1. © IPC, 2008 1 IPC Initiative Future of Mail by Air; why we started

2. © IPC, 20082 first transcontinental air mail flights in the US began on September 8, 1920

3. © IPC, 20083 Mail carried by air has come a long way since  Passenger Flag Carriers have been traditional partners of Posts for a long time

4. © IPC, 20084 Do we have a sustainable and reliable air network for mail carriage ?  Airline industry crisis and competition hit flag carriers  Airlines bankruptcies -- SABENA, Swissair  others in bad shape  Since 2001 the airline industry had  9/11 crisis  SARS crisis  fuel price crisis and  Growing market share of “Low Cost Carriers”

5. © IPC, 20085 Do we have a sustainable and reliable air network for mail carriage ?  Rationalisation of passenger driven network:  Smaller aircrafts  fast turnarounds  less frequency  Increased cancellations  more ground handling failures  more luggage in relation to capacity of aircraft  Higher yield on cargo so less capacity for mail  less interest in mail

6. © IPC, 20086 Trends on capacity for mail carriage

7. © IPC, 20087 What are the expectations on in the future available capacity for mail Demand:  Cargo  demand is growing by 6% increase annually  Mail  letter volumes stable (decrease traditional mail, increase direct mail, increase packages)  parcel volumes increase strong, >10% annually  Luggage  more per flight

8. © IPC, 20088 What are the expectations on in the future available capacity for mail Supply:  On the one hand increase number of flights (> aircraft purchases)  On the other hand traditional network is shrinking due to mergers and rationalization  Regional Airports and Low Cost Carriers not for Mail  Belly space for Cargo + Mail is less per flight  “Mail Airports” congested

9. © IPC, 20089 What are the expectations on in the future available capacity for mail Key issue:  Mail competes with Cargo  Are Posts key account customers?  Yield Mail versus yield Cargo?

10. © IPC, 200810 Demands on Sustainable and Reliable Network

11. © IPC, 200811 Visibility – Supply Chain Management  Capacity is not the only aspect when it comes to a sustainable and reliable network  Growing customer demand, means Post have to show the customer the supply chain is managed including transport  Therefore Visibility of Mail in the mail pipeline, including Transport is a must 11

12. © IPC, 200812 Who wants to know where the mail is?  Customer for planning  Synchronising media for advertising campaigns  Cash flow estimated for bill payment  Post operations  To ensure targets are met  To manage container/receptacle inventory  Post Finance for payments to other Posts/Carriers  Carriers to ensure contracted quality & payments  Ground Handlers to meet targets  Regulators to assess licence compliance  Customs for inspection after arrival

13. © IPC, 200813 Item scan - barcode Scanning receptacle labels RF-ID postal tag in test letter How do we know where the mail is?

14. © IPC, 200814 Initial views Future of Mail by Air Posts & Airlines

15. © IPC, 200815 Future of Mail by Air Initiative; Initial divergent views Carrier view  Mail should be treated like cargo in carrier systems  Space should be booked well in advance  Accounting should work on electronic data  Posts should change their systems

16. © IPC, 200816 Future of Mail by Air Initiative; Initial divergent views Postal operator view  Receptacle-level tracking essential  Only some hours notice possible  Accounting should work on electronic data  Carriers should change their systems 16

17. © IPC, 200817 Future of Mail by Air Initiative; On mature reconsideration  Paper-free transport & electronic accounting are joint objectives  Carriers will perform receptacle level tracking  Mail can be managed as easily as cargo by carriers  Posts will use ULDs for mail as much as possible  Posts will book space based on day-by-day historical data adjusted for special peaks  Both Carriers & Posts will change their systems  Pilot trials needed between Carrier/Post pairs to assess how it works