STATE OF AIR TRANSPORT

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2 A specialized agency of the United Nations, the International Civil Aviation Organization (ICAO) was created in 1944 to promote the safe and orderly development of international civil aviation throughout the world. It sets standards and regulations necessary for aviation safety, security, efficiency and regularity, as well as for aviation environmental protection. The Organization serves as the forum for cooperation in all fields of civil aviation among its 191 Member States. Preamble of the Convention on International Civil Aviation (Chicago Convention, 1944) WHEREAS the future development of international civil aviation can greatly help to create and preserve friendship and understanding among the nations and peoples of the world, yet its abuse can become a threat to the general security; and WHEREAS it is desirable to avoid friction and to promote that cooperation between nations and peoples upon which the peace of the world depends; THEREFORE, the undersigned governments having agreed on certain principles and arrangements in order that international civil aviation may be developed in a safe and orderly manner and that international air transport services may be established on the basis of equality of opportunity and operated soundly and economically; Have accordingly concluded this Convention to that end. Each Contracting State undertakes that its international airlines shall, in accordance with requirements laiddown by the Council, file with the Council traffic reports, cost statistics and financial statements showing among other things all receipts and the sources thereof. Article 67 of the Convention on International Civil Aviation signed at Chicago on 7 December , International Civil Aviation Organization Published in Montréal, Canada International Civil Aviation Organization 999 Robert-Bourassa Boulevard Montréal, Quebec, Canada H3C 5H7 Disclaimer: This report makes use of information, including economic and air transport related statistics, which is furnished to the International Civil Aviation Organization (ICAO) by third parties. All third party content was obtained from sources believed to be reliable and was accurately reproduced in the report at the time of printing. However, ICAO specifically does not make any warranties or representations as to the accuracy, completeness, or timeliness of such information and accepts no liability or responsibility arising from reliance upon or use of the same. The views expressed in this report do not necessarily reflect individual or collective opinions or official positions of ICAO Member States. 2...

3 F o r e w o r d In 2014, the total number of passengers carried on scheduled services rose to 3.3 billion, which is 5.5 per cent higher than in 2013, according to preliminary statistics compiled by ICAO. The number of departures reached 33 million globally in 2014, a 2.1 per cent increase compared to Passenger traffic, expressed in terms of total scheduled revenue passenger-kilometres performed (RPK), posted an increase of 5.8 per cent with approximately billion RPKs in Asia and Pacific remains the largest region with 31.4 per cent of the world traffic posting a 7.0 per cent growth in 2014, followed by Europe with 27.0 per cent of the world traffic and growth of 6.0 per cent over North America, which accounts for 25.0 per cent of the world traffic, grew at 3.0 per cent. The Middle East region once again recorded the highest growth rate of 11.3 per cent, representing 9.0 per cent of world traffic. Latin America and the Caribbean accounts for 5.0 per cent of world traffic and grew at 5.3 per cent. The remaining world traffic (2.0 per cent) was performed by airlines of the African region, with a growth of 0.8 per cent in International scheduled passenger traffic grew by 6.0 per cent in RPKs in 2014, up from the 5.7 per cent recorded in Europe increased by 5.9 per cent, and accounted for the largest share of international RPKs with 38.0 per cent. Asia and Pacific had the second largest share with 28.1 per cent, which grew by 5.8 per cent since The Middle East recorded the fastest growth with 11.5 per cent compared to 2013, while carriers in Africa experienced the slowest growth at 0.6 per cent. In terms of domestic scheduled air services, the world market grew by 5.6 per cent in North America, the world s largest domestic market with 44.0 per cent of the world domestic scheduled traffic, experienced 3.1 per cent growth in The Asia and Pacific region, which accounts for 38.0 per cent of the world domestic scheduled traffic, grew strongly by 8.4 per cent in 2014 mainly due to an increase of 11.2 per cent in the domestic Chinese market and 7.9 per cent in the Indian domestic market. Low-cost carriers carried an estimated 900 million passengers in 2014, which is approximately 27.0 per cent of the world total scheduled passengers. This indicates a 10.3 per cent increase over the number of passengers carried by low-cost carriers in 2013, and almost double the world total average passenger growth rate. The 5.8 per cent growth observed in scheduled passenger traffic in 2014, compared to the 5.5 per cent growth in 2013, should be viewed in light of the World Bank estimates, which indicate a slight improvement in world real gross domestic product (GDP), from a 2.5 per cent growth in 2013, to a 2.6 per cent in In 2014, economic growth improved in the high-income European Region and the United States, resulting in higher traffic growth in these States. Continued strong international traffic expansion was also observed in the United Arab Emirates and China, as well as significant growth in domestic traffic in both the Russian Federation and India. All of these positive impacts offset the negative ones, in terms of traffic relating to the economic weakness in other regions and low commodity prices in Capacity offered by the world s airlines, expressed as available seat-kilometres, increased globally by 5.6 per cent. While capacity growth ranged from 2.7 per cent in North America to 10.9 per cent in the Middle East, the average global passenger load factor improved by a 0.2 percentage point over 2013, ranging from 68.6 per cent for Africa to 83.4 per cent for North America. The average passenger global load factor reached 79.7 per cent in Air carriers in all regions, with the exception of Africa, have been increasingly successful in optimizing their available capacity. After nearly two years of negative or almost flat growth, total scheduled freight traffic rebounded in 2014, in line with improving economic prospects. Air freight, expressed in terms of total scheduled freight tonne-kilometres performed, posted an increase of 4.9 per cent. Approximately 50 million tonnes of freight were carried in Middle East carriers recorded double digit growth rates of 12.1 per cent overall. Africa grew at 6.0 per cent while Asia and Pacific increased by 5.5 per cent. North America, Europe and Latin America and the Caribbean grew at 3.2 per cent, 2.0 per cent and 1.2 per cent respectively.... 3

4 . Scheduled international freight tonne-kilometres performed posted an increase of 5.2 per cent with approximately 33 million tonnes of freight carried in International air freight represents around 86.0 per cent of total scheduled freight tonne-kilometres performed. Nearly 96.0 per cent of scheduled international freight tonne-kilometres performed is transported by air carriers in Asia and Pacific (41.0 per cent), Europe (25.0 per cent), North America (15.0 per cent) and the Middle East (15 per cent), which indicates the impact that the East-West trade lanes has on international freight traffic. It is estimated that nearly 80 per cent of long-haul freight traffic flows on this important trade lane that connects Asia to Europe, Asia to North America and Europe to North America. I wish to thank all Member States and international organizations for their contributions to the ICAO Statistics Programme. Your involvement makes this publication an indispensable tool when reviewing the state of the air transport industry for Boubacar Djibo Director, Air Transport Bureau International Civil Aviation Organization 4...

5 World Map of ICAO Regions... 5

6 T a b l e o f C o n t e n t s. WORLD AFRICA ASIA AND PACIFIC EUROPE LATIN AMERICA AND THE CARIBBEAN MIDDLE EAST NORTH AMERICA Appendix 1: List of acronyms Appendix 2: ICAO Regions and Member States Appendix 3: List of States having LCC traffic by Region in Appendix 4: Implementation of the Recommendations of the Sixth Worldwide Air Transport Conference (ATConf/6)

7 RPK AND FTK EVOLUTION SINCE 1944 Since the signing of the Chicago Convention in 1944, air transport has played a leading role in world economic development: it has become an important means of transportation, that in 2014 alone, carried 3.3 billion passengers. Commercial air transport has existed for decades, expanding despite various crises and showing long-term resilience. The future growth of air transport will likely depend on sustained world economic and trade growth, as well as declining airline costs and ticket prices. Other factors, such as regulatory regimes, technological improvements and fuel costs will also impact future growth. (Source: ICAO reporting forms, ICAO estimates)... 7

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9 W o r l d KEY FIGURES 2014 (versus 2013) RPK +5.8% FTK +4.9% ASK +5.6% LF 79.7% +0.2 pts scheduled commercial airlines 173 air navigation services providers airports with scheduled commercial flights (Source: ICAO and ATAG)... 9

10 W o r l d. WORLD AIR TRANSPORT IN % vs billion Passengers carried. ECONOMIC DEVELOPMENT IN % vs trillion Revenue Passenger- Kilometres +2.1% vs million Commercial flights performed +2.5% = 2014 vs Real GDP annual growth +4.9% vs billion Freight Tonne-Kilometres The world economy recorded an average real GDP growth of +2.5% in 2014, indicating a steady increase of global economics. Passenger traffic (PRK) grew at a higher pace than real GDP, even during the financial crisis of (Source: ICAO and World Bank). TOURISM HIGHLIGHTS: MOST TRAVEL BY AIR FOR LEISURE PURPOSES According to the World Tourism Organization (UNWTO), in 2014, 54% of all overnight visitors travelled to their destination by air, while the remainder travelled by surface transport (46%) whether by road (39%), rail (2%) or water (5%). The trend over time has been for air transport to grow at a somewhat faster pace than surface transport, thus the share of air transport is gradually increasing. In 2014, travel for holidays, recreation and other forms of leisure accounted for just over half of all international tourist arrivals (53% or 598 million). Some 14% of international tourists reported travelling for business and professional purposes, and another 27% travelled for other reasons such as visiting friends and relatives (VFR), religious reasons and pilgrimages, health treatment, etc. The purpose of visit for the remaining 6% of arrivals was not specified. 10 (Source: UNWTO)...

11 W o r l d PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF Passenger Traffic Performed (Source: ICAO Form A and ICAO estimates) Air carriers recorded a higher annual RPK growth of +5.8% in 2014, as compared to the RPK growth of +5.5% in In absolute terms, the 2014 growth was the result of the expansion of air carriers in Asia Pacific, Europe and the Middle East. Airlines in the Middle East recorded the strongest increase in 2014 with a growth of +11.3% of RPK. International traffic represents 62.5% of the airlines' total RPK and recorded a +6.0% annual growth in The strongest international traffic growth is recorded by carriers of the Middle East (+11.5%), followed by the carriers in Asia and Pacific (+5.8%), Europe (+5.9%), Latin American and the Caribbean (+5.2%), North American (+2.9%) and Africa (+0.6%). Domestic traffic represents 37.5% of the airlines' total RPK and showed a +5.6% growth in The United States and China are the largest domestic markets and together they represent 63.3% of all domestic traffic worldwide. Domestic services rose in all regions: Middle East (+8.5%), Asia and Pacific (+8.4%), Europe (+7.3%), Latin America and the Caribbean (+5.4%), North America (+3.1%) and Africa (+1.7%). Capacity Airlines continued to increase their capacity in ASK at a steady speed, resulting in a growth of +5.6% in 2014, an increase of a 0.8 percentage point. Capacity increased by +6.2% for international air services and by +4.5% for domestic services. The highest capacity increase is recorded by Middle Eastern airlines (+10.9%), followed by airlines from Asia and Pacific (+7.3%). Passenger Load Factor The passenger load factor (LF) slightly increased over the last 3 years, reaching 79.7% in 2014, as compared to 79.5% and 78.9% in 2013 and 2012, respectively. Demand for air transport outpaced increases in capacity, leading to a better average load factor. The passenger load factor was 79% for international services and 80.8% for domestic services. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Air carriers recorded a higher annual FTK growth of +4.9% in 2014, as compared to the FTK growth of +0.4% in In absolute terms, the 2014 growth was the result of the expansion of air carriers in Asia Pacific and the Middle East. Although air freight is only 0.5% of world international trade in volume, it represents 35% of international trade in value. International traffic represents 86.2% of the airlines' total FTK and recorded a +5.2% annual growth in The strongest international traffic growth is recorded by carriers of the Middle East (+12.1%), followed by the carriers of Africa (+6.2%), Asia and Pacific (+5.5%), North America (+4.0%), Europe (+2.1%) and Latin America and the Caribbean (+1.2%). Domestic traffic represents 13.8% of the airlines' total FTK and showed a +2.8% growth in The United States and China are the largest domestic markets and together they represent 80.7% of all domestic cargo traffic worldwide. Domestic services rose in the United States (+1.9%) and China (+5.5%). (Source: ICAO Form A and ICAO estimates) Capacity and Load Factor In 2014, scheduled International freight capacity, expressed in freight tonne-kilometres available, was approximately 330 billion, a 5.0 per cent growth compared to Scheduled international freight load factor remained at 49.7 per cent, the same level as in

12 W o r l d. TOP 15 AIR CARRIERS (in RPK) In 2014, 13 of the top 15 air carriers experienced an increase in passenger-kilometres performed compared to Only Lufthansa and Air France decreased, by -0.6% and -0.7% respectively. In the top 15 airlines, there were: : five airlines from North America : five airlines from Europe : four airlines from Asia and Pacific : one airline from the Middle East There were two low-cost carriers (LCCs) in the top 15 world air carriers: Southwest, ranking fifth, and Ryanair, ranking tenth. In 2014, the highest increase of passenger traffic was recorded by Turkish Airlines and China Southern, with +16.3% and +10.0% increases, respectively. (Source: ICAO Form A and ICAO estimates). TOP 15 STATES BY TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) In 2014, 14 of the top 15 States recorded an annual growth of passenger traffic measured in RPK. France is the only State whose passenger traffic decreased, by -0.3%. In the top 15 States, there were: : six States in Europe : five States in Asia and Pacific : two States in North America : one State in the Middle East : one State in Latin America and the Caribbean In 2014, for the top 15 States, three have recorded double digit growth: Turkey (+15.0%), the United Arab Emirates (+12.0%), and China* (+11.7%). * China includes Hong Kong SAR and Macao SAR. (Source: ICAO Form A and ICAO estimates) 12...

13 W o r l d TOP 15 AIRPORTS IN 2014 In the top 15 airports by aircraft departures, there were: : nine airports in North America : five airports in Europe : one airport in Asia and Pacific In 2014, for the top 15 airports, nine recorded an annual growth in departures with five of them located in North America, three in Europe, one in Asia and Pacific. In the top 15 airports by passengers, there were: : four airports in North America : five airports in Asia and Pacific : five airports in Europe : one airport in the Middle East In 2014, for the top 15 airports, all but one recorded an annual growth in passenger traffic. Only Jakarta recorded decreased passenger traffic (-3.6%). In the top 15 airports by freight tonnes handled, there were: : seven airports in Asia and Pacific : five airports in North America : two airports in Europe : one airport in the Middle East In 2014, 14 of the top 15 airports recorded an annual growth in freight tonnes handled. * includes transit freight (Source: ACI)... 13

14 W o r l d. REGIONAL DISTRIBUTION OF PASSENGER TRAFFIC IN TERMS OF RPK (Source: ICAO Form A and ICAO estimates) North America ranked first in the regional distribution of passenger traffic in 2007, followed by Asia and Pacific and Europe. North America lost 7 percentage points of traffic share from 2007 to 2014; the Middle East, Asia and Pacific, Latin America and the Caribbean gained respectively 3, 3 and 1 percentage point. Traffic shares of Europe (27%) and Africa (2%) remained stable.. EVOLUTION OF THE DISTRIBUTION OF PASSENGER TRAFFIC IN TERMS OF RPK (Source: ICAO Form A and ICAO estimates) Passenger traffic flown by carriers from Asia and Pacific ranked second in 2007 and became first in 2010, surpassing North American airlines. Airlines from Asia and Pacific gained 3 percentage points of traffic share between 2007 and Airlines from North America represented 32% of worldwide traffic share in 2007 but decreased to 25% in They initially ranked first and are now third. European airlines maintained a stable traffic share of about 27% from 2007 to 2014, passing North American airlines in Carriers from the Middle East have taken market share every year since 2007, growing from 6% in 2007 to 9% in Carriers from Latin America and the Caribbean gained 1 percentage point of traffic share since 2007, representing 5% of traffic in African airlines maintained a stable traffic share of 2% from 2007 to

15 W o r l d REGIONAL DISTRIBUTION OF CARGO TRAFFIC IN TERMS OF FTK Asia and Pacific ranked first in the regional distribution of cargo traffic in 2007, followed by North America and Europe. North America, Asia and Pacific and Europe respectively lost 4, 3 and 1 percentage point(s) of traffic share from 2007 to 2014 while the Middle East and Africa respectively gained 7 and 1 percentage point(s). (Source: ICAO Form A and ICAO estimates) EVOLUTION OF THE DISTRIBUTION OF CARGO TRAFFIC IN TERMS OF FTK (Source: ICAO Form A and ICAO estimates) Traffic share performed by carriers from Asia and Pacific ranked first from 2007 to 2014 but decreased by 3 percentage points since Europe's traffic share also decreased, but by 1 percentage point, from 23% in 2007 to 22% in Europe ranked third in 2007 and second in Airlines from North America had a traffic share of 25% in 2007 and lost 4 percentage points over the period. In 2014, they ranked third and represented 21% of traffic share. Carriers from the Middle East have taken market share every year since 2007, increasing from 6% in 2007 to 13% in They recorded the highest increase of all the regions. Latin American and the Caribbean airlines maintained a stable traffic share of 3%. African airlines gradually gained 1 percentage point of traffic share since 2007, representing 2% of traffic in

16 W o r l d. SEASONALITY The capacity in ASK offered by airlines in 2014 followed the same trend as the average seasonality of the last ten years. Months offering the highest capacity were July and August. In contrast, the month offering the lowest capacity was February. In 2014, the capacity offered in August was 32% higher than the month with the lowest capacity (February). (Source: ICAO, OAG). LOW COST CARRIERS Intra-Regional LCC Traffic Share 2014 vs 2005 Europe had the highest LCC capacity share among all regions in 2014, measured by the number of available seats. In 2014, 41% of the available seats within Europe were offered by LCCs. Latin America and the Caribbean had the second highest LCC share in 2014, with 38%, followed by North America with 32%, Asia and Pacific with 22%, and the Middle East with 18%. Africa had the lowest LCC share in 2014 with only 9%. In terms of LCC market share growth, Europe also had the largest increase from 22% in 2005 to 41% in 2014: +19 percentage points. Asia and Pacific had the second largest increase from 6% to 22% (+16 percentage points), followed by the Middle East with an increase of 2% to 18% (+16 percentage points), Latin America and the Caribbean grew by +11 percentage points, and North America increased by +6 percentage points. Africa had the lowest increase from 3% in 2004 to 9% in 2014, +6 percentage points. The world average Intra-Regional LCC capacity share has grown from 19% in 2005 to 30% in (Source: ICAO, OAG) 16...

17 W o r l d AIR CARRIER FINANCIAL OPERATING RESULTS In 2014, the operating profit based on available results was estimated at about 5.5% of operating revenues for the scheduled airlines of Member States. The operating profit is expected to be around USD 42 billion in 2014 based on operating revenues of USD 758 billion. More than a third of global operating profits came from the performance of air carriers in North America. The chart below indicates the regional distribution of the operating profits in 2014 compared to those of the previous year. Significant improvements in operating profits of air carriers in Asia and Pacific, Europe and Middle East (that of the United Arab Emirates and Qatar) Regions contributed to the strong operating profit results of Source: ICAO The improvement of the operating profits (in USD) can be mainly attributed to an increase in traffic expressed as revenue tonne kilometre (RTK) by around 6% in 2014 compared to 2013, while capacity offered, expressed as available tonne kilometre (ATK), increased at a slower pace of around 5%. Jet fuel costs, which represent around 30% of an air carriers operating costs, declined by around 6.9 per cent compared to The USD volatility against some of the major world currencies is indicated in the table below. Yearly average exchange rates for converting Foreign currencies into US Dollar Currency Euro Sterling Pound Yen Yuan Singapore Dollar Hong Kong Dollar Dirham State or Country Euro Zone United Kingdom Japan China Singapore Hong Kong SAR China United Arab Emirates var. % 0.1% -5.0% 8.5% -0.8% 1.2% 0.0% 0.0% Source: US Department of Treasury Together, these currencies are the home currencies for air carriers that account for 64% of scheduled passenger traffic. The manageable volatility meant that air carriers could offset, to a significant extent, the exchange losses on account of reduction in USD yields, and increase in USD denominated operating costs (fuel, lease rentals etc.) primarily by matching it with operating revenues earned in USD. To the extent the revenues earned in USD fell short of the expenses incurred in USD the decline in jet fuel prices facilitated in cushioning the exchange losses in The combined effect of all these saw the operating yields per revenue tonne kilometre (RTK) performed in USD remain almost static at 2013 levels while unit costs per available tonne kilometre (ATK) declined by around 2% (see variance analysis table)

18 W o r l d. Analysis of variance in operating result (2014 over 2013) Operating revenues, USD (millions) Operating expenses, USD (millions) Operating result, USD (millions) RTK (millions) ATK (millions) Yield, USD (cent) Cost/ATK, USD (cent) Weight load factor (%) Break-even weight load factor (%) , ,300 41, ,579 1,146, , ,900 25, ,176 1,088, Difference 37,800 21,400 16,400 41,403 58, Analysis of difference in operating revenues (2014 over 2013) Due to reduction in yield, USD (millions) Increase in traffic, USD (millions) Net increase in operating revenues, USD (millions) -3,206 41,006 37,800 Analysis of difference in operating expenses (2014 over 2013) Due to reduction in unit cost, USD (millions) Due to increase in capacity offered, USD (millions) Net increase in operating expenses, USD (millions) -16,021 37,421 21,400 (A) (B) Net increase in operating result (2014 over 2013), USD (millions) 16,400 (A-B) Source: ICAO While 2014 was a very good year for the airline industry, a strengthening USD could see many air carriers being saddled with exchange losses. Material declines in jet fuel costs could impact major air carriers who have secured options and or future contracts at higher rates, exposing them to hedging losses. A world economy that grows at a pace slower than initially envisaged could expose many air carriers to general economic risk leading to overcapacity and lower load factors. The extreme volatility of the margins in the industry is best reflected in the graph below. Out of 108 air carriers, which represent 81% of traffic (RTK), 25 have positive margins that are lower than 5%, while 55 air carriers which represent 46% of traffic (RTK) have positive margins in excess of 5%. 28 air carriers representing 15% of traffic (RTK) have negative margins. Source: ICAO The extreme volatility faced by the industry that manifests in terms of fuel price, currency and general economic risks cannot be ignored. Overall operating margins of the industry are still low and the volatility faced by the industry can easily transfer the slim margins from positive to negative territory

19 W o r l d THE AIRPORT INDUSTRY 1 Global airport revenues remained largely unperturbed based on results from the 2013 financial year, despite the economic uncertainties and downside risks that have persisted across the world s markets. International tourism, in particular, was irrepressible considering the state of the weakened economies in the Euro-area and the geopolitical risks that have persisted in certain parts of the world, such as Northern Africa and parts of the Middle East. Notwithstanding, the international traveler in 2013 appears to have been immune to these potential dangers. Aeronautical revenue, nonaeronautical revenue and non-operating revenue, which are the three components of a typical airport s income streams, all experienced sound growth rates in 2013 compared to the previous year. In essence, growth in key emerging market airports has circumvented the slowdown in the Euro-area and other more mature markets. Industry revenue as a whole grew by 5.5% during 2012, reaching USD131 billion in Region Estimated industry revenues and costs (millions USD) in 2013 Total revenue 2013/ 2012 % change Aeronautical revenue* 2013/ 2012 % change Nonaeronautical revenue** 2013/ 2012 % change Total cost (operating + capital costs) 2013/ 2012 % change Africa 2, % 2, % % 2, % Asia and Pacific 37, % 18, % 18, % 25, % Europe 49, % 30, % 19, % 42, % Latin America and the Caribbean 7, % 4, % 2, % 5, % Middle East 8, % 4, % 4, % 7, % North America 25, % 13, % 11, % 22, % World 130, % 73, % 57, % 106, % *Aeronautical revenue includes ground handling charges **Non-aeronautical revenue includes ground handling concessions revenue N.B. Non-operating revenue is not reflected in non-aeronautical revenue but is included in total revenue Source: ACI Airport Economics Survey Since the recession in 2008, overall industry revenues have grown by 3% on an annualized basis. In other words, if the industry were a State, it would approximate the GDP of the 60th-ranked State in terms of economic output, out of a possible 200 States. On a regional basis, European airports hold the greatest proportion of global airport revenue (38%). This is followed by Asia and Pacific (28%) and North America (19%). Although Europe holds a significant proportion of the world's airport revenues, it has experienced the weakest growth in overall revenues at 2.2% year over year. In particular, with the Euro-area downturn, non-aeronautical revenues grew only by 1.8%. Nevertheless, the region also experienced a decrease in total costs by 2.5%. As expected, the regions with the highest growth in revenues also have the highest growth in passenger traffic. Asia and Pacific and the Middle East saw overall revenues increase by 11.8% and 11.6% respectively. However, the growth in costs varies markedly from one region to the next. Latin America and the Caribbean recorded the greatest rise in total costs from Airport Revenues 2 Airports receive their revenue from two primary sources, aeronautical and non-aeronautical. Non-operating revenue represents a smaller proportion of the total. While non-aeronautical revenue continues to be an important source of income for airports, the major share of revenue remains aeronautical revenue. This revenue stream represents 57% of the total, whereas non-aeronautical and non-operating revenues make up 39% and 5%, respectively. 1 This excerpt is based on sections of the 19th edition of the ACI Airport Economics Report, which presents data and analysis relative to airport activity for the financial year The data in this edition covers an array of different themes that include airport infrastructure, capacity, employment, airport efficiency, ownership, regulatory models, capital expenditure and financial performance. An in-depth analysis of industry revenues (aeronautical and non-aeronautical), costs (operating and capital) and their evolution continues to be the bedrock of the report. To learn more about the Airport Economics Report and Key Performance Indicators visit: 2 Non-operating revenue is composed of interest income, subsidies, grants, asset divestments and other related non-operating items

20 W o r l d. Aeronautical Revenues Aeronautical revenue is derived from charges relating to the recovery of the costs incurred by airports in providing the infrastructure and services to airlines seeking to provide transportation services for passengers and cargo. This infrastructure may be regarded as being either aircraft related (i.e., runways, taxiways, aprons, lighting and fire services) or passenger related (i.e., passenger terminal facilities used exclusively for the travel requirements of passengers, such as check-in areas, gate rooms, ground handling and security). Some airports still generate most aeronautical revenues through aircraft-related charges, but the majority of airports have gradually put their emphasis on charging passengers. There may also be aeronautical revenue related to the use of cargo facilities. Figure 1 provides a detailed breakdown of global aeronautical revenue. As shown, passenger and aircraft-related charges represent a combined 62% of all aeronautical revenues. Terminal rentals paid by airlines for space utilization account for almost 12% of global aeronautical revenue and are mainly limited to North America. Figure 1 Source: ACI Airport Economics Survey (2014). Non-aeronautical Revenues Non-aeronautical revenue is much more diverse than aeronautical revenue. It may be derived from rents charged to concessionaires offering a wide range of services to passengers, including car parks within the airport boundary or retail, banking, advertising or car rental facilities on the airport site. It may also relate to revenue from rents for office accommodation on airport land, either in the form of rents for offices built by the airport operator or rents for airport land leased to third parties on which offices or other facilities have been built. Other, more minor sources of non-aeronautical revenue may include various charges, such as those for thirdparty employee security passes, pass-through charges for utilities consumption or access charges to public transport operators. Figure 2 provides the global breakdown of non-aeronautical revenue by source. Figure 2 Retail concessions remain the leading source of non aeronautical revenue for airports, representing 28% of Source: ACI Airport Economics Survey (2014) non-aeronautical revenue. Car parking revenue and property revenue/rent follow retail concessions as the secondary sources of revenue at 20% and 18% respectively *Car parking revenue includes revenue from airport-operated parking lots and car parking concessions revenue

21 W o r l d Airport Costs The airport cost structure is predominantly characterized by high, fixed costs in the operation and maintenance of major infrastructure components, such as runways and terminal buildings. As airports in many regions of the world reach capacity due to growth in airport throughput, the expansion of such facilities inevitably increases the personnel expenses, maintenance costs, utilities and capital costs related to operating these fixed assets. Airports saw their total costs (operating expenses and capital costs) increase modestly by 2.1% in 2013 compared to However, there is a significant variation in costs from one region to the next. Africa and Europe saw decreases in total costs of 3.7% and 2.5%, respectively, which is reflective of cutbacks and pressure to reduce input prices in the weakened economies of the Euroarea and Northern Africa. On the other hand, Latin America and the Caribbean recorded the greatest gains in total costs from This is mainly the result of the increase in capital costs within the region. The growth in costs for this region exceeded the growth in revenue in Total airport costs can be divided between operating expenses and capital costs. Operating expenses make up 62% of total costs; with the remaining proportion designated to capital costs. The largest component of operating expenses continues to be personnel costs, which account for 35%. Contracted services, which are comprised of activities outsourced to third parties, represent the second-largest component of operating expenses. These services make up 23% of operating expenses. Personnel costs refer to salaries, pensions and other employment costs relating to an airport's staff. The extent to which an airport chooses to operate essential services using its own employees (insourcing) or by contracting services out to third parties (outsourcing), will inevitably affect the proportion of costs in the two main categories of operating expenses. Figure 3 below presents the distributional breakdown of operating expenses. Figure 3 Source: ACI Airport Economics Survey (2014)... 21

22 W o r l d. Airport Profitability Capital costs have a significant impact on an airport's bottom line. These costs include interest on outstanding debt and depreciation on airport infrastructure. When capital costs are taken into consideration within the overall cost structure, the significant weighting of depreciation as part of capital costs relative to operating expenses is indicative of the role that fixed assets and infrastructure play in the overall accounting of airports' costs. Depreciation, which is the cost of a fixed asset allocated over time, makes up as much as 60% of capital costs and more than one-fifth of all costs and expenses incurred by a typical airport. Figure 4 below shows the breakdown of capital costs. Figure 4 Source: ACI Airport Economics Survey (2014) Commercial transport fleet 1 of ICAO Member States at the end of each year, Turbojet Turboprop Total aircraft Year Number Percentage Number Percentage All types , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,653 Source: Reed Business Information (RBI), ICAO Annual Report of the Council 1 Active and parked aircraft are included; aircraft having a maximum take-off mass of less than kg ( lbs) are not included

23 W o r l d FORECASTS SCENARIOS FOR INTERNATIONAL PASSENGER AVIATION UP TO Introduction The scenarios for the future structure of the international air passenger market presented here are part of the work carried out for the ITF Transport Outlook series. These forecasts intend to give a prospective view of air passenger demand levels up to 2050 and to serve as basis for policy discussions in the field of aviation. They rely on a new modeling tool built at ITF with the help of ICAO, which is briefly presented here along with some first results. Methodology Passenger demand volumes result from the combination of two sub-models: a gravity-type model for the prediction of origin-destination passenger volumes; and a route-choice model for the assignment of the latter onto the air transport network. The models apply to a world divided into 310 regions, with each region corresponding to a main center of economic activity. Aggregating the air network in these regions forms a synthetic network on which the model is based. The gravitational model expresses passenger demand between two regions as a function of socio-economic variables, such as GDP, population, trade, cultural relationships (language sharing, emigration volumes, etc.) and the generalized cost of travelling between the two regions. The generalized cost of travel is in itself a function of minimum travel time, minimum number of transfers and some price indicators. A logit-type model then assigns demand on all possible itineraries by comparing their quality of service defined as a combination of travel time, number of transfers, frequency and price. Supply variables enter the demand prediction models, such as minimum travel time, price, etc., so forecasting future passenger demand levels requires a detailed knowledge of the future state of the network. However, the evolution of the air network is dependent on phenomena that are difficult to forecast, such as the extent of future liberalization and its impacts on traffic rights and price setting, or the emergence of new business models based on different airline economics or new airplanes. To assess the full range of possible outcomes, future passenger demand is forecast according to three network evolution scenarios. In the static network scenario we assume no evolution in the design of the air transport network from 2010 onwards but that capacity is allowed to keep up with the demand. On the other hand, in the dynamic network scenario the air network is fully flexible, with increased connectivity and competition observed globally. New direct connections are based on observations made about the evolution of the air network between 2004 and Finally, an intermediate scenario establishes a future where the network responds to external growth factors only and the creation of new direct connections between regions is limited to origin-destination pairs with very strong potential. 3 This excerpt (page 23 to 24) has been provided by the International Transport Forum, 23

24 W o r l d. Results Air passenger volumes will continue to grow steadily in the future, albeit with significant differences between the three alternative scenarios. The annual growth rate in revenue passenger-kilometers ranges from 2.7% in the static scenario to 5.7% in the dynamic scenario. These results highlight that currently observed levels of growth can only continue in the coming decades if the air network is flexible enough not only to sustain the exogenous growth in passenger volumes due to economic and demographic growth but also to create induced demand through liberalization. Annual growth rate (%) in revenue-passenger-kilometers Static Intermediate Dynamic Growth in RPKs slows down after 2030 in all scenarios. In the static scenario, a modest growth after 2030 is driven by underlying GDP and population projections, which are slowing down and even saturating in some places. In the intermediate and dynamic scenarios, the lesser growth rate in the demand after 2030 is mainly caused by the fact that the network reaches saturation reducing the inductive impact of further air liberalization. As expected, there are large regional differences in these growth figures. The highest growth in demand will take place on routes connecting to developing States, especially in the Asian region, reflecting the shift of the economic mass of the world towards Asia. In the dynamic scenario, demand growth for intra-asian routes is above 8%. There are also strong predicted increases in Latin America and Africa from much lower initial levels. Demand for routes between developed economies undergoes smaller than average growth rates in all scenarios. The difference between the static and more dynamic scenarios is overall larger in developing regions. This is driven by development of less mature networks, which are nonetheless able to grow quickly and significantly. The gap between the scenarios is small for developed regions, where the air network is closer to saturation, with fewer viable routes left to open. Revenue-passenger-kilometers in 2010, 2030 and 2050 on the main routes 24...

25 W o r l d ICAO Regional passenger traffic forecasts: 2030 vs. 2010* * by airline of registration Source: ICAO... 25

26 W o r l d. Geographic centre of gravity of departing/arriving passengers per city Source: ICAO The centre of gravity has been steadily moving from the middle of North Atlantic to the middle of the Mediterranean sea in the last four decades. It is expected to move further east by

27 A f r i c a REGIONAL KEY FIGURES 2014 (versus 2013) RPK +0.8% FTK +6.0% ASK +1.4% LF 68.6% -0.4 pts... 27

28 A f r i c a. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF Passenger Traffic Performed African air carriers recorded a decrease in their RPK annual growth in 2014 (+0.8%), comparing to the apex of +4.4% in the previous year. From 2011 to 2013, the annual RPK reached a three-year accelerated rise. In 2014, growth slowed down due to the outbreak of Ebola in Western Africa. The 2014 growth was supported by the expansion of air carriers such as Ethiopian Airlines (+9.6%), Kenya Airways (+8.9%), Air Algerie (+7.2%), and Arik Air (+10.6%). These air carriers expanded their network and benefited from the continued development of internationally-trading industries. However, South Africa, the biggest African market, only showed a slight increase of +0.1% in The airlines of South Africa, Ethiopia and Egypt account for 52.9% of African air carriers total passenger traffic and showed a traffic variation of respectively +0.1%, +9.6% and -10.0% in terms of RPK. International traffic of air carriers in Africa represented 85.0% of the African airlines' total RPK and recorded a 0.6% annual growth in South Africa is the largest domestic market in Africa with 56.5% of domestic traffic in Africa. Domestic traffic in Africa showed a +1.7% growth in RPK in 2014 with a capacity growing of +2.2%. Air Seychelles recorded the highest growth in the region (+43.3%) due to the restructuring plan following the airline's partnership with Etihad Airways. Capacity African airlines increased their capacity in ASK by +1.4% in 2014, a drop of 2.9 percentage points compared to 2013 growth (+4.3%), indicating a reversion to the average growth rate during 2011 and The capacity in ASK increased by +1.2% for international air services and by +2.2% for domestic services. In absolute terms, the States that contributed the greatest increase in capacity are Ethiopia (+11.4%), Kenya (+8.1%), Algeria (+7.3%) and Angola (+9.3%). Passenger load factor The passenger load factor slightly decreased in 2014 compared to 2013, reaching 68.6%, down from 69.0% the previous year. The passenger load factor achieved 68.0% for international services and 72.1% for domestic services. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Cargo traffic performed by African carriers recorded an annual growth of +6.0% in 2014 in terms of FTK, compared to +4.0% in Air freight market performed by African carriers is mostly international and national carriers of South Africa, Ethiopia and Egypt, all accounting for 75.0% of the African traffic, and in turn recorded annual growths of -5.4%, +20.3% and +8.4%, respectively. (Source: ICAO Form A and ICAO estimates). 28 (Source: ICAO Form A and ICAO estimates)...

29 A f r i c a TOP 15 AIR CARRIERS (in RPK) In terms of RPK in 2014, the airlines in the top 15 accounted for 86.9% of the traffic performed by African airlines. South African Airways, the largest African carrier in RPK, recorded a decrease in traffic in 2014, -2.5% compared to 2013, for both domestic and international services. In 2014, Ethiopian Airlines remained the second largest African carrier in RPK and recorded an increase of +9.6% of RPK. EgyptAir's total traffic decreased by -3.5% while domestic traffic increased by +11.0% and international operations decreased by -4.0%. Kenya Airways recorded an increase of +8.9% of RPK in The top three air carriers of Africa are all members of Star Alliance. Mango and Comair, the two LCCs in the largest 15 airlines of Africa, recorded a growth of +5.4% and +5.0%, respectively. (Source: ICAO Form A and ICAO estimates) TOP 15 STATES BY TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) In terms of RPK in 2014, the States in the top 15 accounted for 94.0% of the traffic performed by African airlines. South African air carriers recorded a global increase of +0.1% of traffic in RPK in 2014 compared to South African Airways, the main carrier, posted a -2.5% decrease. Comair and the lowcost carrier Mango increased by +5.0% and +5.4%, respectively. Ethiopian Airlines ranked second in 2014 in Africa, with a growth of +9.6%. Traffic performed by Egyptian Airlines experienced a -10.0% global decrease in 2014 compared to All the carriers in Egypt recorded a decrease in RPK: EgyptAir recorded a -3.5% decrease, Air Cairo, Almasria Universal Airlines and Air Arabia Egypt decreased by -60.0%, -45.1% and -31.8%, respectively. Airlines in Morocco posted a -1.0% decrease of RPK in Royal Air Maroc achieved +0.3% growth while Air Arabia Maroc recorded a -12.2% decrease of RPK. Airlines from Kenya, Algeria, Angola and Seychelles posted growth in traffic RPK with growths of +8.1%, +7.2%, +9.3%, and +43.4%, respectively. (Source: ICAO Form A and ICAO estimates)... 29

30 A f r i c a. SEASONALITY The seasonality of the capacity offered in ASK by African airlines follows the same trends as the worldwide average seasonality of capacity. The highest capacity is offered during the months of July and August, followed by December. The lowest capacity is offered during the months of February, November and April. In 2014, African airlines offered more capacity during spring and summer (March to August) than the average of the last ten years. Consequently, they offered less capacity in fall and winter (January to February and September to December). August offered 35% more capacity than February. (Source: ICAO, OAG). TOP 15 AIRPORTS IN 2014 In 2014, Johannesburg and Cairo airports ranked first and second for departures, passengers and freight tonnes in the region. Hurghada was the most dynamic airport in the African top 15, with a +24.9% growth in passenger traffic. The top 10 airports for departures have recorded an increase in Two out of the top three airports in freight tonnes handled, Cairo and Nairobi airports, have recorded an increase of cargo traffic in 2014, while Johannesburg reported a decrease of -6.4%. (Source: ACI) 30 (Source: ACI) (Source: ACI) *estimate *estimate...

31 A f r i c a LOW COST CARRIERS Africa has the lowest LCC traffic share within all regions in the last ten years. In 2014, 9% of the available seats within Africa were offered by LCCs. This is much lower compared to the world average share of 30%. The largest increase in terms of number of seats intra-africa offered by LCCs was in 2007, where the number had fluctuated between 5.7 and 6.6 million. Overall in the intra-africa market, the number of seats offered by LCCs increased from 1.8 million in 2005 to 7.1 million in LCC market share within the region has also grown at the slowest pace compared to other regions. The percentage of seats within Africa offered by LCCs grew from 3% in 2005 to 9% in 2014, +6 percentage points. This is much lower than the world average growth of +11 percentage points. LCC Traffic Intra Region (Source: ICAO, OAG) LCC penetration in the African market is lower than the world average. In 2014, 46% of the States in Africa had LCC traffic, 29 percentage points lower than the world average (75%). The number of States having LCC traffic has increased from 2005 to 2014, except in 2008 and In 2005, twelve States in Africa had LCC traffic, and in 2014, the number increased to 25 States (see Appendix 3). The percentage of States in Africa having LCC traffic grew from 22% in 2005 to 46% in 2014, +24 percentage points. This growth is higher than the world average growth. Number of States with LCC Traffic in the Region (Source: ICAO, OAG)... 31

32

33 A s i a a n d P a c i f i c REGIONAL KEY FIGURES 2014 (versus 2013) RPK +7.0% FTK +5.5% ASK +7.3% LF 77.7% +0.2 pts... 33

34 A s i a a n d P a c i f i c. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF (Source: ICAO Form A and ICAO estimates) Passenger Traffic Performed Asia and Pacific air carriers recorded an annual +7.0% growth of RPK in 2014, slightly below the +7.7% growth in The 2014 growth was supported by the expansion of air carriers such as China Southern Airlines (+10.0%), Air China (+7.3%), Cathay Pacific (+6.8%) and All Nippon Airways (+7.7%), along with most of the region's airlines. Those air carriers expanded their network and benefited from the strong demand for air transport for the Chinese domestic market (+11.2%), and more globally to and from the Asia Pacific region. Airlines of China (including Hong Kong SAR and Macao SAR), Japan and Australia account for 54.7% of Asian and Pacific air carriers total passenger traffic and showed a traffic variation of +11.7%, +4.9% and +1.0% in terms of RPK, respectively. International traffic of air carriers in Asia and the Pacific represented 55.2% of the region airlines' total RPK, and they recorded a +5.8% annual growth in China is the largest domestic market in Asia and Pacific with more than 58.0% of domestic traffic in the region. Japan and Australia ranked second and third, respectively, in the domestic market. Domestic traffic in Asia and Pacific showed a +8.4% growth in RPK in 2014 with capacity growing at +7.6%. Capacity Airlines in Asia and the Pacific increased their capacity in ASK by +7.3% in 2014, an increase of +0.4 percentage point compared to 2013 growth (+6.9%). The capacity in ASK increased by +7.1% for international services and by +7.6% for domestic services. In absolute terms, States that contributed the most to an increased capacity are China (including Hong Kong SAR and Macao SAR, +11.2%), Philippines (+23.6%), Malaysia (+10.1%), and India (+6.8%). Passenger load factor The passenger load factor decreased slightly by 0.2 percentage point in 2014: it reached 77.7% compared to 77.9% the previous year. The passenger load factor was 76.8% for international services and 78.8% for domestic services.. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Cargo traffic performed by carriers of Asia and the Pacific recorded an annual growth of +5.5% in 2014 in terms of FTK, compared to a +0.2% increase in The air freight market performed by Asian carriers is mostly international. Carriers of China (including Hong Kong SAR and Macao SAR) and the Republic of Korea, all accounting for 51.8% of the regional traffic, recorded annual growths of +12.0% for China and a decrease of -2.7% for the Republic of Korea. 34 (Source: ICAO Form A and ICAO estimates)...

35 A s i a a n d P a c i f i c TOP 15 AIR CARRIERS (in RPK) In terms of RPK in 2014, the airlines in the top 15 accounted for 54.2% of the traffic performed by carriers from Asia and Pacific. China Southern Airlines was the largest carrier in Asia and Pacific in terms of RPK. The airline recorded a +10.0% growth of RPK in 2014 (+8.6% for domestic and +14.8% for international services). Air China, the second largest Asian carrier in RPK, has recorded an increase of +7.3% in 2014 compared to 2013, both for domestic (+2.2%) and international services (+15.5%). All airlines recorded an increase of traffic in terms of RPK except for Singapore Airlines, Qantas, Thai Airways and Malaysia Airlines with decreases of -0.6%, -1.7%, -11.2% and -1.9%, respectively. China, Japan and the Republic of Korea are the only States with at least two airlines in the top 15. There are no LCCs in the top 15 airlines of Asia and Pacific in (Source: ICAO Form A and ICAO estimates) TOP 15 STATES BY TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) In 2014, the top 15 States accounted for 96.8% of RPK performed by airlines from Asia and Pacific. China ranked first and Chinese air carriers recorded a global increase of +11.7% of traffic in RPK in 2014 compared to The top three carriers China Southern Airlines, Air China and China Eastern Airlines posted increases between +3.2% and +10.0%. Other carriers such as Hainan Airlines and Shenzhen Airlines achieved a +10.7% and +10.2% growth, respectively. Traffic performed by Japanese air carriers grew by +4.9%, with the two main contributors, Japan Airlines (JAL) and All Nippon Airways (ANA), posting respectively a +4.7% and +7.7% growth. Traffic performed by Australian airlines achieved a +1.0% global increase in 2014 compared to Qantas recorded a -1.7% decrease while Virgin and Jetstar grew by +2.1% and +4.5%, respectively. Airlines from the Philippines, China, India, and Viet Nam posted the highest increase of traffic in RPK with +23.7%, +11.7%, +7.8% and +7.8%, respectively. All States in the top 15 recorded a growth except Thailand, Sri Lanka and Pakistan with a decrease of -3.9%, -3.6% and -6.8%, respectively. * China includes Hong Kong SAR and Macao SAR. (Source: ICAO Form A and ICAO estimates)... 35

36 A s i a a n d P a c i f i c. SEASONALITY The seasonality of the capacity in ASK offered by airlines of Asia and Pacific is in line with the worldwide average seasonality of capacity, though the summer peak is less pronounced. The highest capacity is offered during the month of December, followed by August and July. The least capacity is offered during the month of February. In 2014, airlines from Asia and Pacific offered less capacity in the second and third quarters than the average of the last ten years. Consequently, they offered more capacity in the first and fourth quarters of the year. In 2014, the capacity offered in December was 18% higher than the month offering the lowest capacity (February).. TOP 15 AIRPORTS IN 2014 (Source: ICAO, OAG) Beijing ranked first for both departures and passengers in the region. Shenzhen airport recorded the highest increase of departures (+11.2%) and the second highest increase of passengers (+12.4%). The number of passengers in all airports in the top 15 have recorded a growth in 2014 except Jakarta and Bangkok airports. Chengdu airport recoded the highest increase of +12.8% in passengers. All airports in the top 15 number of departures have recorded a growth in 2014 except Jakarta and Bangkok airports. (Source: ACI) 36 (Source: ACI) (Source: ACI)...

37 A s i a a n d P a c i f i c LOW COST CARRIERS The Asia and Pacific region has had a lower LCC traffic share than the world average in the last ten years. In 2014, 22% of available seats within the region were offered by LCCs, -8 percentage points lower than the world average of 30%. The number of seats within the region offered by LCCs has increased from 2005 to In 2005, there were about 45 million seats offered by LCCs, growing to around 317 million seats in LCC market share in Asia and Pacific has increased rapidly in the last ten years. The percentage of seats within the region offered by LCCs grew from only 6% in 2005 to 22% in 2014, +17 percentage points. This was much higher than the world average growth of +11 percentage points. LCC Traffic Intra Region (Source: ICAO, OAG) Asia and Pacific has had a slightly higher penetration of LCC than the world average. In 2014, 81% of the States in the region had LCC traffic, +6 percentage points higher than the world average. The number of States having LCC traffic in the region has increased from 2005 to 2013, then slightly dropped in In 2005, 25 States in Asia and Pacific had LCC traffic, and in 2014, the number increased to 33 (see Appendix 3), and Hong Kong Special Administrative Region (SAR) of China and Macao Special Administrative Region (SAR) of China. The percentage of States in the region having LCC traffic grew from 58% in 2005 to 81% in 2014, +23 percentage points. This growth was faster than the world average growth. Number of States with LCC Traffic in the Region (Source: ICAO, OAG)... 37

38

39 E u r o p e REGIONAL KEY FIGURES 2014 (versus 2013) RPK +6.0% FTK +2.0% ASK +5.3% LF 80.8% +0.6 pts... 39

40 E u r o p e. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF (Source: ICAO Form A and ICAO estimates) Passenger Traffic Performed European air carriers recorded an annual +6.0% growth of RPK in 2014, which was +1.4 percent point higher than the 2013 growth (+4.6%). The 2014 growth was supported by the expansion of air carriers such as Turkish Airlines (+16.3%), Aeroflot (+12.8%) and Norwegian Air Shuttle (+35.4%). European airlines carried 872 million passengers in 2014 (+5.7% compared with 2013). Airlines of the United Kingdom, Germany and France accounted for 40.8% of European air carriers total passenger traffic and showed a traffic variation of +6.0%, +3.1% and -0.3%, respectively, in terms of RPK. International traffic of air carriers in Europe represented 86.9% of the European airlines' total RPK and recorded a +5.9% annual growth rate in Russian Federation is the largest domestic market in Europe with 48.8% of domestic traffic performed by European airlines. France has the second largest domestic traffic in Europe with 22.7% of domestic traffic by European airlines. Domestic traffic in Europe showed a +7.3% growth in RPK in 2014 with a capacity increase of +5.4%. Capacity European airlines increased their capacity in ASK by +5.3% in 2014, a remarkable increase of 1.8 percentage point compared to the 2013 growth (+3.5%). The capacity in ASK increased by +5.3% for international air services and by +5.4% for domestic services. In absolute terms, States that contributed the most to increased capacity were Turkey (+15.3%), the United Kingdom (+6.5%) and the Russian Federation (+8.3%). Passenger load factor The passenger load factor achieved 80.8% in 2014 compared to 80.2% the previous year. It is the second load factor after North America. The passenger load factor achieved 81.4% for international services and 77.0% for domestic services.. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK After a two-year decrease, the annual FTK growth rate bounded back to +2.0% for European air carriers due to an upward FTK curve for the world as a whole. Carriers from Germany, the United Kingdom, the Netherlands and Luxembourg, together accounting for 56.8% of freight traffic performed by European carriers, recorded an annual change of -2.1%, -1.9%, -0.5% and +10.1%, respectively. 40 (Source: ICAO Form A and ICAO estimates)...

41 E u r o p e TOP 15 AIR CARRIERS (in RPK) In terms of RPK, the airlines in the top 15 account for 67.3% of air traffic by European airlines. Lufthansa is the largest carrier in Europe and posted a -0.6% decrease of RPK in International services performed by Lufthansa decreased by -0.3% and domestic services decreased by -7.7% (many routes were transferred to Germanwings). British Airways, the second largest European carrier in RPK, has recorded an increase of traffic in 2014 compared to 2013 (+4.3%). International services increased by +4.4%, while domestic services decreased by -3.6%. Ryanair, Easyjet and Norwegian ranked 4th, 8th and 13th, respectively. They were the 3 LCCs in the top 15 airlines of Europe and recorded growths of +9.2%, +7.7% and +35.4%, respectively. Turkish Airlines recorded the second highest increase in the top 15. The +16.3% growth of RPK in 2014 is due to the rapid network expansion of the airline during the previous year. (Source: ICAO Form A and ICAO estimates) TOP 15 STATES BY TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) In 2013, the top 15 States accounted for 95.0% of RPK performed by European airlines. Air carriers of the United Kingdom recorded a global increase of +6.0% of traffic in RPK in 2014, compared to British Airways, the main carrier, posted a +4.3% increase. Easyjet increased by +7.7%, while Virgin Atlantic recorded a decrease of -4.7%. Air traffic by German carriers reported a +3.1% increase in RPK in Lufthansa recorded a slight decrease of -0.6% and Air Berlin demonstrated an increase of +3.6%. Traffic performed by French airlines recorded a -0.3% decrease in 2014 compared to 2013, with Air France having a slight -0.7% decrease and Air Caraibes experiencing a +0.6% increase. Air Austral, however, reported a decrease of -6.0%. Airlines in Russia reported a +8.6% increase in RPK in Aeroflot Russian Airlines and Transaero achieved a +12.8% and +3.0% increase in RPK, respectively. Siberia Airlines and UTair Aviation recorded traffic variations of +9.8% and -5.2%. Airlines from Turkey, Spain and Hungary reported a double digit growth of +15.0%, +10.6% and +20.0%, respectively. In 2014, 11 of the top 15 States recorded a growth; France, Switzerland, Italy and Finland reported decreases of -0.3%, -0.3%, -5.3% and -0.9%, respectively. *Scandinavia jointly reported by Denmark, Norway and Sweden (Source: ICAO Form A and ICAO estimates)... 41

42 E u r o p e. SEASONALITY The capacity in ASK offered by European airlines follows the same trend as the worldwide average seasonality but effects are amplified between the winter season and summer season. Months offering the highest capacity are July and August. In 2014, European airlines offered more capacity from May to October than the average of the last ten years. In contrast, they offered less capacity from January to April, and in November and December. In 2014, the capacity offered in August was 56% higher than the month offering the lowest capacity (February).. TOP 15 AIRPORTS IN 2014 (Source: ICAO, OAG) London, Paris and Frankfurt airports all ranked in the top three in departure and passenger rankings of the region. Amsterdam ranked third and fourth in freight tonnes and departures, respectively, but dropped to fifth in passengers. Istanbul was the most dynamic airport in the European top 15, with a +10.6% growth in passenger traffic, +8.2% growth in departures and +15.5% growth in freight tonnes handled. All airports in the top 15 in passengers and freight tonnes have recorded a traffic growth in Paris and Frankfurt airports (top three in departures), have recorded a decrease in departures in (Source: ACI) (Source: ACI) (Source: ACI) 42...

43 E u r o p e LOW COST CARRIERS Europe had the highest LCC capacity share among all regions in 2014, measured in number of available seats. In 2014, 41% of the available seats within Europe were offered by LCCs, which is +11 percentage points higher than the world average LCC share. The intra-european market has the largest LCC capacity in terms of seats offered among all regions in 2014, with over 392 million seats offered by LCCs. LCC capacity has showed steady growth from 2005 to 2014, except in 2009 when the whole market capacity declined. Also, in the last ten years, the LCC market share in Europe has had the fastest growth within all regions. The percentage of seats within Europe offered by LCCs grew +18 percentage points from 22% in 2005 to 41% in 2014, +7 percentage points higher than the world average growth. LCC Traffic Intra Region (Source: ICAO, OAG) Europe had higher penetration of LCCs than the world average. In 2014, 94% of the European States had LCC traffic, +18 percentage points higher than the world average. The number of States with LCC traffic has increased from 2005 to In 2005, 37 States had LCC traffic, and in 2014, this number increased to 44 (see Appendix 3). The only decrease in the last 10 years was seen in The percentage of States having LCC traffic grew from 79% in 2005 to 94% in 2014, a 15 percentage point increase. This growth is slightly lower than the world average growth. Number of States with LCC Traffic in the Region (Source: ICAO, OAG)... 43

44

45 L a t i n A m e r i c a a n d t h e C a r i b b e a n REGIONAL KEY FIGURES 2014 (versus 2013) RPK +5.3% FTK +1.2% ASK +4.0% LF 77.9% +0.9 pts... 45

46 L a t i n A m e r i c a a n d t h e C a r i b b e a n. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF Passenger Traffic Performed Air carriers from Latin America and the Caribbean recorded an annual +5.3% growth of RPK in 2014, a slowdown compared to the 2013 growth (+6.7%), and the 2012 growth (+9.0%). The 2014 growth was supported by the expansion of air carriers such as GOL (+9.8%), Aeromexico (+11.2%) and Copa (+8.7%). Airlines from Latin America and the Caribbean carried 240 million passengers in 2014 (+3.9% compared with 2013). Airlines of Brazil, Mexico and Chile account for 62.9% of the air carriers' total passenger traffic in the region and showed a traffic variation of +4.0%, +11.3% and +4.9%, respectively, in terms of RPK. International traffic of air carriers in Latin America and the Caribbean represents 47.8% of the airlines' total RPK and recorded a +5.2% annual growth in Brazil is the largest domestic market in Latin America and the Caribbean accounting for 53.7% of domestic traffic in the region. Capacity Airlines from Latin America and the Caribbean increased their capacity in ASK by +4.0% in 2014, also a decrease of -0.5 points compared to 2013 growth (+4.5%). The capacity in ASK increased by +4.9% for international air services and by +3.2% for domestic services. In absolute terms, the States that contributed the most to increased capacity were Mexico (+13.4%), Panama (+14.2%) and Colombia (+7.9%). Passenger load factor (Source: ICAO Form A and ICAO estimates) The passenger load factor continued to increase in 2014: it reached 77.9% compared to 77.0% the previous year. The passenger load factor was 78.0% for international services and 77.9% for domestic services.. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Cargo Traffic performed by airlines from Latin America and the Caribbean recorded an annual growth of +1.2% in 2014 in terms of FTK, compared to +2.7% in (Source: ICAO Form A and ICAO estimates)...

47 L a t i n A m e r i c a a n d t h e C a r i b b e a n TOP 15 AIR CARRIERS (in RPK) In 2014, in terms of RPK, the top 15 airlines accounted for 83.5% of the air traffic performed by airlines from Latin America and the Caribbean. TAM Airlines, the largest carrier in Latin America and the Caribbean, saw RPK fall by -0.5%. The domestic traffic of TAM Airlines declined by -1.0% while international services increased slightly by +0.1%. GOL, the second largest carrier in the region, recorded an increase of +9.8% in 2014, compared to 2013, both for domestic (+7.8%) and international services (+28.3%). Four airlines in the top 15 were Brazilian airlines, two of them ranked first and second. Four airlines of the top 15 were Mexican airlines. GOL, Volaris, AZUL, Interjet, Oceanair and LAN Express were the six LCCs in the top 15 airlines of Latin America and the Caribbean. They achieved a growth in RPK of +9.8%, +8.6%, +31.6%, +6.0%, +23.2% and +13.5%, respectively. All airlines in the top 15 recorded an annual growth in RPK in 2014 except TAM Airlines (-0.5%) and Lan Peru (-4.7%). (Source: ICAO Form A and ICAO estimates) TOP 15 STATES BY TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) In 2014, the top 15 States accounted for 99.4% of RPK performed by airlines from Latin America and the Caribbean. Brazilian air carriers recorded a global RPK increase of +4.0% in 2014, compared to TAM Airlines, the biggest carrier, posted a -0.5% decrease, but the low-cost carrier GOL, a +9.8% increase. Domestic traffic grew by +4.2% and international traffic by +3.5%. Scheduled traffic performed by Mexican airlines recorded an +11.3% growth. Domestic traffic rose by +9.8% and international traffic by +13.7%. Aeromexico accounted for 37.6% of the total Mexican airlines. LCCs are particularly well established in the domestic market with 32.4% of traffic performed (Interjet, VivaAerobus and Volaris). Traffic performed by Chilean airlines recorded a +4.9% global increase in 2014, over LAN Chile is the main operator with 70.8% of the State's traffic performed. Airlines from Mexico, El Salvador and Venezuela posted a double digit growth of +11.3%, +11.2% and +12.0%, respectively. The traffic performed by the airlines of Costa Rica and Cuba declined by -12.1% and -11.0%, respectively, in (Source: ICAO Form A and ICAO estimates)... 47

48 L a t i n A m e r i c a a n d t h e C a r i b b e a n. SEASONALITY The capacity in ASK offered by airlines from Latin America and the Caribbean does not follow the same trend as the worldwide average seasonality. Months offering the highest capacity are December, January and March. In 2014, airlines from Latin America and the Caribbean offered more capacity from May to October than the average of the last ten years. In contrast, they offered less capacity from January to April, and in November and December. In 2014, the capacity offered in December was 17% higher than the month offering the lowest capacity (February). The Latin America and the Caribbean region has the lowest seasonality.. TOP 15 AIRPORTS IN 2014 In 2014, Mexico, Bogota and São Paulo (GRU) airports ranked in the top five for departures, passenger and freight tonne rankings of the region. Mexico, Bogota and São Paulo (GRU) airports, the top three airports for departures, have all recorded an increase in departures for Two airports serving São Paulo (GRU and CGH) ranked in the top five for departures and passengers. It is to be noted that six Brazilian airports ranked in the top 15 for departures and eight Brazilian airports ranked in the top 15 for passengers. (Source: ICAO, OAG) (Source: ACI) (Source: ACI) (Source: ACI) 48...

49 L a t i n A m e r i c a a n d t h e C a r i b b e a n LOW COST CARRIERS Latin America and the Caribbean had the second highest LCC capacity share among all regions in 2014; 38% of the available seats within the region were offered by LCCs in 2014, +8 percentage points higher than the world average LCC share. The number of seats offered by LCCs within the Latin America and the Caribbean market has continually grown from 2005 to In 2005, there were about 48 million seats offered by LCCs, and this grew to around 116 million seats in LCC market share in the region has increased at a similar pace compared to the world average growth in the last ten years. The percentage of seats within the region offered by LCCs grew from 27% in 2005 to 38% in 2014, +11 percentage points. LCC Traffic Intra Region (Source: ICAO, OAG) This region has a slightly higher penetration of LCCs than the world average. In 2014, 81% of the States in the region had LCC traffic, +6 percentage points higher than the world average. The number of States having LCC traffic in the region has been relatively stable in the last ten years. In 2005, 21 States in Latin America and the Caribbean had LCC traffic, and in 2014, there were 26 States (see Appendix 3) that had LCC traffic. The percentage of States in the region with LCC traffic has also been stable, with an increase of 66% in 2005 to 81% in 2014, +15 percentage points. This growth is slower than the world average growth. Number of States with LCC Traffic in the Region (Source: ICAO, OAG)... 49

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51 M i d d l e E a s t REGIONAL KEY FIGURES 2014 (versus 2013) RPK +11.3% FTK +12.1% ASK +10.9% LF 77.7% +0.3 pts... 51

52 M i d d l e E a s t. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF (Source: ICAO Form A and ICAO estimates) Passenger Traffic Performed Middle-Eastern air carriers kept a steady annual PRK growth of +11.3% in 2014, with the growth of RPK in 2013 being +11.2%. The 2014 growth was supported by the expansion of air carriers such as Emirates (+9.4%), Etihad Airways (+23.7%) and Qatar Airways (+15.0%). Those air carriers expanded their networks and benefited from their excellent geographical position to link different cities with only one stop in their respective hubs. Moreover, passenger traffic growth among the top 15 was more balanced in the region with only two air carriers, namely Royal Jordanian and Iran Air, both experiencing a slight decrease of -3.7%. Airlines of the United Arab Emirates, Qatar and Saudi Arabia account for 85.2% of the total passenger traffic of airlines in Middle East. International traffic of air carriers in the Middle East represented 94.8% of the airlines' total RPK and recorded a +11.5% annual growth in Saudi Arabia and the Islamic Republic of Iran were the largest domestic markets in the Middle East with 57.2% and 37.8%, respectively, of domestic traffic in the region. Domestic traffic in the Middle East showed a +8.5% growth in RPK in 2014 with growth in capacity of +8.1%. The Middle East is the region recording the highest traffic growth in the world. Capacity Middle-Eastern airlines increased their capacity in ASK by +10.9% in 2014, a decrease of -0.8 percentage point from 2013's growth (+11.7%). The capacity in ASK increased by +11.1% for international air services and by +8.1% for domestic services. In absolute terms, the States that contributed the most to increased capacity were the United Arab Emirates (+11.8%), Qatar (+13.5%) and Saudi Arabia (+16.9%). Passenger load factor The passenger load factor recovered in 2014: it reached 77.7% compared to 77.4% the previous year. The passenger load factor achieved 77.4% for international services and 82.7% for domestic services.. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Cargo traffic performed by Middle-Eastern carriers recorded an annual growth of +12.1% in 2014 in terms of FTK, compared to +12.0% in Air freight services performed by Middle-Eastern carriers are mostly international, and carriers of United Arab Emirates and Qatar, accounting for 85.2% of the traffic, recorded annual growth of +10.9% and +20.8%, respectively. 52 (Source: ICAO Form A and ICAO estimates)...

53 M i d d l e E a s t TOP 15 AIR CARRIERS (in RPK) In 2014, the airlines in the top 15 accounted for 97.6% of the traffic in terms of RPK performed by Middle-Eastern airlines. Emirates was the largest carrier in the Middle-East in terms of RPK and recorded a +9.4% increase in Qatar Airways, the second largest carrier in terms of RPK, recorded an increase of +15.0% in 2014 over Etihad Airways achieved a traffic increase of +23.7% in terms of RPK, notably with more capacity to North America (+69.7% in ASK), Asia and Pacific (+23.8%) and Middle East (+28.4%). Saudi Arabian Airlines recorded a global +17.0% increase in RPK. Domestic services and international operations both experienced an increase of +17.0%. Air Arabia, Flydubai and Flynas are the three LCCs in the top 15 airlines of the Middle-East. They achieved a growth in RPK of +11.3%, +9.3% and +15.6%, respectively. All airlines recorded a growth of traffic in RPK except Royal Jordanian and Iran Air. RANKING OF STATES IN TRAFFIC PERFORMED BY NATIONAL CARRIERS (in RPK) Air carriers of the United Arab Emirates recorded a global increase of +12.0% of traffic in RPK in 2014 compared to Emirates, the biggest carrier, posted a +9.4% increase and Etihad Airways, a +23.7% increase. Low cost carriers Air Arabia and Flydubai increased by +11.3% and +9.3%, respectively. Scheduled traffic performed by Qatari air carriers mainly consists of Qatar Airways, the national carrier (+15.0%). Traffic performed by Saudi Arabian carriers achieved a +16.9% global increase in 2014 compared to Saudi Arabian Airlines recorded a +17.0% increase, while Flynas reached +15.6%. Airlines from Israel reached a +3.2% increase. Airlines from the United Arab Emirates, Qatar and Saudi Arabia posted a double digit growth of +12.0%, +15.0% and +16.9%, respectively. The traffic of airlines from Jordan and Yemen declined in 2014, while traffic of airlines from Iraq and the Syrian Arab Republic remained stable. (Source: ICAO Form A and ICAO estimates) (Source: ICAO Form A and ICAO estimates)... 53

54 M i d d l e E a s t. SEASONALITY The seasonality of the capacity offered by Middle-Eastern airlines is in line with the worldwide average seasonality, except at the end of the year where Middle-Eastern carriers tend to offer more seats. Months offering highest capacity are August, October and December. In the first half of 2014, Middle-Eastern airlines followed their 10 year capacity average. In the second half of the year, they offered less capacity in summer (June to September), and more in the last quarter (October to December). In 2014, the capacity offered in December was 25% higher than the month offering the lowest capacity (February). (Source: ICAO, OAG). TOP 15 AIRPORTS IN 2014 In 2014, Dubai, Doha, Riyadh and Abu Dhabi airports all ranked in the top five for departures, passenger and freight tonnes rankings of the region. All airports in the top 15 of departures, except Dubai and Al Ain, recorded a traffic growth in All airports in the top 15 for passengers reported growth. Doha and Abu Dhabi have recorded a growth of departures, passengers and freight tonnes handled. * Mostly general aviation (Source: ACI) 54 (Source: ACI) (Source: ACI)...

55 M i d d l e E a s t LOW COST CARRIERS The Middle East has a lower LCC traffic share than the world average. In 2014, around 18% of the available seats within the region were offered by LCCs, 12 percentage points lower than the world average. The number of seats within the region offered by LCCs has increased from 2005 to In 2005, there were about 0.8 million seats offered by LCCs, and this increased to around 17 million seats in LCC market share in the Middle East has increased rapidly in the last ten years. The percentage of seats within the region offered by LCCs increased from only 2% in 2005 to 18% in 2013, then remained stable in The average increase, +16 percentage points, is faster than the world average growth of +11 percentage points. LCC Traffic Intra Region (Source: ICAO, OAG) LCC penetration in the Middle East has grown fast in the last ten years. Starting from 2008, nearly all States in the region had LCC traffic. The number of States in the region having LCC traffic has increased from 2005 to 2013, while slightly declined in In 2005, 11 States had LCC traffic, and in 2014, the number is around 12 States (see Appendix 3). The percentage of States in the Middle East having LCC traffic grew from 85% in 2005 to 100% in 2013 (+38 percentage points increase), then slightly dropped to 92% in This growth of 8% on average for the last ten years is lower than the world average growth. Number of States with LCC Traffic in the Region (Source: ICAO, OAG)... 55

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57 N o r t h A m e r i c a REGIONAL KEY FIGURES 2014 (versus 2013) RPK +3.0% FTK +3.2% ASK +2.7% LF 83.4% +0.3 pts... 57

58 N o r t h A m e r i c a. PASSENGER TRAFFIC Revenue Passenger-Kilometres RPK Available Seat-Kilometres ASK Passenger Load Factor LF (Source: ICAO Form A and ICAO estimates) Passenger Traffic Performed North American air carriers recorded an annual +3.0% growth of RPK in 2014, indicating a strong recovery trend as compared to the 2013 growth of +2.0%. The 2014 growth was supported by the expansion of air carriers such as Southwest (+8.2%), Delta Air Lines (+3.7%) and Air Canada (+8.5%). North American airlines carried 838 million passengers in 2014 (+2.9%, compared with 2013). Airlines of the United States account for 89.5% of total passenger traffic performed by airlines in North America. Airlines of the United States performed million RPK (+2.6%, compared to 2013) and airlines in Canada totalized 163 million RPK (+6.6% ). International traffic of air carriers in North America represented 35.0% of the airlines' total RPK and increased by +2.9% in The United States is the largest domestic market in the world and recorded an annual growth of +3.0% in Canada is the second largest domestic market in North America and recorded a +4.2% annual growth. Capacity Airlines from North America expanded their capacity in ASK by +2.7% in 2014, an increase of 1.0 percentage point compared to 2013 (+1.7%). The capacity in ASK grew by +4.3% for international air services and by +1.9% for domestic services. Passenger load factor The passenger load factor increased in 2014: it reached 83.4% compared to 83.1% the previous year. North America has the highest passenger average load factor among all ICAO regions. The passenger load factor reached 81.8% for international services and 84.2% for domestic services.. FREIGHT TRAFFIC Freight Tonne-Kilometres FTK Cargo traffic performed by airlines from North America increased by +3.2% in 2014, in terms of FTK, compared to a -4.9% decrease in (Source: ICAO Form A and ICAO estimates)...

59 N o r t h A m e r i c a TOP 15 AIR CARRIERS (in RPK) United Airlines was the largest carrier in the world and its traffic increased by +0.5% in 2014 with equal growth in international services and domestic services. Delta Airlines recorded an increase of traffic in 2014 over 2013 (+3.7%). Both domestic and international services recorded a growth of +3.5% and +3.9%, respectively. Among the top 15, Spirit Airlines and Frontier recorded the highest increases in RPK, with +18.0% and +15.1%, respectively. There were 5 LCCs in the top 15: Southwest, JetBlue, Westjet, Spirit Airlines and Frontier. Three Canadian airlines were ranked amongst the top 15: Air Canada (6th), Westjet (9th) and Air Transat (15th). TOP 15 AIRPORTS IN 2014 (Source: ICAO Form A and ICAO estimates) In 2014, Chicago, Atlanta, Los Angeles, Dallas and Denver ranked in the top five airports in terms of departures and passengers. Chicago became the airport that had the most commercial movements; Atlanta airport still ranked first for passenger traffic in the world. Chicago, Atlanta, Denver and Charlotte recorded a decrease in departures. All airports in the top 15 in terms of passenger traffic recorded increases, varying from +1.9% to +7.7%. Los Angeles departures increased by +1.7% while the number of passengers increased by +6.0%. (Source: ACI) (Source: ACI) * includes transit freight (Source: ACI)... 59

60 N o r t h A m e r i c a. SEASONALITY The capacity in ASK offered by airlines from North America follows the same trend as the worldwide average seasonality. Months offering the highest capacity are July and August. In 2014, airlines from North America offered the same capacity year round as in the average of the last ten years, with below-average capacity provided only in September, October and November. In 2014, the capacity offered in July was 31% higher than the month offering the lowest capacity (February). (Source: ICAO, OAG). LOW COST CARRIERS North America had a slightly higher LCC capacity share than the world average in For the same year, 32% of the available seats within the region were offered by LCCs, +2 percentage points higher than the world average LCC share. The number of seats offered by LCCs within the North American market increased from 2005 to 2008, and then declined in 2009 with a slow recovery afterwards. In 2005, 269 million seats were offered by LCCs, increasing to 299 million in In 2009, LCC capacity declined to 271 million seats offered, and then gradually increased to 292 million in Southwest Airlines had a 6% reduction of its capacity in 2009 over 2008, and JetBlue had a -2% reduction. LCC market share in the region has grown at a slower pace compared with the world average in the last ten years. The percentage of seats within the region offered by LCCs grew from 26% in 2005 to 32% in 2014, +6 percentage points. In 2009, as the number of seats offered by LCCs fell, the LCC market share declined accordingly. LCC Traffic Intra Region (Source: ICAO, OAG) 60...

61 Appendix 1: List of acronyms ACI: Airports Council International ASK: Available Seat-Kilometres FTK: Freight Tonnes-Kilometres ICAO: International Civil Aviation Organization ITF: International Transport Forum, Organisation for Economic Co-operation and Development LCC: Low cost carrier LF: Load factor OAG: Official Airline Guide RPK: Revenue Passenger-Kilometres UNWTO: World Tourism Organization VFR: Visiting friends and relatives YoY: Year on Year... 61

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63 Appendix 2: ICAO Regions and Member States as approved by the Council AFRICA Algeria Angola Benin Botswana Burkina Faso Burundi Cabo Verde Cameroon Central African Republic Chad Comoros Congo Côte d'ivoire Democratic Republic of the Congo Djibouti Egypt Equatorial Guinea Eritrea Ethiopia Gabon Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Libya Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda Sao Tome and Principe Senegal Seychelles Sierra Leone Somalia South Africa South Sudan Sudan Swaziland Togo Tunisia Uganda United Republic of Tanzania Zambia Zimbabwe Afghanistan Australia Bangladesh Bhutan Brunei Darussalam Cambodia China Cook Islands Democratic People's Republic of Korea Fiji India Indonesia Japan Kazakhstan ASIA AND PACIFIC Kiribati Kyrgyzstan Lao People's Democratic Republic Malaysia Maldives Marshall Islands Mongolia Myanmar Nauru Nepal New Zealand Pakistan Palau Papua New Guinea Philippines Republic of Korea Samoa Singapore Solomon Islands Sri Lanka Tajikistan Thailand Tonga Turkmenistan Uzbekistan Vanuatu Viet Nam Micronesia (Federated States of) Timor-Leste... 63

64 . EUROPE Albania Andorra Armenia Austria Azerbaijan Belarus Belgium Bosnia and Herzegovina Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Hungary Iceland Ireland Italy Latvia Lithuania Luxembourg Malta Monaco Montenegro Netherlands Norway Poland Portugal Republic of Moldova Romania Russian Federation San Marino Serbia Slovakia Slovenia Spain Sweden Switzerland The former Yugoslav Republic of Macedonia Turkey Ukraine United Kingdom LATIN AMERICA AND THE CARIBBEAN Antigua and Barbuda Argentina Bahamas Barbados Belize Bolivia (Plurinational State of) Brazil Chile Colombia Costa Rica Cuba Dominican Republic Ecuador El Salvador Grenada Guatemala Guyana Haiti Honduras Jamaica Mexico Nicaragua Panama Paraguay Peru Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Suriname Trinidad and Tobago Uruguay Venezuela (Bolivarian Republic of) 64...

65 MIDDLE EAST Bahrain Iran (Islamic Republic of) Iraq Israel Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Syrian Arab Republic United Arab Emirates Yemen NORTH AMERICA Canada United States... 65

66 . Appendix 3: List of States having LCC traffic by Region in 2014 Africa Asia and Pacific Europe Latin America and the Caribbean Algeria Botswana Burundi Cape Verde Djibouti Egypt Eritrea Ethiopia Gambia Kenya Mauritius Morocco Namibia Nigeria Rwanda Sao Tome and Principe Senegal Seychelles South Africa South Sudan Sudan Tunisia Uganda United Republic of Tanzania Zambia Afghanistan Australia Bangladesh Brunei Darussalam Cambodia China Cook Islands Fiji India Indonesia Japan Kazakhstan Kyrgyzstan Lao People's Democratic Republic Malaysia Maldives Myanmar Nepal New Zealand Pakistan Papua New Guinea Philippines Republic of Korea Samoa Singapore Solomon Islands Sri Lanka Tajikistan Thailand Tonga Turkmenistan Vanuatu Viet Nam Albania Armenia Austria Azerbaijan Belarus Belgium Bosnia and Herzegovina Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Hungary Iceland Ireland Italy Latvia Lithuania Luxembourg Malta Montenegro Netherlands Norway Poland Portugal Republic of Moldova Romania Russian Federation Serbia Slovakia Slovenia Spain Sweden Switzerland The former Yugoslav Republic of Macedonia Turkey Ukraine United Kingdom Antigua and Barbuda Argentina Bahamas Barbados Bolivia (Plurinational State of) Brazil Chile Colombia Costa Rica Cuba Dominican Republic El Salvador Grenada Guatemala Haiti Honduras Jamaica Mexico Nicaragua Panama Paraguay Peru Saint Lucia Trinidad and Tobago Uruguay Venezuela (Bolivarian Republic of) Middle East Bahrain Iran (Islamic Republic of) Iraq Israel Jordan Kuwait Lebanon Oman Qatar Saudi Arabia United Arab Emirates Yemen North America Canada United States 66...

67 Appendix 4: Implementation of the Recommendations of the Sixth Worldwide Air Transport Conference (ATConf/6) The ICAO Sixth Worldwide Air Transport Conference (ATConf/6) was held in Montréal from 18 to 22 March It was attended by over 1000 delegates and observers from 131 States and 39 International Organizations. The Conference produced a comprehensive package of conclusions and recommendations. The tasks undertaken and their status of implementation is presented in this Appendix. ICAO LONG-TERM VISION FOR INTERNATIONAL AIR TRANSPORT LIBERALIZATION To facilitate liberalization and guide stakeholders, ICAO has developed the following long-term vision: We, the Member States of the International Civil Aviation Organization, resolve to actively pursue the continuous liberalization of international air transport to the benefit of all stakeholders and the economy at large. We will be guided by the need to ensure respect for the highest levels of safety and security and the principle of fair and equal opportunity for all States and their stakeholders. Link to website: COMPENDIUM OF COMPETITION POLICIES AND PRACTICES An online compendium of competition policies and practices was developed, based on information from States. The compendium presents state competition profiles, including policies, practices and competition government agencies. Link to compendium: ICAO'S CORE PRINCIPLES ON CONSUMER PROTECTION ICAO has developed a set of core principles on consumer protection, to guide States and industry stakeholders. It responds to the need for regulatory and operational convergence and compatibility. Recognizing the dynamic nature of the air transport industry, the core principles are a living document, which will be refined and improved throughout its implementation. ICAO encourages States and industry stakeholders to apply the ICAO principles in policy-making, and in regulatory and operational practices. Link to website: INTERNATIONAL AGREEMENT FOR THE LIBERALIZATION OF AIR TRANSPORT One important step towards modernizing the international regulatory framework is to develop international agreements for States to liberalize market access for cargo and passenger service, as well as air carrier ownership and control. The draft agreement is currently under review by States for finalization. AVIATION SYSTEM BLOCK UPGRADES (ASBUs) In order to support the implementation of aviation system block upgrades, the new operational and economic incentive schemes will be established in line with the ICAO Global Air Navigation Plan. VOLUNTARY AIR TRANSPORT FUND The Voluntary Air Transport Fund serves as a mechanism for the collection of financial and in-kind contributions from States and other donors to support ICAO s projects related to the economic development of air transport. Link to website: 67

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