GTAA 2014 FeasibilityStudy PDF

January 24, 2014
Mr. Howard Eng, P.E.

President and Chief Executive Officer
Greater Toronto Airports Authority
Toronto - Pearson International Airport
3111 Convair Drive
Toronto AMF Ontario L5P 1B2 Canada
Dear Mr. Eng:
AXIS Consulting Inc. (AXIS) is pleased to submit this Report of the Airport Consultant (the Report)
to the Greater Toronto Airports Authority (the GTAA) in conjunction with the planned filing by the
GTAA of a 2014 Short Form Base Shelf Prospectus (the Prospectus). AXIS understands that the
Report will not be included in the 2014 filing.
New activity forecasts have been prepared from 2014 through 2023 (the Forecast Period) based on the
most recent data available for passengers, aircraft movements, maximum takeoff weights and air cargo
tonnage. Key assumptions in this Reports forecast include:
A competitive domestic aviation market will be maintained over the forecast horizon.
The growth and sustainability of low fare airlines will continue to stimulate aviation demand in
the Greater Toronto Area (GTA).
Domestic, transborder and international traffic are expected to increase at moderate levels year
over year during the Forecast Period.
The costs of enhancing aviation security will not overly burden air carriers.
The Terminal 1 and 3 Enhancement Programs will be undertaken and will encompass demand
driven projects designed to provide a better flow of passengers, baggage and new commercial
retail offerings all designed to enhance the customer travel and service experience. Although the
Enhancement Programs will provide better access and connectivity for passengers, the Reports
forecast does not base future aviation activity growth solely on traffic stimulation based on the
Airports facility enhancements.
Based on the aviation activity forecasts prepared for and presented in this Report, the construction
of the sixth runway and Piers H and I will not be required during the Forecast Period.

January 24, 2014 - FINAL ii
The Airport currently has two commercial passenger terminals: Terminal 1 and Terminal 3, each of which
provides domestic, transborder and international service. The two terminals collectively offer 81 gates
with loading bridges (select loading bridges in Terminal 1 can accommodate the Airbus A380 aircraft) and
28 commuter gates. In total, the Airport has 155 aircraft parking positions available for air terminal
operations including 46 hardstand aircraft parking positions.
The Airports size and gate capacity have given the GTAA the ability to plan a short-to-medium term
strategy of making the facility a global connecting hub for Air Canada. Given its large Origin and
Destination (O&D) passenger base in addition to a growing number of international transfer passengers,
the Airport has the unique ability to connect travelers to six continents without having to expand its
existing facilities. The advent of new international carriers in the past 12 months such as Saudi Arabian
Airlines (Saudia) and Egyptair in addition to Air Canadas integration of Rouge to its international
airline network, has added new non-stop destinations and increased frequencies to existing points around
the globe.
The Airports objective of becoming a global hub has prioritized Airport capital programs and major
initiatives to adapt the current facilities to ease connections and the flow of passengers throughout. In
addition, the GTAA through the construction of additional retail space in Terminals 1 and 3 as well as
modifications to product offerings and higher priced merchandise, is expecting to drive non-aeronautical
commercial revenues from the current 8.0 percent to 15.0 percent of total non-aeronautical revenues by
2018 on an average annual compound basis.
On October 17, 2013, the GTAA entered into a Long Term Aeronautical Fees Agreement with Air
Canada (the AC LTA) which goes into effect J anuary 1, 2014, and covers an initial five year term
expiring December 31, 2018. Air Canada will pay a fixed amount to the GTAA in lieu of the GTAAs
standard aeronautical charges comprised of landing fees, general terminal charges and apron fees. For
each calendar year of the term, the AC LTA establishes certain passenger traffic thresholds for Air Canada
and its affiliates collectively. Provided that Air Canada and its affiliates achieve the cumulative passenger
threshold in a given year, Air Canada receives a rebate calculated based on the additional revenues
generated by incremental passenger growth at the Airport in excess of the threshold. The AC LTA
provides that Air Canada and the GTAA will collaborate in the development of certain specified service
level standards important to customer service and the development of a global hub.
The Terminal 3 Enhancement Program had an original approved capital budget of $406.8 million. As part
of the GTAAs 2013 strategic direction review, the capacity elements of the Terminal 3 Enhancement
Program were reviewed and the program has been modified accordingly. The revised capital budget for
the Terminal 3 Enhancement Program is $141.3 million and includes the following projects:
1. Retail improvements and related modifications to check-in and security screening layout;
2. Energy efficiency improvements;
3. Restoration of Pier A (formerly referred to as the Terminal 3 Satellite);
4. Improvements to baggage induction facilities and baggage screening system conversions; and
5. Other general refurbishment items.
Potential projects that will be scoped further in 2014 include: expansion of the restoration program,
relocating security in advance of U.S. Customs and Border Protection; additional baggage system
improvements and improved facilitation of passenger connections.
January 24, 2014 - FINAL iii
As part of the GTAAs 2013 strategic direction review, infrastructure projects for improvements to
Terminal 1 were identified and include:
1. Improved facilitation and flow for passengers connecting from International locations to Domestic
destinations;
2. Addressing regulatory requirements relating to baggage security screening; and
3. Relocating security in advance of U.S. Customs and Border Protection.
The full scope and implementation of these projects will be developed in 2014.
This Report was prepared to analyze the Airports ability to generate sufficient revenues during the
Forecast Period to permit the GTAA to make payments for operating and maintenance expenses, debt
service requirements, fund deposits and coverage requirements. The Report forecasts the economic and
demographic conditions of the GTA and discusses factors that affect aviation demand at the Airport based
on an independent forecast of passenger levels, aircraft movements, maximum aircraft takeoff weights and
air cargo tonnage. A financial analysis that covers revenues, expenses, capital costs, debt service, airline
requirements and that forecasts airline costs per enplaned passenger through the Forecast Period is also
included.
Based upon our analysis, it is the opinion of AXIS that:
The economic base of the GTA is strong and diverse and demonstrates a high demand for air
transportation service. Population, employment and personal income, all important variables in
deriving air service demand, are forecast to produce steady growth over the Forecast Period. The
GTA will continue to be a leading international commercial and financial center and maintain its
well-balanced and diversified economy.
The Airport will continue to be a major international gateway and hub with a substantial number
of airlines providing flights to all major domestic, U.S. and an increasing number of international
destinations through 2023. Total passenger traffic is forecast to increase from 36.7 million
passengers in 2014 to 47.0 million passengers in 2023 at an average annual compound growth rate
of 2.8 percent.
For the Forecast Period, domestic passenger traffic is forecast to increase at an average annual
compound growth rate of 2.2 percent. The Airport will remain a primary destination on both
transcontinental routes and the Toronto-Montreal-Ottawa triangle market.
Domestic passenger demand at the Airport will be stimulated by the growing presence of several
low fare carriers.
The Open Skies Agreement between Canada and the U.S. and the establishment of a U.S.
customs/immigration pre-clearance facility at the Airport will continue to facilitate increases in
transborder traffic. Transborder traffic is forecast to increase at an average annual compound
growth rate of 2.8 percent during the Forecast Period.
International traffic is forecast to increase at an average annual compound growth rate of 3.5
percent during the Forecast Period.
January 24, 2014 - FINAL iv
The air traffic and financial projections contained in this Report are based on what AXIS Consulting Inc.
believes to be reasonable evaluations of existing conditions, estimates of current conditions and estimates
of future conditions.
The Report should be read in its entirety in order to gain an understanding of the projections and their
underlying assumptions. The Airport Consultant has no responsibility to update this report for events and
circumstances occurring after the date of this Report.
Respectfully submitted

AXIS Consulting, Inc.
January 24, 2014 - FINAL v
TABLE OF CONTENTS

CHAPTER TITLE PAGE

I. ECONOMIC AND AIR TRAFFIC ANALYSIS 1
A. ECONOMIC CONDITIONS AND OUTLOOK 1
1. Aviation Industry Outlook 1
2. Drivers of Toronto Pearsons Future Activity 9
B. AIR CANADA LONG TERM AERONAUTICAL FEE AGREEMENT 17
1. Scope 17
2. Term 17
3. Fees 18
4. Airport Improvement Fee 18
5. Rebates 18
6. Non-Exclusivity 19
7. Reservation of GTAA Operational Rights 19
8. Events of Default and/or Termination 19
9. Service Level Standards 20
10. Assignment 20
C. FORECAST OF AVIATION ACTIVITY 20
1. Fleet Mix 21
2. Econometric Approach (Top Down) 23
3. Air Service Approach (Bottom Up) 23
4. Qualitative Approach 23
5. 2014 2023 Passenger Discussion and Forecast 24
6. 2014 2023 Aircraft Movements Discussion and Forecast 27
7. 2014 2023 Maximum Take-Off Weight Discussion and Forecast 27
8. 2014 2023 Air Cargo Discussion and Forecast 27

II. FUTURE AIRPORT CAPITAL PROGRAMS 32
A. TERMINAL 3 ENHANCEMENT PROGRAM 32
B. TERMINAL 1 ENHANCEMENT PROGRAM 32
C. AUTOMATED PEOPLE MOVER PROJ ECT 34
D. MAINTENANCE AND RESTORATION CAPITAL PROGRAM 34
E. FUTURE DEVELOPMENT 34
January 24, 2014 - FINAL vi
III. FINANCIAL ANALYSIS 36
A. AIRPORT FINANCIAL STRUCTURE 36
1. Rate Covenant 36
2. Rates and Charges Methodology 36
3. 2013 Change to Rates and Charges Methodology 37
B. FUNDING SOURCES 38
1. Bank Credit Facilities 39
2. Outstanding Bonds and Future Series Bonds 39
C. HISTORICAL FINANCIAL OPERATIONS 39
D. FORECAST OPERATING EXPENSES 42
1. Personnel Expenses 42
2. Non-Personnel Expenses 42
3. Ground Lease 44
4. Payments In Lieu of Real Property Taxes 44
E. FORECAST NON-AERONAUTICAL REVENUES 45
1. Concessions 45
2. Car Parking and Ground Transportation 47
3. Rental Revenues 47
F. FORECAST AIRPORT IMPROVEMENT FEES 47
G. FORECAST AERONAUTICAL REVENUES 47
1. Landing Fees and Other Services 49
2. General Terminal Charges 49
3. Apron Fees 49
H. FORECAST DEBT SERVICE AND FUND DEPOSITS 49
I. FORECAST AIRLINES COST PER ENPLANED PASSENGER 52
J . CASH FLOW PROJ ECTIONS 52
K. DEBT SERVICE COVERAGE 52
L. CONCLUSION 56
January 24, 2014 - FINAL vii
LIST OF TABLES
CHAPTER TITLE PAGE

I-1 North American Airline Mergers 2008 - Present 3
I-2 Comparison of Boeing and Airbus Global Market Forecasts 5
I-3 Comparison of Bombardier and Embraer Global market Forecasts 6
I-4 2013 Boeing and Airbus Aircraft Orders 7
I-5 Key Revenue Drivers of IATA 2013 Passenger & Freight Forecasts 8
I-6 Average Domestic Fares for Major Canadian Airports 14
I-7 2013 Peak Month Average Weekday Fleet Mix 22
I-8 Total Passenger Forecasts 26
I-9 Aircraft Movements Forecast 28
I-10 Maximum Takeoff Weight Forecast 29
I-11 Air Cargo Tonnage Forecast 30
II-1 Sources and Uses of Funds 33
III-1 Selected Consolidated Audited Financial Information 41
III-2 Forecast Operating Expenses 43
III-3 Forecast Non-Aeronautical Revenues 46
III-4 Forecast Aeronautical Revenues 48
III-5 Annual Debt Service Requirements 50
III-6 Forecast Fund Deposit Requirements 51
III-7 Forecast Airline Cost Per Enplaned Passenger 53
III-8 Summary of Cash Flows 54
III-9 Application of Revenues and Debt Service Coverage 55

Chapter I Economic and Air Traffic Analysis 1
January 24, 2014 - FINAL
I. ECONOMIC AND AIR TRAFFIC ANALYSIS
Aviation activity at the TorontoPearson International Airport (the Airport or Pearson) depends
primarily on economic conditions and the network strategies of the airlines. Many factors operating at the
global, national and local levels will jointly determine the demand for air transportation. This section
outlines the economic conditions and outlook of the global airline industry and the drivers that define the
Airports future activity. The forecast period for this Report is from 2014-2023 (the Forecast Period).
A. ECONOMIC CONDITIONS AND OUTLOOK
The Economic and Air Traffic analysis Chapter for the Study outlines the economic conditions and
outlook of the aviation industry from a global perspective, defines the drivers on future traffic growth at
Pearson and presents a long-term forecast of air traffic volumes for the Airport. The forecast is an
independent analysis using mathematical relationships and trend analysis to provide the Greater Toronto
Airport Authority (GTAA) with the necessary guidance to implement long-term business planning
strategies and to help the airport derive future rates and charges. The Forecast Period details total
passengers broken down into the three travel sectors: domestic, transborder and international.
Additionally, a movements forecast is produced and disaggregated into three categories including
passenger services, charter services and general/aviation and other movements for the same time period as
passengers. This Study will project maximum takeoff weight (MTOW) and cargo demand measured in
tonnage for the Forecast Period.
1. Aviation Industry Outlook
Commercial aviation has weathered many downturns in the past. Yet recovery has followed
quickly as the industry reliably returned to its long-term growth rate of approximately 5.0 percent
per year. Despite uncertainties, 2012 passenger traffic rose 5.3 percent from 2011 levels. This
trend is expected to continue over the next 20 years, with world passenger traffic growing 5.0
percent annually according to the Boeing Co. (Boeing)
1
. Air cargo traffic has been moderating
after a peak period in 2010. Air cargo contracted by 1.5 percent in 2012. Expansion of emerging-
market economies will foster a growing need for fast, efficient transport of goods. Boeing
estimates growth for the air cargo industry at the 5.0 percent level annually through 2032.
Commercial aviation continues a lengthy process of evolution, changing the way airports relate to
their airlines and communities. It has staggered between a series of periodic crises and has not yet
emerged from the cyclical economic events of the past several years including a spike in the price
of oil and a weak revenue / yield environment. New and increased federally mandated screening
measures have further eroded the airlines operational reliability and the overall passenger
experience. After more than a decade recording multi-billion-dollar losses, United States (U.S.)
airlines appear to be reversing their financial losses based on mergers, acquisitions and new
business models that charge passengers for certain cost recovery fees beyond those that are
required by federal governments. As the global economy rebounds, travel demand has risen,
pushing load factors to record levels. Net profits in the second quarter of 2013 were solid for
North American carriers in a quarter that was particularly affected in 2012 by higher fuel prices.
WestJ et recorded earnings of Canadian dollars (C$) $44.7 million making it its 33
rd
consecutive

1
Boeing Current Market Outlook, 2013 - 2032
quarter of profitability
2
. Air Canada posted an adjusted profit of C$169.0 million in the second
quarter of 2013
3
.
In the U.S., United Airlines (United) reported earnings of U.S. dollars (US$) $469.0 million
4
,
Southwest of US$224.0 million
5
, Delta of US$685.0 million
6
and US Airways of US$287.0
million
7
.
From 2000 through 2009, U.S. airlines lost about US$60.0 billion and eliminated 160,000 jobs,
according to the Airlines for America (A4A). During that tumultuous decade, airlines were hit
with a series of events beyond their control: two recessions, the September 11, 2001 attacks, an
avian flu outbreak and rising fuel costs.
The industry was profitable in 2000, 2006 and 2007, during cyclical economic peaks. Those
growth years were masking the industry's underlying problems including high operational costs
and an over-supply of capacity. During 2008 and 2009, airlines lost a combined US$23.0 billion.
During that same time period, the airlines began aggressive cost-cutting plans aimed at fixing
many of the systemic issues which kept them unprofitable. Some of the cost-cutting measures
they adopted to return to profitability included:
Eliminating money-losing flights: With a recovery in travel demand, airlines raised ticket
prices for the smaller supply of seats, which consequently raised yields.
Grounding older, less gas efficient airplanes: As of year to date (YTD) 2013, there
are more than 1,000 commercial airplanes parked at six airports in the southwestern U.S.
according to the Center of Land Use Interpretation. These aircraft include older types
such as DC-9s and older generation Boeing 737s as well as widebodies such as Boeing
747s and MD-11s.
Adding ancillary fees: In 2010, airlines collected more than US$6.3 billion from ancillary
sources such as checked baggage, on-board purchases and ticket change fees. In 2012,
airlines earned US$27.1 billion from these fees, increasing this line of revenue by 330.0
percent in two years
8
.
Consolidating: Delta Air Lines (Delta) purchased Northwest Airlines (Northwest) in
2008 and United and Continental Airlines (Continental) merged in 2010. American
Airlines (American) and US Airways merged on December 9, 2013, and it will take
approximately 12-18 months to merge their operating certificates. In the low-cost sector,
Southwest Airlines purchased AirTran Airways in 2010. Collectively, these changes put
upward pressure on airfares. Table I-1 summarizes the airline mergers since 2008.

2
WestJ et, Media and Investor Relations, www.westjet.com
3
Air Canada, Investor Relations, www.aircanada.com
4
United Airlines Inc., Investor Relations, www.united.com
5
Southwest Airlines Co., Investor Relations, www.southwest.com
6
Delta Air Lines, Inc., Investor Relations, www.delta.com
7
American Airlines, Inc. represent earning for former US Airways Group, Investor Relations, www.aa.com
8
TTG Asia Media Pte Ltd, June 10, 2013

Merging Carriers HQs
Value ($
billions)
Status Background
Chicago $3.20 Complete
On August 27, 2010, the U.S. Department
of J ustice approved the merger. Share
holders of both companies approved the
deal on September 17, 2010. The
transaction was completed on October 1,
2010. Both carriers began to merge
operations in 2011 and a single operating
certificate was issued fromthe FAA in
2012.
Atlanta $17.70 Complete
On September 26, 2008, shareholders
announced they had approved the merger.
After a six-month investigation,
government economists concluded the
merger would likely drive down costs for
consumers without curbing competition.
On October 29, 2008, the United States
Department of J ustice approved the
merger.
Dallas $3.10 Complete
On September 27, 2010, Southwest
Airlines announced they would acquire
AirTran Airways for a total cost of $1.4
billion. By April 2013, the carriers merged
their itineraries in all Southwest and
AirTran cities (domestic and international).
Southwest anticipates that the integration
will be complete in late 2014.
Dallas $14.10
Awaiting
Regulatory
Approval
On February 14, 2013, American Airlines
and US Airways Group announced that
the two companies would merge. The deal
is expected to close in the third quarter of
2013, however, on August 13, 2013, a civil
suit was filed by the U.S. J ustice
Department, six state attorneys general,
and the District of Columbia over antitrust
concerns of the merger. If approved,
bondholders of American Airlines' parent
AMR will own 72% of the new company
and US Airways shareholders will own the
remaining 28% .
Sources:
United; American; USAirways; Southwest; Delta; Washington Post; Bloomberg; Money-CNN
Table I-1
North American Airline Mergers - 2008 to Present
a) Commercial Aircraft Demand
Boeing has forecast a long-term demand for 35,280 new airplanes, valued at US$4.8
trillion from 2013 until 2022
9
. Their projections identify 14,350 of these new airplanes
(41.0 percent of the total new deliveries) for the replacement of older, less efficient
airplanes, reducing the cost of air travel and decreasing carbon emissions. The remaining
20,930 airplanes will be for fleet growth and expansion of low-cost carriers in emerging
markets. The latest available data from Airbus SAS (Airbus) estimates that between
2013 and 2032, 27,347 new airplanes will be delivered
10
. Both of the manufacturers
predict most of these new orders will originate from the Asia/Pacific region in countries
such as China, Indonesia and Malaysia. Bombardier and Embraer, manufacturers of
mostly regional jets under 100 seats, have forecast their aircraft demand estimates. Based
on new, next generation aircraft which both manufacturers are currently planning and
testing, Bombardier has estimated the demand for their aircraft (now defined as seating 20
to 149 passengers) at 12,800 units between 2012 and 2031
11
. Embraer (which defines
their aircraft as seating 30 to 120 seats) estimates aircraft demand in their segment to be
6,794 units
12
. Table I-2 and Table I-3 show the demand for new aircraft as forecast by
these manufacturers divided by global region.

9
Boeing Current Market Outlook, 2013 - 2032
10
Airbus, Global Market Forecast, 2013 - 2032
11
Bombardier, Commercial Aircraft, Market Forecast, 2012-2031
12
Embraer Commercial Aviation, Embraer Market Outlook, 2012-2031
Key Economic Indicators
Boeing
1
Airbus
2
World Economy (GDP) 3.2% 3.2%
Airplane Fleet 3.6% 3.5%
Airline traffic (RPK) 5.0% 4.7%
Cargo Traffic (RTK) 5.0% 4.9%
New Airplane Demand by World Region
Boeing
1
Airbus
2
Asia Pacific 12,820 9,618
Europe 7,460 5,701
North America 7,250 5,851
Middle East 2,610 1,906
Latin America 2,900 2,085
CIS 1,170 1,229
Africa 1,070 957
Total 35,280 27,347
Note(s):
1/ BoeingCurrent Market Outlook, 2013 - 2032
2/ Airbus Global Market Forecast, 2012 - 2031
Source(s):
Boeing; Airbus
Table I-2
Comparison of Boeing and Airbus Global Market Forecasts


Key Economic Indicators
Bombardier
1
20-149 Seat Aicraft
Embraer
2
30-120 Seat Aicraft
World Economy (GDP) 3.3% 3.1%
Airplane Fleet 2.1% 3.2%
Airline traffic (RPK) n/a 5.0%
New Airplane Demand by World Region
Bombardier
1
20-149 Seat Aicraft
Embraer
2
30-120 Seat Aicraft
North America 4,730 2,195
Latin America 930 670
Africa & Middle East 970 515
Europe, Russia & CIS 2,240 1,905
China 2,220 1,005
Asia/Pacific 1,710 505
Total 12,800 6,795
Note(s):
1/ Bombardier AerospaceMarket Forecast, 2013 - 2032
2/ Embraer Market Outlook, 2012 - 2031
Source(s):
Bombardier; Embraer
Table I-3
Comparison of Bombardier and Embraer Global Market Forecasts

b) Aircraft Orders
Boeing and Airbus logged US$129.0 billion in aircraft orders at the Paris Air Show in J uly
2013
13
. Airbus sold 466 planes worth US$69.0 billion and Boeing 382 aircraft valued at
US$60.0 billion. In order to meet demand, both Boeing and Airbus are boosting
production to respond to the risk of longer delivery times. Airbus is planning output of 50
A320 new-engine option (NEO) aircraft per month by the year 2020 from their standard
production level of 42 Airbus A320s. Boeing is increasing monthly output of 737 aircraft
to 42 by 2014 from 35 in 2012 and unveiled its Boeing 737 MAX family as the successor
to the current Boeing 737 Next Generation (NG) family. In May 2013, WestJet ordered
10 Boeing 737-800NG aircraft for delivery in 2014 and 2015
14
. In September 2013,
WestJ et announced a definitive purchase agreement for 65 Boeing 737 MAX aircraft with
deliveries commencing in 2017. Air Canada has outstanding orders with Boeing for two
additional 777-300ERs, 15 787-8s and 22 787-9s
15
. In December 2013, Air Canada
announced its intention to acquire up to 109 Boeing 737 MAX aircraft to replace its

13
Speed News, Penton Media Inc., June 20, 2013
14
WestJ et, Press Release, www.wesjet.com
15
The Boeing Company, Commercial Airplanes, Orders and Deliveries, www.boeing,com
Airbus narrowbody fleet and a portion of the Embraer 190 fleet. A definitive order is yet
to be completed between Air Canada and Boeing. Table I-4 shows Boeing and Airbus
orders for 2013 year-to-date.
2013 Boeing Aircraft Orders
1
737 747 777 787 Total
2013 Gross Orders 758 5 37 83 883
Changes -94 -5 -8 -1 -108
2013 Net Orders 664 0 29 82 775
737 747 777 787 Total
2013 Airbus Aircraft Orders
2
A320 A330 A350 A380 Total
2013 Gross Orders 817 11 104 0 932
Changes -36 0 -4 -40
2013 Net Orders 781 11 100 0 892
Note(s):
1/ Boeingorders through August 6, 2013.
2/ Airbus orders through July 31, 2012.
Source(s):
Boeing; Airbus
Table I-4
2013 Boeing and Airbus Aircraft Orders

c) International Air Transport Association Perspective
The International Air Transport Association (IATA) upgraded its global outlook for the
airline industry to a US$12.7 billion profit in 2013 based on projected revenues of
US$711.0 billion
16
. This is US$2.1 billion better than the US$10.6 billion profit projected
in March of this year and an improvement on the US$7.6 billion profit generated in 2012.
According to IATA, oil prices are expected to average US$108/barrel (Brent Crude) in
2014, a little below the US$111.8 per barrel average for 2012, in part due to increasing
supply from North America. The outlook for global economic growth has deteriorated
slightly since March as the recession in Europe has proven to be deeper than expected.
The beneficial impact of lower fuel prices is expected to offset the adverse effect of
weaker economic growth, providing a moderate boost to industry profitability. Load
factors are estimated to average 80.3 percent by 2014, which would be a record high.
Overall passenger capacity in 2014 is projected to expand to 4.3 percent, which is less than
the 5.3 percent anticipated growth in demand for 2013. The worldwide industry is
expected to see demand grow faster than capacity. The tight supply and demand
conditions, however, will not lead to improved yields. Passenger yields are forecast to
grow at a rate of 0.3 percent in 2013. Table I-5 shows the historical key revenue drivers
utilized in its global outlook.

16
IATA Economics, Outlook, Financial Forecast 2013

2007 2008 2009 2010 2011 2012Estimate 2013 Forecast
World GDP growth 3.8% 1.7% -2.3% 3.9% 2.6% 2.1% 2.2%
Passenger traffic growth 7.5% 2.7% -2.4% 8.8% 6.2% 5.3% 5.3%
Cargo traffic growth 4.7% -0.7% -8.8% 19.4% -0.1% -1.1% 1.5%
Passenger yield growth 1.7% 8.2% 13.7% 9.6% 5.0% 3.5% 0.3%
Passenger load factor 74.9% 76.0% 76.0% 78.4% 78.4% 79.2% 80.3%
Source:
IATA
Table I-5
Key Revenue Drivers of IATA 2013 Passenger & Freight Forecasts

d) Airline Alliances
There are few large network carriers globally that do not belong to an alliance. Airlines
such as Gulf Air and Virgin Atlantic, which do not belong to a global alliance, have
indicated that alliances have significant anti-competitive elements and that membership
would be an artificial brake on their business plans. According to British Airways,
alliances exist only because of restrictions on mergers for which the three main global
groupings are a poor substitute
17
. Alliances provide air carriers revenue synergies, but
consolidation often increases near-term operating costs for the individual airline and the
alliances.
There are currently three major airline alliances across the globe:
One World: 12 members
SkyTeam: 19 members
Star Alliance: 27 members
For customers, the advantages of airline alliances include through-ticketing, reducing the
need to be in a myriad of frequent flyer programs with reciprocal points earning
recognition of Frequent Flyer elite status by partner airlines. There have been several
interesting recent moves influencing the traditional airline alliances:
Delta (Sky Team) which owns 49.0 percent of Virgin Atlantic (non-aligned) has
announced a joint venture on U.K.-U.S. flights;
Qantas has recently shifted a significant amount of business from its OneWorld
partner British Airways to non-aligned Emirates;
Consolidations and mergers are shifting alliance memberships (example: the US
Airways - American merger means US Airways will leave Star Alliance for OneWorld
and Continental Airlines (Continental) left SkyTeam just before its United merger to
join Star Alliance;

17
Bloomberg L.P., April 11, 2013, www.bloomberg.com
In March, 2013, after the merger of LAN Chile (One World) and TAM (Star
Alliance), the joint venture, LATAM, announced they chose OneWorld as their
unified alliance of choice;
Lufthansa is almost its own alliance with its European airline subsidiaries: Austrian
Airlines, Brussels Airlines and Swiss Air Lines;
Virgin Australia has a codeshare relationship with Delta (Sky Team) as well as
Singapore Airlines (Star Alliance) and Air New Zealand (Star Alliance).
Alliances arguably bring revenue benefits to those involved. Nevertheless, examples
above show that secondary alliances and agreements by individual network carriers
outside of their alliance parameters are more frequent and may result in a shift in alliance
structures into the future. Low-cost carriers are increasingly joining alliances, GOL
Linhas Aereas of Brazil, will be joining SkyTeam and J etstar Airlines of Australia will
join OneWorld. Air Canada is a founding member of the Star Alliance and the Airport
serves as a hub for hundreds of daily connections under code-share arrangements between
Air Canada and its partner airlines. WestJ et is not part of an alliance as of 2013, but, does
have code-share relationships with American Airlines, Air France, British Airways,
Cathay Pacific, China Eastern, Delta, J apan Airlines, KLM and Korean Air.
e) Air Cargo Industry
Air transportation trade group associations including IATA have been cautious about the
air cargo industrys outlook. IATA warns of potential future issues with cargo growth
which may affect long-term demand including the slow-down of emerging markets and
recent oil price spikes which may continue into the future. The ability of airlines to match
cargo capacity to demand is limited by the natural growth in belly capacity that occurs as
airlines respond to passenger demand. Despite the overall positive signs, cargo markets
remain depressed with IATA revising its 2013 growth to 0.9 percent from a previously
projected 1.5 percent growth rate. Cargo revenues are expected to show an US $8.0
billion decline to US$59.0 billion from their peak in 2011. In comparison, passenger
revenues expanded by US$68.0 billion to US$565.0 billion over the same period
according to IATA
18
. This performance reflects the impact on demand of the oil price
spike associated with the Syrian crisis and disappointing growth in several key emerging
markets. Profits in 2013 will be considerably better than the US$7.4 billion net profit of
2012 and the upward trend should continue into 2014.
2. Drivers of Toronto Pearsons Future Activity
Fuel prices and the economy have been the leading concerns of airlines worldwide followed
closely by over-capacity according to IATA
19
. Fuel price increases have been steady following a
strong spike that occurred in 2008. The industry has managed to adjust to the increases, but often
at the price of profitability, where fuel accounts typically for around 30.0 to 40.0 percent of airline
costs. Capacity management and higher load factors, combined with higher yields, have made
profitability possible.

18
19
On the global economic front, Asia has remained robust and is gearing up for further growth
throughout the forecast horizon, even faced with a slower global economy. Increased air service
and new aircraft orders have all indicated a heavy focus on China and Southeast Asian growth in
the past decade. Europes economic uncertainty has lowered most major international stock
market indices and austerity measures will likely end in the short-term future. Major banks have
erected barriers to protect themselves from shocks, making funding and financing more difficult.
For full-service, legacy airlines such as Air Canada, tight capacity control and the capture of high-
yield, traffic has been key to keeping pace with its peer airlines in the U.S. The legacy airlines are
aware they cannot significantly narrow the operating cost gap between themselves and the Low
Cost Carrier (LCCs) levels. Capacity reductions remain as one of a few options to protect
against losses. Airlines have only a limited capability to protect themselves against rising fuel
prices. Hedging has been an expensive and risky option prompting airlines to limit this strategy.
It is becoming more difficult to hedge fuel prices over the long-term limiting the threat of
prolonged oil price increases. If oil prices were to increase another US$30.00, there is a real
prospect that airlines will substantially reduce flights, with long-haul operations the most sensitive.
In todays more intensely competitive, price-sensitive market, airlines have become much more
precise in analyzing marginal or loss-producing routes, and implementing selective capacity cuts.
The reduction of flight frequency where possible, or complete route withdrawal where necessary,
can occur quickly, as soon as losses begins. If oil prices were in fact to increase to US$130.00,
this could result in as much as 15.0 to 20.0 percent reductions in long haul seat offerings. This
would not be evenly applied. Route yield profile will be a main determinant, with the first seats to
go from the predominantly leisure routes to tourism-based destinations reliant on long-haul origin
markets. Eventually, lower cost airline models might fill the breach in these markets, but there is
no clear evidence yet that long-haul low-cost operations are effective beyond nine hours flying
time. At that stage, fuel becomes such a high proportion of cost that differentials in other cost
areas pale by comparison.
Short-haul airlines with markedly lower costs (LCCs and others) have expanded and even
flourished while the full-service airlines have stood still. Carriers based in the Middle-East are
growing as fast as any group of airlines in history on long haul and with their yield profile are
probably best equipped to handle any future economic impacts.
a) Air Canada
Air Canada is defined as a legacy carrier and has undergone different restructuring plans
since 2000 to reduce its high operating costs. Air Canada carries the majority of
international and high yield corporate business travelers from its hub at Pearson. Air
Canadas cost structure has made the company particularly vulnerable to regular operating
risks. In addition, as with most legacy carriers, Air Canada is highly unionized and
susceptible to wage concession negotiations and strikes. After several difficult years
marked by labor unrest, the carrier boosted profitability by recording US$55.0 million in
net profit for 2012, its first annual profit since 2007. According to Air Canada, overall
capacity will grow by approximately 9.0 to 11.0 percent in 2014, in part due to the
delivery of the carriers first seven Boeing 787s. In December 2013, the carrier
announced an agreement with Boeing for orders for 33 Boeing 737 MAX 8 and 28 737
MAX 9 aircraft for deliveries starting in 2017. Air Canada also negotiated options and
purchase rights for an additional 48 Boeing 737 MAX aircraft.
Air Canada is focusing on transporting more business travelers from the U.S. to final
destinations in Asia and Europe, by transferring them through Pearson, Montreal and
Vancouver according to Toronto Star Newspapers Ltd
20
. This strategy could potentially
generate an additional US$400.0 million in gross revenue for the carrier.
The airline is adding capacity on Boeing 767 and Airbus 319 aircraft to be used on Air
Canada Rouge, a leisure airline that began service to Europe and leisure markets in the
Caribbean, Mexico and Central America, on J uly 1, 2013. The leisure carrier, which has a
strategy of competing with established charter carriers like Air Transat and Sunwing
Airlines, started operations with four aircraft with the ability to expand its fleet to 50
aircraft by the end of 2015.
b) Low-Cost Carriers
LCCs have succeeded internationally due to reduced expenses, flexible work forces, and
strict debt-management. They are usually limited to regional routes, with minimal
international capacity. There is a recent trend that is based on a new business model that
incorporates popular international and national destinations that preserve a lower operating
cost structure. Both WestJ et and Porter began as LCCs, and have since expanded
significantly. WestJ et is no longer solely regional, offering some select international
flights, and Porter has been looking closer at Western Canada and the North-Eastern U.S.
WestJ et reported its highest quarterly earnings since its founding recording a net income
rise of 33.3 percent to C$91.1 million in the first quarter of 2013. That compared with net
earnings of C$68.3 million or C$0.49 per share in the same period in 2012. Total revenue
was up 8.6 percent to C$967.2 million in the first quarter of 2013 compared to C$891.0
million in the first quarter of 2012. WestJ et is in the process of selling its oldest Boeing
737-700NG aircraft while agreeing with Boeing to purchase 10 737-800NG aircraft, with
deliveries in 2014 and 2015. WestJ et has deferred the delivery of five Boeing 737-700NG
aircraft from 2014 and 2015 to 2016 and 2017
21
.
Encore, a regional airline based in Calgary and wholly owned by WestJ et, commenced
operations on J une 24, 2013, using a fleet of Bombardier Dash 8 Q400s. Encore initially
launched service from its Calgary to Fort St. J ohn and Nanaimo, both in British Columbia,
followed by Brandon, Manitoba. Encore will eventually have two bases, with the eastern
base at Pearson. The carrier has ordered 17 Dash 8 Q400s from Bombardier and currently
has options for 25 additional aircraft
22
.
Porter has evolved over the years from a traditional LCC to a hybrid LCC/full service
carrier. The carrier takes full advantage of its LCC business model, but holds a virtual
monopoly over Billy Bishop Airport (Toronto City Centre Airport) where they have low
landing fees and less expensive, non-unionized labor. As a growing company, Porter will
be challenged by cautious expansion at the risk of allocating a large percentage of its
resources too broadly.

20
Toronto Star Newspapers Ltd., December 18, 2012, www.thestar.com
21
WestJ et, Media and Investor Relations, www.westjet.com
22
WestJ et, Press Release, www.wesjet.com
c) Broad-Based Challenges
Some of the global challenges facing the Canadian air traffic industry include variable
operating costs such as fuel prices and corporate debt borrowing. Specific challenges
imposed by the Canadian government include fees and taxes passed directly to Canadian
air travelers such as the Federal Excise Tax on Aviation Fuel, which Canadian carriers
argue to be an advantage to U.S. carriers. Other Canadian taxes such as the air travelers
security charge introduced after the attacks of September 11, 2001, increased federal
treasury tax collection from travelers by approximately 20.0 percent between 2000 and
2005. Since 2005, these various taxes and surcharges have increased at a rate more
commensurate with overall economic growth.
There has been a significant degree of internationalization of major airlines through inter-
corporate alliances. The result of this could be a global stratification of airlines where a
few leading global carriers would form the first tier followed by a group of national
carriers as second-tier airlines. Most legacy hub carriers such as Air Canada operate with
code-share partnerships within and outside of their global alliances. WestJ et, which is not
a member of a worldwide airline alliance, has code-share agreements with nine global air
carriers and interlines (baggage transfer agreements) with an additional 24 airlines.
d) Industry Competition
Competition rules in the airline industry are significant relative to other sectors. Foreign
ownership limits do not exist to the same degree in things like media and television
competition in Canada. Publicly traded carriers like WestJ et and Air Canada are expected
to increase foreign ownership restrictions from 25.0 percent to 49.9 percent.
e) Canada-U.S. Relations
Canada and the U.S. are currently the world's largest trading partners and share the world's
longest border. Recent difficulties have included repeated trade disputes, environmental
concerns, Canadian concern for the future of oil exports, issues of illegal immigration and
the threat of terrorism. Trade between the two countries has continued to expand in both
absolute and relative terms for the last two hundred years, but especially following the
1988 Free Trade Agreement (FTA) and the subsequent signing of the North American
Free Trade Agreement (NAFTA) in 1994.
Canada and the U.S. have three significant issues/events to see through during the 2013
2014 period: a new U.S. ambassador to assume the post in Ottawa, the decision on the
Keystone XL Pipeline and reciprocal official state visits by Prime Minister Stephen
Harper and President Barack Obama. Each of these events is an important element in the
bilateral relationship between the two nations. This Report maintains that the political,
economic and trade relations climate between Canada and the U.S. will remain positive
and trade will continue to grow throughout the Forecast Period.
f) Fuel Costs
In 2012, prices climbed to approximately US$100.00 a barrel for Brent Crude despite a
soft international economy and relatively weak demand for oil. According to BP, crude
oil consumption in developed countries declined by 1.2 percent in 2012 to record low
levels since 1995, but overall global consumption grew by 0.7 percent
23
.
Uncertainty in unstable political regions such as the Middle East is one factor that is
keeping buyers and speculators from large investments. Instability is not unusual for the
Middle East region, but heightened tensions in Syria, Libya, Turkey and Egypt in addition
to demonstrations quickly assembled through social media in the region have prompted
caution in the investment markets for crude oil.
Most expectations are for fuel prices to remain around current levels for 2013 according to
the U.S. Department of Energy
24
. A fuel price spike in 2014 or beyond could force
airlines to further reduce capacity on marginally profitable routes or to withdraw
completely. In the past full-service airlines may well have persisted with ailing routes, but
todays heightened levels of competition are prompting a greater focus on the short-term
bottom line.
g) Airline Yield
The public data on airfares is very limited. Statistics Canada has published evidence that
Pearson has higher airfares compared to other Canadian airports as shown in Table I-6.
The airlines will be especially reluctant to reduce services at high airfare markets that
produce higher airline yields during a period of weak traffic. High airfare markets are less
vulnerable to problems associated with poor airline earnings and are the most likely to
attract competition, Torontos high airfares were likely part of the attractions that induced
WestJ et to transfer its eastern Canada hub from Hamilton to Pearson in 2004. High
airfares show the potential for traffic stimulation. Should Pearson receive even stronger
domestic competition, its relatively high airfares would fall, further stimulating traffic
growth.
An appreciating Canadian Dollar has and will continue to make the Airport more desirable
to foreign airlines. There is little data available publicly on average international airfare
levels.

23
BP, Energy Outlook 2030 booklet, www.bp.com
24
U.S. Department of Energy, Annual Energy Outlook 2013 - Energy Information Administration, www.eia.gov

h) Currency
The Canadian dollar will hold near current levels through 2013 while seeing a rebound to
parity with the U.S. Dollar by the end of 2014 according to CIBC World Markets Inc
25
.
Historically, the Canada economy fared better than most industrial nations, but still
experienced a serious recession in 2008 and 2009. As a result, the central bank pushed
interest rates to record lows. In Canada, natural resources still make up less than half of
exports, with manufactured products still hanging on to a major role. The country's top
exports are oil, vehicles/parts and machinery. Disappointing growth in China and a shift
in its mix towards less resource-using sectors like services, have had a limited effect on
the Canadian economy given that China's import share in oil, Canada's export
heavyweight, remains limited. Other countries like Australia, heavy producers of iron-ore
mostly exported to China, have experienced a fall in export prices as a result of greater
commodities reliance, and specifically to goods tied to Chinese demand.
Canada's oil reliance brings its own vulnerabilities and according to CIBC, economists
expect crude oil to average US$98.00 per barrel in 2014, helped by improving global
growth, even if politics in the Middle East temper. Canada faces a potentially more
favorable external environment in the coming year, given its significant ties to the
improving U.S. homebuilding market. CIBC forecasts that the U.S. economy could see a

25
CIBC Monthly FX Outlook - CIBC World Markets, October 2013
2011-Q3 2011-Q4 2012-Q1 2012-Q2 Average
Calgary 173.40 183.50 174.10 178.40 177.35 $
Edmonton 166.10 175.20 170.70 173.50 171.38
Halifax 173.50 186.20 186.60 184.00 182.58
Montreal 186.10 191.10 189.40 192.50 189.78
Ottawa 184.40 195.90 190.90 201.40 193.15
Regina 173.30 183.50 174.70 180.50 178.00
Saskatoon 178.10 185.90 185.50 190.60 185.03
Toronto 204.60 217.50 215.50 213.90 212.88
Vancouver 204.40 212.30 208.30 204.70 207.43
Winnipeg 180.20 197.10 189.60 189.40 184.90
Source:
Stats CDA CANSIM Table 401-0003 "Domestic Air Fares, Selected Cities of Enplanement"
Table I-6
Average Domestic Fares for Major Canadian Airports
noticeable acceleration next year and projects growth of 3.3 percent vs. 1.8 percent in
2013.
i) Liberalization
Canadas Blue Sky policy, announced in the fall of 2006, outlined a process to ease the
entry barriers on international air services and have brought tangible benefits to Pearson.
In 2008, Iceland Air inaugurated nonstop services from Toronto to Reykjavik. A March
2009 agreement with Turkey allowed Turkish Airlines to begin nonstop Toronto-Istanbul
flights, limiting the airline to three flights weekly. The spring 2009 agreement with Korea
allowed Korean Air to boost nonstop Toronto-Seoul services to a daily flight. The
December 2009 agreement with the European Union (EU) not only liberalizes air
services to nineteen nations; it extends a liberal agreement to eight EU member states that
previously lacked any air service agreement with Canada. The agreement largely
eliminates routing, pricing, capacity and carrier designation constraints. In August 2011,
Canada and Brazil concluded an open skies agreement. In September 2011, negotiations
with J apan concluded with a greatly liberalized agreement that became effective in 2013.
In 2011, successful Canada-Mexico and Canada-Costa Rica negotiations led to expanded
air service agreements. In 2013, Saudia and Egypt Air announced new nonstop routes to
Pearson following an easing of bilateral restrictions.
The process of international liberalization remains incomplete, and situation-specific
impediments remain. Bilateral agreements still constrain frequencies between Canada and
the United Arab Emirates, Turkey and other countries. The bilateral agreement with
Singapore creates liberal rights only for all-cargo and nonstop passenger flights. Between
2011 and 2013, a larger degree of liberalization towards foreign-investment rights in the
Canadian air traffic industry has occurred. Canada, however, has been faced with a
number of challenges that are not conducive to further liberalization including a heavy tax
burden and intense competition.
j) New Aircraft
With the advent of a new classification of aircraft identified as Group VI, along with new
and fuel-efficient Group IV and V airplanes throughout the forecast horizon, there will be
a large number of new aircraft taking flight, particularly in the next 10-year period. These
aircraft include the 555-seat Airbus 380 (Group VI), the 250 to 290 seat Boeing 787
(Group V) and the 315 seat Airbus A350 XWB (Group V). Most of these aircraft to date
have been sold to foreign flag carriers. In Canada, Air Canada holds orders and options
for 15 Boeing 787-8 and 22 Boeing 787-9 aircraft. In the U.S., American, United and
Delta have orders for 110 Boeing 787-8 and Boeing 787-9 aircraft along with 208 options.
US Airways (ordered prior to the American merger), United Airlines and Hawaiian
Airlines have orders for 53 Airbus A350-800 and Airbus A350-900 aircraft along with 56
options.
A new group of narrow body aircraft in development will enter service in 2014. The
Bombardier C-Series will seat between 110 and 130 passengers and will have two
variants, the CS100 and CS300. In April 2013, Porter signed a conditional order for 12,
with options for an additional 18, C-Series CS100 aircraft. In the U.S., Republic Airways
has already committed to purchase 40 CS300 aircraft.
Airbus will introduce a new version of its 320 aircraft named the NEO (new engine
option). The A320neo will have improvements in fuel burn, maintenance costs and will
gain additional range. These combined improvements are projected to result in 15.0
percent less fuel consumption, 8.0 percent lower operating costs and a reduced noise
production. Airbus has logged over 2,300 orders as of August 2013, and first delivery is
scheduled for 2016
26
.
Similarly, Boeing launched the 737 MAX family of aircraft as a replacement of the
previous Boeing 737 Next Generation (NG) family. It will be the fourth generation of the
Boeing 737 family. The primary change is the use of the larger and more efficient CFM
International LEAP-1B engines. The airframe is to receive some modifications as well.
The Boeing 737 MAX is scheduled for first delivery in 2017 Boeing has firm orders for
the 737 MAX totaling 1,495 as of J uly 2013
27
.
k) Regional J ets
It is expected that a trend towards larger regional jets will continue while most of the
smaller regional jets will be retired from the Canadian airline fleet throughout the Forecast
Period. While demand for 70 to 90 seat aircraft continues to increase, it is expected that
the number of 50 seat regional jets in service will fall, increasing the average regional
aircraft size in 2014 and beyond. Given a production halt of 50-seat regional jets by major
manufacturers such as Embraer and Bombardier and the average age of these aircraft
(Embraer 145/140/135 and Canadair CRJ -200s) slowly increasing throughout the forecast
horizon, the average increase in regional jet size will continue.
l) Aerospace Manufacturers - Bombardier
In late-November 2009, Bombardier announced they would have to cut 715 jobs in the
Montreal area because of lack of interest for buying aircraft
28
. Unlike the major carriers,
aerospace manufacturers are going to take much longer to bounce back. It will
undoubtedly take time for the major carriers to be in the position to place orders for new
aircrafts, and it could be two or more years before aerospace manufacturers catch up with
the rest of the industry with the exception of those with large military contracts. The Q400
Turboprop has been a successful aircraft given its great efficiency and lower price than the
new generation regional jets. Demand for the Q400 has been supported by a broad range
of orders from return customers of earlier versions of the Dash-8 such as J azz, as well as
carriers in European countries and the Middle East. Bombardier has been diversifying
their interests and recently has been talking to major Middle Eastern airlines about
supplying 100 to 149 seat C-Series jets. While these are good linkages to be establishing,
the opportunities to capitalize on these offers will not be realized until major airlines are
well into the recovery process.

26
Airbus, Aircraft Families A320neo, www.airbus.com
27
The Boeing Company, Commercial Airplanes, Orders and Deliveries, www.boeing,com
28
Air Transport World, November 30, 2009, www.atwonline.com
m) Conclusion
The Greater Toronto Areas (GTA) well-balanced and diversified economy, large
population base, and attractiveness as a business and tourist destination should continue to
provide strong demand for air transportation services over the Forecast Period. In
addition, stable fuel costs, increased airline competition both on the domestic and
international fronts as well as an appreciating currency will provide for traffic growth at
Pearson throughout the Forecast Period. The Canadian air carrier industry has responded
to this positive outlook with large wide-body, narrow-body and regional aircraft orders
and the creation of two new subsidiary carriers for domestic and international leisure
customers.
The GTA continues to be the largest gateway to Canada and a leading international
destination. The cultural and social ties resulting from immigration will create economic
development that will support future air service demand. These factors make the GTA a
desirable place in which to live, visit and conduct business. With growth expected in
population, employment and personal income, the GTA is forecast to generate continued
demand for air transportation service through the Forecast Period.
B. AIR CANADA LONG TERM AERONAUTICAL FEES AGREEMENT
29

On October 17, 2013, the GTAA entered into a Long Term Aeronautical Fees Agreement with Air
Canada (the AC LTA). Pursuant to the AC LTA, Air Canada will pay a fixed amount (subject to certain
adjustments as permitted under the AC LTA) to the GTAA in lieu of the GTAAs standard aeronautical
charges (normally comprised of landing fees, general terminal charges and apron fees). The key terms of
the AC LTA are summarized below.
1. Scope
The AC LTA covers the aircraft movements of Air Canada, its wholly-owned subsidiaries, third
party air carriers with whom Air Canada has or enters into capacity purchase agreements and other
arrangements as may be mutually agreed to be included in the scope of the AC LTA (Air Canada
Family Members).
2. Term
The AC LTA comes into effect J anuary 1, 2014, and covers an initial five year term expiring
December 31, 2018. The term will be extended automatically for a further five years expiring
December 31, 2023, provided that (i) Air Canada Family Members collectively meet an agreed
passenger volume threshold during the 2018 calendar year, and (ii) the AC LTA has not otherwise
been terminated prior to the expiry of the initial term. The GTAA may, at its option, elect to
extend the initial term for the further five year period notwithstanding the applicable passenger
volume threshold has not been met.

29
GTAA
3. Fees
The AC LTA provides for the payment by Air Canada of a fixed annual aeronautical base fee, plus
applicable sales or other commodity taxes, over the term (including any extended term). In 2014,
the fixed annual aeronautical base fee is approximately $270.0 million, which reflects Air
Canadas proportionate share of the GTAA is forecasted 2014 aeronautical costs expected to be
incurred by the GTAA at the Airport, which costs would otherwise be recovered by the GTAA
through the imposition of landing fees, general terminal charges and apron fees. In subsequent
years, including any extension of the initial five year term, the prior years fee escalates by
approximately one percent (1.0 percent) annually.
The fixed annual aeronautical base fee may be increased or decreased in certain circumstances,
including if the GTAA elects to adjust any one or more of its then current published aeronautical
charges payable by the remainder of the air carrier community at the Airport for any reason,
including (without limitation) adjustments to address:
Unbudgeted or unanticipated increases or decreases in the GTAAs revenues (other than
reductions pursuant to the payment of rebates under the AC LTA), costs or capital
expenditures;
Increases or decreases in the GTAAs costs arising from changes in or restructuring of the
manner of provision of certain services at the Airport which are currently paid by the
remainder of the air carrier community operating at the Airport directly to third party service
providers as third party service fees; or
Other adjustments which the GTAA determines will be necessary in order to manage the level
of GTAA indebtedness in accordance with its requirements and objectives.
In the above circumstances, the GTAA determines the amount of additional or reduced funds
that it requires to raise through its aeronautical charges. Air Canadas fixed annual
aeronautical base fee is then adjusted by its proportionate share of the additional or reduced
funds accordingly (based on Air Canadas share of 2013 aviation traffic). The proportionate
share percentage remains unchanged throughout the term of the AC LTA.
4. Airport Improvement Fee
The GTAA expressly retains its right to increase or decrease the Airport Improvement Fee at any
time during the term of the AC LTA in its sole discretion.
5. Rebates
For each calendar year of the term, the AC LTA establishes certain passenger traffic thresholds for
the Air Canada Family Members collectively. Provided that the Air Canada Family members
achieve the cumulative passenger threshold in a given year, Air Canada shall receive a rebate
calculated based on the additional revenues generated by incremental passenger growth at the
Airport in excess of the threshold.

6. Non-Exclusivity
The GTAA is not prevented from or restricted in entering into other aeronautical rate agreements
with other air carriers operating or proposing to operate at the Airport on the same or on different
terms, or from offering and implementing incentive programs regarding aeronautical charges in its
sole discretion. If the GTAA enters into a fixed fee contract with another air carrier exceeding
certain parameters, the base fee in such other air carrier must be not less than a specified
percentage of the GTAA forecasted revenues from that other air carrier during the term of that
other agreement. Where the GTAA wishes to engage in an incentive program to the air carrier
community regarding aeronautical charges, the GTAA shall publish its program on its website.
The GTAA shall also publish and adhere to its standard rates and terms with respect to other
commercial arrangements for air carriers at the Airport (such as employee parking and commercial
space rentals).
7. Reservation of GTAA Operational Rights
The GTAA retains all rights to operate the Airport in such manner, as it deems appropriate, both
with respect to its development decisions and with respect to the operational procedures and plans
concerning its facilities. The AC LTA expressly provides that Air Canada has no interest in any
gates, counters, terminals or other GTAA facilities and that the GTAA is not obliged to provide or
construct any infrastructure or improvements or implement any particular operating procedures.
8. Events of Default and/or Termination
The AC LTA provides for certain customary events of default and rights of termination, and
expressly provides for additional rights of termination in certain circumstances, including the
following:
Air Canada may terminate the AC LTA without liability of either party if, at the end of a
calendar year, the fixed annual aeronautical base fee for that year (net of any permissible
adjustments and rebate earned by Air Canada) is greater than the amounts that would have
been paid by the Air Canada Family Members collectively if they had been paying the
GTAA on the basis of its thencurrent published tariffs in respect of aeronautical
charges;
Air Canada may terminate the AC LTA without liability of either party if the GTAA fails
to deliver (a) by J une 16, 2014, a draft airport development plan, including the GTAAs
facility allocation procedures in respect of common use assets, provided that such
termination right must be exercised so as to terminate the AC LTA prior to or on
December 31, 2014, and (b) by December 31, 2015, certain related facility improvements
for common use assets or its written plan for doing so, provided that such termination right
must be exercised so as to terminate the AC LTA prior to or on December 31, 2016;
The GTAA may terminate the AC LTA effective on or after December 31, 2019, if the Air
Canada Family Members fail to achieve agreed threeyear rolling average passenger
volume thresholds, beginning with the 2017-2019 period; and
If the GTAAs Ground Lease is terminated for any reason and the AC LTA is not assigned
to the federal government, the AC LTA shall be terminated as of the date of termination of
the Ground Lease.
9. Service Level Standards
The AC LTA provides that Air Canada and the GTAA shall collaborate in the development of
certain specified service level standards which the parties have identified as being important to
customer service and the development of a global hub. The GTAA and Air Canada will develop
the relevant metrics over a period of six months, with the eventual goal of achieving top quartile
performance as compared to mutually agreed comparator groups of airlines and airports. The
service level standards will be measured and improvement plans will be developed collaboratively,
with remedies available to promote improved service performance. The GTAA will be obliged to
impose (i) commensurate service level standards on ground handling service providers operating at
the Airport and other air carriers with longterm fee agreements and (ii) commensurate non-
binding service level standards on other air carriers operating at the Airport. Any payments to
other air carriers under incentive programs will only be payable if the air carriers achieve a certain
standard of performance. Ground handling companies who fail to comply with the standards shall
be subject to termination by the GTAA in its discretion.
10. Assignment
The GTAA may assign its rights and obligations under the AC LTA, without the prior approval of
Air Canada, to any person which:
Is able to grant the same rights with respect to the Airport and the fixed annual
aeronautical base fees as are granted by the GTAA pursuant to the AC LTA; or
Is the counterparty to the Ground Lease with Her Majesty and is the operator of the
Airport, and the GTAA may encumber such rights by way of security or assignment as
security to its lenders.
C. FORECAST OF AVIATION ACTIVITY
The forecasts of total passengers, aircraft movements, MTOW and air cargo tonnage presented below were
developed by AXIS for the purpose of this Study. Annual, quarterly, monthly and weekly aviation activity
was analyzed in constructing a 10-year forecast of the Airports aviation demand and the longer-term
prospects that are reasonably expected and driven by conventional aviation demand-drivers (e.g.,
population and PCPI). The forecast methodology employed regression analysis (top-down), air service
analysis (bottom-up) and a qualitative approach predominantly observing system-wide industry trends.
The economic environment in 2013 was taken into consideration, particularly the volatile socio-political
climate in the Middle East and North Africa and continuing Euro Zone debt crisis and austerity measures.
The forecast was based on continuing aviation demand recovery in the Canadian, U.S. and international
markets. The forecasts assume that airlines will continue to stress cost controls and the unbundling of
products and services, which were normally included in ticket prices in the past (i.e., checked-luggage
fees, onboard snacks for sale etc.). Pro-competitive policies will force the airlines to pass savings on to
customers and shippers.
Key assumptions for the Forecast Period include:
Long-term population growth will provide the basis for aviation demand in the GTA.
Pearson will remain the principal airport serving the GTA and will remain a competitive gateway
for international travel through the Forecast Period.
The GTA will remain a leading center of industry, innovation, education, and culture and will be
an important influence in the growth of international air traffic.
Domestic air carriers will face a competitive environment, resulting in average airfares that will
remain reasonable; low cost air carriers will maintain their presence at the Airport and grow at a
moderate rate.
Transborder routes will be adversely affected during the Forecast Period by a slowly recovering
U.S. economy.
Both transborder and international travel may grow due to international airline competition and
new trade liberalization. New travel opportunities should increase air service at Pearson.
Reform and liberalization of international aviation agreements on market entry will continue. The
most important agreements have already been liberalized. Restrictions on bilateral agreements
will continue to constrain growth at Pearson on a very case-specific basis.
Fuel supplies will remain available for air transportation, and the cost will be subject to short-term
volatility.
Aircraft will become more fuel efficient, quieter and more cost effective with lower emissions,
thereby reducing airline operating costs while increasing reliability.
1. Fleet Mix
The current fleet mix at Pearson, according to a published schedule provided by the GTAA via
Sabre Airline Solutions for a peak schedule in August 2013, is comprised mainly of narrow body
aircraft. The average number of departing seats per aircraft movement is 114 and the largest
number of departures is performed by the Bombardier CRJ -200 at 9.4 percent of total movements.
It is assumed that the fleet mix at Pearson will change throughout the forecast horizon with a
reduction in 50-seat regional jets and 37-seat DeHavilland Dash-8 aircraft and be replaced by
larger capacity aircraft types such as Embraer E-J ets, Canadair C-Series aircraft and Bombardier
Q-400 turboprops. Narrow body aircraft currently dominating the Airports fleet mix include the
Airbus 320, 319 and the Boeing 737-700 NG (accounting for 26.6 percent of the current fleet
mix), the majority of which comprise the domestic and regional fleets of Air Canada and WestJ et.
Most of these aircraft average a low to medium fleet age are optimally sized and have the best
flight economics to continue comprising the bulk of Pearsons fleet mix. Wide bodies comprised
10.1 percent of Pearsons total fleet mix in 2013. These aircraft are predominantly operated by Air
Canada to long-haul international destinations in Europe, Latin America and the Far East.
Additionally, the Airport hosts 32 foreign air carriers, excluding U.S. carriers, the majority of
which operate wide bodies including Boeing 777s, Airbus 330/340s and Boeing 787s to the
Airport. Table 1-8 shows the 2013 peak month average weekday fleet mix at Pearson.

Aircraft Type 2013 Fleet Mix Share (%)
Canadair Regional J et 9.4%
Airbus A319 9.1%
Airbus A320 9.0%
Boeing 737-700 8.6%
De Havilland DHC-8-100 Dash 8/8Q 8.5%
Embraer ERJ -190 7.6%
Boeing 737-800 5.9%
Beechcraft Beech 1900D 4.4%
Canadair Regional J et 700 3.9%
Boeing 737-600 3.7%
Boeing 767-300 3.3%
Airbus A321 3.1%
BOEING 777-300ER 1.7%
Embraer ERJ -135/140/145 Regional J etF21 1.5%
Airbus A330-300 1.0%
Airbus A330-200 0.9%
Airbus A310-300 0.9%
BOEING 777-200LR 0.7%
Embraer ERJ -145 Regional J et 0.7%
Boeing 777-200ER 0.3%
Boeing 787-8 0.3%
BOEING 747 Freighter 0.2%
Airbus A340-300 0.2%
Airbus A340-600 0.2%
Boeing 747 Combi 0.2%
Boeing 757-200 0.2%
Boeing 767-200 0.2%
Boeing/McDonnell Douglas MD-11 0.2%
Embraer ERJ -140 Regional J et 0.2%
Note(s):
1/ Design Day Schedule for August 15, 2013.
Source(s):
GTAA; Sabre Airline Solutions
Table I-7
2013 Peak Month Average Weekday Fleet Mix
2. Econometric Approach (Top Down)
Air transportation demand is derived from the demographic and economic profile of a region.
Origin & Destination (O&D) passengers are those passengers who arrive at or depart from an
airport; they do not change aircraft at the subject airport. The total number of O&D passengers is
a reflection of a regions attractiveness as a place in which to live, visit, work, and conduct
business. The majority of Pearsons passengers are considered O&D (approximately 70.0 percent
in 2013). With a large number of total passengers, the Airport has a sizeable connecting or
transfer passenger presence expected to equal approximately 10.5 million passengers in 2013. The
Airport serves a major connecting point for both Air Canada and WestJ et and connects numerous
international-to-domestic/transborder passengers via code-share agreements with the Star Alliance
network of carriers.
AXIS reviewed and tested the GTAA forecast using a methodology that has been successfully
used and accepted by most major airports, Transport Canada and the FAA linear regression. The
methodology involves collecting and analyzing historical data and uses standard statistical
techniques to identify relationships between elements of historical information, which can then be
used to project future activity.
Historical enplanement data (the independent variable) was paired against socio-economic and fare
data (the independent variables) to establish a statistical relationship between the demographic and
economic variables and the demand for air travel. With this mathematical relationship (the
regression equation) established, the forecast of demographic variables and airline yield were used
to project future levels of passenger activity.
3. Air Service Approach (Bottom-Up)
After calculating passenger growth rates via an econometric approach, a fleet-mix forecast using a
2013 peak month average week day schedule was developed for Pearson. The schedule, obtained
from the GTAA via Sabre Airline Solutions, looked at an average day in the peak month giving
planners a good indication of what the operational conditions would be at the Airport during the
busiest season of the year. This baseline schedule was then calibrated by applying load factors and
further annualized to reflect near actual annual volumes. Using this baseline schedule and using
air service principles, current industry outlook reports and future aircraft orders, a fleet mix
forecast was constructed for 2018 and 2023. All the changes made in the fleet mix forecast were
documented for discussion purposes and to allow for further revisions and calibration. Airline
planners frequently forecast their future activity through a bottom-up exercises which look at flight
activity based on fleet mix, market growth and competitive assumptions.
4. Qualitative Approach
The qualitative approach is associated with the subjective quality of Pearsons operations and
requires the expertise of an aviation analyst to document and follow trends of air service activity
and growth at the Airport. The qualitative approach did not require quantification as the
knowledge gained was through the observation and experience gained by AXIS and through
conversations with GTAA staff.
Some of the observations included the following:
WestJ et has signed a letter of intent to purchase 65 Boeing 737 MAX aircraft, comprising
40 Boeing 737 MAX 8s and 25 Boeing 737 MAX 7s; the order is valued at US$6.3 billion
and is a key component of the carrier's strategy to optimize and modernize.
WestJ et Encore, the new turboprop regional affiliate of WestJ et, launched operations with
a fleet of Bombardier Q400s in 2013;
WestJ et ordered 20 Q400s plus 25 options and envisions Encore eventually covering all
of Canada; the regional will be focused on serving western Canadian destinations in the
short-term and will serve Pearson in the medium-term.
Air Canada selected the Boeing 737 MAX family to replace its fleet of Airbus narrowbody
aircraft and a portion of its Embraer 190 fleet. Air Canada plans to acquire up to 109
Boeing 737 MAX aircraft, with deliveries commencing in 2017. The order is subject to
completion of a definitive purchase agreement.
Air Canada will commence deliveries of the 251-seat Boeing 787-8 Dreamliner aircraft
during 2014.
Air Canadas new leisure airline, Rouge, launched new service to holiday spots in Europe
and the Caribbean departing daily from Toronto and Montreal; service was launched on
J uly 1, 2013.
Air Canada has completed the transfer of all 15 Embraer E-175 aircraft to Sky Regional
Airlines; under a capacity purchase agreement, Sky Regional now operates 20 aircraft on
behalf of Air Canada.
Air Canada is looking to transfer the operation of some Canada-U.S. transborder regional
flights from Chorus Aviation Inc.s J azz to another regional carrier, in an effort to cut
costs; a Request for Proposal (RFP) is out for regional carriers to take over the operation
of some existing, short, cross-border routes.
New international air service from Pearson in 2013 includes the following carriers:
o Saudia to Riyadh, Saudi Arabia.
o Aer Lingus service to Dublin, Ireland (commences in 2014)
o Egyptair to Cairo, Egypt.
5. 2014 2023 Passenger Discussion and Forecast
Total Airport passenger volume grew from 28.6 million in 2004 to an estimated 35.6 million in
2013, reflecting an average annual compound growth rate of 2.5 percent (see Table I-8).
Although economic factors will constrain the Airports traffic growth, the forecasts reflect and
expect no significant, disruptive, non-recurring events such as SARS or September 11, 2001.
Total passenger volumes have been projected through 2023, reaching an estimated 47.0 million
passengers. During the Forecast Period, total passengers are estimated to increase at an average
annual compound growth rate of 2.8 percent.
Passenger traffic within the Canadian domestic market, the largest segment, is expected to
continue to expand on the strength of the GTA economy and the strong competition between Air
Canada and WestJ et. This segment, however, is mature. In the absence of a sharp increase in
competition and a consequent reduction in fares, domestic traffic is projected to experience an
average annual compound growth rate of 2.2 percent over the Forecast Period
Transborder passengers (Canadian-U.S. local travel plus the international destination passengers
who use Toronto or a U.S. gateway as transit points) will display moderate long term growth. The
recovering U.S. economy and rising real estate prices will help fuel this growth.
During the Forecast Period, the transborder passenger traffic market is projected to increase from
an estimated 9.9 million passengers in 2014 to 12.7 million passengers by 2023, at an average
annual compound growth rate of 2.8 percent. The expansion by Air Canada and the longer term
strategic transborder operations of WestJ et and U.S. based airlines will promote growth, especially
in origin-destination markets. The GTA is a prime candidate for transborder service by a U.S. low
cost carrier such as Virgin America, J etBlue and Southwest Airlines. Should such an airline begin
services to the Airport, transborder traffic may significantly exceed the Forecast.
During the Forecast Period, the Airports international passengers are projected to increase from
an estimated 12.5 million passengers in 2014 to approximately 16.9 million in 2023. This growth
reflects an average annual compound growth rate of 3.5 percent. International traffic, which
represented an estimated 34.0 percent of total Airport passengers in 2013, will account for 36.0
percent by 2023.

Year Domestic Transborder International Total
2004 12,636,748 8,422,537 7,556,696 28,615,981
2005 12,906,457 8,803,505 8,204,788 29,914,750
2006 13,309,531 8,906,324 8,578,726 30,794,581
2007 13,743,920 8,869,494 8,832,785 31,446,199
2008 13,812,866 8,805,898 9,716,067 32,334,831
2009 12,730,047 8,074,027 9,564,455 30,368,529
2010 12,730,680 8,628,851 10,576,567 31,936,098
2011 13,078,513 8,979,103 11,377,661 33,435,277
2012 13,646,163 9,464,858 11,800,829 34,911,850
2013 14,097,670 9,732,809 11,777,024 35,607,503
2014 14,304,797 9,903,321 12,470,849 36,678,966
2018 15,172,017 11,071,472 14,761,963 41,005,452
2023 17,402,824 12,699,358 16,932,478 47,034,661
2004-2013 1.2% 1.6% 5.1% 2.5%
2014-2018 1.5% 2.8% 4.3% 2.8%
2018-2023 1.4% 1.4% 1.4% 1.4%
2014-2023 2.2% 2.8% 3.5% 2.8%
Source:
GTAA for historical data, consultant analysis for forecasts
Table I-8
Total Passenger Forecast
Total Passengers
Average Annual Compound Growth Rates
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2018 2023
Domestic Transborder International
6. 2014 2023 Aircraft Movements Discussion and Forecast
Air traffic growth, airline competitive strategies, long term airframe equipment trends, yield-load
factor relationships and aircraft configuration data together generated forecasts of the number of
aircraft movements (seeTable I-9). Total movements are expected to increase more slowly than
passengers because the average size of aircraft utilizing Pearson is expected to grow, and average
load factors are expected to increase. The movements forecast has assumed that transborder and
international activity will grow more rapidly than domestic movements. The estimates of
movements and fleet types serve as the bases for forecasting of MTOW, which is in turn used to
calculate airline landing fees (see Chapter III). Total aircraft movements are expected to increase
over the Forecast Period, from an estimated 451,538 in 2014 to 532,374 in 2023. This corresponds
to an average annual compounded growth rate of approximately 1.9 percent. Scheduled and
charter operations will increase at an average annual compound growth rate of 2.0 percent, and
general aviation will remain unchanged for the entire Forecast Period.
7. 2014 2023 Maximum Take-Off Weight Discussion and Forecast
Total MTOW is anticipated to increase from an estimated 14.4 million metric tonnes in 2014 to
18.1 million metric tonnes by 2023, reflecting an average annual compound growth rate of 2.6
percent (see Table I-10). The MTOW forecast is based on the anticipated growth in passengers
and aircraft movements, and therefore follows a similar growth trend. Capacity limitations at
many destination airports and airline efforts to reduce costs per available seat-mile will favor
larger aircraft which operate on most routes. This trend will drive a portion of the increase in
MTOW over the forecast horizon. Bilateral agreements that impose flight frequency restrictions
may encourage airlines to use larger equipment. They were a factor in Emirates Airlines decision
to deploy the Airbus A380 on its Dubai-Toronto flight, limited by the applicable bilateral to three
flights per week.
8. 2014 2023 Air Cargo Discussion and Forecast
Approximately half of Canadas air cargo moves through Pearson with a value exceeding over
$30.0 billion. The Airport is expected to handle 496,397 tonnes of air cargo in 2014, increasing to
637,892 tonnes in 2023, increasing at an average annual compound growth rate of 2.8 percent (see
Table I-11). This forecast is based on cargo activity calculated by GTAA methodology and
validated by AXIS using Statistics Canada and econometric data. Carriers have largely eliminated
wide body aircraft on domestic routes, sharply reducing air freight capacity. The forecast assumes
passenger airlines will replace the regional jets flying most transborder routes with aircraft offering
larger air cargo capacities. Air cargo is expected to remain a growth market particularly for the
integrated carriers. In 2010, UPS Canada opened a US$70.0 million expansion of its Toronto
distribution centre. The 463,024 square foot facility handles air and surface traffic.


Year Carrier General Aviation Total
2004 354,828 48,950 403,778
2005 356,007 53,394 409,401
2006 367,263 50,669 417,932
2007 370,198 55,302 425,500
2008 385,200 45,400 430,600
2009 370,900 36,800 407,700
2010 381,100 37,200 418,300
2011 388,400 40,400 428,800
2012 396,700 37,200 433,900
2013 406,599 40,000 446,599
2014 410,538 40,000 450,538
2018 445,326 40,000 485,326
2023 492,374 40,000 532,374
2004-2013 1.5% -2.2% 1.1%
2014-2018 2.1% 0.0% 1.9%
2018-2023 0.9% -3.2% 0.5%
2014-2023 2.0% 0.0% 1.9%
Source:
Total Aircraft Movements
Table I-9
Aircraft Movements Forecast
0
100,000
200,000
300,000
400,000
500,000
600,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2018 2023
Carrier General Aviation

Year MTOW
2004 11,993,764
2005 12,006,994
2006 12,154,790
2007 12,456,550
2008 13,662,730
2009 12,855,528
2010 13,233,730
2011 13,882,679
2012 14,110,742
2013 14,038,198
2014 14,361,077
2018 15,590,611
2023 18,090,810
2004-2013 1.8%
2014-2018 2.1%
2018-2023 1.9%
2014-2023 2.6%
Source:
Table I-10
Maximum Takeoff Weight Forecast
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
2004 2005 2009 2010 2011 2012 2013 2014 2018 2023

Year
Total Air Cargo
Tonnage
2004 295,698
2005 432,564
2006 447,154
2007 441,804
2008 445,500
2009 397,400
2010 447,300
2011 417,000
2012 417,000
2013 479,553
2014 496,397
2015 509,002
2016 526,244
2017 541,765
2018 558,335
2019 573,410
2020 588,893
2021 604,793
2022 621,122
2023 637,892
2004-2013 5.5%
2014-2018 3.0%
2018-2023 1.6%
2014-2023 2.8%
Source:
GTAA for historical data, GTAA andconsultant analysisfor forecasts
Table I-11
Air Cargo Tonnage Forecast
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
2004 2005 2009 2010 2011 2012 2013 2014 2018 2023
The passenger airlines, in conjunction with forwarders, customs brokers and other entities, will
continue to offer air freight services. Merchandise will occupy otherwise unused belly space of
passenger flights. Wide body aircraft will remain especially attractive for air freight, as they offer
a significant quantity of capacity, and the crucial qualitative factor of containerization. On some
routes such as Asia-North America, pure freighter aircraft serve very high volume markets that
cannot be satisfied by by-product belly space. The strong directional imbalance, with airborne
imports from Asia greatly exceeding outbound traffic, will continue to constrain traffic. The
Pacific routes will continue to require all-cargo capacity. Pearson will continue to receive its
share of pure freighter operations to international destinations with an outlook of strong growth in
the medium-to-long term.
Chapter II Airport Capital Program and Major Initiatives 32
II. FUTURE AIRPORT CAPITAL PROGRAMS
The following section describes the major Airport Capital Programs (the Programs) intended to be
planned, designed constructed and placed into operation during the Forecast Period. Certain Capital
Projects (the Projects) have been already approved by the GTAA Board. Other Projects are under
review by the GTAA Boards sub-committees for evaluation in achieving the Airports long-term
objectives. For purposes of this Report, it is presumed that all Programs and the underlying Projects will
be approved and funded as shown in Table II-1 below.
A. TERMINAL 3 ENHANCEMENT PROGRAM
The Terminal 3 Enhancement Program is intended to increase Terminal 3s passenger and baggage
processing capacity, improve customer experience, improve passenger facilitation and connection flow,
enhance the retail layout and offerings and address regulatory requirements relating to baggage security
screening and U.S. Customs and Border Protection. The program also includes a restoration of a
component of the Terminal 3 facility, as well as improving the energy efficiency of the terminal. In 2012,
$0.4 million was expended on this program and in 2013, $9.8 million was expended to commence
planning and design efforts on retail improvements, upgrades related to regulatory requirements and
energy efficiency. In addition, a number of asset restoration initiatives were also completed in 2013.
The Terminal 3 Enhancement Program had an original approved capital budget of $406.8 million. As
part of the Corporations 2013 strategic direction review, the capacity elements of the Terminal 3
Enhancement Program were reviewed and the program has been modified accordingly. The revised
capital budget for the Terminal 3 Enhancement Program is $141.3 million and includes the following
projects:
1. Retail improvements and related modifications to check-in and security screening layout;
2. Energy efficiency improvements;
3. Restoration of Pier A (formerly referred to as the Terminal 3 Satellite);
4. Improvements to baggage induction facilities and baggage screening system conversions;
5. Other general refurbishment items.
Projects that will be scoped further in 2014 include expansion of the restoration program, relocating
security in advance of US Customs and Border Protection, additional baggage system improvements and
improved facilitation of passenger connections.
B. TERMINAL 1 ENHANCEMENT PROGRAM
As part of the Corporations 2013 strategic direction review, infrastructure projects for improvements to
Terminal 1 were identified and include:
1. Improved facilitation and flow for passengers connecting from international locations to
domestic and transborder destinations;
2. Addressing regulatory requirements relating to baggage security screening; and
3. Relocating security in advance of U.S. Customs and Border Protection.
Chapter II Airport Capital Program and Major Initiatives 33
Chapter III-Financial Analysis 34
The full scope of these projects will be developed in 2014.
C. AUTOMATED PEOPLE MOVER PROJECT
The GTAA increased the carrying capacity of the Automated People Mover train (the LINK Train) by
adding a seventh car to each of the GTAAs two LINK Trains and constructed associated platform
modifications to accommodate the additional traffic when the Union Pearson Express train commences its
service. The LINK Train project has an approved budget of $20 million, of which $15.2 million was
spent in 2013. Some additional station and way finding work will be completed in 2014 at an estimated
cost of $1.8 million.
D. MAINTENANCE AND RESTORATION CAPITAL PROGRAM
The GTAA undertakes an ongoing program to improve, restore or replace certain capital assets. During
2013, the GTAA expended approximately $90.0 million with respect to restoration capital primarily to
upgrade, refurbish or replace existing facilities.
E. FUTURE DEVELOPMENT
The timing and phasing of infrastructure investments will be established with reference to both demand
and affordability. The timing of capital investment in capacity is a function of demand and the associated
service levels, per the Aviation Growth and Operational Excellence pillars of the Corporations 20-year
strategic framework, as well as available cash flow for development, per the Corporate Sustainability
pillar of the Corporations strategic framework.
Airside
The key capacity limiter for the Airport is the capacity of its airfield to accommodate aircraft
traffic. Therefore, increasing the capacity and the efficiency of the airfield is the first planning
priority for the Airport.
Airside facilities must not only accommodate the growth but must also provide for increased
reliability of operations in all weather conditions.
A fourth East-West runway is not anticipated to be required to handle growth within the 20-year
strategic planning horizon. Passenger growth will be accommodated by increases in the average
aircraft size in the fleet, increases in average number of passengers per aircraft (load factors) and
spreading of the traffic throughout the day (lengthening of the peak period).
The key question for the Airside system is how to increase the capacity of the North-South
runways from 68 movements per hour and reduce the imbalance from the capacity of the East-
West runways, which are 90 or more movements per hour. This imbalance causes significant
operational delays when traffic shifts from East-West operations to North-South as a result of
changes in weather. The inconvenience and delays to passengers will be magnified as traffic at
the Airport grows.
The 20-year Airport Infrastructure Plan provides for increased North South runway capacity to be
delivered in stages.
The specific nature of additional de-icing capacity has not yet been confirmed; however,
provision is included for future investment in enhanced deicing capacity in the Infrastructure
Plan.
Terminals
Following the determination of infrastructure requirements to maximize the capacity of the
airfield, the next priority is to enhance the flow of aircraft, passengers and their baggage. This
flow will be a function of three things:
Terminal and apron design;
Technological innovation and development; and
Desired customer service levels.
For the Terminals, an analysis and review of future aircraft stand demand has confirmed that
additional apron, and land for that apron, will be required in the long term Lands already reserved
in the 2008 Master Plan for Terminal 1 apron expansion and reallocation of existing hangar lands
immediately West of Terminal 3 will be required for Terminal 3 apron expansion.
Longer-term growth in wide-body aircraft stand capacity to serve the International sector can
only be accommodated at Terminal 1. Longer-term growth in narrow-body aircraft stands
serving the Domestic and Transborder travel sectors, can be accommodated at both Terminal 1
and Terminal 3.
It was determined that in the longer term, the terminals should be operated in a more integrated
manner and accordingly that an airside link between the terminals would be required. This will
provide the Corporation with additional flexibility and opportunity to gain efficiencies through
the effective management of existing capacity and to forestall capital developments. Additional
studies will be undertaken in 2014 to determine the concepts and technology for an airside link
and confirm a project cost estimate.
The timing for the addition of new terminal concourses, with additional contact stands and
associated apron and baggage system expansions, is based on both demand and available cash
flow for capital investment and takes into consideration the International Air Transport
Association planning standard which provides that no more than ten percent of annual passengers
should be processed with remote aircraft stands.
In the near term, growth in aircraft stand supply will be accommodated through the
reconfiguration of existing contact aircraft stands at Terminals 1 and 3 as well as the re-activation
of the Terminal 3 Satellite.
Groundside
The key questions for the Groundside component of the Airport Infrastructure Plan relate to:
The location of a future transit hub, requirement and timing for additional parking
capacity and longer term access road capacity.
The Corporation will undertake more detailed planning work relating to the Groundside
component of the Airport Infrastructure Plan in 2014. Provision for related capital investment
has been made within the capital plan included in the Corporate Sustainability Strategy.
III. FINANCIAL ANALYSIS
This chapter presents an overview of the financial structure of the GTAA and the historical and forecast
financial results for the Airport. It was prepared to analyze the Airports ability to generate sufficient
revenues during the Forecast Period to permit the GTAA to make payments for operating and
maintenance expenses, debt service requirements, fund deposits and coverage requirements. A financial
analysis that covers revenues, expenses, capital costs, debt service, airline requirements and forecast
airline costs per enplaned passenger through the Forecast Period is also included.
A. AIRPORT FINANCIAL STRUCTURE
This section provides an overview of the GTAAs fiscal authority. It contains a description of the key
provisions of the Master Trust Indenture dated December 2, 1997, between the GTAA and the BNY Trust
Company of Canada (the Indenture), an outline of the flow of funds and the requirements for issuing
additional Bonds (Additional Issue Test) and Completion Bonds. A discussion of the airline rates and
charges methodology from which the Airports revenues are derived is included.
1. Rate Covenant
In addition to specific covenants contained in the Series Supplements, the following covenants
apply to the GTAA and its Designated Subsidiaries under the Indenture:
The GTAA and its Designated Subsidiaries shall establish and at all times maintain rates, rentals,
charges and fees for the use of the Airport and for services rendered by them (the Rate
Covenant) so that:
(a) Revenues in each Fiscal Year will be at least sufficient to make (a) all required debt
service payments (other than capitalized interest and sums otherwise provided for) and
deposits in Funds in such Fiscal Year with respect to any of the outstanding Indebtedness,
any Subordinated Debt and any general obligations issued by the GTAA; and (b) all other
payments required to be made by the GTAA in the ordinary course of its business,
including Ground Lease payments to Her Majesty the Queen in Right of Canada,
payment of all O&M Expenses and payments due under any capital leases and Purchase
Money Obligations and payments on Subordinated Debt; and
(b) Net Revenues, together with any Transfer from the General Fund, in each fiscal year will
be at least equal to one hundred twenty-five percent (125.0 percent) of the Annual Debt
Service for such fiscal year.
In the event that Net Revenues for any fiscal year are less than the amounts required by
clause (b) above, the GTAA shall promptly take all lawful measures to revise its schedule
of rentals, rates, fees and charges as may be necessary to increase Net Revenues together
with any Transfer, to the amounts required by clause (b) above. In this regard, GTAA
will not be in default under the Indenture if, after taking such measures, it is in
compliance with this covenant by the end of the next fiscal year.
2. Rates and Charges Methodology
The GTAA has established a rates and charges methodology for its aeronautical revenues, under
which the Airports AIF Revenues less aeronautical related Operating Expenses (Operating
Expenses), including O&M Expenses, Ground Lease payments and PILT, in addition to non-
operating expenses such as debt service, fund deposit requirements and certain capital
expenditure items are recovered for each fiscal year. Non-Aeronautical Revenues (Non-
Aeronautical Revenues) are managed separately on a commercial basis. The GTAA sets
Aeronautical Revenues, comprising of airside fees, terminal rentals for exclusive use space and
general terminal charges, at rates designed to ensure that projected Operating Expenses and
defined capital expenditures are fully recovered. Any differences between actual receipts and
expenditures and amounts estimated for the calculation of fees, rentals and charges in a fiscal year
could result in adjustments to airside fees or general terminal charges during the fiscal year.
In 2014 and 2015, the GTAA intends to maintain its aeronautical fees for other air carriers
operating at the Airport at the 2013 levels in order to provide some price certainty for existing
and potential new air carriers. However, the GTAA retains the right to set fees as required and, if
over this period circumstances should vary from the GTAAs expectations, the GTAA may alter
its fees to ensure that its revenues are sufficient to cover its obligations.
3. 2013 Changes to Rate Setting Methodology
Effective J anuary 1, 2013 (February 1, 2013 in the case of the apron fee), the GTAA
implemented its aeronautical fees for 2013. The combined impact of the aeronautical fee changes
was a reduction of approximately 10.0 percent in overall aeronautical fees charged compared to
2012 overall aeronautical fees when measured as the average air carrier cost per enplaned
passenger.
In 2012, the GTAAs aeronautical revenues comprised the following: the landing fee based on the
aircrafts MTOW, the general terminal charge based on the number of seats of an arriving
aircraft, the turnaround fee charged for the use of terminal facilities to gate aircraft and the
counter fee charged for the use of check-in counters in the terminals.
Beginning in 2013, the GTAA transitioned from a residual rate setting methodology to a rate
setting methodology that targets levels of cash flow sufficient not only to fund operating expenses
and maintenance and restoration capital expenditures but also, in most years, to fund other capital
investments and debt repayment.
As part of this transition, the GTAA made significant changes in its aeronautical fee regime for
2013. The landing fee and general terminal charge remain in place while, effective February 1,
2013, the turnaround fee was replaced by an apron fee and effective April 1, 2013, the counter fee
was replaced by a check-in fee which, upon its implementation, was designated as a non-
aeronautical revenue. In addition, the method of calculating the landing fee and general terminal
charge was changed. A description of the changes in the GTAAs aeronautical fee regime are as
follows:
a) Landing Fees
30

In 2013, the landing fee component of the aeronautical rates and charges is calculated as
the aggregate of certain costs allocated to the airside, including but not limited to, the
airside portions of ground rent, payments-in-lieu of taxes, payments-in-lieu of
development charges, operating and maintenance costs and certain debt service costs.
The landing fee is then established, using projected aviation activity, as a given amount

30
GTAA 2013 Annual Information Formdisclosure
per metric tonne of the certified MTOW of an aircraft as shown on its certificate of
airworthiness, and is levied on each landing by an aircraft.
b) General Terminal Charge
31

A general terminal charge recovers certain costs allocated to the groundside, which
includes the terminal buildings. A general terminal charge is levied on each arrival of an
aircraft at a terminal building and is calculated on the number of seats on the arrived
aircraft. General terminal charges are levied to recover the projected operating expenses
of the groundside and certain capital expenditures allocated to the groundside, net of AIF
Revenue. General terminal charges do not include the groundside costs recovered under
the apron fee, nor the operating costs of air carrier exclusive-use space, retail and
concession space. Terminal charges for non-domestic arrivals are set at 125 percent of
terminal charges for domestic arrivals due to the additional costs of the customs,
immigration and inspection facilities relating to non-domestic arrivals. These facilities
are not paid for by the federal government.
c) Apron Fee
On February 1, 2013, the turnaround fee was replaced by an apron fee. The turnaround
fee recovered costs associated with certain portions of the terminal as well as the aircraft
gates and bridges and the apron area. The apron fee will recover only the costs
associated with the apron and the aircraft gates and bridges. Like the turnaround fee, the
apron fee is designed to encourage efficient use of apron and gate assets by the air
carriers. The costs associated with certain portions of the terminal buildings that were
formerly part of the turnaround fee are now included in the general terminal charge.
[ND: classified as a non-aeronautical revenue]The GTAAs cash flow projections take into
account projections for activity, rates and charges and aeronautical and non-aeronautical revenues
and expenses. Any excess cash flow is reinvested in the Airport for new initiatives to improve
Airport operations and customer service, to fund capital projects or to repay existing debt. The
GTAA expects to generate sufficient cash flow such that over the next five years, the cash flow
will be used to fund capital expenditures.
On October 18, 2013, the GTAA and Air Canada announced a new commercial agreement to
further develop Toronto Pearson as a global hub as described in Chapter I of this Report. The
agreement, which comes into effect on J anuary 1, 2014, covers an initial five year term and
includes fixed annual aeronautical fees for Air Canada in respect of landing fees, general terminal
charges and apron fees.
B. FUNDING SOURCES
As previously outlined in Chapter II, funding for capital projects is expected to occur primarily through
the issuance of Bonds, Future Series Bonds and AIF Revenues. Detailed descriptions of these sources
and their intended uses were provided, in Chapter II of this Report (see Table II-1).

31
GTAA 2013 Annual Information Formdisclosure
1. Bank Credit Facilities
The GTAA maintains a credit facility with a syndicate of Canadian banks (the Credit Facility).
Credit Facilities currently provide the GTAA with a revolving operating facility in an amount of
up to $400.0 million, a letter of credit facility in the amount of up to $100.0 million and an
interest rate and foreign exchange hedging facility in an amount up to $50.0 million. The
revolving operating facility and hedging facility mature on November 22, 2016, and each can be
extended annually for one additional year with the Banks consent. The letter of credit facility
matures on November 22, 2014, and can be extended annually for one additional year with the
consent of the lender under such facility.
2. Outstanding Bonds and Future Series Bonds
As of December 31, 2012, the GTAA had outstanding debt securities, including accrued interest
and net of unamortized discounts and premiums, of approximately $7.0 billion
32
. As shown on
Table II-1 above, proceeds of Future Series Bonds are projected at approximately $2.2 billion.
C. HISTORICAL FINANCIAL OPERATIONS
Table III-1 presents selected Airport audited financial information for the years 2008 through 2012. As
described in Section A, the Airport does not retain profits; therefore, revenue increases reflect both
anticipated increases in expenses and activity levels, which are collected through airline rates, fees and
charges, and real increases in Non-Aeronautical Revenues such as car parking, ground transportation,
concessions and other sources, which are directly related to passenger activity levels.
Total Revenues increased to $1.138 billion in 2012 from $1.136 billion in 2011, an overall increase of 0.1
percent. While car parking and ground transportation increased by 6.9 percent, there was a 6.7 percent
decrease in landing fee revenues. Total Operating Expenses increased to $492,439 million in 2012 from
$485,622 million in 2011, an increase of 1.4 percent.
Revenues over Operating Expenses (excluding amortization) increased to $231.2 million in 2012 from
$193.1 million in 2011. The increase was driven primarily by the increasing revenues and decreasing
operating expenses. The GTAA does not include the non-cash amortization of capital assets in its rates
and charges.
For purposes of this Report, Aeronautical Revenues include landing fees (airside fees), terminal rentals
and general terminal charges. Aeronautical Revenues are comprised of landing fees (airside fees) and
general terminal charges. In 2012, landing fees were $322.4 million compared to $345.7 million in 2011,
a decrease of 6.7 percent. General terminal charges in 2012 were $224.9 million compared to $218.2
million in 2011, an increase of 3.1 percent.
AIF revenue, which is net of the commission paid to the airlines, increased to $304.3 million in 2012
from $299.3 million in 2011. This increase is attributable primarily to an increase in passenger activity.
Car parking and ground transportation revenue increased to $132.8 million in 2012 from $124.2 million
in 2011, an increase of 6.9 percent. Concessions and rental revenue increased to $145.2 million in 2012
from $138.2 million in 2011, an increase of 5.1 percent

32
GTAA Annual Report 2012
Other revenue, which includes revenues from consulting services, fire-training facility and most
significant Co-Generation Plant revenues decreased to $7.9 million in 2012 from $10.1 million in 2011.
Salaries, wages and benefits increased to $119.9 million in 2012 from $111.0 million in 2011. Goods and
services decreased slightly to $214.4 million in 2012 from $216.0 million in 2011. Factors impacting
personnel expenses included bonus and pension expenses, partially offset by a reduction in benefits and
contract employees. Factors impacting non-personnel expenses included increased fuel, utility, snow
removal, professional and contractual services, and busing costs.


Chapter III Financial Analysis 42
Ground Lease decreased to $130.5 million in 2012 from $131.1 million in 2011. In J uly 2003, the federal
government announced a program to defer a portion of the Ground Lease for a two-year period. The
deferred amount is to be repaid over a 10-year period commencing in 2006 and ending in 2015. In 2004,
the federal government established repayment provisions which clarified that the amount by which the
Ground Lease was reduced only represented a deferral and not a forgiveness of the rent. As a result, the
GTAA began recording the full amount of Ground Lease, with a liability for the deferred portion.
D. FORECAST OPERATING EXPENSES
This section discusses the major categories of Operating Expenses and the resulting forecasts for the
Forecast Period as detailed in Table III-2. The major categories of Operating Expenses include O&M
Expenses (Personnel Expenses and Non-Personnel Expenses), Ground Lease and PILT. The Operating
Expense forecast was developed by using the GTAAs projection of O&M Expenses, Ground Lease and
PILT included in the 2013 budgeted rates and charges. Forecasts of O&M Expenses were increased by a
CPI-based inflation rate of 1.6 percent over the Forecast Period. Beginning in 2018, with the opening of
Pier G, O&M personnel expenses were increased by an additional 2.0 percent and non-personnel
expenses were increased by an additional 1.5 percent annually for the remainder of the Forecast Period.
1. Personnel Expenses
This category of expenses is comprised of salaries, wages, benefits and all other employee-related
expenses; it covers all Airport personnel, including union, non-union, salaried and hourly
employees. Personnel Expenses are expected to increase from $124.7 million in 2014 to $153.9
million in 2023.
2. Non-Personnel Expenses
This category includes items required for the daily operation, maintenance and repair of all
Airport facilities, including administration and management of the Airports overall operations
and maintenance functions, materials and supplies, computer equipment and services and training
expenses. The forecast of Non-Personnel Expenses is driven by the Airports operations and
future capital programs. Total Non-Personnel Expenses are expected to increase from $232.1
million in 2014 to $301.7 million in 2023.
The five largest components of Non-Personnel Expenses include: Buildings and Property
Maintenance, Equipment Repair and Maintenance, Hydro, Sewage and Telephone, Policing and
Security, and Professional and Contractual Services.
(a) Buildings and Properties Maintenance
This category includes recurring maintenance services for automatic doors, elevators and
escalators, cleaning services and costs associated with maintaining the infield hangar.
Building and properties maintenance expenses are forecast to equal $66.6 million in
2023.
(b) Equipment, Repair and Maintenance
This category includes recurring maintenance services for building systems such as
baggage handling, alarm and signal, and common use terminal equipment systems.
Equipment, repair and maintenance expenses are forecast to equal $29.2 million in 2023.

OPERATINGEXPENSES 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Salary, Wages & Benefits 97,729,592 $ 99,195,536 $ 100,683,469 $ 102,193,721 $ 105,801,159 $ 109,535,940 $ 113,402,559 $ 117,405,669 $ 121,550,089 $ 125,840,807 $
Overtime 7,564,188.0 7,564,188.0 7,564,188.0 7,564,188.0 7,677,650.8 7,792,815.6 7,987,636.0 8,187,326.9 8,392,010.0 8,601,810.3
Allowances & Benefits 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0 19,432,911.0
Total Personnel Expenses 124,726,691 $ 126,192,635 $ 127,680,568 $ 129,190,820 $ 132,911,721 $ 136,761,666 $ 140,823,106 $ 145,025,907 $ 149,375,010 $ 153,875,528 $
Non-Personnel Expenses
Training and Tuition 1,318,869 $ 1,338,652 $ 1,358,732 $ 1,379,113 $ 1,420,797 $ 1,463,740 $ 1,522,839 $ 1,584,323 $ 1,648,290 $ 1,714,840 $
Association Membership Fees 506,172 513,765 521,471 529,293 545,291 561,772 584,454 608,051 632,601 658,143
Conference, Travel and Meeting Ex 2,354,860 2,390,183 2,426,035 2,462,426 2,536,853 2,613,529 2,719,050 2,828,832 2,943,046 3,061,872
Computer Consultants, Services an 10,778,482 10,940,159 11,104,262 11,270,825 11,611,486 11,962,443 12,445,427 12,947,911 13,470,683 14,014,562
Gas and Fuel 1,679,724 1,704,919 1,730,493 1,756,451 1,809,539 1,864,233 1,939,501 2,017,808 2,099,277 2,184,036
Materials, Supplies and Uniforms 2,164,380 2,196,846 2,229,799 2,263,246 2,331,652 2,402,127 2,499,112 2,600,014 2,704,990 2,814,204
OfficeSupplies and Subscriptions 761,951 773,380 784,980 796,755 820,837 845,647 879,790 915,311 952,267 990,715
Small Parts, Tools and Equipment 3,888,487 3,946,814 4,006,016 4,066,106 4,189,004 4,315,617 4,489,860 4,671,138 4,859,735 5,055,947
Buildings and Properties Maintena 51,197,799 51,965,766 52,745,253 53,536,432 55,154,570 56,821,617 59,115,790 61,502,590 63,985,757 66,569,182
Equipment Repair and Maintenance 22,437,522 22,774,085 23,115,696 23,462,431 24,171,583 24,902,169 25,907,594 26,953,614 28,041,866 29,174,056
Hydro, Sewageand Telephone 28,838,964 29,271,548 29,710,621 30,156,281 31,067,754 32,006,777 33,299,051 34,643,500 36,042,231 37,497,436
CorporatePromotion and Communi 6,832,230 6,934,713 7,038,734 7,144,315 7,360,252 7,582,715 7,888,868 8,207,381 8,538,754 8,883,506
Insurance 4,571,649 4,640,224 4,709,827 4,780,475 4,924,965 5,073,822 5,278,677 5,491,804 5,713,535 5,944,219
Policing and Security 29,862,069 30,310,000 30,764,650 31,226,120 32,169,929 33,142,265 34,480,384 35,872,530 37,320,883 38,827,714
SnowRemoval and Deicing 15,337,429 15,567,490 15,801,002 16,038,017 16,522,766 17,022,167 17,709,437 18,424,456 19,168,343 19,942,265
Consulting Services 7,793,905 7,910,813 8,029,476 8,149,918 8,396,249 8,650,026 8,999,270 9,362,616 9,740,632 10,133,910
Professional and Contractual Servic 41,110,677 41,727,337 42,353,247 42,988,546 44,287,875 45,626,476 47,468,645 49,385,191 51,379,119 53,453,550
Vehicleand Equipment Rentals 222,336 225,671 229,056 232,492 239,519 246,758 256,721 267,086 277,870 289,089
Other Services and Expenses 410,037 416,188 422,431 428,767 441,727 455,078 473,452 492,567 512,455 533,145
Total Non-Personnel Expenses 232,067,540 $ 235,548,553 $ 239,081,782 $ 242,668,008 $ 250,002,649 $ 257,558,979 $ 267,957,923 $ 278,776,724 $ 290,032,334 $ 301,742,390 $
356,794,231 $ 361,741,188 $ 366,762,349 $ 371,858,828 $ 382,914,370 $ 394,320,645 $ 408,781,028 $ 423,802,631 $ 439,407,344 $ 455,617,918 $
Ground Lease 124,168,181 $ 118,836,357 $ 118,765,663 $ 119,297,199 $ 120,604,756 $ 122,588,069 $ 125,571,242 $ 129,840,957 $ 133,209,713 $ 134,958,424 $
Repayment of Deferred Ground Leas 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000 4,156,000
Payments In Lieu of Real Property Ta 32,817,139 $ 33,471,053 $ 34,478,228 $ 35,376,076 $ 36,293,469 $ 37,402,340 $ 38,545,124 $ 39,915,056 $ 41,333,895 $ 42,195,516 $
TOTAL OPERATINGEXPENSES 517,935,551 $ 518,204,598 $ 524,162,241 $ 530,688,103 $ 543,968,595 $ 558,467,055 $ 577,053,395 $ 597,714,644 $ 618,106,953 $ 636,927,858 $
2014-2018 1.2%
2019-2023 3.3%
2014-2023 2.3%
Average Annual Compound Growth Rate
Subtotal Operating and
Maintenance Expenses
Table III - 2
Forecast Operating Expenses
Forecast
(c) Hydro, Sewage and Telephone
This category includes all utility services at the Airport provided to both the GTAA and
its tenants. In 2005, the GTAA completed its automatic metering program which is
expected to improve the recovery rate among its tenants. Hydro, sewage and telephone
expenses are forecast to equal $37.5 million in 2023.
(d) Policing and Security
Policing and security expenses include all airside and terminal operations but do not
include passenger or baggage screening which is the responsibility of CATSA. Policing
and security expenses are forecast to equal $38.8 million in 2023.
(e) Professional and Contractual Services
This category includes legal and consulting services and other professional services such
as planning, engineering and information technology services. Professional and
contractual services are forecast to equal $53.5 million in 2023.
3. Ground Lease
In May of 2005, the transport minister announced a new lease formula which uses a progressive
scale based on gross revenues. The new lease formula was phased in beginning in 2006 and was
fully implemented by 2010, using the following formula:
0.0% of the first $5.0 million of revenue
1.0% of the next $5.0 million of revenue
10.0% of the next $150.0 million of revenue, and
12.0% of any revenue in excess of $250.0 million.
In addition, during 2006 to 2015 (inclusive), the GTAA will continue to pay additional rent of
approximately $4.2 million of ground lease payments per annum as payment of the ground lease
deferred during the 2003 through 2005 period.
Transport Canada has estimated that the Airports Ground Lease payments in 2014 will equal
approximately $124.2 million (net of the deferred ground lease repayment). For the remainder of
the Forecast Period, Ground Lease is estimated based on the new Transport Canada formula.
Ground Lease is forecast to equal $134.9 million in 2023.
4. Payments In Lieu of Real Property Taxes
Property owned by the GTAA is subject to property tax assessment under the Assessment Act
(Ontario), but not taxation. Instead, the GTAA pays a PILT to the cities of Mississauga and
Toronto, which is calculated in accordance with a regulation approved under the Assessment Act.
Forecasts of PILT are calculated for the current year at $0.94 per passenger based on the final
audited number of passengers recorded two years earlier. Therefore, PILT in 2014 is based on
the GTAAs estimate included in the calculation of the 2012 rates and charges.
Additional property acquired or transferred by the GTAA will not result in an increase or
decrease in the amount of PILT. Under this methodology, PILT will increase or decrease on an
annual basis in direct relation to the level of passenger traffic at the Airport. In 2014, PILT is
estimated at $32.8 million and is forecast to increase to $42.2 million in 2023.
E. FORECAST NON-AERONAUTICAL REVENUES
Table III-3 presents the forecast of Non-Aeronautical Revenues for 2014 through 2023. Total Non-
Aeronautical Revenues are forecast to increase from $301.8 million in 2014 to $370.0 million in 2023 at
an average annual compound growth rate of 3.0 percent. Non-Aeronautical Revenues are generated from
sources other than airline rates, fees and charges and include, but are not limited to, certain airside
revenues, terminal concessions, public parking, commercial vehicle fees and rent from such support areas
as hotel, cargo and general aviation facilities. Increases to Non-Aeronautical Revenues over the forecast
period generally parallel the growth in passenger activity.
1. Concessions
As part of the transfer of the Airport to the GTAA, and as required by the Ground Lease, the
GTAA assumed from Transport Canada all existing agreements, including terminal concession
agreements, under their existing terms and conditions. With respect to rental terms, some of these
assumed agreements were considered to be below industry standards. As existing agreements
have expired, the GTAA, where appropriate, has sought and executed better and more sustainable
rental terms from existing and new terminal concessionaires. All GTAA concession agreements
contain a Minimum Annual Guarantee (MAG) that protects concession revenues from certain
downside risks. The GTAA has the ability to earn additional revenues above the MAG.
Concession revenues are a derivative of the number of passengers who travel through the Airport
and their terminal dwell times. The passenger traffic profile as determined by sector (i.e.,
domestic, transborder and international) and industry surveys provide a more refined determinant
of airport concession performance. Generally, international and long-haul passengers spend more
than short-haul passengers. Airport concession sales and revenues are influenced by the terminal
design (i.e., passenger flows), the mix of concessions (i.e., retail, food and beverage, newsstands
and duty-free) and, of course, pricing.
The fastest growing segment of the Airports passenger traffic base has been the international
sector, whose passengers have higher concession spending propensities. Payments from duty-
free shops represent the largest proportion of concession revenues at the Airport. The duty-free
shops are operated by The Nuance Group (Canada) Inc. and are located in all of the terminals.
Other major concessionaires include HMS Host, HDS Retail and Paradise operating outlets such
as Red Rocket Regional Gifts, Oakley Active Apparel and other specialty retailers. Restaurants
include Torontos Kensington Market, Passport to Yorkville as well as a number of other
individual restaurants.
Concession revenues are forecast to increase from $90.9 million in 2014 to $98.4 million in 2018.
By 2023, overall concession revenues are forecast to increase to 120.4 million, an average annual
compound growth rate of 3.2 percent during the Forecast Period.


2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NON-AERONAUTICAL REVENUES
Airside
AirsideFees 4,198,861 $ 4,240,849 $ 4,283,258 $ 4,326,091 $ 4,369,351 $ 4,413,045 $ 4,457,175 $ 4,501,747 $ 4,546,765 $ 4,592,232 $
Terminal
Concessions
Duty Free 29,807,195 $ 30,403,339 $ 31,011,405 $ 31,631,634 $ 32,264,266 $ 32,909,552 $ 34,071,259 $ 35,795,264 $ 37,606,505 $ 39,509,394 $
Advertising 17,208,381 17,552,549 17,903,600 18,261,672 18,626,905 18,999,443 19,670,124 20,665,432 21,711,103 22,809,685
Food & beverage 15,765,878 16,081,195 16,402,819 16,730,876 17,065,493 17,406,803 18,021,263 18,933,139 19,891,156 20,897,648
Foreign Exchange/Travel Insurance 12,440,821 12,689,637 12,943,430 13,202,298 13,466,344 13,735,671 14,220,540 14,940,100 15,696,069 16,490,290
News & Sundry 12,342,155 12,588,998 12,840,778 13,097,594 13,359,546 13,626,736 14,107,760 14,821,613 15,571,587 16,359,509
Specialty Retail/ServiceRetail 3,047,635 3,108,588 3,170,761 3,234,177 3,298,862 3,364,840 3,483,619 3,659,891 3,845,082 4,039,644
Telecommunications 257,040 262,181 267,424 272,773 278,228 283,793 293,811 308,678 324,297 340,706
Subtotal - Concessions 90,869,104 $ 92,686,487 $ 94,540,218 $ 96,431,023 $ 98,359,645 $ 100,326,838 $ 103,868,377 $ 109,124,117 $ 114,645,798 $ 120,446,876 $
Car Parking andGroundTransportation
Public Parking 87,788,023 $ 89,543,783 $ 91,334,659 $ 93,161,352 $ 95,024,579 $ 96,925,071 $ 100,346,526 $ 105,424,060 $ 110,758,517 $ 116,362,898 $
EmployeeParking 19,019,185 19,399,569 19,787,560 20,183,311 20,586,978 20,998,717 21,739,972 22,840,015 23,995,719 25,209,903
Car Rental Concession 22,283,147 22,728,810 23,183,386 23,647,054 24,119,995 24,602,395 25,470,859 26,759,685 28,113,725 29,536,279
Taxis, Limousines & Pre-arranged trips 8,791,641 8,967,474 9,146,824 9,329,760 9,516,355 9,706,682 10,049,328 10,557,824 11,092,050 11,653,308
Bus operations & other ground transportation 2,697,947 2,751,906 2,806,944 2,863,083 2,920,345 2,978,752 3,083,902 3,239,947 3,403,889 3,576,125
Subtotal - Car Parking & Ground Transportation 140,579,943 $ 143,391,542 $ 146,259,373 $ 149,184,561 $ 152,168,252 $ 155,211,617 $ 160,690,587 $ 168,821,531 $ 177,363,900 $ 186,338,513 $
Rental Revenues (1) 44,209,247 $ 45,093,432 $ 45,995,301 $ 46,915,207 $ 47,853,511 $ 48,810,581 $ 50,533,595 $ 53,090,594 $ 55,776,979 $ 58,599,294 $
Check-In Fee 21,915,655 $ 21,775,682 $ 21,993,438 $ 22,213,373 $ 22,435,507 $ 22,659,862 $ 22,886,460 $ 23,115,325 $ 23,346,478 $ 23,579,943 $
TOTAL NON-AERONAUTICAL REVENUES 301,772,811 $ 285,412,311 $ 291,078,150 $ 296,856,881 $ 302,750,759 $ 308,762,081 $ 319,549,733 $ 335,537,989 $ 352,333,441 $ 369,976,915 $
(1) Excludes AirlineExclusiveUseSpaceRentals
2014-2018 0.1%
2019-2023 4.6%
2014-2023 3.2%
Table III - 3
Forecast Non-Aeronautical Revenues
Average Annual Compound Growth Rate
Forecast
January 24, 2014 FINAL
2. Car Parking and Ground Transportation
The Airport has a total of 22,600 parking spaces, 9,000 of which are located in Terminal 1.
Public parking revenues, employee parking revenues, revenues from commercial vehicles such as
taxicabs and limousines and other ground transportation operations are projected to equal $140.6
million in 2014. By 2023, these revenues are forecast to increase to $186.3 million equal to an
average annual compound growth rate of 3.2 percent. There may be a potential risk to this
revenue stream from the 2015 inauguration of the Union-Pearson Express. In this Report,
however, it is assumed that this revenue risk would be mitigated through an access fee to be paid
to the GTAA.
At most major North American commercial airports, private off-airport parking lot operators seek
to draw upon an airports passenger market by providing capacity and enhanced services at
reduced rates. At Pearson, three off-airport parking lot operators, Park N Fly, Skyway and Air
Park Express provide approximately 7,000 spaces and courtesy shuttle services to terminal
frontages. In response to this demand, the GTAA provides its own off-Airport capacity (i.e.,
Area 6A) which contains approximately 2,400 public spaces connected to the terminals via the
APM providing a greater level of service to parking patrons.
3. Rental Revenues
This category of revenue is comprised primarily of rents charged for ancillary aviation purposes
such as cargo facilities and hangars. Projected rental revenue in 2014 is $44.2 million and is
forecast to increase to $58.6 million by 2023.
4. Check-in Fees
In 2013, the GTAA replaced the counter fee with a commercially based check-in fee for the usage
of check-in counters and self-service check-in kiosks located in the terminals. Projected check-in
fees in 2014 are $21.9 million and are forecast to increase to $23.6 million by 2023.
F. FORECAST AIRPORT IMPROVEMENT FEES
Under the terms of the AIF agreement with the airlines, the GTAA has committed that the AIF revenue
will be used primarily for capital programs, including the associated debt service (principal and interest)
and reserve funds. Because capital expenditures and AIF receipts may not occur in the same period, AIF
revenue collected, but not utilized in any given period, is transferred to the AIF Reserve Fund for future
capital or debt service payments.
AIF revenue is correlated with passenger levels. In 2014, AIF revenues are forecast to equal $284.3
million and increase to $324.4 million in 2023. In J une 1, 2009, AIF for O&D passengers was increased
to $25.00. The AIF for connecting passengers was $8.00, as of 2011 the GTAA reduced the AIF for
connecting passengers to $4.00, and will remain at $4.00 over the Forecast Period.
G. FORECAST AERONAUTICAL REVENUES
This section discusses Aeronautical Revenues, which are derived from the airlines serving the Airport.
Aeronautical Revenues are comprised of airside fees based on the MTOW, terminal rental charges based
on the space leased by the airlines and general terminal charges based on the number of seats arrived. .
As per changes in the 2013 rate setting methodology, Aeronautical Revenues now include the recovery of
capital expenditures. The forecast of Aeronautical Revenues is presented in Table III-4.
47
Chapter III Financial Analysis 48 48
January 24, 2014 FINAL
Budget
AERONAUTICALREVENUES 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
LandingFees andOther Services 247,282,547 $ $226,524,484 $188,050,455 $171,242,879 $157,538,667 $144,935,574 $136,239,439 $128,065,073 $125,296,418 $113,448,584 $85,922,855
General Terminal Charges 186,976,073 $ $188,183,901 $190,984,786 $193,792,230 $196,641,076 $204,498,710 $211,920,041 $222,017,315 $232,209,017 $242,814,149 $253,849,110
Apron Fees 55,000,000 $ $55,550,000 $56,105,500 $56,666,555 $57,233,221 $57,805,553 $58,383,608 $58,967,444 $59,557,119 $60,152,690 $60,754,217
TOTALAERONAUTICALREVENUES 489,258,620 $ 470,258,385 $ 435,140,741 $ 421,701,664 $ 411,412,964 $ 407,239,837 $ 406,543,088 $ 409,049,832 $ 417,062,553 $ 416,415,423 $ 400,526,182 $
2014-2018 -3.5%
2019-2023 -0.4%
2014-2023 -1.8%
Table III-4
Forecast Aeronautical Revenues
Average Annual CompoundGrowth Rate
Forecast
49
1. Landing Fees and Other Services
Landing Fees and Other Services include the landing fees for passenger carriers, cargo carriers,
aircraft parking, administrative fees and other services. In 2014, Landing Fees and Other
Services are expected to be approximately $247.3 million and are forecast to decrease to
approximately $86.0 million by 2023.
2. General Terminal Charges
General terminal charges are paid by each airline based on the aggregate number of seats on its
arriving aircraft. General terminal charges are forecast to increase from approximately $188.2
million in 2014 to approximately $253.8 million in 2023.
3. Apron Fees
In 2014 apron fees, are forecast to be approximately $55.5 million, and by 2023, they are
expected to increase to approximately $60.7 million.
Overall, Aeronautical Revenues are forecast to decrease at an average annual compound rate of -1.7
percent during the forecast period.
H. FORECAST DEBT SERVICE AND FUND DEPOSITS
The Indenture stipulates that several designated reserve funds be established, including the Debt Service
Reserve Fund, which is funded with an amount sufficient to insure a coverage ratio of x1.25 annual debt
service. The interest earnings on the Debt Service Reserve Fund are included as an offset in the
calculation of the Airports rates and charges. To comply with the terms of the Indenture, the debt service
collected through the rates and charges paid by the airlines includes the interest and principal payable
within that year and a coverage requirement equal to 25.0 percent of the total debt service (represented by
debt service reserve fund balance), as indicated in Table III-5. The net annual debt service requirement
including the coverage requirement, net of interest earnings and capitalized interest, is projected to equal
$558.8 million in 2014 and decrease to $516.4 million by 2023.
An O&M Reserve Fund equal to an estimated one-sixth of the O&M Expenses of the current fiscal year
and a Renewal and Replacement Fund equal to $3.0 million are currently cash funded. Additional O&M
Reserve Fund deposits are included each year in the airline rates and charges base. These annual deposits
adjust the O&M Reserve Fund balance to meet the difference between the prior years O&M Expenses
and the current years anticipated expenses. The Indenture does not restrict the use of interest earnings
from the O&M Reserve Fund and the Renewal and Replacement Fund. Table III-6 details the Fund
Deposits required by the Indenture.

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
ANNUAL DEBT SERVICE
BondSeries
1997Series Bonds 36,249,408 $ 37,040,195 $ 37,953,348 $ 38,785,417 $ 39,742,474 $ 40,762,276 $ 41,919,656 $ 43,011,573 $ 44,245,710 $ 45,560,758 $
1999Series Bonds 39,984,088 39,957,047 39,994,852 39,898,800 39,862,863 39,823,320 39,833,857 39,735,712 39,683,571 39,626,399
2000Series Bonds 52,875,764 53,887,456 55,084,183 56,141,908 57,387,940 58,723,371 60,267,130 61,696,656 63,341,230 65,103,798
2001Series Bonds 47,763,114 48,649,342 49,703,062 50,626,130 51,719,270 52,891,409 54,251,843 55,503,508 56,949,135 58,499,234
2002Series Bonds 50,622,809 51,491,613 52,534,364 53,426,679 54,494,619 55,638,407 56,975,669 58,183,419 59,589,194 61,094,810
2004Series Bonds 51,566,508 52,404,690 53,409,375 54,257,451 55,272,590 56,354,484 57,619,047 58,743,811 60,053,973 61,450,290
2005Series Bonds 51,084,218 36,324,013 3,221,934 - - - - - - -
2007Series Bonds 31,731,454 32,218,253 32,792,615 13,807,855 - - - - - -
2008Series Bonds 36,103,929 36,626,572 37,253,665 37,761,062 11,208,917 - - - - -
2009Series Bonds 42,844,261 43,307,606 43,895,105 44,330,504 44,888,997 40,771,365 - - - -
2010Series Bonds 29,019,576 29,390,670 29,847,643 30,201,355 30,639,924 31,103,533 31,658,344 32,115,401 32,663,255 33,242,389
2011Series Bonds 66,905,907 67,761,977 68,803,188 69,613,806 70,607,211 71,651,022 72,889,634 73,907,559 75,118,935 76,391,845
2012Series Bonds 21,020,927 21,292,506 21,607,449 21,861,990 22,159,349 22,465,821 22,816,814 23,108,335 17,229,806 -
FutureSeries - - 21,217,946 43,114,391 70,698,816 117,038,422 125,500,615 145,570,422 159,990,773 167,372,220
TOTAL GROSS ANNUAL DEBT SERVICE 557,771,961 $ 550,351,938 $ 547,318,731 $ 553,827,348 $ 548,682,969 $ 587,223,430 $ 563,732,609 $ 591,576,397 $ 608,865,580 $ 608,341,744 $
CoverageRequirement 1,500,203 $ (1,855,006) $ (758,302) $ 1,627,154 $ (1,286,095) $ 9,635,115 $ 120,276 $ 6,960,947 $ 4,322,296 $ (130,959) $
Bank Interest 930,000 $ 930,000 $ 930,000 $ 930,000 $ 15,396 $ 15,591 $ 15,798 $ 16,018 $ 16,251 $ 16,498 $
Less:
Capitalized Interest (2) 1,038,862 $ (27,086,548) $ (35,103,292) $ (46,104,742) $ (21,309,081) $ (35,271,446) $ (69,102,703) $ (87,877,934) $ (94,931,379) $ (91,974,297) $
Interest Earnings (3) (23,695,493) (28,327,691) (24,941,105) (26,518,203) (24,046,789) (20,129,369) (22,210,775) (27,674,921) (33,534,279) (43,002,000)
TOTAL ANNUAL DEBT SERVICE 537,545,533 $ 494,012,693 $ 487,446,033 $ 483,761,557 $ 502,056,400 $ 541,473,321 $ 472,555,205 $ 483,000,507 $ 484,738,468 $ 473,250,986 $
Notes:
1/ Debt Serviceincludesprincipal andinterest.
2/ 2008Seriesdebt serviceisnet of capitalizedinterest
3/ Debt ServiceReserveFundInterest Earnings
Source:
GTAA
Forecast
Table III - 5
Annual Debt Service Requirements (1)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
FUND DEPOSIT REQUIREMENTS
O&M ReserveFund 812,308 $ 824,493 $ 836,860 $ 849,413 $ 1,842,591 $ 1,901,046 $ 2,410,064 $ 2,503,601 $ 2,600,786 $ 2,701,763 $
TOTAL FUND DEPOSIT REQUIREMENTS 812,308 $ 824,493 $ 836,860 $ 849,413 $ 1,842,591 $ 1,901,046 $ 2,410,064 $ 2,503,601 $ 2,600,786 $ 2,701,763 $
Forecast
Table III - 6
Forecast Fund Deposit Requirements
I. FORECAST AIRLINE COST PER ENPLANED PASSENGER
Passenger activity levels are one of the most important performance measures for the GTAA and directly
impact its financial results.
In addition to passenger activity, another measure of operating activity directly affecting revenue is total
MTOW which is determined by the number of aircraft movements and the type of aircraft used.
A general test of reasonableness of airport user fees is the average aggregate airline cost per enplaned
passenger (CPE). The CPE is calculated by dividing the net airline requirement (the total airline
requirement less Non-Aeronautical Revenues and any amount of AIF revenues applied during a Fiscal
Year) by the number of enplaned passengers at the Airport. Table III-7 presents the CPE for the forecast
period.
For purposes of this Report, the CPE at the Airport is projected to equal $25.64 in 2014 and decrease to
$17.03 by 2023.
J. CASH FLOW PROJECTIONS
Table III-8 provides a projection of the GTAAs annual cash flow based on the forecast of Aeronautical
Revenues, Non-Aeronautical Revenues, AIF Revenues, O&M Expenses, Ground Rent, PILT, annual debt
service requirements and annual fund deposit requirements. As shown in Table III-8, the residual
calculation of the GTAAs rates and charges methodology requires that landing fees and general terminal
charges, which are included in Aeronautical Revenues, be set to ensure that the Airport operates on a
break even basis generating neither a deficit nor a surplus. In those years where projects included in the
OM&R Plan, Terminal 3 Redevelopment Project or the Post-ADP Projects are completed and placed into
service, the annual debt service associated with financing those projects and the annual 25.0 percent
coverage requirement are included in the airside fee calculation.
K. DEBT SERVICE COVERAGE
Table III-9 presents the debt service coverage calculation based on the rate covenant included in the
Indenture. As discussed above, the rate covenant requires the GTAA to ensure that Revenues in each
fiscal year will be sufficient to make all of the required debt service payments and deposits in funds with
respect to any of the outstanding Indebtedness, any Subordinated Debt and any general obligations issued
by the GTAA as well as Ground Lease payments and O&M Expenses. The rate covenant requires the
GTAA to set its rates and charges so that in each Fiscal Year Net Revenues plus the cumulative deposit in
the debt service coverage account together with any transfer from the general fund in each Fiscal year will
be at least equal to 125.0 percent of the annual debt service for such fiscal year. As discussed in the
section above as projects are completed and placed into service, the annual debt service requirement
associated with the Bonds issued to finance those projects as well as the 25.0 percent coverage
requirement are included in the calculation of the GTAAs rates and charges. As shown in Table III-9,
the GTAA will meet the rate covenant based on the assumptions and forecasts included in this Report.


2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
AERONAUTICAL REVENUES
Landing Fees and Other Services 226,524,484 $ 188,050,455 $ 171,242,879 $ 157,538,667 $ 144,935,574 $ 136,239,439 $ 128,065,073 $ 125,296,418 $ 113,448,584 $ 85,922,855 $
General Terminal Fees 188,183,901 $ 190,984,786 $ 193,792,230 $ 196,641,076 $ 204,498,710 $ 211,920,041 $ 222,017,315 $ 232,209,017 $ 242,814,149 $ 253,849,110 $
Apron Fees 55,550,000 $ 56,105,500 $ 56,666,555 $ 57,233,221 $ 57,805,553 $ 58,383,608 $ 58,967,444 $ 59,557,119 $ 60,152,690 $ 60,754,217 $
TOTAL AERONAUTICAL REVENUES $470,258,385 $435,140,741 $421,701,664 $411,412,964 $407,239,837 $406,543,088 $409,049,832 $417,062,553 $416,415,423 $400,526,182
Enplaned Passengers 18,339,483 18,817,062 19,305,037 19,894,862 20,502,726 21,231,413 21,986,115 22,444,423 22,908,096 23,517,330
AirlineCost per Enplaned Passenger 25.64 $ 23.12 $ 21.84 $ 20.68 $ 19.86 $ 19.15 $ 18.60 $ 18.58 $ 18.18 $ 17.03 $
EXPENSES
Salaries & Wages 124,726,691 $ 126,192,635 $ 127,680,568 $ 129,190,820 $ 132,911,721 $ 136,761,666 $ 140,823,106 $ 145,025,907 $ 149,375,010 $ 153,875,528 $
Goods & Services 232,067,540 235,548,553 239,081,782 242,668,008 250,002,649 257,558,979 267,957,923 278,776,724 290,032,334 301,742,390
Total O&M Expenses 356,794,231 $ 361,741,188 $ 366,762,349 $ 371,858,828 $ 382,914,370 $ 394,320,645 $ 408,781,028 $ 423,802,631 $ 439,407,344 $ 455,617,918 $
Ground Rent 128,324,181 $ 122,992,357 $ 122,921,663 $ 123,453,199 $ 124,760,756 $ 126,744,069 $ 129,727,242 $ 133,996,957 $ 137,365,713 $ 139,114,424 $
Payment in Lieu of Real Property Taxes 32,817,139 $ 33,471,053 $ 34,478,228 $ 35,376,076 $ 36,293,469 $ 37,402,340 $ 38,545,124 $ 39,915,056 $ 41,333,895 $ 42,195,516 $
Annual Debt Service 537,545,533 $ 494,012,693 $ 487,446,033 $ 483,761,557 $ 502,056,400 $ 541,473,321 $ 472,555,205 $ 483,000,507 $ 484,738,468 $ 473,250,986 $
Fund Deposit Requirements 812,308 $ 824,493 $ 836,860 $ 849,413 $ 1,842,591 $ 1,901,046 $ 2,410,064 $ 2,503,601 $ 2,600,786 $ 2,701,763 $
Total Expenses 1,056,293,392 $ 1,013,041,784 $ 1,012,445,134 $ 1,015,299,073 $ 1,047,867,585 $ 1,101,841,423 $ 1,052,018,665 $ 1,083,218,752 $ 1,105,446,207 $ 1,112,880,607 $
REVENUES
Non-Aeronautical Revenues 301,772,811 $ 285,412,311 $ 291,078,150 $ 296,856,881 $ 302,750,759 $ 308,762,081 $ 319,549,733 $ 335,537,989 $ 352,333,441 $ 369,976,915 $
Total AIF Revenues Applied 284,262,197 292,488,732 299,665,321 307,029,229 337,876,990 386,536,253 323,419,099 330,618,209 336,697,343 342,377,510
Total Revenues 586,035,007 $ 577,901,043 $ 590,743,470 $ 603,886,110 $ 640,627,749 $ 695,298,334 $ 642,968,832 $ 666,156,198 $ 689,030,784 $ 712,354,425 $
TOTAL NET AIRLINEREQUIREMENTS 470,258,385 $ 435,140,741 $ 421,701,664 $ 411,412,964 $ 407,239,837 $ 406,543,088 $ 409,049,832 $ 417,062,553 $ 416,415,423 $ 400,526,182 $
Total EnplanedPassengers 18,339,483 18,817,062 19,305,037 19,894,862 20,502,726 21,231,413 21,986,115 22,444,423 22,908,096 23,517,330
Airline Cost per EnplanedPassenger 25.64 $ 23.12 $ 21.84 $ 20.68 $ 19.86 $ 19.15 $ 18.60 $ 18.58 $ 18.18 $ 17.03 $
Forecast
Table III - 7
Forecast Airline Cost Per Enplaned Passenger

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Operating Revenues
Aeronautical Revenues 470,258,385 $ 435,140,741 $ 421,701,664 $ 411,412,964 $ 407,239,837 $ 406,543,088 $ 409,049,832 $ 417,062,553 $ 416,415,423 $ 400,526,182 $
Non-Aeronautical Revenues 301,772,811 285,412,311 291,078,150 296,856,881 302,750,759 308,762,081 319,549,733 335,537,989 352,333,441 369,976,915
AIF Revenues 284,262,197 292,488,732 299,665,321 307,029,229 337,876,990 386,536,253 323,419,099 330,618,209 336,697,343 342,377,510
Interest Earnings 23,695,493 28,327,691 24,941,105 26,518,203 24,046,789 20,129,369 22,210,775 27,674,921 33,534,279 43,002,000
Total Operating Revenues 1,079,988,885 $ 1,041,369,475 $ 1,037,386,239 $ 1,041,817,276 $ 1,071,914,375 $ 1,121,970,792 $ 1,074,229,440 $ 1,110,893,672 $ 1,138,980,487 $ 1,155,882,607 $
Operating Expenses
O&M Expenses 356,794,231 $ 361,741,188 $ 366,762,349 $ 371,858,828 $ 382,914,370 $ 394,320,645 $ 408,781,028 $ 423,802,631 $ 439,407,344 $ 455,617,918 $
GroundRent 128,324,181 122,992,357 122,921,663 123,453,199 124,760,756 126,744,069 129,727,242 133,996,957 137,365,713 139,114,424
PILT 32,817,139 33,471,053 34,478,228 35,376,076 36,293,469 37,402,340 38,545,124 39,915,056 41,333,895 42,195,516
Interest onBankLineof Credit 930,000 930,000 930,000 930,000 15,396 15,591 15,798 16,018 16,251 16,498
Total Operating Expenses 518,865,551 $ 519,134,598 $ 525,092,241 $ 531,618,103 $ 543,983,990 $ 558,482,646 $ 577,069,193 $ 597,730,662 $ 618,123,203 $ 636,944,355 $
Revenues Available to Pay Debt Service 561,123,334 $ 522,234,877 $ 512,293,998 $ 510,199,173 $ 527,930,384 $ 563,488,146 $ 497,160,247 $ 513,163,011 $ 520,857,283 $ 518,938,251 $
Debt Service
1997Series Bonds 36,249,408 $ 37,040,195 $ 37,953,348 $ 38,785,417 $ 39,742,474 $ 40,762,276 $ 41,919,656 $ 43,011,573 $ 44,245,710 $ 45,560,758 $
1999Series Bonds 39,984,088 39,957,047 39,994,852 39,898,800 39,862,863 39,823,320 39,833,857 39,735,712 39,683,571 39,626,399
2000Series Bonds 52,875,764 53,887,456 55,084,183 56,141,908 57,387,940 58,723,371 60,267,130 61,696,656 63,341,230 65,103,798
2001Series Bonds 47,763,114 48,649,342 49,703,062 50,626,130 51,719,270 52,891,409 54,251,843 55,503,508 56,949,135 58,499,234
2002Series Bonds 50,622,809 51,491,613 52,534,364 53,426,679 54,494,619 55,638,407 56,975,669 58,183,419 59,589,194 61,094,810
2004Series Bonds 51,566,508 52,404,690 53,409,375 54,257,451 55,272,590 56,354,484 57,619,047 58,743,811 60,053,973 61,450,290
2005Series Bonds 51,084,218 36,324,013 3,221,934 - - - - - - -
2007Series Bonds 31,731,454 32,218,253 32,792,615 13,807,855 - - - - - -
2008Series Bonds 36,103,929 36,626,572 37,253,665 37,761,062 11,208,917 - - - - -
2009Series Bonds 42,844,261 43,307,606 43,895,105 44,330,504 44,888,997 40,771,365 - - - -
2010Series Bonds 29,019,576 29,390,670 29,847,643 30,201,355 30,639,924 31,103,533 31,658,344 32,115,401 32,663,255 33,242,389
2011Series Bonds 66,905,907 67,761,977 68,803,188 69,613,806 70,607,211 71,651,022 72,889,634 73,907,559 75,118,935 76,391,845
2012Series Bonds 21,020,927 21,292,506 21,607,449 21,861,990 22,159,349 22,465,821 22,816,814 23,108,335 17,229,806 -
FutureSeries Bonds - - 21,217,946 43,114,391 70,698,816 117,038,422 125,500,615 145,570,422 159,990,773 167,372,220
Less:
CapitalizedInterest 1,038,862 (27,086,548) (35,103,292) (46,104,742) (21,309,081) (35,271,446) (69,102,703) (87,877,934) (94,931,379) (91,974,297)
Total Annual Debt Service 558,810,823 $ 523,265,389 $ 512,215,440 $ 507,722,606 $ 527,373,888 $ 551,951,984 $ 494,629,906 $ 503,698,463 $ 513,934,201 $ 516,367,447 $
Debt Service Coverage 1,500,203 (1,855,006) (758,302) 1,627,154 (1,286,095) 9,635,115 120,276 6,960,947 4,322,296 (130,959)
Revenues Available After Payment of
Debt Service 812,308 $ 824,493 $ 836,860 $ 849,413 $ 1,842,591 $ 1,901,046 $ 2,410,064 $ 2,503,601 $ 2,600,786 $ 2,701,763 $
Other Expenditures/(Credits)
FundDeposit Requirements 812,308 $ 824,493 $ 836,860 $ 849,413 $ 1,842,591 $ 1,901,046 $ 2,410,064 $ 2,503,601 $ 2,600,786 $ 2,701,763 $
GTAANet (Deficit)/Surplus (0) 0 0 0 (0) (0) 0 0 0 (0)
Forecast
Table III-8
Summary of Cash Flows

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
APPLICATIONOFREVENUES ANDDEBTSERVICECOVERAGE
Operating Revenues
Aeronautical Revenues 470,258,385 $ 435,140,741 $ 421,701,664 $ 411,412,964 $ 407,239,837 $ 406,543,088 $ 409,049,832 $ 417,062,553 $ 416,415,423 $ 400,526,182 $
Non-Aeronautical Revenues 301,772,811 285,412,311 291,078,150 296,856,881 302,750,759 308,762,081 319,549,733 335,537,989 352,333,441 369,976,915
AIF Revenues 284,262,197 292,488,732 299,665,321 307,029,229 337,876,990 386,536,253 323,419,099 330,618,209 336,697,343 342,377,510
Interest Earnings 23,695,493 28,327,691 24,941,105 26,518,203 24,046,789 20,129,369 22,210,775 27,674,921 33,534,279 43,002,000
Total Operating Revenues 1,079,988,885 $ 1,041,369,475 $ 1,037,386,239 $ 1,041,817,276 $ 1,071,914,375 $ 1,121,970,792 $ 1,074,229,440 $ 1,110,893,672 $ 1,138,980,487 $ 1,155,882,607 $
Debt ServiceCoverageRequirement 139,702,706 $ 130,816,347 $ 128,053,860 $ 126,930,651 $ 131,843,472 $ 137,987,996 $ 123,657,477 $ 125,924,616 $ 128,483,550 $ 129,091,862 $
Total Operating Revenues and
Debt Service Coverage Requirement 1,219,691,591 $ 1,172,185,822 $ 1,165,440,099 $ 1,168,747,928 $ 1,203,757,847 $ 1,259,958,788 $ 1,197,886,916 1,236,818,288 $ 1,267,464,037 $ 1,284,974,468 $
Operating Expenses
O&M Expenses 356,794,231 361,741,188 366,762,349 371,858,828 382,914,370 394,320,645 408,781,028 423,802,631 439,407,344 455,617,918
GroundRent 128,324,181 122,992,357 122,921,663 123,453,199 124,760,756 126,744,069 129,727,242 133,996,957 137,365,713 139,114,424
PILT 32,817,139 33,471,053 34,478,228 35,376,076 36,293,469 37,402,340 38,545,124 39,915,056 41,333,895 42,195,516
Interest onBankLineof Credit 930,000 930,000 930,000 930,000 15,396 15,591 15,798 16,018 16,251 16,498
Total Operating Expenses 518,865,551 $ 519,134,598 $ 525,092,241 $ 531,618,103 $ 543,983,990 $ 558,482,646 $ 577,069,193 $ 597,730,662 $ 618,123,203 $ 636,944,355 $
Net Revenues Available to Pay
Debt Service 700,826,040 $ 653,051,224 $ 640,347,858 $ 637,129,825 $ 659,773,856 $ 701,476,142 $ 620,817,724 $ 639,087,627 $ 649,340,833 $ 648,030,113 $
Less:
FundDeposit Requirements 812,308 824,493 836,860 849,413 1,842,591 1,901,046 2,410,064 2,503,601 2,600,786 2,701,763
Net Revenues Available to Pay
Debt Service 700,013,732 $ 652,226,731 $ 639,510,998 $ 636,280,412 $ 657,931,265 $ 699,575,095 $ 618,407,659 $ 636,584,026 $ 646,740,047 $ 645,328,350 $
Debt Service
1997Series Bonds 36,249,408 $ 37,040,195 $ 37,953,348 $ 38,785,417 $ 39,742,474 $ 40,762,276 $ 41,919,656 $ 43,011,573 $ 44,245,710 $ 45,560,758 $
1999Series Bonds 39,984,088 39,957,047 39,994,852 39,898,800 39,862,863 39,823,320 39,833,857 39,735,712 39,683,571 39,626,399
2000Series Bonds 52,875,764 53,887,456 55,084,183 56,141,908 57,387,940 58,723,371 60,267,130 61,696,656 63,341,230 65,103,798
2001Series Bonds 47,763,114 48,649,342 49,703,062 50,626,130 51,719,270 52,891,409 54,251,843 55,503,508 56,949,135 58,499,234
2002Series Bonds 50,622,809 51,491,613 52,534,364 53,426,679 54,494,619 55,638,407 56,975,669 58,183,419 59,589,194 61,094,810
2003Series Bonds
2004Series Bonds 51,566,508 52,404,690 53,409,375 54,257,451 55,272,590 56,354,484 57,619,047 58,743,811 60,053,973 61,450,290
2005Series Bonds 51,084,218 36,324,013 3,221,934 - - - - - - -
2006Series Bonds
2007Series Bonds 31,731,454 32,218,253 32,792,615 13,807,855 - - - - - -
2008Series Bonds 36,103,929 36,626,572 37,253,665 37,761,062 11,208,917 - - - - -
2009Series Bonds 42,844,261 43,307,606 43,895,105 44,330,504 44,888,997 40,771,365 - - - -
2010Series Bonds 29,019,576 29,390,670 29,847,643 30,201,355 30,639,924 31,103,533 31,658,344 32,115,401 32,663,255 33,242,389
2011Series Bonds 66,905,907 67,761,977 68,803,188 69,613,806 70,607,211 71,651,022 72,889,634 73,907,559 75,118,935 76,391,845
2012Series Bonds 21,020,927 21,292,506 21,607,449 21,861,990 22,159,349 22,465,821 22,816,814 23,108,335 17,229,806 -
FutureSeries Bonds - - 21,217,946 43,114,391 70,698,816 117,038,422 125,500,615 145,570,422 159,990,773 167,372,220
BankInterest
CapitalizedInterest 1,038,862 (27,086,548) (35,103,292) (46,104,742) (21,309,081) (35,271,446) (69,102,703) (87,877,934) (94,931,379) (91,974,297)
Total Annual Debt Service 558,810,823 $ 523,265,389 $ 512,215,440 $ 507,722,606 $ 527,373,888 $ 551,951,984 $ 494,629,906 $ 503,698,463 $ 513,934,201 $ 516,367,447 $
Debt Service Coverage Ratio 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25
Forecast
Table III -9
Application of Revenues and Debt Service Coverage

L. CONCLUSION
AXIS Consulting, Inc. believes that the strength of the regional economic and demographic
characteristics of the GTA supports a forecast of aviation demand sufficient to generate adequate
revenues to fund the projects in the Terminal 3 Enhancement Program, Terminal 1 Enhancement
Program, the Automated People Mover Project, Maintenance and Restoration Capital Program and Future
Developments. The forecast of aviation activity shows a growth in total passengers (including domestic,
transborder and international passengers) of 2.8 percent and movements of 1.0 percent from 2014 until
2023 on an annual average annual compound basis. Maximum takeoff weight will grow at 2.6 percent
and air cargo tonnage at 2.8 percent on an average annual compound basis for the same time period.
The Airport serves Canadas largest commercial and population centre and is its busiest hub and gateway.
This Report assumes there will be no significant competitive pressures affecting the GTAAs aviation
demand through the Forecast Period. The forecast also assumes that O&D and connecting traffic will
remain steady throughout the Forecast Period with connecting activity averaging between 30.0 and 33.0
percent per year. The forecast shows an increasing number of international passengers transiting the
Airport with the introduction of new European and Latin American destinations served by Air Canadas
new affiliate airline Rouge. Load factors are also projected to remain steady at approximately 77.0
percent per annum throughout the forecast horizon due to lower fares and a larger availability of seat
capacity. Average seats per movement are projected to rise from a current 113.7 seats in 2014 to 124.1
seats in 2023. Recent orders for both Air Canada and WestJ et indicate the purchase and purchase rights
of larger narrow body and wide body aircraft replacing existing types, in particular the 50-seat Canadair
CRJ -200 regional jets expected to be retired by the end of the Forecast Period.
It is the opinion of AXIS that the current rates and charges as measured by CPE passenger are reasonable
and within the range experienced by other major international hubs.
The Terminal 3 and Terminal 1 Enhancement Programs have been planned in a manner that will allow the
GTAA to phase in their development to meet anticipated demand levels. AXIS has based its activity and
financial forecasts on this premise and has presented an analysis of the impact on the airline rates and
charges using the current rates and charges methodology, which was implemented on J anuary 1, 1998.
AXIS assumes that the current AIF of $25.00 for originating passengers and $4.00 for connecting
passengers will be collected by the airlines through the Forecast Period at its current levels. It is AXIS
opinion that the cost of the OM&R Plan, the Terminal 3 and 1 Enhancement Programs and other capital
costs, combined with assumed amount of annual AIF revenues applied to offset annual debt service
payments associated with the projects described in Chapter 2, remains reasonable when measured in
terms of airline CPE.
In addition, certain covenants as detailed in the Indenture, coupled with the Airport managements
prudent approach to operating a commercially viable airport, provide further confidence that the GTAAs
financial obligations will be met. Financial projections in this Report are believed to be an accurate
evaluation of existing conditions and use reasonable assumptions regarding future conditions. The
achievement of any financial projection or any forecast is dependent upon future events that cannot be
assured. Therefore, actual financial results will vary, perhaps significantly, from the projections and
forecasts contained in this Report.

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January 24, 2014

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