The Low Cost Carriers Recipes

P R O P R I E T A R Y I N F O R M A T I O N

0© 2014 1BlueHorizon Group - www.1bluehorizon.com Al l r ights reserved1BHG | THE LOW COST CARRIER RECIPES


LCC MODEL RECIPESRECIPES TO FOLLOW FOR BUILDING A DIFFERENT BUSINESS MODEL…

March 2014Updated

1 BHG, the ‘ idea factory ’ th ink ing ahead st rategies www.1bluehorizon.com

Comfort

Pricing

X

BLUE PAPER



O On a previous 1BlueHorizon Viewpoint (BLUE PAPER) ‘Beyond the Low Cost Carrier model’ we developed ‘1BlueHorizon understanding to consider the Low Cost Carrier Model more than a philosophy to approach the airline industry than just a matter of cost...

O The purpose of that document is to develop some Recipes to build or transform an existing business under the LCC Spirit, what we call ‘1BlueHorizonLow Cost Carrier Cookbook’…

O As the Aviation is a very competitive industry, keep everything confidential and avoid talking about your project until you are very close to start operations… because you will find a lot of ‘sharks’ looking to make money and don’t take everything for granted…

O Keep in mind a few advises before to open the Airline venture door because even you have the best operational model or an unique market opportunity (niche), only once the operations start you will know the truth…

O If you are giving the right kind of segmentation strategy and good execution, there will be enough room in the market for multiple service offering…. Obviously, the future performance of your project will depend on the strength of the selected business model and the focus going forward…

O Last but not least, the maxim ‘How does a Billionaire become a Millionaire? is not just an old and famous joke within the Aviation industry but need to be considered very carefully by anybody thinking to launch an airline…

O Welcome to the world of ‘1BlueHorizonLow Cost Carrier Recipes’ to develop successfully your business by thinking ‘1BlueHorizon’…

FOREWORD TO THINK ‘1BlueHorizon’



The low cost phenomenon has penetrated global aviation starting in the U.S. in 1971 – but now the LCC sector is crowded ‘(Red) Horizon’

Industry pioneers

SouthWest (1971) Ryanair (1985/1991)

Early Adopters

Late Adopters

e.g. AirTran (1992), West Jet (1996) e.g. Norvegian (1993), EasyJet (1995)

e.g. Air Arabia (2003), Nasair (2007), Fly Dubai (2009)

Southwest AirTran Jet Blue Airways West Jet ...

Ryanair EasyJet Norvegian Air Germanwings FlyBe BMI Helvetic Niki SkyWork ...

IndiGo AirAsia Bangkok Airways Kingfisher Red Air Blue FlyScoot ...

Virgin Blue Freedom Air Tiger Airways ...

AirArabia Bahrain Air Fly Dubai Jazeera Airways NasAir Wataniya Airways ...

Azul Brazilian Gol Airlines EasyFly ...

FlyScoot (2012)

Note: The LCCs mentioned above are of course not exhaustive…



The full liberalization of civil aviation is progressing with opportunities coming in Africa, Caribbean and Latin America

Closed Markets Liberalization New Business Models

Power Play & Consolidation

Stable Market Segmentation

Protected markets

Large carriers with governmental support

Financially solid / state owned

Liberalization of markets

Emerging airlines to serve profitable routes

Traditional carriers still have highest market shares

Liberalization of markets allows emergence of LCC

Strong initial growth of LCC carriers

Build-up of an LCC network (P2P)

LCC growth slows down

Traditional carriers and LCC consolidate to super carriers

Synergies and economies-of-scale

Super carriers split markets by customer segment, price and service offering

Stable market split between carriers

Africa Asia Europe North America

CaribbeanLatin

AmericaChinaRussia Malaysia

India

‘ R e d H o r i z o n ’ ‘ B l u e H o r i z o n ’

Middle East

Source: 1BlueHorizon Group Research & Analysis



Air traffic liberalization typically shows significant passenger growth development patterns - Typical Range of Air Traffic Growth Rates - …

Source: IATA, InterVistas, GAD

Post-liberalization

Pre-liberalization

GlobalAverage

MinMax

12-35%

4-7%2-5%

Typical Pre-LiberalizationSetting

Governmental authorities understanding air services as provisioning of transportation infrastructure (esp. for domestic markets)

Protection of (state-owned) flag carriers against ...– … international competitors

(esp. for international markets)

– … market forces of supply & demand (esp. for domestic markets)

Typical Post-LiberalizationSetting

Leaving elaboration of operated networks and routes to market forces of supply & demand

Often requires privatization of (formerly state-owned) flag carriers upfront

Emergence of alternative airline business models (LCC)

Typically a fast network / route expansion is experienced shortly after the liberalization step



… and it clearly appears from analysis of the distribution of alternative customer Travel Method) that in fact LCCs are creating new demand in the market – Basically a LCC creates 1BlueHorizon

Source: Liberalization of European Air Transport 2011

No data4%

Shift within airline market37%

New demand

59%

Otherwise by rail

Otherwise by car

Others

Otherwise would have not travelled

71%

15%

6%8%

Is the Low-Cost Carriers the ultimate model, the wonder recipeto save the whole airline industry? Unfortunately not!



Typical Legacy Carrier Cost structure / operating expenses versus Low Cost Carrier with the fuel as key fluctuating cost

Source: The Aviation & Aerospace Almanac, ICAO Air Transport Reporting Form EF-1, 1BlueHorizon Group Research & Analysis

Labor, Flight Crew 15%

Ticket Sales 2%

Airport, Landing 18%

Depreciation, Amortization 15%

Maintenance, Overhaul 5%

Fuel & Oil 22%

Route Charges

Others

13%

10%

19.6%

16.4%

25.4%

7%

10.1%

12%

2.4%

7.1%

Inclusive Aircraft rental (3%)

Passengers services (10.5 %) Station Expenses (10.8 %) Landing fees (4.1 %)

Flight Crew (7.4 %) General Administration (12.2 %)

Key Costs for an airline are: Fuel Labor Maintenance

Key Costs for a LCC are: Fuel Airport Labor



At this stage it is important to clarify what is 1BlueHorizon Group®

understanding and definition of the Low-Cost Carrier Model

■ Low-Cost Carriers (LCC) are also known as a no-frills (LCC/NF), Less Frills Carrier, discount, budget carrier, Low-Fare/High Value Carrier (LFHV), Budget Carrier, Cheap Flight or even New Generation Carrier…

■ The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. While the term is often applied to any carrier with low ticket prices and limited services, regardless of their operating models…

■ It has been suggested that the Airbus A380, able to hold up to 853 passengers in an all Economy layout, would enable true low-cost long-haul service. While the per-seat costs of such an aircraft would be lower than the competition, there are fewer cost savings possible in a long-haul operation and therefore a long-haul low-cost operator would find it harder to differentiate itself from a conventional airline…

■ Low-Cost Carriers want to be different than their competitors, the reason why they implement different operational model, different recipes to build success…

‘1BlueHorizonCookbook’ highlights the main Model Recipes

Low-Cost is a mood, is a management strategy, is a mind set

‘If you think well 1BlueHorizon, you will cook well your airline...Source: 1BlueHorizon Group Analysis



Rolling out an innovative airline with ‘1BlueHorizonCookbook’ support requires the design of seven fundamental building blocks (1BHG Framework)

Note: 1The costs for an ASK = available seat kilometer are defined as the fraction of all costs which can be attributed to one available seat flown over 1 km distanceSource: 1BlueHorizon Group | Framework

Operational model:– High-frequency shuttle services instead of

connecting traffic (via hubs)– Fleet structure

Distribution model:– Direct sales (online, call center)– Indirect sales (travel agents/CRS)

Tariff model:– Low entry prices (limited volume)– Auction model

Required maximum unit cost (per ASK1)Required minimum average yield per flightBreak-even seat load factorMaster plan for physical roll-out and

business building

Opera-tionalmodel

Distri-butionmodel

Tariff model

Coststructure

Demand / Destin.portfolio

Productconcept

Operational Implementation

1 2 3

4 5 6

7

Business Model



The LCC Recipes from ‘1BlueHorizon Cookbook’ allow any airline to follow a different operational model with significant differentiation and cost difference

Note: As example the Southwest Airlines used recipesSource: 1BlueHorizon Group Research & Analysis

A single passenger class

Recipe doable forAir Carriers?

A single type of aircraft reducing training and servicing costs

Development of one of more hubs to maximize destination coverage and defend their market

A minimum set of optional equipment on the aircraft, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel

Often pilot conveniences are excluded such as ACARS and auto throttle

No in-flight entertainment systems made available

For your Project?

1/5



LCCs capitalize on their simple and efficient business model and their extremely lean cost structure


No seat recliners, seat pockets, window blinds or seat headrest covers


A Fast turnaround times (allowing maximum use of aircraft

Unreserved seating (encouraging passengers to board early and quickly, thus further decreasing turnaround times)

A simple fare scheme, such as charging one-way tickets half that of round-trips (typically fares increase as the plane fills up, which rewards early reservations)

Newer more fuel efficient aircraft (launch customer to be involve din the new or improved aircraft development)

Flying to cheaper, less congested secondary airports and/or flying early in the morning or late in the evening to avoid air traffic delays and taking advantage of lower landing fees

For your Project?

2/5



The LCC Recipes from ‘1BlueHorizon Cookbook’ are tips on how to consider the airline differently


Simplified routes, emphasizing point-to-point transit instead of transfers at hubs (again enhancing aircraft use and eliminating disruption due to delayed passengers or luggage missing connecting flights)


Encourage the use of direct flights. Luggage is not automatically transferred from one flight to another, even if both flights are with the same company

Generation of ancillary revenue from a variety of activities, such as à la carte features and commission-based products

Emphasis on direct sales of tickets, especially over the internet (avoiding fees and commissions paid to travel agents and computer reservations systems)

Passengers paying charges for extras, such as hold luggage, online check in and priority boarding

For your Project?

3/5



The LCC Recipes from ‘1BlueHorizon Cookbook’ are the cornerstone of the airline project or restructuring


Employees working in multiple roles, for instance flight attendants also cleaning the aircraft or working as gate agents (limiting personnel costs)


A disinclination to handle special service passengers, for instance by placing a higher age limit on unaccompanied minors than full service carriers

Aggressive fuel hedging programs

Avoiding using jetways wherever possible to board and alight passengers by using a mobile stairway which is a cheaper alternative

Not supplying meals in a flight, but offering snacks, sandwiches and drinks instead to purchase on board

For your Project?

4/5



The LCC Recipes from ‘1BlueHorizon Cookbook’ are not finalized, plenty need to be added under 1BlueHorizon creation


No refunds or transfers to later flights in the event of missed flights, i.e. If the aircraft leaves on time without a passenger who arrived late, he will have to buy a wholly new ticket for the next flight


Developing freight activities (cargo) with the aircraft belly hold to generate additional revenues

Seeking the extra mile by maximizing revenue per flight, which implicitly includes all ancillary revenues as well as the airfares paid

To pay for using the toilet (if the passengers don’t use it then it is potentially more space for seats!)

(empty for a new recipe)

For your Project?

5/5



The selected recipes from ‘1BlueHorizonCookbook’ are the cornerstone of the business model, but never underestimate the specific situation in the region you are in - Examples of implications/critical questions

Source: 1BlueHorizon Group | Framework & Analysis

Opera-tionalmodel

Distri-bution model

Tariff model

Coststructure

Demand / Destin.

Productconcept

Operational Implementation

11 22 33

44 66

77

Lowest price vs. value for money Convenience of travel chain Specific process needs/amenity

expectations in the particular country No frills vs. frills for money Competitive scenarios

Home base? Maintenance locations?

Achievable average stage length? Achievable frequencies per route? Achievable block hours per day? Fleet size, A/C type?

Master plan for launch FundingManagerial/operational capacities Availability of fleet, maintenance Creation of service contracts and

required processes

Achievable productivity, salary level Realizable airport/handling fees Product/frills concept (cf. 6) Fleet homogeneity, maintenance Fuel subsidies?

p y

Customer/demand segments Accessibility of latent demand

(leisure, religious/ethnical travel) Sustainable destination portfolio for

LC operation within the country Catchment area/airport affinity

55

Business Model

Booking behavior of local (National) passengers

Customer segments (cf. 5) Favorable pricing logic (e.g., auction

model)

Internet penetration/acceptance of online booking within the country?

Presence of travel agencies? Availability of call centers/ respective

resources?



The implementation of the business model based on selected recipes from ‘1BlueHorizonCookbook’ should follow a defined framework...

Source: 1BlueHorizon Group | Framework for illustrative purpose

Coverage 1) Core Questions

Market potential, achievable market shares

Required cost structure

Appropriate positioning of product and brand

Conceptual design of product

Action

Inquiry of current/future transportation streams (also other carriers)

Discussion of attractive destinations (traffic stream, yields, competition)

Evaluation of the offers of competitors and different airports of that region

Economical evaluation of different scenarios (simplified business plan)

Benchmarking of the cost structure of charter airlines + low cost carriers

Determination of target cost structures (top-down)

Definition of valuation rate

Benchmarking of the positioning of other LCC

Analysis of brand attribute of main line vs. low cost carriers

Analysis of the own positioning Client segmentation, characterization

and -quantification

Benchmarking of business models of other LCC

Discussion of product concept (service level, rates, restrictions)

Source Result

Traffic data Flight plans of relevant

competitors (e.g. from OAG) Other transportation streams

(e.g. IATA, MIDT, AEA, ICAO) Official Saudi Arabia sources:

– Presidency of Civil Aviation– SV flight plan/fares

Current cost/yield structure Annual report, Press Releases

of competitors Booz Allen database Analyst report

Future traffic streams Possible market share Target size of business (Fleet,

frequency shares etc.) Operation approach

(destinations)

Yield return Target passenger/-utilization Target productivity airplane Cost structure

Market and competition analyses concerning the brand perception

Own brand positioning Own client-/ passenger data

Target positioning of the brand Target client segment Mission statement

„Best Guess“ of (external/internal) experts

Brainstorming with the team

Operation Approach (destinations)

Product-/price concept (rough) Target size of business (Fleet,

frequency shares etc.)

1

2

3

4

5

6



… and the operational implementation of the seventh fundamental building blocks can occur in 14 operational modules

Network structure/ design Position Destinations Frequencies,

Schedule etc.

Pricing/Yield Management Tariffs Classes Logic of pricing/yield

management

Flight operations Resource scheduling Capacity

requirements Organization

Product concept/-management Board products

„Frills“ Ground products

Sales/Distribution Choice of distribution

channels/partners Reservation system Key account

management

Ground Ops [s. Flight Operations]

Fleet composition Choice of airplanes Planning Roll-Over Funding

Communication Marketing strategy

(channels etc.) Communications

concept Partner

Maintenance Own added value Make or buy

Branding New Brand? Positioning Concept for

launch, communication

Accounting Client accounting

(e.g. credit cards) Profit and loss

account Reporting

Supplier manag./Sourcing Fuel Airport management Other suppliers

Concept/Layout

Commercialprocesses

Commercialprocesses

OperationalProcesses

OperationalProcesses

IT-Profile Internet

platform Reservation/

distribution systems

Operation systems

Controlling systems

System integration

22

66

1010

33 44 55

99

131312121111

77 88

1414

Project management Planning of business Planning of organization

Controlling of project Controlling of implementation

7

Source: 1BlueHorizon Group | Framework



Even the temptation to start a new venture is big due to the fact that the Airline business is known to be ‘sexy’, the Go / No GO decision should follow an uncompromising six-step evaluation approach


Understand the Strategic

Objectives of the project owner in

the selected Marketplace

Conduct Workshop with Key

Stakeholders to Reach a Go / No

Go Decision

6

Define and Evaluate

Alternative Options for a New Entrant in the Domestic

Marketplace

Assess Market Demand in the

Domestic Marketplace

Evaluate the Competitive

Landscape & Profile Leading Players in the


Determine the Implications of the Proposed Changes

in Aviation Regulations for the


3a

1

2a

Define and Evaluate

Alternative Options for a New Entrant for the Regional

Marketplace

Assess Market Demand in the

Regional Marketplace

Evaluate the Competitive

Landscape & Profile Leading Players in the


Determine the Implications of the Proposed Changes

in Aviation Regulations for the


2b 3b

4a

4b

5a

5b

Domestic Assessment

Regional Assessment



Source: © 1BlueHorizon Group | ‘Start me Up A-Plan’ Framework

Would you like to see your Aircraft in the air flying at your brand? You are at the Idea Phase of your new airline. Do not fall into same mistake that many investors do. Prior to your investment, listen to our professionals by keeping in mind that airline business requires more sophisticated management skills and experience than having capability of operation of an aircraft, and more detailed financial and commercial analysis other than changing numbers in standard excel sheets.

Best Strategy with a wide vision can be established at the Idea Phase of Your New Airline. Do not try to fly with your wings, as it can hurt falling from high altitudes, due to the fact that recovery plan should be identified clearly before you take off… © 1BlueHorizon start me up A -plan

1BlueHorizon ‘start me up A-plan’ (A for Airline) Airline Model highlightthe usual ten main phases to be carefully developed to avoid any pitfall



We therefore recommend to consider a multi-phased approach along four main Phases to move forward with the new airline venture


PHASE IVDo it!

Implementation

PHASE IShould we do it?

Go/ No Go

Understand the regulatory environment

Assess competitive activity Analyze demand for air travel Identify target segments Define and evaluate potential

options to be pursued Go/ no go decision to

proceed with next phase

PHASE IIIHow to do it?

Financing Business Planning

PHASE IIWhat to do?

Maj

or

Act

iviti

esK

ey

Del

iver

able

s

Refine target segments Define value proposition Define network and fleet

structure and operating requirements

Evaluate partnering options Address regulatory issues Build business case Define implementation

timetable Go/ no go decision to proceed

with next phase

Detail value proposition Detail network and fleet

structure Detail operating

requirements Establish partnering

agreements Complete outstanding

regulatory submissions Build detailed financials Obtain financing

Finalize network arrangements

Acquire fleet Hire staff Initiate partnerships Implement operating

procedures Launch marketing

activities Launch operations

Assessment of regulatory environment

Competitive assessment Demand assessment Target segments Option evaluation Go/ No Go decision to

proceed

Refined target segments Value proposition definition Network & fleet structure

definition Operating req. definition Partnership options Regulatory submissions Financial assessment and

business plan

Detailed value proposition Network and fleet structure

details Operating requirements

details Partnership agreements Regulatory submissions Financial statements Financing Implementation timetable

Operational airline service(s)



Many Low Cost Carriers have not moved far enough towards customer satisfaction, leaving money on the table – The model of the future ?

Costs

Revenues

Increasing Passenger Satisfaction

Incr

easi

ng O

pera

tiona

l Com

plex

ity

Innovation

LegacyCarriers

TraditionalLCCs

Doable by youFulcrum

High CapacityCarrier (HCC)

LowCostLongHaul

(LCLH)

LowCostHigh

Revenue(LCHR)

Note: Airlines that find the right balance - their ‘innovation fulcrum’ - can dramatically improve their performanceSource: 1BlueHorizon Group | Framework

HCC / LCLH / LCHR‘1BlueHorizon®’



Emirates Airline (EK) is a good example of 1BlueHorizoncreation by implementing Low-Cost Model Recipes to a Legacy Carrier: The High Capacity Carrier (HCC) model for ‘Long Haul’ is born in the Middle East

9,128

+188%

169,469

92,294

28,700

58,786

30,527

‘MEB3’ carriers have 3 times the ordered seat, in the next 10 years compared to the ‘EUB3’ in Europe

Source: © 1BlueHorizon Group Analysis, Ascend, www.anna.aero (without the last Dubai Air Show orders…)



To support EK growth, the airline industry is fully vertically integrated in Dubai from the Regulator to the Airport, Airport Services and the airline

Fleet: Dual Fleet of aircraft (by 2020)Airbus A380Boeing 777 & B777X

‘Long Haul’ Network:Hub and Spoke systemEmirates Airline for ‘Long Haul’

(FlyDubai for ‘Short Haul’)

Airport - One Hub:Dubai International Airport (DXB)The future Dubai World Central beyond 2020

Cargo operations:Emirates SkyCargo with full FreightersFleet Belly hold for major ‘extra’ revenues

Note: Vertical Integration is best understood by applying Michael Porter’s Value Chain model. It refers to the degree of integration between a firm’s value chain and the value chains of its suppliers and distributors.

Air ServicesAircraft ground handling, Cargo, Travel, and

Flight catering services

RegulatorDubai Civil Aviation Authority



As provisional conclusion, we are convince that 1BlueHorizoncreation is still there with the Low-Cost Long-Haul model emergence

6 Can an airline carve out a business model that makes a profit from long-distance routes at low fares?

6 Will the advent of a new generation of fuel-efficient aircraft — shrinking a fuel bill that can account for up to half an airline’s operating costs — makes the enterprise viable?

6 Definitely stretching the low-cost model to profitably operate intercontinental flights would open a new chapter in aviation…

6 1BlueHorizon Groupstrongly believe on the LCLH potential linked to the LCC…

The evolving Long-Haul Low-Cost network airline model: AirAsia Xwith interline onto the Short-Haul LCC Air Asia connectivity?

Scoot Pte Ltd. is a Singapore-based Low-Cost Long-Haul airline from its parent company, Singapore Airlines…

Norwegian is the first Low-Cost Carrier providing Long-Haul transatlantic service between several destinations in the U.S. and Europe…

Are the real opportunity to build a Low-Cost Long-Haul business mainly in Asia with growth market China and South Asia?

‘Gambling?’



SOLUTIONS PACK

1BLUEHORIZON GROUPGENERATING THRUST TO PROPEL YOUR BUSINESS FURTHER...

March 2014

We generate 1B l ueHo r i z on ® out of the Rough... www.1bluehorizon.com


A s s e t M a n a g e m e n t | M a n a g e m e n t C o n s u l t i n g | I n t e r i m M a n a g e m e n t

A b u D h a b i | B e r n | L o n d o n | M a d r i d | M o n t r e a l | P a r i s



Source: © 1BlueHorizon Group | Corporate profile

1BlueHorizon Group® value proposition is simple — Going the Extra Mile by generating trust to propel your business further

O 1BlueHorizon Group® (Asset Management | Management Consulting | Interim Management) was established in 2007 as a network of International aviation professionals, providing objective, independent, evidence-based analysis, advice and implementation support. We build on the experience of our team to help clients realize real and measurable results , quickly. Start-ups, restructuring, cost cutting, project management office, due-diligence or exploiting growth opportunities, we have experts who have faced these challenges.

O Our highly competent seasoned senior professional have experience from leading companies in both management roles within their disciplines and as senior level professional advisors throughout diverse and complex locations in the Middle East, Europe, Africa, Asia Pacific and North America.

O Privately owned, 1BlueHorizon Group® is independent of any financial institution, manufacturer, operator, insurance company or maintenance provider assuring our clients the benefit of truly unbiased, comprehensive and flexible provision of service.

O 1BlueHorizon Group® believes in working closely with client staff to transferour knowledge and experience, which means 1BlueHorizon Group® continuesto deliver value long after the project is complete.

O A unique blend of languages, age groups, cultural backgrounds and skills qualifies 1BlueHorizon Group® to provide turnkey solutions for any and all of your aviation requirements - worldwide.

O 1BlueHorizon Group® range of services is continuously tailored and adaptedto suit the geographical scope and needs of our customers.




Wataniya Airways - Chairman Mr. Abdulsalam Al Bahar with Mrs Ghaida Abdul Latif, vice chairman –

director general & CEO of Syrian Arab Airlines.

Flydubai - CEO Mr. Ghaith Al Ghaith

Gulf Air - Ex CEO Samer MajaliH.E. Mohamed Hamad bin Azzan Al

Mazrouei, WRDC's Director General and Acting Under Secretary of the Court of the Ruler's Representative in the Western Region (al Gharbia)

of Abu Dhabi Emirate

Democratic Republic in Congo (Transport)AerospaceOne Company in India

Jet Green in PakistanAbabeel Air in Libya

His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of the Dubai Civil Aviation

Authority, Chairman of Dubai Airports, Chairman & Chief Executive of Emirates Airline & Group

Note: Detailed references upon request

For the last ten years we have been actively involved with our Senior personnel in major airlines, start-ups or Economic development ventures




Family conglomerates (Governance, Portfolio analysis and investment Strategy)

Economic development (Business review / Cluster / Project Management office)

Air Transportation (Airline / Airport / General Aviation / Aerospace & Defense)

Management ConsultingOperational Improvement

Our understanding of operational improvement is quite simple:

Whereas restructuring is about stabilizing a company and fixing how it does things, operational improvement is about seeing a

company through the transformation of becoming more

competitive – going the Extra Mile.

Asset ManagementFleet Strategy & Planning

With our Fleet Solutions, we can help you expand your fleet,

transition from older models to newer aircraft types, or provide interim capacity. We back our support with a global team of technical experts and industry

specialists who will provide you with the fleet solution and

support that meets your specific needs.

Interim ManagementKnowledge transfer

Finding talent is difficult even at the best of time. Finding

resources to assist for a short-term assignment of a proven

heavyweight interim executive manager to manage a period of transition, crisis or change within

an organization or to take on critical projects or senior

positions for a limited time is even more difficult.

Ahead of StrategiesThree Practices

Shareholders and management of companies with specialized

needs often choose 1BHG for our unique custom turnkey solutions. If you want a business plan or a feasibility study to assess the case, or your are burning cash

and running into trouble, or seek help to assess the case for

entering immunized joint venture or looking for an interim management solution…

1BlueHorizon Group® highly competent seasoned professional

will assist you to propel your business further… Going the

extra mile ahead of strategies …

1BHG® Business model dedicated to particular Sectors is built around three Practices providing clients with turnkey solutions to maximize Value Creation

Source: © 1BlueHorizon Group | Business model with Sectors (Horizontals) & Practices (Verticals)

… no matter how complex the issues are!




Our three Sectors expertise covers the entire breadth of the Aviation and Defense sector, Economic development and Family conglomerates

Airline

Economic development Corporate governance structure

Portfolio analysis Investment strategy The family element

Performance Management Organization Improvement Privatization Aerospace cluster Logistic, Cargo, GH

Airport

Family conglomerate

Restructuring MRO, Aerospace & Defence

Performance Management Organization and Change

Management

Pricing and Revenue Management

Market Forecasting Branding, Marketing and

Sales

General aviation

Aerospace & Defence

Feasibility, Business Plan Operations Improvement Merger & Acquisitions Due Diligence Fleet Planning

Business review Cluster strategy Project Management office Public–private partnership

(PPP)

Source: © 1BlueHorizon Group | Core competencies in the main three Sectors

… and our clients well recognize this!




InterimManage-

mentManagingConsulting

Asset Management

The Management Consulting (MC) Practice is our ability to strike a rapport working side by side with you and quickly understanding what you need when the margin of error is thin… Providing a highly targeted surgical strike (to-the-point) to improve de performance and going the extra mile…

The Interim Management (IM) Practice help you by giving comfort and control with relevant seasoned advisors whenever and wherever they are needed… Whereas a management consultant provides an advisory role, Interim managers with performance improvement focus are directly responsible in delivering quick results, visible and measurable...

The Asset Management (AM) Practice works individually with each of our clients to develop creative strategies and solutions for all types of aviation equipment, with innovative financing models.…

Source: © 1BlueHorizon Group | Practices

Performance improvementQuick results / Hands-on

Turnkey solutionsKnowledge transfer

Ahead of Strategies…

The 1BlueHorizon® difference

1BlueHorizon Group® three dedicated Practices are built to propel clients business further with a comprehensive approach ahead of strategies

GENERATING THRUST TO PROPEL YOUR BUSINESS FURTHER...




1BlueHorizon Group® Asset Management Practice – AM at a glanceCustomers with specialized needs often choose us for our unique custom solutions

Source: © 1BlueHorizon Group | Asset Management Practice (AM) at a glance

If you’re seeking:O A dedicated team with proven aviation asset management

experience with the entire scope of services from initialmarketing through technical services, lease managementand remarketing

O Access to a world recognized industry research team withproven track record working for global clients

O An opportunity to benefit from 1BHGB’s ‘one stop shop’aviation portfolio of skills and services

O Long term commitment to the industry with a globalpresence along an international network of Partners in theEMEA Region (Europe, Middle East and Africa) enabling usto stay in contact with potential customers on a daily basis

O Access to high quality independent technical know how forall aircraft types

O Someone who understands the needs of the investorcommunity and its customers and has extensiveexperience…

Then look no further than 1BlueHorizonGroup® Asset Management Practice (1BHG -AM) to provide you with the highestpossible standards of service and advice.

Advantages of Operating Lease

Aircraft Remarketing When you use us to sell, re-lease or trade aircraft, you don’t just get

the best transactional service on the market. You get the full benefitof our unrivalled marketing expertise, in-depth knowledge of theentire aircraft industry, enormous collective experience in themarket and a vast network of contacts. Potential targets are identified by our teams, working through

established processes that get results…fast, and ensure maximumcoverage of the potential customer base. Our financial analysis capabilities can then prove decisive in

helping you to choose the best transaction. So whether selling, arranging finance or re-furbishing and re-

configuring aircraft for re-marketing, we can provide services to addreal value to the transaction - meaning you get the best possibledeal.

Remarketing is an ongoing activity driven by the market,opportunity and the owners’ strategy…




1BlueHorizon Group® Asset Management Practice – AM at a glance (cont’d)Sometimes all you need is clear, concise and professional advice

Source: © 1BlueHorizon Group | Asset Management Practice (AM) at a glance



Technical Services Our experience in managing a range of aircraft types for clients

around the world gives you the peace of mind that we aremonitoring the technical condition of your aircraft when they’re onlease, and continuously reviewing their schedule of inspections totake into account changes in financial or technical performance ofthe lessee. We ensure that all the terms of the lease contracts arebeing strictly adhered to and putting us at the forefront in this highlyvaluable element of managing the aircraft lease.

Regular reviews provide you with detailed reports that are designedto clearly highlight any areas of concern, and provide advice as tothe most suitable means of rectification.

Our skills in negotiating and managing tailor made vendor and thirdparty maintenance and service agreements will protect your assetsand ensure they remain attractive throughout their life.

Our expertise in the key area of maintenance reserve adjudicationensures that any reserves accumulated by the Lessor are appliedcorrectly, thus retaining the full value of the asset throughout thelease term.


Our knowledge and experience of the commercialaircraft, freighters and business aircraft market,means we’re well placed to provide you withquality advice when considering aircraftacquisitions, lease advice, operationalmanagement, market reviews and outlook and orremarketing.Our market knowledge ensures you’re getting thebest available data to make decisions on the priceof your deal and we’ll provide assistance indiscussing the prevailing market conditions forcertain types and their potential impact on currentand future values.



1BlueHorizon Group® Managing Consulting Practice – MC at a glance Our goal is to provide leadership for helping you achieve higher levels of success

Source: © 1BlueHorizon Group | Managing Consulting Practice (MC) at a glance


CXOs are increasingly focusing on corporate strategies to deliver outcomes that contribute measureable business value. Aligning technology investments to corporate strategies is the key to create competitive advantage, grow the business, and increase revenues. Our team members experience enables a richer understanding of client needs, the competitive landscape, the opportunity landscape, product build out, revenue drivers, and solutions tailoring.



1BlueHorizon Group® Managing Consulting Practice – MC at a glance (Cont’d) Our Solutions Center is providing tailor made solutions with focus on results

Source: © 1BlueHorizon Group Managing | Consulting Practice (MC) at a glace – 1BHG Solutions Center (non exhaustive)

Strategy & Leadership Organization & Change Due Diligence Joint Ventures Competitive Analysis Network Strategy & Planning Pricing Strategy / Yield Management Capacity Management Airline Alliance & Partnerships Cargo strategy and Management Aircraft Selection Fleet Planning & Scheduling Sales & Distribution Ancillary Revenues Airline Loyalty Programmes Product Design and Marketing

Strategy & Leadership Acceleration of economic growth Cluster Strategy Tourism Strategy Organizational design & Reform Project Management Office (PMO) Personnel management and planning Investment Promotion and Marketing

(incl. Real Estate projects support) Strategic studies Roadmap & Performance reviews Capability definition studies Options development and analysis Information & Knowledge management Building Public-Private Partnership

Strategy & Leadership GovernanceWays to structure for the next

generation, understanding the additional dimensions that influence the conventional strategy framework -the family element Portfolio analysis, including

restructuring a poorly performing portfolio and disinvestment Competitive Analysis Due Diligence Joint Ventures Mergers & Acquisitions

Economic development Family conglomerateAviation, Aerospace & Defense

We highlight here some of the specific technical expertise of our team members. Of course, we do not list everything here so if you don't find something listed, please do not hesitate to contact us. We may still have strong capabilities to serve you...




1BlueHorizon Group® Interim Management Practice – IM at a glanceBusiness solutions by an independent senior manager, for a limited period of time

Source: © 1BlueHorizon Group | Interim Management Practice (IM) at a glance


■ Organizations have become more streamlined and typically retain core management todeal with their transactional requirements. As such they no longer have the availableresources to manage exceptional or unforeseen circumstances or have the in-house skillsto deliver specific projects.

■ Interim Executives give organizations the opportunity to utilize management resources tohandle these situations, whilst operating with a leaner structure. Interim Executives providefunctional expertise gained from a wide range of organizations and industry sectors.

■ Interim Management is a short-term executive resource with proven skills to alloworganizations to manage in a period of Transition, Change, Gap management or Crisis.

■ It provides flexibility to organizations when they need to inject a strong track record ofmanagement success combined with specific functional skills.

There are many factors that make interim management an essential option for organizations, which include:► Interim Executives can be in place within days. The speed of recruitment gives organizations the flexibility to respond to market

forces allowing them to implement key decisions rapidly.► Interim Executives bring knowledge. They will have had experience of dealing with a number of different challenges and situations

which means they will be over qualified for the role and ensures they are equipped to handle any issues they are asked to deal with.► Interim Executives are independent and impartial. They offer your organization a fresh outlook whilst providing you with effective

solutions on how to handle situations. They remain objective in dealing with the processes and not seeking promotionaladvancement.

► Interim Executives have clear responsibilities to deliver outcomes from planning through to implementation, review and handover.► Interim Executives bring considerable expertise and are able to transfer both specialized knowledge and ideas on best practice,

giving additional value to their hands-on approach to delivering results.Interim Executives are not seeking permanent positions and are committed to an Interim career. As an interim is constantly judged ontheir ability to deliver against objectives, their previous experience provides organizations with the assurance they seek.



1BlueHorizon Group® Interim Management Practice – IM at a glance (cont’d)Interim Management is delivering quick results, visible and measurable

Source: © 1BlueHorizon Group | Interim Management Practice (IM) at a glance


Ability to create quickly a positive working environment during a period of change and transition…

Self motivated and hard working with the willingness to provide and present results on a monthly basis…

Aware of, but not driven by, internal politics, so making them ideal during periods of change...

Excellent analytical skills. Ability to create roadmap to success rapidly…

A fundamental management tool for shareholders, boards of directors, management committees and human resources directors…

The four elements to any Interim Management assignment are Diagnose, Plan, Implement and Exit…

A ‘hands-on’ specialist with significant experience and a proven track record in the related industry…

The willingness to share expertise and experience…

… whereas a management consultant provides an advisory role, interim managers are directly responsible and accountable to the business in their own right !



“1BlueHorizon Group is the only consulting firm that works successfully on all levels: Board level, middle management, implementation"

“1BHG senior personnel come in with strong views but integrate perfectly in our teams"

“1BHG has convinced us through it's excellent industry- and technology expertise"

"The 1BHG team knows perfectly well how to push the necessary change"

“1BHG guys are implementation -oriented and their cooperationwith my people is very good "

“1BHG Practice has very qualified people who really know a lot about our industry"

Testimonials - What do our Customers think about 1BlueHorizon Group®

"In each project step, we could clearly identify 1BHG's added value and improve the overall bottom line"


THE ONLY WAY TO DO GREAT WORK IS TO LOVE WHAT WE DO…A MILE OF RUNWAY WILL TAKE YOU ANYWHERE

NO ONE HAS EVER COLLIDED WITH THE SKYNote: A list of qualifications is made available separately



Published books and decisive management theories that facilitate critical dialogue and support 1BlueHorizon creation

A short selection of inescapable aviation related books

“Baseline”(Philosophy)

“Low Cost Carriers”

“Courier services” “Various”Airlines’

Turnaround“Air Transport Management”

Source: © 1BlueHorizon Group | Recommended bibliography (non exhaustive)


Partners Network – Aviation Sector



LEONARD FAVREPartner, Group Managing Director

1BlueHorizon GroupP.O. Box 34154 M +971 50 6164007 (U.A.E.)Abu Dhabi M +41 79 2080256 (Switzerland)United Arab Emirates leof007

[email protected]

Abu Dhabi | Bern | Madrid | Montreal | Paris

Any clarifications or questions regarding this document should be addressed to:


We are used to generate 1BlueHorizon® out of the Rough...

Customers with specialized needs often choose us for our unique custom turnkey solutions to propel their business further…

© 1BlueHorizon Group®. All rights reserved. Without the prior written consent of 1BlueHorizon Group®, it is not permitted to modify this document or create derivative works. High quality global airline industry insight requires investment. Please do not cut & paste the document. Email [email protected] to get / buy additional rights.The information contained in this document has not been independently verified. It does not purport to be all-inclusive or to contain all the information that a prospective investor in securities of the Company may desire or require in deciding whether or not to offer to purchase such securities, or any type of legal transaction.The information and opinions contained in this presentation and any other are material discussed verbally are provided as at the date of this presentation and are subject to verification, completion and change without notice. In giving this presentation, neither the Company nor its advisers and/or agents undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent.

The Low Cost Carriers Recipes

Travel

Transcript of The Low Cost Carriers Recipes