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Since August, 2001, international passengers have enjoyed a true maritime welcome to Nova Scotiaand Canada in our expanded arrivals facility. Designed by WHW Architects and built by RideauConstruction, the International Arrivals Area was officially opened in December by HalifaxInternational Airport Authority Chairman Bernie Miller and Transport Minister David Collenette.

T U R B U L E N C E

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Y ANY STANDARDS, 2001 WAS A

TURBULENT YEAR. THE AIR

TRANSPORTATION INDUSTRY

FELT THE SWELLS AND BUMPS OF THE YEAR’S

TUMULTUOUS EVENTS MORE ACUTELY THAN ANY

OTHER SECTOR OF THE ECONOMY. FOR

HALIFAX INTERNATIONAL AIRPORT AUTHORITY

(HIAA), 2001 WAS BOTH A YEAR OF

UNPRECEDENTED CHALLENGES AND AN

OPPORTUNITY FOR MANAGEMENT AND STAFF

TO TEST THEIR METTLE. THROUGHOUT THE

YEAR, HIAA KEPT A FIRM HAND ON THE

CONTROLS AND AN EYE ON THE HORIZON AS

IT NAVIGATED THE IMPACTS OF A SLUGGISH

ECONOMY, A LABOUR DISRUPTION, AND THE

DEVASTATION OF SEPTEMBER 11. WITH

TEAMWORK AND DETERMINATION, HIAA WAS

ABLE TO HOLD STEADY THROUGH ALL OF THIS

AND EMERGE A STRONGER ORGANIZATION AT

THE END OF THE YEAR.

THIS ANNUAL REPORT HIGHLIGHTS HIAA’S

ACTIVITIES, CHALLENGES, AND ACHIEVEMENTS

IN ITS SECOND YEAR OF OPERATING HALIFAX

INTERNATIONAL AIRPORT.

B

chaIt is with great pride that I look back on the past year at Halifax InternationalAirport Authority. It was a year of

unprecedented challenge for HIAA and the airtransportation industry. Operating under oftenstressful and difficult conditions, themanagement and staff of HIAA conductedthemselves with dignity, professionalism, anddetermination as they worked throughchallenging labour negotiations, rebounded fromthe impacts of airline cutbacks and, of course,

coped with the cataclysmic events ofSeptember 11.

On December 31, 2001, wecompleted our second year

of operation. Inretrospect, the federal

government’snational policy

initiative to

turn over control and operation of Canadianairports to not-for-profit airport authorities hasbeen an outstanding success. This policy ofairport devolution has created not onlyimproved airport facilities, but also substantialnew employment. Capital works at Canada’seight largest airports rose from less than $50million in 1992 to over $1.7 billion in 2001. In Halifax alone, the Airport Authority hasinitiated a multi-year $100 million AirportImprovement Program.

Airport authorities like ours are equippedto respond to local economic needs andpriorities through more business-likemanagement practices and Boards of Directorsappointed from the local community. In short,airport devolution has improved facilities, levelsof service, efficiency, and financial performancebenefiting the travelling public, localcommunities, and taxpayers.

a y e a r o f

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C H A L L E N G E

Bernie Miller, ChairmanHalifax International Airport Authority Board of Directors

llengeHere in Halifax, this has meant movingforward with the long-overdue and much-neededexpansion of our airport facility. It has alsomeant greater accountability to the communitywe serve, reaching out to all our stakeholdersand continuing an important dialogue about thefuture of the Airport and its critical role in theeconomic development of the region.

The HIAA Board of Directors is also workingdiligently to represent the community’s interestsat the national level. On June 12, 2001, theGovernment of Canada announced an initiativeto develop a Canada Airports Act to address anumber of perceived policy issues arising out ofairport devolution. Along with our counterpartsacross the country, we are working to ensurethat the new Act advances the efforts of airportsto operate in a safe, secure, efficient, andfinancially sustainable manner and that itstrengthens, rather than erodes, local control

and autonomy so that airports can continue toact in the best interests of the economic regionsthey serve.

In many ways, 2001 was a year ofconsolidating and testing much of what we hadput in place the year before. We began to seeour vision to create a world-class airport facilitybear fruit as we opened our new internationalarrivals area and began development of thedomestic arrivals area and airside subdivision.

The Board of Directors was able to pull backfrom a day-to-day management role in theAirport Authority and focus more appropriatelyon governance. This was due in large part tothe leadership of Reg Milley, who assumed theposition of President & CEO in January, and hiscapable management team.

Finally, we are pleased to welcome threenew members to our Board of Directors. They areJim Cowan, Robert Scott, and Ken Streatch.

Mr. Cowan is a nominee of the Board of Directorsand Msrs. Scott and Streatch are nominees ofHalifax Regional Municipality (HRM). All aredistinguished members of our community andwill play an important role in continuing thehigh calibre of governance required for ourAirport Authority.

At the same time, on behalf of the Board ofDirectors and our community, I would like toexpress our heartfelt gratitude to retiring Boardmembers Sara Filbee, Royden MacBurnie, MichaelO’Hara, and Bill Richardson. They have workedtirelessly for the Authority and each has playedan important role, both during the four difficultyears of negotiations prior to transfer and duringthese first two, very challenging years, operatingthe Airport. We look forward to their continuingsupport in the years ahead as important"Airport Associates" within the community.Thank you all.

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My first year as President & CEO ofHIAA was certainly an extraordinaryone. Although the management and

staff of the Airport Authority faced a number ofdaunting challenges, we came through them astronger organization with both a renewedsense of purpose and a greater sense ofcommunity.

Even as I took the helm in January, theeconomy was already showing signs ofweakness. While our passenger numbers grew bysix percent in the first half of the year, theairlines continued to experience serious declinesin revenues and responded by cutting routesacross North America, including those operatingat Halifax.

In the fall of 2000, we entered into ourfirst collective bargaining negotiations withLocal 80829 of the Union of Canadian TransportEmployees (UCTE). By the spring of 2001, thesenegotiations came to an impasse leading to afour-week strike. It was a tough beginning toour relationship but we learned a tremendousamount about each other during that period. InMay, when the team came back together, we didso with a greater mutual understanding and, Ibelieve, a stronger commitment to workingtogether. Little did we know then, how muchour strength and teamwork would be tested inthe months ahead.

On September 11, we were all shocked bythe devastating attacks in New York, Washington,and Pennsylvania. For the men and women in theair transportation industry, the use of commercialairliners as weapons of terror hit particularlyclose to home. When the Federal AviationAdministration (FAA) closed airports acrossAmerica, we were asked to receive divertedinternational aircraft bound for the UnitedStates. Halifax International Airport receivedmore diverted aircraft than any other Canadianairport, and we were the first to have airplanesback in the air. I was particularly proud of theresponse by our employees, our partners, and thecommunity during those difficult days as thecrisis unfolded. They epitomized “grace underpressure”, coming together with creativity,compassion, and professionalism.

In addition to the enormous human toll, theevents of September 11 had a devastating impacton the air transportation industry. Passengernumbers dropped significantly in the fourthquarter. The situation worsened as airlines beganto cut back and Canada 3000 closed its doorsaltogether. In addition to the immediate impactson our revenues, the bankruptcy of Canada 3000left us with $1.6 million in unpaid bills from the carrier.

Despite these setbacks, our team continuedto aggressively market the Airport in 2001,

attracting new airlines, routes, air cargo business,and retail tenants to our facility. I am pleased toreport that these efforts have had considerablesuccess. Late in the year, a number of airlinesannounced their intention to resume routes orinitiate new ones to Halifax. Early in 2002, DeltaAirlines announced its intention to begin offeringthree flights a day between Halifax and Bostonthrough Delta Connection in May.

In December, we officially opened ournew international arrivals area,marking a significant milestone inour $100 million AirportImprovement Program. Despite theeconomic challenges of 2001, webelieve that in order to stimulatefuture growth, it is imperative tomove forward with our plans toinvest in this long-overdueexpansion of our facility.

Critical to the industry’srecovery in the monthsahead will be ourability to restore publicconfidence in airsafety. While, inCanada, we have one of the moststringent airtransport

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F O R E C A S T

Five Year Forecast

Year2001 (actual) 2002 2003 2004 2005 2006

Passenger Volume2,852,061 2,746,971 2,929,945 3,015,675 3,103,990 3,194,973

Percent Change- 4.3% -3.7% 6.7% 2.9% 2.9% 2.9%

Total Aircraft Movements93,912 84,521 92,212 94,517 96,880 99,302

Percent Change-30.5% -10.0% 9.1% 2.5% 2.5% 2.5%

Planned Captial Expenditures$35,678,313 $20,824,500 $20,073,000 $10,334,400 $12,661,600 $9,112,300

Rent Payable to Transport Canada$ – $ – $3,122,400 $4,541,500 $4,632,300 $4,863,300

The following table outlines the passengertraffic and aircraft movements forecasted overthe next five years. These are key drivers to

our financial success, which enable us toprovide the best airport facility and services to the public and our customers.

security systems in the world, government andindustry took immediate steps to enhance thesystem following the tragedy. Security atCanadian airports will be further enhancedover the coming months as Transport Canada,the industry, and airport authorities across thecountry implement new procedures andtechnologies to protect air passengers.

The theme of this report, NavigatingThrough Turbulence, is particularly apt, not onlyto describe the year that is behind us, but alsoto crystallize the job that is ahead. In the nextfew years, there will be new challenges as wework to recover our revenues and grow ourbusiness, while coping with increasedinsurance, security, and rent costs. To meetthese challenges, we must find ways to reduceour operating costs, while continuing to investin future growth.

Navigating through turbulence requires adual focus. You must keep a careful hand on thecontrols while never losing sight of the horizon.This annual report is the story of how wenavigated through the turbulent months of2001 – how we steadied our operation duringtumultuous events and how we workeddiligently to grow our business.

Reg Milley, President & CEOHalifax International Airport Authority

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Capturing Attention Photographs of the 40 diverted aircraft parked on our runway captured

attention around the world, appearing on the covers of many international magazines, including the

leading industry publication Airports International, an Italian aviation magazine, a Japanese air traffic

control magazine, and British Airways’ News. Canadian publications, including Wings, and the Air

Canada Pilots’ Association newsletter Journal, have also carried the photos.

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t h e e y e o f t h estormOn September 11, while the world

watched in horror at the devastation in

the United States, we mobilized to

handle the logistical crisis that was unfolding on

our tarmac. At 9:40 a.m. Atlantic Standard Time

(AST), the FAA halted all flight operations at U.S.

airports for the first time in American history. At

approximately 11:00 a.m., we were notified to

expect between 40 and 50 aircraft.

By 11:45 a.m., our Emergency Operations

Centre (EOC) was fully operational. Our EOC

partners, including representatives from the

airlines, Transport Canada, Halifax Regional

Municipality, RCMP, Nova Scotia Emergency

Measures Organization, Canada Customs and

Immigration, and NavCanada worked shoulder-to-

shoulder with our operations and security staff

to ensure the smooth handling of the situation

in Halifax.

Diverted aircraft began arriving almost

immediately and, within a few hours, 40 large jets

carrying approximately 8,000 passengers and crew

were sitting on our runway 15/33, which we closed

to accommodate them. The EOC team coordinated

back-up generators to provide air conditioning for

the grounded planes, and organized food, water,

and other supplies for passengers. Then, as we

began the daunting task of unloading, every

precaution was taken. Each passenger’s carry-on

luggage had to be searched before they could enter

the Air Terminal Building (ATB) to be processed

through Customs. It took 16 hours of non-stop

effort before all the passengers were off their

planes and safely taken to temporary

accommodations.

The Community Responds with HeartWhile the EOC

coordinated logistics

at the Airport, Halifax

Regional Municipality

organized accommodations

and food for the

passengers at recreation

centres, schools, and other

facilities throughout the community.

In addition, private citizens opened their

homes to the stranded passengers and crew.

By the early hours of September 13, we were

able to allow planes back in the air. Security was

heightened but, throughout everything, passengers

remained cooperative and understanding. Many of

them arrived back at the Airport wearing Canadian

flags as a symbol of respect for their hosts.

On September 14, we paused to remember the

victims during a national day of mourning. At a

moving ceremony in the ATB, our CEO and the

Airport Chaplain spoke words of comfort and

inspiration, and two RCMP officers in red serge

sang the American and Canadian national anthems.

We joined the rest of the country in observing

three minutes of silence.

The final diverted aircraft departed Halifax

at 11:30 a.m. on Saturday, September 15. The

phenomenal community response, and the warmth

and compassion with which the passengers were

handled at the Airport earned this community

global recognition and praise. At the Airport alone,

we received hundreds of thank you letters from

people whose lives were touched in a positive way

by the kindness and generosity shown

by so many people. In

appreciation for the

hospitality offered to its

passengers and crew both here

and in Gander, Newfoundland,

German airline Lufthansa has

announced that it will name one of its

aircraft in honour of our two communities.

The effects of the terrorist attacks on the

United States will linger a long time. The lives of

those who lost loved ones have been horribly and

irrevocably altered. The event has sent shock waves

throughout the economy and the global airline

industry has suffered enormous losses.

At Halifax International Airport, we are faced with

the loss of key customers, less revenue due to

reduced passenger traffic, and higher security and

insurance costs.

While facing the many challenges posed by

the aftermath of September 11, we must also

remember and cherish the good things that came

out of the crisis. Our employees, partners, and the

community-at-large came together to respond as a

true team, forming bonds that will last well into

the future.

Keeping the Lines of Communication Open In the hours and days following the September 11 tragedy, we were inundated

with calls and emails from the media, family members of stranded passengers, people who had planned or were planning to

travel, and many others. With up-to-date information on-line, our website received 2.1 million hits in September - substantially

more than the 40,000 to 50,000 received in a typical month. We set up a media centre, holding regular media briefings and

fielding about 300 media calls in the four days the diverted planes were in Halifax. We communicated regularly with

employees, volunteers and others via email, with our CEO providing face-to-face briefings to these groups as well.

S T O R M

horizof o c u s o n t h e

H O R I Z O N

The terrorist attacks on the United Stateshave dramatically and forever alteredsecurity policies and procedures at

airports around the globe. Halifax InternationalAirport is no exception.

Even before September11, our standards for safetyand security were among themost stringent in the world.Immediately following thedisaster, Transport Canadaintroduced a new, even morerigorous security regime. Inaddition to these newstandards, the federalgovernment has created theCanadian Air TransportSecurity Authority, which willtake over many of the keysecurity functions currently handled by theairlines. Transport Canada has also announcedexpenditures of well over $1 billion in enhancedpre-board screening equipment and procedures,explosive detection systems, securityimprovements to aircraft design, and theselective deployment of armed police on aircraft.

While most of the security procedures seenby travellers are the responsibility of the airlinesand Transport Canada, HIAA has crucial securityresponsibilities behind the scenes that have alsochanged since September 11. One of our majorroles is to protect the integrity of the Airport’s

restricted areas. This now involves searching every vehicle before allowing its entry to the airfield. We have also placed securitypersonnel at all entrances to secure areas – no

one enters the restricted area without beingpersonally checked.

In order to meet the increaseddemands of the new security measures, we have doubled the size of our securitycomplement provided by the CanadianCorps of Commissionaires and conductedextensive training for new and existing staff. Inaddition, the RCMP has also increased its force ofofficers on-site.

In the coming months, new securityprotocols and new technology will be introducedto further enhance security at Canadian airports.

Air passengers have shown great patience as newsecurity procedures require them to arrive earlierand wait in longer lines prior to boarding theirflights. HIAA and our airline and governmentpartners are doing everything we possibly can toensure the safety of air travel in Canada, and weare confident that we provide one of the safestflying environments in the world.

While the events of the past year have hadsignificant impacts on our organization and willput additional strains on our finances, it iscritical to both our recovery and our futuregrowth that we keep our attention focusedsquarely on the horizon. For HIAA, that means remaining steadfast in our determination to growall facets of our business. Whether it is through

our continued commitment to Airport expansion or our determination to develop new airlinecustomers, new routes, new air cargo business, ornew retail partners, the team at HIAA hasresponded by stepping up our efforts to recoverand rebuild.

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onnRe-building Our Air Service

Travellers enjoyed an unprecedented level of airservice to and from Halifax in the early part ofthe year. In addition to our other carriers,CanJet, Royal, and Canada 3000 were providingstiff competition on the low-fare front, tappinginto a new market of customers. These threeairlines merged in early spring, making Canada3000 the second-largest airline in the nation.

Beginning mid-year, however, we began tofeel the impacts of airline cutbacks, closures,and rationalization of routes. In response toslowing economic conditions in the first twoquarters of 2001, Air Canada announced theelimination of its non-stop Halifax-Newark andHalifax-Washington routes. Icelandairannounced the cancellation of its three flights aweek to Reykjavik and American Eaglediscontinued daily service to Boston. Then, inNovember, Canada 3000 declared bankruptcy.Not only did this have an immediate and severeimpact on our revenue base, but the carrier leftus with $1.6 million in unpaid bills. Inresponse, we worked diligently throughout thefall to replace lost air service and build a solidbase for growth and recovery.

Then, when the tragedy of September 11dealt another blow to the industry, we steppedup our efforts. We partnered with the regionaltourism industry and the local businesscommunity to persuade carriers to expand or

initiate service to and from Halifax. By year-end, our efforts began to pay dividends.

Air Canada announced they would resumetheir non-stop service to Newark and Calgary inthe spring and added Tango flights to Toronto,Montreal, Ottawa and St. John’s. Subsequently,Conquest Tours and Skyservice Airlinesannounced that they would pick up many ofCanada 3000’s flights to sun destinations.Canadian Affair/Sunquest announced they wouldbegin operating weekly service to London usingAirTours International in the spring of 2002.

Realizing our Air Cargo PotentialAn air cargo development study commissionedin 2000 indicated that we have the potential todouble our air cargo business through Halifax,from 20,000 to 40,000 tonnes per year. Torealize this great opportunity, however, weneeded to increase our cargo-handling capacity.

We began the first phase of our plannedairside subdivision in April, awarding the designof this $7.0 million development to VaughanEngineering, and the construction work toDexter Construction. This project consisted ofan extension to Taxiway Alpha, which in turnallowed us to develop approximately 12 fullyserviced lots with direct access to the airfield.By year-end, the work was 95 percent completewith the airside lots ready for occupancy bymid-summer 2002.

These lots will be ideal locations foraircraft maintenance facilities, cargo trans-shipment areas, offshore supply centres, and avariety of other aircraft servicing and repairactivities that together will create tremendoussynergy and potential for economic growth.

A number of companies have alreadyexpressed interest in expanding or initiatingoperations here, and we are actively developingprospects for the remaining lots.

Welcoming the WorldThe flagship project of our Airport ImprovementProgram – the international arrivals area –officially opened in December. Located at thenorth-end of the building, the facility is threetimes larger than the previous internationalarrivals area. Its distinctive maritime themeshowcases the natural beauty of Nova Scotia, ourseafaring tradition, and our emerging high-techand energy industries, to create a strong, dynamic“sense of place”, and a warm maritime welcome.

The new international arrivals area providesexpanded and upgraded customs, immigration,and food inspection facilities, which allowsofficials to process 900 passengers per hour – incontrast to 300 passengers per hour in theformer facility. In addition, space is reserved onthe upper level for customs pre-clearance, anissue that is receiving renewed attention on theCanadian-American diplomatic agenda with

Volunteer Hosts Step in to Help Within an hour of the attacks on the World Trade Centre, more than a

dozen volunteer hosts arrived at the Airport, without being called, to offer whatever assistance they could. Over

the next four days, they logged more than a thousand hours, working around the clock to distribute food, provide

directions and assist passengers. Their vivid Nova Scotia tartan vests set them apart from the crowd, making them a

highly visible source of information and support. The Volunteer Host Program celebrated its first anniversay in

October, 2001, and the Tour Program continues to be popular with schools and community groups.

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heightened security spending and interest in the perimeter clearance concept. WHW Architectsand Rideau Construction completed theinternational arrivals project in just over oneyear. The area is part of our North-End ExpansionProject, which will include the completion of amajor expansion and renovation to our domesticarrivals area in 2002.

Building our Retail BusinessOur business development team successfullyattracted a number of leading retailers to theAirport in 2001, allowing us to expand theproducts and services available to our customers.Our new tenant roster includes Tim Hortons,Starbucks, Burger King, Brisket Boardwalk Deli,Maritime Alehouse, Legends Bar/Lounge, IslandBeach Company, Hudson Group (newsstand andgift shop), AerRianta (duty free), and Travelex(foreign exchange). In addition, we are activelynegotiating with several other retailers to roundout the selection of products and servicesavailable. The new retail stores and food andbeverage outlets will be phased in for operationthroughout 2002, as construction of the CentreCore Retail Expansion project proceeds.

We completed the design phase of thisproject in 2001, and began preparing theconstruction tender documents. This $12.0million joint tenant and landlord project willquadruple the size of the main lobby and retailarea of the Air Terminal Building.

Upon completion, this major redevelopmentproject will allow us to provide our customerswith a much greater range of high-quality goodsand services, while substantially increasing ourretail revenues. In addition to creating some 60jobs, the outlets will offer contemporary retailconcepts, street-pricing, and extended hours.

Enhancing Service to Air TravellersIn 2001, HIAA implemented a number ofinitiatives to meet customer needs. In responseto increasing demand, we opened a staffedbaggage storage facility that has provenextremely popular. We added three sets ofquadruple workstations in the departures loungegiving travellers telephone and internet accessand private workspace while waiting for theirflight. By reconfiguring the parking area, wewere able to create additional spaces toaccommodate rental vehicles during peak season.Finally, we modernized our flight informationdisplay screens, as well as added seating in thearrivals area.

Protecting Our Environment Another key component of the AirportImprovement Program is the construction of astate-of-the-art water treatment facility, whichneutralizes acidic run-off caused by pyritic slate.This $7.0 million plant was designed by CBCLLimited and built by ACL Construction. Thefacility will be fully operational early in 2002,

replacing the existing 20-year-old lime treatmentplant, and will meet or exceed provincialenvironmental protection standards.

A Strong Community ConnectionAt Halifax International Airport, we understandthe value of connections. We are in the businessof making connections, and place just as muchvalue on connecting with our community as wedo on connecting our community to the world.

Strengthening and expanding ourcommunity connections has been a top priorityover the past year. In 2001, we held a series ofstakeholder briefings at the Airport and indowntown Halifax and hosted our first annualmeeting in May. Our CEO, Reg Milley, delivered20 speeches in 2001, meeting as manycommunity members as possible, face-to-face.We also hosted “Sneak Peek Tours” of our newinternational arrivals area, and a grand openingthat brought hundreds of community membersout to celebrate this achievement with us. Weproduced and distributed our first annual report,along with six issues of our regular stakeholdernewsletter.

The regional media are also a crucial part ofthe community. We worked closely with them in2001 providing support as they covered Airportand air transportation issues. This positiveworking relationship was particularly helpfulduring the September 11 crisis, as HIAACommunications & Public Affairs staff and

Airport Breaks Ground on Water Treatment Facility In June, we began

construction of a water treatment facility to address the long standing issue of

pyritic slate run-off on Airport property.

the media worked together to keep thecommunity informed.

Our Community Consultative Committeealso met in 2001. This was an opportunity forHIAA to meet with representatives of such keystakeholder groups as the Metropolitan HalifaxChamber of Commerce, the Tourism IndustryAssociation of Nova Scotia (TIANS), the NovaScotia Department of Economic Development,and Air Canada to discuss the air transportationneeds of the community. Together, we alsolooked further into the future exploring howHIAA and the community can best worktogether to ensure continued prosperity for the region.

Airport Authority Receives Awards HIAA was honoured by TIANS with its 2001Transportation Sector Award for ourcommitment to the community, to economicdevelopment, and to customer service.

In addition, HIAA’s Communications &Public Affairs team received two awards fromthe Airports Council International - NorthAmerica in its annual Excellence in Marketingand Communications contest for our electronicemployee newsletter E-News and our corporate branding campaign, introducing anew logo, designed by Brian Harrison of LouCable Design Inc.

For the year ended December 31, 2001, the Authority

generated $28.7 million in operating revenues

(compared with $26.6 million for the 11 months

ended December 31, 2000). On January 1, 2001, an

Airport Improvement Fee (AIF) was introduced,

earning an additional $8.3 million, for total revenues

of $37.0 million. Every AIF dollar collected was

applied to capital projects, which are approved

through a consultation process, including expansion

of the north-end arrivals area, construction of a water

treatment facility, development of an airside

subdivision, and replacement of approach lighting

on runway 15.

Total operating expenses for 2001 were $23.0

million (compared to $19.6 million for 11 months in

2000). The increase in annualized operating

expenses was attributable to added security and

insurance costs, bad debts related to Canada 3000,

higher operational costs from an unusually harsh

winter, and additional labour costs.

Our excess of operating revenues over expenses

totaled $5.7 million – excluding AIF of $8.3 million

($7.0 million – excluding AIF in 2000). This excess

was retained and invested in our capital program,

enabling us to meet ongoing operating

requirements, as well as proceed with much-needed

repairs and maintenance to our ageing

infrastructure. Our capital expenditures for the year

were $35.7 million, which were financed by our

excess of revenues over expenses including AIF, and

a $6.0 million contribution from Transport Canada,

negotiated as part of our transfer agreement.

As we look to 2002 and beyond, it is clear that

our past operating results are not indicative of our

future financial performance. The Authority has

established financing of up to $30.0 million to fund

our Airport Improvement Program, in addition to

any future surpluses. In 2002, we anticipate

continued increases in costs for enhanced security,

war and terrorism insurance, full realty taxes on new

construction, and maintenance of our expanded

facility. As well, HIAA operates the Airport under a

lease with Transport Canada that sets out the

calculation of annual ground rent. From 2000 to

2002, this calculation resulted in no rent payable.

However, in 2003, we will begin our $3.1 million

annual rent obligation to Transport Canada –

escalating each year thereafter, as well as repayment

of our Airport chattels loan, amounting to $1.3

million annually for four years. These increases,

when coupled with sharp declines in passenger

traffic, seriously undermine our revenues on all

levels.

As we face these very serious financial challenges

in the short and medium term, we have revamped

our five year projections. We know we can weather

the storm – we are confident in the resilience of the

air travel industry, in the strength of our region’s

economy, and in our own ability to manage our

expenses and grow our business. By carefully charting

our course and keeping a firm hand on the controls,

we can successfully navigate the turbulence ahead.

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HALIFAX INTERNATIONAL AIRPORT AUTHORITY

BALANCE SHEET

December 31, 2001, with comparative figures for 2000(in thousands of dollars)

AUDITORS’ REPORT TO THE DIRECTORS

2001 2000ASSETSCurrent assets:

Cash and cash equivalents $ 1,144 $ 9,044Accounts receivable 4,332 3,127Inventories 393 428Prepaid expenses 257 230

6,126 12,829Capital assets (note 2) 33,589 6,616Organization costs (note 3) 1,188 2,285

$ 40,903 $ 21,730

LIABILITIES, DEFERRED CONTRIBUTIONS AND NET ASSETSCurrent liabilities:

Accounts payable and accrued liabilities $ 13,532 $ 6,465Deferred revenue 129 162Current portion of long-term debt (note 4) 268 130

13,929 6,757Long-term debt (note 4) 5,332 5,600Security deposits 515 487Deferred contributions related to

capital assets (note 5) - 1,830Net assets:

Equity in capital assets 21,127 7,056Commitments (note 7)

$ 40,903 $ 21,730

See accompanying notes to financial statements.

On behalf of the Board:

Director Director

We have audited the balance sheet of Halifax International Airport Authority asat December 31, 2001 and the statements of operations and changes in netassets and cash flows for the year then ended. These financial statements arethe responsibility of the Authority's management. Our responsibility is to expressan opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally acceptedauditing standards. Those standards require that we plan and perform an auditto obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation.

In our opinion, these financial statements present fairly, in all materialrespects, the financial position of the Authority as at December 31, 2001 andthe results of its operations and its cash flows for the year then ended inaccordance with Canadian generally accepted accounting principles. As requiredby the Canada Corporations Act, we report that, in our opinion, these principleshave been applied on a basis consistent with that of the preceding year.

Chartered AccountantsHalifax, CanadaFebruary 13, 2002

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STATEMENT OF OPERATIONSAND CHANGES IN NET ASSETS

Year ended December 31, 2001, with comparative figures for 2000(in thousands of dollars)

STATEMENT OF CASH FLOWS

Year ended December 31, 2001, with comparative figures for 2000(in thousands of dollars)

2001 2000*REVENUES

Landing fees $ 8,407 $ 8,155Terminal and passenger security fees 8,165 7,690Concessions 6,142 5,815Parking revenues 3,691 2,756Rentals 1,538 1,449Other revenue 785 765Operating revenues 28,728 26,630Airport improvement fees (note 6) 8,328 -

37,056 26,630

OPERATING EXPENSESSalaries, wages and benefits 10,634 9,108Materials, services and supplies 6,867 5,984General and administrative 2,981 1,810Property and other taxes 530 824Amortization 1,973 1,618Interest expense - 230

22,985 19,574Excess of revenues over expenses 14,071 7,056Net assets, beginning of year 7,056 -Net assets, end of year $ 21,127 $ 7,056

*On February 1, 2000, the Authority assumed responsibility for the management, operation anddevelopment of the Halifax International Airport. The revenues and expenses for 2000 reflect 11 monthsof airport operations.

See accompanying notes to financial statements.

2001 2000Cash provided by (used in):

OPERATIONSExcess of revenues over expenses $ 14,071 $ 7,056Items not involving cash:

Amortization 1,973 1,618Change in non-cash operating working capital:

Increase in accounts receivable (1,205) (3,101)Decrease (increase) in inventories 35 (428)Increase in prepaid expenses (27) (230)Increase in accounts payable and

accrued liabilities 7,067 5,952Increase (decrease) in deferred revenue (33) 162Increase in security deposits 28 487

Total operations 21,909 11,516

FINANCING ACTIVITIESIncrease in long-term debt - 5,829Repayments of long-term debt (130) (3,100)Increase in deferred contributions

related to capital assets 6,000 4,234Total financing activities 5,870 6,963

INVESTING ACTIVITIESExpenditures on capital assets (note 5) (35,679) (4,637)Capital assets acquired from Transport Canada - (4,747)Additions to organization costs - (102)Total investing activities (35,679) (9,486)

Increase (decrease) in cash and cash equivalents (7,900) 8,993Cash and cash equivalents, beginning of year 9,044 51Cash and cash equivalents, end of year $ 1,144 $ 9,044

See accompanying notes to financial statements.

GENERALThe Halifax International Airport Authority (the "Authority") was incorporated on

November 23, 1995 as a corporation without share capital under Part II of the

Canada Corporations Act. On February 1, 2000, the Authority signed a 60-year ground

lease with Transport Canada and assumed responsibility for the management,

operation and development of the Halifax International Airport. Excess revenues over

expenses are retained and reinvested in airport operations and development.

The financial statements of the prior year reflect 11 months of airport operations

and one month of pre-transfer activities.

The objective of the Authority is to manage a financially self-sustaining,

international-calibre aviation complex that enhances provincial economic growth.

The Authority is governed by a Board of Directors whose members are nominated

by the Halifax Regional Municipality, the Province of Nova Scotia and the Federal

Government, as well as the Metropolitan Halifax Chamber of Commerce. The

nominated members can also appoint additional members who represent the interests

of the community.

The Authority is exempt from federal and provincial income tax, federal large

corporation tax, and Nova Scotia capital tax.

1. SIGNIFICANT ACCOUNTING POLICIESa) Presentation and basis of accounting

The Authority's financial statements are prepared in accordance with accounting

principles generally accepted in Canada. The preparation of financial statements

requires management to make estimates and assumptions that affect the reported

amounts of certain assets and liabilities at the date of the financial statements and

the reported amounts of certain revenues and expenses during the year. Actual

results could differ from those estimates.

b) Inventories

Inventories consist of materials, parts and supplies and are stated at the lower of

cost and estimated net realizable value.

c) Capital assets

Capital assets are recorded at cost, net of contributions and government

assistance and are amortized over their estimated useful lives on a straight-line

basis as follows:

Asset Rate

Computer hardware and software 20% - 33%

Leasehold improvements 2.5% - 10%

Machinery, equipment, furniture and fixtures 5% - 20%

Vehicles 5% - 16.7%

Construction in progress is recorded at cost and is transferred to leasehold

improvements when the projects are complete and the assets are placed into service.

d) Organization costs

Organization costs represent start-up expenditures, including due diligence,

engineering studies, and legal fees, incurred by the Authority in advance of the

transfer of operations to the Authority from Transport Canada. Organization costs are

being amortized to operations on a straight-line basis over a period of three years.

e) Revenue recognition

Landing fees, terminal fees, parking revenues and passenger security fees are

recognized as the airport facilities are utilized. Concession revenues are recognized

on the accrual basis and calculated using agreed percentages of reported

concessionaire sales, with specified minimum guarantees where applicable. Rental

revenues are recognized over the lives of respective leases, licenses, and permits.

Airport improvement fees ("AIF") are recognized when departing passengers board

their aircraft as reported by the airlines.

Deferred revenue consists primarily of concession revenue for minimum

guarantees and license fees received in advance of services being rendered.

NOTES TO FINANCIAL STATEMENTS

Year ended December 31, 2001 (tabular amounts in thousands of dollars)

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2. CAPITAL ASSETS2001 2000

Cost Accumulated Net book Net book

amortization value value

Computer hardware

and software $ 918 $ 409 $ 509 $ 525

Leasehold improvements 4,337 109 4,228 1,703

Machinery, equipment,

furniture and fixtures 1,476 414 1,062 927

Vehicles 4,291 1,173 3,118 3,014

Construction in progress 24,672 - 24,672 447

$ 35,694 $ 2,105 $ 33,589 $ 6,616

3. ORGANIZATION COSTS2001 2000

Organization costs $ 3,290 $ 3,290

Accumulated amortization (2,102) (1,005)

$ 1,188 $ 2,285

4. LONG-TERM DEBT2001 2000

Halifax Regional Municipality deed transfer tax

loan, unsecured, non-interest bearing, repayable

in monthly instalments of $5,633 $ 208 $ 338

Halifax Regional Municipality repayable

contribution, unsecured, non-interest bearing,

repayable in full on April 1, 2002 200 200

Transport Canada non-interest bearing debt,

secured by a general security agreement,

repayable in annual instalments of $1,297,825

commencing January 1, 2003 through January 1, 2006 5,192 5,192

5,600 5,730

Current portion of long-term debt 268 130

$ 5,332 $ 5,600

The aggregate principal repayments required over each of the next five years are as

follows:

2002 $ 268

2003 1,365

2004 1,365

2005 1,303

2006 1,299

The Authority has authorized credit facilities with the Canadian Imperial Bank of

Commerce for $30.0 million, which, in the event of default, will be secured by an

Agreement containing a fixed mortgage by way of sublease of the Authority's

interest in the lease with Transport Canada, and a security interest in all of the

other assets of the Authority. This security is not registered, recorded or filed in

any public registry until there has occurred an event of default.

The credit facilities consist of a combined operating line of credit and a

demand instalment loan to a maximum of $6.0 million bearing interest at prime

rate less 70 basis points. A demand instalment loan to finance construction costs

is available to a maximum of $24.0 million and bears interest at prime rate less 65

basis points. Subsequent to December 31, 2001, the Authority began to draw on

these credit facilities to finance certain capital expenditures.

5. DEFERRED CONTRIBUTIONS RELATED TO CAPITAL ASSETSDeferred contributions represent the unspent balance of contributions received

from Transport Canada to fund capital asset expenditures.

2001 2000

Opening balance $ 1,830 $ -

Contributions received from Transport Canada 6,000 4,234

Less: amounts applied to capital asset expenditures (7,830) (2,404)

$ - $ 1,830

NOTES TO FINANCIAL STATEMENTS (continued)

Year ended December 31, 2001 (tabular amounts in thousands of dollars)

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6. AIRPORT IMPROVEMENT FEESOn January 1, 2001, the Authority implemented an AIF of $10 per local boarded

passenger to fund the cost of major capital expenditures. These fees are collected

by the air carriers under an agreement between the Authority, the Air Transport

Association of Canada, and the air carriers serving Halifax International Airport.

Under the agreement, AIF revenues may only be used to pay for the capital and

related financing costs of major airport infrastructure development as jointly

agreed with air carriers.

2001

AIF revenue (net):

AIF revenue, net of bad debts $ 9,108

AIF collection costs (780)

8,328

Expenditures:

North-end expansion 10,553

Centre core retail expansion 459

Pyritic slate treatment facility 6,045

Capital expenditures (pending ratification) 7,685

24,742

Excess of expenditures over AIF revenue (net) $ (16,414)

Net assets of the Authority as at December 31, 2001 are as follows:

Net assets provided by airport improvement fees $ 8,328

Net assets provided by other operations 12,799

$ 21,127

7. COMMITMENTSa) Transfer agreement

Effective February 1, 2000, the Authority signed a 60-year ground lease with

Transport Canada (the "Landlord") which provides for the Authority to lease the

Halifax International Airport (the "Airport"). A 20-year renewal option may be

exercised, but at the end of the term, unless otherwise extended, the Authority is

obligated to return control of the Airport to the Landlord.

The operating lease for the Airport requires the Authority to calculate rent

payable to the Landlord utilizing a formula reflecting annual airport revenues,

passenger volumes, and predetermined base operating costs and capital

expenditures. The estimated lease obligations for the next five years are

approximately as follows:

2002 $ -

2003 3,122

2004 4,542

2005 4,632

2006 4,863

b) Pension

As a condition of transfer, the existing Government of Canada pension assets and

accrued benefits obligation for certain employees may be transferred to the

Authority under a Reciprocal Transfer Agreement. Employees will have up to one

year following the signing of this Agreement to direct the disposition of their

Government of Canada pension funds. The remaining assets of the plan, together

with the actuarially determined pension benefit obligation, will be transferred to

the Authority's pension plan on a fully funded basis. The amount of this transfer

to the Authority cannot be determined at this time.

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c) Construction in progress

At December 31, 2001, the Authority has contractual construction commitments

amounting to approximately $35.1 million (2000 - $24.7 million). To December 31,

2001, the Authority has expended $31.9 million on these contracts, of which $7.8

million (2000 - $2.4 million) was financed by a contribution received from

Transport Canada (note 5). The Authority also has credit facilities available to

finance these commitments (note 4).

d) Environmental

The Authority has proceeded to implement a Pyritic Slate Run-off Management Plan

pursuant to an industrial approval granted by the Nova Scotia Department of

Environment and Labour on January 27, 2000. The Authority estimated the capital

cost of the treatment facility required under the plan to be approximately $6.5

million. To December 31, 2001, the Authority has expended $6.2 million.

8. PENSIONThe Authority sponsors a pension plan (the "Plan") on behalf of its employees

which has defined benefit and defined contribution components. The defined

benefit component is for former Transport Canada continuing full-time employees

who were employed by the Authority on February 1, 2000 and previously

participated under the Public Service Superannuation Act ("PSSA") Plan.

However, these employees may elect to become members of the defined

contribution plan in lieu of the defined benefit plan. All other employees will

become members of the defined contribution plan.

An actuarial valuation has been prepared as of February 1, 2000, for purposes

of funding the Plan. As of the effective date of the funding valuation, the Plan has

no assets or liabilities and, therefore, has no surplus or deficit. The existing

Government of Canada pension assets and accrued benefits obligation for certain

employees may be transferred to the Authority as described in note 7(b). Until

such time as the Pension Transfer Agreement has been finalized and the transferred

employees have chosen to transfer their PSSA Plan pension credits to the Plan,

there will be no liability for pensionable service prior to the effective date of

February 1, 2000.

Pension costs are charged to operations as services are rendered. Pension

expense for 2001 amounted to $723,566 (2000 - $568,187) and consisted of the

Authority's contributions for the period from January 1, 2001 through December

31, 2001, in accordance with the recommendations of the actuarial valuation.

9. FINANCIAL INSTRUMENTSa) Fair values

The carrying values of cash and cash equivalents, accounts receivable, accounts

payable and accrued liabilities, and security deposits approximate their fair value

due to the relatively short periods to maturity of the instruments. At December

31, 2001, the fair value of long-term debt was $5,007,313 (2000 - $4,241,800)

relative to the carrying value of $5,599,733 (2000 - $5,729,300).

The fair values of long-term debt were estimated based on the present value of

contractual future payments of principal and interest, discounted at the current

market rates of interest available to the Authority for similar debt instruments.

b) Credit risk

The Authority is subject to credit risk through its accounts receivable. A

significant portion of the Authority's revenues, and resulting receivable balances,

are derived from airlines. The Authority performs ongoing credit valuations of

receivable balances and maintains reserves for potential credit losses.

b o a r d o f

D I R E C T O R Sdirectorsb o a r d o f

D I R E C T O R SBernard Miller, Chairman

Bernie’s aviation involvement spans five decades.

Starting in 1957 as a Passenger Agent with Trans-Canada

Air Lines (TCA) in Halifax, he rose to hold a series of

senior executive positions with Air Canada. Bernie

retired in 1991 as Vice President In-Flight Service. Since

1992, he has been closely involved with the transfer and

operation of Halifax International Airport, and served as

the Airport’s CEO for most of its first year after transfer.

Following retirement from Air Canada, Bernie spent

several years as the Director of Dalhousie University’s

Advanced Management Centre. He now operates his own

labour relations consulting business, MILR Inc. and is a

member of the Saint Mary’s University management

faculty. On the national level, Bernie serves as the Chair

of the Council of Airport Authority Chairs for Canada and

as a Director of the Canadian Airports Council (CAC).

Frank Matheson, Vice Chairman

Frank is President & CEO of Homburg Canada Inc.,

an international real estate company with holdings in

residential, commercial, industrial, and retail properties.

He is Corporate Secretary of Homburg Invest Inc., a TSE

listed real estate company with holdings in Canada and

the U.S.A. He is a Director of Cedar Income Fund, a

NASDAQ listed real estate investment trust. Frank is

a past Chairman of the Halifax School Board and the

Halifax Forum Commission and has served on

many community and industry related boards

and commissions.

Mary R. Brooks, Director

Mary holds the William A. Black Chair of Commerce at

Dalhousie University and is Professor of Marketing and

Transportation at the University. Her career includes

various teaching and research appointments at

Dalhousie University. She currently chairs the

International Trade and Transport Committee at the

Washington-based Transportation Research Board. Mary

has completed consulting contracts for both industry

and government in Canada, the Caribbean, Europe,

Southeast Asia, and Australia.

Pierre Champagne, Director

Pierre is a graduate of Saint Mary’s University with 37

years of aviation experience, of which 26 years were

involved in airport operation and management in senior

level positions. Pierre currently consults on domestic

and international airport projects.

K. Sara Filbee, Director

Sara is Chair of the Board of Advisors and past Vice

President, Operations for HR-Dept.com, an application

service provider. She also serves as Senior Consultant,

Industrial Analysis Centre, Industry Canada. Her

extensive career includes an appointment as President

& CEO of the Atlantic Provinces Economic Council, as

Principal with KPMG Management Consulting, as

Director, Commercial Banking for Canadian Imperial

Bank of Commerce, and as Partner with McInnes Cooper.

She also served as Chair of the United Way/Centraide

Canada and Metro United Way.

Royden J. MacBurnie, FCA, Director

Prior to his retirement in 1989, Roy was Vice Chairman

and Chief Financial Officer with Central Trust Company

in Halifax. He was Vice Chairman of The Central

Guaranty Trust Corporation in Calgary and previously

served as Executive Vice President and Chief Operating

Officer of Nova Scotia Savings & Loan Company. He is

a Chartered Accountant and is a Fellow of the Institute

of Chartered Accountants of Nova Scotia.

Don Mills, Director

As the President & CEO of Corporate Research

Associates Inc. and Vice Chairman of CCL Group, Don is

one of Canada’s leading public opinion and market

research professionals. He is currently Chair of the

Arthritis Society; and serves as Director of the United

Way Advisory Board, Greater Halifax Partnership,

Dalhousie University, Canadian Association of Market

Research Organizations, The Office Interiors Group,

Ashburn Golf Club, Market Decisions (LLC - Maine), and

Total Marketing & Communications (Bermuda). Don is

also Past President of the Metropolitan Halifax Chamber

of Commerce and past Chair of the Greater Halifax-

Dartmouth YMCA.

Michael J. O’Hara, Director

Michael practices law in Dartmouth, Nova Scotia. His

practice areas include civil litigation, administrative, and

employment law. Mike is a member of the Canadian

Transport Lawyers Association and served as President of

that organization in 1993. He also served on the

Transportation Sector of Nova Scotia Voluntary Planning.

He is a former Chair of the Transportation Committee of

the Halifax Board of Trade.

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Arthur W. D. Pickup, Q.C., Director

Art has 27 years of practice experience in the areas of

municipal, employment, and education law. Art has

served on several provincial and local boards and is

presently on the National Advisory Board of the

Education Law Reporter which provides comprehensive

and current information on legal issues affecting

education in Canada.

W. H. Richardson, Director

Bill is a former Vice President of Empire Company

Limited, Chairman & CEO of Lawtons Drug Stores Limited,

and President of Empire Theatre Limited. He held these

positions for 21 years. He was Chairman of Northwest

Drugs Limited, a large public company in wholesale

drugs, and a director of a number of public companies.

In 1990 he formed William H. Richardson Consultants

Limited to assist companies in financial difficulties by

restructuring and managing their affairs. Bill is a

Certified Management Accountant, served as President of

The Management Accountants of Canada in 1983 to

1984, and is a Fellow of The Management Accountants.

Roy Rideout, Director

Roy is Chairman & Chief Executive Officer of Clarke Inc.,

a publicly traded Canadian company engaged in the

transportation industry throughout North America. He is

also a director of Halterm Limited, Halifax's largest

marine container terminal and a director of Fortis Inc., a

Newfoundland-based public utility holding company.

From 1988 to 1998 he was President & Chief Operating

Officer of Newfoundland Capital Corporation, a

management company engaged in the transportation and

communications sectors. Prior to 1988, Roy worked in

the airline industry for 15 years in executive positions

with EPA, CP Air, and Canadian Airlines International.

Roy is a chartered accountant.

Fred Smithers, Director

Fred is President & Chief Executive Officer of the Secunda

Group of Companies. In addition to being the Honorary

British Consul for the Maritime Provinces, Fred is

Chairman of ProGear Golf Manufacturing, sits on the

Board of Governors of Saint Mary’s University as well as

the Board of Directors for The Shaw Group, St. John

Ambulance Society, Metropolitan Halifax Chamber of

Commerce, and the Nova Scotia Sport Hall of Fame.

Stephen L. Wallace, Director

Stephen is President of the Bedford-based consulting

firm Wallace Macdonald & Lively, Ltd., specializing in

land surveying, civil/municipal engineering, land use

planning, and geomatics consulting services. He

received his engineering degree from the University of

New Brunswick in 1986. Stephen is a former director of

the Nova Scotia Chapter of the Urban Development

Institute and Past President of the Consulting Engineers

of Nova Scotia.

James S. Cowan, Q.C., Secretary

Jim is a partner in the law firm Stewart McKelvey Stirling

Scales. He is the Chair of the Board of Governors of

Dalhousie University, and past Chair of the Atlantic

Provinces Transportation Commission. He was on the

original Airport Planning Committee, which studied the

feasibility of establishing an airport authority in Halifax.

Since 1995, Jim has acted as Secretary and General

Counsel to the Authority.

Back row from left: Royden J. MacBurnie, Arthur W. D. Pickup, James S. Cowan,

Fred Smithers, Roy Rideout, Michael J. O'Hara, Pierre Champagne

Middle row from left: Mary R. Brooks, W. H. Richardson

Seated from left: Frank Matheson, Bernard Miller, Reg Milley

Missing: K. Sara Filbee, Don Mills, Stephen L. Wallace

governaThe HIAA Board consists of 13 directors, 10appointed by nominating entities and threeappointed by the board itself.

Directors are nominated by the followingentities:Federal Government . . . . . . . . . . . . . . . . . . .2Provincial Government . . . . . . . . . . . . . . . . .1Halifax Regional Municipality . . . . . . . . . . . .4Metropolitan Halifax Chamber of Commerce . . .3HIAA Board of Directors . . . . . . . . . . . . . . . .3

A director may serve no more than a total ofeight years. Collectively, directors are expectedto possess knowledge relating to the aviationindustry, air transportation, business, finance,administration, law, government, engineering,labour organizations, and the interests ofconsumers.

Contracts in Excess of $75,000All contracts awarded during 2001 that were inexcess of $75,000 were awarded as a result of acompetitive tendering process.

CommitteesThere are four committees of the Board ofDirectors. Committees are only empowered tomake recommendations to the board unlessdirected otherwise by the board. Wheneverpossible, all board decisions involve the entireboard.

Committees and their chairs include:Governance Committee, chaired by BillRichardson; Finance and Audit Committee, chairedby Royden MacBurnie; Human Resources andPension Committee, chaired by Michael O’Hara;and Capital, Safety, and Environment Committee,chaired by Frank Matheson.

Senior Officers Compensation (Annual Base Pay)President & CEO: R. Milley . . . . . . . . .$ 150,000Vice President Finance & Administration: J. Carter . . . . . . . . . . . . . . . . . . . .$ 105,000 Two directors served as officers in January, 2001,receiving the following compensation:Interim President & CEO:B. F. Miller . . . . . . . . . . . . . . . . . . . $ 4,000Interim Executive VP & COO:P. Champagne . . . . . . . . . . . . . . . . . $ 11,422

Board CompensationIn establishing appropriate compensation fordirectors, HIAA's Governance Committeeconducted a compensation survey, which isreviewed regularly to ensure it is comparable tosimilar markets.

Officers and Directors Total CompensationChairman: B. F. Miller . . . . . . . . . . .$ 66,300Vice Chairman: F. Matheson . . . . . . .$ 26,700Secretary: J. S. Cowan . . . . . . . . . .$ 26,400Directors:M. R. Brooks . . . . . . . . . . . . . . . . .$ 16,200P. Champagne . . . . . . . . . . . . . . . .$ 11,800K. S. Filbee . . . . . . . . . . . . . . . . . .$ 15,000R. J. MacBurnie . . . . . . . . . . . . . . .$ 28,800D. Mills . . . . . . . . . . . . . . . . . . . .$ 16,950M. J. O’Hara . . . . . . . . . . . . . . . . .$ 27,200A. W. D. Pickup . . . . . . . . . . . . . . .$ 14,600W. H. Richardson . . . . . . . . . . . . . .$ 29,200R. Rideout . . . . . . . . . . . . . . . . . .$ 15,400F. Smithers . . . . . . . . . . . . . . . . . $ 12,600S. L. Wallace . . . . . . . . . . . . . . . . .$ 21,350

Total board remuneration was $328,500. Expensesreimbursed to directors were $7,800.

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T E A MOur dedicated team works around the clock to

ensure smooth flying at Halifax International

Airport. We faced many challenges together in

2001, but we emerged from these difficult times

as a stronger team, with a renewed sense of

commitment to each other and our common

goals. We thank our employees for their

unfailing dedication and professionalism.

In addition to the activities and

accomplishments of our Communications &

Public Affairs, Facilities, and Technical Services

departments contained throughout this report,

a great many people worked behind the scenes

to keep things running efficiently throughout

the year. Here are just some of their 2001

achievements.

Our Airside Operations team relocated and

rebuilt our Emergency Operations Centre, set

up a high-intensity approach lighting system on

runway 15, and installed permanent lighting at

the north and south airfield entrances to meet

new security requirements. The team performed

well on Transport Canada’s Aerodrome Audit, a

regulatory compliance audit conducted every

three years at all Canadian airports. Our Airport

firefighters continued to play an important role

in emergency response, and also handled 250

first aid related calls.

With most of its management information

systems in place in 2000, our Finance &

Administration department was able to focus on

fine-tuning its organizational structure and

enhancing overall efficiency this year. They

initiated long-term financial planning, secured

$30 million in bank financing for our capital

program, began collecting the AIF in January,

and conducted our first post-transfer audit. As

well, our information technology group

implemented a site-wide system upgrade and

our procurement team hosted the semi-annual

meeting of the Canadian Airports Procurement

Association.

Perhaps the most significant

accomplishment for our Human Resources

department was the signing of the organization’s

first collective agreement. They also took

responsibility for the Occupational Health and

Safety Program, developed a performance

management system for non-unionized staff, and

established an administrative process review

group to continually assess and improve policies,

processes, and procedures.

It is with profound sadness that we acknowledge the passing of Leo de Wit, Security Officer, on December 26, 2001. Leo was a valuable member of our security team for three and a half years. Onbehalf of his friends and colleagues at Halifax International Airport, we extend our condolences to his family.Leo will be greatly missed.

Code of Conduct for DirectorsAll directors of the Authority are required tocomply with a Code of Conduct and RulesConcerning Conflicts of Interest. These requirethat directors avoid and refrain frominvolvement in conflict of interest situations.

Every director of the Authority is requiredto file a disclosure statement upon becoming adirector. Thereafter, each director must file anannual disclosure statement, which is reviewedby the entire board and by the Authority’sexternal auditors.

One of the Authority’s strategic objectivesis to excel in open relationships with itsstakeholders. The Authority is required tobalance many competing interests;accommodation of all interests is not possible.The Authority, however, has establishedprocesses, including a Community ConsultativeCommittee, by which the views of all interestscan be heard and balanced.

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Halifax International Airport Authority 1 Bell Boulevard, Enfield, Nova Scotia B2T 1K2Tel: 902.873.4422 Fax: 902.873.4750 www.halifax-airport.ca