2014 IN REVIEW
Welcome to Ottawa International Airport Authority's review of 2014.
Last year, we set the stage for a new approach to our business, in the form of a five-year Strategic Plan that we crafted with guidance and direction from the Authority's Board of Directors. After a thorough review of our business, the industry, and the challenges and opportunities we identified in pursuit of fulfilling our redefined Vision and Mission statements, we developed the plan based on the following five key strategic directions:
- To grow strategically;
- To increase the economic footprint of the airport within Canada's Capital Region;
- To optimize operational performance, ensuring safe and secure operations;
- To pursue excellence; and
- To provide additional flight frequencies and destinations.
We know that for the plan to be executed successfully, we need to adapt to changes in the industry, in the local economy and in best practices, and the plan must evolve to accurately reflect the organization's priorities. We made a commitment to report on our progress each year, and this Annual Report will take you through the Authority's achievements and activities in 2014, in furthering the five strategic directions.
1. TO GROW STRATEGICALLY
As the industry contracts and expands, it's critical that we find new and innovative ways to generate revenues that are not directly associated with the number of available airline seats or passengers who fill them. From parking to concessions to advertising, nonaeronautical revenues can make a significant difference where airport development and investment are concerned. Developing property to maximize long term non-aeronautical revenue, enhancing the airport's core business, and leading economic development in the community are important components of this strategic direction.
The following projects represent some advancements made in the area of non-aeronautical revenue generation:
There was a lot of movement and change in the area of ground transportation in 2014. To start, new services for parking were introduced, including the opening of a much anticipated cell phone waiting lot, enhanced signage, and the successful launch of a new online parking reservation system. This new system better enables the Authority to compete for market share and revenue from passengers who choose to drive to the airport.
A number of parking partnerships were inaugurated during the year, with the objective of increasing parking usage and revenue. Some of the partners that we engaged in 2014 include the Hilton Garden Inn Ottawa Airport, the Ottawa Senators, Visa Canada and First Air.
The Authority entered into a new taxi service agreement with Coventry Connections, the parent company of BlueLine, DJ's Taxi, and Capital Taxi. The agreement with Coventry continues to utilize the dedicated services of the existing airport drivers and fleet, and includes a series of milestones which could lead to a longer term agreement beginning in the summer of 2015.
In early 2014, the Authority and master food/beverage concession partner HMS Host introduced two new quick-service brands in the post-security area: The Local and PZA, along with entirely new menus at two of its full-service restaurants: Rideau Bar and Grill and Byward Taps.
The Authority's master retail provider, LS travel retail, introduced the Hudson's Bay Company Trading Post in November 2014, and the Authority and LS continue to work toward introducing other new concepts in 2015.
The Authority concluded a request for proposals process for a number of retail and food/beverage locations in the terminal. This process resulted in leases for several exciting new concepts, all of which will open in the first half of 2015. Good Earth Café, a brand that is well known in Western Canada, will open its first Ontario location pre-security in March 2015. Canadian jewelry boutique Metalsmiths Sterling will open post-security in the domestic/international holdroom in February 2015. Tulip Bar and Wine Lounge, which will be operated by Delaware North Companies, will begin filling wine glasses across from Gate 16 in the second quarter of 2015.
A request for proposals was launched in early November 2014 for the in-terminal advertising concession, which is expected to conclude in February 2015 with the chosen operator in place by May 2015.
A request for proposals was issued for on-airport vehicle rental operators in late summer. All existing on-airport car rental operators were successful in re-obtaining vehicle rental concessions, including Avis-Budget, National-Alamo, Enterprise and Hertz. No new brands or operators were introduced through the competitive process.
2. TO INCREASE THE ECONOMIC FOOTPRINT OF THE AIRPORT WITHIN CANADA'S CAPITAL REGION
The Ottawa International Airport is more than simply three runways and a terminal building. It is a major employer that pays taxes to several levels of government, facilitates tourism and contributes more than $2.2 billion to the local economy each year. Included in the figure are direct, indirect and induced values of employment, gross domestic product, income and spending. The importance of increasing the impact that the airport has on Ottawa and Gatineau was the genesis of this strategic direction. We believe that Ottawa's airport should play a role in stimulating economic development in the region.
The economic prosperity here has a direct relationship with the demand for air travel, given the correlations between population growth, disposable income, and passenger growth. This underscores the need for the Authority to seek opportunities to grow the economic footprint of the airport. To this end, there were several developments during 2014 to report.
Two new land leases were signed that will set the stage for employment growth on airport land.
First, our long-time hotel partners Bona Building and Management Co. Ltd. have signed a franchise agreement with the Marriott hotel chain, and will be constructing a new Fairfield Inn & Suites Ottawa Airport hotel. Ground is expected to be broken in 2015.
And, Otto's BMW has signed a lease for more land adjacent to their operation on Hunt Club Road. The extra space will be used to support their planned dealership expansion.
STUDIES FOR FUTURE DEVELOPMENT
Servicing studies were undertaken as part of the planning process required to begin developing a new airport business park on lands west of the airfield. The project that we are calling the "Limebank North Business Park" will be a mixed-use park, with some airport-related businesses and commercial/industrial employment uses. Dates for actual development have not yet been set.
O-TRAIN TRILLIUM LINE EXTENSION
The Authority is working with the City of Ottawa on the environmental assessment project associated with the extension of the O-Train Trillium Line, to the south. The Authority funded half the portion of the environmental assessment that pertains to an essential airport link, and which could include two stations on airport land. Linking the O-Train to the airport is important for a number of reasons: it will ensure efficient and reliable access to the airport and anywhere along the Confederation Line including downtown for residents, tourists, business visitors and employees; it will become a selling point for conferences and exhibitions in our city; and it will facilitate transit-oriented commercial development in and around airport land. In 2015, the Authority will be building a business case and funding model to support the implementation of this airport-rail link.
AIRPORT PARKWAY WIDENING
The Authority is participating in the City of Ottawa's environmental assessment project that deals with widening the Airport Parkway. As the primary gateway between the airport and the city centre, ensuring long term efficient access, improved capacity, and reduced travel time are critical as commuter traffic from neighbourhoods located south of the airport grows. The Authority is in support of the City's planning for both the Airport Parkway widening and the construction of an airport-rail link to provide the best access and connectivity to the capital region.
The Authority continues to work closely with the City of Ottawa to ensure that airport lands have the appropriate designations to facilitate ongoing commercial development which will ensure that the airport's long term economic contribution in the community can continue to grow. The Authority is participating as members of the working group on the 2014 Employment Land Review scheduled to be completed in 2015. The project was initiated by the City of Ottawa but partially sponsored by the local development community.
3. TO OPTIMIZE OPERATIONAL PERFORMANCE, ENSURING SAFE AND SECURE OPERATIONS
The safety and security of our passengers, employees and facilities are key priorities for the Authority, and enable the other parts of the business to be successful. Regular training, tabletop exercises, live exercises, and safety case reviews ensure full compliance of all policies and procedures where our operation is concerned. The Authority has taken a leadership position in safety and security through our infrastructure improvements and operational reviews, and is committed to continuing to do so.
Without compromising safety and security, the Authority also strives to be operationally efficient. It does so by maximizing resource potential, and maintaining a competitive cost of operation so that it can maintain a competitive fee structure relative to comparable airports. Wherever possible, we leverage technology to improve service levels and enhance the customer experience. The goal is to ensure that our clients receive worldclass services that are cost-effective and befitting the capital of Canada.
Finally, strong financial management is key to ensuring that we have the resources necessary to achieve the overall objective. Care and prudence are required to manage our financial resources and keep our costs to carriers and passengers as low as possible. To that end, the following are some of the projects that we undertook in our pursuit of optimal performance in the three areas:
SAFETY AND SECURITY
Phase III of the Authority's runway rehabilitation project was completed on schedule and within the funding envelope of $30 million. The project, which focused on Runway 14/32, the airport's 10,000 foot runway, began in May and included the following:
- Removal of the surface layer of asphalt from the runway;
- Replacement of runway lighting and electrical wires;
- Removal and installation of a new storm water system;
- Reprofiling of the runway from a crossfall configuration to centre crown;
- Regrading and repaving; and
- Construction of a Runway End Safety Area (RESA) at both ends.
As was the case when Runway 07/25 was reconstructed in 2012, the RESAs were built to International Civil Aviation Organization (ICAO) and Federal Aviation Authority (FAA) standards, bringing this runway to the highest safety standards and recommendations in the industry, as well.
Active Shooter Training Exercise - A First in Canada
On November 28, nearly 300 first responders, Airport Authority employees, volunteers, and observers from across Canada gathered at the Ottawa International Airport to exercise the Airport's Active Shooter Response Plan, known as "Code Silver." Transport Canada mandates that major airports in this country must conduct operations-based security exercises every two years to test and validate their emergency plans.
We are proud to say that Ottawa Airport is the first in Canada to hold this type of exercise in an operational passenger terminal building. Participants and observers alike were impressed with how realistic the exercise was and how well the various stakeholders worked together to resolve the mock situation.
Non-Passenger Screening - Vehicle Screening
Transport Canada accelerated the deployment of a non-passenger screening program for vehicles, which covers all vehicles and occupants that access the critical restricted areas of the airfield of Class 1 airports, with a first implementation deadline of end of November 2014. One airside access point with a temporary facility was created at the Ottawa Airport with a second point to be opened by the end of January 2015. While the ICAO standard has been talked about for a few years, the sudden implementation was imposed on airports with only a few months' notice. The majority of the costs associated with the implementation are to be borne by the airports.
New State-of-the-Art Baggage Handling System
After the groundwork on this $58 million project was completed in 2013, the component installation of the new Baggage Handling System started in early 2014. The system that serves U.S.-bound (transborder) baggage is now fully installed and being prepared for implementation. The domestic/international system installation is progressing well.
The majority of the activity is "back of house" and is not visible to the public. But, it is a very large project that is required to replace aging equipment, that will double system capacity, and will incorporate new screening systems provided by the Canadian Air Transport Security Authority (CATSA). This is the first major system change since the new terminal was opened in 2003.
Visitors to the terminal will have noticed that a new domestic carrousel is now in place on level 1 arrivals, with the associated back-of-house work continuing on the feed conveyor system. Project completion is slated for early 2016.
New Passenger Boarding Bridges
Two of eight new passenger boarding bridges have been installed at two of the most-used gates in the domestic/international holdroom. Bridges at gates 15 and 16 were installed, tested and are now fully operational. These changes will improve reliability, increase ease of use by airline and ground handling staff, and will lower annual maintenance costs.
New Airport Operations Coordination Centre
After significant internal review, a reorganization was undertaken to amalgamate the airport's Security Operations Centre (SOC) and Airport Operations Response Centre (AORC) into a new and streamlined Airport Operations Coordination Centre (AOCC). The project resulted in revised job profiles, the creation of new positions with the intent of improving operational response and facilitating future growth, and will physically bring the teams together in a newly constructed operations centre that is slated to open in the first quarter of 2015.
Optimal performance requires strong finances. Revenue drivers continued at the same reduced pace that the Authority experienced in the latter part of 2012 and through 2013. Travellers to and from Ottawa continued to be affected by government restraints and tightened their own belts as well. 2014 passenger volumes came in at just over 4.6 million passengers, an increase of only 0.8% from 2013, and still below 2012 levels by 1.5%.
Revenues in 2014 were 8% higher at $112.3 million compared to $104.1 million in 2013, mainly because the Airport Authority increased the Airport Improvement Fee it charges passengers in order to pay for infrastructure improvements. These improvements included the reconstruction of Runway 14/32 and government-mandated changes to the airport baggage system. As a result of increased AIF revenues and increased fees charged to airlines, the Authority finished 2014 by generating earnings before depreciation of $29.2 million compared to $24.3 million for the year ended December 31, 2013. As always, these earnings will be reinvested in airport operations and development.
4. TO PURSUE EXCELLENCE
Ensuring a positive customer experience has been a preoccupation of the Authority since it was created. The commitment involves everyone from the Board of Directors to each and every member of the Authority team. It also encompasses the entire airport campus, which requires the Authority to play the role of facilitator to communicate the feedback we receive through surveys, from social media and comments/letters. Together we can ensure that the curb to cabin experience is a great one.
CANADA NOT-FOR-PROFIT CORPORATIONS ACT/BY-LAWS
After a year-long process, the Authority successfully migrated to the new Act and is now operating under its new revised by-laws. The revised bylaws were approved by the Minister of Transport in early December and as the last step in migrating to the new Act, the by-laws were filed with Corporations Canada. The new by-laws were carefully reviewed by the Board and its Governance Committee and were amended to reflect best practices in corporate governance.
SERVICE LEVEL STANDARDS
The Authority has been keeping a close eye on several touch points that are important to our clients, and that generate much feedback. Security wait times and baggage delivery times can make or break a passenger's opinion of their airport experience. We have been working with CATSA with respect to security wait times. By monitoring throughput times and collaborating with CATSA, we can review any service level failures to track trends and determine root causes in an effort to prevent future occurrences.
With respect to baggage delivery, we work with our airline partners to share feedback from passengers who let us know when their wait for baggage exceeds 20 minutes. We do what we can to ensure that there are no Authority-related impediments to airline/ground handler operations that might contribute to any delays.
AIRPORT SERVICE QUALITY AWARDS
We are delighted to have been recognized for our excellent customer service again in 2014. When the passenger surveys were tabulated, we achieved 3rd place in the world for airports that serve between two and five million passengers per year, and 5th place for all airports in North America. The competition is increasingly fierce each year, as more and newer airports join the program, so we're very grateful to the entire airport team that helped us earn these accolades, and to our passengers who take the time to participate.
The Authority launched its new passenger facilitation mobile app called FlyCANADA on October 31st, 2014. Branded as "your airport concierge", FlyCANADA is the go-to app for airport information and tools that will make travel simple and enjoyable with flight information, online parking reservations, information concerning security wait times and push notifications. To date, over 2000 users have downloaded the app, and work continues on making it better and incorporating more features and benefits.
As more customers rely on online information when planning a trip and travelling, having a strong web presence is increasingly important. To ensure that we are presenting our information as comprehensively and clearly as possible, a complete redesign of the Authority's website was completed in 2014. The new website focuses on accessibility, easy mobile access, and current best practices in web design. The change was also driven by changing technology and customer feedback. We tracked the information that was most sought by our clients to ensure that those areas were improved.
ANOTHER SUCCESSFUL PLANE PULL EVENT
The Authority hosted a great, albeit wet, Plane Pull Challenge on September 13th. All 24 teams and many spectators showed up, despite the weather, and together with First Air, our aircraft sponsor, and the Sens Foundation, we raised $50,000 for Project Clear Skies and the Sens Foundation. This brings the total funds raised to date to $500,000.
THE PLANE PULL WINS!
The Plane Pull Challenge was recognized in April of 2014 by Ottawa Tourism, with its inaugural Community Spirit Award. This award recognizes an organization in the tourism industry that organized or participated in a fundraising activity for a charitable organization in Ottawa. The Plane Pull is a success due to the involvement and commitment of the Authority's employees, and this award is shared with them.
AWARD - TOP EMPLOYER
In conjunction with the strategic direction, excellence in employee engagement, the Authority participated in the Canada's Top 100 Employers project, a national competition, hosted by MediaCorp Canada Inc., to determine which employers lead their industries in offering exceptional workplaces for their employees. Employers are evaluated using eight criteria, including physical workplace, work atmosphere and social, health, financial and family benefits, vacation and time off, employee communications, performance management, training and skills development, and community involvement. Employers are compared to other organizations in their field to determine which offers the most progressive and forward-thinking programs.
Employers that apply to the national project are also considered for regional and special interest competitions. The National Capital Region's Top Employers designation recognizes the Ottawa-area employers that lead their industries in offering exceptional places to work.
The Airport Authority was pleased to be selected as one of the National Capital Region's Top Employers in 2014.
JUNIOR PLANE SPOTTER PROGRAM
The winter charter season brings a lot of families into the terminal. It also brings flight delays and creates a busier than normal terminal, which can be challenging for kids who want to get to their vacation destination. To help keep kids busy, the Authority introduced a Junior Plane Spotter Program which provides kids with a membership card, binoculars and a spotting card that they can check off as they find the noted items in and around the terminal. In 2014, more than 2,500 kits were given out between the Family Day holiday and Easter, bringing total distribution since the program was launched in 2013 to more than 5,000 kits.
JUNIOR PLANE SPOTTER PROGRAM - AWARD WINNER
When ACI-NA handed out its annual marketing awards at the Marketing and Communications Conference, the Junior Plane Spotter Program was recognized with a win in the "Creative Innovations - Promotional Items" category!
5. TO PROVIDE ADDITIONAL FLIGHT FREQUENCIES AND DESTINATIONS
The airline industry is very sophisticated when it comes to determining the profitability of routes. The effort to attract new destinations, increased frequencies, and other changes in flight schedules is ongoing. The Authority works closely with airline partners to demonstrate the benefits of serving our market while providing the data they need to make decisions regarding the deployment of their costly assets. We also work closely with Ottawa companies and business groups to understand their needs for air service, and to ensure we can work together to attract valuable routes that the community supports. We must be able to offer evidence to airlines that a market exists and we must be active in the community in order to stimulate the market. We do this by working with our community partners to encourage tourism, business growth and international events in our region.
More flights to more places directly impacts the local economy. But the right flights to the right places are also prerequisites to attract investment to the community, to generate employment, and to attract tourism and related visitor spending.
Here's what happened on the flight schedule front in 2014:
While we were disappointed to learn that Air Canada would be reducing Frankfurt service to seasonal (summer), we were very pleased to learn that the airline planned increases in its service to sunny Florida, including seasonal service to Tampa and increasing its service to Fort Lauderdale to year-round.
Ottawa's offering to the north increased with the addition of new carrier, Air North, which launched non-stop service to Yellowknife and direct service to Whitehorse, in February of 2014.
Celebrity Cruises amped up their marketing effort by introducing dedicated non-stop flights for their passengers. They launched service to Fort Lauderdale, where passengers can easily board their ships. They will be providing the same non-stop service to Miami in 2015.
The strength of the market to the sunny south was confirmed with several announcements by Sunwing for increased service to southern hot spots Fort Lauderdale, St. Pete-Clearwater, and St. Martin.
Other announcements included WestJet summer service to St. John's and Delta non-stop holiday service to Atlanta.
The news wasn't all good, however, with a few losses including Air Transat and Sunwing service to Orlando, American Airlines service to Chicago, and Bearskin service to Kitchener-Waterloo and North Bay.
The Business Development and Marketing team will continue to advocate on behalf of the Ottawa market to ensure that our clients continue to benefit from increased choice in airlines and destinations.