National Conferance on

Civil Aviation: The Decade Ahead

Atilla KORKMAZOGLU Delhi, October 2011

Cargo Handling & Ground Handling What is happening, what to expect ahead

• Air Transportion Development

2

Though the ATM has revealed strong growth (6% CAGR between 1970-2010) in the past, only c.5% of world population has experienced air transportation

-1

0

1

2

3

4

5

6

-5

0

5

10

15

1981 1985 1989 1993 1997 2001 2005 2009

RPK GDP

Income per capita($, 2009)

India

Russia,Brasil

Travel per citizen (2009)

China The future growth driver will be the

improvement in wealth of emerging economies, mainly India, China, Russia and Brasil

• Aircraft Manufacturing

3

0

100

200

300

400

500

600

700

800

900

1000

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

100.000

1997 1999 2001 2003 2005 2007 2009

Global Manufacturing VolumesShip (GT)

Auto (Thousand units)

Aircraft (Unit)

0

500

1000

1500

2000

2500

3000

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Teslimat

Sipariş

Boeing & Airbus Manufacturing

Orders

Deliveries

Development in global business relations between countries affects transportation markets positively in the past decade

Demand increased to air

transportation while middle class got richer

Production orders made top in 2007 and deliveries in 2010, expected to increase in the future ......

• Airlines Market

4

Open Skies, Developing Country Airlines , LCC , Crisis , Consolidation of National Carriers put higher pressure on major flagship carriers day by day.

2001 American A. + Transworld

2002 Easyjet + GoFly 2003  2004 Air France + KLM

2005Lufthansa + SWISS US Airways + American West

2006Cathay Pasific + Dragon Air

2007TUIfly + Hapag LlyoydAir France KLM + VLM Air Berlin + LTU

2008

Lufthansa + bmiLufthansa + Austria AirlinesNorwegian + Fly NordicVueling + Clickair

2009 Air Berlin + TUIfly

2010British Airlines + Iberia Delta + Northwest

2011 United + Continental

Large Scale Mergers among Airlines

0%

5%

10%

15%

20%

25%

30%

35%

40%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UK

N.America

EU

Asia Pasific

World

LCCs Dominating the Seat Capacity

• Passenger and Cargo Forecast

Long-term passenger forecasts shows a world average of %4-5 percent increase until 2019 India expectations are around %7

5

Long-term cargo forecasts shows an average of

%5,9 percent increase until 2029 for the overall world while India expectation is around % 6,5

According to the forecasts freighter fleets will grow%69

Passenger Forecast

Cargo Movement Growth Forecast

Source: Boeing Reports

6

-2

0

2

4

6

8

10

12

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

India

World

GNP Growth Rate

MiddleClass of India is between 325-350 mio, expected to be 600 mio in 2025.

Expected to be the 5. biggest consumption market.

Tourism has % 5,6 in GNP. %87 of tourist are airline passengers.

Growth rate of India Economy is higher than the world average

Economical conjunctures affect India less than most of the others...

Source: McKinsey Global Institute

• GNP Growth Rates

• Aviation in India - Current

7

India become the 9th civil aviation market in the last decade

Scheduled route numbers doubled in last 10 years by reaching up to 82

72 National Airlines operate at India

Fleet size of 413 aircrafts

High Population per aircraft rate

Source: Ministery of Civil Aviation

• Aviation in India - Future

8Source: ACI publications

Average growing rate for India will be annually %8,2 until 2029

Becoming the third biggest market in 2029 after US and China

9

0

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007 2008 2009 2010

KingfisherSpiceJet

Air India Express

Go AirIndiGO

New domestic airlines established after 2005 has reached more than %50 of the domestic market share

• Aviation in India - Domestic Carriers PositioningDomestic Market Shares

Air India; 17,1%

Jet Airways; 18,1%

Jet Lite; 7,0%

Kingfisher; 19,8%

SpiceJet; 13,4%

GoAir; 6,2%

IndiGO; 19,2%

new

pla

yers

• Ground Handling Services

10

Ground and cargo handling services include a broad range of activities requiring significant operational and organizational expertise

Ground Handlin

gRamp

Services

Station Mgt& Admin

Pax Services

Cargo &Mail

Services

Line Maint.

Services

Fuel Services

Security ServicesExe.

Aviation Services

• Ground Handling Market Participants

11

Although airlines and airports continue to provide ground handling services, independent ground handlers are gaining share as the other participants (airlines/airports) focus on core business

Independents - Airlines/Airports

Ground handling market size is currently close to $50 bn and is expected to reach $150 bn in 2030, which indicates more than 5 % CAGR.

• Ground Handling Market Key Trends

12

Who can adopt itself will be the survivor

Strong Growth:The growth will be accompanied by pricing pressure

Airlines Purchasing Criteria:Price and quality are the key criteria in selecting the service provider

Barriers to Entry:Liberalisation facilitates penetration

Changing Market Participants:Airlines and airports focus on core business and dispose their handling activities

Consolidation:Still fragmented and new M&A activities are expected

• Ground Handling Market – Rationale for Consolidation

13

AirlinesNetwork Effect &

Economies of Scale

Competitive Advantage

Consolidation and development of

independent providers

Airports

Airport are moving away from operational control, focusing more on commercial activities

Low profits and rising cost pressures are resulting in focus on core business and outsourcing of GH activities.

Over the last 10 years several airlines

withdrawn from GH activites.

TP Sold , KL sold Cargo Services Centre, LH sold Globe Ground, AA sold WFSSR/LX sold SwissportBD sold ground handling activitiesAY sold parts of its handlingPAL plans to sell of catering and GH Serv.

Ground Handling

• Ground Handling Company Consolidations

14

TODAY

Budapest AGH Celebi AGI ASIG Boker

Menzies Odgen

Ground Star CSC Aero

Ground

Hudson

World Cargo

DynairSwissPort

Aviapartner

Globe Ground Global Servisai

r

Aer Lingus Handlin

g

France Handlin

g

Sabena

Fraport

Tristar

SEN WFSFrapor

t

FCCAeroporto di Roma

Globalia SPdH SFS

BBA

SWISSPORT

AVIA PARTNER

SERVISAIR

WFS

GROUNDFORCE

FCC

MENZIES

Independent handlers are not strong enough to facilitate large scale the consolidation process Several owners of independent handers are considering to dispose their

airport service It is expected to see even more consolidations in the next decade

PAST

Celebi

• Leading Ground Handlers – Turnover vs Profit

15

The difference among service providers is not too wide in terms of profitability contrary to turnover and

stations network

Turnover (€mio, 2010) (€mio, 2010) EBITDA

Locations

Turnover

• Air Traffic Figures in India- Past/Today/Future

16

In the past, domestic traffic has been the main driver for the development of aviation in India as well as it will be in the future

CAGR 10,6 %CAGR 9,8 %

• Air Transport Figures in India- Past/Today/Future

17

In the last 5 years, Indian airports experienced the drastic growth of the commercial air cargo served

Parallel to improving weight of Indian economy among the world trade, the growth in air freight can be over the expectation which still represents a strong growth

• Ground Handling & Cargo Handling in India

SRINAGAR

AMRITSAR

DELHIJAIPUR

AHMEDABAD

NAGPUR

MUMBAI

GOA

PORT BLAIR

HYDERABAD

KOLKATA

CHENNAIBENGALURU

CALICUT

COCHI

THIRUVANNA.

GUWAHATI

International Airports- governmentInternational Airports-private

Custom Airports - government

Large Domestic Airports - private

DELHI Handlers: Celebi, BWFS, Air India/SATS, CambataTraffic : 30 mio pax, 700k ton cargo

MUMBAI Handlers: Çelebi/NASCambata,Air IndiaTraffic : 29 mio pax, 670k ton cargo

COCHINHandlers : BWFS ,Air India/SATSTraffic : 4 mio pax, 40k ton cargo

BANGALOREHandlers: Globe GroundAir India/SATSTraffic: 12 mio pax, 220k ton cargo

HYDERABADHandlers: Menzies, Air India/SATSTraffic: 8 mio pax, 80k ton cargo

Metro airports already allowed independent handlers to provide ground handling works at respective airports

However, self handling activity of domestic airlines occupies substantial part of ground handling works at most of the metro airports

CHENNAIHandlers: Menzies, Air India/SATSTraffic: 12 mio pax, 390k ton cargo

KOLKATAHandlers: Bhadra, Air IndiaTraffic: 9 mio pax, 130k ton cargo

• Ground Handling & Cargo in India – Rationale for the privatisation of the

services

19

Proven fact from the experiences of EU access of independent/eligible GH companies and limiting the

number of self handlers increases the quality & safety at airports, decrease the costs and eliminate the congestion

New EU Directive proposalSelf handling airlines should not outsource their manpower :

outsource entire services to eligible handlers or establish their own organization

World trend Share of independent GH service provider

& Air Cargo Warehouse increases

All airports should privatise their GH services&

Self handling should diminish at airports in India

Increasing capacity needs can only be fullfilled with the help of professional GH services

with international service levels

• Celebi Aviation Holding in India

20

Though Celebi’s has short history in India, its activities are expanding and it is expected that India becomes the main base of its aviation related activities in the near future

As of today, India is the largest location of the group in terms of employed staff

Çelebi has already invested 65 million USD for ground handling and air cargo warehouse activities in India and total investment will be some 100 mio USD in 2 years time

65%14%

21%

Turnover - Breakdown by Country (2010)

Turkey Europe India

39%

54%

7%

Employment – Breakdown by Country (2010)

• Celebi Aviation Holding in India – Future Positioning

21

Çelebi intends to intensify its presence and activities both in ground handling and air cargo warehousing services in India. In this respect, it is targeting

To provide ground handling works at all metro airports in the medium term

To provide ground handling works at international airports of the country which in total covers at least 95% of the international passenger traffic in the long run

To prode warehousing activities at least at four international airports To become the leading independent airport service providers of the

country

2010 2020

6,000

15,000Number of

Staff

2010 2020

2

17Number of

Stations

2010 2020

400

1.500Cargo

Volume (k ton)

Teşekkürler...

Thank You....