11

22

AgendaAgenda

About Mauritius and Air MauritiusAbout Mauritius and Air Mauritius

Cargo Business in PerspectiveCargo Business in Perspective

Passengers and Cargo Businesses are they Passengers and Cargo Businesses are they

Rivals, Brothers or Cousins Rivals, Brothers or Cousins

Cargo Business at Air MauritiusCargo Business at Air Mauritius

ConclusionConclusion

33

About Mauritius…

44

Dot in Indian OceanDot in Indian Ocean

Dakar

Mauritius

55Visit us @ Visit us @

www.airmauritius.comwww.airmauritius.com

66Republic of Mauritius - Island Republic of Mauritius - Island NationNation

Mission of National Carrier Air Links

– Geographical Position - A strategic Hub in Indian Ocean

– Assist in developing International Trade and links Sustain Tourism Industry

– Promote Up-market and Selective Tourism Export/Import of Goods Airline to run on a Commercially Viable Basis

– Annual average air traffic growth of 9% since 1980 Preserve Environment/Ecology of the Island

Aligned Interest : Country and Airline

77

Republic of Mauritius – Fact Sheet Main Pillars of the Economy

Agricultural mainly Sugar, Tourism Industry, Manufacturing Sector mainly

Textiles and Garments, Financial Services, Information Technology and

Services

Moving to Service Economy

New emerging pillars – ICT, Seafood Hub and Offshore development

Main Exports : Clothing & Textiles , Sugar, Flowers, etc.

Main Imports : Manufactured Goods, Capital Equipment, Foodstuffs, petroleum products,

etc.

Member of the SADC and COMESA Promote bilateral and regional trade

88

Past Successes Do Not Guarantee Future ones

99Competitive EnvironmentCompetitive Environment

Mergers & Acquisition

DeregulationLiberalisation

Privatisation

Increased Competition

RegulatoryBarriers

Globalisation

Ecological PressureIncreasing costs Worldwide

Economic Changes

eBusiness

Increased Capacity

New Entrants

More sophisticated &Knowledgeable customers

Global Alliances

1010Radical Change to adapt in new aviation landscape arising from technological

innovations and new policies

Streamlining Business Processes through BPR New cost- efficient fleet , adaptable and responsive

organisation structure, cost effectiveness, yield management E business and Technology adoption

1111

Competition and New PolicyCompetition and New Policy

Liberalisation Waves a worldwide phenomenon getting to our shores

More frequencies and bigger aircraft by existing operators:AF, BA, EK, SAA

New players with new business rules Corsair LTU Comair Air Europe Lauda Air Virgin Condor

1212

Resistance to changeResistance to change

Technical/Functional

Security / Comfort Zone

1313

About About Air MauritiusAir Mauritius

1414

Air Mauritius VisionAir Mauritius Vision

To Be a To Be a

World Class AirlineWorld Class Airline

1515Air MauritiusAir Mauritius

1,156,820 Passengers35,666 Tons Cargo

Euro 416.6 million Turnover

Staff Force of 2800

28 Destinations 4 continents

About 100 weekly frequencies

Fleet of7 Wide-bodied + 2 A319 Aircraft

2 ATR 42 + 1ATR 72 Aircraft3 Helicopters

2005/2006

International Airline operating out of Mauritius

1616

5 Airbus A340-3005 Airbus A340-300

2 Boeing B767 ER2 Boeing B767 ER

2 Airbus A319-1002 Airbus A319-100

2 ATR2 ATR

3 Bell Jet Rangers3 Bell Jet Rangers

FleetFleet

1 DC8-63 Freighter Aircraft 1 DC8-63 Freighter Aircraft (leased)(leased)

1717

New Fleet AcquisitionNew Fleet Acquisition

2 A340-300E in Nov/Dec 2006

2 A330 (One in 2007/8 and the other in 2009)

1818

Route NetworkRoute Network

1919

Cargo Business in Perspective

2020

Economic Growth as driver of Air Cargo Economic Growth as driver of Air Cargo GrowthGrowth

•Strong correlation between GDP evolution and Air Cargo Growth during the past decades

Source: Boeing World Cargo Forecast 2006-2007

2121

Opportunities & Constraints Opportunities & Constraints

for MK Cargo Operationsfor MK Cargo Operations

Opportunities Constraints

World and National GDP

Growth

Export Promotion

New

Products Freighter Operations

Market Intelligence

Renegotiated SPAs

Agents Eductours

Time Ddefinite Products ‘Just-in- time’

concepts

Government Initiatives

New Trade Relationships

& AGOA

Trade Quotas & Restrictions

Currency Fluctuations

Strikes

Renegotiated Bilaterals

Industry delocalisation

Open Skies Policy

Competition

Directional Imbalances

Aircraft Type & Configuration

2222PassengerPassenger vs. Freight Growthvs. Freight Growth

  AAGR 2005-09

Passenger Freight

All International Routes 5.6% 6.3%

North Atlantic 5.3% 4.6%

Trans Pacific 5.8% 6.0%

Within Europe 5.1% 4.1%

Within Asia Pacific 6.8% 8.5%

Europe to Asia Pacific 5.9% 5.7%

Europe to Africa 5.7% 4.5%

Middle East to Europe 6.6% 5.1%

Middle East to Asia Pacific 6.7% 8.8%

N America to Latin America 4.6% 3.7%

Within Latin America 4.2% 5.0%Source :IATA Passenger and Freight Forecast 2005-2009

Higher Growth for Freight as compared to Passenger!

2323

Expected Growth for 2006Expected Growth for 2006

World Economy –

3.1%

Passenger Travel –

4.9%

FREIGHT –

6.1%(source : Boeing 2006 Market Outlook)

Higher Predicted Growth in Freight compared to PAX business!

2424

Type of ProductsType of Products Growth of air-freight due to time sensitive products

2525

World Freighter FleetWorld Freighter Fleet

•Number of freighters expected to exceed 3,500 by 2023, representing an annual growth of 4.3% p.a.

Source: Airbus Global Market Forecast 2004-2023

2626Conversions of aircraft to cater for Conversions of aircraft to cater for

increasing freight demandincreasing freight demand

According to Airbus, higher rate of conversion for regional freighter fleets to cater for the rapidly growing Asian Market.

2727

Relationship Pax and Cargo

2828Similarities & differences between PAX

and CargoPAX CARGO

•Bilateral talks

•Airline to Airline Agreements

•Fleet Planning

•Route Deployment/Profitability

•Bilateral talks

•Airline to Airline Agreements

•Fleet Planning

•Route Deployment/Profitability

•Distribution Channels:

Tour Operators – Travel Agents – PAX

•Logistics :

Check-in counter

•Product definition:

Travel Packages

•Development Strategy:

Stop over

•Distribution Channels:

Shipper – Freight Forwarder – Consignee

Emergence of Consolidators!

•Logistics:

Warehousing

•Product definition:

Destination + Connection + Rates +Timings

•Development Strategy:Transshipments

2929

PAX vs Cargo - TechnologyPAX CARGO

•Inventory

•Booking Engine

•Fares

•Decision Support System

•Yield Management

•Technology E business

•Inventory

•Booking Engine

•Fares

•Decision Support System

•Yield Management

•Customer self-service

Flight and Booking status prior to uplift

Online Sales – B2C

•Departure Control System

•Customer self-service

Track and trace facilities to know shipment status

Online Sales – B2B

•Handling and Warehousing System

•ULD Management

3030AIR MAURITIUS IN THE AIR MAURITIUS IN THE CARGO VALUE CHAINCARGO VALUE CHAIN

SHIPPER FORWARDER CARRIERGROUND

HANDLINGFORWARDERHANDLING

CUSTOMS

CONSIGNEE

OTH

ER

TR

AN

SPO

RT

MEA

NS

MULTIPLE CARRIER

HANDLING

SHIPPER FORWARDER CARRIERGROUND

HANDLING FORWARDERHANDLING

CUSTOMS

CONSIGNEE

OTH

ER

TR

AN

SP

OR

TM

EA

NS

MULTIPLE CARRIER

HANDLING

3131

Sources of Rivalry

Route definition

Days of operations and Timing of operations

Capacity deployment

Offloading priority

Type of Aircraft

Distribution/ Choice of GSA

Funds for development

Resources

Alliances and Partnerships

3232

Sources of Partnership Significantly contributes to the Socio economic development of a Country

Tourism

Manufacturing Services

Transhipment

Bilateral Talks/ Airline to airline talks/ Holistic approach

Contribution to overall Route /Network Profitability

operations

Fleet investment

Economies of scale for Handling cost

Treated on Basis of Marginal Costing for mixed flights

Increase Asset Utilisation by operating Pax aircraft for freight only on short sectors

Compensating for seasonality

Security

3333

Summary

Cargo is a significant contributor to the Overall Aviation Industry Fleet development Aircraft Manufacturers New and conversions Handling Agents Airports Airlines

Supports the Passenger business both in terms of Logistics and Economic Justification

Competes with the Passenger Business for resources and often differs in Schedules, route planning and choice of Aircraft

Has a roadmap of development which can be mainly based on Mixed aircraft but also dedicated Freighters

Has its own needs of People skills Procedures , Security needs, Yield management process and Logistics facilities

3434

Cargo Business at Cargo Business at Air MauritiusAir Mauritius

3535Air MauritiusAir Mauritius

Cargo ObjectiveCargo Objective

TO MAKE CARGO BUSINESS A SIGNIFICANT

CONTRIBUTOR TOWARDS THE PROFITABILITY

OF AIR MAURITIUS BY ENSURING OPTIMUM USE

OF CARGO CAPACITY AND PROVIDING HIGHLY

RELIABLE, INNOVATIVE & COST-EFFECTIVE

SOLUTIONS TO OUR CUSTOMERS

3636Strategic IntentsStrategic Intents To optimise the use of belly capacity throughout the network as

established by passenger operations & complement with freighter operations To have a Revenue Management process optimising capacity through a dynamic

pricing policy based on demand To closely monitor Sales performance/Route contribution and take proactive

actions To develop Mauritius Cargo Hub through regional freighter operations

To build loyalty with all stakeholders of the industry Develop Incentive mechanisms to promote both volume sales and growth Gear the organisation structure to provide personalised services to main

distribution channels Develop an effective and efficient Customer Relationship Management for

personalised services to shippers and consignees Develop Partner Programs with stakeholders

To Streamline and improve processes ie Quality

3737

Strategic IntentsStrategic Intents To develop new products attractive to the customers

Time-definite services Deferred services for price-sensitive customers Multi-modal services and Partner Programs to extend our reach To develop Product specific expertise

To develop a flexible Organisation Structure that promotes accountability, collaboration and teamwork which fosters decision-making through the empowerment and continuous development of staff

Leverage on modern Technologies to develop systems & tools that will enhance processes thereby bringing us closer to the market and be more responsive in meeting customers’ needs.

Information management

To Develop Modern Logistics Infrastructure

3838

Evolution of Cargo Business at MKEvolution of Cargo Business at MK

CARGO REPRESENTS 13% OF MK’s TURNOVERCARGO REPRESENTS 13% OF MK’s TURNOVER

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

2000-1 2001-2 2002-3 2003-4 2004-5 2005-6

Financial Year

Rev

enu

e (M

UR

m)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Wei

gh

t (T

on

s)

1,144

1,448

1,185

1,340

1,551

1,60828,824 28,596

35,706

31,290

34,836 36,717

Weight (Tons)

Revenue (MUR m)

3939

• CARGO CONTRIBUTIONCARGO CONTRIBUTION

– Cargo represents 13% of the company’s turnover & our

operations are primarily based on belly-hold passenger

aircraft though increasing importance of freighter

operations.

Cargo Business @ Air MauritiusCargo Business @ Air Mauritius

4040

Cargo Revenue BreakdownCargo Revenue Breakdown

20.00

25.00

30.00

35.00

40.00

45.00

50.00

55.00

60.00

Re

ve

nu

e (

EU

R m

)

02/03  03/04  04/05  05/06 

Freight Mail and Courier Due Carrier

22%

4141Cargo Revenue inc Surcharges on Cargo Revenue inc Surcharges on Freighter and Pax flights – Eur MFreighter and Pax flights – Eur M

Note: Cargo revenue includes Freight Revenue, Mail and Courier and Surcharges

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2002-3 2003-4 2004-5 2005-6

Eu

r -

M

Revenue on Freighter - Eur M Revenue on Passenger flight - Eur M

4242

Fleet Cargo CapacityFleet Cargo Capacity

    Cargo Capacity

Fleet No of PAX Pallets Containers Bulk Vol. Wgt

A319 120 - - √ 1,000

B767 175 3 2 √ 9,000

A340 294 6 2 √ 12,000

A340E 313 6 2 √ 15,000

DC8 - 18 - √ 40,000

4343Air Mauritius - Cargo Worldwide Air Mauritius - Cargo Worldwide OfficesOffices

Dakar

US/CanadaUS/CanadaNo of Offices: 2

Africa/Africa/Indian Ocean Is.Indian Ocean Is.

No of offices: 7

Asia/Middle EastAsia/Middle EastNo of offices:15

AustraliaAustraliaNo of offices: 3

EuropeEuropeNo of offices: 25

Worldwide Summary:No of offices: 52

Mauritius

4444

HUB STRATEGYHUB STRATEGY

Dakar

Cape Town

EuropeEurope

Madagascar

Durban

Johannesburg

Nairobi

DubaiDubai IndiaIndia Far EastFar East

Whatever Your Direction…Whatever Your Direction…

Mauritius is the HubMauritius is the Hub

Australia3 Flights/Week

Capacity: 33Tons

Reunion Island10 Flights/Week

Capacity: 120 Tons

South Africa12 Flights/Week

Capacity: 80 Tons

Melbourne

PerthReunion

Madagascar8 Flights/Week

Capacity: 31 Tons

India9 Flights/Week

Capacity: 110Tons

Europe24 Flights/Week

Capacity: 305 Tons

MauritiusMauritius

4545Enabling Systems for Cargo Enabling Systems for Cargo Business Business

at Air Mauritiusat Air Mauritius To optimise our aircraft cargo capacity…

Implemented a Cargo Reservation System across the Air Mauritius network.

To provide better customer service… Integrated to a number of Cargo Community Systems

worldwide. To better control our revenue processes…

Developed a Cargo Revenue Accounting System. To assist decision making processes…

Implemented a Decision Support System.

4646

MK Cargo ChallengesMK Cargo Challenges

• NEW MASTER AIR TERMINAL PLANNEW MASTER AIR TERMINAL PLAN

– Creation of an AIR CARGO LOGISTICS CENTRE

– Increased Capacity for DRY WAREHOUSING SYSTEM

– Centralised COURIER CENTRE

– NEW COLD ROOM Facilities with Extra Space

– Permanent DISPLAY CENTRE of Products

4747

Summary

Cargo is a significant contributor to the Overall Aviation Industry Fleet development Aircraft Manufacturers New and conversions Handling Agents Airports Airlines

Supports the Passenger business both in terms of Logistics and Economic Justification

Competes with the Passenger Business for resources and often differs in Schedules, route planning and choice of Aircraft

Has a roadmap of development which can be mainly based on Mixed aircraft but also dedicated Freighters

Has its own needs of People skills Procedures , Security needs, Yield management process and Logistics facilities

4848

Cargo has indeed become a major player of the Aviation Industry --- Dominant Cousin---

4949