Air Canada Cargo

CARGO SALES REPRESENTATION FOR SRI LANKA

Proposal submitted by

United Ventures Private Limited Colombo, May 2015

CONTENTS

Executive Summary Company Profile An analysis of the market for cargo The overall market and its main market segments Total Export cargo Performance by Airline Total, Uplift, Discharge & Transshipment Export Commodities to Canada, US and South America Sri Lanka Export Statistics in weight & Value List of Leading Agents and Shippers The Air Canada Cargo Sales Projection

EXECUTIVE SUMMARY There has been a significant increase in Air Cargo from Sri Lanka to Canada and the US since 2012 year on year, very evident by the statistics gathered from the Sri Lanka Export Development Board and Sri Lankan Airlines. i.e.502, 803 kgs in 2012, 759,009 in 2013 and 865,938 in 2014 demonstrates clear growth year on year.

We believe it is opportune for AIR CANADA CARGO to penetrate the Sri Lanka market based on the growth potential For Canada, USA, and South/Central America. This is statistically demonstrated in this proposal. The volumes are moderate but the incremental revenue to be earned from this segment is a good value proposition.

The Air Cargo related areas covered in the proposal supported with statistical data are as follows.

1. An analysis of the market for cargo, a brief outline of the commodities air freighted (more detailed information is provided further on), the facilities available at the International airport where the cargo terminal is based and the structure of the cargo industry.

2. The overall market & its main market segments highlights the areas of export, Europe being the largest followed by the Indian Sub-continent and Asia, Australasia and the Far East.

3. Total Export Cargo for the period 2012, 2013 &2014 indicates the performance and growth pattern of this sector with 2014 being the highest. Current economic indicators establish that this industry is poised to grow in the next two years.

4. Performance by Airline– Exports from Jan to Dec 2014. This table provides a monthly breakdown weight wise highlighting the trend and seasonality of the shipments.

5. Total Uplift, Discharge &Transshipment identifies the category and monthly performance in each area.

6. Export commodities to Canada, the U.S. and South America - a description of the main commodities and the potential in terms of market share for Air Canada in comparison to the overall market and potential for growth where applicable. The countries in South America include Brazil, Chile, Colombia, Argentina, Mexico and Cuba (AC destinations selected on the basis of its frequency).

7. Sri Lanka export statistics in weight and value to Canada, the U.S. and South America.

8. List of top Cargo Agents and Shippers 9. The Air Canada Cargo Sales Projection is based on leveraging the relationships built over the years with the online carriers for space on the outbound sector & negotiating competitive rates with them, Air Canada’s network and good connectivity to North and South America and the regular provision of space on AC aircrafts, especially ex Europe is the key to success.

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CARGO SALES REPRESENTATION FOR SRI LANKA

THE COMPANY PROFILE United Ventures Private Limited The company first opened its doors in 1995 as United Holidays - a single business entity with two Divisions i.e. Inbound Tours and the Airline Division, with a goal to be one of the leading travel and tourism specialists in the industry. Today, United Ventures has evolved as the Holding Company for 3 independent operations: United Ventures: General Sales Agent for United Airlines and Air Canada and the Representative for STA Travel and the International Student Identity Card - ISIC. Go Holidays: Outbound IATA accredited travel specialist.

Holidays By Design: Destination management and inbound tour operator.

The respective companies provide a wide scope of travel and tourism solutions. Our experienced teams are geared to meet the ever growing demands of the market, whilst maintaining their individual brand identities. Innovation and commitment to excellence are the key factors for United Ventures’ transformation into the company it is today.

Backed by a thorough and comprehensive understanding of the industry, business and customer, we at United Ventures are dedicated to providing a high level of value and care to each client, business partner and stakeholder alike, by becoming partners in achieving their individual and business goals.

OUR CORPORATE VISION We believe every customer is special!

We deliver value for money in a trusting and friendly environment Service is our goal through knowledge & commitment “WE ARE PASSIONATE ABOUT OUR COMPANY AND WHAT WE DO”

MISSION STATEMENT Get the basics right, go beyond expected standards & practices.

Innovate - Products, Service & Delivery Generate - bottom line and Inspire - Team & Partners

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CARGO SALES REPRESENTATION FOR SRI LANKA

GENERAL COMPANY INFORMATION The legal name and trading name of the company:

United Ventures Private Limited.

Registered head office address, and principle telephone number No 54, Walukarama Road, Colombo 3, Sri Lanka.

Telephone: +94 115474747

Type of entity Corporation/Limited Liability Company and operates under the jurisdiction of: Sri Lanka

The date the company was incorporated 11 October 2004

Present Portfolio of the Company 1. General Sales Agents for United Airlines & Air Canada - United Ventures Pvt Ltd. 2. Destination Management - Holidays By Design Pvt Ltd. 3. Outbound Travel and Holiday Packages - Go Holidays Pvt Ltd.

The Board of Directors Chairman Managing Director Executive Director Directors

: Afghar Mohideen : Parveen Dassenaike : Ravi Widyalankara : Rohan Siriwardene, Deepthi Siriwardene

The Board members collectively boast of a 100 year span of experience successfully managing Commercial Aviation and Travel related activity, including direct Airline and GSA Management in Sri Lanka and Overseas. This covers Air Cargo Sales/Operational activity utilizing regular passenger aircraft belly space and scheduled wide-body freighters.

Our Bankers Commercial Bank of Ceylon PLC. WTC Branch, 3rd Floor, West Tower, World Trade Center, Echelon Square, Colombo 01, Sri Lanka.

Tel: +94 112 441291 Ms. Dilrukshi Abeysinghe - Manager Email: Dilrukshi_abeysinghe@combank.net DFCC, Vardhana Bank PLC. Head Office - No 73, W.A.D. Ramanayake Mawatha, Colombo 2, Sri Lanka.

Tel: +94 112 680000 Mr. Hemanath Samaranayaka - Head of Business Development & Private Banking Email: hemanath.samaranayaka@dfccvardhanabank.com

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CARGO SALES REPRESENTATION FOR SRI LANKA

SRI LANKA AIR CARGO MARKET ANALYSIS SRI LANKA AIR CARGO MARKET ANALYSIS Sri Lanka’s airline cargo industry has made significant strides towards developing the industry, increasing efficiency and achieving its full potential as a strategic hub in South Asia, consequent to the political turmoil, effects of the three decade old war, fluctuating fuel prices and the global economic crisis.

The main commodities exported by air to Canada & the US are textiles &apparel, diamonds, gems & jewellery, manufactured goods including newspapers, periodicals and magazines - leather products, fish &fisheries products such as tuna & fresh fish, perishables such as fruit and vegetable and other export crops like coconut based products, tea &petroleum products.

Air Cargo Terminal at Colombo Airport The Bandaranaike International Airport provides cargo handling services with a capacity of 250,000 MT per year along with a dedicated and well trained team to facilitate international trade.

Its Cargo Center is located on the premises of the airport with an impressive storage space of over 20,000 square meters. – for all Exports , Imports and Transshipment, Including SEA/AIR transfers.

The total area of the Cargo Terminal’s ground space is 7,500 sq meters and the first floor 2,000 sq meters. The area of the freezer and cold room is a 133 cu meters. Sri Lankan Airlines occupy Terminals 4/5.

The Cargo Terminal is zoned as shown below; i. Cargo Village Terminal 1 – with a floor area of 2,787 sq. m houses the Freight Forwarders Warehouses (1,500 sqft x 20), Airline Offices, Courier Service, Gem & Diamond Exchange & Customs. ii. Cargo Village Terminal 11 – floor area of 1,858 sq. meters - Fitz Aviation & members of the Sri Lanka Association of Freight Forwarders. iii. Cargo Village Terminal 111 - floor area of 2,320 sq. meters - DHL cargo & The Board Of Investment.

Iv. Cargo Village Terminal iv - floor area of 7,500 sq. meters used for all imports including temperature controlled freezer units, dangerous goods (both imports & exports) and the animal holding facility.

V. Cargo Village Terminal v - floor area 9,000 sq. meters for all Exports The Bandaranaike International Airport has been undergoing numerous expansion projects in the last few years. The highway to Colombo and the rail link has been completed. This development provides more convenient connections to the Colombo City, the entire country and the future city airport on the suburbs of Colombo. Other improvements include the implementation by Sri Lankan Airlines of the E-AWB.

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CARGO SALES REPRESENTATION FOR SRI LANKA

Future Expansionary Plans at the Colombo Airport 짜 A second runway to support the Airbus A380 (CMB is currently able to handle the A380 for emergency landings). 짜 Expansion of the Colombo Airport Highway Project to connect to the Southern highway. 짜 Expansion of International Aircraft Parking capacity to 32 aircraft. 짜 Expansion of cargo movement capacity to 1,000,000 tons per annum.

Current Operators at the Colombo Airport Scheduled Online - UL / EK / QR / SQ / CX / TG / MH / EY / KU / 9W / AI / KE / TK / WY SV / SG / MJ / G 9 / D7 / CA / MU / FZ (mix of Wide-body and Narrow-body Aircrafts ) Freighters - CX / Expo Aviation Active Offline Cargo Operators - AA/ UA/ BA/ DL/ KL/ SR/ LH Sri Lankan Airlines Cargo enjoys the sole monopoly of handling all Cargo related ground handling and Terminal activity at the International Airport.

Direct services are available ex CMB to Europe, South Asia, the Far East, The Middle East and the Indian subcontinent.

The two main Associations representing the cargo industry are SLACA (Sri Lanka Airline Cargo Association) with 12 online airlines and 16 offline members and SLAFA (Sri Lanka Freight Forwarders Association) with 188 members, SLAFA being the more active of the two Associations.

Currently only CX operate a B747-400 freighter and Expo Aviation an ad hoc weekly freighter using an MD82 aircraft to South India.

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CARGO SALES REPRESENTATION FOR SRI LANKA

MAIN MARKET SEGMENTS FOR AIR CARGO - EX COLOMBO (2014) According to the statistics of the Export Development Board the total annual air cargo uplifts 2014:272,050,166 kilograms. This covers all air freight to every destination.

Source: The above statistics are based on 2014 figures published by the Department of Civil Aviation

TOTAL AIR CARGO EXPORTS EX COLOMBO IN KILOGRAMS

Source – Sri Lankan Airlines

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CARGO SALES REPRESENTATION FOR SRI LANKA

TOTAL CARGO UPLIFT BY AIR IN 2014 EX SRI LANKA (IN KGS’S) CODE UL

CONDOR

EK

EMIRATES

BA

BRITISH AIRWAYS

153763

140410

175076

118938

206381

184738

162343

147929

161148

156899

150330

136039

1893994 BA

FZ

FLY DUBAI

117377

115243

147754

125726

53249

85807

121356

123464

136766

163962

146668

141654

1479026 FZ

AI

AIR INDIA

29254

18225

33638

32020

44634

30166

29896

27090

24686

38756

50182

27889

386436 AI

KU

KUWAIT AIRWAYS

153699

146360

204219

159184

161822

202477

193074

147198

127603

160193

151418

139825

1947072 KU

WY

OMAN AIR

114208

139912

229938

219446

285041

193901

183954

204872

202324

204562

123639

163473

2265270 WY

783949

853833

678710

730756

755230

669179

843025

799893

762315

780476

920216

886505

9464087 QR

25854

27118

34142

19620

202694

183444

291835

184954

209945

215758

286458

181817

151934

182182

192398

215757

2499176 SV

367840

351758

444809

364901

382022

312919

348343

349310

306441

336897

303688

312311

4181239 SQ

33596

27377

39362

41692

41378

52821

49968

35970

37114

88952

163357

167117

778704 TG

24189

29208

33521

26330

28832

24721

36372

34151

32554

29211

31642

6603

SV SQ TG MU 9W

JET AIR

MS

EGYPT AIR

SG

SPICE JET

KR

SKIVA/ARM ENIA

717804

519192

555658

486025

416675

448210

407792

529960

508897

1882146 1622654 2167068 2048635 1482519 1463675 1650364 2027935 1740384 1748309

1614156

TTL

CATHAY

RJ

473605

DEC

4978004 57394117 UL

DE

QATAR AIRWAYS ROYAL JORDANIA N SAUDI ARABIAN AIRLINES SINGAPOR E AIRLINES THAI AIRWAYS INTL CHINA EAST

550003

NOV 4990283

CX

QR

658796

6272617 CX 0 DE

1741610 21189455 EK

106734 RJ

337334 MU

44220

33479

56808

50944

66098

55102

61170

32330

29306

42536

47079

58048

577120 9W

111006

116286

0

13487

39394

32898

46520

44670

43668

53920

69773

39087

610709 D7

812

3794

4679

5002

5596

5551

6114

4310

5184

5216

6196

3707

56161 SG

2570

13193

13232

4500

4958

7318

2563

12908

61242 RG

EY

ETIHAD

57451

122466

215659

117932

133849

120468

103788

92320

97499

119503

144610

123204

1448749 EY

TK

TURKISH AIRLINES

281710

363976

457057

273795

353887

374345

336751

279099

305353

297208

402974

441667

4167822 TK

G9

AIR ARABIA

141776

158420

148447

134965

153620

133926

115344

96490

142719

125371

136499

146504

1634081 G9

MJ

MIHIN AIR

174337

167364

192024

147027

177416

231185

241244

160047

179170

197525

202582

227801

2297722 MJ

63325

65446

75276

79588

90699

75920

72576

71019

83812

78347

88543

66819

228406

271594

331439

327157

294052

316010

424398

355556

325196

330033

314011

332910

MH KE

07

NAME JAN FEB MAR APR MAY JUN JUL AUG SEP OCT SRILANKAN 3967153 3689315 4548212 4304808 4844013 5278970 5600382 5088903 4993085 5110989 AIRLINES

MALAYSIA N AIRLINES KOREAN AIR

CARGO SALES REPRESENTATION FOR SRI LANKA

911370 MH 3850762 KE

TOTAL UPLIFT, DISCHARGE & TRANSHIPMENT JAN TO DEC 2014

MONTH

UPLIFT (kg)

DISCHARGE (kg) Excluding Transshipment

Jan-14

9619147

3043232

2176727

14839106

Feb-14

9144792

2399856

1907143

13451791

Mar-14

11315276

3707140

2213633

17236049

Apr-14

10046275

2814071

2318105

15178451

May-14

10539368

3353111

2669249

16561728

Jun-14

10559755

3233050

3124727

16917532

Jul-14

11351455

3243006

3299732

17894193

Aug-14

10757083

3203974

2954663

16915720

Sep-14

10301011

3634513

2908163

16843687

Oct-14

10788325

4004779

3036464

17829568

Nov-14

10789410

4091841

3248571

18129822

Dec-14

11059331

3867861

2931916

17859108

TOTAL

199,656 ,755

TRANSSHIPMENT (kg)

TTL (kg)

MAIN EXPORT COMMODITIES TO CANADA, THE US & SOUTH AMERICA The study was undertaken based on the Air Canada cargo distribution ability and all figures indicated are based on Air Cargo movements only.

Textiles & Apparel Knitted & woven is the primary airfreight export commodity. Although the largest, only 15%-20% is shipped by air. Despite manufacturers looking at reducing inventory cost and just in time production, there has been an increase in air freight of this commodity overall with 114.3 million kgs carried in 2012, 168.6 million in 2013 and 183 million kgs in 2014. The volumes to Canada and the USA however have shown a decrease over 2013. It is expected that GSP + will be reinstated to the US in 2016.

Diamonds, Gems & Jewellery Despite the overall decline in this commodity in the past three years, the GSP tax concession extended by the US currently on all sapphire gemstones exported from Sri Lanka has increased the demand to the US and potential for growth in the future is on an upward trend. Pearls and precious stones to Canada have seen a marginal increase from 30,556 Cs in 2013 to 44,565 Cs in 2014 even though Canada offers no tax concessions on this commodity. Due to the high taxes levied in Canada, the potential for growth in this commodity is relatively low.

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CARGO SALES REPRESENTATION FOR SRI LANKA

MAIN EXPORT COMMODITIES TO CANADA, THE US & AND SOUTH AMERICA Manufactured products The market has remained somewhat static with 484,317 kgs in 2012 to Canada, the US & South America 471,723 kgs in 2013 and a marginal increase to 493,235 kgs in 2014.Machinery & mechanical appliances, industrial products (food &beverage, leather products, appliances, footwear, ceramic & Porcelain, Rubber, Coir and Wooden products are some of the items that fall within this category.

Fish & fisheries products including Tuna & Seafood The demand for this commodity has been increasing year on year from 12.5 million kgs in 2012 to 14.7 million kgs in 2013 and 16.5 million kgs in 2014. The majority of Sri Lanka’s tuna is air freighted fresh to the EU, a trade flow that has taken years to set up and hone, however the EU ban in Oct 2014 has adversely affected this industry. Despite the huge demand for this commodity in the US, the factories in Sri Lanka don’t have the frozen capability to leverage the full potential for this product that has grown from 1.6 million kgs in 2012 to 2.7 million kgs in 2013 to 3.3 million kgs in 2014.

Currently an average of two containers a week of tuna is shipped to Canada alone. Fresh edible fish such as mullet and garupa is another commodity that is growing in demand.

Coconut & Coconut based products A year on year increase has been recorded in the total export of this commodity from 172,382 kgs in 2012 to 346,952 kgs in 2013 and 408384 kgs in 2014. However the market to Canada and the US was 6,231 in 2012, 116,314 in 2013 and 88,534 kgs in 2014. Coconut cream & milk, desiccated coconut, coconut flour and virgin coconut oil are a few of the products growing in demand in this sector.

Other Exports including Tea, Spices & Cashew Kernels This commodity is high density cargo that brings in good yields. The cargo is shipped to various locations as bulk tea and finished products (tea bags, packets).The rest include natural rubber andother export crops ( fresh vegetable, fruit, spices, cashew, essential oils, fisheries products (aquarium fish ). There was a decline to Canada & the US from 193,139 kgs in 2012 to 127,937 in 2013 and a slight increase to 131,277 in 2014 with the same trend apparent in the overall market of this commodity.

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CARGO SALES REPRESENTATION FOR SRI LANKA

SRI LANKA EXPORT STATISTICS TO CANADA, THE US & S.AMERICA AIR FREIGHT Value in US$

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CARGO SALES REPRESENTATION FOR SRI LANKA

SRI LANKA EXPORT STATISTICS TO CANADA, THE US & S.AMERICA AIR FREIGHT Value in US$

AIR CANADA CARGO SALES PROJECTION 2016 POINT OF SALE: SRI LANKA. UPLIFT IN KGS

- Average net rate to AC = USD1:25 - Total AC revenue: USD 468,000.00 - All rates are structured for shipments Q45 and more Routing: CMB YY LHR/ CDG/ FRA/ FCO/ IST/ AC - CANADA/ US/ S.AMERICA CMB YY DXB AC - CANADA/US /S.AMERICA The following leading Forwarders with potential to produce bulk on the above; 1. DHL Global Forwarding (Pvt) Ltd 2. Expo Logistix (Pvt) Ltd 3. Freight Links International (Pvt) Ltd 4. MIT Cargo(Pvt) Ltd 5. Speedmark Transportation Lanka (Pvt) Ltd 6. Ace Cargo (Pvt) Ltd 7. Expo Lanka Freight Ltd 8. MAC Supply Chain Solutions (Pvt) Ltd 9. Hellman Worldwide Logistics (Pvt) Ltd 10. Toll Logistics Lanka (Pvt) Ltd

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CARGO SALES REPRESENTATION FOR SRI LANKA

SERVICE STANDARD The interests of Air Canada will be looked after by a Manager, guided by the MD and Board members of the company who have the required exposure to Cargo marketing and Operations in the past.. Experienced staff will take responsibility for all key functions of Sales/Marketing and Operations.

Dediicated Team: 01 Senior Sales / 01 Executive

Supported by: GSA Manager, Cashier, Accounts Assistant

Role of Senior Sales / Executive: Conduct regular sales visits to all potential agents and interline partners. Identify other agents with potential to generate business on AC. Weekly reporting and feedback to ED. Supervising and tracking all cargo movements whilst maintaining regular communication with agents. Providing updates etc

GSA Manager: Responsible for the overall operation of the Airline. Primary objective is to meet the Principal’s targets. Role includes expanding the Distribution, Agents product updates and quarterly agents review meetings & building relationships with the agents and interline partners.

OBJECTIVES ¥ Secure all possible business opportunities for Air Canada cargo from Sri Lanka to Canada, US & S. America. ¥ Ideally position Air Canada cargo as a reliable express delivery option in the market. ¥ Optimise sales potential including Small/ Sample parcels and Courier traffic. ¥ Leverage the already established strong relationships with interline carriers to secure regular capacity. ¥ Awareness of the AC product and image building as a credible option among the local shipping community through regular visits by a dedicated sale staff to cargo agents and direct shippers. ¥ Strive to ensure that both Stakeholders, i.e Airline and GSA, meet or surpass revenue objectives.

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CARGO SALES REPRESENTATION FOR SRI LANKA

CONCLUSION Our companies have established a reputation for being specialists in the Airline, Travel and Tourism sector. We are proud of the Brands we represent, all of which we have pursued with a specific objective.

The management and staff of United Ventures Private Limited will be totally independent and will place great emphasis and focus on positioning Air Canada Cargo in Sri Lanka.

The close business relationships developed over the years between Air Canada and United Ventures will be further strengthened through the possible representation of Air Canada cargo in Sri Lanka.

We look forward to developing a win win working relationship with AIRCANADA CARGO in the very near future.

Thank You. The Management of United Ventures May 2015, Colombo.

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CARGO SALES REPRESENTATION FOR SRI LANKA

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CARGO SALES REPRESENTATION FOR SRI LANKA