Over the past few years, the Asia Pacific aerospace industry has been accelerating forward. Aircraft OEM production backlog is at historical record levels and demonstrates strong industry confidence looking forward. The Asian fleet will see robust growth over the next decade and the second fastest growth globally. Learn more on this future growth in this ICF presentation, originally shared during a US Commercial Service webinar. For more information, visit: http://www.icfi.com/markets/aviation/aerospace

1. ICF International | icfi.com © ICF 2015 00
Aerospace in Asia Pacific - Webinar
November 2015 - Singapore
Presented by:
David Stewart
Global Lead
Aerospace & MRO
Hosted by:
US Commercial
Service

2. ICF International | icfi.com © ICF 2015 1
The global airline industry has returned strongly to profitability since
the recent economic/financial recession
AVIATION OVERVIEW
Global Airline Profitability
Source: IATA Central Forecast June 2015
$USD Billions
Asia Pacific Airline Profitability
$USD Billions
$29.3B
-$30
-$20
-$10
$0
$10
$20
$30
$40
$5.1B
-$10
-$5
$0
$5
$10

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The aircraft OEM* production backlog is at historical record levels
and demonstrates strong industry confidence looking forward
0%
10%
20%
30%
40%
50%
60%
70%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Note: includes narrowbody, widebody, and regional jets in commercial service. Excludes Russian-manufactured aircraft.
Only includes passenger, freighter, quick change and combi operational roles
Source: ICF research. OEM = original equipment manufacturer
Order
Backlog
Backlog/
Active Fleet
Commercial Aircraft OEM Production Backlog
Driven by
 High oil prices
 Low interest rates
 Emerging market growth
 New Technology aircraft/engines
AVIATION OVERVIEW

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The Asian fleet will see robust growth over the next decade and the
second fastest growth globally of 4.7% CAGR*; +4,200 aircraft
FLEET OUTLOOK
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2014 2024
Africa
Middle East
South America
Europe
Asia Pacific
North America
Air Transport Fleet Growth 2014–2024
Source: ICF International, ACAS September 2014; CAGR = compound annual growth rate
3.8%
2.7%
4.7%
1.4%
5.3%
4.8%
27,500
37,900
CAGR
3.2% Average
~7,150
25%
~11,350
30%
ICF Insight
 Air travel growth of
~4%
 ~19,000 aircraft
deliveries
 ~8,600 aircraft
retirements

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The current air transport MRO* market is $62.1B of which engines
account for 40%; Asia Pacific drives for ~27% of global demand
MRO MARKET
Engines
Components
Line
Airframe
Modifications
15%
17%
22%
40%
6%
North
America
Asia Pacific
Europe
Middle East
South
America
Africa
29%
27% /
$17B
27%
7%
6% 4%
2014 Global MRO Demand
Source: ICF International * MRO = maintenance repair and overhaul
Forecast in 2014 $USD, exclusive of inflation
$62.1B
Total
$62.1B
Total
By MRO Segment By Region

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Over the next decade, MRO growth will be 3.8% with Asia Pacific &
China driving this growth….
MRO MARKET
Source: ICF analysis
Forecast in 2014 $USD, exclusive of inflation * absolute growth in annual spend
US$ Billions
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
2014 2024
Africa
Eastern Europe (Incl. CIS)
Latin America
Middle East
China
Asia/Pacific (Excl. China)
Western Europe
North America
2014-2024 Annual MRO Spend By Region
6.8%
1.7%
1.2%
CAGR
3.8% Average
$62.1B
$90.1B
6.7%
5.2%
6.1%
6.4%
4.9%
Africa
E. Europe
L. America
M. East
China
APAC
(ex. China)
W. Europe
N. America

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…especially in absolute $ terms
MRO MARKET
Source: ICF analysis
Forecast in 2014 $USD, exclusive of inflation
Difference in $ MRO Spend, 2024 vs. 2014 – By Global Region
US$ Billions
$6.9
$5.4
$4.2
$2.6 $2.5 $2.3 $2.3
$1.8
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
Asia/Pacific
(excl China)
China Middle East Eastern
Europe (incl
CIS)
Western
Europe
Latin America North
America
AfricaAsia/Pacific
(excl. China)
China Middle East

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There are four key MRO industry trends to watch…
Industry
Trends
MRO MARKET TRENDS
Material
Strategies
Airframe
MRO
E-enabled
Aircraft
Greater OEM
Centricity
• Airframe, component and
engine OEMS are
increasingly focused on the
MRO market and will likely
gain market share and
position
• New aircraft are increasingly
data intensive and e-
enabled, and growth of the
related fleet will be dramatic
• Outsourcing of airframe related MRO to
Asia Pacific from other regions has likely
peaked
• Growing volumes of aircraft
retirements is generating
significant availability of surplus
parts, providing new cost
reduction opportunity to
airlines and MROs

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Whilst opportunity clearly exists, whether/where to locate depends
(partly) on the nature of the business and what it takes to succeed
Aerospace and MRO Activities
Value-added vs. Labour intensity
Labour Intensity
Value-
Added
High
High
Low
Low
Repair development
& engineering
Airframe
heavy maintenance
Parts repair
Engine & component
overhaul
Modifications
* touch labour
Modifications
engineering
IMPLICATIONS
Business
Aviation MRO
Position of activities on chart are illustrative only
Engineering & Design
Manufacturing

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IMPLICATIONS
Drive for lower cost and access to markets has led to new aerospace
clusters emerging in southern latitudes
Source: ICF International
* Note – Russia is emerging for Western certificated equipment
Southern
California
Eastern
Canada
Southeast
US
Central US
Mexico
Washington
Brazil
North
Africa
France
United
Kingdom Germany
Eastern
Europe
UAE
Malaysia
Singapore
China
Established Clusters
Emerging Clusters
Connecticut
Russia*
Spain
India
Japan
Global Aerospace Manufacturing Clusters
Aerospace suppliers concentrated
In North America and Europe…
…and labor intensive activities
are shifting South

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Recent research spoke to Singapore being the top and most
competitive MRO hub for air transport and business aviation in Asia
IMPLICATIONS

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Example growth opportunities might include....
IMPLICATIONS
Big Data
Composite NDT and
Repair
Logistics Support
Training
Additive Manufacturing
Engineering and Design
Services
High Tech Repairs
Selective Manufacturing
Aircraft Surplus Supply
Chain
Business Aviation
Support

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Outside looking in, questions to investigate and address include…
KEY CONSIDERATIONS
Whether to enter the market – a function of e.g., size of available
market, extent of local competition?
How to enter market ?
Where to locate – which country?
What value proposition (Asia operators buy differently) ?
Separate strategy and approach for China?
KeyQuestions

14. 13© ICF International 2015
Thank you!
For questions regarding this
presentation, please contact:
David Stewart
Vice President
Aerospace & MRO Advisory
+44 (0)7770 410011
david.stewart@icfi.com
icfi.com/aviation