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Seats
Weekly
RT
Avg
pax/month
Pax/yr
RTx2 156 2 1,352 16,224
RTx3 156 3 2,028 24,336
MVD-BOG-MEX basic passengers traffic analysis

FOR AIR TANGO

CONFIDENTIAL


1. PURPOSE AND SCOPE OF THIS DOCUMENT

This study analyzes the air route Montevideo-Bogota and Bogota-Mexico to validate or discard the
statements and assumptions in the Preliminary Financial Projections presented by Tango for the
referred route.

The methodology for the analysis is based in the use of public information sources, cross checking
figures from different sources to get the most accurate possible approximation and then confronting
these figures against the ones in the financial projections.

The scope of this document is the basic analysis of this route for 2 scenarios: 2 weekly round trips
and other with 3 weekly round trips, using both an A320-200 configured with 156 seats (total).


2. BASIC STATEMENTS AND HYPOTHESIS

In this document scenario 1 (2 weekly round trips) will be referred as RTx2 and scenario 2 (3 weekly
round trips) will be referred as RTx3.


Capacity to be added by Tango to this route:



That is, flying twice a week MVD-BOG-MEX Tango would add 1,352 passengers (pax) per month to
the route, that could also be seen as the combination of: MVD-MEX + MVD-BOG + BOG-MEX, and of
course, the corresponding reverse trips.

Flying 3 times a week the number is 2,028 passengers per month.

Or, yearly = 16.224 (for 2 flights per week) and 24.336 (for 3 flights per week).

STATEMENT # 1: Tango will add between 16.224 and 24.336 passengers per year in this route *
* Computed as round trip, that is, the seat is counted as 1 in a round trip

HYPOTHESIS # 1 (TO CHECK): The market can absorb the extra number of seats.
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3. CURRENT FIGURES IN THESE ROUTES

According to the different sources the traffic from-and-to Uruguay corresponding to Colombians and
Mexicans is as follow:



a) MVD-MEX & MEX-MVD by Mexicans

Mexicans account for about 20,000 visitors a year (the number in the chart is below but corrected
weighting different sources result in the 20 thousands figure). This number has descended a bit over
the years, but is currently stable.

b) MVD-BOG & BOG-MVD by Colombians

This number has been growing over the years, accounting currently for about 30,000 visitors, yearly.

c) MVD-MEX / MEX-MVD / MVD-BOG / BOG-MVD by Uruguayans

Uruguays outbound tourism has growth a little over the last few years, and companies in Uruguay
also generate a portion of traffic to the mentioned countries (with personnel working abroad and
executives traveling to these markets).

Plus, Mexico is one the main tourism destinations of the world, with significant growth projections
for coming years, and Colombia is also a tourism destination, that is trying to grow through
investment and promotion.

The current number of Uruguayans traveling to Mexico and Colombia is about 12,000 (in a
conservative estimation).

a + b + c) 20,000 + 30,000 + 12,000 = 62,000

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d) BOG-MEX & MEX-BOG

Considering the 5
th
freedom that allows Tango to pick passengers in this leg (BOG-MEX and vice
versa) this route has to be analyzed separately.

This is a route traveled by about 130,000 persons per month; with some peaks to make a total of
almost 2,000,000 persons per year.

So, the big picture looks like this:


Then, to check the hypothesis #1 we should check if Tango can capture between16.224 and 24.336
passengers per year in MVD-BOG and the same number in BOG-MEX.

HYPOTHESIS # 1.1: The market can absorb between 16.224 and 24.336 passengers per
year between Montevideo and Bogota (MVD-BOG).

HYPOTHESIS # 1.2: The market can absorb between 16.224 and 24.336 passengers per
year between Bogota and Mexico (BOG-MEX).


4. ANALYSIS

HYPOTHESIS # 1.1


The market share to conquer looks high, but then considering the single most important competitive
advantage of Tango in this leg, we can conclude is achievable:

Tango will be the only airline traveling this leg directly, with a non-stop flight.

Residents in Flying to *
MVD-BOG BOG-MEX
Uruguay Colombia MVD-BOG 30,000
Uruguay Mexico MVD-MEX 20,000 20,000
Colombia Uruguay BOG-MVD 4,000
Mexico Uruguay MEX-MVD 8,000 8,000
Colombia Mexico BOG-MEX 126,000
Mexico Colombia BOG-MEX 172,000
TOTAL 62,000 326,000
* and vice versa
Flight leg
Use flight
MVD-BOG
RTx2 RTx3
Current traffic (RT pax) 62,000 62,000
Capacity added by Tango 16,224 24,336
% market share to capture 26% 39%
SCENARIO
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As a precedent, when TACA started flying MVD-LIM (Lima, Peru) it took that and more than that
market share, currently being the # 1 option to fly that route (also generating new traffic not existing
before the addition of this flight).

And, last but not least, a short poll was made among executives of companies usually flying to
Colombia and they confirmed their interest and need for this route.


HYPOTHESIS # 1.1


FEASIBLE (70% CONFIDENCE INDEX)

Then, remains HYPOTHESIS # 1.2

The market share to conquer in this case is much smaller, but, on the other hand, this is a much
more competitive scenario.

A closer look to this leg shows that NOT all the passengers would board in Bogota, because part of
this traffic is generated in Montevideo (MVD-MEX). Then following the relation between
Mexican/Colombian visitors to Uruguay we could assume 70% of the seats would be refreshed with
new passengers in Bogota.

With that math, the numbers look like this:


That is, the real % of market share to be achieved is smaller (only 3% to 5%).

Currently, Mexico and Colombia are connected with flights of Avianca, Copa Airlines Colombia and
Aeromexico, plus Interjet that just added its flights to this market.

So, there are 3 established companies operating the route, and 1 new just starting.

Then, again, we had to check competitive advantages and strategies to be used by Tango:

Both Colombian (1) and Mexican (2) airlines have been contacted and are interested in
participating in this route with Tango. That could be implemented through business
alliances, marketing alliances, shared flight codes or other kind of agreements.

2 of these companies are in the above mentioned group of airlines already flying this route.



BOG-MEX 70%
(% pax turnover in BOG) RTx2 RTx3
Current traffic (RT pax) 326,000 326,000
Capacity added by Tango 11,357 17,035
% market share to capture 3% 5%
SCENARIO
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Upon this, validation of 2
nd
hypothesis would also be positive:


HYPOTHESIS # 1.2


FEASIBLE (80% CONFIDENCE INDEX)*
* Given the possibility of agreements mentioned by Tango steering team


5. CONCLUSION


Figures used in the preliminary financial projections provided by Tango are a valid hypothesis.



A last word on this: The whole study just considered the traffic between the directly involved
countries (Mexico, Colombia, Uruguay), but there is a lot of traffic to/from Mexico and Colombia
from/to Argentina and part of this traffic is a potential market to be considered and that would add
part of the projected traffic for Tango.


6. PUBLIC AND PRIVATE SOURCES CONSULTED

Aerocivil (Colombia)
ATAC - Asociacin del Transporte Areo Colombiano
Consejo Nacional Empresarial Turstico Mexico 2011
Diagnstico del Sector Turismo en Mxico
FEDESARROLLO - Centro de Investigacin Econmica y Social - Colombia
Instituto Nacional de Migracin
InterVISTAS-EU Consulting Inc.
Migracin Colombia
Ministerio de Turismo - Uruguay
Oficina Asesora de Planeacin - Colombia
Secretara de Comunicaciones y Transportes Mexico
Secretara de Turismo - Ciudad de Mexico
Secretara General de la Comunidad Andina
SECTUR - Mexico
SIOM Mexico
Phone poll to 16 executives in Uruguay, from July 15
th
to July 26
th
, 2013




MVD-BOG-MEX basic passengers traffic analysis FOR AIR TANGO
Version 1.0 - August 2
nd
, 2013

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