Message from
Chair & CEO

A Message from the Chair & CEO

2017 was a milestone year for St. John’s International Airport as we recognized and celebrated the Airport’s 75th anniversary of commercial airline operations. Much has changed since our modest early beginnings as “Torbay Airport”, with many more transformations to come over the next few years.

Last year, we finalized our Master Plan and associated Land Use Plan that provides the framework to guide the development of the Airport until 2035. Consistent with this Plan, we have negotiated land leases with both aviation and non-aviation-related entities to expand and improve services at our Airport. In 2018, we will have two hotels, a service station with food and retail outlets, a new cargo facility and a new jet fuel farm. These new developments enhance the attractiveness of our Airport for visitors, employees and airlines, and increase the safety and efficiency of airline operations.

We also made significant progress on the numerous capital projects included in our $200 million Airport Improvement and Expansion Plan. Despite the substantial construction taking place in and around the Airport Terminal Building in 2017, we maintained an 83 per cent overall passenger satisfaction rating. By the end of the year, we were tracking on budget and on time to open the expanded departures area of the Airport Terminal Building prior to the peak summer travel season in 2018. We look forward to being able to offer our passengers many new and expanded services this summer that we believe will be well-received by all our passengers, and will result in an increase in our passenger satisfaction scores beyond 2017 levels.

Cat 3 ILS Project Results Exceed Expectations

One of the most transformational projects in our most recent history was the installation of Category III Instrument Landing Systems. We anticipated a significant reduction in the 1000 flights impacted annually due to low visibility conditions to approximately 300 flights annually. 2016 was the first full year of operation with the new technology. Only 40 flights were impacted as a result of low visibility in year one, and in 2017 only 16 flights were impacted. The success of this project has exceeded our expectations, thereby making an immense difference to reversing our reputation for being an inaccessible location due to fog.

Premier Gateway

Our position as the premier gateway to and from our province was reaffirmed through the Government of Newfoundland and Labrador’s 2016 Exit Survey. More than 70 per cent of all non-resident visitors to and from Newfoundland and Labrador that travel by air travelled through our Airport. It is another reminder of the important role our Airport plays in facilitating economic growth and in shaping people’s perceptions of our province.

With this in mind, we are continuing to pursue new airline routes and to increase overall airline seat capacity to ensure our community’s travel needs are being met. We have been very successful over the last 10 years in adding new routes and increasing frequency to and from our Airport. Since 2008, our Airport has experienced a 35 per cent increase in overall airline seats available for purchase. Annually, more than 1.5 million passengers are travelling through our gates. While we saw a slight decline in 2017, we predict passenger volumes will remain consistent year-over-year in 2018 as the economy continues to improve.

Passenger Volume

Employee Matters

We continue to strengthen our relationship with our employees and expand our team to support our efforts in achieving our strategic goals. In 2017, the Public Service Alliance of Canada and the employees of the St. John’s International Airport Authority ratified a five-year Collective Agreement, which commenced on January 1, 2017. The agreement provides a 12 per cent wage increase for airport employees over the term of the agreement.

We also wish to thank our employees for their commitment to establishing a safe working environment. This past-year, the Airport Authority had zero lost-time incidents. This is a significant accomplishment given the nature of the work our employees perform and the often extreme weather conditions in which it is performed.

Airport Terminal Building Expansion Continues

The highly awaited opening of the expanded Airport Terminal Building in 2018 represents the first Phase of the entire Airport Terminal Building expansion project that focuses on the Departures Area. Once opened, attention will be placed on finalizing the design for the expanded Arrivals area of the Building (Phase Two) so that construction can commence in 2019. When the entire Airport Terminal Building expansion project is complete in 2022, the building will be more than double its existing size at almost 420,000 square feet, and will be a facility of which Newfoundlanders and Labradorians can be proud.

We believe the transformation of the Airport Terminal Building, especially the Departures Lounge that will more than double in size when it opens in 2018, will be well worth the wait. We appreciate and thank travellers, our airline partners, our Airport partners, and the general public for their continued support during the ongoing construction process. We’re not quite finished yet, but we’re getting closer, and the enhanced services on offer this summer for passengers will be notable.

The last 75 years have seen many changes and improvements at our Airport. However, it is evident from the anniversary marketing campaign that solicited Airport stories from the public that the Airport played and continues to play a significant role in people’s lives. We look forward to more memories being made at our Airport for many years to come.

 


Keith Collins


Art Cheeseman

Who We Are

St. John’s International Airport Authority

St. John’s International Airport Authority is a private, not-for-profit, non-share corporation that exists to provide a safe and efficient transportation facility at Newfoundland and Labrador’s premier transportation gateway.

We generate our own revenue, raise our own capital, pay municipal taxes, and pay rent to the Federal Government on an annual basis to operate the Airport on behalf of the community we serve. We are committed to offering an outstanding airport experience for our passengers and enhancing the economic and social well-being of our community.

We will create an
exceptional airport experience at
Newfoundland & Labrador’s premier gateway

community leader | enabling prosperity

Board of Directors:
Top Row (L-R): Art Cheeseman, Tom Williams, Gail Carroll, Darren Martin, Roger Butt, Neil Pittman
Bottom Row (L-R): Holly Hicks, Jim Heale, Jerry Byrne, Mike Donovan, Cathy Farve, Robert Gosse

Strategic
Plan

Strategic Plan

The Airport Authority’s 2015-2019 Strategic Business Plan defines the Authority’s ideal future and includes objectives and strategic initiatives that will serve as our guiding framework that will lead to our vision of providing an exceptional airport experience at our province’s premier transportation gateway. This report provides an update on our progress associated with the seven strategic objectives: Outstanding Facilities; Exceptional Passenger Experience; Focused Business and Air Service Development; Culture of Engagement; Enhanced Community Partnerships and Collaboration; Organizational Effectiveness; and Financial Stability.

Outstanding Facilities

Objective:  Deliver new, improved, and expanded Airport Terminal Building and related Airport facilities to meet 2020 demand.

A total of $32 million was invested in 2017 for infrastructure improvements and expansion.

In 2017, a new Airport Master Plan was completed to provide the framework that guides the development of the Airport, and ensures future improvements are undertaken in a responsible manner with regard to operational efficiency, safety and security, environmental compliance and financial viability. At the same time, a new 10-Year Airport Improvement and Expansion Plan was announced that includes investments in the Airport’s facilities that are consistent with the long-term scope of the Airport Master Plan, and expands the Airport’s capacity to accommodate 2 million travellers annually by 2022.

Airport Terminal Building Expansion

The largest project in the new 10-Year Airport Improvement and Expansion Plan is the expansion of the Airport Terminal Building. This expansion is being conducted in two phases, and when complete in 2022 will more than double the building’s existing size to total approximately 420,000 square feet.

Construction on Phase One of the expanded building commenced in 2014 and will add 145,000 square feet to the Departures area of the Airport Terminal Building. By the end of 2017, the project was tracking on time and on budget, and the opening of this first phase of the expanded building is anticipated for June 2018. While the completion of this phase represents half of the building expansion project, significant improvements and enhancements will be realized by passengers, tenants and airline partners when it opens:

  • Larger check-in area (40% increased space)
  • Larger pre-board screening area (4 times existing size) with faster screening technology and a designated Nexus line
  • Departures Lounge will more than double in size, almost tripling the seating capacity
  • Additional washrooms in the Departures Lounge
  • A new Concessions Program with greater choice of local and national brands, and a greater concentration of outlets located in the Departures Lounge, including a full-service restaurant
  • Two new gate positions with passenger loading bridges
  • A new children’s play area and a nursing mother’s area

Departures Lounge will more than double in size, almost tripling the seating capacity

In 2018, the design for the Phase Two expansion will be completed in preparation for construction to commence in 2019. This Phase will add an additional 100,000 square feet to the Arrivals Area of the Building, including an expanded area for customs activities; additional baggage carousels; and more aircraft gates with passenger loading bridges. The Departures Lounge will continue to see improvements with expanded space for additional seating, concessions, and washrooms facilities.

Airport Terminal Building 2022

Airport Terminal Building Arrivals Expansion 2022

Safety, Security and Life Cycle Replacements

There are a number of projects included in the Airport Expansion and Improvement Plan that are required to meet safety and security regulatory requirements. Last year, the Airport Authority completed the construction and installation of a new facility that provides security screening for all non-passenger vehicles entering the Airport Terminal Building apron, as required by Transport Canada.

Within the scope of the 10-year Plan, there will also be necessary lifecycle replacements and refurbishments of airfield aprons, taxiways and the Central De-icing Facility. Longer term, there is an anticipated requirement to widen the Airport’s access road (World Parkway) to accommodate increased vehicle traffic, as well as to expand airfield taxiways to improve aircraft movement safety and efficiency.

Exceptional Airport Experience

Objective: Provide an exceptional passenger experience at our Airport.

We take pride in our role as the premier transportation gateway to and from Newfoundland and Labrador, and we understand the lasting effect of a positive first and last impression. We’re committed to providing a positive experience for all visitors at our Airport and continue to seek ways to make improvements and enhancements, both big and small, to the level of service offered.

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83% overall passenger satisfaction rating was achieved for 2017.

In order to measure our passengers’ level of satisfaction at our Airport, we participate in a year-round Airport Service Quality Index survey. This global research tool provides quantitative feedback on all aspects of the Airport experience and provides benchmark data from other airports worldwide. Over the last few years, we have consistently maintained an 83 per cent overall passenger satisfaction rating, despite the extensive construction projects that have taken place on the airfield, in the Airport Terminal Building, and on the roadways and parking lots accessed by passengers. This represents a very positive result, and one on which to build over the next few years as the extensive construction projects near completion and passengers enjoy the resulting new services and facilities.

The opening of the first phase of the expanded Airport Terminal Building in 2018 will provide us with the opportunity to substantially improve the departures process for passengers. In addition to the greater capacity being provided for the pre-board screening process, airline operations and gate seating, a great deal of time was spent over the last year in developing a concessions program that offers choice, along with a taste of the region and a sense of place. These new food and beverage and retail options located in the Departures Lounge, including a full-service restaurant, will be well-received by the travelling public.

Another way we ensure we are providing an exceptional passenger experience at our Airport is through consultation with our Passenger Advisory Panel. This panel meets on a regular basis and consists of frequent travellers and users of this facility who are instrumental in providing feedback on their own experiences in using our facilities, and offering suggestions for enhancements and new services. These members advised on the new Concessions Program and their feedback, coupled with information from other communications channels and our own planning, resulted in the installation of water bottle refill stations in the Airport Terminal Building, as well as new cart corrals located in the short-term and long-term parking lots over the last year.

Throughout 2018, planning will continue to finalize designs for the second phase of the Airport Terminal Building expansion, while further enhancements will be made to existing infrastructure:

  • Installation of bus shelters to accommodate users of public transport and hotel shuttle buses
  • Revamp of existing Departures Lounge, including new flooring
  • Further extension of the concessions program on both levels of the Airport Terminal Building, with more brand announcements coming in 2018

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Focused Business & Air Service Development

Objective: Pursue revenue diversification and aggressive air service development.

Since 2008, airline seat capacity has grown by 35%.

Attracting new and expanded airline services to our Airport is a core function of our business. Since 2008, airline seat capacity has grown by 35 per cent. The number of passengers travelling through our Airport has more than doubled since the Airport was privatized in 1998, and in 2017 we welcomed more than 1.5 million people through our gates. Our peak summer travel season last year (May to September) was the second busiest in our Airport’s history, with over 816,000 passengers travelling through our gates. This reflects the strong tourism attractiveness of our region, and the local population’s propensity to travel and explore outside our community boundaries.

WestJet’s launch of Tampa Bay flight

With approximately 80 daily flights to and from 20 destinations in Canada, Europe and the US, travel has become more and more convenient. In 2017, for the first time in more than 15 years, passengers travelling to the popular Tampa Bay area in Florida could avail of a direct, weekly air service offered by WestJet. The success of this new, seasonal service has ensured its return in 2018 for the peak sun charter season. This new air service couples with WestJet’s year-round service to Orlando, our Airport’s number one destination in the US, and increases accessibility to the very popular Florida state.

Our Airport’s close proximity to Europe has provided a strategic advantage in attracting transatlantic airline services. WestJet operates a seasonal, daily service to Dublin, Ireland while Air Canada provides air service to London Heathrow year-round. Starting at the beginning of the summer 2018 season, Air Canada will introduce a new and larger aircraft for this daily service – a Boeing 737 Max – with increased seat capacity to meet demand.

While there has been a significant increase in the number of destinations served and the frequency of flight operations over the last 10 years, we continue to pursue direct air service to key destinations where a strong business case exists. We are committed to continuing to work with our airline partners and community stakeholders in the business and tourism sectors, and to support existing airline services. In particular, we remain focused on promoting the strong business case for a direct service to the New York region and to Moncton, New Brunswick, the largest, unserved airline route within Atlantic Canada.

Focused Business and Revenue Diversification

Total Revenue

54% revenue from non-aeronautical sources

While Air Service Development is a core business focus for the Airport Authority, we have dedicated significant effort to increase and diversify revenue received from non-aeronautical sources in order to reduce our dependency on fees received from airlines. In 2017, our non-aeronautical revenue represented 54 per cent of total annual revenue, a proportion that is much higher than the North American airport average of 45 per cent. This was achieved through our successful focused business program that generates revenue through land leases, the new Concessions Program and advertising.

The Advertising Sales Program continues to offer a viable advertising location for local and national brands looking to connect with passengers at our Airport. More than 1.5 million passengers travel through the province’s premier gateway with a culture that involves picking up or dropping off passengers more so than any other airport in Canada. As a result, advertisers are able to reach a unique demographic of international tourists and local residents alike. Advertising opportunities include digital billboards on the main access road, World Parkway, signage in the Arrivals and Departures areas and strategically placed throughout the Airport Terminal Building, and digital advertising in the Departures Lounge.

The expansion of the Airport Terminal Building also provides an opportunity to strengthen and expand the food and retail Concessions Program at the Airport. Following extensive market research and feedback from passengers, employees and the general traveling public, the new and expanded Program was designed to offer preferred strong local and national brands. The new program has outlets located in prime locations within the Airport Terminal Building where sales revenue will be maximized for these new concessionaires and the Airport Authority. We look forward to working with all our new concessionaires to promote their offerings that will soon be available at our Airport.

Land Development

Over the last few years, the face of the Airport entrance has changed substantially. New developments have added and enhanced services for passengers, airline operations and even the local neighbourhood. These new land developments, along with existing land leases, resulted in close to $5 million in real estate revenue for the Airport Authority in 2017. This represents a long-term, dependable source of revenue, and helps to offset our ever-increasing operating expenses as the Airport continues to grow.

The Holiday Inn Express, located at the entrance of World Parkway, was the first hotel constructed on Airport land when it opened in 2016. In 2017, a second hotel, Best Western Plus, was under construction in the area adjacent to the Cougar Helicopters facility. These state-of-the-art hotels offer the highest level of convenience and comfort for connecting and diverted passengers, airline crews, business travellers and visitors to the city.

Another first is the construction of a new service (gas) station adjacent to the Airport’s cell phone waiting lot. This service station, set to open in 2018, will be operated by North Atlantic Petroleum, and will feature retail and food options. The announcement of this addition has been well-received by the Airport community. It will add convenience for hotel guests, airport employees, passengers and their greeters.

An increase in aviation activity related to cargo operations has created the need for expanded airfield support facilities to enhance efficiency and safety of operations. CargoJet, the largest air cargo service provider in the region, opened its new cross dock loading facility and airfield ramp in 2017. In addition, a new jet fuel farm with much greater capacity is under construction and will replace the existing fuel farm located in front of the Airport Terminal Building.

Located only 10 minutes from the downtown core of the City and with approximately 250 acres of land still available for development, the Airport represents a prime location for further aviation and non-aviation related development. Land lease opportunities at the Airport will continue to be pursued, and efforts will be placed on identifying business opportunities that represent new sources of non-aeronautical revenue.

Culture of Engagement

Objective: Create a culture of employee engagement within the organization.

The Airport Authority recognizes the value of a strong culture of engagement for employee satisfaction and organizational effectiveness. This is defined as a culture where communication channels and dialogue are open; there is a sense of community in the workplace; employees feel their work is meaningful; and all parties are committed to a shared and valued vision.

To ensure and promote regular, open dialogue, the Airport Authority has an active Labour Management Committee. This joint-committee discusses and resolves a variety of workplace issues. It also provides a forum for information-sharing to connect employees to the goals of the business, and supports initiatives to improve employee engagement for the approximate 100 employees of the Airport Authority.

To benchmark employee engagement levels, the Airport Authority conducts Employee Engagement surveys, supplemented by information gathered from employee focus groups, to understand the extent to which employees feel engaged in their work and to identify any areas for improvement. There is also an active Employee Engagement Committee comprised of management and unionized employees. This Committee is responsible for identifying, initiating and/or supporting activities designed to improve the level of engagement by all employees within the organization. In addition, an internal newsletter was created over the last year to enhance the sharing of information amongst employees.

Safety is the number one priority of the St. John’s International Airport Authority and as a result, the Authority has placed considerable effort in creating a culture of safety. An Employee Safety Survey is conducted annually for employees and is designed to measure the safety culture from both an Occupational Health & Safety and Safety Management System (aviation safety) perspective. In 2017, we achieved an overall rating of 82.45 per cent; a rating that has increased by 15 per cent over the last five years. These surveys pinpoint areas of success; areas of advancement in which safety culture has been made; and all areas where further improvements are required.

A significant accomplishment was achieved in the area of safety in 2017: Zero lost-time injuries for Airport Authority employees or any Authority-owned construction projects were reported. This is a testament to the efforts made by all employees to operate in the safest of manners, and the strength of the safety culture at the Airport.

Enhanced Community Partnerships & Collaboration

Objective: Enhance partnerships and collaboration with community while strengthening our brand.

As the premier gateway to Newfoundland and Labrador, St. John’s International Airport plays a significant role in the economic and social well-being of our province. Recognizing this responsibility, we are committed to finding opportunities to collaborate and establish partnerships to increase air services at our Airport; enhance the passenger experience; showcase our unique identity and culture to visitors; and establish a sense of pride within our own community for the facilities and services we offer.

Effective partnerships have developed with Destination St. John’s and the Government of Newfoundland and Labrador to support key strategic air services. We also continue to meet regularly with our Air Service Development Committee, comprised of leaders in our community who help to define our air service development priorities and strategy, and provide information that can be factored into a business case.

Our relationship with Business and Arts NL has continued to grow since the successful introduction of the public piano in the Airport Terminal Building in 2014; the first public piano at any airport in Atlantic Canada. New projects were initiated in 2017 and we are exploring more opportunities for collaboration in 2018 that will continue to add music and art to our Airport Terminal Building, and introduce and celebrate our culture with visitors and locals.

75th anniversary of commercial airline operations.

2017 marked the Airport’s 75th anniversary of commercial airline operations. To celebrate this major milestone, we launched a campaign to encourage people to share their travel stories about our Airport over the last 75 years. While our Airport has changed significantly since its early beginnings, it remains an important linkage to other parts of our province, country and the entire world. The value that our community places on our Airport was evident in the considerable response to the campaign and the memorable stories that were shared. As a result, we look forward to continuing to grow and strengthen partnerships where mutual goals can be achieved for the benefit of the entire community.

Organizational Effectiveness

Objective: Improve organizational effectiveness with improvements to processes and systems.

St. John’s International Airport Authority continues to improve its processes and systems in order to deliver more efficient and effective services at the Airport, allowing resources to be focused on areas that have the greatest impact on achieving our strategic goals. Over the last year, a new Document Management System was introduced to facilitate the sharing and storage of data, and a new Time and Attendance payroll module was implemented.

We operate in an environmentally responsible manner and over the next year will focus particularly on the areas of waste management and electrical consumption. With new systems and processes in place, and ongoing review of new organizational systems to be implemented, organizational effectiveness will continue to be improved.

Financial Stability

Objective: Ensure financial sustainability.

Since 1998, $312 million has been invested in infrastructure improvements.

As a private, not-for-profit, non-share, capital corporation, St. John’s International Airport Authority is responsible for generating its own revenue and raising its own capital funds to support the Airport’s operations and its infrastructure improvement plans. All earnings generated through the operations of the Airport are reinvested back into the infrastructure and operations of the Airport.

The new 10-year Airport Improvement and Expansion Plan announced in 2017 includes investments to ensure the safety and operational integrity of the Airport, and to complete the expansion of its facilities to accommodate 2 million passengers annually. The total investment in the Airport’s facilities will be $200 million between 2017 and 2026.

In order to finance these investments, the Airport Authority also developed and updated its 10-year Financial Plan that includes long-term debt facilities with policies in place to ensure the long-term financial sustainability of the Airport. In 2014, the Airport Authority secured a $60 million private placement bond and a $25 million line of credit. In order to finance the new 10-year Plan, the line of credit was increased to $40 million last year. Since the Airport Authority first went to the bond market in 2007, it has maintained a very positive A1 bond credit rating. This has been reaffirmed each year for the last 10 years by Moody’s Investors Service, recognizing conservative financial management and sound strategic planning.

The Airport Authority’s primary source of revenue to finance its long-term debt and credit facilities for expenses associated with capital projects that have a positive impact on the passenger experience only is the Airport Improvement Fee (AIF). Effective July 1, 2017, the AIF increased from $30 to $35 for each enplaning passenger at St. John’s International Airport.

Since the Airport Authority was incorporated in 1998, it has invested $312 million in infrastructure improvements. This level of investment is substantially more than the total collected in Airport Improvement Fees over the same period. To date, the Airport Authority has collected less than 60% of the total invested through the Airport Improvement Fees. It was important to make these investments in our Airport in advance of collecting the total costs associated with them so that passengers could enjoy the improvements sooner rather than later, and airlines could continue to expand services.

We have strong plans and policies in place to ensure long-term financial stability, including a focus on diversifying our revenue stream and identifying new sources of revenue with the goal to lessen our dependency on the commercial aviation industry. In 2017, 54 per cent of revenue was received from non-aeronautical sources.

Business
Plan

Business Plan Summary

2017 Capital Program

The Airport Improvement and Expansion Plan announced in 2014 is progressing as planned with the ATB East Expansion scheduled for opening in 2018. In 2017 there was significant advancement of the internal fit-up and finishing as well as progress on other related projects, including the new Hold Bag Screening System; the design and manufacture of two new passenger loading bridges which will be delivered in 2018; as well as the associated apron civil modifications.

2017 Actual vs. Business Plan

(in thousands of dollars)

Actual Plan Difference Explanation
Revenue (Note 1) $47,093 $49,669 ($2,576) Lower AIF revenues due to a three month delay in implementing the fee increase than planned.
Expenses (Note 2) $28,716 $29,556 ($840)

Lower Ground Rate due to lower revenues than planned and lower fuel prices than forecasted.

Capital (Note 3) $32,074 $39,797 ($7,723) Certain projects were partially completed in 2017 and will be finished in 2018, including new Delivery Zone of the expanded Terminal Building and Phase 1 (East) Terminal Expansion Apron Grading. Also, some costs for the ATB Expansion shifted from 2017 to 2018.

Note 1. Revenue includes net AIF and operating revenue.
Note 2. Expenses include interest and exclude the non-cash items of depreciation and amortization.

Planning for Growth (2018-2022)

We have completed a long-term infrastructure plan to address capacity constraints and to accommodate the approximately 2 million annual passengers forecast by the year 2020. Over the next five years the Airport Terminal Building will be expanded in two phases – Phase One to be completed in 2018 and Phase Two to be completed in 2022. A long-term Financial Plan was also prepared in order to support the investment in infrastructure improvements, and includes future borrowings in the form of a private placement bond and credit facilities.

Business Plan Forecast 2018-2022

(in thousands of dollars)

2018 2019 2020 2021 2022
Revenue (Note 1 & 2) $49,959 $52,325 $54,033 $55,813 $57,668
Expenses (Note 3) $30,947 $31,891 $33,236 $34,604 $35,995
Capital (Note 4) $29,429 $14,252 $23,953 $21,077 $20,614

Note 1. Assumes passenger growth will be 0% in 2018 and 1.5% each year thereafter.
Note 2. Revenue includes net AIF and operating revenue.
Note 3.Expenses include interest and exclude the non-cash items of depreciation and amortization.
Note 4. Capital includes the expansion of the Airport Terminal Building, additional passenger loading bridges, the expansion of the hold bag screening system and the rehabilitation of apron II and various taxiways.

Financial
Report