Managing external cost: Infrastructure & Fuel

Airport Development

Airport Charges

Fuel Supply and Prices

Airport Development

IATA Airport Development Campaigns

Protect our member airlines’ operational interests by promoting cost-effective, functional, but most importantly, affordable airport development.

How?

- Forging partnerships and building consensus among key

stakeholders

- Promoting the development of airport master plans that allow

incremental expansion (incl. cargo, maintenance and fuel)

- Ensuring airport development is demand driven, optimizing CAPEX

- Removing sub-system bottlenecks, adding capacity when justified

- Developing and maintaining the Airport Development Reference

Manual (ADRM)

Asymmetrical efficiencies demonstrate the need

intervention

↗Airlines cutting prices – but airport charges keep rising

CAPEX should be focused to address determined bottlenecks

CGK Jakarta 390,984 -2.0% 2022 57.2 -4.8% FULLHND Tokyo Haneda 425,064 5.5% FULL 72.8 5.7% 2024BKK Bangkok 293,534 -2.7% 2023 46.4 -9.6% FULL

PEK Beijing 581,953 2.5% 2018 86.1 2.9% FULL

SHA Shanghai 402,105 8.3% 2019 51.7 9.5% 2017

HKG Hong Kong 401,848 5.0% FULL 63.1 5.9% FULLAMS Amsterdam 452,687 2.9% 2016 55.0 4.6% 2018IST Istanbul 439,532 8.2% 2016 56.7 10.5% 2017LHR London Heathrow 472,817 0.2% FULL 73.4 1.4% 2026BOG Bogota 337,161 4.5% 2020 27.5 9.8% FULL

GRU Sao Paulo 304,559 7.2% 2020 39.8 9.9% 2018MEX Mexico 409,954 3.4% 2019 34.3 8.6% FULLDOH Doha 218,204 6.1% 2026 26.5 13.2% 2017AUH Abu Dhabi 154,821 14.5% 2032 19.9 20.2% FULLDXB Dubai 357,339 -3.4% 2019 70.5 6.1% 2019YYZ Toronto 432,825 0.3% 2024 38.6 6.8% 2018

EWR Newark 395,524 -5.8% 2017 35.6 1.7% 2029LGA La Guardia 360,834 -2.9% FULL 27.0 0.9% 2021

North

America

Latin

America

Capacity limit

reached

North

Asia

Asia

Pacific

Europe

Middle

East

Region IATA

Code Name

RUNWAYS TERMINAL

Aircraft

Movements

Growth

Rate

Capacity

limit reached

Passengers

in Millions

Growth

Rate

Airport Charges

IATA Airport Charges Campaigns

Lead and represent member airlines during airport charges’ setting to deliver targeted savings for the industry

How?

- Reviewing capital and operating costs, traffic forecasts

- Benchmarking aircraft turnaround costs

- Determining validity of cost increases/need for reductions

- Building consensus with AOCs/BARs, airlines and associations

- Engaging with C-level at airports

- Negotiating airport charges

- Leveraging ICAO guidelines

Technical assumptions: MTOW 74t, seating capacity 150, occupancy 85%, no transfer/transit, turnaround 1 hour

Source: IATA Aviation Charges Intelligence Center

Identified high priority airports (CAPEX and charges)

9

Europe

ASPAC /

North Asia

Middle

East /

Africa

Americas

LHR AMS CPH BRU LIS FRA MUC

SIN HKG BNIA Navi Mumbai DEL BLR HYD Western

Sydney

MEX LIM GRU YYZ BOG BSB SSA GIG

JNB, CPT

DOH

MCT

JED

RUH

FCO

ZRH

BER

CDG

ARN

DUB

MAD (Aena)

New

Manila

CGK

SGN

BKK

ICN

AKL

Fuel

IATA Fuel Campaigns

Ensure reliable supply and safe delivery of clean, dry, on-spec jet fuel into aircraft on time and at a competitive price

How ?

Cost campaigns on fuel pricing, reliability of supply, implementation of best practices

- Driving industry consensus through Fuel Forum/working groups

- Developing and implementing industry best practices

- Developing key tools for airlines

- Model contract for fuel purchasing

- Into plane standard, airport fuel storage guidelines, crisis management

- Extending quality compliance coverage

Competition

Fuel Pricing

Taxes

Fuel Fees

Supply Reliability

Five fronts of our lobbying activities

Fuel Campaigns in Africa and Middle East

Europe, Russia and CIS

Asia Pacific

Americas

Positive Examples

Regulatory Framework - London Heathrow

Well defined regulatory framework

Concept of ‘constructive engagement’ allowed 93 airlines to agree on a GBP 3 billion CAPEX plan across 5 terminals

Regulator made decisions on OPEX, Cost of Capital

Airport proposal of RPI +5.9 % over 5 years reduced to RPI -1.5% as a result of the constructive engagement and regulatory decisions

Saving airlines more than $ 2.8 billion over 5 years.

18

Consultation Process - South African Airports

Consultation in place since late 90s

Differences in airport – airline views surrounding 2010 World Cup CAPEX slowly being resolved

Airport master plans now in place, with short to medium term CAPEX identified to support future growth

All stakeholders (AOC, AASA, BARSA & IATA) now have opportunity to review & agree on future development options

Regulating Committee provided valued oversight

However, government intervention blocking Regulators decision19

Engagement with airlines - Incheon Airport

Recipient of numerous awards for Best Airport

Maintains a partnership approach with airlines through regular and open communication with airlines.

No regulation obligations but conducts direct negotiation with IATA and AOC and has provided reductions in airport charges over the past several years

New Terminal 2 development expected to be fully funded by airport corporation without impacting current airport charges.

Latest agreement for the period Jan 2016 – Dec 2017 to yield $56 million in savings for airlines.

.

20

Stakeholder collaboration - Accra airport

High fuel prices meant airlines having to tanker fuel in for onward journey

IATA, airlines, fuel supplier, airport, National Petroleum Agency and Minister of Transport met to determine road map to reduce prices

Agreement resulted in reduction in taxes ex-refinery and other fees

Over 20% reduction in pricing overall

Campaign ongoing going but new prices save airlines $128 million over 5 years

. 21

Tracking our progress

33%

22%

32%

13%

AirportChargesFuel Fees

ANSPChargesIndustryTaxation

0

200

400

600

800

1,000

1,200

1,400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Imp

act

$m

Monthly Progress

Reductions

Result: US$1,174

million

2015 Board Monitored Activity KPI - Airport and ANSP charges, fuel fees and taxes

Target: Reduce airport and ANSP charges, fuel fees and taxes in 2015-16 by US$800m

and proposed increases by 27%

66%

0.001%

2%

32%

AirportCharges

Fuel Fees

ANSP Charges

IndustryTaxation

Cost avoidance

Result: 42% (US$539 million)

Total costs

avoided

Final

increases

implemente

d

0

200

400

600

800

1,000

1,200

1,400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Re

du

ctio

ns

$m

Monthly Progress

32%

4%34%

30%

AirportChargesFuel Fees

ANSPChargesIndustryTaxation

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Imp

act

$m

Monthly Progress

Reductions

Result: US$346 million

2016 Board Monitored Activity KPI - Airport and ANSP charges, fuel fees and taxes

Target: Reduce airport and ANSP charges, fuel fees and taxes in 2016-17 by US$800m and proposed increases by 27%

47%

0.025

5%

46%

AirportCharges

Fuel Fees

ANSPCharges

IndustryTaxation

Cost avoidance

Result: 41% (US$997 million)

Total costs avoided

Final increases

implemented

0

50

100

150

200

250

300

350

400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Re

du

ctio

ns

$m

Monthly Progress

To represent, lead and serve the airline industry

Thank you

Questions?