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BUSINESS PLAN

20072009

BUSINESS PLAN 20072009

TABLE OF CONTENTS
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i 1. Corporate Background and Business Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Corporate Vision, Mission, Objectives, and Values . . . . . . . . . . . . . . . . . . . . . . . . 6 3. Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 4. People. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 5. Delivering the Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.1 Air Trafc Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 5.2 Navigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.3 Surveillance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 5.4 Level of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 5.5 Aeronautical Information Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 5.6 Aviation Weather Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5.7 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 5.8 Maintaining and Renewing the Infrastructure. . . . . . . . . . . . . . . . . . . . . . . . 53 5.9 Commercial Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 6. Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 7. Measuring Corporate Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

BUSINESS PLAN 20072009

FOREWORD by the President and Chief Executive Ofcer


Dear NAV CANADA Stakeholder, I am pleased to present the NAV CANADA Business Plan for the period 20072009. This plan represents a high level view of our vision, goals and objectives, and the specific initiatives and programs which will enable us to achieve them. Our ten years of experience as the owner and operator of the Canadian civil air navigation system has certainly taught us that business planning in the aviation industry is a dynamic exercise, which recognizes that objectives must sometimes be amended as we constantly strive to meet our main goals of safety, efficiency and cost effectiveness. Our Annual Report provides information on how we are performing against this plan. Along with the whole NAV CANADA team, I encourage you to provide us with your feedback on the contents of this plan or any other issue.

John W. Crichton

BUSINESS PLAN 20072009

Top Priorities
Enhance air navigation system safety. Improve employee engagement through the effective management of people, focusing especially on leadership and people practices. Successfully implement the Canadian Automated Air Traffic System (CAATS). Maintain effective control of overall headcount while improving operational training success to achieve full staffing of our air traffic services facilities. Reduce the number and severity of customer restrictions on airspace usage that are within NAV CANADAs control. Reduce customer service charges through effective cost controls and revenue generating initiatives. Complete the development of, and publish, appropriate benchmarking data.

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BUSINESS PLAN 20072009

1. CORPORATE BACKGROUND AND BUSINESS CONTEXT


NAV CANADA is the owner and operator of Canadas civil air navigation system (ANS) and provides its customersairlines and other owners and operators of aircraftwith Air Traffic Control, flight information, weather briefings, airport advisory services, aeronautical information services and electronic aids to navigation. NAV CANADA is the private sector non-share capital company which purchased the ANS from the Federal Government, on November 1, 1996, for $1.5 billion. NAV CANADA is governed by a Board of Directors comprised of 10 appointees from the four founding Members of NAV CANADA as follows: 4 from Air Carriers; 1 from General and Business Aviation; 3 from the Federal Government; 2 from Bargaining Agents; as well as 4 independent Directors, appointed by the Board, unrelated to other stakeholders. The President and Chief Executive Officer is also a Director. In addition to the four Member groups, NAV CANADA has approximately 180 Associate Members who are customers, groups and individuals with an interest in aviation and air navigation. Associate Members elect an Advisory Committee, which provides advice to the Board of Directors on a wide range of ANS-related issues.

BUSINESS PLAN 20072009

Approximately 5,400 dedicated employees work at NAV CANADA. The Company is organized as depicted in the following chart:

Board of Directors

Advisory Committee

President and CEO John W. Crichton

VP, Operations Kathleen C. Fox

VP, Technical Operations George H. Powell

VP, Engineering Kim Troutman

VP, Finance, CFO and Treasurer William G. Fenton

VP, Safety and Quality John F. David

VP and Human Resources Officer Richard J. Dixon

VP, Customer and Commercial Services Andrew Campbell

VP, General Counsel and Corporate Secretary Neil R. Wilson

VP and Chief Technology Officer Sidney Koslow

Director Communications John Morris

NAV CANADA facilities across the country include seven Area Control Centres, 42 control towers, 60 Flight Service Stations, seven Flight Information Centres, 38 maintenance centres, as well as over 1,000 unstaffed navigational aid sites (see figure 1). In addition to a headquarters located in Ottawa, the Company has a Technical Systems Centre, a Simulation Centre and a National Operations Centre in Ottawa, and a Training Institute and Conference Centre in Cornwall, Ontario.

BUSINESS PLAN 20072009

Figure 1Facility Map

NAV CANADA revenues come primarily from service charges paid by customers. In accordance with the Civil Air Navigation Services Commercialization Act (CANSCA), NAV CANADA sets customer service charges at a level necessary to recover the cost of providing its services. The Companys acquisition of the ANS, and its ongoing capital requirements, are financed with debt issued in the public markets. The Company maintains one of the worlds best ANS safety records and incorporates a Safety Management System that supports an already strong safety culture.

BUSINESS PLAN 20072009

Over the last ten years NAV CANADA has saved approximately $100 million annually in operating costs as a result of restructuring. These savings have been passed on to customers. At the same time, the Company has adopted an aggressive strategy to modernize and enhance the delivery of air trafc services across the country. Over $1 billion has been invested in new systems and technologies since 1996. The Companys employees are highly focused on achieving NAV CANADAs overarching objectives related to safety, efficiency and modernization.

Business Context
There are over 11 million aircraft movements associated with NAV CANADA Area Control Centres, Control Towers, Flight Service Stations and Remote Aerodrome Advisory Services annually. These movements include take-offs, landings and overflights in domestic airspace and international airspace assigned to Canadian control. The volume of air traffic in Canadian controlled airspace is central to any assessment of NAV CANADAs business context. Beginning in 2001, a series of negative events significantly impacted air traffic volumes. Considerable efforts were required by the Company to mitigate the impact of declining revenues. Traffic returned to pre-2001 levels in fiscal 2005 and is expected to grow in the order of 4 per cent in fiscal 2007. Figure 2 shows traffic in weighted charging units. Despite steady traffic growth over the past few years, our customers continue to face enormous cost pressures, in an intensely competitive environment. They are looking to us to add value to our services by helping them safely reduce the cost of flight operations. One way to do that is through improved ANS efficiency that reduces traffic delays and fuel burn. Future air traffic volumes may be influenced by several factors, including the pace of economic growth, the impact of low cost carriers, airline restructurings and insolvencies, the impact of increased fuel costs, and the effects of terrorist activities or health epidemics including pandemics. Continued focus on cost control will ensure an efficient ANS that is prepared to respond to any eventuality.

BUSINESS PLAN 20072009

Figure 2Weighted Charging Units (Millions)


100 90 80 Weighted Charging Units (Millions) 70 60 50 40 30 20 10 0 Sep Oct Nov Dec Jan FY 2005 Feb FY 2006 Mar Apr FY 2007 May Jun Jul Aug

BUSINESS PLAN 20072009

2. CORPORATE VISION, MISSION, OBJECTIVES, and VALUES


Vision
NAV CANADAs vision is to be the worlds most respected ANS: in the eyes of the flying public for our safety record; in the eyes of our customers for our fee levels, customer service, efficiency and modern technology; and in the eyes of our employees for establishing a motivating and satisfying workplace with competitive compensation and challenging career opportunities.

Mission
NAV CANADA facilitates the safe movement of aircraft, efficiently and costeffectively, through the provision of air navigation services on a long-term, sustainable basis.

Overarching Objectives
The Company will achieve its Mission by: 1. Maintaining a safety record in the top decile of major Air Navigation Service Providers (ANSPs) worldwide; 2. Maintaining ANS customer service charges, on average, in the bottom quartile (lowest charges) of major ANSPs worldwide; 3. Implementing and maintaining a modern, cost-efficient ANS technology platform in the top quartile of major ANSPs worldwide; 4. Ensuring that the growth in costs of providing air navigation services does not exceed the growth in charging units, thereby resulting in a decline in customer service charges over the long term; and 5. Creating a productive and fulfilling workplace environment which places NAV CANADA amongst the best employers in Canada. The goals of each department within NAV CANADA are designed to support these overarching objectives.

BUSINESS PLAN 20072009

Values
The values we live by guide our everyday actions and serve as a constant reminder of our commitments. They are also an integral part of how we do business, linking the high standards we set for ourselves with the realities that go into making ethical conduct a way of life. Respect NAV CANADA promotes an environment in which all interactions with employees, bargaining agents, managers, customers, suppliers, the public and stakeholders are based on respectfor each others opinions, perspectives, experience and contribution. The Company regards courteous and responsible behaviour as the foundation of respectful interpersonal behaviour. Additional dimensions of respect that also apply in our workplace include trust, fairness, equity, honesty, integrity, commitment and loyalty. On the other hand, respect does not mean that we cannot disagree, in good faith, on matters of principle or interpretation or perception of factual situations. It does mean that when such situations arise, we will disagree in a tactful and diplomatic manner. Excellence Excellence, rst and foremost, applies to NAV CANADAs mission of providing a safe Air Navigation System. This focus is supported by particular emphasis on attention to detail, a strategic risk management orientation, and efficient decision-making. NAV CANADA considers other important aspects of excellence to include professionalism, positive attitude, acceptance of responsibility and accountability, competence, commitment, reliability, honest communications, financial and operational effectiveness and efciency, quality, exibility, cooperation, sharing and other aspects of performing work and team work in a superior fashion. Customer Service Serving NAV CANADAs customers is a very important priority and everything done at NAV CANADA is oriented toward meeting customer needs for safe, efficient and cost-effective air navigation services. The Companys ultimate success rests on safety and on its ability to provide the best possible service.

BUSINESS PLAN 20072009

Business Principles
Safety First NAV CANADAs one and only product, conceptually speaking, is safety. Our primary goal is to reduce risk in the air navigation system to as low a level as is reasonably achievable. The Company maintains a Safety Charter, which emphasizes this focus: Safety is a part of everyones job. Safety applies to everything we do without exception. We will meet or exceed our safety targets and our customers expectations. We will achieve excellence in safety through open communication. We will make a safe system even safer.

Customer Service Focus Whether it is weather observations, the production of aeronautical publications, or the provision of air traffic control, or advisory services, the ANS is fundamentally a service. Regular dialogue with our customers helps us to remain focused on meeting their requirements, and on providing cost effective services that support the safety and efficiency of their operations. Transparency and Consultation The Company conducts its business in a transparent way and consults with customers and stakeholders directly or through representative associations and committees. Consultation with customers is essential to ensuring that the Companys services are provided in a way that meets customers requirements and that the charging methodology results in service charges that are fair and reasonable. Provision of a Safe, Challenging and Rewarding Workplace The Companys ambitious safety, service and cost control goals can only be met through the day-to-day work of the dedicated professionals who manage and operate the ANS. People are the essence of NAV CANADAs business and are essential to the attainment of the Companys objectives. The Company is committed to providing a workplace that supports and engages its employees.

BUSINESS PLAN 20072009

International Leadership and Co-operation NAV CANADA believes that sharing information with other ANSPs, and deploying common technologies whenever possible, is in the interest of our mutual customers. When developing its plans and priorities, NAV CANADA coordinates regionally and globally to promote international system compatibility for the benefit of its customers. Prudent Financial Management NAV CANADA fulfills its essential services mandate based on a sound financial foundation, evidenced in part through high credit ratings in the financial markets. Maintaining this foundation requires a fiscally prudent approach that balances the interests of the Companys key stakeholders while complying with our statutory and contractual obligations.

BUSINESS PLAN 20072009

3. SAFETYMAINTAINING THE FOCUS ON JOB ONE


NAV CANADA has identified the following strategic safety goal: to reduce safety risks resulting from the provision by NAV CANADA of Air Navigation Services and products to a level as low as reasonably achievable.

Specific corporate safety goals for 2006-2008 are: to enhance mechanisms to enable NAV CANADA to better communicate safety hazards and risks; to evaluate the effectiveness of operational risk management activities; and to sustain or enhance safety performance through investment in technology.

Conceptually, safety is NAV CANADAs only productsafety underpins everything the Company does. ANS safety depends on a complex and dynamic interaction between people, procedures, technology and the working environment. NAV CANADA maintains one of the best ANS safety records in the world. The table below shows a decline in the rate of losses of separation between Instrument Flight Rules (IFR) aircraft per 100,000 movements over the last four years. (see Fig 3). A strong safety culture encourages open safety reporting. NAV CANADA maintains a comprehensive safety reporting system and investigates all Air Traffic Services (ATS) incidents, regardless of whether or not a loss of separation occurred.

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BUSINESS PLAN 20072009

Figure 3Rate of IFR/IFR Loss of Separation per 100,000 Movements


1.050 1.000 0.950 0.900 0.850 0.800 0.750 0.700

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Note: The data in the above chart reflects a moving 20-quarter average of losses of separation in this category involving two aircraft operating under instrument flight rules.

Communication
NAV CANADA has developed and implemented a comprehensive Safety Management System (SMS). The communication of safety information is one of the key requirements of an SMS. A safety survey of all employees conducted in 2005 showed that employees wanted to be better informed of the ongoing work being done by all functional groups in the area of safety initiatives, projects and processes. Over the next year the Company will focus on enhancing the understanding of safety culture through the development and communication of safety initiatives. More information exchange sessions will be held to promote open discussion and the exchange of ideas on best practices and innovative safety initiatives. Additional communications will be undertaken regarding the enhanced integrated SMS processes for operational systems, equipment and facilities to ensure that all parties fully understand roles and responsibilities with respect to the identification and mitigation of operational hazards.

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BUSINESS PLAN 20072009

Risk Management
The Company will evaluate the appropriateness and effectiveness of risk monitoring on key safety risks. We will also look at how effective our contractors, suppliers and other third party organizations are at meeting safety management requirements.

Assessing Technology Implementation


Fast paced technological advancement has the potential to leave the human using the technology in a position of catch up. An understanding of the appropriate pace of technology implementation and its effects on the human component of the system is therefore essential. The Company will develop strategic plans for enhancing the integration of industry-leading practices in Human Factors into the design, development, implementation, operation and maintenance of our operational systems. We will also seek to identify the means to use existing data and processes to identify Human Factors issues related to the implementation of new technology. Additional details regarding the Companys safety objectives and activities can be found in the Companys Corporate Safety Plan at www.navcanada.ca.

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BUSINESS PLAN 20072009

4. PEOPLE ESSENTIAL TO OUR SUCCESS


NAV CANADAs people goals are: to sustain a motivated and high quality workforce through focused leadership, learning and development; to foster a constructive, trust and respect-based relationship between employees, their unions and the Company as employer; to provide a safe and healthy work environment for employees while promoting a healthy lifestyle; to actively promote the principles of excellence, efficiency, customer service and respect within NAV CANADA; and to achieve full operational staffing.

The attainment of NAV CANADAs corporate goals depends on skilled employees with a safety and customer-focused attitude and a dedication to excellence. The Companys people strategy is focused on putting the right people with the right skills and tools in the right places, and sustaining and supporting their dedication to excellence.

Leadership, Learning and Development


Leadership at all levels is critical to the Companys ability to adapt and deal with the complexity and constant changes inherent in the business environment. Through learning, evaluation and development strategies NAV CANADA is providing its employees with the programs and tools they need to support a high performing organization. The Company will provide employees with the learning and development necessary to excel at their jobs through extensive NAV CANADA focused training programs. In addition to up-to-date technical training, this includes developing, optimizing and leveraging managerial and leadership competencies through PINNACLE, the Companys management development program.

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BUSINESS PLAN 20072009

Recruitment and retention of talent is critical to the success of any organization. NAV CANADA monitors human resource requirements closely and maintains succession plans focused on identifying and developing the talent and skills required to meet the needs of the organization. The Leadership Evaluation and Accelerated Development (LEAD) program is one strategy used for developing corporate leadership needed for the future. Attracting talent also requires the promotion of NAV CANADA as an employer to outside candidates with the potential to join the Company at all levels. This is accomplished by maintaining an active prole in the professional community and with educational institutions, as well as regularly reviewing the Companys human resource policies and total compensation plans, and promoting a culture of recognition, engagement and performance.

Reinforcing the Values Essential to Success


The engagement of employees is an important determinant of organizational success. In 2006 NAV CANADA adopted as one of its overarching objectives the creation of a productive and fulfilling workplace environment which will place NAV CANADA among the best employers in Canada. An employee engagement survey was conducted in the fall of 2006 to assess corporate climate and measure engagement levels. Both managers and employees will be surveyed next in December 2008, with regular surveys occurring every two years after that. The Companys response to the 2006 survey outcomes will seek to address the major themes identified. The key priorities for improving engagement as a result of the last series of surveys include executive leadership, communications, recognition, career planning and management development, and human resources practices. Initiatives have been launched in each of these areas and will be refined in response to the latest survey results. The Company is developing programs and tools to support a performance based culture. Recognition of performance is a critical component to the strategy. Additionally, customer service measures and service standards are being implemented within the Human Resources Department and further streamlining of systems and processes will be made to assist managers in applying NAV CANADAs people practices effectively and consistently.

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BUSINESS PLAN 20072009

The Employee/UnionEmployer Relationship


Effective labour and employment relations between management, employees and their bargaining agents are very important to the business. Approximately 90 per cent of the Companys employees are represented by one of eight different bargaining agents as follows: Air Traffic Specialists Local 2245 CAW-Canada; Association of Canadian Financial Officers (ACFO); Canadian Federal Pilots Association (CFPA); Canadian Auto Workers Local 1016; Canadian Air Traffic Control Association Canadian Auto Workers Local 5454; International Brotherhood of Electrical Workers (IBEW Local 2228); Professional Institute of the Public Service of Canada (PIPSC); and Public Service Alliance of Canada (PSAC).

The Company is focusing on improving communications and engagement with unions and employees. Better consultation and collaboration with the unions on decisions that affect employees, a more expedited review of grievances, and decreased reliance on third party interventions are all components of this strategy. Currently, all collective agreements with the Companys various unions are signed. The agreement with the CFPA, which goes until October 2008, is the next agreement to expire.

The Work Environment


NAV CANADA complies with all safety standards and regulations, and provides a healthy and safe workplace environment. The Company has instituted programs that raise awareness of safe work practices and potential hazards in the workplace.

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BUSINESS PLAN 20072009

A healthy physical environment has to address not only the health and safety of the workforce but must also empower and support employees in adopting a healthy lifestyle. NAV CANADA has instituted employee programs designed to promote wellness and offer a healthy and safe environment. These plans include proactive and preventive programs such as fitness activities, nutrition and wellness events, an ergonomic assessment program and education sessions. Equally important are programs that support employees and assist with their safe return to work such as the Critical Incident Stress Management (CISM) peer program, Chemical Dependency Education and Rehabilitation program (CDERP) and health professional and rehabilitation support through our Disability Management Program. Alertness strategies that assist in mitigating and managing fatigue in the workplace are also in place at operational sites.

Ofcial Languages
NAV CANADA is committed to ensuring respect for the language rights of its employees, customers, and all those with whom it does business by ensuring that English and French, the official languages of Canada, are appropriately used in the way we conduct our business. Our goal is to create a work environment conducive to the effective use of both English and French where appropriate in accordance with the Official Languages Act.

Operational Stafng Levels


NAV CANADA has approximately 5,400 employees, including 592 management staff, 1,819 technical and administrative support personnel and 3,039 operational staff. While various cost control measures have reduced overall staffing levels during the last decade since privatization, operational staffing levels have increased. Over 70 per cent of the Companys operating expenses and nearly 60 per cent of its total expenses relate to salaries and benefits. These ratios are typical for most ANS organizations worldwide. The xed-cost nature of the ANS business means that there are few opportunities to reduce labour costs in a declining market, but significant potential to achieve economies of scale in a rising marketprovided head-count is controlled. Therefore, as traffic continues to grow, NAV CANADA intends to exercise rigorous control on overall headcount, taking into account our operational staffing targets and our safety and efficiency goals.

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BUSINESS PLAN 20072009

Air Trafc Controllers


The Air Traffic Control (ATC) Operational Resource Plan is used to monitor staffing levels to ensure there are sufficient operational resources available at all Area Control Centres (ACCs) and Towers. Training is adjusted when appropriate based on changes to the stafng requirements, the expected attrition and the training output, to ensure that there is sufficient operational staff available in the right places at the right times, to provide the services required by our customers. As previously forecast, a wave of retirements is now in progress, and training continues at maximum capacity where required. While traffic growth will necessitate some increase in Air Traffic Controller staffing requirements over the period covered by this Plan, productivity improvements, largely as a result of new technologies, will reduce the amount of the staffing increase required. Basic training must continue in order to ensure the sufficient availability of Air Traffic Controllers to meet forecast traffic demand. NAV CANADA has made changes in recent years aimed at improving the quality of operational training, reducing overall training times and improving the training success rate. The Company will expand the use of computer-based training, and is examining web-based training and virtual classroom technology to determine if it could support our training programs. We are also reviewing ATC selection criteria with the intent to better refine our overall selection process. The company continues to focus on a variety of initiatives to reduce training times, enhance training effectiveness and reduce costs.

Flight Service Specialists


The Flight Service Specialist (FSS) Operational Resource Plan is used to monitor staffing levels to ensure there are sufficient operational resources available at all Flight Information Centres (FICs) and Flight Service Stations (FSS). Training is adjusted when appropriate based on changes to the staffing requirements, the attrition and the training output, to ensure that 100 per cent of requirements is maintained. Consideration is also given to the number of available staff.

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BUSINESS PLAN 20072009

Over the next several years, minor changes to overall FSS staffing requirements will occur as a result of level of service changes, the reduction in the use of High Frequency (HF) radio communications over the North Atlantic, and traffic growth. In future years, sufficient basic training will be required to maintain 100 per cent of future FSS operational staffing requirements, in order to replace those specialists who retire, depart or who leave for other job opportunities within NAV CANADA.

Technical Operations

Quebec City Control Tower and Flight Information Centre

The national maintenance program is constantly monitored for overall effectiveness and efciency pursuant to the Technical Operations departments ISO 9000 Quality Program. NAV CANADAs stafng requirement for Technical Operations is currently optimized at a level of approximately 675 skilled technologists, administrative specialists and managers. Staff have been streamed primarily into specialties consisting of Air Trafc Management (ATM), Communications, Navigation and Surveillance (CNS) or facility skill sets. Annually, the Technical Operations department develops a National Maintenance Plan which outlines the goals, objectives and work plans for the upcoming year. Technical Operations Technologists, Facility Specialists, Team Supervisors and Managers contribute to the development of the Plan by participating in a series of national advisory group meetings which provide a forum for program discussion and the review of accomplishments and priorities.

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BUSINESS PLAN 20072009

5. DELIVERING THE SERVICE


NAV CANADAs customers operate aircraft in Canada and in international airspace where we provide service. Their requirements are to: Operate safely; Maintain schedules; Operate cost-effectively by: minimizing aircraft operating costs; taking full advantage of investments in cockpit technology; and obtaining good value from fees paid to NAV CANADA.

NAV CANADA helps its customers meet these requirements through a variety of means, including: applying Safety Management System (SMS) principles to evaluate any proposed change in services or products; seeking to increase airspace capacity to reduce delays and disruptions that affect schedules; designing instrument approach procedures with lower minima that increase airport accessibility; co-ordinating efforts with customers to match aircraft and ANS technology solutions; accommodating customer-preferred routes to the maximum extent possible; planning and managing airspace effectively to meet customer needs; improving internal productivity; coordinating planning on a regional and global basis to promote interoperability with other ANSPs; developing requirements for services, products, procedures and systems that are consistent with customers goals; reviewing priorities to maintain the focus on customers goals; and coordinating operations and planning with airport operators to maximize airport operating efficiencies and minimize costs to air operators.

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BUSINESS PLAN 20072009

Due to the nature of the aviation business, external factors can significantly affect our customers and in turn influence service provision. NAV CANADA must keep abreast of the changing environment to respond proactively to customers needs. Some of the more important factors and trends are: The overall business environment as it impacts commercial air traffic; The increased use of regional aircraft, meaning more flights carrying the same number of passengers, and the use of regional jets which compete with other jets for the higher flight levels; The hub and spoke concept which puts a premium on just in time arrival at the busiest airports; The trend to polar routes which cross paths with Atlantic and Pacic trafc; The rate at which operators equip with new technology such as Global Navigation Satellite system (GNSS); The emergence of very large aircraft such as the A380 coupled with the emergence of Very Light Jets (VLJs); Open skies and regulatory harmonization with the United States; and The emergence of Unmanned Aerial Vehicles (UAVs).

Adopting New Technology


The ANS currently comprises more than 100 different Communications, Navigation, Surveillance/Air Traffic Management (CNS/ATM) system types with more than 10,000 individual systems deployed across the country. The modernization of the ANS is an ongoing process which is essential for the long term viability of the system. NAV CANADA believes that a modernized ANS is a safe and efficient ANS. A significant amount of the new technologies being introduced involve the sharing of data among aircraft, dispatchers and ANS operational staff to support better strategic and tactical decision-making. Therefore, benefits may depend on parallel investments by NAV CANADA and aircraft operators. Dialogue with customers on benets and requirements is essential to decisions on adopting technology and coordinating the timing of corporate investments.

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BUSINESS PLAN 20072009

To minimize technical, cost and schedule risks, NAV CANADA follows an incremental approach to adopting existing technology that allows the Company to derive early benefits and provides a path to future benefits. Whenever possible, off-the-shelf technology is used to avoid the risks associated with system development. It is NAV CANADAs goal to adopt new technology in coordination with all of its stakeholders: to ensure that new technology is introduced safely; to ensure that customers can plan investments in aircraft technology that work with ANS technology to provide operational benefits; to ensure acceptance of new technology by customers, pilots and the NAV CANADA staff involved in providing services; and to ensure the effective use of resources.

Near-Term Service Trends


During the business plan period, NAV CANADA anticipates the following changes in the services it provides: more area navigation (RNAV) and Required Navigation Performance (RNP) procedures to match customer equipage; improvements in air traffic flow management to increase airspace capacity through a reduction in complexity, to maximize runway utilization and to minimize deviations from optimal flight paths; the implementation of the Canadian Automated Air Traffic System (CAATS) to streamline the exchange of ATC operational data, enhance productivity and support better, more responsive service to customers; the use of more Controller decision support tools and safety net features aimed at reducing routine tasks, enhancing productivity and improving safety and service;

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BUSINESS PLAN 20072009

redesign of the Remote Communications Outlet (RCO) network to reduce frequency congestion and to allow for more responsive delivery of Flight Information Services En Route (FISE); the implementation of level of service changes to better align service with changing customer requirements; expanded use of air to ground data-link, Automatic Dependent SurveillanceBroadcast (ADS-B) and Multilateration to support communications and surveillance functions in the interest of increasing airspace capacity and supporting customer-preferred trajectories; the replacement of obsolete and in some cases unreliable infrastructure to reduce downtime and maintenance costs; expanded use of the Internet to aid pilot flight planning and accept flight plans from pilots and dispatchers; expanded use of Automated Weather Observation Systems (AWOS) to increase the availability of weather data and improve the efficiency of weather data gathering; expanded use of weather cameras; airspace changes in Vancouver, Toronto, Ottawa, and Montreal and the northern Alberta/northern British Columbia area known as the Oil Patch to resolve safety and efficiency issues; the reduction in traditional non-precision approaches, with the increased use of Wide Area Augmentation System (WAAS) and onboard systems; expanded use of simulation in the development of airspace plans and in the introduction of new ATM hardware and software; and more transparency and consultation with customers on the Companys strategic plans.

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BUSINESS PLAN 20072009

5.1 Air Trafc Management


The Company will pursue the following goals in support of ongoing improvements to Air Trafc Management: reduce the number and severity of ANS-controllable customer restrictions in airspace managed by NAV CANADA; continue investigation into the possibility of reduced separation standards through procedural changes and improvements in CNS/ATM technologies; increase the use of automated Decision Support Tools to reduce ATC workload and improve safety and efficiency; work with customers to optimize route structures and increase the use of customer-preferred trajectories; invest in current and developing ATM technology to meet specific customer challenges; reduce costs for the implementation of new ATM systems through the use of simulation throughout the design and fielding process; exercise more sophisticated air traffic flow and capacity management, with the emphasis on increased capacity rather than demand management; continue to apply and develop new collaborative, decision-making models between ATC, aircraft operators and airports; measure the operational performance of systems and procedures; continue to contribute to the development of international standards, policies and guidance material on air traffic management; and practice more dynamic and flexible use of airspace in identified areas to include the ability to adjust to changing circumstances while keeping tactical ATC intervention to a minimum.

Effective air trafc management is a key element of the service NAV CANADA provides to its customers. Over the next three years NAV CANADA will continue to implement proven technologies and procedures and will investigate new initiatives to improve the Companys performance in this area.

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Reducing Flight Restrictions


NAV CANADA continues to focus on reducing customer service restrictions nationally. Re-examination of training, staffing, equipment, airspace, and consultations with staff and customers was undertaken in the past year. This integrated approach has resulted in a number of new initiatives which will, in the longer-term, enable the provision of a more consistent level of service. Edmonton ACC implemented a number of initiatives resulting in a more streamlined approach to air traffic control in the Flight Information Region. These internal airspace realignments along with equipment enhancements have provided Air Traffic Controllers with more tools to effectively manage the current and anticipated future growth in traffic. Staffing levels in the Edmonton ACC continue to improve. Staffing is projected to be at 95% by August 2008 and training continues at maximum capacity.

Route Changes
As the percentage of aircraft equipped for RNAV increases, it will be possible to improve efficiency by basing routes on RNAV rather than on the location of ground aids. The Companys focus will be on how air trafc can most efciently be served to maximize customer preferred trajectories through the application of random routes, flex tracks and fixed tracks.

Canadian Automated Air Trafc System (CAATS)


CAATS promises to enhance safety, reduce Controller workload, and provide increased operational efficiencies for NAV CANADA and its customers. It provides a new Flight Data Processing System (FDPS) that replaces several systems, automating ight prole monitoring and extending conict prediction and detection into non-radar airspace. The system has been implemented in Moncton, Gander and Winnipeg ACCs. The schedule for deployment to the remaining ACCs is planned with start dates as follows: Montreal ACC April 2007 Toronto ACC November 2007 Vancouver ACC March 2008 Edmonton ACC November 2008

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The Company has also developed a long-term strategy for introduction of advanced functionality, including CAATS training simulation capabilities.

Scheduling and Sequencing System (SASS)


SASS will improve operational efciency through computer automation of the sequencing and scheduling of arrival trafc and will assist in the allocation of available landing slots and therefore minimize delays. It also provides the capability to apportion potential delays from en route xes to the landing runway at times when demand exceeds capacity. SASS will provide Air Trafc Controllers an enhanced ability to maximize airport efciency and deal with trafc surges. Eventually SASS will acquire arrival x times via datalink from aircraft equipped with ight management systems. The system is in operational readiness demonstration (ORD) at Toronto ACC. Evaluation is complete at Vancouver ACC with ORD planned for scal 2007.

National Operations Centre (NOC)


The NOC performs an important role in the daily operation of the ANS and is the national focal point for customer service, system status, trafc management, crisis coordination, corporate information, strategic planning, and analysis. The NOC is responsible for coordination of information regarding the status of the ANS. The NOC acts as a single point of contact for senior management, operational units, customers and other stakeholders to ensure a consistent approach to operational situations whether critical or routine. Collaborative decision-making (CDM) is central to the operations of the NOC. Using the principles of CDM, the NOC ensures that circumstances with the potential to impact the ow of air trafc are analyzed and mitigated. The NOC facilitates reductions in costs and delays by implementing Air Traffic Flow Management (ATFM) initiatives. CDM between operational units, customers, and other service providers is enhanced using e-conferencing technology and advanced web applications to provide stakeholders with operational information in real time. Current NOC initiatives include: The Airport Performance Monitor (APM) will continue to expand beyond the current Toronto, Calgary and Edmonton sites to include Vancouver, Montreal, Ottawa and Halifax airports.

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BUSINESS PLAN 20072009

The National Operations Centre in Ottawa

The Integrated Information Display System (IIDS) Web View provides current wind and Runway Visual Range (RVR) altimeter settings and active runway allocation for major airports across the country. Active runway status and Runway Surface Condition (RSC) information will be included as an enhancement in the near future. The Traffic Density Analyzer (TDA) used for collaboration in designing the daily North Atlantic Tracks (NAT) will expand to include the Northern airspace in Edmonton FIR and will be enhanced to show Notice to Airmen (NOTAM) with additional graphics and functionality. The Enhanced Trafc Management System (ETMS) maintains and monitors air traffic data and displays the data to traffic management specialists in a variety of forms on a graphic display. ETMS data is used in developing short-term strategic flow management plans and is treated as one of NAV CANADAs operational systems. Flight Schedule Monitor (FSM) is being used as part of the CDM process. With the exception of Gander, all ACCs have access to FSM. Airspace Flow Programs (AFP) is a new development in ow management tools that allows traffic managers to control demand in airspace in ways similar to how arrival demand at an airport can be managed through ground delay programs.

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BUSINESS PLAN 20072009

ATS Simulation
The ATS Simulation Centre is being upgraded with the installation of CAATS, RDPS-R and new consoles to better reflect the operational systems in use at our facilities. This will further the Companys ability to realistically replicate the operational environment in support of simulation activities and to evaluate new technologies, procedures and potential level of service changes prior to implementation.

New Decision Support Tools


In the business planning period, NAV CANADA will focus on the deployment of new decision support tools, including: Medium-Term Conflict Detection (MTCD) provides a warning of possible airspace conicts and enhances the en route controllers ability to determine whether a user-requested change in the flight plan will be conflict-free. MTCD will be developed to function in a CAATS environment. Airspace Warning Function (AWF) provides the controller advanced warning when an aircraft is predicted to enter a dened volume of airspace and an alert when aircraft actually penetrate the airspace. AWF is now in widespread use across the country and we plan to further increase its use during fiscal 2007 and 2008.

NAV CANADA Visual Aircraft Spacing Tool (VAST)

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BUSINESS PLAN 20072009

Minimum Safe Altitude Warning (MSAW) will provide controllers with audio and visual warnings for aircraft that are predicted to come too close to terrain. Operational validations have been conducted at the Companys Combined ANS facility adjacent to the Ottawa airport. Initial implementation at the first sectors in Vancouver ACC will occur in fiscal 2008. If successful, national implementation will follow. The Visual Aircraft Spacing Tool (VAST) which improves aircraft arrival rates at an airport during Instrument Meteorological Conditions (IMC). Other software upgrade tools complementary to VAST are also being assessed. One such tool is Terminal Routes Using Speed Control Techniques (TRUST). Traffic Alert Collision Avoidance System (TCAS) provides pilots with traffic advisories to enhance their situational awareness, and resolution advisories to act as a last line of defence in collision avoidance. The feasibility of down-linking TCAS resolution advisory information for display to the controller is being investigated.

Northern ATM
Traffic levels in the northern part of the Edmonton and Montreal FIRs are rising as customers increase service on North Atlantic, Pacific and Polar routes. Limited surveillance and VHF communications in these areas mean that it is difficult for ATC to allow customers to follow preferred trajectories. NAV CANADA has developed a Northern Air Trafc Management Concept of Operations (CONOPS) which proposes the use of various technologies and control techniques to address customer concerns about efciency of operations in this area. Current Operations Northern airspace is designated Canadian Minimum Navigation Performance Specications (CMNPS) to the north and Required Navigation Performance Capability (RNPC) to the south. In CMNPS airspace there is no surveillance and communications are limited to HF voice, therefore separation standards are very similar to the rules used in the North Atlantic (NAT). In RNPC airspace, lateral separation is less than in CMNPS airspace. The southern portion of this airspace is under radar surveillance.

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BUSINESS PLAN 20072009

Future Northern ATM Concept of Operations NAV CANADA plans to improve airspace capacity and overall service via expanded flow management capability, expanded VHF direct controller-pilot communications (DCPC), data link services (ADS-WPR and CPDLC) and implementation of a Northern Organized Track System (OTS). Expanded Flow Management Capability NAV CANADA is adding capability in the National Operations Centre (NOC) and in Edmonton ACC to support better detection and planning, allowing for the resolution of potential conflicts for cross Polar traffic well in advance. The NOC will monitor trafc and assist in conict resolution through collaboration with dispatchers and the appropriate ACC. Additionally, the NOC will use Flight Schedule Monitor to assist in providing flow control into domestic Oil Patch airports. Expanded VHF Communications Capability NAV CANADA will expand the provision of DCPC throughout nearly all RNPC airspace and some parts of CMNPS airspace through the installation of additional VHF voice communications facilities (PALs) in the north. The first 10 PALs were installed and commissioned in the fall of 2006 and five additional PALs will be commissioned in fall 2007. The availability of DCPC enables controllers to apply reduced longitudinal separation, meaning increased airspace capacity. Data Link (ADS-WPR and CPDLC) Edmonton ACC will be able to accept automatic dependant surveillance waypoint position reports (ADS-WPR) via data link by summer 2007. Because data link messages will be relayed via geostationary satellites orbiting over the equator, there is a large area near the North Pole where this service will not be available. ADS-WPR will be used instead of HF or VHF through Arctic Radio or VHF DCPC to provide position reports. As a result, ADS-WPR will partially mitigate the impact of HF black-outs. Controller Pilot Data Link Communications (CPDLC) will be implemented in order to provide a seamless data link service between the North Atlantic and northern domestic airspace. This capability will be introduced following implementation of CAATS in Edmonton.

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BUSINESS PLAN 20072009

Northern Organized Track System (OTS) It is estimated that the implementation of an organized track system in the north will save North Atlantic customers US$6M annually as well as provide safety, efficiency and associated environmental benefits. The Northern OTS was implemented for westbound North Atlantic traffic in January 2007. The OTS is created using airline generated Preferred Route Messages which are used to create the most operationally benecial tracks. NAV CANADA works closely with customers to develop the most efcient tracks on a daily basis. In the future, the OTS will be expanded to include tracks between cities in North America, Asia and Europe via Pacific, Cross Polar and North Atlantic routes. ADS-B Implementation The availability of surveillance and DCPC are the keys to minimum separation, maximum airspace capacity and the ability to support random routes. Analyses of International Air Transport Association (IATA) estimates for aircraft equipage indicate that 90 per cent of the flights operating in northern Canadian airspace will be equipped for ADS-B by 2010. NAV CANADA will install ADS-B ground stations in the Hudson Bay area in order to provide continuity of surveillance from the Bafn Island/Ungava Bay area through to Sensis Corporation ADS-B unit southern airspace. Following the completion of necessary changes to ATM systems, it is expected that this service will be operational in late 2008 and customers will be able to plan operations on random routes rather than on a xed route structure. Based on consultation with customers and assessment of equipage levels, airspace will be segregated vertically, allowing only ADS-B aircraft above a specified flight level. Eventually all levels FL290 and above would be restricted to ADS-B aircraft. In the airspace below FL290 a mixed equipage environment will exist for some time. Control service and flight information service utilizing ADS-B will be integrated into this airspace following high level implementation.

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BUSINESS PLAN 20072009

North Atlantic (NAT)


Customers have invested in advanced avionics. At the same time, the International Civil Aviation Organization (ICAO) has been introducing new lateral and longitudinal separation minima to take advantage of these capabilities. The current NAT ATC environment is based on a strategic separation concept, where separation is assured from oceanic entry to exit, and where controllers monitor the situation and intervene only when necessary. A key feature of Required Navigation Performance (RNP) is the application of distance-based longitudinal separation, where ATC automation systems more frequently update the relative positions of aircraft and controllers intervene to resolve conflicts based on the information provided by the FDPS. Moving from a time-based to a distance-based separation standard on the NAT would require major changes to operational processes and procedures and to the Gander and Shanwick Automated Air Traffic Systems (GAATS and SAATS), and these changes would take time and resources. Achieving near-term benefits by reducing separation therefore requires maintaining current operating techniques to the maximum extent possible, including distance/latitude-based track separation and time-based longitudinal separation. This approach is compatible with the capabilities of current FANS 1/A and other GNSS-equipped aircraft. Current NAT Operations Each day NAV CANADA and UK NATS establish the eastbound and westbound Organized Track Structure (OTS) to manage the oceanic traffic flows as efficiently as possible. Some NAT aircraft are FANS 1/A equipped, so already employ GPS, CPDLC and ADS-Contract in NAT operations. FANS 1/A equipment is specific to Boeing and Airbus aircraft, but other aircraft could meet the same performance standard with similar avionics components. These technologies increase navigation, communications and surveillance performance to the point where reducing separation becomes feasible.

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BUSINESS PLAN 20072009

Future NAT ATM Concept of Operations The goal is to improve airspace capacity and overall service by taking advantage of increased navigation, communications and surveillance performance to reduce separation. Reduced Longitudinal Separation FANS 1/A aircraft broadcast very accurate GPS-time-stamped ADS-C position reports. It should therefore be possible to safely reduce longitudinal separation between these aircraft. Retaining the use of time for longitudinal separation would mean minor changes to GAATS and SAATS, and no change to current ATC techniques used by controllers. A reduction in time-based longitudinal separation would increase overall airspace capacity and result in fuel savings, particularly by increasing the likelihood that altitude change requests could be granted. The ability to step climb enables more fuel efficient flight profiles for aircraft. This approach could enhance the provision of fuel efficient profiles without changing the basic operation, but rather providing altitude changes consistently on a case by case basis. Reduced Lateral Separation NAT flight planning, separation application and separation monitoring currently depend on a routing scheme based upon specifying significant points spaced by whole degrees of latitude at each ten degrees of longitude. A reduction to half degree lateral separation would require navigation performance that supports a 25.25NM (or less) separation standard. ICAO is developing Performance Based Navigation specications to address the need for increased capacity in oceanic and remote airspace. It is possible that the operational implementation of a reduced lateral standard in the NAT environment may require specifying required communications performance (most likely CPDLC) and/or ADS-C reporting in order to satisfy the safety case. Any such requirement would confine the main benefits to FANS 1/A equipped (or equivalent) aircraft. Studies have shown that the fuel savings available from reduced lateral separation are signicant because more aircraft are able to follow tracks closer to the optimum Minimum Time Track (MTT).

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BUSINESS PLAN 20072009

5.2 Navigation
NAV CANADAs goals in the provision of navigation services are to: allow operators to benefit from investments in satellite navigation (SatNav) and other area navigation (RNAV) avionics by making a transition to a total RNAV environment en route, in terminal areas and for some approaches; design approach procedures that take advantage of SatNav systems and other advanced avionics to deliver lower minima; design approach procedures to take advantage of the vertical guidance available from SatNav and other onboard avionics, resulting in reduced risk of controlled flight into terrain (CFIT); design airspace using the Required Navigation Performance (RNP) concept where it provides increased airspace capacity and/or customer efficiencies; and reduce the cost of providing navigation services by reducing the dependence on ground-based navigation aids.

NAV CANADA currently provides a network of ground aids to support IFR en route, terminal and approach operations. The use of area navigation (RNAV) routes and approaches is expanding, allowing operators to take advantage of onboard systems. The introduction of SatNav, based on the Global Navigation Satellite System (GNSS), has brought RNAV within reach of all operators, and makes it possible to consider a full transition to RNAV-based en route and terminal operations. However, in the meantime, some ground aids require replacement. Two factors will determine the scope of the ground aid replacement program: the rate at which aircraft operators equip with SatNav avionics; and, the extent of the requirement to retain some ground aids as part of the mitigation to the hazard posed by interference with SatNav signals. The RNP concept, which considers the accuracy, integrity, continuity and availability of an RNAV system, is directly linked to airspace design, both for route spacing and for approach design, which has positive impacts on airspace capacity. The latest airline and corporate aircraft use GNSS and other sensors,

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BUSINESS PLAN 20072009

along with aircraft-specific software, to meet RNP standards for most phases of flight. ANS providers and regulators for Canada, Mexico and the United States are continuing to implement the RNAV and RNP strategies agreed to in a joint strategy signed by the parties in 2005. GNSS avionics certified for IFR flight meet en route, terminal area and non precision approach RNP, so they support the use of new airspace designs that allow customers to follow the most fuel efcient routes. GNSS already supports highly accurate straight-in approaches with low minima to many runways at secondary airports, meaning fewer delays, diversions and overflights for operators at those airports. However, GNSS by itself does not support approaches with vertical guidance, a key to reducing the risk of CFIT. Moreover, GNSS by itself does not provide the level of availability needed to allow the Company to consider decommissioning an appreciable number of ground aids. The augmentation of GNSS with the Wide Area Augmentation System (WAAS), described below, may allow the company to reach these two goals.

RNAV Transition
The introduction of SatNav, based on the GNSS, has brought RNAV within reach of all operators, and makes it possible to consider a full transition to RNAV-based en route and terminal operations. NAV CANADA, with the support of our customers, continues to espouse the concept of RNAV everywhere and the application of RNP where required for increasing airspace capacity and/or customer efficiencies.

Wide Area Augmentation System (WAAS)


The United States Federal Aviation Administration (FAA) commissioned WAAS in 2003 to enhance GNSS service. WAAS supports instrument landing system (ILS)-like LPV (Lateral Precision with Vertical guidance) approaches, with decision altitudes as low as 250 feet AGL at over 90 per cent of runways that meet physical standards. These LPV approaches do not require navigational aids at the airport. WAAS also raises the availability of SatNav service to the point where ground aids are not required except to mitigate against potential signal interference.

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BUSINESS PLAN 20072009

NAV CANADA is fielding stations connected to the FAAs WAAS to expand LPV service coverage across southern Canada and the western Arctic. Stations have been installed in Goose Bay, Gander, Winnipeg and Iqaluit. These stations will be integrated into the North American WAAS in the fall of 2007. NAV CANADA has worked with Transport Canada to enable the use of WAAS for all phases of ight in Canada. LPV procedures are being developed and the Company will accelerate the publication of these procedures as the availability of commercial avionics and the number of equipped operators increases.

Navigation Aid Replacement/Update Projects


NAV CANADA continues to provide a network of ground-based navigational aids to support IFR en route, terminal and approach operations. Currently, some of the Companys ground aids require replacement. As mentioned above, the rate at which aircraft operators equip with SatNav avionics, and the extent of the requirement to retain some ground aids as partial mitigation to the vulnerability of SatNav signals to interference, will be assessed to determine the scope of the ground aid replacement program.

Instrument Landing System at Toronto Lester B. Pearson International Airport

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BUSINESS PLAN 20072009

In 2002, NAV CANADA identied approximately 40 ILS installed in the early 1970s which had reached the end of their life cycles. The systems are being replaced in order to improve service reliability and reduce maintenance costs, except at sites where a level of service review fails to demonstrate a continued requirement. Twenty-two have been replaced to date. The remainder will be replaced by fall 2009. The new ILS do not radiate a back course signal and therefore their installation results in a loss of service to the opposite end of the runway. A WAAS LPV approach will support a vertically-guided approach, likely with lower minima, to the former back course end of the runway. The new ILS can support Category II operations, and this, coupled with flight deck technologies, may allow the use of Category II minima without the need for expensive runway and approach lighting. NAV CANADA currently operates 130 Distance Measuring Equipment (DMEs); approximately 100 of these will soon reach the end of their projected service lives. The Company began replacing the older DMEs in 2007 with completion of the replacement project expected by the end of fiscal 2009. As the use of RNAV based on SatNav or DME-DME continues to expand there will be less reliance on Very-High Frequency Omni-directional Range (VORs). The majority of VORs are over 30 years old. An examination of customer requirements will be undertaken prior to replacement of these systems. Eight obsolete high power Non-Directional Beacons (NDBs) are being replaced and some infrastructure associated with status monitoring of NDBs is being updated. The future of NDBs will be evaluated as part of the SatNav signal vulnerability analysis.

Flight Inspection Capability


Ground-based navigational aids and instrument landing procedures require periodic flight checks to ensure they meet international safety standards. NAV CANADA utilizes aircraft equipped with sophisticated measuring and testing equipment to meet this requirement.

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BUSINESS PLAN 20072009

NAV CANADA Flight Inspection Aircraft

NAV CANADA has begun to replace key hardware components of the Flight Operations System and will integrate the equipment into two aircraft purchased in fiscal 2007. Software upgrades and functional enhancement of the flight inspection system will be completed in fiscal 2008. These changes will decrease the cost of completing this mandate while decreasing the disruption to customer flight operations and airport traffic flow. Further procedural changes and the transition to an RNAV environment will further reduce the reliance on traditional ground based VHF navigational aids in the ANS, resulting in a further decrease in flight operations related to our flight inspection capability. Through to 2009, flight inspection operations will focus on achievement of the following goals: reduce the total cost of NAV CANADA flight operations; reduce the disruption to airport traffic flows while mandated checks are being conducted; and add value to the ANS by promoting technology and procedures that will enhance air traffic flow throughout the ANS.

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BUSINESS PLAN 20072009

5.3 Surveillance
NAV CANADA strives to achieve the following goals through the provision of aircraft surveillance: enhance safety through broadening the areas of surveillance coverage both in the air and on airport surfaces; reduce restrictions to user-preferred trajectories that might result from surveillance limitations; reduce costs to acquire aircraft and airport vehicle position data; increase the volume of airspace where reduced separation standards can be applied as a result of improved surveillance; broaden the sharing of surveillance data among control facilities and with external stakeholders to enhance tactical and strategic trajectory planning; and increase flexibility in the provision of ATM.

Communications and navigation capability both contribute to airspace capacity, however, in some instances, the presence or absence of surveillance has the greatest impact on airspace capacity. In busy, complex and congested airspace, surveillance is critical in maximizing airspace capacity. As trafc levels rise in remote and oceanic areas, NAV CANADA is being proactive in responding to customer needs for user-preferred trajectories through, for example, the implementation of surveillance based on Automatic Dependent Surveillance (ADS) in the vicinity of Hudson Bay.

Surveillance Systems
Automatic Dependent Surveillance Broadcast (ADS-B) Separation standards for Primary Surveillance Radar (PSR) and Secondary Surveillance Radar (SSR) are already established in the Canadian Aviation Regulations (CARs). Work is well underway to establish separation standards for ADS and Multilateration that will see reference to surveilled targets rather than technology specific radar targets.

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BUSINESS PLAN 20072009

ADS has several response modes that serve different ATC requirements for surveillance. ADS-B equipped aircraft transmit highly accurate GNSS position reports at a rate greater than radar, meeting the target acquisition demands of SSR. Basic ADS functionality is currently operational in Gander airspace for position reporting for oceanic traffic, and is under development for Edmonton northern airspace. ADS-B will be operational in the airspace in the vicinity of Hudson Bay in 2008, providing significant customer benefits through the availability of user-preferred trajectories. Continued expansion of the volume of ADS-B surveilled airspace will be determined in conjunction with our customers and is highly dependant on the rate of avionics equipage.

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BUSINESS PLAN 20072009

Multilateration The technical evaluation of multilateration is being conducted in parallel with the necessary regulatory reform to allow the use of the technology for both ground and airborne target separations. Operational trials have been undertaken at Calgary and Springbank. NAV CANADA intends to implement Wide Area Multilateration (WAM) at Vancouver Harbour and Fort St. John in 2007 to address surveillance requirements in those areas. It is expected that multilateration will initially be used by ATC as a Decision Support Tool (DST) and beginning in early 2008, will be used for air traffic separation. Airport Surface Detection Equipment (ASDE) NAV CANADA has installed and modernized ASDE equipment at major airports in Canada because of the safety and operational efficiency aspects it provides in support of low visibility runway and taxiway operations. Enhancements to the ASDE system that will improve tracking and multipath processing are underway. A new ASDE in Edmonton, and an upgrade to the Toronto Lester B. Pearson ASDE are also being examined. Northern Airspace Display System (NADS) NADS helps Air Traffic Controllers providing service in the northern areas of Canada where there is no radar control. NADS will be enhanced to apply ADS and FMS Waypoint Reporting to improve reliability and accuracy of surveillance in northern Canada and to reduce voice radio loading.

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BUSINESS PLAN 20072009

Surveillance Data Processing and Display Systems NAV CANADA will continue to modernize and upgrade current surveillance data processing and display systems including: Radar Data Processing System (RDPS)The re-hosting of the RDPS is complete in Winnipeg, Toronto, Edmonton and Vancouver ACCs. Remaining ACCs will be completed by fall 2007. Radar Situational Display (RSiT)RSiT will be upgraded to provide Minimum Safe Altitude Warning (MSAW) capability in scal 2007. Further enhancements will be minimized as the system is replaced by CAATS. Gander Automated Air Traffic System (GAATS)GAATS has been enhanced to apply ADS and Flight Management System (FMS) Waypoint Reporting as superior alternatives to voice position reporting. That capability serves approximately half of Gander oceanic traffic and use is growing steadily. GAATS will be further enhanced to reduce ATC dependence on paper ight data strips. Additionally, improvements to the aircraft to aircraft conflict algorithms will be made in fiscal 2007. Extended Computer Display System (EXCDS)EXCDS will undergo changes to ensure smooth interoperability with CAATS and provide backup and recovery functionality. This will increase operational efficiencies in the handling of Visual Flight Rules (VFR) traffic, SSR code management and reduce ATC workload.

IIDS/EXCDS Monitor surrounded, from left to right, by the Aireld Lighting Control Panel, NARDS and ASDE.

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BUSINESS PLAN 20072009

NAV CANADA Auxiliary Radar Display System (NARDS)NARDS now provides lightning situation awareness to controllers and Flight Service Specialists (FSS). Data from the Canadian Lightning Data Network (CLDN) is displayed on NARDS so that NAV CANADA can provide advisory information or re-route traffic around severe lightning activity. With the exception of 3 FSS in western Canada, NARDS deployment is complete. Radar Data Transfer/Maintenance Data Transfer Redesign (RMR) Project This project has created a Surveillance Data Network that leverages network scalability and flexibility to provide access to surveillance data cross the country. The system will be operational at all ACCs by August 2007. FAA/DND Radar Data Sharing ProjectNAV CANADA has increased the sharing of surveillance data with external agencies and will continue to do so where ANS services are enhanced. Radar Data Analysis (RDA) UpgradeFollowing the roll-out of the new Radar Target Information Server systems, network-based surveillance data recording and archive services will be implemented through the new Radar Archive Server subsystems.

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5.4 Level of Service


NAV CANADA has identified the following Level of Service goals: regularly review the level of service NAV CANADA provides to ensure services match customers needs; ensure ANS services are provided in the most cost-effective way possible; and implement the results of the 2004 National Level of Service Review. This is an ongoing initiative forecast to be completed in fiscal 2010.

Changes to levels of service are assessed through the Aeronautical Study process. This process involves consultation with customers and other stakeholders to assess site-specific hazards and risks, and identify appropriate mitigation in accordance with recognized SMS principles.

Airspace Studies
NAV CANADA has completed a major review of airspace and procedures for the Vancouver FIR. Interim changes were implemented in 2005 to the control zones at Boundary Bay and Vancouver to address safety issues. Additional changes to the airspace structure, classication, special use airspace and training areas and IFR services and procedures will occur in the spring of 2007. The Company will also implement VFR flyways, and make other charting improvements as well as undertake pilot education efforts to improve service and safety for VFR customers. Over the longer-term the capacity of the new IFR design to accept more VFR traffic within terminal airspace and other capabilities will be assessed and procedures amended accordingly. Eventually, it is anticipated that trafc density in the Vancouver area will grow to the point that positive control of all VFR trafc within and below the Terminal Control Area will be required. Airspace reviews for other areas such as the Windsor-Toronto-Montreal corridor will be initiated within the business planning period. A focus on the efciencies associated with RNAV, airspace reclassification and other solutions will be applied to develop airspace structures that will handle long term IFR growth in conjunction with concurrent VFR operations.

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Another area of focus is services in the Oil Patch. Air trafc is rapidly growing in northern Alberta and parts of north-eastern British Columbia due to oil and gas exploration and development. As a result, the Company initiated a review of air navigation services in the area in 2006. A number of initiatives have already been implemented to improve aircraft efficiency in this area which is experiencing significant traffic growth. A review of the airspace between Edmonton, Grande Prairie and Fort McMurray above 12,500 ft ASL has been initiated to examine potential further improvements to operations. A separate review will be conducted of the airspace in the vicinity and north of Fort McMurray in 2007.

Transponder Airspace
With the expansion of the capabilities derived from the use of transponders, a review of transponder required airspace and associated airspace classifications will be undertaken. The use of transponders is already required in many control zones and terminal control areas. There are safety benefits to be gained from enhancing radar surveillance using transponders.

Procedural Altitudes
A review of approach procedure altitudes will be conducted to see if more operationally suitable constant descent angle altitudes can be used that would allow for a rationalization of the volume of controlled airspace required for an instrument procedure. This contributes to safety and efficiency and reduces cockpit workload by requiring fewer profile changes during descent and standardizing the approach technique across all procedures.

Additional Area Reviews


The Company often conducts aeronautical studies as area reviews in order to study the complete package of services provided in support of customer operations in any particular area as an integrated system. A review of our services in the oil exploration area of the McKenzie valley will be initiated in 2007. Additionally, the Company intends to complete a level of service review of the services it provides in northern Quebec which was initiated in fiscal 2006.

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5.5 Aeronautical Information Services


NAV CANADA Aeronautical Information Services (AIS) has established the following goals: meet customers requirements for aeronautical information in a safe and cost effective manner, with particular emphasis on airport and airspace access through the provision of aeronautical instrument procedures; implement a strategy for the delivery of Aeronautical Information Services that addresses the move from a product-centric AIS to a data-centric approach to Aeronautical Information Management; move towards a greater use of automation in the collection, storage, manipulation and dissemination of aeronautical data where increases in efficiency and data integrity can be achieved; and meet all of our national and international commitments with respect to compliance to standards and recommended practices in the provision of AIS.

NAV CANADA is designated to provide AIS for the purposes of ICAO Annex 4 and Annex 15. Aeronautical information is information about the aeronautical infrastructure that is essential for the safe use of ANS services and facilities. Aeronautical information is increasingly dependent on the collection and management of digital data in relational databases. NAV CANADA is moving quickly towards using aeronautical databases for procedure preparation and, investigation is ongoing into the distribution of AIS data in electronic format. NAV CANADA

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is seeking to make data available to customers in more useful standardized forms such as AIXM that can be easily manipulated for display as a product specific to their applications.

AIS Operational Implementation Plan


The Company has developed an AIS Strategic Plan that includes a business concept and operational concept and identies transitional issues. The Company has also developed an AIS Operational Implementation Plan that outlines how the strategy will be implemented over the next three years. Procedures and tools will be established to support quality control/quality assurance requirements, and to support the automated acquisition and distribution of data.

AIS Data Management System (ADMS)


The company has procured an AIS Data Management System (ADMS) that will be the authoritative source of AIS data for all AIS publications, charts and NAV CANADA operational systems. The system will be commissioned in fiscal 2007.

NOTAM Format Conversion


To meet the requirements of both domestic and international customers, NAV CANADA currently produces time sensitive flight-planning information in two NOTAM formatsCanadian Domestic and ICAO. The Company will standardize the domestic NOTAM format with the international ICAO format, which is based on geographical co-ordinates. This will simplify NOTAM format and methodology as well as support web applications, improve NOTAM functionality and make retrieval of route information more accurate.

Instrument Procedures Design Automation Tool (IPDAT) Project


Implementation of a new computer-aided design tool for designing landing approach procedures will occur in phases in fiscal 2007. This will result in a significant increase in the production capacity of instrument procedure design time and allow the Company to improve customer responsiveness.

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5.6 Aviation Weather Services


NAV CANADA has adopted the following service provision goals related to aviation weather services: improve the accuracy of weather information; improve the clarity of weather information; improve the timeliness and reliability of the delivery of weather information; improve access to weather information; reduce the costs of weather data collection, forecasting and briefing; and improve the usefulness of weather information data in support of customer requirements.

NAV CANADA is seeking to make new sources of aviation-relevant weather data available for strategic and tactical decision-making regarding aircraft routes and flow management.

Observation Data Gathering


Automated Weather Observation Systems (AWOS) AWOS are designed to produce full routine (METAR) and special (SPECI) aviation weather reports. The current AWOS in use in Canada are reaching the end of their life cycle and must be replaced. Transport Canada developed performance specifications for AWOS and issued these in March 2005 as an Exemption to Canadian Aviation Regulation 804. The next generation AWOS must demonstrate full compliance with these specifications, in part through the use of clinical observer trials. NAV CANADA has competitively selected a commercial off-the-shelf AWOS for evaluation at test sites in Iqaluit and St. Johns. Following NAV CANADA and Transport Canada acceptance of the results, a follow-on contract is expected to be issued in late 2007 for up to 81 systems, conditional upon the chosen system passing its clinical observer trials.

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The first operational installations of the new AWOS system are planned for fiscal 2008 following installation training and maintenance training. Complete conversion of the AWOS network will follow over about a five year period. The new AWOS will offer the following performance improvements over the existing technology: reporting of thunderstorms through integration of data from the CLDN; reporting of RVR at sites where such systems have been installed; and use of a heated, ice-resistant, sonic wind sensor that will reliably report wind speed and direction during most freezing precipitation and wet snow events.

Weather Cameras Weather cameras provide colour, Internet-accessible images of an aerodrome area at ten minute intervals. They allow pilots, dispatchers and weather briefers as well as forecasters access to information on actual conditions. With the aid of distance and height reference markers, these photos provide valuable information to aid in decision-making and flight planning. Beginning in late 2007, NAV CANADA will start expanding its network of weather cameras by deploying digital technology at all stand-alone AWOS and Limited Weather Information System (LWIS) sites and at selected semi-remote sites where no aviation weather information is currently available.

Forecasting
Aerodrome Forecast (TAF) Production NAV CANADA will work with the international aviation community to implement an enhancement or a replacement for the TAF that is expected to present the anticipated weather along with an indication of its probability of occurring. An on-line communications tool that will facilitate direct interaction between MSC meteorologists and FIC briefers, NOC flow managers, and air carrier dispatchers is scheduled for evaluation in early 2007.

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About 50 per cent of all aircraft movements are generated at 10 airports in Canada. Unexpected weather events at these sites, especially the top 4 (Toronto, Montreal, Calgary, and Vancouver) can have a flight schedule ripple effect throughout the ANS. More focus will therefore be placed on forecasting at these sites and their key alternates in an effort to improve flight efficiency. Hub Airport Weather Products NAV CANADA with the support of federal departments (Environment Canada and Transport Canada) is developing weather products to improve the quality of the weather information at the hub airports across Canada. This project, initiated in 2006, will cover the gap between the rigid TAF information and the lack of temporal and spatial information in the graphic forecast area (GFA). These hub forecasts will provide the granularity and the timeliness of weather information needed to make strategic and tactical decisions both at the airlines level and in Air Traffic Flow Management. Aviation Weather Website (AWWS) NAV CANADA has increased the utility of the AWWS with the addition of NOTAM, Internet Flight Planning Services, Weather Mail, and Automated Supplementary Enroute Weather Prediction (ASEP), as well as expanded the accessibility to the site through the installation of Pilot Information Kiosks at airports. The addition of airport weather cameras with realtime updated feeds on the AWWS has been of significant benefit.

A CARS weather observer at work

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5.7 Communications
NAV CANADAs goals in the delivery of aeronautical communication services are to: reduce the life-cycle cost of communication equipment as well as lowering the cost of moving data; expand Direct Controller Pilot Communication (DCPC) coverage in Northern Airspace; reduce VHF radio channel congestion; enhance communications network reliability and message clarity; and improve access to data and information products for tactical and strategic decision-making.

Voice Communications
The Company will pursue a phased investment in new digital radios. These radios are able to increase the capacity of available bandwidth by either providing a channel spacing of 8.33 KHz or by providing digital transmission, like VDL mode 3. With these new radios, NAV CANADA will be ready to easily adapt to any international communications standard.

Data Communications
Technical evaluations of available data-link technologies is ongoing. Technology selection by aircraft operators will be driven by economic feasibility; however some standardization across a large percentage of the traffic mix will need to exist for NAV CANADA to realize benefits.

Communication Projects
NAV CANADA communications initiatives fall into two broad categories: system changes that are required as part of Life-Cycle Management (LCM) and system changes that are driven by new operational requirements for ATM functions. In many cases the opportunity to include system enhancements in support of expanded ATM functions is exercised when a system is undergoing LCM review.

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Major projects are outlined below: Controller Pilot Data Link Communication (CPDLC) for FANS aircraft The first three phases of North Atlantic implementation are complete. The oceanic message set for CPDLC Phase IV is expected to be implemented across the North Atlantic in fiscal 2008. Pre-Departure Clearance (PDC)The EXCDS system that currently provides PDC 620 Protocol service will be enhanced to provide 623 protocol. This will provide PDC access to aircraft running with their tail number identification. RCO RedesignNAV CANADA has established four new frequencies for the provision of flight information services en route (FISE) in order to reduce congestion and interference on 126.7 MHz. Initial focus will be on areas of the country where congestion and interference is most acute. Deployment of new Long Range PALs to cover the Hudson Bay area. Special antennas combined with high power VHF radios will provide full DCPC around and over the Hudson Bay. Ultra High Frequency (UHF) Capability ReviewA reduction in UHF will be implemented in close cooperation with DND. Although some frequencies will be decommissioned, the same geographical coverage will be provided. National Voice Communications System (NVCS)NVCS is being installed at all operational facilities. To date 64 systems have been deployed. Backup Communications System (BUCS) BUCS provides controllers with a backup communications system in the event of failure of the primary core switch or communications equipment at the operational control position. Each ACC and 2 major control towers will be furnished with this equipment. BUCS is now in operation in Vancouver, Gander and Moncton. Installation is planned for completion in fiscal 2009. Northern PAL Project VHF coverage is being expanded in northern Canada through a large project designed to help close the gaps in coverage and support DCPC. This activity is slated for completion in fiscal 2009.

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Satellite Voice Communications (SATCOM) A proof of concept trial to provide ACCs with the ability to communicate directly with appropriately equipped aircraft via satellite voice communications commenced in the Edmonton FIR in late 2006. The goal was to gather performance data and identify any areas where mitigation may be required to address security, technical or operational concerns. The operational trial provided operational and performance data for the use of SATCOM voice for routine ATS use. NOR SATCOM voice procedures will be harmonized with those being used to support ongoing NAT SATCOM voice trials, to ensure interoperability. This may eventually lead to removal of most HF services currently used for communications beyond VHF range. NAV CANADA voice switches will be modified to incorporate the satellite communications capability in fiscal 2008.

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5.8 Maintaining and Renewing the Infrastructure


Facilities
The Company has developed a three-year infrastructure restoration and replacement plan that includes a priority list identifying the replacement of two operational facilities each year. Construction of new FSSs at Campbell River BC, and Kenora ON, and a new control tower at Saint Honor QC, have been recently completed.

Construction of new FSS in Kenora

Construction of a new control tower at Buttonville Airport is underway and will be completed in summer 2007. A major renovation is also planned for Prince Albert FSS which will include the addition of a new control tower type cab to be completed in fall 2007.

Electronic Maintenance
During the business plan period, Technical Operations will continue to review service requirements as well as the effectiveness and efciency of the electronic maintenance program by: reviewing maintenance response times to meet operational requirements; reviewing ATM response priorities;

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reviewing CNS workload; taking advantage of reduced verification and validation cycles offered by new systems, replacing legacy systems with the potential to transition to performance-based maintenance versus the time-based maintenance carried out on legacy systems; introducing specific remote maintenance monitoring and control tools that diminish the need for site visits and permit remote certication of systems; and adjusting training time required for electronics technologists based on the above.

The maintenance management system tool for Technical Operations will continue to be MAXIMO. In the near future, MAXIMO logs will be used to analyze ANS electronic systems performance issues to ensure timely corrective actions are taken, thereby reducing maintenance down time and increasing the reliability and availability of ANS systems.

System Renewal and Enhancements


Life-cycle management of existing systems is critical to the ongoing operation and sustainability of the ANS infrastructure. Some of the infrastructure and life cycle management projects that will be addressed in the next three years are as follows: Digital Voice Loggers (DVL) voice recorders are in operation at 122 sites across Canada. 109 recorders have been replaced and the remainder will be replaced by the end of fiscal 2008. Secondary Link Interface (SLI) The SLI will provide dependable alternative communication means for PALs. SLI, using various types of Sat Phones, is now being deployed at most northern PALs. FSS Information Management System (FIMS) FIMS has been divided into three deployable milestones. FIMS Milestone 1 is currently running Operational Readiness Demonstration (ORD) in North Bay. Milestone 2 is planned for the North Bay FIC in fiscal 2007. Following the completion of these two milestones, the system will be deployed in a phased approach.

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Flight Information Centres (FICs) Seven FICs at Halifax, Quebec City, Edmonton, London, Kamloops, Winnipeg and North Bay are fully operational. Work on Whitehorse is scheduled to be completed in fiscal 2007. Laser Ceilometer Replacement A replacement program is underway to provide new laser ceilometers at eleven sites to replace obsolete units and to satisfy new requirements. Two systems remain to be installed. This will be completed by the end of fiscal 2007. VOLMET A program is underway to re-host the existing VOLMET application, which provides meteorological information in-flight to international traffic, with implementation scheduled for fall 2007. Integrated Information Display System (IIDS) The IIDS system is undergoing an operating system upgrade which is scheduled to be completed in fiscal 2007. This will provide the necessary infrastructure to enhance centralized and remote maintenance, reducing operating costs and service interruptions due to maintenance activities. NAV CANADA Aircraft Movement System (NCAMS) NCAMS will be integrated into the IIDS system and centralized, and remote maintenance will be introduced. The movement updates interval will be increased from once per day to every five minutes, providing tactical information on airport performance and traffic analysis. Airport Data Acquisition and Processing System (ADAPS) ADAPS will be replaced across Canada and integrated into the IIDS system. This will allow interface with the newer Airport Lightning and Control Systems along with centralized and remote maintenance technology. Replacement of High Power HF transmitters in Gander and Cambridge Bay. NAV CANADA is intending to replace all old generation Aerocom 5 kW transmitters used to support oceanic and arctic airspace.

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Emergency Electronic Systems Static Uninterruptible Power Unit (SUPU) (EESS) Project Will provide critical back up power at ACCs and two of the Companys major towers. Work is complete at Vancouver, Moncton, Gander and Winnipeg ACCs and is underway at Toronto, Montreal and Edmonton. Installation in towers in Toronto and Vancouver will begin in fiscal 2007. ANS Monitoring and Control System (AMCS) Project An upgraded ANS equipment and system monitoring and control system is being implemented to detect and provide immediate notification of equipment status changes in order to allow service restoration as quickly as possible. Phase II of the project will see installation at the NOC and further integration of the data feeds from the ACCs. IIDS/EXCDS Simulator upgrade The IIDS/EXCDS hardware and software will be updated in all regional training schools to reect the equipment and functionality currently installed in operational facilities. NATSIM PC Program This project will enhance the functionality of the NATSIM system to meet the future needs for training ab initio Air Traffic Controllers and integrate the project into NAV CANADAs lifecycle processes.

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5.9 Commercial Business Development


NAV CANADA continues to pursue commercial business opportunities, including the sale and licensing of the Companys technologies to other ANS service providers. Efforts to date have resulted in technology sales to the Danish ANSP Naviair and to NATS in the UK. The Companys commercial business development strategy produces a number of tangible benefits for NAV CANADA, the ANS providers purchasing the products, and the Companys ANS customers. First, the revenue from the sale and licensing of these products results in customer service charges for NAV CANADAs customers that are lower than they otherwise would have been. Second, ANS providers receive value for their dollar by purchasing proven, reliable, efficient ATM products, rather than spending money reinventing the wheel. Finally, technology and process improvements, resulting from the dedicated effort put forth on these initiatives, often translate into increased efficiency and cost effectiveness in NAV CANADA operations. The Company will continue to pursue commercial business development opportunities utilizing its existing proprietary technology to the benefit of other ANS organizations and our mutual customers.

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Other revenue sources come primarily from conference and accommodation rentals at our training facility in Cornwall, Ontario and the provision of equipment maintenance services.

NAV CANADA Training and Conference Centre in Cornwall Ontario.

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6. FINANCE
Financial decision support, comprehensive budgeting, sound nancial reporting and traffic analysis are central to the support of the Companys operations. These functions provide the basis for expenditure management and revenue forecasting. Strategic business decisions are made on the basis of cost/benefit analyses, which are used to quantify the creation of value for our customers. The quality of the nancial information used internally and reported externally by the Company is a function of its internal control systems. The Company seeks to establish and maintain strong internal controls. As required by securities regulations, we have assessed the design of the Companys internal controls over financial reporting as at August 31, 2006, and will evaluate the operating effectiveness of its internal controls during the business planning period.

Customer Service Charges


NAV CANADA sets the level of its customer service charges to cover the cost of providing Air Navigation Services in accordance with the Civil Air Navigation Services Commercialization Act. Traffic and cost forecasts are key to this rate setting process. The Company develops an annual traffic forecast based on considerations that include published airline flight schedules, recent actual results and traffic forecasts by other groups (e.g. Transport Canada, ICAO, IATA). Following review for cost reduction opportunities, expenses are forecast and rates are determined. If the Company determines that adjustments to customer service charges are required, it proceeds with a formal notice followed by a 60-day consultation period. As illustrated in Figure 4, the Company has been able to keep the overall growth in customer service charges well below the rate of ination since 1999, when charges were fully implemented. This has been achieved through major cost savings from restructuring, mitigation initiatives implemented following the September 11, 2001 terrorist attacks, ongoing cost control and the generation of non-aeronautical revenues, such as from the sale and licensing of technology.

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Figure 4History of NAV CANADA Rate Changes1 Versus Consumer Price Index
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The Company has a corporate objective to keep the growth in costs less than growth in traffic to enable a reduction in service charges over the long-term. The Company has recently proposed a 3 per cent reduction in charges to take effect September 1, 2007. An extension of daily and movement based charges to jet aircraft weighing three tonnes or less is also being proposed in recognition of the entry of Very Light Jets (VLJs). Another reduction in customer service charges of 1.8 per cent on average took effect September 1, 2006 with the removal of a temporary rate adjustment that had been put in place three years earlier to help replenish the Rate Stabilization Account and recover the deficit incurred following the traffic downturn that occurred after 9/11. The Company reviewed its charging methodology and other issues related to service charges in consultation with customers in 2005 and early 2006. As a result, a number of revenue-neutral changes were implemented to better balance the charges between large and small aircraft, better reflect the impact of new technology, and better absorb the financial impact of fluctuations in air traffic.

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The implementation of Phase II of the service charge review outcomes will come into effect in 2008 with a further adjustment in the existing daily and terminal charges coming into effect on September 1, 2008 and a new charge of $10 per day (maximum $1200 per year) for aircraft weighing three tonnes or less using seven major international airports being put in place effective March 1, 2008.

Treasury
Funding was necessary to acquire the ANS from the government and funding is required to maintain and upgrade the Companys technology and operating systems. As a non-share capital corporation the Company relies on two sources of debt funding: 1) bonds and medium term notes issued in the Canadian public debt market; and 2) a credit facility provided by a syndicate of Canadian nancial institutions. The Company currently has $2,175 million in outstanding bonds and medium term notes. During scal 2007, NAV CANADA will be re-nancing a medium term note issue in the amount of $250 million.

Pension Plans
The Company has established and maintains defined benefit pension plans for its employees. The plans provide benefits based on length of service and final average earnings that are indexed for inflation. The cost of providing these pension benefits is charged to operations as employees render services. The Pension Committee of the Board of Directors reviews the pension investment policy annually. The Plans investment objective is to earn an annual rate of return over time of 4.5 per cent plus inflation. Based on an actuarial valuation of the NAV CANADA Pension Plan conducted as at January 1, 2006, the Plan was in a deficit position under both a going concern basis and a solvency basis. Although the Fund has benefited from double-digit returns in the past three years, pension liabilities have increased at a greater rate, primarily due to declining bond yields.

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The full amount of the Companys going concern and solvency contributions will be recovered through future customer service charges, in order to meet our financial covenants to our bondholders and other lenders as set out in our bond indentures. In November 2006 new regulations came into force to provide solvency funding relief for defined benefit pension plans registered under the Pension Benefits Standards Act by extending the solvency funding period from 5 years to 10 years subject to certain conditions being met. Financial information relating to the pension plans is set forth in the Companys financial statements and Management Discussion and Analysis and is communicated to all employees annually.

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7. MEASURING CORPORATE PERFORMANCE


NAV CANADA believes that benchmarking corporate performance against other ANS Service Providers (ANSPs), as well as internal benchmarking over time, is essential to demonstrating how the Company is doing. The Company is working with CANSO and participating in ICAO initiatives in this area. The results of benchmarking will be shared with customers, stakeholders and employees during fiscal 2007 in an effort to measure progress and establish best practices. The Company believes that certain principles must be followed in developing performance measures. Benchmarks should: be clear, equitable and relate to strategic objectives; be based on verifiable data; reflect/measure management influence; be consistent over time; avoid purely demand driven comparisons; reflect overall traffic workload and exposure; and represent value to customers in service/money terms.

Benchmarking-based objectives have been adopted in four key areas as follows:


1. Safety Maintain a safety record in the top decile of major ANSPs worldwide. 2. Technology Implement and maintain a modern, cost-effective ANS technology platform in the top quartile of major ANSPs worldwide. 3. Service Charges Maintain ANS customer service charges, on average, in the bottom quartile (low charges) of major ANSPs worldwide. 4. Employee Engagement Create a productive and fulfilling workplace environment which places NAV CANADA amongst the best employers in Canada.

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The Company is working to establish appropriate benchmarking methodologies in these areas and is also expanding the scope of its benchmarking activities to other areas such as quality of service (e.g. flight restrictions, delays), productivity, and cost effectiveness.

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GLOSSARY
Note: This glossary is designed to be a reference tool for the NAV CANADA Business Plan. It is not meant as an official terminology aid.
ACC Area Control CentreAn Air Traffic Control unit that provides service to aircraft operating within a specific region of Canadian airspace. ADAPS Automatic Data Acquisition and Processing SystemA system that acquires and distributes information related to navigational aid status, runway lights, runway visual range, local altimeter, wind speed, and wind direction. ADS Automatic Dependent SurveillanceA surveillance technique in which aircraft automatically provide information derived from on-board navigation and positionfixing systems, including aircraft identification and four-dimensional position. AFP Airspace Flow ProgramsA system that allows traffic managers to control airspace demand in ways similar to the use of Ground Delay Programs to control airport arrival demand. AFTN Aeronautical Fixed Telecommunications NetworkThe integrated worldwide system of aeronautical fixed circuits provided, as part of the aeronautical fixed service, for the exchange of messages between the aeronautical fixed stations within the network. AIP Aeronautical Information PublicationA publication issued by or with the authority of a State and containing aeronautical information of a lasting character essential to air navigation. AIS Aeronautical Information ServiceThe provision of information necessary for the safety, regularity and efciency of domestic and international air navigation. AMCS Air Navigation System Monitoring and Control SystemA real-time system which allows the remote maintenance, monitoring and control of electronic air navigation systems and equipment. ANS Air Navigation SystemIn this document ANS specifically refers to the Canadian civil air navigation system.

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ANSPs Air Navigation Service ProvidersThe organizations which are responsible for the provision of air navigation services in domestic or international airspace. APM Airport Performance MonitorA browser-based software application reporting tool that tracks aircraft ground activities at selected Canadian airports and allows for the analysis of ground activities in order to maximize efficiency. ARGUS A confidential safety reporting program administered by NAV CANADAs Office of Safety and Quality intended to complement existing safety reporting programs within the company. ASDE Airport Surface Detection EquipmentRadar equipment specifically designed to detect all principal features on the surface of an airport, including aircraft and vehicular traffic, and to present the entire image on a radar indicator console in the control tower. ASEP Automated Supplementary Enroute Weather PredictionThis product provides route, date/time and altitude-specific meteorological predictions for flight planning purposes. ATC Air Traffic ControlA service provided to aircraft in controlled airspace that provides safe separation of aircraft through positive control by licensed Air Traffic Controllers. ATFM Air Traffic Flow ManagementA service established with the objective of contributing to a safe, orderly and expeditious flow of air traffic. ATM Air Traffic ManagementA management concept aimed at ensuring full utilization of Air Traffic Control systems, according to the possibilities offered by future air navigation systems. ATS Air Traffic ServicesThis group of services offered to the users of the civil air navigation system includes air traffic control services, airport advisory services and alerting services. AWF Airspace Warning FunctionA medium conflict alert feature available on operational display systems across the country which gives Controllers warning predictions, and reinforces safety defences.

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AWOS Automated Weather Observation SystemA set of meteorological sensors and associated systems designed to electronically collect and disseminate meteorological data. BUCS Back-Up Voice Communications SystemA system that provides a credible subset of the primary voice switch features to permit continued operations in the event of the primary voice switch failure. CAATS Canadian Automated Air Traffic SystemA system that automates Air Traffic Control functions. Its main feature is a flight data processing system, which automates ight prole monitoring and extends conict prediction and detection into non-radar airspace. CANSCA Civil Air Navigation Services Commercialization ActAn Act of Parliament which passed in 1996 and transferred the ownership and responsibility for the operation of the Canadian civil air navigation system to NAV CANADA. CARs Canadian Aviation RegulationsRegulations enacted under the authority of the Aeronautics Act. Part VIII of the CARs governs civil air navigation in Canada. Part VIII of the CARs and their associated standards came into force on October 10, 1996. CDERP Chemical Dependency Education and Rehabilitation ProgramA NAV CANADA peer support program under the umbrella of the Health, Wellness and Support programs available to Air Traffic Controllers. CFIT Controlled Flight into TerrainAn occurrence in which an aircraft is flown into terrain, water or an obstacle with no prior awareness on the part of the crew of the impending disaster. CISM Critical Incident Stress ManagementA NAV CANADA peer support program under the umbrella of the Health, Wellness and Support programs available to Air Traffic Controllers and flight service specialists. CLDN Canadian Lightning Detection NetworkA detection network maintained by the Meteorological Service of Canada which is displayed on Air Traffic Control systems and available on NAV CANADA Auxiliary Radar Display System.

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CMNPS Canadian Minimum Navigation Performance SpecificationsThis term refers to the navigation performance capability of aircraft operating in a specified portion of the Canadian Domestic Airspace. CNS Communications/Navigation/SurveillanceThis term refers to a specific branch of Engineering at NAV CANADA and to the basic elements of the air navigation systems. CPDLC Controller-Pilot Data Link CommunicationsA means of direct electronic communication between Controller and pilot using data link instead of voice. These communications may include clearances, requests and reports. CRDA Converging Runway Display AidRadar software that permits the sequencing and spacing of aircraft by terminal Controllers. DCPC Direct Controller-Pilot CommunicationsCommunications between a Controller and a pilot without resort to a relay through another unit. DME Distance Measuring EquipmentAirborne and ground equipment used to measure the slant range distance from a DME navigational aid in nautical miles. DVL Digital Voice LoggerA digital voice recording and playback unit that allows for simultaneous multi-channel recording and multi-user access. ERM Enterprise Risk ManagementThe process of planning, organizing, leading, and controlling the activities of an organization in order to minimize the effects of risk on an organizations capital and earnings. ETMS Enhanced Traffic Management SystemA system that monitors air traffic data and graphically displays this data for use by traffic management specialists. ETSO Enterprise Technology Security OfficeA branch of NAV CANADAs Information Management Group dedicated to maintaining the organisations corporate technology security as it relates to technology security, privacy and cyber security. EXCDS Extended Computer Display SystemA flight data system designed to replace flight data strips and the Air Traffic Controllers work environment into a paperfree environment.

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FAA Federal Aviation AdministrationThe federal authority responsible for civil aviation in the U.S.A. FCOM Flight Communications Search ManualAn application designed for air traffic services which allows specialists to search a central database for the identication of possible landing sites and contacts for aircraft when communications search activity is required. FDPS Flight Data Processing SystemA system which provides electronic or paper strips detailing ight number, destination, altitude and other relevant information to pertinent Air Traffic Control units. FIC Flight Information CentreA centralized air traffic services unit established to provide flight information services. FIMS FSS Information Management SystemA system that provides flight planning and alerting, weather briefing, and aeronautical information to flight service specialists. FIR Flight Information RegionAirspace of dened dimensions extending upwards from the surface of the earth within which flight information and alerting services are provided. FISE Flight Information Service En RouteThe provision of aeronautical information and advice pertinent to the en route phase of ight. FL Flight LevelThe altitude expressed in hundreds of feet indicated on an altimeter set to a specific pressure. FLAS Flight Level Allocation SchemeA system used to ensure vertical separation where flows cross in non-surveillance airspace. FSM Flight Schedule MonitorA system that monitors ights arriving and departing from an airport while tracking demand and capacity at the airport. FSS Flight Service StationAn air traffic service unit established to provide select airport related flight services. Also refers to Flight Service Specialists who work at FICs and FSS.

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GAATS Gander Automated Air Trafc SystemA system used by Air Trafc Controllers to aid in the provision of Air Traffic Control service to aircraft over the North Atlantic Ocean. GFA Graphic Area ForecastA graphical depiction of the most probable meteorological conditions between the surface and 24,000 feet over a given area at a specific time. GNSS Global Navigation satellite system (ICAOgeneric)A navigation system based on the transmission of signals from satellites. HF High FrequencyA high frequency, specically, the band between 3 and 30 MHz. IATA International Air Transport AssociationThe Association founded in 1945 for inter-airline cooperation in promoting safe, reliable, secure and economical air services for the benefit of the worlds consumers. ICAO International Civil Aviation OrganizationA specialized agency of the United Nations, the objective of which is to develop the principles and techniques of international air navigation and to foster planning and development of international civil air transport. IFR Instrument Flight RulesA set of rules governing the conduct of flight under instrument meteorological conditions. IFSS International Flight Service StationAn aeronautical station that is similar to a flight service station but that also provides a communications service for international air operators. NAV CANADA operates one IFSS in Gander NL. IIDS Integrated Information Display SystemA modern display system that allows Controllers to view, manipulate and manage air traffic data. ILS Instrument Landing SystemsA radio navigation precision approach system that provides aircraft with horizontal and vertical guidance.

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IMC Instrument Meteorological ConditionsMeteorological conditions less than the minima specified in Subpart 602 of the CARs for visual meteorological conditions, expressed in terms of visibility and distance from cloud. IPDAT Instrument Procedures Design Automated ToolA system that allows the computer design of instrument approach procedures. ISO International Organization for StandardizationA non-government organization which identifies the international standards required by business, government and society, develops them in partnership, adopts them based on national input and delivers them to be implemented worldwide. LEAD Leadership Evaluation and Accelerated DevelopmentA NAV CANADA program created to build leadership capability to support the Companys succession planning initiatives. LCM Life Cycle ManagementThe management of all activities required for the acquisition, maintenance and replacement of technology and products. LOS Level of Servicethe type or nature of civil air navigation services provided to support safe and efficient aircraft operations, and includes the times at which the services are provided. LPV Lateral Precision with Vertical guidanceA satellite-based augmentation system performance level that combines precision lateral performance with vertical performance. LWIS Limited Weather Information SystemA set of meteorological sensors and associated systems designed to electronically collect and disseminate certain meteorological data. MAXIMO A computerized maintenance management system that stores and maintains data pertaining to electronic and facilities maintenance activities. This information can be used to analyze costs and equipment status, manage inventory resources and plan maintenance/facilities activities.

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METAR Aviation Routine Weather ReportA surface weather observation that uses data collected by human observers or automated stations. MSC Meteorological Services CanadaA division of Environment Canada responsible for the assimilation of weather data for analysis, the development of forecast products and the dissemination of weather information. MSAW Minimum Safe Altitude WarningA function of certain automated Air Traffic Control systems designed to alert radar Controllers of existing or pending penetrations of a minimum safe altitude that requires immediate attention or action. MTCD Medium-Term Conflict DetectionInvolves trajectory modeling in radar environments to a point 20 minutes into the future. Multilateration A surveillance system based on emerging technology. This dependant surveillance system uses triangulation techniques from stationary antennas and requires aircraft to have a transponder. NADS Northern Airspace Display SystemA NAV CANADA system designed to assist Air Traffic Controllers providing service in the northern areas of Canada where there is no radar control. NARDS NAV CANADA Auxiliary Radar Display SystemA graphical radar display system which provides safe and efcient Air Trafc Control services by improving controllers and Flight Service Specialists (FSS) situational awareness in procedural airspace. NATCC North Atlantic Common Co-ordinationThe software of the Gander Automated Air Traffic System which allows the exchange of data between the various centres which govern part of the North Atlantic international designated airspace. NATS National Air Traffic Servicesthe Air Navigation Service Provider responsible for planning and providing air traffic services throughout the United Kingdom and over the eastern North Atlantic. NAVAID Navigation AidAny visual or electronic device, airborne or on the surface of the earth, that provides point-to-point guidance information or position data to aircraft in flight.

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NCAMS NAV CANADA Aircraft Movement SystemA system which allows Air Trafc Controllers and Flight Service Specialists to efciently track and record aircraft movement data at airports. NCTI NAV CANADA Training InstituteA NAV CANADA training and conferencing centre located in Cornwall, Ontario. NDB Non-Directional BeaconA low or medium frequency radio beacon transmitting non-directional signals used for navigation. NOC National Operations CentreThe centralized office based in Ottawa that is responsible for coordinating air traffic management activities, monitoring system performance, and daily aviation occurrences, and serving as the tactical command centre in the event of a system emergency. NOTAM Notice to AirmenA notice distributed by means of telecommunication containing information concerning the establishment, condition or change in any aeronautical facility, service, procedure or hazard, the timely knowledge of which is essential to personnel concerned with flight operations. NVCS National Voice Communications SystemA touch screen communications control panel installed at NAV CANADAs towers, flight service stations and flight information centres. OCP Oceanic Clearance ProcessorAn interface which relays oceanic clearances generated by the Gander Automated Air Traffic System for east-bound oceanic aircraft with suitable data link equipment to the aeronautical radio incorporated networks for distribution to the aircraft. OIDS Operational Information Display SystemA system that displays real-time critical airfield information and the most current atmospheric information to operational Controllers. OSI Operations Safety InvestigationA process which is used to determine why operating irregularities occurred in order to help prevent similar occurrences in the future.

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OSQ Office of Safety and QualityAn independent group reporting directly to the President and Chief Executive Officer of NAV CANADA as required by the CARs. The Ofce administers the operational safety management program, provides internal oversight of the management of air navigation services-related risk, and encourages the use of risk management techniques. PAL Peripheral StationAn unstaffed very high frequency/ultrahigh frequency transmitter/receiver facility used to facilitate direct contact between pilots and Air Traffic Controllers. PDC Pre-Departure ClearanceThe electronic delivery of initial instrument flight rules clearances via air-ground data link to airline companies with an on-site computer capable of interfacing with Air Traffic Control and the data link service provider. PSR Primary Surveillance RadarA radar system that detects objects by means of reflected radio signals. RAAS Remote Airport Advisory ServiceThe provision of advisory information to arriving and departing aircraft concerning wind direction and speed, preferred runway, altimeter setting, pertinent known aircraft, pertinent known field conditions, aerodrome taxi routes and aerodrome traffic circuits, and authorized instrument approach procedures. This service is offered by Flight Service Specialists using remote communications outlets. RADS Radar Analysis Debriefing SystemAn animation system for displaying radar data in an intuitive 3-Dimensional environment. RCMS Radio Control and Monitoring SystemA system using remote radio communication (voice and signalling) equipment which allows the combination of voice and data over a regular phone line. RCO Remote Communications OutletA facility remotely established from a Flight Service Station or Flight Information Centre for the provision of communications between aircraft and the flight service specialist.

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BUSINESS PLAN 20072009

RDA Radar Data AnalysisA system which records, displays and analyses data from radar equipment. RDPS Radar Data Processing SystemSystem that processes radar data and sends it to situation displays used by Controllers. RNAV Area navigationA method of navigation which permits aircraft operation on any desired flight path within the coverage of station-referenced navigation aids or within the limits of the capability of self-contained aids, or a combination of these. RNP Required Navigation PerformanceA statement of the navigation performance accuracy necessary for operation within a defined airspace. RNPC Required Navigation Performance Capability airspace is controlled airspace within the Canadian Domestic Airspace (CDA) designated for area navigation (RNAV) operations. RSC Report Runway Surface Condition ReportA section of the Aircraft Movement Surface Condition Report which provides runway surface information using a verbal description of the runway condition. RSiT Radar Situational DisplayA workstation for Air Traffic Controllers providing a front-end to a Radar Data Processing System, with enhanced computing capabilities and display features, including real-time weather and radar data. RVR Runway Visual RangeIn respect of a runway, the maximum horizontal distance for the direction of takeoff or landing at which the runway, or the lights or markers delineating it, can be seen from a point above its centreline at a height corresponding to the average eye level of pilots at touchdown. SAATS Shanwick Automated Air Trafc SystemA new system based on the Canadian technology of the Gander Automated Air Traffic Control which became operational in early 2007.

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BUSINESS PLAN 20072009

SASS Scheduling and Sequencing SystemA system that assists Air Trafc Controllers in allocating available landing slots and more efficiently managing traffic flows when demand approaches or exceeds capacity on a regular basis. SatNav This term refers to all navigation based on satellite navigation aids. SLI Secondary Link InterfaceProvides a back-up communication link using a regular phone line in case of failure of the primary line. SMS Safety Management SystemA term which Transport Canada describes as a businesslike approach to safety. It is a systematic, explicit and comprehensive process for managing safety risks. SPECI Aviation Special Weather ReportA special aviation weather observation issued at times other than on the hour, as a result of significant weather change. SSR Secondary Surveillance RadarA radar system that requires complementary aircraft equipment (transponder). SUPU Static Uninterruptible Power UnitEquipment which provides uninterruptible emergency power to air navigation systems. TACAN Tactical Air Navigation AidAn ultrahigh frequency electronic rho-theta air navigation aid that provides suitably equipped aircraft with a continuous indication of bearing and distance to the TACAN station. TAF Aerodrome ForecastA meteorological forecast of weather conditions for a specific airport. TCAS Traffic Alert and Collision Avoidance SystemAn airborne collision avoidance system that functions independently of the ground-based Air Traffic Control system to detect potential conflicting aircraft that are equipped with secondary surveillance radar transponders. TDA Traffic Density AnalyzerA software which provides online access to key traffic forecasts for the North Atlantic tracks or lanes that take advantage of the jet stream between Canada and Europe.

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BUSINESS PLAN 20072009

Transponder A receiver and transmitter that generates an identification signal. UHF Ultrahigh FrequencyThe ultrahigh frequency band between 300 and 3000 MHz. UPS Uninterruptible Power SupplyA power supply system that is not subjected to any interruption when a break occurs in the normal power supply. VAST Visual Aircraft Spacing ToolAn automatic spacing aid system which generates ghost targets and assists Controllers in spacing aircraft on converging runways. The visual aircraft spacing tool is also commonly called Converging Runway Display Aid. VFR Visual Flight RulesThe rules that govern the procedures for conducting flight under visual conditions. VHF Very High FrequencyThe frequency band between 30 and 300 MHz. VOLMET Specic in-ight meteorological information provided to international air trafc over radio frequencies. VOR Very-High Frequency Omnidirectional Range StationA ground-based electronic navigational aid that transmits very high frequency navigation signals 360 in azimuth. VORTAC This term refers to a combination of very-high frequency omnidirectional range (VOR) and tactical air navigation aid (TACAN). WAAS Wide Area Augmentation SystemThe augmentation to global positioning system signals to meet en route and terminal navigation, non-precision approach and precision approach requirements. The ground system comprises a network of ground reference stations and a master station linked by terrestrial communications. WAM Wide Area MultilaterationWAM is a method of position sensing using at least three receivers. The location of an aircraft may be determined by performing a Time Distance of Arrival analysis on signals from transponders.

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