ACI International Air Service Program December 6, 2012Washington DC

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Hainan Airlines Overview

Fleet

Codeshare and Interline Partners

Service and Product

Frequent Flyer Program

Honors and Awards

North American Operations

HNA Group Overview

Hainan Airlines

Market Trends

Going Forward – Challenges and Opportunities2

Total Revenue : 100 Billion RMB (approx. 15.4 Billion USD)Employees: around : 110,000

1993Founding of Hainan Airlines

2011Total Assets: 260 Billion RMB(approx. 41.3 Billion USD)

20078 Business Segments In HNA Group

2000Founding of HNA Group

HNA Group Overview

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HNA Group Overview

HNA Aviation Group

Business Segments

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Hainan Airlines— Fleet:115Leading Airline in HNA Group, International and domestic trunk lines

Capital Airlines— Fleet:25Charter flight, regional combined trunk and feeder routes

Deer Jet— Fleet:31Business charter Flight

Tianjin Airlines— Fleet:83Regional combined trunk and feeder routes

HNA Group Overview

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Hong Kong Airlines— Fleet:22Regional flights between Mainland China and Hong KongExpanding International routes

Hong Kong Express— Fleet:6Charter flights between Hong Kong and TaiwanRegular flights to Southeast Asia

Lucky Air— Fleet:17Regional combined trunk and feeder Routes

West Air— Fleet:9Regional Airlines, operate feeder routes

Yangtze River Express— Fleet:17Cargo Transportation

HNA Group Overview

Beijing Capital Helicopter:5Provide exclusive and customised helicopter tours

Aigle Azur:12Based in Orly Airport to operate regional and intl routes

Hong Kong Corporate Jet:9Business charter Flight based in HKG

Africa World Airlines:2Ghana LLC, operate regional routes

ACT Air:4Cargo Transportation in Turkey

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Key Figures of Hainan Airlines 2010 2011

Operating Revenue (billion, USD) 2.86 4.22

Aircraft 102 115

International Destinations 22 28

Domestic Destinations 62 62

Passenger Carried (million) 13.3 21.2

Load Factor 81.8% 87.6%

ASK (billion) 3.93 5.75

RASK(RMB) 0.436 0.502

13 countries, 19 destinations, 9 Operation Bases, 62 domestic destinations478 city pairs 350 flights per day, 70 flights per day in PEK connect 50 cities

9 Operation Bases 62 domestic destinations478 city pairs 350 flights per day

70 flights per day in PEK connect 50 cities 9

Seats NumberA/C Type

115 TotalNote: Update to 2012.04.16

F8/C60Y219 3 A340-600

F32/Y259 A330-3005

F36Y185 6 A330-200

F34/Y198 3 B767-300

F8/Y155 B737-80087

Y147 B737-7003

F8/Y137 4 B737-400

Y143、 147 14 B737-300

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A/C Type Numbers

A330-200 3

A330-300 3

B787 10

B737-800 52

Total 68

Fleet Orders by 2015

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Airline Partners

Hainan Airlines has 10 code-share partners

and 112 interline partners.

Fortune Wings Club was launched in 1999.Currently 10 million members mainly based in China.

Frequent Flyer Programs

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Major airline partners

Air Berlin, China Airlines……

Over 60 partners in eight different categoriesAirline, hotel, car rental, travel services, financial,

telecom, entertainment etc.

Frequent Flyer Programs

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Complimentary ground transfers via Mercedes Benzlimousines to and from Beijing Airport for First and Business class passengers.

Exclusive transfer lounge for connecting passengers in Beijing.

Air To Rail integrated booking service.

VIP Lounges which combine business, entertainment, leisure and catering functions in Beijing, Haikou - Xian and Urumqi.

180 degree first and business class seats.

Personal and thoughtful turndown service.

Advanced in-flight entertainment system.Newly-introduced tableware perfectly integrates Chinese culture with HNA features.

Improves special transportation service standards. “Care More”

Five-star service for passengers traveling with pets.

Designer Amenities.

HNA Style Products & Services

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Golden Eagle Cup, best safety record in Chinese airline industry, CAAC

Passenger Satisfaction Award in ten consecutive years, CAAC & CCAA

Best Airline in China in 2008, Global Traveler

Top Prize for Safety Record in 2009, BCIA

Skytrax 5 star

1. 60 Years 60 Brands in China,the only airline honored2. SKYTRAX 4 star

1. SKYTRAX 5-STAR Airlines in 2011 & 20122. Won the “Best Airlines in China ”and “Excellent Service Award” Awarded by SKYTRAX for consecutive 3 years3. Best Airline in China, Global Traveler – Twice4. Best Airline in China 2012, Premier Traveler

Honors and Awards

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North American Operations

Beijing - Seattle

Service started with Airbus A330 four times a week June 9, 2008

Current schedule varies between 4 times a week to daily,depending on season.

Beijing - Honolulu

Beijing - Chicago

Authorized to serve.

Authorized to serve.

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Market TrendsChinese are becoming world travelers.

In 2011, 70 million Chinese traveled abroad and spent $69B

By 2020, WTO predicts that China will be the world’s biggest destination AND source of visitors

Chinese visitors to the US in 2011 totaled1.1MM, up 36% from 2010, the highest increase of the top 25 countries, down from a 53% increase the year before.

Most Chinese travel in large groups.

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Market Trends

In 2010, 3MM Americans visited China vs. 2.5MM in 2009.

Forecast growth for Chinese visitors to US from 2012-2016 is274% according to the US Department of Commerce.

US visa issuance has been simplified, time reduced

By July 2012 US visas reached 1MM

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Market Trends

Chinese travel to the US exploded afterADS approval in 2007.

As of 2011, China is the 9th largestsource of visitors to the US

Flight POS ratio is shifting to China from the US.

Average spend of Chinese visitors is

Among the highest.

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Market TrendsTypes of Travelers

Pleasure Travel: 57% traveled on pleasure

Business Travel: 25%

VFR – Peaks in summer.

Students

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Business Travel

China’s economy has slowed in lockstep with Europe’s woes. GDP growth has slowed in Q1-Q2 to 8.1%, 7.6% respectively

Chinese authorities manage their economy through the global slowdown

Domestic business travel is increasing faster than international.

Key Points about Business TravelGBTA BTI™ Outlook - China.

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Business Travel

Chinese business travel willshow strong growth overthe next 6 quarters

Key Points about Business TravelGBTA BTI™ Outlook - China.

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Business Travel

China’s business travel market is only second to the US and will exceed $200 billion in 2013 vs. $173 billion In 2012

Key Points about Business TravelGBTA BTI™ Outlook - China.

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Business Travel

Capacity at China’s four largest airports(PEK, PVG, SHA, CAN) has doubledin the past 10 years.

Key Points about Business TravelGBTA BTI™ Outlook - China.

Second and third tier airports have Also doubled or tripled in capacity.

New airports being built in China(82 new, 101 enlarged 2011-15)

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Going Forward

US – China Aviation policy is still not “open skies”

Challenges

Slot / airport congestion problems in China and the US

Limited air route availability (CAAC “non-compete” policy)

Lack of TRWOV shifts some international traffic to Europe and other midpoints

Aircraft / airport range / performance limitations / crew rest

Fuel costs & pilot shortage

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Going Forward

Boeing predicts Chinese carriers will grow at an average annual rateof 8.9% over the next 20 years.

Opportunities

Secondary markets, CAAC policy changes?

New aircraft

Growth of Chinese traveling internationally and potential new visa agreement

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Thank You !

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