Peter Harbison Executive Chairman TFWA 12 May 2014

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Lynn Lester
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1 apac airlines and outlook Peter Harbison Executive Chairman TFWA 12 May 2014

2 The BIG picture 1. Traffic is growing at historic trend levels 2. Premium traffic has recovered 3. The Gulf carriers are having a major impact on traffic flows, esp premium

3 Global passenger traffic is growing IATA AIRLINES PREMIUM TRAFFIC MONITOR Jan-2014

4 Premium is back up to 2007 levels IATA AIRLINES PREMIUM TRAFFIC MONITOR Jan-2014

5 But it s mostly going via the Gulf IATA AIRLINES PREMIUM TRAFFIC MONITOR Jan-2014

6 AsiaPac international growth slowed greatly in March (IATA Air Passenger Market Analysis - March 2014) On international markets, Asia Pacific airlines recorded one of the largest declines, with RPKs up just 1.1%; This partly reflects the relative slowdown after positive impacts from Chinese New Year in January/February; But the result also likely shows downward pressure from China sluggishness and regional trade declines

7 AsiaPac Main Points 1. Fleet expansion plans are a great indicator of the future (a picture is worth a thousand words!) 2. The fast changing face of Asian aviation 1) Short haul low cost 2) Long haul low cost 3) Route growth 3. China is an increasingly important factor determining growth, not just in aviation 4. And Indonesia

8 1. Fleet expansion plans - the indicator

9 Existing fleets by region CAPA Fleet database

10 Global short and long haul orders CAPA Fleet database

11 CAPA Fleet database Total orders - proportions

12 Global short haul orders CAPA Fleet database

13 Global long haul orders 75% are from Asia/Middle East CAPA Fleet database

14 2. LCCs: short and long-haul Entering phase 2 of short haul LCCs Consolidating JVs Big new entrants Lion and maybe IndiGo North Asia and China are moving Long haul LCCs are now established Connectivity between short-long-haul

15 LCC penetration intra-se Asia - still growing 59%

16 LCC penetration intra-ne Asia - only starting 11%

17 Asian airport growth Source: CAPA Centre for Aviation, OAG

Top 20 growth in Asia s 50 largest city pairs: 2010-13

18 Top 20 growth in Asia s 50 largest city pairs: Total: 37,000 city pairs Source: CAPA Centre for Aviation, OAG

19 The Express Train coming around the bend.. Chinese outbound traffic flows are unimaginably large but Chinese airlines are still small internationally Following the 3 rd National Congress on 9/10-Nov-2013, China will now move to allow more private startups ( with low cost characteristics = LCCs) Effect will be: More private Chinese airlines flying internationally More Chinese airline investments in foreign airlines Extremely large tourism flows

20 3. The new wave airlines 15 new Chinese airlines will enter the market this year! CAPA Apr-2014 Next: China s LCCs

21 Indonesia becomes a force too Lion will account for nearly half of the LCC growth in Southeast Asia in 2014 Indonesia s LCC sector has grown by nearly 80% since 2010 centreforaviation.com

22 Indonesian LCC annual passenger traffic (mill) by airline: 2010 to 2013 Airline 2010 pax 2011 pax 2012 pax 2013 pax Lion Air Indonesia AirAsia Citilink Wings Air Mandala* Lion+Wings (Lion Group) TOTAL Source: CAPA Centre for Aviation

23 Indonesia LCC growth Note: *Mandala declared bankruptcy and suspended operations in Jan It re-launched under new ownership and emerged from bankruptcy in Apr Source: CAPA Centre for Aviation, INACA and company reports

24 Many of the next generation aircraft are on order by longhaul LCCs Airline A s and A320-Neos A350 and B 787s AirAsia X Jetstar Cebu Pacific 32 Scoot 20 Source: CAPA Fleet Database

25 LCCs, short and long Add connectivity - and a whole new genre of airline operation is imminent AirAsia X connects 43% of its traffic over Kuala Lumpur

26 CAPA India Airport Retail Report 2014 Accurate, timely and in-depth analysis for retailers and global brands. With election result around the corner, what impact will the next government in Delhi have on the duty free and travel retail industry? Nobody understands Indian aviation like CAPA India. CAPA India Airport Retail Report 2014 covers: In-depth analysis of latest trends and sales figures by category at metro airports; Assessment of the performance of airport retail concessions across India; Current and planned retail space and offerings at key airports; Status of airport modernisation and privatisation programmes; Details of upcoming retail tenders; Key trends in passenger segments and their purchasing behaviour; International and domestic traffic forecasts through to 2023.

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