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Presentation at the Iranian Aviation Symposium - Tehran April 2016

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Presentation at the Iranian Aviation Symposium - Tehran April 2016

  1. 1. Aviation Development and Hub Evolution in Iran Diogenis Papiomytis Frost & Sullivan 26 April 2016 Iran Aviation Summit
  2. 2. 2 Routes to/from Iran are among the most profitable in foreign carrier networks  Turkish Airlines and Persian Gulf carriers have been growing their seat capacity at a rate of 25% and 15% yoy, respectively  Operating margins on routes to/from Iran are 35-50% (excl overheads) 45% Op ProfitDOCRevenues Typical Route P&L profile Source: Frost & Sullivan, OAG, IATA 1 10 100 1,000 10,000 1 10 100 1,000 10,000 Traffic in Thousand Passengers CapacityinThousandSeats Pakistan United Arab Emirates Turkey Netherlands Germany United Kingdom India France Qatar Sweden  Between 2010 and 2015 capacity between EU and Iran has fallen by 360K seats, while demand has actually increased by 150K passengers  India and Pakistan are growth markets that are underserved (direct flights)  The UAE, Qatar and Turkey have seen demand increasing by 500K pax but seats have grown by 750K over 5 years Capacity-Demand profile (2015)
  3. 3. 3 The Tehran hub has a similar profile to UAE hubs and is superior to IST, in terms of its reach for medium and long-haul flights  Modern widebodies can easily reach any world destination, with only a couple of exceptions  Particularly strong position for the following traffic flows:  Europe - India/Pakistan  Europe – Pacific Source: Great Circle Mapper ISTANBUL ABU DHABITEHRAN 6 hours 10 hours 15 hours
  4. 4. 4 Iran’s aviation market has enormous potential • 80 mn people • 34 mn domestic travellers • >40 mn international visitors • Approx. 30 mn international transfers Strategy: Use strong local demand to grow hub potential STRONG DOMESTIC MARKET AND GOOD INTERNATIONAL DEMAND • 30 million people • 16 million domestic travellers • ~20 million international visitors • Very limited international transfers Strategy: Aviation an enabler for new Reform Plan 2030 • 9 million people • 0 domestic travellers • >15 million international visitors • 75% of airline traffic is international transfers (over 50 million people) Strategy: Focus on UAE as a global destination  Leisure (theme parks, EXPO 2020)  Business (Free Zones, Airport Cities)  Other (medical tourism DXH.AE) • 80 million people • 6 million domestic travellers • >5 million international visitors EXCELLENT DOMESTIC MARKET, INTERNATIONAL DEMAND AND A GROWING INTERNATIONAL HUB GOOD INTERNATIONAL DEMAND AND A WORLD CLASS INTERNATIONAL HUB +110 million trips +130 million trips+80 million trips
  5. 5. 5 Route to success 1) Hygiene Factors • Industry & Tourism • Infrastructure (Fleet, Ground, Airspace, IT) • Network breadth and depth • On-board product 2) Value adding Factors (non-exhaustive) • Airline Partnerships o Marketing Partnerships o Strategic Alliances • Joint planning of aviation supply chain o Iran Aviation Inc • Promotion o PR/ Roadshows o Bilateral relations
  6. 6. 6 What about the economic impact? Economic Impact • In 2014 Dubai Aviation contributed $16.5 billion and supported 260,000 jobs in Dubai economy • Etihad Airways contributed $5.0 billion and supported 45,000 jobs in Abu Dhabi economy • Aviation is both a contributor and an enabler in a diversified economy • Direct Impact: EBITDA • Profitable airlines • Indirect: Supply chain spending • Buy locally or offset • Induced: Employee wages • Hire locally • Catalytic: Tourism and Trade enabler • Joint planning of Aviation entities with Tourism Organisation (ICHTO) and Ministry of Economic Affairs
  7. 7. 7 So what is the vision? • AIRLINES: • Grow to meet O&D or compete in global East-West traffic flows? • The former requires aircraft to meet future demand • The latter requires new operating models to cater to a global market (e.g.digital transformation, marketing strategy, distribution strategy, loyalty schemes, etc.) • AIRPORTS: • Build to just manage future demand (Airports) or build to contribute to the economy (Airport Cities)? • Airport Cities require joint master planning for Airports, Airlines, MROs, Cargo, Real Estate • AEROSPACE: • Do you want to create an offset assembly line, a manufacturer of consumables / wing parts, or a high tech manufacturer that could potentially build its own aircraft? • Distinct advantages of the Iranian industry (i.e. skilled staff, low material costs, high quality)
  8. 8. 8 Thank you! Contact me on: diogenisp@frost.com Frost & Sullivan is a global growth partnership company, with over 1,800 analysts and consultants located in 47 offices across the world Visionary Innovation Group Market Research Consulting Frost & Sullivan’s innovation experts, with experience in workshop-based project delivery  Macro-to-Micro exercises with a range of organisations across industries  Access to proven tools, simulation, gaming and other techniques to facilitate workshops Recent aviation-related research reports:  2030 Vision for Airport Terminals  Analysis of the Global Airport Industry  Global Airport Passenger Screening Market  Global Airport Notification Systems  Global Airport Ticketing Kiosk Market  Airport Security – Technical Insights and Innovations Helping Aviation end-users and suppliers:  Develop strategic plans and support in strategy execution  Perform qualitative Customer research and Competitor benchmarking  Define growth opportunities  Develop new business models and monetise opportunities

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