Creating Value

1. Creating Value Looking for Opportunities

2. Introduction – Mia Maki • Why this topic?

3. Agenda • Business models and opportunities in revenue • Trends in aviation • Simulation training technology trend • Regulatory changes • Geographic changes • Macro trends

4. How much would you pay for this purse? Business models HERMES BIRKIN 30CM HIMALAYAN WHITE CROCO SILVER Ebay Buy it Now CDN $112,000

5. What about this ‘vintage’, pristine condition Hermes Birkin? Business models Value approximately US $42,000 Member Price US $4,800/month

6. Revenue Models Streams Single Multiple Bundling (iFR ground school with simulator time) Interdependent Razorblades Loss leader Giving away ground school if the flying is done with the school Models Volume or Unit-based Zipcar (rental pilot/general aviation 15% of revenues; block time at reduced rate; prepaid?) Subscription or membership Advertising Licensing Transaction fee

7. Velotaxis – Revenue Model

8. Revenue Models What about bundling opportunities? Interdependent, e.g. razorblades Supplementary revenue models? Subscription or membership Next generation target market (children) Creating communities of customers Advertising Reaching customers? Reaching employees? Licensing and/or merchandising?

9. Simulation training technology trend • Demand is driving down simulator costs from $tens of millions/millions to hundreds of thousands • What opportunities exist as a result of this trend? • Newer and advanced technology with high fidelity graphics which are as effective for training as a full motion simulator • Pricing? • How can your organization capitalize on this?

10. Regulatory changes • A few things to consider… • Jet transition rating (simulation access) • Multi-crew license (MCL or MPL) • Must be an approved training organization (ATO certification, very robust, requires SMS with effective quality assurance elements) • Gives an ATO latitude to provide alternative means of compliance • Partnering opportunities (domestic & international) • Worldwide attrition due to demographic shifts (retirements)

11. Geographic and demographic changes • Recent graduates and retention • How can you tap into that walking advertisement? (the ones that leave for good) • Domestic licenses have fallen substantially (skill shortage; opportunity for the right student to ‘get that job’) • Fewer schools-fewer students trend • How much more knowledgeable or sophisticated is the entering student compared to 10 years ago? Educate the student to be successful (not just technically)

12. Geographic and demographic changes • China • Long-term, hard to develop market • Limited current approval of North American schools (4 schools in Canada approved put of ~30 schools worldwide) • One of our schools in Canada has the second highest number of students approved in the world (behind the US) for delivery of Chinese professional pilots (cadet or airline sponsored program)

13. Geographic and demographic changes • India • Funding from “The Global Opportunities for Associations (GOA)” (formerly PEMD) • Delegation just came over (follow on to March 2010 trip to India)

14. Geographic and demographic changes • India • What are the opportunities? Lifecycle? • Initial round created a glut; downturn dampened economy; consolidation; ex-patriots • 3,000 Indian pilots went off worldwide to get their training during the initial round; weren’t qualified enough when they returned for interviews • Commercial licenses – check • But it wasn’t enough…. • Airlines have ramped up their requirements • Advanced training opportunities for these pilots • Need for more Commanders/First Officers with advanced decision-making skills and crew resource management skills (Canada is a leader)

15. Macro trends • Play • Volkswagen and the Fun Theory program • http://www.thefuntheory.com/ • The piano staircase • Would more people use the stairs? • World’s largest trash can • Changing behaviour with fun • Implications for cost reductions? • Productivity?

16. Summary • Business models and opportunities in revenue • Trends in aviation • Simulation training technology trend • Regulatory changes • Geographic changes • Macro trends

17. Creating Value Opportunities? Questions?