Pieter K. Zylstra, Head of Strategic Programs, SITA AsiaPac speaks at Terrapinn 2014 World Low Cost Airlines Conference, Singapore, Feb.18-19, 2014

1. “BEYOND
ANCILLARY
REVENUES”
The Rise of New Mobile
Infotainment Services
Pieter K. Zylstra, Head of Strategic Programs, SITA AsiaPac
Terrapinn 2014 World Low Cost Airlines Conference, Singapore, Feb.18-19, 2014

2. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
2
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

3. Aviation: Where is the money?
Source: IATA, 2013 (based upon report McKinsey & Company).

4. Outlook 2014 Profit Margin: 2.6%
Source: IATA, IdeaWorks 2013, CAPA 2012

5. How can Aviation Transportation
Business Model survive?
ATI profit
margins
1st wave:
Transportation
business model
2nd wave:
Non-Transport
business model
“Healthy”
Margins:
10%-20%
“Razor-thin”
Margins:
1%-5%
Time

6. Rise of Ancillary Revenues
Source: IdeaWorks, Oct.2013, LCC websites

7. “Third Wave”: Mobile Infotainment
ATI profit
margins
today
1st wave:
Transportation
business model
“Fat”
Margins:
>25%
2nd wave:
Non-Transport
business model
3rd wave:
Infotainment
business model
“Healthy”
Margins:
10%-20%
“Razor-thin”
Margins:
1%-5%
“”transportation”
“intelligent transportation”
Time

8. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
8
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

9. Beyond Ancillary Revenues…
in the coming years all
your passengers will be
carrying smartphone &
tablets into the plane.
Do you want to know
your passenger?
personal communication
devices are approved by
more and more aviation
authorities worldwide
Next generation (Ka)
satellite technologies
offer high-speed
bandwidth

10. Rail versus Airlines…

11. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
11
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

12. How can LCCs create Personal
Profitable Services?
personal: invest in
agile PSS functionality
profitable: invest in
“touchpoint” solutions
& capture experiences
services: integrated
architecture with “big
data” capabilities

13. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
13
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

14. SITA’s Crewtablet solution
Passenger List
Inventory
Forms & reports
 Slow paper based
reporting
 Admin overhead
 Heavy weight &
fuel consumptions
 No pax service
personalization
Crewtablet movie
14
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

15. Fully managed solution, opex-based
Paperless
operations
1
Integration
Crew App
2
3
Crew Server
Business
Process
efficiency
Passenger
Services
4
Crew Portal
15




Reservation & Ticketing
Roster, Duty free, Loyalty
Mobile Learning, MRO, Bag
Payment Service Providers
New
revenues
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

16. Module-based solution
2014
2014
2013
Core
Retail
M-learning
Analytics
Pax
Defects
Live Sces
Bag Track
16
Crew
Portal
Bus Intel.
Inventory
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

17. ROI-based solution
1 Process & issues
2 Mapping modules
CrewTablet
financials
4
TBD
3
LIVE
SERVICES
MEALS
2
CABIN
DEFECT
RETAIL
CREW
PAX
BAG
COST S
CUSTOMER
COMPET IT ION
E-LEARNING
1
CORE
COMPLIANCY
3 ROI Benefits logic
SOLUTION
MODULE
SERVICE
FUNCTIONALITY
OPERATIONAL
EFFECT(S)
4 ROI Business Case
STRATEGIC
GOALS
crewtablet
financials
Automate digital claim process
@ plane / back-office
CREW
CREW
TABLET
PAX
DIGITAL
PASSENGER
PROFILE
RETAIL
DIGITAL
PASSENGER
SURVEYS
CrewTablet
functionality
marginal
revenue
per user
COST
REDUCTION
Reduce delay “no show”
Optimize passenger
experience
@ plane (by crew)
CUSTOMER
SATISFACTION
BAG
Increase passengers loyalty
(frequent flyer program &
affiliate program)
CUSTOMER
REVENUE
OTHER
Turn passenger loyalty into
cross/upselling revenues
Enrich passenger profile
(especially VIP-program)
STRENGTHEN
COMPETITIVE
POSITIONING
Positive
ROI
Negative
ROI
Marginal
costs
per user
crewtablet
functionality
17
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

18. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
18
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

19. Our vision on the “third wave”:
shared wireless
infra & platform:
• focus upon enterprise
mobility cost-savings
• launch personal profitable
passenger services

20. Examples the “third wave”:
mobile personal digital services
Connectivity
(Internet & GSM)
Landing Page
Digital Magazine
On board retail
Digital Audio/Video
(Live / On Demand)
Crew (operational efficiencies
& service personalization)
Pilots (EFB, Fuel, Safety, etc)
Maintenance (remote MRO,
Smart diagnostics)
“E-Connected Aircraft”
(B2C, B2E, B2B & M2M)

21. OnAir Play: Entertainment on PEDs
➔ Favourite amenities when flying:
Specific Usage of PEDs During Flight
Listen Music
68%
Play Games
54%
Read books or mag
48%
Watch movies
44%
Offline work
39%
Read emails
31%
Connect to Wi-Fi
30%
Take pictures
24%
Semd email
23%
Text messages
23%
Online work
19%
Social media
18%
Shop online
None
Other
7%
4%
2%
Source: 2013 Airline Passenger Experience Association (APEX)
and Consumer Electronics Association (CEA®).
© OnAir 2013
21

22. Examples “third wave”:
mobile personal digital services

23. How can SITA support?
Our 4-Step Approach
1-3 Days
3-6 Months
Insight Day –
Master class
Strategy &
Business Case
Awareness session of
“best ATI practices” &
demonstration SITA
solutions (ATI apps).
Proposition
What is your position
in the value chain?
=Strategic
Deployment Options
How would the
preferred innovation
roadmap look like?
=Integrated Service
Roadmap
What integrated
architecture should
support the roadmap?
=High Level
Architecture
How does the
business case look
like? = Benefit Logic
How to deploy the
innovation roadmap?
= Governance Advice.
!
Value Chain Analysis
Stakeholder Analysis
Governance & Control
Deployment Scenarios
Services
!
!
Innovation Roadmap:
Public Services
Enterprise Services
M2M Services
6-12 Months
Testbed (early
deployment)
Governance
Transformation
@IT / Corporate
Management
Product
Management
Roadmap Introduction
Service Organization
(& Processes)
Architecture
Logical components
Back-office architecture
Middleware platform
On site infrastructure
Network
Infrastructure
Applications
Middleware
Platform
Business Case
@back-office
@site
Benefit Logic
Business Case
Investment Requirements
Capex/Opex-financing
Physical
Infrastructure
@sites
Year 1
Roll-out
Program
Management
Office
Organization
Transformation
(incl. processes)
Transformation
Roll-out
Application
Customization
& System
Integration
Physical
Infrastructure
Deployment +
Network
Integration
Year 2
…

24. Contents
• Beyond Ancillary Revenues
• Personalization is key
• LCCs & personal profitable passenger services
• Crewtablet: best practices & ROI model
• Are LCCs ready for the “third wave”?
• Q&A
24
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014

25. Thank you for your interest!
Questions?
Contact details:
25
| World LCC Conference 2014 | Zylstra – “Beyond Ancillary Revenues” | © SITA 2014