The Next Level

THE NEXT LEVEL ANNUAL REPORT 2016 1996 2000 2004 An agreement is reached to transfer NAV CANADA invests to facilitate The six Northern Radar Program sites the civil ANS from the Government of increased use of fuel-saving polar routes – are completed, bringing surveillance Canada to NAV CANADA on November 1. which grow to over 15,000 flights per year to one million square kilometres of by 2016. Northern airspace. 1997 NAV CANADA announces plans to 2001 2005 invest in ANS renewal and reduce On September 11, airspace in the U.S. and The Moncton ACC is first to make the administrative costs. Canada shuts down due to the 9/11 attacks. transition to CAATS, our automated air Within hours, NAV CANADA lands more traffic system. 1998 than 1,500 aircraft without incident. The world's first “glass tower” opens 2006 at Toronto Pearson International Airport 2002 Naviair, the Danish ANSP, signs an agree- with touch-sensitive screens replacing NAV CANADA and NATS, the U.K. ANSP, ment for the installation of NAV CANADA paper flight data strips. sign an agreement leading to increased technology in the new Copenhagen collaborative development and deployment control tower. 1999 of technology. Customer service charges are set at full 2007 cost recovery as of March 1 and are 2003 Flights crossing North Atlantic airspace significantly lower than the Air Transpor- The control tower at Montreal- are now tracked by Canadian-designed tation Tax they replaced. Pierre Elliott Trudeau International Airport technology, the outcome of a successful is modernized. partnership between NAV CANADA and NATS. THE NEXT LEVEL

2008 2012 2016 NAV CANADA introduces its Just Culture NAV CANADA announces plans for Having invested over $2 billion since 1996, program, encouraging employees to investment in space-based ADS-B NAV CANADA announces a three-year, communicate openly on safety issues. through the Aireon joint venture with $500 million capital expenditure program Iridium Communications Inc., which will further investing in people, technology, 2009 enable worldwide aircraft surveillance. systems and facility upgrades. On January 1, ADS-B, combined with VHF 2013 A temporary 3.7 per cent, one-year rate communications, goes operational over reduction and a 3.9 per cent revision to base 250,000 square nautical miles of airspace Medium-Term Conflict Detection is rates is introduced. As of September 1, 2016, over Hudson Bay. implemented in high level airspace sectors rates are below the level at which they of Moncton, Montreal, Edmonton and were introduced in 1999, compared to a 2010 Winnipeg ACCs. 40+ per cent increase in the Consumer With its commissioning at the Vancouver Price Index over this time period. ACC and the Edmonton ACC's southern 2014 specialties, CAATS is now a national NAV CANADA completes the national Flight Data Processor, with automated rollout of Controller-Pilot Data Link handoffs across the country. Communications in Canadian domestic airspace at FL290 and above. 2 011 NAV CANADA receives IATA's Eagle 2015 Award for Best ANSP, its third to date The $66 million Weather Systems (the other two coming in 2001 and 2010). Upgrade Program concludes, modernizing and expanding the infrastructure and technology supporting our aviation weather services.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL CHANGE IS IN THE AIR

We're excited to reveal to you our As part of our brand identity refresh, new NAV CANADA logo. It forms we have also established brand the cornerstone of our renewed attributes that are reflective of the brand identity, which we will be character of our Company. We are rolling out in 2017. This is the first proud to say that we are committed change to the NAV CANADA 'look' to safety; ready to reach high with since the Company was founded in our objectives; prepared to set new 1996. With twenty years of service, standards for achievement and it was time to present a fresh image excellence; eager to work collabo that celebrates our growth, reflects ratively with industry partners, and our renewed vision, and points the focused on finding inventive ways way as NAV CANADA takes “serving to deliver better service. a world in motion” to the next level. We share our new logo with pride A reinterpretation of our original and excitement. With two decades elliptical logo, our new NAV CANADA of exceptional service behind us, signature is less confined, allowing the we have matured as a Company – Company name to be more prominent and so too should our identity. It is a and impactful. As a nod to the past, true reflection of our commitment to the wing has been retained to remind modernize and show leadership in us of the Company's foundation, but the provision of safe, efficient and updated to offer a sense of upward cost-effective air navigation services. movement and advancement. We have also chosen a more modern and vibrant blue that reflects the hues in the sky, while radiating a sense of innovation, inspiration and trust. TABLE OF CONTENTS

MESSAGE FROM THE CHAIR OF THE BOARD 4

MESSAGE FROM THE PRESIDENT AND CEO 8

NAV CANADA BY THE NUMBERS 16

OUR VISION, MISSION AND OBJECTIVES 17

STRATEGIC PLAN UPDATE 18

OUR PEOPLE 31

NATIONAL AWARD WINNERS 2016 32

CORPORATE GOVERNANCE 34

ADVISORY COMMITTEE REPORT 45

ADVISORY COMMITTEE 47

CONSOLIDATED FINANCIAL STATEMENTS 48

OFFICERS AND OTHER INFORMATION 116

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 3 MESSAGE FROM THE CHAIR OF THE BOARD MARC COURTOIS

It is a great pleasure to introduce While assigning aircraft to their the 2016 NAV CANADA Annual Report optimum flight level is a key function in this, our 20th year. of NAV CANADA's air navigation services (ANS), keeping the Company The title of this year's report, The on course at its optimum level is the Next Level, was selected because it focus of all our planning and execution. so aptly brings together two concepts that go hand in hand in our business – In my four years as Chair, I have flight safety and performance. developed a deep appreciation for NAV CANADA's culture of continuous Flight levels are used in air traffic improvement and its drive to be control to ensure a safe vertical always moving forward in safety, distance is maintained between service and efficiency. aircraft. When the pilot of an aircraft requests to move to the next level, From an innovative idea in the early or an air traffic controller offers a 1990s, to NAV CANADA's creation as change in flight level, it is most a private corporation and its purchase often to help improve efficiency of Canada's air navigation system in and performance. 1996, to our three Eagle Awards as world's best Air Navigation Service Provider (ANSP), this Company has always strived to reach the next level and set the pace for the industry.

4 SAFETY FIRST We benchmark our safety data Our safety record has been among against other ANSPs and our past the best for more than a decade. Through all the changes of the past performance. NAV CANADA is an Standing behind this accomplishment 20 years, our focus on safety has active member of CANSO, the Civil are dedicated and skilled people, remained a constant, driven by a Air Navigation Services Organisation, backed by our strong safety culture desire to continuously improve and we have participated in CANSO's and working in close collaboration and advance. Performance Benchmarking Report with our partner organizations around for more than 10 years. the world. The Company has an exemplary safety record. We continued this We are taking a lead role in CANSO's record in fiscal 2016, as measured Standard of Excellence in Air Navigation KEY TO OUR by a key safety benchmark – the rate Services-Safety (SEANS-Safety) of IFR-to-IFR losses of separation program, which is designed to assess SUCCESS per 100,000 aircraft movements. the maturity of an ANSP's safety People have always been the key to As of August 31, 2016, our five-year management system (SMS). We are NAV CANADA's advancement to new moving average was 0.69 per also working with the CANSO group levels. Their role is reflected in our 100,000 movements – well within that is developing a system for sharing newly revised mission statement, the top decile of major ANSPs. best safety practices among members. which both reflects our determination to be a world leader and emphasizes our commitment to our employees. You can read our new mission statement on page 17 of this report.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 5 Employee engagement continues BUSINESS With the notional balance of the to move to the next level, and this is rate stabilization account growing, reflected in the Company's annual AND FINANCE the Company implemented rate awards program, Points of Pride. reductions at the beginning of fiscal Once again this year, it was my Air traffic for fiscal year 2016 was 2017 that lowered customer service privilege and pleasure to present 4.1 per cent higher than in 2015, charges by an average of 7.6 per cent. Chairman's Awards to some of our and the Company achieved a strong These reductions will save customers outstanding employees at National financial performance, ending the approximately $105 million in fiscal Awards Night 2016. year with a positive balance in its year 2017. rate stabilization account. The 21 winners of the 2016 Chairman's Awards are Jim Daher, Strong traffic growth, practiced cost Roger Morrell, André Bérubé, control and targeted strategic invest James Carr, Remington Danford, ments in the ANS have combined Bénédicte Latimer, Bob Miller, to allow us to deliver savings to Cindy Westphal, Allen Mitchell, customers while increasing planned Matthew Collishaw, Brent Dowding, investments in people, technology Kent Fulton, Pawel Kisielewski, and facilities. Chris Stauble, Charles Daigle, Mark Libant, Kim Stolpmann, Jeff Barry, Matthew Nych, Garry Doering and Marc Lacroix.

You can view all of our National Awards winners on page 32 of this report.

6 AR 2016

Christopher Chisholm AR 2016 TSS Course Maintenance Specialist Chantale Marcoux Head Office Team Supervisor Quebec FIC NC NC

INVESTING IN fuel and greenhouse gas emissions Finally, on behalf of my Board savings. Aireon will truly take surveil colleagues, I would like to congratulate THE FUTURE lance and ATM performance to the Neil Wilson in his first year as President next level. and CEO. He is the right leader to take At the same time, the Company NAV CANADA to the next level. I would announced an increased level of like to thank Neil, his management investment in people, technology, BOARD team and all NAV CANADA people systems and facilities. for their hard work and dedication RENEWAL in moving the Company forward. With this expanded capital program, NAV CANADA will be investing In closing, I want to thank my As we mark our progress and $500 million over the next three years colleagues on the Board of Directors celebrate the highlights of the past in every facet of its business, from air for their contributions to the Company. 20 years, there can be no doubt that traffic services training, to air traffic NAV CANADA values your sound NAV CANADA remains focused on management and business systems, business judgment. moving to the next level, striving to to new facilities, to its investment in deliver excellence – in safety, service, I would like to express my sincere space-based ADS-B surveillance technology and efficiency – for the appreciation to departing directors through the Aireon joint venture. benefit of all its stakeholders. Gary Fane, James Gouk and The introduction of global air traffic Fred Peters for their excellent service services surveillance over the world's on the Board, and I am pleased oceans and remote areas will be a to welcome our new members, game changer, improving safety and Michelle Savoy, Umar Sheikh and flight efficiency, and offering substantial Louise Tardif. Marc Courtois Chair of the Board

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 7 8 MESSAGE FROM THE PRESIDENT AND CEO NEIL WILSON

“Take it to the next level“ – it is Our Annual Report title and theme in 1998, installing our own electronic the phrase we use when we've this year – The Next Level – was flight strips in place of paper. made the decision to improve our selected because it could well be performance; to take aim at goals NAV CANADA's informal motto, We reached milestones in collabo- that promise us greater success given its 20-year effort to improve ration, working with NATS in the UK or fulfilment. the performance of the Canadian to develop and deploy technology air navigation system. that improves service across the For NAV CANADA, taking it to the North Atlantic. next level means focusing on goals that improve the service we provide. MOVING TO THE We introduced safety programs like Just Culture which encourages It means making the system safer for NEXT LEVEL employees to openly communicate our customers, and their customers. on safety issues. NAV CANADA has been “levelling It means enhancing a work up“ to improve its performance We provided value to our customers environment that allows our throughout its history. It began with rates that, as of September 1, employees to do an even better job. in 1996 with the audacious step 2016, are lower than the level at of becoming the world's first which they were introduced in 1999, It means implementing technology fully privatized Air Navigation compared to a 40+ per cent that offers better air traffic man- Service Provider (ANSP) with increase in the Consumer Price agement and improved data a Board of Directors consisting Index over the same period. sharing for collaborative decision of Air Navigation System (ANS) making. And today, we are on the cusp of stakeholders. one of the greatest leaps in air It means evaluating and optimizing Over the years the Company has navigation service, with Aireon's service delivery, selecting from a consistently demonstrated its space-based air traffic surveillance. toolkit of procedures and airspace desire to take it to the next level, design options. To move to the next level once again taking aim at goals that would —to be the ANSP the 21st century bring service, and safety, and It means working with domestic demands—will require a concerted added value to its customers. and global partners to find solu- effort by all of NAV CANADA, tions for common issues that will We built innovative facilities like the working closely with its stakeholders support a robust aviation industry. world's first “glass tower“ in Toronto and partner organizations.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 9 Those who know us well may notice From May 3, when Tower operations and the air traffic management (ATM) a sharper focus and unreserved at Fort McMurray International Airport industry discussed topics including enthusiasm as we set our course ceased, to June 10, when limited safety management, collaborating for the next 20 years. Even our logo air traffic services were restored, with airports and airlines, and Remotely is getting a fresh look to reflect our the entire Company pulled together Piloted Aircraft Systems. resolve to be “best in class“. to provide services to customers and support to colleagues. Levelling Up Looking ahead to 2020, you can expect us to continue taking the lead in safety, Two separate fundraising appeals, SAFETY service and efficiency; delivering value one by the Canadian Air Traffic to our customers. Control Association and one by We often say that safety is our only NAV CANADA, took in more than product. When NAV CANADA was Marking Milestones $90,000 from employees and were created 20 years ago, safety was built matched by the Company, to help into its structure. Over the years, This year I wish to mention two staff affected by the tragedy, and we have developed a strong safety milestones—one for NAV CANADA, the Fort McMurray community. culture, supported by an effective and one more personal. Safety Management System (SMS). All the managers and employees On November 1, 2016, we celebrated who worked through the emergency We have an exemplary safety record our 20th anniversary as the owner demonstrated an incredible level of in the provision of air navigation and operator of Canada's civil ANS. teamwork, and I was happy to have services, and 2016 was no exception. Not long after that, I completed my the opportunity to say thank you in However, as successful as we have first year as the Company's President person to our Fort McMurray staff been, hazards and safety risks still and CEO. when we met in Edmonton. develop, and we must continuously improve our processes and procedures The 20th anniversary is particularly I also want to acknowledge everyone to identify and mitigate them. meaningful for me, because I was who took on extra shifts or worked fortunate to play a part in moving longer hours, particularly those at the New in fiscal 2016 was the introduction the ANS from government to the Peace River Flight Service Station of the NAV CANADA Organizational private sector in the 1990s. I joined who provided service; as well as Safety Event Analysis. Our Safety the Company full time in 2002 and the Engineering and Technical and Quality team use this tool to have been part of its remarkable Operations staff who verified that analyze operational incidents and story ever since. the tower equipment and NAVAIDs determine whether organizational were operational. factors contributed to them. During my first year as President and CEO, I travelled the country, meeting Maintaining Our Global Connections Our SMS Integrated Working Group with employees from coast to coast also developed techniques to to coast, and was inspired by what NAV CANADA plays an important supplement the established Hazard I saw and heard. NAV CANADA's role in global aviation, and it was our Identification Risk Assessment used people are uniquely skilled and pleasure to host the Civil Air Navigation to evaluate the safety risk of any committed to their work. Services Organisation (CANSO) World change to our systems, equipment, ATM Summit and 20th Annual General procedures or products. You only have to look at the outstanding Meeting in Vancouver, BC in June 2016. performance of our people during the New processes were also added Fort McMurray wildfires last May to CANSO events like this one help to our Quality Management System know they will never let you down. ANSPs to maintain strong connec to collect, review and distribute best tions and exchange ideas that practices and lessons learned. This support the safety, sustainability and aligns with a CANSO initiative to share advancement of global ANS services. best practices among ANSPs. The 230 representatives from ANSPs

10 AR 2016 Craig Morrison Air Traffic Controller Fort McMurray Tower

AR 2016 Bradley Young Air Traffic Controller Fort McMurray Tower

We continue to contribute to interna To measure our progress on that front, Points of Pride tional safety initiatives. We are taking we use the AON Hewitt engagement a leading role in developing CANSO's survey. Our 2016 engagement survey As I've mentioned, NAV CANADA Human Performance Standard of had a record 80.6 per cent participation employees are committed to doing Excellence, and we are also members rate, and the results showed an their best every day. Our Points of on the related Human Performance increase of the overall engagement Pride National Awards program is Task Force, which is focusing on rate for our employees to 62 per cent. an opportunity for them to nominate important issues like fatigue. This clearly indicates movement toward colleagues who exceed even this the next level in our corporate culture. high standard. Levelling Up Labour Relations This year, I was pleased to present PEOPLE well-deserved President's Awards Our employees help shape the future for Outstanding Achievement to the People are the foundation of our of NAV CANADA and that is achieved La Ronge Flight Service Station Team success, which is why we have through productive labour relations. and to the MANOPS Re-Engineering made the creation of a “professional Team, as well as to Jeff Cochrane, and fulfilling work environment for Collective bargaining will be an Director, Navigation and Airspace, our employees“ central to our important focus during the coming and Simon Robert, Director, Portfolio mission statement. year, as we begin negotiations with Management and Solutions Delivery. all eight of our bargaining units. We were pleased to be selected as You can view all of our National Awards one of Canada's Top 100 Employers Although collective bargaining can winners on page 32 of this report. for 2017, a national competition that sometimes be challenging, we have recognizes employers for providing developed strong and open lines exceptional workplaces and “best in of communication with all of our class“ employee programs. We are bargaining agents, and we look proud of this award, but our goal is forward to working creatively to to be a top employer in the eyes of respond to complex issues. our employees.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 11 Levelling Up Modernizing NAVAIDs In December 2015, NAV CANADA and NATS began Phase 1 of a trial SERVICE The improved accuracy, integrity to implement reduced lateral and availability of satellite navigation separation minima (RLatSM) by Improving Service Delivery provide us with the opportunity to adding a half-degree track within through Consultation reduce the requirement for ground- the current organized track structure, based NAVAIDs, although some will creating three tracks utilizing a half Consultation with stakeholders is still be needed for aircraft recovery degree of separation. critical to our efforts to improve and to maintain flight efficiencies Between December 2015 and service delivery and community in terminal areas. relations. During fiscal 2016, we held September 2016, over 43,000 flights community consultations in Calgary, We continue to consult our customers took advantage of the change, allowing Ottawa and Halifax on airspace changes and Transport Canada, our regulator, them to take more efficient routes to support the implementation of on the appropriate number of ground- over the ocean, and reducing fuel Required Navigation Performance based NAVAIDs to be retained. burn and greenhouse gas emissions. (RNP) flight paths. Consultations will continue through The RLatSM area will be expanded the aeronautical study process in 2017. in Phase 2 of the trial in fiscal 2017. RNP uses satellite-based positioning and modern flight management Reviewing Toronto Upgrading Technology systems to manage the aircraft's and Infrastructure approach to the runway. RNP makes Pearson Airspace it possible to design more efficient As part of our work with the Greater The need to modernize a system as arrival flight paths, reducing green Toronto Airports Authority to reduce dynamic as the ANS never stops. house gas emissions while maintaining noise for the communities that The Company has initiated a three-year, safety. Its implementation, along surround Toronto Pearson International $500 million capital program to move with other performance-based Airport, we commissioned an indepen us to the next level in technology navigation technologies, is recog dent review of the airspace aimed and infrastructure. nized as a key strategy in meeting at reducing noise from arriving and environmental objectives. From 2016 to 2019, we will focus on departing aircraft. The review team expanding, refurbishing and replacing from the UK-based aviation consul The new flight paths are in place in all facilities. We will also upgrade power tancy, Helios, held community three communities. We continue to systems, make important investments consultations in fiscal 2016. work with our customers and airports in technology, and improve key on the design and implementation of Reducing Lateral Separation business systems and critical elements flight paths that provide benefits for of our communications, navigation both airlines and the communities over the North Atlantic and surveillance infrastructure. they serve. Traditionally the tracks in North Atlantic Projects underway include a new airspace are separated by one degree Tower at Waterloo Regional Airport, of latitude – equivalent to 60 nautical scheduled to open in 2017, and the miles – but advances in aircraft and replacement of Terminal Surveillance air traffic management technologies Radar at 12 sites to improve reliability mean that the separation standard and data exchange, lower mainte can now be safely reduced to half nance costs, and mitigate potential a degree. service outages.

12 NC

AR 2016 Robin Saldanha Air Traffic Controller St. John's Tower

Aireon Advances space-based ADS-B network and Operating expenses were FlightAware's flight-tracking data and $1,238 million, compared to Aireon, our joint venture with Iridium web interface to help airlines comply $1,202 million in fiscal 2015. At year Communications, Enav, Naviair and with ICAO's Global Aeronautical end, the notional balance of our rate the Irish Aviation Authority, continues Distress and Safety System require stabilization account was $183 million to progress. The Iridium NEXT satellites, ments. Qatar Airways has been which is above its target balance of with their Aireon Automatic Dependant announced as the first airline that will $100 million. This strong performance Surveillance-Broadcast (ADS-B) adopt the new GlobalBeaconSM solution. has positioned us to be able to payloads, will be launched by SpaceX increase our capital investments as from California. Meanwhile, our Financial Update mentioned above, and make adjust Engineering and Operations teams ments to our service charges. are updating our systems in preparation The Company's strong financial results You can view our Financial Statements for full Aireon operations in 2018. in fiscal 2016 reflected a healthy 4.1 per cent growth in air traffic for the on page 48 of this report. On September 21, 2016, Aireon fiscal year, combined with continued announced it will partner with flight- fiscal discipline in all areas. As a tracking data company FlightAware to result, revenues were $1,393 million, provide airlines with real-time global compared to $1,334 million in the tracking of ADS-B equipped aircraft. previous fiscal year. The service, called GlobalBeaconSM, will combine data from Aireon's

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 13 FINDING THE >> Elizabeth Cameron, formerly Assistant Vice President, OPTIMUM LEVEL Labour and Employee Relations, was appointed Vice President, Reducing Service Charges Labour Relations. >> Leigh Ann Kirby was appointed Sometimes finding the optimum flight as the new Vice President, level requires a descent. Our solid General Counsel and Corporate financial footing allowed us to Secretary. Leigh Ann, formerly reduce our base rates on average by Associate Vice President, Legal 3.9 per cent and introduce a temporary at TD Bank, takes charge of the one-year rate reduction of 3.7 per cent Legal and Corporate Services for savings of 7.6 per cent on average. department. Revisions to all charges except >> Larry Lachance, formerly general aviation charges took effect Vice President, Operations, September 1, 2016. Revised general was appointed to the position of aviation charges will come into effect Vice President, Safety and Quality, March 1, 2017. replacing John David, who retired.

We expect these reductions will save >> Donna Mathieu, previously NC customers $105 million in fiscal 2017 Assistant Vice President, Pension and $56 million in fiscal 2018. Investments, was appointed to AR 2016 the position of Vice President, Ivan Hajcman Pension Discussions Continue Pension Investments, replacing Electronics Technologist Trainee Thunder Bay Paul Fahey, who retired. Maintenance Centre The Company's Pension Plan is financially sound. Growth continues >> Rob Thurgur, who held the position with strong asset returns, although of Assistant Vice President, low interest rates and market volatility Operational Support, was named present a challenge. The size of the Vice President, Operations. Pension Plan obligations continue to Earlier this year, Andrew (Andy) create a funding risk we are seeking Campbell, former Vice President, to mitigate, particularly the statutory Customer and Commercial Services, solvency deficiency. We continue to retired following a long and suc work with our bargaining agents and cessful career in aviation both at with OSFI to resolve this issue. NAV CANADA and previously at First Air. Coincident with his retire Executive Appointments ment, the Customer and Commercial Services function transitioned to The following changes to the Service Delivery. Company's senior management team were announced earlier this year: More recently, Brian Aitken, former Executive Vice President, Finance >> Raymond Bohn, formerly Vice and Chief Financial Officer, retired President, Revenue and Pension at the beginning of December 2016. Administration, was appointed to I'd like to express my appreciation the new position of Senior Vice to Brian for his business and financial President, Human Resources, leadership during his 14 years at following Richard Dixon's retirement. NAV CANADA.

14 AR 2016 David Armstrong Team Supervisor Moncton ACC

I would also like to welcome his THE NEXT successor, Alexander (Sandy) Struthers, formerly Chief Operating Officer and TWENTY Executive Vice President, Strategic Planning and previously the Chief In conclusion, I want to thank all Financial Officer for Hydro One, of our employees, stakeholders, to the NAV CANADA Executive Team. partners and ANSP colleagues for Sandy started his new position your support and cooperation over the effective December 3, 2016. past year and indeed the past 20 years. Together, we have worked to transform I congratulate all members of the Canada's ANS, setting new standards Executive Team and offer my sincere of safety, service and sustainability thanks and best wishes to those here at home, and making meaningful who retired in fiscal 2016. contributions to support aviation around the world.

I look forward to working with all of you as we continue to take our industry to the next level.

Neil Wilson President and CEO

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 15 NAV CANADA BY THE NUMBERS

18 million 12 million 40,000 km2 of airspace aircraft movements customers annually Airlines, Air Cargo Operators, Air Charter Operators, Air Taxis, Business and General Aviation, Helicopter Operators

1,000 14,000 5.1 billion flights flights litres of customer in Gander oceanic over polar routes fuel savings (1997-2015) airspace daily in 2015 in Collaborative Initiatives for Emissions Reductions (CIFER)

16 OUR VISION, MISSION AND OBJECTIVES

OUR VISION OUR OVERARCHING OBJECTIVES

NAV CANADA's vision is to be the The Company will achieve its Mission by: world's most respected ANS: 1. Maintaining a safety record 4. Providing value to our customers >> in the eyes of the flying public in the top decile of major by assisting in improving operational for our safety record; ANSPs worldwide; efficiency through innovative uses of technology and delivery of service, >> in the eyes of our customers 2. Maintaining ANS customer service domestically and internationally; for our fee levels, customer charges, on average, in the service, efficiency and modern bottom quartile (lowest charges) 5. Continuously striving to create a technology; and of major ANSPs worldwide by work environment which places ensuring that the growth in costs NAV CANADA amongst the best >> in the eyes of our employees of providing air navigation services employers in Canada; for establishing a motivating does not exceed the growth in and satisfying workplace with 6. Identifying and, where feasible, revenues, thereby resulting in a competitive compensation and introducing measurable benefits decline in customer service challenging career opportunities. which contribute to the reduction charges over the long term; of the environmental footprint 3. Implementing and maintaining of the aviation industry. OUR MISSION a modern, cost-efficient ANS technology platform in the top To be a world leader in the provision quartile of major ANSPs worldwide; of safe, efficient and cost-effective air navigation services on a sustainable basis while providing a professional and fulfilling work environment for our employees.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 17 STRATEGIC PLAN UPDATE

Providing Value for Stakeholders

AR 2016 Sadik Ahmad AIM Geographic Information System (GIS) Assembly Specialist Ottawa CANS

18 NC

AR 2016 Andrew Cavanagh Electronics Technologist Vancouver Maintenance Centre

This section provides highlights of our Internationally, NAV CANADA is a developing a Standard of Excellence performance against our Strategic member of the Civil Air Navigation in Human Performance (HP) by Plan priorities during fiscal 2016, and Services Organisation (CANSO) and identifying how to apply HP principles a summary of our direction for fiscal an active contributor to its efforts to to maximize ATM safety and efficiency. 2017 and beyond. advance global safety by participating in benchmarking activities and helping The first full Safety Management develop safety-related best practices. System (SMS) review of Flight Opera SAFETY In September 2016, the Company tions was completed, providing a solid hosted the first CANSO Human platform for continuous improvement Information about NAV CANADA's Performance Task Force meeting in to Flight Operations Safety. major safety goals and its progress Ottawa. This international group is towards its objectives can be found in the fiscal 2016 Corporate Safety Report and the Corporate Safety Plan for fiscal 2017. Below are some of NAV CANADA Rate of IFR-IFR Losses the highlights. of Separation per 100,000 Movements 5-Year Moving Average

Progress 1. 1

NAV CANADA took the lead as host of two Canadian Aviation Safety 1. 0 Officer Partnership (CASOP) forums in Vancouver, BC and Peterborough, 0.9 ON in 2016. Each event attracted some 70 representatives from airlines, 0.8 airports and government organizations. Discussions covered safety concerns such as laser strikes, runway incursions 0.7 and unmanned aerial vehicles in our airspace, along with industry-wide 0.6 initiatives involving trend analysis, 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16 just culture and change management.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 19

1,400

1,200

1,000 Weighted Charging Units (Millions) Weighted

800 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16 Fiscal Year

150

140 Consumer Price Index 130

120

110 Index to 1999 100 NAV CANADA Rates 90

80 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 Ongoing SMS assessments in each new system—which will capture Official Languages Flight Information Region (FIR) are data currently reported in separate NAV CANADA takes seriously its now linked to a regional Safety unit logs, Aviation Occurrence responsibility to ensure Canada's Culture Survey that is providing Reports and safety investigations— official languages, English and French, timely and targeted results and is now underway. are used appropriately in its daily enabling direct follow-up with operations. Bilingual air traffic services employees in the region. In the coming year, we will be benchmarking our Company's are offered in accordance with the Consistency of terminology continues strengths and opportunities in Canadian Aviation Regulations (CARs). to be a priority. The Company recently the area of Human Performance We provide significant support for moved to change the publication of management utilizing the new bilingual work environments in areas IFR routes in major terminal and CANSO Human Performance where this is required by the Official enroute phases to preferred routes, Standard of Excellence (HP SoE). Languages Act and support organiza to align with standard terminology. tions that promote minority language NAV CANADA is a key partner in the and culture in Canada. Direction development of the CANSO Standard of Excellence in Air Navigation In 2016, the Commissioner of Official Languages issued an evaluation of Several safety functions within the Services-Safety, or SEANS-Safety our actions to support our obligations Company have recently been consoli Program. SEANS-Safety will provide under the Official Languages Act. dated into the Safety and Quality CANSO members with an impartial, We received an overall grade of B, function in order to better align standardized means of assessing improving on our previous evaluation; strategies, and ensure collaboration safety management for Air Navigation with a score of A in both Official on safety programs across the country. Service Providers (ANSPs). Languages Program Management and In the upcoming year, the new orga Language of Work, and a B in Service to nization will be communicating their PEOPLE the Public and Development of Official expanded support function, in addition Language Minority Communities. to seeking feedback from frontline Progress Recruitment employees to improve risk identification in the operational environment. Engagement Survey Earlier this year, a decision was made to eliminate tuition and provide an Our engagement survey lets us “check To jump start this collaboration, allowance for new employees under in“ collectively with our employees a sample of NAV CANADA safety taking Air Traffic Services (ATS) training. every two years to see if the actions policies were audited for conformance This change was met with a very we initiated to respond to previous in the past year, in order to identify positive response, as well as increased survey results and support the areas of improvement to the policies applicant numbers. In addition, the Company's reputation, are having and structure. These changes will Company recently implemented a a positive impact on employee be implemented in 2017. referral program for employees who engagement. In response to employee wish to recommend someone they feel The Company will continue to feedback, our 2016 survey was may have an aptitude for ATS training. support CASOP and the Runway simplified to be more user-friendly, Safety and Incursion Prevention but retained key comparators so we Labour Relations Panel in order to share best practices could continue to track our progress. Currently, collective agreements and proactively manage safety risks The survey ran during the month with all eight unions are in force. in the industry. of February with a record high participation level and the highest Since the beginning of fiscal 2016, The first phase of the multi-year engagement score since the survey one-year extensions to seven NAV CANADA Safety Information was implemented in 2004. collective agreements representing System (NC-SIS) project has been approximately 89 per cent of our completed and development of the unionized workforce were ratified.

20 AR 2016 Parth Dave Air Traffic Controller Toronto ACC NC

Direction database, within the airport commu application process, enhancements nity and with other industry partners. to training materials and simulations, Engagement Partnerships will also continue at and additional professional development the community level with organiza and support for instructors. In fiscal 2017, management will tions such as the Centre culturel de continue efforts towards improving Cornwall and the Montreal Aviation Labour Relations employee engagement with a focus Museum, along with support for local, NAV CANADA and its Unions will be on leadership, performance and brand. regional and national events, such as commencing their eighth round of Regular cross-country communication the Festival Franco-Ontarien and Les bargaining in fiscal 2017. Sessions sessions by the CEO and other Rendez-vous de la Francophonie. began with the Air Traffic Specialists Executive Management Committee Association of Canada (ATSAC) members to share the Company's Operational Staffing Unifor Local 2245 and with the accomplishments and future plans and Training Canadian Air Traffic Control Association were well received in 2016 and will In fiscal 2017, the Company intends to (CATCA) Unifor Local 5454 in early continue in fiscal 2017. continue its focus on advancing its November 2016. Official Languages recruitment, training and development strategies. Initiatives will include In fiscal 2017, the Company intends improvements to predictive tools and to generate awareness of Terminav©, simulation tests to streamline the its comprehensive bilingual terminology

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 21 SERVICE as a foundational document, outlines North Atlantic goals and activities in three phases The fourth North Atlantic (NAT) to 2027. DELIVERY Operational Forum, focusing on NAV CANADA is developing required Surveillance and Communication, met Progress navigation performance (RNP) arrival in Toronto in October 2016. Organized procedures for airports across Canada. by NAV CANADA, with support from Performance-Based Navigation sponsors, NATS and Isavia, the two-day Performance-Based Navigation (PBN) >> New RNP approaches to Kelowna event drew 80 participants, repre is becoming the worldwide standard Airport, Standard Terminal Arrival senting airlines and cargo operators, for aircraft navigation. By using Routes (STARs) and sectorization ANSPs, industry associations and GPS technology and sophisticated in the Vancouver Area Control others. The purpose of the event avionics, PBN can offer enhanced Centre (ACC) Airports Specialty was to help prepare stakeholders of efficiency, precision and reduced were put in place in spring 2016. the north and south Atlantic areas for environmental impact. These new initiatives support space-based Automatic Dependent Electronic Clearance Delivery for Surveillance-Broadcast (ADS-B) and Transport Canada, NAV CANADA and Towers and Flight Service Stations support collaboration to improve the Canadian aviation industry represen (FSS), Successive Arrivals and safety and efficiency of NAT operations tatives are continuing to work together ongoing traffic growth. by improving communication. to implement the State PBN Plan for >> New RNP procedures were Canada. This document, developed implemented at Calgary, Ottawa by the Canadian Performance-based and Halifax airports following Aviation Action Team, using the public consultation on flight NAV CANADA PBN Operations Plan path designs.

AR 2016 William Malouf Electronics Technologist NC Calgary Maintenance Centre

22 CIFER Helios, a UK-based aviation consulting the constellation satellites carrying the firm, has been retained to undertake Aireon ADS-B payloads are scheduled In early October, NAV CANADA a review of Toronto-Pearson airspace throughout 2017. released its Collaborative Initiatives and to make recommendations on for Emissions Reductions (CIFER) potential ways to reduce the noise Aireon-based services in the Gander report which summarizes the impact on surrounding communities. Oceanic Control Area (OCA) will be results of efforts by the Company, The firm undertook community available in 2018. The first operational its customers and industry partners, consultations in fall 2016. Additional use of Aireon data is scheduled to to reduce the aviation industry's consultations are planned as well occur concurrently in the Gander and environmental footprint. In 2015, as an examination of best practices Shanwick OCAs, enabling implemen these efforts resulted in a reduction in noise abatement at comparable tation of reduced longitudinal separation in emissions of 1.4 million tonnes and international airports. A final report standards on North Atlantic tracks fuel savings of over 570 million litres. is expected in 2017. from 40 NM to 15 NM. From 1997 to 2020, cumulative emissions reductions are estimated North Atlantic Initiatives Remotely Piloted at 21 million tonnes. Aircraft Systems In December 2015, NAV CANADA Manual of Air Traffic Services and NATS began a trial to implement Commercial and recreational use of reduced lateral separation minima Remotely Piloted Aircraft Systems The new Manual of Air Traffic Services (RLatSM) in the North Atlantic by (RPAS) – also known as Unmanned (MATS) was successfully launched introducing an additional half degree Air Vehicles (UAVs) – is growing on March 31, 2016, replacing two track within the standard organized worldwide. publications: the Air Traffic Control track structure, thus creating three Manual of Operations (MANOPS) NAV CANADA continues to actively tracks utilizing half degree separation. and the Flight Sevices MANOPS. participate in the development of Improvements include harmonized Between December 2015 and domestic regulations, international procedures, terminology and format September 2016, over 43,000 flights standards and recommended practices which has been reorganized into took advantage of the change, allowing for the regulation of RPAS. We have easy-to-read tables, illustrations and them to take more efficient routes provided input to Transport Canada on flowcharts. MATS is available as four over the ocean. Utilization has grown the Notice of Proposed Amendment separate print and electronic (eMATS) steadily throughout the trial period to the Canadian Aviation Regulations publications, one each for Area and future planning is underway to provisions for RPAS operations which Control Centres (ACC), Flight Informa progress to Phase 2 of the trial by are expected to be released in 2017, tion Centres (FIC), Towers and Flight expanding the RLatSM area. and continue to participate on the Service Stations (FSS). ICAO Air Navigation Commission Aireon RPAS Panel. Direction The planned implementation of space-based ADS-B by Aireon will Airspace Initiatives improve service delivery capabilities The International Civil Aviation in the North Atlantic and Canadian Organization (ICAO) has developed northern airspace. harmonized phraseology for Standard Instrument Departures (SIDs) and Aireon ADS-B technology will be Standard Terminal Arrivals (STARs) hosted on the Iridium NEXT constel which is more explicit, eliminating lation of 66 satellites. The first possible misinterpretation by pilots. 10 satellites are scheduled to be NAV CANADA will implement these launched on a SpaceX Falcon 9 Rocket changes in spring 2017. from Vandenberg Air Force Base in California. Subsequent launches of

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 23 In addition, a multi-purpose interface International Marketing TECHNOLOGY capable of connecting these radios to and Development various types of telecommunications NAV CANADA was an active partner Progress circuits was also deployed, leaving in the successful Remote Airport NAV CANADA in a better position to Concept Of OperatioN (RACOON) An important step in our ATM adapt to new technology in the future. strategic plan was completed this project led by Enav, funded by the past fiscal year with the transition to Facility renovations and refurbish SESAR Joint Undertaking. The project a Common Hardware Integrated ments continued in fiscal 2016. demonstrated the use of remote Platform (CHIP) across all of our The Toronto ACC expansion is well tower services combined with ACCs. CHIP will enable system underway, as is the tower replace Required Navigation Performance growth utilizing the same infrastructure, ment at the Region of Waterloo approaches (RNP-APCH) at Malpensa while offering more fully realized International Airport. Renovations and Linate airports, with live trials of system integration and information were completed at the Montreal more than 100 flights. NAV CANADA sharing, improved technology perfor ACC, and console replacements/ contributed its integrated tower mance and reduced maintenance. refurbishments were completed at technology (NAVCANsuite) – specifically 10 other facilities including Vancouver its electronic strips/data manager The multi-year Instrument Landing and Toronto Towers and Gander and (NAVCANstrips) and its Air and Ground System replacement program entered Edmonton ACCs. Surveillance System (NAVCANsitu) – its final phase with installations this leading system integration with past year at five additional sites in Other technology enhancements Searidge Technologies' video processor Vancouver, Abbotsford, Penticton, have included deployment of a new and other digital services. Toronto 33R and Toronto City Centre. dual redundant power system for the Toronto ACC in April 2016, improving NAV CANADA's Technical Operations The Very High Frequency radio overall reliability of this critical system; and Business Development groups replacement project was a multi-year installation of a new main lighting hosted a two-week ANS Maintenance telecommunications project, started system to address glare issues in the Practices course for 25 representatives in 2010, to replace legacy analog Vancouver ACC Operations room; from China's Air Traffic Management radios with 2,000 pairs of digital and completion of an eight-year, Bureau (ATMB) at the NAV CENTRE in radios. It was completed in August $66 million project to upgrade the August-September 2016. This program 2016 with equipment deployed at Company's aviation weather systems. was a follow-up to a successful course over 300 sites across the country. demonstration delivered the previous year in Chengdu, China.

AR 2016 Tom Caines Electronics Technologist Gander ACC 24 NC

NC AR 2016 Anne Esther Morin Service Desk Specialist AR 2016 Head Office Michael Jalosinski Flight Service Specialist Edmonton FIC

Information Management Direction Radar Renewal and Productivity NAV CANADA operates 42 radar units The Company continues to improve NAVAID Modernization across the country, providing surveil its cyber security countermeasures. A multi-year project to reduce the lance information for both primary and Employee awareness programs have network of ground-based NAVAIDs secondary target tracking. The radars been launched to reduce the security across the country has been initiated, are over 30 years old and in need of incidents caused by human error by taking advantage of the advances an upgrade. focusing on password security and in satellite-based navigation and The electronics components at identification of phishing attempts. customer equipage to enhance 11 operational Terminal Surveillance safety and efficiency. Initial consul Our innovative Mandatory Briefing Radar sites as well as the Ottawa tations with Transport Canada and Application continues its rollout to Radar Test Facility will be replaced in stakeholders in all regions were our Air Traffic Control Towers, as well a multi-year project. The operational held in 2016. Consultations with as our Flight Information Centres. sites include Hamilton, Toronto, Calgary, customers and stakeholders will A successful pilot was also con Vancouver, Victoria, Edmonton, continue in 2017 through the formal ducted with Technical Operations Winnipeg, Ottawa, Montreal, Mirabel aeronautical study process. units and a full roll-out to work and Halifax. centres is in progress.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 25 AR 2016 Kelly Letendre Air Traffic Controller Vancouver Tower NC

International Marketing interface that gives them the capability planning. Phase 2 – system imple and Development to initiate a call by clicking on the mentation – will begin in the latter aircraft tag on their surveillance part of fiscal 2017. NAV CANADA is continuing its work display. on the Enav New Tower Architecture A series of foundational technologies Project which will see the deployment Enterprise Resource Planning and and services were established in of the Company's Integrated Tower Office Productivity fiscal 2016 in preparation for the Automation Suite (NAVCANsuite) in introduction of Microsoft Office 365 The transition of NAV CANADA's six air traffic control towers in Italy. (O365) capabilities and cloud-based current Enterprise Resource Planning productivity solutions. The O365 Aireon (ERP) system to a new cloud-based platform will modernize the computing platform will support the Human In 2017, NAV CANADA will imple experience for employees, enable Resources Transformation Program, ment SATVOICE automation as a new forms of collaboration across improving service delivery and communications system to support the Company, provide new methods productivity, reducing compliance Aireon by providing new Ground-to- for mobile access to corporate activities and reducing technology Air and Air-to-Ground communica productivity tools and information, support requirements and costs. tions functions on the Gander and as well as form the basis for future Edmonton ACCs' Voice Communica The planning phase (Phase 1) began desktop computing capabilities and tions Systems. Air traffic controllers early in fiscal 2017 and is focused other cloud-based services. will have the ability to contact flights on the development of requirements, directly with SATVOICE, using an system evaluation and project

26 1. 1

1. 0

0.9

0.8

0.7

0.6 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16

NAV CANADA FINANCE Air Traffic Activity in Weighted Charging Units

Progress 1,400

Financial results for the year ended August 31, 2016 reflect the growth in air traffic of 4.1 per cent as compared 1,200 to fiscal 2015 and demonstrate the Company's continued commitment to controlling costs and its success in making strategic investments 1,000 to support safe and efficient air navigation services. Weighted Charging Units (Millions) Weighted

800 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16 Fiscal Year

150

140 Consumer Price Index 130 AR 2016 Valerie Short Flight Service Specialist 120 Gander IFSS

110 NC Index to 1999 100 NAV CANADA Rates 90

80 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar '99 '01 '03 '05 '07 '09 '11 '13 '15 '17

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 27 1. 1

1. 0

0.9

0.8

0.7

0.6 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16

1,400

1,200

1,000 Weighted Charging Units (Millions) Weighted

800 01 '09'08'07'06'05'04'03'02' '10 '11 '12 '13 '14 '15 '16 Fiscal Year

This strong performance allowed the History of NAV CANADA Rate Changes (1) Company to utilize its available cash Versus Consumer Price Index (2) in fiscal 2016 to reduce debt levels 150 by $225 million, increase capital

investments in fiscal 2017 and reduce 140 service charges to customers. Consumer Price Index 130 On July 18, 2016, the Company announced the implementation of 120 revised service charges, due to the 110 strength of the rate stabilization Index to 1999 account and the positive financial 100 outlook for fiscal 2017. A temporary NAV CANADA Rates one-year rate reduction was introduced 90 in addition to revisions to base rates, each effective September 1, 2016. 80 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 The temporary adjustment reduces (1) Average changes since charges were fully implemented on March 1, 1999 charges for all services during fiscal (2) Consumer Price Index – Growth assumed to be 1.7 per cent for 2016 and beyond 2017 – on average a 3.7 per cent reduction from fiscal 2016 base rates. Revisions were also made to its base rates to align them with costs, resulting in an average reduction of 3.9 per cent Credit Ratings from fiscal 2016 base rates on an The Company's debt obligations have been assigned the following ratings ongoing basis. With these revisions, and outlooks: customer savings are estimated at approximately $105 million for fiscal General 2017 and approximately $56 million Agency Senior Debt Obligation Outlook for fiscal 2018 when the temporary DBRS Limited AA AA (low) Stable adjustment is due to expire. Moody's Investors Service Aa2 Aa2 Stable Standard & Poor's AA AA- Stable

AR 2016 Joshua Milburn Flight Service Specialist NC Saskatoon FSS

28 AR 2016 Samantha Walker NC Manager, Business Services and Shift Optimization NC Edmonton ACC

AR 2016 Mathieu Allain Installation Technologist Moncton ACC

By the end of fiscal 2016, The Company continued to meet its Direction NAV CANADA had invested a funding requirements in accordance total of US $120 million out of the with the regulations of the Office NAV CANADA will continue to focus US $150 million commitment it has of the Superintendent of Financial on initiatives that will control costs made to the Aireon joint venture. Institutions (OSFI), based on the most while maintaining safety and service The remaining two stages of invest recently filed actuarial valuations, levels. Recently announced invest ment are expected to be made by as of January 1, 2016 which reported ments in technology and facilities the end of calendar year 2017. a statutory solvency deficiency of will be enablers to improve the safe $306 million. delivery of our services and ensure The investment performance of the optimal workspaces and equipment. NAV CANADA Pension Plan assets The Company's consolidated financial However, given the uncertainty continued to be strong in fiscal 2016 statements for the years ended of global political and economic although more volatile than in the August 31, 2016 and 2015 are the conditions, we will be monitoring previous year due to uncertainty in first annual financial statements our financial requirements on an global markets about future prospects to be prepared in accordance with ongoing basis to respond to for economic growth. International Financial Reporting changing conditions. Standards (IFRS). Previous annual consolidated financial statements were prepared in accordance with Canadian Generally Accepted Accounting Principles (Part V) standards. Comparative figures for fiscal 2015 have been restated to comply with IFRS.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 29

OUR PEOPLE

of others by supporting activities Push for Change to end youth home TAKING that help strengthen and enrich our lessness and Ride to Conquer Cancer COMMUNITY community, cultural and environ for research and treatment; and by mental connections. donating to local hospital foundations, and children and youth programming. COMMITMENT They volunteer their time and partici TO THE NEXT pate in a wide variety of activities By remaining deeply connected to ranging from coaching sports teams the people in their communities and LEVEL and running, walking or cycling for understanding the challenges that various causes, to promoting our they face, our employees show great NAV CANADA employees live their rich cultural heritage, protecting the compassion, unfailing kindness and values every day. environment and providing for the an indomitable spirit in their commit less fortunate. ment to helping others. In the workplace, they are dedicated to keeping the skies safe and aircraft Once again this year, with the help of It is with pride that we recognize moving efficiently in collaboration the Company's Contributions Program, their outstanding contribution and with colleagues, customers, partners our employees across the country fundraising initiatives. We wish to and counterparts from other Air raised the bar by working together to celebrate their extraordinary acts Navigation Service Providers. raise funds for numerous charitable of giving and volunteering, and their organizations such as Hope Air, the leadership in setting new bench In our communities, they are MS Society and Habitat for Humanity; marks for generosity and kindness committed to improving the welfare by supporting fundraising initiatives like each year.

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 31 Team Winners – Jeff Dawson PRESIDENT'S La Ronge Flight Service Station Claude Fortier Sonia Gagné AWARD FOR Dan Boyer Brad Hiscock Kevin Graves Derek Hudson OUTSTANDING John Guy Kunnumpuram Scott Hunter Michael Heyhurst Neil Kirkwood ACHIEVEMENT Bill Howe Elizabeth Kwong Kayli Mayo The President's Award for Outstanding Tracy Lager Murray Robinson Achievement recognizes those Mark Leblanc Graham Toering individuals or teams of employees Sylvie Lemay Melissa Toering who have made an exceptional Alain Lemery contribution to NAV CANADA through Team Winners – Todd Lewis their dedication to excellence. MANOPS Re-Engineering David Loubier Gary Mac Adam Communications, Individual Winners Sean McElroy Public Affairs and Jeff Cochrane John Nickolchuk Translation Services Director, Navigation and Airspace Sophie Noël Head Office Isabelle Guilbault Isabelle Richer Simon Robert Tiffany Holland Michael Ross Director, Portfolio Management France Pachebat Geneviève St-Pierre and Solutions Delivery Mike Strang Head Office Operations Jonathan Burgoyne Dan Walker Tom Cooper Catherine Weaver Melissa Coulter Terry Cruse NATIONAL AWARD WINNERS 2016

32 Office of Safety and Quality Kent Fulton CHAIRMAN'S Team Supervisor, James Carr Regional Engineering AWARD FOR Manager, Human Performance Vancouver ACC Head Office Pawel Kisielewski EMPLOYEE Service Delivery Engineering Project Leader EXCELLENCE Remington Danford Vancouver ACC Operational Information Analyst Chris Stauble The Chairman's Award for Employee Head Office Installation Technologist Excellence recognizes those employees People Vancouver ACC whose efforts have made a truly significant difference in their work Bob Miller Technology places or in their communities. Site Manager, Springbank Tower, Individual Winners Lethbridge FSS and Medicine Hat FSS Springbank Tower Mark Libant Safety Manager, Flight Information Cindy Westphal Individual Winners Services Automation Manager, Quality Assurance, Ottawa TSC Projects and Employee Development Jim Daher Winnipeg ACC Kim Stolpmann Shift Manager Operational Flight Service Winnipeg ACC Performance Support Specialist Roger Morrell Ottawa TSC Air Traffic Controller Charles Daigle Toronto ACC Electronics Maintenance Specialist Team Winners – Moncton ACC Dual Redundant Powerhouse Team Winners – Customer Service VFR Phraseology Guide Jeff Barry Project Manager, Electrical Services Communications, Individual Winner Head Office Public Affairs and Allen Mitchell Matthew Nych Data Systems Coordinator (Retired) Translation Services Manager, Electrical Power Moncton ACC System Engineering André Bérubé Head Office Manager, Translation and Terminology Team Winners – Services Tofino Airspace Project Head Office Community Service Matthew Collishaw Bénédicte Latimer Garry Doering Engineering Project Leader Air Traffic Controller Communications Specialist Vancouver ACC Whitehorse ANS Head Office Brent Dowding Marc Lacroix Installation Technologist Manager, Technical Operations Vancouver ACC Montreal FIR

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 33 CORPORATE GOVERNANCE

AR 2016 Sally Hung Air Traffic Controller Vancouver ACC

34 NC

AR 2016 Garry Doering Air Traffic Controller Whitehorse ANS

BOARD OF NAV CANADA represents a unique The Board discharges its responsibilities consensus among the major stake directly and through committees. DIRECTORS holders in the ANS – the Government The Board holds five scheduled of Canada, commercial air carriers, meetings each year and unscheduled STRUCTURE general aviation and our unionized meetings are held from time to time employees. Our governance structure as required. Our By-laws disqualify AND reflects this consensus. All four of from directorship any person elected these major stakeholders are Members to the Parliament of Canada or any COMPOSITION of the Company. In addition, there is provincial legislature or territorial a Director Member. legislative assembly; federal, provincial The Company's overall approach to or territorial government employees; corporate governance follows best The result is a board of directors and directors or employees of an practices and keeps pace with where all stakeholder interests are entity that has a material interest as evolving requirements, including those represented but none dominates. a supplier, client or customer of the under applicable securities legislation. The Board's committees are similarly ANS. Every director and officer of constituted except for the Human The Board is comprised of 15 directors, the Company is required to sign Resources & Compensation Com all of whom are required to be and abide by our Code of Conduct mittee. The five Members elect the Canadian citizens. One director (the and Conflict of Interest Guidelines. directors as follows: President and CEO) is an employee of the Company. All other directors Number of are “independent“ directors as that Member Directors Elected term is defined in National Instrument Government of Canada 3 52-110 Audit Committees (NI 52-110). Commercial Air Carriers 4 General Aviation 1 Labour Unions 2 Directors 4

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 35 DIRECTORS

Directors are elected for terms not exceeding three years, with terms expiring at the Company's Annual Meeting. No director, other than the President and CEO, may serve as a director for more than twelve years in total. Set out below is information on the current directors, including their Committee membership and meeting attendance records for the fiscal year ended August 31, 2016.

Marc Courtois Edward M. Barrett DIRECTOR; DIRECTOR; CHAIR OF THE CUSTOMER CHAIR OF THE BOARD SERVICE CHARGES COMMITTEE

Quebec, Canada New Brunswick, Canada Elected by: Board of Directors Elected by: Board of Directors Director since: February 16, 2012 Director since: February 7, 2013 Current term expires: 2018 Current term expires: 2019

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 9/9 Audit & Finance Committee* 5/5 Corporate Governance Committee 3/3 Corporate Governance Committee 3/3 Customer Service Charges Committee 3/3 Customer Service Charges Committee* 3/3 Human Resources & Compensation Committee 10/10 Human Resources & Compensation Committee* 10/10 Pension Committee 5/5 Pension Committee* 4/5 Principal Occupation in Last Five Years: Safety Committee 4/4 Co-CEO and Chair of Barrett Corporation since 1996 *ex officio member Principal Occupation in Last Five Years: Corporate Director

Mary-Ann Bell Jean Coté DIRECTOR DIRECTOR

Quebec, Canada Quebec, Canada Elected by: Government Elected by: Commercial Air Carriers Director since: May 30, 2014 Director since: January 14, 2015 Current term expires: 2017 Current term expires: 2018

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 9/9 Customer Service Charges Committee 3/3 Audit & Finance Committee 5/5 Human Resources & Compensation Committee 10/10 Pension Committee 5/5 Safety Committee 4/4 Principal Occupation in Last Five Years: Principal Occupation in Last Five Years: Corporate Director. Prior to January 2015, Vice President, Commercial Corporate Director. From 2009 to 2014, Senior Vice President, Operations, Air Transat. Quebec and Ontario, Bell Aliant Regional Communications.

36 Robert J. Davis Michael DiLollo DIRECTOR; CHAIR OF THE DIRECTOR SAFETY COMMITTEE

Ontario, Canada Ontario, Canada Elected by: Commercial Air Carriers Elected by: Commercial Air Carriers Director since: April 8, 2009 Director since: February 7, 2013 Current term expires: 2018 Current term expires: 2019

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 9/9 Audit & Finance Committee 5/5 Audit & Finance Committee 5/5 Safety Committee 4/4 Customer Service Charges Committee 3/3

Principal Occupation in Last Five Years: Principal Occupation in Last Five Years: Corporate Director Chief Executive Officer of Caribbean Airlines from May 21, 2014 until October 28, 2015. From January to October 2012, Vice President, Airline Operations, Medatlantica Group. President, Transat Tours Canada from 2009 to 2011.

Bonnie DuPont Linda Hohol DIRECTOR; CHAIR OF THE HUMAN DIRECTOR; CHAIR OF THE AUDIT & RESOURCES & COMPENSATION COMMITTEE FINANCE COMMITTEE

Alberta, Canada Alberta, Canada Elected by: Board of Directors Elected by: Board of Directors Director since: February 7, 2013 Director since: February 16, 2012 Current term expires: 2019 Current term expires: 2018

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 9/9 Corporate Governance Committee 3/3 Audit & Finance Committee 5/5 Human Resources & Compensation Committee 10/10 Customer Service Charges Committee 3/3 Pension Committee 5/5 Principal Occupation in Last Five Years: Corporate Director Principal Occupation in Last Five Years: Corporate Director

Arthur J. LaFlamme Robert Reid DIRECTOR DIRECTOR; CHAIR OF THE CORPORATE GOVERNANCE COMMITTEE

Ontario, Canada Ontario, Canada Elected by: General Aviation Elected by: Commercial Air Carriers Director since: February 16, 2012 Director since: April 8, 2009 Current term expires: 2018 Current term expires: 2018

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 9/9 Human Resources & Compensation Committee 10/10 Corporate Governance Committee 3/3 Safety Committee 4/4 Human Resources & Compensation Committee 10/10

Principal Occupation in Last Five Years: Principal Occupation in Last Five Years: Corporate Director Corporate Director

NAV CANADA ANNUAL REPORT 2016 THE NEXT LEVEL 37 Michelle Savoy Umar Sheikh DIRECTOR DIRECTOR

Ontario, Canada British Columbia, Canada Elected by: Government Elected by: Labour Unions Director since: December 15, 2015 Director since: January 13, 2016 Current term expires: 2018 Current term expires: 2019

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 6/6 Board 5/5 Corporate Governance Committee 1/1 Audit & Finance Committee 2/2 Pension Committee 2/3 Safety Committee 2/2

Principal Occupation in Last Five Years: Principal Occupation in Last Five Years: Corporate Director General Counsel and Director of Legal Services, British Columbia Nurses' Union

Scott Sweatman Louise Tardif DIRECTOR; DIRECTOR CHAIR OF THE PENSION COMMITTEE

British Columbia, Canada Ontario, Canada Elected by: Labour Unions Elected by: Government Director since: April 8, 2010 Director since: April 29, 2016 Current term expires: 2019 Current term expires: 2019

Meeting Attendance/Committee Membership Meeting Attendance/Committee Membership Board 9/9 Board 2/2 Corporate Governance Committee 3/3 Audit & Finance Committee 1/1 Customer Service Charges Committee* 3/3 Pension Committee 1/1 Pension Committee 5/5 Principal Occupation in Last Five Years: *Mr. Sweatman became a member of the Customer Service Corporate Director Charges Committee on January 13, 2016. Principal Occupation in Last Five Years: Partner at Dentons Canada LLP. From February 2010 to March 2013, Partner at Spectrum HR Law LLP.

Neil R. Wilson DIRECTOR

Ontario, Canada Director since: January 1, 2016 Current term expires: N/A

Meeting Attendance/Committee Membership Board 6/6 Pension Committee 4/4 Safety Committee 3/3

Principal Occupation in Last Five Years: President and CEO of the Company from January 1, 2016. From December 1, 2012 to December 31, 2015, Executive Vice President, Administration and General Counsel of the Company. From July 15, 2002 to November 30, 2012, Vice President, General Counsel and Corporate Secretary of the Company.

38 GENDER This policy sets out an objective that consideration when electing directors. the Company's hiring practices are to The Corporate Governance Committee DIVERSITY be as much a reflection of the Canadian similarly identifies desirable compe labour market as possible, while improv tencies and attributes, including gender, The Company and the Board recognize ing designated group representation while ensuring an appropriate mix of the importance of diversity, including within the workplace and supporting skills and experience with respect to gender, in the selection of directors diversity in its business practices. those directors elected by the Board. and executive officers and believe that diversity enhances corporate Two thirds of the Board's members are Currently, one third (33%) of the Board and board discussion, viewpoints elected by the Company's stakeholder members are women, with 100% and, ultimately, performance. members and while the Board cannot of the Government-elected directors dictate requirements to those stake and 50% of the Board-elected While there are no targets in place holders, the Corporate Governance directors being women. There are regarding the representation of Committee of the Board regularly three women on the Executive women on the Board or when hiring examines the experience, skills and Management Committee of the executive officers, the Company has attributes, including gender, required Company. Within the senior manage an Employment Equity and Diversity for filling Board vacancies, and ment group, which by definition Policy which applies when hiring communicates these requirements includes individuals in policy-making and promoting executive officers. to our stakeholder members for their functions, 27% are women.

BOARD COMMITTEES

Our Board has six committees, as described below, which do not take action or make decisions on behalf of the Board unless specifically mandated to do so.

Audit & Finance Committee