1. AIRLINE CHALLENGES CURRENT STRATEGIES AIRLINE CHALLENGES CURRENT STRATEGIES A personal perspective by Pierre J. Jeanniot Opening session

2. INDUSTRY CHALLENGES  Economic cycles  Financial crises  Government actions  Terrorism  Environmental constraints  Infrastructure

3. passenger load factor 80.3% yield 0.3% 2013 profit $12.9 billion forecast - 2014 profit $18.7 billion

4. REGIONAL FORECASTS Asia-Pacific $3.7 billion North America $8.6 billion Europe $3.1 billion Middle East $2.2 billion South America $1.0 billion Africa $0.2 billion

5. NORTH AMERICA

6. Full Service Network Carriers

7. North American Hybrid Models

8. FOUR MAJOR CARRIERS consolidation, slot reduction OPPORTUNITIES FOR NEW LCC’s

9. EUROPE

10. THE SHORT-HAUL MARKET low-cost airlines overtaking legacy airlines

11. regional offerings – HOP! regional offerings – HOP! leisure brand - Transavia leisure brand - Transavia alliance and partnerships alliance and partnerships

12. “SCORE” cost reduction program

14. 81.5 million passengers 81.5 million passengers 1 st base outside Europe 1 st base outside Europe Business model - changing Business model - changing

16. pre-tax profit +27.9% hybrid model for business passengers

17. aims to connect the world via Istanbul one of the fastest growing airlines

18. MIDDLE EAST

19. WORLD GULF HUBS recent aircraft & engine technology-driven

20. the world economy continues to shift so do the traffic flows... so do the traffic flows

21. equity alliance strategy

22. ASIA PACIFIC

25. INDIA World’s largest democracy hard to do business !

26. new airlines, many LCCs Changing Aviation Policies fuel costs Indian rupee depreciation all LCCs losing money – except Indigo

27. lacked liquidity major losses heavily indebted Full Service Segment

28. New Joint Ventures Tata Sons – Singapore Airlines full service airline Tata Sons – Telestra Tradeplace – Air Asia low cost carrier - LCC

29. LATIN AMERICA

30. co-operative model “virtual airline” buys aircraft individual airlines operate flights “virtual airline” buys aircraft individual airlines operate flights

31. CONSOLIDATION

32. highly profitable! largest LCC in Brazil 15% domestic market

33. AFRICA  traffic growth +6% p.a  traffic growth +6% p.a.  accident rate  mostly government-owned

34. ..

35. urbanization emerging middle class strong services aviation would play an important role ! Africa could industrialize

36. North America Europe Asia Pacific Latin America Africa Gulf Airlines

37. SHAPING FORCES New airplanes and engines Narrow bodiesNarrow bodies Less fuel burn – lower operating costs

38. SHAPING FORCES New airplanes and engines Wide bodies Less fuel burn – lower operating costs

39. Continued impact of IT INTERNET SOCIAL MEDIA SELF HANDLING MOBILE DEVICES

40. CURRENT TRENDS Ancillary Revenues Ancillary Revenues up to 20% of total intake up to 20% of total intake New Distribution Capability New Distribution Capability diversified product distribution diversified product distribution

41. OBSERVATIONS Aviation continues to change. It needs to adapt … And it needs STRONG LEADERSHIP