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The role of remote regions in theair transport industrySimon McNamaraDirector GeneralEuropean Regions Airline Association (ERA)www.eraa.orgtwitter.com/eraaorg

Contents What is a regional airline The role of regionals in remoter regions Future challenges for the businesswww.eraa.orgtwitter.com/eraaorg

What is a regional airline?www.eraa.orgtwitter.com/eraaorg

About ERA 960,000 flights per year45 million passengers per year71 minute average sector time480km average sector distance67 seats average seating capacity1,200 point to point routes280,000 direct, indirect and induced jobs generatedby the industry The regional industry makes a contribution of 47bnto Europe‟s GDPwww.eraa.orgtwitter.com/eraaorg

Amapola Flyg Atlantic Airways BelaviaAvion Express Denim Air ACMI WideroeDOT Mistral Air HOP! Regional Luxair Eastern AirwaysBlue 1 Astra Airlines Adria Airways Titan AirwaysBinter Canarias Stobart Air Sata Air Acores EurolotCityJet Air Nostrum Sky Work Airlines Blue IslandsBraathens Regional PGA Portugalia HOP! Brit Air Trade AirMontenegro Airlines Sky Express Hahn Air LinesAir Contractors Ireland VLM Airlines Farnair SwitzerlandAir Iceland West Atlantic Cargo Airlines CimberHOP! Airlinair Welcome Air Aurigny Air Services Avanti AirBMI Regional Estonian Air Air Urga Danish Air TransportDarwin Airline KLM Cityhopper Blue Air Air AndoraTyrol Air AmbulanceMalmo Aviationwww.eraa.orgtwitter.com/eraaorg

WideroeAir IcelandAtlantic AirwaysBlue 1BMI RegionalTitanAmapolaBraathens RegionalEstonian AirWest Atlantic Cargo AirlinesDOTAvion ExpressBelaviaDATMalmoEastern AirwaysAer ArannKLM CityhopperCityJetDenim AirEurolotAir ContractorsAvantiAirVLMIrelandBlue IslandsHahnLuxairAurigny Air Services HOP!Tyrol Air AmbulenceSkyWorkAirlinairWelcome AirHOP! Brit AirHOP! RegionalSata AirAcoresPGAFarnairTrade AirBlue AirDarwin Airilnes AdriaMontenegroMistral AirAir AndoraAstra AirlinesAir NostrumBinter CanariasAir UrgaSky Expresswww.eraa.orgtwitter.com/eraaorg

Who flies short haul anyway?Source: ATRwww.eraa.orgtwitter.com/eraaorg

Characteristics of regional airlinesBusiness models IndependentWholly owned subsidiaryFranchiseCapacity Purchase Agreements/Wet Lease/ACMIwww.eraa.orgtwitter.com/eraaorg

Characteristics of regional airlines51 members supporting many different models: 60% offer ACMI services either as their corebusiness or as an add on revenue stream 50% operate services using their own brandand have their own distribution systems 50% operate using another companies brandeither as ACMI, franchise or wholly ownedsubsidiarieswww.eraa.orgtwitter.com/eraaorg

Market Share - flightsSource:www.eraa.orgtwitter.com/eraaorg

Market Share - seatsSource:www.eraa.orgtwitter.com/eraaorg

The regional aircraft marketWorldwide in service and in production regional, narrow body & wide bodyAircraft in October 2014269516291089750TurbopropRegional Jet 61-90Large Regional Jet 91-120Narrow Body9517Wide Bodywww.eraa.orgtwitter.com/eraaorgSource: ACAS

Where do regionals fit in?www.eraa.orgtwitter.com/eraaorg

GDP per inhabitantConclusion Workersmigrate tohigher GDPconcentrations Higher GDPconcentrationsneed air linksto allowmigrationKEY:Darker blue higher GDP per capitaLighter green lower GDP per capitaSource: Eurostat 2014 yearbook. Data for 2011www.eraa.orgtwitter.com/eraaorg

Population densityKEY:Darker brown higher population densityLighter brown lower population densitySource: Eurostat 2014 yearbook. Data for 2012Conclusion Higherpopulationdensitiesrequiretransport links Higherpopulationdensities needair links toallowmovementwww.eraa.orgtwitter.com/eraaorg

Employment rateConclusion Workersmigrate towhere jobs are Workers needair links tomove to wherejobs andbusiness isKEY:Darker brown higher employment ratesLighter brown lower employment ratesSource: Eurostat 2014 yearbook. Data for 2012www.eraa.orgtwitter.com/eraaorg

Density of rail networksConclusion Where nocompeting orcomplimentarymode exists,air transportbecomesmore andmore vitalKEY:Darker green higher density of rail networksLighter green lower density of rail networksSource: Eurostat 2014 yearbook. Data for 2012www.eraa.orgtwitter.com/eraaorg

Where do regionals fit in Regionals several key markets Feeding major hubs (especially from the regions)Feeding secondary hubsLinking lower volume point to point servicesProviding essential services where no othermode can compete Ensuring Europe‟s remoter regions stayconnectedwww.eraa.orgtwitter.com/eraaorg

How do ERA members fulfil thisneed?www.eraa.orgtwitter.com/eraaorg

ERA‟s Networkwww.eraa.orgtwitter.com/eraaorg

Linking remoter regionswww.eraa.orgtwitter.com/eraaorg

Linking remoter regionswww.eraa.orgtwitter.com/eraaorg

Linking remoter regionswww.eraa.orgtwitter.com/eraaorg

Linking remoter regionswww.eraa.orgtwitter.com/eraaorg

Linking remoter regionswww.eraa.orgtwitter.com/eraaorg

Feedingprimaryhubswww.eraa.orgtwitter.com/eraaorg

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How will the model evolve in thefuture?www.eraa.orgtwitter.com/eraaorg

The future of the industry Continued strong competitionin the sector Yield will remain low Pressure on costs willcontinue to be strong Price will remain a strongdriver for competition The airline sector will remainthe weakest financial link inthe value chainwww.eraa.orgtwitter.com/eraaorg

The future of the industry Regulatory burdens willcontinue to complicate thebusiness Consolidation in airlinebusiness models will continue The “no frills” market willcontinue to mature and willconsolidate Network carrier consolidationwill continue Regionals will fill the gapsand markets left openwww.eraa.orgtwitter.com/eraaorg

The future of the industryA major regional airline CEO‟soutlook on the future of theindustry:“The air traffic market in Europeis moving to a situationdominated by a mix of 3-4legacy carriers, 3-4 low costcarriers and a variety of regionalairlines exploiting specific nichemarkets”www.eraa.orgtwitter.com/eraaorg

Conclusion Remoter regions still rely heavily on air transport European demographics, employment and GDPspread mean air transport will continue to playan important role transporting people from the„regions‟ to the „core‟ Regional carriers play an important role insupporting the movement of people now and inthe future As an industry regional aviation should beencouraged and supportedwww.eraa.orgtwitter.com/eraaorg

www.eraa.orgtwitter.com/eraaorg

Darwin Airline Danish Air Transport CityJet Cimber HOP! Brit Air BMI Regional Malmo Aviation Luxair KLM Cityhopper Braathens Regional Eurolot Estonian Air Sky Express Sata Air Acores HOP! Regional PGA Portugalia Wideroe West Atlantic Cargo Airlines Trade Air