OPPORTUNITIES AND CHALLENGES FOR GREEK TOURISM POSED BY THE LOW COST CARRIERS

Presented by David Bell Senior Consultant – UBM Aviation - ASM

19th May 2011

2

ABOUT UBM AVIATION & ASM

3

• Innovative solutions for strategic partnerships

• Dedicated and focused team of aviation experts

• Unrivalled aviation workflow data & analytics

• Internationally renowned exhibitions, conferences & networking forums

4

• Established 1993, the first company in the field

• Sister company of “Routes” – The World Route Development Forum

• Specialist – bespoke air service delivery for Airports

• The most experienced team – depth of industry knowledge delivers unrivalled support across a broad range of air service management areas

• Operate globally - international offices in Singapore, Beijing, Hyderabad, London, Mexico City, Miami, Warsaw and Wellington

• ASM is the world market leader for route delivery

ASM – introduction

5

• In August 2010 ASM joined UBM Aviation, the leading provider of industry data and knowledge

• As part of a larger group of industry related companies, ASM has extended our global coverage by combining forces with OAG and UBM Aviation in all regional markets

• Collectively we now have one of the largest airport consultancy practices in the world with a suite of data and modelling tools

• Combined with our focus on airport route development, the new consultancy division provides the highest quality service offering to the market

ASM – a UBM Aviation brand

6

• Route Development Strategy, Solutions and Delivery

• Airport Marketing

• Airport Transaction Support

• Air Cargo Development

• Research Data & Analysis

• Training and Skills Development

Principal Products & Services

7

Financial Services –We have the expertise to help in the sale and acquisition of airports.Example: London Gatwick, Leeds Bradford, Prague

Distressed/decliningAirports –We can get airports back on track and geared for growth.

Route Development Plans, Airline meetings, support at Routes events, Marketing and Data AnalysisExample: Kuala Lumpur

Airport Directors/Managers –

We help fill resource needs

Training, In house ConsultantsExample: London Gatwick

Core Proposition

and Skills Set

Tourism Boards –Help formulate tourism and marketing strategiesExample: St Lucia

New/emerging airports –Route Development Plans, Airport Launch Plans, Marketing and Data AnalysisExample: Szymany / Lublin, Poland

Established airports –We review the existing network and look for opportunities for new market growth.

Route Development Plans, Airline meetings, support at Routes events, Marketing and Data Analysis.Example: Birmingham, Malaysia Airports

Principal Products & Services

8

Personal Experience

• The past 3 years working in Route Development in airport and consultancy roles– Europe

– Asia

– Australia and Pacific

• 6 years within Network Planning with leading LCC; easyJet– Identifying new markets

– Airport negotiations

– Tourism and stakeholder management

9

WHAT IS ‘LOW COST’?

10

The Model and its Evolution

• The low-cost model is based on Southwest Airlines’ successful formula in the US

• It has been adopted and adapted by leading LCC players in Europe

• In Europe we now have a number of ‘Low Cost Carriers’, however some offer a completely different proposition to compared to others

• However, each carries has the same single goal; to operate at the lowest cost achievable

11

The Model and its Evolution

• The key components of the model are – Ticketless travel – now an IATA standard

– Internet booking – traditional carriers have followed suit

– No commission for travel agents – low cost GDS systems now allow for commissions

– Usage of secondary airports – Many LCC in Europe use main airports

– No seat allocation or connecting flights – Some carriers offer through ticketing

– No frills such as in-flight catering – some regional LCC’s carriers offer catering

– No business class and lounges – lounge access can be booked as an add on

12

THE LOW COST EFFECT

13

United Kingdom to Greece

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and GreeceJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

14

UK to Mainland Spain

-

5,000

10,000

15,000

20,000

25,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and CanariesJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

15

UK to Balearics

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and BalearicsJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

16

United Kingdom to the Canaries

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and CanariesJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

17

UK to Portugal

-

1,000

2,000

3,000

4,000

5,000

6,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and PortugalJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

18

United Kingdom to Italy

-

2,000

4,000

6,000

8,000

10,000

12,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and ItalyJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

19

UK to Morocco

-

100

200

300

400

500

600

700

800

900 19

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and MoroccoJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

20

United Kingdom to Croatia

-

100

200

300

400

500

600

700 19

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and CoatiaJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

21

United Kingdom to Greece

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the United Kingdom and GreeceJan 1995 - Dec 2010

LCC Scheduled Charter

Source: UK CAA

22

Germany to Southern Europe

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

An

nu

al P

asse

nge

r (00

0s)

Annual Passenger between the Germany and Selected CountriesJan 1993 - Dec 2010

Greece Italy Portugal Spain

Source: Eurostat

23

LCC’s can reduce seasonality

• Charter traffic drives and distorts peak capacity requirements for both airports and hotels

• LCC’s can deliver passengers across the year with longer shoulder periods

• Efficient use of existing facilities & services

• Predictable and regular peak requirements

24

Seasonality - Greece

-

100

200

300

400

500

600

700

800

900

1,000

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

Mo

nth

ly P

asse

nge

r (00

0s)

Passenger Seasonality between the United Kingdom and GreeceJan 2010 - Dec 2010

Charter Scheduled LCC

Source: UK CAA

25

Seasonality - Spain

-

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

Mo

nth

ly P

asse

nge

r (00

0s)

Passenger Seasonality between the United Kingdom and SpainJan 2010 - Dec 2010

Charter Scheduled LCC

Source: UK CAA

26

Seasonality - Portugal

-

100

200

300

400

500

600

700

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

Mo

nth

ly P

asse

nge

r (00

0s)

Passenger Seasonality between the United Kingdom and PortugalJan 2010 - Dec 2010

Charter Scheduled LCC

Source: UK CAA

27

Seasonality - Greece

-

100

200

300

400

500

600

700

800

900

1,000

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

Mo

nth

ly P

asse

nge

r (00

0s)

Passenger Seasonality between the United Kingdom and GreeceJan 2010 - Dec 2010

Charter Scheduled LCC

Source: UK CAA

28

WHAT THE CARRIERS WANT

29

Ryanair

Ken O’Toole, Ryanair Director of Network Planning• “117 airports benefited from one or more new routes with Ryanair in

the last 12 months”

• “Cost, facilities, self handling and a government development fund, are all factors why we opened 5 new bases in Spain”

• “Since 2009, Greece has been on one end of 30 Ryanair routes compared to 136 in Spain and 111 in Italy”

• “Spain, Italy, Portugal, Belgium, Norway, all benefitted from the placement of Ryanair’s new aircraft in 2010”

30

easyJet

Alan McIntyre, easyJet Head of Network and Schedule Development• “For Winter 2012 we still have some aircraft unallocated…we are

interested in hearing route suggestions”

• “Some of the key information we rely on before making a decision to pursue a new route include; Regional tourism data, regional tourism attractions, durations of stay, details of local large corporate companies and businesses.”

• “easyJet's fleet growth is set to continue with 220 aircraft by end FY2013 (currently 196) – there are some major opportunities ahead for several destinations...”

• “53% of easyJet customers originate from outside of the UK. We aim to reach our target of 58% by 2015”

31

Market Characteristics

• Attractive destination market– Sun & beach

– Skiing

– City Break

• Potential for year round services

• A good mix of hotel availability– B&Bs through to 5 star hotels

• Affordable attractions and events throughout the calendar year

32

Support for New Services

33

Government

• Greece is perceived as a high cost market– Airport charges

– Taxes

• Greece needs to compete with other markets– traditional leisure markets – Spain, Portugal

– new markets – Morocco, Croatia

• Government needs to act in conjunction with all stakeholders to attract airlines

34

Government Support

Michael Cawley, Ryanair Deputy CEO

• "Airport costs and taxes are pricing countries out of competitive tourism . To get things moving again, taxes and airport charges have to drop, particularly when the competition [Italy and Spain] don't have it."

• “Spain has seen a €1,000 economic boost per passenger by discounting airport tax. This is the single best investment they can make.”

35

EU Regulations

• “Private Investor Test” – airports must act like a private investor

• Support must be relevant – linked to net growth in the number of passengers

transported

– aid must be applied to the opening of new routes or schedules increasing net passenger volumes (i.e. not merely traffic cannibalization)

– aid should decrease over time

– support should not exceed 50% of ‘total eligible costs’ in any one year

36

Tourism Authorities

• Airlines require support for cooperative marketing campaigns

• The airlines brand and reach can result in maximum exposure for the destination market

37

Hotels

• LCC passengers package their own trip

• Bookings are made later than those travelling on package holidays

38

Airport Facilities

• Point-to-point– Simple efficient facilities

– No transfer baggage or passenger

• “No frills” product – No alliances, code share or

business lounges

• Flexible– Support internet and self

check-in

• Encourage pax to proceed airside– Short walking distances

• Pre-boarding zones– Quick boarding process

• Short walking distance to aircraft– No air-bridges, or bussing

• Minimise wasted operational time– Minimise taxi, holding & ATC

delays

39

AIRCRAFT

40

LCCs have young safe aircraft fleets

9.6 9.5

5.75.3

3.7 3.7 3.63.3

0

2

4

6

8

10

BA Air France

Air Berlin Olympic easyJet Aegean Wizz Ryanair

Ave

rage

Air

craf

t Age

(Ye

ars)

Average Aircraft Age - Short/Medium Haulw/c 16th May 2011

source: airliners.net

41

LLCs have the ability to grow

107

83

64 62

14

5 40

0

20

40

60

80

100

120

Wizz Air Berlin Ryanair easyJet Air France

Aegean BA Olympic

Short/Medium Haul Aircraft Deliveries2011 - 2022

Air

craf

t De

live

rie

s

Source: OAG

42

CLOSING REMARKS

43

Our view

• Low Cost carriers deliver passengers

• A low cost base is required for them to see the return they expect

• The burden of support should not fall on one party alone– Government

– Tourism

– Airports

– Hotels and local business

• The competition is benefiting, so should Greece

44

Disclaimer

© 2011 Airport Strategy and Marketing Limited. All rights reserved.

This material was prepared by Airport Strategy and Marketing Limited. Whilst based on information is believed to be reliable, noguarantee is given that it is accurate or complete.

The opinions, forecasts and assumptions contained in this material are as of the date indicated and are subject to change at any timewithout prior notice. The opinion referred to may not be suitable for any specific investment objectives, financial situation orindividual needs of recipients and should not be relied upon in substitution for the exercise of independent judgement. NeitherAirport Strategy and Marketing Limited, nor other persons shall be liable for any direct, indirect, special, incidental, consequential,punitive or exemplary damages, including lost profits arising in any way from the information contained in this material.

This material is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole orin part for any purpose without the prior express consent of Airport Strategy and Marketing Limited.