“Creating an Environment for Success” Air Service Reform and Why We Should Care

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

2. Airport Evolution

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

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

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

6. Cost and Competitiveness

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. Canada: Gateway to the World Source: OAG Summer Schedule 2006

9. Monthly Seats

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

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

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. Air Canada U.S. Routes 1995

14. Air Canada U.S. Routes 2005

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. Freedoms of the Sky Fifth Freedom Sixth Freedom

17. New, Bigger Regional Jets

18. Long-Range Widebodies: Built for Canada

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. 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 1944. It is an outdated idea for airlines in 2006 and fails to respond to the challenges and opportunities posed by the rise of carriers like Emirates….the real question is whether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. 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. International Air Policy: An Airport Concern Source: OAG Summer Schedule 2006

23. IAP: A Tourism Sector Concern • Source: Statistics Canada

24. Overseas Visitors Sources: Statistics Canada, Transport Canada

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

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

27. Growth in Key EU Markets PASSENGER TRAFFIC GROWTH: CANADA TO FRANCE, GERMANY AND THE NETHERLANDS Pax traffic in millions Source: IATA Passenger Forecast 2005-2009

28. Emerging Markets VISITORS TO CANADA 1999-2005 Sources: Statistics Canada, World Tourism Organization

29. China Traffic Growth CANADA-CHINA PASSENGER TRAFFIC FORECAST Pax traffic in millions Source: IATA Passenger Forecast 2005-2009

30. Blue Sky Policy Support • The CAC has strongly supported Minister Cannon’s Blue Sky international air policy “With its new Blue Sky air policy, the federal government has indicated that it has heard the call of Canada’s airports to improve choice for Canadians in international air service. This is what Canada’s 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. Standing Committee on International TradeSupport “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 doesn’t 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