ATAC International Business Development Strategy 2012/2013

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1 ATAC International Business Development Strategy 2012/2013 EXECUTIVE SUMMARY This is Phase 6 of the GOA supported ATAC International Business Development Strategy (IBD) outreach to the International aviation community. The goal of the ATAC IBD is to promote professional pilot training in Canada to foreign air operators, civil aviation authorities and foreign students in India and Latin America. The current project is focused on Brazil in Latin America. According to Boeing, Latin America will continue to be a growth leader to the point that South America with be the 7 th largest in its table of world regional flows by Each cycle of the ATAC International project brings greater refinement and precision through stronger ties with the authorities, deeper consultation and feedback from the educationalists and air operators. The Opportunity India group led by ATAC, has met numerous times in the last 2 years which included two successful missions to India. ATAC and member companies met with the Joint Direct General of Civil Aviation, 3 major Indian Air operators, educationalists, Indian Industry Associations, Indian Banks and Indian students, and trade commissioners in February The current phase of the Brazil project will follow up on findings from the 2011/2012 research paper commissioned by ATAC to identify market potential for international development of Canadian pilot training in Brazil. The Canadian Flight training sector has excess capacity which can easily handle the training and upgrading of skills for the thousands of student pilot candidates on the Indian subcontinent and in Latin America in need of professional pilot training. Canada has a robust regulatory framework supporting the flight training industry and is highly regarded as one of the best in the world by international airlines. However, we are not very good at marketing and promoting our stellar reputation and safety in flight training to the international market. The current capital upgrades in simulators and aircraft in Canadian Flight Schools are attributed to the influx of International students. International student pilots are the number one priority for the growth of the shrinking Canadian Flight School market. This project will always be a work in progress and is based on the foundation established by our previous mission. We will continue to build on our successes to establish and maintain the flow of foreign students to Canada seeking the necessary skills to become professional commercial pilots with Canadian commercial pilot licences ready to transition into the world s airlines. Maintenance, Repair and Overhaul (MRO) The MRO sector has joined the ATAC GOA proposal for 2012/2013. The MRO market represents $3.2 billion of business in Canada and supports 11,000 jobs. The ATAC international outreach involves mining MRO business opportunities within South America, Central America and Europe by actively participating in the MRO Americas and MRO Europe shows. The shows identified will be attended by representatives from Latin America and Europe and will facilitate interactions with key representatives. The recent addition of a nationally recognized, experienced Canadian MRO resource to ATAC will provide the internal in-depth support required to plan for the event and provide the necessary outreach before, during and after the event. SECTOR ANALYSIS Sector Overview ATAC s vision is to promote safe and reliable air transportation of people and goods to the benefit of Canadian society with the mission statement To support our members in their

2 pursuit of a safe, world-leading and sustainable Canadian air transport industry. The pilot training capabilities of our Canadian companies are competitive, second to none in terms of quality and technology and are recognized worldwide by regulatory authorities. The goal of the association with respect to pilot training is to increase the awareness of Canadian flight training companies to the International marketplace making Canada the number one destination for Professional Pilot Training applicants. The Unit (FTU) sector in Canada consists of 161 Flight Schools which has been decreasing on a yearly basis since the 2002 high of 227 FTU operating certificates. The sector of the aviation industry is of critical importance to Canadian aviation as it is at the grass roots, where ab initio students are trained with the competencies needed to become professional working pilots for the aviation industry. Although the number of flight schools is trending downwards the number of commercial pilot candidates has stabilized and is trending upwards primarily due to the increase in foreign trained pilots in Canada. About 40% of commercial licenses in Canada are obtained by foreign students and that number is expected to continue to grow. Latin America and the Caribbean account for 10% of global air traffic with the largest increase in departures and a combined growth rate of 13%. ATAC s FTU s represent approximately 80% of all of the commercial flight training done in Canada and are represented in all of the provinces from coast to coast. These schools include the top aviation colleges and largest capacity flight schools in the country with the largest fleet of aircraft and most advanced simulation. These schools are notable for having a full range of capabilities to train pilots from ab initio to advanced pilot training. In Canada the diverse geography and diverse weather conditions provide for real world flying situations which are not readily available in other countries. Our safety record is one of the best in the world and our piloting skills are second to none. The Maintenance, Repair and Overhaul (MRO) sector represents % of the $23.2 billion revenue generated by the Canadian Aerospace Industry, as reported by the Aerospace Industries Association of Canada from their 2010 statistical highlights. The recent addition to ATAC of a senior Executive Vice President (VP) with extensive MRO experience to support this initiative. ATAC s new VP created the Canadian MRO Alliance and the corresponding international marketing efforts supporting the key Canadian industry for over 10 years. He has provided internal in-depth support not existing elsewhere in Canadian associations. This new resource will enable the required planning to ensure the success of the event and provide the necessary follow up and outreach before, during and after the event. This new resource with appropriate focus on the MRO subsector will promote the following key advantages of the Canadian MRO: highly trained and competent personnel, world recognized aircraft maintenance engineer license system, Canadian Council for Aviation & Aerospace standards, state of the art facilities, capacity for all sizes and types of aircraft, and full services MRO firms capable of meeting the full range of the customers MRO needs. ATAC s MRO resource has the required background to provide the needed focus on facilitating and harmonizing regulations between Transport Canada (TC), the Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA). In the global aviation industry, harmonizing regulations is an enabler for Canadian MRO companies to service foreign registered aircraft.

3 TARGET MARKET - India India has been targeted for the last 2 years of this project due to its explosive growth in the airline sector and its significant commercial aircraft purchases. Case in point is a recent announcement that India has made aviation history when low cost carrier IndiGo ordered180 Airbus A-320s with a list price of almost $16 billion (Rs 72,000 crore) to be delivered between 2016 and This is the single largest order ever in terms of number of aircraft by an airline globally. The immediate demand for aviation professionals in the Indian market will be 5,000 across the subsectors in aviation. Forecasts predict that India will need 1,000 new pilots every year over the next decade. India has limited training capacity in country. Canada has the capacity to double/triple training among ATAC member operators to the value of $30M per year. The Indian Directorate General of Civil Aviation mandated Indian Air Operators to hire Indian pilots instead of expatriate pilots by Currently information from India has indicated that 3,000 commercial pilot licences require upgrades to be considered for future hiring by air operators. Brazil Brazil is the new target for this phase of the proposal supported by the recent market analysis identifying a strong demand for pilot training. The Brazilian government continues to invest in airport upgrades to support increased aircraft fleets needed to service improvements in domestic air travel. Brazilian aircraft manufacturer Embraer is expecting a 4.9% growth introducing 3,100 new jets in the 30 to 90 seat sector. This forecast contrasts Boeings recently issued market forecast that predicted demand for 1,980 regional jets over the same 20 year period. Embraer is also financially supported by the Brazilian government through subsidies. Association members were consulted about this market and we estimate approximately $18 million dollars will be generated for flight training in Canada. The market analysis for Brazil is the foundation the project and better defines the market potential. We continue to target students who are aspiring to become professional pilots but do not have access to the training within their own country. Western Hemisphere and Europe (MRO) The target market for Canadian MRO companies in the Western Hemisphere is primarily focused on the US however most new opportunities exist in Central and South America supporting the explosive forecast growth of regional aircraft in Latin America. The second area of interest and next most important growth area accessible to Canadian MRO is the European aviation community. These markets have been identified by ATAC s MRO specialist Les Aalders as the target markets for the 2012/2013 GOA resources. STRATEGIC PRIORITIES A multipronged strategy across several initiatives ensures that targeted numbers for International outreach are achieved within a shorter period of time, however to maintain these numbers all participating member companies will have to commit for a sustained marketing presence in the international markets for at least 3-5 years. To further support the International program, Brazil is the focus of the current market analysis and research paper. Future missions in the next fiscal year will be focused on Brazil air operators, civil aviation authorities and student recruitment, to establish the links needed to promote professional pilot training in Canada to the Brazilian marketplace.

4 While support in the research paper to identify the market potential for commercial pilot training is strong, there are no easily identifiable geographic areas within the country which have a concentrated pool of potential student pilots. The strategy for future missions to Brazil will address the limited number of potential applicant pools in any one city. It is recommended that missions/delegates to Brazil consist of several groups of 3-5 members at any one point in time, visiting key cities in Brazil. Each group will visit a particular geographic region so that there is no overlap between the groups while at the same time there is a spread of awareness of Canadian flight training across Brazil. A delegation consisting of more than this recommended number will result in a situation where it will be difficult to identify numbers to satisfy all participating members from any one city. Unless a Brazilian partner demonstrates the capacity to provide student traffic in volumes, it is recommended that no more than 3-4 ATAC member companies sign up with any one local recruitment agency. The following are the objectives to promote the strategy. 1. Develop and maintain a collaborative network of agents, counsellors and trade commissioners in Brazil. a. The network will consists of professionals, agencies/individuals/academics/ counsellors/ alumni/flight schools across Brazil. 2. Agencies will be provided training by in-country representatives on behalf of ATAC member schools on programs, admission process, application forwarding etc. ATAC will provide all material and process support for the training. 3. ATAC companies will participate in select high profile events in Brazil to increase the profile of Canadian pilot training. 4. Ensure member schools internal capacity can accommodate numbers (enquiries, applications and registrations) from Brazil so that service quality is assured as numbers increase. 5. Identify and train an ATAC in-country counsellor (part time) who will maintain existing relationships, develop new relationships, manage online presence and conduct education and visa counselling for the ATAC members. 1. The MRO focus will be supported by extensive consultations with the DFAIT trade commissioners representing Europe and Latin America identifying the most promising linkages with foreign companies requiring the expertise and services from Canadian MRO firms. 2. The project will focus on promoting Canadian MRO service centres who have the capacity to handle narrow body, wide body, commuter, regional jets, military, business and specialty aircraft as well as engines and components from these types of aircraft. The Canadian MRO capability and capacity is a competitive advantage in servicing foreign companies and governments operating mixed fleets of aircraft. Total MRO services provide cost effective, one stop shopping for international operators lacking, in country capacity to provide MRO services to meet their operational requirements. 3. Communication and international marketing of Canadian MRO advantages will be the focus of the MRO initiative of the GOA 2012/2013 proposal.

5 MEASUREMENT OF RESULTS Success for the program will be the delivery of approximately $18 million in flight training year over year once we have established the linkages with the educationalists who recruit students and the airlines who receive pilot candidates from Canada with the skill knowledge and attitudes that are employable at minimum transition costs to Brazilian operators. It is pertinent to point out that activities conducted for student benefit this year will have a rollover effect and will continue to produce results over the next couple of years, until Brazil builds its own in-country capacity. Success will be determined by the revenue growth of Canadian companies working with operators in the Western Hemisphere and Europe. New markets where Canadian MRO has not done business in the past will be a testament to the success of the International outreach in the MRO sector of Canadian aviation. The ability of Canadian companies to service new markets is second to none and will have long term financial benefits to the viability of MRO in Canada. January 10, 2012

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