Business Jets in China, Growth & Risks
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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)

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Business Jets in China, Growth & Risks Presentation Transcript

  • 1. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE ‘JOIN THE DEBATE’ BIZJETS IN CHINA CHINESE ARE BANKING ON THAT BUSINESS: GROWTH AND RISKS… 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE © 2012 1BlueHorizon Group - www.1bluehorizon.com 01BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved December 2012 The ‘idea factory’ thinking ahead strategies www.1bluehorizon.com
  • 2. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE AGENDA 1 Introduction 2 Historical Market Development in China 3 China Market Characteristics 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE © 2012 1BlueHorizon Group - www.1bluehorizon.com 11BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 3 China Market Characteristics 4 Future Trend and Key Success Factors in China Market 5 Executive Summary © 2012 1BlueHorizon Group - www.1bluehorizon.com 1All rights reserved1BHG | Aeropodium Conference Aircraft Repossession 09.12.12
  • 3. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Large and medium business jet accounts for 70% of total fleet while Gulfstream and Bombardier are the leading OEMs in China market © 2012 1BlueHorizon Group - www.1bluehorizon.com 21BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Large business jet has much higher market share in China than other markets and continue gaining market share Business Jet Deliveries Will the segment structure in China market keep current trend or change in future to be consistent with global structure? China 2005 - 2010 2010 2011 - 2030 © 2012 1BlueHorizon Group - www.1bluehorizon.com 31BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: GAMA, CAAC, 1BlueHorizon Group | Management Consulting Analysis Large Medium Light Global
  • 5. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE China has a very low number of business jet fleet relative to it’s size of economy China historical fleet development 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 base1.3% © 2012 1BlueHorizon Group - www.1bluehorizon.com 41BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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 China accounts for only 1% of global business jet fleet in 2010 and 1.3% in 2011 Source: GAMA, CAAC, 1BlueHorizon Group | Management Consulting Analysis
  • 6. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Because of the barrier of underdevelopment of infrastructures and regulatory limitation for general aviation 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 51BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: NBAA report (http://www.nbaa.org/ops/intl/mid/20121126-china-accelerates-opening-of-low-level-airspace.php), 1BlueHorizon Group | Management Consulting Analysis 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE However China business jet demand started increasing sharply in the global demand downturn period China 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 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% © 2012 1BlueHorizon Group - www.1bluehorizon.com 61BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: GAMA; CAAC, OEM’s financial report, 1BlueHorizon Group | Management Consulting Research Global Business Jet Delivery (units) 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
  • 8. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE And is expected to keep sustainable overgrow to other markets in the next 20 years 127%698% 10 year growth rate China Business Jet Delivery Forecast 46%738% 10 year growth rate Global Business Jet Delivery Forecast China Business Jet Fleet Forecast Highlights China market demand is expected to keep sustainable overgrow to other market in the next 20 years © 2012 1BlueHorizon Group - www.1bluehorizon.com 71BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: Ascend, Bombardier forecast, excluded very light jet and large corporate airline categories, 1BlueHorizon Group | Management Consulting Research & Analysis 40%28% 10 year growth rate Global Business Jet Delivery Forecast 43%47%10 year growth rate Global Business Jet Fleet Forecast 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Mainly driven by robust economic growth, wealth creation, increasing corporate profit, strong government support and penetration growth Robust economic growth Wealth creation Corporate profit 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 81BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Corporate profit Increasing Penetration growth Strong government support 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE China economy experienced rapid growth in the past 10 years and is expected to continue robust growth CAGR 8.4% CAGR 7.0% China historical GDP development and forecast Recession © 2012 1BlueHorizon Group - www.1bluehorizon.com 91BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: China statistic year book; World Bank, 1BlueHorizon Group | Management Consulting Research 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Continuous wealth creation provide a big pool of potential business jet customers 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 101BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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%
  • 12. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Increasing number of large corporate and their profit improvement will also support business jet demand growth Global Corporate Profits vs. Business Jet Deliveries (number of aircraft 1995 – 2013E) 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 111BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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 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)
  • 13. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Government support will help progressively removal the barrier of infrastructure shortage and regulatory limitation 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 Highlights Scheduled civil transport airport 188 ≥ 230 General Aviation Fleet Hour 140K 300K © 2012 1BlueHorizon Group - www.1bluehorizon.com 121BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: Chinese government 5 year plan for general aviation industry ‒ 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 140K 300K General Aviation Aircraft 1,010 ≥ 2,000 Pilots 24,000 40,000
  • 14. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Improvements in infrastructures and regulatory limitation and increasing adoption and acceptance will drive the growth of penetration 2011 Business Jet Penetration in the G20 and others Business Jets/ Capita (M) CER, 423 UK, 419 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 131BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: GAMA GDP (K$)/ Capita CER, 423 AUS, 139 INDO, 19 CHINA, 62 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Sustainable growth of GDP per capital will also support the future penetration growth 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 141BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: China statistic year book, 1BlueHorizon Group | Management Consulting Analysis Big gap on GDP per capita among different provinces will cause the geographic unbalance of business jet demand
  • 16. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE As the aviation industry in China is set to take off, Chinese and foreign companies are banking on the business of corporate aircraft © 2012 1BlueHorizon Group - www.1bluehorizon.com 151BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved China's business jet market could help propel the aviation industry
  • 17. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE However realization of growth will really depends on how fast China can remove the barriers to growth Air traffic restriction 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 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- Challenges in China © 2012 1BlueHorizon Group - www.1bluehorizon.com 161BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: 1BlueHorizon Group | Management Consulting Analysis Under development of infrastructure Human Resource Shortage High Operation /maintenance cost 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 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 in China Market
  • 18. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Under development of infrastructures – airport, air traffic control capacity, FBO, MRO service capacity and capability 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 capacityShortage of Airport © 2012 1BlueHorizon Group - www.1bluehorizon.com 171BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: CAAC, 1BlueHorizon Group | Management Consulting Analysis 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
  • 19. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Shortage of human resources - especially pilots and MRO engineers Shortage of Pilots in China Market 560 24 73 24 30 19 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) © 2012 1BlueHorizon Group - www.1bluehorizon.com 181BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: CAAC, Boeing forecast, 1BlueHorizon Group | Management Consulting Analysis Shortage of MRO Engineers in China Market US China Total pilot required Current pilot base New pilot to be provided Gap 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 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 Business jet annual operation cost in China – Challenge 850 example © 2012 1BlueHorizon Group - www.1bluehorizon.com 191BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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 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 Source: 1BlueHorizon Group | Management Consulting Research & Analysis
  • 21. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 Full service package since most of them are the first time buyers, including - Business jet model selection Relatively low price sensitivity Airlines Real Estate Casinos and gaming Chemicals Oil and Gas Coal mining Customer Structure © 2012 1BlueHorizon Group - www.1bluehorizon.com 201BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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 selection - Consulting - Price negotiation - Financing - Import and logistic - License application - Operation management - Used aircraft disposition in future Coal mining Electronics Flight trainingWhite good manufactures IT Energy Bank Advertising Entertainment Source: 1BlueHorizon Group | Management Consulting Analysis
  • 22. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 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 Local manufac- turing footprint and engineering capability © 2012 1BlueHorizon Group - www.1bluehorizon.com 211BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved high flexible configuration 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 Obtain other benefits from Chinese government since it is encouragedcapability 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 入入入入乡乡乡乡随俗随俗随俗随俗 , meaning when in Rome, do as the Romans do…
  • 23. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 221BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Attractive opportunities in all aspects of business aviation but also risks associated Focus on six key success factors in China market 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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. SHOUKRAN - THANK YOU leo@1bluehorizon.com © 2012 1BlueHorizon Group - www.1bluehorizon.com 231BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved (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.
  • 25. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE APPENDIX 1 Introduction 2 Historical Market Development in China 3 China Market Characteristics 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE © 2012 1BlueHorizon Group - www.1bluehorizon.com 241BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 3 China Market Characteristics 4 Future Trend and Key Success Factors in China Market 5 Executive Summary © 2012 1BlueHorizon Group - www.1bluehorizon.com 24 APPENDIX 1 - 3 1BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved
  • 26. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Appendix 1: Major business jet dealers in China market 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 √ √ √ √ © 2012 1BlueHorizon Group - www.1bluehorizon.com 251BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Source: Company website, 1BlueHorizon Group | Management Consulting Research & Analysis 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 √ √ √ √ © 2012 1BlueHorizon Group - www.1bluehorizon.com 261BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE 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 √ √ √ © 2012 1BlueHorizon Group - www.1bluehorizon.com 271BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE MANAGEMENT CONSULTING SOLUTIONS PACK P R O P R I E TA R Y I N F O R M AT I O N 1BlueHorizon Group | Management Consulting Management Consulting: How assisting management to solve a wide range of critical issues… © 2012 1BlueHorizon Group - www.1bluehorizon.com 281BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved 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 g r a t e d C o m m u n i c a t i o n We generate 1BlueHo rizo n ® out of the Rough... www.1bluehorizon.com March 2012
  • 30. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE ‘Big Four’Law firm Management 1BlueHorizon Group | Management Consulting (MC) is providing clients a comprehensive approach, no matter how complex the issues Innovative – Hands-on Knowleadge transferconsulting P R O P R I E TA R Y I N F O R M AT I O N © 2012 1BlueHorizon Group - www.1bluehorizon.com 291BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Operational Improvement Creating 1 B l u e H o r i z o n ® to solve a wide range of critical issues BUSINESS DEVELOPMENT IMPLEMENTATION Project Management Office Source: © 1BlueHorizon Group | Management Consulting Business model
  • 31. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Do you need help starting a new venture? Is it time for a Due Diligence as next step? Are you in need of a strategic business review? Looking for ways to differentiate from competitors? Aiming to restructure a poorly performing business? Are you in need of a sound Project Management office? Illustrative Aviation 1BlueHorizon Group|MC senior personnel core competencies lie in Airlines, General Aviation, Airports, Aerospace and Defense and are deployed on-sites P R O P R I E TA R Y I N F O R M AT I O N © 2012 1BlueHorizon Group - www.1bluehorizon.com 301BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved Are you in need of a sound Project Management office? In today’s Aviation & Aerospace business environment, the margin of error is thin; clients need and expect seasoned advisors. With their respective disciplines, 1BlueHorizon Group senior personnel have experience in various corner of the world. 1BlueHorizon Group |MC is ready to field a team of relevant aviation and aerospace experts whenever and wherever they are needed Airlines Air Cargo Corporate Jet Airports MRO GCAA Source: © 1BlueHorizon Group | Management Consulting Industries & Capabilities – Core competencies Aviation
  • 32. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Project Management Office According to recent studies, 68% of projects do not meet time/cost/scope targets. The PMO strives to introduce economies of repetition in the execution of your projects and Providing innovative solutions, hands-on and knowledge transfer are our difference to maximized value creation - continuously ahead of strategies 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 Interim Management Management trainer 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 1BlueHorizon Group |MC senior personnel assists - ahead of strategies - stakeholders and management of companies in a variety of sectors who are faced with operating challenges, support of a project management office and/or requesting senior executive interim management support. Ahead of Strategies 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 P R O P R I E TA R Y I N F O R M AT I O N © 2012 1BlueHorizon Group - www.1bluehorizon.com 311BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved execution of your projects and we participate actively in Strategic project management as facilitator… 1BlueHorizon Group |MC can help give comfort and control through our hands- on experience to maximize value creation… operational improvement is about seeing a company through the transformation of becoming more competitive. 1BlueHorizon Group |MC works side by side with you to maximize the potential of your people… 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. 1BlueHorizon Group |MC quickly understand what you need, with interactive mentoring if more suitable… … and our clients well recognize this! case for entering immunized joint ventures… 1BlueHorizon Group |MC senior personnel helping to maximize your potential, thinking ahead of strategies…
  • 33. 4th International Repossession Conference – Dubai – Sofitel Dubai Jumeirah Beach, UAE Contact: LEONARD FAVRE Partner, Managing Director Email: leo@1bluehorizon.com 1 BlueHorizon Group | Manag ement 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 © 2012 1BlueHorizon Group - www.1bluehorizon.com 321BHG | Aeropodium Conference Aircraft Repossession 09.12.12 All rights reserved