globalaviationaerospace.com Air Travel Irritants of Global Frequent Travelers Ratio of Airline Loyalty Program Members to Annual Passengers Weekly Operations by Aircraft Size Available Seat Miles and Passengers per Employee Total Employees and Average Wages or Salaries Pilot and Technician Outlook Service Fees and Ticket Revenue Distribution Costs per ASM Based on Average Cost and Revenue for US Carriers Monthly Scheduled Departures by Alliance and by Region

1. © Oliver Wyman
Phoenix Sky Harbor
International Aviation Symposium
Pre-panel Charts
May 6 – 8, 2015

2. • Who pays the bills? The importance of the industry’s
best customers
• Evolving loyalty programs: No more mileage runs
• The customer experience for different segments
Panel 1
Customer
Segmentation –
Where’s My Limo?

3. 2© Oliver Wyman 2
Oliver Wyman surveyed 450 global frequent travelers asking where
frustrations lie in the travel experience.
Frequency of response
Air Travel Irritants of Global Frequent Travelers

4. 3© Oliver Wyman 3
Airline loyalty program membership is spread across alliances. Oneworld
and SkyTeam have similar overall participation.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
S7AB ULCXARST FB RJQRQFAA MU FY GA VNOW CIAM MEMFJL OKKE LADL SU SVCZ BAAZ
LoyaltyProgramRatio
MH
Ratio of airline loyalty program members to annual passengers
SkyTeam and oneworld, 2014
1 2 3
Notes: 1. OW = oneworld; 2. ST = SkyTeam; 3 = Flying Blue, which includes AirEuropa, Air France, Kenya Arways, KLM, and Tarom; Star does not report loyalty numbers.
Source: Company reports

5. • Aircraft technology: How are aircraft needs changing
over time?
• Network trends: Outsourcing short-haul feed, long-
haul LCCs, and the future of regionals
• Where are the new entrants?
• US airlines as a case study for the benefits of industry
rationalization
Panel 2
The Evolving Industry

6. 5© Oliver Wyman 5
World Total
Africa
Asia
Canada
Caribbean
Central America
Europe
Middle East
Oceania
South America
US
120 Seats 136 Seats
+11.5%
2009 2015 2015
120 Seats 122 Seats
+1.7%
164 Seats 164 Seats
0.0%
72 Seats 81 Seats
+12.5%
80 Seats 90 Seats
+12.5%
99 Seats 101Seats
+2.0%
127 Seats 143 Seats
+12.6%
171 Seats 182 Seats
+6.4%
108 Seats 124 Seats
+14.8%
124 Seats 139 Seats
+12.1%
98 Seats 109 Seats
+11.2%
More Seats
Source: PlaneStats.com
Since 2009, airlines have increased their average seats per departure 11.5
percent.

7. 6© Oliver Wyman 6
Airlines are replacing 50-seat regional aircraft with 75- to 100-seat regional
aircraft.
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Weeklyoperations
20152014201320122011201020092008200720062005
More than 100 seats75 seats50 seatsFewer than 45 seats 100 seats
Weekly operations by aircraft size
May 2005 – 2015
Note: 50 seats = aircraft ranging from 46 to 55 seats; 75 seats = aircraft ranging from 56 to 80 seats; 100 seats = aircraft ranging from 81 to 100 seats
Source: PlaneStats.com > schedule > weekly operations May 2005 – 2015

8. • Shortages, real or not: The latest on pilots and
mechanics
• Executive and management career trends
• Labor cost restructuring: Issues and status, US vs.
Europe
• Management and labor relations: Sharing the benefits
of financial success
Panel 3
The Workforce of
Tomorrow

9. 8© Oliver Wyman 8
US airline employee productivity rose in the last two decades.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
19991998199719961995
Passengerperemployee
Availableseatmiles,inmillions,peremployee
20132012201120102009200820072006200520042003200220012000
Passengers per employeeASMs (millions) per employee
Available seat miles and passengers per employee
1995 – 2013, ASMs in millions
Sources: BTS employee statistics; MIT Airline Data Project

10. 9© Oliver Wyman 9
Total US airline employment declined in the last two decades.
Total employees and average wages or salaries
1995 – 2013
Sources: BTS employee statistics; MIT Airline Data Project
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Totalemployees
Averagewages/salaries
2013201220112010200920082007200620052004200320022001200019991998199719961995
Management/other
Maintenance (in-house)
Passenger, cargo, and aircraft handling
Flight attendants
Pilots/co-pilots
Average annual wages/salaries

11. 1010© Oliver Wyman
Asia Pacific has seen the strongest demand for new pilots and technicians.
New pilots by region
2014-2033
New technicians by region
2014-2033
Pilot and technician outlook
2014-2033
Source: Boeing Current Market Outlook (2014-2033)
41%
18%
17%
10%
8%
3% 3%
Region Pilots
Asia Pacific 216,000
Europe 94,000
North America 88,000
Middle East 55,000
Latin America 45,000
Commonwealth
of Independent
States (CIS)
18,000
Africa 17,000
Total = 533,000
38%
17%
19%
11%
8%
4% 3%
Region Technicians
Asia Pacific 224,000
Europe 102,000
North America 109,000
Middle East 62,000
Latin America 44,000
Commonwealth
of Independent
States (CIS)
24,000
Africa 19,000
Total = 584,000

12. • Growing the ancillary revenue slice of the pie
• Increasing seat density and aircraft size to reduce unit
costs and increase revenue
• Distribution costs: Where do we go from here?
• Deploying technology to replace labor
Panel 4
Increasing Revenues
and Reducing Costs:
What Levers Remain?

13. 12© Oliver Wyman 12
Ancillary revenue per passenger segment ranges from $4.54 to $48.73.
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
$240
$260
$280
Revenueperpassengersegment
Delta UnitedAmericanVirgin
America
AlaskaUS
Airways
jetBlueSpiritAllegiantHawaiianFrontierSouthwest
Ticket revenueMiscellaneous Baggage fees Reservation change fees
Note: Adjustment made to Allegiant miscellaneous revenue, which is reported differently than other airlines.
Source: PlaneStats.com > form 41 financials > P1.2 income statement
Service fees and ticket revenue
YE Q3 2014

14. 13© Oliver Wyman 13
Distribution costs for the top three US airlines1 have been flat since 2011.
0.50
0.55
0.60
0.65
0.70
0.75
0.80
1Q13 2Q13 3Q134Q123Q122Q121Q124Q113Q112Q111Q11 4Q13 1Q14 2Q14 3Q14 4Q14
CostperASMinUScents
Distribution costs per ASM
2011 – 2014, cents
Note: (1) Top Three US Airlines = American / US Airways, Delta Air Lines, and United Airlines
Source: PlaneStats.com > form 41 financials > P1.2 income statement

15. 14© Oliver Wyman 14
-8.9%
-20.0%
-12.2%
Airline A
144 seats
12 first
132 coach
Airline B
158 seats
4 first
150 coach
Airline C
180 seats
0 first
180 coach
CASM 14.1 cents 12.9 cents 11.3 cents
Fare requirement $206 $188 $165
Note: Mainline operations only.
Source: PlaneStats.com
Fare requirement change
A320 seat density comparison
Based on average cost and revenue for US carriers, YE Q2 2014
See Oliver Wyman’s seat density tool at: http://www.oliverwyman.com/insights/publications/2014/nov/airline-
economic-analysis-2014.html#.VTfGV2MuN8E

16. • Open skies revisited: Who is unhappy and why? The
Norwegian Air Shuttle case
• The equity-stake-and-partnership model and its
impact on the alliances
• What’s new in the alliance world?
• Pre-clearance and other forms of government-
sponsored international competition
Panel 5
The International
Panel:
Free Trade, Fair Trade

17. 16© Oliver Wyman 16
Alliance share of departures by region in May 2015
63% 4% 7%
27%
7%
16%
24%52%
36%
23%
18%
23%
12%
14%
56%
17%
21%
51%
13%
16%
23%
13%
9%
55%
18%
54%
27%
1%
North America
Europe
Middle East
Asia
Oceania
LACSA Africa
OtherStar Alliance SkyTeam oneworld
Monthly scheduled departures by alliance and by region
May 2015
Note: (1) Other = unaligned airlines and airlines in other alliances
Source: PlaneStats.com > schedule > monthly operations for May 2015
Global total
Star 19.8%
SkyTeam 17.6%
oneworld 14.5%
Other1 48.1%

18. 17© Oliver Wyman 17
Alliance capacity shifts
11% 15% 15%
21% 20% 20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
17%
2013
18%17%
oneworld
2015
SkyTeam
Star Alliance
2014
48%51% 48%
Shareofdepartures
Other1
Monthly scheduled departures by alliance
May 2013 – 2015
Note: (1) Other = unaligned airlines and airlines in other alliances
Source: PlaneStats.com > schedule > monthly operations for May 2013, 2014, 2015

19. • Showcase of new customer-facing technology
• The latest in technology: What do travelers want, and
what are they getting?
Panel 6
Technology Showcase
and Panel

20. 19© Oliver Wyman 19
Social media following doesn’t necessarily correlate to airline size.
The world’s largest airlines have dramatically different followings on Facebook
and Twitter.
Airline Daily departures Facebook page likes Twitter followers
American / US Airways 6,554 1,827,040 1,090,000
Delta 5,152 1,389,554 952,000
United 4,786 783,864 650,000
Southwest 3,588 4,533,636 1,840,000
China Southern 1,976 NA 31,600
China Eastern 1,818 NA 887
RyanAir 1,770 NA 149,000
Air Canada 1,606 986,994 290,000
Lufthansa 1,426 1,810,418 192,000
easyJet 1,409 329,686 282,000
Turkish 1,228 6,251,150 667,000
ANA 1,055 745,425 257,000
British Airways 1,026 1,769,784 654,000
Air France 970 5,030,149 412,000
Alaska 921 578,125 145,000
GOL 881 2,316,713 407,000
jetBlue 870 1,014,096 1,930,000
SAS 859 803,238 69,800
Aeroflot 809 75,883 79,400
Sources: PlaneStats.com departures for May 2015, Facebook.com and Twitter.com as of April 21, 2015

21. 20© Oliver Wyman 20
Social media isn’t going away.
Growth rates for those engaging on social media continues to steadily grow
Airline Daily departures Change
from PY
Facebook page
likes
Change
from PY
Twitter
followers
Change from
PY
American / US Airways 6,554 (2%) 1,827,040 +13% 1,090,000 (9%)
Delta 5,152 (8%) 1,389,554 +9% 952,000 +49%
United 4,786 (12%) 783,864 +12% 650,000 +57%
Southwest 3,588 +12% 4,533,636 +8% 1,840,000 +13%
China Southern 1,976 (1%) NA NA 31,600 +30%
China Eastern 1,818 +13% NA NA 887 +236%
RyanAir 1,770 +2% NA NA 149,000 +133%
Air Canada 1,606 (3%) 986,994 +17% 290,000 +61%
Lufthansa 1,426 (3%) 1,810,418 +15% 192,000 +34%
easyJet 1,409 +1% 329,686 +34% 282,000 +56%
Turkish 1,228 (1%) 6,251,150 +70% 667,000 +59%
ANA 1,055 (14%) 745,425 +37% 257,000 +80%
British Airways 1,026 +2% 1,769,784 +45% 654,000 _+61%
Air France 970 0% 5,030,149 +42% 412,000 +25%
Alaska 921 (1%) 578,125 +46% 145,000 +37%
GOL 881 0% 2,316,713 +29% 407,000 +43%
jetBlue 870 (3%) 1,014,096 +13% 1,930,000 +7%
SAS 859 NA 803,238 NA 69,800 NA
Aeroflot 809 +2% 75,883 +83% 79,400 +52%
Sources: PlaneStats.com departures for May 2015 vs. August 2014, Facebook.com and Twitter.com as of April 21, 2015 vs. March 31, 2014

22. 21© Oliver Wyman 21
About PlaneStats.com
PlaneStats.com is powerful suite of analytical tools and enhanced aviation data that allows
users to rapidly and intuitively craft custom analysis to make critical business decisions.
Inclusive of key industry and governmental data sets, paired with our own proprietary research
and algorithms, it is easy to use and very flexible to analyze things like airline schedules, fleet
composition, cost data, passenger loads, MRO data, and more.
For more information, please contact Khalid Usman at khalid.usman@oliverwyman.com or see
www.PlaneStats.com.

23. 2222© Oliver Wyman
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