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Halifax

Stanfield International 2012

Airport Economic Impact Report

September 2013

Halifax Stanfield International Airport 2012 Economic Impact Report

1

Table of Contents

Executive Summary ............................................................................... 3

1 Introduction ...................................................................................... 7 1.1 Context ........................................................................................ 7 1.2 Airport Overview ........................................................................ 7 1.3 Highlights of 2012 .................................................................... 11 1.4 Operations ................................................................................. 14 1.5 The Airport Setting .................................................................. 21 1.6 Airport Facilities ........................................................................ 21 1.7 Regional Economy ................................................................... 29

2 Study Approach .............................................................................. 30 2.1 Introduction .............................................................................. 30 2.2 Economic Impact ..................................................................... 30 2.3 Study Area ................................................................................ 32 2.4 Economic Impacts Measured and Methods of

Measurement ............................................................................ 32 2.5 Fiscal Impact ............................................................................. 33

3 Economic Impacts ......................................................................... 34 3.1 Introduction .............................................................................. 34 3.2 Economic Output ...................................................................... 34 3.3 Employment .............................................................................. 35 3.4 Wages and Salaries ................................................................. 36 3.5 Renovation and New Construction Impact .......................... 37 3.6 Tourist/Visitors Impacts .......................................................... 38 3.7 ATB Retail Sales Impacts ........................................................ 39 3.8 Aerospace Cluster Impacts ..................................................... 39

4 Fiscal Impacts ................................................................................. 41 4.1 Introduction .............................................................................. 41 4.2 Personal and Consumption Taxes (Provincial) .................... 41 4.3 Retail Sales Tax (HST) ............................................................ 42 4.4 Commercial Property and Business Occupancy Taxes ....... 42

5 Conclusions ..................................................................................... 43


2

List of Exhibits

Exhibit 1.1 REGIONAL SETTING Exhibit 1.2 2012 HALIFAX STANFIELD INTERNATIONAL AIRPORT - SCHEDULED AND SEASONAL PASSENGER SERVICES Exhibit 1.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WEEKLY ACTIVITY AUGUST 2002 to

2012 Exhibit 1.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2012 Exhibit 1.5 HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to

2012 Exhibit 1.6 HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2012 Exhibit 1.7 LAND USE PLAN AND NEW MASTER PLAN (2011) Exhibit 1.8 AIRSIDE SUBDIVISION LOTS Exhibit 1.9 ATLANTIC CANADA POPULATION - 1996 to 2012 Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA KEY INDICATORS - 1996 and 2012 Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - GROSS OUTPUT (MILLIONS) IN 2012 Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2012 Exhibit 3.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2012 Exhibit 3.4 HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR

TRAVELERS ENTERING NOVA SCOTIA IN 2012 Exhibit 3.5 AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011/12 ECONOMIC IMPACTS Exhibit 4.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT - PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2012 Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES

(MILLIONS) IN 2012 Exhibit 5.1 COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2012


3

Executive Summary Halifax Stanfield International Airport (HSIA) is one of 26 airports in

Canada’s National Airports System and is rated by passengers as one of

the best airports in the world. HSIA is operated by Halifax International

Airport Authority (HIAA) pursuant to the terms of a ground lease

agreement between HIAA and the Federal Government.

In 2012, HSIA served a record 3,605,701 passengers or over half of all

air travel passengers in Atlantic Canada. An estimated 15,000 people

pass through the Air Terminal Building (ATB) each day. It has a multi-

province catchment area and functions as a major economic and

employment generator for Halifax Regional Municipality (HRM) and Nova

Scotia. In 2012, HSIA provided direct and connecting passenger and

cargo service for 18 passenger carriers and 13 cargo carriers to

destinations in Canada, the United States, the Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe

with operating cash flows not returning to pre-recession levels until late

2010. Although 75% of Nova Scotia’s economy is based upon service

industries that did not experience the same economic downturn as other

regions, the recovery has been slow. In 2012, Nova Scotia’s gross

domestic product (GDP) increased by 0.9% following growth of 0.5% in

2011. Growth was also slow in the remainder of Atlantic Canada in 2012

and Canada-wide growth was a modest 2.0%.

Against this economic setting, 2012 was still a year of accomplishments,

which included more international awards and the substantial completion

of a major runway extension. These achievements occurred against a

backdrop of carriers shifting capacity in the second half of 2012 from

Eastern Canada to Western Canada or other markets.

The 2011 global Airport Service Quality (ASQ) ratings were released in

2012. The ratings are administered by Airports Council International.

For 2011, Halifax Stanfield was ranked as the third best in the world for

overall passenger satisfaction in its class (under five million passengers)

and placed third in North America. To date, Halifax Stanfield has earned

a total of 28 service quality awards.

HSIA has also been inducted into Airports Council International’s

Director General’s Roll of Excellence, honouring airports that have

ranked among the top five airports in the world for five consecutive years

in the ASQ ratings. HSIA has also been re-certified as ASQ Assured.

This distinction has been earned by just 12 airports world-wide.


4

HIAA also created a new airport service culture program in 2012,

branded “The Stanfield Way”. The program stresses the over-arching

purpose of all airport employees, regardless of role, to serve every

airport visitor. It is expected that all airport employees will have had an

opportunity to participate in this program by the end of 2016.

In February 2011, the Federal Government and the Province of Nova

Scotia announced a joint investment of up to $14 million towards the

extension of the main Runway (05/23) from 8,800 feet to 10,500 feet to

accommodate larger wide bodied and heavy weight aircraft with the

balance being invested by HIAA. Construction work started in late 2011

and the extended runway was fully operational on November 15, 2012.

Cargo growth is a key strategy of Halifax Stanfield as the runway

extension now allows wide-body cargo freighters to operate at full

capacity with the resulting benefits to all exporters; especially seafood

exporters who had to truck product to Boston or New York for export to

international markets. The runway extension further supports a multi-

tenant cargo facility that opened in June 2010. The facility is operated by

Gateway Facilities ULC and contains 40,000 square feet of state-of-the-

art cargo space with 7,000 square feet being climate controlled space. It

is the largest airside refrigerated space north of Miami and enables the

efficient export of high-value products, such as seafood.

In October 2011, Groupe Germain Hospitality announced plans to build a

$30.5 million onsite boutique hotel. It opened in 2013 under the ALT

Hotel brand. The facility includes 169 rooms and 6,775 square feet for

business meetings and gatherings. During 2012, $18 million was spent

on the project’s construction.

The 2010 Master Plan outlines a 20-year development program for the

airport lands. A key element is the planning and development of an

‘Airport City’ that will transform HSIA’s highway showcase location and

regional air hub amenities. In 2012, HIAA released land use plans and

concepts for groundside lands that focus on creating a gateway

destination that could support over 750,000 square feet of new office,

convenience, destination retail and other space.

In 2012, HIAA updated its 5-Year Strategic Plan. The new Strategic Plan

includes an updated mission and vision statement, values and goals, and

an assessment of the general economic conditions likely to occur over

the life of the plan. In addition, it provides an evaluation of current and

future conditions of the aviation industry.

HIAA retained an A+ credit rating from Standard & Poor’s (second

highest among Canadian airport authorities) in 2012.


5

In the fiscal year, HIAA generated revenues of $79.3 million and ended

the year with a surplus that is retained and reinvested in operations and

development. HIAA also invested $24.3 million in its’ capital

improvement program in 2012.

HSIA has a diversified tenant base and serves as the head office of IMP

Group Aerospace and Air Canada Jazz. This economic base has

allowed overall airport-related employment to grow from 2011 to 2012.

The major contributor to the airport’s economic base is IMP Group with

many of this firm’s employees involved in multi-year civilian or military

service contracts. In 2012, HSIA contributed $1.27 billion to the Nova

Scotia economy and provided 12,360 full-time equivalent (FTE) jobs with

wages and salaries of $507.5 million. These employees contributed

$60.9 million to the Province of Nova Scotia in terms of personal and

consumption taxes and $26.6 million in retail sales taxes.

Beyond the economic and fiscal impacts listed in the following exhibit,

renovation and new construction projects, tourists entering Nova Scotia

at HSIA and a cluster of aerospace businesses that includes the

adjacent AeroTech Business Park provide further positive local and

provincial spinoffs.

From 2000 to 2012, HIAA and tenants invested approximately $475

million in new capital development projects and the maintenance of

capital. These projects represent over 70% of the total capital

improvements at all airports in Atlantic Canada and created 7,975 FTE

jobs and contributed $300 million in wages and salaries. HIAA’s Capital

Plan to 2018, completion of the new ALT 169 room boutique hotel and

other expected future tenant projects, will require an additional $276

million in investments from both HIAA and tenants. These planned

projects will create 3,790 FTE jobs and generate $174 million in wages

and salaries.

Tourism is a $2.02 billion industry in Nova Scotia, based upon the most

recent provincial government statistics. There were 1.993 million visitors

to Nova Scotia in 2012 with 32% arriving via air at HSIA. Tourists

entering Nova Scotia at Halifax Stanfield tend to stay longer and spend

more money. They contributed an estimated $882 million to the Nova

Scotia economy and accounted for 15,030 jobs (direct and spinoff), $114

million in total taxes and $390 million in payroll. Spinoff refers to indirect

and induced impacts.


6

IMP Aerospace and tenants at the adjacent AeroTech Business Park are

an aerospace cluster with an estimated 1,450 employees in 2011/12.

This cluster has estimated direct and spinoff expenditures of $420

million. The direct and spinoff jobs are 2,900, and wages and salaries

are approaching $165 million.

COMPARISON IMPACT OF HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2012

Impact

2000

2005

2012

% Change:

2005 to 2012

Total Gross Output Halifax Area Nova Scotia

(Millions)

$614.1 $1,035.1

(Millions)

$683.3 $1,152.8

(Millions)

$753.0 $1,273.0

+10.2% +10.4%

Total Employment Halifax Area Nova Scotia

7,495 11,000

7,870 11,625

8,310 12,360

+5.6% +6.3%

Wages and Salaries Halifax Area Nova Scotia

(Millions)

$196.7 $289.2

(Millions)

$260.3 $384.6

(Millions)

$341.2 $507.5

+31.1% +32.0%

Personal and Consumption Taxes (NS) Halifax Area Nova Scotia

(Millions)

$29.7 $43.7

(Millions)

$35.1 $53.5

(Millions)

$41.0 $60.9

+16.8% +13.8%

Retail Sales Tax Halifax Area Nova Scotia

(Millions)

$10.2 $15.0

(Millions)

$13.7 $20.2

(Millions)

$17.9 $26.6

See Note

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


7

1 Introduction 1.1 Context

The Chris Lowe Group was retained by Halifax International Airport

Authority (HIAA) to determine the 2012 economic impacts of the facility

on Halifax Regional Municipality (HRM) and the Province of Nova Scotia.

The study uses the same approach as previous economic impact studies

at Halifax Stanfield International Airport (HSIA) initially prepared in 1990

and updated from 1992 to 2011. The 2012 update focuses on

incremental changes from previous years and includes a survey of major

airport tenants, and operating and financial data from HIAA.

The report contains five sections. Section 1, Introduction, provides an

overview of the airport and the regional economy. Section 2, Study

Approach, describes how economic and fiscal impacts are measured.

Section 3, Economic Impacts, presents the findings of the airport’s

economic impacts on HRM and Nova Scotia in 2012. Section 4, Fiscal

Impacts, defines the personal and consumption taxes, and retail sales

tax impacts in 2012. Section 5, Conclusions, is a summary of the 2012

update and includes comparisons to previous years.

1.2 Airport Overview

HSIA is one of 26 airports in Canada’s National Airports System and

ranks as one of the world’s premier airports based upon international air

service quality surveys. HSIA welcomed a record 3,605,701 passengers

in 2012 or more than half of all passengers in Atlantic Canada. Halifax

Stanfield has an average of over 170 flights per day with non-stop

service to 48 destinations (22 seasonal and 26 year-round). The facility

is located 35 kilometres northwest of HRM’s urbanized core on Highway

102 which is the major route to New Brunswick, Prince Edward Island

and points west and south. Land uses around the facility are rural or

commercial development that includes the AeroTech Business Park

along Highway 102.

The airport was opened by Transport Canada in 1960 with Instrument

Flight Rule (IFR) operations and a 16,900 square metre Air Terminal

Building (ATB). In 1960, 180,000 passengers were processed or

approximately 5.0% of the 2012 volume. From 1960 until 2000, the

facility was run by Transport Canada. In February 2000, management,

operation and development were transferred from Transport Canada to

HIAA under a 60-year lease. The airport has two runways (05/23 at

10,500 feet and 14/32 at 7,700 feet) with 29 operating gates and 13

loading bridge positions in the ATB. Jets up to and including the Boeing

747 can be accommodated.


8

Exhibit 1.1

REGIONAL SETTING

Halifax Stanfield International Airport

AeroTech Business Park

HWY 102

Downtown Halifax


9

HSIA is the largest airport in Atlantic Canada. It provides direct and

connecting passenger and cargo service across Canada, into the U.S.,

the Caribbean, Europe and Asia. This service is provided by 18

passenger carriers and 13 cargo carriers. The international catchment

area is Atlantic Canada and the domestic passenger catchment area is

Nova Scotia, Southern New Brunswick and Prince Edward Island. HSIA

is unique in Canada’s airport system as it serves four provinces (Nova

Scotia, New Brunswick, Prince Edward Island, and Newfoundland and

Labrador) because of the economic dominance of Halifax.

Halifax Stanfield’s regional importance was further enhanced in 2006

when U.S. Customs and Border Protection Services commenced

preclearance for passengers destined to the U.S. on non-stop flights. In

2012, HSIA remains the only airport in Atlantic Canada to enable

transborder passengers to be processed by U.S. Customs and Border

Protection Services prior to departure. The benefit of preclearance is

passengers now arrive at domestic gates in U.S. destination airports and

have faster connection options for their final destination.

Exhibit 1.2 2012 HALIFAX STANFIELD INTERNATIONAL AIRPORT - SCHEDULED AND SEASONAL PASSENGER SERVICES

17 Domestic

Destinations

13 Transborder (USA)

Destinations

18 International

Destinations

Calgary, AB

Charlottetown, PEI

Charlo, NB

Deer Lake, NL

Edmonton, AB

Fredericton, NB

Gander, NL

Goose Bay, NL

Hamilton, ON

Moncton, NB

Montreal, PQ

Ottawa, ON

Saint John, NB

St. John’s, NL

Sydney, NS

Toronto, ON

Toronto City Centre, ON

Atlanta, GA

Boston, MA

Chicago, IL

Detroit, MI

Ft. Lauderdale, FL

Newark, NJ

New York (La Guardia), NY

Orlando, FL

Philidelphia, PA

St. Petersburg, FL

Tampa, FL

Washington (Dulles), DC

Washington (National), DC

Bahamas – Nassau

Bermuda – Hamilton

Cuba – Cayo Coco, Havana,

Holguin, Santa Clara,

Varadero

Dominican Republic – Puerto

Plata, Punta Cana, Samana

Germany – Frankfurt

Iceland – Reykjavik

Jamaica – Montego Bay

Mexico – Cancun

St. Pierre et Miquelon

Turks and Caicos –

Providenciales

United Kingdom – London

(Gatwick), London (Heathrow)

Source: Halifax International Airport Authority.

HSIA offers 24 hour

operations without curfew or

noise abatement restrictions.

It functions as a major trans-

border and international

gateway airport with flights

connecting Atlantic Canada

to major centres in Canada,

the U.S. and internationally.


10

Since the transfer from Transport Canada in 2000, economic cycles and

geopolitical events have changed the airline industry and the role of

airports. In Canada, the airline industry has seen the demise or merger

of several airlines and the introduction of new carriers, rapid global

economic downturns and slow recoveries, higher energy costs,

pandemics and geo-political events like September 11, 2001. Over this

period, HIAA has followed a four-tier business planning process that

includes a 20-year Master Plan, a 10-year Capital and Financial Plan, a

5-year Strategic Plan and annual business plans. The Authority’s mission

is ‘a world-class airport creating prosperity for our region by connecting

Atlantic Canada to the world through flight’. A Master Plan update to

2030 was completed in 2011 that aligns the mission with market-driven

changes to the airfield, terminal area, highway commercial development,

multi-modal and logistics development and land acquisition.


11

1.3 Highlights of 2012

2012 was a year of accomplishments, which included more international

awards and the substantial completion of a major runway extension.

These achievements occurred against a backdrop of carriers shifting

capacity in the second half of 2012 from Eastern Canada to Western

Canada or other markets.

Halifax Stanfield continues to be rated by its passengers as one of the

best airports in the world. The 2011 global Airport Service Quality (ASQ)

ratings were released in 2012. The ratings are administered by Airports

Council International and measure 34 elements of passenger airport

experience and how well each element satisfies passenger expectations.

To date, HSIA has earned a total of 28 service quality awards.


overall passenger satisfaction in its class (under five million passengers)

and placed third in North America.

HSIA has also been inducted into Airports Council International’s

Director General’s Roll of Excellence, honouring airports that have

ranked among the top five airports in the world for five consecutive years

in the ASQ ratings. HSIA has also been re-certified as ASQ Assured.

This distinction has been earned by just 12 airports world-wide.


12

HIAA also created a new airport service culture program in 2012,

branded “The Stanfield Way”. The program stresses the over-arching

purpose of all airport employees, regardless of role, to serve every

airport visitor. It is expected that all airport employees will have had an

opportunity to participate in this program by the end of 2016.

In February 2011, the Federal Government and the Province of Nova

Scotia announced a joint investment of up to $14 million towards the

extension of the main Runway (05/23) from 8,800 feet to 10,500 feet to

accommodate larger wide bodied and heavy weight aircraft with the

remaining balance being invested by HIAA. Construction work started in

late 2011 and the extended runway was fully operational on November

15, 2012.

Cargo growth is a key strategy of Halifax Stanfield as the runway

extension now allows wide-body cargo freighters to operate at full

capacity with the resulting benefits to all exporters; especially seafood

exporters. The runway extension further supports the multi-tenant cargo

facility that opened in June 2010. The $15 million facility is operated by

Gateway Facilities ULC and contains 40,000 square feet of state-of-the-

art cargo space that includes 7,000 square feet of climate controlled

space. It is the largest airside refrigerated space north of Miami and

enables the efficient export of high-value seafood.

Over the next decade, air cargo is forecast to grow between 85% to

100%. The growth is reflected in the decision by Icelandair Cargo in

November 2011 to restart scheduled weekly Boeing 757 air cargo

service to Reykjavik and onto the major European cargo hub at Liege,

Belgium. Both FedEx and Cargojet have also upgraded their Halifax

based fleets from Boeing 727s to 757s to provide increased capacity.

Thirteen cargo carriers currently handled over 20,000 metric tonnes of

freight while the remaining 9,000 plus metric tonnes are transported on

passenger flights.


13


$30.5 million onsite boutique hotel. It opened in 2013 under the ALT

Hotel brand. The facility includes 169 rooms and 6,775 square feet for

business meetings and gatherings. During 2012, $18 million was spent

on the project’s construction.


airport terminal, airfield, and surrounding properties in response to

growing passenger traffic and commercial opportunities. A key element

of the plan is the planning and development of an ‘Airport City’ that will

transform HSIA’s highway showcase location and regional air hub

amenities. The concept contains five development clusters focusing on

aviation, logistics, aviation reserve (airfield access), multi-modal and

highway commercial development. In 2012, HIAA released land use

plans and concepts for groundside lands that focus on creating a

gateway destination that could support over 750,000 square feet of new

office, convenience, destination retail and other space.


includes an updated mission and vision statement, values and goals, and

an assessment of the general economic conditions likely to occur over

the life of the plan. In addition, it provides an evaluation of current and

future conditions of the aviation industry.


14

HIAA retained an A+ credit rating from Standard & Poor’s (second

highest among Canadian airport authorities) in 2012. In the fiscal year,

HIAA generated $52.4 million in operating and interest revenues, and

collected $26.9 million in airport improvement fees for total revenues of

$79.3 million ($77.9 million in 2011). Total expenses for 2012 were $77.7

million ($74.4 million in 2011). Revenues exceeded expenses by $1.6

million in 2012 ($3.4 million in 2011). The surplus revenue was retained

and reinvested in operations and development. HIAA also invested

$24.3 million ($21.8 million in 2011) in its capital improvement program.

1.4 Operations

HSIA had 3,605,701 enplaned/deplaned passengers in 2012. This

represents the airport’s busiest year in its 52-year history.

Twenty-eight passenger and cargo carriers operated from the airport in

2012. The carriers are:

Air Canada Air Canada Jazz Air Georgian

CanJet Airlines Skylink Express Delta Air Lines

WestJet Airlines Air Saint-Pierre Air Transat

US Airways Cubana Cargojet

Icelandair Sunwing Airlines ABX / TNT

Condor Flugdienst Porter Airlines Air North

American Airlines United / Continental Airlines

Canadian North Provincial Airlines

Cougar Helicopters Kelowna Flightcraft (Purolator)

Execaire Morningstar Express (FedEx)

Canadian Helicopters Maritime Air Charters

Exhibit 1.3 lists the August 2012

destinations of flights from HSIA. There

were 553 flights per week to Canadian

destinations, 107 to transborder (U.S.)

destinations and 17 to international

destinations. In comparison to 2002,

weekly transborder flights increased 37%

and total flights by 18%.

Air Canada/Jazz/Georgian has the largest market share. These carriers’

share of total weekly departing flights went from 83% in August 2002 to

62% during August 2012.

An estimated 15,000 people

pass through the Air

Terminal Building every day.

Scheduled and seasonal

passenger services in 2012

included 17 domestic

destinations, 13 transborder

(U.S.) destinations and 18

international destinations. International destinations

included England, Germany,

Iceland, Bermuda, Mexico

and several Caribbean

islands.


15

Exhibit 1.3 HALIFAX STANFIELD INTERNATIONAL AIRPORT -

WEEKLY ACTIVITY AUGUST 2002 to 2012

Air Carrier – Domestic Service

2002 Flights

Per Week

2012 Flights

Per Week

2012 Destinations

Air Canada/ Air Canada Jazz/Georgian

415 393 Deer Lake, Fredericton, Ottawa, Moncton, Sydney, Saint John, St. John’s, Montreal, Gander, Charlottetown, Goose Bay, Toronto

Porter Airlines 0 76 Ottawa, Montreal, St. John’s

WestJet 0 84 Hamilton, St. John’s, Toronto, Edmonton, Calgary, Ottawa

Subtotal 472 553

Air Carrier – Transborder Service

Air Canada/Air Canada Jazz

42 19 Boston

Delta Air Lines 21 22 Boston, New York (LGA), Atlanta US Airways 0 24 Philadelphia, Washington National (DCA) United/Continental Airlines

0 42 Newark, Washington, DC (IAD), Chicago

Subtotal 78 107

Air Carrier – International Service

Air Canada 8 7 London (Heathrow), Bermuda Air Saint-Pierre 4 3 St. Pierre Icelandair 0 3 Reykjavik Air Transit 1 1 London (Gatwick) Condor 0 3 Frankfurt Subtotal 13 17

Total 563 677

Note: The exhibit only lists 2012 carriers. The totals for 2002 include carriers that no longer operate at the airport. Source: Halifax International Airport Authority.


16

HSIA now has the infrastructure to

accommodate more air cargo with

the extension of Runway 05/23. The

air cargo sector includes carriers,

freight forwarders, customs brokers

and cargo specialists. HSIA handled

29,570 metric tonnes in 2012

compared to 29,263 metric tonnes in

2011, 28,450 in 2010 and 26,910 in

2009. Forecasts by Transport Canada (excluding Runway 05/23

extension) have cargo activity reaching 43,400 metric tonnes in 2019

and 49,000 metric tonnes by 2024.

To support future air cargo activities, Halifax Stanfield has obtained

approval from Transport Canada to participate in the international air

cargo transshipment program. This program allows air cargo to fly into

Halifax for shipment to third countries. For example, cargo can arrive at

Halifax from the U.S., be stored temporarily and then move to European

or Asian destinations. International air cargo can also arrive from

overseas destinations and then be shipped by highway to the United

States under NAFTA.

Liège, Belgium-based TNT Airways, Cargojet and Icelandair provide

regular scheduled international cargo service and HIAA is pursuing other

wide-body freighter operations. The diverse range of support operators

for air cargo are listed below.

Freight Forwarders Integrated Couriers Connexion World Cargo (Canada) Ltd. Federal Express DSV Air & Sea Inc. Purolator Courier

Kintetsu World Express Inc. Cargojet Kuehne & Nagel International Ltd.

Leisure Cargo Cargo Handlers MOL Logistics Worldwide Flight Services PF Collins Customs Broker Ltd. Air Canada Cargo UPS Supply Chain Solution Servisair Worldwide Perishables Canada Worldwide Perishables Canada


17

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

Passenger carriers flying from Halifax Stanfield operate mostly in mature

markets where passenger volumes generally increase or decline in

parallel with regional economic activity. In 2009, a global recession

negatively impacted the air transport sector as passenger traffic fell 6.3%

in North American and system capacity dropped by 5.6% (source: IATA).

There was a strong recovery in passenger traffic in 2010 and then a

flattening of passenger growth to 1.7% in 2011 and 0.2% in 2012. The

highly competitive nature of the airline industry, and a slowing world

economy, have resulted in consolidation in the U.S. market where

several mergers have resulted in capacity being reduced by 10% to pre-

recession levels. There has also been fewer new airlines formed.

Changes in the industry’s structure are a significant factor in allowing

airlines to retain efficiencies implemented in the recession with the

resulting improvement in profits.

The two major carriers at HSIA are Air Canada Jazz and Air Canada. Air Canada Jazz had 717 full-time equivalent (FTE) jobs based at HSIA

in 2012 or three less than in 2011. Air Canada/Air Canada Cargo

increased its workforce by 32% from 361 in 2011 to 418 during 2012.

HSIA’s diversified tenant base and head office functions of IMP Group

Aerospace and Air Canada Jazz have contributed to employment growth

in recent years. The largest contributor to the airport’s economic base is

IMP Group which had 1,108 FTE employees in 2012 or an increase of

9.2% from 1,015 FTE employees in 2011. A focus of IMP’s operations is

multi-year service contracts with the U.S. Navy and the Department of

National Defence. This operating environment also exists for Pratt &

Whitney Canada and L-3 Communications Electronic Systems located in

the adjacent AeroTech Business Park with an estimated combined 500

FTE employees in 2011/12.


18

Air security has required more workers since 2001. The major security

employer is Canadian Air Transport Security Authority (CATSA) with an

employee base that has increased from 30 in 2002 to 226 by 2012. One sector that relies on

passengers is ground

transportation. There are 190

active and licensed taxis and

limousines, and a further 396

non-registered taxis /

limousines and 50 shuttles

through the MACPass system

that operate regularly at HSIA.

These operators made 140,000 pickups (curb tickets collected) in 2012.

Based upon the level of activity, the airport created approximately 170

FTE taxi and limousine driver positions.

In May 2012, ground

transportation options for

passengers and employees

increased with the introduction

of Metro Transit’s commuter

bus service to Downtown

Halifax via Fall River. MetroX

Route 320 offers seven day a

week service (half hour peak

service and hourly regular

service). The 40-foot air conditioned bus can accommodate 36 seated

passengers and features luggage racks and a front mounted bicycle

rack. The first bus leaves Downtown Halifax before 5:00 am and the last

bus leaves Halifax Stanfield at 12:15 am.

HIAA made a one-time contribution to Halifax Regional Municipality of

$500,000 towards the service.

Diversification of core business activities or major new service contracts

allowed many of the key tenants to maintain or modestly increase

employment levels in 2012 from 2011. Exhibit 1.4 presents a list of the

major employers in 2012. Beyond this list, there are many smaller firms

that collectively maintained employment in 2012 at 2011 levels.


19

Exhibit 1.5 lists passenger and aircraft movement activity between 2007

and 2012. Over this period, total enplaned and deplaned passengers

increased by 3.9% from 3,469,062 to 3,605,701 while total aircraft

movements declined by 0.4% from 89,251 to 88,898. The decline results

from fewer piston and local aircraft movements while itinerant

movements have increased. In 2012, the average number of

passengers per aircraft movement was 40.6, or above the average of

39.9 for the previous five years.

Exhibit 1.6 presents the 2012

concession sales at HSIA in

comparison to selective previous

years. Total sales in 2012 were

almost $80.5 million or $22.32 per

passenger (or slightly below 2011

levels). Car rental concessions

totalled $39,235,226 or $10.88 per passenger. The total average annual

rental car sales volume for the previous five years was $40.3 million.

Exhibit 1.4

HALIFAX STANFIELD INTERNATIONAL AIRPORT - MAJOR EMPLOYERS 2012

Employer Full-Time

Equivalent (FTE) Employees

IMP 1,108 Air Canada Jazz 717 Air Canada/ Air Canada Cargo 418 CATSA 226 HIAA 167 HMS Host International 115 Servisair 100 Avis/Budget 92 FedEx 79 Gate Gourmet 78 PAL 77 Tim Hortons 68 Hudson Group 57 NavCanada 51 Cougar Helicopters 45 National/Enterprise/Alamo (ANC) 33 Source: Chris Lowe Group and Halifax International Airport Authority.


20

Exhibit 1.5

HALIFAX STANFIELD INTERNATIONAL AIRPORT - AIR TRAFFIC STATISTICS 2007 to 2012

Enplaned / Deplaned Passengers: Total Aircraft

Movements: Passenger Average Per

Movement: 2007 3,469,062 89,251 38.9 2008 3,578,931 89,033 40.2 2009 3,417,164 88,477 38.6 2010 3,508,153 87,021 40.3 2011 3,594,164 86,874 41.4 2012 3,605,701 88,898 40.6


Exhibit 1.6

HALIFAX STANFIELD INTERNATIONAL AIRPORT - CONCESSION SALES 2007 to 2012

Year Enplaned / Deplaned

Passengers

Total Concession Sales

Sales Per Passenger

2007 3,469,062 $80,351,150 $23.16 2008 3,578,931 $81,071,915 $22.65 2009 3,417,164 $78,739,225 $23.04 2010 3,508,153 $79, 711,056 $22.72 2011 3,594,164 $80,570,892 $22.42

2012 3,605,701 $80,478,770 $22.32

Car Rental Concession Portion

2007 3,469,062 $40,665,786 $11.72

2008 3,578,931 $40,675,586 $11.37

2009 3,417,164 $40,385,453 $11.82

2010 3,508,153 $40,019,450 $11.41

2011 3,594,164 $39,976,260 $11.12

2012 3,605,701 $39,235,226 $10.88



21

1.5 The Airport Setting

Adjacent to HSIA is the 970 hectare AeroTech Business Park operated

by HRM. During 2012, there were no lots available for sale. Two major

tenants in the aerospace field are located in AeroTech. They are Pratt

and Whitney Canada and L-3 Electronic Systems Inc. Combined with

tenants at the airport, the aerospace cluster had an estimated 1,450

employees in 2011/12.

Hilton Garden Inn opened a 145

room hotel in AeroTech during

2005 and Holiday Inn Express

followed with a new 119 room

hotel on the same site in 2008.

Another nearby operation is a

Quality Inn (former Airport Hotel

Halifax), which has 156 rooms.

Combined, the three properties have over 100 FTE employees. In 2013,

the airport’s accommodation base increased by 169 rooms or 40% to

589 rooms when the new ALT Hotel opened. This $30.5 million project

has 45 FTE employees.

1.6 Airport Facilities

The 20-year Master Plan provides HIAA with a longer-term framework for

land uses, infrastructure, services and development projects. The Land

Use Plan for HSIA is shown in Exhibit 1.7. It was initially prepared in

1996 and amended (with associated drawings) in 2002. An updated

Master Plan was completed in 2011 and it is also shown in Exhibit 1.7.

The airport's various land uses are classified as:

Airfield District

Future Airfield District

Operational Services

Air Terminal District

Aviation Services

Airport Industrial

Airport Commercial

Airport Reserve

Future Roads / Runways / Taxiways

The major features of the airport are the airfield, commercial

development and terminal complex.


22

Airfield

HSIA has simultaneous intersecting runway operations that allow for

increased traffic capacity with fewer delays and lower fuel costs.

Runway 05/23 is 10,500 feet by 200 feet with an asphalt/concrete base

and Runway 14/32 is 7,700 feet by 200 feet with an asphalt base.

Taxiways A to H have an average width of 75 feet. There are six aprons

with an average area ranging from 67,713 square feet to 597,070 square

feet.

NavCanada operates the Air Navigation System across Canada and has

51 FTE employees at the airport. The Instrument Landing System (ILS)

navigational aids are Category II while Raytheon Canada Radar provides

primary and secondary coverage on Runway 05/23.

Commercial Development

Commercial land is leased and not sold. In 2012, there were over 20

major commercial and industrial tenants. Airside taxiway access land is

leased to companies involved in aircraft overhaul and repair, air cargo

and courier, helicopter transport and aircraft servicing. Non-taxiway

access land is leased to firms involved in flight food service, brokering,

airport services and car rentals. A service station (Petro Canada) and

fast food outlet (Tim Hortons) are also present.

A commercial development initiative is the Airside Subdivision Project,

which contains 17 parcels with airside access. Exhibit 1.8 shows that

these lots are designed for aircraft maintenance facilities, air cargo

transshipment areas, offshore oil and gas supply centres, and aircraft

servicing and maintenance activities.

CHC Helicopters International leased one of the lots in 2002 for a new

$3.5 million passenger terminal and helicopter facility. In 2003, Inland

Technologies opened a $1.5 million glycol recovery operation for the fluid

used to de-ice airplanes. IMP completed a new $15 million aerospace

hangar in 2006. During 2008, a lease was signed with Gateway Facilities

ULC to build and manage a $15

million multi-tenant cargo facility that

contains 40,000 square feet. This

facility became operational in 2010.

Also in 2010, Cougar Helicopters

commenced construction on a

22,000 square foot hangar that

opened in 2011 to service the

offshore oil and gas sector.


23

In 2011, HIAA had an updated Master Plan for the period to 2030

approved by Transport Canada as a requirement of the Ground Lease.

The updated plan states that the airfield has sufficient capacity to meet

future hourly and annual aircraft movements up to 2030. The ATB is

anticipated to require expansion if increased passenger traffic both

before and after 2020 meets projections. A major feature of the updated

plan is the Airport City Development Plan. It contains the following

features:

A Highway Commercial Precinct for aeronautical and other

businesses with showcase visibility from Highway 102.

A Multi-Purpose Precinct that is accessed by the terminal roadway

system and will contain businesses that meet the commercial

needs of passengers, as well as meeters and greeters.

An Aviation Precinct with facilities for passenger air service

support, general aviation fixed base operators, refueling and

aircraft maintenance.

A Logistics Precinct that is intended to become a key

transshipment centre for North America.

An Aviation Reserve that is for commercial activities requiring

airfield access.


24

Exhibit 1.7

LAND USE PLAN AND NEW MASTER PLAN (2011)


25

Exhibit 1.7 LAND USE PLAN & NEW MASTER PLAN (2011)


26

Exhibit 1.8 AIRSIDE SUBDIVISION LOTS


27

Terminal Building

The Air Terminal Building (ATB) opened in 1960 and it has been

expanded and upgraded numerous times. During 1976, it was enlarged

to accommodate three million annual passengers and this volume was

surpassed in 2004. The international arrival area was expanded and

upgraded in 1987 and has since received additional work. Also, a major

upgrade was completed for the G7 Summit held in Halifax during 1995.

With the facility’s transfer from Transport Canada to HIAA in 2000, over

$100 million has been invested in:

an expanded international arrivals area approximately three times

larger than the previous size;

a domestic arrivals area quadruple the former size;

U.S. preclearance facilities;

a separate and expanded international greeting area;

new Customs, Immigration and Canadian Food Inspection Agency

facilities; and

additional retail space (including Airport Square).

During 2008, major terminal modifications were made as part of the ATB

Groundside Redevelopment Program. This work included

redevelopment of the centre core to efficiently move passengers from the

new parking structure through the ATB by four new escalators, two

elevators and an updated exterior façade.

The ATB currently has 29 operational gates and 13 aircraft loading

bridge positions that can accommodate jets up to the size of Boeing

747s. There are also two covered walkways. Passenger services and

amenities include a tourism visitor information centre, first aid facility,

flight information display system, baggage carts, lounges, duty free

shops, retail outlets and restaurants.

In 2012, HIAA launched a $44.5 million project to upgrade the airport’s

baggage handling systems and to modernize its passenger check-in

processes. The new baggage handling systems will result in increased

reliability and capacity while further improving the security screening of

checked bags. Passengers bound for the United States will benefit from

shorter connection times as a result of harmonizing the screening

process with the process used by U.S. airports. The latest technology in

passenger processing will be deployed in the check-in hall to enable a

faster and more efficient check-in experience for the passenger. The

space will be renovated to provide improved circulation and greater use

of natural light. Construction started in late 2012 and will be complete in

the Spring of 2014.


28

Main Level Domestic/International Departure

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


29

1.7 Regional Economy

Demand for air passenger and cargo transportation is a function of

economic activity. The trend for Atlantic Canada’s economy is a stable

population base with declining unemployment and real economic growth

driven by resource development and the service sector. From 1996 to

2012, the region’s population declined by less than 1.0% from 2,381,002

to 2,363,500. Most of this decline occurred in Newfoundland and

Labrador as Nova Scotia’s population increased from 931,235 to

948,700. The population of New Brunswick and Prince Edward Island

also increased.

Halifax Regional Municipality (HRM) is the largest population and service

centre in Atlantic Canada. HRM has generated strong economic

performance and is the major contributor to Nova Scotia’s economy.

Between 1996 and 2012, the number of people employed in HRM

increased by 67,900 or 39.5% from 172,100 to 240,000 and

unemployment declined from 8.6% to 6.2%. Provincially, total

employment increased by 67,600 or 17.6% from 385,000 to 452,600

while unemployment declined from 12.6% to 9.0%.

Exhibit 1.10 HALIFAX REGIONAL MUNICIPALITY & NOVA SCOTIA

KEY INDICATORS - 1996 and 2012

Halifax Regional Municipality Nova Scotia

1996 2012 1996 2012

Total Population 341,500 413,700 931,200 948,700

Employed Labour Force 172,100 240,000 385,000 452,600

Unemployment Rate 8.6% 6.2% 12.6% 9.0%

Labour Force Participation Rate

67.5%

70.1%

59.8%

64.1%

Sources: Nova Scotia Department of Finance – Economics Indicators (July 2013); Greater Halifax Partnership (August 2013); Statistics Canada CANSIM Tables 051-0046 (August 2013).

Exhibit 1.9

ATLANTIC CANADA POPULATION - 1996 to 2012

Province 1996 2012 Change Newfoundland & Labrador 560,584 512,700 -47,884PEI 136,188 146,100 +9,912 Nova Scotia 931,235 948,700 +17,465 New Brunswick 752,995 756,000 +3,005 TOTAL 2,381,002 2,363,500 -17,502 Source: Statistics Canada, Population Estimates & Projections, CANSIM Table 051-0001 (September 2012).

A key factor influencing air

traffic demand, and hence

economic impacts, is the

strength of the Nova Scotia

and Atlantic Canada

economies. In 2012, GDP

growth was 0.9% in Nova

Scotia, -0.7% in

Newfoundland and Labrador,

1.4% on PEI and 0.8% in

New Brunswick. Nationally,

growth was 2.0%. (Source:

RBC Economics Provincial

Outlook, December 2012).


30

2 Study Approach 2.1 Introduction

This section outlines the approach used to calculate the impacts of HSIA

on HRM and Nova Scotia. These methods, and the terminology used in

the 1992 report and updates, are also summarized in this section.

2.2 Economic Impact

To establish a framework for measuring the economic impacts of Halifax

Stanfield, the following were defined:

The types of economic activity being considered.

The study area.

The units of measurement of economic impact used.

The methods used to measure or estimate economic impact.

The types of economic activity are grouped into three categories: direct,

indirect and induced.

Direct Economic Activity

This activity refers to airport-related activity of those firms or industries

for which aviation or airport activity is a portion of total business activity.

These businesses can be divided into three groups: those with primary

linkage to the airport (generally aviation-related); those with a secondary

linkage (generally not aviation-related); and the aerospace sector.

Primary linkage businesses or organizations include those listed below.

Many of the primary linkage businesses are located at Halifax Stanfield.

General Aviation: This refers to companies engaged in charter air

operations, corporate aviation operations and aviation-related

organizations or educational institutions.

Air Carriers: This refers to companies offering scheduled air

service within Nova Scotia (local), scheduled or charter air

service to other points in Atlantic Canada and Canada (regional

or national) or to transborder (U.S.) or international

destinations.

The economic activity at HSIA is calculated by direct, indirect and induced impacts.


31

Air Support Services: This refers to companies whose business is

primarily or wholly aviation-related, or who provide direct support to air

carriers or general aviation businesses. Air support services include:

Customs brokers, couriers or freight forwarders

Flight catering services

Fuelling services

Sales, rentals or aircraft leasing businesses

Parts and maintenance services

General services (such as fixed base operators)

Airport Operations and Administration: This category includes HIAA,

NavCanada, CATSA, Canada Border Services Agency, Public Health

Agency of Canada, RCMP (Airport Detachment), U.S. Customs and

Border Protection Services and other government functions that are

involved in the direct operation of the airport or which provide support

services at the airport. Excluded from the impact analysis are volunteers

at the Air Terminal Building.

Secondary linkage businesses include:

Commercial Services: These include aviation-related retail and personal

service businesses operating at Halifax Stanfield.

Ground Transportation: These include car rental, taxi and limousine

service, and bus transportation operations that service the airport. The

main offices for these businesses are both on-site and off-site.

Tourist/Travel/Hotel Industry: This group of secondary

linkage businesses includes travel agencies, tour operators,

hotels/motels, and other food and beverage operators who

provide service to passengers travelling by air for business

or pleasure.

Indirect Economic Activity

Direct economic activity is accompanied by indirect and

induced economic activity. Indirect economic activity refers

to activity generated in a sector that supplies raw materials

and other inputs to businesses associated with direct

economic activity (as listed above). Indirect activity occurs

as a result of direct activity. The terms "direct" and "indirect"

depend on the chosen reference point. Any inter-relationships between

the businesses included under the heading Direct Economic Activity and

those included under Indirect Economic Activity were taken into

consideration in the 1992 impact analysis and the updates.


32

Induced Economic Activity

Induced economic activity refers to that economic activity generated by

individuals employed in the direct or indirect activity sectors who spend a

portion of their household income on consumer goods.

Measures of indirect and induced activity show the effect that the direct

expenditures have as they “ripple” through the economy. The measure is

referred to as the multiplier effect or spinoff impacts.

2.3 Study Area

The total economic activity and impacts are defined for a specific

geographic area or regions. For the 2012 update, economic activity and

impacts are analyzed for the following regions:

Local Economy (Halifax Regional Municipality)

Regional Economy (Province of Nova Scotia)

2.4 Economic Impacts Measured and Methods of Measurement

Three measures of Halifax Stanfield’s economic impact on HRM and

Nova Scotia are defined as follows:

Economic Output or Gross Revenue: This measure is determined in

terms of total gross revenue from all airport-related activity, and those

same total gross revenues, less any revenue transferred from one

airport-related activity (primary or secondary) to another airport-related

activity.

Employment: This measure is defined as the total amount of full-time

equivalent (FTE) employment created by airport activity (excluding

volunteers).

Wages and Salaries: This measure is defined as the total amount of

wages and salaries created due to airport activity.

Direct, indirect and induced economic impacts associated with the above

three measures of economic activity were calculated as follows:

Direct Economic Impact: In terms of economic output, employment,

wages and salaries were obtained by means of surveys of the major

airport tenants. Current and past survey results and other data sources

were used to arrive at the final economic impact values.

Positive economic impacts are defined under economic output or gross revenue, employment, wages and salaries, retail sales, the aerospace cluster, construction activity and tourist expenditures.


33

Indirect and Induced Economic Impact: In terms of economic output,

employment, wages and salaries were estimated by means of economic

multipliers. The multipliers used in this report are the same as previous

updates.

In addition to the three measures, other economic impacts were

determined. ATB retail and concession sales, the aerospace cluster at

HSIA and the adjacent AeroTech Business Park, construction activity

and tourists accessing Nova Scotia at the airport were also identified.

These impacts are assessed separately and represent major

contributions to the economy of Nova Scotia.

The research methodology used by Nova Scotia Economic and Rural

Development and Tourism was applied to determine the jobs and payroll

impacts (direct and spin off) of tourists entering Nova Scotia through the

airport. Spinoff refers to indirect and induced impacts. This model also

isolated government taxes from these tourist expenditures. For the

aerospace cluster, the economic impact approaches used at other

aerospace concentrations in Canada and the U.S. were applied. This

approach provides a general indication of expected impacts and

maintains the confidentiality of the few large aerospace firms operating

around Halifax Stanfield.

2.5 Fiscal Impact

The fiscal impact measures include the following:

Personal Income Taxes: This measure refers to the personal income

taxes paid to the Province of Nova Scotia by individuals employed due to

airport activity. This impact was calculated from sources like Statistics

Canada’s financial management system.

Retail Sales Taxes: This measure refers

to retail sales taxes created by

purchases of retail goods and services

by individuals who earn wages and

salaries due to their employment

stemming from Halifax Stanfield activity.

In 2012, the HST rate in Nova Scotia

was 15% (5% federal part and 10%

provincial part).

Fiscal impacts are measured for the same study area and in a similar

fashion as economic impacts in terms of direct, indirect and induced

activity.

Fiscal impacts are defined under personal income taxes, retail sales taxes and municipal taxes. No impact multipliers (spinoffs) are applied to municipal taxes.


34

3 Economic Impacts 3.1 Introduction

The data gathered from the 2012 survey were combined with other sources,

as outlined in Section 2, to develop updated estimates of total economic

impacts in terms of:

Economic Output

Employment

Wages and Salaries

For each type of economic impact indicator listed above, the data have been

used to estimate the economic impacts in HRM and Nova Scotia.

At the time of the survey program in mid-2012, over 100 firms were located

at HSIA. For each indicator of economic impact in the 1992 study, a sample

of organizations by type were surveyed. The figures derived from the

surveys, and used for this update, were scaled up to represent the full

impacts at the airport.

3.2 Economic Output

The first measure of

economic impact is

total economic output.

This measure is also

referred to as gross

revenue. Economic

impacts related to the

airport, in terms of

economic output for

HRM and Nova

Scotia, are

summarized in Exhibit

3.1. The economic impact is separated into direct, indirect and induced. The

direct effects are the same for both HRM and Nova Scotia because all direct

economic output takes place at the airport which is located in HRM.

Exhibit 3.1 shows that HSIA's total economic output for the economy of HRM

is $753 million. This is composed of $414 million in direct output, $111 million

in indirect output and $228 million in induced output.

Exhibit 3.1 further reveals that the airport's total economic output for the

Nova Scotia economy is $1.27 billion. This is comprised of $414 million in

direct output, $261 million in indirect output and $598 million in induced

output.


35

Exhibit 3.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT –

GROSS OUTPUT (MILLIONS) IN 2012

Direct Indirect Induced Total Halifax Regional Municipality

$414.0

$111.0

$228.0

$753.0

Province of Nova Scotia

$414.0

$261.0

$598.0

$1,273.0

3.3 Employment

Employment is another measure of economic impact. It is defined as full-

time equivalent (FTE) jobs. The figures shown in Exhibit 3.2 are year-end

averages and not peaks, and they include estimated off-site and on-site

employment related to the airport.

Exhibit 3.2 presents the estimated total

employment impact of the airport on HRM. For

2012, 8,310 full-time equivalent direct and

spinoff jobs were created in HRM due to airport

activity. There were 240,000 FTE employed

people in HRM during 2012 so the airport

accounted for 3.5% of the total. Direct

employment from airport activity is estimated at

5,400 FTE jobs, indirect employment represents

1,290 FTE jobs and induced employment

accounts for another 1,620 FTE jobs. Total

employment was above 2011 levels because of

increased hiring in the aerospace sector and major passenger carriers. The

result is direct and spinoff employment increased by 210 FTE jobs.

Exhibit 3.2 also shows that the Nova Scotia-wide employment impact from

airport activity is estimated at 12,360 FTE jobs. The number of FTE

employed people in Nova Scotia in 2012 was 452,600 as Halifax Stanfield

accounted for 2.7% of the employment in Nova Scotia. The direct

employment created by the airport in Nova Scotia was 5,400 FTE jobs,

indirect employment was 2,970 FTE jobs, and induced employment was

3,990 FTE jobs.


36

Exhibit 3.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - EMPLOYMENT (FULL-TIME EQUIVALENT) IN 2012


5,400 1,290

1,620 8,310

Province of Nova Scotia 5,400 2,970

3,990 12,360

3.4 Wages and Salaries

Wages and salaries are another measure of economic impact. The direct

wages and salaries are based on the 1992 study and updated results.

Indirect and induced wages and salaries were determined by multiplying the

number of jobs in each category by the average annual Nova Scotia wage in

2012 ($41,064).

Exhibit 3.3 contains the wage and salary impact of the airport on HRM and

Nova Scotia in 2012. The total wages and salaries created by airport activity

in HRM amounts to $341.2 million. The direct wage and salary portion is

$221.7 million, the indirect impact is $53.0 million, and the induced impact is

$66.5 million.

Exhibit 3.3 also presents the total wage and salary impact of Halifax Stanfield

on Nova Scotia for 2012. This impact is $507.5 million.

Exhibit 3.3

HALIFAX STANFIELD INTERNATIONAL AIRPORT - WAGES AND SALARIES (MILLIONS) IN 2012


$221.7

$53.0

$66.5

$341.2


$221.7

$122.0

$163.8

$507.5


37

3.5 Renovation and New Construction Impact

Capital Improvements Since 2000

Since the 2000 transfer of the facility from Transport Canada, HIAA and

tenants have invested approximately $475 million in new capital

development projects and the maintenance of capital. These projects

represent over 70% of all capital improvements at airports in Atlantic

Canada, and reflects Halifax Stanfiled’s regional dominance in both the air

passenger and air cargo segments.

Using an average annual Nova Scotia construction wage of $39,065 for this

period, these projects generated 7,975 FTE jobs. The direct job portion of

this total is 4,865 FTE jobs. Capital projects contributed $300 million in

wages and salaries with the direct portion being $190 million.

To prepare for the next phase of capital development, HIAA completed an

updated Master Plan in 2011. HIAA’s planned future spending on capital

projects is listed below.

2013 - $53.6 million

2014 - $34.2 million

2015 - $49.7 million

2016 - $40.9 million

2017 - $35.1 million

2018 - $17.5 million

In 2012, HIAA spent $24.3 million on capital projects. For 2013 and future

years, an additional $276 million is expected to be spent on capital projects

by HIAA and tenants. These investments do not include all of the ‘Airport

City’ elements of the new Master Plan that could significantly increase future

capital spending. Applying the 2012 average Nova Scotia construction wage

of $47,780, future expenditures of $276 million will provide 3,790 FTE jobs

and $174 million in wages and salaries.


38

3.6 Tourist/Visitors Impacts

Tourism is a major sector of the Nova Scotia economy. In 2012, there were

1,993,300 visitors to Nova Scotia. Of this total, 639,400 or 32.1% entered

Nova Scotia at Halifax Stanfield. Nova Scotia Economic and Rural

Development and Tourism has an economic impact model that calculates the

impacts of the tourism sector on the provincial economy. Outputs from this

model (2008 with estimates for 2012) show that tourism is a $2.02 billion

industry that generates 34,400 direct and spinoff jobs and provides $892

million in household income.

The air segment (domestic, transborder and international) in 2012 represents

32.1% of all visitors. Tourists who enter Nova Scotia at Halifax Stanfield

tend to stay longer and spend more money than other market segments.

Data from the comprehensive report, 2010 Nova Scotia Visitor Exit Survey,

Corporate Research Associates (September 2011) shows that tourists

accessing Nova Scotia at the airport spent $1,432 per party versus the

average of $1,052, stayed longer (6.9 nights versus 5.1 nights) and had a

smaller average party size (1.8 versus 2.1).

Tourists who entered Nova Scotia at HSIA in 2012 contributed an estimated

$882 million towards Nova Scotia’s tourism revenues and $581 million

towards gross domestic product. They also generated an estimated 15,030

direct and spinoff jobs with $390 million in direct and spinoff household

income. The Province of Nova Scotia and the Government of Canada also

benefited from $114 million in new taxes.

Exhibit 3.4

HALIFAX STANFIELD INTERNATIONAL AIRPORT - ECONOMIC IMPACT OF AIR TRAVELERS ENTERING NOVA SCOTIA IN 2012

Indicator

Total – All Tourists

Tourists Entering

Nova Scotia At HSIA Tourism Revenues

$2.02 billion

$882 million

Gross Domestic Product

$1.33 billion

$581 million

Jobs: Direct and Spinoff

34,400

15,030

Household Income: Direct and Spinoff

$892 million

$390 million

Total Taxes: Provincial and Federal

$261 million

$114 million

Sources: Chris Lowe Group estimates based upon 2008 to 2012 tourism industry data, 2010 Nova Scotia Visitor Exit Survey, and Tourism Economic Impact Model, Nova Scotia Economic and Rural Development and Tourism.


39

3.7 ATB Retail Sales Impacts

HIAA collects data on gross sales for

retailers in the ATB and other

concessions. As outlined in Exhibit 1.6,

these sales in 2012 approached $80.5

million. Sales have increased over the

past decade due to increased visitor

traffic and the ATB Centre Core Retail

Expansion Project (Airport Square),

which expanded the retail base.

3.8 Aerospace Cluster Impacts

IMP Aerospace and tenants at the adjacent AeroTech Business Park

comprise an aerospace cluster with an estimated 1,450 employees in

2011/12.

According to the Aerospace Industries Association of Canada (AIAC), in

2012 this sector had $27 billion in revenues and created 170,000 direct and

spinoff jobs across Canada. Exports make up nearly 80% of revenues.

Aerospace is concentrated in Quebec and Ontario as these two provinces in

2012 had 60% and 27% respectively of manufacturing. Atlantic Canada was

the fastest growing region in recent years with 5% of manufacturing and 11%

of maintenance, repair and operations (MRO) in 2012.

Applying the approaches used by AIAC, the U.S. Department of Commerce,

the U.S. Aerospace Industries Association and the University of Manitoba’s

Transport Institute, general impacts of the local aerospace cluster were

estimated. These estimates rely upon secondary sources and industry-wide

norms. Applying the above sources and information on local aerospace

firms, the local sector had estimated expenditures of $420 million in 2011/12.

The direct and spinoff jobs are estimated at 2,900, and wages and salaries

at $164 million. A portion of these positive impacts is included in the

economic and fiscal impacts for the airport.


40

Exhibit 3.5

AEROSPACE CLUSTER - GENERAL ESTIMATE OF 2011/12 ECONOMIC IMPACTS

Indicator Direct Total (Direct & Spinoff) Expenditures

$230 million

$420 million

Employment (FTE)

1,450

2,900

Labour Income

$923 million

$164 million

Sources – Chris Lowe Group estimates based upon Canadian Aerospace Industry Performance 2012, Aerospace Industries Association of Canada; U.S. Bureau of Labor Statistics; U.S. Aerospace Industries Association estimates (2007); Economic Impact Study of Southport Aerospace, The University of Manitoba Transport Institute, 2006.


41

4 Fiscal Impacts 4.1 Introduction

The 1992 survey and updates are the primary sources for estimating the

fiscal impact of the airport on HRM and Nova Scotia during 2012. Statistics

Canada and Nova Scotia Department of Finance data were also used.

These sources were drawn upon to estimate fiscal impacts from:

Personal and Consumption Taxes (Provincial)

Retail Sales Taxes

4.2 Personal and Consumption Taxes (Provincial)

The percentage of wages and salaries paid to the Province of Nova Scotia

was calculated using estimates of the personal income and consumption

taxes (provincial) created due to airport activity. According to the Nova

Scotia Department of Finance, in the range of 12% of total Nova Scotia

personal income goes to personal income and consumption taxes. By

multiplying this average personal income tax rate by the wages and salaries

listed in Section 3, the personal income tax impacts on the Province of Nova

Scotia were calculated.

Exhibit 4.1 summarizes the 2012 personal income and consumption tax

impacts of Halifax Stanfield activity within HRM and across the Province of

Nova Scotia. The total personal income and consumption taxes resulting

from airport activity in HRM amounts to $41.0 million. This consists of $26.6

million in direct personal income and consumption taxes, $6.4 million in

indirect taxes and $8.0 million in induced taxes. The exhibit also shows that

the total personal income and consumption taxes created by airport activity

on the Province of Nova Scotia amounts to $60.9 million.

Exhibit 4.1 HALIFAX STANFIELD INTERNATIONAL AIRPORT -

PERSONAL INCOME & CONSUMPTION TAXES (MILLIONS) IN 2012

Direct Indirect Induced Total

Halifax Regional Municipality

$26.6

$6.4

$8.0

$41.0


$26.6

$14.6

$19.7

$60.9


42

4.3 Retail Sales Tax (HST)

Another fiscal impact measure of HSIA activity is sales taxes generated by

the purchase of retail goods by those who are employed due to airport

activity.

In the range of 35% of personal income is spent on retail trade goods and

services. By multiplying the wages and salaries from Section 3 times this

value, the amount of retail sales generated by airport activity is determined.

By multiplying this figure by the HST rate, the retail sales tax impact of airport

activity can be isolated. The 2012 rate in Nova Scotia was 15% (5% federal

part and 10% provincial part).

Exhibit 4.2 lists the retail sales tax impact of airport activity on HRM and

Nova Scotia. This exhibit shows that $17.9 million in retail sales taxes were

created due to airport activity in HRM. Province-wide, $26.6 million in retail

sales taxes were generated due to airport activities.

Exhibit 4.2 HALIFAX STANFIELD INTERNATIONAL AIRPORT - RETAIL SALES (HST) TAXES (MILLIONS) IN 2012


$11.6

$2.8

$3.5

$17.9


$11.6

$6.4

$8.6

$26.6

4.4 Commercial Property and Business Occupancy Taxes

In 2012, the total value of taxes paid to HRM was $4,008,039 or an increase

of 4.4% from 2011. Of this total, $2,600,035 was paid by tenants and the

remaining $1,408,004 by HIAA.


43

5 Conclusions In 2012, HSIA served a record 3,605,701 passengers or over half of all air

travel passengers in Atlantic Canada. It has a multi-province catchment area

and functions as a major economic and employment generator for Halifax

Regional Municipality (HRM) and Nova Scotia. Halifax Stanfield provided

direct and connecting passenger and cargo service for 18 passenger carriers

and 13 cargo carriers to destinations in Canada, the United States, the

Caribbean and Europe.

The global recession that hit the airline industry in mid-2008 was severe with

operating cash flows not returning to pre-recession levels until late 2010. In

2012, Nova Scotia’s gross domestic product (GDP) increased by 0.9%

following growth of 0.5% in 2011. Growth was also slow in the remainder of

Atlantic Canada in 2012 and Canada-wide growth was a modest 2.0%.

Against this economic setting, 2012 was still a year of accomplishments,

which included more international awards and the substantial completion of a

major runway extension program. These achievements occurred against a

backdrop of carriers shifting capacity in the second half of 2012 from Eastern

Canada to Western Canada or other markets.

The 2011 global Airport Service Quality (ASQ) ratings were released in 2012.


overall passenger satisfaction in its class (under five million passengers) and

placed third in North America. To date, Halifax Stanfield has earned a total of

28 service quality awards.

HSIA has also been inducted into Airports Council International’s Director

General’s Roll of Excellence, honouring airports that have ranked among the

top five airports in the world for five consecutive years in the Airport Service

Quality ratings. The facility has also been re-certified as ASQ Assured. This

distinction has been earned by just 12 airports world-wide.

HIAA also created a new airport service culture program in 2012, branded

“The Stanfield Way”. The program stresses the over-arching purpose of all

airport employees, regardless of role, to serve every airport visitor. It is

expected that all airport employees will have had an opportunity to

participate in this program by the end of 2016.

In February 2011, the Federal Government and the Province of Nova Scotia

announced a joint investment of up to $14 million towards the extension of

the main Runway (05/23) from 8,800 feet to 10,500 feet to accommodate

larger wide bodied and heavy weight aircraft with the balance being invested

by HIAA. Construction work started in late 2011 and the expanded runway

was fully operational on November 15, 2012.


44

Cargo growth is a key strategy of Halifax Stanfield as the runway extension

now allows wide-body cargo freighters to operate at full capacity with the

resulting benefits to all exporters; particularly seafood exporters. The runway

extension further supports the multi-tenant cargo facility that opened in June

2010. The facility is operated by Gateway Facilities ULC and contains

40,000 square foot state-of-the-art cargo space that includes 7,000 square

feet of climate controlled space. It is the largest airside refrigerated space

north of Miami and enables the efficient export of high-value seafood.


$30.5 million onsite boutique hotel. It opened in 2013 under the ALT Hotel

brand. The facility includes 169 rooms and 6,775 square feet for business

meetings and gatherings. During 2012, $18 million was spent on the

project’s construction.


airport lands. A key element is the planning and development of an ‘Airport

City’ that will transform HSIA’s highway showcase location and regional air

hub amenities. In 2012, HIAA released land use plans and concepts for

groundside lands that focus on creating a gateway destination that could

support over 750,000 square feet of new office, convenience, destination

retail and other space.


includes an updated mission and vision statement, values and goals, and an

assessment of the general economic conditions likely to occur over the life of

the plan. In addition, it provides an evaluation of current and future

conditions of the aviation industry.

HIAA retained an A+ credit rating from Standard & Poor’s (second highest

among Canadian airport authorities) in 2012. In the fiscal year, HIAA

generated revenues of $79.3 million and ended the year with a surplus that

is retained and reinvested in operations and development. HIAA also

invested $24.3 million in its capital improvement program in 2012.

HSIA’s diversified tenant base and head office functions of IMP Group

Aerospace and Air Canada Jazz have contributed to overall airport-related

employment to grow from 2011 to 2012. The major contributor to the

airport’s economic base is IMP Group with many of this firm’s employees

involved in multi-year civilian or military service contracts.

In 2012, HSIA contributed $1.27 billion to the Nova Scotia economy and

provided 12,360 full-time equivalent (FTE) jobs with wages and salaries of

$507.5 million. These employees contributed $60.9 million to the Province of

Nova Scotia in terms of personal and consumption taxes and $26.6 million in

retail sales taxes.


45

Beyond the economic and fiscal impacts listed in the following exhibit,

renovation and new construction projects, tourists entering Nova Scotia at

HSIA and a cluster of aerospace businesses that includes the adjacent

AeroTech Business Park provide further positive local and provincial

spinoffs.

From 2000 to 2012, HIAA and tenants have invested approximately $475

million in new capital development projects and the maintenance of capital.

These projects represent over 70% of the total capital improvements at all

airports in Atlantic Canada and created 7,975 FTE jobs and contributed $300

million in wages and salaries. HIAA’s Capital Plan to 2018, completion of the

new ALT 169 room boutique hotel and other expected future tenant projects,

will require an additional $276 million in investments. These planned

projects will require 3,790 FTE jobs and generate $174 million in wages and

salaries.

Tourism is a $2.02 billion industry in Nova Scotia based upon the most

recent provincial government statistics. There were 1.993 million visitors to

Nova Scotia in 2012 with 32% arriving via air at HSIA. Tourists entering

Nova Scotia at Halifax Stanfield tend to stay longer and spend more money.

They contributed an estimated $882 million to the Nova Scotia economy and

accounted for 15,030 jobs (direct and spinoff), $114 million in total taxes and

$390 million in payroll.

IMP Aerospace and tenants at the adjacent AeroTech Business Park are an

aerospace cluster with an estimated 1,450 employees in 2011/12. This

cluster has estimated direct and spinoff expenditures of $420 million. The

direct and spinoff jobs are 2,900, and wages and salaries are approaching

$165 million.


46

Exhibit 5.1 COMPARISON IMPACT OF

HALIFAX STANFIELD INTERNATIONAL AIRPORT 2000 - 2012

Impact

2000

2005

2012

% Change:

2005 to 2012

Total Gross Output Halifax Area Nova Scotia

(Millions)

$614.1 $1,035.1

(Millions)

$683.3 $1,152.8

(Millions)

$753.0 $1,273.0

+10.2% +10.4%

Total Employment Halifax Area Nova Scotia

7,495 11,000

7,870 11,625

8,310 12,360

+5.6% +6.3%

Wages and Salaries Halifax Area Nova Scotia

(Millions)

$196.7 $289.2

(Millions)

$260.3 $384.6

(Millions)

$341.2 $507.5

+31.1% +32.0%

Personal and Consumption Taxes (NS) Halifax Area Nova Scotia

(Millions)

$29.7 $43.7

(Millions)

$35.1 $53.5

(Millions)

$41.0 $60.9

+16.8% +13.8%

Retail Sales Tax Halifax Area Nova Scotia

(Millions)

$10.2 $15.0

(Millions)

$13.7 $20.2

(Millions)

$17.9 $26.6

See Note

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

Halifax Stanfield International 2012 Airport Economic Impact Report Prepared For: Halifax International Airport Authority Prepared By: Chris Lowe Planning & Management Group

September 2013

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