Confidential 4/1/2017 ALLIANCES, JVs & REGULATORY HURDLES IN AVIATION INDUSTRY KOCHHAR & CO. Indo-US Resurgence Summit, IACC December 2013

The Indian Perspective Confidential 4/1/2017 The Indian Perspective

Hurdles Infrastructure Bureaucracy / red-tapism Confidential 4/1/2017 Hurdles Infrastructure Bureaucracy / red-tapism Weak State-owned airline Kingfisher debacle (confidence of investors has taken a tumble) Taxation Fuel Prices Airport Charges 3

Sector-specific Legislative Framework Confidential 4/1/2017 Sector-specific Legislative Framework Archaic set of laws Aircraft Act, 1934 Aircraft Rules, 1937 Civil Aviation Requirements & Aeronautical Information Circulars Bilateral Treaties 4

Confidential 4/1/2017 Upside Untapped potential - currently, under 5% of India’s 1.2 billion people travel by air (IATA) Open Sky 49% FDI permissible in airlines by international airlines Proposed reduction in ATF cost and review of tax structure 100% FDI permissible in existing airports (approval required for FDI beyond 74%) 100% FDI under automatic route for Greenfield airports 100% tax exemption for airport projects for 10 years Proposed multimodal connectivity to facilitate air transportation Regional connectivity – Tier II and Tier III cities Encouragement for development of MRO hub 5

And thus, emanating from the ‘upside’, we have… Confidential 4/1/2017 And thus, emanating from the ‘upside’, we have…

Alliances & JVs Galore Airlines Airports MRO SQ / Tata Air Asia / Tata Confidential 4/1/2017 Alliances & JVs Galore Airlines SQ / Tata Air Asia / Tata Ethiad / Jet SpiceJet … Airports Delhi Airport – JV b/w GMR, Malaysia Airports Holding & Fraport Hyderabad Airport – JV with Malaysia Airports Holding Bangalore Airport – Siemens Project Ventures, Germany MRO Airbus / NACIL – MRO facility in Delhi Boeing - JVs with Air India MRO facility - Nagpur Tata for manufacture of floor beams for Dreamliner IISc and IT firms for development of aerospace-related apps 7

Looking within the region… Confidential 4/1/2017 Looking within the region…

Confidential 4/1/2017 Asian perspective … Traditionally export oriented…increasingly becoming reliant on neighbourly trade and tourism Growth in China and India largely on back of respective domestic consumption Apart from China and India, countries in the South East Asian region (Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines) are also surging towards greater economic strength 9

Asia’s Growth Potential Confidential 4/1/2017 Asia’s Growth Potential * Thailand, Vietnam, Cambodia, Philippines & Malaysia Source: World Economic Outlook, January 2013 Country GDP Growth in 2012 (in %) Predicted Growth in GDP for 2013 (in %) China : 7.8 8.2 India 4.5 5.9 ASEAN – 5* 5.7 5.5 USA 2.3 2.0 EU -0.4 -0.2 10

Effect on aviation industry Confidential 4/1/2017 Effect on aviation industry Extraordinary growth in Asia, has a profound effect on global trade and on the aviation industry in particular To sustain the growth and profitability, the region’s carriers are vying for the largest order books with aircraft manufacturers 11

Innovative Measures, JVs and Alliances Confidential 4/1/2017 Innovative Measures, JVs and Alliances In addition to large aircraft orders, Asian carriers have introduced certain innovative measures to sustain growth: Economically sustainable long-haul low-cost operations Independent cross-border JV LCCs Undermines foreign ownership constraints Flattens regulatory barriers Circumvents bilateral proscription against right of establishment Establishing low-cost subsidiaries of FSCs 12

Confidential 4/1/2017 The way ahead The innovative JVs and alliances in the aviation industry in Asia are disrupting the global status quo 13

(E): piyush.gupta@kochhar.com Confidential 4/1/2017 Thank you! Kochhar & Co. Piyush Gupta (T): +91.124.4545222 (E): piyush.gupta@kochhar.com 14