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Creating an Environment for Success Air Service Reform and Why We Should Care Presented by Jim Facette, President & CEO.

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Presentation on theme: "Creating an Environment for Success Air Service Reform and Why We Should Care Presented by Jim Facette, President & CEO."— Presentation transcript:

1 Creating an Environment for Success Air Service Reform and Why We Should Care Presented by Jim Facette, President & CEO

2 2 Airport Evolution

3 3 Managing Growth - Passenger PASSENGER GROWTH SINCE 1995, FORECAST THROUGH 2019 Forecast Source: Transport Canada Millions pax

4 4 Transborder Growth Millions of Pax Source: Transport Canada CANADA-U.S. TRANS-BORDER GROWTH, FORECAST Forecast

5 5 Canada-U.S. Passengers CANADIAN PASSENGER TRAFFIC Transborder Market Transport Canada Aviation Forecasts –2007

6 6 Cost and Competitiveness

7 7 Transborder Competitors: Vancouver and Bellingham International Airport About 1 hour from downtown Vancouver, downtown Abbotsford 35 minutes from downtown Surrey 200,000 passengers a year and growing, primarily targets greater Vancouver market

8 8 Canada: Gateway to the World Weekly International Seats to/from Overseas Markets Today Antigua and Barbuda 266Finland 681Nicaragua 152 Austria 2,757France 23,593Pakistan 894 Bahamas 448Germany 26,859Peru 594 Barbados 1,192Greece 1,906Philippines 1,056 Belgium 1,087Guadeloupe 224Poland 2,741 Bermuda 1,272Haiti 198Portugal 1,540 Brazil 1,540Hong Kong 8,751Russia 1,811 Chile 660Hungary 985Saint Lucia 112 China 9,227Ireland 2,161South Korea 6,905 Colombia 594Israel 3,211Spain 412 Costa Rica 336Italy 4,618Switzerland 3,150 Cuba 3,109Jamaica 2,429Taiwan 4,807 Czech Republic 1,463Japan 11,715Trinidad & Tobago 1,908 Dominican Republic 636Mexico 10,828Ukraine 456 Egypt 638Morocco 2,220United Kingdom 55,589 El Salvador 372Netherlands 11,592 Source: OAG Summer Schedule 2006

9 9 Monthly Seats Monthly Seats to North America U.S. RankCountry Seats to U.S. Seats to Canada 1UNITED KINGDOM 1,179, ,238 2GERMANY 617, ,461 3JAPAN 602,474 44,285 4FRANCE 378, ,773 5DOMINICAN REPUBLIC 277,626 3,816 6NETHERLANDS 276,363 51,541 7ITALY 218,864 29,700 8SOUTH KOREA 213,202 31,805 9BAHAMAS 200,948 2,824 10TAIWAN 186,361 20,529 11JAMAICA 182,989 10,545 12CHINA 155,337 68,065 13IRELAND 153,024 11,825 14BRAZIL 142,435 6,820 15HONG KONG 141,566 57,724

10 10 Growing International Pax Capacity CANADA – OVERSEAS PASSENGER CAPACITY GROWTH SINCE 2001 Source: Transport Canada & OAG

11 11 More International Pax Growth Forecast FORECAST INTERNATIONAL PASSENGER TRAFFIC GROWTH Source: Transport Canada

12 12 Air Service Regimes The backbone of international air service Bilateral agreements govern international air service between two countries Frequencies, number of carriers, total capacity, destinations served, pricing, intermediate stops, beyond service, etc…

13 13 Air Canada U.S. Routes 1995

14 14 Air Canada U.S. Routes 2005

15 15 What is Open Skies? No limits on –Number of air carriers –Frequency, capacity, aircraft type –Destinations –Pricing –Codesharing –Intermediate points or beyond points (fifth freedoms)

16 16 Freedoms of the Sky Fifth Freedom Sixth Freedom

17 17 New, Bigger Regional Jets

18 18 Long-Range Widebodies: Built for Canada

19 19 Recent Liberalization Progress EU-U.S. Open Skies in Effect (2008) Canada-EU Talks (2007-ongoing) Canada Open Skies with Ireland, Iceland, New Zealand (2007) UK Open Skies with Singapore (includes Cabotage (2007) New U.S. - P.R. China Agreement (2007) Canada Open Skies with UK, U.S. (2005, 2006) New Canada-India, P.R. China agreements (2005)

20 20 Airline Support for Liberalization We are still bound by the antiquated rules of the Chicago convention, something that was created more than 60 years ago. … It may have been a good idea for airlines in the It is an outdated idea for airlines in 2006 and fails to respond to the challenges and opportunities posed by the rise of carriers like Emirates….the real question is whether the basic regulatory foundation of the airline industry, such as the Chicago Convention and foreign ownership restrictions, need to be not only modernized - but turned on its head. The answer, for me, is yes.

21 21 Airline Sector Support for Air Liberalization Today airlines form an intensively competitive mass transit system with thousands of players serving 2.2 billion passengers. But the archaic bilateral system still tells us where we can sell our products, who can own us, and by consequence, how we can access capital. The result is fragmentation…We need leadership that is bolder…the courage to break the mould and set the industry on a completely different course…Liberalization will come to aviation as it did every other industry. The real risk is if governments fail to lead by setting targets for progressive liberalization. - International Air Transport Association Director General Giovanni Bisignani

22 22 International Air Policy: An Airport Concern Canada Markets Served Nonstop by Foreign Carriers Only MarketForeign CarrierMarketForeign Carrier AlgeriaAir AlgériePakistanPIA AustriaAustrian, TaromPolandLOT Czech RepublicCSAPortugalSATA EgyptEgyptairRussia Aeroflot Transaero El SalvadorTACATaiwan China Airlines EVA Airways FinlandFinnairUkraineAerosvit HungaryMalevU.A.E.Emirates IcelandIcelandair MoroccoRoyal Air Maroc Source: OAG Summer Schedule 2006

23 23 IAP: A Tourism Sector Concern Overseas Visitors to Canada #Source2006 VisitorsU.S. Open Skies?Canadian Air Regime 1United Kingdom881,742NoOpen Skies in effect soon 2Japan401,127NoPriority market, Canadian carriers at capacity limit 3France373,606YESPriority market, Canada seeking liberalization, currently routes restricted to Toronto and Montréal, limitations on fifth freedoms 4Germany313,025YESFairly open, restrictions on fifth freedoms 5South Korea201,815YESPriority market, strict capacity limits that only gradually have expanded, both sides near capacity limits 6Australia206,542YESPriority market, fairly open but limitations on fifth freedoms 7Mexico213,945No2 carriers from each side designated for each city pair, charter flights not subject to this limit 8Hong Kong111,866NoFairly open 9Netherlands121,754YESFairly open 10Taiwan94,917YESPriority market, current limited to two daily Taipei flights to Vancouver and three flights a week from Kaohsiung to anywhere in Canada by Taiwanese carriers Source: Statistics Canada

24 24 Overseas Visitors Overseas Visitors to Canada #Source2005 VisitorsAir Regime 1United Kingdom847,000Open Skies reached Japan437,000Priority market, Canadian carriers at capacity limit 3France341,000Priority market, covered by Canada-EU Open Skies 4Germany318,000Fairly open, restrictions on fifth freedoms 5South Korea191,000 Priority market, strict capacity limits that only gradually have expanded, both sides near capacity limits 6Australia185,000Priority market, fairly open but limitations on fifth freedoms 7Mexico177,000 2 carriers from each side designated for each city pair, charter flights not subject to this limit 8Hong Kong121,000Fairly open 9Netherlands120,000Open, covered by Canada-EU Open Skies 10Taiwan109,000 Priority market, current limited to two daily Taipei flights to Vancouver and three flights a week from Kaohsiung to anywhere in Canada by Taiwanese carriers Sources: Statistics Canada, Transport Canada

25 25 IAP: A Community Concern $ millions Source: The 2004 Economic Impact of The Calgary International Airport, Rp Erickson & Associates

26 26 European Union OVERSEAS TOURISTS (International other than the U.S.) Source: Statistics Canada

27 27 Source: IATA Passenger Forecast Growth in Key EU Markets Pax traffic in millions PASSENGER TRAFFIC GROWTH: CANADA TO FRANCE, GERMANY AND THE NETHERLANDS

28 28 Emerging Markets VISITORS TO CANADA Sources: Statistics Canada, World Tourism Organization

29 29 Source: IATA Passenger Forecast China Traffic Growth CANADA-CHINA PASSENGER TRAFFIC FORECAST Pax traffic in millions

30 30 Blue Sky Policy Support The CAC has strongly supported Minister Cannons Blue Sky international air policy With its new Blue Sky air policy, the federal government has indicated that it has heard the call of Canadas airports to improve choice for Canadians in international air service. This is what Canadas airports have called for, and the government has delivered. But Canadian travellers, shippers and the communities our members serve will benefit most from increased choice and improved tourism and trade links. - CAC Press Release Nov. 27, 2006

31 31 Standing Committee on International Trade Support The Standing Committee on International Trade seems to realize what we uncovered as well: That Canada needs an aggressive and competitive international business policy that recognises that Canada doesnt operate in isolation anymore. We are part of a global economy and competitiveness is key to success. - CAC Press Release May 2, 2007

32 Creating an Environment for Success Air Service Reform and Why We Should Care Presented by Jim Facette, President & CEO


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