The Economic Impacts of the Open Skies Initiative: Past and Future

The Economic Impacts of the Open Skies Initiative Past and Future strategic transportation & tourism solutions The Economic Impacts of the Open Skies Initiative: Past and Future Prepared for Aéroports de Montréal, The Greater Toronto Airport Authority, and the Vancouver International Airport Authority

The Economic Impacts of the Open Skies Initiative Past and Future The Economic Impacts of the Open Skies Initiative Past and Future Prepared for Aéroports de Montréal Greater Toronto Airport Authority Vancouver International Airport Authority Prepared by InterVISTAS Consulting Inc.

The Economic Impacts of the Open Skies Initiative Past and Future Page i Executive Summary The Impact of the 1995 Open Transborder Air Services Agreement The open transborder agreement that was signed in 1995 by Canada and the U.S., increased transborder passenger traffic by roughly 3.3 million passengers per annum relative to what had been forecast prior to 1995, as shown in the following table. Table 1: Increase in Transborder Passengers Attributed to the 1995 Open Transborder Agreement Type of Increase 1995-2000 (pre 9/11) 1995-2004 Cumulative increase in passengers 1 15 million 10 million Cumulative increase in passengers with adjustment for impact of 9/11 15 million 33 million Average annual increase in passengers 2.5 million 3.3 million The growth in transborder air service has had significant positive economic impacts for Canada. During the period prior to 9/11, the increase in transborder air traffic, relative to the 1994 preagreement forecast, generated roughly 4,500 additional person years of Canadian employment per annum, $160 million in wages and almost $300 million in gross domestic product (GDP). Including indirect and induced impacts, the annual job creation total may have been 9,400 person years, $325 million in wages and just under $600 million in GDP. Potential Impact of Full Open Skies A new bilateral air services agreement between Canada and the U.S. could be agreed upon in the near future. This expanded agreement might take the name Full Open Skies, and would expand upon the previous agreement by offering Canadian and U.S. carriers fifth freedom rights for passenger services, and fifth and seventh freedom rights for cargo services. This potential agreement would create significant additional economic impacts through increased passenger and cargo services, as well as increased tourism spending. The following table summarises the direct economic impacts associated with some individual types of new air services which could materialise with a full open skies agreement. 1 This is the difference between actual enplaned/deplaned transborder passengers carried versus the forecast of transborder passengers as per the 1994 forecast.

The Economic Impacts of the Open Skies Initiative Past and Future Page ii Table 2: Potential Incremental Annual Direct Economic Impacts of a Full Open Skies Agreement Type of new air service Person Years Wages GDP Economic 5 th freedom passenger service Canadian carrier 5 th freedom passenger service U.S. carrier 5 th freedom cargo service U.S. heavy-lift carrier 5 th freedom cargo service U.S. integrator 175 PY $6.2 million $11.9 million $22.9 million 105 PY $3.8 million $7.2 million $13.8 million 77 PY $2.7 million $5.2 million $10.1 million 98 PY $3.5 million $6.7 million $12.8 million The total impact of a full open skies agreement would of course depend on the number of new air services that are generated. As an illustration of the total potential impact of full open skies, the following table documents the impacts of a package of 5 new Canadian routes enabled by full open skies (e.g., a Canadian carrier flying via the U.S. to Latin American destinations) and for new U.S. routes. Table 3: Potential Annual Incremental Direct Economic Impacts of a Full Open Skies Agreement For scenario of 5 new Canadian and 4 new U.S. routes Type of new air service Person Years Wages GDP Economic Direct 1,294 PY $46 million $88 million $170 million Indirect 682 PY $23.6 million $44 million $87 million Induced 737 PY $24.7 million $46 million $104 million Total 2,713 PY $94.4 million $178 million $361 million

The Economic Impacts of the Open Skies Initiative Past and Future Page iii Tourism Impacts The above economic impacts are those associated largely with the aviation sector of Canada s economy. New air services, however, also stimulate other economic sectors, such as tourism and export industries. This study examined the tourism impacts and found that they were larger than the aviation impacts. For example, while a 5 th freedom passenger service by a U.S. carrier could generate as many as 105 direct person years of Canadian employment in aviation, the estimated impact on jobs in the tourism sector is roughly 1,300 direct person years of employment. For the scenario of 5 new Canadian and 4 new U.S. carrier fifth freedom routes, total tourism employment generation could be roughly 8,700 direct person years, and if indirect and induced job creation takes place, the total job impact may be as high as 14,850 person years in the tourism sector.

The Economic Impacts of the Open Skies Initiative Past and Future Page iv Table of Contents Executive Summary... i 1.0 Introduction...1 2.0 Economic Impact of Transborder Passengers...1 3.0 Economic Impact of 1995 Open Transborder Agreement...2 4.0 Potential Economic Impact of Full Open Skies...7 4.1 Potential Passenger Impacts... 7 4.2 Potential Cargo Impacts... 9 4.3 Potential Tourism Impacts...10 5.0 Conclusion...12

The Economic Impacts of the Open Skies Initiative Past and Future Page 1 1.0 Introduction This note provides a brief overview of the economic impacts derived from the 1995 open transborder agreement, which was signed between Canada and the United States. In addition to the 1995 bilateral agreement, the future economic impacts of a more relaxed open transborder agreement are investigated. The positive economic impacts that can be attributed to the open transborder agreement are linked to the increase in transborder passengers that result from greater air service connectivity. This note is broken down into three primary sections: Section 2.0 of this note will review what is meant by the term economic impact, Section 3.0 outlines the impacts of the 1995 open transborder agreement, and Section 4.0 discusses various potential impacts of an expanded bilateral agreement between the two nations. 2.0 Economic Impact of Transborder Passengers Economic impact is a measure of the spending and employment associated with a sector of the economy, a specific project (such as the construction of a new facility), or a change in government policy or regulation. For this analysis we are assessing the economic impact of a change in government policy (the open transborder agreement) which promotes increased transborder traffic. The four ways of assessing economic impact are (1) in terms of the dollar value of industrial output produced (economic output), (2) the GDP (or value-added) generated, (3) wages earned, or (4) in terms of person years (full-time equivalents (FTEs)) of employment generated. These are used to express the gross level of activity or expenditure from the policy / regulation change. As such, they are not net measures that weigh benefits against costs, but nevertheless these measures can be useful in developing an appreciation of projects, investments and economic sectors. The economic impacts this analysis examines are associated with the resulting increase in transborder passengers caused by the implementation of the 1995 open transborder agreement.

The Economic Impacts of the Open Skies Initiative Past and Future Page 2 3.0 Economic Impact of 1995 Open Transborder Agreement To estimate the impacts associated with the 1995 open transborder agreement, the first step involves measuring the change in overall transborder passengers that can be attributed to the agreement. This was achieved by comparing the observed transborder passenger totals from 1995 to 2004, with a 1994 Transport Canada forecast covering the same time frame. The 1994 Transport Canada forecast embodied an expectation that a transborder agreement between Canada and the U.S. would be agreed upon, but the timing and extent were unknown. Thus the forecast provides a conservative baseline passenger forecast from which the actual trend line can be compared. The following figure plots the actual transborder passenger traffic from 1995 to 2004 versus the forecasted values. Figure 3-1: Canadian Transborder Passenger Traffic Actual versus Forecasted 1995-2004 25,000,000 Forecasted in 1994 Actual 20,000,000 Transborder Passengers 15,000,000 10,000,000 2001: 9/11 2003: SARS & War in Iraq 5,000,000-1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Source: Statistics Canada 51-203-XIB and Transport Canada Forecasts. As can be seen, until the tragic events of 9/11 and following, actual transborder traffic was significantly greater than the 1994 forecast. Despite the significant decrease in traffic levels experienced post-9/11, the impact of the negative economic shocks are starting to ease. In 2004, transborder passenger traffic experienced positive growth, and most airports are reporting that they expect 2005 traffic levels to return to year 2000 levels.

The Economic Impacts of the Open Skies Initiative Past and Future Page 3 However, because the forecast did not take into account the major economic shocks that occurred (9/11, SARS, and the war in Iraq), comparing the actual traffic levels with the forecasted levels would be a misleading comparison for the period of 2001 to 2004, of the effect on the 1995 open transborder agreement. For this reason, the analysis adjusts the actual figures for this period to represent likely passenger levels had the shocks not occurred. The following chart plots the 1994 Transport Canada forecast versus the adjusted actual passenger totals from 1995 to 2004. 2 Figure 3-2: Canadian Transborder Passenger Traffic Adjusted Actual versus Forecasted 1995-2004 30,000,000 25,000,000 Actual (Adjusted for 9/11 etc.) Forecasted in 1994 Actual 2003: SARS & War in Iraq Transborder Passengers 20,000,000 15,000,000 10,000,000 2001: 9/11 5,000,000-1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Source: Statistics Canada 51-203-XIB and Transport Canada Forecasts. As one can see, the actual adjusted trend line is both steeper and higher than that of the 1994 forecast. The following table displays the adjusted actual number of transborder passengers handled per year, the forecasted number, and the difference. 2 The actual 2004 figure is an estimate provided by Transport Canada in February 2005.

The Economic Impacts of the Open Skies Initiative Past and Future Page 4 Table 3-1: Canadian Transborder Passengers Actual versus Forecasted Year Actual Adjusted Actual (Adjusted for 9/11) 1994 Forecast (prior to Open Transborder Agreement) Difference (Adjusted Forecast) 1995 14.8 million 14.8 million 14.1 million 0.7 million 1996 17.1 million 17.1 million 14.7 million 2.4 million 1997 18.1 million 18.1 million 15.4 million 2.8 million 2000 19.0 million 19.0 million 16.0 million 3.0 million 1999 19.6 million 19.6 million 16.7 million 2.9 million 2000 20.8 million 20.8 million 17.5 million 3.4 million 2001 18.6 million 21.9 million 18.2 million 3.6 million 2002 17.6 million 23.0 million 19.1 million 3.9 million 2003 16.8 million 24.2 million 19.6 million 4.6 million 2004 18.6 million 25.4 million 20.1 million 5.3 million Cumulative Total 195 million 217 million 185 million 32.5 million Source: Statistics Canada 51-203-XIB and Transport Canada Forecasts. For the pre-9/11 period of 1995 to 2000, a cumulative 15 million additional passengers were served due to the Canada U.S. open transborder agreement. If trend data adjusted for the effects of 9/11, SARS and the war in Iraq are used, then the open transborder agreement stimulated a cumulative 33 million additional travellers from 1995 to 2004. 3 To derive the economic impacts associated with this increase in passengers, the estimated increase in transborder passengers was multiplied into various economic impact ratios derived from four sources: 1. The most recent economic impact studies completed for the major Canadian airports; 2. An ACI-NA economic impact report examining the aggregate impact of all Canadian airports; 4 3. Micro-studies performed for Canadian airports by InterVISTAS Inc. which examined the economic impact of specific flights; and 3 Alternatively, without the agreement, the post-9/11 traffic would have been even lower than the actual post-9/11traffic. 4 Airports Council International North America (2002), The Economic Impact of Canadian Airports, 2002.

The Economic Impacts of the Open Skies Initiative Past and Future Page 5 4. Statistics Canada passenger data (Catalogue 51-2003-XIB) and Transport Canada passenger forecasts; This research revealed the following averages, which are used in this study. On average, 1 million passengers per annum generates 1,800 direct person years of employment. Each direct person year of employment may generate up to 0.53 person years of indirect and up to 0.57 person years of induced employment. The average annual wage per person year in Canada s airport community is $35,700. Each one million passengers generates $116 million in direct GDP, 5 and $217 million in direct output. 6 The following two tables present the estimated economic impacts of the open transborder agreement from 1995 to 2000. The first displays the cumulative impacts over the six-year period prior to 9/11, while the second displays the average annual impacts for this same period. Table 3-2: Cumulative Economic Impacts of the 1995 Canada U.S. Open Transborder Agreement, 1995-2000 Direct 27,014 PY $964 million $1.8 billion $3.3 billion Indirect 14,242 PY $495 million $879 million $1.7 billion Induced 15,397 PY $516 million $913 million $2.0 billion Total 56,653 PY $2.0 billion $3.5 billion $6.9 billion 5 One million passengers generate $58 million in indirect GDP and $60 million in induced GDP. 6 One million passengers generate $111 million in indirect economic output and $133 million in induced economic output.

The Economic Impacts of the Open Skies Initiative Past and Future Page 6 Table 3-3: Average Annual Economic Impacts of 1995 Canada U.S. Open Transborder Agreement, 1995-2000 Direct 4,502 PY $161 million $292 million $545 million Indirect 2,374 PY $82 million $146 million $280 million Induced 2,566 PY $86 million $152 million $334 million Total 9,442 PY $329 million $590 million $1.2 billion Using the actual data for 1995 to 2000 and the adjusted data for 2001 to 2004, the estimated economic impacts over the ten-year period were derived. The following two tables present the cumulative and average annual impacts, respectively. Table 3-4: Cumulative Economic Impacts of the 1995 Canada U.S. Open Transborder Agreement, 1995-2004 Direct 58,112 PY $2.1 billion $3.8 billion $7.0 billion Indirect 30,639 PY $1.1 billion $1.9 billion $3.6 billion Induced 33,121 PY $1.1 billion $2.0 billion $4.3 billion Total 121,872 PY $4.3 billion $7.6 billion $15.0 billion Figure 3-3: Average Annual Economic Impacts of the 1995 Canada U.S. Open Transborder Agreement, 1995-2004 Direct 5,811 PY $207 million $377 million $704 million Indirect 3,064 PY $106 million $189 million $361 million Induced 3,312 PY $111 million $196 million $431 million Total 12,187 PY $425 million $762 million $1.5 billion

The Economic Impacts of the Open Skies Initiative Past and Future Page 7 4.0 Potential Economic Impact of Full Open Skies 4.1 Potential Passenger Impacts A new bilateral air services agreement between Canada and the U.S. could be agreed upon in the near future. This expanded agreement might take the name Full Open Skies, and would expand upon the previous agreement by offering Canadian and U.S. carriers fifth freedom rights for passengers, and fifth and seventh freedom rights for cargo carriers. 7 Fifth freedom: This freedom would allow Canadian carriers to carry traffic from the U.S. to a third nation as an extension of a service to or from Canada (similar rights for U.S. carriers). Seventh freedom: This freedom would allow Canadian cargo carriers to carry cargo traffic between the U.S. and a third nation on a flight that does not serve Canada (similar rights for U.S. carriers). If a Full Open Skies agreement incorporating fifth freedom passenger rights were enacted, it would be expected to have positive impacts on the air transportation industry. A number of new routes would likely be served, creating additional employment and economic output in Canada. It is difficult to identify all the potential routes that could arise due to the expanded bilateral agreement, so for the purpose of this analysis, three representative potential route additions were examined. 1. A Canadian carrier flying daily from Toronto (YVR) to Rio de Janeiro (RIO) via Houston (HOU), with local traffic served before and after Houston. 2. A Canadian carrier flying daily from Montréal (YUL) to Mexico City (MEX) via Philadelphia (PHL), again with local traffic. 3. A U.S. carrier flying daily from Houston to Hong Kong (HKG) via Vancouver (YVR). Based on the estimated traffic per flight, an annual impact per flight is estimated. The impacts per flight are derived from various micro-economic studies examining the impact of specific flights on an airport. The tables below display the annual direct, indirect, induced and total impacts associated with each specific service. 7 Full open skies would also include unrestricted 6 th freedom fare setting, 6 th freedom through flight numbers and cargo co-terminalization.

The Economic Impacts of the Open Skies Initiative Past and Future Page 8 Figure 4-1: Annual Economic Impact of Potential 5 th Freedom Service Toronto Houston Rio, by a Canadian Carrier Direct 175 PY $6.2 million $11.9 million $22.9 million Indirect 92 PY $3.2 million $6.0 million $11.8 million Induced 100 PY $3.3 million $6.2 million $14.0 million Total 367 PY $12.7 million $24.1 million $48.7 million Figure 4-2: Annual Economic Impact of Potential 5 th Freedom Service Montréal Philadelphia Mexico City, by a Canadian Carrier Direct 64 PY $2.3 million $4.4 million $8.5 million Indirect 34 PY $1.2 million $2.2 million $4.3 million Induced 37 PY $1.2 million $2.3 million $5.2 million Total 135 PY $4.7 million $8.9 million $18.0 million Figure 4-3: Annual Economic Impact of Potential 5 th Freedom Service Houston Vancouver Hong Kong, by a U.S. Carrier Direct 105 PY $3.8 million $7.2 million $13.8 million Indirect 55.5 PY $1.9 million $3.6 million $7.1 million Induced 60.0 PY $2.0 million $3.7 million $8.5 million Total 221 PY $7.7 million $14.5 million $29.4 million It is difficult to estimate the total impact of a full open transborder agreement as it is impossible to predict, in advance, all the routes that would open up as a result of liberal fifth freedom rights. The impact would, no doubt, differ across the years, as service were built up. To illustrate the potential impact of fifth freedom services, we measure the annual economic impact of a total of five potential fifth freedom services provided by Canadian carriers, and four provided

The Economic Impacts of the Open Skies Initiative Past and Future Page 9 by U.S. carriers. The impacts of the increased fifth freedom services are displayed in the following table. Figure 4-4: Incremental Annual Economic Impact of 5 th Freedom Services Five New Canadian Carrier Services and Four New U.S. Carrier Services Direct 1,294 PY $46.1 million $88.2 million $170 million Indirect 682 PY $23.6 million $44.3 million $87.2 million Induced 737 PY $24.7 million $46.0 million $104 million Total 2,713 PY $94.4 million $178 million $361 million 4.2 Potential Cargo Impacts It should be noted that in addition to fifth freedom passenger rights, a Full Open Skies agreement would include fifth and seventh freedom cargo rights. These freedoms would give Canadian carriers the right to operate between the U.S. and other nations where demand justifies service (and vice versa). Our analysis examines the potential economic impacts of two specific cargo services: A five times per week U.S. heavy-lift cargo carrier service originating in Chicago and stopping in Montréal en route to Frankfurt. A five times per week U.S. integrator service originating in Memphis and stopping in Vancouver en route to Tokyo-Narita. The following tables display the estimated economic impacts of the two potential cargo services, based on specific microeconomic studies. Table 4-1: Annual Economic Impact of Potential 5 th Freedom Cargo Service Chicago Montréal Frankfurt, by a U.S. Heavy Lift Cargo Carrier Direct 77 PY $2.7 million $5.2 million $10.1 million Indirect 41 PY $1.41 million $2.6 million $5.2 million Induced 44 PY $1.47 million $2.7 million $6.2 million Total 162 PY $5.6 million $10.6 million $21.5 million

The Economic Impacts of the Open Skies Initiative Past and Future Page 10 Figure 4-5: Annual Economic Impact of Potential 5 th Freedom Cargo Service Memphis Vancouver Tokyo, by a U.S. Integrator Direct 97.8 PY $3.48 million $6.67 million $12.8 million Indirect 51.5 PY $1.79 million $3.35 million $6.59 million Induced 55.7 PY $1.87 million $3.48 million $7.86 million Total 205 PY $7.14 million $13.5 million $27.3 million Based on our analysis, the combined annual economic impact of these two services is 175 person years of direct employment and close to $23 million in direct economic output. It is difficult to predict the exact cargo services that could arise due to the increased cargo freedoms, but based on the impacts of these two services, it is clear that increased cargo freedoms would have a significant positive economic benefit. In addition to the direct impacts of new air cargo services on employment in the aviation sector, there would be significant economic benefits in shipper industries. Canadian exports would have more access to air cargo lift, improving economics in many cases. 4.3 Potential Tourism Impacts In addition to passenger and cargo impacts, a more relaxed air service bilateral could also have a significant impact on the Canadian tourism industry. The fifth freedom rights provide carriers with more flexibility with respect to route options. For example, the freedom would allow a U.S. carrier flight from Europe to the U.S. to land at a Canadian tourism destination before arriving at its final U.S. destination. The airline would continue to provide Europe to U.S. service (and vice versa) for through-traffic, but would also be able to accommodate leisure travellers that wish to stop at the Canadian tourism destination. Our analysis examines the direct tourism impact on Canada of a foreign carrier operating a daily flight from Indianapolis to London-Stansted via Québec City. Québec City is used as an example of a Canadian tourism resort, as it is close in proximity to Mont St.Anne, a world-class ski resort. The first step of the analysis estimates the percentage of total passengers per flight that are deplaning in Québec City to visit the Canadian tourism resort. Based on that estimated number of tourism passengers per flight, total tourism spending per flight is derived from Statistics Canada tourism indicators and foreign spending profiles (average length of stay and average daily spending). 8 From the estimated tourism spending per flight estimates, the economic impacts displayed in the table below were derived from Canadian tourism multipliers. 8 Tourism indicator data was obtained from Statistics Canada Catalogue No. 13-009-XIB.

The Economic Impacts of the Open Skies Initiative Past and Future Page 11 Table 4-2: Annual Tourism Impact of Potential 5 th Freedom Service Operated by a U.S. Carrier (Indianapolis Québec City London) Direct 1,344 PY $33.9 million $43.1 million $101 million Indirect 360 PY $13.6 million $16.3 million $38.3 million Induced 579 PY $15.7 million $20.8 million $41.8 million Total 2,284 PY $63.3 million $80.2million $181 million A daily service from Indianapolis to London-Stansted would generate over 1,300 person years of direct tourism employment and over $100 million in direct tourism output per year. The direct tourism impacts are in addition to the type of direct aviation impacts estimate in Section 4.1. The following table presents the impacts of a scenario in which five new fifth freedom services started up. U.S. carriers, making stops at Canadian tourism resorts en route to their final destinations would operate these services. Table 4-6: Annual Tourism Impact of Four 5 th Freedom Services Operated by a U.S. Carrier Direct 5,376 PY $136 million $172 million $404 million Indirect 1,440 PY $54 million $65 million $153 million Induced 2,316 PY $63 million $83 million $167 million Total 9,132 PY $253 million $321 million $724 million

The Economic Impacts of the Open Skies Initiative Past and Future Page 12 5.0 Conclusion The Impact of the 1995 Open Transborder Air Services Agreement The open transborder agreement that was signed in 1995 by Canada and the U.S., increased transborder passenger traffic by roughly 3.3 million passengers per annum relative to what had been forecast prior to 1995, as shown in the following table. Table 1: Increase in Transborder Passengers Attributed to the 1995 Open Transborder Agreement Type of Increase 1995-2000 (pre 9/11) 1995-2004 Cumulative increase in passengers 9 15 million 10 million Cumulative increase in passengers with adjustment for impact of 9/11 15 million 33 million Average annual increase in passengers 2.5 million 3.3 million The growth in transborder air service has had significant positive economic impacts for Canada. During the period prior to 9/11, the increase in transborder air traffic, relative to the 1994 preagreement forecast, generated roughly 4,500 additional person years of Canadian employment per annum, $160 million in wages and almost $300 million in gross domestic product (GDP). Including indirect and induced impacts, the annual job creation total may have been 9,400 person years, $325 million in wages and just under $600 million in GDP. Potential Impact of Full Open Skies A new bilateral air services agreement between Canada and the U.S. could be agreed upon in the near future. This expanded agreement might take the name Full Open Skies, and would expand upon the previous agreement by offering Canadian and U.S. carriers fifth freedom rights for passenger services, and fifth and seventh freedom rights for cargo services. This potential agreement would create significant additional economic impacts through increased passenger and cargo services, as well as increased tourism spending. The following table summarises the direct economic impacts associated with some individual types of new air services which could materialise with a full open skies agreement. 9 This is the difference between actual enplaned/deplaned transborder passengers carried versus the forecast of transborder passengers as per the 1994 forecast.

The Economic Impacts of the Open Skies Initiative Past and Future Page 13 Table 2: Potential Incremental Annual Direct Economic Impacts of a Full Open Skies Agreement Type of new air service Person Years Wages GDP Economic 5 th freedom passenger service Canadian carrier 5 th freedom passenger service U.S. carrier 5 th freedom cargo service U.S. heavy-lift carrier 5 th freedom cargo service U.S. integrator 175 PY $6.2 million $11.9 million $22.9 million 105 PY $3.8 million $7.2 million $13.8 million 77 PY $2.7 million $5.2 million $10.1 million 98 PY $3.5 million $6.7 million $12.8 million The total impact of a full open skies agreement would of course depend on the number of new air services that are generated. As an illustration of the total potential impact of full open skies, the following table documents the impacts of a package of 5 new Canadian routes enabled by full open skies (e.g., a Canadian carrier flying via the U.S. to Latin American destinations) and for new U.S. routes. Table 3: Potential Annual Incremental Direct Economic Impacts of a Full Open Skies Agreement For scenario of 5 new Canadian and 4 new U.S. routes Type of new air service Person Years Wages GDP Economic Direct 1,294 PY $46 million $88 million $170 million Indirect 682 PY $23.6 million $44 million $87 million Induced 737 PY $24.7 million $46 million $104 million Total 2,713 PY $94.4 million $178 million $361 million

The Economic Impacts of the Open Skies Initiative Past and Future Page 14 Tourism Impacts The above economic impacts are those associated largely with the aviation sector of Canada s economy. New air services, however, also stimulate other economic sectors, such as tourism and export industries. This study examined the tourism impacts and found that they were larger than the aviation impacts. For example, while a 5 th freedom passenger service by a U.S. carrier could generate as many as 105 direct person years of Canadian employment in aviation, the estimated impact on jobs in the tourism sector is roughly 1,300 direct person years of employment. For the scenario of 5 new Canadian and 4 new U.S. carrier fifth freedom routes, total tourism employment generation could be roughly 8,700 direct person years, and if indirect and induced job creation takes place, the total job impact may be as high as 14,850 person years in the tourism sector.