Business Jets in China, Growth & Risks

  • 1,544 views
Uploaded on

Leonard Favre Speech at the 4th International Repossession Conference - Dubai (Aeropodium conference - www.aeropodium.com)

Leonard Favre Speech at the 4th International Repossession Conference - Dubai (Aeropodium conference - www.aeropodium.com)

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,544
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
67
Comments
0
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 0 ‘JOIN THE DEBATE’ BIZJETS IN CHINA CHINESE ARE BANKING ON THAT BUSINESS: GROWTH AND RISKS… December 2012 The ‘idea factory’ thinking ahead strategies www.1bluehorizon.com 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE    
  • 2. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 1 AGENDA 1 Introduction 2 Historical Market Development in China 3 China Market Characteristics 4 Future Trend and Key Success Factors in China Market 5 Executive Summary © 2012 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12     1
  • 3. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 2 Large and medium business jet accounts for 70% of total fleet while Gulfstream and Bombardier are the leading OEMs in China market Note: China Business jet fleet structure by 2011 – by aircraft size and by OEM Source: CAAC, Company website, 1BlueHorizon Group | Management Consulting Research & Analysis The segmentation is structured through a combination of range, cabin volume and price according to Business and Commercial Aircraft Magazine  Large – Prices between $46M and $68M, offering over 5,000 NM of range and 1,500 ft3 (42.5 m3) to 3,000 ft3 (85.0 m3)  Medium - Prices between $18M and $42M, offering 3,100 to 5,000 NM of range and 700 ft3 (19.8 m3) to 1,500 ft3 (42.5 m3)  Light - Prices between $7M and $18M, offering 1,700 to 3,100 NM of range and 300 ft3 (8.5 m3) to 700 ft3 (19.8 m3) Large and medium business jet accounts for around 70% of total fleet in China Gulfstream and Bombardier are dominated in China business jet market – 68% of total fleet
  • 4. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 3 Large business jet has much higher market share in China than other markets and continue gaining market share Source: GAMA, CAAC, 1BlueHorizon Group | Management Consulting Analysis Large Medium Light Business Jet Deliveries Will the segment structure in China market keep current trend or change in future to be consistent with global structure? China Global 2005 - 2010 2010 2011 - 2030
  • 5. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 4 China has a very low number of business jet fleet relative to it’s size of economy China historical fleet development 2010 Business jet fleet by region  However, by 2011, China still only has a very low number of business jet fleet relative to it’s size of economy - As the 2nd large economy in the world, China accounts for only around 1% of global fleet in 2010 and 1.3% in 2011  During 2000-2007, China business jet was developed in a very slow pace, the accumulated deliveries for business jet is less than 50 units  Since 2008, China market demand jump from a small pool of fleet units base China accounts for only 1% of global business jet fleet in 2010 and 1.3% in 2011 1.3% Source: GAMA, CAAC, 1BlueHorizon Group | Management Consulting Analysis
  • 6. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 5 Because of the barrier of underdevelopment of infrastructures and regulatory limitation for general aviation Source: NBAA report (http://www.nbaa.org/ops/intl/mid/20121126-china-accelerates-opening-of-low-level-airspace.php), 1BlueHorizon Group | Management Consulting Analysis The infrastructure of general aviation industry is under development − Shortage of airport − Limitation of air traffic control capacity and capability − Lack of FBO − Limitation of MRO service capacity and capability Low altitude aviation is controlled by the Army of China and general aviation is constricted - altitude below 600 meter is still not open to the publics Commercial air traffic has already occupied the limited altitude released by China Army Limited air traffic release for business jet - black out period in some airports (Beijing etc) Regulatory limitationUnder development of infrastructures China Accelerates Opening the sky, a recent very good news! In what is widely seen as a move heralding the long-awaited boom in China’s civil aviation market, government officials now say more than a third of the country’s airspace below 4,000 meters (13,000 feet) is now open to general aviation. Even this will more ease the helicopter business, including for VIP transport, it path the way for Business Jet general aviation. The opening of China’s airspace is now expected to be completed by 2020 – years ahead of schedule, according to the deputy secretary of the National Air Traffic Management Committee…
  • 7. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 6 However China business jet demand started increasing sharply in the global demand downturn period Source: GAMA; CAAC, OEM’s financial report, 1BlueHorizon Group | Management Consulting Research China Business Jet Delivery (units) Global Business Jet Delivery (units) 1.5% 1.9% 4.3% 5.6% 7.1%1.4%1.1%Market share Note : China business jet delivery unit including HongKong, Taiwan and Macau Global business jet deliveries decline significantly during 2008-2011 due to global financial crisis China market deliveries experienced sharply increasing during 2008- 2011 from a low unit base and already account for 7.1% of global deliveries in 2011 CAGR 31%
  • 8. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 7 And is expected to keep sustainable overgrow to other markets in the next 20 years Source: Ascend, Bombardier forecast, excluded very light jet and large corporate airline categories, 1BlueHorizon Group | Management Consulting Research & Analysis 127%698% 10 year growth rate China Business Jet Delivery Forecast 46%738% 10 year growth rate 40%28% 10 year growth rate Global Business Jet Delivery Forecast 43%47%10 year growth rate China Business Jet Fleet Forecast Global Business Jet Fleet Forecast Highlights China market demand is expected to keep sustainable overgrow to other market in the next 20 years Around 10% of total business jet demand will come from China in 2011-2030  China business jet fleet will account for around 8% of global fleet from a low base of 1.3% in 2011
  • 9. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 8 Mainly driven by robust economic growth, wealth creation, increasing corporate profit, strong government support and penetration growth Robust economic growth Wealth creation Corporate profit Increasing Penetration growth Strong government support  China economy experienced rapid growth in the past 10 years to become the global top 2 high GDP country, future growth will be slow down to adjust the economy structure, but will still keep robust A increasing big pool of super wealthy people have set their sights on private jets as the next must-have accessory, like exotic cars, yachts and luxury real estate  Fast economic growth in the last decade generated many large and profitable state owned and private companies who will be the potential buyers of business jet China government promised to release more traffic rights of altitude between 600 to 1500 step by step to promote the development of general aviation industry China government encourage the investment in general aviation infrastructure – airport and operational infrastructure, FBO, FSS, facilities of air traffic control, maintenance and fuel distributions Improvements in infrastructure and regulatory limitation and increasing adoption and acceptance of business jet will drive the growth of penetration which is much lower than other countries with similar GDP per capita level Sustainable growth of GDP per capital will also support the future penetration growth
  • 10. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 9 China economy experienced rapid growth in the past 10 years and is expected to continue robust growth Source: China statistic year book; World Bank, 1BlueHorizon Group | Management Consulting Research CAGR 8.4% CAGR 7.0% China historical GDP development and forecast Recession China GDP experienced rapid growth in the past 10 years, even in the period of global recession in 2008-2010, China GDP is expected to continue robust growing in 2011-2020
  • 11. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 10 Continuous wealth creation provide a big pool of potential business jet customers Source: Hurun Research Institute; Forbes, 1BlueHorizon Group | Management Consulting Analysis Number of wealth people pool and regional distribution in China CAGR 25% CAGR 25% CAGR 6% CAGR 35% CAGR 35% Number of wealthy people with > 1 billion USD assets A increasing big pool of super wealthy people have set their sights on private jets as the next must-have accessory, like exotic cars, yachts and luxury real estate Around 13% of super wealthy people (with >100 million RMB net assets) are interested in buying business jet
  • 12. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 11 Increasing number of large corporate and their profit improvement will also support business jet demand growth Source: J.P.Morgan Aerospace and Defense; Business Jet Monthly – December 2010; Wind Information, 1BlueHorizon Group | Management Consulting Analysis 467  407  524  728  825  ‐20% ‐10% 0% 10% 20% 30% 40% 50% ‐ 100  200  300  400  500  600  700  800  900  2007 2008 2009 2010 2011 Average netprofit Growth rate Global Corporate Profits vs. Business Jet Deliveries (number of aircraft 1995 – 2013E) Average Net Profit for Companies listed in Mainland China (million RMB) 470 716 969 1117 2008 2009 2010 2011 Number of Listed Company (with net profit >100 million RMB) Net profit for China listed companies decreased by 13% in 2008 comparing to 2007 due to global financial crisis However it recovered quickly in 2009 and hit to the peak of YoY growth rate (39%) in 2010 Profit growth in 2011 slowed down, but still robust The potential pool of company that can afford business jet keep growing in the past several years
  • 13. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 12 Government support will help progressively removal the barrier of infrastructure shortage and regulatory limitation Source: Chinese government 5 year plan for general aviation industry Encourage general aviation enterprises and private sector to take part in: ‒ Construction of general aviation airports and operational infrastructure facilities ‒ Building up and perfecting the facilities of air traffic control, maintenance and fuel distribution ‒ Forming a group of flight service stations (FSS) ‒ Introducing fixed base operations (FBO) ‒ Establishing new fuel distribution centers in Harbin, Hohhot, Urumuchi and Zhuhai Nurture 3 to 5 leading companies for general aviation Expand maritime patrol and country wide search and rescue Highlights Scheduled civil transport airport 188 ≥ 230 General Aviation Fleet Hour 140K 300K General Aviation Aircraft 1,010 ≥ 2,000 Pilots 24,000 40,000
  • 14. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 13 Improvements in infrastructures and regulatory limitation and increasing adoption and acceptance will drive the growth of penetration Source: GAMA 2011 Business Jet Penetration in the G20 and others Business Jets/ Capita (M) GDP (K$)/ Capita CER, 423 UK, 419 AUS, 139 INDO, 19 CHINA, 62 Market forecast Forecasters correlate business jets numbers and per capita levels Business jet penetration in China is much lower than other G20 countries with similar level of GDP per capital due to the barrier of shortage of infrastructure and regulatory limitation Under the assumption that business jets as a function of capita and GDP is constant throughout the world, China is expected to experience a step change in business jets ownership if can removal the barrier
  • 15. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 14 Sustainable growth of GDP per capital will also support the future penetration growth Source: China statistic year book, 1BlueHorizon Group | Management Consulting Analysis  China GDP per capita keep rapid growth in 2001 -2011 and reach to USD4000+ level in 2009 that is the demand start point for general aviation  GDP per capita will keep sustainable growth in this decade that will drive the sustainable demand increase of business jet  Big gap on GDP per capita among different provinces will cause the geographic unbalance of business jet demand
  • 16. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 15 As the aviation industry in China is set to take off, Chinese and foreign companies are banking on the business of corporate aircraft China's business jet market could help propel the aviation industry
  • 17. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 16 However realization of growth will really depends on how fast China can remove the barriers to growth Source: 1BlueHorizon Group | Management Consulting Analysis Air traffic restriction Under development of infrastructure Human Resource Shortage High Operation /maintenance cost Slow Certification, Registration and approval process Limited air traffic release for business jet - black out period in some airports (Beijing etc) since commercial air traffic has already occupied the limited altitude released by China Army Shortage of airport Shortage of facilities of air traffic control, maintenance and fuel distribution Lack of FBO (fixed based operator) Lack of in-country MRO and training capabilities and capacities Limited capacity of air traffic control management Shortage of pilots Shortage of well trained and qualified MRO engineers and other service personnel Preapproval is required to buy business jet Certification and registration process is complicated The whole process will take more than 3 months High operation cost :USD 80- 90K per flight Lack of aircraft size differentiation in landing, handling and navigation fees High maintenance fee: USD per year ‒ Small size: 800-1100K ‒ Medium/large size: 1.6-2.4 million Challenges in China Market
  • 18. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 17 Under development of infrastructures – airport, air traffic control capacity, FBO, MRO service capacity and capability Source: CAAC, 1BlueHorizon Group | Management Consulting Analysis USA  Airport – 14,951  Paved – 5,000  Scheduled service airport – 376 China  Airport – 398  Military based and airfield – 190  Scheduled service airport – 188  Current air traffic control system is difficult to meet diversified air traffic requirements – especially rapid growth of general aviation, cargo and branch line air traffics  Weak air traffic management in medium to small airports in tier 2/3 cities  IT system is not well integrated  Lack of qualified air traffic control personnel Limitations of air traffic control capacity  Only 3 FBO (Fixed Based Operation) in China – Shanghai, Beijing and Shenzhen ‐ Shanghai Hawker Pacific FBO in Shanghai Hongqiao Airport ‐ Beijing Capital Jet FBO in Beijing airport ‐ Shenzhen Jinlu FBO in Shenzhen airport Lack of FBO  In-country maintenance, overhaul and training capabilities and capacities is unlikely to keep pace with fleet growth  Lack of MRO suppliers for business jet in mainland China Lack of MRO Shortage of Airport
  • 19. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 18 Shortage of human resources - especially pilots and MRO engineers Source: CAAC, Boeing forecast, 1BlueHorizon Group | Management Consulting Analysis Shortage of Pilots in China Market Shortage of MRO Engineers in China Market 560 24 US China 73  24  30  19  Total pilot required Current pilot base New pilot to be provided Gap Number of Pilot by 2010 (‘000) Pilot Gap forecast for China Market by 2030 (‘000)  China market required total 73,000 pilot by 2030 for both commercial and business jet  China has 24,000 pilots by 2010  China can only train 1500 new pilots per year based on current capacity due to lack of pilot training school, coach and high training cost (double to triple on US cost) 300 60 240 Total MRO engineer required Current MRO engineer base Gap MRO engineer Gap forecast for China Market by 2030 (‘000)  China market required 300,000 qualified MRO engineers by 2015 based on fleet growth forecast  But China only has 60,000 MRO engineer (including MRO management personnel) by 2010  Most of MRO engineers are lack of knowledge/ experience in MRO for business jet models
  • 20. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 19 High operation cost – account for 5-8% on top of total business jet purchase price per year 1%  3%  3%  7%  Insurance fee Fixed operation cost Variable operation cost Total operation cost Foreign registry Chinese registry US$ US$ Ground Handling Fees 6,750.00 4,500.00 Airline countervailing fee 4,400.00 0.00 Navigation Fee 1,400.11 175.01 Total Fees 12550.11 4,675.01  Variable cost calculation is based on 300 fleet hour per year  Operation cost percentage is based on total purchasing cost including import tax, VAT, logistic cost and agency cost  Fix operation cost includes airport parking fee, safety checking fee, training fee, maintenance fee and etc  Variable operation cost includes all flight operation fee – salary of pilot, cleaning and other related fee, fuel cost, flight insurance fee and etc Example: Hong Kong – Shanghai return  Flight operation fee in China differs between foreign registry jet and Chinese registry jet  Flight operation fee for foreign registry jet is much higher than that for Chinese registry jet Business jet annual operation cost in China – Challenge 850 example Source: 1BlueHorizon Group | Management Consulting Research & Analysis
  • 21. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 20 As Chinese customer prefer well recognized brands and large business jet regardless of trip length Chinese Customer demand characteristics Product Feature Service Requirement Price Sensitivity  Well recognized brands  Super medium to large cabin aircraft regardless of trip length  New or nearly new aircraft  Luxury decoration with specific requirements  Full seats loading - business and political leaders travel with entourages  Couch for head person to lie down on  Full service package since most of them are the first time buyers, including ‐ Business jet model selection ‐ Consulting ‐ Price negotiation ‐ Financing ‐ Import and logistic ‐ License application ‐ Operation management ‐ Used aircraft disposition in future  Relatively low price sensitivity  Airlines  Real Estate  Casinos and gaming  Chemicals  Oil and Gas  Coal mining  Electronics  Flight trainingWhite good manufactures  IT  Energy  Bank  Advertising  Entertainment Customer Structure Source: 1BlueHorizon Group | Management Consulting Analysis
  • 22. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 21 Key success factors in China market  Chinese customers are very keen on well recognized brand  Increasing brand awareness and establish great brand reputation in China market Recognized brand  Deep understanding on customer ‘s demand characteristics by segmentation in China market  Introduce right products to the market with high flexible configuration Right products  Developing right go to market model fit for China market is a must  It can be tailored with successful experience from other markets, not just copy - paste Right go to market model  Offering full service package are important since Chinese customers are lack of experience  Providing super quality service is also key to build up long term relationship with Chinese customers Excellent service  Critical to long term success since it can not only improve the reaction speed to market needs but also provide significant total cost advantage to customers  Obtain other benefits from Chinese government since it is encouraged Local manufac- turing footprint and engineering capability  Develop right partnership strategy – set up JV with Chinese companies can accelerate the pace of market entry and mitigate the risks  Build up partnership with right partner – SOE can help acquire more resources from Chinese government Right partnership Adapting to Chinese customers: most of the time Chinese people will use an idiom 入乡随俗 , meaning when in Rome, do as the Romans do…
  • 23. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 22 Executive Summary - Growth and risks of repossession in China  China account for a very low number of business jet fleet relative to it’s size of economy  And business jet penetration is also much lower than other G20 countries with similar level of GDP per capital  Because of the barrier of underdevelopment of infrastructures and regulatory limitation for general aviation in the past China business jet industry has not grown substantially in the past But it is expected to boom and keep sustainable growth in the next 20 years Attractive opportunities in all aspects of business aviation but also risks associated Focus on six key success factors in China market  However China business jet demand started increasing sharply in the global demand downturn period (2008-2011)  And is expected to keep sustainable overgrow to other markets in the next 20 years  Mainly driven by robust economic growth, wealth creation, increasing corporate profit, strong government support and penetration growth  Market growth provide attractive opportunities in all aspects of the whole industry chain  However realization of growth will really depends on how fast China can remove the barrier to growth – air traffic restriction, underdevelopment of infrastructures, human resource shortage, high operation cost and slow certification, registration and approval process  Increase brand awareness and build up great brand reputation  Introduce right products fit customer’s demand characteristics to the market  Develop right go to market model-can be tailored with successful experience, not copy-paste  Provide full service package and super service to build up long term customer relationship  Establish local manufacturing footprint and build up local engineering capability  Develop right partnership strategy – JV with Chinese companies might be the right approach
  • 24. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 23 LEONARD FAVRE, 1BlueHorizon Group Managing Director Leonard Favre is an experienced senior management advisor with over 10 years experience in the aviation industry, having started his involvement in this particular field of business when the Swiss National carrier Swissair collapse as one of the Swiss ministry of Economy adviser. He is based in Abu Dhabi (U.A.E.) and Bern (Switzerland). He holds Political Sciences & Economics degree from Lausanne University in Switzerland and two MBA, in Public Sector from IDHEAP Lausanne and in management from INSEAD Fontainebleau (close to Paris, France). He participated recently in postgraduate programs from the prestigious Harvard Business School (Boston, MA) in the field of Leadership and competitiveness. Leo combines hands-on experience with strategy management abilities, strong people management skills and motivational leadership qualities to archive results (ex Booz & co). While working for two prestigious management consulting boutiques, the last one as Principal Regional Head of aviation - transportation for the Middle East and South East Asia, he has worked on a wide range of issues at clients with significant experience in Europe and the Middle East, including several successful Low Cost Airlines (LCC) set-up or air carriers (passengers and cargo) restructuring and operational revitalization (CRO), due diligence screenings, strategic sourcing negotiations, mergers & acquisitions advisory, financial advisory, program office management, and strategic reviews. Until recently, he was vice-president Business development & Strategy for an all cargo company in the UAE and was involved in the lease (ACMI) of dedicated freighters with sound achievements and customer satisfaction. Leo is a regular contributor to conferences and forums and his vision of airline industry is always a valuable and knowledgeable input to create Blue Horizon. Leo is fluent in English, French and German with good command of Italian. SHOUKRAN - THANK YOU leo@1bluehorizon.com
  • 25. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 24 APPENDIX 1 Introduction 2 Historical Market Development in China 3 China Market Characteristics 4 Future Trend and Key Success Factors in China Market 5 Executive Summary © 2012 1BlueHorizon Group - www.1bluehorizon.com APPENDIX 1 - 3 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved     24
  • 26. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 25 Appendix 1: Major business jet dealers in China market Source: Company website, 1BlueHorizon Group | Management Consulting Research & Analysis Dealer Name Ownership  structure  OEM product Major customer SOE/Private / WOE/JV Bom‐ bardier Gulf‐ stream Cess‐ na Embra er‐ Dass‐ aulat  Hawke r Govern‐ ment SOE Private Com. Foreign Com. Indi‐ vidual Avion Pacific  Limited WOE √ √ √ √ Sino Private  Aviation WOE √ √ √ √ √ CBAJET Private √ √ √ √ √ √ CPAC Private √ √ PTE WOE √ √ √ √ Lily Jet  Private √ Chinaga Private √ √ Jinggong Private Asia Pacific WOE √ √ ACASS WOE Westjet  Aircraft  WOE  √ Zhuhai Xirui GA JV √ √ AVIATION  SUPPLIES WOE √ √ √
  • 27. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 26 Appendix 2: Major operation company in China market Key operator Ownership  structure  Service provided or business model Fleet   2011 Major customer SOE/Private / WOE/JV Friction Charter Operation  mandate Govern‐ ment SOE Private Company Foreign Company Individual Deer Jet ( Beijing Capital  Airlines) HNA Group:70%  Beijing Tourism  Group:30% √ √ 44 √ √ √ √ √ BAA Private  √ √ 32 Beijing Airlines (Air  China)  SOE √ √ 10 √ Lily Jet Private √ √ √ 10 √ √ √ √ Shanxi Sanjin SOE 8 √ √ Mingsheng  Private √ √ 7  √ √ √ √ Donghai Jet SOE √ √ 7 √ √ √ √ China Eastern  Executive SOE √ √ 5 √ √ √ Yasheng Medevac √ 3 √ Sichuan Xingyao Private √ √ 2 Big White Bear Private √ √ 2 Zhongfei SOE √ √ 2 √ √ Source: Company website, 1BlueHorizon Group | Management Consulting Research & Analysis
  • 28. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 27 Appendix 3: Major business jet MRO suppliers in China market MRO supplier Ownership  structure  MRO service OEMs/Models MRO service  type SOE/Private / WOE/JV Bom‐bardier Gulf‐ stream Cess‐na Embrae r‐ Dass‐ aulat  Haw‐ker Modifi cation Air  frame Com‐ ponent  Line  Engin e TAMECO  (Xiangyu) JV √ CIRRUS GA JV ZhongFei  JV √ Shanghai  Hawker Pacific JV CE‐680 √ Falcon 7X,  900LX,  2000LX √ √ √ Tianjin Execujet JV Sichuan Haite  High Public listed √ Tianjin Air SOE √ Metrojet WOE √ √ STAECO JV CRJ CL604/605 CL850 XRS G450 √ √ Hawker Haikou  RA3901A 800XP √ Source: Company website, 1BlueHorizon Group | Management Consulting Research & Analysis
  • 29. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 28   SOLUTIONS PACK 1BLUEHORIZON GROUP GENERETING THRUST TO PROPEL YOUR BUSINESS FURTHER... March 2012 We generate 1B l u e Horizon ® out of the Rough... www.1bluehorizon.com P R O P R I E TA R Y I N F O R M AT I O N 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 – P a r i s
  • 30. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 29 Source: © 1BlueHorizon Group Corporate profile 1BlueHorizon Group® value proposition is simple — Deliver great value through a network of senior aviation executives worldwide  1BlueHorizon Group® (Asset Management | Management Consulting | Interim Management) was established in 2007 as a network of International aviation professionals. is a specialist aviation consultancy 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.  Our senior experts 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.  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.  1BlueHorizon Group® believes in working closely with client staff to transfer our knowledge and experience, which means 1BlueHorizon Group® continues to deliver value long after the project is complete.  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.  1BlueHorizon Group® range of services is continuously tailored and adapted to suit the geographical scope and needs of our customers. P R O P R I E TA R Y I N F O R M AT I O N
  • 31. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 30 Interim Manage- ment Managing Consulting Asset Management  1BlueHorizon Group® | MC will work side by side with you with senior personnel having experience in various corner of the world and quickly understanding what you need when the margin of error is thin…  1BlueHorizon Group® | IM can help by giving comfort and control, ready to field a team of relevant seasoned advisors whenever and wherever they are needed…  1BlueHorizon Group® | AM team works individually with each of our clients to develop creative strategies and solutions for all types of aviation equipment.… Source: © 1BlueHorizon Group Practices Knowledge transfer Turnkey solutions Innovative Hands-on The 1BlueHorizon difference 1BlueHorizon Group® is build around three dedicated Practice to propel clients business further with a comprehensive approach ahead of strategies P R O P R I E TA R Y I N F O R M AT I O N
  • 32. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 31 Family conglomerates (Governance, Portfolio analysis and investment Strategy) Economic development (Business review / Cluster / Project Management office) Air Transportation (Airlines / Airport / General Aviation / Aerospace & Defence) Management Consulting Operational 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. Asset Management Fleet 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 that meets your specific needs. Interim Management Knowledge 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 Strategies Three Practices If you want a feasibility study or business plan to assess the case or are burning cash and running into trouble as you approach launch or help the executive teams assess the case for entering immunized joint ventures or looking for an interim management solution… 1BlueHorizon Group® senior personnel are helping along three dedicated Practices stakeholders and management of companies to maximize their potential by providing turnkey solutions, thinking ahead of strategies… Our Practices Service Lines are focused on Strategy and Performance Improvement, no matter how complex the issues Source: © 1BlueHorizon Group Business model with Sectors (Horizontals) & Practices (Verticals) P R O P R I E TA R Y I N F O R M AT I O N
  • 33. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 32 1BlueHorizon Group® Sectors expertise covers the entire breadth of the air- transportation, 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 P R O P R I E TA R Y I N F O R M AT I O N … and our clients well recognize this!
  • 34. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 33 “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" "In each project step, we could clearly identify 1BHG's added value and improve the overall bottom line" “1BHG guys are implementation - oriented and their cooperation with my people is very good " “1BHG Practice has very qualified people who really know a lot about our industry" Clients Feedback - What do Travel & Transportation Customers or Family conglomerates think about 1BlueHorizon Group Note: Detailed references upon request P R O P R I E TA R Y I N F O R M AT I O N
  • 35. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 34 Notes Partners Network – Aviation Sector P R O P R I E TA R Y I N F O R M AT I O N Source: © 1BlueHorizon Group Partners Network
  • 36. © 2012 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 35 Contact: LEONARD FAVRE Partner, Managing Director Email: leo@1bluehorizon.com 1 BlueHorizon Group | Management Consulting| P.O. Box 34154 Abu Dhabi, United Arab Emirates M: +971 50 6164 007 (U.A.E.) M: +41 79 2080 256 (Switzerland) S: leof007