Asia Pacific Airline Training Symposium

1
Asia Pacific Airline Training Symposium

• The Business of Aviation Training
• Set for Takeoff (? Or !)
• 8 September 2009 Steve Mann
• Project Director
• CAPA AeroPark

2
Why invest in training? (Answer To prepare
for the unexpected and uncertain)!
Your trial period is over! Please register to
continue using this software
OK
Source http//www.pilotfriend.com/humour/jokes/c
artoons.htm
3
Aviation Training covers a wide spectrum of
disciplines, in an ever-changing environment
Industry Learning
Safety Security
Industry Health
Technical Skills
Maintenance Eng.
IT
Air Traffic Mgmt
Aviation Law
Environmental
Safety Management Systems
Airline Finance Accounting
Regulation
Pilot Training
Aircraft Leasing
Airline/Airport Management
Cabin Crew Training
Airport Charges
Leadership
Societal Trends
Fares and Ticketing
Cost Pressure
Customer Service
Revenue Management
Sales
Commercial Skills
Soft Skills
4
Training caters to different markets, from more
expensive, regulated training for the few to
short courses for the many
Regulated
CPL Pilot Ab Initio 1 ½ yrs
Lic. Aircraft Maintenance Eng 2 yrs
ATCO Ab Initio 10 mths
Pilot Type Rating 3 mths
Course Cost/Length
Aviation Degree 3/4 yrs
Cabin Crew 3 mths
Airport Operations 3 mths
Aviation Mgmt 1 wk
Fares Ticketing 1 wk
Potential No. of Students
5
The industry which supplies training is also
fragmented from traditional in-house to external
Specialist Training Organisations
Governments
OEMs
Service Organisations
Universities/Trade Colleges/ Academies
In-house
In-source

• Advantages of In-house
• Core to product/reputation
• Control over quality
• Instant access
• Lack of scale external providers
• Scale provides low cost
• Ability to in-source work for revenue

• Arguments against In-house
• Do not need to own and run, LCCs
• Not always best quality in-house
• Cost of instant access, breeds waste
• 3rd party providers growing scale
• Larger 3rd party volume reduces cost
• Lack of commitment, marginal pricing

6
After a period of strong growth, the aviation
industry responded with unprecedented aggression
to the crisis
Traffic Change
Capacity Change
Differential Traffic-Capacity
2008 2010 forecast
1971
1975
1980
1985
1990
1995
2000
2005
2010f
Source ICAO, IATA
APATS 2009 Hong Kong
7
Emerging markets grew strongly in the past decade
in line with their economies
CAGR 2000 - 08
10.5 pa
China RPK
10.2 pa
China GDP Indexed
14.5 pa
India RPK
7.3 pa
India GDP Indexed
Source Centre for Asia Pacific Aviation
Analysis, Boeing, IMF, Indian DGCA
8
Emerging markets are strongly represented in
recent aircraft deliveries
India
Brazil
UAE
Mexico
China
Source Centre for Asia Pacific Aviation, Ascend
Jun 09, CAT Magazine Annual Training Survey Apr
09 (all sims)
9
Training industry development in emerging markets
lag their aircraft deliveries
UAE
China
Mexico
India
Brazil
Note Proxy for training industry development,
sims per aircraft ordered from Jan 06 Jun 09
Does not take aircraft/sim type into
account Source Centre for Asia Pacific Aviation,
Ascend jun 09, CAT Magazine Annual Sim Survey Apr
09
10
However, LCCs accounted for almost all growth
this decade, 22 in 09 vs 7 in 2000
Seats m
Source Centre for Asia Pacific Aviation and OAG
11
A recovery in confidence looks well established,
for example in the US
US Leading Economic Indicators Jan 06 Jul 09
USA Leading Economic Indicators
Source Conference Board
APATS 2009 Hong Kong
12
And Asia is recovering strongly

• World Bank President Zoelick said he now expected
  Chinas economy to grow by nearly eight percent
  in 2009 higher than the World Banks official
  forecast of 7.2 AFP, 2 Sept 09
• Hong Kongs exports and economy may fully
  recover by the middle of next year as global
  growth resumes, said Edward Leung, the chief
  economist at the government backed Hong Kong
  Trade Development Council Bloomberg ,3
  Sept 09
• Bank of Japan Governor Masaaki Shirakawa said on
  Monday the Japanese economy is showing signs of
  recovery, though uncertainty over the outlook
  remains high Reuters, 31 Aug 09
• official data showed India's economy grew 6.1
  percent in the three months to June, signalling
  the country was emerging from the negative
  effects of the global downturn AFP, 2 Sept
  09
• Economists more upbeat In the second quarter,
  Singapore emerged from a recession, posting a
  20.7 jump in GDP Straits Times, 2 Sept 09

13
The slowing rate of decline in passenger traffic
is starting to look like a sustained trend
International demand, capacity load
factors?Aug-2008 to Jul-2009
ACI total passenger number growth Jul-08 to
Jul-09
Source Centre for Asia Pacific Aviation and IATA
Source Centre for Asia Pacific Aviation and ACI
14
The Middle East has maintained growth reportedly
at weak yields
IATA airlines RPK growth by region Jul-08 to
Jul-09
15
Usually a lead indicator, the rate of decline for
freight traffic is also slowing, albeit at poor
yield
ACI total cargo volume growth Jul-08 to Jul-09
Source Centre for Asia Pacific Aviation and ACI
16
A recent survey by CAPA found the majority saw
profitable growth returning in 12-18 months

• Fastest Growth next 12 months
• China (85)
• Middle East (76)
• India (43)
• Rest of Asia (33)

• Slowest Growth next 12 months
• North America (72)
• Western Europe (64)
• Eastern Europe (36)
• Africa (36)

Source Centre for Asia Pacific Aviation Survey,
Sept 09
17
Current priorities are not a surprise demand,
cash and costs
Source Centre for Asia Pacific Aviation Survey,
Sept 09
18
Over the medium term, people and environmental
issues are added to demand, cash and costs as key
issues
Source Centre for Asia Pacific Aviation Survey,
Sept 09
19
Over the long term, Asia Pacific and the Middle
East will see the greatest growth in traffic and
fleet size
Source Boeing Current Market Outlook 2008 to
2028 Centre for Asia Pacific Aviation Analysis
20
Urbanisation, the motor of Chinese growth, is set
to continue to drive growth
Chinese Urbanisation (1950 2050f)


China Total Population (000s)
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
13
14
16
17
17
17
19
23
27
31
35
40
45
49
53
56
60
63
66
70
73
Urbanisation
13
13
Source United Nations, World Urbanization
Prospects The 2007 Revision
21
And the BRICS countries will climb up the
rankings of aviation nations over the next 20
years
Source ACI Sept 08
22
Take the Indian example even with current
surplus capacity, the skilled manpower
requirements are significant. How strongly will
demand snap back?
Additional reqmt 2014 in high growth case
Additional reqmt 2014 in low growth case
2008 Complement
Source/Note CAPA Analysis, Personnel numbers
DGCA 2009, IMF GDP forecasts to 2014. Assumes 3
attrition rate for pilots and maintenance
personnel and 8 for cabin crew, 2 per annum
productivity improvement (or outsourcing) in
maintenance personnel
23
Company positions are rewritten during a downturn
with new winners emerging
Source Corporate Executive Board
24
As we look towards recovery on the horizon, how
prepared are you?

• After the biggest shock to the aviation industry
  ever, growth will return and with it, the skills
  shortage
• Choices ahead
• Impact of the changing business models and
  strategies as legacy carriers evolve
• No longer the traditional lifelong airline man
  different backgrounds, skills
• Narrowing the scope of proprietary vs open or
  shared, cf RD
• Challenging the autarky to keep up with the LCCs
• Constrained capital
• Realign to respond to growth shifting to emerging
  markets (especially BRICS countries)
• Need for cost effective models, eg the 2,000
  Nano car?
• Is the export model of training sustainable?
• Renewed focus on employability
• Great marketing emphasis on self-funded students?
• Degree courses, continuous learning? non
  traditional career pathways? internationally
  recognised accreditation? Greater mobility
• Evolving regulatory environment, eg
• EASA, MPL
• Impact of the Environmental New Age
• Need for greater scale, broader discipline and
  market coverage to provide more compelling offer
  to major airlines
• Functional silos or broader training service
  provider covering more disciplines?
• Further consolidation, cross border activity?