Embraer AFRAA Nov 2005

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Intra-Africa air transport market - Appropriate
aircraft for low cost regional air transport
Christophe MICHAUD Marine BENOIT Sales Support
Department EMBRAER Airline Market Europe, Africa,
Middle East
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Intra-Africa air transport market

• Intra-Africa market overview
• How mid sized jets answer market needs ?

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Intra-Africa air transport market

• Intra-Africa market overview
• Current market key points
• En route for liberalization future fleet
  requirements
• How mid sized jets answer market needs ?

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Intra-Africa market overview Current marketA
solid but constrained growth

• A dynamic market
• But air traffic growth constrained
• On the demand side by relatively low average
  income per capita
• On the supply side by intra-Africa air transport
  regulation

Intra-African market Compound annual growth
rates - 1995-2005
Source Back Aviation, OAG 1995-2005
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Intra-Africa market overview Current marketA
market currently strongly regulated

• Current regulation imposes restrictions over
• number of operating airlines,
• frequency and capacity
• Inducing
• Low competition pressure and large proportion of
  monopoly routes
• Some routes served with low capacity, and low
  frequencies

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Intra-Africa market overview Current
marketHalf of routes are under monopoly
Half of intra-Africa routes are served by a
single airline
Source OAG Jets and turboprop. services, Oct05
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Intra-Africa market overview - Current market
Capacity dedicated to high demand city-pairs
Weekly seats offered
Source OAG Jets and turboprop. services, Oct05
Source BACK OAG_Oct2005 Jets and TP
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Intra-Africa market overview - Current market
Weak services for remaining city-pairs
Example CMN-LBV 2 weekly freq. / 338 weekly seats
77 of intra-Africa routes are served with less
than 350 seats a week
Example ADD-LUN 2 weekly freq. / 325 weekly seats
Source OAG Jets and turboprop. services, Oct05
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Intra-Africa air transport market

• Intra-Africa market overview
• Current market key points
• En route for liberalization future fleet
  requirements
• How mid sized jets answer market needs ?

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Intra-Africa market overview Future fleet
requirementsLiberalization is on course

• Current regulation imposes restrictions over
  number of operating airlines, frequency and
  capacity
• But liberalization is on course

• Already started in some African countries
  (Private airlines, low cost carriers)
• Yamoussoukro Decision is a long term
  implementation, open bilaterals are more
  realistic in short term

Source Embraer, based on analysis of inter
countries frequencies and seat capacity
1999-2005, OAG
Sources South African CAA, IATA representatives
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Intra-Africa market overview Future fleet
requirementsLiberalization will enforce more
competitive pressure

• Liberalized market will induce airlines into
• Improving quality of service
• while reducing costs

One possible action for airlines Adapt FLEET in
order to match capacity to the market needs
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Intra-Africa market overview Future fleet
requirementsAgeing fleet of narrow bodies
Source BackAViation-Fleet PC, Oct05
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Intra-Africa market overview Future fleet
requirementsMisuse of narrow bodies

• Amid the intra-Africa routes operated with 91-175
  seaters, 360 routes are operated 4 times a week
  or less.

Routes operated exclusively by aircraft between
91-175 seats
360 routes where smaller capacity a/c is needed
Source OAG, Oct05
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Intra-Africa market overview Future fleet
requirementsOversized fleet Central/Western
Africa example

• In Central and Western Africa, 85 of the
  city-pairs have less than 70 pax per day
• Only 3 corridors justify the provision of
  aircraft with more than 100 seats in West and
  Central Africa. ...For the rest, 50 to 70 seats
  aircraft should be used

Source African Union Study, May 2005
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Intra-Africa market overview Future fleet
requirementsA need for new and right sized
aircraft
Downsizing airplanes to increase frequencies and
LF
61-90 seaters gap
Source BackAViation-Fleet PC, Oct05
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Intra-Africa air transport market

• Intra-Africa market overview
• Current market key points
• En route for liberalization future fleet
  requirements
• How mid sized jets answer market needs ?

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Introducing the EMBRAER 170/190 Family
E190 98 to 108 seats In service since September
13th, 2005 First deliveries to Jet Blue
E195 108 to 118 seats Certification scheduled
for July 2006 First delivery to FlyBe in August
2006
E175 78 to 86 seats In service since July
2005 10 Aircraft in operation with Air Canada
E170 70 to 78 seats In service since March
2004 82 Aircraft in operation with 9 airlines
As of 31 October, 2005
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Introducing the EMBRAER 170/190 Family
As of 31 October, 2005
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Mid sized jets in intra-Africa market Mid-sized
jets fit intra-Africa market needs
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Mid sized jets, improving quality of service -
FrequencyFrequency increase with aircraft size
reduction
Frequency
Capacity
70 seats
90 seats
120 seats
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Twos Company Threes a Crowd
Everyone gets a window or aisle seat.
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Mid sized jets, improving quality of service -
ComfortMid size jets providing standard narrow
bodies comfort
EMBRAER 170/190
AIRBUS A318
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Mid sized jets, improving quality of service -
Cargo and large cargo capacity
Total cargo compartment capacity E195 vs. B737-200
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EMBRAER 170/190
Source Embraer
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Mid sized jets in intra-Africa market Mid-sized
jets fit intra-Africa market needs
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Mid sized jets, reducing airlines costs Network
optimization Rightsizing aircraft to achieve
higher efficiency
150
RIGHTSIZING
Load factor 58
Load factor 80
100
RIGHTSIZING
pax to break even
pax to break even
50
RIGHTSIZING
pax
oper. profit
pax
oper. loss
seats
seats
Current services 150 seater
E195 alternative 118 seater
Sources OAG, African airports data, Embraer
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Mid sized jets, reducing airlines costs Network
optimization Matching demand and capacity
New Route
E170 main missions
Rightsizing
Natural Growth
100
3
5
8
75
43
50
40
41
50
54
51
25
50
0
Average Stage Length 526 nm
Source BACK/OAG (3Q05 routes)
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Mid sized jets, reducing airlines costs Network
optimization thanks to long range capabilities

• E170LR - CF34-8E5A1 engines Range with Max Pax
  (70 seats)

25oC OAT for Take-Off Long Range Cruise 85
annual winds JAR OPS Reserves Taxi Time - 15
minutes 100 nm alternate 3 Airways
Allowance Typical OEW Pax weight 100 kg
Source EMBRAER
PE 07/Jun/04
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Mid sized jets, reducing airlines costs Network
optimization thanks to long range capabilities

• E190AR - CF34-10E7 engines Range with Max Pax
  (100 seats)

25oC OAT for Take-Off Long Range Cruise 85
annual winds JAR OPS Reserves Taxi Time - 15
minutes 100 nm alternate 3 Airways
Allowance Typical OEW Pax weight 100 kg
Source EMBRAER
PE 07/Jun/04
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Mid sized jets, reducing airlines costs -
Utilization Narrow bodies display low
utilization in Africa
Comparison of fleet annual utilization -
Africa/Europe
Source ACAS, Sept05
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Mid sized jets, reducing airlines costs -
UtilizationNew aircraft will induce higher
aircraft utilization

• Low utilisation strongly correlated to high fleet
  age

Source ACAS, Sept05
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Mid sized jets, reducing airlines costs
Operating costs and enables airlines to reduce
operating cost

• Fuel burn and maintenance cost savings

EMBRAER 195 B737-200 (118 seats)
(120 seats)
Sector Length 500 nm 500 nm
Flight Time 1 h 15 min
1 h 20 min Daily flights
6
6 Block Fuel per trip (kg)
2,785 3,692
33 Maintenance Cost (/FH) 552
823 50
At 0.4 USD/litre fuel cost, the EMBRAER 195 can
save 14 Mio USD over 10 years (Maintenance Fuel)
At 0.65 USD/litre fuel cost, the EMBRAER 195 can
save 18 Mio USD over 10 years (Maintenance Fuel)
Source African operator
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Mid sized jets Low cost carriersE-jets
selected by various airlines, including LCC
Source EMBRAER, 30th Sept05
() These aircraft will be delivered to Paramount
through a leasing contract signed with ECC
Leasing Company Ltd..
PR 22/Jul/05
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100 th E-Jet delivered to Air Canada in October
September 13th, 2005
October 2005
First revenue flight scheduled for November
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Thank you !