Airline Split Operaons

Dra final report

October 16th, 2017

Confidenal; for internal use only Execuve summary

Key conclusions airline split operaons research Dra

§ The opening of may result in airlines operang from/to both Schiphol and Lelystad, serving the same catchment area, in a split operaon set up. This research describes what kind of airline split operaon models exist and under which condions such operaon may or may not be sustainable. The basis for this research is an extensive analysis of flight schedules complemented with market developments. Client envisions a Traffic Distribuon Rule (VVR) and requested to imply its implicaons.

§ The term ‘airline split operaons’ refers to network configuraons where an airline operates from its home base to mulple desnaons in the same catchment area or where an airline operates from another airport than its original home base in the same catchment area. The main types of split operaons are: ‘mul-airport’, ‘outside base’, ‘addional base’, and ‘second home base’. For the Dutch situaon the ‘second home base’ type is not relevant

§ All three relevant types of split operaons are being operated by airlines in the Dutch market for a long me. From all regional airports in the ‘outside base’ operaons are executed, while airlines have established ‘addional bases’ at Eindhoven and Roerdam (partly due to the lack of development potenal at Schiphol). Foreign airlines, mainly network carriers, but also low cost airlines, operate flights from their foreign home base to a second airport in the Netherlands next to Schiphol (‘mul-airport’) or have done so in the past

§ The ‘Addional base’ -type is well-suited for Lelystad from a market demand perspecve. Scale seems to offset inconveniences and extra cost of a split operaon in comparable cases. The opening hours as part of the license of Lelystad (06h00 unl 23h00/24h00) meet the condions that airlines require for a base. A more challenging requirement is the minimum scale of this type of operaon. The typical start-up size of a base is 3 – 4 aircras resulng in approx. 6.000 – 10.000 ATMs per year. This will not be possible from day 1 at Lelystad. The start-up period needs to provide airlines a credible perspecve to develop towards that viable scale in 2 to 3 years from an efficiency point of view

§ The ‘Mul-airport’-type fits in terms of scale and desired opening hours at Lelystad. The operaonal condions demanded by the airlines are minimal, however, the commercial drawbacks compared to a ‘single-airport’ operaon appear to be significant and therefore lile growth from the market can be expected. Restricons at Schiphol as a consequence of the VVR can, however, drive some demand for this type of operaon at Lelystad. An analysis of SEO shows that with the current VVR approx. 7.500 flights (mainly by Turkish and Moroccan airlines) currently being operated at Schiphol, might be subject to either move to Lelystad, or alternavely be cancelled

§ The ‘Outside base’-type (the ‘W’-operaon) has long been applied by Dutch charter airlines to regional airports. There are no objecons from a cost- and operaonal feasibility point of view, viability of a W-operaon relies on yield perspecve. Both volume (ATMs) and schedule requirements (mostly during the middle of the day) can be well fied at Lelystad. However, there is a clear trend in the Netherlands and in Europe that the charter model loses in importance against scheduled operaons. A VVR that reliefs Schiphol of leisure flights in the morning (block 2) and aernoon (block 6) needs to imply a free choice in slot me at Lelystad, in order for a carrier to make a 2nd or 3rd turn at Lelystad instead of at Schiphol

§ ‘Mul-airport’ and ‘Outside base’ types of operaon could be considered by airlines as a way to start building presence at an airport with the aim of developing into an ‘addional base’, provided that the desired volume of that base can be achieved within an acceptable me frame (2-3 years)

2

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’ - ‘Outside base’ § Relevant insights for the development of Lelystad Airport

3

Confidenal; for internal use only Goal of this research is to define airline split operaons models, determine condions airlines require for each model and relate those to Lelystad airport Dra

Framework of assignment Applied methodology

Objecve § Mapping the different models of airline § Mapping airline split operaons through archetypes split operaons based on case studies § Mapping the typical airline operang hours and the size Scope § The split operaon models that are of operaon for each archetype based on analyses of relevant for the Dutch airport schedule data § The focus on which condions (operang § Enriching the insights by analyzing the development of hours, number of allowed flights) are these archetypes over me and by gathering necessary for the airlines to succeed the informaon about why certain developments happen split operaon (on instrucon, no conversaons with the airlines were held) Out of scope § An assessment of negave effects if not all condions for a split operaon are met § Describing the expected condions for airlines to operate in a split operaon at Lelystad Airport, based on the archetypes and the impact of the envisioned Traffic Distribuon Rule (VVR)

Disclaimer: the research in this report assumes that the basic airport infrastructure (accessibility, ground facilies) is in place and that the Traffic Distribuon Rule (VVR) is in force

4

Confidenal; for internal use only There are 5 ways an airline can operate from/to an airport of which 4 can be classified as split operaons Dra ARCHETYPES FOR THE WAY AIRLINES OPERATE FROM/TO AN AIRPORT

No split operaon Increasing degree of split operaons

SECOND HOME SINGLE-AIRPORT MULTI-AIRPORT OUTSIDE BASE ADDITIONAL BASE BASE

Operang flights from Operang flights from Operang flights on a Operang flights from Operang a substanal a base to an airport a base to mulple route where neither an addional base number of flights from that is the only one airports located in the departure nor arrival where aircra and a second home base Descripon within that catchment same catchment area airport are a base of crew are based near the current home area the airline (W- base operaon)

• Market opportunity • Market opportunity • Market opportunity • Market opportunity • Limited growth (only at bigger (oen charter airlines • Limited growth opportunies current metropoles) flying commissioned home base Drivers opportunies on • Forced (if primary by tour operators) current base • Somemes defensive desnaon has no capacity to grow)

• Germania at MST • KLM at LIN and MXP • from GRQ/ • easyJet at CDG and • Brish Airways at LHR • TK at RTM and AMS MST to Spain ORY and LGW Examples • KLM at LHR and LCY • Transavia at MUC

5

Confidenal; for internal use only The ‘mul-airport’-, ‘outside base’- and ‘addional base’-types of a split operaon are relevant for the Dutch market Dra

SECOND HOME SINGLE-AIRPORT MULTI-AIRPORT OUTSIDE BASE ADDITIONAL BASE BASE

• Most common • Mulple airlines fly • Charter airlines • A number of airlines • Seng up a second archetype: serving or have been flying flying from regional already have a base home base hardly one airport in a in the past both on airports is a long- other than at occurs and only market from the and standing pracce Schiphol (Roerdam appears at growth base other regional • In the Netherlands, and Eindhoven) limitaon and/or at • No split operaon airports in the these ‘outside base’- • Especially low cost enormous and therefore out of Netherlands flights are usually airlines are sll metropolis (London, scope for this • Volumes are small done by Dutch increasing the Paris) research (mostly less than 10 airlines number of bases • There is no need for flights a week/ 1.000 • A condion for this a similar model in ATMs a year) type of operaon is the Netherlands, • Mostly foreign the availability of neither is this size airlines enough movements. possible at Lelystad In me, this (for example 44k archetype is possible flights at LGW by BA) at Lelystad

Relevance for development of Lelystad/Dutch context

6

Confidenal; for internal use only The three relevant types of a split operaon show a very disncve traffic paern at regional airports Dra

Desnaon Z Desnaon Z Desnaon Z Desnaon Y Desnaon Y Desnaon Y Desnaon X Desnaon X Desnaon X ADDITIONAL BASE

Regional airport in the Netherlands 06h00 24h00

Home base Home base Home base Home base Home base Home base Home base Home base MULTI-AIRPORT Other Dutch airport Regional airport in the Netherlands 06h00 24h00

Desnaon X Desnaon X or Y Desnaon X or Y

OUTSIDE BASE Home base Home base

(W-operaon) Regional airport in the Netherlands 06h00 24h00

7

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’ - ‘Outside base’ § Relevant insights for the development of Lelystad Airport

8

Confidenal; for internal use only All three relevant types of airline split operaons are currently operated by mulple airlines at regional airports in the Netherlands Dra KEY AIRLINES OPERATING IN THE NETHERLANDS CATEGORIZED PER AIRPORT AND ARCHETYPE

Mul-airport Outside base

Addional base Home base

• The fact that each archetype occurs in the Netherlands, without the existence of policies, shows there is a market demand jusfying such services (provided that certain condions are met) and operaonal disadvantages can be overcome

* Based on schedule and airport Source: OAG data; M3 Consultancy analysis 9

Confidenal; for internal use only The ‘Addional base’-model is dominant in the Dutch market; ‘mul-airport’ is important for some airlines operang at Roerdam/The Hague and Dra NUMBER OF ATMs CATEGORIZED PER REGIONAL AIRPORT AND ARCHETYPE IN 2016

30,960 ’Single-airport’ (no split operaons) ’Mul-airport’ ’Outside base’ ’Addional base’ - LCC 19,485 ’Addional base’ - Dutch airlines*

3,082 1,970

EIN RTM GRQ MST

* Dutch airlines operaon at Eindhoven/Roerdam are partly due to constraints in development at Schiphol Source: OAG data; M3 Consultancy analysis 10

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’ - ‘Outside base’ § Relevant insights for the development of Lelystad Airport

11

Confidenal; for internal use only The ‘Addional base’-operaon is mainly applied by low cost airlines ADDITIONAL BASE

Dra Typical airlines § Dutch/foreign (hybrid) airlines Operaonal adjustment in § A part of the current/new fleet is based at the addional base, at which relaon to single-airport aircra typically start and end their day Descripon Impact on the operaon § Significant - Airplane facilies are necessary: maintenance, briefing - Local crew is needed - Local ground facilies are necessary as well (staon manager; flight duty operaons > duplicaon with funcons on other base) § However, the impact of operang in a split operaon will be migated with the scale size

A Dutch airports § Transavia (RTM and EIN) and (EIN) have bases at regional airports B Trends § Sll, new bases are added by European low cost airlines such as easyJet, Insights from Norwegian and Wiz Air analysis/ § case studies C Typical size for Approximately 6.000 – 10.000 ATMs a year for broadly oriented low cost airline airline and 2.000 ATMs a year for ultra-low cost airlines such as Wizz Air D Typical operang hours § Departure wave at 6 - 8 a.m.; arrival wave at 10 p.m. - 12 a.m. § During the day there is an irregularly paern of flights § A curfew at for example 11 p.m. at Paris Orly is not a reason to not operate on this airport due to the popular locaon, which however could be a barrier for Lelystad Airport E Impact Traffic § The traffic distribuon rule will likely encourage airlines to consider an Distribuon Rule ‘addional base’, but given capacity constrains this will inially have to be through other split operaon models (see next secons) 12

Confidenal; for internal use only A Airlines operate at a total of 3 ‘addional bases’ at Dutch regional ADDITIONAL BASE airports today, with an average of 10.000 ATMs a year per base Dra NUMBER OF ATMs PER YEAR PER AIRLINE AND AIRPORT IN 2016

13.324

9.390 8.881 10.000

Transavia@RTM Transavia@EIN Ryanair@EIN

Source: OAG data; M3 Consultancy analysis 13

Confidenal; for internal use only In recent years, low cost airlines have connuously been opening B ADDITIONAL BASE addional bases to expand their network Dra EXAMPLES: ADDITIONAL BASES FOR THREE LOW COST AIRLINES IN THE LAST 6 YEARS

Airline Year Airport

easyJet 2012 Lisbon, London–Southend, Nice, Toulouse 2013 Hamburg 2015 Amsterdam, Napels, Porto • Low cost airlines keep expanding their Wizz Air 2015 Košice, Lublin, Debrecen network with addional 2016 Iasi, Kutaise bases 2017 Chisinau, Varna • easyJet and Norwegian set up new bases at big Norwegian 2011 Helsinki airports and cies, 2012 Malaga, Las Palmas, while Wizz Air prefers 2013 Gatwick, Tenerife, Alicante smaller airports 2014 Barcelona-el prat, Madrid 2016 Rome Fiumicino Airport 2017 Edinburgh, Riga

Source: OAG data; M3 Consultancy analysis 14

Confidenal; for internal use only B Airlines indicate they are interested to open new bases in the ADDITIONAL BASE Netherlands as well Dra

Airline expert – “given the risk of recruing local crew members and the potenal costs of not having extra capacity when there are technical issues, an airline would want to base at least 3 or 4 Not a real new base at Eindhoven, airplanes as minimum scale when opening a new base. If an airline since airplanes will arrive from opens a new base with 1 airplane, they will do this with a crew from Morocco in the morning at the home base that stays the night in a hotel and it is mostly due to Eindhoven and than connues it PR reasons.” flight schedule from Eindhoven

Transavia seems interested to base 3 airplanes at Lelystad Airport

Corendon has no objecon against moving to Lelystad Airport if there are clear rules and regulaons

15

Confidenal; for internal use only A new base needs the perspecve to start at or quickly develop C ADDITIONAL BASE towards 6.000 flights or more per year NUMBER OF ATMs PER YEAR FOR THE FIRST THREE YEARS AT WHICH EASYJET, NORWEGIAN AND WIZZ Dra AIR HAVE OPENED AN ADDITIONAL BASE (in thousands)

easyJet (6 cases) Norwegian (6 cases) Wizz Air (7 cases)

Year 1 9.2 (4.3 – 13.7) 3.4 (0.8 – 6.9) 1.4 (1.0-2.0)

Year 2 10.8 (7.1 – 15.2) +25% 4.6 (2.1 – 8.9) +75% 1.8 (1.2-2.1) +27%

Year 3 11.5 (7.3 – 17.1) 6.0 (1.9 – 11.2) 1.7 (1.3-2.0)

• easyJet is more focused on the business passengers and starts a new base with an average of 9.200 ATMs per year, while the ultra-low cost Wizz Air starts with only 1.500 ATMs a year • All bases show a considerable growth in the first few years, which means that their base involves, apart from Wizz Air, quickly more than 6.000 ATMs a year

Source: OAG data; M3 Consultancy analysis 16

Confidenal; for internal use only C easyJet mostly starts serving a ‘single airport’ to accumulate volume, ADDITIONAL BASE before establishing a new base Dra TOTAL NUMBER OF ATMs PER YEAR BY EASYJET

15.647 11.027 12.872

4.260

• easyJet has a relavely long growth ’00 ’13 ’17 ’00 ’12 ’17 path before they start a base at an HAM LIS airport

17.132 16.500 • Before starng a base, easyJet 13.722 operated most of their flights from 12.352 and to these airports via the ‘single- airport’ model; from one of their bases in different catchment areas to these airports and back to their bases

’00 ’15 ’17 ’00 ’12 ’17 • easyJet started immediately with 3 NAP TLS based airplanes at London Southend (SEN) and therefore there was no growth path 9.534 7.130 6.004 4.758

’00 ’15 ’17 ’00 ’12 ’17 OPO SEN

Source: OAG data; M3 Consultancy analysis 17

Confidenal; for internal use only Case study - easyJet at Paris-Orly and Charles de Gaulle: background ADDITIONAL BASE

Dra

• easyJet has been operang at Paris-Orly airport, the most aracve airport for the OD passenger, since the early 2000s

• In 2007 easyJet announced it would invest EUR 600 million in expanding its presence in the Parisian market and would open a second based at Paris – Charles de Gaulle with 3 aircra (next to the 6 aircras it had based at that me at Paris Orly). Its ambion was to grow from 9 to 20 aircra and 12 million passengers in 3 years

• easyJet’s decision to develop a new base at Charles de Gaulle was mainly triggered by the lack of expansion opportunies at Orly (cap of 250.000 ATMs/year), while Charles de Gaulle did have sufficient capacity. It was a not a decision based on cost differenal as airport charges for both airports at the same

Source: press clippings, interview with former Aeroports de Paris airline markeng staff member 18

Confidenal; for internal use only C Following the opening of its base at Paris-CDG, easyJet quickly ADDITIONAL BASE reached an annual volume of 16.000 ATMs Dra TOTAL NUMBER OF DEPARTURES IN THE FIRST WEEK OF AUGUST BY EASYJET AT CGD AND ORY

321 318 300 292 299 ORY CDG 283 288

255 • easyJet already had a very sizeable In 2008 new 226 base at CDG operaon at Paris- In 2003 start base CDG before opening at Orly (16K ATMs) 176 171 171 its base (flights from (12K ATMs) 163 163 164 164 167 154 other bases into 141 140 142 Paris) 130 130 126 • Aer the opening of 112 106 99 100 an addional base at 89 72 CDG it reached a 69 volume of 16K ATMs

26

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

Source: OAG data; M3 Consultancy analysis 19

Confidenal; for internal use only D easyJet’s flights to CDG require long opening hours, having departure/ ADDITIONAL BASE arrival peaks in the morning and late evening Dra WEEKLY NUMBER OF EASYJET FLIGHTS AT CDG PER HOUR DURING FIRST WEEK OF AUGUST 2017

35 34 28 30 29 24 21 20 20 17 13 10 7 9 • ‘Addional base’- 5 flights peak in the early morning 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (departures) and late evening (arrival) Deparng flights by easyJet from CDG • During the day, flights will also arrive and 45 depart, but there is a 41 less clear paern 29 29 25 21 22 20 15 16 10 11 4 3 6 3

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Arrival flights by easyJet at CDG

Source: OAG data; M3 Consultancy analysis 20

Confidenal; for internal use only D easyJet’s operaon at ORY has an even more pronounced peak in ADDITIONAL BASE the evening due to the curfew at 11.30 pm Dra WEEKLY NUMBER OF EASYJET FLIGHTS AT ORY PER HOUR DURING THE FIRST WEEK OF AUGUST 2017

23.30 06.00 25 22 19 19 20

9 9 7 8 7 8 5 5 1 2 1 • Compared with CDG, the flights arriving at ORY, have an even stronger 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 peak in the evening due to the curfew starng at Deparng flights by easyJet from ORY 11.30 pm 06.00 23.30 39

17 17 19 14 12 9 6 8 7 7 6 6

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Arrival flights by easyJet at ORY

Source: OAG data; M3 Consultancy analysis 21

Confidenal; for internal use only C Transavia started with an ‘outside base’-operaon to grow at ADDITIONAL BASE Eindhoven before seng up its base there with 7.000 ATMs Dra TOTAL NUMBER OF DEPARTURES IN THE FIRST WEEK OF AUGUST BY TRANSAVIA AT EINDHOVEN

118 NB: Non-scheduled 114 flights of Transavia at In 2013 Transavia Eindhoven are not opened a new base with included in the data 3 based airplanes at 92 90 • Transavia was able to 7.000 ATMs a year 80 operate a small number of flights through an ‘outside base’-operaon • As soon as Transavia got 55 the opportunity, 46 Transavia opened a base with approx. 7.000 ATMs per year

19 20 12 12

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17

22 Source: OAG data; M3 Consultancy analysis

Confidenal; for internal use only Case study - Transavia at Munich: background ADDITIONAL BASE

Dra

TRANSAVIA CONFIRMS OPENING OF ADITIONAL BASE IN • Transavia announced in the end of 2015 the opening of MUNICH a new base in Munich from summer 2016 with 4 based aircra and addional 17 new desnaons. This was their first base outside their home market in the Netherlands and France

• This was done with a Dutch Air Operators Cerficate (AOC) with a local crew (approx. 100 crew members)

• However, in the beginning of 2017 Transavia had already decided to close down the base from the end of 2017 due to disappoinng results

Source: newspapers/website arcles 23

Confidenal; for internal use only C The addional base of Transavia at Munich started its first year with ADDITIONAL BASE an operaon of around 8.500 ATMs a year Dra AVERAGE NUMBER OF DEPARTURES PER WEEK BY TRANSAVIA AT MUNICH

90 84 85 85 78 74 68 68 68 64 64 64 63 • In the first part of the 59 59 operaon, Transavia started 51 53 with 80-85 departures per 48 week (approx. 8.500 ATMs 39 per year)

• In the second year, this was decreased to 65 departures per week (approx. 6.500 11 ATMS per year)

Mar May July Sept Nov Jan Mar May July Sept

2016 2017

Source: OAG data; M3 Consultancy analysis 24

Confidenal; for internal use only D Transavia fully exploits the opening hours of Munich airport with a ADDITIONAL BASE disncve deparng- and arriving peak Dra WEEKLY NUMBER OF TRANSAVIA FLIGHTS AT MUNICH PER HOUR DURING FIRST WEEK OF AUGUST 2017

05.00 24.00 17

6 6 4 4 4 3 3 2 2

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

05.00 Deparng flights by Transavia from Munich 24.00 12

7 7 5 5 4 4 3 1 1 1 1

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Arrival flights by Transavia at Munich

Source: OAG data; M3 Consultancy analysis 25

Confidenal; for internal use only C Wizz Air typically operates smaller bases than any other airline, and ADDITIONAL BASE operates flights for 2 to 3 years before starng a new base Dra TOTAL NUMBER OF ATMs A YEAR BY WIZZ AIR

2.046 1.984 2.074 1.750 1.382 1.102 1.108 680 These 6 bases have a similar growth 606 468 516 248 412 path; Wizz Air starts with a small 14 number of ‘single airport’ flights for a ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’11 ’12 ’13 ’14 ’15 ’16 ’17 couple of years to one of their bases KUT LUZ IAS (mostly to LTN, VLN and BUD). Aer opening a base on one of these airports, they increase the number of 1.995 1.896 1.871 1.298 flights beyond 1000 per year and fly to 1.354 1.314 936 1.098 994 other non-base airports as well 700 818 852 456 98 92 180

’11 ’12 ’13 ’14 ’15 ’16 ’17 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’11 ’12 ’13 ’14 ’15 ’16 ’17 KIV KSC DEB

Before Wizz Air opened a base in ‘17 1.849 at Varna, Wizz air only flew from LTN to Varna. Aer opening a base here, 470 556 Wizz Air started flights from Varna to 204 208 258 356 372 30 54 116 non-base airports with a low ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 frequency (twice a week), but also to one of their bases in Sofia with a VAR higher frequency (7 mes a week)

Source: OAG data; M3 Consultancy analysis 26

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’

- ‘Outside base’ § Relevant insights for the development of Lelystad Airport

27

Confidenal; for internal use only A ‘mul-airport’-operaon is mainly run by foreign airlines to feed MULTI-AIRPORT their flights from their home bases Dra Typical airlines § Foreign carriers Operaonal adjustment in § Part of the flights from the home base to 1 desnaon will be done at a relaon to single-airport second airport in the same catchment area Impact on the operaon § Very limited: Descripon - No adjustments at their home base airports - Lile or no effect for crew - Limited increase in ground handling costs

A Dutch airports § Different network airlines fly or have been flying on regional Dutch airports next to Schiphol § However, not all aempts have succeed (for example Air France at EIN and Turkish Airlines at Roerdam) B Trends § Larger airports aract more and more traffic at the expense of regional airports, unless there is a limited capacity or if a regional airport has a Insights from analysis/ more favorable locaon (for example London City) case studies § However, new airlines sll try to succeed in a certain route that has already shown failure at other airlines C Typical size for § Approximately 500-1.000 flights a year (normally one or two flights per airline week on a weekday) D Typical operang hours § Morning and evening (07-09h and 17-21h); somemes includes a night stop § In case of 1 flights: in the morning to feed the flights from their base E Impact of Traffic § Approx. 7.500 flights at Schiphol operated by foreign airlines to/from leisure Distribuon Rule desnaons might (temporarily) have to be a ‘mul-airport’ operaon 28

Confidenal; for internal use only A Some tradional airlines do or did operate a ‘mul-airport’-model in MULTI-AIRPORT the Netherlands, but in most cases not very successful Dra NUMBER OF MOVEMENTS PER YEAR PER AIRLINE IN THE NETHERLANDS

Air France SAS Luhansa Turkish Airlines Brish Airways 1.050

120 7.552 2000 2008 2017 GRQ- SAS is the only one that sll flies at GRQ

2000 2008 2017 4.925 RTM- Some interest in RTM

Considering the city-to-city business 2000 2008 2017 market to and from Roerdam, one of EIN –has not been used by such size would not be applicable at non-low cast airlines since 2007 Lelystad Airport

Source: OAG data; M3 Consultancy analysis 29

Confidenal; for internal use only B Network carriers prefer a single airport within a single catchment area, MULTI-AIRPORT because of passenger preferences and a more aracve proposion Dra

Foreign airlines focus on Schiphol Foreign passengers prefer Schiphol over regional airports Tourist desnaon in NL (2015) Share AMS of all non-LCC airlines of all flights from • Most foreigners coming to the the Netherlands Netherlands, travel to the Rest of NL 100% = 3.480 deparng flights in October 2017 Randstad 35 • Foreign airlines have a higher share of foreign passenger and 65 Regional Noord & thus prefer to fly to Schiphol Zuid-Holland airports in NL 6 Airlines prefer to focus on 1 airport • A more appealing scheme with more frequencies result in a disproporonal high market share on a route (‘S- curve’ effect) 94 • Thus airlines will prefer to Schiphol concentrate their flight on 1 airport

Source : CBS; OAG data ; M3 Consultancy analysis 30

Confidenal; for internal use only B Tradional airlines as well as low cost airlines seem to have most MULTI-AIRPORT interest in flying to/from major airports – Case: Germany GROWTH PATTERN OF TRADITIONAL AND LOW COST AIRLINES AT THE SIZE OF AN AIRPORT FOR Dra GERMAN AIRPORTS WITH MORE THAN 5.000 FLIGTHS A YEAR

Big airports Small airports Tradional airlines Low cost airlines

Growth 2010 - 2017 Growth 2010 - 2017 % % 40 120 TXL HAM 30 SXF 100 20 80 HAJ 10 60 DRS NUE LEJ FRA DUS 0 40 MUC SXF -10 CGN STR DUS 20 LEJ FMM DTM STR CGN -20 NUE HAM 0 FKB BRE MUC -30 SCN FMO -20 HAJ HHN TXL -40 BRE -40 DRS NRN FRA -50 -60 0 50 100 150 200 250 300 350 400 450 0 10 20 30 40 50 60 70 80 Number of flights in 2017 Number of flights in 2017 Thousands Thousands

Source: OAG data; M3 Consultancy analysis 31

Confidenal; for internal use only C The number of annual flights for a ‘mul-airport’-operaon is on MULTI-AIRPORT average between 500 and 1.000 Dra NUMBER OF ANNUAL FLIGHTS PER AIRLINE, AIRPORT AND YEAR

Considering the city-to-city business market between London and Roerdam, a comparable operaon would not be applicable at Lelystad 2.792 Airport

1.050 974 1.030 1.000 690 500

Turkish Nordica@GRQ Air France@EIN Luhansa@RTM Brish Airline@RTM (2015) (2017)1 (2012) (2014) Airways@RTM (2015)

Source: OAG data; M3 Consultancy analysis 1) LOT Polish Airlines under brand name Nordica, feeds the hub of SAS at Copenhagen 32

Confidenal; for internal use only D In ‘mul-airport’ situaons, airlines typically turn around early MULTI-AIRPORT morning/late aernoon to serve the business market and feed the hub Dra TIMES OF ARRIVAL AND DEPARTURE FOR A ‘MULTI-AIRPORT’-OPERATION BY FOREIGN AIRLINES ON DUTCH REGIONAL AIRPORTS

TK@RTM BA@RTM LH@RTM AF@EIN SK@GRQ During the day Early morning/late A 11.10 15.05 19.05 13.20 10.30 20.50 2012 aernoon D 12.00 16.15 19.45 13.55 17.50 7.30

A 9.40 15.00 20.15 8.05 18.35 10.30 20.50 2013 D 10.35 15.40 20.55 8.40 19.10 17.50 7.30

A 14.50 9.20 8.30 18.35 2014 D 15.40 10.20 9.00 19.10

A 21.25 18.30 8.20 18.50 2015 D 8.10 19.20 8.55 19.35

A 21.15 15.25 8.50 18.45 2016 D 8.15 19.15 9.15 19.10

A 21.30 8.50 18.45 2017 D 9.55 9.15 19.10

Source : OAG data; M3 Consultancy analysis 33

Confidenal; for internal use only D In general ‘mul-airport’-operaons seem to lack commercial MULTI-AIRPORT viability - Cases: Turkish Airlines, Luhansa and Air France TOTAL NUMBER OF DEPARTURES IN THE FIRST WEEK OF AUGUST BY TURKISH AIRLINES, LUFTHANSA Dra AND AIR FRANCE IN THE NETHERLANDS

38 38 38 AMS RTM 33 35 34 35 35 31 28 28 31 22 15 16 17 11 14 5 7 7

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 § Flying at Roerdam and Turkish Airlines was AMS RTM 101 107 114 111 102 103 seen as a market 87 96 93 95 100 73 81 75 83 76 76 76 opportunity for these airlines. However, aer 11 5 a while they have stopped flying to the ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 Dutch regional airports, Luhansa due to the lack of demand for these routes AMS RTM EIN 146 141 112 121 126 115 95 91 94 103 102 107 84 71 82 84 81 57 31 30 31 7 11 10 6

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 Air France

Source: OAG data; M3 Consultancy analysis 34

Confidenal; for internal use only D In general ‘mul-airport’-operaons seem to lack commercial viability MULTI-AIRPORT — Case: KLM at Milan Linate/Malpensa

TOTAL NUMBER OF DEPARTURES IN THE FIRST WEEK OF AUGUST BY KLM AT MILAAN-LINATE AND Dra MALPENSA

§ Unl 2012 there was a limited number of slots for KLM at LIN 42 (which is more favorable, due to LIN MXP its locaon), and thus KLM was 35 34 forced to operate at MXP as well § From 2012 unl 2017 KLM had a 30 28 28 28 28 28 28 28 28 28 28 28 28 contract with Alitalia and gained more slots at LIN 24 21 § In 2017, the contract was broken and KLM was forced to move to MXP

7

§ As soon as the possibility arose, KLM concentrated at only 1 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 airport instead of operang in a ‘mul-airport’-operaon § A ‘mul-airport’-operaon seems only interesng if no other alternave is available and is being preferred above ‘not flying’ to this region

Source: OAG data; M3 Consultancy analysis 35

Confidenal; for internal use only E The envisioned traffic distribuon rule could (temporarily) push up to MULTI-AIRPORT 7.500 ATMs of foreign airlines into a ‘mul-airport’-operaon

NUMBER OF AIR TRAFFIC MOVEMENTS BETWEEN SCHIPHOL AND LEISURE DESTINATIONS OF THE KEY Dra FOREIGN AIRLINES IN 2016

Pegasus 2.285

Royal Air Maroc 1.260

Turkish Airlines 931 § The top 10 foreign carriers operang from leisure desnaons to Schiphol (mainly Sun Express 833 Turkish and Moroccan airlines) have a combined volume of 7.316 slots, (17% of Air Arabia Maroc 806 leisure flights to which the traffic distribuon rule would apply to) TAP Portugal 698 § Switching these flights from Schiphol to Aegean 239 Lelystad might at least temporarily lead to a ‘mul-airport’-operaon, but as more Onur Airlines 100 capacity at Lelystad is becoming available, this will ulmately become ‘single airport’- operaons (and thus these airlines will no SunExpress 87 longer operate in a split operaon) Free Bird 77

Source: SEO Analyse: Finaal overzicht leisurebestemmingen 36

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’

- ‘Outside base’ § Relevant insights for the development of Lelystad Airport

37

Confidenal; for internal use only An ‘outside base’-operaon is mainly applied by Dutch charter OUTSIDE BASE airlines, but volumes of this type of operaon are rapidly declining Dra Typical airlines § Dutch charter/hybrid airlines; somemes foreign (for example Turkish) charter airlines Operaonal adjustment in § Aer the first flight from their base to another airport, they fly to a relaon to single-airport Descripon different non-based airport, but will end their day at their base again Impact on the operaon § Limited: - No adjustments at their home base airport - Possible crew inefficiency in case of long haul flights; there is a need of a new crew on the secondary airport or the old crew ends on the wrong airport - Limited increase in ground handling costs

§ Non-scheduled flights have been operated from regional airports for a long A Dutch airports me. However, its volume/relave importance is declining since 10 years § Yet, TUI Fly intends to base airplanes at Roerdam and Eindhoven to offer Insights from flights to leisure desnaons analysis/ § The only business model in which the ‘outside base’-operaon occurs, is case studies B Trends the charter concept, which is however declining in volume in Europe due to frequency needs and compeon of low cost C Typical size for § Approximately 1.000 ATMs a year (once or twice a week to mulple airline desnaons by 1 or 2 airplanes) D Typical operang hours § During the day (normally between 11h00 and 18h00)

E Impact of Traffic § This paern does not fit with the requirements of the VVR to priorize flights distribuon rule in block 2 and 6 § It is oen applied as an intermediate step before opening an addional base 38

Confidenal; for internal use only A Non-scheduled flights make up a small part of air traffic operated at OUTSIDE BASE the Dutch regional airports, and this part is decreasing Dra NON-SCHEDULED FLIGHTS PER YEAR The annual volume of non-scheduled Number of flights per year flights at regional airports is around % non-scheduled of total air traffic 1000 flights per year

6.000 100 6.000 100 5.000 5.000 80 80 4.000 4.000 60 60 3.000 3.000 40 40 2.000 2.000 1.000 20 1.000 20 0 0 0 0 2000 05 10 2015 2000 05 10 2015

Roerdam The Hague Airport Groningen Airport Eelde

6.000 100 6.000 100 5.000 80 5.000 80 4.000 4.000 60 60 3.000 3.000 40 40 2.000 2.000 1.000 20 1.000 20 0 0 0 0 2000 05 10 2015 2000 05 10 2015

Eindhoven Airport Maastricht Aachen Airport

39 Source: OAG data; M3 Consultancy analysis

Confidenal; for internal use only B The charter airline model, typically operang ‘outside base’, is under OUTSIDE BASE pressure in Europe Dra

-50% in 10 years me

Reason decline charter flights: - Passengers want more flexibility and thus a higher frequency - Low cost airlines have the same low cost structure as charter airlines and since 2000, they also focus on typical charter desnaons - In the USA, which has the most mature aviaon market, there is hardly any charter airline and leisure desnaons are almost completely offered by tradional airlines (such a Delta Airlines) and low cost (for example Jet Blue). KLM as well has leisure desnaons in her network (Ibiza)

Source: Eurocontrol 40

Confidenal; for internal use only D The ‘outside base’-operaon occurs typically during the middle of the OUTSIDE BASE day Dra WEEKLY NUMBER OF FLIGHTS AT GRQ PER HOUR IN THE LAST WEEK OF AUGUST 2017

06.30 23.00 16 13 11 ’Mul-airport’ flights (type 1) ’Addional base’ flights LCC (type 3) 6 ’Outside base’ flights (type 2) 2 2 2 2 2

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Deparng flights from Groningen Airport Eelde • This paern is very 06.30 23.00 14 similar for Maastricht 13 Aachen Airport, at which 11 ‘outside base’-flights also occur during the middle of the day 4 4 • This paern does not fit 2 2 2 2 2 with the requirements of the VVR to priorize flights in block 2 and 6 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Arriving flights at Groningen Airport Eelde

Source: hps://www.groningenairport.nl/voor-reizigers/vluchten 41

Confidenal; for internal use only Agenda

Dra

Contents Airline Split Operaons

§ Introducon § Airline split operaon in the Netherlands § Detailed review of airline split operaon models

- ‘Addional base’ - ‘Mul-airport’ - ‘Outside base’ § Relevant insights for the development of Lelystad Airport

42

Confidenal; for internal use only Lelystad directly meets airline requirements to operate ‘mul-airport’- and ‘outside base’-operaons, but does not immediately offer capacity for one or more bases Dra REQUIREMENTS PER TYPE OF SPLIT OPERATION

LELYSTAD AIRPORT MULTI-AIRPORT OUTSIDE BASE ADDITIONAL BASE

Early morning/late During dayme: Maximum opening hours: Opening hours 6.00 – 23.00/24.00 aernoon: 11.00 – 18.00 6.00 – 24.00 7.00 – 21.00

>6.000-10.000 ATMs Required scale Total: 4.000 (met >500 – 1.000 ATMs >500 – 1.000 ATMs per airline (ATMs) yearly growth of +2k) per airline per airline (ultra LCC: 2.000 ATMs)

Based on current insights. Final condions for LEY have not Even at 10.000 available ATMs at Lelystad airport, been decided capacity may not be sufficient to open an addional base, since slots will be distributed over mulple airlines

43

Confidenal; for internal use only The envisioned opening hours at Lelystad airport are relave to other regional airports not overly constrained Dra HOURS OF OPERATION FOR 162 REGIONAL AIRPORTS IN EUROPE (>200.000 deparng seats/year)

Opening hours Lelystad Airport: 6.00 – 23.00/24.00 106

Other regional airports Holiday regional airports, mostly done by charter airlines Regional airports at which a Charleroi, Oslo Rygge and point-to-point carrier has a base Eindhoven are the only regional airports with point-to- point bases that are open for less than 18 hours

29

15 12

<16h 16-18h 18-24h 24h Hours of operaon Source: SEO-study: “Analysis opening hours Eindhoven Airport” 44

Confidenal; for internal use only In conclusion, airlines could operate in a ‘mul-airport’- or ‘outside base’-type at Lelystad, while developing towards an ‘addional base’ once sufficient capacity is available Dra OUTSIDE BASE MULTI-AIRPORT ADDITIONAL BASE

Opportunity for • Well feasible • Well feasible (depending on • Only if total capacity is >10-15K Lelystad opening hours) ATMs Type airline • Charter airlines • Foreign airlines • Dutch/foreign (hybrid) airlines

Bolenecks • Market trends are declining for • Only of interest to limited • Requires a larger scale operaon this type of operaon number of airlines (>6.000 ATMs), which, given the • Some airlines may be aracted • Creates small volumes (ATMs) projected growth path for LEY, with low airport charges • Requires long opening hours will not be reached before 2024 • This paern does not fit with the requirements of the VVR to priorize flights in block 2 and 6

ATMs at Growth at Lelystad Lelystad Airport

2019 45

Confidenal; for internal use only