Attachment C5

Travel & Tourism Guide

Attachment C5 – Travel & Tourism Guide

Travel & Tourism

Reference Guide

.travel TLD – Attachment C5

September 2000

Part I – Travel & Tourism Industry

Travel & Tourism Definition

The Travel & Tourism Industry consists of vendors/suppliers who aim to support and/or provide the end customer with travel experience.

Introduction

Travel & Tourism is the world's largest industry and accounts for 11% of the world GDP and 8% of total employment. It has been described as one of the most powerful global forces for positive change and development in an economy and a society. Forrester Research predicted that by 1999 travel would be the number one electronic commerce category, with sales topping $2.8 billion.

Travel & Tourism in the U.S. generates the largest balance of trade surplus of any industry, which totalled almost $25 billion in 1998. U.S.A. tops the list of tourism earners ($71 billion in receipts in 1998) and tourism spenders ($51.2 billion in expenditure in 1997) and is third on the list of the world’s top tourism destinations (France is #1, Spain is #2).

World Travel & Tourism has largely weathered the Asia/Pacific financial crisis, thanks to the economic strength of the North American and European Union regions. In 1999, Travel & Tourism was estimated to generate some $3.5 trillion of GDP and almost 200 million jobs across the world economy – approximately one third of this comes from the industry itself and the remainder from its very strong catalytic flow-through effect in other sectors such as retail and construction. Travel & Tourism has emerged strongly from the Asia crisis with leisure tourism expected to grow by 4.7% in 1999 and business travel by 4.4%.

Travel & Tourism Trends

General trends affecting the travel industry include increased competition through globalisation (new players coming from abroad) and through deregulation (competitors coming from other industries), changing customer demands (different lifestyles, for instance the look for specialised trips such as adventure or edutainment and different demographics with increasing numbers of seniors) and increased expectations (more convenience and value, getting used to the customisation of offerings). At the same time, customers are becoming ever more knowledgeable (direct marketing is certainly one of the drivers) and growing accustomed to automated technologies (such as phone-based systems, various travel websites and multimedia kiosks).

Looking at the trends of international tourist arrivals during the decade 1989-1998, the growth rate of arrivals worldwide slowed in the second half of the decade to 3.5% from 5% in the first half. For the ten-year period 1989-1998 overall, the annual average was 4.3%. East Asia and the Pacific performed the best throughout, registering 6.8% growth a year on average over the 10 years. South Asia was the only region of the world which recorded faster growth (6.8%) in the second half of the decade, whereas the Middle East exhibited stable growth during the whole period (6.4% growth a year). Growth in Europe, Africa and the Americas slowed significantly during the second half of the decade. Nevertheless, Europe performed better than expected due to the significant increase in tourism to Central and Eastern Europe. In volume, the total number of tourists worldwide increased by 209 million between 1989 and 1998.

Historically, the industry has been an early adopter of new technologies, for instance Computer Reservation systems (CRS). As technology becomes more pervasive, traditional consumers begin to use tools formerly reserved for travel professionals. In the case of CRS, consumers who have access to similar systems through their home computers and open networks can now take over some functions traditionally performed by travel agents.

Some other trends affecting the travel & tourism industry are:

· Code-sharing agreements between business partners

· Scheduling and marketing pacts between top airlines

· Consolidations/Mergers/Acquisitions

· Commission capping by airlines

· Intermodal transportation

· Privatisation of airlines and airports

· Outsourcing (legal, financial, consultants, IT etc services)

· Wireless Travel Service (joint project Delta/IBM/Modern Media Poppe Tyson)

· Travel Superstores; offering everything from luggage to guidebooks to full reservations under one roof. Ex TravelFest Superstores.

· Green Travel; 83% of travellers are inclined to support “green” travel companies and are willing to spend on average 6.2% more for travel services and products provided by environmentally responsible travel suppliers.

· 20% of all business trips include two household members, 28% included some time for pleasure travel and 38% included an overnight weekend stay.

The WTO reports bright outlook for Tourism in 2000 following 2 years of limited growth. International tourist arrivals are expected to increase by 4-5% mainly due to Asian and European travel growth.

Overview of the Travel & Tourism Process

The following provides an overview of the travel & tourism process when all segments/components are present. The traveller (customer) contacts the ‘Travel Vendor’ (segment #1) to make arrangements for his travel. The travel vendor makes the necessary reservations for the traveller using a variety of available ‘Tools’ (segment #2). The vendor also relies on the ‘Support Facilities’ (segment #4) available in order to obtain additional information and settle the transaction once completed. The travel vendor sells the travel product offered by the ‘Travel Suppliers’ (segment #3). The customer then ultimately enjoys the ‘Travel/Tourism Experience’ (segment #5).

Travel & Tourism Segmentation

For purpose of this project, the travel & tourism industry has been divided into five main segments.

Segment #1: Travel Vendors

In order to provide their product to the end consumer, travel suppliers (airlines, hotels, car rental companies, etc.) are heavily reliant upon the Travel Vendor segment. This segment is composed of the following categories, which ultimately form the travel distribution chain:

· Travel Agents
Travel Agents are essentially retailers, selling the services and packages of other organisations and they are the first link in the distribution chain; they sell the travel product at the agreed retail price, for which they are paid a commission and/or fee.

· Tour Operators
A Company that assembles the various elements of a tour. The tour operators control/dictate the price at which retailers can sell holidays. Generally 10% commission is paid by the tour operator/wholesaler to the travel agents on the sale of a particular service.

· Consolidators
A company or individual who negotiates bulk contracts with an airline (or other travel supplier) and then sells that space to a travel agent or the general public, usually at a discount.

· Electronic Travel Agencies (ERSPs – Electronic Reservation Service Providers)
Any entity which provides on-line booking or other electronic medium of travel products.

Travel Distribution Chain

The travel product can reach the final consumer through any of the following methods:

(1) A tour operator assembles a package which includes a variety of travel products such as air transport, car rental and hotel stay. This package is then sold through a travel agency to the end consumer at the retail price. In this case, the travel agency will make a commission or fee on the sale of the package. In the UK and Europe a small number of the major tour operators are “direct sell” i.e. their products are sold directly to the consumer and not through the retail agent.

(2) A consolidator has pre-arranged agreements with airlines who furnish him with bulk amount of seats at a reduced rate. He then sells these seats at a mark-up he determines can be sustained in the market either directly to the end consumer or through a travel agency who will collect a fee or commission.

(3) The travel agent sells individual travel products or combines them into a package for sale to the end consumer.

(4) The consumer accesses an electronic travel agent through the Internet and makes a purchase on-line. Electronic travel agents have a wide range of functionalities, some are full service and enable consumers to reserve, buy and obtain tickets for a combination of travel products while others allow only reservations of a single travel product.

(5) The consumer buys their travel product directly from the travel supplier, either through a company outlet, a reservations centre or via the Internet.

There is some consolidation going on within the European travel industry. Retails chains and airlines are forming co-operations to strengthen their position in the market (i.e. vertical integration of sorts by forming alliances).

(Note: The term ‘wholesalers’ is a generic term used interchangeably with consolidators and tour operators)

Segment #2: Travel Purchase Facilitation Tools

The Travel Purchase Facilitation Tools are key components that enable the travel vendors to access travel supplier inventory and process reservations for the end consumer. These can be classified into the following categories:

· CRSs/GDSs
Any of several proprietary computer systems allowing real-time access to airline fares,

schedules, and seating availability and offering the capability of booking reservations and generating tickets.

· Internal systems
This category includes any internal system operated within a travel supplier company related to inventory management, billing & settlement and management functions. (For example a rental car company needs a system to track the movement of its fleet of vehicles). In some cases, travel vendors are given access to these internal systems in order to enable them to view product information/inventory and sell the travel product.

· Other Automated Systems/Products
Apart from GDSs and internal supplier systems, travel vendors use other automated products to access supplier information and inventory. (Note: not all travel vendors subscribe to GDS services, and GDSs do not carry the inventory for all travel products). This category includes the following:
(1) Online products available through the Internet
Example: “Saint” operated by Viator Systems enables travel agencies to access a wide

variety of leisure product including sightseeing tours, theatre & restaurant packages etc. via the Internet
(2) Software database products
Example: Farenet operated by Jetset Tours offers instant unlimited access to consolidated airfares and enables travel agencies to manage their business better.
Example: InfoHub offers tour query software to travel agencies and independent travel consultants which allows them to sell tours in the InfoHub database to their customers.

Segment #3: Travel Suppliers

The Travel Suppliers provide the traveller with the actual travel product to enjoy the travel and tourism experience. These suppliers rely heavily on the travel vendor segment for the distribution of their products and services. The following categories have been outlined for this segment and are self-explanatory; for detailed descriptions refer to the individual category profiles.

· Charter Airlines

· Coaches

· Cruise

· Hotel/Resorts/Motel

· Car Rental

· Railways

· Ferries

· Travel Insurance

· Airports

We have limited the scope to the actual travel suppliers only (i.e., hotels and resorts, car rental companies, etc.) and have excluded their suppliers (i.e., florists, caterers, etc. for the hotels & resorts).

Segment #4: Support Facilities

The Support Facilities segment provides the additional support needed for the travel vendors to carry out their business activities. The following categories have been defined:

· Associations
These include travel industry associations such as IATA and UFTAA which offer an operating framework for the travel vendor, as well as various travel agent associations.

· Tourist Boards
These include country, regional and municipal tourist boards whose function is to market their location to the end consumer. They provide expert destination information to the travel vendor or end consumer.

· IT systems/infrastructures
These include any external systems or networks which are used by the travel vendors/suppliers to carry out their business process such as settlement systems (i.e. Hotel Clearing Corporation, IATA BSPs), scheduling systems (OAG).

Segment #5: Travel/Tourism Experience

The Travel/Tourism Experience is the end result of the travel distribution chain. The previous four segments form the delivery mechanism that enables the traveller to obtain the travel/tourism experience. The following categories have been outlined for this segment and are self-explanatory; for detailed descriptions refer to the individual category profiles.

· Theme Parks

· Restaurants

· Casinos/Gaming Facilities

· Attractions

· Museums/art galleries

· Monuments

· Historic sites

· Convention centres

PART II : Category Profiles

Segment #1: Travel Vendors

Category: Travel Agents

Profile

Travel Agents are essentially retailers, selling the services and packages of other organisations directly to the public. They sell the travel product at the agreed retail price, for which they are paid a commission and/or fee. Although the Internet looms as a huge threat to the traditional travel agency business process, many are realising that the Internet also represents opportunity; it gives them a means to reach a much larger audience whether they serve a niche or the mass market. In addition, travel industry studies show that consumers typically use the Internet to compare prices, then turn to travel agents for actual bookings. Online travel brings in only about 1% of the $101 billion of travel products sold by travel agents. The following chart depicts the breakdown of travel agency bookings(source: Encyclopedia of American Industries):

The US market has more than 30 000 independently owned, locally operatedoffices, whichbook 40% of American travel and tourism-related reservations (70% domestic, 30 % international). Business travel makes up slightly more than half of sales. Leisure travel offers a greater profit potential but is more labour intensive.

Trends

· Travel agents continue to change with the times. Since 1995 the industry has been consolidating. Many single-office agencies have closed or merged with others, the result of the commission cap on tickets by most major US airlines. The bigger you are, the more likely you are to be profitable: 9/10 agencies doing more than $5 million in business made a profit whereas those doing business under $1 million, only 6/10 were profitable. (1997 statistics).

· A new breed of travel agency has also cropped up the travel superstore where everything is offered from luggage to guidebooks to full reservations under one roof.

· Profit margins in travel retailing have shrunk in recent years because of industry rationalisation and increased competition from call centres and online operators. To compete, retailers must invest large sums.

· Retailers must move into electronic commerce immediately, or be left behind.

· Due to the recent commission caps imposed by the airlines, the following trends have occurred:
- shift away from selling air to other travel products such as cruise and tour packages which provide a higher commission;
- a shift from selling business travel to leisure travel (now 50-50); and
- the charging of fees directly to corporate clients or consumers for services rendered to survive, about two-thirds of agencies now charge ticketing fees, compared to 10% five years ago.

· Ticketless bookings now accepted by most U.S. travel agencies.

· Internet access by agencies have gone up dramatically.

· Companies are changing their payroll basis by hiring more commissioned salespersons versus salaried agents.

· The need for experienced, highly trained corporate agents is on the rise. This is due to the rise in on-site branches (i.e. travel agencies located within corporations). ARC figures show that the number increased from 195 in March 1995 to 2860 in 1998.

· Smaller agencies are now affiliating more with leisure-oriented consortium or marketing groups such as GEM, Travelsavers or Giants. In the last 10 years the figure has jumped from 36% to 54%.

Major Players

#	Name	HQ	1998 Sales in US$ Mil	Outlets/staff	Presence	Additional Comments
1	American Express	USA	13392.4	/85000	160 countries	· #73 in Fortune 500 · 73% sales US, 13% Europe, 7% Asia, 7% Other
2	Japan Travel Bureau	Japan	12757.5	1100/ 9343	17 countries	· 60% sales from domestic travel · Originally government own (until 1963) · Private company
3	Carlson Wagonlit Travel	Netherlands	11000	3000/ 20100	140 countries	· Co-owned by Accor and Carlson Group
4	Nippon Travel Agency	Japan	7000	309/ 6899	Japan, US + 7 countries	· Domestic travel accounts for 65% sales · Kinki Nippon railway owns 30.4%
5	World Travel Partners	USA	4000	1700/ 5000	US	· WorldTravel Partners and BTI Americas merged in October 1998 · Private company · 80% of business corporate · 5% of sales from Software/Internet products
6	Rosenbluth	USA	3500	1300/ 4500	25 countries	· Private company · Philosophy: customer comes second i.e. employee is first · Corporate market based on fees rather than commissions · Majority stake in Biztravel.com
7	Navigant	USA	3300 (1999)	1150	-	-
8	AAA	USA	3100 (1999)	1000	-	-
9	Thomas Cook Group	UK	2416	4500/ 20000	100 countries	· Owned by Preussag (50.1%), Carlson 22% · #3 in UK travel market · UK tour operator
10	Havas Voyages	France	2403	615/ 3770	France	· Partnered with Amex for corporate onsite agencies
11	Maritz Inc.	USA	2200	240/ 6500	US + 40 countries	· Owns majority stake in GTM which operates 1250 offices in 40 countries · Private Company · Concentrates on corporate travel, consulting and event management
12	Nokyo Tourist Corp	Japan	1429	/1500	Japan	· Sells package tours/inbound travel service · Official agent for Japan Railways and Japanese airlines · In Agricultural Cooperatives market
13	Liberty	USA	1320 (1997)	200/ 1700	East coast of U.S.	· Private company · Focus on leisure market · Does not franchise · GOGO division offers wholesale packages
14	Sato Travel	USA	1200 (1999)	1500/ 2000	US + 18 countries	· Dedicated agency of the US government and US military and Fortune 500 corporate travel
15	Flight Center	Australia	1181 (1999)	450/ 900	Australia, NZ, South Africa, Canada, UK	· Largest retailer in Australia by sales · 14% market share in Australia
16	Mccord Travel Management	USA	585	95/ 1000	US	· Private company · Focus on corporate clients · Offers a software system that allow users to book trips and track expenses

Category: Tour Operators

Profile

Tour Operators are travel vendors of enjoyable, convenient and affordable sun and leisure vacations, some of which are all-inclusive. The scope of the business entails selecting, purchasing and processing of services and products for use in package tours and tailored travel arrangements. The holiday package might combine various services such as flight, hotel accommodation, coach transportation, local services etc. and is sold at a total price designated in advance. Tour operating is tailored to the needs of the customer segments in individual countries. Incoming tour operators are the complement to outgoing tour operators. At the destination, they assume certain responsibilities, such as the transfer of travellers from the airport to hotels, the availability of guides, and the organisation of excursions and tours.

Trends

A wave of consolidation is sweeping the travel industry in continental Europe. Market is likely to be dominated by 4 to 5 big players in the future (Thomson, Airtours, Preussag). Recent mergers/acquisitions might lead to either price wars or further consolidation in the industry. This would harm the consumers as less travel operators means less competition and higher prices.

Most large companies operating in the industry have adopted vertical integration of production and distribution methods. This approach makes it possible to bring tour operators and air carriers under one roof, as well as, in several cases, travel agencies and incoming tour operators. Integration allows companies not only to control the entire production and distribution process, but also to add value to each level of production. For the tour operator, these formulas secures, on the one hand, loyalty from the distributors for the sale of its packages and, on the other hand, control of its seat inventory to destinations where it has blocked hotel rooms.

Multinational activities are becoming increasingly important because through growing turnover and passenger volumes tour-operators are able to improve the terms on which services can be delivered. In the business travel segment, corporate customers require a global reach on the part of their travel company. Additional trends are value orientation, specialist destinations and winter holidays. British Travel Groups have been the most successful in recent years. The reasons for this are, among other factors, the significant turnover consolidation resulting from their high degree of vertical integration, a strong British pound and a liberal approach to night flights.

Major Players

#	Company	Group	HQ	Sales in 1998 US$ mil	Additional Comments
*North America*
1	Transat Holidays	Transat A.T. Inc.	Montreal, Canada	618.4 Transat A.T. 921.2	Owner of 9 tour operators
2	Pleasant Holidays		CA, USA	350	Providing travel agents with a Web site through which they can make travel reservations.
3	American Tours International		CA, USA	136	- US leading inbound tour operator - Private company
4	Global Vacation Group		Washington DC, USA	90.4
-	Gogo Worldwide Vacations	Liberty Travel	NJ, USA	Liberty Travel: 1,320	Travel Agents-only website
-	MLT Vacations				- One of US’ largest wholesale vacation travel companies. - Nearly 1 million vacationers/year
-	Signature Vacations				- Wholly owned by First Choice, UK - Canada’s largest Tour Operator
-	Royal Vacations	Royal Aviation Inc.
-	Alba Tours International
Europe
1	Hapag Touristik Union	Preussag/West LTB	Germany	9,600	- #1 in Europe - Merger between TUI and Hapag-Lloyd - Majority shareholder of Thomas Cook/Carlson UK (50.1%) - 3,469 travel agencies, 51 tour operators, 5 cruise liners, 63 aircraft, 18 incoming agencies, 164 hotels (80,000 beds)
2	Airtours	Airtours Plc	UK	Airtours Plc 4,678	- #2 in Europe - #2 in the UK
3	C&N (Condor & N-U-R/Neckermann)	Lufthansa 50% Karstadt 50%	Germany	4,000	Second biggest Travel Group in Germany
5	Thomson Travel		UK	4,078	- #5 in Europe - #1 in the UK - Owner of: Air Travel Group Limited Britannia Airways
6	Kuoni Travel Holding Ltd.		Switzerland	2,100	- #6 in European market - The 1998 World Travel Award for Best Tour Operator
7	LTU Group	SAir Group 49.9%, Pvt Investors 39.9%	Germany	2,100
8	First Choice		UK	1,900	- #3 in the UK - Owner of Air 2000
9	Nouvelles Frontières		France	1,400	#1 in France and one of the largest T/O in the world; Owner of a cruise line
Asia/Pacific
1	Japan Travel Bureau	JTB	Japan	-	-Handles 50% of total business in Japan - 60-70% of business is domestic
-	Kuoni Travel (India) Ltd	Kuoni Group	India	-	- Kuoni brand name in Asia - #1 tour operator in Asia outside Japan
-	Jalpak Co Ltd	JAL Group	Japan	-	- JTB owns 5% - 135 offices worldwide
-	Jetset Tours Pty Ltd	Jetset Tours	Australia	932.2	- business comprises retail franchises and Jetset-owned stores
-	HK Four Seas Tours Ltd	Four Seas Consor-tium	Hong Kong	-	- Wholesalers and travel agents in Hong Kong - 4 offices in HKG + offices in China
-	HK Wing On Travel	Ananda Group	Hong Kong	-	- Wing On Travel is retail agent with presence in Asia/Pacific and Europe
-	Allo Pacifique	-	-	-	-
-	AAT Kings Australian Tours	-	-	-	-

Category: Consolidators

Profile

A consolidator is a company who buys tickets from the airlines in bulk or carries its own contract with the airlines. Consolidators usually get very low fares, often from 20 to 50% lower than the airlines’ best published fares. Some consolidators then sell these tickets to travel agents at a mark-up while others may sell them to the general public directly. Consolidators traditionally have been small, with low-overhead operations that make the owners a tidy but not spectacular profit. Airlines have used them because consolidators help them fill sets they are unlikely to sell at regular retail price. Customers use them for low-price, no-frills tickets. (They are the equivalent of warehouse retail stores: low prices, limited selection, and minimal service). In addition travel agents can earn up to 30% commission on consolidator tickets versus 8% on standard tickets. Consolidators basically fall into three categories:

1) Wholesale-only consolidators
These generally have no retail or advertising and deal only with round trips originating in the country where they are based. Common in the US, UK and Australia.

2) Destination specialists
These specialise in a particular destination or region and often have negotiated discounts on tickets to that region which they offer both to their own customers and to other agencies as a wholesaler. Frequently an agency operating and retailing tours to a particular country will have a discount agreement with the airline it uses for its tours. (Sometimes these wholesalers are the ‘general sales agents’ for that carrier)

3) “Bucket Shops” and other multi-stop specialists
These are discount retail agencies that specialise in trips more complicated than simple round trips, often to a wider range of destinations or to multiple destinations, they are also mostly concentrated in a few world cities.

In the U.S. there are consolidators that sell directly to the public; they use newspaper advertisements, 1-800 numbers and the Internet as their primary dissemination vehicle. In other countries, consolidation activities are regulated and they are prohibited from selling to the public.

Trends

· Since 1995, when the major airlines began reducing the sales commissions they paid to the traditional travel agencies, several big travel companies have begun entering the consolidation business, where profit per ticket sold can be higher than with other tickets, therefore creating a few large new players in the field. Also other consolidators that historically sold to travel agents only have started selling to the public which has created even greater competition.

· Some Internet sites now access consolidator fares from many different consolidators i.e.1travel.com and EconomyTravel.com.

· Travel agents are now using them more since commission cuts as they can earn more on consolidator tickets.

Major Players

This table is a sample of some of the major consolidators worldwide.

Name	HQ	1998 Sales in US$ Mil	No. of airline suppliers	Customers	Additional Comments
North America
Jetset Tours Inc.	USA		65	Travel Agents	Maintains FareNet software system – Travel agent tool
Travel Services Int.	USA	129.9*		Travel Agents/ Public	largest cruise sales distribution company in the world, selling nearly 10% of all cruise vacations About 50% rev from consolidation type activities 350,000 airline tickets in 98
Travac	USA		20	Travel Agents/ Public	75 000 airline tickets/year
Intertransit	Canada			Travel Agents
Consultour	Canada	60			Part of Air Transat group
Europe
DER Travel Services	Germany	4000*	30		Member of USACA 6300 wholly owned agencies around the world Wholly owned by Deutsche Bahn (German Railway)
Citibond	UK		All Major
L’Tur	Germany	230 (1999)
Asia/Pacific
Concorde International Travel	Australia	1010*		Travel Agents	Consolidation activities is one of 4 divisions
Ever Sun Travel Ltd.	Hong Kong				Leading in Hong Kong, Macau, China, + SE Asia

* Includes all sales of company not only consolidation division

Note: USACA = United States Air Consolidators Association (requires members to do at least $10M in business each year)

Category: Electronic Travel Agencies (ERSPs – Electronic Reservation Service Providers)

Profile

As outlined in the travel vendor segment overview, the consumer has the option of obtaining travel products through the following channels: Traditional Travel Agency, Consolidator, Tour Operator, Travel Supplier (traditional methods – phone, ticketing office, supplier location), Electronic Travel Agency and Travel Supplier (electronically via the Internet). As evidenced by the appearance of the last two distribution channels above, the Internet has changed the landscape in the way that travellers search, reserve and buy travel products. This has both enabled suppliers to bypass the traditional distribution channels and sell directly to the traveller and also created a whole new category of travel vendors, which we have termed “electronic travel agencies”. In the marketplace today there is a proliferation of Internet sites designed to compete for the online travel dollar. However all sites do not maintain the same functionality nor do they generate revenue in the same way. For the purpose of this analysis the following types were defined:

· Full Service sites:
The traveller can search through schedules, obtain availability and pricing, book the travel product, receive confirmation and purchase online. These electronic agencies carry a full selection of travel products including air, hotel, car rental, cruise and possibly tour packages. (Most of these are still being powered by GDSs)

· Travel Product Specific sites:
The traveller can search through schedules, obtain availability and pricing, book the travel product, receive confirmation and purchase online. However, these electronic agencies carry only a specific type of travel product, i.e. only hotels or only air.

· Listing/Referral sites:
The traveller can search through schedules, obtain availability and pricing. However to book the travel product they are referred to the travel supplier web site or need to call a 1-800 number.

· Unique Selling Point sites:
This type of agency will have a unique selling point or angle to cater to the traveller such as ‘travel auctions’ or ‘name your price’. As an example, “priceline.com” has potential customers outline their travel requirements including dates, destinations and price. The customer commits to purchase the travel product fitting those requirements. The site then tries to find a travel supplier willing to fit the outlined requirements.

· Supplier sites:
The traveller can search through schedules, obtain availability and pricing, book the travel product, receive confirmation and purchase online. However this type of site is dedicated to the specific travel supplier i.e. American Airlines or Via rail. The distinct benefit of these sites is that travellers may obtain electronic tickets if the company supports it.

· Vendor sites:
These sites are operated by the traditional vendors such as Tour Operators, Consolidators and Travel Agencies. The site will list travel products available only through that particular vendor. In this way the traditional vendors are still able to retain their commission or mark-up for the product.

Web portals are also key aspects of the online travel business, sites such as Yahoo and Excite are the doorway that many customers use to access the online agencies.

There are a number of different ways the online agencies can generate revenue; either by obtaining a referral fee, a commission on the segments sold, or by the mark-up between the price they have paid by buying in bulk and the price the consumer has paid (some companies also charge buyers a handling fee). It is of special note that although the major electronic agency Web sites generate a large amount of traffic volume and gross sales, they are not yet profitable. It requires a lot of investment to develop the needed technology and even more investment to attract and retain customers, especially when those customers can get to competitors by clicking a mouse. Travelocity and Expedia, in fact, expect to spend more money before they try to turn a profit, primarily on promoting themselves to Web users. However, some smaller online agencies are already profitable.

Trends & Statistics

The following depicts trends and estimates for the online and online travel market, however it is growing and changing at such a rapid pace that no sooner can research statistics be compiled than they are already out of date and the numbers have doubled or tripled.

· The online travel market is the largest retail e-commerce category, projected to grow from $7.8 Billion in 1999 to $32.1 billion by 2004.

· The European online travel industry is expected to generate US$ 1.7 billion in sales by 2002, up from US$ 7.7 million in 1997.

· According to “Advertising Age” in a nation-wide American survey the top 5 uses of the Internet for those with home Web access in all age groups included buying travel-related products. 28% identified the Internet as their primary source of information on new products in the case of travel and leisure.

· Although an online agency may have high traffic volume, this does not mean necessarily that they are selling a lot of travel booking. As many customers will review and obtain information through the online agencies and then book their trip through a traditional travel agency. For examplePreview.com has 8 million registered users, but fewer than half a million (about 7%) book travel plans with the company. In fact, almost a quarter of its revenue comes not through bookings, but through advertising on its Web site.

· In order to capture audiences, online companies need to advertise on other media, for example they spent $72.6 million on television ads in June 1999, a $67 million jump from June 1998, and almost $19.5 million on radio ads, more than a $8.6 million increase from 1998.

· Currently, the most developed and lucrative sector of the online travel market is flight sales (they represent 84% of all online travel revenues), however online package holiday sales are expected to grow substantially in the future.

· Over $32 billion in annual sales, travel is currently the second most profitable sector for online transactions currently on the Internet. The investment bank Bear, Stearns Co. Inc. estimates hotel reservations made via the Internet will generate $3.1 billion in revenues in 2002, up from less than $100 million in 1997. That compares to a total market for hotel reservations of $58 billion. (of special note: 28% of visitors to hotel sites book)

· Forrester Research predicts that mid- and lower-tier travel sites will begin to thin out by 2003, with many larger sites swallowing smaller sites.

· Jupiter research predicts that travel suppliers will account for an increasing percentage of online travel sales (currently at 50-50 split).

· increasing trend of aiming portals at specific demographics and industries, commonly known as "vertical portals," (example: “Biztravel”)

Major Players

The dominant players in the full service sites are Expedia, Travelocity and Preview Travel. The planned merger between Travelocity and Preview Travel will create a combined membership base of 17 Million and more than $1 Billion in projected travel sales. A potential new dominant player is an online agency to be formed by Continental, Delta, Northwest and United in first half of 2000.

The following table outlines the major players for the full service sites and gives typical/-popular examples of companies which fall into the other types. (L=Leader)

#	Name	Statistics	1998 Sales US$ Mil [growth]	1998 Net Income US$ Mil	Additional Comments
*Full Service*
1	Travelocity	9M members	285		· Is merging with Preview Travel · 3M airline tickets sold online since March 1996 · Offers electronic ticketing · Sales figure is gross travel sales
2	Expedia	4.2M hits/month (2Q 1999)	38.7* [179.9%]	(19.6)	· The most visited online travel site for 7 months in a row (Oct 99)
3	Preview Travel	$200.1M gross bookings 1998 7M members	14 [2.9%]	(27)	· Is merging with Travelocity · Primary travel service on AOL · Only 7% of users book travel plans (about 0.5M) · 76% of sales from transactions and 24% from advertising
L	Cheap Tickets	1.8M registered users	171.1 [66.4%]	1.1	· The company sells airline tickets through retail outlets, by phone, and through its Web site · 60% of sales are through air sales – acts as a consolidator · 30% of gross bookings currently are through Internet
L	Travelscape		20.9 [67.9%]	(4.4)	· Over 90% of sales come from hotel rooms (niche market) · Maintains a proprietary booking engine technology · Considered a wholesaler
-	Getthere.com		6.4* [113.3%]	(15.6)*	· Internet Travel Network is the consumer site · Provides online booking capability for Trip.com and Travel.com · Link corporate Intranet or Web site to their online booking and travel management data centers · affiliated with American Express
-	LowestFare		224.4	9.1	· Most of its sales come from discounted tickets on TWA · Internet sales account for only 4% of total sales. · Internet sales only account for $8.6M
-	Trip.com	1M registered	Private co.	Private co.	· Top rated travel site · Caters to business travellers · FlightTrackers – real time flifo · Owns THOR – 24 hour online reservation firm
-	Travelnow	28000 bookings /month	.886 [156.4]%	0.03	· Latest revenue figures 1.4M for last 6 months · Principal source of rev is commissions on hotel bookings
Unique Selling Point
L	Priceline	3M customers	35.2	(112.2)	· “name your own price" for airline tickets, hotel room · accounts for over 2% of leisure airline tickets sold in the U.S. · Marketing alliance with Preview Travel and Travelocity
-	Ebookers		6.9M [337.6%]	0.2	· Web sites in English, French and German · Offers a bidding service where travellers nametheir own price UK based company and full service · European online leader
Travel Product Specific
-	Worldres				· Specialises in hotel bookings · completely Internet-based and independent of older, mainframe-based airline CRS or intermediary systems · WorldRes takes a commission of between 3 and 10 percent of the cost of the booked room
-	Hotel Reservations Network		66.5 [91.2%]	1.7	· 80% of rev comes from online · estimate of $120M rev for 1999
*Vendor*
-	Direct-Holidays				· Tour operator marketing direct to customer – UK based – part of Airtours
-	Biztravel		Private co.	Private co.	· Biztravel.com is a line of business of Rosenbluth Interactive, a newly formed affiliate of Rosenbluth International · Concentrates on business traveller –niche (rated #1 business travel site)
*Referral*
-	Lastminutetravel		Private Co.	Private co.	· travellers browse through travel products –only distressed inventory - and are connected to supplier site for booking

* 1999 statistics

Note: Net income is being reported here to emphasise the fact that these companies are still operating with a negative bottom line because of the high investment costs for development and maintaining their online systems.

The following is a listing of travel suppliers which are dominant in the online industry:

Airlines:

· American Airlines

· United Airlines

· Delta

Cruise:

· Carnival Cruise

· Renaissance Cruise

Hotels:

· Hotel Discounts

· Norwegian Cruise Lines

Segment #2: Travel Purchase Facilitation Tools

Category: CRSs/GDSs

Profile

A Central Reservation System or Global Distribution System is a computer system, which allows real-time access to airline fares, schedules, and seating availability and offers the capability of booking reservations and generating tickets. The CRSs generate revenue by charging fees for booked segments and ticketed segments. The CRS market is dominated by four major players who account for most of the travel reservations worldwide. Although the advent of the Internet may have spelled the end for the domination of the traditional GDSs, they have actually prospered by aggressively taking advantage of the Internet business opportunity. Amadeus forged a Web deal with Wal-Mart. Sabre is of course the engine behind Travelocity.com, Worldspan provides reservation services to some of the leading travel sites including Expedia.com and Priceline.com. Finally, Galileo is launching its own consumer site in the first quarter of 2000. Despite this fact, the Internet will continue to be a potential area which will foster many competitors for the GDSs. Many players are getting into the game who can develop unique tools using current technology rather than being saddled with systems relying on old architecture.

Trends

· Air segments booked through GDSs increased for the 12-month period ended Sept. 30 1999, by 6%.

· Booking volumes in the U.S. continue to outpace the rest of the world.

· Airlines are terminating access to same-day gate and flight information usually accessed through the GDSs. Originally the intent was to provide the data to the travel agents to pass on to the end consumer, however Internet sites are beginning to take over this functionality. The sites also maintain the functionality to deliver the information to pagers, cell phones and other hand-held devices.

· Worldspan has joined the United States Air Consolidators Association, it plans to develop and implement automation solutions designed to assist and strengthen the air consolidation businesses.

· A number of wholesale tour systems providers are in various stages of developing leisure travel portals, using their own hosting service to aggregate inventory and distribute it via the Internet, either directly to consumers or with the help of travel agents.

· Channel based pricing is becoming more prevalent. Lower fees are charged for any bookings generated through a channel that is owned and managed by an airline. Amadeus said it was sharing the savings of agency distribution costs with its airline customers, in Sabres case the company is providing an incentive of 30% off regular booking fees for carriers to sell the corporate system.

Major Players

Name	Areas of Ops/ dominance	No. Agency Locations	Mkt Share – Air Seg. Booked (rank)*	Mkt Share – Agcy Locations (rank)	Sales Break down	1998 Sales in US$ Mil	Additional Comments
Sabre	USA, Canada	35439	32.8% (1)	24.3% (3)	57% GDS 43% IT svcs	2306.4	operates in 45 countries 1/3 of the world’s travel reservations are booked through Sabre
Galileo	USA, Canada	39000	30.3% (2)	28.4% (2)	91% GDS 9% IT svcs	1480.8	operates in 100 countries
Amadeus	Latin America, Caribbean, Europe	44102	25.1% (3)	34.3% (1)		1395.5	Europe accounts for 60% of bookings; 25% owners: AF, IB, LH
Worldspan		17900	11.8% (4)	13% (4)		637	Joint venture DL, NW, TWA; operates in 60 countries
Abacus	Asia/Pacific	7300					Joint venture with Sabre
Axess	Japan	6800
Infini	Japan	6257
Topas	Korea	2240

* Figures 12 months ended Sept. 30, 1999

** Nov. 30, 1999

Segment #3: Travel Suppliers

Category: Charter Airlines

Profile

Charter airlines cater to a wide range of customers including tour operators, groups, governments, sport teams, corporations and individuals (including personalised requirements) either for a series of flights or on an ad-hoc basis. Their offering may include: a team of experienced professionals, state-of-the-art equipment, a superior training facility and a full service maintenance and engineering facility. Charter carriers often provide a network of holiday flights to destinations around the world. Charters are a key component of the holiday package.

Charter should be considered when:

1. The entire group must travel together on a single aircraft

2. Custom non-stop aircraft routing is required

3. VIP group requires first class aircraft configured

4. Schedule allows travel during off-peak times

5. The group is willing to pay for the convenience of having exclusive use of an aircraft

The cost of a charter is a function of distance, aircraft size and aircraft positioning.

Trends

Charter carriers continue to expand transcontinental, international, domestic and interregional services and are thereby fuelling competition to major scheduled airlines. Some of the larger and most reputable charter airlines work in partnership. These partnerships provide an important distribution vehicle for the product and ensure competitiveness. The Charter Industry has doubled since 1980.

Currently some regulatory restrictions which prevent charter carriers from providing equal competition (Canada). Under Open Skies, 90% of Canada-US transborder operations are scheduled services.

Major Players

#	Company	Group		HQ	Fleet	1998 Sales in US$ Mil	Additional Comments
*North America*
1	Air Transat	Transat A.T. Inc.		Montreal, Canada	20	349.7 Transat A.T. 921.2	- 2.5 million pax/year - Canada’s leading charter airline with 45.3% Canadian Market share (1997)
2	Amtran, Inc			Indianapo-lis, USA	54	Charter: 340.2 Total Group: 919.4	37% charter 56% scheduled Principal Subsidiary: American Trans Air (ATA) North-America’s largest Charter carrier 11^th largest carrier in the US
3	Royal Airlines			Montreal, Canada	8	1999 Sales: 339	One of Canada’s largest charter operator. Partner with Signature Vacations 18.9% Canadian Marketshare (1997)
4	Canada 3000			Toronto, Canada			26% Canadian Marketshare (1997)
*Executive Charter:*
1	~~1.1.1.1.1~~ Executive Jet					1997 Est. Sales: 500	World’s largest fleet in business jets.
2	Jet Aviation Intl, Inc		Zurich, Switzerland		140	403	Largest international provider of executive charter (corporate and private jets, helicopter). For the last three years Jet Aviation's charter operations in the U.S. ranked among the best charter provider according to the "Professional Pilot" poll.
Europe
-	Airtours International	Airtours Plc	UK		42	Airtours Plc 4,677.6 mil	Airtours Plc owns Air Belgium, Airtours International and Premiair
-	LTU International Airways	SAir Group 49.9% Priv Investors 39.9% West LB 10.2%	Germany		28	1996/1997: 2,064	-7.2 million pax/year -Private company
-	Britannia Airways	Thomson Travel Group	Luton, UK		44		-UK’s biggest charter -7 million pax/year
-	Air 2000		UK		25	Private Company	-2^nd largest UK charter airline -30,000 flights a year; 5 million passengers - 1999: “ Best UK Charter Airline” by Travel Weekly Golden Globe
-	British World Airlines	BWA Group Plc	Stansted, UK
-	Edelweiss Air	Kuoni Travel Grp			4		Airline of Kuoni Travel Group Expands into the long haul sector
-	Corsair				9		Airline of Nouvelles Frontières (No. 1 Tour Operator in France)

Category: Motor Coach Operators

Profile

Motorcoach companies offer quality ground transportation services for the business or leisure traveller. Motorcoach transportation often represents a very affordable option for the traveller.

Companies range from one and two vehicles to those with many hundreds of coaches; from small tour-specific companies to those performing intercity route service and charters. Charter services include local shuttles, single or multiple day trips, and long-distance charters nationwide for such groups as meeting planners, convention services, companies, schools, civic, and church groups. Tour Operators offer city-, regional- or multi-country tours.

The scope of services is furthermore increased by agreements /alliances with other companies in the industry to meet the total travel needs of its passengers, by bus, air or rail. Some of the main competitors are airlines and railways. Very fragmented/regional business

Trends

· Intermodal alliances and partnerships with other coach operators, airline companies and/or railway companies

· Increase in trips of more than 1,000 miles – thus competing with discount airlines (US)

Major Players

#	Company	Group	HQ	Fleet (buses)	1998 Sales in US$ Mil	Additional Comments
North America
1	Greyhound Lines, Inc.	Laidlaw, Inc.	Dallas, USA	2,500	846	Largest coach operator in the US 22 million pax/year 2,600 destinations in US and Mexico
2	Coach USA, Inc	Stagecoach Holdings	Houston, USA	9,500	803.6
-	Boston Coach	Fidelity Investments				One of Coach USA’s main competitors
-	Greyhound Canada			400		2 mil pax/year
Europe
1	Arriva Plc		UK		(1999) 2,583.4	#3 in UK
2	Stagecoach Holdings		UK	12,000	(1999) 2,495.7	UK’s largest bus and rail company 30 subsidiaries
3	First Group Plc		UK		(1999) 2,371.8
4	National Express Group		UK		Group: 2,195.1 Buses & Coaches: 592
-	Eurolines					Europe’s largest scheduled coach operator
-	Greyhound South-Africa
*Asia/Pacific*
-	DelGro Corporation		Singapore		482.7 Bus operations: 69
-	Greyhound Australia		Australia
-	Transit Regency Bus Coaches		Australia			South Australia’s premier bus and coach co.
*Tour Operators*
-	Gray Line Worldwide					Tour Operator
-	Trafalgar Tours					Tour Operator
-	Skylink Tours		India			Tour Operator

Category: Cruise Lines

Profile

Cruise lines enable vacationers to embark on an adventure that unfolds amidst the beauty and charms of the seas, aboard a luxurious ocean liner. The package usually includes a stay in luxurious suites and cabins, dining on gourmet cuisine, entertainment by top-quality performers, accessibility to a pool, salon, library, cinema, casino, duty-free boutiques and the list goes on. The length of a cruise package could vary from a weekend getaway to several months in the high seas. The cruise lines cater to an International customer base, who can do their bookings through a travel agent, consolidator or directly with the cruise company. The customer must pre pay the cruise charges which may or may not include the port charges.

Trends

The cruise business is totally dominated by US citizens. About 80-90% of the passengers are Americans. There is a lot of activity within the European Union and the Baltic market is also expected to grow. There is a growing emphasis on ‘value for money’, which a cruise voyage provides in good measure. According to the 1999 benefits study conducted by CLIA (Cruise

Lines International Association, an organization representing the North American Cruise Industry), cruise sales among CLIA-affiliated travel agencies accounted for 50% of all vacation sales. Referrals are the primary source for cruise business (92%), followed by direct mail. Seven-day cruises are the most popular.

Major Players

#	Group*	HQ	Cruise Lines	No. of Ships	Destinations	Market Share	1998 Sales in US$ Mil
1	Carnival Corporation	Florida, U.S.A.	Carnival Cruise Lines, Holland America Line, Windstar Cruise Line	25	Alaska, Caribbean, Europe, Mexico, South Pacific	35%	3,009
2	Royal Caribbean Cruises Ltd.	Florida, U.S.A.	Celebrity Cruises, Royal Caribbean International	16	Alaska, Canada, Caribbean, Europe, Scandinavia	25%	2,636
3	Star Cruises PLC NCL Holding ASA	Singapore Oslo, Norway	95% ownership of Norwegian Cruise Line Norwegian Cruise Line, Orient Lines, Norwegian Capricorn Line	11 10	Asia-Pacific destinations Alaska, Antarctica, Australia, Bermuda, Canada, Caribbean, Europe, Hawaii, New Zealand, South America	- 10%	392 (1999) 770
4	Princess Cruises Inc.	California, U.S.A.	-	-	Africa, Alaska, Caribbean, Mediterranean, South America	16%	-
-	Royal Olympic Cruises Ltd.	Piraeus, Greece	-	6	Mediterranean, Europe, Central and South America	-	121

Category: Hotels & Resorts

Profile

Hotels develop, manage, own, operate and offer lodging facilities under two tiers: full service and limited service. Within these tiers are motels, economy hotels and inns, mid-range hotels, quality hotels, luxury hotels, extended-stay lodging and time-share vacation companies. Resorts provide recreation and entertainment to vacationers and are usually all-inclusive. Most resorts are specialised – beach resorts, fishing resorts, golf resorts, casino resorts, etc. About 60% of the lodging industry rooms are affiliated with a national or regional brand. The chains are either hotel property owners or hotel franchisers, with a significant international presence. These rooms are aimed at corporate travellers as well as vacationers, who can do their bookings directly with the hotel, through a travel agent, CRS or on-line. The customer can either pre-pay the lodging charges or settle them at the end of his stay, though a minimum payment credit card guarantee is required.

In the case of some hotel chains, the marketing and sales function is outsourced to outside organisations. For example, Leading Hotels of the World is the prestigious sales, marketing and reservation organisation representing 315 of the world’s luxury hotels.

Trends

Worldwide, the hotel industry makes about $41 billion. In the US alone, there are 3.8 million hotel and motel rooms on 49,000 properties. A booming trade in globe-trotters helped boost international profits as well as revenues, even though the industry remained fiercely competitive. It is going through a merger and acquisition boom with chains preferring to buy other properties as it is a lot cheaper to buy than to build. There is a trend of link-ups and alliances to ensure synergies in terms of geography and complementarity of businesses, as well as offer wider range of services and facilities. Extended-stay hotels, which cater to people staying five or more nights, are the hottest category: The number of rooms has risen 60% since 1991.

Major Players: Hotels

Group*	~~1.1.1.1.2~~1.1.1.1.1 HQ	Brand Names	Type of Hotel	Number of Locations	1998 Sales in US$ Mil	Additional Comments
Starwood Hotels & Resorts Worldwide	New York, USA	St. Regis, The Luxury Collection, Westin, Sheraton, W, Caesars World, Four Points	Upscale full service, business traveller hotels	700	4,700	#1 lodging company
Marriott International Inc.	Maryland, USA	Courtyard, Marriott, Ramada International, Ritz-Carlton, Fairfield Inn, SpringHill Suites,	Mid-priced, economy, extended stay, full-service, luxury	1,900	7,968	Operates food and related supplies distribution service
Cendant Corporation	New York, USA	Days Inn, Howard Johnson, Ramada Inn	Middle and economy priced hotels	6,000	5,284	Owns world’s #1 time share exchange service (Resort Condominiums International)
Choice Hotels International, Inc.	USA	Comfort Inn, Clarion, Quality Inn	Middle and economy priced hotels	4,100	165	#2 franchiser
Accor	Evry, France	IBIS, Sofitel, Novotel, Mercure, Motel 6, Red Roof Inns, ETAP Hotel, Formule Hotel	Economy, business and leisure hotels	3,170	6,566	Owns 50% of world’s largest travel agency – Carlson Wagonlit
Bass PLC	London, UK	Holiday Inn, Crowne Plaza, Intercontinental	All types	2,700	6,220	Britain’s 5^th largest hotel group
Hyatt Corporation	Chicago, USA	-	Business and upscale destination oriented vacationers	190	3,400 (1999)	-
Hilton Hotels Corporation	Beverly Hills, USA	-	-	275	1,769
Raffles International Limited	Singapore	Raffles, Raffles Merchant Court, Raffles Resorts	Deluxe and Landmark hotels	13	-	-
Shangri-La Hotels	Hong Kong	Shangri-La	Upscale full service	37	-	- all hotels in Asia/Pacific
Hong Kong & Shanghai Hotels	Hong Kong	The Peninsula Hotels	5-star upmarket, city hotels	9	-	- 5 properties in Asia + 4 in USA
ITC Hotels Ltd	New Delhi, India	Sheraton, Fortune Hotels, WelcomHeritag	Luxury, palaces, mid-price range	33	-	-

* parent company, ownership company

Major Players: Resorts

Group*	HQ	Number of Locations	1998 Sales in US$ Mil	Additional Comments
Club Mediterranee S.A.	Paris, France	120 resort villages in 36 countries + 11 villas	1,512	A cruise ship operator + owns a French tour operator
Vistana, Inc.	Florida, USA	8 time share resorts	234	Subsidiary of Starwood
Boca Resorts, Inc.	Florida, USA	6 luxury resorts + 1 golf resort	387 (1999)	Huizenga controls 98% of Boca

* parent company, ownership company

Category: Car Rental Companies

Profile

Car Rental Companies provide comprehensive automotive transportation and vehicle management solutions with strengths in car rental, vehicle leasing and vehicle management services. The typical car rental customer travels for business or leisure. The rental locations may be company owned, licensed or franchised. Most of the rental companies have subsidiaries that offer liability and auto insurance. The customers can do their bookings directly with the car rental company, through a travel agent, CRS or on-line and can guarantee the payment either when making the reservation or when renting the car.

Trends

The car rental company is going through a period of intense consolidation with changes in ownership or management thereby reflecting the industry’s new emphasis on profitability. The rental companies are also entering into partnerships with airlines and hotels. The companies are also entering into cooperation agreements with other rental companies in terms of geography and to enable exchange of reservations. As car prices, insurance rates, and labour costs continue to climb, rental car companies will operate fewer locations, discontinue discounting, and increase surcharges.

Major Players

Company	HQ	Ownership	Number of Locations	Number of Vehicles	1998 Sales in US$ Mil	Additional Comments
The Hertz Corporation	New Jersey, USA	Ford (81%)	6,000	500,000	4,154	#1 rental company
Avis Rent A Car, Inc.	New York, USA	Cendant Corporation	4,200	1,000,000	2,298	#2 rental company
Avis Europe plc	Berkshire, UK	D’Ieteren (57%)	2,500	81,000	839	#1 rental firm in Europe
Alamo Rent A Car, Inc.	Florida, USA	Auto Nation	550	150,000	1,520	-
National Car Rental System, Inc.	Minnesota, USA	Auto Nation	3,000	250,000	-	-
Dollar Thrifty Automotive Group, Inc.	Tulsa, USA	Dollar Thrifty	1,619	932,000	-	-
Enterprise Rent-A-Car	St. Louis, USA	Enterprise Capital Group	-	370,000	4,180 (owner’s total rev)	Biggest US car rental fleet
Budget Rent-A-Car	Florida, USA	Budget Group	6,400	-	2,616	#2 renter of moving trucks in US
Europcar International	St. Quentin-Yvelines, France	Volkswagen (100%)	In 98 countries	-	-	-Ranked #2 in Europe - 70% of business is corporate
Sixt AG	Pullach, Germany	Erich Sixt (Chairman)	700+	-	2,760	Leader in Germany

Category: Railroads

Profile

Railroad is a form of transportation consisting of mainly freight cars and passenger cars. The scope of our research is limited to passenger transportation. Railroads are primarily used by vacationers who can do their bookings directly with the railway company, through a travel agent or on-line. The traveller pays the transportation charges before commencing his travel.

Trends

Railways have come a long way from being driven by steam-powered engines in the 1800s to high speed passenger trains, such as the bullet and TGV trains, developed in the 1980s in France, Germany and Japan. In most countries other than the U.S., railways have long been nationalised or heavily subsidised by the Government, but in the 1990s there was a movement towards privatisation and reduction of subsidies in several West European countries. Railways are facing strong competition from airlines. Europe’s rail companies are pushing to keep pace with the airlines in the race for the wired traveller. 15 of Western Europe’s 16 national operators meet customers on-line, as do most commuter rail companies and the 2 major cross border ventures, Eurostar and Thalys.

Major Players

Area	Company	HQ	Ownership	1998 Revenues in US$ Mil	Passengers Transported	Related T&T Activities
N. Am.	VIA Rail Amtrak	Montreal, Canada Washington, DC, USA	- National Railroad Passenger Corp	200 2,285	3.8 mil p.a. 21 mil p.a.	- -
Eur.	Eurostar	UK	Eurostar UK, SNCF France, SNCB/NMBS Belgium	-	-	-
	SNCF	France	State Owned French Railway Co.	10.92 bil	-	-
	Deutsche Bahn AG	Frankfurt, Germany	State Owned German Railway Co.	18,011	-	-
	Trans-Siberian Railway	Russia	State Owned	-	-	-
Asia	East Japan Railway Co.	Tokyo, Japan	-	20,851 (1999)	16.5 mil daily	-
	West Japan Railway Co.	Osaka, Japan	-	1.2 bil (1999)	-	-
	Guangshen Railway Co. Ltd	Guangdong, China	State Enterprise owned (70%)	235	25 mil p.a.	-
	Tranz Rail Holdings Ltd.	Wellington, New Zealand	Wiconsin Central Transportation Corpn. (25%)	292	-	-
	Indian Railways	India	State Owned	5.3	11 mil daily	-

Category: Ferry Operators

Profile

Ferry Operators transport passengers and vehicles (cars, coaches, trucks and trains) on domestic coastlines, inter-island or international seas. In addition, the main companies provide a wide range of other services such as freight, logistics, port operations etc. The scope of our research is limited to passenger transportation. There are synergies with cruises in serving the leisure end of the market and more specifically in areas such as customer services, purchasing of supplies, crewing, training and relations with shipyards. Combined rail & ferry service is particularly common in Europe.

Check-in time is commonly 30-60 minutes and tickets should be purchased in advance, either through travel agency or directly with ticket office. Some larger ferries offer restaurants, boutiques, children’s playroom, cinema, currency exchange and meeting facilities.

The largest multi-purpose ferry in the world can carry 2,600 people aboard 17 decks.

Trends

· Fast ferries

· The growth of the developing and newly industrialised economies has reduced western industrialised nations' share of world shipping, as it has their share of other industries. Changing patterns of world seaborne trade have shifted the geographical focus of growth towards different trading routes, in particular those to, from and within the Far East.

Major Players

#	Company	HQ	Fleet (vessels)	1998 Sales in US$ Mil	Additional Comments
1	P&O The Peninsular and Oriental Steam Navigation Company	London, UK		9,813	# 1 in UK Ferries, cruises and ports are core activities. Established in 1835
2	Nippon Yusen Kabushiki Kaisha	Tokyo, Japan		8,104	Passenger ships, cargo and warehousing.
3	Stena Line AB	Göteborg, Sweden	26	973.2	10.4 mil pax/year
4	Finnlines Group	Helsinki, Finland	21 (80)	681.8	German subsidiary: Poseidon Schiffahrt AG
5	BC Ferries	Vancouver Canada	40	264.9	21.4 mil pax/year
-	Grimaldi Group				#1 in Italy #6 in the world
-	Cenargo International Group
-	Washington State Ferries	Washington, USA	27		25.6 mil pax/year
-	DFO Deutsche Fährgesellschaft Ostsee	Germany			Largest ferry operator in Germany
-	Silja Line	Finland			First large shipping company in the world to be awarded ISO Environment Certification
-	Brittany Ferries	UK
-	Moby Line	Corsica	13
-	Sydney Harbor Ferries	Sydney, Australia	27
-	China (18 ports)

Category: Travel Insurance

Profile

Travel insurance companies provide travellers with superior protection and insurance during their travel. They take care of the travel insurance needs, from overseas medical and dental expenses, through to a comprehensive range of insurance benefits and services to cover the travel inconveniences a traveller may encounter during his trip. These include any or all of the following – trip cancellation and interruption, default by a travel provider, trip delays, medical expenses, emergency medical transportation, lost or damaged luggage. The coverage can be on a per trip basis or on an annual basis. Travel insurance must be bought and paid for by the traveller before commencing his trip. The insurance fee is typically a daily charge and varies with the age of the traveller. The insurance brokers act as go-betweens for insurance buyers and sellers, arranging for clients the most suitable insurance with the most appropriate insurers.

Trends

Traditionally, the insurance industry was regulated by the individual states, which oversaw rates, coverage and cancellation requirements, and settlement provisions. U.S. Insurance companies, like all financial companies, are increasingly internationalised. Throughout the 1980s and 1990s, the insurance industry, like many other industries has consolidated through mergers and acquisitions. Insurance companies face increasing competition on their own turf as banks broaden their range of services. in the 1990s, Japan passed the U.S. as the world’s largest insurance market.

Major Players

Rank	Company	HQ	Revenues in US$ Mil	Risk Coverage in	Additional Comments
9	American International Group, Inc. (AIG)	New York, USA	3.77 bil	130 countries	US’s largest underwriter of commercial and industrial coverages
10	Royal & Sun Alliance	London, UK	24,988	130 countries	UK’s largest general insurer
-	Travel Guard International	USA	-	-	-
-	Smart Cover	Australia	-	-	-
-	Universal Travel Protection Insurance	USA

Category: Airports

Profile

Airports provide airlines with the infrastructure to handle passenger, cargo, freight and mail. Its purpose is to provide high levels of safety and security, customer service and business operations to passengers, tenants and employees ensuring the airport is a gateway and valuable business enterprise for the city. Airports are the gateways to and from the cities and countries they serve and are responsible for all aspects of airport operations such as terminal management (the buildings, passenger services and cargo) and airfield management (the runways, aprons and taxiways). Priority is ensuring safety and security of passengers in airport environment. They also manage the commercial facilities at the airport including shops, restaurants, pubs, car hire, car parks, duty-free (which may also be operated by subsidiary companies). Their main source of revenue is landing fees, parking fees, building and land rentals, passenger facility charges (PFCs), etc.

Trends

There is an increase in the number of passengers passing through most airports (average in Europe 7.5% at the top 10 airports). Growth rate of cargo traffic is lower than passenger traffic. Brussels has the highest growth figures (8.6%), a result of the airport’s strong position on the relatively fast growing express market. Nearly every airport is faced with the problem of poorer punctuality as a result of capacity problems in the European air space. Adjusting noise zones and allowing selective growth of air transport movement so that fewer dwellings around airports are affected by noise pollution, i.e., noise measurements are starting to play a key role. Another recent trend to comply with restrictions on night flights, has been to move air traffic to newly built airports on artificial islands. The aviation industry views the offshore option as more realistic once continued growth at current location has reached its maximum aircraft movement level. Privatization of airports is now a worldwide trend. It is becoming necessary to remain competitive and to gain access to the capital market so that it can finance future activities and make the enterprise move efficient.

Major Players

Rank	Airport	Owned by	Managed by	Total Passengers Mil	1998 Revenue US$ Mil	Airlines Served
1	Atlanta Hartsfield	City of Atlanta	Dept of Aviation	73	236	52
2	Chicago O’Hare	City of Chicago	Chicago Airport Systems	72	444	50
3	Los Angeles	City of L.A.	L.A. World Airports	61	-	-
4	London Heathrow	British Airport Authority	British Airport Authority	61	3160 (1999)	-
6	Frankfurt	Flughafen FRA/Main AG	Flughafen FRA/ Main AG	43	-	125
9	Paris Charles de Gaulle	Government of France	Aeroports de Paris	39	1,413	364
11	Amsterdam Schiphol	Schiphol Group	Schiphol Group	34	NLG 569
16	New York John F Kennedy	City of New York	Port Authority of NY and NJ	31	-	-
23	Hong Kong	Hkg Government	Airport Authority	28	-	60

Segment #5: Travel/Tourism Experience

Category: Amusement & Theme Parks

Profile

Amusement parks are commercially operated parks offering various rides for entertainment. A theme park is an amusement park in which the settings are based on a central theme. A majority of the park operators belong to brand-name conglomerate, whose businesses range from movies to beer to snacks. The parks are either ‘regional parks’, which draw the bulk of their visitor base from areas nearby, or ‘destination parks’ which pull visitors from further away. The visitors can either pre-pay the park entry fee and purchase the ticket from a travel agent or a tour operator, or pay the fee and purchase the ticket on-site.

Trends

The amusement park business is booming and a lot of investors are looking for leisure ideas. The park operators are having a ‘phenomenal year’ with significant increase in season pass sales and attendance. Parks themselves are beginning to chip in their share to ride the wave of interest. A recent study showed that for the first time in five years, the cost of going to a park has declined for a family of four. A recent trend is to offer customers with a special promotion through an alliance with a business partner.

Major Players

Group*	HQ	Amusement & Theme Parks	Type of Park	Revenues US$ Mil 1999	Other T&T Related Products
The Walt Disney Company	Burbank, USA	Walt Disney World, Disneyland	Destination Parks	6.1billion	Disney Cruise Line, Disney Resorts
Seagram Company Ltd.	Montreal, Canada	Universal Studios in USA, China, Japan; Universal Studios Port Aventura in Spain, Wet ‘n Wild in USA	Destination Parks	5 billion	Universal Studios Escape Resorts, Universal Studios Vacations (Travel Co)
Euro Disney S.C.A.	Cedex, France	Disneyland Paris Resort	Destination Park	1053	Includes 7 themed hotels, theme park, Disney Village Entertainment, Golf Centre
PremierParks, Inc.	Oklahoma, USA	Six Flags, Walibi, Waterworld, White Water	Regional Parks	814	-
Tokyo Dome Corporation	Tokyo, Japan	Tokyo Dome stadium surrounded by Big Egg City (an amusement park)	Regional Park	981	Hotels and resorts
Cedar Fair, L.P.	Ohio USA	6 amusement parks in USA	Seasonal (winter prone Parks)	420	Hotels
ViaCom Inc.	New York, USA	Paramount’s Parks in USA and Canada	Regional Parks	21.1 billion (from all ViaCom business)	-
Anheuser-Busch Companies, Inc.	USA	11 adventure parks in USA including SeaWorld	Regional Parks	450	-

Attachment C8

IATA Information Technology Services

Attachment C8 – IATA Information Technology Services

IATA employs 73 IT staff world-wide.

Karin GEBERT

Senior Director, Information Technology Services

IATA

Ms. Karin Gebert is the Senior Director Information Technology Services (ITS) in IATA, reporting to Vice President Corporate Services and CFO. Ms. Gebert graduated with a Bachelor of Computer Science from the University of Sherbrooke (Quebec, Canada). During her career she has worked in the areas of banking, police computer services and IATA. This included areas of software development, project management, general IT management and developing IT strategies to meet IATA's business needs.

Ms. Gebert's department is responsible for all areas of information technology in IATA, including infrastructure, telecommunications & networks, systems & operations, applications development and IT strategy & architecture. Ms. Gebert is Secretary to the Information Technology Steering Committee and the Information Management Committee. As Secretary to the Information Technology Steering Committee, she is also responsible for developing IT strategies based on IATA's developing business requirements.

She manages a team of IT professionals in Montreal, Geneva, Singapore, London, Miami and Beijing. In addition to managing full IT services in the main offices, she is also responsible for providing infrastructure strategy and services to over 80 field offices.

Attachment C9

IATA Business Standards & Ethics Guidelines

Attachment C.9 - IATA BUSINESS STANDARDS & ETHICS GUIDELINES

Introduction

The object of these guidelines is to set out IATA’s Corporate Policy regarding the business standards and ethics that the personnel of IATA must follow in their relations with:

(a) other employees;

(b) our Members;

(d) suppliers, and;

(e) the community in general.

These guidelines are consistent with IATA’s Mission and Goals.

We must all respect the basic guidelines set out in this document. Failure to observe these guidelines may give rise to disciplinary action.

Written policies are not enough, however, I also count on the good judgement of all employees to ensure that both the spirit and letter of these guidelines are respected.

Pierre J. Jeanniot o.c. Director General

01 May 2000

IATA Policy Guide

IATA EXPECTATIONS & REQUIREMENTS

IATA expects its employees to carry out their responsibilities in a professional and ethical manner in accordance with applicable laws.

IATA expects its employees to pay due respect to the customs and practices of other people.

IATA requires integrity from its personnel. Every employee’s behaviour must be of a standard such that it will not undermine the Association’s reputation or compromise the ability of employees to carry out their duties. To help meet these standards, all employees shall act in accordance with the following guidelines:

Equal Opportunity

IATA is an equal-opportunity employer. In all aspects of employment, no regard shall be given to race, colour, religious belief, sex, age or national/ethnic origin.

Conflict of Interest

Employees have a primary professional obligation and a duty of loyalty to IATA. Accordingly employees must avoid direct or indirect conflicts of interest.

Employees must avoid any act or omission which may prejudice, or be seen to prejudice, impartiality of decisions made on behalf of the Association. All questions regarding possible conflict of interest should be referred to the appropriate Division Head or to an Ombudsman.

Acceptance of Gifts

Acceptance of a gift or favour by an employee can prejudice the Association’s interests by affecting the employee’s judgement or by creating an unfavourable impression. The same is true regarding the offering of gifts or favours.

Employees shall use prudence in relations with suppliers of goods and services to IATA, and ensure that their independent judgement will not be influenced or impaired in any way by the acceptance or grant of any benefit.

Only gifts of nominal value may be personally accepted or given.

External Professional Activities

Prior authorisation in writing from the employee’s Division Heads shall be obtained before undertaking any external professional activity, including other employment, other consulting work or directorship.

IATA Business Standards and Ethics Guidelines

Financial Interests

Employees must avoid engaging in any financial transaction which could undermine, or be perceived as undermining, the impartiality of decisions relating to IATA. Impartiality could be compromised if a close relative (such as a spouse, common-law spouse, co-habitant or dependant) directly or indirectly owns an interest in a business that is a competitor to the Association or deals with the Association.

An interest not exceeding 5% of the capital shares of a public company shall not be deemed to be the basis for a conflict.

Employment of Relatives

Relatives of employees are eligible for employment with the Association, and thereafter for promotions or transfers within the Association, if no first-level or second-level supervisory relationship exists between them.

Confidential Information

IATA considers the protection of confidential information and trade secrets of utmost importance Employees shall not disclose, any confidential or other information relating to the affairs of the Association.

Relations with Members

IATA Members are our “shareholders” and our clients. Each employee must treat them with respect and respond professionally to their needs.

In conjunction with the activities of the Association, IATA Members may provide employees with information that they do not want divulged. Such information must be treated as confidential and should not be given out without the Member’s permission.

Contacts with the Media

Requests for information from the media or any other source which falls outside the scope of the ordinary duties of an employee should be referred immediately by the employee to their immediate superior or the Member Relations & Communications Division, as may be appropriate.

Accounting Procedures

Procedures relating to financial commitments, expenditures and the reimbursement of personal expenses are set out in the Business Travel Regulations and in the Accounting Policy and Procedures Manual.

IATA Policy Guide

Contractual Arrangements with Outsiders

No individual employee shall have the right to commit the Association financially or legally at any time. All contracts shall have a Contract Clearance Form duly completed and signed in accordance with the Accounting Policy and Procedures Manual. The same procedure shall apply for all Purchase Orders.

Antitrust Compliance

Antitrust and competition laws regulate the way in which businesses compete. Among other things, they govern how competitors may conduct joint activities. IATA’s activities involve the participation and co-operation of airlines that compete with one another, often market and sell services to the same customers, and often purchase supplies from the same vendors. For this reason familiarity with, and awareness of, the possible implications of the antitrust laws is essential for IATA employees.

In approving the updated IATA Antitrust/Competition law Compliance Guide (2nd edition 1994), the Board of Governors, recognised that an express policy of compliance with competition law, together with an awareness of the need to comply, on the part of IATA Members and staff, will assist in reducing exposure to investigations and lawsuits. Employees must familiarise themselves with the contents of the Guide, apply its Guidelines, and consult the Legal Department whenever a particular situation may be unclear.

Use of Information Technology and Internet

The storage of data on computers and the use of the Internet is governed by a continually evolving body of national law and, in certain cases, may expose the owner, sender and his employer to criminal and/or civil action. In order to reduce the risk of such exposure, IATA has developed an Internet Acceptable Use Policy (IAUP) and all IATA employees must adhere to this policy

Application of Guidelines

Should any employee have a question regarding the application of these guidelines on the part of other employees, the employee is urged to discuss the issue with the appropriate Division Head, IATA Ombudsman or the Chief Auditor

PERIODIC DECLARATION

In order to ensure that employees are aware of the business standards and ethics expected of them, an Employee Declaration shall be completed periodically.

A copy of this declaration is reprinted below.

EMPLOYEE DECLARATION

BUSINESS, STANDARDS & ETHICS

GUIDELINES

IATA Corporate Policy

IATA’s Guidelines for Business Standards and Ethics set out the requirements for IATA personnel with respect to their relations with other employees, Members, clients, suppliers and the community in general.

This is to confirm that I have read the IATA Guidelines and am aware of the standards of conduct that are expected from all IATA employees. I further recognise that failure to conform to these Guidelines can result in severe disciplinary measures.

NAME __________________________________________________________________________

DIVISION: ________________________________________________________________

DATE: ________________________________________________________________________

SIGNATURE: __________________________________________________________________________

This form should be signed and returned to Bill Twinn, Senior Director, Human Resources, IATA Geneva. If you have any questions, please contact an IATA Ombudsman or the Chief Auditor.

Attachment C12.A

IATA Audited Financial Statements

Attachment C12.A – IATAAudited Financial Statements

Deloitte & Touche, llp

Chartered Accountants

1 Place Ville-Marie
Suite 3000
Montréal QC H3B 4T9

Telephone: (514) 393-7115

Facsimile: (514) 390-4104

Auditors' report

To the Members of

International Air Transport Association

Montréal, Canada

We have audited the consolidated balance sheet of International Air Transport Association as at December 31, 1999 and the consolidated statements of revenue and expenditure, surplus and cash flow for the year then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Association as at December 31, 1999 and the results of its operations and changes in its cash flow for the year then ended in accordance with the International Accounting Standards.

Chartered Accountants

May 5, 2000

Montréal, Canada

Page 1 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Consolidated statement of revenue and expenditure

year ended December 31, 1999

(expressed in 000's of US dollars)

1999 1998

$ $

Revenue

Training sales 10,781 8,654

Product and service sales 117,023 108,379

Financial income 10,451 10,185

138,255 127,218

Expenditure

Salaries and employee benefit plans 82,961 77,500

Travel and accommodation 12,800 9,924

Office services 15,479 13,425

Printing and distribution 51,893 53,551

Data processing 39,421 36,465

Depreciation and amortization 8,357 7,081

Other expenditure 33,506 29,119

Financial charges 4,715 4,164

Taxes 795 1,014

Unrealised foreign exchange (gain) loss on long-term debt (3,584) 1,661

Other foreign exchange (gain) (1,609) (20)

244,734 233,884

Excess of expenditure over revenue before

Members’ contributions (106,479) (106,666)

Members’ contributions 110,105 107,109

Excess of revenue over expenditure 3,626 443

Page 2 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Consolidated statement of surplus

year ended December 31, 1999

(expressed in 000's of US dollars)

1999 1998

$ $

Balance, beginning of year

As previously reported 14,747 14,304

Reclassification of surplus (Note 8) (4,987) (4,987)

As restated 9,760 9,317

Cumulative translation adjustment brought forward (2,333) (2,591)

7,427 6,726

Cumulative translation adjustment for the year (896) 258

Excess of revenue over expenditure 3,626 443

Balance, end of year (Note 7) 10,157 7,427

Page 3 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Consolidated balance sheet

year ended December 31, 1999

(expressed in 000's of US dollars)

1999 1998

$ $

(restated)

Assets

Current assets

Cash and term deposits 39,034 32,952

Funds held in trust (Note 4) 460,288 738,838

Membership dues receivable 8,927 18,561

Accounts receivable (Note 4) 221,110 109,857

Inventory (Note 3f) 9,324 11,098

Other current assets 6,849 6,052

745,532 917,358

Fixed assets, net (Note 5) 44,327 45,453

Goodwill 1,230 2,937

Deferred pension asset (Note 12) 6,375 1,051

Other non-current assets 982 3,624

798,446 970,423

Liabilities

Current liabilities

Bank loans and overdrafts 16,333 17,755

Accounts payable (Note 4) 682,544 843,094

Accrued liabilities and deferred income 51,444 55,053

Other current liabilities 5,881 11,271

Current portion of long-term liabilities (Note 6) 792 871

756,994 928,044

Long-term liabilities (Note 6) 31,295 34,952

788,289 962,996

Surplus (Note 7) 10,157 7,427

798,446 970,423

Approved by the Board

....................................................................... Chairman, Chair Committee

....................................................................... Director General

....................................................................... Chief Financial Officer

Page 4 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Consolidated statement of cash flow

year ended December 31, 1999

(expressed in 000's of US dollars)

1999 1998

$ $

(restated)

Operating activities

Excess of revenue over expenditure 3,626 443

Items not affecting cash

Depreciation and amortization 8,357 7,081

Pension credit (1,367) -

Effect of exchange rates on long-term debt (3,584) 1,661

7,032 9,185

Cash provided from (used in) other working capital items

(Decrease) increase in accounts payable (3,363) 18,089

(Decrease) increase in accrued liabilities and deferred income (3,609) 22,206

(Decrease) in other current liabilities (5,390) (1,076)

(Decrease) in current portion of long-term liabilities (79) (135)

Decrease (increase) in membership dues receivable 9,634 (14,827)

Decrease (increase) in accounts receivable 10,110 (19,502)

Decrease (increase) in inventory 1,774 (3,904)

(Increase) decrease in other current assets (797) 828

8,280 1,679

15,312 10,864

Investing activities

Net acquisition of fixed assets (5,524) (12,026)

(Increase) in deferred pension asset (3,957) (531)

Decrease (increase) in other non-current assets 2,642 (2,615)

Effect of exchange rates on foreign assets and liabilities (896) 258

(7,735) (14,914)

Financing activities

Repayment of long-term liabilities (871) (27,883)

Increase in long-term liabilities 798 29,629

(73) 1,746

Trust activities (Note 4)

(Decrease) increase in accounts payable (157,187) (135,620)

(Increase) decrease in accounts receivable (121,363) (9,910)

(278,550) (145,530)

Net cash inflow (outflow) operations 7,504 (2,304)

Net cash (outflow) trust activities (278,550) (145,530)

Cash position, beginning of year 754,035 901,869

Cash position, end of year 482,989 754,035

Cash position comprises cash and term deposits, funds held in trust and bank loans and overdrafts.

Page 5 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

1. Description and legal status of the Association

International Air Transport Association (the "Association") is a non‑governmental organization whose purpose is to represent its members. Its principal objectives are to promote safe, reliable and secure air services and provide a means of collaboration among airlines engaged in international air transport. It provides technical and professional services to its members and sells a range of products and services related to the airline industry and international air transport. It was created by a special act of the Canadian Parliament in 1945 as a not‑for‑profit organization.

2. Basis of consolidation

The consolidated financial statements of the Association include the accounts of all wholly-owned subsidiary companies and IATA's Settlement Systems over which the Association has effective control. The consolidation includes five settlement operations that were not owned by IATA as at December 31, 1999. Negotiations to bring ownership in line with control are continuing and it is anticipated that transfer of ownership of all the consolidated entities will be substantially completed during 2000.

In respect of the IATA Settlement Systems, the consolidated accounts include only those amounts that are recorded in the books of account. This does not necessarily represent the full cost of the system to the members as certain processing costs are passed directly to the members.

During the year the Association entered into a 50% joint venture relating to the publication of air tariffs. The results and assets and liabilities of this joint venture have been proportionately consolidated in the consolidated financial statements.

3. Accounting policies

The financial statements have been prepared in accordance with International Accounting Standards (IAS).

The principal accounting policies are as follows:

a) Fixed assets

Fixed assets are accounted for at the historical cost. Depreciation and amortization are generally computed using the straight‑line method with rates based on estimated useful lives of the assets as follows:

Building 50 years

Furniture and fixtures 5 years

Equipment 1 - 5 years

Leasehold improvementslower of 50 years or terms of the leases

Computer software 2 - 5 years

Page 6 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

3. Accounting policies (cont'd)

b) Goodwill

Goodwill represents the excess of the cost of the investments in International Airline Publication B.V. (IAP) and in The Air Cargo Tariff B.V. (TACT) over the fair value of the net identifiable assets acquired and is amortized over its expected economic useful life of three to five years.

c) Foreign currency

The activities of many of the foreign branches are treated as an integral part to the operations of the Association. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non‑monetary assets and liabilities are translated at historical rates. The Association hedges most of its net foreign expenditure through the use of forward exchange contracts. Hedged foreign currency transactions are translated at the hedged rate of exchange, all other transactions are translated at the average rates for the period. Translation gains or losses are reflected in the statement of revenue and expenditure.

The Association also holds investments in foreign self-sustaining entities. The assets and liabilities of these entities are translated at the closing rate of exchange and revenue and expenditure items are translated at the average rates for the period, the resulting exchange differences are shown in cumulative translation adjustment in the statement of surplus.

d) Capital leases

Assets acquired through capital leases are amortized using the straight‑line method based on the estimated useful lives of the assets. Minimum lease payments reduced by imputed interest are presented as long‑term liabilities.

e) Retirement benefits

The Association offers retirement benefits to various groups of employees based on arrangements adapted to comply with local legislation and agreements. Employees generally contribute to defined benefit plans and pensions are based on the length of service and on the average end‑of‑career salary. The cost, based on actuarial valuations, is charged to revenue and expenditure accounts. When the cost for the year differs from the Association's contribution, an asset or a liability is recorded to reflect the timing difference. The cost of servicing defined contribution plans corresponds to the funding required during the year.

f) Inventory

Inventory is valued at cost less provision for slow moving or obsolete items. In respect of Standard Traffic Documents (STDs) inventory does not include amounts held by agents.

Page 7 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

4. Funds held in trust

There are four main activities under which the Association is holding monies on behalf of third parties. These are:

· The Clearing House, under whose regulations, the liability of the Association to any member arising from clearing transactions is subject to the payment of the balance due by debtor members;

· Air Traffic Control (ATC) Enhancement and Financing which holds funds in trust on behalf of the Air Traffic Control organizations in various countries;

· the IATA Currency Clearance Services (ICCS), whose funds are held in trust on behalf of members for international currency trading; and

· the funds related to the IATA Settlement Systems.

The following amounts are included in receivables and payables in respect of these activities:

	1999		1998
	Receivable $	Payable $	Receivable $	Payable $
Clearing House Members	15,880	42,090	13,801	48,280
Air Traffic Control	1,926	53,266	2,708	37,347
IATA Currency Clearance Services	-	22,823	-	24,406
IATA Settlement Systems	177,140	537,055	69,074	714,388

5. Fixed assets, net

1999 1998

Accumulated

Depreciation

and Net Book Net Book

Cost Amortization Value Value

$ $ $ $

Building 37,972 7,666 30,306 31,060

Furniture and fixtures 9,637 7,261 2,376 3,166

Equipment 15,754 13,147 2,607 2,531

Leasehold improvements 9,742 1,891 7,851 7,564

Computer software 7,942 6,755 1,187 1,132

81,047 36,720 44,327 45,453

Page 8 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

6. Long-term liabilities

1999 1998

$ $

First rank mortgage CHF 30,047,000

(1998: CHF 30,047,000) 18,771 21,876

Second rank mortgage CHF 6,934,000

(1998: CHF 6,934,000) 4,332 5,048

Unsecured loan CAD 6,620,440

(1998: CAD 6,231,639) 4,562 4,057

Medium term loan NLG 2,550,000 - 1,359

Capital lease obligations 1,510 1,965

29,175 34,305

Current portion 792 871

28,383 33,434

Other long-term liabilities 2,912 1,518

31,295 34,952

The First and Second rank mortgages relating to the building in Geneva bear interest at a fixed rate of 4.70% per annum. This interest rate is fixed until June 1, 2003. The mortgages are repayable in semi-annual instalments of CHF 500,000 ($312,363), starting on December 1, 2001.

The unsecured loan of CAD 6,620,440 bears interest at a fixed rate of 6.0% and is repayable in monthly instalments, the final instalment becoming due in January 2009.

The medium term loan is repayable as follows: NLG 150,000 ($68,213) on March 31, 2000 and a final payment of NLG 2,250,000 ($1,023,192) on November 15, 2000. The loan bears interest at LIBOR plus 0.70%. The loan is included in Bank loans and overdrafts in the Balance Sheet as at December 31, 1999.

7. Restricted surplus

The retained earnings of the subsidiary companies are not distributable to the Association. In addition, the surpluses of those IATA Settlement Systems not owned by IATA are considered restricted in their use. Included in surplus are restricted amounts totalling $3,764,000 (1998 - $20,355,000). The significant decrease in the level of restricted surplus arises from a reclassification of most of the IATA Settlement System balances from restricted to free due to the control now exercised over these entities by IATA.

Page 9 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

8. Reclassification of surplus

The opening balances in respect of surplus and accrued liabilities and deferred income have been restated to reflect the reclassification to deferred income of amounts previously reported in surplus. This reclassification has been made in order to match the revenue stream and costs associated with the IATA Settlement Systems activities in respect of the procurement and distribution of Standard Traffic Documents for the airline industry.

The effect of the reclassification is to reduce the 1998 reported surplus, and increase deferred income, by $5,742,000

9. Commitments

The Association has the following rental and equipment lease commitments:

	$

2000	4,902
2001	4,864
2002	4,272
2003	3,185
2004	2,491
Thereafter	33,934

10. Related party transaction

While providing services to the industry, the Association purchases goods and services at market value and recovers costs incurred from its members in the normal course of business.

Page 10 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

11. Financial instruments

The Association does not trade in derivative financial instruments for speculative purposes, but uses them to hedge foreign currency transactions. At December 31, 1999, the Association had the following outstanding exchange contracts for the purchase of foreign currencies:

Average

Nominal rate to

Currency amount Maturity date maturity

Canadian dollars CAD 33,637,000 Monthly 01.01.00 to 31.12.00 1.4744

Swiss francs CHF 51,288,000 Monthly 01.01.00 to 31.12.00 1.4648

Swiss francs CHF 17,287,000 Monthly 01.01.01 to 31.12.01 1.4684

Singapore dollars SGD 7,200,000 Monthly 01.01.00 to 31.12.00 1.6526

Belgium francs BEF 48,000,000 Monthly 01.01.00 to 31.12.00 37.6000

British pounds GBP 4,800,000 Monthly 01.01.00 to 31.12.00 0.6181

The Association is also exposed to credit risk on the outstanding exchange contracts in the event of non‑performance by counterparties. The non‑performance is not anticipated as the Association deals only with highly‑rated financial institutions and manages the concentration of credit risks.

12. Employee benefits

The Association maintains a number of contributory and non-contributory defined benefit plans for a significant proportion of its employees where the benefits are based on the length of service and the end-of-career salary. The Association’s funding policy is to make contributions to the pension plans, as permitted by local legislation, based on actuarial cost methods. The actuarial cost reflects the actuarial assumptions concerning future investment returns based on the fair value of the plan assets, the discount rate, salary projections and future service benefits. Variance between such estimates and actual costs are amortized over the average remaining service lives of the employees estimated at 11 to 13 years. The Association is responsible to adequately fund the plans.

The main assumptions used to calculate the pension credit for accounting purposes for the year are as follows:

Average remaining service life of the group of employees	11 to 13 years
Discount rate	3.0% to 5.5%
Expected rate of return on plan assets	3.5% to 6.0%
Inflation	1.0% to 2.5%
Future salary increases	2.0% to 4.5%

Page 11 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

Employee benefits (con't)

The pension credit for the year includes the following components:

1999

Current service cost 7,746

Interest cost 5,381

Expected return on plan assets (6,701)

Transition amount (7,793)

Pension credit for the year (1,367)

The changes in benefit obligations and in the plan assets for the year are as follows:

1999

Projected obligations

Projected benefit obligation, beginning of year 136,262

Current service cost 8,377

Interest cost 6,834

Plan amendments and changes in assumptions 16,643

Benefits paid (6,904)

Effect of foreign exchange rate change (12,527)

Projected benefit obligation, end of year 148,685

Fair value of assets

Fair value of assets, beginning of year 173,961

Actual return on plan assets 20,662

Employer contribution 3,522

Employees contributions 2,494

Plans expenses (723)

Benefits paid (6,904)

Effect of foreign exchange rate changes (15,696)

Fair value of assets at end of year 177,316

Funded status 28,631

Unrecognized net asset from experience differences (22,256)

Deferred pension asset 6,375

Page 12 of 13

INTERNATIONAL AIR TRANSPORT ASSOCIATION

Notes to the consolidated financial statements

year ended December 31, 1999

(expressed in 000's of US Dollars)

13. Segmented information

For management purposes the Association’s operations are organised under three separate activities, as follows:

· Central Activities, comprising the Association’s traditional membership services activity, financed through membership dues and through the sale of products and services

· IATA Settlement Systems (ISS),

· Subsidiaries, operating a tariff publishing business in the Netherlands, and serving the Passenger and Cargo agent communities in North America

Segment information for these operations is presented below:

Central Activities

ISS

Subsidiaries

1999 1998 1999 1998 1999 1998

$ $ $ $ $ $

Revenue

Members’ contributions 20,678 20,395 88,581 85,902 846 812

Other revenue 100,621 86,937 18,999 20,898 18,635 19,383

Total revenue 121,299 107,332 107,580 106,800 19,481 20,195

Expenditure

Total expenditure 109,061 111,674 116,431 103,889 19,242 18,321

Current year surplus (deficit) 12,238 (4,342) (8,851) 2,911 239 1,874

Balance Sheet

Current assets 155,905 151,033 578,311 756,459 11,316 9,866

Non-current assets 48,493 45,937 2,369 2,969 2,053 4,159

Total assets 204,398 196,970 580,680 759,428 13,369 14,025

Current liabilities 167,688 170,966 581,080 749,566 8,735 8,267

Long-term liabilities 29,451 32,364 1,845 1,309 - 1,279

Surplus (deficit) 7,260 (6,360) (2,245) 8,553 4,634 4,479

Total liabilities & equity 204,399 196,970 580,680 759,428 13,369 14,025

Working Capital

Surplus (deficiency) (11,783) (19,933) (2,769) 6,893 2,581 1,599

Attachment C12.B

Pro Forma Initial Budget

Attachment C12.B – Pro Forma Initial Budget

Estimated 10% Confidence level

Pro Forma Initial Budget	Prep. + Y1 Ops	Y2 Operating	Y3 Operating	Y4 Operating
all $ figures in US$

Pricing
Applications (Accreditation Process)
Global Applicants (one-time)	$500	$500	$500	$500
Domestic Applicants (one-time)	$100	$100	$100	$100
Subscriptions (per TLDomain name)
Global Domain Services (annual)	$500	$400	$300	$200
Domestic Domain Services (annual)	$100	$90	$80	$70
Discounts
Renewal & Volume discounts	n/a	-30%	-30%	-30%

Market Size
Total Eligible Market (Applicants)	675,000	702,000	730,080	759,283
Total Eligible Market ("20 Names")	13,500,000	14,040,000	14,601,600	15,185,664
Total Growth Rate		4.0%	4.0%	4.0%
Global Sector ("international")	21%	23%	26%	30%
Global Eligible Market	141,750	161,460	189,821	227,785
Domestic Sector ("non-international")	79%	77%	74%	70%
Domestic Eligible Market	533,250	540,540	540,259	531,498

Penetration
Global Penetration	13.0%	29.25%	43.88%	57.04%
Global Growth Rate	100.0%	125.0%	50.0%	30.0%
Domestic Penetration	4.0%	14.00%	31.50%	47.25%
Domestic Growth Rate	100.0%	250.0%	125.0%	50.0%
Total Market Penetration	8.5%	21.6%	37.7%	52.1%

Domain Applications
Global	18,428	28,800	36,057	46,639
Domestic	21,330	54,346	94,506	80,951
Accredited Applicants
Global	13,821	21,600	27,043	34,979
Domestic	19,197	48,911	85,055	72,856
Accredited Names (New)
Global (5 names per applicant)	65,648	102,598	128,452	166,151
Domestic (1 name per applicant)	18,237	46,465	80,803	69,213
Accredited Names (Renewals)
Global Renewals	0	62,366	159,834	281,864
Domestic Renewals	0	13,678	48,527	109,129
Cumulative Totals
Global	65,648	164,964	288,286	448,015
Domestic	18,237	60,143	129,330	178,342
Active Domains	83,885	225,107	417,616	626,358

Staff
Management	6	6	8	8
Administration Support	10	19	28	27
Technical Support	3	6	6	6
Sales & Marketing	3	3	3	3
Quality Assurance & Accreditation	80	166	261	255
Customer Support & Service	10	10	10	10
Total Staff	111	210	316	310

Estimated 10% Confidence Level


FINANCIAL PROJECTIONS


Cash Inflow
Financing
Capital Investment/Loan	$10,000,000	($4,000,000)	($3,000,000)	($3,000,000)
Accreditation
Global Applicants	$9,213,750	$14,399,775	$18,028,413	$23,319,485
Domestic Applicants	$2,133,000	$5,434,560	$9,450,605	$8,095,127
Subscription/Renewal
Global Domain Services	$6,564,797	$13,197,117	$17,297,189	$17,920,608
Domestic Domain Services	$1,823,715	$5,412,902	$10,346,372	$12,483,962
Discounts on Global Names	$0	($1,496,774)	($2,877,013)	($3,382,366)
Discounts on Domestic Names	$0	($369,302)	($1,164,647)	($2,291,709)
Total Cash Inflow	$29,735,262	$32,578,278	$48,080,919	$53,145,108


Cash Outflow
Personnel & Related Costs	$10,282,263	$13,667,095	$20,368,488	$19,967,183
Office Infrastructure	$2,184,998	$3,147,290	$4,742,075	$4,643,978
Awareness & Education Support	$2,000,000	$1,000,000	$500,000	$500,000
Accreditation Fees	$1,677,702	$4,502,146	$8,352,323	$12,527,150
Registrar Fees	$1,136,763	$1,628,914	$2,404,046	$2,657,255
Advisory Board Costs	$1,000,000	$500,000	$500,000	$500,000
Audit and Control Costs	$1,000,000	$1,000,000	$1,500,000	$1,500,000
Technical Fees
Development	$3,000,000	$1,000,000	$500,000	$500,000
Operating	$1,000,000	$1,000,000	$1,000,000	$1,500,000
ICANN (Registry)	$250,000	$250,000	$250,000	$250,000
Maintenance (Registry)	$100,000	$100,000	$100,000	$100,000
Per Domain (Registry)	$503,311	$1,350,644	$2,505,697	$3,758,145
Consulting Fees	$1,000,000	$500,000	$500,000	$500,000
Legal Fees (Contracts/Arbitration)	$2,000,000	$1,000,000	$1,000,000	$1,500,000
Financing Costs	$1,120,000	$800,000	$480,000	$240,000
Other Expenses	$892,058	$977,348	$1,442,428	$1,594,353
Total Cash Outflow	$29,147,094	$32,423,438	$46,145,056	$52,238,065

Annual Cash Surplus/(Deficit)	$588,168	$154,840	$1,935,863	$907,043

Reserve (Working Capital)	$352,084	$371,504	$1,339,435	$1,792,957
Contributions Fund
- Special Projects Funding (see Note)	$352,084	$371,504	$1,339,435	$1,792,957

Note*: INTERNET Fund for Projects to be decided by .travel Advisory board

Estimated 50% Confidence Level

Pro Forma Initial Budget	Prep. + Y1 Ops	Y2 Operating	Y3 Operating	Y4 Operating
all $ figures in US$

Pricing
Applications (Accreditation Process)
Global Applicants (one-time)	$500	$500	$500	$500
Domestic Applicants (one-time)	$100	$100	$100	$100
Subscriptions (per TLDomain name)
Global Domain Services (annual)	$500	$500	$400	$300
Domestic Domain Services (annual)	$100	$100	$70	$50
Discounts
Renewal & Volume discounts	n/a	-25%	-25%	-25%

Market Size
Total Eligible Market (Applicants)	675,000	702,000	730,080	759,283
Total Eligible Market ("20 Names")	13,500,000	14,040,000	14,601,600	15,185,664
Total Growth Rate		4.0%	4.0%	4.0%
Global Sector ("international")	21%	23%	26%	30%
Global Eligible Market	141,750	161,460	189,821	227,785
Domestic Sector ("non-international")	79%	77%	74%	70%
Domestic Eligible Market	533,250	540,540	540,259	531,498

Penetration
Global Penetration	10.0%	22.50%	33.75%	43.88%
Global Growth Rate	100.0%	125.0%	50.0%	30.0%
Domestic Penetration	3.0%	10.50%	23.63%	35.44%
Domestic Growth Rate	100.0%	250.0%	125.0%	50.0%
Total Market Penetration	6.5%	16.5%	28.7%	39.7%

Domain Applications
Global	14,175	22,154	27,736	35,876
Domestic	15,998	40,759	70,880	60,713
Accredited Applicants
Global	10,631	16,615	20,802	26,907
Domestic	14,398	36,683	63,792	54,642
Accredited Names (New)
Global (5 names per applicant)	50,498	78,922	98,810	127,809
Domestic (1 name per applicant)	13,678	34,849	60,602	51,910
Accredited Names (Renewals)
Global Renewals	0	47,974	122,949	216,818
Domestic Renewals	0	10,258	36,395	81,847
Cumulative Totals
Global	50,498	126,895	221,759	344,627
Domestic	13,678	45,108	96,997	133,757
Active Domains	64,176	172,003	318,756	478,384

Staff
Management	6	6	8	8
Administration Support	8	14	22	21
Technical Support	3	6	6	6
Sales & Marketing	3	3	3	3
Quality Assurance & Accreditation	60	126	197	193
Customer Support & Service	10	10	10	10
Total Staff	90	165	246	241

Estimated 50% Confidence Level


FINANCIAL PROJECTIONS


Cash Inflow
Financing
Capital Investment/Loan	$12,000,000	($3,000,000)	($4,500,000)	($4,500,000)
Accreditation
Global Applicants	$7,087,500	$11,076,750	$13,868,010	$17,938,066
Domestic Applicants	$1,599,750	$4,075,920	$7,087,954	$6,071,345
Subscription/Renewal
Global Domain Services	$5,049,844	$12,689,536	$17,740,707	$20,677,625
Domestic Domain Services	$1,367,786	$4,510,751	$6,789,807	$6,687,837
Discounts on Global Names	$0	($1,199,338)	($2,458,985)	($3,252,275)
Discounts on Domestic Names	$0	($256,460)	($636,917)	($1,023,084)
Total Cash Inflow	$27,104,880	$27,897,159	$37,890,575	$42,599,513


Cash Outflow
Personnel & Related Costs	$8,988,288	$10,935,715	$16,055,600	$15,782,094
Office Infrastructure	$1,868,693	$2,479,619	$3,687,813	$3,620,956
Awareness & Education Support	$2,000,000	$1,000,000	$500,000	$500,000
Accreditation Fees	$1,283,526	$3,440,057	$6,375,122	$9,567,676
Registrar Fees	$1,005,244	$1,394,858	$1,894,529	$2,129,976
Advisory Board Costs	$1,000,000	$500,000	$500,000	$500,000
Audit and Control Costs	$1,000,000	$1,000,000	$1,500,000	$1,500,000
Technical Fees
Development	$3,000,000	$1,000,000	$500,000	$500,000
Operating	$1,000,000	$1,000,000	$1,000,000	$1,500,000
ICANN (Registry)	$250,000	$250,000	$250,000	$250,000
Maintenance (Registry)	$100,000	$100,000	$100,000	$100,000
Per Domain (Registry)	$385,058	$1,032,017	$1,912,536	$2,870,303
Consulting Fees	$1,000,000	$500,000	$500,000	$500,000
Legal Fees (Contracts/Arbitration)	$2,000,000	$1,000,000	$1,000,000	$1,500,000
Financing Costs	$1,120,000	$960,000	$720,000	$360,000
Other Expenses	$813,146	$836,915	$1,136,717	$1,277,985
Total Cash Outflow	$26,813,954	$27,429,181	$37,632,317	$42,458,990

Annual Cash Surplus/(Deficit)	$290,926	$467,978	$258,258	$140,522

Reserve (Working Capital)	$203,463	$379,452	$508,581	$578,842
Contributions Fund
- Special Projects Funding (see Note)	$203,463	$379,452	$508,581	$578,842

Note*: INTERNET Fund for Projects to be decided by .travel Advisory board

Estimated 90% Confidence Level

Pro Forma Initial Budget	Prep. + Y1 Ops	Y2 Operating	Y3 Operating	Y4 Operating
all $ figures in US$

Pricing
Applications (Accreditation Process)
Global Applicants (one-time)	$500	$500	$500	$500
Domestic Applicants (one-time)	$100	$100	$100	$100
Subscriptions (per TLDomain name)
Global Domain Services (annual)	$500	$500	$490	$450
Domestic Domain Services (annual)	$100	$100	$90	$90
Discounts
Renewal & Volume discounts	n/a	-10%	-10%	-10%

Market Size
Total Eligible Market (Applicants)	675,000	702,000	730,080	759,283
Total Eligible Market (“20 Names”)	13,500,000	14,040,000	14,601,600	15,185,664
Total Growth Rate	0.0%	4.0%	4.0%	4.0%
Global Sector (“international”)	21%	23%	26%	30%
Global Eligible Market	141,750	161,460	189,821	227,785
Domestic Sector (“non-international”)	79%	77%	74%	70%
Domestic Eligible Market	533,250	540,540	540,259	531,498

Penetration
Global Penetration	7.0%	15.75%	23.63%	30.71%
Global Growth Rate	100.0%	125.0%	50.0%	30.0%
Domestic Penetration	2.0%	7.00%	15.75%	23.63%
Domestic Growth Rate	100.0%	250.0%	125.0%	50.0%
Total Market Penetration	4.5%	11.4%	19.7%	27.2%

Domain Applications
Global	9,923	15,507	19,415	25,113
Domestic	10,665	27,173	47,253	40,476
Accredited Applicants
Global	7,442	11,631	14,561	18,835
Domestic	9,599	24,456	42,528	36,428
Accredited Names (New)
Global (5 names per applicant)	35,349	55,245	69,167	89,466
Domestic (1 name per applicant)	9,119	23,233	40,401	34,607
Accredited Names (Renewals)
Global Renewals	0	33,581	86,064	151,773
Domestic Renewals	0	6,839	24,263	54,564
Cumulative Totals
Global	35,349	88,827	155,231	241,239
Domestic	9,119	30,072	64,665	89,171
Active Domains	44,467	118,898	219,896	330,410

Staff
Management	6	6	8	8
Administration Support	6	10	15	15
Technical Support	3	6	6	6
Sales & Marketing	3	3	3	3
Quality Assurance & Accreditation	41	85	133	131
Customer Support & Service	10	10	10	10
Total Staff	69	121	176	173

Estimated 90% Confidence Level


FINANCIAL PROJECTIONS


Cash Inflow
Financing
Capital Investment/Loan	$14,000,000	$0	($4,000,000)	($10,000,000)
Accreditation
Global Applicants	$4,961,250	$7,753,725	$9,707,607	$12,556,646
Domestic Applicants	$1,066,500	$2,717,280	$4,725,302	$4,047,564
Subscription/Renewal
Global Domain Services	$3,534,891	$8,882,675	$15,212,656	$21,711,506
Domestic Domain Services	$911,858	$3,007,168	$5,819,834	$8,025,404
Discounts on Global Names	$0	($335,815)	($843,432)	($1,365,956)
Discounts on Domestic Names	$0	($68,389)	($218,371)	($491,080)
Total Cash Inflow	$24,474,498	$21,956,644	$30,403,597	$34,484,084


Cash Outflow
Personnel & Related Costs	$7,694,313	$8,204,334	$11,742,712	$11,597,005
Office Infrastructure	$1,552,388	$1,811,948	$2,633,552	$2,597,935
Awareness & Education Support	$2,000,000	$1,000,000	$500,000	$500,000
Accreditation Fees	$889,350	$2,377,969	$4,397,920	$6,608,202
Registrar Fees	$873,725	$1,097,832	$1,520,180	$1,724,204
Advisory Board Costs	$1,000,000	$500,000	$500,000	$500,000
Audit and Control Costs	$1,000,000	$1,000,000	$1,500,000	$1,500,000
Technical Fees
Development	$3,000,000	$1,000,000	$500,000	$500,000
Operating	$1,000,000	$1,000,000	$1,000,000	$1,500,000
ICANN (Registry)	$250,000	$250,000	$250,000	$250,000
Maintenance (Registry)	$100,000	$100,000	$100,000	$100,000
Per Domain (Registry)	$266,805	$713,391	$1,319,376	$1,982,461
Consulting Fees	$1,000,000	$500,000	$500,000	$500,000
Legal Fees (Contracts/Arbitration)	$2,000,000	$1,000,000	$1,000,000	$1,500,000
Financing Costs	$1,120,000	$1,120,000	$1,120,000	$800,000
Other Expenses	$734,235	$658,699	$912,108	$1,034,523
Total Cash Outflow	$24,480,814	$22,334,173	$29,495,848	$33,194,329

Annual Cash Surplus/(Deficit)	($6,316)	($377,529)	$907,749	$1,289,754

Reserve (Working Capital)	$54,842	($191,923)	$261,952	$906,829
Contributions Fund
- Special Projects Funding (see Note)	$54,842	($191,923)	$261,952	$906,829

Note*: INTERNET Fund for Projects to be decided by .travel Advisory board

Travel & Tourism Definition

Travel & Tourism Segmentation

Travel Distribution Chain

Segment #4: Support Facilities

Profile

Trends

Major Players

Profile

Trends

Major Players

North America

Profile

Trends & Statistics

Major Players

Profile

Trends

Major Players

Additional Comments

operates in 45 countries

operates in 100 countries

Europe accounts for 60% of bookings; 25% owners: AF, IB, LH

Joint venture DL, NW, TWA;

operates in 60 countries

Joint venture with Sabre

Profile

Trends

Major Players

1.1.1.1.1 Executive Jet

Europe

Category: Motor Coach Operators

Profile

Trends

Major Players

Europe

Profile

Trends

Major Players

Profile

1.1.1.1.21.1.1.1.1 HQ

Major Players: Resorts

Profile

Trends

Major Players

Profile

Profile

Trends

Major Players

Profile

Trends

Major Players

Profile

Trends

Major Players

Profile

Trends

Major Players

IATA

Introduction

PERIODIC DECLARATION

1. Description and legal status of the Association

2. Basis of consolidation

3. Accounting policies

4. Funds held in trust

5. Fixed assets, net

6. Long-term liabilities

7. Restricted surplus

8. Reclassification of surplus

9. Commitments

10. Related party transaction

11. Financial instruments

12. Employee benefits

Employee benefits (con't)

13. Segmented information

Europe accounts for 60% of bookings;
25% owners: AF, IB, LH