2011-2015Strategic

Plan

Toronto Pearson

How we’re realizing our vision for Toronto Pearson International Airport

Toronto Pearson is more than Canada’s leading airport – it’s your gateway to a world of possibilities. Like the millions of people who pass through our terminals each year, we have a vision of where we’re heading. And, like all well-prepared travellers, we have a step-by-step strategy for how we’re going to get there.

We spent 18 months detailing, testing and refi ning those steps in a comprehensive new strategic plan. Now we’re pleased to share some of its highlights. We want to show you what we’re doing to make your Toronto Pearson experience more rewarding – and to bring the entire globe within your reach.

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Our VisionToronto Pearson will be North America’s premier portal to a world of possibilities.

Since taking over management of Toronto Pearson in 1996, the Greater Toronto Airports Authority (GTAA) has gone through a three-stage evolution. Initially our focus was that of a construction com-pany as we oversaw the massive Terminal 1 develop-ment project, along with the enhancement of our existing facilities. As those projects were completed, we shifted more of our energy and resources toward setting new standards of excellence as an airport operator.

Now we’re once again adjusting our strategic priori-ties to focus on one key goal: better serving the needs of all Toronto Pearson customers. Our efforts to constantly refi ne and enhance quality of service are vital to achieving long-term success in a fi ercely

competitive air travel marketplace.

To guide us as we continue this evolution, we’ve crafted a new vision statement that sums up our priorities and forms the foundation of our Strategic Plan. In order to be “North America’s premier portal to a world of possibilities,” Toronto Pearson must become a global hub, providing the key access point for an entire continent while setting the standard for other hubs worldwide. We’ll do so by offering travellers superb service and greater access to the world via more airlines fl ying to more destinations.

Our job is to get you better connected – to family and friends, to colleagues and potential partners, to all of the promising opportunities, exciting adven-tures and unforgettable experiences that await you around the globe. And as we provide better access to and from the rest of the world, we’ll create more jobs in nearby communities, attract more invest-ment and tourist spending from abroad, and help the local economy thrive.

Our Core Values Integrity: Say what you mean; mean what you say.

Accountability: Walk the talk.Pursuit of excellence: Reach higher.

Collaboration/teamwork: Stronger together.Stewardship: Responsibility to others.

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Our MissionTogether, we will attract, serve and delight our customers by consistently delivering value through innovative products and services.

Transforming our airport into a global hub is only one step on a longer journey. As we pursue our vi-sion of becoming North America’s premier aviation portal, we will make Toronto Pearson a place where convenience and effi ciency converge with boldness, curiosity and the pure romance of air travel to offer you a whole new world of choices.

The spirit of innovation shapes everything we do. We’re building on Toronto Pearson’s strengths to become more relevant to customers. We’re growing our airport by attracting new carriers, new routes

and new guests. As we work each day to fi nd ad-ditional ways of collaborating – within our organi-zation, among our stakeholders and with partners around the globe – we’re crafting the quality advan-tages that will drive our future success.

At Toronto Pearson, our core values provide the foundation on which we’ll grow our vision and ac-complish our mission. They defi ne how we wish to be treated, as individuals and as a company, and they guide how we interact with others.

Our ability to live up to these values is critical to our continued progress. We understand that you’ll judge our success not by what we say, but by what we do and how we do it.

Delivering Our VisionToronto Pearson is in business to serve two types of customers: air carriers and travellers. To better distin-guish between them, we refer to travellers – who are both our direct customers and our customers’ custom-ers – as guests. While they are in our airport, we are their hosts and are responsible for their wellbeing.

Today’s airport guests have more options than ever in the range of destinations they can visit around the world. Similarly, airlines – whether individual carri-ers or the new global alliances – can choose from a growing array of potential routes in providing the best access to those destinations. From Toronto Pearson’s perspective, the common thread is choice: for our guests, in the diversity of services and amenities that our airport provides; and for all customers, in the invi-tation to see how Toronto Pearson compares favour-ably with possible alternatives.

To achieve our vision, we must work constantly to

ensure that all customers have compelling reasons for choosing Toronto Pearson – not just once, but time and again.

Leaders at Every LevelAir travel can be challenging for guests. From park-ing your vehicle and checking your bags to clearing outbound security or returning through Customs, you want your airport experience to be as effortless and enjoyable as possible. At Toronto Pearson, our com-mitment goes far deeper than simply ensuring every step unfolds smoothly. Our goal is to consistently delight our guests – to bring back the genuine pleasure and excitement of air travel.

Airlines face their own set of challenges as they decide on the most effective deployment of aircraft and re-sources to meet customers’ needs. In a busy competi-tive environment crisscrossed with potential routes, making the right connections is crucial. Again, our goal at Toronto Pearson is to put in place the ideal balance of infrastructure, support systems and responsive

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service so that more and more carriers will choose to fl y through our airport.

Our success is built on the day-to-day efforts of indi-viduals in every area and level of airport operations. Within the GTAA, we encourage each employee to play a leadership role, taking personal responsibility for meeting customers’ needs and fostering team ef-forts throughout the company. At the same time, our people lead by example, inspiring colleagues in cus-tomer and partner organizations to join us in pursuing our vision for Canada’s leading airport.

Our Promise to GuestsToronto Pearson’s vision is grounded in the values and aspirations of the millions of guests who pass through our airport every year. We are continually reassessing what travellers value most by seeking their feedback

via surveys, focus groups and other communications channels.

Our guests’ priorities include: • convenience in terms of destinations served and the frequency and reliability of fl ights • saved time in airport scenarios that require walking, queuing or waiting • comfort and quality of service – at a reasonable cost • a safe, secure airport environment.

Working with our airline customers and other partners, we’re responding with new initiatives and enhance-ments to existing services, including: • easy access to the world, beginning with direct or one-stop connections to every major city • improvements that enable guests to move more quickly and effi ciently through the airport, making easier connections between fl ights • a wide range of products and services – from free Wi-Fi access to valet parking – that deliver value for money while creating a more comfortable, relaxing airport visit

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• a renewed emphasis on providing friendly, helpful service as the foundation of the Toronto Pearson experience.

Our promise to guests is that they will feel welcome, relaxed and delighted as they travel through our airport.

Our Promise to Airlines Our strategic vision must also refl ect the needs and priorities of Toronto Pearson’s airline customers. Through constant dialogue, we refi ne our under-standing of carriers’ needs in every area: capacity, quality of service, operational effi ciency, reliability, safety and security.

Toronto Pearson offers airline customers: • access to a large, culturally diverse economic centre with an ideal location and high volumes of travellers • effi cient, reliable operations in a safe and secure environment • airport infrastructure with the depth and fl exibility to meet future requirements • innovative products and services to facilitate managing aircraft and help meet passengers’ changing expectations • a critical mass of other carriers, each contributing to the momentum of success • highly responsive service from a business partner that understands carriers’ needs.

Our promise to every airline is that it will be treated as a world-class, connected global player and will be listened to, valued and enabled.

Why Become a Global Hub?Today’s air carriers and guests have important fac-tors to weigh when determining which airports are best suited to their plans. We need to ensure that Toronto Pearson is at the top of every list. We’re therefore committed to working closely with our airline partners to make Toronto Pearson a true global hub.

To sustain our evolution into North America’s pre-mier portal, we have to look beyond our immediate service area. We must reach out to travellers and airlines who have the option to make connections elsewhere and attract them to our airport. We have to show that we’re ideally positioned to link them to what they value most – to the most interesting people and places, the most inspiring ideas and

opportunities – as their world of choices continues to grow.

Capturing market share from other airports brings many benefi ts to our community: • access to new destinations that would not otherwise be viable • more frequent service on existing routes • an overall boost to economic activity and job creation from these service improvements.

There are also specifi c advantages for Toronto Pear-son’s airline partners: • increased revenue as demand rises • lower airport usage fees as costs are spread over a larger base.

For all Toronto Pearson stakeholders, our global hub strategy is the key to new opportunities and long-term success.

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How We’ll Achieve Our GoalsWe’ve identifi ed a series of steps we must take to ensure that Toronto Pearson gains more connec-tions to the world and becomes a true global hub:

• Provide air carriers with compelling reasons to offer more frequent fl ights and to increase the number of destinations they reach around the globe.

• Reduce costs for our airline partners while further increasing the effi ciency of airport operations to help them prosper.

• Provide a level of service – and an overall airport experience – that exceeds expectations, inspiring people to come back again and again.

• At the same time, develop Toronto Pearson as a ground mobility hub – an interconnection point for air, rail, road and public transit. By making our airport even more accessible to the surrounding region, we’ll strengthen our role as a centre for economic activity and open up new avenues for sustainable growth.

All of these steps are encompassed by the broad set of objectives outlined in our Strategic Plan.

Our FIVE Strategic ImperativesIn developing a plan that will make our vision a reality, we’ve worked closely with customers, em-ployees, members of the community and other key stakeholders to ensure that we’re addressing their

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needs and priorities. The result is a set of strategic building blocks, each supporting the next, all aimed at making Toronto Pearson what you’ve told us it must be: your convenient access point to a world of opportunities.

The Strategic Plan formalizes these building blocks into fi ve Strategic Imperatives that frame and give momentum to all of the initiatives we’ll undertake from 2011 through 2015. We’ll be evaluating these imperatives annually to ensure they remain relevant in light of changing conditions, including updated assessments of risk.

1. Empower all airport employees to deliver the Toronto Pearson value proposition. We’re committed to giving our people the train-ing and tools, along with the confi dence and trust, to provide optimum value to our customers. We’ll continue to develop our strengths, identify what we need to do and ensure we’re all motivated and

working together to create the best possible cus-tomer experience.

2. Achieve operational excellence.We’re introducing highly effective, cost-effi cient processes – including signifi cant expense reductions – to maximize value for airport customers. We’ll continue enhancing our facilities and services to make Toronto Pearson the airport of choice for both carriers and guests.

3. Deliver value and innovation through our as-sets and products.We’re developing a wide range of innovative prod-ucts and services while also optimizing our exist-ing assets to better meet the needs of airlines and guests. By taking advantage of our collective skills and experience – along with our terminals and facili-ties – we can create profi table, sustainable out-comes for all Toronto Pearson stakeholders.

4. Become a leading air and ground mobility hub. We’ll work to make Toronto Pearson a premier portal through: • airside activities – attracting and retaining leading global carriers and airline alliances • groundside activities – developing infrastructure to support various modes of ground transporta- tion, including improved public transit • stakeholder activities – working with government and business to stimulate airport-related commercial development.

5. Ensure Toronto Pearson’s long-term sustainability.We’ll fulfi ll the economic, environmental and social commitments we’ve made to our airlines, guests, employees, business partners and community stake-holders. And we’ll continue seeking new and better ways to ensure our airport’s future sustainability.

The Benefi ts of Our Strategic PlanThe GTAA is a corporation without shareholders. That means we measure success not by the profi ts we generate or the dividends we issue, but by the positive impact we create. As we evolve Toronto Pearson into a global hub, we’ll create a whole array of benefi ts for our airline customers and guests, making it hard for carriers to justify shifting their business activities to competing airports.

Our priorities must also refl ect and promote the needs of the surrounding region. The Greater To-ronto Area and, indeed, all of Canada count on our airport for safe, reliable, effi cient transport of pas-sengers and cargo – across the country and to the farthest corners of the Earth.

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Economic Benefi tsThe GTAA has thoroughly analyzed the economic impact of becoming a global hub. We looked at the expected gains: increased aircraft activity, more passengers travelling through our airport, growth in employment opportunities and higher capital expenditures to support the rise in traffi c. We then compared these factors to a “de-hubbing” scenario in which Toronto Pearson would experience far less traffi c and see its growth limited to simply mirroring the region’s natural pace of development.

We project that our airport, by expanding regional, national and global connections, and by offering more frequent non-stop fl ights to a broader range of destinations, will serve an additional 6 million guests annually by 2015. The volume of connect-ing passengers will rise by more than 10 percentage points. An estimated 20,000 new jobs would be cre-ated as a result of increased airport activity. And our capital expenditures will also increase dramatically.

Overall, Toronto Pearson’s evolution into a global hub will bring: • direct economic impacts – i.e., immediate con sequences of the operation and development of our airport, as we generate new commercial activity in the aviation and travel sectors • indirect economic impacts – as businesses that interact with Toronto Pearson purchase goods and services to support their operations. • induced economic impacts – from spending by people who are employed either directly or indirectly by airport-related businesses.

By 2015, we project gains between 15 per cent and 19 per cent in all key areas of economic impact that can be attributed to Toronto Pearson. These include total business revenue and the value of all goods and services, as well as the number of people employed, average personal income and total taxes paid to various levels of government.

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Financial Benefi tsWe’ve assessed the fi nancial impact of our global hub strategy on the GTAA using the following mea-sures: • liquidity and reserves – many factors beyond the control of the GTAA can affect the air travel industry and the GTAA’s fi nancial performance and in keeping prudent levels of reserves the GTAA can maintain its long-term focus in the face of unanticipated events • cost per enplaned passenger – this general mea sure of cost calculated by dividing revenues received from air carriers plus Airport Improvement Fee revenues by the by the number of guests departing through the airport is an important measure of our competitiveness • total debt of the GTAA – as a non-share capital corporation the GTAA fi nances the majority of its development through borrowing and must insure that debt levels are reasonable

• debt per enplaned passenger – as the GTAA invests in new capacity it is important to ensure that the cost is appropriate in terms of the number of guests that will be using Toronto Pearson.

Investors and rating agencies use these same metrics to evaluate the GTAA’s credit worthiness. In our fi nancial projections for the global hub strategy (versus the de-hubbing scenario), higher passenger volumes will lead to an improved ability to manage reserves and unit costs such as cost per enplaned passenger and debt per enplaned passenger as fi xed costs can be spread over the larger passenger base, making our airport a more competitive choice for airlines and guests.

Social ResponsibilityIn pursuing Toronto Pearson’s global hub strategy, we’ll ensure that the economic benefi ts to the com-munity are balanced by our continued sensitivity

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to the social and environmental impacts of every initiative we undertake. By enhancing our airport’s connections to the world, we’ll also boost prosper-ity and create new opportunities for the millions of people who live and work nearby – while managing our business responsibly to respect the quality of life in our communities and the future health of our planet.

The Big PictureWe’ve developed Toronto Pearson’s Strategic Plan in the context of a global aviation business that has changed dramatically over the past decade. Major airlines have merged, altering the competitive land-scape. Aircraft builders have introduced long-range jets that are smaller and more fuel-effi cient, making more destinations readily accessible from centres such as Toronto. At the same time, worldwide growth in air travel has been tempered somewhat

by rising fuel costs and the need to reduce green-house gas emissions.

As “Open Skies” agreements between Canada and other countries have simplifi ed the regulation of air travel, we’ve seen a proliferation of new routes and a steady increase in competition. And as more and more airlines form multi-carrier alliances, they’ve begun redirecting long-haul traffi c to a select group of airports that are best equipped to meet their needs. These global hubs are the only airports that can expect to see signifi cant long-term growth.

In concluding that Toronto Pearson has what it takes to become a global hub, we’ve demonstrated that there are enormous benefi ts to be gained, for our airport and for the Greater Toronto Area. What’s more, the alternative – having major airlines shift their activities elsewhere – would lead to serious social and economic consequences for our commu-nity, the province and the entire country.

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The Status Quo Won’t DoBased on the experience of other airports that have gone through “de-hubbing,” we can predict the likely outcomes if Toronto Pearson should elect not to become a global hub and simply maintains the status quo: • Traffi c will decrease signifi cantly – beginning with connecting fl ights – and will not be recovered in the short term. Indeed, airports that undergo de-hubbing typically do not recover their original traffi c levels even after fi ve years. • The number and overall quality of fl ight connections will decline. • If a key carrier or alliance shifts focus to another hub, its presence and positive infl uence at the airport will steadily wane.

At a de-hubbed Toronto Pearson, the dramatic reduction in the number of passengers and fl ights would mean lost revenue and fewer airport-related jobs, creating a severe negative economic impact on the communities we serve. What’s more, experience has shown that de-hubbing is likely to be irrevers-ible.

All major North American airports face the same challenges that we do. All are trying to draw pas-sengers and services away from competing facilities. In a few cases, airports that fail to keep pace with the new global realities may still see some modest growth, as long as the regions they serve continue to develop by other means. But most will lose rev-enue and market share to their competitors. They will become spokes instead of hubs, supporting short-haul fl ights rather than non-stop long-haul services.

Our Strategic Plan is aimed at ensuring Toronto Pearson never suffers this fate.

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Measuring Our SuccessThe GTAA’s vision and mission are vital to defi ning where we want to be in the future. But it’s equally important that we have a yardstick to track our progress in getting there. And ahead of that, we need to decide what it is we’re trying to measure.

In the past, profi t-driven corporations gauged their progress by the growth in shareholder value. Today, though, more and more companies are placing a higher premium on environmental sustainability, consumer protection, community building and other aspects of corporate responsibility. There is growing recognition that traditional fi nancial met-rics must be considered alongside measures that consider the needs of all stakeholders.

The GTAA, as a not-for-profi t corporation with a mandate to serve the general benefi t of the public, naturally welcomes this evolution in how success is measured. We’ve adopted what is called a “balanced scorecard” approach, developing eight key measures for assessing our progress in terms of customer sat-isfaction, employee engagement, business growth and overall fi nancial performance.

By consistently tracking our performance against this scorecard – and continuing to meet the rigorous criteria applied by fi nancial institutions and mar-kets – we will ensure the long-term sustainability of Toronto Pearson. And, at a broader level, we’ll fulfi ll the overall vision that drives our Strategic Plan: to serve the future needs of our community by becoming North America’s premier portal to a world of possibilities.

2011-2015Strategic

Plan

Toronto Pearson

How we’re realizing our vision for Toronto Pearson International Airport