AIR Issue No. 6 - August 2011

CANADIAN AVIATION INTELLIGENCE REPORT

AUGUST 2011

IN THIS ISSUE:

CEO Update – p 1

Air Canada’s International Seat Capacity

(2006-2010) – p 2

Airline Data – p 3

Airport Data – p 6

News – p 7

Asia Report – p 13

European Report – p 14

Washington Report – p 15

InterVISTAS News – p 17

InterVISTAS’ Canadian Aviation Intelligence Report August 2011 Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved. Page 1

Gerry Bruno

CEO

CEO UPDATE August 2011

Welcome to the August 2011 edition of InterVISTAS Consulting Inc.’s Canadian Aviation Intelligence Report (CAIR).

Below are some new projects that we are currently working on:

InterVISTAS Retained to Undertake Resort Employee Housing Needs Assessment for Whistler Housing Authority InterVISTAS has been retained by the Whistler Housing Authority to conduct its annual resort employee housing needs assessment. This will be the sixth year in a row InterVISTAS has been chosen by Whistler Housing Authority for this research assignment.

InterVISTAS Completes Study for International Standard for Business Aircraft Operations on Business Model Operations The International Standard for Business Aircraft Operations (IS-BAO) has experienced considerable growth over the past two years. InterVISTAS conducted a comprehensive study of business model options to ensure that the IS-BAO Management Team has a blueprint to facilitate management of the increase in demand and protect the integrity and effectiveness of the industry standard. A copy of the study is available at http://www.ibac.org/article/2659.

InterVISTAS to Conduct Economic Impact Study of Tourism in Richmond, British Columbia Tourism Richmond has commissioned an update to the Economic Impact of Tourism Study that InterVISTAS originally prepared in 2005. In 2005, the study found that there were 4,800 direct jobs associated with tourism in Richmond. The study is currently underway.

The August 2011 CAIR Line-Up This month, we lead off with an article on changes in Air Canada’s international seat capacity over the last five years, followed by our regular monthly columns, which include:

Asia Report

European Report

Washington Report

We hope you enjoy this issue.


Celina Ramirez

Senior Analyst

AIR CANADA’S INTERNATIONAL SEAT CAPACITY (2006-2010) August 2011

Overview Air Canada (AC) recorded consistent international seat capacity over the last five years, with an average of 3.9 million seats each year and with international seat capacity comprising 10%-12% of the carrier’s total seat capacity. This column reviews the changes in AC’s international seat capacity from 2006-2010.

International seat capacity at Air Canada’s largest hub airports From 2006-2010, Toronto Pearson International Airport handled over 50% of Air Canada’s international services, based on seat capacity, with an average of 2.1 million seats each year. Vancouver International Airport and Montréal-Pierre Elliott Trudeau International Airport recorded the second and third largest shares of international seat capacity. However, Vancouver’s share of total international seat capacity declined, from 19% in 2006 to 16% in 2010, as Air Canada’s Asian seat capacity through Vancouver decreased by 15 percentage points. Montréal, on the other hand, experienced an increase in international seat capacity share, from 13% to 16% over the last five years, due to the growth in Air Canada’s seat capacity through Montréal to Europe and Latin America. In the last five years, Air Canada also offered international services from eight other Canadian cities, which together comprised 12% of the carrier’s total international seat capacity in 2006 and 14% in 2010.1

International seat capacity by destination region Air Canada offers international services to Europe, Latin America2, Asia, the Middle East and the Southwest Pacific. From 2006-2010, services to Europe accounted for half of Air Canada’s international seat capacity, with an average of 1.9 million seats each year. In 2010, the number of European destinations increased to 13 from nine destinations in 2006. This was followed by services to Latin America and Asia, which made up 21.5% and 26.5%, respectively, of total international seat capacity on average. The carrier recorded an average of 1.0 million seats to nearly 40 Latin American destinations and an average of 833,600 seats to five to seven Asian destinations each year. Over the last five years, Air Canada offered an average of 51,800 seats (average of 1.3% of international seat capacity) each year to Tel Aviv, Israel in the Middle East. International services to Sydney, Australia in the Southwest Pacific were introduced in 2007, with a total of 6,560 seats. By 2010, seat capacity to Sydney amounted to 98,300 seats (2.4% of 2010 international seat capacity).

1 These eight Canadian cities are Calgary, Ottawa, St. Johns, Halifax, Edmonton, Winnipeg, Moncton and Quebec. In 2010, Calgary, Ottawa, Halifax and Edmonton had year-round international service on Air Canada.

2 Latin America includes the Caribbean, Central America and South America.

Note: Latin America includes the Caribbean, Central America and South America. Source: Official Airline Guide (OAG).

Source: Official Airline Guide (OAG).


AIRLINE DATA – CANADA Traffic and Load Factors on Canada’s Major Air Carriers July 2011

Air Carrier

Passenger Traffic Revenue Passenger

Kilometres

Capacity Available Seat Kilometres Load Factor

% Change over 2010

% Change from 2009

% Change over 2010

% Change from 2009

Change over 2010

Change from 2009

Air Canada3 +4.3% +15.6% +2.5% +11.8% +1.5pts

(to 86.4%) +2.8pts

(to 83.6%)

Domestic +2.7% +4.9% +0.0% +0.6% +2.2pts +3.4pts

International & Charter

+4.9% +20.9% +3.7% +17.9% +1.1pts +2.2pts

WestJet +8.4% +28.2% +7.2% +19.9% +0.9pts

(to 81.6%) +5.2pts

(to 80.7%)

Analysis:

Air Canada’s system-wide load factor increased to 86% in July 2011 compared to July 2010.

Air Canada’s domestic traffic increased (+2.7%), while domestic available seat capacity remained constant year-over-year. With traffic increasing and capacity constant, the carrier’s domestic load factor increased (+2.2 percentage points to 83.1%).

International traffic (+4.9%) and available capacity (+3.7%) increased year-over-year. This resulted in an international load factor increase of +1.1 percentage points (to 87.9%).

WestJet reported an increase in passenger traffic (+8.4%) and available capacity (+7.2%) in July 2011 over July 2010. The carrier’s system-wide load factor increased slightly by +0.9 percentage points (at 81.6%).

3 Air Canada Mainline consists of all Air Canada operations with the exception of Air Canada Express (formerly Air Canada Jazz).


AIRLINE DATA – U.S. U.S. Airlines Release July 2011 Traffic Figures

Airline Traffic (RPMs – millions)

Capacity (ASMs – millions)

Load Factor

3,063 11.1%

3,565 11.6%

85.9% 0.3 pts

905

15.7%

1,158 12.6%

78.2% 2.1 pts

1,2 20,478 0.1%

23,488 0.2%

87.2% 0.3 pts

12,176 1.7%

13,881 0.9%

87.7% 0.7 pts

19,641 0.1%

22,433 1.0%

87.6% 0.7 pts

2 6,007 5.1%

6,806 2.0%

88.3% 2.6 pts

10,047 5.9%

11,811 6.6%

85.1% 0.5 pts

Notes: 1. Load factor includes scheduled service only. 2. Consolidated results for United Continental Holdings. Sources: Carrier traffic reports.


AIRLINE DATA – INTERNATIONAL International Airlines Release July 2011 Traffic Figures

Airline Traffic (RPKs – millions)

Capacity (ASKs – millions)

Load Factor

1

21,043 6.9%

24,101 5.4%

87.3% 1.2 pts

2

21,066 8.1%

25,142 9.1%

83.8% 0.8 pts

16,108 3.5%

18,801 2.9%

85.7% 0.6 pts

3, 4

8,447 0.4%

10,520 1.3%

80.3% 0.7 pts

7,839 4.5%

9,605 5.5%

81.6% 0.8 pts

10,814 13.3%

18,373 2.1%

58.9% 10.4 pts

5

9,272 5.4%

10,764 7.0%

86.1% 1.4 pts

1. Includes Martinair. 2. Includes Lufthansa Passenger Airlines, SWISS, Austrian Airlines, British Midland, and Germanwings. 3. Includes Qantas Domestic, QantasLink, Jetstar Domestic, Qantas International, Jetstar International, and Jetstar Asia. 4. Traffic results are for June 2011 as July 2011 results are not yet posted. 5. Includes Cathay Pacific and Dragonair.

InterVISTAS’ Canadian Aviation Intelligence Report August 2011 Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.

Page 6

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

Toronto Vancouver Montréal Calgary Edmonton Ottawa Winnipeg Halifax Victoria Kelowna Saskatoon Regina

St. John’s

2010

June +7.9% +8.2% +11.4% +7.6% +3.8% +8.2% +2.4% +1.6% +0.7% -11.7% +6.4% +8.3% +11.2% 2nd Quarter +6.3% +6.0% +8.1% +5.0% +1.1% +5.7% -0.2% +2.8% +0.2% -3.0% +6.9% +9.6% +9.7%

July +7.3% +4.7% +7.1% +5.9% 0.0% +6.9% +2.4% +6.9% +0.8% +3.4% +2.8% +11.6% +12.0% August +4.7% -0.3% +5.3% +1.1% -1.1% +6.7% -2.5% -1.6% -2.6% +4.1% +3.0% +6.3% +6.0%

September +6.8% +3.0% +10.3% +3.4% +2.1% +3.9% +1.9% -0.2% -2.8% -0.5% +5.1% +3.6% +1.4% 3rd Quarter +6.2% +2.4% +7.4% +3.4% +0.2% +5.8% +0.5% +1.6% -1.6% +2.5% +3.6% +7.1% +6.7%

October +8.6% +7.3% +8.1% +3.3% -1.8% +2.1% -1.0% +0.2% -2.0% +3.0% +2.2% +4.9% +4.4% November +6.2% +5.8% +8.2% +8.1% +1.2% +7.1% +2.2% +3.9% -3.6% -6.1% +5.0% +9.5% +6.3% December +5.8% +3.0% +6.0% +0.4% -2.2% +5.6% -0.6% +7.2% -3.0% +2.4% +3.3% +14.9% +8.8% 4th Quarter +6.9% +5.3% +7.4% +3.8% -1.0% +4.9% +0.1% +3.5% -2.8% -0.2% +3.5% +9.8% +6.3%

2011

January +6.8% +3.0% +8.5% +1.9% +0.7% +3.2% -2.7% +4.0% +1.6% -1.9% -2.6% +3.9% +1.9%

February +4.6% -3.1% +5.1% -1.2% +0.3% +3.2% -2.2% +12.3% +1.5% +4.9% -0.3% +2.4% +4.8%

March 5.0% +0.5% +5.9% -0.8% +1.6% +0.1% -2.6% +1.4% -5.6% -3.0% +4.7% +5.2% N/A

1st Quarter +5.4% +0.1% +6.5% -0.1% +0.9% +2.1% -2.5% +5.4% -1.2% -0.2% +0.4% +3.8% N/A April +6.1% +0.5% +6.9% +2.2% +3.1% +2.7% -1.4% +3.4% -5.5% -3.1% -0.6% +6.2% N/A May N/A +1.5% +5.5% +1.6% +2.5% +1.8% -2.4% +0.3% -1.4% -1.6% +0.9% +3.7% N/A June N/A +1.1% +5.6% +0.2% +1.8% +0.2% -0.6% +1.1% -3.4% +1.7% +0.7% -2.1% N/A

2nd Quarter N/A +1.1% +6.0% +1.3% +2.5% +1.5% -1.4% +1.6% -3.4% -1.0% +0.4% +2.6% N/A

Source: Transport Canada and individual airports’ traffic reports. Note: Subject to revision. Passenger traffic for some airports was not yet available at the time of publication.


NEWS AIR CANADA UPDATE TENTATIVE AGREEMENT BETWEEN AIR CANADA AND UNION NOT RATIFIED

After a tentative agreement was reached between Air Canada and the Canadian Union of Public Employees (CUPE), which represents the

airline's flight attendants, on 1 August 2011, Air Canada announced that the collective agreement was not ratified by the union membership on 27 August 2011. Despite this, Air Canada confirmed that the airline’s business will resume as usual. The collective agreement between CUPE and Air Canada expired on 31 March 2011.

AIR CANADA RECEIVES AWARD FOR BEST INTERNATIONAL AIRLINE IN NORTH AMERICA

During the Skytrax World Airline Awards at the Paris Air Show, Air Canada received the award for the 'Best International Airline in North

America'. A total of 18.8 million air passengers participated in the global industry survey that was conducted between July 2010 and May 2011. The annual worldwide survey includes 38 categories of passenger satisfaction.

AIR CANADA JAZZ IS RENAMED AIR CANADA EXPRESS

On 31 May 2011, Air Canada announced that it is renaming its largest regional carrier from Air Canada Jazz to Air Canada Express beginning 1

June 2011. Air Canada’s other regional services, such as Sky Regional Airlines, Central Mountain Air, Air Georgian and EVAS, will also be operated under the new brand name. The carriers’ aircraft fleet will also be repainted and updated as part of Air Canada’s rebranding strategy.

WESTJET UPDATE WESTJET DISCUSSES CODESHARE AGREEMENT WITH DELTA AIR LINES

According to WestJet’s Chief Executive, Gregg

Saretsky, the carrier is currently discussing a codeshare agreement with Delta Air Lines. WestJet passengers can already transfer onto Delta Air Lines flights on a single ticket and bag check through the interline partnership between the two carriers. The codeshare agreement would improve services for WestJet and Delta Air Lines passengers by allowing them to purchase tickets on the partner carrier’s operated flights. WestJet signed a codeshare agreement with United and Continental Airlines in February 2011, and intends to enter into partnerships with four more carriers this year.

WESTJET LAUNCHES NEW NON-STOP SERVICE BETWEEN HAMILTON AND LAS VEGAS

On 25 July 2011, WestJet announced that it will

launch a new non-stop service from Hamilton to Las Vegas beginning 9 September 2011. The new transborder service will be offered twice weekly for an 11-week trial period, departing Hamilton at 6:00 p.m. and departing Las Vegas at 9:45 a.m. The flight will be operated with Boeing Next-Generation 737 aircraft.

WESTJET SETS NEW PASSENGER VOLUME LEVEL

WestJet announced that it served an all-time high

number of passengers for a single day, at almost 52,000. This was accomplished on 30 June, leading into the Canada Day celebrations. WestJet’s daily passenger volumes are generally around 40,000.


NEWS U.S. AIRLINES UPDATE AMERICAN AIRLINES ANNOUNCES NON-STOP SERVICE BETWEEN NEW YORK AND ANTIGUA

On 25 August 2011, American Airlines announced that it will be introducing a new

non-stop service between John F. Kennedy International Airport (JFK) in New York and V. C. Bird International Airport (ANU) in Antigua beginning 17 November 2011. The new service will be offered four-times weekly and will be operated by a 148-seat Boeing 737 aircraft. This is the carrier’s second service to be offered to Antigua, as it already offers services from Miami, Florida.

SOUTHWEST AIRLINES AND AIRTRAN AIRWAYS PILOTS’ UNIONS REACH AGREEMENT

On 16 July 2011, the pilots’ unions of Southwest Airlines and AirTran Airways reached an agreement that would integrate the seniority lists of

the two groups upon the merger of the two carriers. The agreement still needs to be ratified by union membership and approved by the unions’ board of directors. Southwest Airlines finalised its acquisition of AirTran Airways on 2 May 2011.

DELTA AIR LINES TO CANCEL SERVICES TO 24 U.S. CITIES

On 15 July 2011, Delta Air Lines announced that it will

be informing the U.S. Department of Transportation of its plans to cancel services to 24 U.S. cities due to lack of demand on these routes. According to the carrier, the average load factor on flights to these cities is 52%, with some destinations recording a load factor as low as 12%, causing Delta Air Lines to lose approximately US$14 million each year on these routes. The cancellations will mostly be affecting services to the U.S. Midwest, including flights to Michigan, Minnesota and Iowa.

CONTINENTAL AIRLINES AND US AIRWAYS VIOLATE PRICE ADVERTISING RULES

On 2 June 2011, Continental Airlines and US Airways were fined by the U.S. Department of Transportation for violating

price advertising rules. The department’s rules indicate that all airlines are required to include the full price paid by customers for their air services, including surcharges. Continental Airlines was fined $120,000 for not including fuel surcharges on the fares listed on its website, while US Airways was assessed $45,000 for not including an explanation of additional fees and taxes on its website.

DELTA AIR LINES AND VIRGIN AUSTRALIA AIRLINES ALLIANCE RECEIVES FINAL APPROVAL

On 10 June 2011, Delta Air Lines and Virgin Australia Airlines received final approval from the U.S. Department of

Transportation for anti-trust immunity for the alliance between the two carriers. With anti-trust immunity, the two carriers to will be able to establish a trans-Pacific joint venture by the end of 2011, which will enable them to coordinate services between the U.S. and Australia. In December 2009, the Australia Competition and Consumer Commission approved the alliance between the two carriers, and in May 2011, the U.S. DOT granted the alliance application tentative approval.

TOTAL U.S. AIR CARRIERS’ WORK FORCE INCREASED 1.9% IN APRIL 2011

The U.S. Department of Transportation (DOT) reported that the total work force of the U.S. air carriers increased 1.9% in April 2011 compared to April

2010. This represents 572,797 full-time and part-time employees. The total number of the U.S. airlines’ employees in April 2011 was slightly higher (by 0.2%) than the total employment in March 2011 (571,873 employees).


NEWS CARGO UPDATE BOEING RECEIVES APPROVAL TO OPERATE NEW 747-8 FREIGHTER

On 19 August 2011, Boeing received

approval from the Federal Aviation Administration of the U.S. and the European Aviation Safety Administration to operate the company’s new 747-8 freighter. The new aircraft will be the largest freighter to be manufactured in the U.S. Boeing intends to begin delivery of the aircraft as early as September 2011. The company has already received 78 orders for the freighter from several airlines, including Cargolux International Airlines and Lufthansa Airlines.

NEW CARGO LANE ANNOUNCED AT FREDERICTON INTERNATIONAL AIRPORT

Fredericton International Airport Authority announced that a new cargo lane will be established that will

enable shippers to transport seafood from Atlantic Canada to Europe or Asia via Fredericton International Airport. Prior to the new cargo lane, shippers had to truck their seafood products to the U.S. in order to ship them to international destinations. With the new cargo lane, seafood products originating from Atlantic Canada will be consolidated at Fredericton International Airport and then transported to Toronto by air and then distributed to European and Asian destinations. The commodities will be moved from Fredericton to Toronto via EXP-AIR services, using a Cargojet 727-200 freighter.

JAPAN AIRLINES AND AMERICAN AIRLINES ENHANCE JOINT BUSINESS AGREEMENT

Japan Airlines and American Airlines enhanced their joint business agreement by adding freight services on new routes between

the U.S. and Japan. Under the agreement, cargo will be routed through five U.S. cities - Los Angeles, Chicago, Dallas/Fort Worth, New York, and Honolulu – and three Japanese cities - Tokyo, Osaka and Nagoya. The enhanced cargo relationship between the two carriers is expected to maximize the airlines’ cargo capacity. Japan Airlines and American Airlines commenced their joint business agreement in April 2011.

HAMILTON INTERNATIONAL AIRPORT REPORTS 2010 CARGO GROWTH

According to Hamilton International Airport’s 2010 Annual Report released on 10 June 2011, cargo flights to the airport increased by 14% in 2010 compared to 2009. With the construction of a new 60,000 square-foot cargo facility at the airport, officials project cargo volumes to exceed 500,000 tonnes by 2020.

ASIANA AIRLINES LAUNCHED NON-STOP CARGO SERVICE BETWEEN SEOUL AND

PORTLAND

On 3 June 2011, Asiana Airlines announced that it will be launching an all-cargo service between Incheon

International Airport (ICN) and Portland International Airport (PDX) on 2 September 2011. Flights from Oregon to South Korea will be a non-stop service, while flights from South Korea to Oregon will have stops at Anchorage, Miami or Atlanta. The new air cargo service is the first direct service flight between the two cities. It will be operated thrice weekly using Boeing 747 freighter aircraft.


NEWS PEOPLE IN THE NEWS THE FAMILY OF LESLIE (SEIGEL) GAVIN SADLY ANNOUNCES HER DEATH

Leslie (Seigel) Gavin passed away on 13 August 2011 in Fredericton, New Brunswick. Mrs. Gavin’s most recent position was Director of Marketing and Business Development at

Fredericton International Airport. She had also previously served as Manager of Air Service Development for Calgary International Airport for 10 years and as Director of Passenger Air Service Development at the Winnipeg International Airport for five years. She will be missed by her industry colleagues.

OPENSKIES FOUNDING CEO TO STEP DOWN

OpenSkies, a subsidiary of British Airways (BA), announced that its current CEO, Dale Moss stepped down from his position on 30 June 2011. Mr. Moss was also the founding CEO of

OpenSkies. He will be replaced by Patrick Malval who is currently British Airways’ Regional Commercial Manager for Western Europe, and who will be responsible for the overall revenue of the BA Group in France.

AIR TRANSPORT ASSOCIATION OF AMERICA NAMES SEAN KENNEDY AS SENIOR VICE PRESIDENT, GLOBAL GOVERNMENT AFFAIRS

On 14 June 2011, Sean Kennedy was named Senior Vice President, Global Government Affairs of the Air Transport Association of America (ATA). Mr. Kennedy

currently serves as Special Assistant to the President for Legislative Affairs for President Obama. Mr. Kennedy also has experience working as Assistant Vice President, Federal Relations with AT&T.

CURTIS GRAD APPOINTED AS NEW CEO OF GREATER VICTORIA HARBOUR AUTHORITY

On 1 June 2011, the Greater Victoria Harbour Authority (GVHA) announced that Curtis Grad was appointed as the new CEO of the port authority. Mr. Grad previously served as the

Airport Manager at Abbotsford and Nanaimo airports. His most recent position was Airport Manager of the Queen Alia International Airport in Jordan. Mr. Grad assumed his position at GVHA on 6 June 2011.

AIRPORTS UPDATE TRANSPORT CANADA REPORTS NEED FOR NEW AIRPORT NORTHEAST OF TORONTO

On 11 July 2011, Transport Canada

released a study which revealed the need for a new airport in the greater Golden Horseshoe area around Toronto in the next 16-26 years. The study recommends that the potential new airport be built on 7,530 hectares of land in Pickering, Ontario, northeast of Toronto, which was bought by the government in 1972 in anticipation of a new airport. Transport Canada’s next step is to develop short- and long-term plans for the development of the prospective airport.

CITY OF CALGARY AND CALGARY AIRPORT AUTHORITY FINALIZE AIRPORT TRAIL TUNNEL LEASE AGREEMENT

On 16 June 2011, the City of Calgary and the Calgary Airport

Authority (YYC) finalized a lease agreement for the Airport Trail tunnel project. Under the agreement, the city will be granted access to YYC lands for the construction of the tunnel. The underpass project will be integrated into the Airport Development Program to extend the Airport Trail tunnel and allow the tunnel to be constructed under the new airport runway. Work on the tunnel was scheduled to begin at the end of June 2011.


NEWS AIRPORTS UPDATE – CON’T PLANE TIME ON TARMAC REDUCED AT SEATTLE-TACOMA INTERNATIONAL AIRPORT

In effort to reduce fuel costs, the Seattle-Tacoma International Airport (SEA) has reduced plane time spent on the tarmac. Since a new control tower was built at the airport six years ago,

the airport’s old control tower has been converted into a privately operated ramp tower to control airplane traffic on the ground. Because of this change, the total time spent by a plane on the tarmac before take-off has been reduced to six minutes (from 15 minutes) at SEA. Approximately 800,000 gallons of jet fuel is saved each year because of this reduction.

CHANGES AT CHICAGO O’HARE INTERNATIONAL AIRPORT UNVEILED FOR UNITED AIRLINES AND CONTINENTAL AIRLINES PASSENGERS

Changes at the Chicago O’Hare International Airport were unveiled for the

passengers of United Airlines and Continental Airlines. The changes include more self-service capabilities, new "Premier Access" airport services, new Mileage Plus and OnePass features and benefits, a new onboard menu, aligned policies/procedures and new airport signage, as part of the merged carriers’ steps to receiving a single operating certificate from the U.S. Federal Aviation Administration for their joint operations. Similar changes are also expected to be introduced at other airports.

HONG KONG INTERNATIONAL AIRPORT INCLUDES THIRD RUNWAY IN 2030 MASTER PLAN

According to the 2030 Master Plan for the Hong Kong International Airport

(HKG), it is necessary for a third runway to be built at the airport in order to meet air traffic demand at Hong Kong over the next 20 years. The current two-runway system at the airport is not sufficient to meet the increasing demand and will reach maximum capacity by 2020. The construction of a third runway at HKG is estimated to cost HK$86.2 billion (US$11.1 billion).

OTHER NEWS PORTER AIRLINES REPORTS RECORD-HIGH LOAD FACTOR FOR JULY 2011

On 4 August 2011, Porter Airlines reported that it set a record-high

load factor of 66.8% for the month of July, which is an increase of 4.8 percentage points from the previous year. Both monthly traffic (+26%) and capacity (+17%) also increased year-over-year. The carrier has been introducing new services recently, including flights from Billy Bishop Toronto City Airport to Sault Ste. Marie.

BOEING FORECASTS EXPONENTIAL GROWTH IN DEMAND FOR AIRCRAFT

Boeing forecasts exponential growth in

demand for aircraft in the coming years, with the market for new planes estimated to be worth $4 trillion by 2030. In particular, the aircraft manufacturer projects the largest increase to occur in the Asia-Pacific region, with an estimate of 11,450 new airplanes over the next 20 years. Boeing also anticipates a large increase in worldwide demand for freighter aircraft from 1,760 to 3,500 airplanes. In response to the forecasted growth in demand for aircraft, Boeing plans to increase its monthly production rate from 31.5 airplanes per month to 35 airplanes per month in early 2012.


NEWS OTHER NEWS – CON’T LUFTHANSA AND AIRBUS LAUNCH WORLD’S FIRST COMMERCIAL PASSENGER BIOFUEL FLIGHTS

On 15 July 2011, Lufthansa and Airbus launched the world’s first commercial passenger biofuel

flights. The scheduled round-trip flights are offered four-times daily between Hamburg and Frankfurt and are operated by Airbus A321 aircraft. The A321 aircraft is powered by IAE (International Aero Engines) V2500 engines and makes use of biofuel consisting of a blend of 50% Hydro-processed Esters and Fatty Acids (HEFA) supplied by Finland's Neste Oil. The biofuel flights will be operated over a six-month trial. Over the six months, Lufthansa expects approximately 1,500 tons of carbon dioxide emissions to be saved as a result of the use of biofuel. The American Society for Testing and Materials (ASTM) has approved the use of the biofuel for jet engines.

SUNWING AIRLINES INTRODUCES SEVEN NEW TRANS-ATLANTIC SERVICES

On 16 June 2011, Sunwing Airlines

introduced seven new non-stop trans-Atlantic services from Montréal and Toronto to Europe. The new services include flights from Montréal-Pierre Elliott Trudeau International Airport (YUL) to Paris-Charles de Gaulle Airport (CDG), and flights from Toronto Pearson International Airport (YYZ) to Amsterdam Airport Schiphol (AMS), Lisbon Portela Airport (LIS), London Gatwick Airport (LGW), Paris-Charles de Gaulle Airport (CDG), Porto Francisco Sá Carneiro Airport (OPO) and Rome Fiumicino Airport (FCO). All new flights are offered by the carrier until 12 September 2011 and are operated with 296-seat 767-300ER aircraft.

AIRLINES SIGN LETTERS OF INTENT WITH SOLENA GROUP TO ACQUIRE BIOMASS-DERIVED JET FUEL

Ten airlines have signed letters of intent

with the Solena Group, an energy production company based in Washington, D.C., to acquire biomass-derived jet fuel in the future. The fuel will be derived from post-recycled urban and agricultural waste. Solena Group has plans to build a plant in Santa Clara County, California in 2013, where the biomass-derived fuel will be produced and then trucked to airports in San Francisco, Oakland and San Jose. The 10 airlines that have signed letters of intent include Air Canada, American Airlines, United Continental Holdings, Alaska Airlines, FedEx, Frontier Airlines, JetBlue Airways, Southwest Airlines, US Airways and Lufthansa.


Doris Mak

Director, Special Projects

THE ASIA REPORT August 2011

Jetstar Asia and Japan Airlines to introduce new low cost carrier On 16 August 2011, Jetstar Asia, Qantas’ low-cost subsidiary, and Japan Airlines announced that the two carriers will be introducing a new low cost carrier (LCC). They will also be partnering with Mitsubishi Corp. The two carriers will own 33.3% each and Mitsubishi will own 33.4% of the LCC. The new airline will offer services to destinations across Asia and fares are expected to be 40% lower than current prices, on average. A name has yet to be decided for the new airline, which will be based in Narita and will be launched at the end of 2012.

Cathay Pacific expands codeshare agreement with American Airlines On 14 July 2011, Cathay Pacific and American Airlines announced that the two carriers will be expanding their codeshare agreement to include additional services starting 1 September 2011. The expansion includes flights from Hong Kong to Chicago O’Hare and to Ho Chi Minh City, both offered by Cathay Pacific on a daily basis. The two carriers began their codeshare relationship in 2003, and will now have 23 North American markets and eight Asian markets included in their agreement.

Korean Air launches A380 inaugural flight On 17 June 2011, Korean Air launched the inaugural flight of its A380 aircraft to Narita International Airport in Tokyo, Japan from Incheon International Airport in Seoul, South Korea. The aircraft has a 407 seat capacity, with 94 seats in business class on the upper deck and 12 seats in first class and 301 seats in economy class in the lower deck. The new aircraft also has a “Duty Free Showcase” on the lower deck, displaying duty free products, such as cosmetics, perfume and alcoholic beverages. Korean Air has placed a total order for 10 A380 aircraft, and has plans to operate the aircraft on services to Hong Kong, Bangkok, New York, Paris and Los Angeles by the end of 2011.

Malaysia Airlines to become member of oneworld alliance On 6 June 2011, oneworld announced that Malaysia Airlines intends to join the airline alliance by late 2012. The carrier is expected to complete its formal membership with the alliance soon, with Qantas Airways serving as its sponsor. With Malaysia Airlines joining the alliance, oneworld’s network will expand to 950 destinations across 150 countries. Through codesharing, the carrier’s customers will gain access to over 10,000 daily flights operated by other alliance partners. Being a member of oneworld will improve Malaysia Airlines’ relationship with two oneworld partners who it already codeshares with, Cathay Pacific and Royal Jordanian.

Qantas Airways and American Airlines joint venture receives interim approval Qantas Airways and American Airlines received an interim approval for the carriers’ joint venture by the Australian Competition and Consumer Commission. The proposed trans-Pacific partnership will allow the two carriers to coordinate their services between Australia, New Zealand and the U.S. Revenue sharing will not be included under the joint venture. The two carriers already codeshare on flights to 52 destinations, and the proposed joint business agreement is expected to yield lower fares, improve connections and offer increased frequent flyer benefits. Qantas Airways and American Airlines are still awaiting approval from the New Zealand Minister of Transport and the U.S. Department of Transportation.


Ian Kincaid

Vice President, Economic Analysis

THE EUROPEAN REPORT August 2011

Lufthansa Group carriers levy credit card surcharge Beginning on 2 November 2011, a credit card surcharge will be levied on all tickets for the Lufthansa Group carriers’ flights departing from airports in Germany, Belgium, Finland, the U.K., the Netherlands and Switzerland. A surcharge of €5 per ticket will be applied on domestic routes, while the charge per ticket on intra-European routes and long-haul routes will be €8 and €18, respectively. According to the group of carriers, the decision to impose the credit card surcharge is mostly due to the increase in payment transaction costs. Lufthansa has already been imposing a credit card surcharge on bookings made through its website, call centers and ticket counters since 2006. Other payment options, such as non-credit card payments at travel agencies and cash payments, will not incur a surcharge.

Ryanair to open 45th base in Manchester in October 2011 On 12 July 2011, Ryanair announced that it will be opening its 45th base at Manchester Airport. Two Boeing 737-800 aircraft will be based in Manchester when it opens on 2 October 2011, with services offered on 17 routes. By the summer of 2012, the low cost carrier intends to increase the number of aircraft based at the airport to four, with services offered on 26 routes. The new base is expected to accommodate 2 million passengers each year and generate 2,000 jobs.

Frankfurt Airport reports historic passenger traffic figures for May 2011 On 15 June 2011, Frankfurt Airport, operated by the Fraport Group, announced that the German airport reached historic passenger traffic figures in May 2011. Passenger traffic during the month increased 5.8% year-over-year to 5.04 million passengers. Previously, the airport had never experienced passenger traffic exceeding 5 million in May; these figures were usually recorded for the month of July. Similarly, aircraft movements grew 3.6% to 43,207 take-offs and landings in May 2011 over May 2010. The airport forecasts a 4-7% increase in passenger traffic for the entire year of 2011.

Air Cargo Germany plans to add services to Latin America According to Air Cargo Germany’s CEO, Michael Bock, the Frankfurt-based air freight carrier plans to add services to Latin America. The cargo carrier intends to begin services to several cities, such as Sao Paulo, Quito and Bogota, in the fall of 2011. Air Cargo Germany’s current route network includes Hong Kong, China, the United Arab Emirates, Kazakhstan and India. It also received traffic rights to the U.S. recently. Its current fleet is comprised of four B747-400SF aircraft.

airberlin enters new codeshare agreement with British Airways and expands agreement with American Airlines On 15 June 2011, airberlin announced that it will be entering a codeshare agreement with British Airways starting 5 July 2011. The two carriers will codeshare on over 40 flights across Europe, including airberlin services from German airports to London Heathrow, and British Airways services from Frankfurt and Zurich to London City Airport and from Salzburg to London Gatwick. Through the agreement, passengers of the two airlines can purchase tickets on the partner carrier’s operated flights. The following week, on 20 June 2011, airberlin also announced that it has expanded its codeshare agreement with American Airlines. The agreement between the U.S. carrier and the German carrier now includes airberlin’s non-stop services between Berlin-Tegel and New York-JFK, which commenced in May 2011.


Steve Martin

Senior Vice President

THE WASHINGTON REPORT August 2011

DHS Spending Bill Advances through House The U.S. government advanced its spending proposals for the Department of Homeland Security following approval by the full House of Representatives of a $40.6 billion budget for fiscal year 2012. The measure passed 231-188, largely along party lines. The budget bill represents a decrease of $1.1 billion – or 2.6% – below last year’s level and $3 billion – or 7% – below the President’s request. The bill funds the activities of the Secret Service, Customs and Border Protection, Immigration, Transportation Security Agency (TSA), Federal Emergency Management Agency (FEMA), and the Coast Guard. The bill is now with the Senate for action.

The final total reflected the House’s resistance to proposals from more conservative Republicans for an additional 10 percent across-the-board cut from the department’s programs. Over 100 Republican members joined with Democrats in opposing those deep cuts.

Most of the significant program cuts were targeted to port and transit security grants, awards for high-risk cities, and departmental administration.

For the TSA, the House provided $5.4 billion, which is $5 million above the FY2011 budget and $177 million below that requested by the Obama Administration.

The final bill incorporated an amendment sponsored by Transportation Committee Chairman Rep. John Mica to cut funding for TSA screeners by 10 percent and boost airport screening operations undertaken by private companies instead of federal workers was adopted 219-204. In arguing for his amendment, Chairman Mica noted that it was his intention to ensure that adequate resources exist to fund private screeners and the possible expansion of the Screening Partnership Program (SPP) or airport opt-out program beyond the existing 16 participating airports.

The legislation cuts off funding for new advanced airport scanners that have sparked concerns over their revealing images of travelers' bodies. The measure denies the administration's $76 million request for an additional 275 scanners. The report language indicated that the cut was inspired partly by budget austerity concerns as well as TSA’s lack of progress in modifying the software so that the AIT images highlight only potential security anomalies on “stick figure”-type human renderings. Protests from privacy advocates and arguments that TSA should not rely on AIT as the primary means of screening passengers were defeated.

The underlying measure would not affect the roughly 500 AIT machines already installed at 78 airports or the 500 recently funded in a separate bill.

The House narrowly adopted an amendment that effectively overrides TSA Administrator John Pistole's decision to grant screeners limited labour rights by prohibiting the use of federal funds for collective bargaining. That provision is expected to face stiff resistance in the Democratic-controlled Senate.


THE WASHINGTON REPORT – CON’T U.S. to Formally Object to EU Emissions Trading Scheme The Wall Street Journal reported that the U.S. is preparing to deliver its first formal objections to the European Union's impending emission-trading plan for airlines, adding to global pressure on the EU to scale back its ambitions.

China, Russia and other major countries, as well as airlines world-wide, have criticized the project. The EU emissions trading scheme, which would include aviation starting in January, forces any carrier departing or arriving at an EU airport to buy credits for greenhouse-gas emissions above specified levels, with large fines for noncompliance.

U.S. officials are expected to present their objections at a scheduled half-yearly meeting of the U.S.-EU Joint Committee in Oslo. The committee, established by a U.S.-EU aviation treaty signed in 2007, is a forum for both sides to discuss important aviation-related issues.

According to people familiar with the U.S. position, U.S. officials will argue that the EU is taking a unilateral approach that violates international treaties and is illegally asserting jurisdiction in other countries. A spokesperson for the EU Climate Commissioner said the plan has been firmly adopted as legislation. "We do not intend to back down at all," the representative said.

The Oslo meeting comes two weeks before the start of an American legal challenge to the EU plan. On July 5, the European Court of Justice in Luxembourg held its first hearing on a suit filed in 2009 by a group of U.S. airlines and the U.S. Air Transport Association to overturn the emissions program. The lawsuit asserts that the EU's "unilateral and extraterritorial approach to regulating the world under the European system is illegal," said Nancy Young, vice president for environmental affairs at the Air Transport Association.

EU officials argue that they have jurisdiction to regulate the emissions of flights entering and leaving the 27-country bloc. The emissions plan potentially allows airlines from other countries to be excluded from the EU system if their home countries adopt pollution-control measures that the EU deems "equivalent."

Non-EU governments and airlines argue that the EU has no right to regulate emissions outside its borders, and has not set an objective standard for equivalent measures.

The International Civil Aviation Organization has been working on plans to regulate airline emissions globally. Carriers and many governments say the EU should work through ICAO. EU officials have said ICAO is moving too slowly and its targets are insufficiently ambitious.


INTERVISTAS NEWS Ken Lee joins InterVISTAS

InterVISTAS is pleased to announce that Ken Lee will be joining InterVISTAS as Market Information Analyst with the Market Information Services team in Vancouver on September 1, 2011. Ken is a specialist in information system consulting and database administration. He possesses a BSc in Computer Science from Simon Fraser University (SFU), and has recently completed his MBA from SFU. His previous work experience includes roles in database development and server administration, plus five years as an account executive with a logistics firm. As the Market Information Analyst, Ken will be responsible for the development and delivery of InterVISTAS’ air transport traffic and capacity analysis services.

Zach Mensen joins InterVISTAS

InterVISTAS is pleased to announce that Zach Mensen has joined InterVISTAS as a Senior Analyst. Zach joins InterVISTAS from Delta Air Lines in Atlanta, GA, where he has been focusing on domestic network planning for the past two years. He graduated from the Georgia Institute of Technology with a major in Business with Finance and Marketing, and worked in IT consulting before entering the airline industry. Zach will primarily provide support to the Airports practice group including developing air service strategies, preparing and delivering business cases to airlines and advising airport management on industry issues and trends.

Koen Brinkman Promoted to Director

InterVISTAS is pleased to announce that Koen Brinkman has been promoted to Director effective July 1, 2011. Since being promoted to Senior Consultant in January 2010, Koen has focused on airport technical due diligence, air traffic forecasting, financial analysis, airport privatization and reviews of institutional and regulatory framework, becoming an all-round, versatile and valuable consultant. His project responsibilities have included Regional Airports Emergency Investment Feasibility Study in Bosnia and the Samara Technical Audit project. As a Director, Koen will deploy his project management skills on larger and more complex projects and play a more important leadership role in client interactions.

Diego Leon Chi Promoted to Senior Analyst

InterVISTAS is pleased to announce that effective July 1, 2011; Diego Leon Chi has been promoted to Senior Analyst. Diego first joined InterVISTAS in March 2010 as Project Analyst in the Consumer Research group. With a Masters degree in Statistics, Diego has supported delivery of customer satisfaction survey contract and other survey based work. Diego has also supported new business development initiatives in Puerto Rico and Latin America and will continue to do so where his mother tongue of Spanish and his Mexican heritage are an asset. As he moves to the Senior Analyst role, Diego will take on greater responsibility in co-ordinating Customer Satisfaction contracts and other contracts, and will further develop the new statistical analyses and models he has begun to introduce to our consumer research programs.


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 Robert Andriulaitis at [email protected] or 1-604-717-1807.

To subscribe, please send an email to [email protected]

To unsubscribe, please send an email to [email protected]

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 Robert Andriulaitis at [email protected] or 1-604-717-1807.

To subscribe, please send an email to [email protected]

To unsubscribe, please send an email to [email protected]

INTERVISTAS NEWS – CON’T

InterVISTAS Upcoming Speaking Engagements

Dr. Mike Tretheway, President, InterVISTAS Consulting Inc., Executive Vice President and Chief Economist, InterVISTAS Group Bombardier Airline Executive Seminar: Montreal, QC – 13 September 2011

Dr. Tretheway will be the conference keynote speaker.

Canadian Council for Aviation & Aerospace: Winnipeg, MB – 20 October 2011 Dr. Tretheway will be providing an industry update.

BC Hospitality Conference: Vancouver, BC – 9 November 2011 Dr. Tretheway will be giving a presentation entitled “Hotel Industry vs. Airline Industry on Rate Parity, Integrity and Transparency. Who Has the Right Strategy to Win the Price War?”.

George Novak, Director, Safety, Borders and Security

ACI-NA Public Safety and Security Fall Conference: Arlington, VA – 29 August - 1 September 2011

Mr. Novak will be presenting on benchmarking and developing risk-based security systems at international airports.

Robert Andriulaitis, Vice President, Transportation & Logistics Studies

Altitudes East Air Access Forum: Halifax, NS – 28 September 2011 Mr. Andriulaitis will serve on a panel discussing the future of air cargo

Aaron Beeson, Manager, Policy, Borders & Security

Global Airport Expansion Summit: Abu Dhabi, UAE – 26-27 September 2011 Mr. Beeson will presenting on modern border processes and technologies that support growth in international air services.

AIR Issue No. 6 - August 2011

Documents

Transcript of AIR Issue No. 6 - August 2011