Presented by AACO Secretary General Abdul Wahab TeffahaAACO Members Major Additions by Type in 2018 AACO Members Major Withdrawals by Type in 2018. Optimistic Expansion of liberalization

29 April 2019 - Dubai

Presented by AACO Secretary General

Abdul Wahab Teffaha

ECONOMIC UPDATE

GLOBAL AIR TRAVEL MARKET

ARAB AIR TRAVEL MARKET

ARAB AIRPORTS

ARAB AIRLINES

ARAB AVIATION OUTLOOK

0%

1%

2%

3%

4%

5%

6%

7%

8%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020*

Source: AACO, IMF, World Bank

Year-on-Year Real GDP Growth (%)

World Arab World

*Estimated

*Measured by Purchasing Managers Index which tracks business confidence amongst managers at manufacturing,construction, and services firms, **Above 50 represents an expansion, below 50 represents a contraction when compared toprevious month

Source: AACO, Bloomberg

53.352.8

55.1

51.4

52.8

56.8

54.855.7

52.4

50

48

49

50

51

52

53

54

55

56

57

58

Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19

Business Confidence* (Deviations from 50**)

Global Germany Saudi Arabia UAE United Kingdom

Better oil prices and

bank mergersExtension of credit terms

Driven by the services sector in the AmericasThreat of tariffs

on the automotive industry

Brexit

Source: AACO, ATAG, IATA, IMF, World Bank, WTTC

Contribution to GDP isaround USD 164$ billion(7.8% of total GDP)

Economic multiplierof aviation is around1$:3$

Employs around 6million (5.0% oftotal employment)

Data provided for the Arab world isbased on 2017 figures. Calculatedbased on total contribution (somecountries include tourism effects)

Globally expected at1$:2.1$ in 2018

Globally 2.7$ trillion(3.6% of total GDP)

Globally 65.5 million(around 2% of totalemployment)

Source: AACO, IATA*Estimated

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

Global RPKs Growth Global ASKs Growth

Slower Growth

Brexit

?Trade

Tensions

?Economic slowdown

?

Source: AACO, IATA

168.9204.3 211.9 222.1 231.6 249.1 269.6 281.0

17.8

20.7 22.3 23.9 25.026.5

27.1 28.7

0%

3%

6%

9%

12%

15%

18%

21%

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015 2016 2017 2018

Mill

ion

Pass

enge

rs

Total International traffic (Left scale) Domestic Traffic (Left scale) Growth (Right scale)

Source: AACO, IATA*Arab World

With The Americas+4.5%/9.1M

(3.3%)

With Europe+11.2/99.8M

(35.5%)

With Asia+2.1%/102.4M

(36.5%)

Within the AW*-3.0%/59.5M

(21.1%)

With Sub-Saharan Africa+8.6%/10.2M

(3.6%)

Change/Total number of PAX (share of total market)

050

100150200250300350400450

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Mill

ions

Arab World International Passenger Traffic Forecast - optimistic

Forecast - current situation Forecast - difficult environment

Difficult environment: Trade tensions,economic downturn, neo-protectionism, andexpansion of threats

CAGR: compound annual growth rate CAGR: 8.3%

CAGR: 4.4%

CAGR: 2.0%

Source: AACO, IATA

Source: AACO, ACI

113.4

177.1

0

50

100

150

200

250

300

350

400

2003 2004 2005 2006 2007

192.2258.8

2008 2009 2010 2011 2012

Avg. growth +10.4%

Million Passengers

Avg. growth +8.0%

0%

2%

4%

6%

8%

10%

12%

2013 2014 2015 2016 2017

273.7

Avg. growth +6.8%

Growth

359.4

73%

74%

75%

76%

77%

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015 2016 2017 2018

Billions

RPKs (Left scale) ASKs (Left scale) PLF (Right scale)

Source: AACO

Source: AACO, IATA

100.8

124.7 131.0 139.3 144.9158.5 166.1 169.5

17.8

20.7 22.323.7 25.0

26.5 27.1 28.7

14.3

17.018.9

21.124.7

28.430.6 32.9

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

2011 2012 2013 2014 2015 2016 2017 2018

Mill

ion

Pass

enge

rs

Int'l To/From Domestic Transit Traffic Int'l To/From Growth Transit Growth Domestic Growth

Growth

0%2%4%6%8%

10%12%14%16%18%20%

2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019*

Additions Share of Total Fleet Withdrawals Share of Total Fleet Fleet Growth (Y-o-Y)

Gap between fleet additions andwithdrawals tightened further in Q12019

Source: Flight Fleets Analyzer, AACO*comparison is between Q1-2019/Q1-2018

A320, -24, 10.5 yrs

A330, -23, 10.6 yrs

B737, -10, 14.3 yrs

B777, -19, 13.5 yrs

A319, -6, 14.7 yrs

A320, +31,3.4 yrs

B777, +31, 4.7 yrs

B787-9/10,+ 18,

0.4 yrs

A350-900/100, +15,

0.6 yrs

B737 Max 8, +14,

0.6 yrs

A380, +9, 1.6 yrs

A320 Neo, +2, 0.3 yrs

Data includes re-activated, freight converted, andleased-in aircraft

Data includes grounded, leased-out, and retiredaircraft

Source: AACO, Flight Fleets AnalyzerData label contains: A/C Type, Count, and Average Age

Avg. Age 3.9 years Avg. Age 13.3 years

AACO Members Major Additions by Type in 2018 AACO Members Major Withdrawals by Type in 2018

Optimistic

Expansion of liberalization

Peaceful resolutions of some conflicts

Due stakeholders’ consultations for user chargers

Taxation that don’t hinder tourism growth

Development of infrastructure that mitigates congestion

Pessimistic

Restrictions on market access

Expansion of instability

Unchecked user charges

Unchecked taxation policies

Limited development of infrastructure

Source: AACO, Eurostat, World Bank

Data has been recalculated to include current EU members

5.0%

6.5%

8.1%

3.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

1978-1987 1988-1997 1998-2007 2008-2017

European Union Total Passenger Traffic Change

Source: AACO, IATA

2011-4.1 percentage points

2012-2018 Avg.

Growth +7.6%

2004-2010Avg. Growth

+11.7%

Arab Air Transport Market Average Growth Rate before and after 2011

Airline Ticket Breakdown (Europe)

Base fare and other fees Airport Passenger Charges Taxes

90%

7%

3% 79%

15%

6%

Air fares declined while taxes and airport charges doubled in 10 years

Source: AACO, ACI, IATA

2006 2016

If taxes remained constant between 2006-2016:• On average ticket price would have been less by 17 Euros per one-way trip• Which should have Added 50 million passengers, resulting in additional 50

billion euros in European GDP and created 238,000 jobs

Impact of Average Dollar Spent in Aviation on the Economy

20181$:2.1$

20171$:2.5$

A weaker multiplier, reached 20-year median of 2.1 in 2018

20161$:3$

Source: AACO, IATACalculated based on spending from disposable income on travel

Success story: Dubai Airport Passenger Traffic and Capacity Evolution 1990-2018

Source: AACO, ACI, Dubai Airport

2 Million

10 Million

23 Million

60 Million

75 Million

93 Million

0

10

20

30

40

50

60

70

80

90

100

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Mill

ions

Dubai Airport Passengers Airport Capacity

Opening of Terminal 2

Opening of Terminal 1 + concourse C

Opening of Terminal 3 + concourses

A&B

Second Phase concourse A

Opening of concourse D

q In spite of a cloudy picture ahead, yet aviation proved to be resilient.

q Maturity of the market is not yet the case in the Arab World. Lower

growth is attributed to other factors.

q Government Policies are critical to expand Air Transports’ contribution

to sustainable development.