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AIRLINE CHALLENGES CURRENT STRATEGIES A personal perspective

Opening session. AIRLINE CHALLENGES CURRENT STRATEGIES A personal perspective. by Pierre J. Jeanniot. INDUSTRY CHALLENGES. Economic cycles Financial crises Government actions Terrorism Environmental constraints Infrastructure. 2013 profit $12.9 billion . passenger load factor 80.3% .

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AIRLINE CHALLENGES CURRENT STRATEGIES A personal perspective

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  1. Opening session AIRLINE CHALLENGESCURRENT STRATEGIESA personal perspective by Pierre J. Jeanniot

  2. INDUSTRY CHALLENGES • Economic cycles • Financial crises • Government actions • Terrorism • Environmental constraints • Infrastructure

  3. 2013 profit $12.9 billion passenger load factor 80.3% yield 0.3% forecast - 2014 profit $18.7 billion

  4. REGIONAL FORECASTS Asia-Pacific $3.7 billion North America $8.6 billion Europe $3.1 billion Middle East $2.2 billion South America $1.0 billion Africa $0.2 billion

  5. NORTH AMERICA

  6. Full Service Network Carriers

  7. North American Hybrid Models

  8. FOUR MAJOR CARRIERS consolidation, slot reduction OPPORTUNITIES FOR NEW LCC’s

  9. EUROPE

  10. THE SHORT-HAUL MARKET low-cost airlines overtaking legacy airlines

  11. regional offerings – HOP! • leisure brand - Transavia • alliance and partnerships

  12. “SCORE” cost reduction program

  13. 81.5 million passengers • 1st base outside Europe Business model - changing

  14. pre-tax profit +27.9% hybrid model for business passengers

  15. one of the fastest growing airlines aims to connect the world via Istanbul

  16. MIDDLE EAST

  17. WORLD GULF HUBS recent aircraft & engine technology-driven

  18. the world economy continues to shift ... so do the traffic flows

  19. equity alliance strategy

  20. ASIA PACIFIC

  21. INDIA World’s largest democracy hard to do business !

  22. Changing Aviation Policies new airlines, many LCCs fuel costs Indian rupee depreciation all LCCs losing money – except Indigo

  23. Full Service Segment lacked liquidity major losses heavily indebted

  24. New Joint Ventures Tata Sons – Singapore Airlines full service airline Tata Sons – Telestra Tradeplace – Air Asia low cost carrier - LCC

  25. LATIN AMERICA

  26. co-operative model “virtual airline” buys aircraft individual airlines operate flights

  27. CONSOLIDATION

  28. highly profitable! largest LCC in Brazil 15% domestic market

  29. AFRICA • traffic growth +6% p.a. • accident rate • mostly government-owned

  30. .

  31. urbanization • emerging middle class • strong services Africa could industrialize aviation would play an important role !

  32. North America Europe Asia Pacific Latin America Gulf Airlines Africa

  33. SHAPING FORCES New airplanes and engines Narrow bodies Less fuel burn – lower operating costs

  34. SHAPING FORCES New airplanes and engines Wide bodies Less fuel burn – lower operating costs

  35. Continued impact of IT INTERNET SOCIAL MEDIA SELF HANDLING MOBILE DEVICES

  36. CURRENT TRENDS Ancillary Revenues up to 20% of total intake New Distribution Capability diversified product distribution

  37. OBSERVATIONS Aviation continues to change. It needs to adapt … And it needs STRONG LEADERSHIP

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