Booz & Company

1. Beijing, 25 September, 2009 Booz & Company General Aviation Implementation Support (GAIS) Operators Module (Revised) 1st Revision: October, 2010 Final Revision: October, 2011 This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

2. Purpose of Document • The intent of this document is to provide a detailed handover of all analysis and materials relating to regulatory gap studies on Operators Module as part of deliverables for General Aviation Implementation Support (GAIS) project funded by the US Trade Development Administration (USTDA) • The study focuses on drawing general aviation (GA) regulatory experience and insights from the U.S. because: • The U.S. has the most established and successful GA industry with a mature regulatory system that increases GA capacity and efficiency while maintaining safety • ACP is an U.S. organization with its members consisting of FAA and key GA aircraft and equipment manufacturers with global presence. ACP member firms are best able to share GA regulatory, management, technological and operational experiences from the U.S. • Analysis has been conducted and completed by Booz & Company with active contribution from Civil Aviation Administration of China (CAAC), Development Research Center of the State Council (DRC), Aviation Industry Corporation of China (AVIC), ACP members and other key stakeholders • For further information please contact: • Mr. Paul Fiduccia (PFiduccia@aol.com) • Mr. Frank Yu (dongfang.yu@ge.com) • Mr. Kevin Wu (kevinwu@textron.com) • Dr. Edward Tse (edward.tse@booz.com) • Mr. Yang Guang (yang.guang@booz.com) • Mr. Timothy Wong (timothy.wong@booz.com)

3. This is one of the seven sets of deliverables developed for ACP GAIS project ACP General Aviation Implementation Support (GAIS) List of Deliverables Executive Summary 1 2 3 4 5 6 Safety Module General Aviation Airport Module Airworthiness Module Flight Standards Module Operators Module GA Associations Module Main Module GA Safety Regulation GA Airport Regulations Airworthiness Regulations Flight Standards Regulations Regulatory Constraints for Operators Roles of GA Associations Safety Oversight Organizational Structure GA Airport Planning & Design Type and Production Certifications Mechanics GA Aircraft Ownership Case Studies Sub - Module Safety Performance Measurement GA Airport Funding Aircraft Registration and Certification Pilots GA Operating Cost Safety culture and promotion

4. In China, GA refers to all civil aircrafts activities other than public aircraft transportation activities NON EXHAUSTIVE Three Main Categories of General Aviation Flight Activities* Definition of General Aviation General Aviation China: General Aviation refers to all civil aircrafts activities other than public aircraft transportation activities. Including flight operations associated with industrial, agricultural, forestry, fishery and construction, and other purpose operations such as medical and sanitation, emergency rescue, Meteorological sounding, ocean monitoring, scientific experiments, education and training, culture and sports etc. Public Service Economic Construction Consumer Aviation Agriculture Aerial Photography Training and Sports Forestry Mine Exploration Tourism FAA: General aviation (GA) refers to all flights other than military and scheduled airline flights, both private and commercial. Meteorology Petroleum Services Business Travel Disaster Relief Others2 Private Use ICAO: General aviation comprises all aircraft that are not operated by commercial aviation or by the military. Others1 Non scheduled commercial operations3 (*) CAAC categorization (1) Others include aircraft seeding, pest control, farming and emergency rescue (2) Others include remote sensing, power line services and industrial associated applications (3) Non scheduled commercial operations include air taxi and air charter operations Source: Committee of General Aviation Specialist of China Aviation Industrial Base (CAIB), CAAC and Booz Allen analysis

5. Operators Module aims to identify opportunities to improve GA operating environment by reducing ownership and operating costs • The module aims to identify opportunities to promote GA use by reducing ownership and operating costs by drawing examples from practices in the U.S. • The scope of Operator Module is as follows: • Highlight regulatory constraints for GA operators in China • List interview findings with GA operators to gain understanding in challenges that facing the operators in China today • Present a case study on fractional ownership in the US including its impact and regulatory issues, including other options to reduce (initial) ownership costs • Present typical aircraft operating cost structure and conduct comparison with China where possible

6. New generation of GA operators differ from current GA operators in terms of aircraft ownership, management and usage • Current GA operators own the aircraft, employ the aircraft, mechanics and use the aircraft for profit in the aviation business, arrange for and source for maintenance of aircraft • In the U.S. the owner of the aircraft and the pilot in command have responsibility and authority over their aircraft • The new generation of GA operators exhibits the following characteristics: • individual GA operators: own the airplane, use the airplane for personal and business use, provide the pilot (themselves or hire someone), select and contract with a GA company for aircraft management, decide on aircraft storage and maintenance and make decisions on operation and use of airplanes, for aircraft management services • GA company aircraft management services include “FBO services” (aircraft storage, maintenance, fuel supply, etc.), assistance with ATC approval and flight planning including weather information • GA company may lease the aircraft from the owner for flight training • Current problem is that because of the new generation GA has one person owns and uses an airplane and another entity manages the airplane, the responsibility for safe operation is now unclear • This results in the dispute between the owner and the management company about who has authority over the operation of the aircraft • CAAC must make clear the owner has the authority (unless he leases the airplane to the management company). FAA has finally developed rules to address this situation

7. Summary of observations and recommendations for Module 5: Operators Module 5: Operators

8. Regulatory constraints for operatorsGA aircraft ownershipGA operating costAppendix

9. GA operators and users in China face many challenges - lack of GA airports and high pilot training cost are two key ones EXAMPLE - NON EXHAUSTIVE Key Challenges for GA Operators in China • Ownership • Cost of ownership is high due to high import tax - 22% for helicopter 5% for fixed wings • Fees for managing airplanes owned by others are high and authority over airplanes unclear • Difficult and lengthy aircraft registration procedures and processes • Pilot • Source of GA pilots are mainly from veterans • It is increasingly difficult for military transfer of helicopter pilots to civil aviation -- Pilot training costs are high Key Challenges for GA Operators in China • Operating costs • There are unforeseeable and often high operating costs in China e.g. airspace costs are one of the grey areas • Aviation gas is difficult to obtain, locations are uncertain • Airport • There is no regulation on GA airport • It’s very expensive and takes a long time to build a GA airport in China - almost the same as build a normal civil airport Source: Interview findings

10. In China, private aircraft owners face regulatory constraints that results in the low utilization of their aircraft EXAMPLE: Typical Aircraft Registration Process CAAC Documents Required Acquire Credentials Resource Constraints • Purchasing purpose • ID document • Police record • Feasibility study • Pilot license • Intent Contract with base airport • Resource consuming aircraft purchasing processes e.g. registration process on the left chart takes about 2-3 month • Unreasonable regulatory requirements imposed - must have base airport, management company etc • Inaccessible airspace - resulting in extremely low utilization and depreciation cost Submit Aircraft Logo Marking Plan Apply for Aircraft ID Number Submit as one document Apply for Aircraft Registration • Registration application • Evidence of ownership • Applicant ID document • Evidence of the aircraft not registered elsewhere • Other documents required Submit Application INTERVIEW QUOTES “My client has decided to sell his helicopter to Africa, despite taking the pain to import from the U.S., without realizing the difficulty to use it” Airworthiness Contact Office Process the Application Aircraft Certification Obtained • Applicant to fill in “Non-Commercial GA Registration Administration” Aircraft Registered

11. Aircraft tax is another burden for GA operators as China imposes 23% import tax on imported GA aircraft International practice on aircraft tax • US has set the import tariff and VAT to less than 1% for aircraft weight exceeding 2,000 kg and not tax on aircraft weight less than 2,000kg • In some US States, luxury tax is charged to GA aircraft or some of the States are proposing the luxury tax bill • e.g. In 2005, Oregon State proposed luxury tax on GA aircraft - this was strongly opposed by AOPA • Other countries such as Germany, Japan, UK and France do not impose import tax on aircraft China aircraft tax (import) • China currently propose aircraft import tax of 22.85% - this is significantly higher than the US and other developed countries - the high import tax makes aircraft ownership less affordable and not suitable for GA development in China INTERVIEW QUOTES “We can’t find suitable and reliable aircraft type manufactured locally for our operation - imported aircraft is expensive” Source: New search, Booz & Company analysis

12. Similarly, some of the GA operating costs are not transparent and difficult to estimate making economic analysis impossible GA Operator Interview Findings AIRSPACE “We have canceled our Aircraft Management function due to it is very difficult to apply for the airspace usage - you’ll need relationship with the military” PENSION COST “After restructuring, some of the GA companies carry heavy burdens on giving out pensions to a large group of people” AVIATION GAS “Its difficult to get aviation gas in China - we sometimes go to the military office to get gas” AIRPORT “Most of the GA companies needs to share airport facilities with air carrier - the usage control of the airport is limited - hence aircraft utilization rate is low resulting in relative high costs” Source: Interview findings

13. CAAC has also implemented market regulations for non-commercial operation management which are restrictive Restrictions on Non-Commercial GA Operations CCAR 285 Non-Commercial GA Registration Administration 非经营性通用航空登记管理规定 Documents Required from CCAR 285 • This has introduced excessive paper work for the CAAC and at the same time created burden for GA operators • Some of the documents required from CCAR 285 are duplicative and inconsistent with other regulations which make it difficult for operators to comply with • Operators do not see any benefits of this rule which has significant costs • Signed application • ID document • Living address • Personal CV and police record • Activity purpose and source of funding and insurance documents (copy) • Aircraft registration certificate, airworthiness certificate and radio license • Pilot license or intention to hire a pilot • Intent contract with airport • Aircraft management company contract, activity scale and length of time and other necessary proceedings • This rule is applied to anyone who wish to use GA aircraft for non-commercial purpose • The applicant must obtain aircraft registration certificate and airworthiness certificate beforehand • Forms and materials required are included in this document • FAA does not have equivalent of this rule

14. China’s Operating Certificate centralized management in general aviation is stricter than that of the U.S. Comparison of Operating Certificate Rules of FAA and CAAC Source: literature research; Booz & Company analysis

15. Operating Certificate application procedure for GA in China is much more complicated than in US with more key steps Operating Certificate Application Procedure in China OperatingCertificateApplication Procedure in U.S. Submit the application to the Administrator at least 90 days before the date of intended operation Submit preparation application documents Make decision within 20 days and notify the result for preparation Submit an application in a form and manner prescribed by the Administrator to the Flight Standards District Office Start to Prepare the materials and documents for OC Each change shall notify the Administrator within 10 days Submit all the preparation work for OC application Issue OC within 20 days after the submission List the situation that certificate will be issued or denied Documentation at local industry and business authority File application to amend its certificate with the certificate-holding district office at least 15 days before the date proposed for the amendment to become effective Complete the certificate for future test & inspection General Steps Key Steps Source: FAA，CAAC, Booz & Company analysis

16. The categories and definitions of GA in FAA (1/2) Source: FAA，Booz & Company analysis

17. The categories and definitions of GA in FAA (2/2) Source: FAA，Booz & Company analysis

18. Regulatory constraints for operatorsGA aircraft ownership and useGA operating costAppendix General ownership optionsFractional ownershipOther uses (aircraft rental and flying clubs)

19. In the US, there are many different ownership options for GA operators to consider (1/2) Type of Aircraft Ownership (1/2) Source: World Aircraft Sales Magazine, AvBuyer.com

20. In the US, there are many different ownership options for GA operators to consider (2/2) Type of Aircraft Ownership (2/2) Source: World Aircraft Sales Magazine, AvBuyer.com

21. There are also aircraft ownership leasing companies and banking institutions to help make aircraft more affordable EXAMPLE National Aircraft Finance Company AOPA Aircraft Financing Program with Bank of America Type of aircraft covered for loan • Single Engine and Twin Engine  • Corporate Turbine  • VLJ's  • Completed Experimental Aircraft  • Experimental Aircraft in Kit Form  • War Bird Trainers  • Engine Overhauls & Re-Furbishing • Avionics Up-Grades  Loan options • Pre-Approval Credit • Variable Rate Loans • Fixed Rate Loans • Balloon Payment Loans • AOPA Aircraft Financing Program makes aircraft financing easy and aircraft ownership affordable through Bank of America • This loan can be used for purchasing new or used aircraft, avionics, refinancing and upgrades • AOPA also provide tips for first time buyers on how to finance aircraft purchasing more effective and efficient The applicant can borrow up to 90% of the aircraft value The applicant can finance up to US$ 500,000

22. Similarly, pilot training is also offered different financing options EXAMPLE US Pilot Training Financing Options AOPA Flight Training Funds Program • The candidate can contact local pilot training schools for cost/lesson and make decision on frequency of lesson and payment to the school Self-Funded AOPA Flight Training Funds offers: • Predictable payments • No annual fee • No collateral needed • Renewable source of cash • Credit line up to $25,000 • Support AOPA and General Aviation In association with • The airline scholarship is the most common one • However, there are industry associations and individual funds that offers scholarship - e.g. EAA Young Eagles Scholarship Scholarship The program gives perspective pilots flexibility to structure training - the applicant can use the account to pay for a rating or certificate program, get additional training hours, aircraft rental, instructor fees, books and supplies • This options can help people to pay part of the training fee • The most noticeable one are offered by AOPA - AOPA Flight Training Funds Program Line of Credit Source: AOPA, Booz & Company analysis

23. Regulatory constraints for operatorsGA aircraft ownership and useGA operating costAppendix General ownership optionsFractional ownershipOther uses (aircraft rental and flying clubs)

24. Part 91K and AC 91-84 oversees the fractional ownership and ensure safe operations Fractional Ownership Definition and Regulatory Oversights • A fractional ownership program is a program of shared aircraft ownership that is conducted under the requirements of part 91. As defined in part 91K, a fractional ownership program must contain all of the following elements: • Single program manager who provides aviation expertise and management services • Two or more airworthy aircraft • One or more fractional owners per program aircraft • Possession of at least a minimum fractional ownership interest in one or more program aircraft by each fractional owner (1/16th for airplanes/1/32nd for helicopters) • Dry-lease exchange agreements among owners, and • Multiyear contracts or program agreements for management services and aircraft dry-lease exchange • Subpart K provides the regulatory definitions and safety standards for fractional ownership programs; defines the program and program elements; allocates operational control responsibilities and authority to the owners and program manager; and provides increased operational and maintenance safety requirements for fractional ownership programs Source: AC 91-84

25. Fractional program can also operate under Part 135 with key differences identified Fractional Ownership vs. Part 135 Source: AC 91-84

26. 3 Fractional ownership has played a significant role in revitalizing the general aviation jet manufacturing industry in the 90’s Fractional Ownership Development 1995 1999 1986 2000 Today FAA OVERSIGHT • Today, fractional ownership programs are subject to an FAA oversight program • FAA aviation safety inspectors (ASI) conduct scheduled and unscheduled inspections, and surveillance of personnel, aircraft, records, and other documents to ensure compliance with the regulations FORAC • In October 1999, the FAA convened a special aviation rulemaking committee, the Fractional Ownership Aviation Rulemaking Committee (FOARC), to address the issues surrounding the regulation of fractional ownership program operations PART 91K • The Fractional Ownership Rule, published on September 17, 2003, identifies fractional ownership programs as private, general aviation programs conducted under part 91K DEVELOPMENT • During the 1990s this growth was substantial and sustained. While growth in new fractional ownership programs is minimal, the FAA expects existing programs to continue increasing in size Number of Aircraft in Fractional Fleet (1986-2001) EMERGENCE • The fractional ownership concept began in 1986 with the creation of an industry program that offered increased flexibility in aircraft ownership and operation 2001 2000 1999 1998 1997 1996 Fractional Ownership Program has bring discontinued growth 1995 1994 1993 1992 1991 1990 1989 1988 1987 # of A/C in Fractional Ownership Fleets 1986 Source: AC 91-84, Wilbur Smith Associates, NBAA

27. Fractional ownership can make aircraft more affordable, economical and enable more people to use GA aircraft Fractional Ownership Advantages NetJets Example Efficient Use of Capital • The fractional owner actually purchase an undivided interest in a specific, serial numbered aircraft • The size of the undivided interest purchased is directly proportional to the number of hours flown each year Comments • NetJets pioneered the concept of fractional ownership in 1986 by allowing businesses to purchase shares in a jet to reduce costs • Aside from regular fractional ownership program, NetJets also offers flight card program, Marquis Jet Card Predictability of Expenses • Once a fractional ownership contract is signed, which is typically five years, the cost of using the aircraft is guaranteed and predictable for the entire term of the contract Guaranteed Liquidity • Once the fractional owner meet the minimum commitment term, the aircraft management company normally offers the guaranteed liquidity and guaranteed repurchase of the fractional owners interest at fair market value less a remarketing fee Guaranteed Availability • Aircraft is guaranteed available when the fractional owner requests it - sometimes the aircraft in demand may not be the owned aircraft but a comparable or a larger one in the fleet Source: NetJets, AvBuyer.com and Booz & Company analysis

28. % Significant savings can be made with Fractional Ownership - the operating cost can reduce by 80% with 1/8 of fractional ownership ILLUSTRATIVE Whole Aircraft Ownership vs. Fractional Ownership Gulfstream V US$ 1,926 / Hour Others Total Cost: US$ 1,926 / Hour 100% 1% 100% 9% Engine Reserve Variable Cost Fuel Cost With Fractional Ownership Program, costs are shared among fractional owners including both ownership and operating cost Maintenance Fixed Cost Insurance Hanger 1/8 Fractional Ownership: US$ 240 / Hour Training 7% Hourly Variable Cost Hourly Variable Cost

29. Regulatory constraints for operatorsGA aircraft ownership and useGA operating costAppendix General ownership optionsFractional ownershipOther uses (aircraft rental and flying clubs)

30. In the U.S. other ways of using aircraft, not involving ownership are significant • People who fly more hour usually own aircraft through sole ownership or joint ownership • In the U.S. significant part of GA piston airplane usage is aircraft rental and for major part of flight training • Aircraft rental from FBO • Hourly rental - pilots must be previously “checked out” and authorized by FBO flight instructors, or flying with the instructors • Flying clubs • Pilots pay annual, monthly and hourly fees to fly aircraft. Use by pilots who fly more hours per year than those using aircraft rental, but less hour per year by those owning aircraft

31. AOPA indicates that in the U.S. two third of pilots don’t own an airplane, they rent airplanes and are charged on a hourly basis EXAMPLE Brief Descriptions of Platinum Aviation Rental Business On Line Scheduling • Platinum Aviation is a South Florida based family of companies which team up with Cirrus to provide flight training, aircraft rentals, aircraft maintenance services for the newest Technologically Advanced Aircraft market • Basic minimum requirements for rentals and solo flight are aircraft type dependent. Requirements for renting Cirrus SR22 Turbo are: • Private Pilot Certificate • Instrument Rating • High Performance Endorsement • 250 Hours Total Time • 10 Hours Aircraft Make and Model • Cirrus Transition Training Course Completed • Cirrus Turbo Transition Course Completed • Platinum Instructor Sign Off • Pilots that are interested in renting aircraft will be required to do an aircraft checkout with one of its instructor pilots prior booking any rental flights which include: • A standard aircraft checkout with a review of a few ground topics such as regulations, airspace and aircraft systems • In addition, the instructor will go over procedures and policies of the rental company • This will be followed by a flight for the instructor to evaluate your ability to operate the aircraft safely Clear information on aircraft type and rates Less than US$300 per hour (not inclusive of fuel cost) Source: Platinum Aviation Company website, Booz & Company analysis

32. The Flight Card and Block Charter programs, which derived from fractional ownership, can accommodate some ad hoc flying needs Flight Card Program Block Charter Program • A type of fractional ownership made available to persons with aircraft utilization requirements of less than 50 hours per year • For example, with a Jet Card Program, a customer generally pre-pays for a certain number of flight hours (typically 25) on a certain make and model of aircraft, and thereby gain access to the fractional fleet • Whenever the customer flies, the total number of flight hours flown is debited from the card - when the card is used up, the customer has no further obligation • This program is similar to card program associated with large fractional programs but usually provide for access to charter fleets rather than fractional fleets • Aircraft in charter fleets tend to be older on average and do not have standardized interiors and amenities like fractional fleets • The customer may have access to only the charter fleet of a single charter operator Source: World Aircraft Sales Magazine, AvBuyer.com

33. Regulatory constraints for operatorsGA aircraft ownershipGA operating costAppendix

34. China share very similar GA operating cost structure to the U.S. with difference in proportions Aircraft Operating Cost Breakdown *) Detailed information on China GA operating cost is difficult to obtain - only partial information available Source: PlaneQuest.com, industry interviews and Booz & Company analysis

35. The US allows free usage of GA airports and airways through AATF which existing GA operators contribute to via tax charges Airport and Airway Trust Fund • The Airport and Airway Trust Fund (AATF), created by the Airport and Airway Revenue Act of 1970, provides funding for the federal commitment to the nation’s aviation system through several aviation-related excise taxes • Funding currently comes from collections related to passenger tickets, passenger flight segments, international arrivals/departures, cargo waybills, aviation fuels, and frequent flyer mile awards from non-airline sources like credit cards GA Contribution to AATF GA Benefits from AATF • General aviation operators pay into the Airport and Airway Trust Fund through a fuel tax of 21.9 cents per gallon for aviation jet fuel and 19.4 cents per gallon for aviation gasoline • Furthermore, on-demand air charter operators pay the same ticket and fuel taxes as scheduled airlines due to their classification as commercial operators • This funds helps guarantee free usage of FAA funded airports and airways which makes GA more affordable and available to people This is believed by US GA Industry as the best method for non-commercial GA paying into the AATF because it guarantees a consistent and efficient stream of funding and promote more flying as the result of safe operation Source: NATA, FAA, Booz & Company analysis

36. The new proposals for GA user fees has raised many oppositions from the GA industry GA User Fee Impact on GA • For over a year, the FAA has claimed that the existing aviation tax revenues are falling short of the FAA's expenses, noting that ticket prices are not linked to their productivity costs • They also claim that the current tax-based funding system promotes an unstable operating environment for the FAA, making long-term financial planning impossible • Stating tight budget years make continued funding from the General Fund unlikely, the administration proposes to implement a user-fee-based system of revenue collections • Increased cost to nonscheduled operators • All operations should be charged the same fee because air traffic control does not differentiate between types of aircraft • Less general aviation activity • Due to the increased costs of using the aviation system, many GA operators would fly on a less frequent basis • A tremendous administrative burden • Virtually all countries that have implemented a user fee system have adopted a method of billing users of the system for the air traffic services used after their particular flight - given the large amount of GA activities in the US, this would create significant burden for GA pilots Source: AOPA and NATA

37. For airspace charges, Australia has a set of rules on when and how to charge aircraft that using low altitude airspace (Class E to G) EXAMPLE Australia Airspace Classification and Charges Australia Air Traffic Service (ATS) Enroute Charges The Main features of NAS Australia airspace are… • Complies with ICAO Classifications with minimum differences • Based primarily on the North American airspace system • Provides a continuous Search-and-Rescue (SAR) and IFR traffic service for IFR services to the terminal area • Allows for IFR aircraft to operate on a self-announce, no enroute charge basis in Class G airspace • Facilitates VFR climb and descent in Class E airspace for aircraft which have filed an IFR flight plan • Changes the MBZ calling in the blind procedures to proven FAA style CTAF/UNICOMs with a third party operator • Ensures that ATC frequencies remain free of aircraft self-announce broadcasts • Provides an IFR separation service to 700’ AGL at non tower terminal airspace at selected locations. • Provides a full radar based advisory service on a workload permitting basis for VFR aircraft • Simplifies procedures and makes the maximum use of modern technology • En-route ATS charges apply to aircraft that have filed IFR flight plans with the ATS provider • There will be no charge to aircraft that have not filed IFR flight plans but require a short term IFRclearance to climb or descend in Class E airspace, or a clearance to cross a Class E corridor • There will be no charge for a workload permitting RAS, flight following service for VFR aircraft • There will be no charge for SAR alerting services to VFR flights over water Source: National Airspace System, Australia

38. In China, some of the operating costs may not seem very transparent and difficult to capture… GA Operator Interview Findings AIRSPACE “We have canceled our Aircraft Management function due to it is very difficult to apply for the airspace usage - you’ll need relationship with the military” PENSION COST “After restructuring, some of the GA companies carry heavy burdens on giving out pensions to a large group of people” AVIATION GAS “Its difficult to get aviation gas in China - we sometimes go to the military office to get gas” AIRPORT “Most of the GA companies needs to share airport facilities with air carrier - the usage control of the airport is limited - hence aircraft utilization rate is low resulting in relative high costs” … There is a need to establish fee policies to guide charges for GA airport and airspace access Source: Interview findings

39. Regulatory constraints for operatorsUS fractional ownership modelGA operation costAppendix

40. t Cost breakdown examples for a single engine prop… ILLUSTRATIVE Typical Operating Cost of Cessna 172XP (Single Engine Prop) U.S. Example Total cost for a Cessna 172XP is ~ US$ 68,500 US$ 78 / Hour 100% 5% Others 11% Engine Reserve US$ 4,294 / Year Fuel Cost 100% Annual Insurance Maintenance Fixed Cost Annual Hanger / Tie Down Training 4% Hourly Cost Annual Fixed Cost Source: PlaneQuest.com, Booz & Company analysis

41. t …and a twin-engine business jet ILLUSTRATIVE Typical Operating Cost of Gulfstream V (Twin-Engine BizJet) U.S. Example Total cost for a Gulfstream V is ~ US$ 45 million US$ 1,926 / Hour 100% 1% 9% Others Engine Reserve US$ 206,134 / Year Fuel Cost 100% Annual Insurance Maintenance Annual Hanger / Tie Down Fixed Cost 19% Training Hourly Cost Annual Fixed Cost Source: PlaneQuest.com, Booz & Company analysis