CANADIAN AVIATION
INTELLIGENCE REPORT
MARCH 2011
IN THIS ISSUE:
CEO Update – p 1
Impact of the Earthquake in Japan – p 2
Tourism Industry Update – p 4
Airline Data – p 6
Airport Data – p 9
News – p 10
Asia Report – p 14
European Report – p 15
Washington Report – p 16
InterVISTAS News – p 19
CEO UPDATE
March 2011
Welcome to the March 2011 edition of InterVISTAS Consulting Inc.‘s Canadian Aviation Intelligence
Report (CAIR). The following are some interesting new projects we are currently working on.
Gerry Bruno
CEO
InterVISTAS to Assist with Strategy Implementation at Kilimanjaro
International Airport
After completing a detailed market size analysis, route development strategy and stakeholder
consultations, InterVISTAS will assist in strategy implementation for Kilimanjaro International
Airport. This will involve preparation of new route profitability forecasts and business cases,
participation in meetings with target airlines, and representation at industry events.
InterVISTAS to Conduct the Region of Waterloo Airport Program
Review
InterVISTAS has been selected to conduct the Region of Waterloo Airport Program Review. The
airport is seeking a detailed review of the administration & operation of the airport, including:
Safety/security, Ops & maintenance, Finance/administration and Marketing/communications. In
addition, a review of human resources and organizational structure between and within functional
areas will also be conducted.
The March 2011 CAIR Line-Up
In this month‘s publication, we lead off with an article on the impact of the earthquake in Japan and a
recap of 2010 international tourism, followed by our regular monthly columns, which include:

Asia Report

European Report

Washington Report
We hope you enjoy this issue.
Page 1
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
Picture
IMPACT OF THE EARTHQUAKE IN
JAPAN
March 2011
On the morning of 11 March 2011, a 9.0 magnitude earthquake struck Japan which was then followed
by a tsunami that brought the country to a halt. Stock markets around the world reacted by unloading
Japanese stocks, which led to a 5% drop in the Tokyo Stock Exchange and the Nikkei reaching a 5week low.
Matt Boire
Project Analyst
Japanese Airport Impacts
The tsunami flowed through Sendai Airport (located in northeast Japan) submerging and debilitating
the runway, taxiways, and infrastructure of the airport. Currently, Sendai Airport remains closed and is
only being used for humanitarian purposes. Included in the airport shutdown was Narita, Japan‘s main
international gateway and Haneda, Japan‘s busiest airport, which were closed for 24 hours and saw
air traffic re-routed to Yokota Air Base. Although the disruption in service is measurable, the long run
impact on the demand for air services to and from Japan still remains uncertain. Amidst damages
estimated by the World Bank in the range of $230 billion, the official death toll surpassing 10,000
people and with 17,000 still missing, and several nuclear reactors on the brink of meltdown, there is
still much uncertainty. Disruptions to manufacturing and supply chains, particularly in the electronics
and automotive sectors, and in air transportation and tourism sectors provide further challenges.
Japanese Airline Impacts
The earthquake and tsunami could not have come at a more challenging time for Japan Airlines. In
January 2010 Japan Airlines filed for bankruptcy protection after several years of losses compounded
by the slowdown in international business travel following the 2008 financial crisis. As a result of a
number of restructuring steps, including raising $3 billion in new loans and capital and reducing its
workforce by nearly 40%, Japan Airlines emerged out of bankruptcy protection on 28 March 2011,
only two and half weeks after the earthquake and tsunami. Facing reductions in international
passenger traffic of 25% and a decrease in domestic air travel close to 28%, Japan Airlines President
Mr. Masaru Onishi has a considerable managerial challenge ahead of him. In response to the
reduced international demand, Japan Airlines has announced a reduction of 74 weekly flights on 11
international routes. Given the devastation and continued uncertainty surrounding the outcome of the
Fukushima Daiichi nuclear power plant, international air travel is expected to be slow to recover.
The earthquake also brought major disruptions for All Nippon Airways, especially on international
flights to North America and other Asian destinations. Over 162 ANA flights were cancelled on 11
March 2011, contributing to the 20,000 passengers that were reported stranded at Narita and
Haneda. In light of these delays, ANA is waiving fees associated with flight cancellation, refunds or
date change on international flights to and from Japan for tickets dated before 16 March.
The falling demand for seats could cause major issues for ANA, especially as ANA moves into April
and the tourist season. In the midst of the uncertainty and the damage, ANA is supporting earthquake
and relief efforts donating 10 million yen to aid those affected and offering free transport of relief
workers and supplies.
Page 2
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
IMPACT OF THE EARTHQUAKE IN
JAPAN – CON’T
Rail Impact
The tsunami and following electrical crisis also impacted the Shinkansen rail service in Japan,
although no derailments occurred on this line. The Shinkansen or ‗Bullet train‘ network suspended
operations on 11 March with most lines coming back into operation after 14 March. Since 1992, the
Shinkansen have been equipped with Urgent Earthquake Detection and Alarm System, which causes
the trains to break automatically in the event of an earthquake, may have prevented any derailment
on this network.
After 14 March, shortages of power and concerns over the Fukushima Daiichi nuclear power plant,
rail services were reduced with trains running at approximately 30% of their normal frequency. Only
within the last week of March has service returned to normal levels after several weeks of disruption.
Going Forward
As stories of suffering and loss turned to stories of survival and rescue, the markets have slowly
begun to regain confidence. Going forward, it will be important to keep a watchful eye on major
Japanese airlines and how they are able to respond to reductions in demand, in particular, Japan
Airlines having come out of bankruptcy protection and restructuring and All Nippon Airways.
Page 3
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
INTERNATIONAL TOURISM IN 2010
March 2011
Eugene Chu
Senior Project Manager
2009 was a challenging time for the tourism industry, with international tourist arrivals dropping to
below 2007 levels following a decade of almost uninterrupted growth (there was a decline in 2003 due
to SARS). However, the recovery started in the last few months of 2009 and has continued through to
2010, which was marked by a number of international mega events including the Winter Olympic &
Paralympic Games in Canada, Commonwealth Games in India, FIFA World Cup in South Africa, and
World Expo in China.
International Tourist Arrivals
Rebound in 2010. 2010 was a
much-welcomed year in the
world of international tourism
with total tourist arrivals reaching
935 million. This is an increase
of 6.7% from 2009 and the
highest number on record for
international tourist arrivals. Data
on 2010 international tourism
receipts is not complete yet, but
preliminary results show that
although receipts lagged behind
arrivals, it has rebounded as
well.
Emerging Markets Continue to
the Lead Recovery. One of the
key trends over the past decade
has been the rapid growth of
emerging markets (both as a
source market and as a
destination) relative to the
advanced economies/traditional
markets. As a result, the gap in
tourist arrivals in advanced
economies and emerging
markets has been reduced
considerably. This was apparent
in the 2010 rebound as well.
Mirroring the two speed
economic recovery, international tourist arrivals in emerging markets grew by +8.2%, compared to
+5.3% for advanced markets.
Specifically, tourist arrivals in North America increased by 7.8% in 2010 to approximately 99 million.
Elsewhere around the world, Europe, Africa and the Middle East experienced growth in tourist arrivals
of 3.2%, 6.4%, and 14%, respectively, while the Asia Pacific region recorded growth in tourist arrivals
of about 13% - nearly double the world average. China, Taiwan, South Korea and Japan all recorded
double digit growth.
Page 4
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
INTERNATIONAL TOURISM IN 2010
– CON’T
International Travel to Canada Increases in 2010. International (non-U.S.) tourist arrivals in
Canada increased by 6.8% in 2010 – almost mirroring the growth of international tourist arrivals
globally. This was driven by the emerging BRIC countries (Brazil, Russia, India, China), nearly all of
which showed double digit growth.1 Growth of arrivals from Mexico and Australia were also notable.
Meanwhile, automobile trips by U.S. residents to Canada decreased by -3.5% while air travel was up
5.7% to 3.7 million visitors.
Looking Ahead – Confidence in the International Tourism Industry. The World Tourism
Organization‘s (UNWTO) Panel of Tourism Experts, which includes some 330 specialists from over
100 countries around the world, are bullish about 2011 – most are expecting results to be better than
the rebound in 2010. Meanwhile, the UNWTO is projecting growth of 4-5% growth in tourist arrivals
for 2011. However, it should be noted that significant risks do remain. This includes continued
economic weakness and slow growth in advanced economies, political unrest in the Middle East, and
the evolving nuclear crises in Japan, among others.
1
2010 statistics for Russia were unavailable at the time of publication.
Page 5
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
AIRLINE DATA – CANADA
Traffic and Load Factors on Canada’s Major Air Carriers
February 2011
Air Carrier
Passenger Traffic
Revenue Passenger
Kilometres
% Change
% Change
over 2010
from 2009
Capacity
Available Seat Kilometres
Load Factor
% Change
over 2010
% Change
from 2009
Change
over 2010
Change from
2009
Air Canada1
+3.7%
+9.4%
+7.1%
+14.7%
-2.5pts
(to 75.9%)
-3.7pts
(from 79.6%)
Domestic
-1.8%
-1.9%
-3.7%
+1.0%
+1.5pts
-2.4pts
International
& Charter
+6.1%
+14.7%
+11.8%
+8.2%
-4.0pts
-4.1pts
+12.2%
+22.2%
+10.7%
+20.9%
+1.1pts
(to 83.6%)
+1.0pts
(from 82.6%)
WestJet
Analysis:
Air Canada‘s system-wide
traffic increased by +3.7%
and available capacity
increased by +7.1% in
February 2011 compared
to February 2010.
Both traffic (-1.8%) and
available capacity (-3.7%)
of Air Canada‘s domestic
sector experienced a decrease
year-over-year. Load factor
increased (+1.5 percentage
points to 79.4%) over the
same period.
Air Canada‘s international
traffic increased by +6.1% and
available capacity grew by
+11.8% year-over-year. All
regions experienced increases
in traffic, except for the
Atlantic region (-4.4%).
WestJet reported a growth in
both passenger traffic
(+12.2%) and available
capacity (+10.7%) over
February 2011. Its systemwide load factor increased
+1.1 percentage points to
83.6% year-over-year.
1
Air Canada Mainline consists of all Air Canada operations with the exception of Jazz.
Page 6
March 2011
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AIRLINE DATA – U.S.
U.S. Airlines Release February 2011 Traffic Figures
Airline
1, 2
1
Notes:
Traffic
Capacity
(RPMs – millions)
(ASMs – millions)
2,082
9.0%
2,600
1.4%
80.1%
5.6 pts
604
14.7%
898
13.6%
67.3%
0.6 pts
13,747
1.1%
18,078
1.8%
76.0%
2.3 pts
8,626
2.2%
11,532
3.1%
74.8%
0.7 pts
12,663
1.4%
17,188
6.1%
73.7%
3.4 pts
4,010
4.1%
5,223
5.3%
76.8%
0.8 pts
1,330
2.7%
1,730
0.3%
76.9%
1.8 pts
Load Factor
1. Load factor includes scheduled service only.
2. Results are consolidated for United Airlines and Continental Airlines.
Sources: Carrier traffic reports.
Page 7
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
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AIRLINE DATA – INTERNATIONAL
International Airlines Release February 2011 Traffic Figures
Traffic
Capacity
(RPKs – millions)
(ASKs – millions)
1
14,665
4.9%
18,902
5.1%
77.6%
0.1 pts
2
12,929
13.1%
18,234
15.7%
70.9%
1.6 pts
7,893
1.2%
11,140
6.0%
70.9%
3.3 pts
7,977
5.1%
10,244
7.2%
77.9%
1.6 pts
6,374
1.0%
8,483
5.4%
75.1%
4.8 pts
4
4,473
22.7%
6,949
23.6%
64.4%
0.8 pts
5
7,360
0.1%
9,520
8.9%
77.3%
6.8 pts
Airline
3
Load Factor
1. Includes Martinair.
2. Includes Lufthansa Passenger Airlines, SWISS, British Midland and Austrian Airlines.
3. Includes Qantas Domestic, QantasLink, Jetstar Domestic, Qantas International, Jetstar International, and Jetstar Asia.
4. Traffic results are for January 2011. February 2011 results are not yet posted.
5. Includes Cathay Pacific and Dragonair.
Page 8
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
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
2010
January
February
March
1st Quarter
April
May
June
2nd Quarter
July
August
September
3rd Quarter
October
November
December
4th Quarter
-0.7%
0.0%
+4.1%
+1.2%
+2.7%
+8.2%
+7.9%
+6.3%
+7.3%
+4.7%
+6.8%
+6.2%
+8.4%
+4.7%
+3.6%
+5.6%
-1.9%
+3.4%
+3.0%
+1.5%
+2.3%
+7.3%
+8.2%
+6.0%
+4.7%
-0.3%
+3.0%
+2.4%
+7.3%
+5.8%
+3.0%
+5.3%
+0.7%
+0.9%
+3.3%
+1.7%
+3.6%
+9.1%
+11.4%
+8.1%
+7.1%
+5.3%
+10.3%
+7.4%
+8.1%
+8.2%
+6.0%
+7.4%
+2.1%
+1.0%
+5.0%
+2.8%
+0.1%
+7.5%
+7.6%
+5.0%
+5.9%
+1.1%
+3.3%
+3.4%
+3.2%
+7.8%
+0.4%
+3.6%
-1.4%
-2.7%
+1.2%
-1.0%
-3.8%
+3.7%
+3.8%
+1.1%
0.0%
-1.1%
+2.1%
+0.2%
-1.8%
+1.2%
-2.2%
-1.1%
+4.9%
+5.4%
+8.1%
+6.2%
+5.0%
+3.9%
+8.2%
+5.7%
+6.9%
+6.7%
+3.9%
+5.8%
+2.1%
+7.1%
+5.6%
+4.9%
-2.1%
-3.6%
+1.2%
-1.5%
-4.4%
+1.4%
+2.4%
-0.2%
+2.4%
-2.5%
+1.9%
+0.5%
-1.0%
+2.2%
-0.6%
+0.1%
+1.2%
+0.9%
+5.8%
+2.9%
+0.5%
+5.0%
+1.6%
+2.8%
+6.9%
-1.6%
-0.2%
+1.6%
+0.2%
+3.9%
+7.2%
+3.5%
+0.1%
-6.8%
+4.6%
-0.5%
-1.6%
+1.5%
+0.7%
+0.2%
+0.8%
-2.6%
-2.8%
-1.6%
-2.0%
-3.6%
-3.0%
-2.8%
+10.0%
-1.3%
+4.4%
+4.4%
+3.4%
+0.3%
-11.7%
-3.0%
+3.4%
+4.1%
-0.5%
+2.5%
+3.0%
-6.1%
+2.4%
-0.2%
+7.0%
+5.8%
+5.6%
+6.2%
+4.9%
+9.5%
+6.4%
+6.9%
+2.8%
+3.0%
+5.1%
+3.6%
+2.2%
+5.0%
+3.3%
+3.5%
+10.5%
+11.7%
+13.5%
+11.9%
+9.7%
+11.0%
+8.3%
+9.6%
+11.6%
+6.3%
+3.6%
+7.1%
+4.9%
+9.5%
+14.9%
+9.8%
St.
John’s
+4.6%
+4.1%
+10.9%
+6.8%
+9.3%
+8.4%
+11.2%
+9.7%
+12.0%
+6.0%
+1.4%
+6.7%
+4.4%
+6.3%
+8.8%
+6.3%
2011
January
+5.7%
+3.0%
+8.5%
+0.6%
+0.7%
+3.2%
-2.7%
+4.0%
+1.6%
-1.9%
-4.1%
+3.9%
+1.9%
Source: Transport Canada and individual airports‘ traffic reports. Note: Subject to revision.
Page 9
March 2011
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NEWS
AIR CANADA TO LAUNCH SERVICES FROM
BILLY BISHOP AIRPORT
AIR CANADA UPDATE
AIR CANADA TO SUSPEND SERVICES DUE
TO HIGH FUEL COSTS
On 16 March 2011, Air
Canada announced that it will
be suspending services in
response to high fuel costs.
The carrier will no longer be
offering flights from Ottawa to Thunder Bay and
Washington Dulles, from Montréal to
Washington Dulles, and from Calgary to
London, Ontario, Chicago and San Francisco
beginning 1 May 2011. In addition, Air Canada
has also started incorporating fuel surcharges
on particular routes, due to rising jet fuel prices.
FIRST DELIVERIES OF 787 AIRCRAFT
DELAYED
On 8 March 2011, Air Canada
announced that according to
Boeing, the delivery of the first
five 787 aircraft that the carrier
has ordered has been
delayed. The orders are now scheduled to be
delivered between the fourth quarter of 2013
and the first half of 2014. Initially, the deliveries
were scheduled for the latter of half of 2013. Air
Canada has placed a total of 37 orders for the
787 aircraft. Boeing has yet to update the carrier
with the schedule of deliveries for the remaining
orders.
AIR CANADA CARGO SIGNS TWO-YEAR
CONTRACT FOR INTERNATIONAL RFS
In order to decrease total
costs and to improve services,
Air Canada signed a two-year
contract for international road
feeder services (RFS) with the
Wallenborn Group. The Wallenborn Group is a
leading international road feeder service
provider and a high-value cargo transportation
company in Europe. It will be handling services
for Air Canada in 40 airports, including
Frankfurt, London Heathrow, Brussels,
Copenhagen, Amsterdam, Oslo and Zurich.
Page 10
March 2011
Air Canada announced that it
will be launching its services
from Toronto City Centre Billy
Bishop Airport on 1 May 2011.
The carrier will offer 15 flights
each day from the airport operated by Sky
Regional Airlines Inc. using Bombardier Dash 8
Q-400 aircraft. These initial services will include
non-stop flights between downtown Toronto and
Montreal Trudeau International Airport. Ticket
sales for Air Canada‘s services from Toronto
Island began on 7 March 2011.
WESTJET UPDATE
WESTJET ANNOUNCES CHERYL SMITH AS
EXECUTIVE VICE-PRESIDENT & CHIEF
INFORMATION OFFICER
On 11 March 2011,
WestJet announced Cheryl
Smith will be serving as the new Executive VicePresident and Chief Information Officer of the
carrier. Ms. Smith currently works for Smith and
Associates in Virginia, U.S.A. She has 30 years
of experience in information technology, working
in senior leadership positions for companies
such as Ernst & Young, Honeywell Federal
Systems, Verizon and KeySpan Energy.
WESTJET SIGNS CODESHARE AGREEMENT
WITH AMERICAN AIR LINES
On 28 February 2011,
WestJet signed a
comprehensive codeshare agreement with
American Airlines. Under the agreement,
WestJet will be allowed to place its code on
American Airlines and American Eagle flights
from Canada to Chicago O'Hare and Boston,
while American Airlines will be allowed to place
its code on WestJet flights to 20 Canadian cities.
This will allow WestJet and American Airlines to
expand their transborder networks. The
codeshare agreement is still pending regulatory
approval.
InterVISTAS‘ Canadian Aviation Intelligence Report
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NEWS
WESTJET UPDATE – CON’T
WESTJET INTRODUCES NON-STOP
SERVICES TO ORLANDO
On 20 February 2011,
WestJet launched non-stop
services to Orlando from St. John's International
Airport. The seasonal services will operate every
Sunday from 20 February 2011 to 8 May 2011.
WestJet is currently the only carrier to offer
services on this route.
U.S. AIRLINES UPDATE
AMERICAN AIRLINES LAUNCHES NEW
SCHEDULE FOR LONDON EXPRESS
SERVICE
On 17 March 2011,
American Airlines
announced that, together
with British Airways and Iberia, the carrier is
offering a new schedule for express services
between London Heathrow Airport (LHR) and
New York John F. Kennedy International Airport
(JFK). In the new schedule, the three carriers
offer the trans-Atlantic flights 15 times daily, with
flights offered every hour in late afternoons and
evenings from New York to London. The
services between the two cities were launched
on 27 March 2011.
U.S. AIRLINE EMPLOYMENT INCREASES IN
JANUARY
According to the U.S. Department of
Transportation, the number of full-time
equivalent jobs in the overall
workforce of the U.S. airline
industry increased by +0.4% in
January 2011 compared to the
same month last year, to a total
of 380,949. In December 2010, the U.S .airlines‘
workforce also grew year-over-year. Prior to the
growth experienced in December 2010 and
January 2011, year-over-year U.S. airline
employment growth contracted each month
since June 2008.
Page 11
March 2011
SOUTHWEST AIRLINES AND AIRTRAN
MERGER RECEIVES
APPROVAL
On 24 February 2011,
Southwest Airlines and
AirTran received an
approval from the U.S.
Federal Aviation
Administration (FAA) on the transition plan for
the merger between the two carriers. The
transition plan indicates that the two carriers
intend to operate under a Single Operating
Certificate. Southwest Airlines first announced
its plans to acquire AirTran in 27 September
2010. The merger is still pending approval from
US Department of Justice and AirTran
shareholders.
CARGO UPDATE
GROWTH OF GLOBAL AIR FREIGHT
CONTRACTS DUE TO POLITICAL UNREST
According to international air
traffic statistics released by
the International Air
Transport Association (IATA)
on 29 March 2011, growth of cargo demand
contracted in February 2011 to 2.3% year-overyear, which was 6.4 percentage points less than
that of the previous month. Cargo grew 8.7% in
January 2011 compared to January 2010.
According to IATA, the significant fall in airfreight
growth was mainly due to the political unrest in
the Middle East and North Africa.
IBERIA UNVEILS PLAN FOR NEW CARGO
HUB AT MADRID-BARAJAS AIRPORT
On 28 March 2011,
Iberia and Aena unveiled
new plans for a $140 million cargo facility, which
would become the largest hub for air cargo to
and from Latin America. Iberia will be
responsible for 60% of the cost of new 39,000m2
facility, with Aena responsible for the remaining
40%. The Madrid-Barajas cargo terminal saw
23% growth in cargo volumes in 2010 over 2009
cargo levels. By 2030, the cargo terminal is
expected to grow to 650,000 tonnes per annum.
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
NEWS
CARGO UPDATE – CON’T
GLOBAL AIR CARGO ADVISORY GROUP
FINALISE GROUP’S BASIC PRINCIPLES
The newly formed
Global Air Cargo
Advisory Group
(GACAG) finalised and
signed the group‘s
basic principles and
objectives at the IATA
World Cargo
Symposium in Istanbul that occurred 8-10 March
2011. The four founding members of the group,
the International Federation of Freight
Forwarders Associations (FIATA), the
International Air Transport Association (IATA),
the International Air Cargo Association (TIACA)
and the Global Shippers' Forum (GSF), agreed
that air cargo security and e-commerce would
be the top priorities of the group. The GACAG
will also be addressing issues with regards to
customs and trade facilitation and sustainability
of the global air cargo industry.
PEOPLE IN THE NEWS
CANADIAN AIRPORTS COUNCIL APPOINTS
DANIEL-ROBERT GOOCH AS PRESIDENT
On 21 March 2011, the
Canadian Airports Council (CAC)
announced that Daniel-Robert
Gooch has been appointed as
President of the national airports
trade association. Mr. Gooch is
currently the CAC Director of Communications
and Policy and has been serving the CAC for
the past five years. He has 16 years of
experience in communications and public
affairs, including a position as publisher and
editor of the electronic newsletter, Commercial
Aviation Today.
Page 12
March 2011
CALLS FOR REVIEW OF ATC STAFFING
LEVELS AND PROCEDURES
On 28 March 2011, Rep. Brian
Higgins (D-N.Y.), called for
multiple staffing at major airport
air traffic control towers following
an incident at Ronald Regan
Washington National Airport
involving an air traffic controller.
Representative Higgins drew attention to the
red flags issued by the National Air Traffic
Controllers Association (NATCA) and what they
call ―a nation-wide staffing crisis.‖ According to
the NATCA, as of March 31, 2009, there were
11,219 fully certified controllers in the U.S., 27%
below the jointly authorized FAA and NATC
levels from 1998 and a 16 year low.
Congressman Higgins, a member of the
Homeland Security and Foreign Affairs
Committees, also called for a review of current
staffing level procedures.
AIRPORTS UPDATE
PM HARPER ANNOUNCES NEW FUNDING
FOR
JEAN-LESAGE
INTERNATIONAL
AIRPORT
On 16 March 2011 in
Québec City, Prime
Minister Stephen Harper
announced new support for long-term
expansion and modernization projects at JeanLesage International Airport. The work will
include widening and extending two paved
strips, upgrading utilities, and the construction of
new taxiways to improve passenger service and
cargo capacity at the airport. Funding of this
project is made available through the Gateways
and Border Crossings Fund, which is intended
to provide funding for transportation
infrastructure and other initiatives aimed at
developing border crossings, gateways, and
trade corridors.
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
NEWS
AIRPORTS UPDATE – CON’T
OTHER NEWS
BAA LTD. PLANS $80 MILLION INVESTMENT
IN HEATHROW AIRPORT
BILL REQUIRING AIRLINES TO PASS
ALONG CANADIAN PASSENGER DETAILS
TO U.S. HOMELAND SECURITY PASSES
3RD SENATE
READING
On 28 March 2011,
BAA‘s chief executive,
Colin Matthews
announced an investment of 50 million pounds
(US$80 million) to improve existing weather and
emergency response infrastructures with a goal
of never closing because of controlable
conditions. Mr. Matthew, acknowledging the role
of Heathrow to International travel, said that the
resources will go to training and investment to
achieve the highest standards of passenger
care. British Airways, Virgin Atlantic, and British
Midland International will be among three
airlines and regulators who will be able to review
the proposal in April.
CATSA INTRODUCES NEW INIATIVES TO
IMPROVE TRAVEL IN CALGARY
The Canadian Air
Transportation Security
Authority (CATSA) has
announced that it will be
launching the ‗Trusted Traveller CATSA Security
Line‘ for pre-approved, low risk travellers. Also
announced is a new line, ‗Family/Special Needs‘
to assist passengers requiring greater
assistance and attention.
Page 13
March 2011
On 23 March
2011, Bill C-42
entitled ‗An Act
to Amend the
Aeronautics Act‘ has passed the third reading in
Canada‘s Senate. With Bill C-42, personal
information, such as name, gender and birthdate
of passengers travelling to the United States or
through U.S. airspace can now be shared with
the U.S. Department of Homeland Secutiry. This
information will be used to determine whether
any passengers pose risks to U.S. national
security.
IATA DOWNGRADES AIRLINE INDUSTRY
OUTLOOK FOR 2011
Amidst political
unrest in the
Middle East
and rising oil
prices, the
International Air
Transport Association (IATA) has downgraded
its industry profits outlook for 2011 from $9.1
billion estimated in December 2010 to $8.6
billion, with a predicted net profit margin of
1.4%. This downgrade represents a 46% decline
from 2010 profits of $16 billion. Although fuel
represents 29% of costs (up 3% in 2010), IATA
predicts that growing economies may help
airlines offset the rising costs.
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
THE ASIA REPORT
March 2011
IATA calls on Japanese government to support airports and aviation industry
Doris Mak
Director,
Special Projects
In response to the earthquake and tsunami that affected Japan, the International Air Transport
Association (IATA) has been coordinating with the Japanese Government and major United Nations
and industry organizations to bring relief supplies and fuel supplies, and to ensure that airlines are
receiving the best medical and operational advice. On 18 March 2011, the association also released
its first assessment of the impact of the calamity on global air transport. The Director General and
CEO of IATA, Giovanni Bisignani, indicated that although it is too early to determine the long-term
impacts of the crisis, the short-term impacts would include a decrease in traffic to/from Japan, which
is not expected to improve until reconstruction begins in the second half of the year.
Qantas reaches settlement with New Zealand Commerce Commission regarding price fixing
activities
On 18 March 2011, Qantas announced that it had reached a settlement with the New Zealand
Commerce Commission regarding price fixing activities with other international airlines that occurred
between 2000 and 2006. As part of the settlement, the Commission will be giving a recommendation
to the New Zealand High Court that Qantas pays a fine 50% less than other carriers, equivalent to
NZ$6.5 million, for cooperating with the Commission in the investigation of the price fixing case. All
other terms of agreement are confidential. The penalty hearing is scheduled for 11 April 2011.
Korean Air increases orders of 747-8 freighter aircraft
On 18 March 2011, Boeing announced that Korean Air increased its order of 747-8 freighters by two.
The additional orders are valued at US$639 million. The carrier had already placed an order for five
747-8 freighter aircraft and five 747-8 Intercontinental aircraft. Korean Air‘s current fleet includes 27
freighter aircraft manufactured by Boeing.
Air China to increase fleet size by more than 30 planes in 2011
Air China has plans to increase its current fleet size by more than 30 aircraft in 2011 to meet
increasing market demand. The new aircraft will operate on the carrier‘s long-haul international routes
and be used on the carrier‘s services to Shanghai. As part of Air China‘s plans to increase its fleet
size this year, the carrier has reached an agreement with Boeing for an order of five 747-8
Intercontinental aircraft. The order for the new aircraft is still pending approval from the Chinese
government. Air China is the first Chinese carrier to place an order for this aircraft type.
Domestic jet fuel price increases 5.8% in China
On 19 February 2011, the Chinese government increased domestic jet fuel prices by 5.8% to
CNY6,340 (US$967) per ton due to rising oil prices. With fuel costs comprising 40% of total expenses,
on average, Chinese carriers will experience an increase in costs on their domestic routes. China
Southern is expected to incur an increase in fuel costs of CNY924 million (US$141 million) annually,
while the annual fuel costs of Air China and China Eastern Airlines are expected to be higher by
CNY784 million (US$120 million) and CNY809 million (US$123 million), respectively. In response to
the increase in jet fuel prices, most Chinese carriers have raised the fuel surcharges on their domestic
services.
Page 14
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
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THE EUROPEAN REPORT
March 2011
New nonstop services between London Heathrow Airport and two U.S. cities to be offered by
Delta Air Lines
Ian Kincaid
Vice President,
Economic Analysis
After gaining new slots at London Heathrow Airport, Delta Air Lines launched new nonstop services
between the airport and two U.S. cities – Boston and Miami – on 26 March 2011. The nonstop transAtlantic flights will be offered daily. Delta began offering services to London Heathrow Airport in 2007,
and currently offers 10 daily flights to the airport from the U.S. Other U.S. cities that have services to
London Heathrow operated by Delta are Atlanta, Detroit, New York-JFK, and Minneapolis-St. Paul.
EU signs comprehensive aviation agreement with Brazil
On 18 March 2011, the European Union (EU) signed a comprehensive aviation agreement with Brazil.
Under the air services agreement, EU airlines will be allowed to operate direct flights between Europe
and Brazil, without any restrictions on prices, routes and frequency of flights. The agreement is
expected to bring new business opportunities to Brazil by creating better services for passengers and
European cargo operators. Approximately 4.5 million passengers travel by air between Europe and
Brazil each year and passenger traffic is expected to grow by 335,000 additional passengers during
the first year of the agreement. The strategic partnership between the EU and Brazil began in 2007.
Lufthansa to place orders for 35 new aircraft
On 16 March 2011, the Lufthansa Supervisory Board granted permission for the carrier to order 35
new aircraft to expand the aircraft fleets of the entire group. Included are orders for 25 Airbus
A320neos, five A321neos and five Boeing 777 freighters, which are valued at approximately US$4
billion. The new aircraft from Airbus will be used to operate continental services across Europe for the
Passenger Business Group, while the Boeing freighters will be used to meet the growing demand of
Lufthansa‘s Logistics business segment. The new aircraft from Airbus and Boeing are expected to be
delivered beginning in 2016 and 2013, respectively.
British Airways and American Airlines launched services between Tokyo and London
As part of the oneworld alliance, British Airways and American Airlines joined together to launch a
new service between Tokyo Haneda Airport and London Heathrow Airport on 21 February 2011.
Oneworld alliance is the only alliance with member airlines that offer flights from Haneda Airport to
Europe, with Japan Airlines also offering services from Haneda Airport to Paris Charles De Gaulle
Airport. The flights between Haneda Airport and Heathrow Airport will be offered five times weekly.
British Airways already offers daily services to Narita Airport from the U.K.
European Union Member States are allowed to impose penalties on airlines for excessive
noise
In response to a fine imposed on noise made by freighter aircraft operated by European Air Transport
(EAT) at Brussels-National Airport, Advocate General Cruz Villalón of the Court of Justice of the
European Union (EU) delivered his opinion on 17 February 2011, indicating that Member States of the
EU are allowed to impose penalties on airlines for excessive noise, as measured from the ground. He
stated that EU rules on maximum noise levels and operating restrictions does not prohibit Member
States from imposing fines. However, Villalón‘s opinion is non-binding and the judges of the EU‘s
highest court have yet to make a decision on the fine imposed in Belgium.
Page 15
March 2011
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Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
THE WASHINGTON REPORT
March 2011
FAA Forecasts Steady Growth in U.S. Airline Traffic
FAA‘s annual forecast predicts that air travel will more than double in the next 20 years and will reach
the 1 billion passenger mark by 2021, two years earlier than foreseen in last year‘s projection.
Steve Martin
Senior Vice President
The agency predicted that the number of passengers traveling on U.S. airlines will increase by 3.5
percent from last year to 737.4 million passengers in 2011. That figure is projected to grow an
average of 2.8 percent each year during the remaining forecast period to 1.3 billion by 2031.
Enplanements on international flights will grow nearly twice as fast as the domestic market.
Growth rates for domestic and international traffic, indexed to 2000.
Most growth in aircraft will occur within narrowbodies. FAA projects that the number of narrowbody
aircraft operated by U.S. mainline carriers will increase by nearly 1400 between 2010 and 2029. The
number of widebody aircraft will increase at a slightly faster rate than narrowbodies, increasing from
just over 500 to more than 1200. The increase in regional jet aircraft is expected to be in units with
more than 60 seats.
Page 16
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
THE WASHINGTON REPORT –
CON’T
Total landings and takeoffs at FAA-towered airports are forecast to decrease slightly in 2011, and
then grow at an average annual rate of 1.6 percent each year, reaching 69.4 million in 2031.
Oil Price Rise Threatens Carrier Revenue, Fares, and Traffic Gains
Airlines worldwide face ―a very challenging year‖ as the price of oil rises, even after air-traffic growth
accelerated in January, the International Air Transport Association said. Fuel costs have surged amid
concern that the turmoil in Libya will crimp supply. IATA estimates that every $1 increase in the perbarrel price of oil costs the airline industry $1.6 billion. In the U.S., the Air Transport Association has
reported that a 1 cent increase in a gallon of fuel costs U.S. airlines $175 million annually; a $1
increase in the price of a barrel costs them $415 million.
International scheduled traffic rose 8.2 percent in January, compared with a year earlier, IATA said in
a statement. That beat the 5.4 percent growth logged in December when wintry weather in Europe
and North America curbed traffic.
―With most major indices pointing to strengthening world trade and economic growth this is positive
for the industry,‖ Giovanni Bisignani, IATA‘s chief executive officer, said in the statement. ―But we are
all watching closely as events unfold in the Middle East. The region‘s instability has sent oil prices
skyrocketing.‖
IATA on Dec. 14 forecast carriers would log net income of $9.1 billion in 2011 based on oil at $84 a
barrel. This month, ATA noted that if fuel costs are 45% above last years‘ average (as those costs
were in mid-March), U.S. carriers‘ fuel expenses would increase by $9 billion.
Page 17
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
THE WASHINGTON REPORT –
CON’T
Carrier respond to rising fuel costs
Airlines have responded by raising ticket prices, cutting flights, and adding fuel surcharges on longer
flights.
United Continental Holdings Inc. said that it is cutting growth plans for 2011. Its system-wide
capacity would remain flat for the year, and it would curb capacity by offering fewer flights on some
routes, exiting less-profitable routes and postponing the start of some new flights, such as planned
service from Newark, N.J., to Cairo slated to launch this spring. Before the fuel spike, United had
planned to boost its international flying by 4.5 percent to 5.5 percent this year, while trimming
domestic capacity by 0.5 percent to 1.5 percent. The new plan is for United to increase overseas
capacity by 2.5 percent to 3.5 percent and cut domestic flying by 1.5 percent to 2.5 percent. United
said it is also studying dropping fuel-inefficient aircraft from its fleet.
Frontier Airlines said Monday it will be ―trimming its operating schedule‖ this spring due to the
―uncertainty of future oil prices.‖ It had previously planned to grow capacity somewhere between 1.5
percent to 2.5 percent for the second quarter of 2011. With the rise in fuel prices, it now plans for
capacity to remain unchanged compared to the second quarter of 2010. A Frontier spokesperson
said the planned schedule reductions are limited, focused predominately on off-peak travel days, and
are mostly limited to day-of-week frequency reductions.
Southwest Airlines is raising ticket prices in response to rising fuel costs. According to CEO and
Board Chairman Gary Kelly, the fare increase that went into effect mid-February — $10 round trip —
is part of the company‘s effort to pass along fuel costs to customers and maintain a healthy level of
profitability for the company. ―Our fuel bill compared to last year, adjusting for some slight changes in
capacity, is up $1.3 billion and our earnings last year were up about $550 million,‖ Kelly said. ―So it is
a very significant effect, in other words, to incur the kinds of changes in energy prices we‘ve seen.‖
Kelly said the carrier is also focusing on efficiency measures to lower its fuel consumption. The
company is also working to increase its fuel efficiency, including implementing new cockpit
technology. Efforts to modernize the air traffic control system could save the airline 15 percent or
more compared with today‘s consumption levels, he said.
Page 18
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
INTERVISTAS NEWS
Carol Smiciklas Joins InterVISTAS
InterVISTAS is pleased to announce that it has engaged Carol Smiciklas as an Executive Consultant
effective immediately. Carol, who is based in Toronto, comes to InterVISTAS with 16 years‘
experience with the Greater Toronto Airports Authority (GTAA) where she held various key positions
including Manager of Terminal Services, ORAT Manager of the Airport Development Project and
SLA/Customer Experience Manager. Prior to GTAA, Carol worked in in-flight services for Air Transat
and reservation and sales in the hotel industry.
InterVISTAS Upcoming Speaking Engagements
Dr. Mike Tretheway, President, InterVISTAS Consulting Inc., Executive Vice
President and Chief Economist, InterVISTAS Group
CAC 2011 Conference: Ottawa, ON – 20 April 2011
Dr. Tretheway will be participating in a panel and speaking on ―Piloting through Clear Skies? Putting
the Canadian Footing into a Global Context‖.
Marine Pilotage Association: Halifax, NS – 6 July 2011
Dr. Tretheway will be presenting on the status and future of economic and safety regulation, in
general, and of marine transport in particular.
Kevin Schorr, Vice President, Air Service Development
AAAE/Great Lakes Chapter AAAE 16th Annual National Air Service
Conference: Lansing, MI – 10-12 April 2011
Mr. Schorr will be participating in two separate panel discussions/presentations:
How to Gain Credibility as an Air Service Development Professional and Airline Marketing Incentives
New Standards – Are You in Compliance?
Karla Petri, Manager, Consumer Research
14th Annual Manitoba Aviation Council Conference: Winnipeg, MB – 26-27 April
2011
Ms. Petri will be presenting an overview of global economic and industry trends with
a focus on factors that impact Manitoba‘s aviation industry.
Page 19
March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.
INTERVISTAS NEWS – CON’T
Mark Haneke, Vice President, Network and Strategic Planning
Terrapinn Low Cost Airlines World Americas Conference: Miami, Florida – 3-4
May 2011
Mr. Haneke will be participating as a panel moderator on ―Maximizing Passenger Yields with
Effective Route Development Strategies‖.
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.
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Canadian Aviation Intelligence Report, please contact Robert Andriulaitis at
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March 2011
InterVISTAS‘ Canadian Aviation Intelligence Report
Copyright ©2011 InterVISTAS Consulting Inc., all rights reserved.