TravelSky Technology Limited — Proxy Solicitation & Information Statement 2007

Dec 9, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, stock broker, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in TravelSky Technology Limited , you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(Stock Code: 0696)

CONTINUING CONNECTED TRANSACTIONS: RENEWAL OF THE SHANDONG AIRLINE SERVICES AGREEMENT AND

THE SICHUAN AIRLINE SERVICES AGREEMENT AND NOTICE OF EGM

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 1 to 8 of this circular. A letter from the Independent Board Committee is set out on page 9 of this circular. A letter from China Merchants containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 10 to 20 of this circular.

A notice convening the EGM to be held at Conference Room 1907, Floor 19, South Wing, Park C, Raycom InfoTech Park, No.2 Ke Xue Yuan South Road, Haidian District, Beijing, People’s Republic of China at 11:00 a.m. on Friday, 25 January 2008 is set out on pages 29 to 30 of this circular. Whether or not you intend to be present at the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed on it to the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Ltd. at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not prevent you from attending, and voting at, the EGM or any adjournment thereof if you so wish.

10 December 2007

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
LETTER FROM CHINA MERCHANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29

— i —

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“2006 Circular”	the Company’s circular dated 7 April 2006 in relation to, among other
	things, the Shandong Airline Services Agreement and the Sichuan Airline
	Services Agreement
“2006 EGM”	the extraordinary general meeting of the Company held on 25 May 2006
“Annual Caps”	the respective annual caps under the Renewed Shandong Airline Services
	Agreement and the Renewed Sichuan Airline Services Agreement
“associate(s)”	have the same meaning ascribed to it under Chapters 1 and 19A of the
	Listing Rules
“Board”	the board of the Directors
“Bonus Issue”	the bonus issue of 888,157,500 new ordinary shares at par value of RMB1
	per share to the Shareholders on the basis of one bonus share for one
	existing share, which was approved by the Shareholders at the Company’s
	annual general meeting and classing meetings held on 5 June 2007
“CAAC”	中國民用航空總局(General Administration of Civil Aviation of China),
	the administrative authority in the civil aviation industry in the PRC
“China Merchants”	China Merchants Securities (HK) Co., Ltd., the independent financial adviser
	to the Independent Board Committee and the Independent Shareholders and
	a corporation licensed to carry on Type 1 (dealings in securities), Type 2
	(dealings in futures contracts), Type 4 (advising on securities), Type 6
	(advising on corporate finance) and Type 9 (asset management) regulated
	activities under the SFO
“Company”	TravelSky Technology Limited, a company incorporated under the laws of
	the PRC whose Shares are listed on the Stock Exchange and whose American
	depositary shares are traded on the over-the-counter market in the United
	States
“Continuing Connected	the transactions contemplated under the Renewed Shandong Airline Services
Transactions”	Agreement and the Renewed Sichuan Airline Services Agreement
“Directors”	the directors of the Company

— ii —

DEFINITIONS

“EGM”	extraordinary general meeting of the Company convened to be held on
	Friday, 25 January 2008 for the purpose of approving the Continuing
	Connected Transactions and the Annual Caps by the Independent
	Shareholders, and the notice of which is set out on pages 29 to 30 of this
	circular
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Board	the independent board committee of the Company established by the
Committee”	Company which comprises Yick Wing Fat, Simon, Yuan Yaohui and Chua
	Keng Kim to advise the Independent Shareholders in respect of the
	Continuing Connected Transactions and the Annual Caps
“Independent Shareholders”	the Shareholders, other than Shandong Airlines, Sichuan Airlines and their
	respective associates
“Latest Practicable Date”	6 December 2007, being the latest practicable date prior to the printing of
	this circular for the purpose of ascertaining certain information for inclusion
	in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Percentage Ratios”	the percentage ratios, other than the profits ratio and equity capital ratio,
	under Rule 14.07 of the Listing Rules as calculated on an annual basis
“PRC”	the People’s Republic of China
“Renewed Shandong Airline	the Shandong Airline Services Agreement which on 1 November 2007,
Services Agreement”	Shandong Airlines and the Company agreed to renew for a term of one year
	from 1 January 2008 to 31 December 2008
“Renewed Sichuan Airline	the Sichuan Airline Services Agreement which on 14 November 2007,
Services Agreement”	Sichuan Airlines and the Company agreed to renew for a term of one year
	from 1 January 2008 to 31 December 2008
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

— iii —

DEFINITIONS

• “Shandong Airlines” Shandong Airlines Company Limited (山東航空股份有限公司), a promoter of the Company and the B shares in the capital of which are listed on the Shenzhen Stock Exchange

“Shandong Airline the agreement dated 5 November 2004 entered into between Shandong Services Agreement” Airlines and the Company in relation to the Technology Services for a term of three years from 1 January 2005 to 31 December 2007

• “Sichuan Airlines” Sichuan Airlines Company Limited (四川航空股份有限公司), a subsidiary of Sichuan Air Group Company (四川航空集團公司) which is a promoter of the Company

• “Sichuan Airline the agreement dated 26 January 2005 entered into between Sichuan Airlines Services Agreement” and the Company in relation to the Technology Services for a term of three years from 1 January 2005 to 1 January 2008

• “Share(s)” H share(s) of RMB1.00 each in the capital of the Company

• “Shareholder(s)” shareholder(s) of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

“Technology Services” various aviation information technology services and ancillary support to be provided by the Group to Shandong Airlines and Sichuan Airlines as set out in the paragraph headed “Continuing Connected Transactions” in the Letter from the Board in this Circular “%” per cent

For the purpose of this circular, unless otherwise indicated, the exchange rate at HK$1 = RMB0.96 has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amount have been, could have been or may be exchanged.

— iv —

LETTER FROM THE BOARD

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(Stock Code: 0696)

Directors: Zhu Yong (Chairman) Zhu Xiaoxing Ding Weiping Song Jinxiang Wang Quanhua # Luo Chaogeng # Gong Guokui # Rong Gang # Sun Yongtao # Liu Dejun # Xia Yi # Song Jian # Yick Wing Fat, Simon ## Yuan Yaohui ## Chua Keng Kim ##

Registered office: Raymon InfoTech Park No. 2 Ke Xue Yuan South Road Haidian District, Beijing 100080 PRC

• # Non-executive Directors

• ## Independent non-executive Directors

10 December 2007

To the Shareholders

Dear Sir/Madam

CONTINUING CONNECTED TRANSACTIONS: RENEWAL OF THE SHANDONG AIRLINE SERVICES AGREEMENT AND THE SICHUAN AIRLINE SERVICES AGREEMENT AND NOTICE OF EGM

1. BACKGROUND

As set out in the Company’s announcement dated 19 November 2007, the Company and Shandong Airlines and Sichuan Airlines agreed to renew the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement for one year on 1 November 2007 and 14 November 2007 respectively. The transactions contemplated under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement constitute the Continuing Connected Transactions for the Company.

— 1 —

LETTER FROM THE BOARD

The Directors propose to seek the Independent Shareholders’ approval for the Continuing Connected Transactions and the Annual Caps at the EGM.

The purposes of this circular are to provide you with, among other things, (i) further details of the Continuing Connected Transactions; (ii) a letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders on the Continuing Connected Transactions and the Annual Caps; (iii) the recommendation of the Independent Board Committee regarding the Continuing Connected Transactions and the Annual Caps to the Independent Shareholders; and (iv) a notice of the EGM to consider and if thought fit, pass the resolutions to approve the Continuing Connected Transactions and the Annual Caps.

2. CONTINUING CONNECTED TRANSACTIONS

Background

As set out in the 2006 Circular, the Company entered into (1) the Shandong Airline Services Agreement with Shandong Airlines on 5 November 2004 for a term of three years from 1 January 2005 to 31 December 2007; and (2) the Sichuan Airline Services Agreement with Sichuan Airlines on 26 January 2005 for a term of three years from 1 January 2005 to 1 January 2008.

The Company and Shandong Airlines and Sichuan Airlines agreed to renew the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement for one year on 1 November 2007 and 14 November 2007 respectively. As disclosed in the 2006 Circular, the renewal clauses contained in the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement provide that the said agreements shall be renewed for one year respectively unless terminated by parties in writing in advance. Accordingly, the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are each of a term of one year only.

There are no prior transactions between the Company and Shandong Airlines or Sichuan Airlines which would require to be aggregated with the Continuing Connected Transactions under Rule 14A.25 of the Listing Rules.

Particulars of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are set out below:

Renewed Shandong Airline Services Agreement

Date : 1 November 2007 Parties : The Company (as provider of the Technology Services); and Shandong Airlines (as recipient of the Technology Services). Term : 1 January 2008 to 31 December 2008

— 2 —

LETTER FROM THE BOARD

Renewed Sichuan Airline Services Agreement

Date

: 14 November 2007

Parties : The Company (as provider of the Technology Services); and Sichuan Airlines (as recipient of the Technology Services). Term : 1 January 2008 to 31 December 2008

The services to be provided by the Company under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are same as those under the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement, including but not limited to:

• (i) flight control system services which provide, among other services, the consolidated information, flight formation, flight control, flight tickets sales, automatic tickets sales and announcement of freight price;

• (ii) electronic travel distribution system services which provide, among other services, flight information display, real-time flight reservation, automatic tickets sales, tickets price display and other travel-related services;

• (iii) airport passenger processing system services which provide check-in, boarding and load planning services; and

• (iv) civil aviation and commercial data network services which provide, among other services, the network transmission services and connection services.

The service fees for the Technology Services payable by Shandong Airlines and Sichuan Airlines respectively under the Renewed Shandong Airline Services Agreement and Renewed Sichuan Airline Services Agreement are currently determined in accordance with the existing pricing schedule prescribed by CAAC, which is same as the one disclosed in the Company’s prospectus dated 29 January 2001.

In accordance with CAAC’s prescribed prices, depending on the types of system through which the transactions are processed, Shandong Airlines and Sichuan Airlines are required to pay the Company a per passenger booking fee for domestic routes ranging from RMB4.5 to RMB6.5 depending on the monthly booking volume and for international and regional routes ranging from RMB6.5 to RMB7.

— 3 —

LETTER FROM THE BOARD

In addition, the fees payable by Shandong Airlines and Sichuan Airlines to the Company for the services include (i) fees for each boarding passenger handled by the airport passenger processing system up to maximum allowable price of RMB7 for international and regional routes and up to a maximum of allowable price of RMB4 for domestic routes depending on the types of the route, volume, level of services etc., (ii) load balancing fees for each flight handled by the airport passenger processing system up to maximum allowable price of RMB500 depending on the size of the aircraft, and (iii) fees for using the Company’s data network services such as physical identified device (PID) connection fees and maintenance fees depending on type and quantity of equipment at the rate prescribed by CAAC.

The service fees shall be calculated on monthly basis and shall be paid within 30 days after receipt of the invoice by cash. The invoice shall be issued by the Company on the 20th day of each month for the amount charged for the immediately preceding month.

The Directors are of the view that the basis of determination of the service fees mentioned above is fair and reasonable.

3. INFORMATION ON SHANDONG AIRLINES AND SICHUAN AIRLINES

Shandong Airlines is a promoter of the Company and thus a connected person of the Company under Rule 14A.11(3) of the Listing Rules. Sichuan Airlines is a subsidiary of Sichuan Air Group Company, the associate of a promoter of the Company. Accordingly, Sichuan Airlines is also a connected person of the Company under Rule 14A.11(4) of the Listing Rules. Both Shandong Airlines and Sichuan Airlines are principally engaged in airline operation in the PRC.

4. HISTORICAL TRANSACTION RECORDS

Set out below is a summary of the amount of the transactions between Shandong Airlines and the Company under the Shandong Airline Services Agreement, and between Sichuan Airlines and the Company under the Sichuan Airlines Services Agreement respectively for the year ended 31 December 2006 and the nine months ending 30 September 2007 (which is based on the unaudited management accounts of the Company for the nine months ended 30 September 2007);

		Year/period ended
	31 December 2006	30 September 2007
Shandong Airline	RMB31,699,000	RMB25,000,000
Services Agreement	(equivalent to approximately	(equivalent to approximately
	HK$33,019,792)	HK$26,041,667)
Sichuan Airline	RMB60,753,000	RMB52,806,000
Services Agreement	(equivalent to approximately	(equivalent to approximately
	HK$63,284,375)	HK$55,006,250)

— 4 —

LETTER FROM THE BOARD

5. ANNUAL CAPS FOR THE TWO YEARS ENDING 31 DECEMBER 2007

As disclosed in the 2006 Circular, the annual cap of the transactions under the Shandong Airline Services Agreement for the two years ending 31 December 2007 are RMB59,920,000 and RMB77,920,000 respectively; and the annual cap of the transactions under the Sichuan Airline Services Agreement for the two years ending 31 December 2007 are RMB67,410,000 and RMB87,660,000 respectively.

Taking into account the aggregate amount of the transactions carried on pursuant to the Shandong Airlines Services Agreement and the Sichuan Airlines Services Agreement for the nine months ended 30 September 2007 as set out above, the Directors consider that the actual aggregate amount of the transactions under the said two agreements for the year ending 31 December 2007 would not exceed the annual cap for the year ending 31 December 2007 as set out above.

6. ANNUAL CAPS

The respective annual caps for the year ending 31 December 2008 for the transactions under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are RMB45,646,560 (equivalent to approximately HK$47,548,500) and RMB102,672,570 (equivalent to approximately HK$106,950,594) are determined by reference to (i) the historical transaction amounts between Shandong Airlines and the Company under the Shandong Airline Services Agreement and between Sichuan Airlines and the Company under the Sichuan Airline Services Agreement for the year ended 31 December 2006 and the nine months ended 30 September 2007; and (ii) the estimated growth of the transaction volume taking into account of the anticipated growth of the China’s aviation and travel industry as well as the increasing frequency of business trips. The Directors estimate that (i) the Continuing Connected Transactions under the Renewed Shandong Airline Services Agreement will increase by about 15% to 20% per annum and 20% is used in determining the amount of the annual caps of such transactions mentioned above; and (ii) the Continuing Connected Transactions under the Renewed Sichuan Airline Services Agreement will increase by about 15% to 30% per annum and 30% is used in determining the amount of the annual caps of such transactions mentioned above.

The Directors are of the view that each of the annual caps under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement in respect of the Continuing Connected Transactions are fair and reasonable.

— 5 —

LETTER FROM THE BOARD

7. REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

The Group is principally engaged in provision of aviation information technology services in the PRC. The provision of the Technology Services to Shandong Airlines and Sichuan Airlines is in the ordinary and usual course of business of the Group.

The Continuing Connected Transactions have been and will be conducted in the ordinary and usual course of business of the Group.

The Directors are of the view that the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) the terms of the Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the shareholders of the Company as a whole.

8. LISTING RULES REQUIREMENTS

Given that both Shandong Airlines and Sichuan Airlines are connected persons of the Company as mentioned above, the Continuing Connected Transactions constitute continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

While none of the Percentage Ratios for the Continuing Connected Transactions on an annual basis exceed 25%, the annual consideration under each of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement will exceed HK$10,000,000. Accordingly, the Continuing Connected Transactions are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The Company will disclose information in relation to the Continuing Connected Transactions in its subsequent published annual report and accounts in accordance with Rule 14A.45 of the Listing Rules.

9. THE EGM

The EGM will be held at Conference Room 1907, South Wing, Park C, Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing, People’s Republic of China at 11:00 a.m. on Friday, 25 January 2008 to consider and, if thought fit, approve, among other matters, the transactions contemplated under the Continuing Connected Transactions and the Annual Caps. Notice of the EGM is set out on pages 29 to 30 of this circular.

— 6 —

LETTER FROM THE BOARD

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you intend to be present at the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed on it to the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Ltd. at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong no later than 24 hours before the time fixed for holding the EGM or any adjournment thereof. Completion and delivery of the form of proxy will not prevent you from attending, and voting at, the EGM or any adjournment thereof if you so wish.

10. VOTING ARRANGEMENTS

Under the Listing Rules, the Continuing Connected Transactions and the Annual Caps are subject to the approval of the Independent Shareholders. Accordingly, Shandong Airline, Sichuan Airlines and their respective associates will abstain from voting on the resolutions to approve the Continuing Connected Transactions and the Annual Caps. As at the Latest Practicable date, Shandong Airlines was interested in 8,697,000 domestic shares of RMB1 each in the issued share capital of the Company, representing about 0.49% of the total issued share capital of the Company while Sichuan Airlines was interested in 3,445,000, domestic shares of RMB1 each in the issued share capital of the Company, representing about 0.19% of the total issued share capital of the Company.

In accordance with Rule 13.39(4) of the Listing Rules, the vote of the Independent Shareholders taken at the EGM to approve the Continuing Connected Transactions and the Annual Caps will be taken by poll, with Shandong Airlines, Sichuan Airlines and their respective associates abstaining from voting. The voting results will be announced after the EGM.

11. POLL PROCEDURE

Pursuant to Article 73 of the Articles of Association of the Company, a resolution put to the vote at a meeting shall be decided on a show of hands unless (before or after the voting on show of hands) a poll is demanded:

• (i) by the chairman of such meeting;

• (ii) by at least two Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (iii) by shareholder(s) of the Company present in person or by proxy(ies) and holding 10% or more Shares conferring a right to vote at the meeting on his/her own or in aggregate.

— 7 —

LETTER FROM THE BOARD

12. RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 9 of this circular and the letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders in connection with the Continuing Connected Transactions and the Annual Caps and the principal factors and reasons considered by it in arriving at such advice set out on pages 10 to 20 of this circular.

The Independent Board Committee, having taken into account the advice of China Merchants, considers that the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole, and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolutions approving the Continuing Connected Transactions and the Annual Caps at the EGM.

13. GENERAL

Your attention is drawn to the general information set out in the appendix to this circular.

Yours faithfully, By order of the Board TravelSky Technology Limited Zhu Yong Chairman

— 8 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Stock Code: 0696)

10 December 2007

To the Independent Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS: RENEWAL OF THE SHANDONG AIRLINE SERVICES AGREEMENT AND THE SICHUAN AIRLINE SERVICES AGREEMENT

We refer to the circular (“ Circular ”) issued by the Company to its shareholders dated 10 December 2007 of which this letter forms part. Capitalised terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to consider the Continuing Connected Transactions. China Merchants has been appointed as independent financial adviser to advise us and the Independent Shareholders in this respect.

We wish to draw your attention to the letter from the Board and the letter from China Merchants set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, China Merchants set out in its letter of advice set out in the Circular, we consider that the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole, and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions approving the Continuing Connected Transactions and the Annual Caps at the EGM.

Yours faithfully, For and on behalf of the

Independent Board Committee

Yick Wing Fat, Simon Yuan Yaohui Chua Keng Kim

Independent non-executive Directors

— 9 —

LETTER FROM CHINA MERCHANTS

The following is the text of the letter of advice from China Merchants to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

48th Floor, One Exchange Square, Central, Hong Kong

10 December 2007

TravelSky Technology Limited Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing 100080, the People’s Republic of China

To: the Independent Board Committee and the Independent Shareholders of TravelSky Technology Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS: RENEWAL OF THE SHANDONG AIRLINE SERVICES AGREEMENT AND

THE SICHUAN AIRLINE SERVICES AGREEMENT

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transactions and the Annual Caps, details of which are contained in the letter from the Board (the “Letter from the Board”) of the circular dated 10 December 2007 (the “Circular”) issued by the Company to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

— 10 —

LETTER FROM CHINA MERCHANTS

As referred to in the Letter from the Board, Shandong Airlines is a promoter of the Company and thus a connected person of the Company under Rule 14A.11(3) of the Listing Rules. Sichuan Airlines is a subsidiary of Sichuan Air Group Company, the associate of a promoter of the Company. Accordingly, Sichuan Airlines is also a connected person of the Company under Rule 14A.11(4) of the Listing Rules. While none of the Percentage Ratios for the Continuing Connected Transactions on an annual basis exceed 25%, the annual consideration under each of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement will exceed HK$10,000,000. As such, the transactions contemplated under each of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement constitute non-exempt continuing connected transactions for the Company under Chapter 14A of the Listing Rules. The Continuing Connected Transactions are subject to the approval by the Independent Shareholders by way of poll at the EGM.

In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to provide you with an independent opinion and recommendation as to whether the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole, and whether the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our advice and recommendation, we have relied on the accuracy of the information and facts supplied, and the opinions expressed by the Group, the Directors and the Group’s management to us. We have assumed that all statements of belief and intention made by the Directors in the Circular were made after due enquiry. We have also assumed that all information, representations and opinion made or referred to in the Circular were true, accurate and complete at the time they were made and will continue to be true at the date of the EGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Group, the Directors and the Group’s management, and have been advised by the Directors that no material facts have been omitted from the information provided by or referred to in the Circular.

In rendering our opinion, we have researched, analyzed and relied on information in relation to the Group and the Continuing Connected Transactions as set out below:

• (i) the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement;

• (ii) the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement;

• (iii) the annual report of the Company for the year ended 31 December 2005;

• (iv) the annual report of the Company for the year ended 31 December 2006;

• (v) the interim report of the Company for the six months ended 30 June 2007;

— 11 —

LETTER FROM CHINA MERCHANTS

• (vi) the 2006 Circular; and

• (vii) the Circular.

We have also researched, analyzed and relied on information as set out below:

• (i) China Statistical Yearbook 2006 (《中國統計年鑑－2006年》) published by the National Bureau of Statistics of China (中華人民共和國國家統計局);

• (ii) the statistics published on the official website of the National Bureau of Statistics of China (中華人 民共和國國家統計局);

• (iii) the article headed “Production statistics report for civil aviation airports in 2006” (《2006年民航機 場生產統計公報》) published on the official website of CAAC on 21 March 2007;

• (iv) the annual report of Shandong Airlines for the year ended 31 December 2004;

• (v) the annual report of Shandong Airlines for the year ended 31 December 2005;

• (vi) the annual report of Shandong Airlines for the year ended 31 December 2006; and

• (vii) the statistics published on the official website of Sichuan Airlines.

We have assumed such information to be accurate and reliable and have not carried out any independent verification on the accuracy of such information. Such relevant information provides us with a basis on which we have been able to formulate our independent opinion.

We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We also consider that we have performed all reasonable steps as required under the Rule 13.80 of the Listing Rules (including the notes thereto) to formulate our opinion and recommendation. We have not, however, conducted any form of in-depth investigations into the business affairs, financial position and future prospects of the Group and the parties to the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement, nor carried out any independent verification of the information supplied, representations made or opinions expressed by the Group, the Directors and the Group’s management.

— 12 —

LETTER FROM CHINA MERCHANTS

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. BACKGROUND

1. Information on the Group

The Group is principally engaged in provision of aviation information technology services in the PRC. As referred to in the annual report of the Company for the year ended 31 December 2006, being a provider of information technology solutions for the China’s aviation and travel industry, the Company is at a core tache along the value chain of China’s aviation and travel service distribution. While the Company provides advanced aviation information technology and related services to the Chinese commercial airlines, it also distributes commercial airlines products and services and provides information technology solutions to travel agents, travel service distributors, ticketing offices, corporate clients and individual consumers.

The Group’s turnover for each of the three years ended 31 December 2006 is set out below:

	Year	ended 31 December	ended 31 December
	2004	2005	2006
	(RMB million)	(RMB million)	(RMB million)
	(Audited)	(Audited)	(Audited)
The Group’s turnover	1,282.9	1,496.8	1,711.7

For the three years ended 31 December 2006, the Group’s audited turnover achieved a compound average growth rate (“CAGR”) of approximately 15.5% per annum. As advised by the Directors, the growth in the Group’s turnover was attributable to (i) the rapid economic growth in the PRC; (ii) the increase of international trade between the PRC and other countries; and (iii) the growing aviation and tourist industries in the PRC.

2. Information on the aviation information technology business of the Group

As advised by the Directors, the Company’s aviation information technology (“AIT”) services, which consist of a series of products and solutions, are provided to Chinese commercial airlines as well as foreign and regional commercial airlines. The AIT services comprise electronic travel distribution service (including Inventory Control System service, Computer Reservation System service) and Airport Passenger Processing service, as well as other extended information technology solutions related to the above core businesses, including but not limited to, data service to support decisions of commercial airlines, product service to support aviation alliance, solutions for developing commercial airlines’ e-ticket and ecommerce as well as information management system to improve ground operational efficiency of commercial airlines and airports. As referred to in the annual report of the Company for the year ended 31 December 2006, the revenue generated from the AIT services in the year ended 31 December 2006 increased by approximately 12.7% to approximately RMB1,395.2 million, which accounted for approximately 81.5% of the Group’s total turnover for that year.

— 13 —

LETTER FROM CHINA MERCHANTS

The Group has been focusing on product lines like seat management, distribution information technology solutions and fare solutions for commercial airlines, and to perfect and improve its AIT and extended services. The Group’s customers include a number of commercial airlines in the PRC.

3. Information on Shandong Airlines and Sichuan Airlines

Set our below is the information on each of Shandong Airlines and Sichuan Airlines:

Entities	Relationship with the Group	Principal activities
Shandong Airlines	Shandong Airlines is one	The provision of passenger,
	of the promoters of the Company.	cargo, mail and other extended
		transportation services in the PRC
Sichuan Airlines	Sichuan Airlines is a subsidiary	The provision of the air passenger,
	of Sichuan Air Group Company,	air cargo and airline-related
	an associate of one of	services in the PRC
	the promoters of the Company.

Set out below is the chart on the audited operating revenue of Shandong Airlines from the year ended 31 December 2003 to the year ended 31 December 2006, as extracted from the audited consolidated financial statements of Shandong Airlines for the corresponding years (which were prepared in accordance with the Generally Accepted Accounting Practices in the PRC):

The audited operating revenue of Shandong Airlines

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RMB
----- End of picture text -----

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==> picture [31 x 81] intentionally omitted <==

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----- Start of picture text -----

Year
----- End of picture text -----

Source: the annual reports of Shandong Airlines for the three years ended 31 December 2006

— 14 —

LETTER FROM CHINA MERCHANTS

Set out below is the chart on the number of passenger traffic of Sichuan Airlines from the year ended 31 December 2003 to the year ended 31 December 2006:

The number of passenger traffic of Sichuan Airlines

Persons

==> picture [32 x 181] intentionally omitted <==

==> picture [33 x 72] intentionally omitted <==

==> picture [32 x 107] intentionally omitted <==

==> picture [32 x 135] intentionally omitted <==

==> picture [32 x 162] intentionally omitted <==

==> picture [18 x 7] intentionally omitted <==

----- Start of picture text -----

Year
----- End of picture text -----

Source: the official website of Sichuan Airlines (based on information extracted therein as at 19 November 2007)

Based on the above, we noted that (i) the audited operating revenue of Shandong Airlines increased from approximately RMB1,723,844,877 for the year ended 31 December 2003 to approximately RMB4,198,152,385 for the year ended 31 December 2006, representing a CAGR of approximately 34.5% per annum; and (ii) the number of passenger traffic of Sichuan Airlines increased from 2,221,933 persons for the year ended 31 December 2003 to 5,881,210 persons for the year ended 31 December 2006, representing a CAGR of approximately 38.3% per annum.

4. Economy and aviation industry in the PRC

Based on the article headed “Production statistics report for civil aviation airports in 2006” 《( 2006年民航機場生產統計公報》) published on the official website of CAAC on 21 March 2007, the number of passenger traffic of the PRC airports (measured by number of passengers) in the PRC increased to approximately 332 million for the year ended 31 December 2006, representing an increase of approximately 16.7% as compared with that for the year ended 31 December 2005.

Based on China Statistical Yearbook 2006 (《中國統計年鑑－2006年》) published by the National Bureau of Statistics of China (中華人民共和國國家統計局) and the statistics published on the official website of the National Bureau of Statistics of China (中華人民共和國國家統計局), from 2000 to 2006, the PRC’s Gross Domestic Product increased from approximately RMB9,921 billion to approximately RMB20,941 billion, representing a CAGR of approximately 13.3% per annum.

— 15 —

LETTER FROM CHINA MERCHANTS

Taking into account (i) the robust growth in the passenger traffic of the aviation industry in the PRC; (ii) the steady growth of the Gross Domestic Product in the PRC; and (iii) the CAGR of the Group’s turnover of approximately 15.5% per annum from the year ended 31 December 2004 to the year ended 31 December 2006, we concur with the Directors’ view that the Group’s turnover will continue to achieve a stable growth in the coming years.

5. The Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement

The AIT services and ancillary support to be provided by the Group under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are the same as those under the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement, including but not limited to:

• (i) flight control system services which provide, among other services, the consolidated information, flight formation, flight control, flight tickets sales, automatic tickets sales, announcement of freight price;

• (ii) electronic travel distribution system services which provide, among other services, flight information display, real-time flight reservation, automatic tickets sales, tickets price display and other travel-related services;

• (iii) airport passenger processing system services which provide check-in, boarding and load planning services; and

• (iv) civil aviation and commercial data network services which provide, among other services, the network transmission services and connection services.

Set out below are the amounts of revenue derived from services provided by the Company to Shandong Airlines and Sichuan Airlines for the year ended 31 December 2006 and the nine months ended 30 September 2007:

			For the
	Year ended	nine months ended
	31 December 2006	30	September 2007
	(RMB)		(RMB)
Revenue derived from services provided
by the Company to Shandong Airlines	31,699,000		25,000,000
Revenue derived from services provided
by the Company to Sichuan Airlines	60,753,000		52,806,000

— 16 —

LETTER FROM CHINA MERCHANTS

As set out in the 2006 Circular, (i) the annual caps for the transactions between Shandong Airlines and the Company contemplated under the Shandong Airline Services Agreement for the year ended 31 December 2006 and the year ending 31 December 2007, which have been approved by the independent Shareholders at the 2006 EGM, are RMB59,920,000 and RMB77,920,000 respectively; and (ii) the annual caps for the transactions between Sichuan Airlines and the Company contemplated under the Sichuan Airline Services Agreement for the year ended 31 December 2006 and the year ending 31 December 2007, which have been approved by the independent Shareholders at the 2006 EGM, are RMB67,410,000 and RMB87,660,000 respectively.

II. THE RENEWED SHANDONG AIRLINE SERVICES AGREEMENT AND THE RENEWED SICHUAN AIRLINE SERVICES AGREEMENT

1. Reasons for and benefits of entering into the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement

As referred to in the Letter from the Board, the Group is principally engaged in provision of AIT services in the PRC. The transactions under the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement had been duly approved by the independent Shareholders at the 2006 EGM.

As referred to in the Letter from the Board, the Company and Shandong Airlines and Sichuan Airlines agreed to renew the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement for one year on 1 November 2007 and 14 November 2007 respectively. As disclosed in the 2006 Circular, the renewal clauses contained in the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement provide that the said agreements shall be renewed for one year respectively unless terminated by parties in writing in advance. Accordingly, the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are each of a term of one year only.

After reviewing the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement, we noted that the IT services provided under such agreement are similar to (i) the core businesses of the Group; and (ii) the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement. In light of the above, we consider that the entering into of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement is in the ordinary and usual course of business of the Group.

— 17 —

LETTER FROM CHINA MERCHANTS

2. The terms of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement

As referred to in the Letter from the Board, the service fees for the Technology Services payable by Shandong Airlines and Sichuan Airlines respectively under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are currently determined in accordance with the existing pricing schedule prescribed by CAAC, which is the same as the one disclosed in the Company’s prospectus dated 29 January 2001. We have discussed with the Directors and were informed that the services fees to be charged by the Group under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement are governed by the aforesaid pricing schedule prescribed by CAAC.

In accordance with CAAC’s prescribed prices, depending on the types of system through which the transactions are processed, Shandong Airlines and Sichuan Airlines are required to pay the Company a per passenger booking fee for domestic routes ranging from RMB4.5 to RMB6.5 depending on the monthly booking volume, and for international and regional routes ranging from RMB6.5 to RMB7.

In addition, the fees payable by Shandong Airlines and Sichuan Airlines to the Company for the services include (i) fees for each boarding passenger handled by the airport passenger processing system up to maximum allowable price of RMB7 for international and regional routes and up to a maximum of allowable price of RMB4 for domestic routes depending on the types of the route, volume, level of services etc.; (ii) load balancing fees for each flight handled by the airport passenger processing system up to maximum allowable price of RMB500 depending on the size of the aircraft; and (iii) fees for using the Company’s data network services such as physical identified device connection fees and maintenance fees depending on type and quantity of equipment at the rate prescribed by CAAC.

In this regard, we have reviewed the services fees to be charged by the Group under the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement, and noted that they are within the respective price ranges prescribed by CAAC. Based on the aforesaid, we consider that the pricing of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement, which is based on the price ranges prescribed by CAAC, is on normal commercial terms and is fair and reasonable so far as the Independent Shareholders are concerned.

Overall, we consider that the terms of the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole.

— 18 —

LETTER FROM CHINA MERCHANTS

III. THE ANNUAL CAPS

Set out below is a summary of (i) the annual caps for each of the Shandong Airline Services Agreement and the Sichuan Airline Services Agreement for the year ended 31 December 2006 and the year ending 31 December 2007; and (ii) the annual caps for each of the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement for the year ending 31 December 2008:

	Year ended	Year ending	Year ending
	31 December 2006	31 December 2007	31 December 2008
	(RMB)	(RMB)	(RMB)
The Shandong Airline Services Agreement	59,920,000	77,920,000	N/A
The Renewed Shandong Airline
Services Agreement	N/A	N/A	45,646,560
The Sichuan Airline Services Agreement	67,410,000	87,660,000	N/A
The Renewed Sichuan Airline
Services Agreement	N/A	N/A	102,672,570

The annual cap for the Renewed Shandong Airline Services Agreement for the year ending 31 December 2008 (the “ 2008 Shandong Airlines Cap ”) represents a decrease of approximately 41% as compared with the annual cap for the Shandong Airline Services Agreement for the year ending 31 December 2007 of RMB77,920,000, and is higher than the revenue derived from the services provided by the Company to Shandong Airlines for the nine months ended 30 September 2007 of RMB25,000,000 by approximately 83%.

The annual cap for the Renewed Sichuan Airline Services Agreement for the year ending 31 December 2008 represents an increase of approximately 17% as compared with the annual cap for the Sichuan Airline Services Agreement for the year ending 31 December 2007 of RMB87,660,000, and is higher than the revenue derived from the services provided by the Company to Sichuan Airlines for the nine months ended 30 September 2007 of RMB52,806,000 by approximately 94%.

We consider that the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned, taking into account:

• (i) the Annual Caps are based on the revenue derived from the services provided by the Company to Shandong Airlines and Sichuan Airlines respectively for the year ended 31 December 2006 and the nine months ended 30 September 2007;

• (ii) the positive outlook of the aviation industry in the PRC;

• (iii) the historical growth in the Group’s turnover;

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LETTER FROM CHINA MERCHANTS

• (iv) the historical growth in the Group’s revenue derived from its AIT services;

• (v) the historical growth in the number of passenger traffic of Sichuan Airlines; and

• (vi) the historical growth in the Group’s revenue derived from services provided by the Company to Shandong Airlines and Sichuan Airlines.

We noted that the 2008 Shandong Airlines Cap represents a decrease of approximately 41% as compared with the annual cap for the Shandong Airline Services Agreement for the year ending 31 December 2007 of RMB77,920,000. Given that the revenue derived from the services provided by the Company to Shandong Airlines for the year ended 31 December 2006 (the “ 2006 Shandong Actual Amount ”) amounted to approximately RMB31,699,000, the 2008 Shandong Airlines Cap is higher than the 2006 Shandong Actual Amount by approximately 44%, which is tantamount to say that the 2008 Shandong Airlines Cap represents a CAGR of approximately 20% per annum as compared with the 2006 Shandong Actual Amount.

Based on the aforesaid, we consider that the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Group and the Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors and reasons, we consider that the Continuing Connected Transactions are (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole, and the Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Group and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Continuing Connected Transactions and the Annual Caps at the EGM.

For and on behalf of

China Merchants Securities (HK) Co., Ltd. Tony Wu Executive Director

— 20 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE IN THE SHARE CAPITAL OF THE COMPANY

As at the Latest Practicable Date, the interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) held by the Directors, supervisor or chief executive of the Company which is required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or any interests required to be entered in the register maintained in accordance with Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules are as follow:

			Percentage to the	Percentage to
	Number and class	Capacity of	corresponding	the total share
Name of Director	of shares	Holder	share capital	capital
	(Note 1)			(Note 2)
Chua Keng Kim	417,000 H shares (L)	Interest of spouse	0.07%	0.02%
	of RMB1 each

Notes:

1. (L) — Long position

2. The percentage to the total share capital is calculated based on the total number of 1,776,315,000 shares in issue of the Company as at 30 June 2007.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisor or chief executive of the Company had any interest or short position in any shares, underlying shares and debentures of the Company or any of its associated corporations (as defined in Part XV of the Ordinance) which is required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or any interests required to be entered in the register maintained in accordance with Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules.

— 21 —

GENERAL INFORMATION

APPENDIX

3. SUBSTANTIAL SHAREHOLDERS

• (a) As at the Latest Practicable Date, as far as it was known to any Directors, supervisors or chief executive of the Company, the following entities (other than the Directors, supervisors or chief executive of the Company disclosed under the paragraph headed “Interests and short positions of Directors, supervisors and chief executive in the share capital of the Company” above) had an interest or short position in the respective class of Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of the respective class of share capital carrying rights to vote in all circumstances at general meetings of the Company:

			Approximate	Approximate
Name of	Class and		percentage of	percentage of
shareholder	no. of		respective class of	total share
	securities	Capacity	xshare capital	capital
	(Note 1)			(Note 2)
OppenheimerFunds, Inc	74,939,000	Investment	12.05%	4.22%
	H shares of	Manager
	RMB1 each (L)
Platinum Investment	5,656,276	Investment	1.82%	0.32%
Management Limited	H shares of	Manager	(Notes 3 and 9)
(Formerly known as	RMB1 each (L)
Platinum Asset
Management Limited)	22,820,650	Trustee	7.34%	1.28%
	H shares of	(other than	(Notes 3 and 9)
	RMB1 each (L)	a bare trustee)
Matthews International	28,239,000	Investment	9.08%	1.59%
Capital Management,	H shares of	Manager	(Notes 4 and 9)
LLC	RMB1 each (L)
J.P.Morgan Fleming	22,199,000	Investment	7.14%	1.25%
Asset Management	H shares of	Manager	(Notes 5 and 9)
(Asia) Inc.	RMB1 each (L)
J.P.Morgan Fleming	22,199,000	Investment	7.14%	1.25%
Asset Management	H shares of	Manager	(Notes 5 and 9)
Holdings Inc.	RMB1 each (L)
JF Asset Management	22,199,000	Investment	7.14%	1.25%
Limited	H shares of	Manager	(Notes 5 and 9)
	RMB1 each (L)

— 22 —

GENERAL INFORMATION

APPENDIX

Templeton Asset	48,835,000	Investment	7.85%	2.75%
Management Limited	H shares of	Manager
	RMB1 each (L)
Plantinum International	15,809,650	Beneficial	5.09%	0.89%
Fund	H shares of	owner	(Notes 6 and 9)
	RMB1 each (L)
China TravelSky	198,496,500	Beneficial	34.38%	22.35%
Holding Company	Domestic shares of	owner
	RMB1 each (L)
	(Note 7)
China Southern Air	116,460,500	Beneficial	20.17%	13.11%
Holding Company	Domestic shares of	owner
	RMB1 each (L)
	(Note 7)
China Eastern Air	109,414,500	Beneficial	18.95%	12.32%
Holding Company	Domestic shares of	owner
(“CE Holding”)	RMB1 each (L)
	(Note 7)
	5,317,000	Interest of	0.46%	0.29%
	Domestic shares of	controlled
	RMB1 each (L)	corporations
	(Note 8)
China National	89,433,500	Beneficial	15.49%	10.07%
Aviation Holding	Domestic shares of	owner
Company	RMB1 each (L)
	(Note 7)

Notes:

• (1) (L) - Long position.

• (2) Percentage of total share capital is based on 1,776,315,000 shares of the total issued share capital of the Company as at the Latest Practicable Date.

• (3) Such percentage is shown in the corporate substantial shareholder notice of Platinum Investment Management Limited declared and dated 11 April 2007 at the latest. As to the knowledge, the information collected and belief of the Directors, they are unable to confirm whether such ratio represents the shareholding ratio of the shareholder after the Bonus Issue. Please also refer to note (9) below.

— 23 —

GENERAL INFORMATION

APPENDIX

• (4) Such percentage is shown in the corporate substantial shareholder notice of Matthews International Capital Management declared and dated 5 August 2005 at the latest. As to the knowledge, the information collected and belief of the Directors, they are unable to confirm whether such ratio represents the shareholding ratio of the shareholder after the Bonus Issue. Please also refer to note (9) below.

• (5) Such percentage is shown in the corporate substantial shareholder notice of this shareholder declared and dated 1 April 2003 at the latest. As to the knowledge, the information collected and belief of the Directors, they are unable to confirm whether such ratio represents the shareholding ratio of the shareholder after the Bonus Issue. Please also refer to note (9) below.

• (6) Such percentage is shown in the corporate substantial shareholder notice of Plantinum International Fund declared and dated 18 April 2007 at the latest. As to the knowledge, the information collected and belief of the Directors, they are unable to confirm whether such ratio represents the shareholding ratio of the shareholder after the Bonus Issue. Please also refer to note (9) below.

• (7) To the knowledge of the directors of the Company, after the Bonus Issue, the number of the domestic shares of the Company held by substantial shareholders, the percentage of such domestic shares to the total domestic share capital and percentage to total share capital are as follows: (i) 396,993,000 domestic shares are held by China TravelSky Holding Company, representing 34.38% of the total domestic shares and 22.35% of the total share capital; (ii) 232,921,000 domestic shares are held by China Southern Air Holding Company, representing 20.17% of the total domestic shares and 13.11% of the total share capital; (iii) 218,829,000 domestic shares are held by CE Holding, representing 18.95% of the total domestic shares and 12.32% of the total share capital; (iv) 178,867,000 domestic shares are held by China National Aviation Holding Company, representing 15.49% of the total domestic shares and 10.07% of the total share capital.

• (8) These shares are held by China Eastern Airlines Corporation Limited (“CE Airlines”). CE Holding is deemed to be interested in the shares held by CE Airlines by virtue of the SFO.

• (9) The Directors are unable to confirm the shareholding of the relevant substantial shareholders because those substantial shareholders have not filed any corporate substantial shareholder notice after the Bonus Issue. Theoretically, the number of Shares held by those substantial shareholders should increase after the Bonus Issue (with the shareholding percentage remain unchanged). However, the Directors cannot exclude the possibility that those substantial shareholders have disposed of any Shares after the Bonus Issue, so that the number of Shares held by those substantial shareholders before and after the Bonus Issue and as at the Latest Practicable Date remain the same. The Directors are also unable to ascertain the shareholding of those substantial shareholders from the register of holders of H Shares of the Company as the information contained therein may not reflect the actual beneficial shareholding of the shareholders (i.e. the registered shareholders may be bare trustee or holding some Shares on behalf of the others and this kind of interest is not required to be disclosed under the SFO).

Save as disclosed herein, there was no person or other entity known to the Directors, supervisors or chief executive of the Company, who, as at the Latest Practicable Date, had an interest or short position in the respective class of Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of the respective class of shares capital carrying rights to vote in all circumstances at general meetings of the Company.

— 24 —

GENERAL INFORMATION

APPENDIX

• (b) So far as is known to the Directors, supervisors or chief executive of the Company, as at the Latest Practicable Date, the following entities (other than the Directors, supervisors or chief executive of the Company disclosed under the paragraph headed “Interests and short positions of Directors, supervisors and chief executive in the share capital of the Company” above) were directly or indirectly interested in 10% or more of the nominal value of the registered capital carrying the rights to vote in all circumstances at the general meetings of the subsidiaries of the Company:

			Approximate
		Registered	percentage of
Name of subsidiary	Name of shareholder	Capital	interest
Hainan Civil Aviation Cares	China Southern Air Holding Company	RMB1,505,000	22.74%
Co., Ltd.	(中國南方航空集團公司)
(海南民航凱亞有限公司)
Cares Hubei Co., Ltd	Wuhan Tinhe Airport Limited	RMB625,000	12.50%
(湖北民航凱亞有限公司)	(武漢天河機場有限責任公司)
Cares Hubei Co., Ltd	Committee of labour union of Wubei Branch	RMB625,000	12.50%
(湖北民航凱亞有限公司)	of China Southern Air Company Limited
	(中國南方航空股份有限公司湖北分公司
	工會委員會)
Cares Hubei Co., Ltd	China Eastern Air Wuhan Limited	RMB625,000	12.50%
(湖北民航凱亞有限公司)	(中國東方航空武漢有限責任公司)
Cares Hubei Co., Ltd	Cares Shenzhen Co., Ltd.	RMB625,000	12.50%
(湖北民航凱亞有限公司)	(深圳民航凱亞有限公司)
Cares Chongqing Information	Air China Limited	RMB2,401,000	24.50%
Co., Ltd.	(中國國際航空股份有限公司)
(重慶民航凱亞信息
技術有限公司)
Cares Chongqing Information	Chongqing Airport (Group) Limited	RMB2,401,000	24.50%
Co., Ltd.	(重慶機場(集團)有限公司)
(重慶民航凱亞信息
技術有限公司)
Aviation Cares of Yunnan	China Eastern Airlines	RMB980,000	49.00%
Information Co., Ltd.	— Yunnan Company
(雲南民航凱亞信息有限公司)	(中國東方航空雲南公司)

— 25 —

GENERAL INFORMATION

APPENDIX

InfoSky Technology Company	Société Internationale de	US$1,225,000	49.00%
Limited	Telecommunications
	Aeronautiques Greater China
	Holdings Limited
Civil Aviation Cares of	Xiamen Airlines Company Limited	RMB1,140,000	28.50%
Xiamen Ltd.	(廈門航空有限公司)
(廈門民航凱亞有限公司)
Civil Aviation Cares of	Xiamen International Aviation	RMB820,000	20.50%
Xiamen Ltd.	Company Limited
(廈門民航凱亞有限公司)	(廈門國際航空港股份有限公司)
Civil Aviation Cares of	Qingdao International Airport	RMB720,000	36%
Qingdao Limited	Company Limited
(青島民航凱亞有限公司)	(青島國際機場集團有限公司)
Civil Aviation Cares of	Shanghai Civil Aviation East China	RMB260,000	13%
Qingdao Limited	Cares System Integration Co., Ltd
(青島民航凱亞有限公司)	(上海民航華東凱亞系統集成有限公司)
Civil Aviation Cares of	Shanxi Airport Management	RMB850,000	17%
Xi’an Ltd.	Group Company
(西安民航凱亞科技有限公司)	(陝西省機場管理集團公司)
Civil Aviation Cares of	China Eastern Airlines	RMB1,600,000	32%
Xi’an Ltd.	Northwest Company
(西安民航凱亞科技有限公司)	(中國東方航空西北公司)
Civil Aviation Cares Technology	China Southern Air Holding Company	RMB735,000	24.50%
of Xinjiang Ltd.	(中國南方航空集團公司)
(新疆民航凱亞信息
網絡有限責任公司)
Civil Aviation Cares Technology	Xinjiang Airport Group	RMB735,000	24.50%
of Xinjiang Ltd.	Company Limited
(新疆民航凱亞信息網絡	(新疆機場集團有限責任公司)
有限責任公司)

Save as disclosed above, as at the Latest Practicable Date and so far as is known to the Directors, supervisors or chief executive of the Company, there was no other entity (other than the Directors, supervisors or chief executive of the Company disclosed under the paragraph headed “Interests and short positions of Directors, supervisors and chief executive in the share capital of the Company” above) who was directly or indirectly, interested in 10% or more of the nominal value of the registered capital carrying rights to vote in all circumstances at the general meetings of any subsidiary of the Company.

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GENERAL INFORMATION

APPENDIX

4. SERVICE AGREEMENT

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into a service agreement with any member of the Group which will not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and there was no litigation or arbitration or claim of material importance known to the Directors to be pending or threatened by or against either the Company or any of its subsidiaries.

6. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, being the date to which the latest published audited financial statements of the Group were made up.

7. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors or China Merchants had any interest, direct or indirect, in any asset which had been since 31 December 2006, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

8. MATERIAL INTEREST IN CONTRACTS

As at the Latest Practicable Date, none of the Directors was materially interested in any contracts or arrangement subsisting as at the date hereof which was significant in relation to the business of the Group.

9. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest in any business apart from the Company’s business which competes or is likely to compete, either directly or indirectly, with the Company’s business.

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GENERAL INFORMATION

APPENDIX

10. EXPERT

China Merchants is licensed under the SFO for Type 1 (dealings in securities), Type 2 (dealings in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities as defined under the SFO. Its letter of advice to the Independent Board Committee and the Independent Shareholders dated as of the date of this circular was given for the purpose of incorporation herein.

China Merchants has given and has not withdrawn its written consent to the issue of this circular with copy of its letter and the reference to its name and its advice included in this circular in the form and context in which they respectively appear.

As at the Latest Practicable Date, China Merchants did not have any shareholding, directly or indirectly, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

11. GENERAL

The English text of this circular shall prevail over the Chinese text in case of inconsistency.

12. DOCUMENT AVAILABLE FOR INSPECTION

Copy of each of the Shandong Airline Services Agreement, the Sichuan Airline Services Agreement, the Renewed Shandong Airline Services Agreement and the Renewed Sichuan Airline Services Agreement will be available for inspection at the offices of Chiu & Partners, 41st Floor, Jardine House, 1 Connaught Place, Central, Hong Kong during normal business hours from the date of this circular up to and including the date of the EGM.

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NOTICE OF EGM

==> picture [416 x 62] intentionally omitted <==

(Stock Code: 0696)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of TravelSky Technology Limited (“ Company ”) will be held at Conference Room 1907, Floor 19, South Wing, Park C, Raycom InfoTech Park, No.2 Ke Xue Yuan South Road, Haidian District, Beijing, People’s Republic of China, at 11:00 a.m. on Friday, 25 January 2008 to consider and, if thought fit, pass with or without amendments, the following ordinary resolutions:

1. “ THAT :

2. (a) the renewal (“ Renewed Shandong Airline Services Agreement ”) of the agreement dated 5 November 2004 (a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for the purpose of identification) and made between the Company and Shandong Airlines Company Limited (山東航空股份有限公司) (“ Shandong Airlines ”) for a term of one year from 1 January 2008 to 31 December 2008 in relation to the provision of the Technology Services (as defined in the circular (“ Circular ”) of the Company dated 10 December 2007 (copy of which has been produced to the meeting marked “B” and signed by the chairman of the meeting for the purpose of identification)) to Shandong Airlines by the Group (as defined in the Circular) and all the transactions contemplated thereby; and

3. (b) the Annual Caps (as defined in the Circular) for the transactions contemplated under the Renewed Shandong Airline Services Agreement for the year ending 31 December 2008 as shown in the Circular,

be and they are hereby approved and that the directors of the Company be and they are hereby authorised to take any step as they consider necessary, desirable or expedient in connection with the Renewed Shandong Airline Services Agreement and the transactions contemplated thereby.”

1. “ THAT :

2. (a) the renewal (“ Renewed Sichuan Airline Services Agreement ”) of the agreement dated 26 January 2005 (a copy of which has been produced to the meeting marked “C” and signed by the chairman of the meeting for the purpose of identification) and made between the Company and Sichuan Airlines Company Limited ( 四川航空股份有限公司 ) (“ Sichuan Airlines ”) for a term of one year from 1 January 2008 to 31 December 2008 in relation to the provision of the Technology Services (as defined in the Circular) to Sichuan Airlines by the Group (as defined in the Circular) and all the transactions contemplated thereby; and

3. (b) the Annual Caps (as defined in the Circular) for the transactions contemplated under the Renewed Sichuan Airline Services Agreement for the year ending 31 December 2008 as shown in the Circular,

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NOTICE OF EGM

be and they are hereby approved and that the directors of the Company be and they are hereby authorised to take any step as they consider necessary, desirable or expedient in connection with the Renewed Sichuan Airline Services Agreement and the transactions contemplated thereby.”

By the order of the Board TravelSky Technology Limited Zhu Yong Chairman

Beijing, the People’s Republic of China, 10 December 2007

Registered office:

Raymon InfoTech Park No. 2 Ke Xue Yuan South Road Haidian District, Beijing 100080 People’s Republic of China

Notes:

1. The register of members of the Company will be closed from 27 December 2007 to 25 January 2008 (both days inclusive), during which no share transfers will be effected. Holders of the Company’s H shares and domestic shares whose names appear on the register of members of the Company at the close of business on 24 December 2007 are entitled to attend the EGM. Transfer documents of the Company’s H shares must be lodged with the Company’s branch share registrar in Hong Kong at or before 4:00 p.m. on 24 December 2007 to entitle the transferee to attend the EGM.

2. A member entitled to attend and vote at the EGM is entitled to appoint one or more than one proxy to attend and vote instead of him. A proxy need not be a member of the Company.

3. To be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be deposited at the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Ltd. at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 24 hours before the time for scheduled for holding the EGM or adjournment thereof.

4. Completion and return of the form of proxy will not preclude a member from attending and voting in person at the EGM or any adjournment thereof. If such member attends the EGM, his form of proxy will be deemed to have been revoked.

5. Shareholders who intend to attend the EGM in person or by proxy should return the reply slip for attending the EGM to the registered address of the Company on or before 4 January 2008 personally or by mail or fax.

6. Since the transactions referred to in the resolutions constitute continuing connected transactions for the Company under Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”), the aforesaid resolutions proposed at the EGM will be voted on a poll pursuant to Rule 13.39(4) of the Listing Rules.

7. As at the date hereof, the board of the directors of the Company comprises:

Chairman: Mr Zhu Yong; Executive Directors: Mr Zhu Xiaoxing, Mr Ding Weiping and Mr Song Jinxiang; Non-executive Directors: Mr Wang Quanhua, Mr Luo Chaogeng, Mr Gong Guokui, Mr Rong Gang, Mr Sun Yongtao, Mr Liu Dejun, Mr Xia Yi and Mr Song Jian; Independent non-executive: Mr Yick Wing Fat, Simon, Mr Yuan Yaohui and Mr Chua Keng Kim.

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