Andrew Gordon - Airneth

15th April 2010, Airneth Annual Conference,

Andrew GordonDirector Market Analysis

15th April 2010, Airneth Annual Conference,

y

• Where is the industry today?• Economy• Traffic outlook

• Industry drivers

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• Airbus GMF, 2009 – 2028

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• Emerging markets

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• Airbus GMF, 2009 – 2028

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The aviation cycle, several cycles impacting in series

The last Cycle (s)

1520 15

)

The last Cycle (s)

51015

Traf

ficro

wth 5

10

ofit

($bn

-505

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-50

ting

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-15-10

Econ Pe

r

-15

-10

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1999

2000

2001

2002

2003

2004

-20

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Source: Global Insight, ICAO & IATA

2 2 2 2 2Economy Traffic Op Profits

Economists believe recession has bottomed out

Real GDP year over year quarterly evolution (%)

14% World USA Western Europe Japan

Real GDP year-over-year quarterly evolution (%)

6%

10%

-2%

2%

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-6%We are

here

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2006 2007 2008 2009 2010 2011St th

-10%Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

here

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s Strong growthsince 2004 Slowdown Deep crisis Recovery Complete

recovery

Source: Global Insight (January 2010), Airbus


Real GDP year over year quarterly evolution (%)

14% World USA Western Europe Japan Emerging economies

Real GDP year-over-year quarterly evolution (%)

6%

10%

-2%

2%

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-6%We are

here

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2006 2007 2008 2009 2010 2011St th


here

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recovery



Real GDP year over year quarterly evolution (%)Real GDP year-over-year quarterly evolution (%)

14%World USA Western EuropeJapan Emerging economies China

6%

10%

-2%

2%

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-6%We are

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2006 2007 2008 2009 2010 2011St th


here

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recovery


Asia’s domestic traffic grew in a difficult year

International and domestic traffic growth of RPK per region, 2008 vs. 2009 (%)

EuropeEurope

4 0

North AmericaNorth America

International

Domestic

-4.0

-10.5Asia/PacificAsia/Pacific

International -7.1

International

Domestic

-5.5

-5.5

Middle EastMiddle East

International +10.0

Domestic +7.6

Total:Total: 1 2%1 2%

Total: Total: --5.5%5.5%Total: Total: --4.8%4.8%

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AfricaAfricaDomestic +10.3 Latin America/Latin America/

CaribbeanCaribbeanWorldWorld

Total: Total: --1.2%1.2%

%%

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International

Domestic

-8.9

-13.4

International

Domestic

-2.9

+1.9

WorldWorld

International -3.9

Total: +10.0%Total: +10.0%

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Source: ICAO December 2009

Domestic -1.8 Total: Total: --0.7%0.7%Total: Total: --9.6%9.6%

Total: Total: --3.1%3.1%

Emerging markets leading traffic recovery

12%

16% ASKs year-over-year monthly evolution (%)

12%

16% ASKs year-over-year monthly evolution (%)

US AIRLINES WESTERN EUROPEAN AIRLINES

Feb

0%

4%

8%

0%

4%

8%Feb.

passenger traffic down

1.0%

Feb. passenger traffic down

2.6%

-12%

-8%

-4%

J M M J S N J M M J S N J M M J S N J M M J S N-12%

-8%

-4%

J M M J S N J M M J S N J M M J S N J M M J S N2007 2008 2009 2010 2007 2008 2009 2010

16% ASKs year-over-year monthly evolution (%) 16% ASKs year-over-year monthly evolution (%)

EMERGING ECONOMIES* AIRLINES REST OF WORLD AIRLINES

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4%

8%

12%

4%

8%

12%Feb. passenger traffic up15.9%

Feb. passenger traffic up2.2%

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-8%

-4%

0%

-8%

-4%

0%

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Source: OAG, * 54 emerging economies, Airbus

-12%J M M J S N J M M J S N J M M J S N J M M J S N

-12%J M M J S N J M M J S N J M M J S N J M M J S N2007 2008 2009 20102007 2008 2009 2010



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• Airbus GMF, 2009 – 2028

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Taking into account key industry drivers

Economics Demographics NetworksEconomics• Growth• Emerging markets• Cycles

Demographics Networks• Population growth• Age profiles• Disposable income

• Global cities• Hubs• New routes

• Urbanisation • Deregulation

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Airlines AircraftPassengers• Ticket price • Fuel • Seats Speed utilisation

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pro • Ticket price

• Comfort• Origin and destination• Connectivity

• Fuel• Range• Fleet mix• Business models

• Seats, Speed, utilisation• Frequency, load factor • Range• Replacement

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• Environment • Legislation/taxation• Environment

• Fleet mix• Environment

The world of 2028 will be very different from today

Ranking of countries by real GDPRanking of countries by real GDP

19881- US

20081- US

20281- US

a g o cou t es by ea Ga g o cou t es by ea G

US

2- Japan

3- Germany

2- Japan

3- China2- China 3- Japan

4- UK

5- France

6- Italy

4- Germany

5- UK

6- France

4- Germany

5- India 6- UK

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7- Russia

8- Canada

9 Spain

7- Italy

8- Spain

9 C d

6 UK

7- France

8- Brazil

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10- Brazil

11- Mexico

9- Canada

10- India

11- Brazil

9- Italy

10- Canada

11- South Korea

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12- China

Source: Global Insight (August 2009), Airbus

12- South Korea 12- Russia

Air transport is still emerging for 85% of the world

Traffic growth by airline domicile 2009-2014

China +10.2%India +8.8% 5.7

Traffic growth by airline domicile 2009-2014

Middle East +7.2%Asia* +6.8%Africa +6.5%

5.7billionpeople

2008CIS +6.2%Latin America +5.9%Eastern Europe +5.4%

2008

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Western Europe +4.2%North America +3.5%Japan +2.4%

1billionpeople

2008

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* Asia excludes India, China and Japan

Large potential to increase propensity to travel

10

SwitzerlandDenmark

Ireland

SwedenUKQatarCanada

UAE

Australia

MacaoSingapore

Hong Kong

New Zealand

Spain

Kuwait

Cyprus

Bahamas

Puerto Rico Greece

Malta

Bahrain

Barbados

Seychelles

Maldives

TrinidadFiji

St Lucia

M i i

USA

10

8

2 trips per

capita

Netherlands

Finland

JapanBelgium

France

GermanyItalyBrunei

KuwaitPuerto Rico

PortugalSouth Korea

Slovenia

IsraelTaiwan

Saudi Arabia

Czech Rep.

Estonia

HungarySlovakia

LatviaPanama

Suriname

j

Cape Verde

Samoa

Jordan

Poland

MauritiusMalaysia

Croatia

Mexico

Turkey

RussiaBrazil

1

pita

-20

08

0.11 trip per

World average

Equatorial GuineaBotswana

Bosnia

BrazilChina

India

Algeria

BelarusAngola

Nigeria

0,1

* per

cap

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capita0.05 trip

per capitaIraq

BangladeshLesotho

Afghanistan

ChadNiger

0,01

Trip

s*

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0,0010 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 55 000

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Passengers originating from a particular country Note: GDP in 2005 US$

Source: IATA PaxIS, Global Insight, Airbus

2008 Real GDP per Capita

A network of cities : 92% of the long haul traffic is from and/or to 37 “mega-cities”

37 “mega cities” in terms of37 mega-cities in terms of international air traffic demand

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AIR

BUS

S.A.

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Destinations with more than 10 000 daily long haul pax

Emerging markets driving World urbanisation

5

6Population (billions)

Urban Population

4

5Today

2

3Rural Population

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0

1Source: UN,Airbus

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1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

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With continuing growth & urbanisation, the number of mega-cities will more than double

82 bi iti h l h l

MoreMega-cities82 big cities where long-haul passengers

will want to fly between in 20 yearsMega-cities

AAA B

A

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AIR

BUS

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Growth in the size and number of mega-cities

Main long haul VLA routes by 2028Main long-haul VLA routes by 2028

AAA B

A

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AIR

BUS

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The A380 network is growing

Toronto

New York

London

ParisTokyo

New YorkRome

Dubai

Seoul

Hong KongBangkokLos Angeles

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Auckland

Sydney

Melbourne

Johannesburg

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Additional airline-announced routes for 2010 shown dotted

Low Cost Airlines have continued to grow

Worldwide LCCs market share (% seats offered)

21% of seats now

ff d b

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offered by LCCs

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2006 2007 2008 2009

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Source: OAG, Airbus

Low cost traffic as driver of traffic growth

Intra Asian traffic and LCC market share development, 2001 - 2009

6%

Seats (1,000s) LCC market share %Total Intra

Asian traffic

6%yearly growth*

LCC traffic

38%yearly growth*

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LCC 2009

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market share

14%

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Source: OAG (September traffic), Airbus

* Average annual growth rate

Indian LCC targeting first class and 30% 2nd class train passengers

MUMBAI DELHI b il MUMBAI DELHI by airMUMBAI-DELHI by rail MUMBAI-DELHI by air

• 1380 km • 1130 km

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• 23 hours

First class fare: 3373 Rs

• < 90 minutes flight

Network fare: 8970 Rs2000

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Second class fare : 1775 Rs LCC fare : 2000 Rs

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Low cost carriers spread their wings over Asia

Intra Asian LCC network, 09/2001 vs. 09/2009,

Sep. 2001 Sep. 2009

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48 576Airport Airport

iiAirport Airport

ii

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Average Average flight distanceflight distance

700km

pairspairs

Average Average flight distanceflight distance 1800

km

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Source: OAG



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• Airbus GMF 2009 – 2028

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The Airbus Global Market Forecast (GMF) 2009

20 i ft d d f t i ft >19 t20 year aircraft demand forecast, aircraft >19 seatsTraffic forecast modeling 156 distinct traffic flowsDetailed study of network evolution including new routes, markets and deregulation hot spots

Model the impact of evolving airline modelse.g. Low cost carriers

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Fleet build-ups covering >750 passenger airlines, 190 freight carriersAvailable as a book, interactive pdf and on the web.

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Today’s passenger traffic 38% above 2000 level

RPK growth: 2008 vs. 2000

Europe29%

CIS+121%+29%

North America+7%

Middle East Int’lChina184%

+121%

Middle East Int’l+166%

+184%India

+192%

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Latin America Int’l+40%

Africa Int’l+53%

Asia-Pacific Int’l+29%

192%

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Source: ATA (North America), AEA (Europe), AAPA Int’l (Asia-Pacific), IATA Gabi (Latin America, Africa & Middle East), CAAC (China)

Air travel remains a growth market

20-year ld l

12

World annual traffic(RPKs - trillions)

ICAO t t l t ffi

AirbusGMF 2009

world annual traffic growth

4.7%

Ai t ffi

10

total traffic GMF 2009

Air trafficwill doublein the next15 years6

8Air traffic

has doubledevery 15 years

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15 years

4

every 15 years

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Source: ICAO, Airbus

1970 1980 1990 2000 2010 2020 2030

Asia to lead in world traffic by 2028

20-year world annual traffic growth

Traffic by airline domicile

RPK (billi )

traffic growth4.7%

% of 2028 World RPKs

33%

20-year growth

6 0%

0 500 1,000 1,500 2,000 2,500 3,000 3,500

Asia

RPKs (billions)

2008 traffic 2009-2028 growth

% of 2008 World RPKs

26% 33%

26%

20%

6.0%

4.3%

2.4%

Europe

North America

2008 traffic 2009 2028 growth

28%

31%

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6%

6.9%

5.8%

Middle East

Latin America

5%

4%

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4%

3%

5.9%

5.2%

CIS

Africa

3%

3%

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Flows including Africa, India and China to grow fastest

Domestic Turkey

Top 10 growth markets next 20 years

10.1%

N. Africa - P.R.China

Domestic India

9.4%

10.0%

Drivers:D l tiCIS - P.R.China

Sub S.Africa – P.R. China

9.4%

9.3%

• Deregulation• Economic growth• Population growth

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t. Middle East - S. Africa

Sub S.Africa – N. Africa

9.1%

9.0%

Population growth• Inter regional trade

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P.R. China - S. Africa

N.Africa - S. Africa

8.7%

8.6%

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P.R.China - Russia 8.5%

India will be the fastest growing country for air travel for the next 10 years

RPK growth: annual average 2009RPK growth: annual average 2009--20182018

E rope

g o t a ua a e age 009g o t a ua a e age 009 0 80 8

CISEurope6.2%

North America8 7%

6.4%

Middle East6.1%

8.7%

12.2%

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Asia-Pacific6.8%

Africa7.9%

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India World

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2009-2018 2019-2028 20-year growth

7.9% 6.6% 7.3%

2009-2018 2019-2028 20-year growth

4.6% 4.8% 4.7%

India’s passenger aircraft fleet will grow fourfold by 2028

Fleet size

1 000

1,200Fleet size

1,163

800

1,000

722

600993 new aircraft

US$ 131 billion

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200

400297

New

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200

2008 2018 2028

RecycledStay

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Passenger aircraft ≥100 seats (excluding freighters)

Chinese market in next 20 years

• A passenger traffic to be multiplied by 4 p g p y• A passenger aircraft fleet to be multiplied by 3• A dedicated freighter fleet to be multiplied by 7g p y• A market for 2,798 aircraft over 100 seats worth

$353B

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t. • Large cities, congestion will demand larger aircraft• Very large aircraft for all Chinese markets

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• 201 VLAs and 725 twin-aisles required in China

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Mainland China will need 2,798 new passenger & freighter aircraft over the next 20 years

1,8721,872 single-aisles

725725 twin-aisles725725 twin-aisles

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201201 very large aircraft

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Market value of $353 billion

BRIC market more than 20% of new delivered aircraft and business volume over next 20 years

Share of BRIC countries, units and business volume of new delivered aircraft to 2028

worldwide new aircraft deliveries

valued at a total of

worldwide new aircraft deliveries

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Brazil Russia India ChinaBrazil Russia India China

22%22% 23%23%

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Source: September ASK traffic from OAG

Other emerging countries as big as China and India combined

3 000Population (millions)

2,500

3,000

China and India today:

2,000China

more countries to

follow

1,50021 countries

2 billion people

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500

1,000

IndiaBrazilUkraine

R iTurkey

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0

500

ArgentinaIndonesiaRussia

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Emerging countries of tomorrow

Emerging countries of today

Andrew Gordon - Airneth

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