The Role of the Aviation Sector in Toronto's Economic Recovery
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15 July, 2021 The Role of the Aviation Sector in Toronto's Economic Recovery
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July 15, 2021

The Empire Club of Canada Presents

The Role of the Aviation Sector in Toronto’s Economic Recovery

Chairman: Kelly Jackson, President, The Empire Club of Canada; Associate Vice-President, Humber College

Moderator
Farah Mohamed, Social Entrepreneur & Former CEO, Malala Fund

Panelists
Neil Pakey, CEO, Nieuport Aviation
John Thomas, CEO, Connect Airlines
Scott Beck, President & CEO, Destination Toronto

Distinguished Guest Speaker
Christopher Bloore, President & CEO, Tourism Industry Association of Ontario (TIAO)

Introduction
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau. Literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.

It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.

Welcome Address by Kelly Jackson, President, The Empire Club of Canada
Good afternoon fellow directors, past presidents, members, and guests. Welcome to the 118th season of the Empire Club of Canada. My name is Kelly Jackson. I am the President of the Board of Directors of the Empire Club, and an Associate Vice-President at Humber College. I'm your host for today's virtual event, “The Role of the Aviation Sector in Toronto's Economic Recovery."

I'd like to begin this afternoon with an acknowledgement that I'm hosting this event within the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. In acknowledging Traditional Territories, I do so from a place of understanding the privilege my ancestors and I have had, since they first arrived here in the 1830’s. Today, as I think about the land we are all on, I am reflecting on it’s many stories, and those of the people who have lived on it. As we continue to learn more about the experiences of Indigenous children, who were forced to attend Residential Schools, it’s clear that many of their stories remain untold, buried with them in the land. And many survivors, who have tried to tell their stories, have not been believed. As we work towards reconciliation, how we listen and learn from each other is so important. We encourage everyone tuning in today to learn more about the Traditional Territory on which you work and live.

I now want to take a moment to recognize our sponsors, who generously support the Empire Club, and make these events possible, and complimentary, for our supporters to attend. Thank you to our supporting sponsors, Edelman, and TIAO, the Tourism Industry Association of Ontario, who you will be hearing from later, with some closing remarks delivered by President and CEO, Christopher Bloore. And thank you to our season sponsors, the Canadian Bankers Association and Waste Connections of Canada. Last, but not least, I also want to thank our event partners, VVC and LiveMeeting.ca, for webcasting today's event.

Now, I do want to take a moment to remind everyone participating today, that this is an interactive event. Those attending live are encouraged to engage with our speakers, by taking advantage of the question box to the right of your screen. We'll try to incorporate as many questions as possible throughout the discussion. We also invite you to share your thoughts on social media, using the hashtags displayed on the screen throughout the event. To those watching on demand at a later date, and to those tuning in on the podcast, welcome.

It is now my pleasure to call this virtual meeting to order. Today's discussion will highlight the importance of the aviation sector to Toronto's economic restart and recovery, and in particular, the key role Billy Bishop Toronto City Airport plays in the region's integrated transportation network. Our panelists will look at how this airport connects Canada's financial sector with our largest global trading partner, the United States, and the important role it will play in helping to reinvigorate business travel. We will also hear from new airline Connect Airlines, on why it has its eye on this airport as the hub for a new passenger service to key American cities.

It is now my absolute pleasure to welcome Farah Mohamed, Neil Pakey, John Thomas, and Scott Beck to the Empire Club's virtual stage. Farah is our moderator today, and is a tri-sector executive leader, with national and international experience in government, social profit, for-profit sectors, and as an independent director for Music Canada. She has extensive experience in communications, government relations, corporate social responsibility, and leading teams built for purpose. She is currently working on the launch of a game-changing business to engage corporations to combat climate change and deliver on ESG obligations. She lives less than one kilometre away from Billy Bishop Airport. Farah will introduce our panelists, and if you would like to learn more about them, you can scroll below and see more about them, and their full bios. Now, I'd like to turn it over to Farah to get the discussion started. Over to you.

Opening Remarks by Farah Mohamed, Social Entrepreneur & Former CEO, Malala Fund
Thanks, Kelly. It's a real pleasure to be leading this panel and to be on the Empire stage. Thank you so very much. So, the way forward today is—you've all read the bios. So, I thought rather than rehash any bios, I would share with you a little bit about each of the panelists from a little less of a formal point of view. So, Neil, let's start with you, Neil. Neil Pakey is a CEO of Nieuport Aviation. Neil is from across the pond, as we like to say—you can talk to him about what that means, about haggis another time—and when you scan Neil's bio, you think that Neil was born to be in aviation, having spent more than four decades in the sector. I can tell you from personal experience, on every occasion that I've seen Neil, whether it is at events—when we used to have them—passing him on Queen's Quay, literally in an intersection, or any other avenue that I've seen him, he is always really clear on his commitment, and making sure that what happens at the terminal is best for the city. Neil, it's a pleasure to be on the stage with you.

John Thomas. John is the CEO of Connect Airlines. John is also the CEO, and Co-Founder of Waltzing Matilda Aviation, the company launching Connect Airlines. This fall, John will be hopefully landing planes, and taking them off from Billy Bishop, and the destinations will be Northeast, and Midwest United States. We're very excited to hear more about that John. John has got also 40 years of experience in aviation, which likely explains why he was chosen to lead the turnaround of Virgin Australia Airlines—no small feat I'm sure, John. I think he's the person that you lobby, if you want to try to get a seat on Virgin Galactic, so I'll leave people to do that during the VIP session. John, welcome to the stage.

Scott Beck. Scott is the president and CEO of Destination Toronto. Scott came to Toronto a couple years ago from Salt Lake City to head up Destination Toronto. It's no surprise that when you say visitor—like literally say the word visitor—in any sentence, Scott will raise his head, and jump into the conversation, because this is the man with lots of big ideas. He'd spent his life literally in the hospitality sector, which gives him all kinds of angles, and is what we would call, in terms of all of these men on this panel, what we call brain vein to Canada. Despite COVID, Scott's been generating ideas on how to bring back Toronto to life, and I can tell you that whenever he's got the opportunity, he's eager to always open up his network, and make things happen for the city.

So, with that, I hope that the panelists are going to show a little bit of their flavour, of their background, and their passion, obviously, for the city. So, we're going to ease into the conversation, we're going to start with the fact that none of us on this panel were actually born in Toronto, yet here we are, really trying to make the city the place to be, in terms of where you work, where you live, and where you have fun along the way. So, a question for all of you is, what has surprised you the most about Toronto? Neil, I'm going to start with you, I'll head over to Scott, and then John, we’ll end that question with you. Neil?

Neil Pakey, CEO, Nieuport Aviation
Thank you very much, and thanks for the introduction. Yeah, my first recollection of arriving in Toronto is with my son, and I was going to take him to all the traditional tourist venues, all the all the big-ticket items, if you like, and I said to my son Louis, “look, you choose what we do.” So, he took me up graffiti alley, took me to the shoe shop on Bloor, where you get your picture taken upside down, and things like this. And it was a great tour, all through my son's eyes, it was fantastic. And I think that, then combined with the diversity of people—incredible, going into the office for the first time, I looked at a big white board there, where everybody put “hello,” on the on the wall, you know, and “welcome,” but they did it in their own languages. And we've only got a team of 23, and yet there are 17 different languages up there. And I just thought, you know, this is great. And Toronto's never let me down when it comes to looking for great experiences with diversity. I knew about it before I came but seeing and breathing it as believing it. And that's perhaps for me the biggest surprise, that it's actually true. It’s a really great, diverse city.

Farah Mohamed
That's great. Scott?

Scott Beck, President & CEO, Destination Toronto
Wow, I mean, a lot of things, but I call it “micro-pride.” I was exposed to Toronto as a visitor, and people were always proud that they were from Toronto. But then when you got here—and I took the 501, the entire length of the 501 to look for a place to live, and to stay, and everyone I met in a coffee shop or spoke to, the staff I spoke to, there was this enormous micro-pride in their own neighbourhood. And I had heard that Toronto is a city of neighbourhoods, and I thought it was a cliché, or a marketing sort of position, but it's not. I am so inspired by that pride, and that micro community that is such a part of Toronto, and it is surprising, but it is also so refreshing.

Farah Mohamed
That's great, thanks very much. And John?

John Thomas, CEO, Connect Airlines
Farah, I'm gonna be the boring one. What really surprised me about Toronto, being a major North American city, was just the amount of development. Every time I come to Toronto, I'm just so surprised by the buzz. I mean, there's always stuff going on. And for a city that's so large, to have that level of activity on development, I think it just phenomenal. It's a real testament to the city, that a city that large can still be growing, with the amount of development that's going on.

Farah Mohamed
Yeah, I wouldn't, I wouldn't say that was boring. I think that's something that we're all really excited about, and leads perfectly into my first question around, let's focus on the economy. So, Scott, I'm going to start with you. What has been the impact of COVID-19 to the urban visitor economy in Toronto; and from your point of view, how do we recover?

Scott Beck
Well, the impact is enormous. We tracked the first full year of the impact, and the lost economic sort of vitality was $8.35 million. And I want to sort of qualify that by saying that hasn't stopped, you know, if you look at what's going on right now, we're not into recovery yet. So, to sort of, you know, give even more context to that, every month we're closed, our community loses $650 million from the impact of lost visitation. So, it just, you know, when we talked about the impact of the pandemic, we sort of talked about it in the past tense, and I just want to sort of clarify that it's in the present tense for us. And I think the visitor economy is a complex ecosystem. There is not one path to recovery. But there is no recovery, without the full recovery of business travel, including meeting and events. For an urban city like Toronto, with all of the assets we have from an economic perspective, the second largest financial sector in North America, the second largest tech sector in North America, business travel is so key to that ecosystem, and meetings and events. You just think about things like collision, and not having 28,000 people with that sort of focus on one of the most vital economic sectors to our community, you know, that’s what's gonna put us on the path to recovery. And I don't want to overstate the obvious, but that connection to the US is what really is going to drive that recovery, because that is the largest market for all of that. And business travel, you know, also sort of has this impact in many other areas, in workforce development, and FDI, and so many things that are sort of, where travel is a catalyst to. And I think those elements, of everything that I've just noted, you can kind of look at Billy Bishop and say its sort of the poster child for all of that. And then you throw in access and velocity, where business travel, access is key, but also the speed and the velocity of that travel. And again, comes back to aviation being important, and then looking at how important our City Airport is to that, I think is really, really important.

Farah Mohamed
Yeah. So, Neil, on the heels of Scott's observations, you know, we know that there's jobs that are created, that it does affect tourism. How does aviation contribute to the broader economic success of Toronto and the region? Do you have some facts, figures that you want to share? Maybe put it into perspective, from the perspective of Nieuport Aviation, and the and the City Airport?

Neil Pakey
Yeah, thanks. Building on Scott's comments, you know, the airport really is the arteries into the city for international travelers, and domestic, as well, is Toronto. So, you know, with that role, we act, really, as a catalyst for the economy. And when we look at additional air services, for example, that means new connections, and new connections means new trade, new visitors that otherwise wouldn't have come. And I agree that the US seems to be the biggest market going forward. There was a study done a few years ago, which showed that Billy Bishop Airport stimulates $2 billion to the economy a year. And that's really built up with the direct component, direct jobs, but also the indirect jobs, and also induced jobs. So, there's a sort of catalytic effect going forward. And we've just done another study, in conjunction with an economic impact company called York Aviation, and also reviewed by York University here in Toronto, and that shows that we can grow that to $5 billion per annum by 2025, within the confines of our landlord, PortsToronto's Master Plan, if we do things right. And that means making sure that we use the slots that are available there most effectively, and look at the markets that will stimulate the greatest opportunity for continuing to develop Toronto as a great city.

Farah Mohamed
So, you know, Neil, I just want to ask, then, just for clarification, you're saying by 2025, with managed growth, we get to $5 billion, and right now we're at $2 billion. That's incredible. I just want to make sure I heard those numbers right, that you can actually get to $5 billion with proper managed growth. And that's the key, right, is having it be properly managed versus, you know, an all-for-nothing, that's not what you're suggesting. So, it's $5 billion, which is a remarkable growth factor if we're at $2 billion right now.

Neil Pakey
Yeah, that's correct. And I mean, we do need a few things to happen, and perhaps we'll come on to talk about the US pre-clearance facility, but that would be one stimulating effect that would lead to more visitors coming into the city. And I should say that, of course, Pearson, I'm not forgetting Pearson is the major airport for city. And we fit very well alongside that; the two airports actually create quite a good airport network. Porter have identified that, they're looking forward to restarting with ourselves at the beginning of September. And yeah, a lot of cities have two big airports, and so, we're very happy working alongside Pearson. We have different—we’re really the downtown airport for the downtown business market, and have a strong important role.

Farah Mohamed
And as you say, you know, lots of cities have that element. You know, I lived in London for a couple of years and having, you know, a City Airport, and a larger Heathrow, it does bring that sort of amazing growth potential, but also options, unbelievable options that you would not have. So, we're gonna flip over to the expansion question, and ask you, John, why have you chosen Billy Bishop? Like just straight up, why have you chosen Billy Bishop? What's the draw for an American Airline like Connect? You know, there's obviously lots of thought that goes into these types of decisions. So, please just, you know, lay it out for us, because it's pretty exciting to have an American Airline come in and sort of say, that's the airport out of all the different airports that are options to us. Why Billy Bishop?

John Thomas
Yeah, so, great question Farah. Let me start even higher, sort of why Toronto? I mean, as I said, what sort of surprised me about Toronto, it's the amount of it's the development; the sort of the drive to develop, as you say, in a very responsible way, the Toronto community. So, Toronto is one of the largest airline markets in North America, I think it's actually the fourth largest airline market in North America. So, as a US carrier, as we looked at where we're going to fly, you know, that sort of hit the radar, that clearly Toronto, being a very vibrant airline market. And as you both you and Neil have said, airline markets the size of Toronto, such as New York, Los Angeles, London, you know, San Francisco, etc, they all support more than one airport, they all very happily support two, and sometimes even three airports. And as Neil said, Pearson has done a fantastic job as a hub, it's a major hub, very successful hub, but it makes sense, given the size of the Toronto market, that there needs to be that business airport. And, just conveniently, because of the size of the airport, and also because of location, we can't think of a better downtown airport to complement the big hub, than Billy Bishop. So, Billy Bishop, we think, sort of checks all the boxes in terms of why you would want to fly into Toronto, why you'd want to fly into a Billy Bishop. And, we think there's great growth opportunities there. As we sort of looked at the market, we think there's probably something like about 30 markets in the US, that would be prime for connections to Billy Bishop. And again, we want to encourage—and I think most US business travellers at the moment default to Pearson. And I think, you know, that because of just sort of, let's say because I think at the moment, or pre COVID, Billy Bishop was only served out of four markets in the US. There really wasn't that many markets, I mean, they were major markets. But we think that by expanding the number of markets out of the US into Billy Bishop, we can significantly increase the business traffic to Billy Bishop.

Farah Mohamed
Not to make any assumptions, or prejudge that which is going to happen, but I'm just making my list of where I'm going to be travelling soon. So, I wonder if you want to share with us, any of those markets that you're going to be choosing, you know, just in case you want to?

John Thomas
Well, and yeah, it sort of gets back to Neil's point about pre-clearance. I mean, obviously, the ideal scenario is City Airport to City Airport. But the two that we think are probably the most attractive, is obviously LaGuardia to Billy Bishop, and Washington National to Billy Bishop. But at the moment, they're precluded from service from Billy Bishop, because, in order to operate into those airports, you need to operate basically as a domestic, so you need the US pre-clearance, which obviously you have at Pearson. So, those in particular, we think are very attractive. I mean, part of the issue in serving the New York market at the moment, is obviously, pre-COVID, the only service was from Billy Bishop to Newark. So, Newark’s a great airport, but the problem is, that precludes everyone from that Westchester County, southern Connecticut catchment area, which we think is very attractive. So, again, getting into LaGuardia, perhaps JFK, etc. opens up a whole part of the New York market that currently really isn't addressable to Billy Bishop.

Farah Mohamed
So, I want to jump to that. We've talked about pre-clearance a couple of times. Neil, I think it's really important for people to understand, what is the benefit? How does that affect? Give us a sense of what's going on with pre-clearance, as it relates to how Nieuport aviation, and Billy Bishop’s working to get this done? Because this seems to be a very big factor in our success, you know, with Connect, without Connect, whatever, it's a huge factor. So, Neil, I’m gonna toss it over to you, and ask you, where are we right now on this journey? What's standing in the way? What role do you guys have to play in making this happen?

Neil Pakey
Thank you. Yes, as John said, you know, with a pre-clearance facility, you can remove that extra barrier of arriving in the in the US and having to clear the customs, and you do all of it at this end. And that just makes a big difference, because as John also said, there are some airports that just don't have the customs facilities in the US, so we couldn't have the service if we if we wanted it just now. So, it was identified long before my arrival, that there was a great opportunity with development of the pre-clearance facility at Billy Bishop, and if anything, that opportunity has become more transparent, and more understood. And there’s been PortsToronto, a lot of credit for leading the way on this initiative, also, Porter Airlines, they’re also big advocates of securing the pre-clearance. So, with it, it just will open up more markets; we know that there are opportunities beyond the ones John talked about as well. And looking at our growth projections, we see the US market as being the strongest market, stronger even in Canadian domestics in terms of growth numbers. And that's good news for Scott, because it will bring in more corporate, business tourists as well. So, where we are in the process is we're waiting, in a sense. We've got a few little things to sort out in terms of the financing of it, and really, with COVID, it’s sort of set us back, especially with the discussions with the US authorities. So, we're looking forward, now that we're starting to get all the good signs about recovery and restart, and of course safety, we’ll look forward to quickly resuming discussions with the US Homeland Security people to get the design right, because obviously, technology is one thing that has evolved over the years, and you have to keep pace with. So, hopefully the sooner the better. But it is critically important. And it's critically important that Canadian politicians, US politicians, maintain their good judgement, when they committed to this project developed at the airport.

Farah Mohamed
Yeah, so Scott, I'm gonna assume just—John, I'll come back to you—but Scott, I'm going to assume that you have something to say here, because you've got a master plan, and part of the master plan would include this type of expansion. So, Scott, I want to ask if you'll if you'll reflect on those comments, and then John, I'll have you come in after that.

Scott Beck
Well, first I want to call out Neil for a great term, the corporate business tourist. Often we define tourists as the person that sits by the pool and has margaritas, but in the visitor economy, tourism is sort of synonymous with traveler, or visitor, so thanks for that new term, Neil, we're going to use that, I can tell you. But I also think it's important that these visitors are also equally important to Stephen Lund, and his work at Toronto Global, to Leigh Smout, at World Trade Centre, Toronto. I mean, these are equally their clients as our clients. And I think it goes back to what I talked about about the velocity as a real key driver for business. And if you can, pre-clearance is such a such an important part of that process, of getting somewhere fast, efficiently. And it it's one of those things, as a city like Toronto, we should be aspiring to those kinds of things, as the global city that we are. Global cities have these types of assets, and global cities function on them, and again, it just makes travel easier, and access and velocity are so important in business travel. And so, I would just double down on everything that Neil said, and sort of the idea of how important that is, as a service to the economic vitality of our city.

Farah Mohamed
John?

John Thomas
Yeah, and Farah, that's actually another angle on the whole pre-clearance, and that's the connecting traffic in the US. So, pre COVID, there was something like about 2600 passengers a day, that were connecting somewhere in the US, that ended up in Toronto. And obviously, as everyone recognizes, with pre-clearance, it would allow gate-to-gate connections, whereas at the moment, obviously, if you don't have pre-clearance, you've got to clear US customs in an international terminal in the US, and then connect to a domestic terminal. But if you had this domestic-to-domestic connectivity at US airports, it just phenomenal in terms of the convenience, and for those 2600 passengers a day, it actually gives them a better choice in terms of their destination being Toronto, the destination being downtown Toronto, much more convenient than necessarily being pushed to Pearson at the moment.

Farah Mohamed
So, what's the—I mean, I know Neil, you've said there's things that need to be worked through, but what's the what's the timing, like what are we talking about in terms of, you know, we are recognizing what Scott said, which is we're not out of the pandemic, but we really have to look forward if we want to make things happen in the city. So, we've got interest from Connect, you know, Nieuport’s got a plan, organizations like the ones that Scott mentioned have plans, so what is the ideal timing? I know it would be yesterday, but what's the ideal timing to actually have this happen without losing opportunities, because that's the key, right? If this goes on for too long, you start to lose opportunity. So, maybe talk to us a little bit about that timing.

Neil Pakey
Yeah, it's really important question. I mean, for every month we lose at the moment, of course, that's a month at the other end, and it's a month that we were impatient about, because of the economic impact. Essentially actually, you know, in one sense, we're shovel-ready. We've actually moved offices already, because that's the location for the new pre-clearance. So, we have vacated the premises, with the co-operation of the of the Port Authority. So, we kind of look at it, in one sense, as being a shovel-ready project. However, there is a funding issue, because—I don’t want to get into too much technical detail, but—the way it's always worked in the past, the way it still works with other airports, is that the US have funded the facility, funded the manpower, or the people power I should say, they basically funded all of it. And they've done so because it helps ease their immigration queues, and it's a service for their people. But now, they changed that model when the pre-clearance facility into Qatar Airport, maybe five years ago, and they now look for the other side of the routes to fund it. So, that's creates a complexity around funding. We are committed to funding the infrastructure of it, and we’re just waiting for final solutions from the Federal Government of Canada, around how we fund it from there, the additional funding.

Farah Mohamed
So, Nieuport is committed to putting in funds?

Neil Pakey
Yes, absolutely. Absolutely.

Farah Mohamed
And that's a departure from how it's happened in the past, which obviously speaks to the commitment that Nieuport has to make this happen. Okay, well, that's interesting, because I think most people would not understand that that was funded in the past by the US, and now that model has changed. And, you know, that does mean that organizations like Nieuport, you have to put some substantial money in to make it happen, and that you're committed to the expansion.

Neil Pakey
That's why it's important that people understand the economic impact, because of course, the economic impact is so, so significantly higher than any cost.

Farah Mohamed
So, with that, John—yes, go ahead. please.

John Thomas
Farah, if I can sort of put in the airline perspective, I think airlines, obviously, when it comes to airports, and airport costs, are always looking for a level playing field. Again, I think the concern from an airline perspective is, if you've got other airports that effectively you're competing with, or complementing with, that I've got a different set of economics to the ones that are being put to the situation, we see the role of government coming in and perhaps providing funding for that. Because, as we all know, we can talk about economic development, but the major benefactor of economic development is the government, in terms of the tax receipts they received through economic development. So, to us, it's a bit of a no brainer for a government to come in and say, well look, if there's this economic development, from a government standpoint, we're going to pick up these significant increased tax revenues, why don't we actually help on the funding of them to expedite? And then I think, again, obviously, governments around the world are looking at ways to stimulate economic development coming out of COVID; we would say that this is an ideal example of one of those opportunities.

Farah Mohamed
So, John—and I just want to take the chance to again, remind people that we're going to have Q and A's come in through, and I see a couple coming up, we've got about 20 minutes left for our conversation—but John, I think this is really important. If I'm putting you on the on the spot, you'll find a gentle way to not answer my question, I'm sure, but with everything that's going on with pre-clearance, with the situation that we find ourselves, the fact that Connect is chosen Toronto, can you give us a sense of when you'll be landing your first plane here in Toronto to take off again?

John Thomas
So, Farah, lots of things we need to do to get there, but we're looking around sort of the November timeframe, so sometime during November. But actually, you will see our aircraft in the skies a lot earlier than that, because we have to do these things called proving runs; so, that will be soon. And in fact, actually, our first aircraft actually is in the paint shop in Muskoka at the moment, so we'll actually unveil our unveil aircraft in the next week or so.

Farah Mohamed
Oh, that's pretty exciting, I didn't know that. I should tell you that literally, as I'm looking out, I am staring at where the planes would fly by. I live on Queens Quay, and as Kelly mentioned, I'm less than a kilometre away from the airport, so I look forward to seeing that plane go by, and cheering on the sidelines for you.

QUESTION & ANSWER

Farah Mohamed
So, I want to go to a couple of questions that we have received from our audience. The first is from Joan, and I will just read it out. It's not specifically for one particular person, so we'll have a quick round and see who wants to answer it. The pandemic has also shown companies how they can reduce cost and speed production pipelines, by turning to technologies introduced during the pandemic. Zoom, for sure, but each individual industry—mine being film and television production—has pivoted and adopted these new technologies that will continue into the future. How has that factored into your estimates, and the return to business travel via airline? So, who wants to take that first? I think each of you might have something to say.

John Thomas
I’ll—no, go for it, Scott.

Scott Beck
John, please, you go first, please.

Farah Mohamed
Okay, let’s go John, Scott, and Neil, if you want to add something.

John Thomas
So, Farah, in my former life, I was a consultant, and ran an aviation practice for a consulting firm. And we lived through all this, with 9/11, and all of the—and back in sort of the previous days, people sort of said, you know, business travel is never going to come back, it's never—and remember, around, you know, early 2000s, we didn't have video conferencing. It will come back. I mean, it will come back, because, at the end of the day, more than 50% of business travel is related to selling services, it's salespeople out on the road, selling services. And the moment you have a competitor that's in there, doing a face-to-face meeting, you want to get on a plane and get back. So, we think that—and certainly we're seeing signs of this in the US. I mean, again, people thought that it would be a lot slower, but there are now very positive signs, certainly in terms of North American business travel—international will take longer to come back—but certainly there are very positive signs on business travel coming back to the forefront. I think if there was a word of caution, it's more of a timing. I think we will go back to previous levels, but it's more the timing under which we get there.

Farah Mohamed
Right. Fair enough. Scott?

Scott Beck
I mean, we do a lot of work with organizations like the Greater Business Travel Association of Canada, and many organizations that—we’re hearing sort of three things. There's clearly inefficiency from Zoom in certain aspects of our business life, whether that's, you know, training or a user’s conference, or, as we we're saying, instead of picking up the phone and calling someone, you know, to connect on a Zoom, so it's kind of replaced the phone call versus the in person meeting on some level. But when you're talking about team building, when you're talking about networking, when you're talking about creating an ethos, creating common vision and strategy, that's been very elusive on Zoom, almost to the point where it's actually kind of gone in an opposite direction. And so, while we have a maybe a more remote workforce, bringing that workforce together to meet, and talk about ethos, and strategy and direction of the company, is going to be a part of the future. And so, we're very optimistic about the return of business travel. And again, meetings and events, just for that very reason. And again, to lean in to what John said, a lot of business travel is sales, and there's still a very important component of that face-to-face, that can be replicated on some level on Zoom, much more at the transactional point, than at the origination point. And so, we're very bullish about the return of business travel.

Farah Mohamed
Yeah, and there's been a lot said and written, I guess, in the last two weeks, in particular, as people are trying to figure out, is it a hybrid model? What does that mean for teams that are not face-to-face, or are you relying too much on Zoom? And I think that that has to be taken into consideration. Neil, quick comment before we move on to another question?

Neil Pakey
Yeah, I think, just to add to that. It's been really interesting seeing what has happened in the US domestic market for flying, and how quickly it was restored, and comes back to almost exactly where it was pre-pandemic, in terms of the amount and flow of traffic. And there there’s, talk about Zoom taking over, and so forth. And I think part of that is just the natural tendency is the preference. We're all a bit Zoom fatigued by now, if we're honest, and after this call, I'm sure that many of the viewers are straight onto another Zoom call, and straight onto another one after that. So, there ends up becoming quite a pent-up demand to get back, and the greatest thing we've got is Toronto, because like if you haven't been able to visit Toronto for the last two years, you know, clearly there's going to be a pent-up demand. And I'll go back to my corporate business tourist, because the businesspeople that come here are not just coming because it's a great convention, or a great event that they’re coming to, they come because of the location. And I think there's a great demand for this location that would go away because people are, you know.

Farah Mohamed
So, you know, this will lead to a question that Brian has asked. Brian says, for John—and I think Neil, you’ll, all three of you can answer, but specifically for John—the question is, three airlines, City Express, Air Ontario, and it appears from news reports, Porter, have failed to build successful businesses at the island airport. Now, I just want to make sure that people understand this is Brian's point of view, and not the point of view of the organization, or mine. Will you recognize that there's just not enough business, and accept the airport doesn't have the necessary volume for an airline to be successful there? I'm gonna guess that you want to take that on, and you've done your math, and it is—you know, we wouldn't be having this conversation with you if you haven't. So, maybe just explain to Brian, and those who have this opinion, that there are concerns that there’ve been others who have come in, and they've left. Over to you, to take that on.

John Thomas
Yeah, so. So far, I think the first observation is that they're all Canadian airlines, and again, I think I put them in the context of their focus has been Canadian domestic travel out of the island. And we've got a very different approach. I mean, I think it's well known that a number of US carriers have been trying to get into the island over the years. You know, there's been a lot of consolidation, so things sort of changed, but I think it's the notion of a US carrier that actually has a good proposition for US business travellers coming into the island, juxtaposed to Pearson that we think we are, is the game-changer. I think again, you look at the longevity of Porter's operation into the US, they've got a very successful operation into the US. You look at the frequency on some of their routes, say Newark, etc. You know, they wouldn't be doing that if that wasn't successful. So, I think you've going to make the distinction between the Canadian domestic operation, where clearly everyone's operations at Pearson, the strength of Air Canada at Pearson, it's very hard to go against the strength of Air Canada, with their network at Pearson. Juxtapose that to a US carrier that's coming in, that's focused very much on the transporter market.

Farah Mohamed
A huge differential, right? Neil, did you want to say something there?

Neil Pakey
Yeah, just in case there was a perception that—I think you mentioned Porter being unsuccessful; Porter are very successful, so successful, in fact, that they're able to springboard from where they are now into the Pearson development, but not at any expense of our airport, where they are clearly set on returning on September the 8th.

Farah Mohamed
Yeah, yeah. And important, I think an important point to make, that Porter has been very successful. I myself, you know, I've tried many times to book a flight only to see sold out, which is what you want to see, because you know that the volume’s up there. We've got about, I would say about eight minutes, or a bit more than that, and I've got a number of different questions. So, we're going to try to go rapidly through some of these things. Let's see, we've got one here from Ravi about the Delta variant. So, this goes to John, and I'm going to ask Scott to respond also, is that Toronto Region has been under lockdown, partial lockdown for a long period, and travel and airline sectors have been adversely impacted; cross-border business travel has almost come to a complete halt, and the Delta variant is knocking on our doors. Connect Airlines choosing to launch here is fantastic news for the region. However, can you share some of the considerations that you've built into your strategy, given that COVID, or its variants, are here to stay, and may continue to disrupt travel in the near term? Where do you see yourself at five years from now, after you launch? So, John, that goes to you; Scott, I'm going to ask you if you have any information you want to share, as you've been plugged in to sort of how to deal with the variants, and COVID. So, John—and I remind everyone, we’ve just got a very short period of time for a very big question.

John Thomas
So, far—I’m certainly not an expert on this, but what I have seen, and as we all read, we are getting into two very different states around the world, there's the vaccinated and the unvaccinated. What people are saying time and time again, is that in a vaccinated environment, people are very safe versus the Delta variant. So, I think part of it is obviously the timing of our launch. Again, as you may be aware, there's something like about 50 airlines around the world that are launching, because they see the significant opportunity in the airline industry post-COVID. So, I mean, we're very mindful of it; I think it also gets back to that launch date. We're clearly not going to launch if there are still issues. I think we're very encouraged by Porter's announcement of restarting in September. So, I think, you know, we're watching it carefully, and we obviously will adjust our launch plans depending upon the state of play. And then, I think in terms of five years time, I mean, we believe, as I said, we think there's about 30 markets in the US that are primed for service into Billy Bishop; we would like to be serving as many of those as possible.

Farah Mohamed
Great. Scott, any reflections you want to add?

Scott Beck
I would just double down on the idea of vaccinations; that is the way that we ensure protection against the Delta variant. We've been making enormous strides as a community, and we know that people like Chris Bloore from TIAO in our industry have been calling for a plan from the government, and that's going to be really important. And that plan must include things like testing, but also, you know, vaccination, and the interoperability of vaccination verification is going to be key to the recovery, and key to our ability to protect our community.

Farah Mohamed
Yeah, and I'll just say, look, I'm really proud of how Canadians have responded to the vaccine. We are now, I think, number one in the world for first vaccinations, and we're growing in the second, and I think that's a testament to how, you know, we've had a plan, we're activating that plan, everything from distribution—and people want to get moving, right? People want to get moving. So, I think that's a really big thing. Look, we've only got five minutes, we've got a major question that I wanted to ask; it's being asked by three other people on the chat here, and it's about when people hear the word expansion of airlines, they also think about environment and noise. I'm asking this as a resident, as the moderator, as somebody who is working currently on a huge environmental business opportunity. John first, I'm going to put you on the spot. That's a major concern down here, and I know that you guys have taken that into consideration. So, let us know, what are you guys doing to ensure that we're not going to be, you know, sitting here worried about pollution, noise; what is Connect’s plan? What's your contribution to making sure that that does not happen? And then Neil, I want to ask you a little bit about what can you say about the work and the information that you have around environmental impact, around the expansion? So, first John, to you, and then Neil, I'll put it over to you.

John Thomas
So, Farah, it's a great question, and the global airline industry is committed to obviously reducing their footprint. The nice thing about Billy Bishop is that it only allows turboprop aircraft into the airport. And turboprop aircraft, I mean, we did a recent analysis to say if you actually took, if you replaced some of the jets flying out of Pearson with turboprops flying out of out of Billy Bishop, you would significantly reduce the carbon footprint in the Toronto area. So, number one is, already the airport is limited to the most environmentally friendly aircraft, that is available the Q400, so that's a plus. But secondly, if we sort of look forward over the next couple of years, there's obviously a lot of talk in the industry about electric, you know, everyone's going to fly around in these electric planes and blah, blah, blah—we think that's, you know, we think that's a little bit too much of hype. There is, however, a significant effort and investment going on on alternative energy. And the alternative energy for transport aircraft, ours being a 78 seat aircraft, is hydrogen power. There's a company called Universal Hydrogen, led by some of the luminaries in the aerospace industry, that basically has a roadmap for the next, within four to five years of actually converting the aircraft that we will be flying into hydrogen powered aircraft. So, number one, zero emissions, which is fabulous, but number two, actually a significant reduction in the noise. So, we see that as a huge win. And the nice thing about it, the reason why we think this is very practical, other than, you know, you've got all these electric people that are saying we're going to come out and develop all these new aircraft. No. Why this is so practical, is we're taking existing aircraft, and just changing the power plants on the aircraft to zero emissions. So, we're actually very excited that, we think that within five years, the aircraft flying into Billy Bishop will have 0 emissions, and actually be quieter, which we think will allow us and other operators into the airport, to grow very responsibly.

Farah Mohamed
That's great news. I mean, again, I say that as a resident, but I also say that because that's the way the world is going. Every corporation has to have an ESG plan, every corporation has to do its part to get to net zero, net negative. So, I'm thrilled to hear that. Neil, a long time ago, you know, when we first met, I said, I do live in the area, and I'd love to know what you guys are doing to ensure that the impact on the environment is nil, negatively, and what are you guys doing about it? So, maybe if you could quickly share, from your perspective, the work that Nieuport is interested or committed to doing, to ensure that any kind of expansion, particularly managed expansion, doesn't have a negative impact on the environment, and the residents in this area.

Farah Mohamed
Yeah, thanks Farah. Just building on what John just said there, it's actually quite remarkable from an industry perspective. You know, there's a lot of times I think that this industry can be accused of saying things, and what have we really done. And I think we're actually in a good place, because when we talk about creating a sustainable future, it's ideas like John's that really can make it make a huge difference, not just to us, but to other people. And, you know, I think some airports are, you know, trying to be first, and some airlines too, are trying to be first let's create this. But sometimes the best thing to do is actually steal some ideas from somewhere else. And they say this idea with universal hydrogen, I read about it with Icelandair, for example. I mean, if it works, just steal it, and give them credit for it, and just move on, because it's only when we drop our egos, and all work together as an industry that we can move forward really, with a sustainable future that we've talked about in the past. And I think, also for us, it's about the service partners or suppliers, we’ve got some very big companies that depend on us for employment and Toronto, whether it's the Hudsons and SSP’s of the world, or the JCI’s, the Bee-Cleans, all the other companies at the airport and beyond. And they've also got big environmental ambitions. So, really, we need to find a way of working closer as an industry, and stop looking at it as airlines and airports, but actually this industry, and bring these service partners, some of which are bigger than the airport's themselves when you look at their profit and loss accounts, and let's start working together as a whole chain. So, you know, we've done some great things, and PortsToronto, especially, have done some great things at the airport. I mean, the fact that our airport has over 40% of people travelling on public transport, and green transport to get to the airport, is pretty good. I mean, it's much higher than anywhere else I've ever been at. And they were pretty determined, in terms of like future car parking, etc, to prioritize the continuation of good, green, public transport. And so, we picked up on that, and we're committed to supply, get our bus services electric, for example—hydrogen if possible. But we are committed, and we'll back John, and other airlines, Air Canada, and other airlines, of course, and Porter; we will, we will look to co-invest, PortsToronto have got some great ideas in this area. So, that's quite exciting to be thinking collectively about a sustainable future, and community outreach as well. Because, you know, the communities are great around us. There's some great communities on the waterfront, etc. And it's just about finding that way of working together with them.

Farah Mohamed
And, Neil, was it fair for me to ask that you guys have likely done some environmental impact studies, and, you know, because it's such an active area for people to be worried about that issue, that when the time comes, when the work is done, or whenever you finish those environmental impact assessments, some of that detail will come out, so you can really back up the fact that you guys have taken environment into consideration. So, I think, you know, I think people want to know what you know, in some ways, where it's helpful to ensure that the community feels safe. So, I just plant, as one of the questions that’s just come in. Have you done any studies on the impact on the people who live beside the airport? What have you found? Are the studies available to the public is the question. I'm not sure if you guys have done stuff that you want to share now, or you'll be making it available later?

Neil Pakey
Yeah, no, we'll do that, and we've recently completed a study on the economic impact, because often that is an area that's just not fully understood in terms of the meaningful contribution that we make to the city, and the economy. But you're absolutely spot on Farah, in terms of the environment study, as well, the environmental impact; this work’s all being done. And also, PortsToronto are very strong, I have to say, as a regulator, holding us to account, as the terminal operator, holding the airlines to account—John, they'll hold you to account as well, in terms of some of these things. And that's good, it's healthy, because actually we are pretty responsive, and we can work more together to further that, and absolutely being committed to being more transparent in terms of what we publish on websites, etc.

Farah Mohamed
Yeah. Well, listen, we're at time. We could have spoken a lot more, we covered all of our questions. I want to thank all three of you. It's been a pleasure. Again, I think I speak for a lot of people, I've got ants in my pants, and I'm ready to fly. And so, I look forward to that. With that, I'm going to hand it back to Kelly. Again, thank you for the opportunity to moderate this discussion.

Kelly Jackson
Thank you, Farah, that was such an informative and insightful conversation, you know, wide ranging for sure, not just about economic recovery. And thank you, Neil, John, and Scott. I'd now like to introduce Christopher Bloore, President and CEO of TIAO, the Tourism Industry Association of Ontario, our supporting sponsor. Christopher is going to deliver some closing remarks. Over to you, Christopher.

Note of Appreciation by Christopher Bloore, President & CEO, the Tourism Industry Association of Ontario (TIAO) Thank you, Kelly. And first of all, let me thank Farah for moderating such an engaging conversation between such a great panel of guests this afternoon. Rather like everybody else on the panel today, as my accent gives away, I'm not originally from Toronto either. But such is the lure of this diverse and exciting city. My family has made Toronto our home in the last two years. And I'm currently sitting in my office in downtown Toronto right now, overlooking the topic of discussion today, Billy Bishop Airport. I'd like to thank Neil, John and Scott for such a comprehensive discussion on the importance of Billy Bishop Airport to Toronto, and the integral role it will play in the recovery of the tourism industry, the visitor economy, and specifically, business travel and events. You know, there can be no escaping the fact that the past 16 months have been nothing short of catastrophic for the tourism industry. You know, as we cautiously start to reopen our economy, we know that reopening doesn't necessarily mean recovery. As Scott mentioned earlier, Toronto has suffered enormously over the past 16 months. With the collapse of its visitor economy, and business travel, it’s likely to have lost well over $10 billion by the time we recover from COVID-19. We've lost thousands of jobs, and the economic scars of increased debt and lost opportunity for expansion, will undoubtedly live with us for some years to come. Our industry will need long-term economic support, from both the province and federal governments, well into 2022, to remain competitive, and help lead our recovery. And as vaccinations rates increased dramatically, we need the federal government to announce its plan to reopen our international borders, specifically with the United States. But you know, while our industry is innovative, and resilient, it's discussions like today that make me excited for our future. When I see firsthand the work that Scott is doing at Destination Toronto to promote our city, and when I listen to John and Neil's plans for the future, I'm not only confident that Toronto will recover, but surpass pre-COVID-19 levels. But we have to act quickly and decisively. You've heard today about the opportunities we have to seize the initiatives with, and if we're ambitious for our city, we can help lay the groundwork for an exponential growth, improve our connectivity, and open up our city to new and exciting lucrative markets. TIAO stands ready to play our part in both government relations, and in any support that we can give. I'd like to thank the Empire Club for facilitating this afternoon's conversation, Farah for moderating so eloquently, and again, Neil, Scott and John for their insight. And I'll hand back to you, Kelly.

Concluding Remarks by Kelly Jackson
Thank you, and thank you, again, for your support as supporting sponsor. It's really great to be able to bring these critical conversations on topics that impact Canadians, and others, of course, as lots of chat about, you know, connections with the US today, for example, and we really appreciate that. And I want to thank again, Farah, Neil, John, and Scott, and everybody joining us today, or anybody who's going to be tuning in or listening at a later date. The Empire Club will be taking a short break over the next weeks, but we will be back in September with more of those conversations that matter. So, stay tuned. Have a safe summer, and we'll see you in September. This meeting is now officially adjourned.

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The Role of the Aviation Sector in Toronto's Economic Recovery


15 July, 2021 The Role of the Aviation Sector in Toronto's Economic Recovery