Strategic Business Plan Digby Municipal Airport
December 2006
Prepared by:
JOZSA MANAGEMENT & ECONOMICS 1630 Vernon Street Halifax, Nova Scotia Canada B3H 3N1
Tel: (902) 422-9638 e-mail: [email protected]
In association with:
LPS Aviation Inc. CBCL Limited One Antares Drive, Suite 250 1489 Hollis Street, P. O. Box 606 Ottawa, Ontario Halifax, Nova Scotia Canada K2E 8C4 Canada B3J 2R7
Tel: (613) 226-6050 Tel: (902) 421-7241 Fax: (613) 226-5236 Fax: (902) 423-3938 e-mail: [email protected] e-mail: [email protected] Web site: www.lpsaviation.ca Web site: www.cbcl.ca Digby Municipal Airport Strategic Business Plan December 2006
Table of Contents
Executive Summary...... iii
1.0 Introduction ...... 1-1 1.1 The Challenge ...... 1-1 1.2 Strategic Planning ...... 1-1 1.3 Digby Airport and Area Economic Development ...... 1-2 1.4 Guiding Principles ...... 1-3
2.0 Catchment Area Profile ...... 2-1 2.1 Socio-Economic and Geographic Context of Digby Municipal Airport ...... 2-1 2.2 Population Dynamics ...... 2-2 2.3 Visible Minorities ...... 2-5 2.4 Education ...... 2-5 2.5 Area Economic Profile ...... 2-5 2.6 Provincial and Sub-provincial Economic Growth Factors Affecting Digby and Annapolis Counties ...... 2-13
3.0 Digby Airport Profile ...... 3-1 3.1 Location and Access ...... 3-1 3.2 History ...... 3-1 3.3 Role ...... 3-2 3.4 Infrastructure Overview ...... 3-2 3.5 Airport Operations ...... 3-4 3.6 Aviation Services ...... 3-4 3.7 Financial Performance and Ongoing Funding ...... 3-4 3.8 Historical Activity ...... 3-5 3.9 Projected Activity ...... 3-6
4.0 Aviation Trends ...... 4-1 4.1 Scheduled Air Services ...... 4-1 4.2 General Aviation ...... 4-3 4.3 New Approaches to GA Airport Management in Canada ...... 4-4 4.4 Key Success Factors ...... 4-5
5.0 Strategic Opportunities and Vision ...... 5-1 5.1 Stakeholder Consultations ...... 5-1 5.2 SWOT Analysis Findings ...... 5-2 5.3 Economic Development Imperatives and Strategic Vision ...... 5-10
6.0 Marketing Plan ...... 6-1 6.1 Target Markets ...... 6-1 6.2 Catchment Area/ Airport Re-branding ...... 6-1 6.3 Positioning the Airport ...... 6-2 6.4 Partnerships and Private Sector Initiatives ...... 6-3 6.5 Pricing Strategy ...... 6-3
JOZSA MANAGEMENT & ECONOMICS i LPS Aviation Inc. Digby Municipal Airport Strategic Business Plan December 2006
6.6 Promotion Strategy ...... 6-3 6.7 Human Resource Strategy ...... 6-5
7.0 Land Development Planning ...... 7-1 7.1 Land Tenure ...... 7-1 7.2 Recommended Strategy ...... 7-2
8.0 Infrastructure/ Operations Plan ...... 8-1 8.1 Aviation Needs Analysis ...... 8-1 8.2 Essential Airfield Upgrades ...... 8-2 8.3 Upgraded Aviation Services ...... 8-2 8.4 Upgraded Aeronautical Facilities ...... 8-4 8.5 Operations ...... 8-4 8.6 Other Future Upgrades ...... 8-4 8.8 Role-Infrastructure Summary ...... 8-5
9.0 Capital and Service Enhancement Plan ...... 9-1 9.1 Plug-ins ...... 9-1 9.2 Hanger Development ...... 9-1 9.3 Supply of Jet fuel ...... 9-2 9.4 Snow Removal ...... 9-2 9.5 Power and Communications Services ...... 9-2 9.6 Runway Repair ...... 9-3 9.7 Airport Beacon ...... 9-3
10.0 Revenue and Expenditures Projection ...... 10-1 10.1 Baseline Projection ...... 10-1 10.2 High Aircraft Movement Projection ...... 10-3 10.3 Low Aircraft Movement Projection ...... 10-4 10.4 Improving the Financial Situation and Attractiveness to Users and Investors ...... 10-5
11.0 Action and Funding Plan ...... 11-1 11.1 Action Plan ...... 11-1 11.2 Funding Plan ...... 11-1
12.0 Conclusions ...... 12-1
Appendix 1: Person Interviewed and/or Attended Planning Workshop Appendix 2: Complete Commercial Environmental Scan List Appendix 3: Financial Projections; Detailed Results
JOZSA MANAGEMENT & ECONOMICS ii LPS Aviation Inc. Digby Municipal Airport Strategic Business Plan December 2006
Executive Summary Goal The goal is to create a business plan for the Digby Municipal Airport (DMA) that will turn the DMA into a driver of local economic development; and achieve financial sustainability and growth. Digby Airport Location and Access The DMA is located in the Municipality of the District of Digby at Hillgrove, about 7 kilometres southwest of Town of Digby Digby. It is the highest airport in Nova Scotia at 491 feet. Access from Highway 101 is via Route 303, Acacia Valley Road, Ridge Road and Bloomfield Road. History The DMA began as a privately-owned grass and gravel airstrip in the early 1960s. In 1974 the Municipality of the District of Digby purchased the site. Construction of airport infrastructure, including a 3,000 x 75 foot day Visual Flight Rules (VFR) facility was completed in 1976. Funding was provided by Transport Canada, the Nova Scotia Government and the Municipality. The new airport was completed in 1976, and in 1977 was equipped for night operations with the addition of pilot-controlled lighting. In 1979 the Municipality built the first phase of the administration building, and added a Non-Directional Beacon (NDB) and communications equipment. Upgrades during the first half of the 1980s included airfield and administration building improvements, and acquisition of an aviation weather reporting station, and installation of perimeter fencing. The runway was extended to nearly 4,000 feet in length in 1989. In 1986 the first hangar was built by the Municipality a small regional airline, Air Bras D'Or commenced a short-lived scheduled commuter air service between Digby and Saint John, NB. The Situation at The DMA DMA Infrastructure and Services The DMA has the following infrastructure characteristics: • Runway and Traffic Handling: airport administration building main runway, 06-24, 3,950' by 75', Isles Aero Service hangar paved runway, ramp & taxiway two hangars " all surfaces in good condition municipal animal control facility turf runway, right angle to main • Air Navigation Facilities: runway Non-Directional Beacon (NDB), 25 " for light aircraft, not certified watt, 10mile signal limit 06-24 subject to cross-winds, clear Nav Canada has published GPS instrument approaches, lighted for approach to Runways 06 and 24 night operations, taxiway lit, airport no instrument approaches beacon " longest possible runway extension • Aviation Meteorology: about 7,000 feet weather station for wind speed & " capable of handling projected direction traffic, assuming predominance of capable of providing local altimeter VFR conditions setting, not approved by Nav Canada • Buildings: • Airport Operations and Services:
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Operations: aviation gasoline tank " Transport Canada certified " jet A kerosene provided with " attended 24/7 notice " maintained between 07:00 and " aviation oil available 19:00 hours, outside of hours Financial Operations runway cleared on request " operating deficit i19,000 in 1995, " dispatcher on duty monitors the $47,000 in 2005 Digby UNICOM air radio • Aircraft movements frequency, can provide weather 1995, 2,200 and air traffic information to pilots 2005, 1,400 " runway inspected 3 times per day downward trend not unique to DMA Services: " over-ground 100LL (low-lead)
Need for the DMA The DMA is a community asset, has room to grow and land available for development. It can be: a tool for creating a competitive attract new enterprises, advantage by facilitating; open market for products and faster access to markets, services, and lower costs, support a vibrant, welcoming region. better communication links; • a driver of economic growth that helps; enhance existing businesses,
Focus of the Business Development Strategy This strategy focuses on opportunities related to general aviation. General aviation involves: • all commercial non-scheduled, private • sightseeing; aviation activities; • flight training; • personal business air charter; • government and military flying; and • corporate aviation; • medical evacuation. • recreational flying (wheels, floats, skis); • surveying; • spraying;
Guiding Principles 1. The DMA is a key component of Digby and Annapolis Counties civic infrastructure. 2. Opportunities at the DMA should derive from closer ties between area business and tourism agencies and transportation. 3. Levels of service to general aviation should improve, or at least remain the same. 4. The land base of the airport should be considered for a broader range of uses. 5. A practical and sustainable management approach is essential. 6. The airport may not necessarily be financially self-sufficient, especially in the short term. Socio-economic Situation in Annapolis and Digby Counties:
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The area’s competitive advantages include: • relatively stable and diverse economic base; • primary agriculture & fishery remain profitable; • seafood processing remains strong; • manufacturing has a core of leading firms; • regional tourism has room to grow (is also a challenge); • leader in geographic sciences & geomatics; and • Université Sainte-Anne. Its challenges include: • is technically a peripheral region; • transportation/communication links reduced; • forest products sector in state of flux; • provincial tourist numbers are in a second year of decline; and • dealing with globalization, which brings opportunities and more competition. The Competitive Position of the DMA Its strengths include: • Operating Advantages: no current debts or capital costs to amortize or recover; low operating costs; low cost of use- no fees; staffed and/or attended 24/ - unique for a municipal airport in Canada; maintenance facilities on-site; competitive aviation gasoline fuel prices; CANPASS airport of entry; known as a welcoming and user-friendly facility; enables improved response time of air search and rescue; ground search and rescue have their base of operations at the airport; and co-location of emergency dispatch & other community and municipal services at the airport provides efficiencies and benefits. • Aeronautical Advantages: superior weather with respect to other airports in the region; highest airport in Nova Scotia, therefore good communications capabilities; and unobstructed approaches to main runway and relatively flat terrain. • Ground-based Advantages: close to the Town of Digby & no risk of community encroachment; well located with respect to Saint John, NB, and other Atlantic Canada centres; close to Highway 101; and port of entry for Nova Scotia via- Digby - Saint John ferry. • Infrastructure Advantages: certified to Transport Canada standards; paved 3,950' x 75' lighted runway, good condition;
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able to handle most light & medium propeller & turbo-prop aircraft, some light jets, gliders, ultra-lights; maintained year round & attended 24/7; serviced by electrical, communications and municipal utilities; no noise restrictions; unconstrained & un-congested airfield environment; no significant limitations on airport use or aviation activities; well suited for ab-initio flight training; availability of fuel, lighting, tie-downs, and 24-hour attendance; excellent alternate airport for cross-country flights, a staging point for emergency services, entry point into the national air transportation system; community understands the advantage of possessing an airport as tool for economic development; real estate available for aviation and non-aviation business; and given costs & challenges, one would not build one today, leaves Digby & Annapolis with a scarce piece of infrastructure. DMA’ s weaknesses include: • lacks services such as public hangar space, full Airport of Entry status and broadband communication; • limited visibility in the community; • proximity of Halifax International Airport, limited population, and carrier operating costs makes DMA an unattractive destination for scheduled air service; • limited flexibility in land purchase and lease and requirements for building on the airport site; • three-phase power unavailable (lines run to property boundary); • no turbine fuel (jet fuel); and • single aging piece of snow removal equipment & inefficient snow removal process. The opportunities for the DMA include: • Direct Airport Opportunities: layout and operating characteristics as an uncontrolled airport make it ideal for virtually all forms of recreational aviation; small non-certified aircraft, including home-builts and ultralights, fastest growing sector of private aviation in Canada; access point for an intra-provincial air taxi service; utility for business users • Non-aviation Opportunities: e-commerce, manufacturing, and logistics/ just-in-time supplier businesses with expedited transportation requirements; residential, commercial and industrial development that would see a location at the airport as a unique selling point or business advantage; learning tool related to ground search and rescue, air search and rescue, and geomatics; an ab-initio flight training program in association with regional flight training unit; " return to flight training via co-operative program with Université Sainte-Anne, NSCC, high schools;
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raise the visibility of the airport in the community by a locating a telescope purchased by the school board at the airport, could also be used as a tourism activity; develop linkages with area tourism and hospitality business; promote Digby and area as a vacation destination to Americans and tie-in with area hotels and bed and breakfast(s); • Community Role Opportunities: air ambulance service point; events that will increase the airport’s visibility, such as an aviation technology fair, regular fly-ins, a Community Day at the airport, air tours of the area • Airport-Seaport Strategic Opportunities: treat the marine and air ports as complementary transportation and tourism assets; • Land Development & Residential, Commercial and Industrial Opportunities: substantial land base available for development (woodlot, residential and ICI development, recreational. The assessment of the competitive position of the DMA indicates that: • it is unlikely to attract scheduled airline service; • it suffers from a lack of community visibility; • it may not necessarily be financially self-sufficient, especially in the short term; • its levels of service to general aviation should be improved, or at least remain the same; • its management and marketing strategy should; reinforce position as an economical and high value regional general aviation airport, retain existing traffic base, maximise the utilisation of the airport and airport lands, and run the DMA as an economic development asset. Business Plan for the DMA Business Development Vision for the DMA The Digby Municipal Airport should: • reinforce its position as an economical and high value REGIONAL GENERAL AVIATION AIRPORT focussed on meeting the future air transportation needs of private citizens, the community, and business in the Digby and Annapolis Counties; • retain and increase its existing traffic base, expanded with a marketing strategy designed to maximise the utilisation of the airport and airport lands; and • be run as an economic development asset, rather than a mere public utility, with an understanding that the DMA's intangible value to the region is worth supporting. Market Development The DMA should target the following markets: • regional businesses and organizations requiring timely access to markets; • community/ regional essential services requiring air transportation; • flight training; and • aero-tourists from the USA and Canada.
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The DMA should be re-branded as the “Digby-Annapolis Regional Airport” to create a clearer sense of place and significance in the customer’s mind and give the airport geographic prominence. Positioning, Pricing and Promotion It should position itself in the marketplace: • as a base for private recreational aircraft for Digby and Annapolis Counties; • in a community support role (e.g., air ambulance and other emergency measures organisations requiring aviation; • a centre for flight training; gliders, light single and twin-engin aircraft; and • as a user-friendly environment for business and tourist aviation & non-aviation related business and tourism activity With respect to pricing, it: • may not be capable of cost recovery in the short-term; • should not alienate the target markets with undue fees; • should place a small tax on fuel sales, common at most general aviation airports; and • should provide additional services (plug-ins, hangar space for purchase and lease…) to add revenue and municipal tax base. For promotion it should: • have a dedicated budget for a marketing manager; • improve signage; • develop an airport brochure; • implement a communications strategy to increase public awareness; • create community outreach programs; • attend aviation industry events with area tourism agencies; • co-locate tourism infrastructure and engage in cross-promotion with the tourism sector; • ensure that the new regional development agency identifies the DMA’s role in its economic development plan; and • promote airport land for non-aviation activities. Physical Planning With respect to development of its land base: • the development of airport land for aviation and non-aviation use should form a key part of Digby Municipal Airport’s future viability; • land should be made readily available for sale and lease; and • the DMA should prepare a land use master plan for commercial development. Physical planning for infrastructure and operations should include plans for: • Commercial Aviation airport must be instrument flight rules (IFR) capable and be lit for night operations current 24 hour staffing should be maintained ground facilities should be made capable of servicing commercial aviation, in particular business aviation; and these facilities include; " jet fuel refuelling services, " waiting lounge with modern amenities, " after-hours schedule to make work crews available to clear & check runway, JOZSA MANAGEMENT & ECONOMICS viii LPS Aviation Inc. Digby Municipal Airport Strategic Business Plan December 2006
" direct line to taxi & car rental agencies, " availability of aircraft maintenance for at least minor repairs, " office space and hangars, " support potential flight training units by keeping flexible operating hours; • Recreational / Private Flying; additional storage/hangar capabilities should be considered, and consideration might be given to designating a turf landing strip parallel to 06-24. Airfield Upgrades The DMA needs to consider upgrading the following services and facilities: • Aviation Services: provide plug-ins for engine pre-heaters consider adding an additional tank for jet fuel rent, lease and sell condominium-style “t-hangars” achievement of Airport of Entry (AOE) status with customs clearance service is desirable • Aeronautical Facilities: explore installation of Nav Canada approved altimeters. Capital and Service Enhancement Plan The business plan recommends consideration of the following capital and service enhancements: • installation of 10 electrical plug-ins for engine pre-heaters; • construction of a 10 unit T-hangar; • investment in improved snow removal; • provision of three phase power on airport property; • investment in a broadband service pilot study; • installation of jet fuel supply system; and • runway repair. Future Financial Performance Projection of Aircraft Movements There were about 1,400 aircraft movements in 2005. The baseline projection sees about 1,680 movements in 2016. With an aggressive development and marketing plan movements could reach about 2,304 in 2016. The low projection sees a decline from about 1,400 to 1,039 in 2016. Revenue and Expenditure Projections (2005$) Under the Baseline Movement Projection, with a modest increase in user fees and a return to typical gross margins on fuel sales the gap between revenue and expenses will be $36,478 in 2014/15. The operating loss does not shrink appreciably because the DMA stills shows an operating deficit on a per movement basis and the number of movements is increasing. Under the High Movement Projection, with a modest increase in user fees and a return to typical gross margins on fuel sales the gap between revenue and expenses will be $37,569 in 2014/15. The operating loss does not shrink appreciably because the DMA stills shows an operating deficit on a per movement basis and the number of movements is increasing. Under the Low Movement Projection, with a modest increase in user fees and a return to typical gross margins on fuel sales the gap between revenue and expenses reduces to $35,069 in
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2014/15. Even though losses per movement increase in the low traffic scenario the gap between total revenue and expenses decrease due to the reduction of movements. Improving the Financial Situation and Attractiveness to Investors Investments in infrastructure and services would help attract traffic and earn net revenue. The following estimates are based on the achievement of the high movement forecast, which sees movements increase 2,151 in 2014/15 from about 1,400 in 2005. Renting pre-heater plugins would yield an annual net profit to the airport of about $233 (2005$) The decision to supply jet fuel should be made once a market assessment has been completed. The DMA would need to sell about 32,335 litres of jet fuel per year at 30% profit margin to earn a profit of about $500 per year We recommend that the DMA conduct a marketing effort to determine the number of owners who would base their aircraft at the airport if T-hangar bays were available. Assuming a profit margin of about 10% and 75% occupancy the profit would reduce the annual operating deficit by about $4,500. We do not recommend building hangar bays “on spec.” The DMA could improve efficiency and reduce snow removal costs if a piece of municipal snow clearing equipment were stationed at the airport. If this is not possible we recommend that the airport examine the cost/benefit relationship associated with purchasing four wheel drive truck with a plow. The DMA should move immediately to make available three phase power on airport property. The DMA should approach the FUNDYweb Broadband Network to press for the extension of broadband service to the airport. It should also examine the options suggested in pilot projects completed in 2006 for small community broadband service in Apsley, Ontario and Kinmount, Ontario. Assuming the cost of runway repair is financed runway repair would add to $22,000 per year to operating expenses. Application should be able to be made to ACOA for the NS Office of Economic Development for capital assistance. Land Development The airport has a substantial land base. It should seriously consider the use of land for aviation and non-aviation related residential and commercial / industrial development. Action Plan The steps to implementing the business plan are as follows: • implement the marketing strategy; includes marketing for opportunities related directly to aviation & residential and industrial land development, • establish a budget of approximately $15,000 to engage staff to conduct a direct marketing; • make three phase power available on airport property; • streamline conditions for buying property and building structures at the airport; • re-establish 30% margin on fuel and raise other prices about 5% to reflect margins at competing regional airports; • position changes as part of the plan to improve service levels at the airport; • ensure that the new regional economic development agency identifies role of the DMA in its economic development strategy;
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• have the new regional economic development agency apply for capital investment funds from ACOA and the Nova Scotia Government (scope of application defined by the level of success of the marketing strategy); and • implement investments in runway repair and other enhancements in airport service based on funding approvals and market demand. Funding Plan Ongoing Funding The responsibility for operations funding remains with airport users and those that benefit indirectly, whose contribution would be paid by municipal government The DMA should begin negotiations, via the offices of the new development agency, for contributions to the airport from all municipal units benefiting from its operation. Provincial Funding Programs The reestablishment of the regional development authority especially fortuitous. The Nova Scotia government delegated virtually all questions of locally based economic development initiatives to regional economic development agencies. Virtually all provincial economic development funding is coordinated through these local agencies. Federal Funding Programs The Atlantic Canada Opportunities Agency is the most likely source of investment funds. It has two main programs for which the DMA is eligible. The Business Development Program assists profit and non-profit organizations via capital contributions in the form of interest-free, unsecured, repayable loans. The Canada Nova Scotia Infrastructure Program is fully committed. However, should the program be renewed it could also be a source of funding for the DMA. Conclusions The purpose of the business plan is to retain existing users and attract new customers and provide more services to earn more net revenue from airport users. New customers include aviation related activities, industrial and commercial developments, residential development as well as expansions in activities such as aero-tourism, emergency services training, flight training and, trade and technology shows In combination with the marketing plan the rental of plug-ins, sale or lease of hangar bays and sale of jet fuel would reduce the annual operating deficit by about $5,800. The DMA will likely continue to run an operating deficit, although smaller. Such a situation is common for regional airports such as the Digby Municipal Airport, which are generally operated as a form of public infrastructure that improves the economic base. The Digby Municipal Airport needs to be seen in this light.
JOZSA MANAGEMENT & ECONOMICS xi LPS Aviation Inc. Digby Municipal Airport Strategic Business Plan December 2006 1.0 Introduction
1.1 The Challenge The Digby Municipal Airport (DMA) is a valuable economic development tool that is under-utilized. Furthermore a general lack of awareness of the airport’s existence in the community is apparent. There is however, a fundamental recognition that, given area business and tourism opportunities, the airport could play a greater role. Noting that the Digby Airport infrastructure represents a potentially important development opportunity for the Region, the municipal government has been tasked to secure development opportunities for the Digby Airport site. This strategic business plan is aimed at identifying market opportunities and positioning the airport to attract and retain new business. The DMA is a general aviation airport serving the Digby and Annapolis Counties of western Nova Scotia. A municipally-run facility, the airport sits on roughly 500 acres of land with a 3,950 by 75 foot paved and lighted runway. It is home to the Digby Emergency Measures Organization which mans a 24-hour 911 emergency dispatch centre, in addition to providing weather and air traffic information to pilots. The administration building also houses the Digby Ground Search and Rescue office, the local Civil Air Search and Rescue chapter, also located on the field are an aircraft maintenance company, and a satellite flight training program (dormant at the time of writing). The airport is frequented by private and business aircraft throughout the year, however few private aircraft are actually based at the airport at present. A recent site visit revealed a single aircraft tied down outside and 2 others in private hangars. Traffic levels over the last 10 years illustrate a steady decline in movement activity. Providing mainly a municipal service, the airport currently has little in the way of revenue generating activity. Digby Municipal is not unlike many other airports of its kind in Canada, without air services or a diversified economic base they are difficult to self-sustain. The Digby Municipal Airport’s operating deficit grew to nearly $47,000 in 2004/ 2005. Consultations with various stakeholders, including the Airport Steering Committee, have made it clear that the airport is a recognized municipal utility that should be maintained. However, the continued status quo is undesirable. This strategic business plan is aimed at identifying market opportunities and positioning the airport to attract and retain new business. A number of proponents have identified untapped market potential for the airport. However challenges exist, given the current level of use, available infrastructure, ongoing aviation industry challenges, and demand for aviation services in the province. 1.2 Strategic Planning A good strategic business plan ensures that an organization remains competitive in the business environment and responsive to the needs of stakeholders. A strategic plan provides long term direction for management that enables it to define and pursue market position, conduct operations, attract and retain customers, and achieve organizational objectives. If the DMA’s future success is to be aligned with area business and tourism development goals, the airport
JOZSA MANAGEMENT & ECONOMICS 1-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 should be positioned to effectively promote area growth and maintain viable skills within the community. Airports are widely recognised as one of the driving economic engines in prospering regions. Prior to their transfer over the last two decades, many of Atlantic Canada’s airports were owned and operated by the federal or provincial government and managed for public convenience and necessity. In the post-transfer era there is now a fundamental recognition that airports must be responsive to regional development needs, as they facilitate significant economic spin-offs that propel growth. A recent conference on transportation, “Growing the Atlantic Economy: The Transportation Factor”, hosted in Truro, highlighted the importance of transportation linkages to the regional economy. Within the realm of aviation action issues identified at the conference, priority was given to the need to coordinate aviation and community development goals, and to improve the viability of small airports. The process of strategic business planning for Digby Municipal Airport should address the following key points: • Identify the business activities that the airport should pursue; • Address current and future market position; • Determine how the airport will accommodate aviation activity; • Identify how changes to the airport’s role might impact adjacent lands; • Be aligned with regional development and transportation goals; and • Enable a customer-centred focus. Once a new business plan is put into action, periodic review of business activities will be required in order to ensure that the organization remains attuned to continual changes in business and industry, and responsive to evolving stakeholder needs. A strategic business plan must be competitive so as to attract customers, withstand competitive pressures, and strengthen market position. The Digby Municipal Airport can play an invaluable support role that enhances regional economic attraction and growth. 1.3 Digby Airport and Regional Economic Development The municipal units within the Counties of Digby and Annapolis are in the process of re-establishing a community-based a regional economic development agency. At the time of writing advanced discussions were underway that will see the establishment of such an agency. Municipal units have identified funding targets in the framework of a corporate governance model for the agency. With the formalization of the agency the communities within the two counties will most likely engage in the creation of a detailed, community-based, economic development strategy for the area. The business and development plan proposed for the Digby Municipal Airport must be complementary and supportive of the overall economic strategy for the area. Therefore, the consultants conducted additional socio-economic research that would help identify the place and role of the airport in the local area's economy. The objective was to ensure that the business plan for the airport would require the type and scope of commitments from the forthcoming regional
JOZSA MANAGEMENT & ECONOMICS 1-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 development agency that could reasonably be expected of such a community-based development organization. 1.4 Guiding Principles The Strategic Business Plan is a practical guide responding to the needs, and to the maximum extent possible, the expectations of the many stakeholders involved. Table 1-1, below, summarises the guiding principles of this business plan.
Table 1-1: Guiding Principles • The DMA is an key component of Digby and Annapolis Counties civic infrastructure. • Opportunities at the DMA should derive from closer ties between area business and tourism agencies and transportation. • Levels of service to general aviation should improve, or at least remain the same. • The land base of the airport should be considered for a broader range of uses. • A practical and sustainable management approach is essential. • The airport may not necessarily be financially self-sufficient, especially in the short term.
JOZSA MANAGEMENT & ECONOMICS 1-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 2.0 Catchment Area Profile
2.1 Socio-Economic and Geographic Context of Digby Municipal Airport The Digby/ Annapolis County region lies along the Bay of Fundy, the western coast of Nova Scotia. The Town of Digby, 227 km (2.5 hours driving time) from Halifax via Highway 101 and a 3 hour ferry-ride from Saint John, New Brunswick is a gateway to the Province. The two counties are the heart of the picturesque and history-rich Southwest Shore region. The Airport is one of the region’s assets that can tie Digby and Annapolis Counties closer to other population and economic centres. The overriding goal of Digby Airport development will be met by a comprehensive strategic business plan, integrated into the economic and social fabric of the region. The Digby Municipal Airport while located in Digby County equally serves as an opportunity for nearby Annapolis County. Therefore, throughout the discussion of the social and economic context of the area we discuss Digby and Annapolis Counties as the natural market areas of the airport. In combination the two counties are often referred to as the Western Valley region of the province. Geographically, Digby and Annapolis Counties, as well as Yarmouth and Shelburne Counties, are in a peripheral area1 of the province, particularly in relation to Halifax, the metropolitan centre of the Atlantic region. Geography is also what gives the counties , bounded on the west by the Bay of Fundy and on the south by a forested land base, an economy based on marine and forest resources. Given the cycles typical of marine resource development and the demand for commodities such as lumber the economy of the two counties, and of the southwestern region of Nova Scotia in general, experiences the kinds of highs and lows that have shaped the history of the Atlantic provinces. However, during the 1990s the groundfish crisis that shook the whole Atlantic region the area was spared some of the impact through some diversification of species caught together with good catches of lobsters and scallops. While the area is peripheral in relation to Halifax, it has some invaluable access routes. In 100 series highways travelling east and west, Yarmouth ferry service to Maine and Digby ferry service to the City of Saint John, New Brunswick. Since the area’s primary market is the New England states these links represent strategic assets. Despite its successful resource based economy the area remains a peripheral region from the structural standpoint because it is not benefiting from the development of the knowledge-based
1 We take the definition of a peripheral region from “Peripheral but Vigorous: Southwestern Nova Scotia.” Canadian Institute for Research on Regional Development, 2002. A peripheral region has some industrial and urban fabric, but is located more than 200 km from a metropolitan area (urban centre having a population greater than 500,000), with no centre having a population greater than 150,000.
JOZSA MANAGEMENT & ECONOMICS 2-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 economy, which remains essentially an urban phenomenon. The region is also heavily dependent on government transfer payments.2 There are promising development initiatives in the area. For example, a dynamic industrial park and the Pearson Peacekeeping Centre have successfully replaced the former Cornwallis military base. Tourism remains a strong contributor to the economy. This study itself, which will produce a business plan for the Digby Municipal Airport, will also add to the productive assets of the area. The area has a diverse population with many cultures contributing to the area. The Counties’ population includes a Mi'kmaq community dating back 10,000 years, and is the site of Canada's first permanent European settlement. It is also home to some of the nation's earliest Black settlements, and to Nova Scotia's largest Acadian population. 2.2 Population Dynamics Table 2-1 provides an overview of the recent demographic history of Digby and Annapolis Counties and an estimate of future population based on historic trends. The population of the counties has been declining since 1991. Communications with representatives of municipal units in the two counties suggest that, due to relatively high rates of non-county resident ownership the service population is about 25% higher than full-time resident population. Combined with population growth in the rest of Nova Scotia , primarily in the Halifax census metropolitan area, the area’s share of the Nova Scotia resident population is also declining.3 Table 2-1: Digby and Annapolis Counties, Population 1996 - 2026 Digby Annapolis Digby + Digby + Rest of Nova County County Annapolis Annapolis as % Scotia of RoNS 1991 21,250 23,635 44,885 5.2% 855,060 1996 20,500 22,325 42,825 4.9% 866,455 2001 19,545 21,775 41,320 4.8% 866,685 2006 (estimate) 18,383 20,836 39,219 4.5% 877,841 2016 (estimate) 15,808 8,628 34,436 3.9% 873,568 2026 (estimate) 12,816 15,748 28,565 3.4% 847,714 1991 to 2001 Population Change -8.0% -7.9% -7.9% 1.4% Total Occupied Dwellings / Ave. Hld 8,075 / 9,055 / 2.40 17,130 / 5.0% / 95.3% 342,890 / Size 2.42 2.41 2.53 Population Density per Sq. Km. 7.8 6.8 7.3 39.4% 18.4 (2001) Land Area (square km.) 2,511 3,183 5,694 12.1% 47,223 Source: Community Counts, Nova Scotia Department of Finance & Jozsa Management & Economics
2 “Peripheral but Vigorous: Southwestern Nova Scotia," Canadian Institute for Research on Regional Development, 2002.
3 The Province of Nova Scotia is currently undertaking a major demographic research effort. With the release of the consultants’ report more in-depth and the study projections of population will be available.
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2.2.1 Age Profile Table 2 – 2 describes the age profile of Digby and Annapolis Counties and compares it to the rest of Nova Scotia. As the table shows the population of the two counties is older on average than the rest of Nova Scotia. Table 2-2 Regional Population Age Profile, 2001 % of Total Age Cohort Digby County Annapolis County Rest of Nova Scotia < 5 4.8% 4.6% 5.3% 5 - 19 17.1% 18.8% 19.8% 20 - 34 16.6% 14.0% 19.7% 35 - 54 31.2% 30.9% 32.1% 55 - 64 11.8% 12.8% 10.1% 65+ 18.4% 18.9% 13.0% Source: Community Counts, NS Department of Finance
2.2.2 Migration The population of Digby County and Annapolis County tend to be less mobile than that of the average Nova Scotian. About 24.1% of Digby County’s population moved during 1996 to 2001 ( of which about 15% moved within or outside the rest of Canada) and about 32.6% of the population of Annapolis County moved in the same time frame (of which about 22% moved within or outside the rest of Canada).This compares to about 36.0% for Nova Scotia as a whole ( of which about 20% moved within or outside the rest of Canada). Halifax County’s population was the most mobile with about 45.8% having moved in Figure 2-1: Digby County, Population Change 1991-01 by Age the five years prior to 2001. Figures 2-1, 2-2 and 2-3 describe the process by which the population in Digby and Annapolis Counties, as well as Nova Scotia, are aging. Figure 2-1 indicates that Digby County has had a net out- migration of persons aged 39 and younger over the 1991 to 2001 time frame. Figure 2-2, following page, shows a similar process for Annapolis County, except with a
JOZSA MANAGEMENT & ECONOMICS 2-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 small net in-migration of persons aged 35 to 39. Figure 2-3 shows that Nova Scotia as a whole has experienced net Figure 2-2: Annapolis County, Population Change 1991-01 by Age out-migration of persons 34 years of age and younger. However, the rate of out-migration is less than either of the Digby or Annapolis Counties. In addition, Nova Scotia as a whole, shows stronger rates of in-migration for persons aged 35 to 44 than do either of the two counties in the study area. 2.2.3 Demographic Outlook As noted above, current trends imply a continuing a decline in population of the two counties in absolute terms and relative to the rest of Nova Scotia. However, it is most important to remember that historic trends do not to determine Figure 2-3: Nova Scotia, Population Change 1991 - 2001 by Age the future. By building on its assets in investing its future Digby County and Annapolis County need not be subject to and inexorable decline in population. Among the population of Digby County 64.6% report their mother tongue as English and 32.7% report their mother tongue as French. Annapolis County shows a substantially a different profile with respect to mother tongue. In 2001 96.8% reported their mother tongue as English and only 1.7% reported their mother tongue as French. In Nova Scotia as a whole, 92.8% reporter their mother tongue as English and 3.8% reported their mother tongue as French.
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2.3 Visible Minorities Digby and Annapolis Counties in terms of persons of Aboriginal identity or origin as a percent of total population are home to larger concentrations of Aboriginal people than the rest of Nova Scotia. This concentration is reflected in the fact that there’s archaeological evidence of Mi'kmaq settlements dating back 10,000 years. Digby County as noted above is home to some of the original black settlements in Nova Scotia. This history is reflected in the relatively high concentration of the black population in Digby County compared to either Annapolis County or the rest of Nova Scotia. The very strong representation of the Acadian culture in the study area combined with the strong presence of visible minorities gives the two counties a broader mix of cultures than one might stereo-typically expect of a rural area. The mix of cultures can be a strong asset contributing to the vibrancy and creativity within the socioeconomic structure of the two counties. Table 2-3: Visible Minority Population as a Percent of Total, 2001 Digby Annapolis County Rest of Nova Scotia County Aboriginal Identity & Origin Population 5.9% 6.0% 5.6% Black 3.1% 0.9% 2.2% Other 0.7% 0.3% 1.7% Source: Community Counts, Nova Scotia Department of Finance
2.4 Education Education levels of persons 20 years and older in the two counties are substantially lower than those for the rest of the province. In Digby County the 2001 Census recorded that 46.9% of persons 20 years of age and over had less than a high school education. In Annapolis County the figure was 39.8%. In the rest of Nova Scotia only 31.1% of persons aged 20 years and older had less than a high school education. The percentage of the population, aged 20 years and older, with a high school education was about the same in all three places; 9.8% in Digby County, 9.9% in Annapolis County and 9.7% in the rest of Nova Scotia. Divergences between the three locations show up again when considering post secondary education. About 43.3% of persons aged 20 years and over had some or had completed a post secondary education. The comparable figure was 50.3% for Annapolis County but rose to 59.2% in the rest of Nova Scotia. The lower levels of education suggest that Digby and Annapolis Counties' labour forces may be less well positioned to take advantage of new economic sectors developing in the province than the rest of Nova Scotia, especially those that are knowledge and technology intense. 2.5 Area Economic Profile The economy of Digby County and Annapolis County is greatly influenced by their geographic location. They combine strong elements of a maritime economy, oriented towards the primary
JOZSA MANAGEMENT & ECONOMICS 2-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 fishery and seafood processing, agriculture , forestry and lumber production. However, the recent closure other large lumber mill has reduced the role of overproduction in the economy. The leading employers in the Digby County, ranked by employment are as follows:4 • Comeau's Sea Foods Ltd., Fish Products, employment, 500+ • A. F.Theriault & Son Ltd., Boatbuilding and Repair, 100-199 • Tideview Terrace, Personal & Nursing Care, 100-199 • Yarmouth Sea Products Ltd, Fish Products, 100-199 • Conseil scolaire acadien provincial (CSAP). Elementary & Secondary Education, 100-199 • The Pines Resort, Hotels, 100-199 • Digby General Hospital, 100-199 • Universite Sainte-Anne, University Education, 100-199 • Lewis Mouldings & Wood Specialties Ltd., Millwork, 50-99 • D.B. Kenny Fisheries Ltd. Fish Products, 50-99 • Comeau & Saulnier Ltd., Fish Products, 50-99 • O'Neil, T. G. Fisheries Ltd. Fish Products Industry 50-99 • Mountain Gap Inn, 50-99 • Islandfresh Seafood Inc., Fish Products, 50-99 • Sobeys - Digby, Supermarkets, 50-99 • Seacrest Fisheries Ltd., Fish Products, 50-99 • Atlantic Super Store - Digby, Supermarkets, 50-99. The leading employers in Annapolis County are as follows:5 • Convergis, Contact Centre, 500+ • Soldiers Memorial Hospital, 200-499 • T.R.A. Foods Ltd. Foods, Wholesale, 100-199 • Mountain Lea Lodge, Personal & Nursing Care, 100-199 • Darmos Enterprises International Ltd., Toys and Games, 50-99 • Lester B. Pearson Peacekeeping Centre, Training International Assistance, 50-99 • Home Support Services of Annapolis, Home-Maker Services, 50-99 • Northhills Nursing Home Homes For Personal & Nursing Care 50-99 • Annapolis Community Health Centre, Public Health Clinic/Community Health Ctr ,50-99 • Annapolis County Adult Residential Centre, Home for Mentally Handicapped/Disabled, 50- 99 • Annapolis East Elementary School, 50-99 • Annapolis Valley Regional Library, 50-99 • Thompson's Transfer Company Limited, General Freight Trucking, 50-99
4 Source: Nova Scotia Department of Finance
5 Ibid.
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• Middleton Regional High School, 50-99 • Annapolis Royal Nursing Home Ltd., Personal & Nursing Care, 50-99 2.5.1 Labour Force, Employment and Income Table 2 – 4, following page, provides an overview of the experienced labour force a by industry as of 2001. Digby and Annapolis Counties show a significantly higher concentration (30% above the rest of Nova Scotia, shown in bold black of labour force involved in agriculture, forestry, fishing and hunting than the rest of the province. This is as expected given the geographic location of the counties and their land resource base. Digby County has a relatively high percentage of its labour force involved in manufacturing compared to the rest of Nova Scotia. These jobs are primarily in the seafood processing and forest products sectors. The moderately high percentage of the labour force involved in retail trade, compared to the rest of Nova Scotia, suggests that Digby County serves as a retail centre for the southwestern shore of Nova Scotia. Digby County’s strong role in the province’s tourism sector is reflected in the moderately high percentage of its labour force involved in accommodation and food services. Owing to the very high concentrations in the primary sector and, in the case of Digby County, in the manufacturing sector, the two counties show significantly lower concentrations (30% below the rest of Nova Scotia, show in bold red on Table 2 – 4) of the labour force in many other sectors, particularly in the mining and oil and gas extraction, information and cultural, finance and insurance, real estate and rental and leasing, and in the case of Digby County the professional, scientific and technical service and administrative and support, waste management & remediation service sectors.
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Table 2-4: Labour Force by Industry, 2001 Digby County Annapolis County Rest of Nova Scotia Industries # % # % # % All industries 9,215 9,315 423,895 Agriculture, forestry, fishing and hunting 1,460 15.8% 1,045 11.2% 20,405 4.8% Mining and oil and gas extraction 20 0.2% 20 0.2% 3,330 0.8% Utilities 20 0.2% 40 0.4% 2,660 0.6% Construction 440 4.8% 665 7.1% 25,650 6.1% Manufacturing 1,745 18.9% 975 10.5% 41,475 9.8% Wholesale trade 225 2.4% 310 3.3% 15,905 3.8% Retail trade 1,320 14.3% 1,190 12.8% 52,135 12.3% Transportation and warehousing 370 4.0% 330 3.5% 19,365 4.6% Information and cultural industries 45 0.5% 160 1.7% 10,435 2.5% Finance and insurance 170 1.8% 150 1.6% 13,615 3.2% Real estate and rental and leasing 40 0.4% 60 0.6% 6,580 1.6% Professional, scientific and technical 150 1.6% 280 3.0% 18,420 4.3% services Management of companies and enterprises 0 0.0% 0 0.0% 315 0.1% Administrative and support, waste 165 1.8% 305 3.3% 19,930 4.7% management & remediation services Educational services 695 7.5% 590 6.3% 30,375 7.2% Health care and social assistance 690 7.5% 1,010 10.8% 47,345 11.2% Arts, entertainment and recreation 90 1.0% 175 1.9% 7,855 1.9% Accommodation and food services 815 8.8% 625 6.7% 30,515 7.2% Other services (except public 455 4.9% 510 5.5% 20,930 4.9% administration) Public administration 295 3.2% 885 9.5% 36,645 8.6% Industry - Non applicable 115 1.2% 225 2.4% 8,615 2.0% Source: Nova Scotia Community Counts web page - data modelled from Statistics Canada, Census of Population, 1991, 1996, 2001. Table 2 – 5, following page, shows that unemployment rates tend to be higher in Digby and Annapolis Counties of than in the rest of Nova Scotia. The more telling statistic with respect to economic well-being is the ratio of employed persons to total persons of labour force age. A number of jobs per person aged 15 and over has 9.1% lower in Digby County than in the rest of Nova Scotia and is 14.5% lower in Annapolis County band in the rest of Nova Scotia.
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Table 2-5: Labour Force Activity - 15 Years and Over, 2001 Digby County Annapolis County Rest of Nova Scotia # % # % # % Total Reporting (aged 16,105 17,870 698,390 15+) In the Labour Force 9,335 9,545 432,495 Employed 8,115 8,460 385,720 Unemployed 1,215 1,085 46,780 Not in the Labour Force 6,770 \2.0% 8,330 46.6% 265,890 38.1% Participation Rate 58.0% 53.4% 61.9% Employment Rate 86.9% 88.6% 89.2% Unemployment Rate 13.0% 11.4% 10.8% Employment/Person 0.50 0.47 0.55 Aged 15+ Source: Nova Scotia Community Counts web page - data modelled from Statistics Canada, Census of Population, 1991, 1996, 2001. 2.5.2 Income Digby County’s average household income stood at $37,904 in 2001. Its median income stood at $32,624, well below the provincial median income of $39,908. This median income level places Digby in the bottom 25% of communities in the province. Annapolis County, in 2001 , had an average household income $38,003 and a median household income $32,516. This median household income level also ranks in the bottom 25% of Nova Scotia communities. Almost half, 46%, of income in Digby and Annapolis Counties comes in the form of transfers from government. this compares to about 32% for the rest of Nova Scotia. the dependence on government transfers provides part of the reason for the relatively slow income growth in these two candies. In addition, as described above, the economies of these two counties depend largely on the seafood processing, forestry and forest products sectors, which tend to pay lower wages than the new economic sectors developing within the province. However, the incidence of low income among households, according to the 2001 Census, is lower in Digby and Annapolis Counties than in Nova Scotia in general. About 15.7% of households in Digby County were considered to be low income households and 17.9% of households in Annapolis County were considered to be low income households. This compares favourably to the provincial average of 16.6% of households. The difference is primarily caused by the lower cost of living in the Digby and Annapolis Counties and that their smaller than average household sizes. 2.5.3 Investment Figure 2-4, following page, describes the total value of building permits in Digby and Annapolis Counties from 1996 to 2004. The purpose include residential, industrial, commercial and institutional and government investments. Except for a peaked during 1998 and 1999 the value of building permits, in current dollar terms, is hold relatively steady in the two counties.
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However, as the Figure 2-5, following page, shows, the two counties’ share of the value of building permits as a percentage of the rest of Nova Scotia is showing a slight downward trend.
Figure 2-4: Digby & Annapolis Counties, Value of Building Permits (2 year moving average, $ millions, 2004$) $40.0
Digby County $35.0 Annapolis County Digby + Annapolis $30.0 s t i m r e
P $25.0
g n i d l
i $20.0 u B
f o
e $15.0 u l a V $10.0
$5.0
$- 1996 - 97 1997 - 98 1998 - 99 1999 - 00 2000 - 01 2001 - 02 2002 - 03 2003 - 04 Year
2.5.4 Digby and Annapolis Counties’ Competitive Advantages and Disadvantages Digby County and Annapolis County have much in common: an aging population, the out-migration of young people, and unemployment and illiteracy rates that are higher than the provincial average and educational levels that are lower. Growth has been slower than in the rest of Nova Scotia in Digby and Annapolis Counties, perhaps because of their greater isolation and a traditional dependence on agriculture and fishing. The Counties were hard hit by the recession of the early 1990s and their difficulty in recovering are likely at least partly due to their economic structure, which is heavily concentrated on the extraction and primary processing of natural resources. Moreover, the traditional resources have been over-
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Figure 2-5: Building Permits Value, Digby + Annapolis Counties as % of Rest of NS (2 year moving average) 5.0%
4.5% Digby + Annapolis as % of Rest of Nova Scotia
4.0% S N
f o
t
s 3.5% e R
f o
% 3.0%
2.5%
2.0% 1996 - 97 1997 - 98 1998 - 99 1999 - 00 2000 - 01 2001 - 02 2002 - 03 2003 - 04 Years Included exploited, and the activities related to these resources are still highly seasonal.6 However, significant progress has been made in the past few years rehabilitating these aspects of the economy. Agriculture remains profitable. Digby County reported close to $26 million in farm receipts in 2000, against expenses of about $21.3 million, according tot he 2001 Census. Annapolis County farms reported close to $20 million in farm receipts against farm business operating expenses of $17.7 million. The fishery and forestry have remained strong and viable, to a large extent because of value-added production.7 Seafood processing creates a considerable number of jobs. Seafood processors have strong representation among the major employers in the counties. However, most seafood jobs are part-time or seasonal. Low processing plant utilisation rates hamper re- investment and diversification efforts. The increase in fish imports from Norway, Iceland, Russia and the United States for processing in the region curbed moratorium-related job losses in the
6The economic impact of the primary fishery is somewhat less in Digby County because the main catch, scallops, is characterized by a lower return per kilogram than the lobster fishery (a ratio of about 6:1 in favour os lobster) in Shelburne and Yarmouth Counties.
7 “The State of the Regions: the Economic Region of Southwestern Nova Scotia,” The Canadian Institute for Research on Regional Development, 2000.
JOZSA MANAGEMENT & ECONOMICS 2-11 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 processing sector. The seafood processing industry now helps to make marine products a principal export of Nova Scotia. Concentration on resource based sectors is not the only factor that the counties need to contend with. Economic globalization brings the opportunity for expansion into new markets and also brings its corollary, heightened competition. With the heightened competition comes the need and market pressure to adopt new technology and communications, which force businesses to readjust their management and reorganize their production. Adding to the difficulties for economic adjustment by Digby and Annapolis Counties is impact associated with the history of, and continued, review and rationalisation of the delivery of government services and infrastructures. For example, the concentration of the federal public service in the large centres has doubly affected peripheral regions because they lost jobs and the positions that were eliminated (or redirected towards the centres) were often the best paid.8, 9 Recent changes in the transportation infrastructures such as the cessation of scheduled air service at Yarmouth Airport, cessation of service by the Scotia Prince, rail line closures and cessation of the Bluenose ferry service have done nothing to foster economic development. The only university, Université Sainte-Anne in Church Point, is facing chronic financial problems because of a decline in government support. Its primary purpose - providing higher education to Acadians - leaves little room for research and development. This is unfortunate, as the presence of a university is crucial to the prosperity of any region not only because it responds to changing needs in the labour market and facilitates the contribution and leadership of academics within the community. The Collège de l'Acadie was established in 1988, the same year as the Nova Scotia Community College. Its mandate was to provide community college level training in the French language for Nova Scotia's Acadian/French population. In 2002 the Collège de l'Acadie merged with Université Sainte-Anne and is now one university-college institution — Université Sainte-Anne. The Annapolis Valley Campus of the Nova Scotia Community College has three sites in the two counties, the Town of Digby, Lawrencetown and Middleton. The Centre of Geographic Sciences (COGS) in Lawrencetown is renown for its geographical sciences programs. In addition to technical training and diplomas programs COGS offers post-degree Geomatics programs in marine geomatics, remote sensing, geographic information systems (GIS), and business geographics. Its faculty also conduct applied research programs that receive federal and provincial research funding. COGS attracts students and business attention from the Maritimes and beyond. On the subject of entrepreneurship in the region - it has always been and still is very dynamic. The vitality of the fishing and fish-processing industries speaks well of the condition of entrepreneurship in the counties. The seafood processing industry seems is adjusting to the
8Thus, in 1998 the average annual income of an employee in the federal public administration was $46,840 in the Halifax census metropolitan region, compared with $31,270 elsewhere in Nova Scotia. This difference is due to the concentration of senior management and technical positions in the metropolis, while the regions have a disproportionately high number of clerical and lower-level positions.
9 “The State of the Regions: the Economic Region of Southwestern Nova Scotia,” The Canadian Institute for Research on Regional Development, 2000.
JOZSA MANAGEMENT & ECONOMICS 2-12 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 decrease in stocks by concentrating on imports and exports and by diversifying into value-added products. The forest products sector offers good opportunities for growth in value added, in particular in milled-wood or manufactured products. Diversifying the manufacturing and services sectors must be a priority for the counties. Evidence of this can already be seen in the growth of call-centres, the diversification of fishing boat builders into the export of pleasure craft and the location of new businesses in the industrial/business park at the former Canadian forces base at Cornwallis. The industrial/business park at the former Canadian forces base at Cornwallis is now home to almost 1,000 jobs, about the same number that existed when the base was in full operation. Although tourism is more important on the South Shore, which has the advantage of being a natural extension of the Halifax metropolitan area Digby and Annapolis Counties still benefit from the influx of visitors during the high season owing to the ferry services, although many visitors simply pass through on their way to other destinations. The new and fastest growing sectors of the provincial economy are based mainly on service sector jobs. Within this sector, the term "dynamic services" is often used to designate jobs in the areas of distribution, trade, and business services, as well as finance, insurance, and real estate. In addition, the medium and high value-added manufacturing sector remains a central element of the new economy, insofar as its products involve high technological input.10 However, Digby and Annapolis Counties have relatively have few jobs in the dynamic services sector. Being essentially a peripheral area the counties will likely find it difficult to attract a significant number of the high paying jobs in dynamic industries, which more often than not prefer large urban centres, where there is an abundant supply of skilled personnel and business services. In this regard, Digby and Annapolis Counties are a distinct disadvantage as the representation of business and professional service jobs in their economies is about half that in the rest of Nova Scotia. However, again on the plus side, the establishment of the Lester B. Pearson Canadian International Peacekeeping Training Centre has added to the dynamic sector base and helped further diversify the economy. Hence, as the currently stand are, relative to much of the rest of Nova Scotia in a more difficult position to benefit from the globalized economy, which is knowledge-based, but local economic players are dealing with this situation by instituting a series of strategic measures. 2.6 Provincial and Sub-provincial Economic Growth Factors Affecting Digby and Annapolis Counties 2.6.1 Nova Scotia Economic Outlook 2.6.1.1 The Short Term - To 2007 The 2005-06 Nova Scotia government budget stated that its projections, as well as those of the private sector, indicate Nova Scotia can expect steady growth throughout 2005 and 2006. Employment growth is expected to increase 1.5% per cent in 2005 and 1.0% in 2006, with the unemployment rate dipping slightly in 2005 and remaining stable through 2006. Despite modest
10 “Peripheral but Vigorous: Southwestern Nova Scotia," Canadian Institute for Research on Regional Development, 2002.
JOZSA MANAGEMENT & ECONOMICS 2-13 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 employment growth the reduction is made possible by the slowdown/decrease in Nova Scotia’s population and the entry of the “baby-boom” generation into its retirement years. The provincial government also anticipates a modest growth in personal income over 2005-06 and in the consumer price index of about 2.0%. Despite the modest increase in employment and personal income the provincial government expects a 4.2% increase in personal expenditures on consumer goods and services and a 4.4% growth in retail sales. GDP, after inflation, was projected to increase by 2.1% in 2005 and 2.6% in 2006. 2.6.1.2 The Longer Term - To 2016 The Nova Scotia economy in the coming years will be dominated by two key drivers: export performance; and the slowing population growth. Export performance will be slow in the immediate future and then pick up more strongly as the North American economy recovers from its recessionary/slow growth environment. Growth in consumer spending is expected to ease, and a change in expenditure patterns is also expected as the population ages. Growth in consumer spending for services will outstrip that for goods. Real consumer spending is expected to advance by an average of 2.2% per year to 2011. Low population growth and the movement of retirees to smaller homes will introduce some weakness into the residential construction sector. Non-residential construction investment will fluctuate over the next 10 years. Much of the fluctuation will be caused by the fortunes of the hydrocarbon and petrochemical sectors. The provincial debt will limit government spending growth over the next five years, at least. This is the case because even with the deficit gone, the provincial government will focus on reducing its’ $11.6 billion debt. As the debt is brought under control, health care and education demands are expected to boost government spending. One of the strongest sectors in the economy over the projection period will be the hydrocarbon extraction and petrochemical sectors. Expansions to pipelines are expected and several LNG receiving stations and petrochemical projects are in the early and late planning stages. The fabricated metal industry will also benefit from expansions to the hydrocarbon extraction and petrochemical sectors. The Michelin Tire plants and the Tesma auto parts plants will continue to shore up growth in the province’s manufacturing sector. In the long term, wind turbines may be manufactured in Amherst by Renewable Energy Services in support of activities to implement the Kyoto Protocol. On average, real growth in manufacturing output is projected to reach 3.5 % per year until 2011. Shipments of gas and manufactured products to markets, combined with the expansion of the Port of Halifax to handle Post-Panamax Ocean vessels, will boost real growth in the transportation industry to an average of 2 % per year over the next 5 to 10 years. Modest income growth and slow population growth should limit expansion in the wholesale and retail trade sector, as well as in the finance, insurance, and real estate sectors. Engineering and management consulting services growth will be heavily influenced by the fortunes of the hydrocarbon extraction and petrochemical sectors and their success at their increasing efforts to export services. Growth in the service-producing industries is expected to be about 1% per year over the next 5 to 10 years.
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2.6.2 Impacts on Digby and Annapolis Counties Digby and Annapolis Counties can to a large extent count on their traditional industries and entrepreneurs working in those industries to at least maintain the economy of the area. The counties are faced with a complex transition to a knowledge and technology intense economic base. Like all Canadian provinces and territories, Nova Scotia wants to make the transition to the new economy. In 2000 the Nova Scotia government adopted an economic growth strategy aimed at reinforcing the province's foundation industries (fisheries, forestry, agriculture, tourism, and culture) and at stimulating the “growth industries,” including the digital economy, energy, advanced manufacturing, learning, and life sciences.11 In co-operation with ACOA and a number of federal departments, the Province has also developed a knowledge economy initiative with a $90 million budget, aimed at developing a better technology infrastructure to support Internet users. Centre of Geographic Sciences (COGS) in Lawrencetown is part of the Annapolis Valley Campus of the Nova Scotia Community College COGS has benefited significantly from the R&D component of the initiative. Entrepreneurs who already use information technology to communicate with their clients and promote their businesses are demanding enhanced connectivity. Rural areas in the counties, including the Digby Municipal Airport, are still waiting for high- speed Internet access The shift to the knowledge economy is essential for any jurisdiction in North America. However, experience and economic theory show that the counties cannot simply count on a spectacular change that will transform the region's resource-based economy to an IT-based economy. Traditional industries must continue gradually adapting to the realities of the new economy, and the traditional economic base will have to expand by creating jobs in those new sectors. The data with respect to education levels indicates that the counties face challenges to improve the labour force's level of skill to compete in the new economy. Consideration must be given to more aggressive methods to improve the education level and skill set of the labour force. For example, the programs offered by the Nova Scotia Community College campus in Lawrencetown could be expanded and a satellite/distance education campus of an English-language university could be established. The more rapid employment growth in the rest of Nova Scotia, the aging of the baby-boom generation and competition for labour by booming provinces like Alberta will make the current trades skills supply shortage worse for Digby and Annapolis Counties. However, the information age has pushed students and the technical training system toward information technologies. The counties should lobby to expand the expand the trades programs offered at the NSCC campus in Lawrencetown. Finally, with respect to tourism it would appear that the tourism potential of this picturesque area with its beautiful land and sea-scapes, architectural heritage and culturally diverse population has not yet been fully developed.
11Province of Nova Scotia, Opportunities for Prosperity: A New Growth Strategy for Nova Scotians (Halifax: Department of Economic Development, 2000).
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3.0 Digby Airport Profile
3.1 Location and Access Digby Municipal Airport is located in Hillgrove, a little over 7 kilometres southwest of Digby. The airport sits atop a ridge and is the highest airport in all of Nova Scotia at 491 feet. Access from town is via Route 303, Acacia Valley Road, Ridge Road and Bloomfield Road. 3.2 History A privately-owned grass and gravel airstrip was built on the present airport site in the early 1960s. In 1974 the Municipality of the District of Digby purchased the site and began construction of the initial airport infrastructure, including a 3,000 x 75 foot day Visual Flight Rules (VFR) facility. Funding and support for the new airport was provided by Transport Canada’s Airport Financial Assistance Program, the Nova Scotia Department of Development, and the Municipality of the District of Digby. The new airport was completed in 1976, and a year later it was equipped for night operations with the addition of pilot- controlled lighting. In 1979 the Municipality built the first phase of the current administration building, and added a Non- Directional Beacon (NDB), and communications equipment. Upgrades during the first half of the 1980s included airfield and administration building improvements, and acquisition of an aviation weather reporting station, and installation of perimeter fencing. In 1985 federal assistance was obtained for a runway expansion study which explored the possibility of extending to 7,000 by 150 feet, the construction of a lighted and paved crosswind runway measuring 3,000 by 75 feet, and two grass strips for glider use. None of these projects came to fruition. The existing runway was however extended to nearly 4,000 feet in length in 1989. The first hangar was built by the Municipality in 1986, and that year a small regional airline, Air Bras D’Or commenced a short-lived scheduled commuter air service between Digby and Saint John, NB, with part of the administration building used as a terminal and waiting lounge.
JOZSA MANAGEMENT & ECONOMICS 3-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
3.3 Role In assessing new strategic business opportunities, the current and future role of the airport must be throughly assessed and validated, or if necessary, re-defined. Digby Municipal Airport is a general aviation facility operating for the public convenience. It is designed to serve a variety of local business, essential community, and recreational aviation needs. The airport is funded as a public utility and while it is not currently a self-sustaining entity, the airport is nonetheless recognised by the Municipality as having a useful role in other ways. In addition to the private aircraft based on the airport, the administration building at the Digby Municipal Airport is home to the County Emergency Measures Organization (EMO) and 9-1-1 emergency dispatch centre, Digby Ground Search and Rescue, and the Digby branch of the Civil Air Search and Rescue Association (CASARA). The presence of the former ensures that there is 24 hour coverage at the airport. The county dog pound is also located on site in an adjacent building. The Greenwood Flight Centre, a Flight Training Unit licenced by the Atlantic Region of Transport Canada located at the Waterville/ King’s County Airport, operates a satellite flight training school at Digby. Other occasional aviation activities at the airport are diverse and include mainly civil users. Digby has on occasion been used by commercial aircraft in support of clients with businesses in the region, including those in fisheries and tourism industries. Private aircraft carrying guests to the Digby Pines resort occasionally use the airport, as do Air Canada Jazz (DHC-8) aircraft for training flights out of Halifax, RCMP patrol and interdiction flights, and DND helicopter night training flights out of Greenwood. Digby Municipal Airport is also a designated CANPASS permit holder airport, enabling pre- approved pilots to enter Canada via a telephone-reporting system. While Canada Border Services Agency personnel may occasional choose to attend a particular CANPASS international arrival, Digby Municipal Airport is not an approved Airport of Entry and therefore does not offer full Canada Customs service. 3.4 Infrastructure Overview Digby Municipal Airport’s infrastructure ranges up to 30 years of age. It is served by a single certified runway, which is paved and lighted. A single taxiway links the runway to a public apron, with an administration building, and two private hangars adjacent. 3.4.1 Runways, Taxiways, Apron Areas The main runway, 06-24 measures 3,950 by 75 feet and is paved. Ramp and taxiway are also paved. All surfaces are in good condition, with some rougher areas located approximately on the south-west third of the runway. A shorter turf runway runs perpendicular to the main runway and while suitable for light aircraft, it is not certified owing to zoning, lack of signage, and non- standard construction. This runway is also not maintained during the winter months. The main runway was last overlaid in 1989 when it was extended by 950 feet. Runway 06-24 is most favourably inclined for the prevailing winds, has clear instrument approaches, and is lit for night operations via aircraft radio control of airport lighting (ARCAL). Lighting consists of medium intensity runway lights, threshold and end lights. The taxiway is also lit for night operations. An airport beacon is also activated by ARCAL.
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Constraints to the future expansion of Runway 06-24 exist primarily at the north end of the airport, owing to the close proximity of a county road which runs along the northern perimeter of the airfield, from northwest to southeast. Given the surrounding terrain, the longest possible runway extension which could be accommodated at Digby Airport would be approximately 7,000 feet although this will need to be validated through further research. From a capacity standpoint the airfield is likely more than capable of handling projected traffic for the foreseeable future, assuming a predominance of VFR conditions. Further analysis will be required to confirm this. 3.4.2 Buildings Aviation activity is located on the west side of the airfield where the Municipality of the District of Digby operates an administration building, the EMO and ancillary operations are located, and private aircraft are parked, and maintenance operations are conducted. There are 5 buildings on the airport, including the airport administration building, a hangar currently occupied by Isles Aero Service, and a smaller private aircraft storage hangar. Table 3-1 details the airport building inventory. Table 3-1 Airport Building Inventory
Building Ownership Current Use Airport Administration Municipality Terminal/ Admin building Building Isles Aero Service Hangar Municipality Aircraft maintenance Private Hangar Land- Eddie Peck, leased by Mark Lowe 1 aircraft stored Private Hangar Peter Burnie 1-2 aircraft stored Municipal Dog Pound Municipality Animal quarantine 3.4.3 Air Navigation Facilities The Digby Non-Directional Beacon (NDB) is a low-powered navigational aid located on the airport. It is privately owned and maintained by the Municipality. The 25 watt facility is not monitored by Nav Canada. The Municipality of Digby maintains the NDB. While there are currently no instrument approaches tied to this facility, it is customary for IFR airports to have at least one terrestrial navigation aid to support commercial operations and to back-up satellite- based guidance systems. Nav Canada has published a GPS approach to each of Runways 06 and 24, permitting both lateral and vertical guidance to roughly 500 feet above the runway threshold under IFR (Instrument Flight Rules) conditions. GPS approaches do not require ground-based navigation aids. As per current uses of GPS, these procedures are non-precision, and therefore may not be useable in all weather conditions. 3.4.4 Aviation Meteorology The Digby Municipal airport possesses a small weather station on the west side of the airfield adjacent to the administration building, providing wind speed and direction to pilots. While capable of providing local altimeter setting, it is not approved by Nav Canada owing to a lack of two certified altimeters and an absence of staff trained to Nav Canada standards. Aircraft flying the published instrument approaches to Digby Municipal Airport must use the Saint John, NB
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Airport altimeter setting. Because the nearest approved altimeter reporting point is located roughly 85 kilometres to the north, restrictions are imposed on instrument approaches at DMA. 3.5 Airport Operations From a regulatory standpoint Digby is a certified airport operating to Transport Canada standards. Maintaining this certification is important to ensuring the maximum number of aviation operations take place at the airport. This certification, ensures that all aspects of operations and design, from runway and taxiway edge lighting, surface marking and signage, to transitional and approach slopes, and wildlife control are to published standard. Having a certified status enables a lower level of risk to be perceived, thus helping to attract potential users. The airport is attended 24 hours a day, year round, owing to the presence of the Digby EMO. The dispatcher on duty monitors the Digby UNICOM air radio frequency and can provide current weather and air traffic information to pilots around the clock. The airport is maintained between the hours of 07:00 and 19:00 daily and the runway is inspected three times per day. Outside of these hours the runway may be cleared of snow on prior request only. 3.6 Aviation Services The airport has an above-ground 100LL (low-lead) aviation fuel tank, which serves local and itinerant general aviation aircraft. The airport does not carry Jet A fuel, and is therefore not capable of fuelling turbine powered aircraft including small jets. Aviation oil available for purchase in the administration building includes W65, W100, 15W50, and 20W50. 3.7 Financial Performance and Ongoing Funding The Municipality of the District of Digby funds ongoing capital expenditures, operations and maintenance of the airport. In 2005/06 the municipality provided the DMA an annual operating budget of roughly $82,200 for operations and maintenance costs, including insurance. Runway 06-24 was last resurfaced 17 years ago, in 1989, and the Municipality continues to fund crack filling, wiring, and other repairs to the airfield when necessary. Runways are typically resurfaced every 12-15 years as required, under average use. Digby Municipal Airport’s budget deficit has been increasing for a number of years. The largest expense increases are visible in the areas of: • airport maintenance, growing from $3,100/ yr in 1994/95, peaking at about $24,100 in 2001/02 and then declining to $17,700 in 2004/05; • the spike in the purchase price of aviation gasoline in 2003/04 and 2004/05; and • utilities and insurance, which grew from about $9,000 in 1994/95 to $13,300 in 2004/05. Fuel revenue at the airport has been lacklustre over the last 10 years, declining as the price of oil declined in the 1990s on declining traffic, and barely managing to recover given the recent sharp rise in fuel prices. Revenue from aircraft tie-downs has been stable. The average ratio between fuel and oil sales and expenditures for inventory from 1994/95 to 2002/03 was about 1.258, suggesting an average gross margin of 25.8%. However, from 2003/04 to 2004/05 the ratio was 1.005, suggesting a gross margin of less than 1%. Figure 3-1, below, illustrates revenue, expense, and a picture of overall operating deficit which the airport experienced over the last decade. The annual operating deficit has increased from about $19,000 in 1995 to about $47,000 in 2005.
JOZSA MANAGEMENT & ECONOMICS 3-4 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 3.8 Historical Activity Aircraft movements over the last decade (Figure 3-2, following page) illustrate a gradual decline in aviation activity at Digby Municipal Airport. A split between local and itinerant movements is not available over the entire decade owing to data reporting procedures, however between 1996 and 2000 traffic was split roughly evenly between the two types.
Figure 3-1: Digby Municipal Airport: Operating Revenue & Expenditure $100 History Operating Revenue $80 Operating Expenditures Net Revenue from Operations $60
$40 s 0 0 0 '
, $
t $20 n e r r u C $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-$20
-$40
-$60 Fiscal Year
The downward activity trend is not unique to Digby and is in fact similar to many municipal airports across Canada. Increasing costs and decreasing levels of service within the industry have had a significant impact. Digby Municipal Airport aircraft movements over the last decade consisted mainly of light piston-engine aircraft in the 2,000 kg and under category (mainly Cessna, Piper, and Beechcraft single and light-twin engine).
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Figure 3-2: Digby Airport Movements, 1995 - 2005 3000
2500
2000
1500
1000
Digby Airport Movements 500
0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
3.9 Projected Activity Table 3-2, page following, provides a 10-year projection of general aviation growth has been developed for DMA based on econometric variables, mainly projected Gross Domestic Product (GDP) and Personal Disposable Income (PDI) data obtained from the private sector and Transport Canada. The Transport Canada data is published in its Forecast Assumptions Report 2005-2019 dated December 31, 2005.The baseline projection is based on current activity levels at Digby, and therefore assumes no significant changes to the airport’s business direction (ie. no significant new opportunities). Without active marketing and development of new opportunities for the airport, the projection anticipates relatively flat growth over the next 10 years with activity rising to roughly 1,700 movements by 2016. During this time movements in the “air carrier” and “other commercial” itinerant movements category are projected to rise at between 1.8 and 2% per annum, while private itinerant and local movements rise 1.7% per annum. Should marketing initiatives be curtailed or prove unsuccessful, the low growth scenario shows steadily declining traffic over the next 10 years to roughly 1,040 movements by 2016. Additional marketing steps could help generate new traffic growth, particularly from international visitors, from the resumption of flight training, and from the promotion of the airport for other
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commercial aviation activities. Should this prove successful, annual movement could theoretically rise to roughly 2,300 by 2016. This would mark a return to traffic levels of the mid 1990s. Table 3-2: Ten Year Movement Projection, Digby Municipal Airport Year Baseline Growth Low Growth High Growth Movements Rate Movements Rate Movements Rate % % % Projection Projection Projection 2006 1413 2% 1272 -2% 1554 4% 2007 1439 2% 1246 -2% 1616 4% 2008 1465 2% 1221 -2% 1682 4% 2009 1491 2% 1197 -2% 1750 4% 2010 1517 2% 1173 -2% 1821 4% 2011 1543 2% 1150 -2% 1894 4% 2002 1570 2% 1127 -2% 1969 4% 2013 1597 2% 1104 -2% 2048 4% 2014 1624 2% 1082 -2% 2130 4% 2015 1652 2% 1060 -2% 2215 4% 2016 1680 2% 1039 -2% 2304 4% Figure 3-3 combines the historical and projected movements in one graphic.
3,000 Figure 3.3 Digby Municipal Airport Movements: Historical & Projected
2,500
2,000 s t n e 1,500 m e v o M
1,000
historical movement high projection
500 baseline projection low projection Historical 3 Yr Moving Ave
0 1995 2000 2005 2010 2015 Calendar Year
JOZSA MANAGEMENT & ECONOMICS 3-7 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 4.0 Aviation Trends
4.1 Scheduled Air Services Global aviation is struggling to emerge from years of crisis due to decreased demand, escalating cost, and general acknowledgement, at the airline level, that the "classic" costing model no longer works. The industry is known to have been in crisis six months to a year before the events of September 11th caused a massive short term decline in traffic. The proliferation of many new entrant "low cost" air carriers has exacerbated the problem for the major carriers and in many ways provoked the recent airline economic crisis in Sou’west Air was unable to sustain scheduled air Canada, the US and Europe. Air Canada's services from Halifax to Yarmouth even with a highly restructuring has brought with it a radically new efficient 9 seat Cessna Caravan, air taxi size operation. approach revenue management and subsequently (LPS Aviation Inc. photo) a reduction in levels of service in secondary markets across the country. While demand has rebounded to some extent, many markets in Canada have experienced a loss of service to the direct benefit of others, and recent spikes in the price of oil have placed severe pressures on carrier’s bottom lines. For many smaller markets in Atlantic Canada this has meant declining service and often higher fares. 4.1.1 Scheduled Passenger Air Service Trends Key issues impacting passenger air travel in Atlantic Canada include: • Air Canada's reorganization under bankruptcy proceedings in October 2004; • the decline of airline yields (measured as revenue per revenue passenger kilometre); • new low cost airline strategies; • continued and escalating high price of fuel; • improved highway infrastructure; • declining population in certain parts of the region; and • other economic factors.
Atlantic Canada has been among the last regions At the height of recent industry restructuring Halifax was of the country to enjoy lower average air fares, served by three low cost carriers, including WestJet, after years of being the country's most costly air CanJet and the now defunct Jetsgo, while Air Canada was reorganizing. travel market. However the results have been (LPS Aviation Inc. photo) uneven. The arrival of low cost air services has opened up an array of new opportunities for business growth in major centres such as Halifax and Moncton. Meanwhile traffic has been
JOZSA MANAGEMENT & ECONOMICS 4-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 lackluster in other areas, such as Saint John and Sydney, and airlines have ceased operating into some markets such as Yarmouth, Chatham, and Charlo. Low cost service is coming to be perceived as a significant regional economic benefit. Few communities in Atlantic Canada are large enough to support low-cost air travel solutions. As a result consumers are increasingly willing to drive greater distances in exchange for low-fares, particularly those who may not have otherwise travelled by air. Improvements to highway infrastructure in Nova Scotia such as Highway 101 have made it easier for people to drive to Halifax. Although commuter air services are more adept at servicing smaller communities, many of the aircraft currently in service have higher unit operating costs which tends to put upward pressure on fares, thus making it difficult to compete with other forms of transport. A catchment area of roughly 500,000 people is considered a bare minimum to attract and maintain low cost scheduled air service. Under the two national airline system, Air Canada and Canadian Airlines operated a “hub and spoke” system in Atlantic Canada centred on Halifax. The arrival of low cost “point to point” carriers in parts of Atlantic Canada caused a major shift in strategy by Air Canada. To compete and cut costs, Air Canada eliminated mainline service in some markets, increased use of its regional airline Jazz, and introduced third level 19-seat carriers such as Air Georgian as a replacement in some markets. Other small operators have attempted to fill the voids in local scheduled services with very limited success. Saint John, New Brunswick, has lost much of its jet air services, while Yarmouth has lost all scheduled air service. A brief attempt to revive passenger air services at the latter in 2003 failed due to a number of local economic and funding constraints. Limited air service by small aircraft can actually de-stimulate demand, particularly when price is high compared to the perceived benefit, and the presence of other modes of transport such as road or rail are perceived as superior. This has precisely what has occurred in much of Atlantic Canada, including Yarmouth, Charlo, Saint John, Gander and Stephenville. Under the current airline and aircraft operating environment, the likelihood of a viable commercial scheduled air service at Digby is unlikely. 4.1.2 Air Cargo Trends Cost, location and operating efficiency are the primary drivers in the air freight and air express side of the air cargo business. These carriers operate mainly outside of business hours, preferring to use less congested and more economical airports where available. With currently rising costs and potentially slimmer operating margins than the passenger carriers, air express providers such as Fedex, UPS, Purolator, and others have developed extensive ground networks in Canada where trucking over shorter distances is preferable to air transportation. This is driven in part by current national air policies which, among other restrictions, preclude operation of domestic air networks by foreign carriers. Consequently cargo is consolidated at selected Canadian hub airports and moved trans-border for sortation and global distribution, albeit back to Canada in many instances. Also, Canadian air carriers must be subcontracted to provide the airlift. A relatively low volume of time sensitive goods, and driving distance to Halifax precludes even an effective air cargo feeder operation at Digby.
JOZSA MANAGEMENT & ECONOMICS 4-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 4.2 General Aviation General Aviation includes a wide variety of activities beyond those provided by scheduled air carriers. The GA fleet compromises nearly 80% of the total Canadian aircraft fleet, and includes commercial non-scheduled and air industrial activities including but not limited to: • ad-hoc charter; • corporate aviation activity; • surveying, spraying; • sightseeing; • flight training; • personal business flying; • recreational aviation; and • government flying. Many industries support general aviation activities including warehousing, maintenance services, fuelling, catering, and grooming. 4.2.1 Domestic GA Growth General Aviation (GA) activity levels have historically tracked overall economic conditions, income levels, and industry performance. Commercial flying tends to track economic output measured by Gross Domestic Product (GDP), while private flying tracks Personal Disposable Income (PDI) growth. Transport Canada GA forecasts note that regional economics play an important role in determining the health of GA traffic. The Canadian economy grew strongly during the mid-to-late 1990s with GA growth in synch. The beginnings of economic recession in North America during 2000 were exacerbated by the 2001 terrorists attacks and the wars in Afghanistan and Iraq. In recent times however, a number of factors have inflicted serious harm to Canada’s aviation industry. The Canadian Owners and Pilots Association (COPA) have reported that recent declines in GA movement activity in Canada are attributable to: • the after-effects of 9/11 including the dramatic increase in aviation insurance rates; • continued cost pressures from rising aviation gasoline (AVGAS) prices; • the introduction of landing fees; and • a lack of hangar facilities at many airports. Post 9/11, a dramatic decline in GA flights from the United States has also been noted, both private and commercial. Some of these factors, such as the lack of airport infrastructure and rising fees on GA can be mitigated. The various fee increases at major international and regional airports across the country are encouraging general aviation pilots to use municipal and local airports which traditionally do not charge fees. While statistics are generally not tracked for these airports, there is ample anecdotal evidence to suggest that pilots are increasingly willing to drive greater distances to airports which do not charge fees and where there is less air traffic congestion.
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An examination of light aircraft ownership in Canada between 1984 and 2004 shows that while the private certified aircraft fleet declined from nearly 16,000 aircraft to 12,500, owing to the increasing cost of ownership, this decline has stabilised in the last 5 years and has begun to stage a recovery. This recovery is due primarily to the strengthening Canadian Dollar which, having increased in value over the American Dollar by nearly 30% in the last few years, has significantly lowered the cost of buying general aviation aircraft. The growth in the total private fleet in 2005 (both certified and non-certified) was 2.8%, adding 648 aircraft. This brings the private fleet to 23,771 aircraft which is 79% of the 30,244 aircraft in Canada. The shifting patterns of private aircraft operations and upward momentum in GA aircraft ownership suggests potential opportunities for smaller municipal airports such as Digby. 4.2.2 New Trends in General Aviation Demand within the GA sector is shifting, due in part to the security delays and rising costs at large airports. Very Light Jets (VLJs) such as the Eclipse and Cessna Mustang are coming, aimed at personal travel and air taxi charters to avoid large airports and increasing security delays and costs. These aircraft are considered "game changers" in that they bring affordable personal jet air travel to airports with runways as short as 2,000 to 3,000 feet. Eclipse already has 2,200 on order, 60% are for air taxi operators. An air taxi service is a commercial service with 9 or less seats. Changes in the general aviation marketplace are expected to have a positive benefit on non- traditional airport locations. The arrival of new technology aircraft along with societal shifts towards personalised air travel solutions that will save businesses time and money, particularly in an era of rising commodity prices, will present new opportunities for airports such as Digby. 4.3 New Approaches to GA Airport Management in Canada From a competitive standpoint, Digby Airport is not unlike most GA airports across Canada, comprised primarily of private aircraft and flight training activities. Given GA’s lackluster performance nationally, GA airports require new strengths and core competencies. Specific new approaches may be determined from the way other GA airports manage stakeholder relationships. At the best of times aviation is a challenging industry fraught with high fixed costs and substantial risk. Airports across Canada continue to face numerous challenges in the post 9/11 environment. Recent LPS Aviation Inc. case studies of airports at Springbank in Alberta, Carp in Ontario and Gatineau in Quebec provide benchmarks in new innovative approaches to GA airport management. These three airports are GA “reliever” facilities, handling air traffic deemed undesirable at Calgary and Ottawa International Airports respectively. A common theme among many GA airports which The Calgary Airport Authority developed a customer- have been handed down from federal or provincial centric aviation development strategy for its Springbank entities, is that of mistrust. This lack of trust comes Airport. (Source: Noel Kenneth Melton)
JOZSA MANAGEMENT & ECONOMICS 4-4 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 from both airport tenants, who fear the loss of their flying privileges, and from surrounding communities which fear an increase in noise from additional traffic. Successful airports recognize that they must be more transparent, demonstrating that they are generators of economic growth which will benefit all stakeholders. Successful airports make it their mission to lure new growth by providing the business climate that encourages new growth. The Calgary Airport Authority which runs Springbank Airport, took the following approach: 1. Work to establish positive community relations. 2. Create a cohesive tenant group, through frequent meetings with stakeholders. A suggestion was made that the tenant group form a subcommittee that would report to the airport manager. This became the Springbank Airport Business and Pilots Association (SABPA). 3. Return the airport to positive financial position. Upon acquisition, the airport inherited a $350,000 annual deficit. The CAA set out to cut expenses by reducing staff levels and developing new contracting-out procedures. 4. Invest in infrastructure improvements and increase leasable land. In 1998 the CAA constructed a new taxiway and brought in 5 new lots. This was an immediate display of commitment to the airport community. 4.4 Key Success Factors The landlord should develop a plan that outlines key success factors to a diversified business operation, by harnessing existing core competencies and developing new ones. Airport management should recognize that business owners are it's partners and cannot succeed without them. Adopting a holistic vision for the airport, supported by locally based airport management, willing to advocate for GA, is an important factor compared to what is commonly found in Canada. Five lessons learned from Springbank, Carp, and the other general aviation airport cases are summarized below. Not all strategies are applicable to every situation, however they form the basis of a well conceived strategy to help harness new opportunities for a GA facility such as Digby Airport.
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4.4.1 Effective Communication Stakeholders have begun to understand that dealing one-on-one with airport management is not effective. Pilots and business owners must understand the need to speak with one voice. It is preferential to work together to build lines of communication with airport management, local municipalities, Nav Canada, Customs, and other organizations committed to the success of the airport. Through organized and open lines of communication airport managers are better able to discuss and explain what resources are available to an airport. An organized stakeholder group becomes a strong voice in setting priorities that will allow the airport to become more functional from an infrastructure and operational standpoint. Airport management can act as an advocate for and facilitate the formation of such stakeholder organizations. 4.4.2 Push/Pull Strategy- Stimulate Airport Business Development Tenants will respond by investing in their GA airport if supported by management with investment in related infrastructure. In the Calgary case, the CAA has made $2.5m worth of investments at Springbank to date, which resulted in tenants investing $5m to $10m in new facilities, including new businesses and t-hangars. Setting a "growth vision" for an airport has been demonstrated to help escalate property values, and encourage private investment at the site. Creating a fee structure which ensures that the airport attracts and doesn't turn away its target market is an essential issue. In addition, land ownership can be a significant attraction for investment as was proven in an LPS Aviation inc. business plan for Muskoka Airport where a traditional tenant doubled the size of his aircraft maintenance business once he was allowed to purchase his site. Evidence from a number of locales in Canada suggests pilots are moving out of larger airports where high GA landing fees have been introduced and/or where a lack of GA facilities prevails. An airport cannot afford to wait for business to come, but must actively identify and pursue new opportunities. 4.4.3 Out of the Box Thinking Conducting "business unusual", instead of "business as usual", creates an impact in any line of business. Time and again it has been demonstrated that word of mouth publicity is the most cost-effective form of marketing. In one example, a deal was struck whereby a GA airport houses a piece of community roads maintenance equipment in its airport garage and agrees to maintain airport roads with it. Another airport created a public park off the end of one of the runways by providing services which would otherwise not exist in the area. The park draws people to the airport which in turn supports area support business such as gas stations and restaurants. 4.4.4 Supportive, Knowledgeable Airport Management It is important for airport management to deal with tenants in a fair and consistent manner. Customer development and the pursuit of excellence are more easily said than done in any business environment, but it is important that these key facets be made a part of corporate culture. To this end, some airport management organizations offer courses to their staff in achieving customer service excellence.
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It is also important to have both knowledgeable and involved airport management that is willing to take ownership of issues. The assumption is that senior management is willing to delegate not only the day-to-day running of the airport but also other potentially larger issues to subordinates. It can be demonstrated that by streamlining processes between senior and local airport management, new ideas can be acted upon more quickly and costly bureaucracy can be avoided. More importantly, airport management can become proactive instead of reactive. 4.4.5 Aligning Business Strategy with the Community By cultivating a positive working relationship between the airport and the surrounding municipal district, costs can be reduced and services improved. In the CAA case, the airport authority, municipal district, and community signed an agreement to bring the community "closer" to the airport, which included the construction of a fire hall on airport property. While not required by federal regulation, this is a first-ever in Canada for a general aviation airport. Cross-trained firefighters will shortly be capable of fighting aircraft as well as structural fires, thus adding to a package of incentives that will lure additional investment to the airport in the future. The airport also acknowledges the importance of an Area Structure Plan. With equitable input on the ground floor, both airport and surrounding lands can be adequately protected from improper use, thus serving airport interests long-term.
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An essential component of strategic business planning is to perform a Strengths, Weaknesses, Opportunities and Threats Analysis (SWOT). A SWOT establishes an overall picture of both the external and internal environmental forces which act on a business such as an airport. The analysis is an important first step towards creating a vision of future success, and positioning the airport to maximise its potential as it identifies strategic opportunities. The SWOT analysis began with a series of personal interviews and was concluded with a workshop attended by a wide range of persons with direct interest in the operation of the airport. 5.1 Stakeholder Consultations Consultations were undertaken with aviation, aviation-related and selected non-aviation stakeholders in the region in coordination with officials. All stakeholders were most cooperative and constructive in considering the future of the airport. Table 5-1 summarizes the findings of the initial interviews. Appendix 1 provides a list of persons interviewed and in attendance at the planning workshop.
Table 5-1: Summary of Key Personal Interview Findings
Infrastructure Runway in generally good condition. Some subsurface issues on southern 1/3 rwy.
Parts to rotating beacon becoming harder to find
Operations Altimeter not certified by Nav Canada, forcing restrictions in instrument approaches
Single tractor for snow removal- blower only, no plow. Time consuming process.
Movement activity on a gradual decline. Little commercial aircraft activity.
Financial Increasing budget deficit over last decade, particularly maintenance and utilities
Profit margin on fuel low due to management practices and increasing cost
Consultation Low profile for airport in community. Lack of awareness of the airport among the general Feedback population.
Need to open up and market airport lands, relax any restrictive procedures
Digby a great place to live, need to provide incentives for people to stay. Might the airport to be one of those incentives?
Need to explore cooperation between tourism and industry, air charter services , the provincial government.
Could Digby obtain Canada Customs Port of Entry Status?
Airport needs to be better marketed.
JOZSA MANAGEMENT & ECONOMICS 5-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 5.2 SWOT Analysis Findings The following sub-sections provide the findings of the assessment of strengths, weaknesses, opportunities and threats using information collected during the personal interviews and workshop. 5.2.1 Digby Airport Strengths Digby Municipal Airport's major strengths lie in its ability to handle recreational and commercial aviation, and play a vital community support role. Because it is un-congested and located in the countryside, it is well suited for ab-initio flight training. The availability of fuel, lighting, tie-downs, and 24-hour attendance make this an excellent alternate airport for cross-country flights, a staging point for emergency services, and entry point into the national air transportation system. The airport has a paved and lighted main runway of 3,950 feet, adequate for handling most light and medium propeller and turbo-prop aircraft, as well as some light jets. The community understands the advantage of possessing an airport and that given costs and challenges, one would not build one today. Moreover, there is a fundamental recognition that neighbouring communities would not wish to construct or operate an airport. This leaves Digby and Annapolis with a relatively unique piece of infrastructure. Digby Municipal Airport has a number of location, infrastructure, and cost advantages, which may be summarised as follows: 5.2.1.1 Location Ground-based advantages include: • Close proximity to the town of Digby; • No risk of community encroachment, far enough away from homes and businesses that does not create noise problems; • Well located with respect to Saint John, NB, and other Atlantic Canada centres; • Situated not far from Highway 101 linking the region with Halifax and Yarmouth; • Port of entry for New Brunswick Ferry; • 11 manufacturing and 21 businesses within 30 minutes employing about 4,000 people; and • Airport in centre of a region, comprising about 40,000 residents. Aeronautical advantages include: • Superior weather with respect to other airports in the region with few fog days; • Highest airport in Nova Scotia with good communications capabilities; and • Unobstructed approaches to main runway(s) and relatively flat terrain. 5.2.1.2 Infrastructure Infrastructure related advantages include: • Certified Airport to Transport Canada standards; • Paved 3,950' x 75' lighted runway; • Excellent, proven airport site, expandable; • Flat, well-drained site with stable geotechnical conditions and mild climate; • No noise restrictions;
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• Maintained all year round; • Serviced by electrical, communications and municipal utilities; • Unconstrained airfield environment; • Capable of supporting multiple aviation uses including gliding due to tranquillity of site; • No significant limitations on airport use or aviation activities; • A marketing tool for community development; and • Real Estate available for aviation and non-aviation business. 5.2.1.3 Low Costs From a cost perspective the airport has the following advantages: • No current debts or capital costs to amortize or recover; • Low operating costs; and • Low cost of use- no fees. 5.2.1.4 Superior Service to the Community The airport brings advantages in terms of its service to the broader community: • Staffed 24 hours a day- unique for a municipal airport in Canada; • Maintenance facilities on-site; • Competitive aviation gasoline fuel prices; • CANPASS airport of entry; • Airport is known as a welcoming and user-friendly facility; • Without the Digby municipal Airport the response time of air search and rescue would be increased by up to three hours for air search and rescue activities in Digby and Annapolis Counties; • Ground search and rescue have their base of operations at the airport; • Emergency dispatch is at the airport; and • Co-location of emergency services at the airport provides efficiencies and benefits that stem from easier cooperation between emergency services 5.2.2 Digby Airport Weaknesses Despite a number of unique strengths and competitive advantages, Digby’s airport is an underutilised asset and lacks certain services which would help better market the airport as an attractive place to do business. Commercial aviation enterprise is the greatest potential generator of revenue for an airport. Commercial non-scheduled aviation (commonly referred to as aviation industrial activities) include but are not limited to business and corporate aviation, air-taxi services, flight training, cargo transportation, aerial surveying/ photo flights, crop spraying, banner towing and skydiving support. To successfully lure and keep commercial aviation customers at the airport, a number of facilities should be present. Some of these are unavailable, including public hangar space, lack of full Airport of Entry status, a land-lease/purchase process that could be streamlined, and lack of broadband communication services. The lack of public hangars should addressed. Operating and maintaining private aircraft is a costly endeavour, and a growing number of operators seek affordable hangar space for their
JOZSA MANAGEMENT & ECONOMICS 5-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 aircraft in order to protect their investment. Additional storage capabilities are required particularly if the airport seeks to lure tenants from other communities and tap a potential source of revenue. Digby Municipal Airport's weaknesses may be grouped into the following categories. 5.2.2.1 Community Awareness The airport has limited visibility and awareness among the community of Digby and Annapolis Counties. 5.2.2.2 Scheduled Air Service Challenges Proximity of Halifax International Airport, limited population, and carrier operating costs makes Digby an unattractive destination from the standpoint of scheduled air services 5.2.2.3 Infrastructure The airport lacks • regularly available customs clearance service for all aircraft; • flexibility with respect to land purchase and lease and the requirements and for buildings on the airport site; • broadband internet access; • public hangar space available; and • three-phase power (although lines run up to property boundary). 5.2.2.4 Aviation Services Turbine fuel (jet fuel) is not readily available at the airport, preventing turbo-prop and small jet aircraft such as business charters and NS Ministry of Natural Resources aircraft from refuelling. 5.2.2.5 Operations and Maintenance The use of a single aging piece of snow removal equipment makes the snow removal process inefficient. The tractor, a 1989 vintage Ford 276, is aging and the community will soon be faced with replacing it. The tractor is presently fitted with a blower attachment although it can accommodate a blade which would increase snow removal efficiency. For convenience purposes, however, the operator has chosen not to swap between blower and plow unit. The resulting tradeoff is that it commonly takes hours to clear the runway, taxiway and apron, reducing airport availability during winter months. 5.2.3 Digby Airport Opportunities Statistical analysis by COPA (Canadian Owners and Pilots Association) indicates that small non-certified aircraft, including home-builts and ultralights, are the fastest growing sector of private aviation in Canada. Many municipal and commercial airports, however, currently do not accommodate these aircraft given their location, level of traffic, and infrastructure. As many of these aircraft do not have electrical systems, they are generally not capable of operating at controlled airports (airports with control towers or flight service stations) where radio communication is mandatory. Furthermore, given their operating characteristics these aircraft types prefer to land on grass areas separated from paved runways. Digby Municipal Airport’s layout and operating characteristics as an uncontrolled airport make it the perfect spot for virtually all forms of recreational aviation. Digby Municipal Airport is well positioned to tap into this growing market opportunity.
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Stakeholder consultations included a suggestion that a private business concern might consider purchasing the airport for a nominal fee providing it makes a certain commitments with respect to development at the airport site. Ideally, this business with the one that needs a runway and an operating airport. Business activities should therefore be designed to raise the profile of the airport to the target market. 5.2.3.1 Direct Airport Opportunities Digby Municipal Airport's opportunities may be grouped into the following categories. Air Transportation Role The airport has the potential to serve as an: • access point for an intra-provincial air taxi service (such a proposition would have to be developed in concert with other community airports in response to the needs of a specific market segment); and • utility for business users, ranging from area manufacturing to the Pearson Peacekeeping Centre. Industrial Role With respect to industrial development the airport offers the potential for: • Non-aviation opportunities include attracting electronic-commerce, manufacturing, as well as logistics/ just-in-time supplier businesses with expedited transportation requirements; and • attraction of a "cluster" of businesses that would see a location at the airport as a unique selling point or business advantage. Training and Learning Role Digby Municipal can serve roles related to: • training related to ground search and rescue, air search and rescue, and geomatics • site for an ab-initio flight training program in association with regional flight training units • flight training, which could be conducted via co-operative program with area high schools or a technical college; • the location of public service infrastructure (For example, the level of public recognition of the airport in the community could be increased by locating a telescope recently purchased by the school board at the airport. If the telescope is of sufficient size and quality, it could also be used as a tourism activity.) Aero-Tourism Role With respect to tourism the airport could: • develop linkages with area’s tourism and hospitality sectors; and • help promote Digby and Annapolis Counties as a vacation destination. Air tourism from private aircraft is a commonly overlooked opportunity, as tourism associations tend to concentrate on passengers arriving at major airports on scheduled airlines. Private fliers are an important segment of the aviation sector in Canada, given the aging population’s greater propensity to spend on recreational aviation. Some examples of scenic beauty and key area attractions include the Bear River area, often referred to as the Switzerland of Nova Scotia and
JOZSA MANAGEMENT & ECONOMICS 5-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 the Kejimkujik National Park. Flight packages could be marketed in conjunction with other area attractions. Community Role The airport could take on a greater community service role. For example it could be developed to become: • an air ambulance service point (This traffic is diverted to Yarmouth when they cannot land at the Digby Hospital rather than landing at the airport. The lack of jet fuel at Digby forces the air ambulance helicopters and fixed wing aircraft to carry more fuel at a penalty to efficient operations.); and • a site for events that will increase the airport’s visibility, such as an aviation technology fair, regular fly-ins, a Community Day at the airport, air tours of the area, and so on. 5.2.3.2 Airport-Seaport Strategic Opportunities The idea of treating the seaport and airport as complementary transportation providers has been discussed. For example, the case for justifying Canada Border Services Agency Port of Entry status might be made easier if the two facilities shared resources. The port’s role in area tourism activities might go hand-in-hand with airport marketing initiatives designed to promote Digby and area as a destination of choice. However, the potential cessation of the Digby - Saint John ferry places this opportunity in some jeopardy. At the time of writing the government of Nova Scotia has promised to provide funding support and is currently in negotiations with the government of New Brunswick to assess its interest in sustaining the ferry service. 5.2.3.3 Land Development Opportunities The airport has some advantages that could encourage land development at the airport site. There is a substantial land base available for residential, commercial and/or industrial development, or possibly as a source of revenue based on timber harvesting. Figure 7-1 in Section 7.1 provides a conceptual land use plan and an overview of a rationale for that plan. Airport land cannot be purchased at properties such as Saint John and Halifax Airports but could be at the Digby airport. Investors tend to prefer to buy rather than lease land and in addition preferential terms are more widely available from financial institutions for investments on owned land. The establishment of the new community-based economic development agency could open avenues to planning for residential, recreational commercial and industrial development at or near the airport. To help realise this opportunity the Municipality of the District of Digby, the owner of the airport should consider developing more flexible land purchase and leasing strategies. 5.2.3.4 Residential, Commercial and Industrial Opportunities A range of aviation and non-aviation related opportunities are identified in Table 5-2, Commercial Opportunities Scan, following page. The table shows uses judged to have at least a medium-low potential. Appendix 2 provides more details of the opportunities scan. It does not represent the sum total of possible commercial enterprises, but does give a fair representation of the opportunities in the area.
Table 5-2: Commercial Opportunities Scan (Medium-Low Potential or Better) Potential Use Local Competition Interest Constraints Potential Flying training No Yes Marketing development Medium
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Aircraft hangar Yes Potential Lack of t-hangars Medium Tourist/ outfitters Yes No none Medium Special events No Unknown none Medium Picknic grounds No No none Medium Camping No No none Medium Other recreation No No none Medium Residential, runway access No Potential none Medium-Low Aircraft maintenance Yes Potential land and mgmt policy Medium-Low Trailer park No No none Medium-Low Restaurant No Unknown none Medium-Low Hotel/ motel Limited No none Medium-Low Auto track, auto events No No none Medium-Low Manufacturing Yes No Power, land and mgmt Medium-Low Depending on the economic development strategy that will likely be forthcoming for the new regional development agency some of the opportunities identified in Table 5-2 may not be appropriate to pursue. This commercial opportunities summary illustrates that flying training, aircraft hangars, tourist/ outfitters, special events, picnic grounds, camping and other recreational activities and residential development with runway access are the main potential drivers of commercial growth at the Digby Municipal Airport given area traits. There is some additional potential in aircraft maintenance, although this will be heavily dependent on current market forces and marketing initiatives undertaken by the community to lure such an operation to Digby. Manufacturing and aircraft maintenance have limited potential, and will be heavily dependent on supplying the requisite electrical power to the site, as well as marketing initiatives to land an anchor tenant. Other activities with limited potential include a restaurant which might operate with limited hours and cater to fly-in pilots on weekends, and hotel/motel and/or trailer park which will be dependent on regional tourism initiatives. 5.2.4 Threats There are three main threats to the development of the Digby Municipal Airport. 5.2.4.1 Economic Threats The airport faces the following threats that relate to economic issues: • Aviation growth is linked closely to provincial economic growth rates including gross domestic product (GDP) and personal disposable income (PDI) growth which is cyclical; • Aviation is commonly first sector to go into recession and last to emerge; • The rising value of the Canadian dollar may deter American visitors; • Implementation of United States passport legislation that threatens existing travel from the United States to Canada • Rising cost of recreational flying due to the price of fuel, insurance, regulatory creep, and other user fees • High cost of extending water and sewer services to the airport; • At the time of writing, the Digby and Annapolis County area do not have a community based economic development organization in place to market the area as a place to do business.
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5.2.4.2 Value Recognition Threat The municipalities within Digby and Annapolis Counties have recently decided to suspend the operation of the Western Valley Development Authority. The municipalities in the two counties, with the exception of the Municipality of the District of Clare that joined the Southwest Shore Development Authority, are currently in the process of establishing a community based economic development agency. This gap in economic planning leadership could have a negative effect on the implementation of a development plan for the airport unless that plan is easily seen to be consistent with the overall economic development needs of the economy in the two counties. The hiatus in the operation of and economic development authority presents a number of threats to the future viability of the Digby Municipal Airport, including: • Absence of a champion or regional interests committed to making the best use of the airport, to implement a new vision, and to lead the current airport operation forwards; • Shortage of time and resources to market the airport and build new business; • Lack of an overall economic development strategy that would help identify the priority of the airport as an economic development initiative; and • Perception by the community that costs relative to benefits as too high. 5.2.4.3 Competing Airports Threat Other airports throughout the region offer a number of services and cater to different target markets, some of which may overlap aviation activities that could use Digby Municipal. The following examples illustrate the competition faced by Digby from an aviation infrastructure standpoint. Industrial Airports Slemon Park on Prince Edward Island as well as Yarmouth and Debert Airports have aviation industrial tenants and longer runways. However, the potential to draw certain types of business to Slemon Park is in some respects limited by its island location. Scheduled Service Airports The proximity of Halifax International Airport (HIA) with its high level of existing infrastructure and services, and extensive airline connectivity is a major threat to the growth of the Digby Municipal Airport. The proximity of HIA and failures of passenger service at Yarmouth preclude development of sustainable scheduled passenger services at Digby Airport. Municipal Airports There are other light general aviation airports within the region; including airports at: • Yarmouth • Waterville, Kings County Municipal Airport, and • Liverpool. Yarmouth Airport has a 6,000 foot lighted runway with a precision instrument approach. This makes it extremely difficult for Digby to lure aviation requiring more sophisticated ground and navigation infrastructure. Certain aviation roles suitable for Digby Airport such as flight training and private charter, have a limited catchment area.
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Other airport related businesses , such as aircraft maintenance activities and air express shipping, need to draw from a larger area and already compete with other facilities throughout Atlantic Canada. The following table compares Digby Municipal Airport to its regional competitors according to nine important criteria. Table 5-3, following page, compares regional airport competitors with respect to the following criteria: • Status: A Certified airport meets Transport Canada standards. Registered aerodromes and do not meet minimum standards and recommended practices. • Longest Runway: Longer runway lengths are required for larger/higher performance aircraft. • Best Approach: Precision approach capability indicates the presence of an instrument landing system, which boosts airport reliability/availability in poor weather. • Approach Limits: Lower cloud ceiling and visibility limits improve poor weather availability. • Lighting: Higher intensity lighting enables operations in poorer weather. • Fuelling Facilities: Jet fuel is required for the turbine engines of almost all commercial aircraft while aviation gasoline (AVGAS) is used by training and recreational aircraft. • Customs: Essential requirement for trans-border or international flight operations. • FBO: A Fixed Base Operation is essential to support commercial GA activity. • Scheduled Services: Scheduled passenger services enhance the commercial attraction of some of it's the regional competitors. • Ownership: Federal ownership and land lease discourages some investors at some of Digby's competing airports. Table 5-3 illustrates that Digby Airport provides a level of service commensurate with the size of the community intended role as a municipal resource. It is certified and as such can handle a variety of traffic without restrictions imposed by some insurance providers. Its GPS approach provides horizontal and vertical guidance superior to that of Waterville/ King’s County. It is lit medium intensity for night operations, and supplies aviation gasoline. For the most part, infrastructure is not a major cause of concern. One potential area of weakness is that it does not provide jet fuel which is common to turbine-engine aircraft. Its lack of Airport of Entry status might impose some restrictions which must be investigated further. Runway length is adequate in the short to medium term, particularly with regards to many forms of private and business aviation, and flight training. However, this may be a competitive disadvantage in the longer term for certain aviation industrial uses.
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Table 5-3: Competing Atlantic Canada Airports
Criteria Halifax Saint Yarmouth Digby Waterville Liverpool Stanley Intl. John
Status Certified Certified Certified Certified Certified Registered Registered Longest 8,800' x 7,000' x 6,000' x 3,950' x 3,500' x 3,937' x 75' 2400' x 100' Runway 200' 200' 200' 75' 75' Non- Non- Non- Best Approach Precision Precision Precision Precision Precision Precision VFR only Capability Approach Approach Approach Approach Approach Approach Approach 100' 200' 200' 501' 840' 579' - Limits ¼ mile ½ mile ½ mile 1 ½ miles 2 ¼ miles 1 3/4 miles Lighting High High High Medium Medium Medium No Intensity Intensity Intensity Intensity Intensity Intensity Fuel AVGAS AVGAS AVGAS AVGAS No public AVGAS AVGAS Availability Jet Fuel Jet Fuel Jet Fuel Jet Fuel fuel Airport of Airport of Airport of Customs No No No No Entry Entry Entry FBO Yes Yes No No No No No Sched Svcs Yes Yes No No No No No Federal Ownership Federal Provincial/ Leased Local Local Local Private Leased land Local land Source: CAP(Canada Air Pilot), CFS(Canada Flight Supplement) 5.3 Economic Development Imperatives and Strategic Vision The following guiding principles form the basis of the strategic vision for the Digby Municipal Airport. The importance of the airport as a potential generator of economic activity is clearly understood and regional interests have expressed a number of clear desires to: • Retain existing airport infrastructure; • Improve the sustainability out of the existing infrastructure and services; • Enhance the current infrastructure and services; • Diversify the economic base of the airport; • Enhance tourism assets and tourism products, including packaging tourism products; • Exploit new tourism markets such as the European and Asian markets as well as certain niche markets from the United States; • Increase marketing in Canada; • Improve the use of the environmental assets; and • Use the airport as a marketing tool, treat the airport as a port in the same way that the marine port is treated with enhanced services including a customs port of entry.
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The existing airport has lacked a business vision that prevents it from realising its full potential in serving the interests of business and tourism in the region. While it benefits from relatively good infrastructure, it is presently underutilised. The strategic vision centres around a marketing-lead approach to generate new business and maximise the asset, which in turn will drive future capital upgrades. An examination of opportunities, prevailing trends in the area, and stakeholder interests have led to the identification of a select group of opportunities which should be developed. A clear strategic vision is essential to realising successful airport development and avoiding costly errors. The following vision is recommended:
Digby Municipal Airport should reinforce its position as an economical and high value REGIONAL GENERAL AVIATION AIRPORT focussed on meeting the future air transportation needs of private citizens, the community, and business in Digby and Annapolis Counties.
The airport should retain its existing traffic base, expanded with a marketing strategy designed to maximise the utilisation of the airport and airport lands. The airport should be run as an economic development asset, rather than a mere public utility, with an understanding that the airport is an asset that has value for regional economic development that is worth supporting.
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6.0 Marketing Plan
The airport's value to economic development and regional competitiveness justifies public support to attract development and ensure its long-term viability. The marketing plan takes the vision for the airport and identifies target clientele who should be pursued in order for the airport to develop a closer relationship with potential customers. Steps to position the airport to respond to the needs of customers are discussed, as is a pricing and promotion strategy. Finally, the need to undertake development and marketing activities focussed on airport land is discussed along with anticipated benefits. 6.1 Target Markets It is recommended that light-to-medium-sized general aviation traffic be pursued at Digby, with a mixture of aviation and non-aviation related business and tourism infrastructure occupying adjacent lands. Section 6.3 details how the airport should be positioned to meet the needs of the target market while fulfilling the aims of the strategic vision. Given the proximity of Yarmouth and Halifax Airports and the underlying realities of commercial aviation in Atlantic Canada, Digby Municipal Airport should not be developed to handle scheduled passenger traffic. However, a regional air taxi service could be considered to serve the business interests of a number of coastal communities, tying them to the national transportation system at airports such as Saint John, Moncton, and Halifax. Identified by members of the steering committee as an area of potential interest, this initiative will involve additional business planning in order to determine the extent of area demand, the most suitable aircraft to operate the route, and aviation partners to provide the service. Such an initiative could prove more important if the Digby - Saint John ferry service were to be discontinued. Marketing resources and capital investments should be aligned accordingly based on the target market. This long term strategy will help control costs. The primary target markets for Digby Municipal Airport are: • Regional businesses and organizations requiring timely access to markets; • Community/ regional essential services requiring air transportation; • Flight training for students through adults; and • Aero-tourists from the USA and Canada. 6.2 Catchment Area/ Airport Re-branding The airport’s historic catchment area is considered to be mainly Digby County. However, given its location the airport’s potential economic benefits extend beyond Digby County’s borders into neighbouring Annapolis County to the east. Securing "buy-in" from adjacent communities, from Bridgetown to Weymouth, is highly advantageous. To this end the airport advisory committee should consider expanding its membership to involve representatives from adjacent communities. Future re-branding of the airport as the "Digby-Annapolis Regional Airport" would create a clearer
JOZSA MANAGEMENT & ECONOMICS 6-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 sense of place and significance in the target user's mind while allowing the airport greater geographic prominence. 6.3 Positioning the Airport As a regional general aviation airport, Digby Municipal Airport should be positioned to support a number of diverse business, private, and other community needs. The airport could become a utility of greater value for the regional economy if marketed appropriately. The marketing strategy is designed to enhance airport visibility and increases the utilisation of the airport and airport lands. The airport's physical location, near a major highway corridor and in the vicinity of a number of manufacturing will guide its future prosperity. The following direct airport related roles are envisaged for Digby Municipal Airport: 1. A base for private recreational aircraft for Digby and Annapolis Counties; 2. A community support role, providing access to air ambulance and other emergency measures organisations requiring aviation such as search and rescue, disaster evacuation and recovery; 3. A centre for flight training, from gliders to light single and twin-engine aircraft; and 4. A user-friendly environment for business and tourist aviation, as well as non-aviation related business and tourism activity. Recreational flight activities should be maintained and flight training activity should be restored and expanded. The latter may be a challenge in the short-term, given the recent decline in demand from the community for flight training. However Greenwood Flight Centre, based at King’s County Airport in Waterville, expressed a willingness to work with local individuals to provide flight training from a satellite facility at Digby Municipal Airport. If a locally-based flight training unit is not feasible, the way forward might involve joint marketing initiatives between the Greenwood Flight Centre, the Municipality, local and regional educational institutions. Developing marketing initiatives that expand the airport catchment area might produce new opportunities for flight training. The need for pilots in Canada is presently growing. Flight training promotes a sense of responsibility and accomplishment in young people, shaping adults of stronger character with greater confidence. In this sense, restoring flight training should be viewed in the context of its contribution to a stronger community. The airport should be capable of accommodating aviation uses deemed incompatible with Yarmouth and other centres, and should target businesses and individuals seeking a facility at which to grow their enterprise. A few area pilots own private airstrips out of which they fly and/or operate an aviation business. Such individuals should be approached as part of marketing efforts designed to concentrate area flying activity at Digby Municipal. Understanding that such individuals will weight the costs and benefits of relocating to Digby, the marketing plan should ensure that the needs of aviation business can be met in an economical, effective, and efficient manner. 6.3.1 Positioning and Marketing for Other Investment Other investment should be encouraged from the private sector. Section 7, Land Development Planning, describes potential land use development options that go beyond strict airport related uses and open up wider avenues for private sector investment on airport land. Potential development related to residential (with runway access) and commercial and industrial uses that are not directly tied to airport activity are reviewed and a conceptual land use plan is presented.
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Further discussion of the airport's infrastructure strategy is detailed in Section 8, Infrastructure / Operations Plan. 6.4 Partnerships and Private Sector Initiatives Public-private initiatives should be considered to generate new investment activity, increase public awareness, improve customer service, and attract business to the airport. The investment in tourism infrastructure and luxury residential (with runway access) development are two areas of potential partnership. Another would be the construction of hangars to provide services to the GA community. 6.5 Pricing Strategy Digby Municipal Airport may not be capable of operating on a cost recovery basis in the short-term. However the airport must be careful so as not to alienate the target markets with undue fees and charges. For example a landing fee for private aircraft may discourage business and is not recommended. Digby Municipal Airport may be able to attract private fliers who base their aircraft at other locations, such as Waterville or Liverpool, by providing additional services such as hangar space. Understandably an airport should be capable of generating income to provide service. By providing hangar space, the airport would be able to collect taxes and levy a maintenance charge for hangar upkeep. A small tax on fuel sales, which is common at most general aviation airports, could also be injected back into the airport. The price point for fuel should be in line with other regional airports so as not to deprive Digby Municipal of needed revenue. 6.6 Promotion Strategy A communications strategy is required to increase public awareness for the airport. Although a continued airport operation is in principle supported by the community, it currently suffers from a general lack of visibility. A number of steps should be undertaken to remedy this situation and promote the airport and its services to a wider audience. 6.6.1 Enhance Airport Website The airport website should be redeveloped to identify the airport and its services to potential users and serve as a vehicle for promoting airport lands for development. Links to aviation weather, flight planning, and other pilot services might be provided; an electronic "guest book" for pilots and visitors might provide an ongoing source of feedback for management; while news and other developments might be also publicised through the site. 6.6.2 Improve Road Signage Visitors to the airport at present find locating the airport difficult owing to a lack of road signs off of Highway 101, within the community, and along the main access route. Appropriate signage should be available along main arteries leading to and from town from major intersections. Signage will help identify the airport to passers-by and the community at large, while helping to create a private and corporate awareness. The location and erection of road signage should be pursued with the province or regional authority (if applicable), which ever is responsible for road signs.
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6.6.3 Increase Community Outreach Programs Additional community programs or events might be held at the airport in order to promote awareness and development, both aviation and non-aviation related. From community tours to recreational aviation fly-ins, to hosting regional gatherings such as air show, and non aviation events such as fairs and sporting events, to providing public green space including picnic tables and walking trails, the airport should be given greater prominence in the community. Increasing community visibility will be essential given its important role. Other initiatives to bring the community closer to the airport include enhancement of existing municipal services based at the airport. For instance a piece of community roads maintenance equipment might be housed in a garage on airport property. This might enable airport access roads and the parking lot to be given priority treatment during winter. Similarly, so long as it could be kept free of road salt a plow could be dedicated to clearing the airport runway. 6.6.4 Joint attendance of Aviation Industry Events with Area Tourism Agencies An annual budget should be set aside for appropriate representatives to attend regional and national aviation events, such as the Canadian Aviation Expo which takes place at Oshawa Airport outside of Toronto each June. The largest fly-in, aviation trade and consumer show in the country, The Canadian Aviation Expo has proven to be an effective marketing voice in the Canadian aviation community. The three-day event drew 25,000 like-minded pilots and aviation enthusiasts in 2005, with 27,000-30,000 attendees expected in 2006. This is an excellent opportunity to increase the airport's visibility, and to enhance area tourism. Exhibitor space starts at 5 feet x 10 feet, costing $500.00. For international exposure, the annual EAA Air Venture which takes place at Oshkosh, Wisconsin each July is the world’s premier general aviation event. It brings all segments of aviation together for a week-long celebration of flight. “Oshkosh” has become the home of new innovations and annual announcements that impact the aviation industry, and attracts over 750,000 aviation leaders and enthusiasts annually. Among the exhibitors are communities and tourist destinations seeking to capitalize on what has become the largest single concentration of pilots anywhere in the world. A 10 foot x 10 foot exhibitor space starts at US $2,000 for the 7 day event. 6.6.5 Co-Locate Tourism Infrastructure, Tourism/ Hospitality Cross Promotion A courtesy phone to the area tourism information office is recommended, or alternatively airport staff could be trained to provide a greater hospitality role, given that establishing a tourism office onsite is likely not feasible. Area tourism attractions, including the local bed and breakfast, rental car agencies, and local restaurants should be promoted inside the airport terminal, with the option of a direct phone line to various service providers. While the airport might not be capable of supporting a restaurant, there is a good opportunity to advertise delivery services to the airport for visiting pilots, and to work with area business to offer the kinds of services which visiting pilots might desire including car rentals. Fly-in camping might be encouraged on the airport. A portion of the large grassy area adjacent west of the runway could be designated as a camping spot, or the non-certified turf/gravel strip perpendicular to the main runway could be converted for this purpose.
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Additional tools to enhance the airport’s customer services include providing bicycles for rental to visiting pilots and air crews, converting dis-used space in the terminal building to rest areas for pilots, and continuing to offer self-service coffee, snack and beverage services. 6.6.6 Develop an Airport Brochure A small publication outlining the facilities and services of the airport might be produced for minimal cost. The publication could be distributed at industry events, and/or mailed to interested pilots. As part of an airport branding exercise the community might consider the development of an airport logo to be used on all print and electronic literature and signage. 6.6.7 Promotion of Airport Lands for Non-Aviation Activities Diversification of revenue streams has become increasingly important for airports of all sizes. Communities commonly fail to recognize the value of lands and their potential given that they are commonly flat, serviced, and natural centres for business activity. Digby Municipal Airport has available land which can be developed without sacrificing current or future aviation capabilities. Revenue diversification from land should target aviation and non-aviation enterprise. Section 7, Land Development Planning, describes potential land use development options that go beyond strict airport related uses. 6.7 Human Resource Strategy In the ideal situation the Digby Municipal Airport would have the services of a full time airport business and marketing manager with a thorough knowledge of airport operations, the individual would be responsible for implementing the airport marketing and land development plan and responding to customer needs. The individual might also be regularly involved in the daily operation of the airport through various maintenance and tenant outreach activities. These duties should be aligned, in so far as applicable, in accordance with key success factors outlined in Section 4. The municipality would expect to budget about $55,000 for the first year for such an individual. However, given the financial position of the airport the ideal situation is not likely to be realistic. Therefore, recommend as a more practical alternative that: • the about to be established regional economic development agency be tasked with including the airport in its mandate for development and promotion; and that • an incremental budget (i.e., incremental to the “baseline budget of the new agency) of approximately $15,000 be established to engage staff, or expand the duties of the present airport supervisor, to conduct an airport related direct marketing and selling exercise.
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7.0 Land Development Planning
Apart from potential aviation opportunities, the development of airport lands for both aviation and non-aviation use forms a key part of Digby Municipal Airport’s future viability. Airport land should be made available for lease to commercial enterprises. A number of different business strategies exist in this regard which Digby Municipal Airport can utilise. Future land use planning for the airport should consider how flying activities might ultimately integrate into future airport development. In addition an industrial park might be accommodated on airport lands. Further land use planning will be required to identify the most suitable locations. The Digby Municipal Airport’s operational area consists of 17.5 hectares, with 63.7 hectares set aside for industrial development. Given that only a small portion of the latter is developed there are several potential revenue-generating activities that could be pursued. 7.1 Land Tenure Airport land may be leased to commercial tenants, or sold for commercial use as summarized below. 7.1.1 Land Ownership The advantages of land ownership for investors and commercial operators include the following: • long term commitment to the airport; • opportunity for capital appreciation of the assets; • relative ease of financing (depending on the health of the business); and • pride of ownership and probably a superior facility development. The disadvantages of land ownership for airport commercial operators lie mainly in the significant long term commitment to the airport. The advantages to the airport owner include: • higher quality facilities may be developed and maintained when owners enjoy potential for capital appreciation of their assets; and • potentially longer term commitment to the airport by commercial operators. The disadvantages to the airport owner include: • a lower level of development control; • more difficult to maintain operational control; • loss of rental income; the offsetting purchase cost may not accrue directly to airport budgets; • future airport operations may depend on rental income to offset operating costs; • may impede future development in adjacent areas; and • development may not relate to airport corporate vision.
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7.1.2 Land Lease The advantages of leasing land for investors and operators include the following: • lower initial capital investment; and • less commitment to the airport. The disadvantages of leasing land for investors and operators include the following: • increase in difficulty and higher cost of financing development; • exposure to rental cost escalation at periodic intervals; • outside oversight of activities and development; and • viability of investment depends on the aviation business’ cash flow. The advantages to the airport owner include: • long term rental income; • increased control of activities and development; • orderly long term development / optimization of airport land and resources; • compatibility of land uses; and • potentially level playing field if all leases have the same terms and conditions. The disadvantages to the airport owner include: • repayment or sharing of costs for infrastructure development; • possibly lower rate of commercial development; and • lower quality facilities. 7.2 Recommended Land Development Strategy The airport site and infrastructure permit both land ownership and land lease strategies to be offered at Digby Municipal Airport. Investment zones may be designated for one or other of the two approaches to land tenure. The flexibility to offer land purchase or short/medium/long term land leases to prospective investors will significantly broaden the potential market for Digby Airport lands and will provide a major competitive advantage over other regional airports, especially the NAS airports owned by Transport Canada (ie: Halifax, Moncton, Saint John, Charlottetown). The airport has a substantial land base. It should seriously consider the use of land for: • residential development with runway access; • residential development that takes advantage of the valley viewscape to the east of the runway; • commercial / industrial development that airport related; and • commercial / industrial development that is not airport related. The airport should prepare a land use/ master plan for commercial development to accurately identify the best land parcels for each land tenure strategy and to promote the development, sale and leasing of airport land. The terms of land leases should be as favourable as possible to encourage investment and development. Favourable terms might include:
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• Valuation of rental cost based on independent market analysis of comparable land values; • Long term leases (25-50 years for example), with periodic renewal options; • Limited opportunities for rent escalation; • A fair procedure for independently assessing rent escalation; and • First right of new lease, upon expiry, to protect the financial investment already made. We recommend that further consideration of commercial and industrial development at the Digby Municipal Airport be conducted in the context of an overall economic development strategy for Digby and Annapolis Counties. Expansion at the airport should take into consideration the relative strengths and weaknesses of the other commercial and industrial parks in the two counties and the longer-term development objectives of Cornwallis Park. Moreover there remains a relatively large amount of land available in the following industrial and commercial parks listed on the “Target Nova Scotia”12: • Bridgetown Development Centre, Annapolis County; • Cornwallis Business Park, Annapolis County; • Digby Industrial Park, Digby County; • Kespuwick Industrial Park, Annapolis County; and • Middleton Industrial Park, Annapolis County. Figure 7.1, following page, provides a concept for a land use plan for airport land. Area 1 shows the opportunity to develop residential estate lots with either access to the runway or excellent viewscapes of the valley to the east. The attraction of Nova Scotia as the location of second-homes is well established. The natural and built attractions of the Digby and Annapolis County area, combined with the potential for direct runway access, could be a strong selling point. For example, the Humber Valley Resort near the Town of Deer Lake, at the north end of Deer Lake, Newfoundland and Labrador13 is financed by private investors. Initial construction on the 240 hectare site was completed in 2002. The goal was to develop a luxury, four season, resort property. Residential properties are available for sale and lease. Marketing efforts were focussed on Europe. After selling its initial 300 properties in less than two years, the Resort is expanding to over 1,000 properties and adding more leisure oriented infrastructure. After the expansion the Resort will cover 1,000 hectares. The point made by this example is that the natural beauty combined with the tourist and leisure attractions of Digby and Annapolis Counties, niche marketed to persons with interest in direct runway access, could become a significant development opportunity. The remote location of the Humber Valley Resort suggests that a relatively remote location (The Resort is a 45 minute drive from the Deer Lake Airport. The DMA is a two hour drive from the Halifax International Airport but,
12http://www.targetnovascotia.com/industrialparkpdfs.htm and personal commuications.
13http://www.humbervalley.com/default.asp
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HIA offers direct flights to Europe whereas Deer Lake connections to Europe make at least two stops in-between.) can be a plus, not a negative. Areas 2 and 3 provide for expansions to commercial activity at the airport. Areas 5 and 6 provide for industrial /commercial development that is not necessarily airport related. Area 4 should be held in reserve until the potential for residential development is tested. This area is located adjacent to the grass runway, which could of course be upgraded to provide residential development with access to the main runway. The land base covered by Areas 4 and 6 is sufficient to incorporate a buffer between the residential and commercial / industrial areas.
JOZSA MANAGEMENT & ECONOMICS 7-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 8.0 Infrastructure / Operations Plan
8.1 Aviation Needs Analysis The requirements of specific aviation sectors form the basis for future planning activities. 8.1.1 Commercial Aviation Activities Greater potential aviation revenue for Digby Municipal Airport will be derived from commercial aviation opportunities. Commercial non-scheduled aviation (commonly referred to as aviation industrial activities) include business aviation (air taxi), flight training, cargo transportation, aerial surveying/ photo flights, crop spraying, banner towing and skydiving support. Commercial non- scheduled aviation activities function on a 24-hour basis in order to meet the needs of individual users. Since time, reliability, efficiency and discreteness are most valued by those chartering or flying on commercial aircraft the airport should be equipped to handle business aviation’s needs. The airport must be instrument flight rules (IFR) capable, equipped with at least a non-precision instrument approach, and be lit for night operations. Digby Airport meets both of these requirements and currently has a published GPS (Global Positioning System) non-precision approach which is adequate. However the requirement to obtain an altimeter setting from another airport is a limiting factor. The type and level of airfield lighting at the airport is commensurate with the airport’s IFR capability, existing and future demand. The current 24 hour staffing is an additional asset and should be maintained. While not a major disadvantage in the short-term, the inability to refuel turbine-engine aircraft may in the future restrict the number and frequency of turbo-prop aircraft, turbine helicopters, and small turbo-fan aircraft such as business charters, Nova Scotia Emergency Health Services aircraft, and other commercial aircraft from using Digby Municipal Airport. The availability of Jet Fuel at Waterville King’s County Airport, as well as at Yarmouth, are a competitive disadvantage for Digby and should be taken into consideration. A comfortable waiting lounge with modern amenities such as internet and fax machines, flight planning capabilities, and crew rest areas is desirable. The current lounge is quite comfortable and might be enhanced. Services required after hours can and are frequently provided on a call- out basis. If it is not cost-effective to maintain a readiness posture year round an after-hours fee schedule should be prepared with work crews available to clear and check runways as required. Other useful services common to commercial aviation includes having a direct line to car rental agencies, and the availability of aircraft maintenance for at least minor repairs. Office space and hangars are considered highly useful for commercial operations. Increased marketing of office space in the terminal should be considered in the short term given current availability, with future capabilities made available elsewhere on the airfield. Hangar space is useful for keeping aircraft warm overnight during winter and free of unnecessary snow and ice accumulation, particularly if de-icing chemicals are not available as is the case at Digby. Ab initio flight training requirements are based on small single and multi-engine piston aircraft with both daytime and evening hour operations. In order to maximise student instruction, flight training units operate from un-congested and slot-free airports in close proximity to airspace where a range of aerial manoeuvres might be taught. Digby Airport is well suited in this regard.
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The high cost and marginal returns experienced by flight school operators require overhead be kept as low as possible. Airport management can support potential flight training units by helping to market the community, keeping flexible operating hours, streamlining the lease or sale of land, and resisting the urge to impose landing fees which inhibit growth. 8.1.2 Recreational/ Private Flying Given its current role, Digby Municipal Airport currently possesses much of the infrastructure required for recreational and private flying activities. This includes adequate runway lengths, ample parking and tie-down space, and aviation gasoline. While most recreational flying activities are generally conducted in evenings and on weekends, this type of flying can occur anytime. Business flying occurs mainly during the work-week. Operating and maintaining certified private aircraft is a costly endeavour, and a growing number of operators seek affordable hangar space for their aircraft in order to protect their investment. Little aircraft storage capability exists at present and additional storage capabilities should be considered. Hangar development is discussed in Sections 8 and 9. Digby Municipal Airport has superior flying weather, is uncontrolled, and has available level grassed areas parallel to the main runway making it highly suitable for gliders, home-builts and ultra-light aircraft. Future consideration might be given to designating a turf landing strip parallel to and offset from the current runway depending on demand. 8.2 Essential Airfield Upgrades The Digby Municipal Airport airfield infrastructure is in generally good condition, with a number of facilities which similar-sized general aviation airports in Canada do not possess. There is evidence however, of some subsurface issues on the runway’s southern end that will have to be remedied in th next four to seven years. We recommend that a runway condition assessment be completed before decisions are made with respect to major runway maintenance issues. 8.3 Upgraded Aviation Services 8.3.1 Fuel Supply The airport has recently replaced the fuel cabinet and pumps that supply aviation gasoline. The current system of dispensing fuel at the airport functions on an honour system. Given 24-hour staffing, a self-service card-lock system, similar to the “pay at the pump” service to which drivers are accustomed, might not be necessary. However should the Municipality plan to reduce airport staffing coverage at any point in the future a card-lock system would be extremely useful. The cost of a new AVGAS tank and support infrastructure has been costed in the capital investment and service enhancement plan in Section 9. Further to the upgrade of the fuel system, consideration might be made for adding an additional tank for jet fuel. Analysis and consultations shows that other than the EHS medivac few potential operators would rule out using Digby due to the lack of jet fuel alone. The practice of “tankering” fuel (carrying sufficient fuel for the return trip) is common short-range flights. However, the lack of jet fuel does impose operational restrictions on turbine users which in turn carries penalties such as the weight of the extra fuel carried and associated costs.
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In consideration of traffic projections, the costs related to the installation of jet fuel capability in the short term would likely exceed the economic benefit. The provision of jet fuel would therefore likely have to be justified on other grounds, such as service and convenience. The cost of a jet fuel tank is incorporated into the capital plan in Section 9. 8.3.2 Hangars and Plug-ins The construction of condominium-style “t-hangars” should be demand driven, with airport management leading sales and marketing initiatives. The addition of public hangar space would help attract additional aircraft to Digby and allow the airport to tap new revenues from fuel and parking, as well as additional tax revenue. While most of the hangar bays should be sold or leased to individual owners, the airport might retain one or two bays for visiting pilots, charging a nominal fee for overnight use. General aviation pilots also appreciate the capability to connect a pre-heater to their engines during winter months, just as automobile drivers do. Plug-ins are not currently provided, and while not essential to the marketing plan costing data for this option are provided in Section 9. 8.3.3 Canada Customs While currently designated a CANPASS airport, Digby Municipal Airport does not have full Airport of Entry (AOE) status from the Canada Border Services Agency (CBSA) and therefore cannot process non-Canadian citizens nor foreign aircraft. Designating the airport an AOE with customs clearance service for all aircraft is desirable given area tourism potential and marketing initiatives aimed at luring visitors from south of the border to enjoy the South West Coastal region. From a marketing standpoint, Digby’s strategic location places it much closer to the state of Maine than Yarmouth with likely arrivals overhead Grand Manan Island. The straight-line distance between Bangor and Yarmouth places roughly 160 kilometres of the route over water, while the portion of the route over water between Bangor and Digby is roughly 80 kilometres. Given that light aircraft pilots prefer to fly over water for shorter periods of time Digby is a natural port of entry to Nova Scotia for many types of general aviation. A staffed facility at Digby is not feasible given demand patterns, unless a joint-use strategy can be developed with the seaport. CBSA are prepared to discuss the provision of customs service at municipal airports such as Digby but caution that a proper business case would need to be prepared. CBSA operates such facilities on a cost recovery basis, and therefore Digby Municipal Airport would have to shoulder costs related to staff salaries including overtime, as well providing for mileage charges related to transporting staff from Yarmouth Airport (or the nearest customs office). Any customs facility would have to meet CBSA design standards and be paid for by the owner/operator. The existing office made available in the terminal for CANPASS might have to be expanded subject to discussion with CBSA. The scope of these facilities, and costs incurred thereof, depend on the type of customs service provided. Given the likely traffic mix, CBSA could theoretically offer Digby an AOE/15 status. AOE/15 is an authorized airport of entry for the clearance of those arriving by general aviation aircraft where the flights are unscheduled and the passenger capacity, including crew, does not exceed 15 people. Clearance is provided by customs officers attending each arrival at their discretion. The airport must provide an office and examination room, which is usually a sterile facility which cannot be used for other purposes and may only be accessed by customs
JOZSA MANAGEMENT & ECONOMICS 8-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 personnel. Customs staffing costs are based on flight frequency, the number of passengers per arrival, and hour of day. A signed contract is issued with CBSA providing a cost recovery bill based on projected movements in a given period of the year. The estimates are amended as necessary to reflect the final tally of services delivered. CBSA officials in Halifax have indicated that once a formal proposal for customs services has been submitted, they will be able to provide cost estimates for their services along with space requirements. 8.4 Upgraded Aeronautical Facilities Commensurate with increasing reliability and maximising instrument approach capabilities for commercial and ai ambulance aircraft, initiatives might be undertaken to explore the possibility of installing proper Nav Canada approved altimeters and providing the requisite training. The status quo, which forces approaching aircraft to set their instruments based on data at Saint. John, NB, Yarmouth or Greenwood, imposes a penalty on landing minimums at Digby which might adversely impact airport usability during reduced ceiling and visibilities. 8.5 Operations The improvement of airfield maintenance capabilities during winter is essential to increasing airport usability. This will likely include the need to procure a snow-plow (with or without a wing blade) in order to alleviate the current practice of clearing all surfaces with a single snow-blower. Costing for such an initiative is provided in Section 9. While the airport currently has a 24-hour manned UNICOM air-to-ground communications frequency, staff cannot provide local altimeter setting information to pilots for the purposes of carrying out an instrument approach at Digby nor at the nearby hospital. An Approach UNICOM service might be considered for the future. An Approach UNICOM is an air-to-ground radio facility similar to the service provided at present, with additional staff training and certification by Transport Canada. It enables operators to provide pilots with altimeter setting and wind-speed and direction for the purposes of carrying out a straight-in instrument approach procedure. 8.6 Other Future Upgrades A number of other upgrades would be considered useful to help market the airport. These include bringing three-phase power fully onto the airport site in order to support business and industrial development, and exploring the installation of broadband internet access. Future potential upgrades to the airport would include extending and widening the runway from its current length of 3,950 feet to between 4,500 and 5,000 feet long by 100 feet wide to handle a number of larger or heavier business jets and turbo-props. Given existing traffic projections this initiative is however not required, nor will it restrict the implementation of the marketing plan in the near term.
JOZSA MANAGEMENT & ECONOMICS 8-4 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 8.8 Role-Infrastructure Summary (Airport Related) Table 8-1, below, relates the airport positioning statement in Section 6, Marking Plan with the infrastructure requirements addressed in this section. A priority action plan is presented in Section 11, Action and Funding Plan. Table 8-1: Role and Infrastructure Summary (Airport Related) Role Activities New Infrastructure/ Capabilities Suggested - Locally based and 1. A base for - Ample hangar space and plug-ins itinerant aircraft private recreational movements - Replacement of AVGAS fuel cabinet (completed) aircraft for Digby - Canada Customs AOE status and Annapolis - Fixed and rotary wing Counties - Gliders - Ultra-lights - Home-builts - Air Ambulance - Installation of Transport Canada certified altimeter 2. A community support role for - Staging point for - Provision of Approach UNICOM emergency and other Emergency and other vital services support services as - Improvements to Winter maintenance procedures and required equipment - Replacement of AVGAS fuel cabinet (completed) - Jet Fuel (future capability) - Fixed wing single and - Replacement of AVGAS fuel cabinet (completed) 3. A centre for flight twin-engine powered training - Improvements to Winter maintenance procedures and aircraft equipment
- Ample hangar space and plug-ins 4. Business and - Business and tourist aviation, as commercial (chartered) - Improvements to Winter maintenance procedures and well as non-aviation aviation movements equipment - Leasable land zoned for aviation/ non-aviation uses related business - Light industry or and tourism activity offices - Marketing program and dedicated Airport Manager - Green/ picnic space - Partnerships with area tourism and hospitality organisations - Canada Customs AOE status - Replacement of AVGAS fuel cabinet - Jet fuel (future capability) - Installation of Transport Canada certified altimeter - Provision of Approach UNICOM
JOZSA MANAGEMENT & ECONOMICS 8-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 9.0 Capital and Service Enhancement Plan
Capital investment and service enhancement options described below relate to the business strategies outlined earlier in this document. 9.1 Plug-ins A row of roughly 10 electrical plug-ins would cost approximately $6,000. A nominal charge for their use would range from $15-$20 per night. Capital and operating costs would be paid back after approximately 400 to 450 rentals. 9.2 Hangar Development In some respects the reticence of some pilots to move their aircraft to DMA may be related to a perception that land lease or purchase and construction requirements set forth by the airport were not as straightforward as a the needed to be. The type of hangars envisioned are essentially designed to provide protection from weather and not for extensive maintenance procedures. In implementing the marketing plan the airport must streamline procedures to attract and keep private fliers and related business. Hangar development would provide proof of the improved situation at DMA. Notwithstanding, marketing efforts by the airport should work to attract interest in the construction of hangers based on the attractive features of the airport. These features include: • the well maintained facility; • operates around the clock; • refuelling services; • selected on-site maintenance services; and • commitments to future improvements. With respect to hangar construction there are two main options. The first option involves the construction of a general occupancy type hangar measuring 120 feet wide by 80 feet deep. Such a hangar would be sufficient to accommodate five light single-engine aircraft, or two to three medium-sized twin engine aircraft (e.g., Dash-8 and Beechcraft King Air). Construction costs would be in the order off $2.0 to$3.0 million, including site preparation. However, there is not sufficient demand to justify an upfront investment of this magnitude. The second, and more cost effective option, would be to construct “T” hangars” that would accommodate private single and twin engine aircraft in individual bays. Construction would only begin once base suitable demand has been expressed an appropriate letters of commitment signed. A 10 unit T-hangar would measure approximately 350 feet wide and 35 feet deep. Construction costs would be about $250,000-$300,000, which includes a concrete floor and electrical connections. It is common to sell the bays on a cost recovery basis to provide an incentive for pilots currently basing their aircraft at other airports to move to the new location. Rental rates would be above
JOZSA MANAGEMENT & ECONOMICS 9-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 cost recovery levels to allow for the additional risk being taken on by the airport as the renter of the bays. Moving private aircraft to the bays could be made even more attractive by the implementation of flexible leasing arrangements that would allow pilots to lease on a partial year basis, providing sufficient commitments were made for a number of years. In either case, a monthly service and maintenance charge of roughly $100 would also be included in the selling or rental contract. 9.3 Supply of Jet fuel As per the marketing plan the installation of a jet-fuel tank at the airport is not a priority given the limited demand that currently exists. Nonetheless, the ability to supply jet fuel would increase the attractiveness of the airport for use by a wider range of aircraft. We understand that jet fuel has been made available at the airport on previous occasions. A 4,500 litre jet fuel tank, which is one of the smallest sizes available, would cost roughly $50,000 - $60,000, installed. 9.4 Snow Removal The current snow removal method of using a snowblower attached to a tractor is time-consuming and therefore expensive in terms of costs and in-service time lost on the runway. If it is not possible to base a piece of municipal snow clearing equipment at the airport then we suggest considering the alternative of purchasing a four-wheel-drive 1 to 2 tonne truck with a front plow. The cost would be approximately $50,000 (new). The objective would be to have the plow do most of the work, leaving the tractor/blower for the windrows and final cleanup around the lights. This arrangement will make for more efficient snow clearing and might also extend the life of the existing tractor/blower. 9.5 Power and Communications Services Unfortunately, broadband communications services are not widely available in the rural areas of Canada. The recent decision of the federal government to suspend support of Community Access Points suggest that the situation may not improve in the short-term. However, the airport should investigate ways to bring broadband Internet access to the airport. This service would be useful to the airport, the emergency measures services that operate with bases at the airport and the emergency dispatch centre. Three phase power lines now run up to the airport property. The cost to extend the lines onto the airport property will not be large and the airport should work to make this a reality as soon as possible. The availability of three phase power will be a critical factor in encouraging businesses to locate and expand at the airport, since three phase power is necessary for the operation of heavier industrial and commercial equipment.
JOZSA MANAGEMENT & ECONOMICS 9-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 9.6 Runway Repair Crack filling and runway resurfacing may need to be carried out within approximately 4 to 7 years, subject to a more detailed assessment. The will likely be in the order of $500,000-$700,000. 9.7 Airport Beacon As parts become more scarce and costly for the existing rotating beacon, the airport should consider replacing it with a strobe light. The use of a strobe light is in line with current airport standards outlined in Transport Canada Document TP-312. The advantage of a strobe is that there are few moving parts, and it requires less maintenance. The cost of such an aeronautical beacon installed would be in the order of $12,000, assuming it is installed on an existing tower.
JOZSA MANAGEMENT & ECONOMICS 9-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 10.0 Revenue and Expenditures Projection
Data provided by the airport included a number of non-airport related revenues and expenditures, owing to some of the other municipal functions performed at the site. After discussion with airport management these costs were refined in order to provide a clearer picture of airport-related operations. The following paragraphs described in the results of financial analyses of several operating scenarios. 10.1 Baseline Projection The following provides a description of the results of a 10-year projection of revenue and expenses based on the following assumptions. Detailed results are provided in Appendix 3: Financial Projections, Detailed Results. • revenue and expense information for 2003/04 and 2004/05 are as provided by the airport and include only those revenue and expenses directly attributable to the operation of airport services ( That is, they do not include any costs and revenue associated with the operation of the dispatch centre or the animal control facility.); • aircraft movements are assumed to follow the baseline projection provided earlier in the report; • no substantial investments in capital or new services are made; • revenue, with the exception of hangar rentals, is based on the number of aircraft movements; • expenses with the exception of salary and maintenance aviation gas purchases and aviation oil purchases are based on the number of aircraft movements • salaries and maintenance costs are assumed to remain, in constant dollars, at the level experienced in 2004/05 • average revenue and expenses per movement by line item are based on the experience from 2003/04 to 2004/05 inclusive; • revenue and cost in 2005/06 is based on average revenue and cost per movement from the previous two years; • changes in revenue from 2006/07 to 2014/15 are based on average revenue per movement and the change in the number of aircraft movements; • changes in expenses from 2006/07 to 2014/15 are based on estimates of marginal cost by line item (Specifically, all expense line items, with the exception of salaries and maintenance, hang or rental, and inventory purchases of aviation gas and oil, are assumed to change at 25% of their average cost per aircraft movement after 2005/06. Salaries and maintenance are assumed not to change with aircraft movements. Hangar rental is assumed to have been negotiated independent of aircraft movements. Purchases of aviation gas and oil are based on their sales.); and • all calculations are made in 2006 constant dollars (We use constant dollars because they allow the revenue and cost analysis to show the impact of changes in traffic volume and investments without the masking effects of arbitrary decisions regarding inflation rates.)
JOZSA MANAGEMENT & ECONOMICS 10-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Appendix 3 provides the detailed description of the revenue and expense results for the “Baseline Aircraft Movement Projection.” Two fiscal years of historical information are shown, 2003/04 in 2004/05. The reader will note that total expenses in these two years were substantially higher than those projected for the immediate future. This occurs because inventory purchases of aviation gas and aviation oil were substantially higher in those two years than in the nine years previous, in relation to aviation gas and oil sales. The data from 1994/95 to 2004/05 show a ratio of aviation gas and oil sales to purchases of approximately 1.195, implying a average gross margin of 19.5% on aviation gas and oil sales. During the period 2003/04 to 2004/05 inclusive The ratio dropped to 1.005, which is an aberration due to rapidly fluctuating fuel prices during that time. For the baseline analysis from 2005/60 to 2014/15: • aircraft movements increase from 1,484 in 2005/06 to 1,632 in 2014/15; • fuel and oil purchases are based on aircraft movements; and • the 11 year average gross margin on aviation gas and oil sales of 19.5% is used to estimate purchases for inventory. Even with a modest increase in traffic the gap between revenue and total expenses does not change. However, when proper accounting is taken of costs that are directly related to airport operations the gap between revenue and costs is reduced to below $40,000. Total revenue grows by 8.2% from 2005/06 to 2014/15. Revenue per movement is about $20.75 in 2005/06 and declines slightly to $20.43. The decline occurs because hangar rental fees are not tied to aircraft movements. Total expenses grow only 4.1% during the same time. Expenses per movement decline from $46.70 in 2005/06 to $44.25 in 2014/15. The gap between revenue and expenses per movement declines from -$25.95 in 2005/06 to - $23.82 in 2014/15. 10.1.1 Baseline Projection with Price Changes Our research suggests that there is room for modest price increases at the airport. DMA is already a very low cost aviation facility and therefore modest price increases would not likely drive traffic away nor deter the arrival of new traffic, so long as delivered value continues to increase.. We suggest that a more appropriate gross margin for aviation gas and oil would be 30% rather than the historical 19.5%. In addition, we suggests the application of a modest price increase of 5% for tie downs fees and user fees be explored. If these changes are implemented: • revenue per movement rises to about $22.1 in 2005/06 and decline slightly to $21.88 in 2014/15 because hangar rental fees are not tied to aircraft movements; • expenses per movement remain the same as in the base case with no price changes; and • the gap between revenue and expenses reduces to about -$36,478 from -$38,851 in the baseline scenario with no price increases. Because the growth in aircraft movements is small and the only significant revenue source at the airport is the sale of aviation gas and oil the gap between total revenue and expenses does not close even though incremental costs associated with each new aircraft movement are estimated
JOZSA MANAGEMENT & ECONOMICS 10-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 at about 25% of their average cost. 10.2 High Aircraft Movement Projection For the high aircraft movement analysis from 2005/60 to 2014/15: • aircraft movement increases from 1,520 in 2005/06 to 2,150 in 2014/15; • The majority of new movements are itinerant visiting aircraft that do not purchase or lease hangar space; • fuel and oil purchases are based on aircraft movements; and • the 11 year average gross margin on aviation gas and oil sales of 19.5% is used to estimate purchases for inventory. Total revenue is 28.6% higher than in the baseline case, growing from $31,404 in 2005/06 to $42,849 in 2014/15. Revenue per movement is about $20.67 in 2005/06 and declines slightly to $19.92. The decline occurs because hangar rental fees are not tied to aircraft movement. Total expenses are 15.8% higher than the baseline case. Expenses per movement decline from $46.38 in 2005/06 to $38.86 in 2014/15. The gap between revenue and expenses per movement declines from -$25.71 in 2005/06 to - $18.94 in 2014/15. By 2014/15 the gap between revenue and expense is -$40,750. With growth in aircraft movements to 2,150 the gap between revenue and total expenses compared to the baseline actually increases. This occurs despite the fact that the gap between revenue and expense in the high aircraft movement scenario is -$18.94 per movement in 20014/15 compared to -$23.82 in the baseline traffic growth scenario. Despite improved efficiency (i.e., reduction in the net loss per movement) the gap between revenue and expense increases to about -$40,750 in 2014/15 compared to -$38,851 in 2014/15 in the baseline scenario because aircraft movements are about 19% higher relative to the baseline case. The performance of the airport is improving but the lack of revenue sources beyond gas and oil sales limits the improvement that can actually be made. 10.2.1 High Aircraft Movement Projection with Price Changes We suggest that be a more appropriate gross margin for aviation gas and oil would be 30% rather than the historical 19.5%. In addition, we suggest the application of a modest price increase of 5% for tie down and user fees. If these changes are implemented: • total revenue rises to about $46,030 in 2014/15 and total expenses remain at $83,599; • the gap between revenue and expenses per movement falls to -$17.58 compared to - $18.94 in the high traffic case without price increases; and the • gap between revenue and expenses reduces to about -$37,569 from -$40,750 in the high traffic case without price increases. Again, the performance of the airport is improving but the lack of revenue sources beyond gas and oil sales limits the improvements that can be achieved.
JOZSA MANAGEMENT & ECONOMICS 10-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 10.3 Low Aircraft Movement Projection For the low aircraft movement analysis from 2005/60 to 2014/15: • aircraft movements decrease from 1,499 in 2005/06 to 1,071 in 2014/15; • the number of locally based aircraft does not decline but, the number of itinerant visiting aircraft does decline; • fuel and oil purchases are based on aircraft movements; and • the 11 year average gross margin on aviation gas and oil sales of 19.5% is used to estimate purchases for inventory. Total revenue is 26.9% lower than in the baseline case, declining from $28,795 in 2005/06 to $24,256 2014/15. Revenue per movement is about $19.87 in 2005/06, rising to $22.63 in 2014/15. The increase occurs because hangar rental fees are not tied to aircraft movement. Total expenses by 2014/15 are 15.4% lower than the baseline case. Expenses per movement rise from $46.82 in 2005/06 to $56.69 in 2014/15. The gap between revenue and expenses per movement rises from -$26.95 in 2005/06 to -$34.06 in 2014/15. By 2014/15 the gap between revenue and expense is -$38,668. With a decline in aircraft movements to 1,077 the gap between revenue and total expenses actually decreases compared to the baseline. This occurs despite the fact that the gap between revenue and expense in the high aircraft movement scenario is -$34.06 per movement in 20014/15 compared to -$23.82 in the baseline traffic growth scenario. Despite reduced efficiency (i.e., increase in the net loss per movement) the gap between revenue and expense decreases to about -$36,668 in 2014/15 compared to -$38,851 in 2014/15 in the baseline scenario because aircraft movements are about 21% lower relative to the baseline case and hangar rental fees do not decline as movements decline. The performance of the airport is decreasing on a per movement but the reduction in movements and retention of hangar rental fees from existing tenants serve to limit the losses. 10.3.1 Low Aircraft Movement Projection with Price Changes We suggest that a more appropriate gross margin for aviation gas and oil would be 30% rather than the historical 19.5%. In addition, we suggest the application of a modest price increase of 5% for tie downs fees, and user fees. If these changes are implemented: • total revenue rises to about $25,955 2014/15 and total expenses remain the same; • the gap between revenue and expenses per movement falls to -$32.58 compared to - $24.06 in the low traffic case without price increases; and the • gap between revenue and expenses reduces to about -$35,069 from -$36,668 in the low traffic case without price increases. As in previous scenarios the performance of the airport is improving but the lack of revenue sources beyond gas and oil sales limits the improvements that can be achieved.
JOZSA MANAGEMENT & ECONOMICS 10-4 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 10.4 Improving the Financial Situation and Attractiveness to Users and Investors This section reviews the strategies to improve the financial situation of the airport. They build upon the high traffic projection scenario and assume that the higher traffic is due to marketing and services improvements at the airport. In the high projection traffic movements increase from 1,520 in 2005/06 to 2,151 in 2014/15. The comparable numbers for the baseline projection are 1,484 and 1,631 respectively. 10.4.1 Addition of Plug-ins A line of plug-ins would cost about $6,000 to install. Interest rates at the Nova Scotia Municipal Finance Corporation are approximately 5%. Therefore, assuming a 15 year repayment period the total cost would be about $8,500. Operating and maintenance costs would add about $6,000 over 15 years. Assuming a profit margin of about 25% and a $20 fee the airport would need to sell about 60 rentals per year. Average movements in the high scenario are about 1,815, or roughly 910 departures and arrivals. However, only about 23% of movements are in the winter months and therefore the potential market drops to about 209/year. Therefore about 28% of aircraft using the airport during winter months would need to rent a plug-in for the airport to breakeven. This investment should be regarded solely as a service enhance and would yield an average annual net profit to the airport of about $233. 10.4.2 Hangar Construction and Rental The construction of hangars presents a particular challenge to the airport. At the time of writing one or two aircraft were based at the airport. Hence, to be financially feasible the rental of hangar space would depend on the ability of the airport to attract aircraft from other regional airports and private air strips. A unit of 10 bays in a t-hanger style wold cost about $275,000 to construct. At a 5% interest rate and 15 year pay-back period the total cost would be about $375,500. Operating and maintenance costs would add about $82,500 over 15 years. Assuming a target profit margin of about 10% and 100% occupancy the airport wold need to sell each bay for about $50,380 or lease a bay for about $3,358/year. It would be unreasonable to assume 100% occupancy. For illustration purposes an occupancy rate of 75% would be reasonable. At this occupancy rate purchase prices would need to be $67,173 and annual lease rates would be about $4,478. In this situation the airport would realize a net profit of approximately $45,800. Looked at over a 10-year period this is the rough equivalent of reducing the annual operating deficit by about $4,500. Even at 75% occupancy the airport would need to raise the number of aircraft based at the airport from one or two to at least eight or ten and then have over 80% of the owners of aircraft based at the airport buy or rent a bay. Given our assessment of potential demand we do not recommend building hangars “on spec.”
JOZSA MANAGEMENT & ECONOMICS 10-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
We would recommend that a marketing effort be conducted first to determine the number of owners who would base their aircraft at the airport. The airport would commit to construct the hangar space once sufficient letters of intent to purchase or lease have been signed. 10.4.3 Sell Jet Fuel The decision to supply jet fuel should be made once a market assessment has been completed. The market assessment would determine the: • number of aircraft currently flying through the airport’s airspace that use jet fuel; • proportion of those aircraft that can be accommodated by the runway at the airport; • location currently used to purchase jet fuel; • conditions under which they would purchase fuel at the Digby Municipal Airport (assuming the airport has jet fuel supplies). At a construction cost of about $50,000 and an interest rate of 5% the total cost over a 15 year pay-back period would be about $68,300. Maintenance costs would add about $11,500 over 16 years. The airport would need to sell about 32,335 litres of jet fuel per year to pay for its investment and maintenance costs, and based on a 30% profit margin would earn a net profit of about $500 per year. 10.4.4 Snow Removal Efficiency Improvement The ideal situation, in terms of cost, would be to station a piece of municipal snow clearing equipment at the airport to improve efficiency. The equipment would be restricted to use on the airport runway so as not to risk salt contamination from any off airport use. If such a relocation is not possible we recommend that the airport examine the cost/benefit relationship associated with purchasing a four wheel drive truck with a plow. The benefits would accrue in terms of reduced personnel time to conduct snow clearing, lower maintenance costs for the tractor/blower combination and an extended life of the tractor/blower. Costs would include the purchase, operation and maintenance of the new plow. 10.4.5 Power and Communications Services The airport should move immediately to make available three phase power on airport property. There are already to businesses on the property whose operation would be enhanced with the availability of three phase power. The availability of three phase power is a necessity to attract other a light industrial and manufacturing businesses to the site. Options for the provision of broadband Internet services are a limited in rural areas. Most service providers find that the number of potential customers is insufficient to cover the capital cost. The DMA should approach the FUNDYweb Broadband Network to press for the extension of broadband service to the airport. It should also examine the options suggested in pilot projects completed in 2006 for small community broadband service in Apsley, Ontario and Kinmount, Ontario. The communities are about 1 3/4 hours drive northeast of Toronto, Ontario. Each has a resident population of about 2,250 and a very large non-resident population (three to five times the resident population) as this is a prime tourism/cottager area in Ontario. These two pilot projects describe pilot projects that brought broadband internet access to the full-time and seasonal residents. The findings of the
JOZSA MANAGEMENT & ECONOMICS 10-6 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 pilot projects could help build on the success of the FUNDYweb Broadband Network. The pilot studies also offer some insight into the measurement of the economic impact of the expansion of broadband service in rural and sparsely populated areas.14 However, the airport should investigate the option of installing a dedicated wireless broadband Internet connection as part of the Municipality’s communications system. The costs could be shared with emergency measures organizations based at the airport, the emergency dispatch centre and other businesses at the airport. 10.4.6 Runway Repair Without a high-quality surface other efforts to improve the performance of the airport will be potentially wasted effort. The cost for runway repair and resurfacing will be in the order of $500,000 to $700,000. Assuming the cost is financed by borrowing its total cost would amount to about $950,000 over 25 years or about $38,400 per year. Such a cost would double the annual operating deficit. Even at 0% interest paid out over 25 years the runway repair would add to $22,000 per year to operating expenses. As the financial analyses demonstrate the airport will not generate sufficient cash flow to cover these increased costs. Therefore, other sources of funding would need to be tapped. Should the newly formed regional economic development organization conclude that the airport is an important part of economic development infrastructure convincing arguments should be able to be made to either ACOA for the Nova Scotia Office of Economic Development to pay for the runway repair.
14“Broadband Pilot Project - Apsley,” Strategic Network Group, November 2, 2005 (prepared fro the Government of Ontario, Ministry of Government Services). “Broadband Pilot Project - Kinmount,” Strategic Network Group, November 2, 2005 (prepared fro the Government of Ontario, Ministry of Government Services).
JOZSA MANAGEMENT & ECONOMICS 10-7 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 11.0 Action and Funding Plan
11.1 Action Plan The following actions should be taken to improve the DMA: • implement the marketing strategy described in Section 6; • make three phase power available on airport property as soon as possible; • consult with potential purchasers of property at the airport to determine the conditions under which it would be most beneficial to buy property and build structures at the airport; • raise prices for aviation gas and oil and tie-downs to reflect profit margins that are more in line with those of competing regional airports and position these changes as part of the plan to improve service levels at the airport; • request that the new regional development agency take on the tasks of; • conducting a direct marketing and selling exercise for, hangar sale or lease, sale of jet fuel, residential development with runway access and other commercial and industrial property development (with the aid of an incremental budget of approximately $15,000 to engage staff); • specifying the role of the airport in its economic development strategy for Digby and Annapolis Counties; • marketing the airport and development of its surplus land; • applying for and receiving capital investment funds from ACOA and the Nova Scotia government for runway repair, plug-in construction, investment in infrastructure for the sale of jet fuel, t-hangar construction and residential (runway access) and commercial and industrial development as part of its economic development strategy for Digby and Annapolis Counties (The scope of the request for investment funds would be defined by the level of success of the marketing strategy and the direct marketing and selling primarily of hangar and the jet fuel services.); and • implement capital improvements in runway repair and other enhancements in airport service based on funding approvals and market demand. 11.2 Funding Plan 11.2.1 Ongoing Funding A good push-pull strategy, where the airport operator invests in improving assets, will help ensure that users in turn continue to invest in their airport. Ongoing funding for the airport will remain with direct airport users and those that benefit indirectly from its existence and whose contribution would be funded, as it has in the past, by municipal government. However, with the creation of the new regional economic development authority for Digby and Annapolis Counties it would appear that the time is right to consider the nature and scope of
JOZSA MANAGEMENT & ECONOMICS 11-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 potential benefits brought to the municipalities in each of the counties by the DMA.15 Once this analysis is complete it would be appropriate to begin negotiations, via the offices of the new development authority, on appropriate levels of contribution to the airport from each of the municipal units. We suggest that an economic impact assessment of the airport be conducted to provide supporting evidence for funding requests. However, the impact assessment should be conducted after sufficient marketing and selling work has been completed that would establish a plausible case for the potential direct impacts related to airport development. The impact assessment, based on the findings of initial marketing work would be used to help solidify funding negotiations. 11.2.2 Federal Funding Programs The Atlantic Canada Opportunities Agency will be the most likely source of investment funds for the airport. The agency has two main programs for which the airport is eligible. The Business Development program offers access to capital in the form of interest-free, unsecured, repayable contributions. For profit and non-profit organizations are eligible. Eligible activities include business studies, capital investment, training, marketing, and not-for-profit activities that support business in the region. The program will fund up to 50% of construction or building acquisition costs including investment in machinery and equipment and related infrastructure. The program will contribute up to 75% financing for marketing, training , consulting advice in support of non- profit activities designed to contribute to local economic development. The Canada Nova Scotia Infrastructure Program Is now fully committed. However, should the program be renewed it could also be a source of funding for the airport. The primary focus of the program is on "green" projects that will protect or enhance the quality of our environment, such as potable water, waste and wastewater systems and improved air quality. The secondary priorities include local transportation infrastructure, cultural and recreational facilities, affordable housing, remote and rural telecommunications links and high-speed Internet connections for public institutions. 11.2.3 Provincial Funding Programs The reestablishment of the regional development authority in Digby and Annapolis Counties is especially fortuitous for the airport. The province, with the creation of its community based economic development policy, has a delegated virtually all questions of locally based economic development initiatives to the regional economic development authorities which are supported by the federal government, provincial government and municipal governments that are members of an authority. Virtually all economic development funding is coordinated through these authorities. With the reestablishment of the regional development authority Digby and Annapolis Counties again have access to Provincial funding targeted to subtype and provincial economic development initiatives.
15 When assessing the In assessing the potential benefits of the airport one needs to analyse the situation from a variety of perspectives. For example, the benefit of having the airport should be assessed against the negative impact of not having the airport. Closing the airport would open one more gap in the transportation and communication network of Annapolis and Digby Counties. The absence of the airport might be more noticed than its presence.
JOZSA MANAGEMENT & ECONOMICS 11-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 12.0 Conclusions
The purpose of the marketing strategy and the investment plan is to increase the attractiveness of the Digby Municipal Airport to traditional users and attract new types of customers. New customers would include businesses locating at the airport as well as expansions in activities such as aero-tourism, emergency services training, flight training and, trade and technology shows. These types of new customers would also benefit other businesses in Digby and Annapolis Counties. Successful implementation of actions that lead to the rental of plug-ins, sale or lease of hangar bays and sale of jet fuel would at most reduce the annual operating deficit of the airport by about $5,800. Successful implementation of the marketing plan to attract new customers would also help reduce the operating deficit. However, the airport will likely continue to run an operating deficit, although smaller than at present. Only marginal improvement to the airport’s overall financial situation appears likely in the absence of significant new economic activity. Such a situation is common across Canada for regional airports. Airports such as Digby Municipal are generally operated as a form of public infrastructure that improves the economic base of its local area. The analogy is to that of a public transportation system, which is generally considered to be successful and financially viable if direct revenue covers from 65% to 75% of total operating costs. The amount of operating costs not covered by direct revenue is generally considered the price that an urban area must pay to provide the type of public infrastructure needed to assist in the effective operation of the overall economy. The Digby Municipal Airport should be seen in this light. To make significant headway in reducing the airport’s operating deficit, the DMA will need to increase aviation-related revenues as well as aircraft movements. These steps together will enable the airport to move towards break even status.
JOZSA MANAGEMENT & ECONOMICS 12-1 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006 Appendix 1: Person Interviewed and/or Attended Planning Workshop The following people were interviewed and/or attended the planning workshop: Marc Amirault Barry Kendall, President Marc Robichaud Local pilot Digby Board of Trade Claire Chamber of Commerce Pam Boudreau Arnold LeBlanc A. Keith Robicheau Development Officer Chief Administrative Officer Rene LeBlanc South West Shore Regional Municipality of the County of Development Authority General Manager Annapolis Digby Pines Resort Ron Cooper Carolyn Smith local business owner Jimmy MacAlpine, Deputy Tourism Planner former manager of the Digby Warden Municipality of the District of Municipal Airport Municipality of the District of Digby local pilot Digby Paul Stone Mike Comeau Julie MacLean Jim Thurber, Warden Atlantic Canada Opportunities Growth Opportunities Limited Municipality of the District of Agency Martin O’Hara Digby Noel Depres Geomatics Centre Donna Trimper Comeau Seafoods Nova Scotia Community Administrative Service College Becky Doucette Relations Manager Airport/Dispatch Supervisor Brinley Peck Pearson Peace Keeping Digby Municipal Airport local pilot Centre Albert Dunphy Eddie Peck Rick Vroom Planning Coordinator owner of aircraft related Civil Air Search and Rescue manufacturing business Mike Fitzpatrick Louise Watson local pilot General Manager Development Officer Acadian Seaplants Mark Philips Nova Scotia Office of Manager Economic Development Brian T. Goldie, CD (ret'd), Annapolis Basin Conference Manager Gordon Wilson, Deputy Chief Centre Greenwood Flight Centre Administrative Officer Elizabeth Rice Municipality of the District of Bruce Isles Annapolis Ventures Digby President Isles Aero Service
JOZSA MANAGEMENT & ECONOMICS 12-2 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Appendix 2: Complete Commercial Environmental Scan List Commercial Opportunities Scan Potential Use Local Competition Interest Constraints Potential Flying training No Yes Marketing development Medium Aircraft hangar Yes Potential Lack of t-hangars Medium Tourist/ outfitters Yes No none Medium Special events No Unknown none Medium Picknic grounds No No none Medium Camping No No none Medium Other recreation No No none Medium Residential (runway access) No Potential none Medium-Low Aircraft maintenance Yes Potential land and mgmt policy Medium-Low Trailer park No No none Medium-Low Restaurant No Unknown none Medium-Low Hotel/ motel Limited No none Medium-Low Auto track, auto events No No none Medium-Low Manufacturing Yes No Power, land and mgmt Medium-Low Rental car facility No No none Low Fixed Base Op. (FBO) No No none Low Gas station/ service stn. No No none Low Air cargo facility No No none Low Freight forwarder No No none Low Truck terminal No No none Low Warehousing No No none Low RV/ Boat storage Yes No none- distance from port Low Out/ indoor market No No none Low Motor sport park No No Availability of land Low Office buildings No No services Low Mini malls Yes No none Low Flight kitchen No No none Low Aircraft assembly No No services Low Mini-storage No No none Low Resource processing No No land and services Low Postal facilities No No none Low Car dealerships Yes No none Low Shopping plaza Yes No land and services Low Big box retail No No land and services Low Outdoor advertising No No none Low Educational institutions Yes No none Low Livestock handling Yes No none Low Animal farm Yes No none Low Animal quarantine Yes No none Low Plant nursery Yes No none Low Athletic Track No No none Low Skating rink Yes No none Low Golf course Yes No none Low Fair grounds/ amusement No No none Low
JOZSA MANAGEMENT & ECONOMICS 12-3 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Appendix 3: Financial Projections; Detailed Results
JOZSA MANAGEMENT & ECONOMICS 12-4 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Digby Municipal Airport: Revenue and Expenses, Historical to 2004/05 and Projected Baseline Aircraft Movement Projection 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Revenue AVGAS 100 $28,715 $26,500 $23,837 $22,797 $23,215 $23,632 $24,050 $24,468 $24,889 $25,323 $25,756 $26,194 Av. Oil $656 $680 $577 $552 $562 $572 $582 $592 $602 $613 $623 $634 Tiedown Fees $848 $1,192 $881 $842 $858 $873 $889 $904 $920 $936 $952 $968 Room Rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Hangar Rental $4,000 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 User Fees $158 $19 $76 $73 $74 $76 $77 $78 $80 $81 $82 $84 Other $100 $121 $95 $91 $93 $95 $96 $98 $100 $101 $103 $105 Total Revenue $34,477 $33,845 $30,800 $29,689 $30,135 $30,581 $31,027 $31,473 $31,923 $32,387 $32,850 $33,317
Expenses Airport Expenses: Salaries & Maintenace $8,782 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 Tractor Expenses $7,833 $4,687 $5,405 $5,346 $5,370 $5,394 $5,417 $5,441 $5,465 $5,489 $5,514 $5,539 $16,615 $18,483 $19,201 $19,142 $19,166 $19,189 $19,213 $19,237 $19,261 $19,285 $19,310 $19,335 Maintenance: Mobile Equipment $678 $425 $476 $471 $473 $475 $477 $479 $482 $484 $486 $488 Hangars $518 $1,747 $1,133 $1,133 $1,133 $1,133 $1,133 $1,133 $1,133 $1,133 $1,133 $1,133 Admin. & Other Buldinings $9,645 $8,417 $7,798 $7,713 $7,747 $7,781 $7,815 $7,849 $7,884 $7,919 $7,955 $7,991 Runway Lighting $1,132 $2,352 $1,504 $1,488 $1,494 $1,501 $1,507 $1,514 $1,521 $1,528 $1,534 $1,541 Electronic Equipment $825 $269 $472 $467 $469 $471 $473 $476 $478 $480 $482 $484 Aviation Gas pumps $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Grounds, Runway & Taxiway $2,702 $3,743 $2,782 $2,752 $2,764 $2,776 $2,788 $2,801 $2,813 $2,826 $2,838 $2,851 Tiedowns & Parking $0 $715 $309 $305 $307 $308 $309 $311 $312 $313 $315 $316 $15,500 $17,669 $14,474 $14,329 $14,387 $14,445 $14,504 $14,562 $14,621 $14,682 $14,743 $14,804 Inventory Purchases Aviation Gas 100 $29,686 $25,534 $19,947 $19,076 $19,426 $19,775 $20,125 $20,474 $20,827 $21,190 $21,553 $21,919 Aviation Oil $594 $455 $483 $462 $470 $479 $487 $496 $504 $513 $522 $531 $30,280 $25,989 $20,429 $19,538 $19,896 $20,254 $20,612 $20,970 $21,331 $21,703 $22,074 $22,449 Operating Expenses Electricity $5,617 $5,821 $4,938 $4,884 $4,906 $4,927 $4,949 $4,971 $4,992 $5,015 $5,037 $5,060 Telephone $1,148 $1,183 $1,006 $995 $999 $1,004 $1,008 $1,013 $1,017 $1,022 $1,026 $1,031 Insurance $5,878 $6,251 $5,236 $5,179 $5,202 $5,225 $5,248 $5,271 $5,294 $5,318 $5,342 $5,366 Office Supplies $1,608 $1,251 $1,234 $1,221 $1,226 $1,232 $1,237 $1,242 $1,248 $1,253 $1,259 $1,265 Cleaning Supplies $281 $234 $223 $220 $221 $222 $223 $224 $225 $226 $227 $228 Publications $55 $106 $70 $69 $69 $70 $70 $70 $70 $71 $71 $71 Lic., Regis. & Memberships $36 $63 $43 $42 $42 $42 $43 $43 $43 $43 $43 $44 Travel $389 $600 $427 $422 $424 $426 $428 $430 $431 $433 $435 $437 Advertising $100 $25 $54 $53 $54 $54 $54 $54 $55 $55 $55 $55 Freight $11 $26 $16 $16 $16 $16 $16 $16 $16 $16 $16 $17 Postage $31 $24 $24 $23 $24 $24 $24 $24 $24 $24 $24 $24 Photocopies $384 $131 $222 $220 $221 $222 $223 $224 $225 $226 $227 $228 Miscellaneous $1,263 $2,863 $1,781 $1,762 $1,770 $1,777 $1,785 $1,793 $1,801 $1,809 $1,817 $1,825 $16,800 $18,578 $15,274 $15,107 $15,174 $15,241 $15,308 $15,375 $15,442 $15,512 $15,581 $15,651
Total Expenses $79,195 $80,719 $69,378 $68,116 $68,623 $69,129 $69,636 $70,143 $70,655 $71,181 $71,708 $72,239
Net Revenue -$44,717.82 -$46,874 -$38,578 -$38,427 -$38,488 -$38,549 -$38,609 -$38,670 -$38,731 -$38,795 -$38,858 -$38,921 -$38,427 -$76,915 -$115,464 -$154,073 -$192,743 -$231,475 -$270,269 -$309,127 -$348,048
JOZSA MANAGEMENT & ECONOMICS 12-5 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Digby Municipal Airport: Revenue and Expenses, Historical to 2004/05 and Projected High Aircraft Movement Projection 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Revenue AVGAS 100 $28,715 $26,500 $24,403 $25,772 $26,784 $27,852 $28,956 $30,105 $31,285 $32,506 $33,786 $35,115 Av. Oil $656 $680 $591 $624 $648 $674 $701 $729 $757 $787 $818 $850 Tiedown Fees $848 $1,192 $902 $952 $990 $1,029 $1,070 $1,112 $1,156 $1,201 $1,248 $1,298 Room Rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Hangar Rental $4,000 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 User Fees $158 $19 $78 $82 $86 $89 $93 $96 $100 $104 $108 $112 Other $100 $121 $98 $103 $107 $111 $116 $120 $125 $130 $135 $141 Total Revenue $34,477 $33,845 $31,404 $32,867 $33,948 $35,089 $36,269 $37,495 $38,757 $40,061 $41,429 $42,849
Expenses Airport Expenses: Salaries & Maintenace $8,782 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 Tractor Expenses $7,833 $4,687 $5,533 $5,611 $5,668 $5,729 $5,792 $5,857 $5,924 $5,993 $6,065 $6,141 $16,615 $18,483 $19,329 $19,407 $19,464 $19,525 $19,587 $19,653 $19,719 $19,789 $19,861 $19,937 Maintenance: Mobile Equipment $678 $425 $488 $494 $499 $505 $510 $516 $522 $528 $534 $541 Hangars $518 $1,747 $1,001 $1,015 $1,026 $1,037 $1,048 $1,060 $1,072 $1,084 $1,097 $1,111 Admin. & Other Buldinings $9,645 $8,417 $7,983 $8,095 $8,178 $8,265 $8,355 $8,449 $8,546 $8,646 $8,750 $8,859 Runway Lighting $1,132 $2,352 $1,540 $1,561 $1,577 $1,594 $1,612 $1,630 $1,648 $1,668 $1,688 $1,709 Electronic Equipment $825 $269 $484 $490 $495 $501 $506 $512 $518 $524 $530 $537 Aviation Gas pumps $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Grounds, Runway & Taxiway $2,702 $3,743 $2,848 $2,888 $2,918 $2,949 $2,981 $3,015 $3,049 $3,085 $3,122 $3,161 Tiedowns & Parking $0 $715 $316 $320 $324 $327 $331 $334 $338 $342 $346 $351 $15,500 $17,669 $14,659 $14,865 $15,017 $15,177 $15,343 $15,516 $15,693 $15,876 $16,069 $16,268 Inventory Purchases Aviation Gas 100 $29,686 $25,534 $20,420 $21,566 $22,413 $23,306 $24,230 $25,191 $26,179 $27,200 $28,272 $29,384 Aviation Oil $594 $455 $494 $522 $542 $564 $586 $610 $634 $658 $684 $711 $30,280 $25,989 $20,915 $22,088 $22,955 $23,870 $24,817 $25,801 $26,813 $27,859 $28,956 $30,095 Operating Expenses Electricity $5,617 $5,821 $5,055 $5,126 $5,178 $5,234 $5,291 $5,350 $5,412 $5,475 $5,541 $5,610 Telephone $1,148 $1,183 $1,030 $1,044 $1,055 $1,066 $1,078 $1,090 $1,103 $1,115 $1,129 $1,143 Insurance $5,878 $6,251 $5,361 $5,436 $5,491 $5,550 $5,611 $5,674 $5,739 $5,806 $5,876 $5,949 Office Supplies $1,608 $1,251 $1,263 $1,281 $1,294 $1,308 $1,322 $1,337 $1,353 $1,368 $1,385 $1,402 Cleaning Supplies $281 $234 $228 $231 $233 $236 $238 $241 $244 $247 $250 $253 Publications $55 $106 $71 $75 $77 $79 $82 $85 $87 $90 $93 $96 Lic., Regis. & Memberships $36 $63 $44 $44 $45 $45 $46 $46 $47 $47 $48 $48 Travel $389 $600 $437 $443 $448 $452 $457 $462 $468 $473 $479 $485 Advertising $100 $25 $55 $56 $57 $57 $58 $59 $59 $60 $61 $61 Freight $11 $26 $17 $17 $17 $17 $17 $17 $18 $18 $18 $18 Postage $31 $24 $24 $25 $25 $25 $25 $26 $26 $26 $27 $27 Photocopies $384 $131 $228 $231 $233 $236 $238 $241 $244 $247 $250 $253 Miscellaneous $1,263 $2,863 $1,823 $1,849 $1,868 $1,888 $1,909 $1,930 $1,952 $1,975 $1,999 $2,024 $16,800 $18,578 $15,636 $15,858 $16,022 $16,194 $16,373 $16,559 $16,750 $16,947 $17,154 $17,369 Total Expenses $79,195 $80,719 $70,540 $72,218 $73,458 $74,767 $76,120 $77,528 $78,975 $80,471 $82,041 $83,669
Net Revenue -$44,718 -$46,874 -$39,135 -$39,351 -$39,510 -$39,678 -$39,852 -$40,032 -$40,218 -$40,410 -$40,612 -$40,821 -$39,135 -$78,486 -$117,996 -$157,674 -$197,526 -$237,558 -$277,776 -$318,186 -$358,798 -$399,619
JOZSA MANAGEMENT & ECONOMICS 12-6 LPS Aviation Inc Digby Municipal Airport Strategic Business Plan December 2006
Digby Municipal Airport: Revenue and Expenses, Historical to 2004/05 and Projected Low Aircraft Movement Projection 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Revenue: AVGAS 100 $28,715 $26,500 $23,271 $20,890 $20,477 $20,079 $19,694 $19,312 $18,943 $18,574 $18,208 $17,855 Av. Oil $656 $680 $563 $492 $482 $472 $463 $454 $445 $436 $427 $418 Tiedown Fees $848 $1,192 $860 $751 $736 $721 $707 $693 $679 $665 $652 $639 Room Rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Hangar Rental $4,000 $5,333 $3,934 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 $5,333 User Fees $158 $19 $74 $65 $64 $62 $61 $60 $59 $58 $56 $55 Other $100 $121 $93 $65 $64 $62 $61 $60 $59 $58 $56 $55 Total Revenue $34,477 $33,845 $28,795 $27,596 $27,155 $26,730 $26,319 $25,912 $25,517 $25,123 $24,733 $24,356
Expenses: Airport Expenses Salaries & Maintenace $8,782 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 $13,796 Tractor Expenses $7,833 $4,687 $5,277 $5,110 $5,086 $5,064 $5,042 $5,020 $4,999 $4,978 $4,958 $4,938 $16,615 $18,483 $19,073 $18,906 $18,882 $18,860 $18,838 $18,816 $18,795 $18,774 $18,754 $18,734 Maintenance Expenses Mobile Equipment $678 $425 $465 $450 $448 $446 $444 $442 $441 $439 $437 $435 Hangars $518 $1,747 $955 $925 $920 $916 $912 $908 $905 $901 $897 $893 Admin. & Other Buldinings $9,645 $8,417 $7,613 $7,372 $7,338 $7,305 $7,274 $7,243 $7,212 $7,182 $7,152 $7,123 Runway Lighting $1,132 $2,352 $1,468 $1,422 $1,415 $1,409 $1,403 $1,397 $1,391 $1,385 $1,380 $1,374 Electronic Equipment $825 $269 $461 $447 $445 $443 $441 $439 $437 $435 $433 $432 Aviation Gas pumps $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Grounds, Runway & Taxiway $2,702 $3,743 $2,716 $2,630 $2,618 $2,606 $2,595 $2,584 $2,573 $2,563 $2,552 $2,542 Tiedowns & Parking $0 $715 $301 $292 $290 $289 $288 $287 $285 $284 $283 $282 $15,500 $17,669 $13,979 $13,537 $13,475 $13,415 $13,357 $13,300 $13,244 $13,189 $13,134 $13,081 Inventory Purchases Aviation Gas 100 $29,686 $25,534 $19,473 $17,481 $17,135 $16,802 $16,479 $16,160 $15,851 $15,542 $15,236 $14,941 Aviation Oil $594 $455 $471 $412 $403 $395 $387 $380 $372 $365 $357 $350 $30,280 $25,989 $19,944 $17,892 $17,538 $17,197 $16,867 $16,540 $16,223 $15,907 $15,594 $15,291 Operating Expenses Electricity $5,617 $5,821 $4,821 $4,668 $4,647 $4,626 $4,606 $4,586 $4,567 $4,548 $4,529 $4,511 Telephone $1,148 $1,183 $982 $951 $947 $942 $938 $934 $931 $927 $923 $919 Insurance $5,878 $6,251 $5,112 $4,950 $4,927 $4,906 $4,884 $4,863 $4,843 $4,823 $4,803 $4,783 Office Supplies $1,608 $1,251 $1,205 $1,196 $1,191 $1,186 $1,181 $1,176 $1,171 $1,166 $1,161 $1,157 Cleaning Supplies $281 $234 $217 $210 $209 $208 $208 $207 $206 $205 $204 $203 Publications $55 $106 $68 $66 $66 $65 $65 $65 $64 $64 $64 $64 Lic., Regis. & Memberships $36 $63 $42 $40 $40 $40 $40 $40 $39 $39 $39 $39 Travel $389 $600 $417 $403 $402 $400 $398 $396 $395 $393 $391 $390 Advertising $100 $25 $53 $51 $51 $51 $50 $50 $50 $50 $50 $49 Freight $11 $26 $16 $15 $15 $15 $15 $15 $15 $15 $15 $15 Postage $31 $24 $23 $22 $22 $22 $22 $22 $22 $22 $22 $22 Photocopies $384 $131 $217 $210 $209 $208 $208 $207 $206 $205 $204 $203 Miscellaneous $1,263 $2,863 $1,739 $1,684 $1,676 $1,669 $1,661 $1,654 $1,647 $1,641 $1,634 $1,627 $16,800 $18,578 $14,911 $14,468 $14,402 $14,338 $14,276 $14,215 $14,156 $14,097 $14,038 $13,982 Total Expenses $79,195 $80,719 $67,907 $64,803 $64,296 $63,810 $63,338 $62,871 $62,419 $61,967 $61,520 $61,087
Net Revenue -$44,718 -$46,874 -$39,112 -$37,207 -$37,142 -$37,080 -$37,019 -$36,960 -$36,902 -$36,844 -$36,787 -$36,731 -$37,207 -$74,348 -$111,428 -$148,447 -$185,407 -$222,308 -$259,152 -$295,939 -$332,670
JOZSA MANAGEMENT & ECONOMICS 12-7 LPS Aviation Inc