Halifax Stanfield International 2011 Airport Economic Impact Report

Prepared For: Halifax International Airport Authority

Prepared By: Chris Lowe Planning & Management Group

September 2012

Halifax Stanfield International Airport 2011 Economic Impact Report

Table of Contents

Executive Summary ...... 3 1 Introduction ...... 7 1.1 Context ...... 7 1.2 Airport Overview ...... 7 1.3 Highlights of 2011 ...... 11 1.4 Operations ...... 13 1.5 The Airport Setting ...... 20 1.6 Airport Facilities ...... 20 1.7 Regional Economy ...... 27 2 Study Approach ...... 28 2.1 Introduction ...... 28 2.2 Economic Impact ...... 28 2.3 Study Area ...... 30 2.4 Economic Impacts Measured and Methods of Measurement ...... 30 2.5 Fiscal Impact ...... 31 3 Economic Impacts ...... 32 3.1 Introduction ...... 32 3.2 Economic Output ...... 32 3.3 Employment ...... 33 3.4 Wages and Salaries ...... 34 3.5 Renovation and New Construction Impact ...... 35 3.6 Tourist/Visitors Impacts ...... 36 3.7 ATB Retail Sales Impacts ...... 37 3.8 Aerospace Cluster Impacts ...... 37 4 Fiscal Impacts ...... 39 4.1 Introduction ...... 39 4.2 Personal and Consumption Taxes (Provincial) ...... 39 4.3 Retail Sales Tax (HST) ...... 40 4.4 Commercial Property and Business Occupancy Taxes ...... 40 5 Conclusions ...... 41

Halifax Stanfield International Airport 2011 Economic Impact Report

List of Exhibits

Exhibit 1.1 REGIONAL SETTING Exhibit 1.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - SCHEDULED AND CHARTER PASSENGER SERVICE Exhibit 1.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WEEKLY ACTIVITY AUGUST 2002 to 2011 Exhibit 1.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2011 Exhibit 1.5 HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to 2011 Exhibit 1.6 HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2011 Exhibit 1.7 LAND USE PLAN Exhibit 1.8 AIRSIDE SUBDIVISION LOTS Exhibit 1.9 ATLANTIC CANADA POPULATION - 1996 to 2011 Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA KEY INDICATORS - 1996 and 2011 Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - GROSS OUTPUT (MILLIONS) IN 2011 Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2011 Exhibit 3.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2011 Exhibit 3.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR TRAVELERS ENTERING NOVA SCOTIA IN 2011 Exhibit 3.5 AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011 ECONOMIC IMPACTS Exhibit 4.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2011 Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES (MILLIONS) IN 2011 Exhibit 5.1 COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011

Halifax Stanfield International Airport 2011 Economic Impact Report

Executive Summary

Halifax Stanfield International Airport (HSIA) is one of 26 airports in Canada’s National Airports System and ranks as one of the world’s premier airports. HSIA is operated by Halifax International Airport Authority (HIAA) pursuant to the terms of a ground lease agreement between HIAA and the Federal Government.

In 2011, HSIA served a record 3,594,164 passengers or over half of all air travel passengers in Atlantic Canada. It has a multi-province catchment area and functions as a major economic and employment generator for Halifax Regional Municipality (HRM) and Nova Scotia. In 2011, HSIA provided direct and connecting passenger and cargo service for 18 passenger carriers and 12 cargo carriers to destinations in Canada, the United States, the Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe with operating cash flows not returning to pre-recession levels until late 2010. Although Nova Scotia’s economy is 75% based upon service industries that did not experience the same economic downturn as other regions, the recovery has been slow. In 2011, Nova Scotia’s gross domestic product (GDP) increased by 0.3% following growth of 1.6% in 2010. The slowing growth is attributed mostly to the goods producing sectors that declined by 4%, and less construction as government stimulus spending was ending and construction on the Deep Panuke offshore project was nearing completion. The impact on the transportation and warehousing sector was growth of 0.9%. In comparison to the rest of Atlantic Canada, GDP growth in 2011 was 2.8% in Newfoundland and Labrador, 1.1% in Prince Edward Island and 0.1% in New Brunswick.

Against this economic setting, 2011 was a year of achievements at HSIA that included a major international award; record setting passenger levels; the funding and commencing of construction of a runway extension program that will diversify and expand passenger and cargo traffic; and an updated Master Plan to 2030.

HSIA has been rated the best airport in its class for seven of the past nine years. In total, it has earned 28 awards over the same time period. In November 2011, HSIA was inducted into the Airport Council International’s (ACI) Director General’s Roll of Excellence. The Roll of Excellence is exclusively reserved for airports that have ranked among the top five in the world for five consecutive years based upon the Airport Service Quality rankings.

Halifax Stanfield International Airport 2011 Economic Impact Report

In February 2011, the Federal Government and the Province of Nova Scotia announced a joint investment of up to $14 million towards an estimated cost of $28 million to extend its main runway from 8,800 feet to 10,500 feet to accommodate larger wide bodied and heavy weight aircraft. Construction work started in late 2011 and will be completed in 2013.

An estimated average of 15,000 people pass through the Air Terminal Building (ATB) per day. In October 2011, Groupe Germain Hospitality announced plans to build a $27 million onsite boutique hotel. It is scheduled to open in 2013 and will use the ATL Hotel brand. The facility will include 169 rooms, a restaurant and 10,000 square feet for business meetings and gatherings. The ATB also added four new food service concessions in 2011: a second Starbucks, a Clearwater Seafood kiosk on the departure level, Booster Juice and The Chickenburger, an iconic 1950’s style diner.

Cargo operations benefitted from the opening of a 40,000 square foot multi-tenant cargo facility in June 2010 and will further benefit from the extension of Runway 05/23. The $15 million facility is operated by Gateway Facilities ULC and contains 7,000 square feet of climate controlled space that allows for fresh seafood to be directly shipped to Europe and beyond. It is the largest refrigerated space with direct airside access north of Miami, Florida. In 2011, 29,263 metric tonnes of cargo was processed through HSIA representing a 2.9% increase over 2010.

HSIA’s diversified tenant base and head office functions of IMP Group Aerospace and Air Canada Jazz has allowed overall airport-related employment to remain stable in recent years. The major contributor to the airport’s economic base is IMP Group with many of this firm’s employees involved in multi-year civilian or military service contracts. This operating environment also exists for Pratt & Whitney Canada and L-3 Communications Electronic Systems in the adjacent AeroTech Business Park. These multi-year service contracts resulted in some staff reductions or re-deployments in 2011, while most other airport operations either retained or increased employment levels.

In 2011, HSIA contributed $1.26 billion to the Nova Scotia economy and provided 12,040 full-time equivalent (FTE) jobs with wages and salaries of $480.6 million. These employees contributed

Halifax Stanfield International Airport 2011 Economic Impact Report

$57.7 million to the Province of Nova Scotia in terms of personal and consumption taxes and $25.3 million in retail sales taxes.

Beyond the economic and fiscal impacts listed in the following exhibit, renovation and new construction projects, tourists entering Nova Scotia at HSIA and a cluster of aerospace businesses that includes the adjacent AeroTech Business Park provide further positive local and provincial spinoffs.

From 2000 to 2011, HIAA and tenants have invested approximately $450 million in new capital (development) projects and the maintenance of capital. These projects represent over 70% of the total capital improvements at all airports in Atlantic Canada and created 7,565 FTE jobs and contributed $284 million in wages and salaries. HIAA’s Capital Plan to 2016, the new 169 room boutique hotel and other expected future tenant projects, will require an additional $300 million in investments. These planned projects will require 4,220 FTE jobs and generate $190 million in wages and salaries.

Tourism is a $1.82 billion industry in Nova Scotia based upon the most recent provincial government statistics. There were 1.954 million visitors to Nova Scotia in 2011 with 34% arriving via air at HSIA. Air visitation increased by 9% from 2010 while total visitation to Nova Scotia was down slightly. Tourists entering Nova Scotia at HSIA tend to stay longer and spend more money. They contributed an estimated $675 million to the Nova Scotia economy (37% of all tourism-related activity) generating an estimated 11,775 jobs (direct and spinoff), $120 million in total taxes and $295 million in payroll.

IMP Aerospace and tenants at the adjacent AeroTech Business Park are an aerospace cluster with 1,360 employees in 2011. This cluster has estimated direct and spinoff expenditures of $397 million. The direct and spinoff jobs are 2,720 and wages and salaries are over $150 million.

Halifax Stanfield International Airport 2011 Economic Impact Report

COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011

% Change: Impact 2000 2005 2011 2005 to 2011

(Millions) (Millions) (Millions) Total Gross Output Halifax Area $614.1 $683.3 $746.0 +9.2% Nova Scotia $1,035.1 $1,152.8 $1,260.0 +9.3%

Total Employment Halifax Area 7,495 7,870 8,100 +2.9% Nova Scotia 11,000 11,625 12,040 +3.6%

(Millions) (Millions) (Millions) Wages and Salaries Halifax Area $196.7 $260.3 $323.3 +24.2% Nova Scotia $289.2 $384.6 $480.6 +25.0%

(Millions) (Millions) (Millions) Personal and Consumption Taxes (NS) Halifax Area $29.7 $35.1 $38.8 +10.5% Nova Scotia $43.7 $53.5 $57.7 +7.9%

(Millions) (Millions) (Millions) Retail Sales Tax Halifax Area $10.2 $13.7 $16.9 See Note Nova Scotia $15.0 $20.2 $25.3

Note: Comparisons cannot be made because of changing tax definitions and rates.

Halifax Stanfield International Airport 2011 Economic Impact Report

1 Introduction

1.1 Context

The Chris Lowe Group was retained by Halifax International Airport Authority (HIAA) to determine the 2011 economic impacts of the facility on Halifax Regional Municipality (HRM) and the Province of Nova Scotia. The study uses the same approach as previous economic impact studies at Halifax Stanfield International Airport (HSIA) initially prepared in 1990 and updated from 1992 to 2010. The approach for the 2011 update focuses on incremental changes from previous studies. A survey of major airport tenants, operating and financial data from HIAA and other data sources are the basis for the 2011 study findings.

The report contains five sections. Section 1, Introduction, is an overview of the airport and the regional economy. Section 2, Study Approach, outlines how economic and fiscal impacts are measured. Section 3, Economic Impacts, presents the findings of the facility’s economic impacts on HRM and Nova Scotia. Section 4, Fiscal Impacts, categorizes the personal and consumption taxes, and retail sales tax impacts. Section 5, Conclusions, is a summary of the 2011 update and comparisons to previous years.

1.2 Airport Overview

HSIA is one of 26 airports in Canada’s National Airports System and ranks as one of the world’s premier airports. In 2011, HSIA served a record 3,594,164 passengers or over half of all passengers in Atlantic Canada. HSIA is located 35 kilometres northwest of HRM’s urbanized core on Highway 102 which is the direct link to New Brunswick, Prince Edward Island and points west and south. Land uses around the facility are rural and commercial development that includes the AeroTech Business Park along Highway 102.

The airport was opened by Transport Canada in 1960 with Instrument Flight Rule (IFR) operations and a 16,900 square metre ATB. In 1960, 180,000 passengers were processed or 5.0% of the 2011 level. From 1960 until early 2000, the facility was managed by Transport Canada. In February 2000, management, operation and development of the facility were transferred from Transport Canada to HIAA. The airport has two runways (05/23 at 8,800 feet and 14/32 at 7,700 feet) with 29 operating gates and 13 loading bridge positions in the ATB. Jets up to and including the Boeing 747 can be accommodated.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.1 REGIONAL SETTING

Halifax Stanfield International Airport

AeroTech Business Park HWY 102

Downtown Halifax

Halifax Stanfield International Airport 2011 Economic Impact Report

For half a century, HSIA has been the largest airport in Atlantic Canada HSIA offers 24 hour with a multi-province catchment area. It now provides direct and operations without curfew or connecting passenger and cargo service across Canada, into the U.S., noise abatement restrictions. the Caribbean, Europe and Asia. This service is provided by 18 It functions as a major trans- passenger carriers and 12 cargo carriers. The international catchment border and international area is Atlantic Canada while the domestic passenger catchment area gateway airport with flights covers Nova Scotia, Southern New Brunswick and Prince Edward Island. connecting Atlantic Canada HSIA is unique in Canada’s airport system as it serves four provinces to major centres in Canada, (Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland the U.S. and internationally. and Labrador) because of the dominance of Halifax as the East Coast’s major service centre, and the population distribution and geography of Atlantic Canada.

The facility’s regional dominance was enhanced in October 2006 when U.S. Customs and Border Protection Services initiated preclearance for passengers destined to the U.S. on non-stop flights. In 2011, HSIA remains the only airport in Atlantic Canada to enable transborder passengers to be processed by U.S. Customs and Border Protection Services prior to departure. The benefit of preclearance is passengers now arrive at domestic gates in U.S. destination airports and have faster connection options for their final destination.

Exhibit 1.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - SCHEDULED AND CHARTER PASSENGER SERVICE

15 Domestic 13 Transborder 15 International Destinations (USA) Destinations Destinations Calgary, AB Atlanta, Georgia Bermuda – Hamilton Charlottetown, PEI Boston, Mass. Cuba – Cayo Coco, Deer Lake, NL Chigago, Illinois Holguin, Santa Clara, Edmonton, AB Detroit, Michigan Varadero Fredericton, NB Ft. Lauderdale, Florida Dominican Republic – Gander, NL Newark, New Jersey Puerto Plata, Punta Goose Bay, NL New York (JFK) Cana, Samana Hamilton, ONT Orlando, Florida Germany – Frankfurt Moncton, NB Philidelphia, Penn. Iceland – Reykjavik Montreal, PQ St. Petersburg, Florida Jamaica – Montego Ottawa, ONT Tampa, Florida Bay Saint John, NB Washington (Dulles) Mexico – Cancun St. John’s, NL Washington (National) St. Pierre et Miquelon Sydney, NS United Kingdom – Toronto, ONT London (Gatwick), London (Heathrow) Source: Halifax International Airport Authority (as of December 2011).

Halifax Stanfield International Airport 2011 Economic Impact Report

Since the transfer from Transport Canada in 2000, economic cycles and geopolitical events have reshaped the airline industry and the role of airports. The Canadian airline industry has witnessed the demise or merger of several airlines, the launch of new carriers, global economic downturns and recoveries, higher energy costs, pandemics and geopolitical events like September 11, 2001 that created the need for heightened airport security.

During this period, HIAA has followed a four-tier business planning process that includes a 20-year Master Plan, a 10-year Capital and Financial Plan, a 5-year Strategic Plan and annual business plans.

The Authority’s mission is to connect Nova Scotia to the world through flight. A Master Plan update to 2030 was completed in 2011 that aligns the mission with market-driven changes to the airfield, terminal area, highway commercial development, multi-modal and logistics development and land acquisition.

Halifax Stanfield International Airport 2011 Economic Impact Report

1.3 Highlights of 2011

2011 was a year of achievements that included a major international award, record setting passenger levels, the funding and commencing of construction of a runway extension program that will diversify and expand passenger and cargo traffic, and an updated master plan to 2030.

HSIA has been rated the best airport in its class for seven of the past nine years. In total, it has earned 28 awards during the same time period. In November 2011, HSIA was inducted into the Airport Council International’s (ACI) Director General’s Roll of Excellence. The Roll of Excellence is exclusively reserved for airports that have ranked among the top five in the world for five consecutive years based upon the Airport Service Quality rankings.

In February 2011, the Federal Government and the Province of Nova Scotia announced a joint investment of up to $14 million towards an estimated cost of $28 million to extend the main Runway (05/23) from 8,800 feet to 10,500 feet to accommodate larger wide bodied and heavy weight aircraft with the remaining $14 million being invested by HIAA. Construction work started in late 2011 and will be complete in 2013.

Cargo growth is a key strategy of HSIA and this runway extension will allow wide-body cargo freighters to operate at full capacity with the resulting benefits to all exporters; particularly seafood exporters who currently truck product to Boston or New York for export to international markets. In June 2010, Gateway Facilities ULC in partnership with HIAA opened a $15 million, 40,000 square foot state-of-the-art cargo facility that includes 7,000 square feet of climate controlled space. It is the largest airside refrigerated space north of Miami and will allow for the efficient export of high-value seafood products. Over the next decade, air cargo is forecast to grow between 85% to 100%. The growth is reflected in the decision by Icelandair Cargo in November 2011 to restart scheduled weekly air cargo service from HSIA to Reykjavik and onto the major European cargo hub at Liege, Belgium.

Halifax Stanfield International Airport 2011 Economic Impact Report

2011 was the final year of the Airfield Restoration Program to improve safety and reliability. The construction schedule was timed to minimize flight delays based upon historic weather conditions. Major work completed in 2011 included Taxiways Foxtrot and Delta, and Gate 24’s Aircraft Parking Apron.

An estimated average of 15,000 people pass through the ATB per day. In October, Groupe Germain Hospitality announced plans to build a $27 million onsite boutique hotel. It is scheduled to open in 2013 and will use the ATL Hotel brand. The facility will include 169 rooms, a restaurant and 10,000 square feet for business meetings and gatherings.

The ATB also added four new food service concessions in 2011. A second Starbucks location opened in the domestic arrivals area. Clearwater Seafood opened a kiosk on the departure level where passengers can place an order for lobster or seafood after clearing security. Booster Juice also opened an outlet on the departure level. In November, The Chickenburger, a 1950’s style diner, opened in the Airport Square. The Bedford, Nova Scotia based Chickenburger has been a Halifax Region icon for more than 70 years.

HIAA completed a Master Plan update in 2011 that outlines the development program for the airport terminal, airfield, and surrounding properties in response to growing passenger traffic and commercial opportunities. A key element of the plan is the planning and development of an ‘Airport City’ that will transform HSIA’s highway showcase location and regional air hub amenities. The vision contains five development clusters focusing on aviation, logistics, aviation reserve (airfield access), multi-modal and highway commercial development.

HIAA retained an A+ credit rating from Standard & Poor’s (second highest among Canadian airport authorities) in 2011. In the fiscal year, HIAA generated $51.1 million in operating and interest revenues, and collected $26.8 million in airport improvement fees for total revenues of $77.9 million ($67 million in 2010). Total expenses for 2011 were $74.4 million ($65.4 million in 2010). Overall in 2011, revenues exceeded expenses by $3.44 million ($1.6 million in 2010). The surplus revenue was retained and reinvested in operations and development. HIAA also invested $21.8 million ($22.7 million in 2010) in its capital improvement program.

Halifax Stanfield International Airport 2011 Economic Impact Report

1.4 Operations

HSIA had 3,594,164 enplaned/deplaned passengers in 2011. This volume of activity was an increase of 2.5% from 2010, and represents the airport’s busiest year in its 51-year history.

Thirty passenger and cargo carriers operated from the airport in 2011. The scheduled and charter The carriers are: passenger service in 2011 included 15 domestic Air Canada Air Canada Jazz Air Georgian destinations, 13 transborder CanJet Airlines Skylink Express Delta Air Lines (U.S.) destinations and 15 WestJet Airlines Air Saint-Pierre Air Transat international destinations. US Airways Cubana CargoJet

Icelandair Sunwing Airlines Thomas Cook (UK) International destinations Condor Flugdienst Porter Airlines Continental Airlines included England, Germany, American Airlines United Airlines Air North Iceland, Bermuda, Mexico Canadian North Provincial Airlines ABX / TNT and several Caribbean Cougar Helicopters Kelowna Flightcraft (Purolator) islands. Execaire Morningstar Express (FedEx) Canadian Helicopters Maritime Air Charters

Air Canada/Jazz/Georgian has the largest market share. These carriers’ share of total weekly departing flights went from 83% in August 2002 to 61% during August 2011.

Exhibit 1.3 lists the August 2011 destinations of flights from HSIA. There were 561 flights to Canadian destinations, 119 to transborder (U.S.) destinations and 19 to international destinations per week in August, 2011. In comparison to 2002, weekly transborder flights increased 53% and total flights by 26%.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WEEKLY ACTIVITY AUGUST 2002 to 2011

Air Carrier – 2002 2011 2011 Destinations Domestic Service Flights Flights Per Per Week Week Air Canada/ Deer Lake, Fredericton, Ottawa, Moncton, Sydney, Saint Air Canada 415 400 John, St. John’s, Montreal, Gander, Calgary, Jazz/Georgian Charlottetown, Goose Bay, Toronto Porter Airlines 0 70 Ottawa, Montreal, St. John’s Hamilton, St. John’s, Toronto, Edmonton, Calgary, WestJet 0 91 Montreal, Ottawa, Vancouver Subtotal 466 561 Air Carrier – Transborder Service Air Canada/Air 42 19 Boston Canada Jazz Continental Airlines 15 28 Newark Delta Air Lines 21 22 Boston, New York (JFK), Atlanta American Airlines 0 14 New York (JFK) US Airways 0 22 Philadelphia, Washington National (DCA) United Airlines 0 14 Washington, DC (IAD), Chicago Subtotal 78 119 Air Carrier – International Service Air Canada 8 8 London (Heathrow), Bermuda Air Saint-Pierre 4 3 St. Pierre Icelandair 0 3 Reykjavik Thomas Cook (UK) 0 1 London (Gatwick) Condor 0 3 Frankfurt Cubana 0 1 Santa Clara Subtotal 13 19 Total 557 699 Source: Halifax International Airport Authority.

Halifax Stanfield International Airport 2011 Economic Impact Report

HSIA will have the necessary support services to handle increases in air cargo volumes after the extension to Runway 05/23 is completed in 2013. Cargo activity is supported by carriers, freight forwarders, customs brokers and cargo specialists. These facilities handled 29,263 metric tonnes in 2011 compared to 28,450 metric tonnes in 2010 and 26,910 metric tonnes in 2009. The 2011 cargo volume is a 2.9% increase over 2010. Longer-term baseline forecasts by Transport Canada without the extension of Runway 05/23 have cargo activity reaching 43,400 metric tonnes in 2019 and 49,000 metric tonnes by 2024. The 2024 Transport Canada forecast has 4.0% average annual growth from 2010.

Key building blocks for air cargo growth are the new multi-tenant cargo facility and HSIA’s participation in the international air cargo transshipment program that was granted by Transport Canada. This program allows air cargo to fly into Halifax for shipment to third countries. For example, cargo can fly into Halifax from the U.S., be stored temporarily and then move to an Asian destination, or international air cargo can arrive from overseas destinations and then be shipped by rail or road from Halifax to the U.S. under NAFTA.

Liège, Belgium-based TNT Airways and Icelandair provide regular scheduled international cargo service and the Airport Authority will pursue other wide-body freighter operations as part of the Runway 05/23 extension program. Supporting operators for air cargo are listed below.

Freight Forwarders Integrated Couriers Connexion World Cargo (Canada) Ltd. Federal Express DSV Air & Sea Inc. Purolator Courier Kintetsu World Express Inc. Cargojet Kuehne & Nagel International Ltd. Cargo Handlers Leisure Cargo Worldwide Flight Services MOL Logistics Air Canada Cargo PF Collins Customs Broker Ltd. Servisair UPS Supply Chain Solution Worldwide Perishables Canada Worldwide Perishables Canada

Halifax Stanfield International Airport 2011 Economic Impact Report

Customs Brokers Other Cargo Services Atlantic Customs Brokers Armour Transport Inc. KN Customs Brokers Canadian Gold Seafood Ltd. DB Schenker Cape Nova Express EDI Custom Brokers Halifax Marine Agencies Ltd. Kintetsu World Express Inc. Monts Transfer Ltd. Livingston International Inc. Pole Star Transport Inc. PBB Global Logistics Summit Transportation Group PF Collins Customs Broker Ltd. Network Cargo Systems

Passenger carriers that fly from Halifax operate in markets where most domestic routes are mature and passenger volumes generally increase or decline in parallel with changes in the regional economy. In 2009, a global recession negatively impacted the international air transport sector as passenger traffic fell 2.1% and cargo volume dropped 9.8% (source: IATA). The cyclical downturn from the 2008 peak to the 2009 trough was the deepest experienced by the commercial airline industry since the 1930s. By mid-2009, air travel markets began to turn upward, assisted by fiscal and monetary stimulus measures taken by governments and this growth continued during 2011.

The two major carriers at HSIA are Air Canada Jazz and Air Canada.

Air Canada Jazz had 720 full-time equivalent (FTE) jobs based at HSIA in 2011. This represents a 3.7% increase from 2010. Air Canada reduced its workforce by 9% from 367 in 2009 to 334 during 2010.

HSIA’s diversified tenant base and head office functions of IMP Group Aerospace and Air Canada Jazz have allowed overall employment to grow in recent years. The largest contributor to the airport’s economic base is IMP Group which had 1,015 FTE employees in 2011, with many of these workers involved in multi-year service contracts with the U.S. Navy and the Department of National Defence. This operating environment also exists for Pratt & Whitney Canada and L-3 Communications Electronic Systems located in the adjacent AeroTech Business Park with a combined 500 FTE employees in 2011.

Halifax Stanfield International Airport 2011 Economic Impact Report

Air security requirements have generated job growth over the past decade. The largest security employer is Canadian Air Transport Security Authority (CATSA) with an employee base that has increased from 30 in 2002 to 238 in 2011.

Diversification of core business activities or major new service contracts allowed many of the key tenants to maintain or modestly increase employment levels in 2011 from 2010. As an example, four major employers (Host International, Servisair, FedEx, Hudson Group) increased their employment by 10%.

Exhibit 1.4 presents a list of the major employers in 2011. Beyond this list, there are many smaller firms that collectively retained employment during 2011 at 2010 levels.

One sector that relies upon commercial aviation is ground transportation. There are approximately 207 active and licensed taxis and limousines, and a further 294 non- registered taxis/limousines and 46 shuttles through the MACPass system that operate regularly at HSIA. These operators made close to 137,000 pickups (curb tickets collected) in 2011. Based upon the level of activity, the airport created approximately 160 FTE taxi and limousine driver positions.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2011

Full-Time Employer Equivalent (FTE) Employees IMP 1,015 Air Canada Jazz 720

Air Canada/ Air Canada Cargo 361

CATSA 238 HIAA 162 Host International 121 Avis/Budget 95 Servisair 95 Gate Gourmet 78 FedEx 74 Tim Hortons 73 PAL 71 Hudson Group 57

NavCanada 51

Cougar Helicopters 45

National/Enterprise/Alamo (ANC) 33 Source: Chris Lowe Group and Halifax International Airport Authority (as of June 2012).

Exhibit 1.5 lists passenger and aircraft movement activity at the airport between 2007 and 2011. Over this period, total enplaned and deplaned passengers increased by 3.6% from 3,469,062 to 3,594,164. Over the same period, total aircraft movements declined by 2.7% from 89,251 to 86,874. The decline is due to fewer piston and local aircraft movements while itinerant movements have increased. In 2011, the average number of passengers per aircraft movement was a record high of 41.4 or an increase of 6.4% from 2007.

Exhibit 1.6 outlines the 2011 concession sales at HSIA in comparison to selective previous years. Total sales in 2011 were over $80.5 million or $22.42 per passenger (second highest annual total). Car rental concessions totalled $39,976,260 or $11.12 per passenger. This total sales value is similar to the average for the previous five years.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.5 HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to 2011

Enplaned / Deplaned Passengers: Total Aircraft Passenger Average Per Movements: Movement: 2007 3,469,062 89,251 38.9 2008 3,578,931 89,033 40.2 2009 3,417,164 88,477 38.6 2010 3,508,153 87,021 40.3 2011 3,594,164 86,874 41.4 Source: Halifax International Airport Authority.

Exhibit 1.6 HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2011

Enplaned / Total Year Deplaned Sales Per Passenger Concession Sales Passengers 2007 3,469,062 $80,351,150 $23.16 2008 3,578,931 $81,071,915 $22.65 2009 3,417,164 $78,739,225 $23.04 2010 3,508,153 $79, 711,056 $22.72 2011 3,594,164 $80,570,892 $22.42 Car Rental Concession Portion 2007 3,469,062 $40,665,786 $11.72 2008 3,578,931 $40,675,586 $11.37 2009 3,417,164 $40,385,453 $11.82 2010 3,508,153 $40,019,450 $11.41 2011 3,594,164 $39,976,260 $11.12 Source: Halifax International Airport Authority.

Halifax Stanfield International Airport 2011 Economic Impact Report

1.5 The Airport Setting

Adjacent to HSIA is the 970 hectare AeroTech Business Park operated by HRM. During 2011, there were no lots available for sale. Two major tenants in the aerospace field are located in AeroTech. They are Pratt and Whitney Canada and L-3 Electronic Systems Inc. Combined with tenants at the airport, the aerospace cluster had 1,360 employees in 2011.

Hilton Garden Inn opened a 145 room hotel in AeroTech during 2005 and Holiday Inn Express opened a 119 room hotel on the same site in 2008. Another nearby operation is a Quality Inn (former Airport Hotel Halifax), which has 156 rooms. Combined, the three properties have over 100 FTE employees. In 2013, the close proximity room total will increase by 169 rooms or 40% to 589 rooms when the new ALT Hotel opens connected to the ATB.

1.6 Airport Facilities

The 20-year Master Plan provides HIAA with a longer-term framework for land uses, infrastructure, services and development projects. The Land Use Plan for HSIA is shown in Exhibit 1.7. It was originally prepared in 1996 and amended (with associated drawings) in 2002. An updated Master Plan was completed in 2011.

The airport's various land uses are classified as:

 Airfield District  Future Airfield District  Operational Services  Air Terminal District  Aviation Services  Airport Industrial  Airport Commercial  Airport Reserve  Future Roads / Runways / Taxiways

The major features of the airport are the airfield, commercial development and terminal complex.

Halifax Stanfield International Airport 2011 Economic Impact Report

Airfield HSIA has simultaneous intersecting runway operations that allow for increased traffic capacity with fewer delays and lower fuel costs. Runway 05/23 is 8,800 feet by 200 feet with an asphalt/concrete base and Runway 14/32 is 7,700 feet by 200 feet with an asphalt base. Runway 05/23 is currently being extended to accommodate fully loaded wide body cargo freighters. Taxiways A to H have an average width of 75 feet. There are six aprons with an average area ranging from 67,713 square feet to 597,070 square feet.

NavCanada operates the Air Navigation System across Canada and has 51 FTE employees at the airport. The Instrument Landing System (ILS) navigational aids are Category II while Raytheon Canada Radar provides primary and secondary coverage on Runway 05/23.

Commercial Development Commercial land at the airport is leased and not sold. In 2011, there were over 20 major commercial and industrial tenants. Airside taxiway access land is leased to companies involved in aircraft overhaul and repair, air cargo and courier, helicopter transport and aircraft servicing. Non-taxiway access land is leased to firms involved in flight food service, brokering, airport services and car rentals. A service station (Petro Canada) and fast food outlet (Tim Hortons) are also present.

A commercial development initiative is the Airside Subdivision Project which contains 17 parcels with airside access. Exhibit 1.8 shows that these lots are designed for aircraft maintenance facilities, air cargo transshipment areas, offshore oil and gas supply centres, and aircraft servicing and maintenance activities.

In 2002, CHC Helicopters International leased one of the lots for a new $3.5 million passenger terminal and helicopter facility. During 2003, Inland Technologies opened a $1.5 million glycol recovery operation for the fluid used to de-ice airplanes. IMP completed a new $15 million aerospace hangar in 2006.

During 2008, a lease was signed with Gateway Facilities ULC to build and manage a $15 million multi- tenant cargo facility that contains 40,000 square feet. This facility became operational in 2010.

Halifax Stanfield International Airport 2011 Economic Impact Report

In 2010, Cougar Helicopters commenced construction on a 22,000 square foot hangar that opened in 2011 to service the offshore oil and gas sector.

In January 2011, HIAA submitted an updated Master Plan to Transport Canada as a requirement of the Ground Lease. The updated plan seeks to maximize the use of current airport land holdings over the 2011-2020 and 2020-2030 planning horizons. It states that the airfield has sufficient capacity to meet future hourly and annual aircraft movements up to 2030. The ATB is anticipated to require expansion if increased passenger traffic both before and after 2020 meets projections. A major element of the updated plan is the Airport City Development Plan. It contains the following features:

 An Aviation Precinct with facilities for passenger air service support, general aviation fixed base operators, refueling and aircraft maintenance.  A Logistics Precinct that is intended to become a key transshipment centre for North America.  An Aviation Reserve that is for commercial activities requiring airfield access.  A Multi-Purpose Precinct that is accessed by the terminal roadway system and will contain businesses that meet the commercial needs of passengers, and meeters and greeters.  A Highway Commercial Precinct for aeronautical and other businesses with showcase visibility from Highway 102.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.7 LAND USE PLAN

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 1.8 AIRSIDE SUBDIVISION LOTS

Halifax Stanfield International Airport 2011 Economic Impact Report

Terminal Complex The ATB (opened in 1960) has been expanded and upgraded numerous times by Transport Canada prior to 2000 and subsequently by HIAA. In 1976, it was enlarged to accommodate three million annual passengers. This level was surpassed in 2004. The international arrival area was expanded and upgraded in 1987 and has since received additional work. Also, a major upgrade was completed for the G7 Summit held in Halifax during 1995.

With the facility’s transfer from Transport Canada to HIAA in 2000, a $25 million development program started at the ATB’s north end to address congestion and overcrowding in the domestic and international arrival areas. Completed in 2002, the project improved capacity and service level by adding:

 an expanded international arrivals area approximately three times larger than the previous size;  a domestic arrivals area quadruple the former size;  space for U.S. preclearance;  a separate and expanded international greeting area;  new Customs, Immigration and Canadian Food Inspection Agency facilities; and  additional retail space.

In 2003, Airport Square was opened with new retail and food service tenants. This $12 million project increased retail space by 70%. Retail tenants are located on the main and departure levels of the ATB.

By 2008, the $93 million ATB expansion, which began in 2004, was mostly complete. The project focused on an expansion to the north and south ends of the terminal to meet Federal Government requirements, as well as to accommodate the U.S. preclearance facility.

Subsequently, during 2008, major terminal modifications were made as part of the ATB Groundside Redevelopment Program. This work included redevelopment of the centre core to efficiently move passengers from the new parking structure through the ATB by four new escalators, two elevators and an updated exterior façade.

As of 2011, the ATB has 29 operational gates and 13 aircraft loading bridge positions that can accommodate jets up to the size of Boeing 747s. There are also two covered walkways. Passenger services and amenities include a tourism visitor information centre, first aid facility, flight information display system, baggage carts, lounges, duty free shops, retail outlets and restaurants.

Halifax Stanfield International Airport 2011 Economic Impact Report

Main Level Domestic/International Departure Level Atlantic Sweet Shoppe AerRianta Duty Free Brisket Boardwalk Deli Beaches Burger King Booster Juice Central Amusements Brisket Boardwalk Deli The Chickenburger The Classic Backrub Clearwater Seafoods Clearwater Seafoods Everything Under $20 Hudson News (4 locations) Hudson Aeromart Legends Nova Scotia Lounge Hudson News Starbucks Kids Works Tech on the Go Maritime Ale House Tim Hortons Nova Scotia Store Relay Books US Preclearance Departure Level Roots AerRianta Duty Free Starbucks Hudson News Tim Hortons Spirit of the Maritimes TravelEx Travel & Leisure Travel Store

Halifax Stanfield International Airport 2011 Economic Impact Report

1.7 Regional Economy

Demand for air passenger and cargo transportation is a function of A key factor influencing air economic activity. The overall trend for Atlantic Canada’s economy is a traffic demand, and hence stable population base with declining unemployment and real economic economic impacts, is the growth driven by resource development and the service sector. From strength of the Nova Scotia 1996 to 2011, the region’s population declined by less than 1.0% from and Atlantic Canada 2,381,002 to 2,357,400. Most of this decline occurred in Newfoundland economies. In 2011, GDP and Labrador as Nova Scotia’s population increased from 931,235 to growth was 0.3% in Nova 945,400. The population of New Brunswick and Prince Edward Island Scotia, 2.8% in also increased. Newfoundland and Labrador, 1.1% on PEI and 0.1% in Halifax Regional Municipality (HRM) is the largest population and service New Brunswick. centre in Atlantic Canada. HRM has produced strong economic performance and is the major contributor to Nova Scotia’s economy. Between 1996 and 2011, the number of people employed in HRM increased by 65,800 or 38% from 172,100 to 237,900 and unemployment declined from 8.6% to 6.3%. Provincially, total employment increased by 67,800 or 18% from 385,000 to 452,800 while unemployment declined from 12.6% to 8.8%.

Exhibit 1.9 ATLANTIC CANADA POPULATION - 1996 to 2011

Province 1996 2011 Change Newfoundland & Labrador 560,584 510,600 -49,984 PEI 136,188 145,900 +9,712 Nova Scotia 931,235 945,400 +14,165 New Brunswick 752,995 755,500 +2,505 TOTAL 2,381,002 2,357,400 - 23,602 Source: Statistics Canada, Population Estimates & Projections, CANSIM Table 051-0001 (September 2011).

Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA KEY INDICATORS - 1996 and 2011

Halifax Regional Municipality Nova Scotia

1996 2011 1996 2011 Total Population 341,500 408,198 931,200 945,400 Employed Labour Force 172,100 237,900 385,000 452,800 Unemployment Rate 8.6% 6.3% 12.6% 8.8% Labour Force Participation Rate 67.5% 70.3% 59.8% 63.7% Sources: Nova Scotia Department of Finance – Economics Indicators (May 2012); Greater Halifax Partnership (July 2012); Statistics Canada CANSIM Tables 051-0046 (July 2012).

Halifax Stanfield International Airport 2011 Economic Impact Report

2 Study Approach

2.1 Introduction

This section presents the approach used to calculate the impacts of HSIA on HRM and Nova Scotia. These methods, and the terminology used in the 1992 report and updates, are also summarized in this section.

2.2 Economic Impact

To establish a framework for measuring the economic impacts of HSIA, The economic activity at the following were defined: HSIA is calculated by direct, indirect and induced impacts.  The types of economic activity being considered.  The study area.  The units of measurement of economic impact used.  The methods used to measure or estimate economic impact.

The types of economic activity related to HSIA are classified into three categories: direct, indirect and induced.

Direct Economic Activity This activity refers to airport-related activity of those firms or industries for which aviation or airport activity is a portion of total business activity. These businesses can be divided into three groups: those with primary linkage to the airport (generally aviation-related); those with a secondary linkage (generally not aviation-related); and the aerospace sector.

Primary linkage businesses or organizations include those listed below. Many of the primary linkage businesses are located at the airport.

Air Carriers: This refers to companies offering scheduled air service within Nova Scotia (local), scheduled or charter air service to other points in Atlantic Canada and Canada (regional or national) or to transborder (U.S.) or international destinations.

General Aviation: This refers to companies engaged in charter air operations, corporate aviation operations and aviation- related organizations or educational institutions.

Halifax Stanfield International Airport 2011 Economic Impact Report

Air Support Services: This refers to companies whose business is primarily or wholly aviation-related, or who provide direct support to air carriers or general aviation businesses. Air support services include:

 Customs brokers, couriers or freight forwarders (i.e., cargo operations)  Flight catering services  Fuelling services  Sales, rentals or aircraft leasing businesses  Parts and maintenance services  General services (such as fixed base operators)

Airport Operations and Administration: This category includes HIAA, NavCanada, CATSA, Canada Border Services Agency, Public Health Agency of Canada, RCMP (Airport Detachment), U.S. Customs and Border Protection Services and other government functions that are involved in the direct operation of the airport or which provide support services at the airport. Excluded from the impact analysis are volunteers at the Air Terminal Building.

Secondary linkage businesses include:

Commercial Services: These include aviation-related retail and personal service businesses operating at the airport.

Ground Transportation: These include car rental, taxi and limousine service, and bus transportation operations that service the airport. The main offices for these businesses are both on-site and off-site.

Tourist/Travel/Hotel Industry: This group of secondary linkage businesses includes travel agencies, tour operators, hotels/motels, and other food and beverage operators who provide service to passengers travelling by air for business or pleasure.

Indirect Economic Activity Direct economic activity is accompanied by indirect and induced economic activity. Indirect economic activity refers to activity generated in a sector that supplies raw materials and other inputs to businesses associated with direct economic activity (as listed above). Indirect activity occurs as a result of direct activity. The terms "direct" and "indirect" depend on the chosen reference point. Any inter-relationships between the businesses included under the heading Direct Economic Activity and those included under Indirect Economic Activity were taken into consideration in the 1992 impact analysis and the updates.

Halifax Stanfield International Airport 2011 Economic Impact Report

Induced Economic Activity Induced economic activity refers to that economic activity generated by individuals employed in the direct or indirect activity sectors who spend a portion of their household income on consumer goods.

Measures of indirect and induced activity show the effect that the direct expenditures have as they “ripple” through the economy. The measure is referred to as the multiplier effect.

2.3 Study Area

The total economic activity and impacts are defined for a specific geographic area or regions. For the 2011 update, economic activity and impacts are analyzed for the following regions:

Local Economy (Halifax Regional Municipality) Regional Economy (Province of Nova Scotia)

2.4 Economic Impacts Measured and Methods of Measurement

Three measures of the airport’s economic impact on HRM and Nova Positive economic impacts Scotia are defined as follows: are defined under economic output or gross revenue, employment, wages and Economic Output or Gross Revenue: This measure is determined in salaries, retail sales, the terms of total gross revenue from all airport-related activity, and those aerospace cluster, same total gross revenues, less any revenue transferred from one construction activity and airport-related activity (primary or secondary) to another airport-related tourist expenditures. activity.

Employment: This measure is defined as the total amount of full-time equivalent (FTE) employment created by airport activity (excluding volunteers).

Wages and Salaries: This measure is defined as the total amount of wages and salaries created due to airport activity.

Direct, indirect and induced economic impacts associated with the above three measures of economic activity were calculated as follows:

Direct Economic Impact: In terms of economic output, employment, wages and salaries were obtained by means of surveys of airport tenants. Current and past survey results and other data sources were used to arrive at the final economic impact values.

Halifax Stanfield International Airport 2011 Economic Impact Report

Indirect and Induced Economic Impact: In terms of economic output, employment, wages and salaries were estimated by means of economic multipliers. The multipliers used in this report are the same as previous updates.

In addition to the three measures, other economic impacts were determined. ATB retail and concession sales, the aerospace cluster at HSIA and the adjacent AeroTech Business Park, construction activity and tourists accessing Nova Scotia at the airport were also identified. These impacts are assessed separately and represent major contributions to the economy of Nova Scotia.

The research methodology used by Nova Scotia Economic and Rural Development and Tourism was applied to determine the jobs and payroll impacts (direct and spin off) of tourists entering Nova Scotia through the airport. This model also isolated government taxes from these tourist expenditures. For the aerospace cluster, the economic impact approaches used at other aerospace concentrations in Canada and the U.S. were applied. This approach provides a general indication of expected impacts and maintains the confidentiality of the few large aerospace firms operating around the airport. 2.5 Fiscal Impact

The fiscal impact measures include the following: Fiscal impacts are defined under personal income Personal Income Taxes: This measure refers to the personal income taxes, retail sales taxes and municipal taxes. No impact taxes paid to the Province of Nova Scotia by individuals employed due to multipliers (spinoffs) are airport activity. This impact was calculated from sources like Statistics applied to municipal taxes. Canada’s financial management system.

Retail Sales Taxes: This measure refers to retail sales taxes created by purchases of retail goods and services by individuals who earn wages and salaries due to their employment stemming from airport activity. In 2011, the HST rate in Nova Scotia was 15% (5% federal part and 10% provincial part).

Fiscal impacts are measured for the same study area and in a similar fashion as economic impacts in terms of direct, indirect and induced activity.

Halifax Stanfield International Airport 2011 Economic Impact Report

3 Economic Impacts

3.1 Introduction

The data gathered from the survey were combined with other sources, as HSIA is a major economic outlined in Section 2, to develop updated estimates of total economic engine for HRM and Nova impacts in terms of: Scotia that continues to grow and provide high value employment.  Economic Output  Employment  Wages and Salaries

For each type of economic impact indicator listed above, the data have been used to estimate the economic impacts attributed to HRM and Nova Scotia.

At the time of the survey program in mid-2011, over 100 firms were located at HSIA. For each indicator of economic impact in the 1992 study, a sample of organizations by type were surveyed. The resultant figures derived from the surveys (and used for this update) were scaled up to represent the full population at the airport.

3.2 Economic Output

The first measure of economic impact is total economic output. This measure is also referred to as gross revenue. Economic impacts related to the airport, in terms of economic output for HRM and Nova Scotia, are summarized in Exhibit 3.1. The economic impact is separated into direct, indirect and induced. The direct effects are the same for both HRM and Nova Scotia because all direct economic output takes place at the airport which is located in HRM.

Exhibit 3.1 shows that HSIA's total economic output for the economy of HRM is $746 million. This is composed of $410 million of direct output, $110 million of indirect output and $226 million of induced output.

Exhibit 3.1 further shows that the airport's total economic output for the Nova Scotia economy is $1.26 billion. This is composed of $410 million of direct output, $258 million of indirect output and $592 million of induced output.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT – GROSS OUTPUT (MILLIONS) IN 2011

Direct Indirect Induced Total

Halifax Regional $410.0 $110.0 $226.0 $746.0 Municipality

Province of Nova Scotia $410.0 $258.0 $592.0 $1,260.0

3.3 Employment

Employment is another measure of economic impact and is presented as full-time equivalent (FTE) jobs. The figures shown in Exhibit 3.2 are year- end averages and not peaks, and they include estimated off-site and on-site employment related to the airport.

Exhibit 3.2 presents the estimated total employment impact of the airport on HRM. For 2011, 8,100 full-time equivalent direct and spinoff jobs were created in HRM due to airport activity. There were 237,900 FTE employed people in HRM during 2011 so the airport accounted for 3.4% of the total. Direct employment from airport activity is estimated at 5,260 FTE jobs, indirect employment represents 1,260 FTE jobs and induced employment accounts for another 1,580 FTE jobs. Total employment was slightly lower than 2010 levels because of adjustments in the aerospace sector and some smaller service providers. The result is direct and spinoff employment declined by 215 FTE jobs.

Exhibit 3.2 also shows that the Nova Scotia employment impact from airport activity is estimated at 12,040 FTE jobs. The number of FTE employed people in Nova Scotia in 2011 was 452,800 with the result being airport activity accounted for 2.7% of the employment in Nova Scotia. The direct employment created by the airport in Nova Scotia was 5,260 FTE jobs, indirect employment was 2,890 FTE jobs, and induced employment was 3,890 FTE jobs.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2011

Direct Indirect Induced Total

Halifax Regional 5,260 1,260 1,580 8,100 Municipality

Province of Nova Scotia 5,260 2,890 3,890 12,040

3.4 Wages and Salaries

Wages and salaries are another measure of economic impact. The direct wages and salaries are based on the 1992 study and update results. Indirect and induced wages and salaries were determined by multiplying the number of jobs in each category by the average annual Nova Scotia wage in 2011 ($39,913).

Exhibit 3.3 contains the wage and salary impact of the airport on HRM and Nova Scotia in 2011. The total wages and salaries created by airport activity in HRM amounts to $323.3 million. The direct wage and salary portion is $209.9 million, the indirect impact is $50.3 million, and the induced impact is $63.1 million.

Exhibit 3.3 also presents the total wage and salary impact of HSIA on Nova Scotia for 2011. This impact is $480.6 million.

Exhibit 3.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2011

Direct Indirect Induced Total

Halifax Regional $209.9 $50.3 $63.1 $323.3 Municipality

Province of Nova Scotia $209.9 $115.4 $155.3 $480.6

Halifax Stanfield International Airport 2011 Economic Impact Report

3.5 Renovation and New Construction Impact

Capital Improvements Since 2000

After the 2000 transfer of the facility from Transport Canada, HIAA and tenants have invested approximately $450 million in new capital (development) projects and the maintenance of capital. These projects represent over 70% of the total capital improvements at airports in Atlantic Canada, and confirm HSIA’s dominant position in both the air passenger and air cargo segments.

Using an average annual Nova Scotia construction wage of $39,030 for this period, these projects generated 7,565 FTE jobs. The direct job portion of this total is 4,610 FTE jobs. They also contributed $284 million in wages and salaries with the direct portion being $180 million.

To prepare for the next phase of capital development, HIAA completed an updated Master Plan in 2011. HIAA budgeted capital projects for 2011 and planned future spending to 2016 are listed below.

 2011 - $21.8 million  2012 - $81.6 million  2013 - $44.6 million  2014 - $12.9 million  2015 - $39.1 million  2016 - $31.1 million

From 2011 and future years, an additional $300 million is expected to be spent on capital projects by HIAA and tenants. This level of investment does not include the ‘Airport City’ element of the Updated Master Plan that could result in significantly more capital projects. Applying the 2011 average Nova Scotia construction wage of $46,640, future expenditures of $300 million will provide 4,220 FTE jobs and $190 million in wages and salaries.

Halifax Stanfield International Airport 2011 Economic Impact Report

3.6 Tourist/Visitors Impacts

Tourism plays a significant role in Nova Scotia. Nova Scotia Economic and Rural Development and Tourism has an economic impact model that calculates the impacts of the sector on the provincial economy. Outputs from this model for 2008 (most recent data) show that tourism is a $1.82 billion industry that generates 31,700 direct and spinoff jobs and provides $795 million in household income.

From 2008 to 2011, the number of visitors to Nova Scotia decreased by 6.1% from 2,079,800 to 1,953,600. This indicates that the findings of the 2008 tourism economic impact model are a reasonable indicator of conditions in 2011 when shifts between modes of transportation and inflation are considered.

Between 2010 and 2011, tourism visitation to Nova Scotia increased slightly year-over-year. Growth occurred in the air visitors segment (up 9% to 655,900) and motorcoach visitor segment (up 35% to 65,000) while declines occurred in the automotive segment (down 5% to 1,184,000) and recreation vehicle segment (down 14% to 49,000).

Between 2010 and 2011, domestic volume was up 10%, transborder 3% and overseas 12%. The air segment in 2011 represents 34% of all visitors. Visitors who enter Nova Scotia at HSIA tend to stay longer and spend more money than other segments. The result is air visitors to Nova Scotia account for 37% of the sector impacts. Exhibit 3.4 shows that tourists accessing Nova Scotia at the airport contributed an estimated $675 million towards tourism revenues in 2011. They also generated an estimated 11,775 jobs (direct and indirect), $120 million in total taxes and $295 million in payroll.

Exhibit 3.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR TRAVELERS ENTERING NOVA SCOTIA IN 2011

Tourists Entering Indicator Total – All Tourists Nova Scotia At HSIA

Tourism Revenues $1.82 billion $675 million

Jobs: Direct and Spinoff 31,700 11, 775

Payroll: Direct and Spinoff $795 million $295 million

Total Taxes: Provincial and Federal $324 million $120 million Sources – Chris Lowe Group estimates based upon 2008 to 2011 tourism industry data, and Tourism Economic Impact Model, Nova Scotia Economic and Rural Development and Tourism.

Halifax Stanfield International Airport 2011 Economic Impact Report

3.7 ATB Retail Sales Impacts

HIAA collects data on gross sales for retailers in the ATB and other concessions. As outlined in Exhibit 1.6, these sales in 2011 exceeded $80.57 million. Sales have increased over the past decade due to increased visitor traffic and the ATB Centre Core Retail Expansion Project (Airport Square), which added to the retail base.

3.8 Aerospace Cluster Impacts

IMP Aerospace and tenants at the adjacent AeroTech Business Park comprise an aerospace cluster with 1,360 employees in 2011. The major aerospace tenant at AeroTech is Pratt & Whitney Canada with 350 employees.

According to the Aerospace Industries Association of Canada (AIAC), in 2011 this sector had $22.4 billion in revenues and created 87,230 direct jobs nation-wide. Exports make up 73% of revenues with 77% of total sales generated from the civil aviation sector and the remainder from military contracts. The sector has a positive impact with high paying jobs and investments in capital, and research and development. During 2011, investments in capital totaled $1.4 billion while research and development expenditures were $2.0 billion.

Applying the approaches used by AIAC, the U.S. Department of Commerce, the U.S. Aerospace Industries Association and the University of Manitoba’s Transport Institute, general impacts of the local aerospace cluster were estimated. These estimates rely upon secondary sources and industry-wide norms to maintain confidentiality of local firms.

Applying the above sources and information on local aerospace firms, the local sector had expenditures of $397 million in 2011. The direct and spinoff jobs are 2,720, and wages and salaries are $153 million. A portion of these positive impacts is included in the economic and fiscal impacts for the airport.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 3.5 AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011 ECONOMIC IMPACTS

Indicator Direct Total (Direct & Spinoff)

Expenditures $218 million $397 million

Employment (FTE) 1,360 2,720

Labour Income $87 million $153 million Sources – Chris Lowe Group estimates based upon Canadian Aerospace Industry Performance 2011, Aerospace Industries Association of Canada; U.S. Bureau of Labor Statistics; U.S. Aerospace Industries Association estimates (2007); Economic Impact Study of Southport Aerospace, The University of Manitoba Transport Institute, 2006.

Halifax Stanfield International Airport 2011 Economic Impact Report

4 Fiscal Impacts

4.1 Introduction

The 1992 survey and updates are the primary sources for estimating the fiscal impact of the airport on HRM and Nova Scotia during 2011. Statistics Canada and Nova Scotia Department of Finance data were also used. These sources were drawn upon to estimate total fiscal impacts in terms of:

 Personal and Consumption Taxes (Provincial)  Retail Sales Taxes

4.2 Personal and Consumption Taxes (Provincial)

The percentage of wages and salaries paid to the Province of Nova Scotia was calculated using estimates of the personal income and consumption taxes (provincial) created due to airport activity. According to the Nova Scotia Department of Finance, in the range of 12% of total Nova Scotia personal income went towards personal income and consumption taxes in 2011. By multiplying this average personal income tax rate by the wages and salaries specified in Section 3, the personal income tax impacts on the Province can be determined.

Exhibit 4.1 summarizes the 2011 personal income and consumption tax impacts of HSIA activity on HRM and the Province of Nova Scotia. The total personal income and consumption taxes resulting from airport activity in HRM amounts to $38.8 million. This consists of $25.2 million in direct personal income and consumption taxes, $6.0 million in indirect taxes and $7.6 million in induced taxes. The exhibit also shows that the total personal income and consumption taxes created by airport activity on the Province of Nova Scotia amounted to over $57 million.

Exhibit 4.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2011

Direct Indirect Induced Total

Halifax Regional Municipality $25.2 $6.0 $7.6 $38.8

Province of Nova Scotia $25.2 $13.9 $18.6 $57.7

Halifax Stanfield International Airport 2011 Economic Impact Report

4.3 Retail Sales Tax (HST)

Another fiscal impact measure of HSIA activity is sales taxes generated by the purchase of retail goods by those who are employed due to airport activity.

In the range of 35% of personal income is spent on retail trade goods and services. By multiplying the wages and salaries from Section 3 times this value, the amount of retail sales generated by airport activity is determined. By multiplying this figure by the HST rate, the retail sales tax impact of airport activity can be isolated. The 2011 rate in Nova Scotia was 15% (5% federal part and 10% provincial part).

Exhibit 4.2 reveals the retail sales tax impact of airport activity on HRM and Nova Scotia. This exhibit shows that $16.9 million in retail sales taxes were created due to airport activity in HRM. Province-wide, $25.3 million in retail sales taxes were generated due to airport activities.

Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES (MILLIONS) IN 2011

Direct Indirect Induced Total

Halifax Regional Municipality $11.0 $2.6 $3.3 $16.9

Province of Nova Scotia $11.0 $6.1 $8.2 $25.3

4.4 Commercial Property and Business Occupancy Taxes

In 2011, the total value of taxes paid to HRM was $3,838,408 or an increase of 6.6% from 2010. Of this total, $2,448,984 was paid by tenants and the remaining $1,389,424 by the Authority.

Halifax Stanfield International Airport 2011 Economic Impact Report

5 Conclusions

Halifax Stanfield International Airport (HSIA) is one of 26 airports in Canada’s National Airports System and ranks as one of the world’s premier airports. In 2011, HSIA accommodated a record 3,594,164 passengers or over half of all passengers in Atlantic Canada. It has a multi-province catchment area and functions as a major economic and employment generator, and aerospace cluster, for Halifax Regional Municipality and Nova Scotia. In 2011, HSIA provided direct and connecting passenger and cargo service by 18 passenger carriers and 12 cargo carriers to destinations in Canada, the United States, the Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe with operating cash flows not returning to pre-recession levels until late 2010. Although Nova Scotia’s economy is 75% based upon service industries that did not experience the same economic downturn as other regions, the recovery has been slow. In 2011, Nova Scotia’s gross domestic product (GDP) increased by 0.3% after growth of 1.6% in 2010. The slowing growth is attributed mostly to the goods producing sectors that declined by 4%, and less construction as government stimulus spending was ending and construction on the Deep Panuke offshore project was nearing completion. The result on the transportation and warehousing sector was growth of 0.9%. In comparison to the rest of Atlantic Canada, GDP growth in 2011 was 2.8% in Newfoundland and Labrador, 1.1% on Prince Edward Island and 0.1% in New Brunswick.

Against this economic setting, 2011 was a year of achievements at HSIA that included:

 a major international award;  record setting passenger levels;  the funding and commencing of construction of a runway extension program that will diversify and expand passenger and cargo traffic; and  an updated Master Plan to 2030.

Cargo operations benefitted from the opening of a 40,000 square foot multi- tenant cargo facility in June 2010 and will further benefit from the extension of Runway 05/23. The $15 million facility is operated by Gateway Facilities ULC and contains 7,000 square feet of climate controlled space that allows for fresh seafood to be directly shipped to Europe and beyond. It is the largest refrigerated space with direct airside access north of Miami, Florida. In 2011, 29,263 metric tonnes of cargo was processed through HSIA representing a 2.9% increase from 2010.

Halifax Stanfield International Airport 2011 Economic Impact Report

HSIA’s diversified tenant base and head office functions of IMP Group Aerospace and Air Canada Jazz has allowed overall airport-related employment to remain stable in recent years. The major contributor to the airport’s economic base is IMP Group with many of this firm’s employees involved in multi-year civilian or military service contracts. This operating environment also exists for Pratt & Whitney Canada and L-3 Communications Electronic Systems in the adjacent AeroTech Business Park. These multi-year service contracts resulted in some staff reductions or re-deployments in 2011 while most other airport operations either retained or increased employment levels.

In 2011, HSIA contributed $1.26 billion to the Nova Scotia economy and provided 12,040 full-time equivalent (FTE) jobs with wages and salaries of $480.6 million. These employees contributed $57.7 million to the Province of Nova Scotia in terms of personal and consumption taxes and $25.3 million in retail sales taxes.

From 2000 to 2011, over $450 million was spent at the airport on new capital (development) projects and the maintenance of capital. These projects represent over 70% of the total capital improvements at all airports in Atlantic Canada and created 7,565 FTE jobs and contributed $284 million in wages and salaries. HIAA’s Capital Plan to 2017, the new 169 room boutique hotel and other expected future tenant projects, will require an additional $300 million to be spent. These planned projects will require 4,220 FTE jobs and generate $190 million in wages and salaries.

Tourism is a $1.82 billion industry in Nova Scotia based upon the most recent provincial government statistics. There were 1.954 million visitors to Nova Scotia in 2011 with 34% arriving via air at HSIA. Air visitation increased by 9% from 2010 while total visitation to Nova Scotia was down slightly. Tourists entering Nova Scotia at HSIA tend to stay longer and spend more money as they contributed an estimated $675 million to the Nova Scotia economy or 37% of all tourism-related activity. Tourists arriving by air at HSIA generated an estimated 11,775 jobs (direct and spinoff), $120 million in total taxes and $295 million in payroll.

Halifax Stanfield International Airport 2011 Economic Impact Report

Exhibit 5.1 COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2011

% Change: Impact 2000 2005 2011 2005 to 2011

(Millions) (Millions) (Millions) Total Gross Output Halifax Area $614.1 $683.3 $746.0 +9.2% Nova Scotia $1,035.1 $1,152.8 $1,260.0 +9.3%

Total Employment Halifax Area 7,495 7,870 8,100 +2.9% Nova Scotia 11,000 11,625 12,040 +3.6%

(Millions) (Millions) (Millions) Wages and Salaries Halifax Area $196.7 $260.3 $323.3 +24.2% Nova Scotia $289.2 $384.6 $480.6 +25.0%

(Millions) (Millions) (Millions) Personal and Consumption Taxes (NS) Halifax Area $29.7 $35.1 $38.8 +10.5% Nova Scotia $43.7 $53.5 $57.7 +7.9%

(Millions) (Millions) (Millions) Retail Sales Tax Halifax Area $10.2 $13.7 $16.9 See Note Nova Scotia $15.0 $20.2 $25.3

Note: Comparisons cannot be made because of changing tax definitions and rates.

Halifax Stanfield International 2011 Airport Economic Impact Report