#ATPCOelevate

Kevin Zhang, Travelsky Limited

Development and Trends of Airline Retailing in China

01 Market Change and New Opportunity

Elevate 2019Note: The s tat is t ics don' t inc lude the fore ign a i r l ines

Source :CAAC

Gro

wth

Trend

of

Air Passen

ger Traffic in

Ch

ina

Air Passenger Traffic in China is still growing, but Growth Rate slows down

9.70% 10.30% 13.70%

18.80%

33.30%

22.70%

7.40%

10.00%

6.80%9.50%8.80%

10.60% 10.10% 9.40%10.70%

13.70%15.00%

11.90%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

0

100

200

300

400

500

600

700

2011 2012 2013 2014 2015 2016 2017 2018 2Q 2019

Number of Passengers Growth Rate （%）Domestic Routes Growth Rate （%）International Routes

Changes in China tourism market with the increase of GDP per capita 2001-2018 (Unit : US$)

Total Tourism Revenue in China 2001-2018 (Unit: Trillion RMB)

0.50.560.490.680.770.891.11.161.291.57

2.252.59

2.953.73

4.134.69

5.4

0 2 4 6

In 2011 , When GDP per capi ta was more than 5000 US dol lars , Ch ina became a mature le isure and vacat ion market .

$ 5000

In 2008 , When GDP per capi ta was more than $3000 , le isure tour ism is booming

.

$3000

In 2001 , When GDP per capi ta was more than $1000 , tour ism market entered a rap id

development era .$ 1000

In 2006 , When GDP per capi ta was more than $2 ,000 , le isure tour ism took of f

.

$ 2000

GDP Per capi ta：64520 .7RMB（About $9509 .8753）

$9509 2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

5.97

From 【Business Travel Market】 to 【Leisure Travel Market】

Source: National Bureau of Statistics

Consumers'

Demand

Became

Diversified

Consumers

Prefer Shopping

on the Mobile

Device

Consumers

Developed Online

Consumption Habit

Consumers'

Requirements for

Product

Consistency

Elevate 2019

From 【Stone Age】 to 【 Internet Age】

02 Airlines' Strategy and Change

All Domain of Travel All Touch Points of Passenger

Airlines' Strategy

All Domain of Airline

All Domain ofTransportation

All Domain ofTravel

Booking

Pre-Trip OutBound On Board

Transfer Return Post-Jounrney

ShoppingDream&Planning

Airlines' Change: Promote Airline Direct Channel

Source : Trave lSky

China Air Market Share by Channel

Elevate 2019

【Airlines' Change】

Expand New Channels

Social Media

WeChatMini Program

E-commerce Platform

FliggyFlagship Store

List of Flagship Store in Alibaba's Fliggy

Flagship Store Entrance of China Eastern Airline

NDC

Airline: China Southern Airlines is certified by IATA NDC Level 4 certification

Elevate 2019

IT Provider: TravelSky is certified by IATA NDC Level 4 certification - IT Provider and Aggregatorand working with OpenJaw on Cathay Pacific'sNDC project

Agent: The six big Chinese OTAs/wholesalers are taking NDC contents from both Chinese and foreign airlines

Elevate 2019

【Airlines' Change】

Sell New Products

01

02

03

Branded Fares

Optional Services

Air-Rail Intermodality

Branded Fares

Optional Services

In 2018, Seventeen Domestic Airlines

Five kinds of Optional Services

Cabin Upgrade,17.38%

Baggage,

46.28%

Seat Assignment,36.33%

Other, 1%

Cabin Upgrade

Baggage

Seat Assignment

Other

Air-Rail Intermodality

我们正处在【数字化转型】的十字路口…

We are at the Crossroads of the Airline Retailing Revolution…

#ATPCOelevate