2023 Annual Public Meeting - Formal remarks

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After nearly three years of pandemic-imposed virtual meetings, I was very glad to be able to return to gatherings around the boardroom table, in 2022. I was particularly delighted that we resumed our annual strategic planning retreat last summer, during which we advanced several timely and important matters that are changing how we approach our business. Several topics rose to the top, and will form a part of the Authority's strategic and action plans for the 2023-2027 timeline.

The first is Environmental, Social and Governance (ESG) reporting. In and of themselves, ESG topics are not new to the Authority. While we haven't publicly reported on our activities through a formal ESG lens, we have been internally focused on many areas identified as ESG- related for many years.

In fact, our environmental stewardship and sustainability efforts go back to the late 1990s when the Authority planned the terminal construction project. Recycling, waste diversion, and energy savings were priorities that have continued over the years and are reflected in our achievements in Airports Council International's Airport Carbon Accreditation program. After several years of climbing through the program's levels, I am pleased to report that the airport received level 3+ accreditation for carbon neutrality in 2022.

ESG discussions also included YOW’s path to net zero and the Authority is working diligently on a plan to achieve our ambitious, yet necessary environmental goals.

The Authority has also demonstrated its commitment to social responsibility through accessibility projects, supporting charitable projects and causes, and striving for a safe, inclusive, and healthy workplace for all employees. From now on, we will report on these and other related themes in our ESG and annual reports.

The Board is also engaged in organizational culture. We appreciate that the pandemic affected every aspect of the business, as well as the team, with some employees working remotely, while others were required to report on-site. We feel it is essential to focus on culture in the workplace as part of our rebuilding and recovery processes. To that end, we are taking on one related theme each year with safety first on the list, and will track it as part of our culture dashboard.

The third topic we discussed and have pursued vigorously is purpose. The Authority's mission, vision and values are well entrenched, and have served us for many years. But, we wanted something more inspirational that reflects our ideals as an organization and can act as a guiding principle for our employees.

A working group comprised of board directors and senior management collaborated with an experienced consultant to canvas partners and stakeholders for their perspectives about our core business and our role in the community. We also relied heavily on all of our employees, inviting them to participate in focus groups to contribute to the process.

The input we received from all sources was invaluable and provided the material that we shaped into our newly adopted purpose statement, which is:

"Building on teamwork and sustainability, YOW safely connects people, moves goods, and creates economic prosperity for our community."

It's simple, hits the right notes, includes the keywords that repeatedly emerged during our consultations, and, I believe, articulates our role in the community. I sincerely thank everyone who contributed to this meaningful and inspiring effort and look forward to seeing it introduced in the community.

I'm proud of the Board's involvement in these and many other projects. Their commitment and valued contributions made it hard to say goodbye to two Directors whose terms ended in 2022. Scott Eaton and Jan Traversy joined the Board in 2013 as at-large members and each served their maximum term. Both Jan and Scott chaired the Audit Committee during their tenure and served on the Major Infrastructure and Environment Committees. Scott also worked on an ad-hoc committee examining airport models, when the federal government contemplated changes to how airports are governed. I appreciated the ideas and expertise they brought to the boardroom table and their dedication to the success of the Airport Authority. They will be missed.

Their departure and one existing vacancy allowed us to welcome three new Directors in 2022: Bruce Lazenby, Marc Joyal, and Deanna Monaghan, all joined as at-large members. Each brings significant executive level experience, board leadership, and a clear passion for our community to the Board and they are already contributing to their committee work in a meaningful way. I look forward to working more closely with all three.

As you know, the aviation industry has been under tremendous stress over the past three years, due to staffing and other challenges brought on by the pandemic. In typical fashion, the YOW team has risen to the challenge to mitigate the impact. They’ve worked very hard to help our partners and tenants navigate these challenges. Whether helping airlines manage their baggage issues, or hosting a job fair to help partners fill their many vacancies, I’m proud of their efforts and extend heartfelt thanks on behalf of the Board.

The future appears much brighter, by contrast, as we work on many of 2022's successes bearing even more fruit in 2023. As one example, Porter's new aircraft hangars are rising and will become the home for maintenance operations for the airline's new Embraer E195-E2 jets. As a key hub in their evolving network, we have the potential to add all-new direct routes from YOW which the community will no doubt embrace.

Next, the return of non-stop Trans-Atlantic service to YOW is very exciting with Air France’s service to Paris-Charles de Gaulle Airport starting in June. The news has created a lot of excitement and anticipation from Ottawa-Gatineau travellers. We trust the community will throw its support behind this flight by adding Paris and the many destinations beyond, to their travel plans this year.

To Mark and his team, I extend my heartfelt thanks and congratulations for your efforts to make projects like Porter's and others a reality. Thank you to our community and our many stakeholders and partners for the support you demonstrate each time you buy an airline ticket that includes YOW. We pledge to keep doing our best, to provide you with the best possible travel experience at the Ottawa International Airport.

Merci.

Presented by Deanna Monaghan, Chair of the Audit Committee of the Ottawa International Airport Authority Board

I am very pleased to provide the financial report for the Ottawa Airport Authority’s year ended December 31, 2022. 

I would like to note the full audited financial statements are in the Authority’s annual report which is now available in both English and French online at yow.ca.

The annual report includes a detailed financial review of the Authority’s financial statements and results for 2022. This financial review discusses changes in passenger volumes and landed seat volumes that impacted the Authority’s results from operations. The COVID-19 pandemic continued to impact the airport and the Canadian and global travel industry in 2022. With the lifting of public health restrictions over the course of 2022, passenger volumes have trended higher throughout the year. In 2022, passenger volume of 2.99 million passengers was 156% higher and landed seats were 120% higher than in 2021 and represents approximately 59% of 2019 volumes.

The Authority generated revenues of $112 million during 2022, including Airport Improvement Fees of $50 million and landing and terminal fees and other charges to airlines of $28 million. The Authority’s remaining revenues came from concessions, car parking, land and space rentals, and other sources.  While the Authority received pandemic specific funding under the Airport Critical Infrastructure Program in 2022, the Authority does not receive government funding to support its ongoing operations. 

The Authority started collecting an Airport Improvement Fee, included in the price of airline tickets, in 1999 and this fee was $35 throughout the years. This fee is used to fund the cost of airport infrastructure and related debt service costs.  During 2022, the Authority invested approximately $15 million in a variety of high priority projects including the new LRT Airport Terminal Station, apron and taxiway construction and refurbishment, main terminal building enhancements and the acquisition of major fleet vehicles. There is no plan to increase the Airport Improvement Fee in the foreseeable future.

The Authority incurred total operating expenses of $87 million excluding depreciation. Ground Rent payable to the Government of Canada, calculated based on gross revenues, amounted to $8 million. Payments in Lieu of Municipal Taxes payable to the City of Ottawa amounted to $1 million.  The total interest cost of $22 million was paid on debt incurred to finance the Authority’s capital expenditure programs. 

The Authority generated earnings before depreciation of $25 million in 2022 and which was notably better than the loss of $5 million in 2021 due to the impact of the pandemic and the resulting decline in passenger volumes.

The Authority depreciates the cost of its capital assets, including the main terminal building, parking garage, vehicle maintenance and firehall buildings and major fleet vehicles.  Depreciation of capital assets amounted to $30 million in 2022, and was $1 million lower than 2021 depreciation. 

The Airport Authority ended the year with $46 million in cash together with approximately $150 million in available credit facility capacity. These credit facilities are essential elements of the Authority’s cash flow management strategy.

As we look ahead to 2023, the Authority looks forward to continued momentum in the recovery from the pandemic and as it moves closer to reaching and exceeding 2019 passenger volumes over the next few years. The Authority remains cautious about potential disruptions from additional pandemic developments and impacts from macro-economic trends and outlooks. We remain confident that the Authority will be in a solid position to withstand these events and engage with the community, passengers and stakeholders throughout the next phases of the recovery.

Presented by Mark Laroche, President and CEO of the Ottawa International Airport Authority

Recovery was the theme again in 2022. From passenger volumes to revenues, capital projects to talent retention and recruitment, Y-O-W continued on its path to financial sustainability while setting the stage for growth in 2023 and beyond.

We set some conservative projections for the year, but COVID variants affected travel plans at the beginning of the year and inclement weather affected them at the end during what would have been a very busy holiday travel season. That said, we finished the year just shy of 3 million passengers, which was a 155 percent increase over 2021, and 60% of our pre-pandemic yearly count of 5 million passengers.

The increase is thanks to a revived appetite for leisure travel and Y-OW-'s expanding route map. We are not quite at our pre-pandemic list of non-stop destinations; however, our winter charter offering was robust, and our service to the U.S. is steadily rebuilding. Geographical factors will always be challenging as we sit between two of Canada's major hub airports – Montreal-Trudeau and Toronto-Pearson. Our team continues to present the Y-O-W business case to airline network planners to show how important routes can fit within their schedules.

These efforts met with success outside of Canada with the recent Air France announcement concerning new, non-stop service to Paris-Charles de Gaulle Airport. Air France has never served Y-O-W, so this is truly great news. We look forward to their inaugural flight on June 27th and the celebrations that will accompany the big day. Most of all, I am confident that Air France’s success will send a clear message that there is real demand from Y-O-W and that we are an important market to serve with non-stop international destinations.

I will talk a more about Porter and their expansion at Y-O-W, but let me briefly mention that they have begun taking delivery of their new fleet of Embraer E195-E2 jets. These will join their newly refurbished fleet of De Havilland Dash 8 turboprops that have been their hallmark since 2006. Porter has announced several new routes from Y-O-W on both aircraft types, and we were especially pleased to be the inaugural route as they launched service from Toronto-Pearson in addition to adding service to Boston, Newark, Charlottetown and Thunder Bay. We’re excited about what’s to come with Porter.

Cargo is another important business line, and our hometown-headquartered Canadian North is a key player in this space in addition to their movement of passengers. The airline provides a vital service to Canada’s Eastern Arctic with daily flights to Iqaluit, moving more than thirty thousand metric tonnes of cargo and tens of thousands of passengers through Y-O-W each year.

As Deanna mentioned, passenger volumes had a positive impact on our financial results for 2022. We generated $111.8M in revenues compared to $56.6M in 2021. We also improved our bottom line with a net loss of $4.8M compared to a net loss of $36.7 in 2021. We look forward to returning to a small net earnings position in 2023.

Non-aeronautical revenue includes in-terminal advertising, retail, food and beverage, car rentals, parking, land development and other sources. These revenues play a vital role in our finances and we are always in search of new sources and streams to keep aeronautical fees as low as possible as was explained quite a bit recently when Germain Hotels applied to the city of Ottawa for a grant under the Airport Community Improvement Plan

In 2019, our Y-O-W+ terminal enhancement program comprised four pillars, including: moving the Canadian Air Transport Security Authority’s (CATSA) domestic pre-board screening area to level 3, a concessions program overhaul; LRT Airport Terminal Station; and an airport hotel. We’ve made excellent progress on the first three pillars.

Our Retail Master Concessionaire, Paradies Lagardère, opened No Boundaries and the iStore on October 7th, 2022, in the space we call our Centre Court, where the new access from security screening flows into the gate area. These two beautiful stores join the Locks and Maison de la Presse, which opened in 2021.

The Centre Court's Canal Market Hall construction started in late October, with expected completion this summer. The Hall will be home to a Big Rig sit-down restaurant, a food court area, a Bridgehead Coffee bar and a customer seating area.

The LRT Airport Terminal Station is completed and ready to accept the airport spur once the City completes its work on the line.

Now for the last pillar – the airport-connected hotel.

Part of the airport's mandate is to develop airport lands in support of aviation in the interest of economic development. Government support for development initiatives has never been more critical than in this post-pandemic recovery period. In the written Annual Report, I detailed how the City of Ottawa recognized this need after discussions during the previous Mayor’s Economic Development Task Force round table. As directed, City staff took action and created the Y-O-W Community Investment Program (CIP), which was approved by Council in July 2022.

The proposed Y-O-W CIP was created as a self-funding tool with incentives in the form of a Tax Increment Equivalent Grant (TIEG) based on the incremental municipal property tax increase resulting from the increase in property assessment attributable to an eligible project. The CIP validated the airport’s designation as a Special Economic District in the City's new Official Plan.

We continued to work closely with our airport hotel partners, Germain Hotels, the proponent determined in a second RFP process that dates back to 2018. They were hard-hit by the pandemic, face mounting construction and material costs, were the perfect candidate for the Y-O-W CIP, and were counting on the program to be in construction as we speak. Unfortunately, while their application met 100% of the criteria for the program and had the recommendation of City staff, City Council voted down their application. Needless to say, we were extremely disappointed.

We continue to work with Germain Hotels to find a way to move the Alt Hotel Ottawa Airport project forward. This project is a vital element, though not the only one, in our quest to become a hub airport that serves more connecting traffic as opposed to the 97% origin and destination traffic we currently serve. Airport-connected hotels are highly desirable and expected of a world-class hub airport.

We also continue to work with the Mayor and City Council to explore opportunities to assist Y-O-W in the development of new international routes. I think we all recognize the importance of international air connectivity to our City’s economy by providing enhanced access for business travellers and inbound tourists alike.

Other infrastructure activities included rehabilitating taxiways A, M, A.A., B.B., and CC. We are grateful for federal government funding support of $3.9M of the $8M total project costs through the Airport Critical Infrastructure Program.

Federal support freed up capital funds for the construction of Taxiway Romeo in the north field, which we started and finished during the year. The $15M project represents the first airside expansion of runway/taxiway infrastructure in the Authority's history. As mentioned during last year’s APM address, land around Romeo will accommodate federal government needs and open up other commercial aviation-related development opportunities, including with Porter.

We were excited to bring the airport community and stakeholders together in November to hear our friends from Porter Airlines announce their hangar development project, culminating years of working to attract more of the airline's operations to Y-O-W. Once completed, the two hangars, which will measure more than 150,000 ft2, will be the primary maintenance base for the airline’s new Embraer E195-E2 jets and a secondary base for its existing De Havilland Dash 8-400 aircraft. Phase one of the project will finish by Q1 2024, with phase two a few months later.

This news is great for our community for several reasons. From an economic development perspective, Porter will add 200 local team members to their roster. These include highly skilled aircraft maintenance engineers, technicians, stores clerks and administrative support. Additionally, 150 local construction jobs are supporting the project. In terms of air service, Porter has since commenced new non-stop service on both aircraft types, including service to Thunder Bay, Charlottetown, Boston and Newark announced for this July. We look forward to future announcements as their route map grows with the introduction of each new jet to their fleet.

We were busy on the environmental front as well. The Authority proudly joined Environment and Climate Change Canada's Net-Zero Challenge as one of 12 founding members. The Challenge brings together organizations across the country and various sectors to develop comprehensive plans to decarbonize operations by 2050. Y-O-W has committed to an even more ambitious goal of 2040 or earlier for its direct operations.

We partnered with Hydro Ottawa to explore opportunities to electrify our vehicles and heavy equipment and possibly generate solar power on our property. These lofty projects will require a substantial financial commitment, and we will be looking to every level of government for financial support to mitigate the impact on the cost of flying for our travellers.

Work with our airline partners to electrify ground handling equipment with state-of-the-art recharging stations has already begun. Y-O-W is committed to reducing our carbon footprint and encouraging our campus partners to join us in our net-zero quest.

Safety and security continue to be our priority. The airport's security posture includes support from several third parties. We were pleased to sign a new five-year contract for airport policing with long-time partners, the Ottawa Police Service (OPS). We recently transitioned to a new third-party security service provider. Industry veteran, Allied Universal Security, began their three-year contract in March 2023 after a seamless transition.

We regularly test Y-O-W's emergency response capabilities, and from time to time, we are tested spontaneously.

On May 21st last year, Ottawa-Gatineau experienced a derecho, which caused widespread destruction. While the storm was brief, with no significant impact on flights, almost every structure on the property sustained damage, with some still under repair. The loss of trees was severe. Despite the event happening on the Saturday of a long weekend, I was pleased to see staff from across the organization reporting in person where possible, or virtually where not, to assist in our response to the storm. I appreciated the care and concern for our passengers demonstrated by all who jumped in to help.

As for planned events, the Authority conducted its biannual regulatory security exercise on November 16. The scenario involved an airside security incursion, which required a response by the Airport Operations Coordination Centre (AOCC), the OPS Airport Section, the Airport Canine Unit and several other emergency response assets. The exercise successfully demonstrated the organization's ability to respond to such an incident promptly and effectively, but also taught us important lessons that form part of our continuous learning. 

We tested the Authority's Business Continuity Plan (BCP) during a one-day tabletop exercise on September 28th. Approximately 30 employees joined me in a scenario involving a devastating cyber event that affected several core information technology services. While the exercise achieved its objectives, there were several takeaways for follow-up, and we are planning a second exercise for 2023 to increase awareness of the BCP across the organization.

The IT team introduced a modernization program in 2022 that focused on safety, cyber resiliency, and the availability of all core business systems. Thanks to the team's commitment to its programs, I am pleased to say that we experienced no impacts to core systems this year. Well done!

None of the above would be possible without the best, most committed staff in the business and a hard-working Human Resources team that recruits them.

Recovery kept HR busier than usual, hiring for dozens of positions at every level and department across the organization. Additionally, the department had several projects layered on its day-to-day endeavours including the implementation of a new Human Resources Information System as well as negotiating a new collective agreement with the Public Service Alliance of Canada.

H.R. also resumed an ambitious training including the first phase of Accessibility, diversity, equity and inclusion training to all employees, Duty to Accommodate training for all managers and Diversity and Inclusion training for all employees.

After two years of remote work for approximately 30% of our staff, we welcomed the whole team back on-site last March in concert with the roll-out of a trial Hybrid Work Policy. The Policy, which includes a minimum of three days on-site and a maximum of two days remote per week for positions suitable for hybrid work, is working well. Our team will continue to evaluate and adjust as necessary to ensure efficient, customer-focused operations coupled with safeguarding the health and safety of all staff in the workplace.

The inaugural Environment, Social and Governance (ESG) Report the Chair mentioned will include many themes I've covered but in more detail. Themes such as ADE&I, the environment and employee health and wellbeing. We will be also be setting our targets and key performance indicators for the ESG material topics.

As for 2023, it's already shaping up to be quite a year, starting with more good news from Porter. On February 1st, we welcomed the first revenue flight of its first in-service Embraer E195-E2 from Toronto Pearson Airport. We are excited about the possibilities this jet brings Y-O-W, with its extended range and ability to fly non-stop to almost anywhere in North America and the Caribbean. As I’ve already said, we will be watching closely for their route announcements.

The IT Modernization Program continues in 2023 with a continued focus on core business systems, Cybersecurity and ensuring a positive user experience for all passengers, employees and stakeholders.

This will be particularly important as our stakeholders continue shifting operations to digital platforms and building upon existing services requiring the Authority's support.

Our Communication team is busy developing a new airport website that will be launched early next year. The site will support the digital shift and to allow us to provide the information our customers want as quickly and efficiently as possible.

We are in the process of finalizing an Accessibility Plan to ensure barrier-free access for employees, passengers and the general public.

We are rebuilding taxiway E and several sections of the apron under a $6M capital program.

And, we will move aggressively forward on our environmental projects and ESG commitments.

Finally, as the Chair mentioned, we collaborated on a project to develop a Purpose Statement

"Building on teamwork and sustainability, Y-O-W safely connects people, moves goods, and creates economic prosperity for our community."

We are in the midst of introducing it in a comprehensive campaign that is rolling out across digital platforms and social media, and I am pleased to share a video from the campaign for the first time with you today. Please play the video.

Thank you to everyone who took the time to participate in the focus groups and other outreach to help us articulate who and what we are. The work of ingraining the statement in the organization has begun and I hope the community embraces it as much as our team has.

I believe we have made some bold moves over the past year in our aggressive pursuit of financial sustainability, which we could not have done without the support of the Board of Directors. They engage in lively discussion, trust our due diligence and stand by our decisions. I can't thank them enough for their trust and support. They represent our entire community and their selecting bodies well.

Our team is always ready to bring ideas to reality when we make these bold moves. I had the pleasure of meeting with almost every staff member during a series of town hall meetings at the beginning of this year to acknowledge the accomplishments of 2022 and set the stage for 2023. I was very pleased with their thoughtful questions and obvious concern for the airport and the community we serve. They are the best, and I am grateful that Human Resources is not just filling vacancies but seeking out extraordinary candidates to ensure our teams are well-supported.

More than 1,000 airport guests and community members reached out with questions, suggestions and constructive feedback during the year. Their input allows us to make changes that are important to our guests and address issues and other things that may not be working as well as they should. Ultimately, it makes us better and can improve the travel process for everyone. I encourage you to keep reaching out, and we will do our best to respond.

If recovery defined 2022, I believe partnership will best categorize 2023. Porter, Air France and SSP Canada, among others, are investing in Y-O-W and adding to the economic prosperity of our region. We hope to come to a revised agreement with Germain Hotels despite the CIP setback. Our tourism and economic development partners in Ottawa-Gatineau have continued to support our initiatives and lobby various levels of government on our behalf. And, our longstanding partners across the campus continue to help shape Y-O-W into the safe, secure, customer-focused facility it is. 

As the Chair said, the future is bright at Y-O-W. I hope you will follow our progress and continue to cheer us on as we reach beyond our pre-pandemic success and make the community proud.

I want to close with more details about Air France and a request. On February 2nd, Air France announced that it was adding Y-O-W-Paris-Charles de Gaulle service five times weekly beginning June 27th. The community has been very vocal about having non-stop service to Europe restored. We were thrilled that Air France recognized the opportunity in Ottawa-Gatineau and answered the call. As a super-hub, CDG opens easy access to the rest of the world. We thank Ottawa Tourism, Tourisme Outaouais and Destination Canada for their support in securing this game-changing route.

As I have said repeatedly, air service is a 'use-it-or-lose-it' proposition. So now, it's up to the community to let Air France know their decision was the right one by supporting the route and helping us build on this success for the future. Let's do this Ottawa-Gatineau!

Thank you. Merci