Altitude East 2017 – Atlantic Canada’s airports and airlines gather to discuss region’s aviation challenges and opportunities
Halifax was the venue for Altitude East 2017, which represents the largest and most significant forum of the year for Atlantic Canada’s airport, airline and tourism professionals. Taking place between 12-14 September, and hosted by Halifax International Airport Authority, 138 delegates attended the two-day event which was held at the Halifax Marriott Harbourfront Hotel. Altitude East offered not only an incredible educational opportunity, with content highly focused on helping participants succeed in an extremely competitive and ever-changing environment, but it was also an amazing venue for networking and collaboration among airline industry stakeholders.
It is indeed an exciting time for Atlantic Canada, with the Atlantic Provinces Economic Council (APEC) identifying a record C$132 billion (£97.4 billion) worth of major investment projects in various stages of development across the region. In relation to Halifax, for 2018 an estimated C$1.9 million is to be spent on projects in the city. Scott Brison, MP for Kings-Hants (Nova Scotia) also reiterated the booming economy during his address at Altitude East. “Canada has seen its best economic growth in 15 years, and in the past two years 400,000 new jobs have been created,” informed Brison. This impressive statistic is no doubt part of the reason why Atlantic Canada airports now transport eight million passengers per annum.
Welcome to Altitude East
Altitude East 2017 was kick-started by Joyce Carter, President & CEO of Halifax Airport, who has held the top job since March 2014. “This event provides an opportunity to show how all of you can help to provide a role in helping grow aviation in this region,” Carter informed delegates. “We are a vibrant region that is prospering. One project which is showing this is the new convention centre which is already sold out through 2018, indicating we are a destination to do business.” Along with Carter, also welcoming delegates to Halifax was the airport’s CCO Bert Van der Stege who joined the airport in 2016 from being VP Commercial at First Air, Canada’s largest independent regional airline, where he turned around the heavily loss making operations into a profitable and sustainable niche carrier. As part of his speech, Van der Stege asked the audience the question that he gets asked a lot following his change from working at an airline for most of his career to now being with an airport: What is it like to be on the other side?” He encouraged participants to keep that in mind when having bilateral airport/airline air service development meetings during the conference.
Cost competitiveness is Canada’s key challenge
One of the first keynote addresses at this year’s event was given by Nicola Coleville, Area Manager, Canada and Bermuda, IATA, who discussed the state of the industry in the nation. In Canada, 2.7% of GDP is supported by air transport and foreign tourists arriving by air, C$49 billion gross value added contribution to nation’s GDP in 2014, plus the sector supports 570,000 jobs of which 230,000 are from direct employment.
Lower fares stimulate demand
Charles Duncan, President of WestJet Encore was the next to speak at the conference, with his keynote address focusing on how WestJet Encore is able to stimulate demand with lower fares. “Total traffic at new Encore airports increased between 50% and 90% after entering the market and lowering fares,” commented Duncan. The carrier has been extremely proactive in Atlantic Canada in recent years, a market which it began serving in 2000. Most of its growth however has come since 2012, a year when it averaged 28 flights a day from the region. In 2016, WestJet Encore has an average of 69 daily flights from Atlantic Canada, representing an increase in daily flights over the four-year period of 145%, with it expected to offer 2.7 million seats this year. So significant is the success of WestJet in Atlantic Canada, in 2016 the airline contributed an estimated C$500 million in economic value to the region, with 55% of this value being in Halifax.
Average domestic fares from Halifax dropping
When referring to Statistics Canada, during Q4 2016 the average domestic airfare from Halifax dropped 7.7% to C$151.90 when compared to Q4 2015. This is great news for passengers, and indeed for Halifax as its average fare dropped at a greater rate than those from Toronto (which dropped 5.6% to C$189.50) and Vancouver (down 5.9% to C$183.50). One airline which has helped reduce fares from Halifax is WestJet.
10 years of Porter Airlines
Another airline keynote address was given by Robert Deluce, President and CEO of Porter Airlines. Deluce is responsible for overseeing the airline’s strategy, finances, commercial objectives and operations performance, a role that he has had for 10 years. “It is so great to be here in Atlantic Canada, especially as we launched flights to Fredericton yesterday (12 September) from Ottawa and Toronto,” commented Deluce. During his presentation, Deluce mentioned that the carrier now operates 29 Q400s and has recently carried its 20 millionth passenger since beginning operations 10 years ago. A promising piece of information for Halifax from Deluce’s presentation was that the carrier is still mulling CS100s, with it not ruling out operations with the aircraft on routes out of Nova Scotia’s busiest airport.
Keeping it regional
After the airline keynote addresses, the first panel discussion of the conference took place, with the premier discussion titled: ‘Keeping it Regional: A Discussion on the Market Characteristics and Direction of Regional Flying in Canada’. The conversation mainly focused on how well Atlantic Canada is served, and how advancing aircraft technology will help develop route prospects in the region. “Air Canada is expecting its first C Series aircraft by 2020,” informed Ronald Kaercher, Director, Regional Airlines & Markets, Air Canada to delegates. He also said that Air Canada will welcome its first 737 MAXs by end-2017, and he reiterated that fact that these aircraft will also serve the transatlantic market. This was confirmed on the day by Air Canada announcing new routes from Montreal to Dublin and from Toronto Pearson to Shannon. “We still have the lion’s share of capacity in this region, and with new aircraft technology we will be able to expand our route offering from this region.”
Pilot shortage threat to regional Canada
While speaking to delegates, Andrew Pierce, VP Network Planning and Reporting, Porter Airlines, mentioned how the airline could not do business without the Q400, with the aircraft allowing the airline to operate in a sustainable environment in the region. However one big threat facing Porter, regional Air Canada operations, and indeed throughout Canada, is the lack of pilots. “Pilot shortage is a big problem, and indeed on a regional aircraft operation,” commented Pierce. “The Q400 has allowed us as an airline to enter regional markets here in Atlantic Canada, however with a lack of new pilots coming through to operate regional aircraft it will affect our services and limit rates of expansion.”
Nova Scotia Kitchen Party
On the Wednesday evening of the conference, after a full day of talks and hot topics being discussed, delegates headed down to Pier 21 for an old-fashioned Nova Scotia Kitchen Party which included a lobster dinner. Among the VIPs to the event was the Mayor of Halifax Michael Savage, with whom anna.aero managed to catch a couple of moments to talk about the importance of aviation links to the city. “Every city wants to be an international city. Halifax has an active port, but being connected by air service is important, not only in North America, but also the connections we have to Europe. I think that with the CETA (Comprehensive Economic and Trade Agreement EU-Canada treaty) trade agreement that we have with Europe, and particularly more important going over to the UK, it allows us to open new business and trade links, leisure travel and makes regional commuting realistic.” Savage also commented to anna.aero about how proud he is of the team at Halifax Airport in doing a great job in going out and gaining new routes.
The Chinese market has given a big boost to the region in recent years, and Savage reiterated this notion to anna.aero. “It is not just the tourism market from China that is important, but it is also about foreign students coming to study at one of our six universities, and that FDI (Foreign Direct Investment) is growing. We now have companies in Shanghai and they are investing here,” commented Savage. One market which is important between Halifax and China is lobster exports, a market which is worth C$1 billion to the economy. “If we could leverage some of the cargo to get some more passenger traffic that would be better,” informs Savage. The mayor also highlighted that by having a direct air service, it would help to open up the regional airports in Atlantic Canada to international visitors. According to Savage, economic studies suggest that Halifax Airport is worth £2.7 billion Canadian Dollars for the regional economy, which for a city with a population of 426,000 people is significant. “With the airport’s passion to develop air services, this figure is surely to rise.” Speaking to Andy Lyall, Manager, Air Service Development Cargo, Halifax Airport, anna.aero learnt that lobster exports to China from the region have grown 450% in four years, which has now resulted in several weekly 777 freighter services helping ship produce to Asia. Currently 60% of cargo from Halifax is shifted via belly hold of passenger aircraft and 40% by dedicated freighter. Last year cargo volume was up 6% on 2015, with the airport currently tracking an 8% growth for 2017.
The need to work together
The second day of the conference was kicked off with remarks from Monette Pasher, Executive Director, Atlantic Canada Airports Association. One of the key topics mentioned by Pasher was the welcome news of Bill C-49 – the Transportation Modernisation Act. (More information about the act can be found at this link.) Another topic brought up was Transportation 2030, and that on 16 May new legislation was proposed by the Government of Canada to improve the transportation system in the country. The action of Transportation 2030 comes under five themes: the traveller; safer transportation; green and innovative transport; waterways, coasts and the North; and trade corridors to global markets. One of the outputs from the action stated by the Canadian Government is to build capacity and reduce supply chain congestion as part of its C$81 billion investment in infrastructure over the next 11 years. Along with Pasher, Scott Brison also informed in his address that: “Change is needed in transport infrastructure, and this will be supported and invested in. Aviation is becoming more and more important and the government supports the vision for Transportation 2030 to help grow the sector.” Pasher commented that another factor that can help with bringing these actions to reality was by working together, which helped introduce the next panel discussion.
The first panel discussion of day two covered the topic ‘We’re in this together: Decoding the link between tourism and aviation’. The panel was moderated by Evan Berg, VP Campbell-Hill Aviation. He has vast experience in airline network planning, having headed Southwest Airlines’ international expansion to destinations including Belize, Los Cabos, Mexico City and San Jose in Costa Rica. One factor which became evident in the discussion was just how important tourism was to Halifax and Nova Scotia. “5.3 million overnight stays were made in Halifax last year,” commented Ross Jefferson, President & CEO, Discover Halifax. “This resulted in C$1 billion expenditure in the region. What is surprising though is that of this demand, 75% travelled to the region by car,” informed Jefferson. Adding to Jefferson’s comments, Michele Saran, CEO, Tourism Nova Scotia, said: “The goal is to achieve C$4 billion in tourism revenue by 2024. Last year it was C$2.6 billion. In order to achieve this aim, we need to grow overseas visitors from 80,000 per annum to 200,000. Overseas visitors stay longer, spending more, and that is why we need to increase this figure,” insists Saran. Bringing up the point of needing to work together, Johanne Gallant, President & CEO, Fredericton Airport, noted: “Not one party can do this alone. Tourism is a key driver of the economy in this region and it takes multiple parties to leverage the demand in order to increase our reach as a destination.”
Time for disturbance
The last panel discussion of Attitude East looked at the topic ‘Doing things differently: Is Canada ready for disturbance?’ One issue with Canada is that it has very high airfares, with it being one of only a few major countries to not have an established ULCC. One of the panelists was Dean Dacko, Business Strategist Consultant, Jetlines, a new start-up ULCC planning to launch in June 2018. Dacko is no stranger to the airline industry, having been CCO of recently launched NewLeaf, and before that being SVP Head of Market and Product of Malaysia Airlines. “It is a marvellous opportunity to meet with unique airports here in Atlantic Canada,” commented Dacko. “Canada has been ready to be disturbed for over 20 years, not just today. At the moment 35% of Canadians are priced out of the market because costs are too much. That’s is a market size of between 9-10 million people,” Dacko informs. “4.2 million Canadians will drive 100 miles to save C$100, so it’s time that airfares were lowered.” The panelists also talked about how price is a factor in stopping people from actually buying, and why data sometimes does not give the true picture of a market, particularly when pricing limits true market potential.