BUSINESS 2025

1. BUSINESS 2025 Fiji Chamber of Commerce and Industry 1st September 2018

2. Table of Contents Framing Our Reality Strategic Purpose Value to Fiji A Challenged Business Model Air Access and the Myth About Open Skies Big Picture – Where are we now? • Current Network and Partnerships • Our Network in 2027 • Fleet: Now and 2027 • Passenger Numbers: Now and 2027 The Challenges Restricting Our Growth

3. OUR STRATEGIC ROLE DRIVES OUR MISSION

4. Fiji Airways - founding principles • Strategic links for an nation in middle of South Pacific • Domestic (Fiji Link) • International • Assist in the development of the tourism sector • Assist in the development of the export sector • A sustainable self funded airline • Inherent objective: be the National Airline of Fiji • Fiji Airways acts as an ambassador for the country • Focus on customers • Empower employees • Our core objectives are not inconsistent with original mandate set by our shareholder Founding principles still relevant and drives our Mission 4

5. Our Strategic Role Drives our Mission National interest and profitability are not mutually exclusive – Fiji Airways needs to focus on balancing profitability aligned to national interests The strategic role of Fiji Airways is to be a profitable National Airline 5

6. Our Strategic role drives our Mission Strategic Role • To be a profitable National Airline Core Objectives: • Sustained profitability • Support inbound tourism and home originating market • Grow with smart investment • Deliver exceptional service with Fijian touch • Create a culture that encourages innovation and efficiency and • rewards creativity Mission Statement: • We are the National Airline of Fiji proudly connecting our country to the world • with exceptional Fijian hospitality • Through innovative Employees determined to exceed the expectations of our • Customers, weare committed to delivering sustained profitability in a socially responsible manner 6

7. OUR VISION IS INFORMED BY OUR MISSION

8. Our Vision is Informed by our Mission Vision Statement • To Be the Most Desired, Most Flown, Most Profitable Airline in the South Pacific

9. Framing Our Reality Fiji Airways – a significant economic contributor Passenger Growth (tourism) • Four years of successive growth in passengernumbers • Growth in passenger numbers planned for 2018

10. Framing Our Reality Fiji Airways – a significant economic contributor Foreign Currency Generator Keeping it within the economy

11. Framing Our Reality Fiji Airways - a small National Airline needs to consistently punch above its weight to ….. Overcome a challenged Business Model

12. Framing Our Reality .... a challenged Business Model Size and Scale

13. Framing Our Reality Additional Business Model (& Structural) Limitations .... a challenged Business Model • Small size and scale limits negotiation leverage with international suppliers. (e.g. Airports - Catering, Engineering - C checks etc.) • In-sufficient supply of type rated and experienced local pilots results in need to contract foreign pilots. (162 Local / 95 Expat)

14. Air Access Dispelling the Myth About Open Skies

15. Types of Airlines Network Carrier National Developer Low Cost New World Carrier Core objective: • Strategic tool to develop country Defining feature: • Product and network versus fare Access to capital: Government* Network strategy: • Maximize inbound traffic is the core priority • Serve strategic markets • Exaggerated network reach • Connectivity used to grow network Product: • Above average quality product (4-5 stars) Examples: • Emirates, Qatar, Etihad, Royal Brunei Core objective: • Profitability Defining feature: • Hybrid business model, low costs, innovative product Access to capital: • Publicly listed Network strategy: • Dual business model for long haul and short haul • Network connectivity to maximize revenue • Strategic partnerships to create scale, network reach and defensible position Product: • Product varies for short/long haul (4 star) Examples: • Air NZ Core objective: • Profitability Defining feature: • Restructured legacy airline Access to capital: • Mix of publicly listed and Government Network strategy: • Maximize traffic flowing across the network • May have more than one hub (i.e. United has eight) • Competitive advantage (city presence) in ‘home’ market Product: • Ranges from 3 to 5 stars Examples: • US, European and Asian majors (most former national airlines Qantas, Lufthansa and British Airways) Core objective: • Profitability Defining feature: • Cheap fares Access to capital: • Mix of publicly and private ownership Network strategy: • Pure model is point to point • Some evolve to add connectivity • High seat density and utilization with common fleet type Product: • Below average quality product (2-3 stars) Examples • Southwest*, Ryanair, Air Asia Revenue Cost 15 *Seabury

16. Air AccessInternational Air Service Agreements – ASAs Australia Canada Chile China Cook Island France Germany Hong Kong India Japan Kiribati Malaysia Marshalls Nauru 15. New Zealand 16. Niue 17. Papua New Guinea 18. Samoa 19. Singapore 20. Solomon 21. South Korea 22. Thailand 23. Tonga 24. Turkey 25. Tuvalu 26. United Kingdom 27. USA 28. Vanuatu Bilateral air transportation agreement between two sovereignties regulating the air services.  Altogether Fiji has negotiated 28 ASAs:

17. Air Access Air Service Agreements - Types of ASAs 17

18. Air Access Air Service Agreements - Types of ASAs…cont Control Liberalisation 18

19. Air Access What is ‘Open Skies’? • Highly Liberalised air service environment between sovereignties that allows unlimited access to all destinations/routes and often includes no restrictions on intermediate and beyond traffic. • Open Skies is expected/promised to: • boost flight frequency • enhance connectivity • increase traffic (passengers) • lower ticket prices

20. Air Access Open Skies • Uncontrolled liberalising of ASAs does not create win-win situations • Major beneficiaries are the larger/industrialised countries/airlines. • Aviation history is littered with the carcasses of national airlines when smaller countries sign Open Skies with much bigger countries. This always works in the favour of the large carriers/countries. 20

21. Air Access Open Skies • For small island economies: • There is no historic evidence of strong economic growth post liberalisation of skies • Liberalisation leads to reduced stability of airline supply & less Government control • Foreign Airlines will serve Fiji based on home economics & route profitability • There may be a capacity growth but no evidence of real increase in tourist traffic • Fiji could end up with excess capacity or undersupply (note the current situation of Tonga & the Cook Islands) • Unfair competition can pose threats to jobs and long-term viability of National airline. • Loss of foreign currency earnings 21

22. Air Access In past 10 years more than 80 small airlines including national carriers have failed/disappeared. Some of them are: • Cyprus Airways • Estonian Air • Air Nigeria • Ghana Airways • Air Ivoire • Air Gabon • Air Jamaica • Air Malawi • Air Mauritanie • Mexicana • Armavia Airline • Sabena • Wings of Alaska • Monarch Airlines • Air Berlin

23. Air Access Fiji Airways recommends that the Fijian Government continue with its policy of controlled liberalisation. The Way Forward

24. FIJI AIRWAYS NOW

25. A World Class Aviation Academy Ground Breaking Ceremony carried out, construction underway 1st Simulator Bay - CAE Boeing 737 MAX 8 Full Flight Simulator 2nd Simulator Bay - CAE Airbus A330 Full Flight Simulator 3rd Simulator Bay – Watch This Space • Fiji Aviation Academy (FJAA) Project progressing to plan (Total project cost circa US$32.2m) • Cost saver for Fiji Airways (currently spend F$14for overseas simulator training) • Revenue generator for Fiji Airways and Fiji!

26. A Leaner, Greener Operation • Customer Carbon Offset Program • Every Take-off…One Tree programme will plant tens of thousands of trees • Drastically removing the amount of plastic we use on board – enough to cover up to 6 rugby fields in a year. This will greatly reduce waste and weight. • Deeper cuts in Carbon Emission New Generation Long Haul Aircraft – the replacement of our A330’s with new generation (Carbon Fibre) aircraft will burn 25% less fuel.

27. Strong Network and Partnership Growth 14 Codeshares • New Strategic Airline Partnerships • Alaska Airlines • Singapore Airlines/SilkAir • Jetstar • Solomon Airlines • Air New Zealand • Air Vanuatu • Qantas • American Airline • Cathy Pacific Airways/DragonAir • Jetstar Asia Airways • Jet Airways • Hong Kong Airlines • British Airways • Air Niugini

28. Strong Network and Partnership Growth 43 Interline Agreements • Growth in Codeshare and Interline Alliance Partners improves penetration in the destination

29. Putting Fiji on the global aviation map The world’s first ‘oneworld connect’ member airline • The oneworld sponsors of Fiji Airways are all four of oneworld’s original founding members - American Airlines, British Airways, Cathay Pacific and Qantas • Fiji Airways joining the oneworld alliance, including 13 of the world’s biggest airlines

30. Network and Partnership Growth Grew from 69 to 108 Destinations in just 18 months

31. FIJI AIRWAYS IN 2027

32. 2027 – A Modern Widebody Fleet Aircraft Fleet ModernisationProgramme • Fleet Campaign currently underway with Boeing & Airbus to consider replacing the Classic A330 aircrafts with New Generation candidates B787 (DREAMLINER) A350 Fuel Saving  25% & Flies Faster and Further (catalogue price for 6 widebodies circa US$1.5billion)

33. 2025 – More Aircraft, More Passengers, More Destinations Future Outlook (Based on 5 & 10 year Network Master Plan) 4% organic growth • Objective to grow Fiji Airways by at least 8% per annum over next 10 years 4% new footprint 5 Years 5 Years 10 Years 10 Year Plan Widebody: 8 Narrowbody: 8 ATR: 3 Twin otter: 4 Current 18 increases to Total – 23 aircraft

34. 2027 – Will the infrastructure grow to match this supply? Future Outlook • Accommodation? • To meet 4% growth in arrivals in Fiji (8% by Fiji Airways passengers), it will be necessary to add at least 1 hotel of 250 rooms per year. • Nadi International Airport? • Great new airport with passenger facilities. But our below-the-wing requirements moving forward are many. We will outgrow the current infrastructure (gates, parking bays) when we grow fleet to 23 aircraft. • Fiji (The Destination) in 10 Years

35. The Challenges Resources and capacity • Lack of availability of trained personnel and aviation experts, beyond pilots. Addressing this with Fiji Aviation Academy’s ab initio training. But this is a long term solution, and not all students will qualify as pilots (extremely high qualification requirements). • Airlines require specialist experts like commodities traders, fuel analysts, IT systems engineers, flight planning experts with meteorological expertise, talent (HR) development experts. • Fiji Airways has no choice but to seek recruit from abroad. • We invest heavily in capacity building for Fijians to specialise in these fields and eventually localise the positions which have expatriate staff. • A group of 25 talents Fijians identified, who will undertake an intensive Leadership Development Programme and become our future leaders. • In our Executive Leadership Team of 10, we have 5 Fijians. 2 of who are women. CSF 1 =

36. The Challenges Technology CSF 1 = • Airlines use a myriad of platforms and systems to run operations, perform functions, run forecasts and analysis. • Operations, Finance, Revenue Management, Engineering, Airports, HR all use numerous applications and systems daily. • We invest in appropriate leading edge technology • Our requirements for data warehousing, connectivity and speeds, back-ups, disaster recovery, data and cyber security are substantial – and often beyond the capability of suppliers. • We need our service providers to be on par, and meet the growing demands of all industries, not just tourism and aviation.

37. The Challenges Pricing in the industry CSF 1 = • Destination competition means we are a price-sensitive destination • Bali • Gold Coast • Hawaii • Airline price wars do not help • How is Fiji placed among the competition price-wise? • Limited Accommodation Availability Very Expensive During Peaks • Are we keeping up with evolving travel trends and demands by consumers? • Are we creating new products, experiences and activities, or are we running the risk of having a ‘stale product’? • Without an evolving, up-to-date and ‘priced right’ product, we will send business away to competing destinations.

38. The Challenges Service in the industry CSF 1 = • Contracted Up Your Service from Singapore late 2016 & started program in 2017 • Established our Service Vision and Objectives • For Fiji Airways, this is an ongoing, evolving service education and application to inform a centric service culture. • As an industry, do we have a similar attitude towards service? • Brand Fiji: Fijian hospitality is world renowned, but does it match future service demands? Is ‘FijiTime’ appreciated globally? Fiji Airways Established a Customer Experience Team to have ‘one owner of the customer’. to improve behavioural factors, we need a shift in service culture to a centric service culture

39. The Future CSF 1 = “Travel is now more about rejuvenation, adventure, fulfilment, learning new skills and ‘being more of who you are’ than just ticking off places and things and flopping in the sun.” -Responsible Travel Group Fiji can stake its claim as one of the world’s most sought-after destinations, but we have to innovate and create new value propositions!