Issuu on Google+

INTERVISTAS ’ CANADIAN AVIATION INDUSTRY REVIEW

In this issue… Features Columns: • Australia’s Outbound Travel Market (p.1) • Growth in World Tourism – Past and Future Trends (p.3) • Summary of Aircraft Orders at Farnborough Air Show (p.4)

Regular Reports: • Airline Data-Canada (p.5) • Airport Data (p.6) • Airline Data-U.S. (p.7) • Industry News (p.8) • The Ottawa Report (p.14) • The Washington Report (p. 15) • InterVISTAS News (p.16)


AUSTRALIA’S OUTBOUND TRAVEL MARKET September 2006

Doubling of Outbound Australian Visitors

Figure 1: Total Outbound Travel From Australia 1995-2005 5,000,000

$16,000

4,500,000

Outbound Visitors

Expenditures (US $ Millions)

$14,000

4,000,000 $12,000

3,500,000

$10,000

3,000,000

$8,000

2,500,000 2,000,000

$6,000

1,500,000 $4,000

1,000,000

Expenditure (US$ Millions)

Senior Analyst

Outbound Visitors

Amy Yeung

Outbound travel for Australia has nearly doubled over the last decade. The number of Australians visiting aboard for a period of less than one year has increased from 2.5 million in 1995 to 4.8 million in 2005, equivalent to an average annual increase of 7%. The outbound tourism growth rate would have been higher if not for the Asian economic crisis in 1999 resulting in a 2% decline in outbound travel, 9/11 and the SARS outbreak in 2003 leading to a 3% decrease in outbound travel over the 2001-2003 periods. Tourism related expenditures1 have kept pace with the number of outbound Australian travellers. The amount of money spent by Australian visitors has doubled to $15 billion since 1995, averaging a 7% increase per annum. Each visitor spends approximately US$3,250 per trip on average, among the highest in the world in part due to the cost of long-haul air travel.

$2,000

500,000 0

$0 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Source: Australian Bureau of Statistics

Major Destinations for Australians In 2004-05, New Zealand and the United States were the top two countries of destination for Australians. Together, these two countries accounted for over one-fourth of the Australia outbound travel market. China and Hong Kong, the U.K. and Indonesia are also popular outbound destinations for Australians, accounting for nearly 25% of the total outbound travel market. The remaining half of the market is made up of many countries, including Thailand, Japan and Italy, each with less than 5% of the market share.

Figure 2: Top Outbound Destinations 2004-05 New Zealand 18%

United States 9%

Other 50%

China & Hong Kong 8%

Indonesia 7%

United Kingdom 8%

Source: Tourism Satellite Account, Australian National

Derived by combining total travel services (business, education-related and other personal travel), passenger fares, and the air transport component of other transportation services which relates to agency fees and commission receipts.

1

Page 1 September 2006

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


AUSTRALIA’S OUTBOUND TRAVEL MARKET – CON’T Inbound Travel to Canada on the Rise Australia has always been one of the top 10 inbound tourism markets for Canada. Statistics Canada reported a total of 209,000 Australian travellers to Canada in 2005, representing approximately 1% of Canada’s inbound travel market and 5% of Canada’s non-U.S. inbound travel market. Over the 200304 and 2004-05 periods, the Australia outbound travel Figure 3: Outbound Trip Purpose 2005 market grew by 18% and 13% respectively.

Nearly 75% Travel for Pleasure and for VFR

Pleasure 47%

VFR 25%

In 2005, approximately one-fifth of the outbound Australians travel for business reasons while approximately 70% of travellers travelled for pleasure purposes or were visiting friends and relatives as illustrated in Figure 3. Business 19%

Outbound Travel Peaks from July to September

Other 9%

Source: Australian Bureau of Statistics

Overall, as shown in Figure 4, Australians appear to prefer to travel in the third quarter of each year (July-September). However, Australia outbound travels peaked in the final quarter (October-December) in 2003 and 2004. The effect of the SARS outbreak in 2003 may have caused this change in travel peak periods in 2003 and 2004. Figure 4: Seasonality of Outbound Travel From Australia 1,400

Outbound Visitors (000s)

1,200 1,000 800 600 400 200

Q3

Q3

Q1-2005

Q1-2004

Q3

Q3

Q1-2003

Q3

Australia Outbound Travel Forecasts

Q1-2002

Q3

Q1-2001

Q3

Q1-2000

Q3

Q1-1999

Q3

Q1-1998

Q1-1997

Q3

Q3

Q1-1996

Q1-1995

0

Source: Australian Bureau of Statistics

New Zealand will continue to be the number one country of destination for Australians due to its proximity to Australia. Based on the outbound travelling trend of Australians over the 2003-04 and 2004-05 periods, more Australians have been travelling to Southeast (26% increase) and Northeast Asia (22% increase), particularly Indonesia and China. Over the same two periods, the number of Australian travellers to the Americas, including Canada, grew by 16%. The 75,000 increase in visitors to the Americas is relatively lower than the 116,000 and 199,000 increase in Australian travellers to Southeast and Northeast Asia respectively. 2 Statistics

Canada National Tourism Indicators 2006, Catalogue No. 13-009-XIB.

Page 2 September 2006

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


GROWTH IN WORLD TOURISM – PAST AND FUTURE TRENDS September 2006

Over the past several years, the global tourism industry has been challenged by a series of market shocks including economic downturn, terroist attacks, war, natural disasters, and health issues. This column examines the historical growth of tourism, and also looks at the projected growth of international tourism to 2020.1

Historical Growth of International Tourism

Senior Analyst

12 10 Year Over Year Change (%)

Eugene Chu

In general, tourism growth as measured by international tourist arrivals has outpaced global economic growth over the last 20 years. Although there have been exceptions, most of have been the result of extraordinary events (i.e., war in Iraq, 9/11, SARS), and largely temporary in terms of its effect on tourism growth. History shows that the industry has been able to recover fully from these events.

International Tourist Arrivals and World Economic Growth

8 6 4 2 0 -2

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

-4 GDP

International Tourist Arrivals

Source: International Monetary Fund (IMF), World Tourism Organisation (UNWTO).

Forecast Growth of International Tourism to 2020 Looking ahead, the World Tourism Organisation (UNWTO) expects that international tourist arrivals will reach nearly 1.6 billion by 2020, with international tourism receipts of approximately US$2.0 trillion. In 2005, there were 808 million tourist arrivals, up 5.5% over 2004. The UNWTO forecasts an average 4.1% per year increase in tourist arrivals over the long term.

Farther and More Often One emerging tourism trend has been the increase in long haul travel relative to short haul intra-regional travel. By 2020, the UNWTO expects long-haul travel to make up 24% of total international travel, up from 18% in 1995. In addition, as extended leisure time becomes more difficult to find travellers are taking more frequent, shorter trips, rather than long trips.

Travel by Type - 1995

18%

Long Haul

82%

Travel by Type - 2020

24% 76%

Intraregional

Long Haul

Intraregional

Source: World Tourism Organisation (UNWTO).

Are you Ready? The tourism trends above point to a general increase in tourism and travel, especially over the long term. This will present both challenges (i.e., increasing traffic), and opportunities (i.e., new air services) for airports. Are you ready? International tourism refers to same-day and overnight travel to a destination outside the traveller’s country of residence.

1

Page 3 September 2006

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


SUMMARY OF AIRCRAFT ORDERS AT FARNBOROUGH AIR SHOW

Farnborough International Limited reported that the value of the order announcements at the latest show, held on 17-23 July 2006, totals to approximately $42 billion. Airbus announced the sale of 156 aircraft compared to 72 aircraft orders for Boeing and the remaining 3 aircraft orders announced for Bombardier. The announced orders at the show are detailed below: AIRPLANE MODEL Airbus A319

ORDER QUANTITY

BUYER

3

Afriqiyah Airways (MOU) AirAsia (Firm) Blue Wings (MOU) Wizz Air (Firm) GoAir (Not Firm) Afriqiyah Airways (MOU) CIT Group Inc. (Firm) Aegean Airlines (Firm)

A320s Sub-total

40 20 20 10 6 4 3 103

Grupo Marsans (MOU) CIT Group Inc. (Firm) Afriqiyah Airways (MOU)

A330-200s Sub-total

12 5 3 20 1 20 9

Air Caraibes (Firm) Singapore Airlines (LOI) Singapore Airlines (Firm)

A320

Sushma Narayan Senior Analyst

A330-200s

A330-300 A350 XWB-900 A380-800s AIRBUS TOTAL

156

Boeing 737-800s Next Generation 737-800s 737-900ERs 747-400ERs 747-8F

6 14 30 2 10

777F 777-300ERs

4 2

787 Dreamliners 787 Dreamliners Sub-total

2 2 4

BOEING TOTAL

72

Bombardier Next Generation Challenger 605 Business Jets TOTAL ORDERS Page 4 September 2006

3

International Lease Finance Corp. (Firm) Aviation Capital Group (Not Firm) Lion Air (Not Firm) LoadAir Cargo (Firm) Emirates (Not Firm) Flyington Freighters (Subjects to statutory clearances) International Lease Finance Corp. (Firm) International Lease Finance Corp. (Firm) Pegasus Aviation Finance Co. (Firm)

VistaJet (Firm)

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


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

Air Carrier

Revenue Passenger Kilometres

% Change over 2005

% Change from 2004

Change over 2005

Change from 2004

+5.2%

+0.7%

+3.6%

-0.8 pts

+1.3 pts

-3.2%

+0.7%

-1.9%

-2.4%

-1.1 pts

+2.7 pts

Jazz

+54.0%

+139.1%

+47.6%

+112.4%

+3.2 pts

+8.4 pts

International & Charter

+1.1%

+7.3%

+1.8%

+6.3%

-0.6 pts

+0.8 pts

+19.3%

+45.9%

+18.0%

+37.9%

+1.1 pts

+4.7 pts

Air Canada

-0.2%

CanJet: not reported

Domestic (Mainline)

WestJet

Air Canada Domestic Mainline

Analysis: ƒ

ƒ

ƒ

Load Factor

% Change over 2005

OTHER CARRIERS: LOAD FACTORS

% Change from 2004

Capacity

Available Seat Kilometres

Air Canada Mainline’s domestic mainline traffic continued a 3.2% decline from 2005 amid a 54.0% increase in domestic Jazz traffic. Air Canada continues to transfer capacity to Jazz. During the month of August, Air Canada’s international and charter service traffic and capacity rose 1.1% and 1.8% respectively. Overall, there is an decline in load factor of 0.6 points in August. International traffic growth was supported mainly by strong U.S. and Latin American volumes. For the month of August, WestJet managed to increase load factor by 1.0 points, despite capacity expansion of 18.0% over 2005. This is caused by the 19.3% expansion in traffic over August 2005. WestJet continues to match its capacity increase to traffic growth.

10%

Jazz data is not included in this graph

5% 0% -5% -10%

Jun- Jul Aug Sep Oct Nov Dec Jan- Feb Mar Apr May Jun July Aug 05 06

Dom RPK

Air Canada International 15% 10% 5% 0% -5% Jun- Jul Aug Sep Oct Nov Dec Jan- Feb Mar Apr May Jun July Aug 05 06

Int'l RPK

Int'l ASK

WestJet 35% 30% 25% 20% 15% 10% 5% 0% Jun- Jul Aug Sep Oct Nov Dec Jan- Feb Mar Apr May Jun July Aug 05 06

RPK

Page 5 September 2006

Dom ASK

ASK

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

+3.4%

MontréalTrudeau +4.0%

+11.2%

+11.7%

+4.8%

+4.5%

-9.7%

+1.2%

+15.9%

+5.2%

+10.9%

St. John’s +14.0%

-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

Toronto

Vancouver

July

+3.6%

August

2005

+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

+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%

+10.1%

+4.4%

+9.7%

February

-0.5%

+1.5%

+2.1%

+8.7%

+10.5%

+0.2%

-0.6%

+1.2%

+1.4%

+11.0%

+3.0%

-2.8%

+7.0%

March

+3.1%

+3.5%

+6.6%

+9.0%

+13.6%

+3.9%

+2.0%

+4.8%

-3.5%

+15.4%

+0.1%

-3.8%

-7.8%

Quarter

+1.3%

+1.3%

+3.6%

+8.7%

+11.8%

+1.8%

+1.4%

+3.8%

+0.9%

+15.5%

+4.4%

-0.8%

+2.0%

April

+1.2%

+4.3%

+6.2%

+19.5%

+20.4%

+3.8%

+0.7%

+6.1%

+4.2%

+17.9%

+9.5%

+13.9%

+13.1%

May

+4.8%

+3.2%

+7.6%

+16.3%

+20.3%

+0.3%

+6.4%

+8.4%

+10.3%

+13.2%

+7.7%

+23.3%

+15.2%

1st

Quarter

Quarter

2006

June

+2.8%

+2.7%

+4.5%

+9.7%

+12.9%

+1.8%

+4.1%

+0.7%

+8.6%

+13.4%

+5.3%

+12.5%

+3.7%

2nd Quarter

+4.5%

+3.3%

+6.3%

+14.6%

+17.8%

+1.9%

+3.8%

+5.2%

+7.8%

+14.7%

+7.4%

+16.3%

+10.3%

July

+2.2%

+4.8%

+2.2%

+7.0%

+13.8%

-2.1%

+4.9%

+8.5%

+7.4%

+14.4%

+5.9%

+7.1%

+13.2%

Source: Transport Canada and individual airports’ traffic reports. 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 September 2006

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


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

Traffic (RPMs – millions)

(ASMs – millions)

2,217

2,648

83.7%

Ç11.6%

Ç20.1%

È6.4 pts

792

1,066

74.3%

Ç9.3%

Ç3.8%

Ç3.7 pts

6,240

8,090

77.1%

Ç10.0%

Ç8.5%

Ç1.0 pts

8,398

10,189

82.4%

Ç9.2%

Ç8.5%

Ç0.6 pts

10,597

12,694

83.5%

Ç1.5 %

Ç3.2%

È1.3 pts

12,475

15,214

81.5%

È1.4%

È1.9%

Ç0.4 pts

10,943

13,700

79.9%

È3.0%

È2.9%

È0.1 pts

6,581

7,576

89.7%

È5.4%

È7.6%

Ç2.0 pts

5,728

7,202

79.5%

È5.3%

È7.6%

Ç1.9 pts

397

454

87.5%

È41.0%

È45.3%

Ç6.4 pts

1

2

2

Notes:

Capacity

Load Factor

1. Mainline operations only. 2. Load factor includes scheduled service only.

Sources: Carrier traffic reports.

Page 7 September 2006

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


NEWS ARTICLES AIR CANADA UPDATE AIR CANADA LAUNCHES THREE TIMES WEEKLY NON-STOP EDMONTONLONDON HEATHROW FLIGHTS Air Canada announced plans to launch three times weekly non-stop services between Edmonton and London Heathrow starting 31 October. This is Edmonton’s first scheduled service to London Heathrow. The service will be operated using 212-seat Boeing 767-300ERs.

AIR CANADA INTRODUCES NEW SERVICE TO SARASOTA, FLORIDA Air Canada will launch new seasonal non-stop service between Toronto and Sarasota, Florida. The service will begin on 4 November with Saturday and Sunday flights and increasing to daily service on 16 December. The flight will be operated using 93-seat Embraer E190 aircraft.

AIR CANADA ADDS FLIGHTS TO HALIFAX On 6 September, it was announced that Air Canada mainline will add one round-trip flight to Halifax from Toronto, Ottawa, Montréal and Deer Lake, scheduled to start this October. The Toronto-Halifax flight will be operated using 73seat Embraer E175 aircraft. The OttawaHalifax, Montréal -Halifax and Deer Lake-Halifax flights will be operated using 75-seat Bombardier CRJ aircraft.

AIR CANADA ADDS FOUR NON-STOP ROUTES IN WESTERN CANADA

On 1 August, Air Canada launched once daily, non-stop service between Edmonton and Victoria, Calgary and Comox, BC, and Winnipeg and London, ON. The carrier also launched twice daily, non-stop service between Edmonton and Kelowna. All flights are operated by Air Canada Jazz using 50-seat Bombardier CRJ aircraft.

Page 8 September 2006

AIR CANADA RESTORES NON-STOP ST. JOHN-LONDON HEATHROW SERVICE Air Canada will restore non-stop service between St. John and London Heathrow beginning Spring 2007. Air Canada plans to offer three times weekly service in April, five times weekly service in May and daily service from mid-June to September 2007. The service will be operated using 120-seat A319 aircraft.

AIR CANADA LAUNCHES ‘TANGO PLUS’ MULTI-TRIP PASSES On 31 August, Air Canada launched ‘Tango Plus’ North America and Rapidair multi-trip passes. The passes, priced starting at $189, are valid for 10 or 20 prepaid one-way trips with a one-year usage period. The pass allows travellers to fly anywhere within Canada and for selected areas in continental U.S., where services are offered by Air Canada, Jazz and their regional partners. The pass can be purchased via Air Canada’s web site or through travel agents.

ACE ANNOUNCES 40% PROFIT INCREASE IN Q2 2006 ACE Aviation Holdings Inc., the parent company of Air Canada, announced that the company’s second quarter profit increased by 40% to C$236 million this year. The company’s operating profit increased by nearly 2% to C$181 million despite rises in fuel cost by $101 million (or 19%). During the quarter, Air Canada’s passenger revenues increased by 9% as yield and traffic grew by 3% and 5% respectively (also see Airline Data-Canada).

AIR CANADA JAZZ SECOND QUARTER PROFIT DOUBLES

Air Canada Jazz announced that its second quarter net profit doubled from C$18 million to C$37 million in 2006. Air Canada Jazz has been successful in cutting all unit costs, with the exception of aircraft rent and fuel costs.

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


NEWS ARTICLES AIR CANADA UPDATE – CON’T AIR CANADA JAZZ POSTPONES TORONTO CITY CENTRE OPERATIONS

On 8 August, Air Canada announced that Air Canada Jazz will not resume operations from the Toronto City Centre Airport on 28 August, despite prior announcements made on 6 July. According to the Toronto Port Authority’s Press Release on 6 July, Jazz cannot operate at the Toronto City Centre Airport without signing a Commercial Carrier Operating Agreement with the TPA. Air Canada has refused to enter into an agreement with the TPA, claiming the proposed contract is too restrictive; hence Jazz has postponed its plans to offer ten round-trip flights to Ottawa and seven round-trip flights to Montréal from the City Centre Airport starting 28 August.

WESTJET UPDATE TRANSPORT MINISTER CANNON DESIGNATES WESTJET TO FLY TO THE CARIBBEAN On 17 August, the Federal Minister of Transport, Infrastructure and Communities announced the designation of WestJet as a scheduled international carrier for the Caribbean. The new designation allows the carrier to operate between Canada and the Caribbean countries – Aruba, Antigua and Barbuda, the Bahamas, Bermuda, the Cayman Islands, Dominican Republic, Guadeloupe, Jamaica, Martinique and the Turks and Caicos Islands – with no limit on the flight frequency.

Page 9 September 2006

WESTJET LAUNCHES NON-STOP SEASONAL FLIGHTS BETWEEN TORONTO AND BAHAMAS THREE TIMES WEEKLY

WestJet will launch non-stop seasonal flights between Toronto and Nassau three times weekly. The seasonal service will begin in November and end in April. Air Canada is scheduled to fly the same route using 140-seat Airbus A320 once daily. Air Canada will also begin operation in November.

WESTJET FINANCES SIX BOEING 737S

WestJet has secured a US$191.1 million financing deal with ING Capital to purchase five Boeing 737-600s and one 737-700. In July 2006, WestJet also confirmed a deal with Singapore Aircraft Leasing Enterprise for three 737-700s and one 737-800.

WESTJET VACATIONS EXPECTS TO EARN UP TO $30 MILLION IN REVENUE WestJet CEO Clive Beddoe announced that WestJet Vacations, launched in June 2006, has surpassed expectations. WestJet anticipates the new program to generate between C$20 and C$30 million in revenue during its first year of operation.

WESTJET ANNOUNCES $20 MILLION INCREASE IN Q2 2006 PROFIT WestJet announced that its second quarter profit has increased from C$2.3 million to C$22.4 million in 2006. An increase in domestic traffic and load factor (see Airline Data-Canada) offset the 21% increase in operating expenses. Operating expenses totalled to C$387 million for the second quarter, most of which is attributable to the 28% or C$104.5 million increase in fuel costs.

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


NEWS ARTICLES OTHER CANADIAN AIRLINE NEWS TRANSPORT MINISTER CANNON DESIGNATES HARMONY TO FLY TO AUSTRALIA AND FIJI On 18 September 2006, the Federal Minister of Transport, Infrastructure and Communities announced the designation of Harmony Airways as a scheduled international carrier for Australia and Fiji. It appears that Harmony Airways intends to offer code-sharing services with Hawaiian Airlines to Australia, and code sharing services with Air Pacific to Fiji. The new designation would allow Harmony to operate between Canada, Australia and Fiji countries, with no limit on flight frequency including code-sharing services. Harmony operates a number of services, primarily from Western Canada to several points in Hawaii.

CANJET DISCONTINUES ALL SCHEDULED OPERATIONS On 5 September, CanJet Airlines announced that it will discontinue its yearround scheduled services effective 10 September. Travellers who purchased tickets to fly after 10 September can get full refund or request alternate travel arrangements from the carrier. CanJet will continue to offer charter services after 10 September.

CARGO NEWS

QANTAS FORMS EXPRESS FREIGHTERS AUSTRALIA TO FLY DOMESTIC CARGO On 16 August, Qantas formed a subsidiary, Express Freighters Australia, to operate domestic air freight. Express Freighters Australia will begin operation in October with one aircraft. Qantas’ CEO, Geoff Dixon, expects operations to grow to four aircrafts by March 2007. The subsidiary will wet lease Boeing 737-300 freighters to Australian Air Express under a 12-year contract for the operation.

BAYSIDE CAPITAL BECOMES GEMINI’S NEW MAJORITY OWNER On 16 August, Gemini announced that it has emerged from bankruptcy protection and that Bayside Capital is now the majority owner of Gemini. On 20 July, the bankruptcy court approved Gemini’s reorganisation plan which allowed the company to emerge from Chapter 11 bankruptcy protection. Gemini managed to eliminate nearly $50 million of debt and strengthened the company through the bankruptcy process. Bayside Capital, Gemini’s largest lender before the bankruptcy, exchanged its secured loans for a combination of new debt and majority ownership of Gemini.

VOLGA-DNEPR AND ANTONOV AIRLINES SET UP JOINT VENTURE Volga-Dnepr and Antonov Airlines will launch Ruslan International together to manage new “urgent and high volumes” cargo charter business. The joint venture will operate using both fleets.

EMIRATES ORDERS TEN BOEING 747-8F Emirates has cancelled its order for the freighter version of the Airbus A380 and ordered ten freighter version of the Boeing 747-8 aircraft (747-8F), as announced at the Farnborough Air Show. The Emirates-Boeing deal is worth $3.3 billion.

Page 10 September 2006

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


NEWS ARTICLES PEOPLE IN THE NEWS WINNIPEG AIRPORTS AUTHORITY NAMES SENIOR VP, ADMINISTRATION AND CFO The Winnipeg Airports Authority Inc. named Catherine Kloepfer as Senior Vice President, Administration and Chief Financial Officer. Ms. Kloepfer is a Chartered Accountant and CGA. Her in-depth financial knowledge will help lead WAA’s capital program. Ms. Kloepfer’s position is in effect 1 September.

AIR CANADA APPOINTS NEW VPS FOR PLANNING AND MARKETING

Air Canada has appointed Mr. Daniel Shurz as Vice President, Network Planning and Mr. Charlie McKee as Vice President, Marketing. Mr. Shurz was formerly Senior Director – Airports and Mr. McKee was formerly Senior Director, Daniel Shurz Strategic Marketing at Air Canada. Both positions are in effect 25 August. The Vice President, Network Planning position was previously held by Benjamin Smith, who is Charles McKee now the President and CEO for Air Canada Vacations.

WESTJET NAMES DURFY NEW PRESIDENT

On 7 September, WestJet has named Mr. Sean Durfy as the new President for WestJet and its subsidiaries. Mr. Durfy had been the Executive VP-Marketing and Sales of WestJet since December 2004. Former President Mr. Clive Beddoe will remain as Chairman and CEO for WestJet.

Page 11 September 2006

WESTJET APPOINTS VIRGIN BLUE CEO TO ITS BOARD

WestJet has appointed Virgin Blue CEO Mr. Brett Godfrey to its Board of Directors effective 22 August. Mr. Godfrey is the co-founder and CEO of Virgin Blue Airlines in Australia. He was the Finance Manager for Virgin Atlantic and Financial Controller for Sherrard/National Jet in Melbourne.

CAC ANNOUNCES NEW VICE PRESIDENT AND DIRECTOR On 25 July, CAC announced the appointment of Mr. Fred Jones as Vice President, Operations and Legal Affairs and Mr. Daniel Robert-Gooch as Director of Communications. Mr. Jones will provide legal advice to CAC on regulatory issues and will remain as Secretary to the Operations and Technical Affairs Committee for CAC. Mr. Robert-Gooch will assume the position of Secretary to the Human Resources Committee in his role.

EMBRAER APPOINTS NEW PRESIDENT AND CEO

Embraer has appointed Frederico Curado as the new President and CEO for the company. Mr. Frederico Curado & Mauricio Curado will be the Botelho successor of Mr. Mauricio Botelho effective April 2007. Mr. Botelho will remain Embraer’s chairman until 2009. Mr. Curado has been the Vice PresidentAirline Market at Embraer for the last eight years.

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


NEWS ARTICLES OTHER FRONTIER ORDERS TEN Q400S FOR SUBSIDIARY Frontier Airlines has ordered ten 74-seat Q400 turboprops from Bombardier for its new unnamed subsidiary’s Colorado and Rocky Mountain regional operations. The ten aircrafts will be in operation by December 2007.

BOMBARDIER PLANS TO LOWER CRJ PRODUCTION

Bombardier executives will decide over the next few months whether to lower the company’s CRJ700/900 production, since U.S. carriers have failed to place firm orders. Despite the company’s cost-cutting strategy, Bombardier’s 8% aerospace target margin will not be met if its business jet market slows down and therefore will be unable to offset decreasing regional aircraft deliveries.

BOMBARDIER ANNOUNCES $59 MILLION DECREASE IN Q2 PROFIT

Bombardier announced that its second quarter profit has decreased to C$58 million from C$117 million compared to the same quarter in 2005. Income before interest and taxes fell by C$10 million to C$66 million for the Aerospace division but rose by C$17 million to C$60 million for the rail unit division. Bombardier’s total revenues has decreased from C$3.6 billion to C$3.5 billion.

Page 12 September 2006

IATA LOWERS FORECASTS INDUSTRY LOSS TO $1.7 BILLION DUE TO LOAD FACTOR INCREASE WORLDWIDE

IATA lowered its estimate on industry wide loss for the year from $3 billion to $1.7 billion. The revision stems from economic growth surpassing expectations and industry effort in increasing load factors. As of 31 July, passenger traffic increased by 6.4% while capacity increased by 4.7% compared to the same period in 2005. Traffic and capacity growth caused load factors to reach a high of 76%. Meanwhile, cargo traffic increased by 5.3% compared to 2005. European and Asian airlines are expected to earn $1.8 billion and $1.7 billion respectively. But the North American airline industry is expected to incur a $4.5 billion loss as a result of restructuring. In June, IATA forecasted that Latin American and Middle Eastern carriers would likely break-even while African airlines would lose nearly $1 billion.

ACI-NA’S MARKETING AND COMMUNICATIONS CONTEST – CANADIAN WINNERS BY AIRPORT

On 21 August, ACI-NA announced the winners of the 2006 Excellence in Marketing and Communications Contest. The Halifax International Airport Authority was awarded first place in the category of Public Relations Campaigns. The Aéroports de Montrèal took third place in the Internal Newsletters category. The Vancouver International Airport won first place for Press Kits and third place for Public Relations Campaigns. The Winnipeg Airports Authority was awarded third place in both the Annual Reports and Brochures categories.

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


NEWS ARTICLES OTHER – CON’T AIRBUS VERSUS BOEING AIRCRAFT ORDERS

This year, Airbus received 222 aircraft order through 31 August while Boeing has received 548 orders through 5 September. There has been 99 orders on A320, making it the highest demand model for Airbus. With 421 order, Boeing 737 is the most popular model for Boeing this year.

Page 13 September 2006

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


THE OTTAWA REPORT September 2006

Canada-U.S. Harmonise Pilot Licensing Standards On 7 September, the Minister of Transport, Infrastructure and Communities, announced that Transport Canada and the U.S. Federal Aviation Administration (FAA) have signed an Implementation Procedures for Licensing (IPL) agreement that permits private, commercial and airline transport licence holders from Canada to obtain a licence from the U.S., or vice versa, if certain criteria are met. The bilateral aviation licensing agreement is effective 1 December, 2006.

Transport Canada Amends Canadian Aviation Regulations on Safety Sam Barone Regional Vice President Ottawa, ON

Transport Canada has proposed amending the Canadian Aviation Regulations (CARs) for improving safety and for maintaining Canada’s aviation safety record. The proposed amendments would require all recently manufactured aircraft to install Traffic Alert and Collision Avoidance Systems (TCAS). The collision avoidance equipment alerts flight crews when the aircraft is on course to collide with another aircraft. Large commercial aircraft operators would have two years to comply with the new requirement for all of their operating fleet. The proposed amendments also include the prohibition of commercial aircraft pilots from attempting to land when runway visibility is poor. The regulations will establish the minimum visibility standards for all runways where visibility is reported either by a sensor or a qualified person.

Transportation Appeal Tribunal of Canada Rules in Favour of Cancelling NexJet Aviation Inc.’s Operator Certificate Transport Canada has cancelled NexJet Aviation Inc.’s Air Operator Certificate effective 8 March, 2006. NexJet cannot provide commercial services without an air operator certificate. NexJet appealed to the Transportation Appeal Tribunal of Canada and the Appeal Tribunal ruled in favour of Transport Canada after having reviewed the company’s suspension records, regulatory offences and aircraft maintenance records.

NAV CANADA Removes Rate Stabilisation Account Service Charge NAV CANADA has announced the removal of the temporary service charge that was implemented on 1 August, 2003 for rebuilding the Rate Stabilisation Account to $50 million. The Account has reached $73 million by 31 May, 2006. The temporary rate adjustment will be removed on 1 September, 2006.

CTA Upholds New Daily Charge on Small Aircraft NAV CANADA has imposed a new daily charge on small aircraft, weighing three tonnes or less, at seven international airports – Vancouver, Calgary, Edmonton, Winnipeg, Toronto Pearson, Ottawa Macdonald-Cartier and Montréal Trudeau – effective 1 March, 2008. The new charge is $10 per day, with a maximum of $1200 a year. The Canadian Owners and Pilots Association and the Helicopter Association of Canada have appealed to the Canadian Transportation Agency (CTA). The CTA will decide whether the new charge complies with the charging principles of the Civil Air Navigation Services Commercialisation Act.

Page 14 September 2006

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


THE WASHINGTON REPORT September 2006

White House Names New Transportation Secretary President Bush has nominated Mary Peters, head of the Federal Highway Administration (FHA) from 2001 to 2005, as the next Secretary of Transportation after Norman Mineta announced his resignation on 23 June, 2006. Prior to working at the FHA, Mary Peters had worked in the Arizona Department of Transportation for sixteen years and served as the Director for the department for three years. She is currently a Senior Vice President at HDR Inc., an architectural, engineering and consulting firm. She also serves as the Co-Vice Chairman to the National Surface Transportation Policy and Revenue Study Commission.

Jon Ash President Inc. Washington, D.C.

InterVISTAS-ga2 Consulting

Delay in Foreign Ownership Rule Slows Down U.S.-E.U. Open Skies Deal The U.S. Congress will not make a final decision on easing the foreign ownership restriction before the European Council of Transport Ministers’ meeting in October. The current foreign ownership rule restricts foreign ownership of U.S. airlines to a maximum of 25%. European officials have communicated to U.S. counterparts that the ownership rule is a prerequisite to signing the U.S.-E.U. open skies agreement. Both the U.S. and the E.U. would like to complete the deal but Congress is concerned about weakening national safety and security if the ownership rule is amended.

FAA Deploys First ASDE-X System With SMRi Feature The Federal Aviation Administration (FAA) has decided to deploy the first ASDE-X (Airport Surface Detection Equipment, Model X) system that features improved surface movement radar (SMRi) at the Bradley International Airport in Connecticut. The ASDE-X system allows airport controllers to get a clear view of the aircraft and movements on the runway. The SMRi feature enhances the accuracy of the view captured when poor weather affects visibility. The FAA plans to deploy the ASDE-X system at 35 airports in the U.S.

Smart Chip Embedded Passports Issued The U.S. State Department has begun issuing new passports which are embedded with a smart chip (e-passport) that contains the same information as that printed on the passports. The chip in the passport wirelessly transmits data to a customs officer’s computer screen when swiped across an electronic RFID reader. The e-passport is expected to improve facilitation at borders and airports for most travellers. The new e-passport costs $97 and it includes a $12 security surcharge. Existing passports without the smart chip will remain valid until they expire.

FAA Sets Slot Rules for O’Hare The Federal Aviation Administration (FAA) has decided to continue to limit the number of arrivals to Chicago O’Hare to 88 flights per hour from 7 a.m. to 8 p.m. until 31 October, 2008. This slot limit has been in effect for two years and the FAA reported that it has reduced delays at O’Hare by 27%. The FAA has also ruled how new slots will be allocated should the FAA decide that O’Hare can accommodate more arrivals. Other than finalising slot limits for O’Hare, the FAA has established a buy-sell mechanism for slot trading. The O’Hare Airport is the world’s busiest airport in terms of passenger traffic according to the Airports Council International’s 2006 preliminary (January-April) statistics, handling 26.6 million passengers. It has been the world’s second busiest airport in the last five years, behind Hartsfield-Jackson Atlanta International Airport. Page 15 September 2006

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


INTERVISTAS NEWS September 2006

Marcel Champagne Appointed as Manager, Operations Planning InterVISTAS is pleased to announce that Marcel Champagne has been appointed as Manager, Operations Planning. Mr. Champagne has a decade of experience in transportation-related projects, facilitating the movement of passengers and goods in facilities world-wide. His expertise includes providing systems analyses, management advice and physical planning services.

InterVISTAS Upcoming Speaking Engagements ƒ

Mr. Paul Ouimet, Executive Vice President B.C. Aviation Council Annual Conference: Vancouver, BC – 6 October 2006 Mr. Ouimet will be delivering a presentation titled, “Aviation and 2010 Conference Wrap-up and Closing Remarks.”

ƒ

Dr. Mike Tretheway, Executive Vice President Financing Aviation Infrastructure: Toronto, ON – 17 October 2006 Dr. Tretheway will be the keynote speaker delivering the luncheon presentation titled, “The Role of Government Policy in Airport Finance.” CD Howe Institute Conference: Competition Policy in Regulated Industries: Toronto, ON – 6 November 2006 Dr. Tretheway will be a discussant on the topic of competition policy for the airline industry.

ƒ

Mr. Solomon Wong, Vice President, Security & Planning AVSEC: Sydney, Australia – 17-19 October 2006 Mr. Wong will be delivering a presentation titled, “Border and Aviation Security: The Complexity of the Challenge.” Passenger Terminal EXPO 2006 USA Conference, Fort Lauderdale, FL – 6-8 December 2006 Mr. Wong will be delivering a presentation titled, “Open and Secure Skies.”

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 16 September 2006

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


CAIR Issue No. 44 - September 2006