To represent, lead and serve the airline industry

Changing business realities Changing business realities of airline industryof airline industry

Guido GianassoChina Travel Sky 2010 Airline Conference Guangzhou, 1st December 2010

航空领域的现况改变航空领域的现况改变

Markets almost back on trackMarkets almost back on track市场几乎回到正规市场几乎回到正规

Source: IATA

International air freight and passenger volumesseasonally adjusted

160

180

200

220

240

260

2005 2006 2007 2008 2009 2010

RPK

, bill

ions

9

10

11

12

13

14

FTK

, bill

ions

FTK

RPK

Air cargo gains share from trade reboundAir cargo gains share from trade rebound空运从贸易复苏中获益空运从贸易复苏中获益

World trade in goods and air FTKsSource: Netherlands CPB and IATA

8

9

10

11

12

13

14

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billio

n FT

Ks

90

100

110

120

130

140

150

160

170

inde

x of

wor

ld tr

ade,

200

0=10

0

International FTKs(left scale)

World goods trade volumes(right scale)

Source: IATA, Netherlands CPB

Business travel revives premium businessBusiness travel revives premium business商务出行推动两舱收益商务出行推动两舱收益 Busines confidence and premium travel growth

55

65

75

85

95

105

115

2006 2007 2008 2009 2010

Con

fiden

ce in

dex

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

% c

hang

e ov

er y

ear

Premium travel(right scale)

Business confidence(left scale)

Source: IATA, Haver

Geography matters Geography matters 地理因素地理因素

Source: IATA

Growth in passenger numbers by market

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2006 2007 2008 2009 2010

Cha

nge

over

yea

r

Middle-East - Asia

Within Asia

North & Mid Pacific

Within- Europe

North Atlantic

Growth of Chinese Aviation IndustryGrowth of Chinese Aviation Industry中国航空业的发展中国航空业的发展

Source: IATA

1400480AircraftsAircrafts

5.7 M1.6 MDomestic seats Domestic seats per weekper week

2010201020002000

But there is much more potentialBut there is much more potential更大的发展潜力更大的发展潜力

Source: IATA

3.00.3Seats per Seats per personperson

300 M1.300 MPopulationPopulation

USUSCHINACHINA

Some regions back in profit, some notSome regions back in profit, some not部分地区已开始盈利部分地区已开始盈利

Source: ICAO, IATA

Airline net profits by region

-6

-4

-2

0

2

4

6

Europe Asia-Pacific N America L America Middle east Africa

US$

billi

on

2009 2010 2011

Industry profits see good cyclical upturnIndustry profits see good cyclical upturn行业利润呈循环上升趋势行业利润呈循环上升趋势

Global commercial airline profitability

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

F

2011

F

% re

venu

es

-20

-15

-10

-5

0

5

10

15

20

US$

bill

ion

Net losses(right scale)

EBIT margin (left scale)

Source: ICAO, IATA

Challenges Challenges 挑战挑战

Fuel price is raising from 24 % to 26 % of operating costs

Unused capacity Wide body utilization 7.8% down1400 aircrafts to be received in 2010

Cost of labor / Trade Unions issues

Fares turning up but so are fuel pricesFares turning up but so are fuel prices票价和油价上涨票价和油价上涨

Source: IATA and Platts

Average international fares and jet kerosene prices

300

320

340

360

380

400

420

2006 2007 2008 2009 2010

US

$ pe

r one

-way

fare

100

150

200

250

300

350

400

450

US

cen

ts p

er g

allo

n

Jet kerosene price(right scale)

Average one-way international fare(left scale)

Capacity starting to outpace demandCapacity starting to outpace demand承载量承载量//运力开始超过需求运力开始超过需求

International air travel and capacityseasonally adjusted

185

195

205

215

225

235

245

255

265

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

RP

K bi

llion

250

260

270

280

290

300

310

320

330

AS

K b

illio

n

ASKs(right scale)

RPKs(left scale)

Source: IATA

To sum upTo sum up…… 总结以上内容总结以上内容

Strong cyclical rebound in travel Airlines still financially fragile Some potential upside to travel demand Potential downside look larger

IATA and CHINA IATA and CHINA –– areas of cooperationareas of cooperation国际航协与中国国际航协与中国-- 合作领域合作领域

Simplifying the business (Bar coded, Boarding passes) => target is 100 % at yearend (China is at 43%)

E-freight (Tianjin is the only airport in the e-freight program)

Air China has five FAST TRAVEL projects Environment – the targets are:1.5% improvement of fuel efficiency annually up to

2020)Carbon neutral growth from 2020Cutting emissions in half by 2050, compared to 2005

IATA in CIATA in CHINAHINA -- a Human Resources perspectivea Human Resources perspective从人力资源的角度看国际航协在中国从人力资源的角度看国际航协在中国

Office established in 1994 (3 employees)Now Regional Office with 90 employees from 5

countriesChinese employees are the second national group

in IATA IATA training activities in China grow In 2007 IATA launches the IATA INTERCULTURAL

LEADERSHIP ENGAGEMENT and DEVELOPMENT(I.LEAD) Program in Beijing

Building the winning coalition: I.LEADBuilding the winning coalition: I.LEAD打造胜利的团队打造胜利的团队

To represent, lead and serve the airline industry