Fort McMurray International Airport

FINAL REPORT Fort McMurray International Airport Economic Impacts Associated with Current Air Services PREPARED FOR Fort McMurray Airport Authority (FMAA) PREPARED BY InterVISTAS Consulting Inc. 29 September 2017

Contents 1 Introduction... 1 2 Context & Regional Economy... 2 3 Estimating Economic Impact... 3 4 Microeconomic Impact Analysis... 5 4.1 Air Canada A319/A320/A321 Service to Toronto... 5 4.2 Encore Q400 Service to Calgary... 11 5 Estimate of FIFO Workforce Spending in Fort McMurray... 19 5.1 Context... 19 5.2 Approach & Assumptions... 19 Glossary of Terms... 21 Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) i

1 Introduction The Fort McMurray International Airport (YMM) welcomed over 740,000 passengers in 2016, down 32% from the 1.1 million handled the previous year. 1 Aircraft movements also fell, with the airport receiving over 46,000 movements in 2016, versus roughly 65,200 aircraft handled in 2015. 2 External factors including the wildfire, as well as the price of oil, have contributed significantly to the decrease of passenger numbers at YMM in 2016. Microeconomic Analysis The airport currently offers service to four domestic locations, including Calgary, Edmonton, Toronto and Fort Chipewyan. 3 Each departure of an aircraft at YMM generates labour hours for individuals with jobs involved in handling passengers, their baggage, cargo and the aircraft. To understand the labour necessary to support and operate these air services, employment and other economic factors of the air service are examined. These analyses are called micro economic studies to differentiate them from other broader economic impact study that was completed that takes into account all employment and economic activity at an airport, not just that associated with a given service to a particular destination. The analysis provided in this report highlights the average economic impact of labour hours associated with turning around an aircraft at YMM on an annual and per flight basis. Two services are analysed as follows: 1. Air Canada A319/A320/A321 service to Toronto 2. Encore Q400 service to Calgary Fly-In, Fly-Out (FIFO) Workforce Analysis of Spending in YMM The Fort McMurray International Airport facilitates the movement of the FIFO worker population (based on a recent survey conducted by the airport, nearly half (45%) of those surveyed had indicated that they were a part of the FIFO worker population). These workers arrive at YMM, and proceed onwards to project accommodation (worker camps) or lodging within or around the Fort McMurray urban service area. 4 Those that stay within the Fort McMurray area spend money locally on shelter, food and retail goods. This spending supports employment in the accommodations, food/beverage and retail sectors. 1 Fort McMurray Airport Authority 2 Ibid. 3 http://www.flyymm.com/ 4 https://www.rmwb.ca/assets/departments/planning+and+development/urban+service+area+boundary+map.pdf Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 1

2 Context & Regional Economy The City of Fort McMurray, located within the Regional Municipality of Wood Buffalo (RMWB), is a unique travel market within the broader Canadian landscape. The city connects a significant transient worker population to more remote oil sands drill sites (yet still within the RMWB), and welcomes tourists that enjoy a broad range of activities such as the northern lights, fishing and hunting and oil sands tours. The air travel demand of tourists, transient workers and residents supports significant employment in the region across a variety of industries. The region s economy has been subject to a particularly tough environment in recent years with the 2016 wildfire and a relatively low price of oil (as of May 2017). Oil and gas investment spending in the region is forecast to be $15 billion in 2017, down from $23 billion in 2015. 5 As a result, Fort McMurray is observing a transition out of the construction phase and rapid growth into a steady operations phase. These recent events have meaningful implications for the current and future population of the RMWB region and the type of jobs that it will support in the future. The Oil Sands Community Alliance (OSCA) has prepared and submitted to Council a Population Projections Model to assist the RMWB with strategic services and capital spending planning. The model bases the population projections on a number of key elements such as the CAPP production forecast, changes in regional workforce requirements and impacts of the 2016 wildfire. The model suggests population levels will rebound closer to 2020, when construction phases for a number of key oil sands projects begin. Figure 1: Current and Forecast Population for the RMWB (2016-2013) Source: OSCA Population Projections Model (2016-2030) 5 CAPP February 2017 Capital Investment & Drilling Forecast Update Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 2

3 Estimating Economic Impact 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. These are not net measures that weigh benefits against costs; nevertheless, these measures can be useful in developing an appreciation of projects, investments, activities, and economic sectors. The economic impact estimates generated by passenger air services at YMM include: Direct Economic Impacts These are impacts associated with employment in the aviation sector directly related to operating and servicing flights at YMM. This includes employment in customer services, airline crew based in Fort McMurray, and jobs related to ground handling, cleaning and maintenance. This employment can be either on-site or off-site. Direct airport related impacts also include those from employment of airport staff members (e.g., airport concessions, security screening, etc.). Indirect Economic Impacts These are impacts associated with employment in industries that supply services or employment to the direct impacts. For example, food wholesalers that supply food for catering on flights would be considered indirect employment. Indirect employment is generated in industries that supply or provide services to the direct employment. Induced Economic Impacts These are impacts that stem from expenditures by individuals employed indirectly or directly. These impacts are often referred to as the household spending effect. For example, if an airport employee decides to expand or re-model his/her home, this would result in additional (induced) employment hours in the general economy. The home renovation project would support hours of induced employment in the construction industry, the construction materials industry, etc. The estimates provide the average economic impact of labour hours associated with turning around an aircraft on a per flight basis. The direct economic impact of air services to/from YMM was based on an analysis of the employment associated with the operation or potential operation of these services. For the specific purpose of the following micro studies, we examined the size of the employment base involved in processing the aircraft and its passengers for a target air service, and the impact it has on the local and provincial economy. Employment attributable to air services to/from YMM was estimated through information collected through primary research with stakeholders, data available to InterVISTAS from previous studies and existing industry data. The results of the macro economic impact study conducted for YMM was also integral to the micro economic impact analysis. InterVISTAS estimated the time and resources required in processing a flight with respect to different tasks and functions that are required to execute to turn an aircraft at the airport. These estimates were then used as the primary inputs to model the total estimated amount of employment that is associated with the operation of a particular air service. In addition, economic ratios and multipliers were used to infer other economic impacts from the employment figures, such as wages, gross domestic product (GDP) and economic output. GDP is a measure of the money value of final goods and services produced as a result of economic activity, while economic output is the dollar value of industrial output produced. Economic multipliers were also used to Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 3

estimate the indirect and induced (or multiplier) impacts. InterVISTAS applied economic multipliers and ratios produced by the Alberta Treasury Board and Finance. 6 Estimating Non-Local Visitor Spending Impacts In addition to the employment that is supported at the airport, air services will also bring in non-local visitors who spend money on items such as hotels, ground transportation, food and beverage, entertainment, etc. in Fort McMurray. This analysis includes an estimate of the visitor spending in the region facilitated by the current air services to YYZ (A319, A320 and A321equipment) and YYC (Q400) from YMM. The annual number of air visitors to the region from Calgary and Toronto is estimated based on information provided by Fort McMurray tourism stakeholders. Given estimates of the number of in-bound visitors, data on visitor spending patterns and travel characteristics for the Alberta North Tourism Region obtained from Alberta Tourism, Parks and Recreation was applied to produce estimates of the total spending of visitors from each air service. Based on this data, it is estimated visitors spend approximately $333 per person per trip when travelling to Alberta s northern region, which is used as a proxy for Fort McMurray. The Alberta Treasury Board and Finance economic impact multipliers are used to estimate the direct employment generated by each dollar of non-local visitor spending, as well as direct wages, GDP and economic output. The following sections of this report present the individual micro economic impact analyses for two specific air services at YMM: Domestic A319/A320/A321 passenger service to Toronto with Air Canada; Domestic Q400 passenger service to Calgary with Encore. 6 Source: https://open.alberta.ca/publications/alberta-economic-multipliers. The basis of the multipliers is from Statistics Canada Input-Output model. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 4

4 Microeconomic Impact Analysis 4.1 Air Canada A319/A320/A321 Service to Toronto This section examines the employment necessary to support a typical domestic operation out of YMM. The information and data required to model the employment was gathered through an interview with industry stakeholders, desk research, and InterVISTAS industry expertise. The route is operated by either the 120 seat A319, the 146 seat A320, or the 185 seat A321. For illustrative purposes, the analysis will use the weighted average of 127 seats of the aircraft. The average load factor is approximately 75%, though it should be noted that there is significant variation throughout the week. 7 Based on these flight characteristics, it is estimated that over 38,600 passengers fly this route every year. 8 Details of the air service are summarized in Table 4-1. Table 4-1: Details of Air Service between Fort McMurray and Toronto Aircraft Type Seats Load Factor Annual Frequency A319, A320 or A321 127 75% 407 Source: Innovata Schedules accessed via DIIO Mi; Air Canada Fleet Website; InterVISTAS industry expertise. Figure 4-1: Fort McMurray-Toronto Direct Route 7 Information provided by industry stakeholders. 8 38,663 passengers = 407 flights x 127 seats (weighted average) x 75% load factor. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 5

4.1.1 Direct Airport-Related Economic Impacts per Round-Trip The direct employment associated with the operations of an air service at Fort McMurray International Airport generates labour requirements including hours associated with check-in, boarding, arrival and baggage services for both the inbound and outbound passengers, ground servicing of the aircraft (loading/unloading, fuelling, other services), plus catering and other services. The analysis also includes employment hours at other organizations that enable flight operations and passenger facilitation, including security, immigration and customs services, freight forwarding and customs brokerage of cargo and ground transportation. The employment and earnings associated with these activities are considered to be direct impacts of the flight. They are immediately associated with the operation of the aircraft. The analysis presented represents the labour requirement for this particular domestic service. It includes the sum of the labour hours from all jobs/tasks associated with the flight - both hands-on jobs as well as overhead jobs that are required to turn the aircraft at YMM. Employment hours at YYZ (Toronto) are not included in the analysis. Table 4-2 below presents the detailed information and assumptions used to compute the direct airport related employment. Estimations are based on stakeholder interviews, InterVISTAS Consulting industry knowledge and secondary research. Table 4-2: Summary of Direct Estimated Hours per Departure and Annual FTEs per Flight between Fort McMurray and Toronto Job Type FTE per Departure Annual FTEs Pilots 0.000 - Flight attendants 0.000 - Airline In-Terminal Staff 0.009 4 Other Terminal Staff 0.044 18 Cargo Terminal Staff 0.000 - Passenger-Related Ramp Crew 0.004 2 Aircraft-Related Ramp Crew 0.001 0 Other overhead, including ATC, training, etc. 0.002 1 Aircraft Maintenance 0.000 - Catering 0.000 - Hotel & transport 0.000 - TOTAL 0.059 24 Notes: Airline In-Flight Services does not include labour hours of pilots and flight attendants as they are presumed to not be based in YMM. Terminal Support includes labour hours of airline in-terminal staff (e.g. check-in agents, ticket agents, gate agents, escorts, supervisors and the airline s overhead staff) as well as other terminal staff (e.g. air traffic control, security screening, Customs Border and Protection, retail and restaurant, car rental and the airport authority). Other Support includes labour hours of jobs in Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 6

ramp crew, other overhead and aircraft maintenance. Figures shown for hours and full-time equivalents are rounded, and the total may not sum due to rounding. As shown in Table 4-3, annual employment associated with the air service is estimated to generate 24 direct full-time equivalents of direct local employment in Fort McMurray during the year. The year-round service to Toronto is estimated to generate $2.5 million in direct value added GDP. GDP is a measure of the value added by labour and capital services used to produce the airline services. The total economic impact of a flight would also include indirect and induced effects. Indirect and induced impacts are those stimulated by the direct employment and activities at the airport (e.g., businesses that supply goods and services to the airport, and spending by airport employees in the general economy). Considering multiplier effects (indirect and induced), the total economic impacts of the air service may support approximately 57 FTEs, with value added GDP of nearly $6 million in Alberta on an annual basis. Table 4-3: Annual Direct, Indirect and Induced Impacts of YMM-YYZ Impact Employment (FTEs) Wages GDP Output Direct 24 1.7 2.5 6.1 Indirect 24 1.5 2.3 3.6 Induced 9 0.5 1.1 1.9 Total 57 3.7 5.9 11.6 Note: Totals may not sum, due to rounding. 4.1.2 Non-Local Visitor Spending Impacts Non-local visitors arriving on air services at YMM spend money on items such as hotels, taxis, food and beverage, entertainment, etc. This section presents the direct spending impacts of the visitors. The number of visitors on the Toronto air service is estimated based on assumed load factors and the percentage of visitors on-board the flight. Based on stakeholder consultations, it is assumed that approximately 10% of passengers on-board each flight from Toronto will be visitors that stay in the RMWB region. 9 The remainder of deplaning passengers is likely to consist of returning passengers who are residents with their trips originating in Fort McMurray, or transient workers. 9 Based on discussions with the Fort McMurray Tourism and Fort McMurray Airport Authority, it was estimated that roughly 10% of passengers on-board are non-local visitors. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 7

The yearly number of visitors to the region resulting from the air services from YYZ is estimated to be approximately nearly 2,900 visitors in the first year, spending over $957,100 per annum. 10 To the extent that total passenger traffic grows in subsequent years, the volume of in-bound traffic would also likely increase, along with spending in the Fort McMurray area. Table 4-4 shows the YMM-YYZ Annual Passenger Profile. Table 4-4: YMM-YYZ Annual Visitor Passenger Profile Air Service 1 Aircraft Type A319/A320/A321 2 Seat Capacity 127 3 Load Factor 75% 4 Annual Frequency 407 5 # of Passengers On-Board per Flight 95 6 # of Passengers On-Board per Annum 38,663 7 Percentage O & D Traffic 75% 8 Total Annual Deplaned Passengers 28,997 9 Estimated % Visitors 10% 10 Total Annual Estimated Deplaned Visitors 2,900 Sources: 1 FMAA, 2 AC Fleet Data, 3 InterVISTAS Industry Expertise, 4 Innovata Schedules, 5 InterVISTAS computation, 6 InterVISTAS computation, 7 InterVISTAS Industry Expertise, 8 InterVISTAS computation, 9 Stakeholder Interview, 10 InterVISTAS computation. As shown in Table 4-4, the annual number of visitors to the RMWB region is estimated based on a variety of sources including the FMAA, airline schedules, InterVISTAS industry expertise and stakeholder consultations. Given estimates of the number of in-bound visitors, data on visitor spending patterns and travel characteristics for the Alberta North Tourism Region was obtained from Alberta Tourism, Parks and Recreation and applied to produce estimates of the total spending of visitors from each air service. Based on the data, Toronto visitors are expected to spend approximately $333 per person per trip. Visitor spending would include, for example, amounts spent on hotel/accommodation, food/beverage, retail, ground transportation, etc. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. The direct employment and economic impacts associated with visitor spending from the air service to YYZ is estimated to support 9 direct FTEs and contribute approximately $0.5 million in GDP per annum to the region. The direct economic impacts of annual visitor spending from the YYZ air service are illustrated in Table 4-5. 10 Average spend per visitor is based on data available from Alberta Tourism, Parks and Recreation, and has been adjusted for inflation (2014-2017). Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 8

Table 4-5: Annual Direct Visitor Spending Impacts YYZ Passenger Service Impact Employment (FTEs) Wages 2,900 Visitors GDP Output Direct 9 $0.4 $0.5 $1.0 4.1.3 Aeronautical and Non-Aeronautical Revenue Impacts Using the schedule of rates and charges at YMM, an assessment of the annual amount of carrier fees and charges is estimated. 11 This includes the landing fee, airport improvement fee, and general terminal charges. In total, the carrier pays approximately $2.9 million in airport fees and charges annually for the Toronto service. On a per flight basis, this amounts to over $7,000, based on 407 annual flight operations. The non-aeronautical revenue collected by the airport from passengers on the YYZ flights, through interminal spending and parking revenues, is also estimated. 12 Every year, the passengers on this air service at YMM generate $0.5 million in non-aeronautical revenue. Table 4-6 shows the estimated airport charges paid by the carrier per annum, as well as the estimated yearly non-aeronautical revenue from passengers. Table 4-6: Annual Airport Revenue Impacts YYZ Passenger Service Revenue ($ Million) Aeronautical Revenue $2.4 Non-Aeronautical Revenue $0.5 Total $2.9 Note: Totals may not add up due to rounding. 11 http://www.flyymm.com/ 12 Average in-terminal and spending and parking revenue per passenger was calculated using information from the 2016 YMM Annual Report. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 9

4.1.4 Combined Aviation and Visitor Spending Impacts The analysis in this section estimates the economic contribution of air service to Toronto from Fort McMurray. The combined economic impact of the air service, which includes the total impact of airportrelated operations and the direct visitor spending impacts, is shown in Table 4-7. These air services and associated tourism spending are estimated to support 33 direct FTEs and contribute $2.9 million in direct GDP. Including indirect and induced effects, the total impacts of the YYZ air service includes 66 FTEs and $6.3 million in total GDP to the broader economy. Table 4-7: Annual Combined Economic Impacts (Airport + Tourism) YYZ Passenger Service Impact Employment (FTEs) Wages GDP Output Direct 33 2.1 2.9 7.1 Indirect 24 1.5 2.3 3.6 Induced 9 0.5 1.1 1.9 Total 66 4.1 6.3 12.5 Note: Totals may not sum, due to rounding. Direct impacts include airport and tourism. Indirect and induced impacts are for airport operations only. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. The economic impacts of this air service can also be considered on a per departure basis. Table 4-8 illustrates the employment and associated wage, GDP and output impacts for every flight departure from YMM to YYZ. Each time an Air Canada flight takes off for Toronto, over $7,200 in direct GDP and approximately $17,300 in direct economic output is contributed to the economy. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 10

Table 4-8: Per Departure Economic Impacts (Airport + Tourism) YYZ Passenger Service Impact Employment (FTEs) Wages ($ Thousands) GDP ($Thousands) Output ($Thousands) Direct 0.08 5.2 7.2 17.3 Indirect 0.06 3.8 5.6 8.8 Induced 0.02 1.2 2.8 4.7 Total 0.16 10.1 15.6 30.7 Note: Totals may not sum, due to rounding. Note: Totals may not sum, due to rounding. Direct impacts include airport and tourism. Indirect and induced impacts are for airport operations only. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. 4.2 Encore Q400 Service to Calgary This chapter examines the labour impacts of a scheduled air carrier service to Calgary. The route most frequently operates a 78 seat Bombardier Dash 8 Q400 aircraft with an over five times weekly service frequency. During peak operations, the aircraft may be up-gauged to a 737-600 (113 seat capacity) or the 737-700 (130 seat capacity), yet this analysis only takes into account Q400 operations. The average load factor is 75% after consulting with industry stakeholders. Based on these air service parameters, nearly 74,939 passengers will fly this direct route every year. 13 Details of the air service are summarized in Table 4-9. Table 4-9: Details of Air Service between Fort McMurray and Calgary Aircraft Type Seats Load Factor Annual Frequency Q400 78 75% 1,281 Source: Innovata Schedules accessed via DIIO Mi; WestJet Encore Fleet Website; InterVISTAS industry expertise 13 74,939 passengers = 1,281 flights x 78 seats x 75% load factor. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 11

Figure 4-2: Fort McMurray-Calgary Direct Route 4.2.1 Direct Airport-Related Economic Impacts per Round-Trip The direct employment associated with the operations of the air service at Fort McMurray International Airport would generate labour requirements related to check-in, boarding, arrival and baggage services for both the inbound and outbound passengers, ground servicing of the aircraft (loading/unloading, fuelling, other services), plus catering and other services. The analysis also includes hours of employment at other organizations that enable flight operations and passenger facilitation, including incremental hours of security, immigration and customs services, freight forwarding and customs brokerage of cargo as well ground transportation. The employment and earnings associated with these activities are considered to be direct impacts of the flight, which are associated with the operation of the flight. The analyses presented represent the labour requirement for the YMM-YYC route. It includes the sum of all of the labour hours from all jobs/tasks associated with the turn of the flight - both hands-on jobs as well as overhead jobs that are required to turn the aircraft at YMM. Employment hours at YYC are not considered. Table 4-10 below presents the detailed information and assumptions used to compute the direct airport related labour requirement. Estimations are based on InterVISTAS industry knowledge, input provided during the stakeholder interviews and observation of the flight operation, as well as other secondary online research. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 12

Table 4-10: Summary of Direct Estimated Hours per Departure and Annual FTEs per Flight between Fort McMurray and Calgary Job Type FTE per Departure Annual FTEs Pilots 0.000 - Flight attendants 0.000 - Airline In-Terminal Staff 0.009 11 Other Terminal Staff 0.027 35 Cargo Terminal Staff 0.000 - Passenger-Related Ramp Crew 0.003 4 Aircraft-Related Ramp Crew 0.001 1 Other overhead, including ATC, training, etc. 0.002 2 Aircraft Maintenance 0.000 - Catering 0.000 - Hotel & transport 0.000 - TOTAL 0.041 53 Notes: Airline In-Flight Services does not include labour hours of pilots and flight attendants as they are presumed to not be based in YMM. Terminal Support includes labour hours of airline in-terminal staff (e.g. check-in agents, ticket agents, gate agents, escorts, supervisors and the airline s overhead staff) as well as other terminal staff (e.g. air traffic control, security screening, Customs Border and Protection, retail and restaurant, car rental and the airport authority). Other Support includes labour hours of jobs in ramp crew, other overhead and aircraft maintenance. Figures shown for hours and full-time equivalents are rounded, and the totals may not sum due to rounding. As shown in Table 4-11, annual employment associated with the air service is estimated to generate 53 direct full-time equivalents of direct local employment in Fort McMurray during the year. The air service to Calgary is estimated to generate $5.5 million in direct value added GDP. GDP is a measure of the value added by labour and capital services used to produce the airline services. The total economic impact of a flight would also include indirect and induced effects. Indirect and induced impacts are those stimulated by the direct employment and activities at the airport (e.g., businesses that supply goods and services to the airport, and spending by airport employees in the general economy). Considering multiplier effects (indirect and induced), the total economic impacts of the air service may support approximately 128 FTEs, with value added GDP of $13.4 million in Alberta per annum. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 13

Table 4-11: Airport-Related Direct, Indirect and Induced Impacts of YMM-YYC Impact Employment (FTEs) Wages GDP Output Direct 53 3.9 5.5 14.4 Indirect 55 3.5 5.3 8.7 Induced 21 1.1 2.5 4.3 Total 128 8.5 13.4 27.4 Note: Totals may not sum, due to rounding. 4.2.2 Non-Local Visitor Spending Impacts Non-local visitors arriving on air services at YMM spend money on items such as hotels, taxis, food and beverage, entertainment, etc. This section presents the direct spending impacts of the visitors. The number of visitors on the Calgary air service is estimated based on assumed load factors and the percentage of visitors on-board the flight. Based on stakeholder consultations, it is assumed that approximately 10% of passengers on-board each flight from Calgary will be visitors that stay in the RMWB region. 14 The remainder of deplaning passengers is likely to be returning resident passengers whose trips originated in Fort McMurray, or transient workers. The yearly number of visitors to the region resulting from the air services from YYC is estimated to be approximately over 5,600 visitors in the first year, spending an estimated $1.9 million per annum. 15 To the extent that total passenger traffic grows in subsequent years, the volume of in-bound traffic would also likely increase, along with spending in the Fort McMurray area. Table 4-12 shows the YMM-YYC annual passenger profile. 14 Based on discussions with the Fort McMurray Tourism and Fort McMurray Airport Authority, it was estimated that roughly 10% of passengers on-board are non-local visitors. 15 Average spend per visitor is based on data available from Alberta Tourism, Parks and Recreation, and has been adjusted for inflation (2014-2017). Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 14

Table 4-12: YMM-YYC Annual Visitor Passenger Profile Air Service 1 Aircraft Type Q400 2 Seat Capacity 78 3 Load Factor 75% 4 Annual Frequency 1,281 5 # of Passengers On-Board per Flight 59 6 # of Passengers On-Board per Annum 74,939 7 Percentage O & D Traffic 75% 8 Total Annual Deplaned Passengers 56,204 9 Estimated % Visitors 10% 10 Total Annual Estimated Deplaned Visitors 5,620 Sources: 1 FMAA, 2 Encore Fleet Data, 3 InterVISTAS Industry Expertise, 4 Innovata Schedules, 5 InterVISTAS computation, 6 InterVISTAS computation, 7 InterVISTAS Industry Expertise, 8 InterVISTAS computation, 9 Stakeholder Interview, 10 InterVISTAS computation. As indicated in Table 4-12, the annual number of visitors to the RMWB region is estimated based on a variety of sources including the FMAA, airline schedules, InterVISTAS industry expertise and stakeholder consultations. Given estimates of the number of in-bound visitors, data on visitor spending patterns and travel characteristics for the Alberta North Tourism Region was obtained from Alberta Tourism, Parks and Recreation and applied to produce estimates of the total spending of visitors from each air service. Based on the data, Calgary visitors are expected to spend approximately $333 per person per trip. Visitor spending would include, for example, amounts spent on hotel/accommodation, food/beverage, retail, ground transportation, etc. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. The direct employment and economic impacts associated with visitor spending from the air service to YYC is estimated to support 17 direct FTEs and contribute approximately $0.9 million in GDP per annum to the region. The direct economic impacts of annual visitor spending from the YYC air service are illustrated in Table 4-13. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 15

Table 4-13: Annual Direct Visitor Spending Impacts YYC Passenger Service Impact Employment (FTEs) Wages 5,620 Visitors GDP Output Direct 17 $0.7 $0.9 $1.9 4.2.3 Aeronautical and Non-Aeronautical Revenue Impacts Using the schedule of rates and charges at YMM, an assessment of the annual amount of carrier fees and charges is estimated. 16 This includes the landing fee, airport improvement fee, and general terminal charges. In total, the carrier pays approximately $4.6 million in airport fees and charges annually for the Calgary service. On a per flight basis, this amounts to approximately $3,600 based on 1,281 annual flight operations. The non-aeronautical revenue collected by the airport from passengers on the flights to YYC, through interminal spending and parking revenues, is also estimated. 17 Every year, the passengers on this air service at YMM generate $0.9 million in non-aeronautical revenue. Table 4-14 shows the estimated airport charges paid by the carrier per annum, as well as the estimated yearly non-aeronautical revenue from passengers. Table 4-14: Annual Airport Revenue Impacts YYC Passenger Service Revenue ($ Million) Aeronautical Revenue $4.6 Non-Aeronautical Revenue $0.9 Total $5.5 Note: Totals may not add up due to rounding. 16 http://www.flyymm.com/ 17 Average in-terminal and spending and parking revenue per passenger was calculated using information from the 2016 YMM Annual Report. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 16

4.2.4 Combined Aviation and Visitor Spending Impacts The analysis in this section estimates the economic contribution of air service to Calgary from Fort McMurray. The combined economic impact of the air service, which includes the total impact of airportrelated operations and the direct visitor spending impacts, is shown in Table 4-15. These air services and associated tourism spending are estimated to support 69 direct FTEs and contribute $6.5 million in direct GDP. Including indirect and induced effects, the total impacts of the YYC air service includes 145 FTEs and $14.3 million in total GDP to the broader economy. Table 4-15: Annual Combined Economic Impacts (Airport + Tourism) YYC Passenger Service Impact Employment (FTEs) Wages GDP Output Direct 69 4.6 6.5 16.3 Indirect 55 3.5 5.3 8.7 Induced 21 1.1 2.5 4.3 Total 145 9.2 14.3 29.2 Note: Totals may not sum, due to rounding. Note: Totals may not sum, due to rounding. Direct impacts include airport and tourism. Indirect and induced impacts are for airport operations only. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 17

The economic impacts of this air service can also be considered on a per departure basis. Table 4-16 illustrates the employment and associated wage, GDP and output impacts for every flight departure from YMM to YYC. Each time an Encore flight takes off to Calgary, a total of $5,100 in direct GDP and $12,700 in direct economic output is estimated to be contributed to the Alberta economy. Table 4-16: Per Departure Combined Economic Impacts (Airport + Tourism) YYC Passenger Service Impact Employment (FTEs) Wages ($ Thousands) GDP ($Thousands) Output ($Thousands) Direct 0.05 3.6 5.1 12.7 Indirect 0.04 2.7 4.1 6.8 Induced 0.02 0.9 2.0 3.3 Total 0.11 7.2 11.2 22.8 Note: Totals may not sum, due to rounding. Note: Totals may not sum, due to rounding. Direct impacts include airport and tourism. Indirect and induced impacts are for airport operations only. Other downstream industries would also benefit from visitor spending in Fort McMurray; however, InterVISTAS prefers to exclude these impacts because of double counting. Thus, we show only the direct impacts of visitor spending. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 18

5 Estimate of FIFO Workforce Spending in Fort McMurray 5.1 Context The Fort McMurray International Airport facilitates the movement of the FIFO worker population (based on a recent survey conducted by the airport, nearly half (45%) of those surveyed had indicated that they were a part of the FIFO worker population). These workers arrive at YMM, and proceed onwards to project accommodation (worker camps) or lodging within or around the Fort McMurray urban service area. 18 Those that stay within the Fort McMurray area spend money locally on shelter, food and retail goods. This spending supports employment in the accommodations, food/beverage and retail sectors. 5.2 Approach & Assumptions To approximate the number of FIFO workers staying in the Fort McMurray area, InterVISTAS utilizes the urban shadow population estimate found within the RMWB Municipal Census 2015 Report. 19 The report estimates that there are approximately 4,300 residents of the urban shadow population. The urban shadow population is defined in the report as transient residents enumerated in the Fort McMurray urban service area. This component of the population may reside in hotels, motels, campgrounds, homeless shelters and public facilities, such as the hospital and a custodial facility. A summary of all the assumptions used to generate the spending impacts of urban shadow population in the Fort McMurray area are provided below: 1. All of the urban shadow population is considered FIFO traffic; 2. All estimated FIFO traffic are assumed to use YMM; 3. Each individual within the urban shadow population is employed; 4. Each worker of the urban shadow population flies home after every work rotation; 5. Based on varying work rotations, the urban shadow population is assumed to work half of the year (26 weeks); 6. The weekly spend of the urban shadow population is based on cost of living estimates sourced from the Regional Municipality of Wood Buffalo. 20 Expenditures include food, shelter (paid accommodations), and retail. The average weekly expenditure by a FIFO worker is estimated to be $999 or $143 per day (i.e., consisting of $40 spent on food, $85 spent on paid accommodation and $18 spent on retail purchases). 7. The spending in Fort McMurray associated with the shadow population in worker camps is not considered in this analysis; 18 https://www.rmwb.ca/assets/departments/planning+and+development/urban+service+area+boundary+map.pdf 19 https://www.rmwb.ca/assets/corporate/census+reports/municipal+census+2015+report.pdf 20 https://www.rmwb.ca/living/newcomers/about-wood-buffalo/cost-of-living.htm (Data is assumed to be for 2016). Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 19

8. The majority of the urban shadow population stays in paid accommodations at hotels and motels; and, 9. It is assumed that the transportation costs of workers are covered by employers (ferrying workers to and from the drill sites), and health benefits are covered under employer insurance plans. Based on the assumptions listed above, the total estimated spending in Fort McMurray by FIFO workers that use YMM is as follows in Table 5-1: Table 5-1: Estimated Spending in Fort McMurray, by FIFO Workers Urban Shadow Population 4,342 Source: RMWB Municipal Census, 2015 Work Weeks per Annum 26 Source: InterVISTAS Assumption Spend per Week in Fort McMurray $999 Total Spending $113 million Source: RMWB Cost of Living Estimate and InterVISTAS Assumption The economic impacts associated with spending of the Fort McMurray residing FIFO population are presented in Table 5-2. On an annual basis, the spending of FIFO traffic in the Fort McMurray area is estimated to support 995 direct FTEs, earning an associated $43 million in direct wages. The associated direct economic output sums to $113 million. Table 5-2: Estimated Annual Economic Impacts Associated with Spending in Fort McMurray by FIFO Workers Impact Employment (FTEs) Wages GDP $ Millions) Output $ Millions) Direct 995 43 65 113 Note: Totals may not sum, due to rounding. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 20

Glossary of Terms Direct Employment: Direct employment is employment that can be directly attributable to the operations in an industry, firm, etc. It is literally a head count of those people who work in a sector of the economy. In the case of the airport, all of those people who work in an aviation related capacity would be considered direct employment. Economic Output: (also Economic Activity, Production) The end product of transforming inputs into goods. The end product does not necessarily have to be a tangible good (for example, knowledge), nor does it have to create utility (for example, pollution). Or, more generally, it is defined as the process of transforming the factors of production into goods and services desired for consumption. Employment Impact: Employment impact analysis determines the economic impact of employment in terms of jobs created and salaries and wages paid out. In the case of the airport, the direct, indirect, induced and total number of jobs or person years created at the airport is examined to produce a snapshot of airport operations. Fort McMurray Urban Service Area: Fort McMurray is an Urban Service Area in the Regional Municipality of Wood Buffalo. Formerly a city, Fort McMurray became an Urban Service Area when it amalgamated with Improvement District No. 143 on April 1, 1995, to create the Regional Municipality of Wood Buffalo. Full Time Equivalent (FTE): (also Person Year) One full time equivalent (FTE) year of employment is equivalent to the number of hours that an individual would work on a full time basis for one year. In this study, we have calculated one full time equivalent year to be equivalent to 1,832 hours. Full time equivalent years are useful because part time and seasonal workers do not account for one full time job. 21 Gross Domestic Product: (GDP, also value-added) A measure of the money value of final goods and services produced as a result of economic activity in the nation. This measure is net of the value of intermediate goods and services used up to produce the final goods and services. Indirect Employment: Indirect employment is employment which results because of direct employment. For the airport, it would include that portion of employment in supplier industries which are dependent on sales to the air transport sector. In some cases, contract work would be considered indirect employment. Induced Employment: Induced employment is employment created because of expenditures by direct and indirect employees. Multiplier Analysis: Analysis using economic multipliers in which indirect and induced economic impacts is quantified. Essentially, a multiplier number is applied to the "directly traceable economic impact" to produce indirect, induced and total effects (see Multiplier.) Multiplier: Economic multipliers are used to infer indirect and induced effects from a particular sector of the economy. They come in a variety of forms and differ in definition and application. A multiplier is a number which would be multiplied by direct effects in order to calculate indirect or induced effects. In the case of the airport, as in many other cases, multipliers can lead to illusory results, and thus must be used with great care. 21 The Dictionary of Modern Economics, David W. Pearce, General Editor, The MIT Press, Cambridge Mass.,1984 Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 21

Shadow Population: The shadow population is the temporary residents of a Municipality who are employed by an individual or commercial establishment in the Municipality for a minimum of 30 days within a municipal census year. Urban Shadow Population: These are transient residents enumerated in the USA. This includes a nonresidential component that consists of hotels, motels, campgrounds, homeless shelters and public facilities, such as the hospital and a custodial facility. Value-Added: (also GDP) A measure of the money value of final goods and services produced as a result of economic activity in the nation. This measure is net of the value of intermediate goods and services used up to produce the final goods and service. Economic Impacts Associated with Existing Services from YMM FINAL Report (29 Sep 2017) 22

Prepared by InterVISTAS Consulting Inc. Airport Square Suite 550 1200 West 73 rd Avenue Vancouver, BC Canada V6P 6G5 Telephone: +1-604-717-1800 Facsimile: +1-604-717-1818 www.intervistas.com