R Ae S Vlj Presentation Gc Mar 2009

Considerations in Expanding the Corporate Air Taxi Market in Europe

Considerations in Expanding the Corporate Air Taxi Market in Europe

Gary CrichlowAviation Analyst

19th March 2009

2

AGENDA

Ascend — who we are

Defining the European corporate air taxi market

Considerations in expanding the market

Summary

www.ascendworldwide.com

AEROSPACEINFORMATIONREDEFINED

“The information contained in our databases and used in this presentation has been assembled from many sources, and whilst reasonable care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend Worldwide Limited, its offices, or employees in respect of any error or omission that may have occurred.”

AEROSPACEINFORMATIONREDEFINED

Provider of specialist information and consultancy services to the global air transport industry.

www.ascendworldwide.com

AEROSPACEINFORMATIONREDEFINED

Data & advisory services

Ascend Online Fleets 100,000 aircraft

Ascend Online Values (V1) Historical, current and

forecast values

Market studies on a range of different aircraft types

Demand forecast projects

Detailed market outlook analyses

5

Regulatory

OEM

Finance

Insurance

Leasing

MRO

Components

Publishing

Operators

AEROSPACEINFORMATIONREDEFINED

6

AGENDA

Ascend — who we are

Defining the European corporate air taxi market

Considerations in expanding the market

Summary

7

Corporate air taxi market

On-demand charter

Whole aircraft

Per-seat

Branded operations

New technology (VLJs)

8

Flight cost by distance using a range of business jet models

Journey Length

Pri

ce

Commercial Airline:- Without hubbing- With hubbing

VLJ air taxi (whole aircraft)

Traditional business jet charter

VLJ air taxi(per seat)

Source: Embraer

Corporate air taxi market

9

AGENDA

Ascend — who we are

Defining the European corporate air taxi market

Considerations in expanding the market

Summary

10

Considerations in expanding the market

EuropeanAviationMarket

DEMAND SIDE SUPPLY SIDE

Access to funding

Price & scheduling

Geography

Customer characteristics

Economic environment

Public perception

Aircraft type

Operating model

Regulatory compliance

Infrastructure

Competition

11

Demand side—European economic environment

Sources: Eurocontrol, Eurostat, Ascend analysis

2.80

2.85

2.90

2.95

3.00

3.05

3.10

3.15

3.20

3.25

Q1

06

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

Q1

08

Q2

08

Q3

08

Q4

08

EU

27

GD

P (

€ b

illi

on

)

17

18

19

20

21

22

23

24

25

26

Bu

sin

es

s a

/c d

ep

artu

res

(00

0)

EU27 GDP (€bn) Business aircraft departures (000)

Business aviation and the economy

12

European economic environment

Reduction in corporate travel

“… At the moment, we have a “no travel” ban in place. This calls for only essential travel to be undertaken. We are being steered towards phone and video conference as much as possible to avoid travel …”

Business Executive, mining company

Trading down

“… For flights less than five hours the policy is the cheapest economy ticket …”

Corporate travel buyer, investment bank

Source: Ascend research

13

Cost differential between commercial and corporate aviation increasing

Journey Length

Pri

ce

Traditional business jet charter

VLJ air taxi (whole aircraft)

VLJ air taxi(per seat)

Source: Embraer, Ascend analysis

European economic environment

Economy classBusiness class

14

Supply side—Aircraft type

Performance & operating cost

Acquisition cost

Seating capacity

Manufacturer

15

Operating costs

Aircraft types

Matching performance, capacity and cost to demand is critical

Typical range

Va

ria

ble

co

sts

VLJs

Entry-level jets(CJ1+, Premier 1A)

Single pistons (SR22)

Single turbines (PC-12, TBM850)

Typical range

Va

ria

ble

co

sts

VLJs

Entry-level jets(CJ1+, Premier 1A)

Single pistons (SR22)

Single turbines (PC-12, TBM850)

16

There is a known backlog of 542 VLJs for European customers …

Aircraft type

Source: Ascend Online Fleets

Citation Mustang

122

Phenom 100102HondaJet

2 PiperJet8

D-JET8

Eclipse 500204

Adam A70096

17

… however, there is cause for concern

Aircraft type

Source: Ascend Online Fleets

Adam A70096

Eclipse 500204 Diamond

D-JET8

PiperJet8

HondaJet2

Phenom 100102

Citation Mustang

122

18

Aircraft type

The established players

Cessna: 130 Mustang

deliveries planned for 2009

30% increase over 2008

Major European customers:

Blink, Jetalliance

19

Aircraft type

VLJ deliveries largely unaffected by production cuts—for now

The established players

Embraer: 110 Phenom 100

deliveries planned for 2009

Major European customers:

JetBird, JetForYou

20

Access to funding

Funding is critical

A primary reason behind market failure

BIKKAIR, DayJet, Eclipse

Financiers not willing to accept lengthy timescale before ROI

Shortened window to break-even

Competition from other sectors and industry for limited financing

21

AGENDA

Ascend — who we are

Defining the European corporate air taxi market

Considerations in expanding the market

Summary

22

Summary points

Commercial airline price benchmark moving down

Choice of aircraft type becomes even more important

Managing the funding issue is critical

Expansion investment needs to generate positive cash flow sooner rather than later

www.ascendworldwide.com

AEROSPACEINFORMATIONREDEFINED

“The information contained in our databases and used in this presentation has been assembled from many sources, and whilst reasonable care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend Worldwide Limited, its offices, or employees in respect of any error or omission that may have occurred.”

AEROSPACEINFORMATIONREDEFINED

Provider of specialist information and consultancy services to the global air transport industry.

THANK YOU!