THE EMERGING MARKETS AS AN UNFORSEEN NICHE

LOCATORY.COM IS A PART OFAVIA SOLUTIONS GROUP

MRO SECTOR GROWTH

MARKET OVERVIEW:

NEW JOINT VENTURES

ECAR - Engineering Centre of Airbus in Russia - despite the existing downturn in the world airline industry, Airbus has decided to remain fully committed

The Airbus (Beijing) Engineering Centre (ABEC) - marked a new phase in the decades-long industrial partnership between China and Airbus

Kaman Aerospace Group, Inc., a subsidiary of Kaman Corporation and Kineco Private Limited in March announced that they have entered into an agreement to form a manufacturing company in India

Cessna and Aviation Industry Corporation of China (AVIC) entered into two strategic agreements to develop general and business aviation in China

2011 | 20,203 AIRCRAFT

2012 | 20,840AIRCRAFT

2017 | 24,365AIRCRAFT

2022 | 29,995AIRCRAFT

Fleet growth forecast at 3.7 % CAGR to 29,955 in 10 yearsAverage age of fleet has declined since 2009 – 12.2 to 11.9 years over >20,000 aircraftLatin America represents only about 5% of the global air passenger market

*The Global MRO Forecast 2012-2022, Teamsai 2012

LONG TERM FLEET GROWTH

Narrowbody60%

Regional Jets17%

Widebody23%

Narrowbody60%

Widebody23%

Regional Jets17%

Narrowbody59%

Regional Jets18%

Widebody23%

Narrowbody57%

Widebody24%

Regional Jets19%

GROWTH OF MRO SECTOR IMPLICATES THE EXPANSION OF SPARE PARTS BUSINESS

- $49.5B industry will grow to $68.4B over 10-year forecast period - Engine remains the largest segment with the highest growth rate - Component expected to grow as fast as engines MRO in the latter half of the forecast

2012 2017 20220 $

10 $

20 $

30 $

40 $

50 $

60 $

70 $

80 $

8.9 10.6 11.5

9.5 11.3 13.4

22.427.7

31.68.7

9.9

11.9

2012 Global MRO Forecast, Total Value $B

HMV&ModEnginesComponentLine

$ 49.5

$ 59.5

$ 68.4

GROWTH OF MRO SECTOR BY REGIONS

Americas Europe Asia Middle East Africa0 $

5 $

10 $

15 $

20 $

25 $

17

13.711.6

3.1 1.5

21.93

17.8115.08

3.3171.545

20112021

Americas Europe Asia Middle East AfricaMarket ($B)

(2011)$17 $13.7 $11.6 $3.1 $1.5

M-kt Share(2011)

36% 29% 25% 7% 3%

CAGR(2011-21)

2.4% 4.7% 6.8% 5.3% 3.5%

M-kt Share(2021)

29% 30% 30% 7% 3%

Major market regions show relative parity in ten years time

Growth in the airline business will continue to generate new MRO demands

GROWTH OF MRO SECTOR IMPLICATES THE EXPANSION OF SPARE PARTS BUSINESS

AeroStrategy (2010-2019) TeamSAI (2011-2021)0%

2%

4%

6%

8%

10%

12%11.00%

9.60%10.00%9.10%

3.30%3.90%

MRO market forecast according to TeamSAI and AeroS-trategy

IndiaChinaGlobal average

IF EMERGING MARKETS LOOKS SO PROMISING,

WHYIT IS SO HARD TO APPROACH THEM FOR

WESTERN COUNTRIES?

IF EMERGING MARKETS LOOKS SO PROMISING, WHY IT IS SO HARD TO APPROACH THEM FOR

WESTERN COUNTRIES?

Western companies should leave the “I’m from the West, I know best” attitude at home. Entrance into the emerging markets is a new learning experience as companies must find the best ways to adapt to new cultures and navigate their businesses according to new rules and regulations.

- Who knows the Russian political system better than the Russians? - Who is better than an Indian to advise you on the Indian authorities’ documentation requirements?- And who speaks Chinese better than a native?

3 MAIN OBSTACLES

WHYCOMMUNICATION BETWEEN EMERGING AND

EVOLVED MARKETS IS COMPLICATED?

Geographical distance

Language barrier

Cultural differences

3 OBSTACLESWHY COMMUNICATION BETWEEN EMERGING

AND EVOLVED MARKETS IS COMPLICATED:

FROM WESTERN POINT OF VIEW – IT’S……A REAL PAIN IN A NECK…

SOLUTIONS?

SOLUTION NO. 1

JOINT VENTURESREPRESENTATIVE OFFICE

PROBLEMS

PROBLEM NO. 2 – YOU STILL NEED SEVERAL OFFICES TO COVER DIFFERENT MARKETS – E.G. RUSSIA, CIS, SOUTH ASIA, NORTH AFRICA

PROBLEM NO. 1 – YOU STILL DEAL WITH CULTURAL DIFFERENCES

SOLUTION NO. 2

USAGE OF TECHNOLOGY

NO BOUNDARIES FOR TECHNOLOGIES

Internet is global although some emerging markets still feel a lack of internet broadcast.

If you want to Travel from India to US, it will take at least 20 hours. With internet, you can make it in fraction of a second.

Africa Asia Europe Middle East North Amer-ica

Latin America/

Carib.

Oceania/Aus-tralia

Internet users, 2000

4514400 11430400 105096093 3284800 108096800 18068919 7620480

Internet users, 2012

139875242 1016799076 500723686 77020995 273067546 235819740 23927457

100,000,000

300,000,000

500,000,000

700,000,000

900,000,000

1,100,000,000

1,300,000,000

1,500,000,000

World internet usage statistics (thousands)

CHALLENGE FOR AVIATION INDUSTRY

- SECURE PRESENT BUSINESS- WIN TRUST OF NEW CUSTOMERS- INCREASE COMPETITIVENESS

- CATCHING-UP WITH NEW TECHNOLOGIES- CAPABILITY EXTENSION- REMAIN IN THE GAME

TRADITIONAL AIRLINE MODEL

AeroStrategy estimates the amount of MRO supply chain inventory is $44 billion – greater than current annual MRO spend.

SO THE TRADITIONAL AIRLINES MODEL MEANS:

EFFECTIVELY MANAGING SPARES ROTABLES

UNPREDICTABILITY

INSUFFICIENT INVENTORY VOLUME OR MIX

SIGNIFICANT OVERHEADS

DIFFICULTIES IN MANAGING FLEET CHANGES

This inventory costs the industry in excess of $10 billion annually

60% of this inventory is owned by Airlines. Airlines are holding a total of $12 B in component inventory.

KEY FACTORS OF POOLING

FLEET PLANING

GEOGRAPHICAL LOCATION

FINANCIAL MODEL

SYSTEM CAPABILITIES

LOGISTICS

EXPERIENCE IN AIRCRAFT TYPE

POOLING

A BETTER WAY FOR AIRLINES IS PARTS POOLING

SERVICES AND AVAILABILITY

If a billion people living in India gained the same air travelling habits as the Americans, it would account for a market share of 2.1 billion passengers. Even if the Indians chose air transport three

times less than the Americans, India would still become a serious competitor to the USA.

More passengers, more aircraft, more MRO, more usage of technology.

SERVICES AND AVAILABILITY

Airlines should demand a solution based on

SERVICE & AVAILABILITY:

STRONG COMPONENT AVAILABILITY

PREDICTABLE & CONSISTENT COMPONENT COST

WORLDWIDE COMPONENT AVAILABILITY

MINIMAL ADMINISTRATIVE EFFOR

WHY LOCATORY.COM?

- Get aircraft parts you need by moment - faster solutions for AOG situations- Market your stock to different regions- List, sell and search for MRO services & repair capabilities- Use supplier management tool- Aircraft spare parts and components Marketplace- Multilingual platform

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