OnAir. Briefing. London 27 September 2007

Transcription

1 OnAir Briefing London 27 September 2007

2 Agenda Corporate Information Airline & Passenger Benefits Market Overview Entry in to Service/Commercial Situation 2

3 OnAir corporate overview OnAir business: In-flight passenger communications service Develop, sell and operate in-flight communication services that supports voice, SMS and services over passengers own handsets (mobile phones, BlackBerry, etc) Passengers will be charged international roaming rates as set by and billed by their existing operator Develop and sell internet services Member of GSM Association OnAir September

4 OnAir shareholding structure SITA NV Airbus Various Shareholders c. 65% c. 30% c. 5% OnAir NV (Dutch Registered Company) SITA NV - Community service provider owned by members of air travel industry Airbus - Leading aircraft manufacturer Shareholder strength integral to OnAir success Committed funding of more than US$100M 4

5 OnAir service architecture SwiftBroadband Ground station OnAir point of presence OnAir GSM ground OnAir business systems Repository 5

6 Commercial commitments Fleet deployments: A320 line & retrofit (fleet wide) B737 retrofit (fleet wide) A320 family line & retrofit + B737 retrofit (fleet wide) A330/A340/A350/A380 (fleet wide) linefit Undisclosed Customer X A320 line & retrofit (fleet wide) A330 line & retrofit (fleet wide) Trials leading to fleet deployment: A318 linefit A320 retrofit A319 retrofit 6

7 Why OnAir is leading the market Certification (alone) Two shareholders from air transport community Superior product performance (SBB) Enhanced capacity/ simultaneous calls Lower communication costs Affordable GPRS access Open integration solution Service from 3000 metres 7

8 Airline perspective Type of airline Low-cost carrier Large traditional carrier Medium carrier Market leader Business jets 54% of business travellers would turn their phone on to be reachable Ancillary revenue Competition with low-cost carriers for business traveller market through service differentiation Stay ahead of the game Must have Driver Improved service to business travellers Competitiveness 40% of Business Class travellers departing from LHR carry a BlackBerry-type device 8

9 Airline perspective Ancillary revenue Up to 105,000 per aircraft per annum from basic usage Passengers mobile phones used as inflight entertainment terminals on single-aisle aircraft (games, gambling, quizzes etc.) Additional revenue from content provision (premium) Additional revenue from increased communications 9

10 Airline perspective Improved service to passengers Travel information sent to passenger by text message (e.g. departing & connecting gates; baggage carrousel number) Passenger information sent to crew (e.g. passenger preferences) Passenger surveys over mobile phone Purchase of duty-free items & onboard refreshments through premium SMS (reduced risk of fraud, convenience) Customer Relationship Management Targeted Advertising Payment by SMS 10

11 The crew is in control Three service modes 1. Voice, text messages, s 2. Text messages and s only 3. System off The no mobile sign lets passengers know when they can use their phones 11

12 Market demand OnAir has conducted extensive market research which shows that: Passengers travelling on business Up to 40% carry a BlackBerry-type device 69% would like to turn their device on 93% of those would like to send & receive s Voice calls 55 % would like to turn their phone on Of those 94% would accept incoming calls they want to be reachable 82% would make calls & send s 12

13 Pricing & usage Wholesale rates charged by one mobile operator to another for handling communications of the other operator s visiting subscribers. OnAir s inter-operator tariffs (IOTs) and usage Service type (/flight/100 passengers) Outgoing calls IOT Wholesale Pricing 1.80/min Sample Usage 60 mins Incoming calls Outgoing SMS GPRS traffic 1.20/min 0.50/sms 15.00/MB 40 mins 50 1 MB 13

14 Retail roaming market (Europe) Rates exclude VAT SMS Outgoing calls/messages Desired OnAir positioning Satellite services up to 5.50 Exotic countries Eastern Europe & North America Within Western Europe Far countries Calls from abroad to home in Western Europe

15 Operational performance Traditional carrier: Seating capacity 144 Load factor 70% Split business/leisure 50%/50% Daily service flights 5.5 Out-of-service days per year 14 Low cost carrier: Seating capacity 156 Load factor 80% Split business/leisure 30%/70% Daily service flights 6 Out-of-service days per year 5-6 Note: Only OnAir can offer service starting at 3000 meters = greater revenue potential 15

16 Airline revenue projections Annual aircraft revenue Airline revenue share (10-20%) Payback* Full Service Model 528, , years No Voice Model 222,000 44,000 5 years Based on airborne cost of circa 225,000 Sample Benefits: Sample LCC Airline with 100 A320 aircraft Revenue generation potential of Euro 10M per year Model possible without voice component but payback is longer 16

17 Flow of funds Ground Infrastructure Mobile Network Operators (MNO) (1) Receives passenger usage data Monaco Telecom (bills on behalf of OnAir) (2) Bills passenger MNO via roaming agreements (3) MNO pay OnAir OnAir (4) OnAir pays MTI/Inmarsat (5) Revenue share (6) OnAir corporate 17

18 Target markets Addressable Market, with 3 rd Satellite & ALNAv2 from mid 2008 (red = no planned reach) N America Europe Middle East & North Africa India China Japan, S Korea SE Asia South / Central America Aus / Pac Requires CDMA / GSM 1900 Mhz connectivity via BTS (Not planned) SBB satellite Target markets of Europe, MEA, Asia and South America 18

19 Addressable market single aisle A320/B737 market OnAir objective Target market (EU, ME, APAC) Not targeted (RoW) Market Definition Aircraft Percentage Total market A320s/B737s in operation & on order 13, % Target market EU, ME, APAC 6,312 48% of total OnAir objective 1, % of total 20% of target 19

20 Addressable market single aisle On order in APAC, 1214 Aircraft # s In operation in EU, 2560 In operation in APAC, 1413 On order in ME, 77 OnAir objectives In operation in ME, 104 Europe: 762/3,504= 21% ME & APAC: 500/2,808 = 18% On order in EU, 944 Aircraft known orders in target market (up to Jul 07): 2,235 aircraft Aircraft needed in target market : 4,140 aircraft 20

21 Long Range GSM plus Internet Access through laptop Either wired (RJ-45) or wireless ( b) Support of Internet-enabled applications VPN clients Web browsers Access through seatback A Web browsing commodity service Access to files relies on applications supported by the IFE e.g. Adobe Acrobat MS Office Passenger payment by major credit cards Currently up to two volume-based price plans to be agreed with airline Available over SwiftBroadband only - today 21

22 Long-haul usage profile Usage C A Voice Off mode Take-off 1 2 Hour before main meal Main meal B Light meal Time (10-hour flight) Landing On a typical long-haul flight, Passengers are likely to use the voice service over a period of 3 hours (see above flight profile) While SMS can easily be used at any time between take-off & landing, it is likely to be used mostly over the same 3 hours because of The nature of the messages ( Will be landing, Flight delayed etc.) The closeness of the time zone of the other party 22

23 The new long-range cabin SwiftBroadband will introduce real-time IP connectivity to the aircraft, opening the door to the introduction of new applications that improve: Operational efficiency (cockpit & crew) Customer service Passenger entertainment Passenger & crew communications OnAir will provide its own communications applications but also support third-party applications, and enable the airline to charge third-parties for the use of the bandwidth. 23

24 Link OnAir OnAir-enabled Customer service Telemedicine Baggage tracing Inventory control Credit card authorization SMS micro-payments Third-party applications OnAir-provided Communications Mobile telephony Smartphones & PDA VPN, Internet, Webmail, Webchat OnAir applications Link OnAir SBB service OnAir-enabled Operational efficiency Electronic flight bag Crew Inventory control Third-party applications OnAir-enabled Entertainment Embedded Internet access for IFE applications, to update entertainment content in real time Onboard online shopping Third-party applications 24

25 Regulatory status in Europe = Secured = Expected to be secured within 1-6 months = Too early to make assessment target is 6 12 months 25

26 Roaming status 200+ agreements = Secured roaming agreements with MNOs that have a total of 50%+ subscriber share = Secured roaming agreements with MNOs that have a total of 25%+ subscriber share = Roaming agreement in signing process 26

27 Entry into service - Key milestones Aviation regulatory OnAir ahead in certification EASA approval of installations on A318 EASA approval on B737 National Authorization to Operate In progress In progress Telecom regulatory CEPT framework providing framework for in-flight mobile telephony across Europe Country of Registration of aircraft and overfly In progress rights (access to GSM1800 and operational approval) Product conformance (R&TTE and ETSI) In progress 27

28 Entry into service - key dates Air France trial Dec 2007 Ryanair 1 st 25 aircraft Q Bmi & TAP trials Q Undisclosed European LCC mid 2008 AirAsia mid 2008 Shenzhen mid 2008 Kingfisher Q AirAsia X Q

29 Commercial commitments Projected Deployment 1,200 Targets Customer negotiations started A ir c r a f t 1, Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 29

30 OnAir leads market 660+ aircraft representing up to $2 Bn in revenue potential Both Airbus & Boeing aircraft Long range & short range Voice & data 30

31 Conclusion OnAir launch of service imminent Service launch lead by early adopter (LCC market) Expect passenger demand to lead to full market penetration Financially attractive to airlines OnAir uniquely positioned to remain market leader 31

32 Disclaimer All rights reserved. Any use, republication or redistribution of content in this document is expressly prohibited without the prior written consent of OnAir. Whilst we endeavour to ensure that the information contained herein is correct, we do not warrant its completeness or accuracy; nor do we not commit to ensuring that the services and/or pricing remains current and available. To the maximum extent permitted by applicable law we exclude all representations, warranties and conditions (including, without limitation, the conditions implied by law of satisfactory quality, fitness for purpose and the use of reasonable care and skill). Our liability is limited and excluded to the maximum extent permitted under applicable law. We will not be liable for any direct, indirect or consequential loss or damage arising in connection with this document, whether arising in tort, contract, or otherwise including, without limitation, any loss of profit, contracts, business, goodwill, data, income, revenue or anticipated savings. However, nothing in this disclaimer shall exclude or limit our liability for fraud, for death or personal injury caused by our negligence, or for any other liability which cannot be excluded or limited under applicable law. 32