Keynote Address Onno van den Brink President and Chief Executive Officer, transavia.com

Transforming the business model Airline Distribution 2006 Onno van den Brink President & CEO transavia.com Dublin 30 March 2006

Distribution 2006 Transforming the business model About transavia.com Founded in 1966 Ownership: independant division of the Air France-KLM group Operating revenues ‘04/05: € 521 mln. Pretax income ‘04/05: € 28 mln. Profitable: 27 years in a row since ‘77/78 Number of aircraft: 27 (10 B , 17 B ) Average number of employees: 1,482 Passengers carried ’04/05: 4,5 mln. Bases: 2 (Amsterdam Airport Schiphol and Rotterdam Airport) Two main businesses: B2B (charter) 60%, B2C (low-cost scheduled) 40% Marketleader in the Netherlands in both B2B (55%) and low-cost (32%)

Dublin 30 March 2006 Distribution 2006 Transforming the business model CHARTERS TRANSAVIA SCHEDULED SERVICES low cost airlines Strategic reorientation! Profitability Transavia under pressure! vertical integrati on Position year 2000

Dublin 30 March 2006 Distribution 2006 Transforming the business model ComponentsTouroperators Travel agencies (retail) Neckermann (C&N) TUI (Preussag) Sudtours Neckermann Travel Broere Travel Holidayland... Arke/Holland Int. Travelplanet.nl Lastminute.nl... Touroperator market Great-Britain: 4 touroperators own 75% of the touroperator market. All have their own charter-company and in total more than 3500 travel agencies Position year 2000

Dublin 30 March 2006 Distribution 2006 Transforming the business model Marketshare traffic segments Schiphol (O&D Europe) 29.0% 1.4% 1.9% 2.5% 4.6% 10.4% 15.9% 30.5% 36.0% 37.8% 37.2% 36.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% LCLF Hub (lscheduled)Charters (HV/MP)OC (scheduled)OC (charter) Introduction of low-cost in the Netherlands Source: Amsterdam Airport Schiphol, own analysis

Dublin 30 March 2006 Distribution 2006 Transforming the business model Cost development Basiq Air versus competition Cost reduction ‘04/05 versus ’00/01 Virgin Express-7% Basiq Air-22% Easyjet-9% Ryanair-25% Model Source: McKinsey, HSH Nordbank, Annual reports

Dublin 30 March 2006 Distribution 2006 Transforming the business model Cost per seat flown Basiq Air versus competition ’04/05 Model Source: McKinsey, HSH Nordbank, Annual reports

Dublin 30 March 2006 Distribution 2006 Transforming the business model 2000/ /05 - Low fares V V - No refunds V V - 1 type of aircraft V - 1 class concept V V - Max # seats per aircraft V - No transfer/interline V - No FFP/lounges V - Short segments* v - Short turnarounds v V - Average utilization act > 12h V - Internet sales > 92% V - Ticketless* v - Fees for Changes V - Fee For Credit Cards V - Paid for catering/no frills v V - Additional Income V - Productivity cockpit/cabin crew v v Standardization low-cost concept for both B2B and B2C leaded to... merging the 2 brands in 2004 * Scheduled services only

Dublin 30 March 2006 Distribution 2006 Transforming the business model Traffic development (passengers carried x ‘000) *Basiq Air dec dec 2004 Average growth over the past 5 years 6.5 % is too limited

Dublin 30 March 2006 Distribution 2006 Transforming the business model easyjet Ryanair SkyEurope AirBerlin Others Development of low-cost competition in the Netherlands (# of flights perweek) transavia.com

Dublin 30 March 2006 Distribution 2006 Transforming the business model Profitability under pressure Increased competition from both low-cost and flag carriers Pressure on yields High fuel prices Flying becomes a commodity Market is price driven Very limited differentiation between carriers Limited customer loyalty Difficult to drive cost further down

Dublin 30 March 2006 Distribution 2006 Transforming the business model Further change is necessary Branding Low cost with attention From product oriented to customer oriented Increase customer loyalty through CRM Brandstretch: move from airline brand to travel brand Selling travel related products and services Selling holiday packages Adjusting the internet look & feel to the new strategy Increase travel partner loyalty by improving the E-infrastructure

Dublin 30 March 2006 Distribution 2006 Transforming the business model Business economics Decrease unit cost Additional income from ancillary products and services Economies of scale by further growth in – and outside the Netherlands Interline/transfer with KLM (group) Cooperation with other low-cost airlines Further change is necessary

Dublin 30 March 2006 Distribution 2006 Transforming the business model Being big is not the issue, but the ability to adapt fast to changing market circumstances!!