A STELLAR START TO 2013, WITH FIVE PER CENT GROWTH IN INTERNATIONAL ARRIVALS IN THE FIRST QUARTER

Quarterly Update A STELLAR START TO 2013, WITH FIVE PER CENT GROWTH IN INTERNATIONAL ARRIVALS IN THE FIRST QUARTER According to the Australian Bureau of Statistics (ABS), there were 1.7 million short term international visitors to Australia during the three months to March 2013, an increase of five per cent compared to 2012. For the 12 months to March, short term visitors totalled 6.2 million, up five per cent compared to the previous year. The latest International Visitor Survey (IVS) results show that expenditure for the year-ending December 2012 reached AUD27.5 billion, an increase of four per cent. Leisure arrivals continue to grow out of Asia, the USA and New Zealand With major holiday periods such as the Lunar New Year and Easter occurring in the first quarter of 2013, Holiday and Visiting Friends and Relatives (VFR) arrival numbers were up a solid eight per cent and six per cent respectively in the first quarter. 1 The Greater China markets were the main contributors to the quarterly increases, with Holiday arrivals from China up 27 per cent and Hong Kong up 36 per cent. 1 Other top Holiday performers for the quarter included Singapore (up 37 per cent), Malaysia (up 17 per cent), and India (up 25 per cent). 1 The steady return to growth out of the USA continued, with total arrivals for the quarter up nine per cent, driven largely by the Holiday segment which grew by 17 per cent. 1 Overall, for the March 2013 year end, there was a six per cent increase in both Holiday and VFR visitors. 1 Australia s largest source market continued to grow in the first quarter of 2013, with Holiday arrivals from New Zealand up one per cent and VFR up four per cent. 1 Compared to a year ago, spend from the Holiday segment has improved, increasing by three per cent for 2012 calendar year, whilst spend from the VFR segment increased eight per cent on 2011. 2 Business Events There was solid growth in Business Events arrivals for the year-ending March 2013, up five per cent on 2011. 1 The top five business events markets for Australia remained unchanged as: New Zealand, the USA, China, Japan and the UK. International arrivals are forecast to gain further momentum in coming years According to the recently released Tourism Forecast 2013 Issue One by TFC, international visitor arrivals are forecast to increase five per cent to reach 6.3 million by the end of this fiscal year and then a further four per cent to 6.5 million in 2013-14. s expected to drive this growth include China, Malaysia, Singapore and India. With the USA market continuing to recover, arrivals are also expected to improve, with an increase of five per cent forecast for the year-ending June 2013. Resilience from Europe Visitor numbers from Germany, France and Italy have shown resilience in the first quarter, growing four per cent, six per cent and 13 per cent respectively. 1 In particular, growth was driven by the youth market aged 15-29 years. This was reflected in the rise in Working Holiday Maker visa application grants in the six months to 31 December 2012, where the number of visas offered to Germans were up 21.2 per cent, French up 24.5 per cent, and Italians up 78.3 per cent off a small base. 3 Arrival numbers from the UK have been weak in recent months, with cumulative decline of four per cent for the year-ending March 2013. 1 However, the Bank of England recently upgraded its economic growth forecast, which is now expected to be greater than one per cent for this year (up from 0.9 per cent) and inflation is forecast to drop to its target of two per cent within two years. It is hoped the upcoming major sporting events in Australia such as the British & Irish Lions rugby tour and the Ashes cricket series later in 2013 will also assist to boost arrivals out of the UK. 1. Australian Bureau of Statistics, Overseas & Departures, year-ending March 2013 2. International Visitor Survey (Tourism Research Australia), year-ending December 2012 3. Department of Immigration ad Citizenship, Working Holiday Maker visa program report, 31 December 2012 1 Tourism Australia s Quarterly Update Issue 10

Quarterly Update Tourist arrivals to Australia (rolling annual) and monthly percentage change on previous year 6,300,000 6,200,000 6,100,000 Monthly % change year-on-year (RHS) Annual tourist arrivals (LHS) World Youth Day (WYD) July 2008 Easter occured in April 2009 versus March 2008 Chinese New Year occured in Feb 2010 versus January 2009 Impact from Icelandic ash cloud April May 2010 Reverse impact from declines in arrivals out of NZ during RWC 2011 Start of Air Asia X's KUL SYD in Apr and Scoot's SIN SYD in June 15.0% 10.0% 6,000,000 5.0% 5,900,000 0.0% 5,800,000 5,700,000 5,600,000 'Credit crunch' and US recession begins (Nov 07) Global financial markets crash confirming GFC (Oct 08) Flooding and Cyclone Yasi in Queensland in February 2011 Volcanic eruption in Iceland impacted air transport from 14th April into May 2010 Japan earthquake and series of aftermaths RWC 2011 in NZ slowed outbound Kiwi travel in Sep & Oct Grounding of flights due to Chilean ash cloud June 2011 Chinese New Year occured in Feb 2013 versus Jan 2012 5.0% 10.0% 5,500,000 Reversed impact from WYD July 2008 5,400,000 Source: TA & ABS, 3401.0 Overseas and Departures, Australia, up to Mar 2013 15.0% Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 2 Tourism Australia s Quarterly Update Issue 10

Aviation Summary International aviation capacity growth to Australia has strengthened since the December 2012 quarter, up an estimated six per cent in the March 2013 quarter. Overall load factors are also expected to increase to 87 per cent, up one per cent. Results for Australia continue to be boosted by capacity growth from Singapore and Malaysia as well as growth from New Zealand, the United Arab Emirates and Japan in recent months. Key themes > > Capacity growth from China to Australia slowed temporarily during January and February, before resuming pace in March 2013: During Chinese New Year, an additional 30 services were operated from China to Australia by China Eastern Airlines, China Southern Airlines and Air China. Growth continues from secondary Chinese cities to Australia, with Sichuan Airlines launching thrice-weekly Chengdu-Melbourne services from February 2013. China Southern announced plans to deploy A380 aircraft on its daily Guangzhou-Sydney services from 27 October 2013, increasing capacity into Australia by 41 per cent. Global aviation environment Global aviation capacity increased four per cent in March 2013, with load factors also increasing. Demand was driven by emerging markets of Middle Eastern, Latin American and Asia Pacific carriers. Domestic aviation environment in Australia Australian domestic aviation capacity growth slowed in the March 2013 quarter, particularly during the month of February. Capacity increased by one per cent for the quarter, compared to over seven per cent growth in the second half of 2012. Average load factors increased 0.2 per cent to 74.4 per cent in February 2013, suggesting capacity is more closely aligned with demand. Growth continues to be focussed on high yielding traffic such as mining e.g. Newman-Perth, Brisbane-Gladstone, and Perth-Port Headland. > > Alliances and partnerships continue to develop and deepen: Virgin Australia s 100 per cent acquisition of Skywest Airlines and 60 per cent acquisition of Tiger Airways Australia was approved by authorities. Singapore Airlines also increased its stake in Virgin Australia to 19.9 per cent. Etihad is seeking approval to acquire a minority stake in Indian airline, Jet Airways. The potential injection of cash is likely to accelerate domestic and international expansion plans (which could include Australia) for Jet Airways as well as aircraft deliveries. If approved, it would be the first transaction approved since the government agreed to allow 49 per cent foreign investment in Indian carriers. British Airways and Cathay Pacific commenced codesharing on the UK-Australia route starting 31 March 2013. This will mean British Airways customers travelling to and from Sydney, Melbourne, Adelaide, Perth, Brisbane and Cairns can fly on Cathay Pacific services with a British Airways flight number and will provide consumers with increased schedule options and flexibility. The Qantas and Emirates alliance has been approved until 31 March 2018. Conditions were placed on specific trans-tasman routes to maintain collective capacity levels (Auckland-Sydney, Auckland-Melbourne, Auckland-Brisbane, and Christchurch-Sydney). Qantas has been granted approval to coordinate services and marketing with four Jetstar branded joint ventures (Jetstar Asia, Jetstar Pacific, Jetstar Japan and Jetstar Hong Kong). On 4 February 2013, Qantas announced its growing Asia strategy including the retiming of some routes (e.g. Hong Kong-Melbourne), cancellations (e.g. Singapore-Adelaide and Hong Kong-Perth) and increased frequencies (e.g. Singapore- Sydney). The carrier continues to explore opportunities with Asian carriers to provide regional connections. 3 Tourism Australia s Quarterly Update Issue 10

Aviation Summary Change in international and domestic seats for year ended March 2013 for selected airports % change on same month previous year Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Sydney Domestic 2% -1% 3% 10% 10% 10% 13% 8% 6% 7% 0% 3% 6% International 2% 3% 8% 6% 6% 6% 4% 4% 5% 3% 0% 4% 4% Melbourne Domestic 2% 1% 7% 18% 15% 16% 17% 16% 12% 10% 3% 5% 10% International 0% 0% 5% 1% 3% 5% 7% 4% 2% 3% 0% 6% 3% Brisbane Domestic 5% 4% 5% 8% 11% 11% 15% 10% 5% 9% 4% 6% 8% International 4% -7% 2% -1% -4% -2% -4% -1% -1% -2% 2% 8% -1% Gold Coast Domestic 5% -4% 7% 16% 17% 24% 20% 13% 13% 7% -2% 2% 10% International -3% -20% 11% 63% 56% 65% 19% 26% 24% 18% 20% 20% 22% Cairns Domestic 8% 8% 5% 10% 7% 11% 13% 11% 12% 13% 5% 5% 9% International -8% -12% -16% -16% -8% -12% -6% 2% -2% -5% 5% -4% -7% Adelaide Domestic -5% -2% 3% 6% 8% 8% 11% 11% 11% 12% 2% 7% 6% International 4% 2% 9% 21% 18% 19% 19% 36% 23% 20% 42% 48% 22% Perth Domestic 14% 15% 18% 20% 18% 15% 25% 14% 14% 12% 3% 6% 14% International 4% 4% 5% 8% 7% 10% 14% 13% 15% 13% 12% 17% 10% Darwin Domestic 2% -5% -6% 8% 10% 14% -100% 18% 13% 11% 14% 21% 9% International 3% -23% -25% -24% -32% -36% -34% -17% -26% -25% -27% 2% -23% YE Mar 13 Outlook In the June 2013 quarter, Tourism Australia anticipates discussions will continue on a number of bilateral agreements where capacity is currently constrained (such as Malaysia and the Philippines). The outlook for additional capacity growth on international routes into and around Australia remains positive. For further aviation information, see Tourism Australia s monthly Aviation Newsletter published on www.tourism.australia.com 4 Tourism Australia s Quarterly Update Issue 10

Greater China China 659,400 17.5% 16.6% Hong Kong 183,400 7.8% 14.5% Visitor arrivals from China continued to grow at a robust pace, led by growing numbers of Holiday and VFR visitors in three months to March 2013. The Holiday and VFR segments are also driving solid growth in arrivals from Hong Kong. Visitor numbers from China continued to grow for the first three months of 2013, boosted by a busy Chinese New Year (CNY) period in February. Over the CNY period, there were 30 additional services between China and a number of Australian destinations. For the year-ending March 2013, visitor arrivals increased by 18 per cent, driven by the strong Holiday segment which accounts for 52 per cent of total visitors from China. Apart from Education, all other segments registered growth in the 12 month period, including Business Events which increased 13 per cent. Chinese visitors continue to spend more, stay longer and disperse outside of Australia s gateway cities. Expenditure by Chinese visitors reached AUD4.2 billion for the 2012 calendar year, up 13 per cent on 2011. Leisure visitors (Holiday and VFR) represented 38 per cent of total spend, or AUD1.6 billion. Of Leisure visitors, the Holiday segment performed strongly with total spend up 24 per cent, visitor nights up 16 per cent and dispersed nights up 47 per cent. A quarter of total nights spent in Australia were outside of gateway cities of Sydney, Melbourne, Brisbane and Perth. For the first three months of the year, visitors from Hong Kong to Australia increased 15 per cent compared to 2012. Overall, for the 12 months to March 2013, visitor numbers were up eight per cent, predominantly driven by Holiday arrivals. Despite growth in spend by Leisure visitors for the year-ending December 2012, the overall result for the market was impacted by the decline in spending by the Education segment. Spend by visitors from Hong Kong totalled AUD785 million in 2012, a decline of four per cent compared to 2011. However, the Leisure segment performed well with spend up six per cent, visitor nights up six per cent, and dispersed nights up 16 per cent. > > China Eastern Airlines plans to increase its Shanghai-Cairns services from two to three per week from 1 July 2013. > > China Southern Airlines plans to launch its flagship A380 on the Guangzhou-Sydney route from 27 October 2013. > > China Southern Airlines plans to increase its Guangzhou-Brisbane service (from four to five per week) from June 2013. > > China Southern Airlines launched thrice-weekly Guangzhou-Brisbane- Cairns-Guangzhou service between 29 January 2013 and 1 March 2013, making Cairns the sixth destination for China Southern Airlines in Oceania. > > Following Beijing and Shanghai, the Guangdong Government has proposed the introduction of a 72-hour visa free policy which should help build Guangzhou Airport into a transit hub for China Southern Airlines. > > On 4 February 2013 Qantas announced its growing Asia strategy including the retiming of some routes (such as Hong Kong-Melbourne). The carrier continues to explore opportunities with Asian carriers to provide regional connections. > > Newcastle Airport is targeting new direct services to Adelaide, Cairns and Perth within the next 12 months, in part to improve access for Chinese tourists to the Hunter region. > > China s expenditure on travel abroad reached USD102 billion in 2012, making it the leading tourism source market in the world in terms of spending. 4 > > New Australian products in the China market include: Shenzhen CEPT travel agency launched its new product promotion on golfing and self drive to Australia in March 2013. Sichuan CYTS Shuncheng Branch is now promoting eight Australian golfing itineraries in Western China. 4. United Nations World Tourism Organisation media release, China - the new number one tourism source market in the world, 4 April 2013 (http://media.unwto.org/en/press-release/2013-04-04/china-new-number-one-tourism-source-market-world) 5 Tourism Australia s Quarterly Update Issue 10

Japan and South Korea Japan 346,500 2.5% -7.5% South Korea 192,900-2.8% -6.8% Holiday visitors were the driver behind arrivals growth out of Japan for the year-ending March 2013. Japan remains the fourth largest inbound market for Business Events, which grew five per cent for the year-ending March 2013. A slower economy, political uncertainty and poor consumer confidence, as well as a declining Education visitor segment out of South Korea, has affected visitor numbers and spend. Despite a drop in the number of Japanese visitors to Australia in the first three months of the year, arrivals were up three per cent for the year-ended March 2013. This growth was driven by Holiday visitors, which remained the largest segment out of Japan. However, total visitor numbers are still below the 2010 levels, prior to the natural disasters of 2011. Japan remains the fourth largest inbound market for Business Events, which performed solidly for the year-ending March 2013 with five per cent growth. The Leisure segment (Holiday and VFR) was the driver behind growth in expenditure and visitor nights for the year-ended December 2012. Prime Minister Abe s stimulatory package has driven a strong rise in the stock market, pushed down the value of the yen and is creating early signs of a rise in consumer confidence in some segments. According to Nielsen, consumer confidence in Japan increased 14 points to 73 for the first quarter of 2013, however it remains well-below the global average of 93. 5 Through the Asia ing Fund, Tourism Australia has partnered with BS Asahi, Japan Airlines, industry and State and Regional Tourism Offices on a TV broadcast program aiming to revitalise perceptions of an Australian holiday in the Japan market. The TV series, which encourages Japanese consumers to rank the experiences featured in the show via digital platforms, launched in April and will run throughout May. Travel seller partners are already capitalising on the initiative, promoting new itineraries and products featured in the program. Visitor numbers from Korea softened in the 12 months to March 2013, against the backdrop of a slower economy, political uncertainty and poor consumer confidence. were down three per cent, impacted by a decline in Education visitors. Business Events arrivals for the year remained stable. Overall expenditure from the Korean market was down four per cent for the 2012 calendar year, affected mainly by a decline in spend by Education and Holiday visitors. At the same time, the VFR segment remained steady with spend up two per cent, visitor nights up 29 per cent and the doubling of dispersed nights. This may be influenced by the growing Working Holiday Maker (WHM) segment out Korea, which was ranked the third largest market for Australia in regards to the number of WHM visas granted for the second half of 2012. Tourism Australia will undertake additional research into understanding the barriers impeding the growth of the Korean market for Australia, and key actions to increase arrivals and spend. > > Jetstar has announced spot cancellations to the Narita-Cairns services for nine selected days starting 10. > > Jetstar will increase its Osaka-Cairns service, to a daily service, from 24 July to 1 September 2013. > > Japan s Ministry of Land, Infrastructure, Transport and Tourism has approved Virgin Australia s application to codeshare with Singapore Airlines on services between Japan and Australia from 28 February 2013. The Ministry s approval covers codeshare on services between Sydney, Melbourne, Brisbane, Perth, Adelaide and Darwin to Singapore, and onto Tokyo Narita, Nagoya Chubu, Osaka Kansai and Fukuoka. > > Japan Airlines has announced it will use the 787 Dreamliner on Tokyo Narita-Sydney services from December 2013, effectively diminishing capacity by up to 24 per cent, however improving the passenger experience. > > Heavy demand from Australians travelling to Japan in the first quarter for skiing has reduced the number of seats available for Japan-Australia traffic in an already tight capacity environment. > > Korean Air suspended a number of services in Northern Summer 2013, including its thrice-weekly Seoul-Melbourne services from 3 March 2013. > > Air Asia X announced the launch of its Busan-Kuala Lumpur route in April, and is heavily promoting its Australian routes to Perth, Melbourne, the Gold Coast and Sydney effective from July 2013 onwards. > > In February 2013, JTB and Air Asia Expedia announced a joint partnership which will offer mutual access to accommodation listings available on their booking websites. > > The Japan Travel Bureau Foundation reported that Facebook is the most used social media website among Japanese opinion leaders who like travelling (42 per cent), followed by mixi (27 per cent), Twitter (26 per cent), and LINE (20 per cent). 6 > > In March, Hanatour launched its new FIT brand, Hanafree. > > According to Hotels.com, 80 per cent of Korean travellers want free WIFI service in their hotel rooms. 5. Neilsen Global Survey of Consumer Confidence, Q1 2013, based on respondents with online access only 6. Sakiyomi Trend #23 by Japan Travel Bureau Foundation, February 2013 6 Tourism Australia s Quarterly Update Issue 10

South and South East Asia Singapore 355,800 12.6% 18.2% Malaysia 268,200 12.5% 10.1% India 160,900 7.3% 4.3% Indonesia 144,200 0.6% -4.3% Singapore has become Australia s fifth largest inbound market in terms of visitor arrivals. The Leisure segment continues to perform well out of India, with increases in arrivals and spend. Business Events performed well out of Malaysia, increasing by seven per cent compared to 2012. A decline in spending by Holiday, Business and Employment visitors impacted overall spend results for Indonesia. There has been strong growth out of the Singapore market in early 2013, with arrivals increasing 18 per cent for January to March. For the 12 month period ending March 2013, visitor numbers were up 13 per cent and the Singapore market became Australia s fifth largest inbound market for visitor arrivals. This growth has been driven by a strong Leisure segment (Holiday and VFR) which increased 21 per cent. Singaporeans are spending more, staying longer and dispersing outside of Australia s gateway cities. The Holiday segment performed well in 2012, with growth in spend (up 4 per cent), visitor nights (up 6 per cent) and dispersed nights (up 15 per cent) during the calendar year. The Leisure segment continues to drive growth out of India, with total arrivals increasing four percent in the first three months of 2013, and seven per cent for the year-ending March 2013. Business Events is also a top performing segment, with 28 per cent growth for the 12 months to March 2013, buoyed by the 4,000 delegates from Amway India who visited during December 2012. Declines in Education spending softened the overall result for 2012, despite 50 per cent growth in spending by Holiday visitors compared to 2011. Holiday and VFR spend now represents 31 per cent of total expenditure out of the Indian market. In 2012, dispersed nights spent outside of Australia s gateway cities increased 30 per cent, driven by the VFR segment. Visitor numbers from Malaysia increased 10 per cent for the first three months of 2013, and 13 per cent for the year-ending March 2013. The Leisure segment has been key to this growth, with Holiday visitors increasing 14 per cent and VFR increasing 21 per cent for the year-ending March 2013. Further growth is forecast this year following anecdotal industry feedback that consumers were putting short-term travel plans on hold in anticipation of the general election, which was held on 5 May 2013. Business Events arrivals also grew during the year-ending March 2013, up seven per cent. Despite declines in spend by the Holiday and Education segments, overall spend from the market was up eight percent for the year-ending December 2012. Visitor nights and dispersed nights also increased overall. the year-ending March 2013, visitor numbers were up one per cent with the highest increases seen in the VFR segment and a decline of 2 per cent in Holiday arrivals for that period. Overall spend for the yearending December 2012 declined two per cent, impacted by declines from Holiday, Business and Employment visitors. Visitor nights and dispersed nights for the Leisure segment are growing. Tourism Australia, in partnership with the Department of Immigration and Citizenship, has rolled out the Preferred Agency Scheme (PAS) to help facilitate visa application responses to within 48 hours. To date, 13 Aussie Specialist Agencies have been appointed. > > From 1 July 2013, Singapore Airlines plans to increase its Singapore- Adelaide services (from 10 to 12 per week) and Singapore-Melbourne services (21 to 28 per week). The airline also plans to temporarily reduce services in the three weeks ending 26 May: Singapore-Brisbane (21 to 20 per week), Singapore-Melbourne (21 to 18), and Singapore- Sydney (28 to 26). > > Etihad Airways increased Abu Dhabi-Singapore-Brisbane frequencies to daily from 1 February 2013. > > Tiger Airways plans to increase Singapore-Perth frequencies from daily to 10 per week from 1 June 2013. > > Cathay Pacific will introduce three additional flights per week on its Mumbai-Hong Kong route from April 2013. These flights will reduce layover time in Hong Kong for travel to and from Sydney and Melbourne. > > Malaysia Airlines joined the Oneworld alliance in February 2013, which will enable the airline to offer better domestic connections within Australia through its Oneworld partner Qantas. > > Malaysia Airlines will reportedly increase Kuala Lumpur-Brisbane frequencies from five times weekly to daily from 17 September 2013. > > Garuda Indonesia plans to launch daily Jakarta-Perth services from 28 June 2013, using B737-800 aircraft. In August, it will commence services to Brisbane from Jakarta, via Denpasar. > > Lion Air recently announced plans to launch Lion Air Australia as part of a South East Asia and Australia strategy, with an intention to fly to Darwin and Adelaide via Denpasar. > > According to recent research conducted by online travel portal Wego, Malaysians are increasingly exploring new destinations driven by new air routes in the region. > > TripZilla deals site has expanded to Malaysia offering 3,000 packages and itineraries from 69 travel agents. > > Smailing Tour has appointed Joycelyn Su as Chief Operating Officer heading the Leisure Travel division effective March 2013. > > International online travel portal, Travelocity, has closed its India operations. Total visitor numbers from Indonesia declined by four per cent from January to March 2013, impacted by declines in Holiday visitors, whilst VFR grew by eight per cent and Business increased by 12 per cent. For 7 Tourism Australia s Quarterly Update Issue 10

New Zealand New Zealand 1,208,100 2.3% 2.9% New Zealand remained Australia s largest inbound market by total visitor arrivals and Business Events arrivals for the year-ending March 2013. New Zealand visitors are spending more money and staying longer in Australia, however they are reducing the number of nights spent outside Australian gateway cities. The New Zealand market has continued to perform well overall, up three per cent in the first three months of 2013 and up two per cent for the 12 months to March 2013. Leisure visitors remained the strongest performing segment for the year, accounting for 69 per cent of total arrivals. New Zealand also continued to be the largest source market for Business Events visitors to Australia, with more than 42,000 arrivals, despite a six per cent decline in year-ending March 2013. For the year-ending December 2012, overall spend by visitors from New Zealand increased by five per cent to AUD2.3 billion, driven by strong growth in the VFR segment. Holiday and VFR visitors continued to increase their spending and visitor nights in Australia, albeit at slower rates than the previous quarter. Dispersed nights from the market declined 10 per cent compared to 2011, with anecdotal feedback continuing to suggest this has been affected by continued airline sale activity to gateways. Tourism Australia is partnering with Tourism & Events Queensland and Air New Zealand on a campaign during April and May to mitigate competitor activity over the New Zealand winter and assist dispersal challenges. > > At the Australia-New Zealand annual leader s summit in February 2013, the Governments of both countries agreed to fast track automated border processing procedures. The technology will be trialled over the next two years. > > The Qantas-Emirates alliance received regulatory approval from the New Zealand government on 15 May allowing the two carriers to cooperate on the trans-tasman route. The Australian authorities approved the alliance with conditions two months earlier. > > Air New Zealand will commence its second seasonal direct Auckland-Sunshine Coast service from 18 June to 13 October 2013. > > Air New Zealand announced two weekly non-stop Christchurch- Perth flights to be trialled between December 2013 and April 2014, to complement its existing Auckland-Perth services. > > Tourism Fiji is underway to recruit a new General Manager New Zealand and Global ing Manager. > > Fiji Airways, formerly Air Pacific, Managing Director and CEO David Pflieger is leaving the airline and will return to the USA at the end of his three-year contract on 1. Pflieger is also currently chairman of Tourism Fiji. > > Since its restructure in January 2013, Air New Zealand has announced an increased business focus on travel distribution and service, and has made further key appointments for the new structure: Nick Judd is the new GM of Government, Corporate and Distribution Annabelle Fowler is the GM Development and Retail Sales. 8 Tourism Australia s Quarterly Update Issue 10

Americas USA 490,700 6.6% 9.1% Canada 119,200 0.4% -2.1% Brazil 32,200 10.3.% 14.3% More Americans continue to travel to Australia, driven by growth in the Holiday segment. Canada is not recovering as quickly as the USA, with visitor numbers marginally increasing for the year-ending March 2013. Australia continues to be an increasingly popular long haul destination for Brazilians, particularly amongst Leisure travellers. It has been a strong start to the year for the USA, with visitor numbers for the first three months of 2013 up nine per cent, compared to 2012. Holiday visitors remained the largest segment and the driver of arrivals growth for January to March 2013, up 17 per cent. For the year-ending March 2013, visitor numbers were up seven per cent with the major visitor segments of Holiday, Visiting Friends and Relatives (VFR) and Business all growing. numbers are edging closer to the previous peak of 502,106 during the year-ending June 2001, following the Sydney Olympic Games. Business Events has performed well, with visitors up 24 per cent for the 12 months to March 2013. For the 2012 calendar year Americans were spending more and staying longer on their trips to Australia. Expenditure totalled AUD2.4 billion for the year, an increase of eight per cent. Holiday visitors contributed 38 per cent to the total expenditure and were the driver behind spend growth during the year. The number of dispersed nights Americans spent outside Australia s gateways cities (Sydney, Melbourne, Brisbane and Perth) remained stable in 2012. The Canadian market has not performed as well as the USA for the first three months of 2013, with visitor numbers down two per cent. For the year-ending March 2013, visitor numbers were up marginally following growth across the VFR and Education segments. For the year-ending December 2012, spend by Canadian visitors remained flat compared to 2011 while the number of visitor nights and dispersed nights declined. The number of Brazilian visitors to Australia continues to increase, up 14 per cent for the first three months of 2013, and totalling 32,200 for the year-ending March 2013. growth remains to be driven by the Leisure segment (those travelling for Holiday or VFR purposes). Brazilians were spending more and staying longer with solid growth experienced for all key indicators in the 12 months to December 2012. > > Fiji Airways, formerly Air Pacific, announced it will increase capacity from Nadi to Brisbane, Sydney and Melbourne starting from 21 April 2013 with the delivery of its new A330s. This will indirectly increase capacity between North America and Australia. > > Hawaiian Airlines plans to add three additional seasonal services between Honolulu and Sydney and two additional services per week from Honolulu to Brisbane during September and October 2013. Hawaiian Airline s growth is more likely to assist Australian outbound. However, anecdotal feedback suggests that awareness of its inbound services to Australia is increasing with competitive fare offers. > > South American carrier LATAM Airlines Group, which formed last year from a merger between LAN and TAM, announced it will pursue the Australian Meetings, Incentives, Conferences and Exhibitions (MICE) market by exhibiting at Asia-Pacific Incentives and Meetings Expo in 2014 under the new airline brand. > > American Express announced it will cut an estimated 5,400 jobs as part of a restructuring program, with the largest percentage of job losses coming from its Travel Division. > > Vacation.com (Part of the Travel Leaders Consortium) added 137 new Canadian members in 2012, increasing its Canadian presence to over 600 agency partners. > > Thomas Cook North America was sold for CAD5.3 million to Red Label Vacations, which owns and operates the website redtag.ca. > > Contiki Vacations named former STA Vice President of Sales, Melissa da Silva as President of US Operations. > > Ensemble Travel Group appointed Georganne Shirk as Vice President, ing for Canada. > > Goway Travel was named wholesaler of the year by TravelHotNews, as voted by industry partners in Canada. > > Travel 2 (part of Stella Travel USA) launched its brand and product in Canada, naming Leia Marvin Director of Sales. > > According to a study by social media analytics company SocialBakers, 30 million Brazilians joined Facebook in 2012 representing the biggest increase in any country in the world. Brazilian users on average spent 535 minutes a month on the site, 208 per cent more time than in 2011. 7 7. www.socialbakers.com/facebook-statistics/brazil 9 Tourism Australia s Quarterly Update Issue 10

UK and Europe UK 592,400-3.5% -0.6% Germany 156,700 2.6% 4.2% France 99,100 4.5% 5.8% Italy 62,900 11.9% 13% Business Events continues to perform well out of the UK, with nine per cent growth for the year-ending March 2013. Leisure visitors are driving the growth out of the German market. Youth and Working Holiday Makers (WHM) continue to drive arrivals growth out of France and Italy. It has been a slow start to 2013 from the UK market, with decreases in Holiday and Business arrivals for the first three months of the year. In the 12 months to March 2013, arrivals growth from the Business segment combined with a stable VFR segment softened the impact of the decline in Holiday visitors. For the 12 month period, total arrivals declined four per cent compared to the previous year. Business Events arrivals continue to perform well, with nine per cent growth for the year-ending March 2013. UK visitor expenditure inched out of decline during the last quarter of 2012, resulting in one per cent growth for the year-ending December 2012. The growth in spend was caused by increases in length of stay across most visitor segments, with the number of visitor nights up five per cent for Holiday, seven per cent for VFR and eight per cent for Business. Tourism Australia continues to work with partners to leverage the tourism opportunities offered by the British & Irish Lions Rugby Tour (starting in June 2013) and the Ashes Cricket Tour (December 2013) to stimulate demand for Australia in difficult market conditions. Anecdotal feedback suggests forward bookings to Australia have improved in the lead up to the British & Irish Lions tour and that booking times are lengthening to six months with strong bookings reported for 2014. Despite the continuing economic challenges in the European region, Germany s economy remains resilient. Unemployment remains low and Nielsen reports consumer confidence up four points to 91 in the first quarter of 2013. 8 There has been a positive start to 2013 with visitor numbers from Germany increasing four per cent compared to the first quarter of 2012. For the year-ending March 2013, arrivals numbers were up by three per cent, driven by the Leisure segment (Holiday and VFR). In local currency (EUR) expenditure remains positive, up five per cent for the 2012 calendar year, however spend declined in Australian dollars, impacted by the strong local currency against the Euro. In 2012, the number of visitor nights increased two per cent, driven by the Holiday segment. Against the backdrop of a soft economic outlook for France and Italy, visitor numbers have been encouraging in the first three months of 2013, up six per cent and 13 per cent respectively. from France for the year-ending March 2013 grew five per cent, compared to the same period last year, driven by strong a performance from the youth market and Working Holiday Makers. Growth in spend by French Holiday visitors could not compensate for spend declines by other segments, resulting in an overall decline of five per cent in 2012. However, similar to Germany, spend in local currency was positive, increasing two per cent. The total number of French visitor nights increased in 2012, while spend per trip and spend per night decreased, which is likely a result of the increased proportion of youth and WHM visitors from the market. Italians arrivals for the year-ending March 2013 reached 62,900, representing an all-time high for the market. All visitor segments delivered growth during the 12 month period. Spend by Italian visitors was also strong in the last two quarters of 2012, resulting in growth of seven per cent for the calendar year. Italians are also staying longer and dispersing outside of Australia s gateway cities of Sydney, Melbourne, Brisbane and Perth. The youth and WHM segments are performing well out of this market. > > Following the approval of the Qantas and Emirates alliance by the Australian Competition and Consumer Commission: The Qantas and British Airways Joint Services Agreement was terminated in March 2013. Qantas advised the double daily A380 services between London Heathrow and Sydney and Melbourne would continue with the same schedule. Qantas discontinued its Frankfurt-Sydney service on 15 April 2013. > > Emirates increased its from Dubai-Perth service to triple-daily from March 2013. > > British Airways and Cathay Pacific Airways started their codeshare agreement from 31 March 2013 for services to Australia, meaning customers travelling to Australia can connect via Hong Kong to flights operated by Cathay Pacific to destinations including Sydney, Melbourne, Perth, Brisbane and Cairns. > > Virgin Australia confirmed plans in April 2013 that it intends to allow AirBerlin to start codesharing on services between Abu Dhabi and Sydney. Virgin currently operates thrice-weekly return services to Abu Dhabi out of Sydney, while AirBerlin currently operates flights to Abu Dhabi from Düsseldorf and Berlin, as well as Frankfurt and Munich on Etihad code share agreements. > > Virgin Australia has expressed interest in operating Italy-Australia services to the International Air Services Commission (IASC). 10 Tourism Australia s Quarterly Update Issue 10

UK and Europe > > Airline appointments in the region include: UK - Etihad has appointed Wayne Redman, Manager in charge of Meeting Incentives Conference and Exhibitions (MICE). UK - Emirates has appointed Fiona Passant, Senior Sales Executive in charge of MICE. Italy - Emirates appointed Thierry Aucoc as its interim Manager for Italy, effective immediately. Mr Aucoc is also currently the airline s Country Manager for France based in Paris. Germany - Emirates appointed former Lufthansa executive Anett Heid the new Global Accounts Manager for the Germany market based in Frankfurt. Germany - Christoph Heberer has been announced as the new ing Manager of Singapore Airlines in Germany, following Dr. Norbert Hofmann s retirement in April 2013. > > According to the Business Travel Show annual survey, buyers of business travel in the UK will become increasingly strategic in 2013, seeing their roles being far more procurement led and focused on reducing the cost of travel rather than the amount of travel. 9 > > Long haul specialist Explorer Fernreisen expanded its retail network by taking over six Travel Overland branches in 2013. > > FVW Media group is being sold to Verlagsgruppe Deutscher Fachverlag. This also includes Travel Talk and Biz Travel. > > Former Vodafone Germany Manager Friedrich Joussen has been appointed as Head of TUI AG. > > TUI Germany is intensifying its cooperation with Boomerang Reisen, with Boomerang taking over the production of the TUI Australia/New Zealand product. > > There have been a number of management position changes at STA Germany: Nadine Mathis has been appointed the new GM for STA Switzerland, Reinhard Kotzaurek will take the position for Austria and Isa Weber has been appointed as Sales Manager in Germany. > > Luca Battifora has been appointed as the new Hotelplan Italia CEO and announced plans to focus on a number of markets, one of which is Australia. > > Alessandro Rosso Group bought the brand Kuoni and appointed Marco Cisini as CEO. Cristina Langi has been confirmed Product Manager Australia. 8. Neilsen Global Survey of Consumer Confidence, Q1 2013, based on respondents with online access only 9. Buyers strategy in 2013: reduce costs, not travel; January 2013 http://www.meetpie.com/modules/newsmodule/newsdetails.aspx?newsid=16400 11 Tourism Australia s Quarterly Update Issue 10