Is the dragon dance about to slow down? Business Aviation in Asia

Björn Näf

Chief Executive Officer

Corporate Jet & Helicopter Finance Asia 2012, Hong Kong

AGENDA

Welcome

The Economy of China

The Challenges that come with operating business jets

– Resources

– Infrastructure

– Culture

Summary

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THE ECONOMY OF CHINA

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FAST FACTS FOR BUSINESS AVIATION IN CHINA

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10.5% Real GDP Growth in

Asia 2007 - 2011

1.4m Millionaire households

in China

#2 Global Luxury Goods

Market

95 Billionaires in China

(USD)

7,212bn GDP 2012

324.5bn Foreign Direct

Investment 2011

61 Companies in Fortune

500

63,500 Ultra High Net Worth

Individuals

ONE AIRCRAFT DELIVERY EVERY THREE DAYS FOR 10 YEARS

Oceania 263 Business Jets

US$6.0bn

China 635 Business Jets

US$21.0bn

Northeast Asia 90 Business Jets

US$2.9bn

South Asia 485 Business Jets

US$12.0bn

Southeast Asia 217 Business Jets

US$6.1bn

Source: Embraer Analysis – totals may differ due to rounding – sustained growth scenario

IT’S AN EXPLOSIVE CHAOTIC GOLD RUSH

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Complex regulatory

environment

Lack of infrastructure Lack of talent

Balance of growth vs.

quality

Lack of experience in

clients & operators

THE CHALLENGES THAT COME WITH

OPERATING BUSINESS JETS

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IT’S EASY TO SELL AIRCRAFT, BUT WHERE ARE THE EXPERTS WHO CAN OPERATE THEM?

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= 100 Units Source: Bombardier Market Forecast 2012-2031 (jets only, excludes very light jets) & Metrojet Analysis, Numbers are rounded Asia includes South East Asia, India, Asia Pacific, Japan & China

1,700

New First Officers

3,400 New Captains

3,400

New Flight Attendants

5,100 New Engineers

New Business Aircraft in Asia by 2021 1,700

WE MUST COOPERATE AND COEXIST TO THRIVE

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CHINA CURRENTLY LACKS THE INFRASTRUCTURE TO FULLY SUPPORT BUSINESS AVIATION

190 public use airports

Over 110 military only airports

1.6 airports per 100,000 km2 land area

Lack of FBOs

Only 6 MROs

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EXISTING INFRASTRUCTURE IS FOCUSED ON THE NORTH EAST

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Beijing Shenyang

Dalian

Shanghai

Shenzhen

Beijing

• Beijing Airlines Ltd. • Beijing Capital Airlines Ltd. • CITIC General Aviation Co. Ltd. • Free Sky Aviation Co. Ltd. • Hanneng Business Aviation Co. Ltd. • Big White Bear Aviation Co. Ltd.

Shenyang

• ZYB Lily Jet Co. Ltd.

Dalian

• Hanhua Business Jet Airlines

Shenzhen

• Donghai Jet Co. Ltd. • Asia United Business Aviation Co.

Ltd.

Shanghai

• China Eastern Airlines Executive Air

Circle size indicates the number of aircraft Source: Metrojet Research

WE NEED SOME HOLDING FUEL IN THE TANKS

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DON’T UNDERESTIMATE YIN-YANG

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Balanced Approach

“Think globally, act

locally”

East meets West

Achieves Unity

BEING PART OF THE CULTURE IS KEY TO SUCCESS

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SUMMARY

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THE DRAGON IS DANCING

Business aviation is growing in China, but…

the Industry needs to cooperate in order to crack the market

be prepared to carry some holding fuel in the tanks

understand and accept the culture

choose your partner carefully

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