20-22 March 2018

Connecting the Americas through

Sustainable Tourism

Challenges and Opportunities for Regional

Air Connectivity

ICF proprietary and confidential. Do not copy, distribute, or disclose. 2

joined in

2011

joined in 2007 joined in

2012joined in

2014

Airports | Airlines | Aerospace & MRO | Asset Advisory

Founded in 1963

100+ professional staff

Dedicated exclusively to aviation

and aerospace

Blend of consulting professionals and

experienced aviation executives

Specialized, focused expertise

and proprietary knowledge

Broad functional capabilities

Backed by parent company ICF

(2016 revenue: US$1.05 billion)

Global presence — offices around

the world

ICF Aviation is one of the world’s largest and most experienced aviation and aerospace consulting firms

Aviation specialist focused on

commercial strategy, route

planning and fleet for airlines.

Supports airports and tourism

agencies with strategic planning

and development of air

services.

Before joining ICF in 2006, Ms.

Mejia worked for AeroMexico

22 years experience

Barbara Mejia

New York | Boston | Washington D.C. | London | Singapore

ICF proprietary and confidential. Do not copy, distribute, or disclose.

ICF offers a global airline client list and network of airline contacts

3

ICF proprietary and confidential. Do not copy, distribute, or disclose.

ICF is especially strong in international air service experience and support

4

Boston

Baltimore

Miami

Dallas/Ft. Worth

Denver

LasVegas

LosAngeles

U.S./Canada

Tampa

SaltLake City Islip

SanFrancisco

Ft. Myers

Richmond

Edmonton

Indianapolis

Omaha

San Paulo

LiberiaBogota

Port ofSpain

Medellin

Lima

Latin America and the Caribbean

*

* Mexico includes all airports managed by GAP, and MEX satellite airports

San Jose

San Juan

Quito

Santiago

Rio De Janeiro

Natal

*Spain includes all airports managed by AENA

Manchester

Newcastle

Donetsk

Cairo

Nantes

Stockholm

Istanbul

Birmingham

OmanMedinah

Heraklion

Jeddah Riyadh

Morocco

MoscowHamburg

London

Cheongju

Krasnoyarsk

Asia

SiemReap

ShanghaiKunming

Beijing

Khabarovsk

Hong Kong

Singapore

SeoulICN

Atlanta

Europe / Russia/ Middle East

Montego Bay

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Introduction

It is indisputable that the liberalization of air travel has

made a positive contribution to the growth of connectivity

and tourism

Regional air connectivity is moving in the right direction

However, there are tensions among stakeholders who all

need funding through:

Ticket and hotel taxes

Airport fees to airlines and passengers

Visa issuance fees (and complexities)

Overregulation including restrictive bilaterals

Stakeholders need revenue:

Airports to operate and make capital investments

Hotels to build and promote

Government to operate, create infrastructure, regulate and promote

Airlines to run profitable operations

These tensions work at cross-purposes to achieving the

greater goal, which is sustained economic impact

5

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Both supply and demand factors have contributed to robust passenger traffic growth rates in many countries across the region…

6Source: Airports Council International

Passenger Traffic Growth in Sample Countries, 2011-2016 CAGR

Mexico

+10%

Peru

+15%

Chile

+9% Argentina

+7%

Colombia

+10%

Panama

+20%

Dominican Republic

+8%

Ecuador

-2%

Uruguay

+1%

Brazil

+5%

USA

+3%

Canada

+5%

ICF proprietary and confidential. Do not copy, distribute, or disclose.

…which is also reflected in the growth of tourist arrivals

7

Source: UNWTO (countries not reporting 2016 data excluded)

12%

10%9%

8% 8% 8% 7%7% 6% 6% 6% 6% 6%

4%4%

0%

2%

4%

6%

8%

10%

12%

14%

Growth of Tourist Arrivals 2011 – 2016 CAGR, Top Fastest Growing in LAC

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Regional air connectivity in the Americas is moving in the right direction

8

Improvement in service and traffic growth

Big markets are already

served

Strong Latin American Carriers

Introduction of LCC

6% traffic

international

average

annual growth

in the last 5

years within

the region

The growth in

number of

non-stop

routes served

international

markets within

the Americas

grow by 26%

in the last 10

years

Latin America

Full Service

Carriers are

profitable and

have large

aircraft orders

LCC in Latin

America have

high market

shares or are

gaining market

shares,

especially in

the Domestic

Market

ICF proprietary and confidential. Do not copy, distribute, or disclose.

It is widely recognized that aviation/tourism drives significant economic benefits for the broader regional economy

9

$21.2 millones.

$228 millones.

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Yet many countries still present barriers to air travel and tourism, such as onerous visa requirements, infrastructure deficiencies and bilateral agreements

10

Country Score

Argentina 2.7

Barbados 3.8

Bolivia 2.2

Brazil 3.7

Chile 2.7

Colombia 2.8

Costa Rica 3.2

Dominican Republic 2.8

Ecuador 2.5

El Salvador 2.1

Guatemala 1.9

Honduras 2.2

Jamaica 2.4

Mexico 3.7

World Economic Forum

2017 Air Transport Infrastructure Scores

(1 Worst to 7 Best)

Source: World Economic Forum, Travel and Tourism Competitiveness Report 2017

Country Score

Nicaragua 2.0

Panama 4.7

Paraguay 1.6

Peru 2.5

Trinidad and Tobago 4.1

Uruguay 2.1

Venezuela 2.0

Averages:

LAC 2.7

East Asia 4.4

Middle East 3.2

Western Europe 3.8

Sub-Saharan Africa 2.0

World Economic Forum

2017 Visa Openness Index

ICF proprietary and confidential. Do not copy, distribute, or disclose.

In many countries in the region, taxes and airport fees add cost to airfares which could discourage air travel – but the data doesn’t always support that view

11

Note: Assumed a base one-way fare of USD 800 (international) to compute VAT, where applicable

Sources: ITA Matrix Airfare Search by Google, UNWTO

$38 $60 $51

$31 $49 $44 $35

$20 $36 $30

$180 $149 $144

$144 $76

$60

$41

$32

$218 $209

$195

$175

$125

$104

$76

$52 $36 $30

$0

$50

$100

$150

$200

$250

BOG UIO PUJ LIM EZE MVD SJO CUN GRU SCL

Airport Departure Fee

Government Imposed Tax

Comparison of Ticket Taxes on One-Way International Airfare (Base fare of USD 800)

10% 6% 7% 8% -1% 1% 6% 8% 4% 12%Growth of Tourist

Arrivals

CAGR 2011-16

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Governments jointly with other stakeholders can help grow air service and tourism via a focused program –resulting in sustainable connectivity

12

Stakeholders in a Successful Air Service Development (ASD) Program

Chambers of

Commerce

Regional or

Local Tourism

Entity

Hotel

Association

Specific Industry

Associations

Economic

Growth Agencies

Local

Governments

Airport &

Advisor

ASD programs can consist of:

Market data & recent developments

Specific route proposals

Incentive programs

Marketing & branding support

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Stakeholders must balance conflicting goals for the greater economic impact via holistic aviation and tourism policies

13

Visa/Immigration Policy

(National Security)

Airport/Government Taxes

(Need for $$$)

Economic Impact

Passenger Traffic

Tourist Arrivals

Home Country Airline Interest

(Political pressure)

Infrastructure

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Thank you!

For questions related to this presentation, please contact:

Barbara MejiaTechnical Directorbarbara.mejia@icf.com +1 917.345.3161

14

ICF proprietary and confidential. Do not copy, distribute, or disclose.

The Americas have experienced a 6% annual average growth on International Air Traffic within the Region

Source: IATA PaxIS 15

5%

4%

6%

- 10 20 30 40 50 60

North America-North America

Caribbean-North America

North America-South America

South America-South America

Central America-North America

Caribbean-South America

Caribbean-Caribbean

Central America-South America

Central America-CentralAmerica

Caribbean-Central America

Millions

Air Passenger International Traffic within the Americas by Region

CAGR YE Jan 2013- YE Jan 2018 Origin-Destination Passengers (Million)

7%

4%

Central

America-

North

America

North America-

North America

North America-

South America

South America-

South America

Caribbean-North

America

6%

Caribbean-

South America

-2%

Caribbean-

Caribbean

4%Central America-

South America

9%

Central America-

Central America

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Non-stop services in the Americas have increased by 26% in the last 10 years (2.3% annual average)

16Source: SRS Innovata Published Schedules

0

50

100

150

200

250

300

350

400

450

500Mar-08 Mar-18

Number of Direct Markets

The Central-South

America region have

seen the highest growth

with 6% annual average

over the last 10 years

The top destinations are

already well-served

within each region

There is still huge

opportunity to increase

service within the

Caribbean

Comparison Number of Non-stop Routes International Markets within the Americas

2008 vs. 2018 (excludes domestic markets)

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Latin American carriers are stronger with high level or aircraft orders and are providing good service to its customers

-$139.5

$63.0

-$219.3 -$225.0

$44.2 $58.5 $69.2

$339.8

-$300

-$200

-$100

$0

$100

$200

$300

$400

AviancaGroup

AeromexicoGroup

LATAMGroup

CopaAirlines

2015 2016

17Source: CAPA

Million USD

Main Full Service Carriers in Latin America

Net Profit (loss) – million USD

Main Full Service Carriers in Latin America

Confirmed Aircraft Orders

223

61

8066

0

50

100

150

200

250

AviancaGroup

AeromexicoGroup

LATAMGroup

CopaAirlines

Number of Aircraft

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Strong Latin American carriers coupled with the LCC boom that in some countries encompass 60% of the market share in the domestic market

18

0%

10%

20%

30%

40%

50%

60%

70%

Year

0

Year

1

Year

2

Year

3

Year

4

Year

5

Year

6

Year

7

Year

8

Year

9

Year

10

Year

11

Year

12

Year

13

Year

14

Year

15

Year

16

Year

17

Year

18

Year

19

Year

20

Canada Brazil Colombia Mexico US

Note: Year 0 defined as the first year with >4% LCC penetration; Aires not included as Colombian LCC

Source: : IATA, OAG

In only 6 years, Mexico’s

low-cost carriers achieved a

60% market share

Brazil took longer than

Mexico and has already

more than 50% of the market

share

US is a mature air market,

where LCC has around 30%

of the market share, similar

case as Canada

Colombia LCCs,

VivaColombia and Wingo,

are growing their market

share with 15% in the last

year

Low Cost Carriers Market Share in the Domestic Market

From First Year of Operation to Latest Year of Operation

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Market sizes within Latin America and Caribbean are still thin, therefore an opportunity for stakeholders to create critical mass

Rank Destination

Annual

Passengers

(‘000)

Passengers

Weekly

Each Way

Served

from

Guyana

Airlines

Providing

Service

Average

Fare

(USD)

1 New York 227 2,188

• Caribbean

Airlines

• Fly Jamaica

406

2 Port of Spain 83 801 • Caribbean

Airlines235

3 Toronto 64 619 • Fly Jamaica 395

4 Miami 54 520 • Surinam

Airways283

5 Kingston 53 513 • Fly Jamaica 315

6 Bridgetown 38 361 • LIAT 233

7 Santa Domingo 17 168 309

8 Panama City 15 148 • COPA 303

9 London 14 144 418

10 Paramaribo 10 96 • Surinam

Airways99

89% of Total

19

Note: Includes both airports in Guyana; Average Fares do not include concessions

Source: PaxIS CY 2017, Innovata Schedules YE March 2018

There is already

service to the top

destinations from

Guyana

Current Average

Fares are high,

however increased in

LCC presence with

intra-region service

would offer more

affordable fares

Top Market from/to Guyana by Air Traffic, CY 2017

ICF proprietary and confidential. Do not copy, distribute, or disclose.

Regions such as Caribbean need to develop a “multi-country” airline that would enable more connectivity within the region and to other destinations

20

Source: CAPA and carriers website

Current Active Fleet for Caribbean Carriers

Schedule Regular Service March 2018 There is lack of global brand

recognition among carriers in the

Caribbean

None of the Carriers in the Caribbean

is part of a Global Alliance

The carriers in the region are typically

small airlines

Etihad Airways has created a multi-

country model with its alliance

“Etihad Partners” covering over 300

destinations worldwide

17

12

12

11

10

10

4