8

10

Indian Market Overview & Outlook

28 February 2023
Lalitya Dhavala – Valuations Consultant

1 cirium.com
Disclaimer of Liability

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2 cirium.com
 Global market outlook
Indian market overview
Agenda
Agenda Key opportunities
Key risks
Summary

3 cirium.com
 Global market outlook
Indian market overview
Agenda
Agenda Key opportunities
Key risks
Summary

4 cirium.com
Scheduled global capacity ended 2022 around 15% down over 2019 equivalent, recovery
projected to continue through first quarter but stabilises at around 5% below 2019 equivalent
thereafter

10% Global capacity projected to be only 5% down

over 2019 equivalent by end of Q2 2023
0%
Daily capacity change year-over-2019

-10%

-20%

-30%

-40%

-50%
Projected
-60%

-70%

-80%

-90%
Aug-20
Sep-20

Aug-21
Sep-21

Aug-22
Sep-22
Jul-20

Nov-20
Dec-20

Jul-21

Nov-21
Dec-21

Jul-22

Nov-22
Dec-22
Jan-20

Jun-20

Jan-21

Jun-21

Jan-22

Jun-22

Jan-23

Jun-23
Apr-20

Apr-21

Apr-22

Apr-23
Oct-20

Oct-21

Oct-22
May-20

May-21

May-22

May-23
Feb-20
Mar-20

Feb-21
Mar-21

Feb-22
Mar-22

Feb-23
Mar-23
Source: Cirium Schedules, data filed 12 February 2023, 2021-2023 change is over 2019 equivalent
5 cirium.com
February 2023 capacity (ASKs) currently down 10% vs February 2019; International now just
reduced by 20%, with transatlantic and Europe-Africa markets now above 2019 levels

100% Africa
Middle East
Others S & C Am/Caribbean Others
90%
Canada Intra N America
Mexico Europe-Africa
Australia
80% Indonesia
North-S & C America
Japan
Brazil
Share of Feb 2019 ASKs

70% Russia Europe-Middle East

India Intra Europe

60% Transpacific

China
50%
Asia-Middle East
40%

30% Europe-Asia

Intra Asia
United States
20%

10% Transatlantic

0%
Domestic Intra-regional Intercontinental
36% of ASKs 25% of ASKs 39% of ASKs

Source: Cirium Schedules data. Shading represents ASK change Feb 2023 vs Feb 2019 @ 4 Feb 2023. GREEN = less than 10% fall, AMBER = 10-30%, RED > 30%

6 cirium.com
China domestic has positive outlook; international schedule beginning to show reaction to
change in quarantine policy, cancellation rates have stabilized but further capacity is limited

80%
Daily capacity change year-over-2019 (rolling 7-day

60%

40%

20%

0%
average)

-20%
Projected
-40%
Reports indicate that CAAC has set a target of
-60% carrying 460m pax for 2023 (70% of the 660m in
2019; but note that 586m of those were domestic
-80% so seems a conservative 2023 estimate)

-100%
Cancelled Flights China Domestic China International
-120%
Jan-20

Jun-20

Jan-21

Jun-21

Jan-22

Jun-22

Jan-23

Jun-23
Aug-20
Sep-20

Aug-21
Sep-21

Aug-22
Sep-22
Jul-20

Nov-20
Dec-20

Jul-21

Nov-21
Dec-21

Jul-22

Nov-22
Dec-22
May-20

May-21

May-22

May-23
Feb-20
Mar-20

Feb-21
Mar-21

Feb-22
Mar-22

Feb-23
Mar-23
Apr-20

Apr-21

Apr-22

Apr-23
Oct-20

Oct-21

Oct-22
Source: Cirium Schedules, data filed 19 February 2023, 2021-2023 change is over 2019 equivalent
7 cirium.com
Global tracked fleet up over 2019 equivalent: single-aisle fleet tracked stable for past month,
now around 1% up over February 2019 benchmark, twin-aisle 16% down over same
13,870 single-aisle aircraft
16,000 tracked on 10 February 2023 vs
14,073 on 3 January 2020
14,000
Global aircraft tracked daily

12,000

10,000

8,000

6,000 3,196 twin-aisle aircraft tracked

on 10 February 2023 vs 4,081
on 3 January 2020
4,000

2,000 Single-Aisle
Twin-Aisle
0
Aug-20
Sep-20

Aug-21
Sep-21

Aug-22
Sep-22
Jul-20

Nov-20
Dec-20

Jul-21

Nov-21
Dec-21

Jul-22

Nov-22
Dec-22
Jan-20

Jun-20

Jan-21

Jun-21

Jan-22

Jun-22

Jan-23
Apr-20

Apr-21

Apr-22
Oct-20

Oct-21

Oct-22
May-20

May-21

May-22
Feb-20
Mar-20

Feb-21
Mar-21

Feb-22
Mar-22

Feb-23
Source: Cirium utilisation data, commercial passenger jets, utilisation data for aircraft tracked on a daily basis only

8 cirium.com
 Single-aisle availability continues to decline as strong demand sees placement
of young and ‘ready to go’ aircraft; twin-aisle also reduced to around 100
600 Single-aisle availability now back at
Single-Aisle 340 aircraft (325 if Russian-
managed excluded), around 30%
Twin-Aisle
lower than 12 months ago and 11%
500 lower than 2021 equivalent

400
Lessor Idle Aircraft

300

200

100

0
10/07/2020
31/07/2020
21/08/2020
11/09/2020
02/10/2020
23/10/2020
13/11/2020
04/12/2020
25/12/2020
15/01/2021
05/02/2021
26/02/2021
19/03/2021
09/04/2021
30/04/2021
21/05/2021
11/06/2021
02/07/2021
23/07/2021
13/08/2021
03/09/2021
24/09/2021
15/10/2021
05/11/2021
26/11/2021
17/12/2021
07/01/2022
28/01/2022
18/02/2022
11/03/2022
01/04/2022
22/04/2022
13/05/2022
03/06/2022
24/06/2022
15/07/2022
05/08/2022
26/08/2022
16/09/2022
07/10/2022
28/10/2022
18/11/2022
09/12/2022
30/12/2022
20/01/2023
10/02/2023
Source: Cirium Fleets Analyzer, passenger jets only, idle aircraft defined as stored with lessor and no future event identified

9 cirium.com
Strong and positive market sentiment trend for both values and lease rates over
past 21 months
60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%
Apri l - May 2021 June - July 2021 August - September October - January - February March - April 2022 May - June 2022 Jul y - September October - January - February
2021 November 2021 2022 2022 November 2022 2023

Lease Rates Market Values

Source: Ascend by Cirium Commercial Aircraft Market Sentiment Index

10 cirium.com
 2022 delivery volumes failed to match initial targets due to supply chain issues,
2018 totals unlikely to be exceeded before 2024
2000

1800

1600

1400
Deliveries / scheduled deliveries

1200

1000

800

600

400

200

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Airbus Boeing

Source: Cirium Fleets Analyzer, all Airbus and Boeing jets including non-commercial roles, 2023-2027 is known committed firm order backlog

11 cirium.com
2023 global GDP forecast has risen in Q1 as China reopens and energy prices
moderate – recession still possible in Europe & N America, but seen as shallow
6%

5%
Year-on-year change in GDP

4%

3%

2%

1%

0%
Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 2024
Development of 2023 Forecast by month

USA W Europe Asia Pac China Lat America World

Source: EIU, World is calculated at Market Exchange Rates

12 cirium.com
 Global market outlook
Indian market overview
Agenda
Agenda Key opportunities
Key risks
Summary

13 cirium.com
 India airlines flights tracked daily change over 2019

14
(Rolling 7-Day Average)

-80%
-60%
-40%
-20%
20%

-100%
0%
Jan-20
Feb-20

cirium.com
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
flight levels in past few days

Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Source: Cirium utilisation data, commercial passenger jets and turboprops, utilisation data for aircraft tracked on a daily basis

Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
After shocks of Delta and Omicron, Indian market has finally recovered to 2019

Feb-23
Both domestic and international markets are close to 2019 flight levels with final
improvements being achieved in early part of 2023
20%
Domestic International
India market flights tracked daily change over 2019

0%

-20%
(Rolling 7-Day Average)

-40%

-60%

-80%

-100%
Aug-20
Sep-20

Aug-21
Sep-21

Aug-22
Sep-22
Jul-20

Nov-20
Dec-20

Jul-21

Nov-21
Dec-21

Jul-22

Nov-22
Dec-22
Jan-20

Jun-20

Jan-21

Jun-21

Jan-22

Jun-22

Jan-23
May-20

May-21

May-22
Feb-20
Mar-20

Feb-21
Mar-21

Feb-22
Mar-22

Feb-23
Apr-20

Apr-21

Apr-22
Oct-20

Oct-21

Oct-22
Source: Cirium utilisation data, commercial passenger jets and turboprops, utilisation data for aircraft tracked on a daily basis

15 cirium.com
 Domestic market outlook shows strong growth in next few months, international growth (over
2019 levels) kicks in during second quarter

20% 20%

15% 15%
India Domestic Capacity (ASKs) vs 2019

India International Capacity (ASKs) vs 2019

10% 10%

5% 5%

0% 0%

-5% -5%

-10% -10%
Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23

Source: Cirium Schedules

16 cirium.com
Airbus dominates single-aisle fleet but Air India commitment is first breakthrough for new
generation twin-aisle Airbus in India, very limited regional aircraft backlog

Current fleet New Passenger Jet Deliveries 2020-2023

YTD
Boeing T-A
Regional 8%
14%

Regional Jet
Boeing S-A 7%
13%
Boeing T-A
1%

Boeing S-A
10%

Airbus S-A
82%

Airbus S-A
65%

Source: Cirium Fleets Analyzer, all commercial passenger jets with Indian operators

17 cirium.com
Firm order backlog already exceeds fleet in service, even before Air India (and potential other)
commitments are contracted

Current fleet and ratio of backlog: existing fleet Existing backlog from 2023-31
350 140

1.66
300 120

1.95*
250 100

IndiGo
200 80
SpiceJet
Go First
150 60 Akasa Air
Air India Group

100 40
1.92
1.49
50 20
3.06

0 0
IndiGo Air India SpiceJet Go First Akasa Air Jet Airways Others 2023 2024 2025 2026 2027 2028 2029 2030 2031
Group

*Air India ratio including the 470 commitments

Source: Cirium Fleets Analyzer, all commercial passenger jets of Indian operators, 2023-2031 is known committed firm order backlog

18 cirium.com
 India’s commercial passenger jet fleet is much younger – 6.1 years on average – compared to
global fleet (11.0 years)

140 1,400

120 1,200
India Passenger Jet Fleet in Service

Rest of World Passenger Jet Fleet in Service

100 1,000

80 800

60 600

40 400

20 200

0 0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Aircraft Age (Years) Aircraft Age (Years)
Source: Cirium Fleets Analyzer, excludes regional jets

19 cirium.com
 India’s commercial passenger jet fleet is 80% managed by operating lessors (global is 50%), so
replacement is easier provided lease contracts are structured in favour of return at scheduled
lease end

140 1,400
Other Other
Operating Lessor Managed Operating Lessor Managed
120 1,200
India Passenger Jet Fleet in Service

Rest of World Passenger Jet Fleet in Service

100 1,000

80 800

60 600

40 400

20 200

0 0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Aircraft Age (Years) Aircraft Age (Years)
Source: Cirium Fleets Analyzer, excludes regional jets

20 cirium.com
 Current backlog / commitments suggest almost 15% CAGR fleet growth through 2031 – is this
too aggressive and will there need to be more replacement as a consequence, or delays in
deliveries?

2,000

1,800

1,600
India Airline Jet Fleet in Service

1,400

1,200

1,000

800

600

400

200

0
Current Fleet Existing Firm Backlog Air India LoI Estimated Estimated retirements/lease Estimated 2031 Fleet
Deliveries returns
Source: Cirium Fleets Analyzer plus Ascend Analysis

21 cirium.com
YOY performance of most indicators of economic health appear to be in growth
phase

Source: ICRA Business Activity Monitor February 2023

22 cirium.com
Combination of size yet to be connected and population gives India plenty of
room to grow in domestic demand
90,000 12
Population: 1.43bn
Current pax fleet:
80,000
4045
10

70,000

60,000 8
Domestic ASKs in millions

Size in km2*millions
50,000

6
40,000

Population: 1.41bn
30,000 Current pax fleet: 4
736
Population: 0.27bn
20,000 Current pax fleet:
565
2
10,000

0 0
India China Indonesia

Domestic ASK Size

Source: Cirium Schedules data as of 18/2/23, Domestic ASKs for scheduled passenger traffic from India, China, Indonesia

23 cirium.com
International routes across all three emerging markets significantly lower than
domestic, room for growth linked to economic growth, but limited by dominance
of single-aisle fleet and LCC business models
International
8%

180000
162655
160000

140000

Number of flights Jan 2023

120000

100000

78109
80000

60000

40000

20000 14262
6454
1088 418
0
Domestic International
Domestic
92% China Indonesia India

*China since international flights

re-opened
Source: Cirium Schedules data as of 18/2/23, Domestic and International total number of departure flights for scheduled
passenger traffic from India, China, Indonesia
24 cirium.com
With a surprisingly low number of freighters, there is a room for expansion in
both fleet growth and replacement in the freighter/cargo sector

300 40

35

Total number of aircraft and average age of fleet

250 239
Total number of freighter/combi fleet

30

200
25

20
150

15

100
10

50 44
5

14
0
0 757 737 NG A320 A321

India China Indonesia Total number of aircraft Average age

Source: Cirium Fleets Analyzer, all commercial freight/combi jets with Indian, Chinese or Indonesia operators

25 cirium.com
 Global market outlook
Indian market overview
Agenda
Agenda Key opportunities
Key risks
Summary

26 cirium.com
Significant opportunity for financing and operating leasing, over 1,142 aircraft in
backlog and strong interest from operators for SLBs

Lessor distribution on current fleet Leasing activity on deliveries 2020-2023 YTD

No lessor Operating lease

21% 21%

no lease
2%
Others
48% AerCap
8%

Avolon
7%

DAE Capital SLB on delivery

6% 77%
Carlyle Aviation SMBC Aviation
Partners Capital
4% 6%

Source: Cirium Fleets Analyzer, all commercial passenger jets with Indian operators

27 cirium.com
Single-aisle Market to Base value ratio has exceeded one and continues to
strengthen but remains below 2020 peak, twin-aisles lag but also improving
Post-COVID single-
1.2 aisle market recovery
Fleet-Weighted Average CMV / BV Ratio

1.1

1.0

0.9

0.8
2020 mid-year BV
impairment 2021 mid-year Signs of twin-aisle
BV impairment market recovery
0.7
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Twin-Aisle Single-Aisle
Source: Cirium Values Analyzer, passenger jets only

28 cirium.com
 Airline mergers and consolidation
18% growth rate in number of operational airports following
Other introduction of UDAN/RCS in 2016
Favourable government policies
opportunities Access to skilled workforce
Diversity in workforce

29 cirium.com
 Global market outlook
Indian market overview
Agenda
Agenda Key opportunities
Key risks
Summary

30 cirium.com
Potential risks on financing

Escalation risk on pricing is significant for operators and will need to be watched

Market Values may not reflect cost of acquisition by the airline in the long term

Lease Rates are on an upward trajectory and may continue to do so in the short term, with
constrained supply of new single-aisle aircraft

Inflation slowing down in India but CPI still above 6%

Currency volatility between USD/INR with strong US$ may make it hard for Indian operators to
service their obligations

Capital outflows due to current financing preferences through SLB

31 cirium.com
With market built on SLBs, aircraft long-term values and lease rates trends
become critical to financing
45.00 0.350

40.00
0.300

35.00

0.250

Base Lease Rates US$ mil

30.00
Base Value US$ mil

0.200
25.00

20.00
0.150

15.00
0.100

10.00

0.050
5.00

0.00 0.000
2023 2026 2029 2032 2035 2038 2041 2044 2047

HL Base Values HL Downside Future Values Generic Base Lease Rate

Source: Cirium Values Analyzer, 3 year old Airbus A320-200 neo, future Values assuming a sustained inflation rate of 2%
32 cirium.com
Brent crude averaged $100.9 per barrel through 2022, to date in 2023 average
is $82.2, however ATF cost in India remains high due to taxation

160
High fuel prices in early part of
Europe Brent Spot Price FOB ($ per Barrel)

last expansion cycle precipitated

140 launch of A320neo / 737 Max

120

100

80

60

40
April 2012 price of ~$120 per
barrel equated to ~$3.25 per
20
USG Jet Fuel price

0
0

3
0

2
n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-

n-
Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja

Ja
IATA’s most recent 2023 industry
Source: US EIA, 10 February 2023
projections based upon an assumption
33 cirium.com
of $92.3 per barrel Brent Crude average
 Effect of high interest rates on consumer debt and consequently,
demand
Talent- limited training facilities for workforce of next generation
Political turbulence
Other Insufficient maintenance facilities

risks Airspace congestion

Pressure to act on achieving sustainability goals

34 cirium.com
 Indian recovery and growth, albeit a bumpy start,
has been positive
Macroeconomic indicators of the country appear
more positive than the rest of the world, however,
subject to inflation and currency risk
Summary
Agenda Planned fleet growth will need cooperation
across airports, airlines, MRO and training
facilities
Untapped markets in local leasing, financing
Potential for growth in international and freight
sectors in the long term

35 cirium.com
Ascend by Cirium: The World’s Largest team of Certified Appraisers
Chris Wills
George Dimitroff Rob Morris Joanna Lu Eric Tamang
Head of Consultancy Ops.
Head of Valuations Global Head of Consultancy Head of Valuations Analyst
ISTAT Sr. Appraiser
ISTAT Appraiser Consultancy Asia

Michael Lapson Michael Graham Ken Quan

Chris Seymour Valuations Analyst
Pascal Chui
Senior Valuation Consultant Head of Market Analysis Valuations Manager Valuations Associate
ISTAT Sr. Appraiser ASA Appraiser

Daniel Hall Alex Vathylakis

Senior Valuation Consultant Sara Dhariwal Lionel Olonga
Senior Valuations Analyst Herman Tse
Senior Aviation Analyst Senior Valuations Analyst
ISTAT Appraiser ISTAT Appraiser Valuations Manager
ASA Sr. Appraiser
Syed Zaidi Rob Norton
Consultancy Operations Henk Ombelet Scott Zhao
Principal Aviation Analyst Head of Advisory Operations
Manager Senior Aviation Analyst
ISTAT Appraiser
ASA Sr. Appraiser
Thomas Kaplan Richard Evans Connor Diver
Senior Valuations Consultant Senior Consultant Senior Aviation Analyst
ISTAT Sr. Appraiser
Tony Brooks
Yiru Zhang Lalitya Dhavala
Senior Valuations Analyst
Valuations Analyst Valuations Consultant
ISTAT Appraiser

Youcef Berour Minarro

Max Kingsley-Jones Principal Valuations Analyst
Senior Consultant ISTAT Appraiser

Tim Li
Valuations Analyst Vacancy
Valuations Associate

36 cirium.com
37 cirium.com