African Airlines: Strategy for Sustainable Development and Competitiveness

1. African Airlines:Strategy for Sustainable Development and Competitiveness Business Process Outsourcing BPO Outsourcing for Competitiveness Simon Riha 37th Annual General Assembly African Airlines Association Sun City November 14-15, 2005

2. e-go 169® in cooperation with Hahn Air Lines GmbH • Established in 1997. • A full member of IATA, IATA Clearing House, MITA and ERAA. • Scheduled service between Zurich and Salzburg. • Major focus on providing distribution services to airline companies. • Interline agreements with more than 120 carriers worldwide. • 39 BSP memberships worldwide, coverage of 46 countries. • Joint cooperation with Lufthansa Systems, a IATA StB strategic partner. 10. März 2014 Outsourcing 2

3. Agenda Outsourcing and Process Reengineering Airline Marketing Distribution Network e-Ticketing and e-Interlining BPO Outsourcing

4. 2 companies serve 45% of the market >500 airlines,excess capacities, strongcompetition <3 competitors at deregulated airports 2 companies supply 40% of the market „Natural Monopolies" 4 companies worldwide 2 large companies control 100%of the market Aircraft Manu- facturers Leasing companies Airlines Ground Handling Catering Airports GDS Return on capital: >30% 16% 15% 11-24% 10-13% 10% <-5% Hurdle Airlines: The Weakest Element of the Value Chain Outsourcing

5. Revenues Seek incremental revenues opportunities Deliver only what customers value Costs Cost reduction/cost cutting inevitable Your influence/power limited (oligopoly) Experience from other industries – e.g. manufacturing Focus on Process of creating value for customer Inputprocesses … … a g k j h b i d e f l c Value Process generates costs and errors = Rev’s Inputprocesses w v m s r q u o n y … t p … • Process Analysis(Jack Welsh’s “Destroy your business”) • Core, Supportive, Redundant • Process reengineering / KAIZEN improvements (Toyota) • Simplify, streamline, outsource • No compromise on quality (ISO quality management) Outsourcing and Process Reengineering >500 airlines,excess capacities, strongcompetition Airlines ROC <-5% Hurdle Outsourcing

6. Agenda Outsourcing and Process Reengineering Airline Marketing Distribution Network e-Ticketing and e-Interlining BPO Outsourcing

7. Airline Marketing Distribution NetworkYour Gateway to Worldwide BSP Sales • A network of IATA BSP memberships covering major markets on all continents (incl. whole Europe, Canada, SE Asia and ARC in USA). • After signing a simple unilateral interline agreement, airlines can use Hahn Air as their CLEARING CARRIER (HR / 169) on desired markets. • Why that? Although your flights are visible in GDSs and agents can book them, sales have to be ticketed to become revenues. • Meeting IATA rules and standards. • No cannibal effect on your existing sales: • HR ticket is a neutral ticketing platform. • HR is no GSA of any airline in the world. • A proven (>120 airlines) and complete BPO distribution solution including detailed reporting and revenue accounting. • ET interlining introduced shortly. • Your Benefits • Additional sales from more than 50,000 IATA agents in 46 countries. • Total flexibility: choose desired markets and commissions country by country. • Reputation: Worldwide sales, cooperation with HR • HR provides marketing support and agent help desk for its AMDN. • Lower Distribution Costs NOJoining / monthly feesNOUp-front capital investmentNO Individual BSP expenseNO Management & unit costs (BSPs)NO data processing & banking feesNO CIP production & distribution expenses NO GDS ticketing feesNO ADM/ACM ProductionNO Exchange rate risk Outsourcing

8. Agenda Outsourcing and Process Reengineering Airline Marketing Distribution Network e-Ticketing and e-Interlining BPO Outsourcing

9. Traditional Paper Based Ticket Process Paper Ticket Distribution Ticket Office Check-In Boarding Lifted Flown RevenueAccounts Revenue AccountsInterline Partners Settlement Outsourcing

10. All paper based processes must be mirrored digitally and data channeled both through sales process and operational systems BSP ARC Agent Sales Data/CC Data Sales Data ATO/CTO ATO/CTO Sales Data/CC Data CRS Revenue AccountingSystem Agent Final Status to RAS Res/TKT System E-TKT Database Final Status to RAS • Boarded/Flown own Coupons • Refund • Void • Double-Coupons • EA-Print • Ground Transportation Print • FIM Issued • Exchanged • Print Exchange • Printed to Paper • Flown OAL-Coupon with ESAC • Own Coupon flown with ESAC Check-In / Document Control System E-TKT DB OAL Outgoing/Incoming Invoices via IDEC OAL RAS Outsourcing

11. e-Ticketing affects all areas within your company Marketing and Sales Airport Ground Operations Revenue Accounting Reservation Ticketing Check in Boarding Flight closure Revenue Accounting Distribution and sales skills Operational know-how Accounting skills Business process know-how and ability to organize a change management process Outsourcing

12. Bilateral e-Interlining versus Hub based e-Interlining Outsourcing

13. e-go 169® in cooperation with Challenges & Concerns • Upgrade GDSs (slots…) • Inventory system provider • ET databank • BSP testing / implementing (per country per GDS…) • Code share issues / interlining (mutual priority) • EDIFACT links • DCS • Staff / training • Revenue accounting Outsourcing

14. e-go 169 ® e-Ticketing and e-Interlining Platform in cooperation with • Affordable plug-in BPO solution available in 3 models depending on a desired scale of BPO: • e-go 169 ® exclusive • e-go 169 ® host • e-go 169 ® interline Outsourcing

15. e-go 169 ® e-Ticketing and e-Interlining Platform Outsourcing

16. e-go 169® in cooperation with Get Ready for Transformation Hahn Air Simon RihaAn der Trift 65D - 63303 DreieichGermanyTel.: +49 6103 5013 0Fax: +49 6103 5013 129E-mail: frankfurt@hahnair.comwww.hahnair.com in cooperation with Outsourcing