Developing a Regional Airport and Ground Transportation Plan for Southern Ontario

May 4, 2015

CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited Understanding regional airport & ground transportation needs for Southern Ontario

▪ Airports require long-term ▪ The study was supported by planning cycles of 20-30 McKinsey & Company, The year periods in order to Centre for Spatial support the development of Economics (C4SE) and large scale infrastructure like Professor Eric Miller terminals and runways ▪ We consulted with all ▪ As part of its long-term levels of government, planning process, the GTAA is including the Province studying the regional (MTO, Finance, Municipal airport and ground Affairs, Tourism), Transport transportation network in Canada, , City of Southern Ontario

▪ We developed a perspective ▪ We are engaging with 10 on growth for the economy, regional airports in Southern population, air travel and Ontario to understand their ground transportation growth plans and requirements of the region operational capabilities

McKinsey & Company | 1 We studied the macroeconomic conditions in Southern Ontario and the implications on ground and air transportation 30 years from now

$1.0 Trillion Ontario GDP in 2043

~15.5 Million people Population in 2043 90 Million passengers Air travel demand in 2043

Substantially increased ground transportation time

McKinsey & Company | 2 After 2032, the region will not be able to accommodate expected increases in demand for air travel, even with GTAA planned capacity investments

Ontario-level passenger forecast

Enplaned/Deplaned passengers Projected pax volume 1 Max capacity2 Millions 100 Estimated 90 capacity 80 gap 2043: 24 million 70 passengers 60

50

40 2014 pax: 30 42.2 million 20

10

0 2010 2015 2020 2025 2030 2035 2040 2045

1 Projection for Southern Ontario passenger traffic (excluding Ottawa) based on base case economic and population growth 2 Estimated maximum regional capacity assuming no additional investment, except Pearson

SOURCE: C4SE Economic Model; GTAA data; regional airport data; McKinsey analysis McKinsey & Company | 3 Driving times to Pearson will increase over the next 30 years

Projected Pearson 10 2043 passenger volume (for one day)1 8 Percent of passengers 6

4

2 Passengers will need to 0 leave much Midnight 7AM 9AM 11AM 1PM 3PM 5PM 7PM 9PM 11PM earlier than to 5AM ever before prior to their Travel time to departure Pearson (mins) 2014 2043 2014 2043 time due 25-35% to traffic 27 30 increase 49 67 in Downtown Hamilton 66 82 49 50 driving Pickering Town Centre 54 71 time 38 42

AM rush PM rush

McKinsey & Company | 4 1 Does not correlate to flight departures. This chart represents when passengers leave to reach the airport on average 2 hours earlier Toronto Pearson is increasingly becoming a major global hub airport

Change in passenger Passenger traffic, traffic between 2013 Airport name 2014, Millions and 2014, %

London 73.4 +1.3% Heathrow

Dubai 70.5 +5.5% International

Charles de 63.8 +2.6% Gaulle

Singapore 54.1 -0.2% Changi

John F. Kennedy 53.2 +5.8% International

Toronto Pearson 38.6 +6.8% International

SOURCE: Airport traffic statistics, GTAA Passenger Traffic statistics, Airport Council International, press search McKinsey & Company | 5 There are multiple options for regions to accommodate growing air passenger demand

Description Example airport ▪ Large hub airport to handle all current and future demand 1 Build a single, large airport (connecting and O&D traffic)

▪ Network of regional airports Develop a robust throughout across greater Toronto 2 regional airport ▪ Could be mixture of dual-hubs, system hub and spoke, and separate O&D-focused airports

▪ Pearson builds out to capacity ▪ Limited coordination amongst 3 Status quo airports and ground transportation to accommodate demand

McKinsey & Company | 6 2 Approach and examples to regional airport systems

Regional airport systems around the world

London: London Heathrow – Gatwick – Luton – etc. ▪ Multi-airport systems are increasingly common in city-regions; ~60 ‘systems’ worldwide

Washington, DC: Ronald Reagan National – ▪ Multi-airport systems Washington Dulles International can have a division of roles between the airports involved Paris: Charles de Gaulle – Paris Orly ▪ The GTAA is working closely with stakeholders to assess the development of a New York: John F. Kennedy International – Newark multi-airport system in Liberty International – La Guardia – etc. Southern Ontario

SOURCE: Team analysis McKinsey & Company | 7 Ground transportation is an integral component for a regional airport system

Why ground transportation matters Some airports have gotten it right… ▪ Increases airport access for travelers and employees ▪ Connects airport to city center and other transport nodes (e.g., regional airports) ▪ Drives airport growth ▪ Requires integrated planning with city and region, including roadways

(National airport)

Typical modes of “best-in-class” ground transportation …while others have room to improve ▪ High speed rail ▪ Heavy rail ▪ Bus rapid transit

McKinsey & Company | 8 The last mile…transportation to Pearson

Regional express rail Proposed SmartTrack plan

Proposed GTA west corridor Union Pearson Express

McKinsey & Company | 9 Key considerations in supporting regional air traffic growth ▪ Airports are economic catalysts; driving major regional economic benefits ▪ Global cities have prioritized airports as part of their growth plans ▪ There are multiple ways to accommodate investment in airports (e.g., new airports, expanding existing system of airports) ▪ Ground transportation is critical to airport and regional growth

McKinsey & Company | 10