Draft to be discussed Give & Ask workshop – Operations offers

Air France Cargo FAP lies in the low end of Iata Benchmark Source: Iata.org

Almost 60% of the non quality can be adressed by investigating 3 root factors Ventilation de la NQDS en base 100% AttributionJalonTRANSITEXPORTTOTAL DA Fin palettisation0,2%0,0%0,1% Autre GRF0,0% Anticipation0,0% Classement7,3%0,0%5,7% Tri21,2%0,0%16,7% 28,6%0,0%22,6% DD Fin palettisation33,1%52,3%37,1% Autre GRF2,2%9,1%3,6% Anticipation0,2%2,3%0,7% Acceptation export local0,0%19,5%4,1% Sans Réservation0,0%3,3%0,7% 35,5%86,4%46,3% DAC Entrée SIL0,5%0,0%0,4% 0,5%0,0%0,4% TOTAL G1XL64,7%86,4%69,3% AUTRES SERVICES (RM-CSO- PROGRAMME-WW-….)35,3%13,6%30,7% 58% of G1XL non quality Source: Cargo2000 G1XL VAC2

?? Contracts & Prices  Capacity Management / Access Priority  Free Sales rate with guaranteed capacity for 3-month  Price rebate on belly / Pallet deals  Access to best price AF-KL-MP  Expert support for value added products  24h contact  Direct access to operations  Special monitoring / Dedicated shipment control  Flown as planned commitment  Dedicated lane for acceptance Operations  SVP, VP involvement  Senior designated Key Account Manager  Area Correspondent  Implants / Direct CSO contact (incl after sales) Market Coverage  E-program – E-booking, E-freight and host to host  Customer dashboard  Consulted supplier in all AF/KL tenders Partnership Levers  End of year rebates + attractive bonus rebate on over- performance Loyalty Program Feedback from customer highlights both these quality issues and the need for better tracking and communication processes Offer 4 Priority prioritaireInportantNon cité “They should notify us when a shipment is not sent so that I can arrange the pick up better” TNT Post “There is hardly any communication when things go wrong” Airfoldt Verbatim “We do not trust CDG for our fast delivery products : it happens to often that our products are not on the agreed plane” UPS “We want our merchandises to be on the flight as promised” Kuehne Nagel “ For some products, transit time is still too long” SDV “Good relationship is to a certain extent more important than rate” AIF Shangai

We then have to merge the operations improvements and the commercial to address our customer demands 5 Operations approach Commercial approach  Further investigate and prioritize customer needs  Value customer satisfaction  Prioritize processes improvements  Launch pilot tests  What objectives can we reasonably set ?  What is the right schedule ?

APPENDICES 6

Reminder of customer survey Key offers as mentioned by customers* 1.Communication and merchandise tracking 2.Capacity management / access priority 3.Efficient process to solve operational issue : « someone you can call and that can handle the problems you may have with your merchandise » 4.Flown as planned commitment and controlled transit time in hubs 5.Processes alignment, especially on IT 6.Binding traffic agreements 7.Direct access to operations : « a person that can follow the goods on the operations field » 7 * Extracts from customer survey are provided in appendix

Reminder of customer survey results Forwarders have clearly expressed their interest for good rates and global reach but also value quality of service  Since offering lower rate and global reach are key differentiators in their market, forwarders clearly expressed their interest in getting goods prices and global network  « Competition is fierce…you need to align on the lowest rate to get the business » Transglobal  « Line haul is more than 70% of our costs so no wonder we squeeze airlines as hard as we can » Geodis Wilson  « Our business is network driven, if you do not have a global reach you can only adress part of your client needs » DGF  « It is expensive for us to deal with a large number of carrier, we would like to deal with 10 preferred carriers » UPS  But quality of service is also crucial in the final choice of the airline both for big accounts and some local customers  « For global customers, it is important to get the same quality of service and the same processes from any point of the globe » Expeditors  « We choose them because we have been working for 15 years with them, relationships are good and to a certain extent it is more important than rates » AIF shangai  And most interviewees are willing to developp partnerships with AF-KL  « We have several joint ventures / partnerships with airlines and they work very well in improving processes and reducing costs » DGF  « I wish we could make more deals together » CEVA 01

Reminder of customer survey results Main needs expressed concern improved communication and flown as planned  Communication and merchandise tracking is the main need expressed by almost all clients  « They should notify us when a shipment is not sent so that I can arrange the pick up better » TNT Post  « The worst problem at CDG was communication » NIPPON  « We used to work with Air France but there is hardly any communication when things go wrong and it is not perishable-friendly to wait on the tarmac » Airfoldt  « The worst thing that can happen is that my shipment does not get on board and they don’t tell me » TNT  From a more general perspective, customers appreciate the relationship with AF-KL staff but would like them both to focus more on their needs and to develop a more efficient process to solve their operational issues  « There has always been reliable people at KAM willing to help and get things right but they do not have the power to solve issues due to their organization » CEVA  « Relationship are good and to a certain extent it is more important than rates » AIF Shangai  « They know their customers intimately » CEVA  « They do not have the knowledge. They should work with customers more closely on operational needs » Kuehne Nagel  Forwarders insists on the improvements to be made in terms of flown as planned and transit time  Transit time matters -« What matters is that the shipment is delivered on time » SDV -« For postal services, transit time is still too long » TNT post  But most companies expect a flown as planned commitment -« Air France offloads our dimensions shipments when they have higher yield. That leads to many logistics problem on our part » CEVA -« We want our merchandise to be on the flight as promised » Kuehne Nagel

Reminder of customer survey results Opportunities for processes alignment, new binded traffic agreements and mixed teams also point out in the interviews  Processes alignment, in particular as concerns IT solutions appear to be a key stake for forwarder  « The important thing is to get the same quality of service and same processes from any point of the globe » Expeditors  « Ability to collaborate and build solutions to improve overall cost and efficiency will be key in the future. I believe there is no future for forwarders if they do not work closely with a small number of airlines and really integrate their IT » Rhenus  Many forwarders expressed their interest in developing « binded traffic agreements »  « British Airways, Emirates and also Martinair are very good in working with us on a global level. For example, we will ask for extremely low rates to get customers out of Asia and in return we offer them support to fill some of their more difficult routes » CEVA  « We want to develop this kind of deals » DGF  Some companies have mentioned direct access to the operation field as a possible improvement  « A real step forward would be that airlines let us have a K+N person with ability to navigate with the goods on the operation field and solve issues when needed » Kuehne Nagel