new arrivals bold departures

Halifax International Airport Authority 2006 Annual Report Message from the C Chair | 2

Message from the President P & CEO | 4

Setting the Stage S | 6

Rewarding Experiences R | 8

NEW ARRIVALS. BOLD DEPARTURES. Making Connections M | 10

“ New arrivals and bold departures” reflects the historic changes completed in Taking 2006 at Halifax Stanfield International Airport and the opportunities created with Flight T | 12 this new foundation in place. It captures our sense of pride in all the milestones we

achieved together: opening new facilities, adding new flights and carriers, unveiling Improving state-of-the-art technology, and securing the financing for our multi-year airport the Bottom I Line | 14 improvement program.

Each of those new arrivals helped us build on our reputation for superb service and Financial safe and secure facilities for travellers, visitors and every member of the airport Statements | 15 community. They also helped lay the groundwork for our future plans. We’re setting Board of Directors | 22 out on an innovative new course of action – a bold departure toward new Corporate possibilities, new horizons. Governance | 24 O U R P E O P L E Mark Bowser, Randall Clooney, Keith Conner, Lee Nolter, Steven Nelson, Michael MacEwan, Catherine Huddleston, James Moulton, Tom Murray, Esther MacDonald, Robert Ettinger, Delbert Geddry, Richard Gooding, Drake Clarke, Todd Ball, Eleanor Humphries, Clifford Gillie, James McKee, William D. Turple, Paul Tuttle, Melissa Foley, Robert Clarke, Larry Naugle, John MacLean, Paul Dalrymple, Kevin Gaudet, Judy Berglund, Derek Forrest, Terry Hilchey, Janet Menzies, Ron Moakler, Howard Rose, Alan O’Leary, Don Lajoie, Cecillia Anderson, Peter Snair, Ivan Frame, Frank Leavitt, Kellie Hannam, Ron Conway, Allan Pace, Jane Scott, Leonard Brown, Christopher Ball, Donald Myers, Dave Snow, Joyce Hoskin, Donna Anderson, Reg Beeler, Sean Dempsey, Gary Christian, Mike Hartlen, John Melbourne, Bill Crosman, Brian Cutler, Burton Wright, Joyce Carter, Paul Hood, Thomas Morris, William A. Turple, Stephen Bezanson, Deborah MacLeod, Alastair Cox, William Wellwood, Kenneth Bayers, Ronda Brassard, Tim Fisher, Timothy Bull, Vernon Myers, Gord Duke, Nancy Fong, Malcolm Phippen, Kelly Martin, Janet Ingraham, Barry Carroll, Art Nowen, Charles Clow, Robert Gallant, Thomas Maguire, Joey MacPherson, Cathy Walker, Roxanne Hilchie, Larry Butler, Stephen Whalen, Mike Maxwell, Mike Sweet, Richard Boutilier, Shawn Hicks, Kim Keeling, Brian Gillette, Gary Porter, David Dawe, Bruce Loveridge, Charles Robson, Jamie Wilkins, Angela Hartt, Sherrie Clow, Gilbert Chandler, Peter Sworin, Chris Collier, Lydia Bowie, Theresa Conway, Karen Harrie, Wayne DeCoste, Reg Verge, Peter Clarke, Stephanie Gorman, Shawn Delong, Aaron Whynder, Rachael Robinson, Catherine Towers, Jerry Staples, William Cowan, Alex Skinner, Andy Lyall, Marcel Laforest, John Young, Kelly Zwicker, Art Ives, Douglas Kinsman, Rick Garson, Mel Dinney, Milly Hardwick, Tim Zinck, Edward Dempsey, Troy Appleby, Dan Tanner, Arnold Wood, Garry Parsons, Greg Shackleton, Kim Oakley, Doug Eisan, Michael Healy, Leigh Robinson, Twila Grosse, Dan Pride, Ken Champion, Barry Woynar, Robert Silver, Tony McMillen, Kevin Mosher, Stephen Fudge, Norman Ross, David Brown, Joseph MacLean, Blair Christian, Steven Hilchie, Jack Weir, Kevin Boutilier, Bruce Gaudet, Rick Wyatt, Dean Letto, Laine Peters,

Harry McMullen, Carol Mackie, Kim Porter, Peter Spurway, Karen Sinclair (AS OF DECEMBER 31, 2006) C

We’re certain that acting boldly in the future is the only option in today’s challenging environment.

2 Message from the Chair

Halifax International Airport Authority (HIAA) strives to provide a safe, secure and efficient experience at Halifax Robert L. Stanfield International Airport.

We do this by measuring ourselves against the best In her message, Eleanor Humphries, our President Transport and twice acted as HIAA’s CEO. airports around the globe. We recognize that the & CEO, explains how we’re transforming the airport In his usual selfless style, Bernie agreed to serve on world is changing rapidly and to achieve our goals, into the greatest air transportation hub this region the Board after his official term ended in December we must build today what we will need tomorrow. has ever seen: by unveiling new technologies, services until his replacement was chosen. We welcomed two We achieved that in 2006, creating a platform from and facilities; by enhancing the visitor experience; by new valued members of the Halifax business com- which to soar. This is why we believe “New Arrivals working with our partners. I would like to thank her munity to the Board in 2006 – Wadih Fares, President and Bold Departures” is the ideal theme for this and the HIAA team for their efforts in 2006 – a year of W.M. Fares Group, and Jamie Baillie, President & year’s annual report. in which HIAA received awards for communications CEO of Credit Union Atlantic. Fred Smithers, one of Sure, we want to celebrate everything that hap- and community involvement, and Eleanor herself was our existing Board members, became Vice Chair. pened in 2006, a year in which our terminal building honoured twice, first by Atlantic Business Magazine as 2006 was clearly a significant year for HIAA, as expanded from end to end, becoming a sleek, modern, one of Atlantic Canada’s Top 50 CEO’s, marking the you will see by the accomplishments and milestones cutting-edge facility that’s the envy of any in the fourth time she has been named to this distinguished noted throughout this report. As we look ahead, country. We’re also certain that acting boldly in the list, and then with a Women of Excellence Award we expect more of the same in 2007, starting with future – whether adopting a more entrepreneurial from the Canadian Progress Club. the celebration in February to honour a great Nova spirit or becoming even more service-oriented – is I’d like to express our sincere appreciation to Scotian, when Prime Minister Stephen Harper the only option in today’s challenging environment. Norbert Comeau who, in December, completed his renamed Halifax International Airport in honour So HIAA’s vision is clear: continue working to build three-year term on our Board. I’d also like to extend of Robert L. Stanfield. the best airport in the world. the entire HIAA’s heartfelt gratitude to Bernie Miller Excellence, after all, has nothing to do with scale. whose dedication to the Board has never wavered Our ambition is born of an understanding that glo- since becoming one of the original members at its balization has shrunk the world. Today, the business inception in 1995. customer on the other side of the continent may mean Bernie, of course, spent the next decade as Chair as much as the customer across the harbour. Without – a period during which he also served as the airport’s Frank Matheson air connectivity, a city and region is out of the game. chief negotiator during the transfer negotiations with chair of the board of directors

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 3 Message from the President & CEO

In 2006, HSIA served almost 3.4 million passengers, a new record. A study conducted in 2006 concluded that the airport community injected $1.15 billion into the provincial economy in 2005.

4 2006 will be remembered as a watershed year in the evolution of HIAA. P It’s difficult to overstate the milestones we achieved during those 12 months.

It was an energetic year: we introduced new tech- that the airport community injected $1.15 billion airport run even more smoothly. In 2006, we started nology and services, completed a $90 million into the provincial economy in 2005. HIAA’s inau- designing a proposed 2300-space parking facility infrastructure expansion that opened new growth gural bond issue – which gave us $150 million to and moved forward in the planning for a potential opportunities, and solidified our long-term financ- pursue our capital plans over the next several years 175-room . We also commissioned a study to ing. The upshot: six years after taking over operation – is another sign of our fiscal strength. ask passengers, employees, our tenants, and local of Halifax Stanfield International Airport (HSIA), Having a solid financial foundation is a critical residents what new services they’d like to see. HIAA has truly arrived. Now we’re ready to move in building block for any corporate entity. So, I’m happy That process demonstrates something else about a bold new direction and show the world what the to say that in 2006 HIAA reported an excess of HIAA: our commitment to listen to and work airport of the 21st century can be. revenues over expenses of $10.5 million. with our partners – whether tenants, , In so many ways, 2006 was an historic one for U.S. Secretary of State Condoleezza Rice chose to stakeholders, different levels of government, or HIAA. On October 4, our new U.S. preclearance visit Halifax and made a special stop at the airport the neighbouring community. facility – the first such facility launched in North to personally thank our people and our partners for I encourage you to have a look at the names on America since 9/11 – opened after years of intensive their remarkable outpouring of help and hope, on the inside front cover of this report; they’re the people work and negotiations. Halifax has now joined an the fifth anniversary of 9/11. of HIAA – vibrant and committed. I want to thank elite group of major airports: non-stop U.S.-bound We strengthened the core of our corporate culture: every one of them for their efforts in 2006. It takes passengers can check in, be cleared by U.S. Customs we’re in the service business; our ultimate goal is to a lot of people working together to chart the bold new and Border Protection, then board a plane and arrive make every moment passengers spend within our course we have set for ourselves. As far as we’re at their U.S. destination as domestic passengers. That building fresh and engaging. We already do a good concerned, the question is no longer: what is an makes for easier connections and gives passengers job in this regard, receiving two first-place awards airport? We believe it is: what can an airport be? We’re access to more U.S. airports. in the 2006 Airport Service Quality survey, a global confident we have created a solid foundation for the Our connections with the world improved in customer service ranking program that rates 90 of future, as we work to build the best airport in the world. other ways too: our established carriers added flights the world’s airports. and new carriers came on board. Clearly CanJet Awards like these confirm we’re on the right track. Airlines’ decision to end scheduled air service was Yet, we’re determined to do even more to provide unforeseen, but we quickly regained our balance. passengers with exceptional service. That’s why we In 2006, HSIA served almost 3.4 million passengers, introduced a broad range of technological improve- Eleanor Humphries a new record. A study conducted in 2006 concluded ments to make life easier for travellers and help the president & ceo

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 5 S

Why embark on a $90 million program to expand and enhance Halifax Stanfield International Airport (HSIA)? Because big ideas need plenty of room in which to flourish. Our new U.S. preclearance facility – the latest accomplishment in our long- term airport improvement program – undeniably demonstrates this.

Located in the airport terminal’s north end, the preclearance facility has performed beyond expectations since opening in October. Passengers ascend into a sky-lit check-in area. There, they present their tickets, check their luggage, complete their pre-board security screening, and proceed to U.S. Customs and Border Protection. Once cleared, they move to a dedicated departures area where they board their United States-bound aircraft. When their plane lands in the U.S., they disembark as domestic passengers.

6 SETTING THE STAGE Transforming our facilities and services

We think of this facility as the crown jewel in our expansion. Yet it’s only airport experience. Along the way we also provided yet another reason one way we’re improving service at HSIA. “Everything we do,” explains why 2006 marked a stellar year at HSIA. Michael Healy, HIAA’s Vice President Infrastructure & Technology, “is designed Passengers notice the transformation the moment they step inside the to positively shape the experience of our partners, tenants and passengers.” terminal. Common use self-service kiosks make checking in easier than Consider, for example, the $12 million spent completing Phase II of our ever, and a new digital public address system keeps travellers well informed. Runway Restoration Program – repaving Runway 14/32 and reconstructing Starting in January, the convenience level went up another notch. The reason: Taxiway H – ahead of schedule and with minimal disruption. This serves as a new common use terminal equipment (CUTE) installed in the ticket counter testament to our well-developed construction and communication processes. and gate areas, which has further streamlined the check-in process. At the terminal’s south end we also opened our new commuter facility, CUTE represents a smart solution to capacity constraints. Instead of which means regional air passengers now enjoy an expanded waiting area depending on equipment owned by each individual air carrier, passengers and more retail and food and beverage options, along with 12 additional now use a common platform for the check-in process. The benefits: greater gates and covered walkways providing improved ground access to aircraft. accessibility, efficiency and flexibility for carriers and travellers – and a better The list of infrastructure improvements doesn’t stop there. HIAA has also use of terminal space – helping to reduce the need for major capital investment installed a new common use departures baggage system with the latest on the part of the airlines. in security technology. And we’re proud of our newly expanded arrivals In 2006, we also focused on increasing communications accessibility area, featuring a majestic glass wall that enhances the natural light and allows within our walls. We fully understand that, in today’s global marketplace, arriving passengers to see waiting greeters and the baggage carousels as they success means being reachable 24/7 no matter where you happen to be. descend. In 2006, HIAA also took over operation of seven loading bridges Which is why, with the help of Cisco Systems, Inc. and alliance partner HP at HSIA that were previously owned by Air Canada – making a total of 13 Canada, we introduced Atlantic Canada’s first unified voice, video, data, HIAA-owned bridges now available for common use by all airlines. and wireless communications system. As of January, telephone calls in the The only way to create the airport of tomorrow – HIAA’s ultimate goal terminal building use state-of-the-art Voice over Internet Protocol (VoIP) – is with the technology of the future. By introducing a series of technological technology rather than traditional analog telephone communications. changes and upgrades in 2006, we made huge strides in transforming the Just one more way we’re working to build the best airport in the world.

05.2006 > HIAA teams up with Cisco Systems and Hewlett-Packard (Canada) Co. to announce the completed installation of an airport-wide integrated IP voice, video and data network as part of the ongoing technology upgrade and airport improvement program 01.2006 > Common Use Terminal Equipment is installed for use by airlines in the ticket and gate counter areas

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 7 R

Airport Service Quality survey results for 2006 :

First in overall passenger satisfaction for airports worldwide with under five million passengers, for the fourth year in a row

First in the Americas in the new category of Airport People Awards

Second in the best domestic airport worldwide category

Second in the Americas for overall satisfaction

8 REWARDING EXPERIENCES Enhancing our customer service

At HIAA, we strive to improve the customer experience. That means spending millions of dollars upgrading infrastructure, providing the latest technology and adding services. Taking the airport in a bold new direction also means paying attention to the smallest detail.

Need proof? Just consider the piles of blankets, diapers, 11 new full-time staff members. Many of them work for our baby food, decks of cards, cribbage boards, and bottled water newly-formed maintenance response teams – multi-disciplin- standing ready in a storage room – emergency provisions to ease ary teams of tradespeople who provide rotating on-site shift traveller discomfort when unexpected delays occur. “Passengers coverage over 16 hours a day, seven days a week. are our focus,” says Kelly Martin, HIAA’s Customer Relations Our attention to customer service seems to be working. In Manager. “While they are here with us, we do whatever we can 2006, once again we received awards from the Airport Service to make them comfortable.” Quality survey, which ranked customer service in 90 participating Our service-oriented philosophy comes to life in the first airports worldwide. HSIA took first place for overall passenger and last faces many visitors see in the airport terminal – the satisfaction for airports worldwide with under five million tartan-vested volunteers who provide everything from directions passengers, for the fourth consecutive year. And we were and information, to help for special needs travellers. In 2006, named best in the Americas in a new category – Airport People 120 dedicated and enthusiastic Volunteer Hosts, who come Awards – that recognizes airports that have cultivated a strong from all walks of life, logged more than 17,500 hours serving customer service culture among their staff and partners. We passengers and visitors. also placed second in the best domestic airport worldwide We also spread the service word via special training to our category and second in the Americas for overall satisfaction. tenants who are on the front-line throughout the terminal. Global recognition, of course, is wonderful. HIAA, however, Over 60 per cent of the terminal’s retail and service outlets puts just as much stock in our own ongoing internal traveller have received this training, and we remain a Super Host surveys. “The really important thing is that when we bench- designated airport – the only one in the country. mark against ourselves, customer satisfaction is growing year Everything we’re doing to respond to the needs of travellers after year,” says Martin. Paying attention to the details is its and tenants isn’t obvious to the eye. In 2006, we recruited own reward.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 9 MAKING CONNECTIONS Doing our part in the community M

At HIAA, being connected matters. We mean that in the widest possible sense of the word: connected to the world’s airports, connected to our tenants and staff, connected to the 5,400 people who work in and around Halifax Stanfield International Airport. We also mean being connected to the broader Nova Scotia community – a link we value on so many levels.

HIAA employees, for starters, are active community participants and fundraisers. In 2006, they raised over $13,000 for the United Way, entered a team in the annual Manulife Dragon Boat Festival raising almost $4,200 for amateur sport in Nova Scotia, and donated over $1,000 worth of school supplies and food to the Parker Street Food & Furniture Bank.

10 What’s more, HIAA supported over 200 organiza- Like the rest of the world, we’re going green – In March we launched iWatch – our unique and tions with almost $100,000 in corporate donations, as and giving support to environmental initiatives. award-winning program designed to increase aware- well as promotional items and public display space. HIAA provided the Nature Conservancy of Canada ness of security threats and to encourage members Our Humanities Fund is another way we provide with a contribution to help with the acquisition of the airport community to report suspicious community support. Developed through the and stewardship of a parcel of land in the Mus- activity. Results for the first year showed a four-fold collective agreement process between HIAA and quodoboit Harbour area. As an important place for increase in reports to security from employees the Union of Canadian Transportation Employees migratory birds to fuel up between flights, that’s a throughout the airport community – everyone from Local 80829, this fund was created to help meet cause close to our heart. cleaners to contractors, retailers to ramp workers. basic needs in the community. Union members We’re also pleased that the Southern Twayblade The program was recognized with two honours – an contribute $.01 for each hour worked, and HIAA (Listera australis), an exceedingly rare Nova Scotia award of merit from the Canadian Public Relations doubles that contribution. orchid, continues to thrive at HSIA. In 2006, more Society (Nova Scotia) Inc. and first place in the In 2006, taking its lead from employee suggestions, of those plants grew on our lands than ever before Public Relations category of the Airports Council the fund distributed $7,000 to six organizations: in recorded history. International - North America’s 2006 Excellence in the Emily Fund, for the purchase of insulin pumps; We are always striving to make the airport a Marketing and Communications Contest. Alcare Place, to help people with addictions; Habitat safer, healthier place to work. A 21 per cent decline We shored up security in other ways too: increased for Humanity, to purchase building supplies; the in time lost because of workplace accidents in policing within the new preclearance facility and Canadian Mental Health Association’s Building 2006 indicates that all the hard work is paying off. greater scrutiny of HIAA buildings and grounds Bridges Program, to help those suffering from We’re determined to enhance that record, placing outside the terminal. One big change: a new system mental illness; Ark, to help feed the homeless; and a strong emphasis on improving existing programs that uses biometric scans (retina and figerprint) to the Pictou County Early Intervention Program, to and developing new ones to reduce the accident gain access to secure areas throughout the airport. assist children with special needs. rate even further. We commissioned an audit in Futuristic stuff, even if the goal – doing everything We also get out into the community with our 2006 to see how our occupational health and safety in our power to be a good community partner – is a parade float. In 2006, many of our volunteers programs stack up against OHS standards elsewhere. decidedly old-fashioned one. and employees and their families walked and Based on early results, we’ve started working on waved in the Apple Blossom Festival parade, the improvements in many areas, including hazard Halifax-Dartmouth Natal Day parade, the Halifax reporting and health and safety training. Holiday Parade of Lights, and the Truro Santa Our aim, after all, is unwavering: to make Claus Parade. travellers, visitors and workers as safe as possible.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 11 TAKING FLIGHT Increasing our air services T

4.6 % 5.0 % rise in passengers from 2005 increase in cargo traffic over 2005

3,378,601 passengers through Halifax Stanfield International in 2006

06.2006 > United Airlines launches service to Washington Dulles 12.2006 > American Eagle begins service to New York LaGuardia

09.2006 > Air Canada offers non-stop daily flights to Heathrow

10.2006 > Icelandair announces return of service beginning in May 2007 12 U.S. preclearance means many new destinations and markets for all of Atlantic Canada, cementing Halifax as the region’s air gateway.

In 2006, a record 3,378,601 passengers travelled Throughout the year, several airlines gave notice Airlines ceased scheduled service, and CanJet Airlines through Halifax Stanfield International Airport, that they would launch new services in 2007. ended scheduled service in September, announcing a 4.6 per cent increase from 2005. After a six-year absence from the Halifax market, plans to enter the charter market. The opening of our U.S. preclearance facility Icelandair announced that it would resume service On the cargo side, ABX Air, Inc. began a new dedi- represented the single most important development to Keflavik International Airport, near Reykjavik, cated weekly DC-9 service to New York and Miami since the airport opened in 1960. And the benefits starting in May, with three flights per week. Other via Wilmington, Ohio in October. That addition were immediate. Four months before the first pas- announcement highlights for 2007 include Air helped cargo traffic rise to 27,700 metric tonnes, a senger checked in, United Airlines began flying from Canada beginning daily service to LaGuardia in five per cent increase over 2005. Halifax to Washington Dulles International Airport April; American Eagle adding a weekend summer The federal governement’s Blue Sky air transporta- in anticipation of the new era. As well, in December, season service to Chicago in May; United Airlines tion policy, announced in November 2006, set the American Eagle began daily roundtrip flights from launching daily service to Chicago in June; North- stage for new opportunities for marketing our Halifax to New York’s LaGuardia Airport, which west Airlines flying twice daily to Detroit in May; and city, province and region. This policy represents a serves only domestic and precleared passengers. Delta Air Lines beginning weekly service to Atlanta in welcome approach to increasing choices and options U.S. preclearance means many new destinations June. As well, WestJet announced a weekly seasonal for travellers and shippers alike. and markets for all of Atlantic Canada, cementing flight to Tampa Bay (March through May 2007) and We improved service in other ways too. For instance, Halifax as the region’s air gateway. “The opening of Transat Holidays, in partnerhip with CanJet Airlines, both our U.S. preclearance and commuter facilities preclearance has already delivered the kinds of gains announced winter seasonal charter service to Orlando include new food, beverage and retail outlets. Outside we anticipated when we considered the business case,” and St. Petersburg in Florida. the terminal there were also enhancements: I.M.P. says Jerry Staples, HIAA’s Vice President Marketing Internationally, Condor announced it would return Group International Inc. finished its new aerospace & Business Development. with two weekly flights to Frankfurt, Germany, in the hangar on airport lands; a pair of car rental giants That was only the start of more good news. summer of 2007. Zoom Airlines announced it would – Avis Budget Group, Inc. and Dollar Thrifty Automo- Air Canada began non-stop daily flights to resume weekly summer service to London (Gatwick) tive Group, Inc. – completed construction of new London Heathrow, and increased seasonal service and , Scotland in 2007, and launch weekly operational headquarters. to , , Ottawa, and Sydney. WestJet seasonal service to two new destinations in Europe All of these new facilities, air services and amenities Airlines introduced new seasonal daily non-stop – Belfast and Paris – in June. , partner- demonstrate our collective commitment to build service to Edmonton. ing with Canadian Affair, announced plans to offer a the best airport in the world. Condor enhanced its summer schedule by twice-weekly seasonal service to London (Gatwick), extending service to Frankfurt into November, and to resume weekly service to Frankfurt, Germany. and Sunwing Airlines operated summer seasonal These new services were tempered by some service to Toronto and London, Ontario. service reductions. In February 2006, Provincial

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 13 IMPROVING THE BOTTOM LINE Reinforcing our financial stability I

There’s a precise logic to the choice of theme for this annual report: in 2006, HIAA put in place key building blocks to help us reach our ambitious goals. Consider the financial front.

The big news: in 2006, we completed our first bond per cent of HIAA’s total revenue. Passenger volumes In 2007, for example, HIAA will concentrate on issue – a $150 million private placement offering. were absorbed by increased capacity added by other implementing its multi-million dollar Groundside The 35-year, non-amortizing bonds pay a 5.503 carriers, namely Air Canada and WestJet, thereby Redevelopment Plan, which includes reconstruction per cent annual interest rate. “We’re still as prudent reducing HIAA’s revenue loss. of the north tunnel to provide passengers with as we’ve ever been,” says Joyce Carter, HIAA’s Vice As a result, by year-end, our bottom line was not ground access to the parking lot at the north end of President Finance & CFO. “HIAA maintains one of significantly affected by CanJet’s decision. Our total the terminal building and reconfiguring the terminal the lowest debt-per-enplaned-passenger ratios in revenues – including the Airport Improvement front roadway to improve the flow of passengers the country. In fact, Standard & Poor’s assigned us Fee – reached $51.8 million in 2006, compared to and vehicles by creating separate roads for passenger an A+ credit rating – one of the best ratings among $46.0 million in 2005. A combination of factors was pick up and drop off. We’ll also consider a 2300-space major airports across Canada.” behind the increase. Offering common use services parking facility adjacent to the north end of the We now have the financing in place to pursue to airlines meant higher aeronautical revenues. At the terminal building, with an over-road pedway, and our capital plans over the next several years. That’s same time, our enhanced parking options – includ- installation of underground drainage and electrical good news for HIAA – and the community. In ing our expanded Park’N Fly facility – led to a hike in services, including services for a future hotel. 2005, HIAA and its aviation partners located at parking revenue. We also had an increase in interest We will continue to grow the U.S. preclearance the airport generated $1.15 billion in gross output. revenue due to surplus funds from our bond issue. program. We have the strength and flexibility to That translates into 11,625 jobs and $385 million in Our expenses totalled $41.3 million in 2006, com- maintain and operate our new south end commuter wages and salaries for the province. pared to $32.4 million the previous year. That rise facility along with the other facilities introduced in We’re pleased to report that landing and terminal was mainly due to providing common use services 2006. The new arrivals have set the stage for bold fees have not risen in the six years since manage- to our partners, along with the higher cost departures. We are well on our way. ment of the airport was transferred from the federal of maintaining the expanded air terminal building, government to HIAA. and paying the interest on our bonds. CanJet’s announcement that it was ending sched- Overall, revenues exceeded expenses by $10.5 uled service in September 2006 was unexpected. In million in 2006, compared to $13.6 million in 2005, 2005, the airline had accounted for 18 per cent of which means we’re in great shape to forge ahead all passengers passing through our airport and 11 with our future plans.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 14 BALANCE SHEET As at December 31

Financial Statements 2006 2005 (in thousands of dollars) $ $

assets Current Cash 77,354 6,065 Accounts receivable 3,943 5,380 Inventories 380 320 AUDITORS’ REPORT Prepaid expenses 695 570 82,372 12,335 To the Directors of Halifax International Airport Authority Capital assets (note 3) 170,223 117,935 Deferred financing costs (note 4) 3,862 – We have audited the balance sheet of Halifax International Airport Authority Debt service reserve fund (note 4) 4,127 – as at December 31, 2006 and the statements of operations and changes in net Accrued benefit asset(note 7) 426 – assets and cash flows for the year then ended. These financial statements are the responsibility of the Authority’s management. Our responsibility is to 261,010 130,270 express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted liabilities and net assets auditing standards. Those standards require that we plan and perform an Current audit to obtain reasonable assurance whether the financial statements are Accounts payable and accrued liabilities 20,569 24,227 free of material misstatement. An audit includes examining, on a test basis, Deferred revenue 938 736 evidence supporting the amounts and disclosures in the financial statements. Current portion of long-term debt (note 4) 80 26,081 An audit also includes assessing the accounting principles used and significant 21,587 51,044 estimates made by management, as well as evaluating the overall financial statement presentation. Long-term debt (note 4) 150,644 724 In our opinion, these financial statements present fairly, in all material Accrued benefit liability(note 7) – 46 respects, the financial position of the Authority as at December 31, 2006 Security deposits 1,764 1,887 and the results of its operations and its cash flows for the year then ended 173,995 53,701 in accordance with Canadian generally accepted accounting principles. As Net assets required by the Canada Corporations Act, we report that, in our opinion, Equity in capital assets (note 5) 87,015 76,569 these principles have been applied on a basis consistent with that of the preceding year. 261,010 130,270

Commitments (note 6) Contingencies (note 9) Halifax, Canada See accompanying notes February 9, 2007 Chartered Accountants On behalf of the Board:

Director Director

15 FINANCIAL STATEMENTS

STATEMENT OF OPE RATIONS AND CHANGES IN NET ASSETS Year ended December 31 STATEMENT OF CASH FLOWS Year ended December 31

2006 2005 2006 2005 (in thousands of dollars) $ $ (in thousands of dollars) $ $ revenues operating activities Terminal and passenger security fees 11,875 8,833 Excess of revenues over expenses 10,446 13,643 Landing fees 9,148 8,703 Items not involving cash: Concessions 8,301 7,789 Amortization 6,530 3,361 Parking 6,260 5,314 Net change in non-cash working capital Rentals 1,825 2,018 balances related to operations (7,559) 3,949 Interest income 1,756 63 Cash provided by operating activities 9,417 20,953 Other (note 4) 312 1,640 39,477 34,360 investing activities Airport improvement fees (note 5) 12,316 11,707 Expenditures on capital assets (54,008) (48,581) 51,793 46,067 Cash used in investing activities (54,008) (48,581) operating expenses financing activities Salaries, wages and benefits 11,655 11,042 Proceeds of bond issue 150,000 – Materials, services and supplies 11,276 9,061 Proceeds of long-term debt construction loan 24,000 26,000 Amortization 6,530 3,361 Repayments of long-term debt (50,081) (1,086) Ground lease rent 4,271 4,361 Debt service reserve fund (4,127) – General and administrative 3,588 3,376 Deferred financing costs (3,912) – Interest expense on long-term debt (note 4) 2,762 36 Cash provided by financing activities 115,880 24,914 Property taxes 1,265 1,187 41,347 32,424 Increase (decrease) in cash 71,289 (2,714) Cash, beginning of year 6,065 8,779 Excess of revenues over expenses 10,446 13,643 Net assets, beginning of year 76,569 62,926 Cash, end of year 77,354 6,065

Net assets, end of year (note 5) 87,015 76,569 Supplementary Information Cash interest paid – long-term debt – 35 See accompanying notes See accompanying notes

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 16 NOTES TO FINANCIAL STATEMENTS December 31, 2006

1. general 2. significant accounting policies (continued) The Halifax International Airport Authority (the “Authority”) was incorporated Assets Rate on November 23, 1995 as a corporation without share capital under Part II Computer hardware and software 20% - 33% of the Canada Corporations Act. On February 1, 2000, the Authority signed Leasehold improvements 2.5% - 10% a 60-year ground lease with Transport Canada and assumed responsibility Machinery, equipment, furniture and fixtures 5% - 20% for the management, operation and development of the Halifax Robert L. Vehicles 5% - 17% Stanfield International Airport. Excess revenues over expenses are retained and reinvested in airport operations and development. Construction in progress is recorded at cost and is transferred to leasehold The Authority is a dynamic and multi-faceted aviation enterprise that provides improvements when the projects are complete and the assets are placed into service. air access to the world, facilitates personal and business connections and promotes regional economic growth. Revenue recognition The Authority is governed by a Board of Directors whose members are Landing fees, terminal fees, parking revenues and passenger security fees nominated by the Halifax Regional Municipality, the Province of Nova Scotia are recognized as the airport facilities are utilized. Concession revenues are and the Federal Government, as well as the Halifax Chamber of Commerce. recognized on the accrual basis and calculated using agreed percentages of The nominated members can also appoint additional members who represent reported concessionaire sales, with specified minimum guarantees where the interests of the community. applicable. Rental revenues are recognized over the lives of respective leases, The Authority is exempt from federal and provincial income tax, federal licenses and permits. Airport improvement fees (“AIF”) are recognized when large corporation tax, and Nova Scotia capital tax. originating departing passengers board their aircraft as reported by the airlines. Deferred revenue consists primarily of a portion of the common-use 2. significant accounting policies terminal equipment (“CUTE”) fee required for future capital acquisitions and the unamortized portion of a grant received from the government to The Authority’s financial statements have been prepared in accordance with undertake specific marketing activities to increase the air connections and Canadian generally accepted accounting principles. The preparation of routes between the United Kingdom, Germany, Iceland, the Netherlands and financial statements requires management to make estimates and assumptions Nova Scotia that use Halifax Robert L. Stanfield International Airport. that affect the reported amounts of certain assets and liabilities at the date of the financial statements and the reported amounts of certain revenues and Employee benefit plans expenses during the year. Actual results could differ from those estimates. The Authority sponsors a pension plan on behalf of its employees which has defined benefit and defined contribution components. In valuing pension Inventories obligations for its defined benefit component, the Authority uses the accrued Inventories consist of materials, parts and supplies and are stated at the lower benefit actuarial method prorated on services and best estimate assumptions. of cost, determined on an average cost basis, and estimated replacement cost. Pension plan assets are valued at current market values. The excess of the accumulated net actuarial gain or loss over 10% of the greater of the accrued Ground lease benefit obligation and the fair value of the plan assets is amortized over the The ground lease with Transport Canada is accounted for as an operating lease. average remaining service life of employees. Defined contribution component Capital assets amounts are expensed as incurred. Capital assets are recorded at cost including interest on funds borrowed for Deferred financing costs capital purposes, net of contributions and government assistance and are Costs relating to the issue of Series A Revenue Bonds, including agent fees, amortized over their estimated useful lives on a straight-line basis as follows: professional fees and termination of interest-rate swap agreements, are deferred and amortized on a straight-line basis over the term of the related debt.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 17 NOTES TO FINANCIAL STATEMENTS December 31, 2006

3. capital assets 4. long-term debt 2006 2006 2005 (in thousands of dollars) $ (in thousands of dollars) $ $ Accumulated Net Book Cost Depreciation Value 5.503%, non-amortizing Series A Revenue Bonds $ $ $ due July 19, 2041. Interest payable semi-annually in arrears on January 19 and July 19 of each year Computer hardware and software 6,136 2,876 3,260 until maturity, commencing on January 19, 2007. 150,000 – Leasehold improvements 161,436 9,525 151,911 Machinery, equipment, furniture Canadian Imperial Bank of Commerce Construction and fixtures 6,230 2,057 4,173 installment loan, bearing interest at prime rate less Vehicles 8,031 3,388 4,643 65 basis points. – 26,000 Construction in progress 6,236 – 6,236 Transport Canada deferred rent, non-interest bearing, 188,069 17,846 170,223 repayable in monthly installments of $6,700 which commenced in 2006. 724 805 2005 150,724 26,805 (in thousands of dollars) $ Current portion of long-term debt 80 26,081 Accumulated Net Book Cost Depreciation Value 150,644 724 $ $ $

Computer hardware and software 2,472 1,587 885 Bond Issue Leasehold improvements 72,100 5,542 66,558 In July 2006, the Authority completed a $150 million Revenue Bond issue. The Machinery, equipment, furniture $150 million 5.503% Series A Revenue Bonds, are due on July 19, 2041. The net and fixtures 4,025 1,514 2,511 proceeds from this offering are being used to finance the 10 year Capital Plan, Vehicles 7,609 3,165 4,444 and for general corporate purposes. These include repayment of existing bank Construction in progress 43,537 – 43,537 indebtedness incurred by the Authority in connection with the 10 year Capital Plan and the funding of a $4.1 million Debt Service Reserve Fund and a $5.9 129,743 11,808 117,935 million Operating and Maintenance Reserve Fund required by the Master Trust Indenture entered into by the Authority in connection with the offering. The bonds are direct obligations of the Authority ranking pari passu with all other indebtedness issued under the Master Trust Indenture. Reserve Funds Pursuant to the terms of the Master Trust Indenture, the Authority is required to establish and maintain with a trustee a Debt Service Reserve Fund with a balance at least equal to 50% of annual debt service costs. As at December 31, 2006, the Debt Service Reserve Fund included $4.1 million in interest bearing deposits held in trust. These trust funds are held for the benefit of bondholders for use in accordance with the terms of the Master Trust Indenture.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 18 NOTES TO FINANCIAL STATEMENTS December 31, 2006

4. long-term debt (continued) 5. airport improvement fees (continued) The Authority is required to maintain an Operating and Maintenance A summary of the AIF collected and capital and related financing Reserve Fund of approximately $5.9 million. The Operating and Maintenance expenditures are as follows: Reserve Fund must be established and funded as required by the Master Trust Indenture, for the benefit of bondholders. The balance in the Fund is equal to 2006 2005 at least 25% of certain defined operating and maintenance expenses for the (in thousands of dollars) $ $ previous fiscal period. For 2007, approximately $6.6 million will be required to fund the Operating and Maintenance Reserve Fund. The Operating and AIF revenue (net): Maintenance Reserve Fund may be satisfied by cash, letters of credit, or the AIF revenue 13,122 12,459 undrawn availability under a committed credit facility. AIF collection costs (806) (752) 12,316 11,707 Deferred Financing Costs Interest on surplus funds 1,756 — 2006 2005 Net funds received 14,072 11,707 (in thousands of dollars) $ $ Capital expenditures funded by AIF 44,388 50,398 Deferred financing costs 3,912 – Interest expense funded by AIF 2,762 — Less: Accumulated amortization (50) – 47,150 50,398 3,862 – Excess of expenditures over AIF revenue 33,078 38,691 Capitalized Interest Excess of expenditures over AIF revenue, Interest on long-term debt of $1,966,365 (2005 - $260,596) was capitalized as beginning of year 59,725 21,034 part of construction in progress during the year. Excess of expenditures over AIF revenue, Debt Forgiveness end of year 92,803 59,725 During 2005, Transport Canada agreed to forgive $1.2 million of debt, which is included in other revenue. From January 1, 2001 to December 31, 2006, the cumulative capital expenditures totaled $157,241,000 (2005 - $110,091,000) and exceeded the 5. airport improvement fees cumulative amount of AIF revenue by $92,803,000 (2005 - $59,725,000). On January 1, 2001, the Authority implemented an AIF of $10 per local Net assets of the Authority as at December 31 are as follows: boarded passenger to fund the cost of a major capital program. These fees are collected by the air carriers for a fee of 6% under an agreement between 2006 2005 the Authority, the Air Transport Association of Canada, and the air carriers (in thousands of dollars) $ $ serving Halifax Robert L. Stanfield International Airport. Under the agreement, AIF revenues may only be used to pay for the capital and related financing Net assets provided by airport improvement fees 55,147 50,366 costs as jointly agreed with air carriers operating at the airport. Net assets provided by other operations 31,868 26,203

Net assets, end of year 87,015 76,569

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 19 NOTES TO FINANCIAL STATEMENTS December 31, 2006

6. commitments 7. pension Transfer Agreement The Authority sponsors a pension plan (the “Plan”) on behalf of its employees, Effective February 1, 2000, the Authority signed a 60-year ground lease with which has defined benefit and defined contribution components. The defined Transport Canada (the “Landlord”) which provides for the Authority to lease the benefit component is for former Transport Canada continuing full-time Halifax Robert L. Stanfield International Airport (the “Airport”). A 20-year renewal employees who were employed by the Authority on February 1, 2000 and option may be exercised, but at the end of the term, unless otherwise extended, the previously participated under the Public Service Superannuation Act (“PSSA”) Authority is obligated to return control of the Airport to the Landlord. Plan. However, these employees had the option to elect to become members of On May 9, 2005, the Government of Canada announced the adoption of a new the defined contribution component in lieu of the defined benefit component. rent policy that will result in reduced rent for Canadian airport authorities, All other employees will become members of the defined contribution including the Halifax International Airport Authority. This reduced rent will be component. An actuarial valuation has been prepared as of January 1, 2006, for phased in over four years beginning in 2006, with the new formula achieving purposes of funding the Plan. its full impact in 2010. The new formula is based on percentage of gross The existing Government of Canada pension assets and accrued benefits revenues on a progressive scale. The Authority finalized the amendment to its obligation for certain employees have been transferred to the Authority. The ground lease with Transport Canada in December 2005. pension transfer agreement between Transport Canada and the Authority was Rent payable under the old ground lease with Transport Canada included finalized during 2004 and the total pension liability has been transferred, fully base rent calculated on a formula reflecting annual passenger volumes, annual funded to the Authority. revenues, and predetermined base operating costs. Base rent was calculated on The following table provides information concerning the accrued benefit a capped passenger volume formula subject to adjustments for inflation. obligation, plan assets, funded status and prepaid (accrued) pension costs of The estimated lease obligations under the amended ground lease over the the plan as at December 31, 2006: next five years are approximately as follows (in thousands of dollars): 2006 2005 (in thousands of dollars) $ $ 2007 $ 4,093 2008 3,825 Plan assets 22,290 18,785 2009 3,290 Accrued benefit obligation (23,093) (20,147) 2010 3,454 2011 3,587 Funded status – plan (deficit) (803) (1,362) Unamortized net actuarial gain (loss) 1,229 (1,316) Long-Term Debt – Bond Issue The $150 million Series A Revenue Bonds yield interest of 5.503% per annum, Accrued benefit asset (liability) 426 (46) payable on January 19 and July 19 of each year until maturity. The interest due over the next five years is as follows (in thousands of dollars): The significant actuarial assumptions adopted in measuring the Authority’s 2007 $ 8,255 accrued pension benefits are as follows: 2008 8,255 2006 2005 2009 8,255 % % 2010 8,255 2011 8,255 Discount rate 5.25 5.25 Expected long-term rate of return on plan assets 6.75 6.75 Construction in Progress Rate of compensation increase 4.00 4.00 At December 31, 2006, the Authority had outstanding contractual construction commitments amounting to approximately $1.5 million (2005 - $11.0 million).

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 20 NOTES TO FINANCIAL STATEMENTS December 31, 2006

7. pension (continued) 8. financial instruments (continued) Other information related to the Authority’s defined benefit component is as Credit risk follows: The Authority is subject to credit risk through its accounts receivable. A significant 2006 2005 portion of the Authority’s revenues, and resulting receivable balances, are derived (in thousands of dollars) $ $ from airlines. The Authority performs ongoing credit valuations of receivable balances and maintains reserves for potential credit losses. Employer contribution 1,032 573 Employees’ contribution 203 205 9. contingencies Benefits paid 138 93 The Authority may, from time to time, be involved in legal proceedings, claims Pension expense for 2006 amounted to $165,000 (2005 - $136,000) for the and litigation that arise in the ordinary course of business which the Authority defined contribution component and $556,000 (2005 - $618,000) for the believes would not reasonably be expected to have a material adverse effect on defined benefit component. the financial condition of the Authority. Plan Assets 2006 2005 10. comparative figures % % The comparative financial information has been reclassified to conform to the presentation adopted for 2006. Equity securities 60 57 Fixed income securities 32 32 Real estate securities 8 8 Other – 3 100 100

8. financial instruments Fair value The Authority’s primary financial instruments consist of cash and cash equivalents, accounts receivable, long-term debt and accounts payable and accrued liabilities. The difference between the carrying values and the fair market values of the primary financial instruments, excluding long-term debt, are not material due to their short-term maturities. At December 31, 2006, the fair value of Transport Canada deferred rent was $547,285 (2005 - $641,000) relative to the carrying value of $724,167 (2005 - $724,000). The fair value of the Revenue Bonds was $139,698,000 (2005 - nil) relative to the carrying value of $150,000,000 (2005 - nil). The fair values of long-term debt were estimated based on the present value of contractual future payments of principal and interest, discounted at the current market rates of interest available to the Authority for similar debt instruments.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 21 Frank Matheson – Chair James S. Cowan, QC – Secretary to the Board Frank is President and CEO of Homburg Canada Jim is a member of the Senate of Canada and partner Inc., an international real estate company with of the law firm Stewart McKelvey. He is the Chair of holdings in residential, commercial, industrial, and the Board of Governors of Dalhousie University and retail properties. Frank is a past Chair of the Halifax past Chair of the Atlantic Provinces Transportation School Board and the Halifax Forum Commission. Commission. Upon his appointment to the Senate Frank became Chair of the Board on January 1, in March of 2005, Jim resigned from the Board but 2006. He currently is a Governor of Canada’s Sports continues as Secretary, a position that he has held Hall of Fame and sits on the Board of Governors for since 1995. Saint Mary’s University and the Advisory Board of the Sobey’s School of Business. Wadih M. Fares – Director Wadih currently serves as the President of W.M. Fred Smithers – Vice Chair Fares Group, a building design, project manage- Fred is the President and CEO of the Secunda Group ment and development firm, and has served as the of Companies, and the Honorary British Consul for Honourary Consul of Lebanon for the Maritime the Maritime Provinces. He is a Director of ProGear, Provinces for the past 10 years. He is the Capital a golf club manufacturing company, and President Campaign Chair for the Halifax Theatre Project, and Owner of Granite Springs Golf and Country Vice-Chair on the Board of Directors for Pier 21, and Club. He sits on the Board of Directors of Barrington member on the Board of Directors for the Halifax Wind Energy, the Saint John Ambulance Society, and Chamber of Commerce, The Urban Development the World Wildlife Fund of Canada, and is on the Institute of Nova Scotia, and the Multicultural Board of Governors for Saint Mary’s University. Association of Nova Scotia. Recently Wadih was elected as Councillor for the Association of Profes- Jamie Baillie – Director sional Engineers of Nova Scotia and is a recipient Jamie is President & CEO of Credit Union Atlantic. of Her Majesty the Queen Golden Jubilee Medal, Prior to joining the Credit Union, he held various and the 2005 APENS Citizenship Award. leadership roles in Nova Scotia business and gov- ernment, spending three years as Chief of Staff for Paul Gurr – Director Premier John Hamm, and was previously a Partner Paul is principal of Gurr & Associates, a Halifax- with Robertson Surrette. Jamie’s community efforts based management consulting firm specializing in also include the Boards of Neptune Theatre Foun- strategic development and core process redesign BOARD OF DIRECTORS dation and Dalhousie University. across a broad range of functions including commer- cial, performance management, human resources, Norbert Comeau – Director logistics, and public affairs. Paul participated on the Norbert had a lengthy career as a school adminis- Halifax Chamber of Commerce, and currently serves trator with the Provincial Acadian School Board. on the Advisory Board of the Frank H. Sobey Faculty He has served as a member of the Nova Scotia of Commerce at Saint Mary’s University, the Cana- Human Rights Commission and chaired the orga- dian Centre for Ethics in Public Affairs and the Trade nizing committee for FANE (Acadian Federation Centre Limited. of Nova Scotia). He has always been active as an entrepreneur and provided leadership to numerous organizations in the community of Clare.

22 Peter McDonough, QC – Director Roy Rideout – Director Peter is a senior partner at McInnes Cooper, Roy is past Chairman and CEO of Clarke Inc., and has been in practice for over 30 years in the a publicly traded company in the transportation areas of property development and real property industry. He is also a Director of Oceanex Income (commercial and residential). He has served on the Fund, Fortis Inc. and NAVCANADA. Prior to Board of Governors of Dalhousie University, Nova 1988, Roy held senior executive positions with Scotia College of Art and Design, Special Olympics both Eastern Provincial Airways and Canadian and the YMCA. He was the co-Chair of the Halifax Airlines International for 15 years. Roy is a Industrial Commission, President of the Dalhousie chartered accountant. Alumni Association, and is the founding President of the Dalhousie Black and Gold Club. Robert J. Scott – Director Bob is Executive Vice President of Glenora Bernard F. Miller – Director Distillers International Ltd. and is a former Bernie served as the Chair of the Airport Authority Director of the Small Business Development Board for 10 years. He was the Authority’s chief Corporation for the province of Nova Scotia. negotiator during the transfer negotiations with Transport Canada which brought the airport under Ken Streatch – Director local control and also served as the airport’s CEO Ken has over thirty years of senior management for much of the first year after transfer. He assumed experience in both business and government. He the CEO role again in 2005 from February until is the President and CEO of Sunberry Cranberry August. He retired as Chair at the end of 2005 and Producers Inc., and Chairman of the Board of continued to serve on the Board as Past Chair in Atlantic Canada Cranberries Inc. Ken has held 2006. Bernie previously enjoyed a 35-year career a number of portfolios with the government of with Air Canada, where he held a number of senior Nova Scotia, including Minister of Transportation executive positions. He retired from the airline in and Communications and Minister of Economic 1991 as Vice President, In-Flight Service for Air Development. Canada’s worldwide operations. J. Robert Winters, QC – Director Cheryl Newcombe – Director Robert is counsel to Burchell MacDougall, Cheryl joined the HIAA Board in July 2005. Barristers & Solicitors of Truro, Nova Scotia, She is the Comptroller of Lighthouse Lumber and Chairman of Napwick Holdings Limited, BOARD OF DIRECTORS Wholesalers Limited in Dartmouth, a position a private holding company. He is past Chairman she has held since 2002. Cheryl is also on the of the Board of Regents of Mount Allison Board of Beacon House and is the immediate University, a member of the advisory board of past Chair of the Halifax Regional Water the Bragg Group of Companies, and a Director Commission. of High Liner Foods Inc.

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 23 Corporate Governance

Halifax International Airport Authority (HIAA) is a dynamic and multi-faceted aviation enterprise that provides air access to the world, facilitates personal and business connections, and promotes regional economic growth.

HIAA is governed by a board consisting of a jurisdiction: the Governance Committee, chaired by Board of Directors Total Compensation (continued) maximum of 14 directors nominated by the Robert Winters; the Audit Committee, chaired by Directors: following entities: Roy Rideout; and the Capital Projects Committee, C. Newcombe $15,200 chaired by Peter McDonough. HIAA has adopted R. Rideout $20,600 Federal Government 2 conflict of interest guidelines to govern the conduct R. J. Scott $16,400 Provincial Government 1 of, and the disclosure and avoidance of conflicts of K. Streatch $14,000 Halifax Regional Municipality 4 interest for, all officers and directors. These disclo- S. L. Wallace $ 6,917 Halifax Chamber of Commerce 3 sures are updated as required. J. R. Winters $22,950 HIAA Board of Directors 4 During 2006, the Governance Committee of the Board reported that there were no breaches of Generally, a director may serve no more than a total Executive Compensation the conflict of interest guidelines by any officer or of nine years from the date of transfer, February 1, The salary range for the President & CEO and for director of HIAA. 2000. Collectively, directors are expected to possess each of the Vice Presidents of HIAA during 2006 Compensation of the senior officers and directors knowledge relating to the aviation industry, air was $98,800 to $250,000. of HIAA is reviewed annually. Amounts paid to transportation, business, finance, administration, In addition to base salaries, annual bonus payments HIAA’s officers and directors during 2006 follow. law, government, engineering, labour organizations, totalling $75,500 were paid during the year. Bonus and the interests of consumers. payments are contingent on individual and corporate Board of Directors Total Compensation The Board oversees the conduct and operation achievements. Chair: F. Matheson $52,175 of HIAA; reviews and approves corporate strategies, Vice Chair: F. Smithers $15,775 plans and financial objectives; appoints the Chief Contracts in excess of $94,887 Executive Officer; assesses the performance of the Secretary: J. S. Cowan $30,400 HIAA, in accordance with its ground lease with Board and the Chief Executive Officer; ensures Directors: Transport Canada, is required to report all contracts effective communication with the nominators and J. Baillie $ 1,834 in excess of $94,887 ($75,000 in 1994 dollars adjusted the community; and ensures the effectiveness of N. Comeau $15,600 for Consumer Price Index) that were entered into HIAA’s internal controls and systems in preserv- during the year and that were not awarded on the C. Cushing $ 3,622 ing and enhancing HIAA’s assets and pursuing its basis of a competitive tendering process. During 2006, W. Fares $ 6,800 mission. The Board meets as often as is required to no contracts in excess of $94,887 were awarded P. Gurr $15,200 carry out its responsibilities and maintains three without a competitive tendering process. standing committees that make recommendations P. McDonough $20,950 to the Board with respect to matters within their B. Miller $27,050

HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2006 ANNUAL REPORT 24 Five-Year Forecast A C T U A L F I V E - Y E A R F O R E C A S T

YEAR 2004 2005 2006 2007 2008 2009 2010 2011

Passenger Volume 3,242,389 3,229,111 3,378,601 3,527,591 3,673,668 3,811,453 3,920,326 4,027,889

Per cent Change 9.1 % -0.4 % 4.6 % 4.6 % 4.1 % 3.8 % 2.9 % 2.7 %

Total Aircraft Movements 89,845 86,393 86,110 90,157 94,485 98,453 100,816 103,135

Per cent Change 1.8 % -3.8 % -0.3 % 4.7 % 4.8 % 4.2 % 2.4 % 2.3 %

Planned Capital Expenditures ($ 000’s) $15,268 $57,881 $58,807 $53,058 $40,052 $18,483 $19,513 $8,243

Rent Payable to Transport Canada ($ 000’s) $4,240 $4,361 $4,271 $4,093 $3,825 $3,290 $3,454 $3,587

Scheduled and Charter Passenger Services Scheduled and Charter Passenger Air Carriers

1 6 D O M E S T I C 1 7 I N T E R N AT I O N A L 9 T R A N S B O R D E R 1 9 P A S S E N G E R 9 C A R G O DESTINATIONS DESTINATIONS (USA) DESTINATIONS AIR CARRIERS CARRIERS

Calgary, AB Bermuda – Hamilton Boston, Massachusetts Air Canada Air Canada Charlottetown, PE Netherlands Antilles – Detroit, Michigan Air Canada Jazz Airborne Express Deer Lake, NL St. Maarten Newark, New Jersey Air Georgian CargoJet Edmonton, AB New York (JFK), New York Air St. Pierre Icelandair Cuba – Camaguey, Cayo Fredericton, NB New York (LGA), New York Air Transat Kelowna Flightcraft (Purolator) Coco, Holguin, Varadero Goose Bay, NL Orlando, Florida American Airlines Korean Air Lines Dominican Republic – Hamilton, ON St. Petersburg, Florida CanJet Airlines Morningstar Express (FedEx) La Romana, Puerto Plata, London, ON Sarasota, Florida Condor Flugdienst Provincial Airlines Punta Cana Moncton, NB Washington (IAD), DC Continental Airlines Prince Edward Air Montreal, QC Jamaica – Montego Bay Delta Air Lines Ottawa, ON Germany – Frankfurt, Munich My Travel (Air Tours) Saint John, NB Mexico – Cancun Northwest Airlines St. John’s, NL Provincial Airlines St. Pierre et Miquelon Stephenville, NL SkyService Airlines Sydney, NS United Kingdom – Sunwing Airlines Glasgow, London (Gatwick), Toronto, ON Thomas Cook (UK) London (Heathrow) United Airlines WestJet Airlines Zoom Airlines Strata Communications Strata 1 Bell Boulevard Enfield, Nova Scotia B2T 1K2

Tel: 902.873.4422 Fax: 902.873.4750 www.halifaxairport.com