B.C.`s Aviation Industry

S P R I N G
F O C U S I N G
O N
M E M B E R S
I N
2 0 1 5
I N D U S T R Y
B.C.’s Aviation Industry
Employer profile:
Kelowna Flightcraft
Revenue recognition standards
impact airline revenue transactions
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Taking Flight – The Aviation Industry in
British Columbia
S P R I N G
2 0 1 5
A growing industry in British Columbia, aviation connects the world to B.C.’s
tourism sector, creates educational opportunities for international students,
enables a market for our agrifood and aquacultural products, and allows
for global investment in our natural resources.
Nearly a quarter of all people working in air transportation in Canada are
based in B.C., and over 24,000 British Columbians are employed in the
air transportation industry. B.C. is also home to Canada’s second-busiest
airport, Vancouver International Airport (YVR). YVR is a key contributor
to B.C.’s economy as it supports over 61,000 direct and indirect jobs and
generates over $11 billion a year in economic activity.
British Columbia’s CA, CGA, and CMA bodies
are currently working to unite under the CPA
designation. CPABC Industry Update is their
online magazine for members, candidates,
and students working in industry.
About
CPABC Industry Update is published online four
times a year and is sent to over 36,000 CA, CGA,
and CMA members, candidates, and students in
British Columbia. Opinions expressed are not
necessarily endorsed by the ICABC, CGA-BC, or
CMABC. Copyright CPABC Industry Update 2015.
Contact us
Visit us online at bccpa.ca, or email
[email protected]. Editorial inquiries can be sent to
Tiana Mah at [email protected].
In this Issue
7
The Past and Future of YVR
8
The Sky’s the Limit
A Profile of Kelowna Flightcraft
In this issue of CPABC Industry Update, we profile the aviation industry’s
contribution to the B.C. economy and take a look back at a CPABC
member’s involvement with the federal government’s transfer of YVR to a
community-based, not-for-profit organization. We assess the impact of new
revenue recognition standards on airline revenue transactions, and we’ve
included a Q&A with members working in the aviation industry. This issue
also profiles Kelowna Flightcraft, a B.C. aviation success story, and one of
Canada’s leading aerospace companies.
Also included in the spring issue is a diverse listing of professional
development courses being offered by CPABC.
We hope you enjoy this edition of Industry Update, and we look forward
to your feedback.
Look for this icon throughout Industry Update
Click to return to In this Issue (page 3)
in every issue
10
New Revenue Recognition
Standard Touches Down
4
13
Fares Too Good to be True?
18
PD Opportunities
15
Poised for Takeoff – Members
Share Their Perspectives on B.C.’s
Aviation Industry
22
Connect with
CPABC Online
20
Industry Snapshot:
Aviation
20
Powering
Airport
Sustainability
8
10
13
$100
AIR TICKETS
15
SPRING 2015
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page 3
A Look at B.C.’s Aviation Industry
Aviation connects the world to B.C.’s:
Natural resources for
global investment
Tourism opportunities
Educational opportunities
for international students
Agrifood and
aquacultural products
YVR's Contribution to the B.C. Economy
#1
#2
Welcomed
Handled
people in 2014*
tonnes of cargo*
Supports
Generates
19.36 million
Ranked as the
best airport in
North America
since 2010*
Vancouver
International (YVR)
is Canada’s secondbusiest airport
>256,000
>61,000
>$11 billion
direct, indirect, and spinoff jobs
a year in economic activity
>310,000
Generates over
aircraft takeoffs
and landings*
$600 million
a year in revenues to all levels of government:
>$435 million
>$135 million
to the federal government,
equal to the annual budget
for Western Economic
Diversification Canada
to the B.C. government, equal
to the annual budget of the
B.C. Ministry of Environment
>$6 million
>$27 million
to TransLink, equal to
funding the purchase of
10 new conventional buses
to the City of Richmond, equal
to the annual funding for the
City’s parks and recreation
programs
page 4
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I N D U S T R Y U P D AT E
B.C.’s Airports
38 certified airports in B.C.
B.C. aviation sector has
airports, heliports, and
water aerodromes
B.C. airports
handle 20%
of Canada’s
airport traffic
300+
The federal government owns the four
largest airports in B.C. – Vancouver,
Victoria, Kelowna, and Prince George
vs.
We Love to Fly
41%
of B.C. households buy airline
tickets annually, compared to
Victoria International (YYJ)
is B.C.’s second, and Canada’s
ninth, largest airport
Kelowna International (YLW)
is B.C.’s third, and Canada’s
tenth, largest airport
YYJ served
YLW served
passengers in 2014**
passengers in 2014***
>1.6 million
B.C.’s 13%
share of
Canada’s
population****
31%
nationally****
>1.6 million
Together, YYJ and YLW support
over 2,900 direct jobs and generate
>$1.1 billion
23%
of all aircraft landings and takeoffs
in Canada occur in B.C.****
per year in economic activity
The B.C. government’s aviation strategy
supports its Pacific Gateway target:
40%
increase in
passenger traffic
70%
increase in cargo tonnage
through Vancouver by 2020
B.C.’s aviation industry generates $1.2 billion in revenues annually
Source: AIAC Pacific
Main data source: B.C. Ministry of Transportation and Infrastructure report: Connecting with the World: An Aviation Strategy for British Columbia, 2012.
Additional info: *Vancouver International Airport website - Facts & Stats, yvr.ca; **Victoria International Airport website - Facts & Stats, victoriaairport.com;
***Kelowna International Airport - Facts and Statistics, Kelowna.ca/CM/page68.aspx; ****BC Aviation Council.
SPRING 2015
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page 5
A Look at B.C.’s Aviation Industry
Jobs
>24,000
>2,000
British Columbians
work in the air
transportation industry
British Columbians
work in the
aerospace industry
****
Schools
1 daily international passenger service supports:
150-200
300-400
jobs related to
servicing the plane,
passengers, and cargo
jobs in the
tourism sector
Average weekly earnings are $975, which is
20%
higher than the
provincial average
24%
Industry Challenge:
Competitiveness
What:
In 2011, Canada ranked ninth out of 139
countries on competitiveness in The
World Economic Forum's Travel and
Tourism Competitiveness Report.
Impact:
The same report ranked Canada
in the 105th spot in terms of price
competitiveness. Canada's poor ranking
is mainly due to fee structures imposed
directly on travellers, such as the
Air Travellers Security Charge,
which was introduced following
the 9/11 terror attacks.
page 6
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I N D U S T R Y U P D AT E
B.C. colleges and universities
with aviation programs:
BCIT, College of New Caledonia,
Northern Lights College,
Okanagan College, Trinity Western
University, and the University of the
Fraser Valley
of people working in
air transportation in
Canada are based in B.C.
Industry Challenge:
Leakage
What:
Impact:
Loss of Canadian air travellers to
U.S. airports, which frequently
offer lower fares to U.S. and
international destinations.
A study for the Canadian Airports
Council estimated that leakage
accounted for a loss of 4.8 million
passengers, equal to 20% of the total
trans-border Canada–U.S. market.
The Past
and Future of YVR
CPABC’s part in the Airport Authority’s history
N
early 23 years ago, the Vancouver International
Airport (YVR) became one of the first airports
in Canada to transfer from federal government
control to administration by a local, community-based,
not-for-profit organization. During the 1980s, a number
of dedicated business leaders spent years working on
negotiating the transfer of Vancouver’s airport from
Ottawa back to British Columbians. These leaders had a
vision for YVR as a premier global gateway, and the late
Chester Johnson, CPA, FCA, was among these visionaries as
the first chair of the Airport Authority’s board of directors.
As board chair, Johnson was tasked with overseeing
the transfer of the airport from the federal government
to the local Airport Authority. In a 2007 interview in
Beyond Numbers magazine published by the Institute
of Chartered Accountants of BC, Johnson was quoted
as saying, “I wasn’t interested in running an airport, but
I sure enjoyed the years of negotiation with the federal
government on devolution. It was like the elephant and
the mouse, and we were the mouse.” Johnson spent five
years in fierce negotiations with the federal government
before the airport was transferred to the Airport Authority
on July 1, 1992. He was also instrumental in negotiating a
$425-million bank syndication loan prior to the transfer.i
During his 10-year tenure as chair, Johnson oversaw the
construction of a new runway and YVR’s International
Terminal Building. A strong advocate for public art within
the terminal, Johnson championed the purchase of “The
Jade Canoe” sculpture by renowned First Nations artist
Bill Reid as crucial to creating a “street scene” within the
Terminal Building. In recognition of his work for YVR, the
Chester Johnson Park was created near the International
Terminal, a building he had played a large role in creating.
Since the formation of the Vancouver Airport Authority,
ICABC – one of CPABC’s legacy organizations – has been
one of eight nominating entities for the Authority’s board
of directors, and has had a member on the board since its
establishment. The other nominating entities include the
Association of Professional Engineers and Geoscientists
of British Columbia, the City of Richmond, the City of
Vancouver, the Government of Canada, ICABC, the Law
Society of British Columbia, Metro Vancouver, and the
Vancouver Board of Trade.
As Canada’s second-busiest airport, YVR welcomed 19.36
million visitors in 2014, facilitated more than 310,000
aircraft takeoffs and landings, and handled over 256,000
tonnes of cargo. Sixty-two airlines serve YVR, connecting
people and businesses to 99 destinations in Canada, the
U.S., and around the world.ii
Today, YVR has a 20-Year Master Plan that identifies what
air travel needs must be met for 2027 and the Airport
Authority’s recommendations to achieve these needs.
A $1.8 billion investment by the Airport Authority is
part of the master plan to attract new routes and air
carriers, improve travellers’ experience at YVR, and make
upgrades to the terminals, baggage systems, and safety
and security.
i
Beyond Numbers magazine,
Institute of Chartered Accountants
of BC, February 2007
ii
yvr.ca
SPRING 2015
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page 7
The Sky’s the Limit
L
ike the story of Steve Jobs and
Apple, many successful companies
have stories of their founders
starting their business in a basement
or garage. For Kelowna Flightcraft, the
company’s humble beginnings trace
back to founder Barry Lapointe in 1970.
A newly minted aircraft maintenance
engineer and pilot, Lapointe moved
to the Okanagan Valley to provide
mobile aviation services in Vernon
and Kelowna. Seeing a niche market
opportunity for aircraft maintenance
in the Okanagan, Lapointe moved from
servicing small aircraft, using tools in
the back of his van, to running a fullservice aircraft maintenance, repair,
and overhaul depot in Kelowna with
his business partner Jim Rogers.
Together, Lapointe and R ogers
de ve loped a ran g e of avia t ion
services, including air cargo, heavy
maintenance, aircraft modifications
(building air tankers and “stretch”
fuselage aircraft), avionics, defence
program pilot training, and engine and
parts overhauls. The company now has
over 1000 employees, a fleet of over
50 aircraft, and three main operational
bases in Kelowna, Hamilton, and
Southport (Portage la Prairie). Kelowna
Flightcraft also has four satellite bases
across Canada.
Expansion
As the business grew in its early days,
Kelowna Flightcraft expanded from
page 8
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maintenance into charter flying. The
story of how the company became the
exclusive air cargo carrier for Purolator
Courier is one of going the extra mile
for a customer. Company history recalls
the late night call Lapointe received
requesting a rush cargo flight for a
courier company whose pilots had
gone on strike. That first flight in 1978
was the beginning of a successful
35-year relationship between Kelowna
Flightcraft and Purolator, during which
the company flew over one million
pounds of Purolator and Canada Post
cargo daily, on a fleet of narrow- and
wide-body aircraft, to 12 airbases
across Canada.
The company continued to diversify
its revenue sources by offering a
continuum of services. It purchased
larger aircraft and offered aircraft
leasing arrangements, allowing
Purolator to grow its business while
maintaining steady cash flows.
Kelowna Flightcra
“KF Aerospace” t
defence programs. These government
contracts represented huge growth
potential with the bonus of lowrisk receivables. In 2005, Kelowna
Flightcraft successfully won a $1.8
billion contract to train Canadian Air
Force pilots for the next 22 years at
the Portage la Prairie base in Manitoba.
Since winning this contract, the
company has expanded the number
of services it offers to the military
and now has a dedicated business
development team that regularly
reviews and bids on national defence
programs and other major contracts.
Looking to the
Future
Kelowna Flightcraft’s initial business
model of “fly, maintain, lease” was also
applied to other customers. Cargo
clients were offered maintenance and/
or leasing options, and maintenance
clients were offered aircraft
modifications and leasing options.
The company’s goal was to provide
seamless service to meet its clients’
wide-ranging aviation needs.
Kelowna Flightcraft recently re positioned its entire business model.
In 2013, Purolator and the Canada Post
Group of Companies issued a request
for proposal that changed their air
cargo pricing structure from dollars
per flight hour to a unit toll of dollars
per kilogram. This change, along with
other requirements, forced Kelowna
Flightcraft to review its overall air cargo
business, strategy, and pricing. In the
end, the cargo contract was awarded
to another company and Kelowna
Flightcraft transitioned out of Purolator
and Canada Post’s air cargo program as
of March 2015.
Examining their business once again in
the early 2000s, Lapointe and Rogers
strategized to expand into military
During the 12-month transition
period, Kelowna Flightcraft’s business
development team explored
I N D U S T R Y U P D AT E
aft celebrates 45-year milestone by launching a new brand,
to reflect expanding business model of “fly, maintain, lease, teach”.
opportunities to establish new air
cargo routes and markets, while
management worked on redeploying
t h e c o m p a ny ’s Pu ro l a to r “ h u b”
airbase into a maintenance, repair,
and overhaul facility. To support the
transition, the company developed a
marketing plan to renew and rebrand
all the company’s aviation services.
In April 2015, Kelowna Flightcraft
launched a new website, logo, and
trademark – “KF Aerospace” – to depict
its significant presence in the Canadian
and international aviation industry.
The new brand is the next step the
company has taken as it prepares for
global growth.
a “fly, maintain, lease, teach” business
Longer term, the company’s strategy is
to continue expanding and improving
its integrated aviation services under
the aircraft leasing business as airlines
model. The new vision provides
a renewed focus on international
opportunities, establishing an Eastern
Canada maintenance, repair, and
overhaul presence, adding defence
program contracts, and expanding
look to replace their aging fleets postrecession.
Connecting with CPABC: A Q&A with KF Aerospace’s
director of finance and CFO, Meryle Corbett, CPA, FCMA
I
ndustry Update spoke to Meryle Corbett, CPA, FCMA,
director of finance and CFO of KF Aerospace, formerly
Kelowna Flightcraft Group of Companies, to find out
what it’s like to work at the company and learn about its
involvement with CPABC’s Career Connect program. At
KF Aerospace, Corbett oversees the finance department,
and acts as a facilitator between other functional areas
of the company such as human resources, maintenance
operations, and risk management.
What makes KF Aerospace a unique place
to work?
The company has an incredible ability to thrive and find
solutions in crisis situations. For example, our Canadian
Forces Flight Training School was created from ground
zero to a “steady state” flight school in 15 months, and a
national wide-body air network for Canada Post cargo was
established in less than six months.
What qualities are common among your
most successful employees?
They all have an excellent work ethic, a passion for aviation,
enthusiasm for troubleshooting all kinds of problems, and
they operate as a team in a “work family” environment.
KF Aerospace has a number of CPAs in
the organization. What sets CPAs and
CPA candidates apart from other hires?
We have a succession planning process and find that CPA
candidates are well positioned to develop a career path
within our family of companies. CPAs have an ability to think
on their feet, ask the right questions, and are able to adapt
to the issues and needs of our business.
What attracted you to become a member
of the CPA Career Connect employer
program?
Our goal is to find and retain the best candidates possible;
CPABC Career Connect is a win/win for us as we gain
preferred access to the skills and strengths of CPA candidates
and we’re able to offer them great career opportunities.
CPABC Career Connect recognizes leading companies that
provide an effective working and training environment for
designated members, students, and candidates and affirm the
value of CPA-trained accountants and finance professionals
within their organization. To learn more about the program,
visit www.bccpa.ca/careers/career-connect.
SPRING 2015
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page 9
New Revenue Recognition Standard
By Peter Rogan and Zhe Xuan Choo, CPA, CA
It is expected that a new revenue recognition
standard will have a significant impact on all
airline revenue transactions, and will likely
require some airlines to change certain
revenue recognition practices.
page 10
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I N D U S T R Y U P D AT E
Touches Down
I
n M ay 2014, the Financial
Accounting Standards Board (FASB)
and the International Accounting
Standards Board (IASB) jointly issued
a new revenue recognition standard
that will supersede vir tually all
revenue recognition guidance in
International Financial Reporting
Standards (IFRS) and U.S. Generally
Accepted Accounting Principles (US
GAAP), including the industry-specific
guidance that airline entities use today.
The new standard, IFRS 15, provides
guidance for those accounting for all
revenue arising from contracts with
customers and affects all entities that
enter into contracts to provide goods
or services to their customers.
In five steps, the new guidance outlines
the principles an entity must apply
in order to measure and recognize
revenue and the related cash flows:
1
2
Identify the contract(s) with the
customer;
3
4
5
Identify the separate
performance obligations in
the contract;
Determine the transaction
price;
Allocate the transaction price
to the separate performance
obligations; and
Recognize revenue when each
performance obligation is satisfied.
Key Accounting
Consideration for
Airlines
Frequent Flyer and Loyalty
Program Accounting
Airlines often offer loyalty programs
that allow customers to earn reward
points for flying with them or through
partner arrangements, such as cobranded credit cards, flights on other
airlines, and activities with other travel
partners, such as rental car companies
and hotels.
Under the new standard, goods and
services an entity might currently
consider to be marketing incentives
– including reward miles or points
issued in frequent flyer or loyalty
programs – are now classified as goods
or services for which the customer
pays and to which the entity should
allocate consideration (i.e., identify as
performance obligations) for purposes
of revenue recognition.
This change arises because the
reward miles or points have value
to the customer and obligate the
airline to provide a future good or
service. The new standard will require
airlines to defer revenue for their
loyalty programs until the related
performance obligations are satisfied.
This could have a material effect on
an airline’s financial results for entities
currently accounting for loyalty
transactions in accordance with the
incremental-cost method.
Although reward points sold
through partner arrangements are
accounted for as revenue transactions
in accordance with today’s revenue
recognition guidance in US GAAP,
reward points that are issued to
program participants for using the
entity’s products and services can
be accounted for as an accrued
expense under US GAAP using the
incremental-cost method. However,
the incremental-cost method is not
currently permitted by IFRS, which
requires entities to account for reward
points as a separately identifiable
component of the sales transaction(s)
in which they are granted.
Airlines moving from an incrementalcost method to treating reward
points as a revenue element will
have to allocate some portion of
the transaction price to the reward
element based on the estimated
stand-alone selling price of each
performance obligation. Airlines that
have treated reward points sold to
partners, such as co-branded credit
card providers, as revenue elements
should be able to use that model as
a starting point to estimate the value
of used reward points. However, the
valuation of the reward points may
change under the new standard.
SPRING 2015
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page 11
New Revenue Recognition... (cont’d)
Implementing
Accounting Change
A common five-phase model
for implementing accounting
change in an organization
includes:
1. Assessment:
Identify accounting, reporting,
and tax differences, and assess
the consequences in business
processes and systems.
2. Design and
planning:
Set up program and project
infrastructure, including
a roadmap and change
management strategy.
3. Solution
development:
Identify solutions, prepare
an implementation plan,
and develop solutions across
the work streams.
4. Implementation:
Approve and roll out solutions
across the work streams.
5. Postimplementation:
Address deferred items
and transition to operational
model.
Accounting Standards for
Private Enterprises (ASPE)
The Private Enterprise Advisor y
Committee has discussed the impact
of the new standard on the application
of Section 3400 Revenue, given that
Section 3400 is based on US GAAP.
The committee observed that IFRS
15 has yet to be incorporated into
Part I of the CPA Canada Handbook
– Accounting. As a result, IFRS 15 is
not yet part of Canadian GAAP. The
committee noted that, as with any IFRS
issued or amended by the IASB, any
potential changes to the accounting
standards for private enterprises as a
result of the issuance of IFRS 15 would
be considered by the committee once
the standard has become effective and
some experience has been gained in
applying it.
Effective Date and
Transition
For IFRS financial statements, the
standard is mandatorily effective for
annual periods beginning on or after
January 1, 2017. Early adoption is
permitted.
IFRS 15 requires a full retrospective
approach, in which the standard is
applied to all of the periods presented,
or a modified retrospective adoption.
Under the modified retrospective
adoption, entities will apply the
standard retrospectively to only the
most current period presented in the
financial statements (i.e., the initial
period of application).
Implementation
Considerations
The new standard will affect the
recognition, measurement, and
disclosure of revenue for many
airlines. Since revenue is often the
most important financial performance
indicator, this accounting change
could have impacts on an organization
beyond its financial statements.
Airlines should perform a preliminary
assessment on how they will be
affected as soon as possible so they
can determine how to prepare to
implement the new standard.
Due to the potential wide-ranging
impact of IFRS 15, the implementation
process should be comprehensive
and include the IT, tax, legal, sales,
marketing, and human resources
depar tments, and the executive
management team. Public entities
should also consider how they will
communicate the changes to investors
and other stakeholders, including their
plans for disclosing the effects of the
new accounting standards and the
transition method the organization
has selected.
Zhe Choo is a senior manager,
financial accounting advisory
services at EY.
Peter Rogan is a senior manager,
Financial Accounting Advisory
Services at EY and a member of EY
Canada’s Expert Network for the
new revenue recognition standard.
Disclaimer: The views expressed in this article are preliminary. The authors may identify
additional issues as they analyze the standard and entities begin to interpret it. During that
process, the authors’ views may evolve.
page 12
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I N D U S T R Y U P D AT E
$100
AIR TICKETS
Fares Too Good to be True?
Canadian Transportation Agency rules that passengers
cannot take advantage of mistake fares
By Kathryn McGoldrick
I
n this electronic age, more air
travellers are purchasing flights
online, on the basis of posted fare
prices. But what happens when the
wrong fare price is posted? Is the airline
still required to transport the passenger
at the posted price, even if that price
is significantly lower than the fare it
intended to charge?
In the United States, Department
of Transportation (DoT ) regulations
prohibit airlines from increasing the
price of a fare after the ticket has been
purchased. While the precise impact of
SPRING 2015
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page 13
Fares too good... (cont’d)
this regulation in relation to “mistake
fares” has been the subject of some
debate in the U.S., the DoT has taken
the position that it applies to such fares.
action to remove the fares. Swiss then
notified its passengers that the tickets
were cancelled, and provided refunds.
total cost of approximately US$1,000
The CTA rejected the passengers’
position that a valid and binding
Canada has no similar legislation. The
contract of carriage had been created
Canadian Transportation Agency (CTA)
when the tickets were purchased, and
recently addressed the issue of mistake
that Swiss was therefore obligated to
fares in the context of complaints by
honour the posted fare price. In
83 passengers who purchased
doing so, it relied on case
tickets for travel on Swiss
A
law that provides that a
International Air Lines AG.
general
party may be entitled
(“Swiss”) but later had
rule is that if it
to have a contract
these tickets cancelled
seems too good
revoked if there has
by Swiss on the basis
to be true, it
been a fundamental
that the posted fares
probably is!
mistake, and if a party
were erroneous. These
who
knows or ought to
passengers had purchased
know of this mistake “remains
tickets for multi-segment first
silent and snaps at the offer, seeking to
class or business class travel between
take advantage of the other’s mistake.”
Yangon, Myanmar and Montreal,
was lower than the equivalent posted
Toronto, or Ottawa for a base fare
price that ranged between US$113
and US$150, with a total fare price of
approximately US$1,000 including
taxes and surcharges. The correct base
fare prices for these flights ranged
between US$10,000 and US$15,000.
The majority of the tickets were
purchased after notice of the fares was
posted on a popular flying blog, which
referred to the fares as “mistake fares.”
mistake. If the ticket was purchased less
The fares were never posted on the
Swiss website, but were distributed
to other online selling agents by the
Airline Tariff Publishing Company
(ATPCO). Swiss claimed that these
fares had been mistakenly included by
ATPCO, and that Swiss was unaware of
the error. Upon discovering the error on
September 28, 2012, it took immediate
page 14
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The CTA concluded that the fares were
a mistake, as they were approximately
one percent of the correct fare, and
that those purchasing tickets either
knew or ought to have known of the
mistake. The CTA noted that it did not
appear to be coincidental that many of
the tickets had been purchased after
the blog had been posted, although
it did not rely on the post in coming
to the conclusion that the purchasers
knew or ought to have known of
the mistake. The CTA observed that
it could not be determined from
the post that the author was in fact
aware that the fares were a mistake,
and that, in any event, some tickets
were purchased prior to the post. It
did find, however, that a reasonable
person ought to have known that a
I N D U S T R Y U P D AT E
for first class/business class travel from
Myanmar to Eastern Canada, which
economy fare, was not a low ticket
price, but a mistake. As fare price was
a fundamental term of a contract
of carriage, the required mutual
agreement for a valid contract to be
formed was not present, and Swiss was
therefore entitled to cancel the tickets.
T h e C TA a l s o s e t o u t g e n e r a l
expectations for carriers in addressing
mistake fares. When all or any portion
of a ticketed itinerary is cancelled due
to a mistake fare, the carrier should, at
a minimum, notify the passenger of
the cancellation no later than 72 hours
after the carrier becomes aware of the
than 72 hours before the scheduled
departure, the passenger should
be notified at least 24 hours before
departure. In either case, the carrier
should refund the amount paid.
This decision suggests that passengers
will not be able to take advantage of
mistake fares when these fares are so
low that a reasonable person ought
to have realized they were a mistake.
While cases will be fact-specific, a
general rule is that if it seems too good
to be true, it probably is!
Kathryn McGoldrick is an associate
with Alexander Holburn Beaudin
+ Lang LLP, and practices civil
litigation in the areas of aviation,
insurance, and appeals.
Poised for Takeoff
Members share their perspectives on B.C.’s aviation industry
I
ndustry Update spoke with members
working in aviation to gain their
insights into the industry, its future
outlook, and areas of growth. Recently,
we spoke with Glenn McCoy, CPA, CGA,
senior vice president, finance and
chief financial officer of the Vancouver
Airport Authority in Richmond; Pat
Kennedy, CPA, FCMA, chief financial
officer of Pacific Flying Club in Delta;
and Mike Delves, CPA, CGA, accountant
and business advisor with MNP LLP
in Nanaimo and treasurer of the BC
Aviation Council.
fleet of 27 aircraft at the Boundary
Club. This includes strategic planning,
Bay Airport. The Club was founded in
risk management, human resources,
1965 as the Canadian Pacific Airlines
budgeting, marketing, and business
Employees Flying Club. We train both
development. I also liaise with various
Industry Update:
Can you give a brief overview of your organization
and your role within it?
recreational and commercial pilots and
levels of government and national and
we’re accredited by the Private Career
provincial organizations.
Training Institutions Agency of BC and
McCoy: As the senior vice president,
hold the Education Quality Assurance
finance and chief financial officer of the
Kennedy: I’m the chief financial officer
designation issued by the Province
Vancouver Airport Authority (YVR), I am
of Pacific Flying Club, Western Canada’s
largest flight training centre with a
of B.C. As CFO, I’m responsible for all
part of the executive team responsible
of the non-flying operations of the
for the overall management of YVR and
SPRING 2015
|
page 15
Poised for Takeoff... (cont’d)
its subsidiaries. I am directly responsible
for the Airport Authority’s corporate
finance, accounting, and commercial
services, including retail and parking
operations. I am also on the board
of two of the Airport Authority ’s
subsidiaries, including Vantage Airport
Group and the McArthurGlen Designer
Outlet Vancouver Airport joint venture.
Industry Update:
Aviation is a growth
industry for B.C., but many
British Columbians don’t
know it is one of our key
industries. What needs to
change for us to realize
the importance of aviation
to our economy?
Delves: As a business advisor at MNP,
McCoy: The Airport Authority’s entire
I work with a variety of aviation clients
– particularly those with interests in
airports. Since 2012, I’ve been involved
with the BC Aviation Council: I was
elected treasurer in 2014 and named
chair of the audit and investment
committee in 2015.
mandate is to generate economic
value, create jobs, and connect our
province and region to the world. I
believe that increased reporting of
the industry’s economic impact and its
role as an essential connecting agent
for other industries would help people
realize the importance of aviation to
B.C.’s economy. For example, cargo, a
key area of the industry, contributes
greatly to the economy and needs
increased awareness. Approximately
25 percent of YVR’s cargo trade is
with the Asia-Pacific region – the top
destination for B.C. exports by air –
accounting for more than $600 million
in 2013.
Industry Update:
Pat, you’re also involved
with BCIT’s school of
transportation’s aerospace
program. Can you tell us
a bit more about your
involvement?
Kennedy: The Club, in partnership
with BCIT, offers the flying component
of BCIT’s airline and flight operations
program. Personally, I work with the
associate dean and chief instructor of
the aerospace programs to ensure the
program meets the high standards
required by employers to guarantee
the success of our program graduates.
Our alumni are employed by Canada’s
major airlines and fly for other major
carriers around the world.
page 16
|
Kennedy: We need to make more
noise in presenting aviation and
the aerospace industry as a large
component of B.C.’s economic fabric.
Major employers include Cascade
Aerospace, KF Aerospace, Canadian
Helicopters, WestJet, Air Canada,
and of course, the Vancouver Airport
Authority. Government is aware of
the importance aviation plays in the
province’s growth, but the travelling
public isn’t always aware of how many
jobs are generated by the aviation
sector in B.C.
I N D U S T R Y U P D AT E
Delves: Similar to other modes
of logistics and transpor tation,
many consider aviation as part of
our infrastructure rather than as an
industry unto itself. With greater access
and usage, people are more likely to
realize the importance of aviation to
our economy. Wider access results
from expanded infrastructure, as well
as reduced restrictions on competition
and air space access.
Industry Update:
For any business to grow,
certain key success factors
must be present. What
factors are crucial for the
B.C. aviation industry to
succeed?
Safet y, a good
relationship with the various levels
of government, and good strategic
planning. It is always critical for any
business, not just those in aviation,
to be ahead of the competition and
work collaboratively to ensure the
company and indeed the whole sector
is strong. Strong competition ensures
a healthy industry. The province has a
responsibility for ensuring that the B.C.
aerospace and aviation sectors are not
at a competitive disadvantage because
of government policies, be they tax
policies or other regulations.
Kennedy:
McCoy: Increased partnerships with
the government are crucial to growing
Canadian airports. We are currently
working with the federal government
on implementing Transit Without Visa.
This is a program whereby international
travellers can transit through YVR
without obtaining a Canadian visa.
This would be a game changer for YVR
and other major airports in Canada, as
it would attract more passengers and
carriers that currently can’t serve this
market using only Vancouver-based
originating and departing passengers.
This is key for our continued growth as
a global hub.
Delves: Four key things need to be
in place. One, it’s essential we have
available and trained personnel
ranging from operational resources
(such as pilots and support crews) to
technicians and engineers for aircraft
maintenance and development. Two,
we need to invest in our infrastructure,
and our airports especially need
capacity to meet future demand.
Three, we need to be competitive:
our services must be competitively
priced and we must ensure taxation
isn’t impeding that. Finally, in terms
of access to markets, we need to
expand our Air Transport Agreements
to ensure greater access from B.C. to
more areas internationally.
Industry Update:
In which areas do you see
the greatest growth for
the B.C. aviation industry?
McCoy: Our greatest opportunity for
growth lies in connecting the emerging
economies and middle classes of
China with South America. 2014 was a
year of exceptional passenger growth
for YVR. We had record passenger
volumes to Asia-Pacific, with traffic to
the region up 9.8 percent over 2013
and traffic to Mainland China up 6.6
percent. Cargo service has also seen
significant growth. A recent agreement
with Shanghai Pudong International
Airport will allow YVR to collaborate
on improving the perishable goods
supply chain between Vancouver and
Shanghai.
Kennedy: Airports present strong
growth opportunities as the airlines
expand routes and add new
equipment. The weakening Canadian
dollar presents challenges to the cost
structure of many aviation companies,
as many have their purchases billed
in U.S. dollars, but this can also be an
opportunity for companies to export
their goods and services to other
markets.
Industry Update:
What trends are you
seeing within the industry?
Kennedy: Training can be a challenge.
The aviation flight training sector has
consolidated recently and increasing
demand from international markets
for Canadian-trained pilots affects the
availability of training and airspace
requirements. We have also seen pilot
shortages for senior management and
senior pilot positions due to changing
demographics. It can be a challenge
to attract a younger demographic
to an industry that is very expensive
to train for and where entry-level
positions often do not offer as much
compensation as other professions.
McCoy: Increased competition within
the airport business. Edmonton is
adding a 210,000-square-foot facility
with the goal of becoming a cargo
hub. Calgary opens its new $1.4-billion,
22-gate international terminal later
this year. And many U.S. airports are
expanding to compete for the growing
Asian market. Competition is good, as
it forces us to keep innovating. In the
last year, YVR has made huge progress
with initiatives that will increase
its non-aeronautical revenue, such
as our BorderXpress kiosks – YVR’s
industry-leading automated passport
control solution – or the Authority’s
partnership with McArthurGlen to
build a luxury shopping centre within
minutes of the terminal.
Delves: On a positive note, our
passenger numbers continue to
grow. Of concern is the availability of
skilled people and access to training.
Recent enrolment in BCIT’s Aerospace
Technology Campus peaked in 201011, declined through 2012-13, but
began to increase again in 2013-14.
SPRING 2015
|
page 17
Professional Development Opportunities for
COMMUNICATION | NEGOTIATION
Clear Thinking/Clear Speaking
Learn to speak clearly and succinctly when you have little
or no time to prepare. You will discover how to respond
to questions, speak up at meetings, and even feel more
comfortable in social situations. While speaking is the
primary focus, you will also gain tips to improve your phone
messages, e-mails, and written reports.
June 3, 2015 | 9 am – 5 pm | Vancouver
Effective Negotiations for Finance
Professionals
The basis for successful business relationships is negotiation
rather than power. The aim of this interactive program is to
enable finance professionals to reach mutually agreeable
internal business solutions by thinking and acting for the
long-term success of negotiated outcomes.
June 10, 2015 | 9 am – 5 pm | Vancouver
CONTROLLERSHIP |
MANAGEMENT ACCOUNTING |
HUMAN RESOURCES
Documenting Your Organization’s
Financial Processes
This seminar teaches participants how to document
their financial work processes and prepare detailed taskbased procedure manuals. It focuses on documenting an
organization’s financial processes, including AP, AR, asset
management, treasury, accounting, cash management,
accruals, journal entries, and payroll.
May 21, 2015 | 9 am – 5 pm | Vancouver
Employment Standards Overview
This seminar provides an introduction to key provisions
of the B.C. Employment Standards Act (ESA), with emphasis
on commonly misunderstood requirements. At the end of
this seminar, the participant should be able to identify ESA
compliance requirements, identify current HR compliance
issues, and formulate solutions.
June 11, 2015 | 9 am – 12:30 pm | Vancouver
page 18
|
I N D U S T R Y U P D AT E
Understanding the Financial Risks of
Employee Benefits
Costs related to employee benefit programs are significant
and growing. Through a combination of lecture and
interactive discussions, this seminar will help participants
better understand the area of employee benefits, the key
cost drivers and future trends impacting benefits, and
strategies to better manage them.
June 12, 2015 | 9 am – 12:30 pm | Vancouver
LEADERSHIP | PERSONAL
DEVELOPMENT | ETHICS
Becoming … what you really want to be
What kind of life do you seek for yourself? If, despite your
many talents, you haven’t arrived where you want to be,
are at a crossroads, between jobs, or just want to get off the
treadmill, this life-altering course was designed with you
in mind. It will provide you with the framework, tools, and
guidance for becoming extraordinary, regardless of your
destination.
June 3, 2015 | 9 am – 5 pm | Vancouver
Conflict: Changing Viewpoints &
Influencing Behaviours
Too often our well-intentioned efforts to change the views
and behaviours of others lead to escalating emotions
and debilitating conflict. And this mismanaged conflict
impairs performance and destroys relationships. To
enhance the quality of your relationships with people
who count, you need to acquire the insights and skills
for turning disagreement and disputes into opportunities
for co-operation.
June 4, 2015 | 9 am – 5 pm | Vancouver
Ethics 24/7 for CPAs
This seminar focuses on ethical leadership and decisionmaking in the current business environment to avoid and
minimize ethical issues in serving employers, clients, and
the public. This workshop will primarily address ethics in
the environment of all professional accountants, regardless
Members in Industry
Highlights from the CPABC PD
Program for May-June, 2015
of legacy designation, and whether in public practice or
industry. This seminar qualifies towards the four-hour ethics
requirement.
May 4, 2015 | 8
:30 am – 12:30 pm
1 pm – 5 pm | Vancouver
June 4, 2015 | 8
:30 am – 12:30 pm
1 pm – 5pm | Vancouver
June 17, 2015| 8:30 am – 12:30 pm |
Richmond
Stop the Insanity! Radical Ideas for
Unpredictable Times
There are two types of enterprises in the world today –
those that get better and those that go out of business.
This cutting-edge, counterintuitive course will enable you
to start important conversations about how to fix failing or
broken practices by embracing ideas that run contrary to
everything you’ve ever been taught about managing people
and surviving in a volatile, unpredictable world.
June 2, 2015 | 9 am – 5 pm | Vancouver
STRATEGIC MANAGEMENT
CERTIFICATE PROGRAM
Strategic Planning
This interactive workshop will use several case examples to
examine the link between stated organizational goals, the
business environment, and visible strategies, with focus on
the functional strategy level. You will gain an appreciation of
the tools used to develop and execute successful strategies.
May 27, 2015 | 9 am – 5 pm | Vancouver
Risk Management & Governance
The first part of this interactive workshop will examine
different types of risks that can undermine the achievement
of an organization’s objectives, and the management
approaches and tools used to manage them. Part two will
overview director and board responsibilities and take an
in-depth look at the governance practices of top Canadian
companies.
INFORMATION & BUSINESS
TECHNOLOGY
Building a Financial Model of a Company
(Hands-on)
This hands-on course focuses on the skills required to design
and create an interactive financial model of a company
that adheres to the highest industry standards. The course
includes model design, logic, construction, financial
concepts, and accounting treatment. Participants will build
a model that includes a forecast of a company’s income
statement, cash flow statement, and balance sheet.
June 9, 2015 | 9 am – 5 pm | Vancouver
Financial Modelling – DCF Valuation
Analysis (Hands-on)
This seminar will focus on the steps required to properly
value a company using the discounted cash flow (DCF)
methodology. Participants will learn to recognize and avoid
the five most common errors finance professionals make
when creating DCF analyses.
June 10, 2015 | 9 am – 5 pm | Vancouver
Financial Modelling – Merger Modelling
(Hands-on)
This hands-on course will focus on the skills required to
design and create a powerful model to analyze the impact
of a merger or acquisition. Issues related to combining two
companies will be reviewed and discussed. The seminar
will be taught from the perspective of finance professionals
who need to quickly assess the impact of a merger between
publicly traded companies.
June 11, 2015 | 9 am – 5 pm | Vancouver
For a full listing of spring/summer seminars and
programs, please visit the CPABC PD website at
pd.bccpa.ca.
June 2, 2015 | 9 am – 5 pm | Victoria
June 9, 2015 | 9 am – 5pm | Vancouver
SPRING 2015
|
page 19
Powering Airport Sustainability
By Majidah Hashim
T
he ‘green revolution’ in the aviation industry has
evolved to take on the more holistic (and far more
economically favourable) approach of sustainability.
What started as presumably the flavour of the day has now
become the order of days to come.
In April 2008, the aviation industry came together in
Geneva in a monumental show of solidarity to sign
what has come to be known as the ‘Aviation Industry
Commitment to Action on Climate Change.’ Signatories
included international and regional industry organizations,
aircraft manufacturers, engine manufacturers, airlines,
airports, and air traffic control providers. Within this
commitment, the industry made a pact to gear towards
a pathway to carbon-neutral growth and a carbon-free
future, but also called out to governments and other
friends within the industry to do the same.
A series of events could be said to have triggered this pact,
page 20
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I N D U S T R Y U P D AT E
most notable of which was the increasingly aggressive
protests held against London Heathrow Airport and its
expansion plans. With an established precedence, similar
sentiments from environmental groups threatened to
obstruct growth not just for UK airports, but for airports
worldwide. In Europe, the extension of the European
Union Emissions Trading Scheme onto airlines threatened
to reshape the already delicate balance of air traffic
movements globally.
And so the aviation industry came together to take a stand
in support of sustainability. At the Copenhagen Conference
of the Parties (COP 15) in 2009, aviation became the only
industry to announce ambitious environmental targets, and
it laid out its plan on how it was going to do so for the world
to see. This move effectively, albeit momentarily, improved
the image of airports and their prospects for growth – but
now airports, in living up to their end of the pact, need to
make good on their promises.
It was not that airports were not already doing a lot
of good, but the biggest challenge stood in finding a
suitable method to communicate these efforts to the
world. It was not until 2011, when the Global Reporting
Initiative launched the Airpor t Operators Sector
Supplement (AOSS), that airports found a framework that
not only gave them a set of indicators to measure their
environmental performance with, but also gave them a
basis of comparison to see where they stood.
The AOSS, however, is not an environmental reporting
framework. It is a sustainability reporting framework.
This means that besides environmental performance, it
gives equal attention to measuring economic and social
impact performance, and presents a global picture of an
airport’s worth. Fuelled by stakeholder pressure, or simply
the desire to inform the world of the great contribution
of airports, the number of airport sustainability reports in
circulation increased exponentially and continues to do
so today.
In 2012, the Air Transport Action Group (ATAG), responsible
for bringing the aviation industry together to sign the
2008 climate change commitment in Geneva, brought
the industry together once again. This time, they signed
a declaration ‘Towards Sustainable Aviation,’ and once
again called out to governments and others to join in this
endeavour.
This constant trail-blazing has been a conscious and
careful move on the part of industry. ATAG calculates
the global economic impact of aviation in 2010 alone to
have been in excess of $2.2 trillion. According to current
statistics from ATAG and Airbus, air traffic is set to double
in the next 15 to 20 years. In fact, according to a study
from IHS Global Insight, OAG and Airbus, since 2008 the
increase in passenger traffic has constantly outperformed
world GDP and continues to do so today. Clearly, there is
a lot at stake.
What started out as the ‘fashion statement’ of the decade
(green was the new black, wasn’t it?) has interestingly
transformed to reveal one of the most powerful business
approaches for the next century.
Majidah Hashim was a project manager, and aviation
sustainability specialist with NACO, Netherlands
Airport Consultants.
This article is an excerpt from InterVISTAS’s Aviation Intelligence
Report, March 2014.
Sustainability Initiatives at YVR and YYJ
Solar Power
Reducing Energy Consumption
Solar hot water heating systems at YVR help heat more
than 800 gallons of hot water every hour, resulting in
energy savings of $110,000 each year. YYJ’s solar hot water
pre-heating system on the roof of the airport terminal
heats an estimated 20 percent of the airport’s hot water
in the winter and nearly 100 percent during the summer.
YVR has saved more than 24 gigawatt hours of electricity
and $5.5 million since establishing a cross-department
energy reduction team in 1999. Energy-saving initiatives
include econo-mode settings on baggage conveyor belts
and installing carbon dioxide sensors to control heating,
ventilation, and air conditioning according to the number
of people within an area.
Going Geothermal
YYJ’s new $9.7 million Airside Operations Centre is
powered by a geothermal system and includes occupancy
sensors and energy-efficient lights.
Alternative Fuelled Fleets
YVR’s rebate program for alternative-fuelled taxis has
improved air quality at the airport by taking the equivalent
of 1,651 cars off the road and reducing carbon dioxide
emissions by 8,422 tonnes a year. YYJ’s Electric Vehicle
Program provides electricity at no additional cost to
airlines that use electrical vehicles.
Green Walls
One of the largest living walls in North America can be
found at YVR at the Canada Line YVR-Airport station. The
green wall, which is 18 metres high and 12 metres wide,
includes 28,249 individual plants on 2,173 panels and
houses a built-in irrigation and feeding system.
Source: Vancouver International Airport website - Community
& Environment, Sustainability, yvr.ca, and Victoria International
Airport’s 2011 Environmental Management Plan.
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Feedback on Industry Update?
In upcoming issues we’ll be examining the public sector,
tourism industry, construction industry, healthcare and
more. Send your feedback and suggestions for future issues
to [email protected]; we look forward to hearing from you.
page 22
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I N D U S T R Y U P D AT E
Industry Update
is CPABC’s industryfocused online magazine
that is published four
times a year.
Interested in contributing to Industry
Update?
Members, candidates, and students interested in contributing
to Industry Update can send articles to [email protected].