WHAT GAMES ARE AIRLINES PLAYING

1
WHAT GAMES ARE AIRLINES PLAYING?

• JOE MOHAN
• VP SALES MARKETING
• COPA AIRLINES

2

• Ricardo Ferreira
• ACTE Board Member Latin America

3
What Games Are Airlines Playing?

• Joseph Mohan
  VP Sales Marketing
• Copa Airlines
• May 2008

4
Overview

• Why is U.S. airline consolidation necessary?
• Why Latin America is important in this
  consolidation?
• What are possible consolidated groups and methods
  of consolidation?
• What are benefits of this consolidation to
  consumers?
• What is Copa Airlines experience with partnering?

5
Why Are U.S. Airlines Playing Games?
To Survive!

• Market Challenges
• Increased fuel costs
• Lower U.S. demand

• Traditional Responses
• Reduce Costs
• Eliminate staff or lower their pay
• Lower fuel consumption
• Cut distribution costs
• Increase Revenues
• Raise fares
• Government assistance

6
Why Are U.S. Airlines and Global Alliances
Interested in Latin America?

• Great Potential
• 9 of world population but only 5 of traffic
• Passenger traffic up 8.4 (2007 vs. 2006)
• GDP/capita has risen nearly 15 since 2003

7
Intra Latin American Traffic is Growing
Source 2007 Boeing Current Market Outlook
4 of the top 12 fastest growing markets are in
LATAM
8
U.S. Consolidation

• Let the Games Begin!

9
Airline Consolidation What Are the Methods?

• Mergers
• Acquisitions
• Global Alliances
• Bi-Lateral Agreements
• Virtual Mergers
• Capital Investments

10
Who is Buying, Who is Selling and What Happens to
Global Alliances?

• Who Knows????!!!!!!

11
Latin Groups
Fragmented LATAM and Caribbean market is
consolidating as strong groups look for new
markets and try to gain international access
12
Copa Continental an Example of
Successful Direct Investment and True Partnership

• Non government investment
• Lowered cost structure
• Improved customer service
• Opened new routes
• Joint corporate discounts
• Expanded alliance scope
• Successful investment for Continental

Latin
Customers, Carriers and Local Economies Gained
13
How Does Consolidation Benefit Corporate Travelers

• Joint corporate discount agreements
• Simplified Customer Service
• Single carrier check-in and seamless transfer
  experience
• Coordinated and consistent policies and
  procedures
• Strong and unique Frequent Flyer Program
• Significant scope to earn and redeem miles
• Uniform Elite status recognition
• Access to carriers VIP Lounges system-wide

14
Conclusions

• U.S. carriers will focus on international flying
  and alliances to survive their present crisis
• Latin America has great potential, its big and
  getting bigger
• Strong Business Alliances can help US/Latam
  carriers improve performance, thereby benefiting
  customers

15
Thanks Have a Great Conference