Impact of aviation an airports perspective. Vincent Harrison Director Strategy, Regulation & B2B

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1 Impact of aviation an airports perspective Vincent Harrison Director Strategy, Regulation & B2B

2 Dublin Airport Authority Overview 100% State owned, commercially managed, entity Owns and manages Cork, Dublin and Shannon Airports Passenger numbers 22.7m in 2011 Group turnover of 548m in 2010 Contributed > 500m to Exchequer over 30 years DAA provides: Direct employment to >2,500 Additional 2,000 jobs in supply Firms, Ireland and overseas Aer Rianta International (ARI): Global airport retailing subsidiary operating in more than 20 countries managed turnover > 900m in 2010

3 74% traffic to/ from island of Ireland 96% traffic to/from Rep. of Ireland DAA Airports in Context Dublin Airport A top tier international airport. 24 th largest worldwide 1 14 th largest in Europe 1 Dublin London: Busiest international route in Europe 4 th biggest international route in world 2 Long haul: Boston, New York (2), Philadelphia, Toronto, Montreal, Atlanta, Orlando, Chicago, Abu Dhabi, Charlotte, Dubai, Washington ~16x city population used Dublin Airport last year Shannon Airport More transatlantic passengers than capital cities like Warsaw, Lisbon and Athens Cork Airport 1 ACI 2010 International traffic 2 IATA Airport IS Services to 20 EU countries ~ 5 x county population used Cork Airport last year

4 Economic Growth the key driver of Aviation Economic Growth the key driver of Aviation Worldwide economic activity is the most powerful driver of growth in commercial air transport and the resulting demand for airplanes 1 A rise in urban population has historically led to an increase in per capita GDP, a key driver for aviation 2 Economic growth fuels the demand for air transport 3 The econometric analysis concirmed that the key variables determining UK air travel varied by market segment, but in general included measures of economic activity, air fares, and exchange rates 4 1 Boeing s Current Market Outlook Airbus s Global Market Forecast Embraer s Current Market Outlook UK DoT Aviation Forecast Aug

5 Internationally recognised that economic growth is primary driver Worldwide air traffic growth compared to worldwide GDP growth Boeing Ratio of RPK s to GDP: Global Ratio 1.7 times; European Airline Ratio 2.3 times (Boeing Current Market Outlook )

6 Correlation of Passenger Growth and Economic Growth 15% Irish GDP v Airport Passenger Growth 15% German GDP v Airport Passenger Growth 10% 5% 5% 0% -5% -10% GDP DAA Passengers -5% GDP Passengers -15% % % 10% 5% 0% -5% -10% UK GDP v Airport Passenger Growth GDP Passengers 15% 10% 5% 0% -5% -10% French GDP v Airport Passenger Growth GDP Passengers -15% -15% % US GDP v Airport Passenger Growth 15% Spanish GDP v Airport Passenger Growth 10% 10% 5% 5% 0% -5% GDP Passengers 0% -5% GDP Passengers -10% -10% -15% -15% Source: DAA Statistics, ESRI & OECD 6

7 Economy & Passenger Growth 220 World Passengers & GDP Indexed (1995 = 100) Index Worldwide GDP Worldwide Pax Source: IMF and ACI World 7

8 Republic of Ireland International TrafFic 35,000 30,000 Passengers (000 s) 25,000 20,000 15,000 10,000 5,000 0 Compound Avg. Growth Rate 6.3% Approx double the average global growth rate Source: Fáilte Ireland, DAA Statistics 8

9 Irish International TrafFic Comparison Growth Index 1999=100 % Growth on Ireland Intl UK Spain Italy Germany USA France European Avg Source: anna.aero and DAA statistics 9

10 Other Factors that influence Demand for Aviation Fuel is generally the single biggest cost item for airlines: Fuel as a % of overall Expenditure Ryanair 43% Aer Lingus 23% Easyjet 31% Source: Ryanair, Aer Lingus and Easyjet Annual Reports IATA forecast 62% drop in airline procits in 2012 due to fuel costs Regional instability Alternative sun destinations (e.g. Greece, Spain) saw increase in trafcic due to the Arab spring Weather Impact of volcanic ash in 2010 estimated at c$5 bn Destination specicic 10

11 2010 Trips per Pax v GDP per Capita 11

12 Short Term Impact of Emerging Economies Short term forecast by region: January May % 6.6% 3.1% 3.9% 7.4% 7.4% Source: ACI Emerging economies forecasting stronger growth rates than mature markets 12

13 Long Term Impact of Emerging Economies Asia PaciFic region will soon surpass all other world regions 13

14 Increase in direct Flights to/from emerging markets reduces dependency on traditional European hub airports for connectivity 14

15 Aviation industry supports nearly 8% of the world s economy Over 5.5 million workers are employed directly in the aviation industry worldwide, with a turnover of more than US $1 trillion. If aviation was a country, it would rank 21st in the world in terms of Gross Domestic Product Even for major European cities, air travel can account for a third or more of their foreign visitors Amsterdam airport accounts for nearly 2% of GDP Paris CDG is responsible for 90,000 direct jobs on and around the airport and 270,000 indirect jobs in the Roissy basin Munich Airport is Bavaria s second largest company Airport aeronautical revenue worldwide amounted to US$55 billion in 2011 Source: ACI Europe (2004) The Social and Economic impact of airports in Europe and Oxford Economics Aviation: The Real World Wide Web 15

16 Economic Importance of Aviation Ireland Irish jobs and Output supported by the Aviation sector Source : IATA, ACI, Oxford Economics Estimated that the aviation industry and its supply chain contributes 1.35 billion p.a. to public Finances. 16

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18 Hong Kong Airport Public support for airport expansion United States Study Osaka Airport Source: 2011 Saint Index 18

19 Airline ETS Charge Ryanair 0.25 Delta $3 American Airlines, US Airways and United Continental understood to have added to fuel surcharges no public statements Lufthansa have indicated that it will increase its fuel surcharge 19

20 Aviation Industry s Environmental Initiatives IATA IATA s industry wide goal, airlines must reduce their net CO 2 emissions by 50 per cent by the year 2050 compared to 2005 Clean Sky Joint Technology Clean Sky Joint Technology Initiative is working to develop technologies resulting in quieter and more fuel efcicient aircraft Single European Sky Single European Sky will make clight paths and approach cycles more efcicient thus reducing fuel burn and carbon emissions Biofuels Developments in Bio fuels and fuel efcicient aircraft January 2012 Lufthansa operated the world s cirst biofuel powered transatlantic commercial clight from Frankfurt to Washington 20

21 Dublin Airport T2 Sustainable, Energy EfFicient Facility Key design principle to minimise T2 s energy needs and energy consumption Dedicated, efcicient combined heat & power plant High performance external cladding for insulation Strategic positioning of insulated glazing to minimise need for articicial lighting Overall reduction of c. 20% in CO² levels relative to comparable terminal buildings 21

22 Airport SpeciFic Initiative Airport Carbon Accreditation In June 2009 ACI EUROPE launched Airport Carbon Accreditation, a certicication programme setting an industry standard for carbon mapping and carbon management at airports. Voluntary ACI Europe Initiative Endorsed by EU & UN 55 Airports / 52% of European traffic 4 Accreditation Levels 22

23 Airport Carbon Accreditation DAA airports delivered a reduction in CO 2 of approximately 3,500 tonnes at DAA airports (2009/10) Equates to taking some 1,100 cars off the road for a year Dublin Airport Cork Airport Shannon Airport 23

March 2015 Debt Investor Update

March 2015 Debt Investor Update E u r o p e s O n l y U l t r a L o w C o s t C a r r i e r Proven, resilient business model Europe s lowest fares/lowest unit costs Europe s No 1, Traffic Europe s No 1,