2001 Annual Public Meeting
Ottawa International Airport Authority
An allocution by:
Claude Bennett, Chair of the Board of Directors
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On December 31st 2001, we closed the books on our fifth year of operating the Ottawa Airport. Despite the setbacks in the industry and the events of one tragic day in September, we concluded the year on a positive note. Again, we managed to offer our customers more services with improved facilities.
For fours and a half years, the Ottawa Airport Authority struggled to cope with growth on all fronts. More passengers, more planes, more services for our customers was the routine call during our first 54 months.
The region we serve demanded more from its air transportation infrastructure. The Airport Authority's mandate is to deliver these additional services. We have and will continue to do just that.
Indeed, some 20 million airport customers witnessed the airport's transformation, from plain, unconnected facility to a modern, vibrant gateway welcoming travellers to Canada's capital region.
Members of the Board of Directors, many before you here today and many who have now left the corporation but whose contribution will remain for years to come, have focus their energy on long-term planning. Our mandate is to ready our corporation for long-term growth, to ensure that the appropriate infrastructure is in place to meet current and future air-travel needs and also to facilitate regional economic growth.
Some of our corporation's early achievements during our high growth period include the establishment of the Airport Operating Influence Zone, which protects the community's airport by preventing encroachment by residential developments close to the airport. With our partners, local governments and developers, we have ensured strict guidelines apply to any future development around the airport.
A more recent accomplishment was the construction of our Combined Services Building to replace an aging firehall and outdated maintenance garage. This facility won international praise for its design and practicality, while providing our employees with a modern and efficient work environment.
The most significant development of our first five years was the opening of the United States pre-clearance facility. This facility represents a true competitive advantage for our region's local businesses. Its introduction allowed US carriers to come into what was previously a poorly connected air travel market, and drastically improve the number of routes and the frequency of direct flights to the world's most important marketplace.
The introduction of our airport improvement fee, which will fund one hundred percent of our expansion, also met our customers' approval -- thanks to its convenient collection. While we followed in the footsteps of all other major Canadian airports by introducing the fee, our airline collection agreement has now become the standard among the industry.
The Airport Authority helps to provide good connections, with quality, affordable facilities. But we contribute to the local economy in many other ways.
A May 2000 economic impact study on airport-based employment showed that the Authority and its partners provide one million dollars of direct economic impact each and every day to our region. A million dollars a day, plus connecting local businesses, friends and families.
Since our inception five years ago, the Airport Authority has purchased over 160 million dollars in good and services from within the region we serve. This includes the salaries Authority employees receive, the costs of operations and the required capital improvements we have completed. Using the average Ontario salary, 160 million dollars represents the equivalent of a workforce of almost five thousand employees, full-time for an entire year.
But there is more. Again since our inception, we have remitted to the local municipality eighteen million dollars in the payment-in-lieu-of-taxes, or PILT. On this subject, I wish to personally thank the new Premier of Ontario, the Honorable Ernie Eves and his colleague Mr. Flaherty. Their involvement led the way toward a resolution of the burdensome PILT formula. Today, the new formula is fair and beneficial to both the municipality and the airport. Based on passenger volumes, the formula ensures that the municipality can share in the growth of the airport, and that the airport can forecast its tax payments.
Indeed, we have come a long way during our first five years. The one obstacle remaining is that of Ground Rent to the Crown. First denounced publicly two years ago, Rent remains a threat to the affordability of our community's air service. Since 1997, Rent has gone from 3.9 million dollars to 8.7 million dollars, and will jump to 11 million dollars next year.
As long as Rent continues to increase, so will the fees the Authority must charge its partners and customers. The Board of Directors continues to monitor this situation and awaits the result of a review process currently underway.
Now, let's look at the year that was, and its implications for our corporation. Ground Rent notwithstanding, the Ottawa Airport has managed to achieve financial stability. The Board of Directors wishes to underline the performance of Airport Authority staff in 2001. They demonstrated their ability to manage and operate in bad times, as they had in the previous four and a half years of good economic times.
On behalf of the Board of Directors, I thank every employee for keeping the corporation's best interests in mind while faced with unprecedented challenges. The September 11th crisis, the bankruptcy of Canada 3000 and the subsequent reduction in budgeted revenues plunged our industry into a worldwide crisis.
Our employees reacted - even anticipated events superbly and for this, the Board extends its most sincere congratulations.
Members of the Board also took steps to improve our corporation's bottom line. We have re-designed directors' fees, resulting in a lesser costs to the Ottawa Airport Authority. This new fee structure will be reflected in our 2002 annual report, as required by our corporation's by-laws.
As well, three members of the Board have been appointed to keep at the forefront of our discussions the well being of key local sectors. The interests of consumers are represented by Ms. Pamela Sweet; Mr. Jeff Dale acts as business community representative and Mr. Hugh Blakeney as organized labour representative. They each ensure these sectors have a prominent voice within the Airport Authority's governing body.
When making decisions that affect our corporation's future, members of the Board have the best interest of the community at heart. The Board has demonstrated its fiscal responsibility, and its prudence. Each year we have ensured surpluses were available to complete required improvements to the facilities. We have asked the difficult questions from Senior Management, and we have insisted that a "no-surprises" approach be endorsed.
When considering the future one must, however, be a realist. Our community will continue to grow. Indeed to suggest otherwise would not only be imprudent, but irresponsible. A recovery is underway and growth is returning. We anticipate that growth will continue to, at the very least, match the conservative estimates the viability of our project is based on.
To validate our position, consider the following Conference Board of Canada forecasts:
•For 2001 to 2006, Ottawa is expected to have the highest employment growth of all Canadian cities at 14.1% over those five years.
•For the same period, 2001 to 2006, despite slowed growth in 2001 and expected slow growth in 2002, Ottawa will rank in the top 3 cities for GDP growth.
These projections exceed our conservative estimates, as did the recent Census results that also indicated strong economic growth for our region. They do, however, reflect similar opinions expressed by local community leaders, such as Adam Chowaniec, past Chair of the Board of Trade who stated his delight that finally, Ottawa has begun building an airport worthy of the current century.
The airport must grow with its community. The Airport Authority is building a new airport, a visionary project that includes the potential for further expansions: Two additional phases that will be built only when the community requires them, as traffic returns to normal levels.
Following last year's events, it is possible that these two additional phases be undertaken later than originally forecasted. Should the Conference Board of Canada forecast prove correct, however, we could very well need to expand before the year 2010, as originally scheduled.
This is the true vision behind our project. The Airport Expansion is affordable, it is flexible, and it will serve our community for decades. And despite the difficulties of 2001, the Ottawa Airport Authority is in good shape, and getting better.