Good Afternoon

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Good Afternoon!

• John H. Jackson
• Senior V. P Marketing
• AvGroup, Inc
• Specialist in Latin American Aviation since 1988.
• www.avgroupinc.com

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Latin American Low Cost Carriers!

• A success in The Making!

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Whats the Difference!

• Full service
• Multiple fleet Types
• Primary airports
• 8.3 hr a/c utilisation
• 30 interline
• Full service
• 80 agent sales
• 70 paper tickets
• IATA
• 736 pax per employee

• Low cost
• Single a/c type
• Secondary airports
• 10.7 hr a/c utilisation
• Point to point
• No freebies
• Limited agents sales
• Mostly paperless
• No IATA
• 5,500 pax per employee

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Low Cost Carriers
- Young - Enthusiastic - Motivated - Nothing
is Impossible
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Low Cost Carriers Advantages

• Point to point routes
• Unified fleet
• High aircraft, crew and personnel utilization
• Low unit costs
• No intermediaries
• New direct channels for sells (internet)
• Secondary airport use

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Low Cost Carriers Disadvantages

• Dependant on
• High volumes
• Substantial growth
• Slots at major airports
• Salary Developments
• Avoidance of Unions
• Ability to stay Low cost over time

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The Growing LCC Network
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Traditional Flag Carriers
- Flat Life Cycle - Mature Staff High Average
Age - Old fashioned union agreements
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Traditional Flag Carriers Advantages

• Well known and respected brands
• Large Customer Base Strong Loyalty Programs
• Experienced management and staff
• Developed network (connections)
• Developed technology
• Developed Revenue, Capacity and Yield Management
  and Distribution Systems
• Grandfather rights for slots
• Fleet capacity

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Traditional Flag carriers Disadvantages

• Diversified company structure
• High Responsibility towards the society
• Complicated network operations need for feed
• Complicated price structure
• Mixed fleet with low seating density
• Aircraft, crew and personnel low utilization
• Diversified products
• Too high unit costs

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Latin America Caribbean...

• 5 worldwide traffic
• 39 states
• 574 airports
• 100 airports moving 85 of traffic
• In which over 100 airlines operate
• Transporting over 100 million passengers

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LCCs in Latin America

• Slower growth than other regions
• Two major LCCs in Latam
• GOL
• UAIR
• Low Cost Full Service?
• TACA
• LAN

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Industry in Crisis

• Worldwide airlines that have disappeared
• Panam - Swissair
• Laker - Airways
• Eastern - Braniff
• Sabena
• In Chapter 11 or similar
• United - US Airways
• Avianca - Alitalia
• SW - VASP
• ATA - Aerocontinente
• Azteca

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Industry in Crisis

• Latam airlines that have disappeared
• Aces (Colombia) - AeroPeru (Peru)
• Transbrasil (Brazil) - LAPA (Argentina)
• Cruzeiro do Sul (Brazil) - Taesa (México)
• Avant (Chile) - National (Chile)
• VIASA (Venezuela) - Saeta (Ecuador)
• SAN (Ecuador) - Avensa (Venezuela)
• Ecuatoriana de Aviación - Faucett (Peru)
• LAP (Paraguay)

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Our region presents LCC opportunities

• In theory, our region is low cost due to
• Low level of salaries
• Low costs of living
• Traffic growth
• Low penetration of air transport

But unfortunately.
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There is Lack of

• Long term policies that stimulate a healthy and
  sustained growth of Air Transport.
• Governmental understanding of the importance of
  Air Transport for Regional economies as an engine
  of Regional / Worldwide Integration.
• Understanding of the need for a low cost industry
  by our main partners (airports, ATS providers,
  suppliers, etc.)
• Incentives to foreign investment due to high
  protectionism to localswhich results in less
  competitiveness for the airline industry.
• Transparency

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In our opinion!

• The origin of Low Cost carriers has been the
  result of the critical situation faced by the
  airline industry worldwide.
• Our industry is going through a strong
  restructuring due to the adverse business
  environment.
• Airlines are being forced to migrate to a lower
  cost structure.
• The impact!

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Thank you for your very kind attention!!!