadair Regional Jet aircraft will connect the cities with twice daily non-stop flights. Air Canada Jazz will also increase its Halifax-Charlottetown service, from two daily non-stop flights to three.

AIR CANADA INCREASES FREQUENCIES AT CALGARY

On 29 March, Air Canada announced it is increasing flight frequencies from Calgary to Edmonton and Vancouver beginning 3 July. The new services will provide hourly flights yearround, with 18 flights each business day between Calgary and Vancouver and 19 flights per business day between Calgary and Edmonton.

AIR CANADA AND UNITED APPROVED FOR CODE SHARE TO MEXICO

On 3 March, Air Canada and United Airlines received approval for blind-sector code sharing allowing Air Canada to offer service to Mexico. Air Canada’s code will appear on United flights to destinations in Mexico from Denver, Los Angeles, San Francisco, and San Jose.

AIR CANADA LEASES ADDITIONAL BOEING 777

Air Canada announced on 3 April that it has signed a 10-year lease on a new Boeing 777300ER from International Lease Finance Corporation. The lease will help accelerate the carrier’s fleet renewal and modernisation plans. In November 2005, Air Canada concluded agreements with Boeing for firm orders of 18 B777s and 14 B787s, with options on an additional 18 B777s and 46 B787s.

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


NEWS ARTICLES AIR CANADA UPDATE – CON’T ACE SELLS PART OF STAKE IN US AIRWAYS ACE Aviation Holdings, parent company of Air Canada, said in a statement 10 April that it is selling part of its stake in US Airways. The deal, expected to be completed by 13 April, involves selling 1.75 million shares at a total value of US$67.6 million. These proceeds represent a $41.3 million gain on the shares sold. ACE will continue to hold 3.25 million shares in US Airways.

AIR CANADA ADJUSTS FARES TO REFLECT FUEL COST INCREASES

Air Canada announced on 11 April that effective that date, base fares for tickets on domestic and transborder flights on Air Canada and Air Canada Jazz would increase due to record high fuel prices. Domestic fares have been increased by $6 for flights less than 300 miles (483 km), $8 on flights 301-1,000 miles (484-1,609 km) and $10 for flights of 1,001 miles (1,611 km) or more. On flights between Canada and the United States, fares have increased by $6 on flights up to 750 miles (1,207 km), $8 on flights 751-1,500 miles (1,209-2,414 km) and $10 for flights of 1,501 miles (2,416 km) or more.

WESTJET UPDATE WESTJET SETS RECORD HIGH LOAD FACTOR FOR MARCH

WestJet announced its March 2006 traffic statistics on 5 April, showing an all-time high load factor for March at 81.9%, compared to 77.8% for March 2005. Year-todate load factor for the carrier has been 79.4% compared to 73.6% over the first three months of 2005. Revenue passenger miles for the first quarter were 2,300 million, up 19% compared to the previous year, and capacity in available seat miles increased 10% from the first quarter of 2005 to 2,897 million in the first three months of 2006.

Page 8 April 2006

WESTJET LAUNCHES TRAVEL PASS

On 6 April, WestJet announced the launch of its new travel pass for return flights from Toronto to Ottawa and Toronto to Montréal. The pass, targeted at both business and leisure travellers, provides 10 one-way flights on these routes for travel up to and including 31 August 2006.

WESTJET EYES ADDITION OF QUEBEC CITY ROUTES TO NETWORK

WestJet CEO Clive Beddoe stated on 21 March that the carrier would like to expand to Québec City within the year. According to WestJet forecasts, the move would help the carrier achieve expectations of growth in revenue by as much as 20% and growth in capacity by 14%. However, the carrier faces a challenge in hiring sufficient French-speaking flight attendants to service the market.

OTHER CANADIAN AIRLINE NEWS PORTER LAUNCHES WEBSITE

On 17 April, Porter Airlines unveiled its new website (www.flyporter.com). The site currently provides information about the airline’s fleet, Toronto City Centre Airport, and the Porter management team. Porter also intends to update the website to allow online bookings. A finalised schedule has not yet been revealed.

CANADIAN AIRPORTS EDMONTON INTERNATIONAL LAUNCHES TRANSHIPMENT PROGRAM On 20 April, Lawrence Cannon, Minister of Transport, Infrastructure and Communities, commenced a new program that simplifies air cargo transhipment at Edmonton International Airport (YEG). As a result of the program, both domestic and foreign carriers will be able to use YEG to tranship air cargo, even if Canada’s air bilateral agreements do not provide these rights. Similar programs are in place at Gander, Hamilton, Mirabel, Windsor, and Winnipeg.

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


NEWS ARTICLES CANADIAN AIRPORTS – CON’T

PEOPLE IN THE NEWS

BRITISH COLUMBIA CONTRIBUTES FUNDING TO KAMLOOPS AIRPORT EXPANSION

NAV CANADA SELECTS BOARD MEMBERS

British Columbia Transport Minister Kevin Falcon announced on 25 March a $4 million funding contribution to the expansion of Kamloops Airport. The contribution will help fund a $17 million expansion involving the extension of the airport’s main runway to 8,000 feet, in addition to improved navigation and terminal facilities. Expansion of the runway will begin in late 2006 or early 2007.

GTAA REPORTS 15% INCREASE IN REVENUES IN 2005

NAV CANADA announced on 12 April that Nick Geer has been appointed Chairman of Board for the air navigation service provider. Geer has previously served as both Chairman of the Board and CEO of the Insurance Corporation of British Columbia. NAV CANADA also announced the appointment of six new directors to the board: Paul Brotto, Ernie Caron, Jim Gouk, John Lawson, Pierre Robitaille, and Joel Whittemore. Caron is the former CEO of the Calgary Airport Authority, and Gouk is a former conservative MP and air traffic controller. Butto is a former Air Canada executive.

Toronto-Pearson International Airport handled 29.9 million passengers in 2005, an increase of 4.5% over the previous year. Revenues for the year were $954 million, up 15% over 2004, while operating expenses (including federal ground rent) were $528 million. After accounting for debt service and amortisation, 2005 resulted in a net operating loss of $118 million. The shortfall of revenues under expenses is attributed to the depreciation of the new terminal facilities at Pearson.

Effective 1 May 2006, Cliff Mackay has been named the new President and CEO of the Railway Association of Canada. Mackay previously served as President and CEO of the Air Transport Association of Canada.

CARGO

KOBEH GONZÁLEZ ELECTED PRESIDENT OF ICAO COUNCIL

CARGOJET REVENUE INCREASE OF 13% IN 2005

Cargojet Income Fund reported revenues of $32.9 million for the fourth quarter of 2005, a 12.7% increase over the fourth quarter of 2004. Cargojet’s overnight tonnage for the fourth quarter increased by 11% over the same period of 2004.

CLIFF MACKAY MOVES FROM ATAC TO RTAC

The Council of ICAO elected Roberto Kobeh González as its new President, effective 1 August 2006. Kobeh González has served on the Council representing Mexico since 1998. He succeeds Dr. Assad Kotaite as President.

OTHER COMAIR SEEKING APPROVAL FOR CRJ700 FLIGHTS TO TORONTO Delta Connection carrier, Comair, has applied to the US Department of Transportation for approval to operate flights from Atlanta and Cincinnati to Toronto using 70-seat CRJ-700 aircraft. Service would commence in June 2006.

Page 9 April 2006

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


NEWS ARTICLES NAV CANADA REVENUE INCREASES $5 MILLION IN SECOND QUARTER

OTHER – CON’T IATA’S REVISED FORECAST REDUCES 2006 LOSSES, IMPROVES 2007 PROFITS The International Air Transport Association (IATA) announced on 22 March that in its quarterly revision to its forecasts for airline performance, airlines globally were projected to lose US$2.2 billion in 2006 and post profits of $7.2 billion in 2007. These numbers represent improvements over the initial forecast of a $4.3 billion loss in 2006 and a $6.2 billion profit in 2007. Regionally the forecast shows continued profitability for Asia-Pacific and European carriers in 2006, and reductions in losses for North American carriers.

AEROFLOT TO JOIN SKYTEAM Aeroflot, Russia’s largest air carrier, will join the global SkyTeam Alliance effective 14 April. Aeroflot joins existing members AeroMexico, Air France, Alitalia, Continental Airlines, Delta Air Lines, KLM, Korean Air, Northwest Airlines, and TSA Czech Airlines.

Page 10 April 2006

NAV CANADA reported on 13 April that revenue was $264 million during the second quarter ended 28 February 2006. This figure is $5 million higher than in the comparable period a year prior, and reflects a 1.2% rise in air traffic as well as increases in non-aeronautical revenue.

BOEING 1ST QUARTER DELIVERIES UP 40% The Boeing Co. has announced that first quarter airliner deliveries increased 40% in 2006. Shipments of commercial jets totalled 98 during the period, 28 more than in first quarter 2005.

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


CARGO CAPERS April 2006

ITS Canada Workshop. ITS Canada and UBC’s Sauder School of Business, home to the Centre for Transportation Studies (CTS) and the Bureau of

Intelligent Transportation Systems and Freight Security (BITSAFS) held a two-day workshop in Vancouver in late March. Sponsored by Transport Canada, the focus of the workshop was “Using Technology to Enhance the Secure and Efficient Movement of Freight through the Pacific Gateway.” Workshop Highlights. A theme emerging from the conference was that there was still a negative perception of intelligent transportation systems “out there” that:

Robert Andriulaitis Director, Transportation and Logistics Studies

• •

the technological benefits were not credible and compelling; and we still have to wait for viable technologies to be perfected before we can implement them.

A number of heartening examples were given to show that the technologies to make significant improvements are already in use and are having an important impact. Cliff Stewart of P&O Canada described how Centerm (one of the three Port of Vancouver container terminals) used technology to dramatically increase capacity. The port added rubber-tired gantries, OCR and RFID for rail switching and automated truck access, an integrated terminal operating system, and differential GPS, WiFi and fibre optics. This increased capacity from 340,000 TEUs to 785,000 TEUs in the same 29 hectares of land. Furthermore, these technologies gave management the ability to measure productivity and utilization and to identify developing problems in real time. Kenneth Troup of the North River Consulting Group cited a number of field tests sponsored by the U.S. DoT that documented user benefits from the application of technology: • • •

asset tracking and mobile communications saved $8,000 to $15,000 per tractor per year; freight status information, biometric ID and ESCM (Electronic Supply Chain Manifest) saved $16.20 in time and labour per air freight shipment; and network status information resulted in $21 to $248 in savings per dray terminal trip.

The need for continuing focus on ITS is clear. As Asia-Pacific trade grows, meeting the demands that will be placed on ports and airports, and the supporting road and rail systems, will be a challenge: • •

Keenan Kitisaka of Translink cited a 56% increase in truck and 62% increase in rail car volumes in B.C.’s Lower Mainland by 2021. Gordon Rogers of the Whatcom Council of Governments noted that U.S. ports are already nearing capacity. Trends in container ships will add a new level of pressures – an 8,000 TEU ship will require 3,500 trucks to handle the cargo! Paul Belella of Delcan noted the Intelligent Border Crossing initiative in Ontario is looking at ITS to integrate information from Canadian and U.S. public and private data sources to provide advanced border and transportation management – a challenge considering the number of players involved.

ITS, with its ability to increase the capacity of our transportation systems, transmit critical information about traffic flows, expedite border processes, and keep goods secure will be a key component if we are to meet the challenges. If interested, more information on ITS is available at http://www.itscanada.ca/english/index.htm Page 11 April 2006

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WASHINGTON REPORT 12 April 2006

FAA Forecasts U.S. Passenger Traffic Over One Billion By 2017

Jon Ash President InterVISTAS-ga2 Consulting Inc. Washington, D.C.

The Federal Aviation Administration (FAA) released its 20062017 Aerospace Forecast on 28 February, with total enplanements expected to grow from 739 million in 2005 to 1.1 billion in 2017. Over this period, system-wide growth is expected to average 4.3% per year, with regional carriers growing faster than mainline carriers (6.4% compared to 4.1% respectively). Traffic growth is expected to exceed capacity growth, resulting in higher load factors. Air cargo is expected to grow at an average of 5.1% over this period to reach 71.7 billion revenue ton-miles (RTMs) by 2017. The commercial airline fleet is expected to grow from approximately 7,800 in 2005 to 10,700 in 2017, including growth in mainline, regional, and cargo carrier fleets.

Department of Labor Seeks Back Wages for Airport Security Workers The U.S. Department of Labor is seeking to recover over $7.1 billion in back wages for employees of a contractor that provided security services at 39 airports during 2002. Huntleigh USA was hired to provide additional security services following the September 11 attacks until the Transportation Security Administration assumed this responsibility. The 7,171 affected employees had been paid wages and benefits lower than rates required by law for their cities.

Mineta Presents $65.6 Billion DOT Budget Request for FY 2007 Department of Transportation (DOT) Secretary Norman Mineta submitted the Department’s budget request for fiscal year 2007 to the Senate Appropriations Transportation Subcommittee on 16 March. The budget request provides US$13.7 billion for the FAA, including US$8.4 billion for operational needs and US$2.8 billion for the Airport Improvement Program (AIP). Other major components of the budget include US$39.8 billion for the Federal Highway Administration, US$8.9 billion for the Federal Transit Administration, and US$1.1 billion for the Federal Railroad Administration. About one quarter of the budget is related to safety objectives, including US$9.6 billion for the FAA.

Domestic Traffic Rises 1% in January The Department of Transportation’s Bureau of Transportation Statistics reported that U.S. airlines carried 0.7% more domestic passengers in January 2006 than in January 2005. This growth occurred despite a 4.5% month-over-month decrease in domestic flights.

January Airline Employment Declines 6% Employment by U.S. scheduled passenger carriers was 405,000 in January 2006, a decline of 6% from January 2005. The decline was most pronounced for network carriers, where employment declined 8%. Employment declined 5% at low-cost carriers and 2% at regional carriers.

Page 12 April 2006

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


OTTAWA REPORT 13 April 2006

Canada and the United Kingdom Negotiate “Open Skies” Agreement Minister of Transport, Infrastructure and Communities, Lawrence Cannon and Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics David L. Emerson have announced that effective 1 September 2006, Canada and the United Kingdom will have a new “Open Skies” air bilateral agreement come into effect. The agreement, announced on 21 April 2006, will allow Canadian airlines to offer virtually unlimited passenger and cargo flights to and from third countries through the U.K. U.K. airlines will have similar rights through Canada. Further to these provisions, Canadian and U.K. airlines will also no longer be restricted in how they set prices when carrying traffic through their own country to the third country.

Minister of Transport Speaks at Aviation Safety Conference Sam Barone Regional Vice President Ottawa, ON

On 20 March, Minister of Transport, Infrastructure and Communities, Lawrence Cannon, spoke at the Directors General Conference on a Global Strategy for Aviation Safety. The Minister noted the importance of moving from an operations level approach to a systems-wide approach to improve safety and manage risk, with Safety Management Systems (SMS) as a large part of enhanced aviation safety. He also noted the International Civil Aviation Organization’s (ICAO) goal of having all baggage screened on international flights by 1 January 2006, and indicated that Canada has met and exceeded this goal by screening all baggage on domestic flights.

Border Transportation Partnership Announces Options for Further Study for New Windsor-Detroit Border Crossing The Border Transportation Partnership, comprised of the governments of Canada, the United States, Ontario, and Michigan, announced on 28 March a list of specific options for a new Windsor-Detroit border crossing for further study. The Detroit River International Crossing (DRIC) study team has met with stakeholder groups and conducted additional environmental assessment work leading to the development of the short list of options. The options to be considered include five options for the access road in Canada, three inspection plaza options, and three river crossing options. All options include a six-lane access road extending Highway 401 to the new inspection plaza and river crossing, and should accommodate current and future traffic flows through the gateway.

Airports Capital Assistance Program (ACAP) Announces $27 million for 41 Projects On 27 March, Lawrence Cannon, Minister of Transport, Infrastructure and Communities, announced the list of projects to be funded under the Airports Capital Assistance Program (ACAP) for 2006-07. The program will provide $27 million to fund 41 new projects, mainly airside safety-related projects. Major projects funded include rehabilitation of manoeuvring surfaces at Mont-Joli, Québec, taxiway rehabilitation at Grande Prairie, Alberta, and runway rehabilitation at Castlegar, B.C. The program has funded over $379 million in safety-related projects at 154 Canadian airports since its introduction.

Transport Canada Releases Study on Cost of Urban Traffic Congestion On 22 March, Transport Canada released the findings of a study entitled “The Cost of Urban Congestion in Canada”, which examined the cost of urban traffic congestion in Canada’s nine largest urban centres (Quebec City, Montreal, Ottawa-Gatineau, Toronto, Hamilton, Winnipeg, Calgary, Edmonton, and Vancouver). The study found that congestion in these centres costs Canadians between $2.3 billion and $3.7 billion annually, measured in 2002 dollars. Ninety percent of these costs are associated with time lost by drivers and passengers, with seven percent of costs due to increased fuel consumption and three percent due to greenhouse gas emissions. Page 13 April 2006

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INTERVISTAS NEWS April 2006

InterVISTAS Upcoming Speaking Engagements •

Dr. Michael Tretheway, Executive Vice-President Airline Finance Conference: Toronto, ON – 6 June 2006 Dr. Tretheway will be delivering a presentation titled, “Overcoming Turbulence: Recovery of the Airline Industry.”

Mr. John Weatherill, Director, Airline Planning World Low Cost Airline Congress (Americas): Miami, FL – 26 June 2006 Mr. Weatherill will lead a workshop for airline planners and airport marketing personnel. The workshop will educate participants on how to evaluate and structure incentive programs to ensure the objectives of both airports and airlines are met.

Mr. Martin Copeland, Senior Vice-President, Airline Marketing & Planning World Low Cost Airline Congress (Americas): Miami, FL – 27 June 2006 Mr. Copeland will participate in a panel discussion with low cost airline route planning personnel.

InterVISTAS’ Canadian 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 inquire about advertising opportunities or to provide comments/feedback on the InterVISTAS’ Canadian Aviation Intelligence Report, please contact Rob Beynon at rob_beynon@InterVISTAS.com or 1-604-717-1864. To subscribe, please send an email to subscribe@InterVISTAS.com To unsubscribe, please send an email to unsubscribe@InterVISTAS.com

Page 14 April 2006

InterVISTAS’ Canadian Aviation Intelligence Report Copyright ©2005 InterVISTAS Consulting Inc., all rights reserved.


CAIR Issue No. 40 - April 2006