TravelSky Technology Limited - Proxy Solicitation & Information Statement 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 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 10 of this circular. A letter from the Independent Board Committee is set out on page 11 of this circular. A letter from China Merchants, the independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 12 to 25 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, 23 November 2007 is set out on pages 34 to 35 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 October 2007

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM CHINA MERCHANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
APPENDIX - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

— 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 CE Holding Technology Services and Ancillary Support Agreement

“2006 EGM”

the extraordinary general meeting of the Company held on 25 May 2006

“2007 Annual Cap”
the expected maximum amount of fees payable by CE Airlines under the CE Airline Services Agreement for the year ending 31 December 2007
“2008 Annual Cap” the expected maximum amount of fees payable by CE Airlines under the CE Airline Services Agreement for the year ending 31 December 2008
“2009 Annual Cap” the expected maximum amount of fees payable by CE Airlines under the CE Airline Services Agreement for the year ending 31 December 2009
“2010 Annual Cap” the expected maximum amount of fees payable by CE Airlines under the CE Airline Services Agreement for the year ending 31 December 2010
“2011 Annual Cap”
the expected maximum amount of fees payable by CE Airlines under the CE Airline Services Agreement for the year ending 31 December 2011
“Airline Services Promoters”
(i) Hainan Airlines Company Limited (海南航空股份有限公司), (ii) China Eastern Air Wuhan Company Limited (中國東方航空武漢有限責任公司 ), (iii) Shanghai Airlines Company Limited (上海航空股份有限公司), (iv) Shandong Airlines Company Limited (山東航空股份有限公司), (v) Shenzhen Airlines Company Limited (深圳航空有限責任公司),(vi) Sichuan Airlines Company Limited (四川航空股份有限公司), (vii) China Southern Airlines Company Limited (中國南方航空股份有限公司), and (viii)中國國際航空股份有限公司(Air China Limited)
“Annual Caps”

the 2007 Annual Cap, the 2008 Annual Cap, the 2009 Annual Cap, the 2010 Annual Cap and the 2011 Annual Cap

— ii —

DEFINITIONS

“associate(s)”

“Board”

“Bonus Issue”
“CAAC”
“CE Airlines”
“CE Airline Services Agreement”
“CE Holding”
“CE Holding Technology Services and Ancillary Support Agreement”
“China Merchants”
“Company”

have the same meaning ascribed to it under Chapters 1 and 19A of the Listing Rules

the board of the Directors

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

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 Eastern Airlines Corporation Limited (中國東方航空股份有限公司), a subsidiary of CE Holding

the agreement dated as of 30 June 2007 entered into between CE Airlines and the Company in relation to the Technology Services

China Eastern Air Holding Company (中國東方航空集團公司), a promoter of the Company

the agreement entered into between the Company and CE Holding in relation to the Technology Services on 16 November 2005, particulars of which are set out in the 2006 Circular

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

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

— iii —

DEFINITIONS

“Continuing Connected Transactions”	the transactions contemplated under the CE Airline Services
	Agreement
“EGM”	extraordinary general meeting of the Company convened to
	be held on Friday, 23 November 2007 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 34 to 35 of this circular
“Group”	the Company and its subsidiaries
“Independent Board Committee”	the independent board committee of the Company to be formed
	by the Company to advise the Independent Shareholders in
	respect of the Continuing Connected Transactions and the
	Annual Caps
“Independent Shareholders”	the shareholders of the Company, other than CE Holding and
	its associates
“IT”	Information technology
“Latest Practicable Date”	8 October 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
“Relevant Period”	the five years ending 31 December 2011
“RMB”	Renminbi, the lawful currency of the PRC
“Share(s)”	H share(s) of RMB1.00 each in the capital of the Company
“Shareholder(s)”	shareholder(s) of the Company

— iv —

DEFINITIONS

“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 CE Airlines as set out in the paragraph headed “CE Airline Services Agreement” in the Letter from the Board in this Circular “Technology Services and the technology services and ancillary support agreements or Ancillary Support Agreements” the airline services agreements entered into between the Company and the Airline Services Promoters, particulars of which are set out in the 2006 Circular or the Company’s circular dated 7 March 2007

For the purpose of this circular, unless otherwise indicated, the exchange rates at HK$1 = RMB1.00 and US$1 = HK$7.80 have been used, where applicable, for the purpose of illustration only and not constitute a representation that any amount have been, could have been or may be exchanged.

— v —

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 October 2007

To the Shareholders

Dear Sir / Madam

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EGM

1. BACKGROUND

As set out in the Company’s announcement dated 19 September 2007, the Company has entered into the CE Airline Services Agreement in relation to the Continuing Connected Transactions.

— 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 from China Merchants containing its advice 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, if thought fit, pass the resolution to approve the Continuing Connected Transactions and the Annual Caps.

2. CONTINUING CONNECTED TRANSACTIONS

Background

As set out in the 2006 Circular, the Company and CE Holding entered into the CE Holding Technology Services and Ancillary Support Agreement for a term of three years from 16 November 2005 to 15 November 2008. It is provided in the CE Holding Technology Services and Ancillary Support Agreement that references to CE Holding therein shall include its subsidiaries and associated companies. CE Airlines is a subsidiary of CE Holding and therefore, its transactions with the Company in respect of the Technology Services have been covered by the CE Holding Technology Services and Ancillary Support Agreement. The transactions between the Company and CE Airlines under the CE Holding Technology Services and Ancillary Support Agreement have been approved by the Shareholders at the 2006 EGM.

As CE Airlines is the sole recipient of the Technology Services under the CE Holding Technology Services and Ancillary Support Agreement, CE Airlines considers that it is more appropriate for it to enter into an agreement in respect of the Technology Services with the Company in its name and therefore entered into the CE Airline Services Agreement with the Company.

It is not provided in the CE Airline Services Agreement that it will replace the CE Holding Technology Services and Ancillary Support Agreement, the CE Holding Technology Services and Ancillary Support Agreement is therefore still valid on its term (i.e. for the term of three years from 16 November 2005 to 15 November 2008). However, as mentioned above, CE Airlines is the sole recipient of the Technology Services under the CE Holding Technology Services and Ancillary Support Agreement, and the future transactions between CE Airlines and the Company will be governed by the CE Airline Services Agreement, the CE Holding Technology Services and Ancillary Support Agreement, in substance, is being replaced by the CE Airline Services Agreement.

— 2 —

LETTER FROM THE BOARD

CE Airline Services Agreement

Date	:	30 June 2007_(Note 1)_	30 June 2007_(Note 1)_
Parties	:	The	Company (as provider of the Technology Services); and
		CE Airlines (as recipient of the Technology Services).
Term	:	1 January 2006 to 31 December 2011 (Note 2)
Number of years of renewal	:	One
Services	:	The	services to be provided by the Company under the CE
		Airline Services Agreement are same as those under the CE
		Holding Technology Services and Ancillary Support
		Agreement as set out in the 2006 Circular. The services will
		include without limitation:
		(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.

— 3 —

LETTER FROM THE BOARD

Service fees

: The service fees for the Technology Services payable by CE Airlines under the CE Airline Services Agreement are same as those payable by CE Airlines under the CE Holding Technology Services and Ancillary Support Agreement (as described in the 2006 Circular). The service fees 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, CE Airlines are required to pay the Company a per passenger booking fee for domestic routes ranging from RMB4.5 to RMB 6.5 depending on the monthly booking volume and for international and regional routes ranging from RMB 6.5 to RMB 7.

In addition, the fees payable by CE 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 RMB 500 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.

— 4 —

LETTER FROM THE BOARD

Notes:

The CE Airline Services Agreement was dated as of 30 June 2007. It was signed by the Company on 29 August 2007 after it was approved by the Board at the meeting of the Board held on 24 August 2007. The CE Airline Services Agreement becomes effective on 29 August 2007.
From 1 January 2006 to 29 August 2007 (“ Approved Period ”), the Technology Services were rendered by the Company to CE Airlines pursuant to the CE Holding Technology Services and Ancillary Support Agreement. For the purpose of confirming in writing the transactions between CE Airlines and the Company during the Approved Period, the term of the CE Airline Services Agreement also covers the Approved Period.

As set out above, save for the duration and the signing party, the terms of and the actual recipient of the Technology Services (i.e. CE Airlines) under the CE Holding Technology Services and Ancillary Support Agreement and the CE Airline Services Agreement are same in all material respects.

3. INFORMATION ON CE AIRLINES

CE Holding is a promoter of the Company and thus a connected person of the Company under Rule 14A.11(3) of the Listing Rules. To the best knowledge and belief of the Directors, CE Holding was interested in about 59.7% of the issued shares of CE Airlines as at the Latest Practicable Date. CE Airlines, being a subsidiary of CE Holding, is an associate of CE Holding. Therefore, according to Rule 14A.11(4) of the Listing Rules, CE Airlines, being an associate of a connected person, is also a connected person of the Company.

CE Airlines is a company listed on the Main Board of the Stock Exchange (Stock Code: 670) and is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services.

— 5 —

LETTER FROM THE BOARD

4. HISTORICAL TRANSACTION RECORDS

Set out below is a summary of the amount of the transactions between CE Airlines and the Company contemplated under the CE Holding Technology Services and Ancillary Support Agreement and its predecessor agreement for the three years ended 31 December 2006:

Year ending 31 December 2004 2005 2006 RMB152,182,000 RMB190,561,000 RMB228,760,000 (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$152,182,000) HK$190,561,000) HK$228,760,000)

Annual caps for the transactions contemplated under the CE Holding Technology Services and Ancillary Support Agreement

As set out in the 2006 Circular, the annual caps for the transactions between CE Holding (including its subsidiaries (e.g. CE Airlines) and associated companies) and the Company contemplated under the CE Holding Technology Services and Ancillary Support Agreement for the three years ending 31 December 2008, which have been approved by the Shareholders at the 2006 EGM, are as follow:

	Year ending 31 December
2006	2007	2008
RMB284,620,000	RMB370,120,000	RMB481,080,000
(equivalent to	(equivalent to	(equivalent to
approximately	approximately	approximately
HK$284,620,000)	HK$370,120,000)	HK$481,080,000)

The amount of the transactions between CE Holding (including its subsidiaries (e.g. CE Airlines) and associated companies) and the Company during the period commencing on 1 January 2007 to 29 August 2007 is within the annual cap for the year ending 31 December 2007 mentioned above.

— 6 —

LETTER FROM THE BOARD

5. ANNUAL CAPS

Set out below is a summary of the Annual Caps of the Continuing Connected Transactions entered or to be entered between CE Airlines and the Company under the CE Airline Services Agreement for the Relevant Period:

2007 Annual Cap RMB 297,388,000 (equivalent to approximately HK$297,388,000) 2008 Annual Cap RMB 386,604,000 (equivalent to approximately HK$386,604,000) 2009 Annual Cap RMB 502,585,000 (equivalent to approximately HK$502,585,000) 2010 Annual Cap RMB 653,360,000 (equivalent to approximately HK$653,360,000) 2011 Annual Cap RMB 849,368,000 (equivalent to approximately HK$849,368,000)

The Annual Caps for each of the five years ending 31 December 2011 are determined by reference to (i) the historical annual transaction amounts between CE Airlines and the Company under the CE Holding Technology Services and Ancillary Support Agreement and its predecessor agreement for the three years ended 31 December 2006; 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 the Continuing Connected Transactions will increase by about 15% to 30% per annum and 30% is used in determining the amount of the Annual Caps.

The Directors are of the view that the Annual Caps in respect of the Continuing Connected Transactions are fair and reasonable.

6. REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

The Group is principally engaged in provision of aviation information technology services in the PRC.

As mentioned in the paragraph headed “Continuing Connected Transactions” above, CE Airlines has been the sole recipient of the Technology Services under the CE Holding Technology Services and Ancillary Support Agreement. The provision of the Technology Services to CE 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.

— 7 —

LETTER FROM THE BOARD

7. LISTING RULES REQUIREMENTS

Given that CE Airlines is a connected person of the Company as mentioned above, the Continuing Connected Transactions constitute continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

Since the Percentage Ratios for the Continuing Connected Transactions on an annual basis exceed 2.5%, the Continuing Connected Transactions are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

The contract duration of the CE Airline Services Agreement is more than three years. The Directors are of the view that the contract duration of the CE Airline Services Agreement of more than three years is commercially beneficial to the Company and of normal business practice for contracts of these types to be of such duration and it is in compliance with Rule 14A.35(1) of the Listing Rules. The Company entered into the CE Airline Services Agreement for five years, instead of three years (i.e. the term of CE Holding Technology Services and Ancillary Support Agreement) because CE Airlines agreed to enter into an agreement with longer duration. As the Company will generate income from the transactions contemplated under the CE Airline Services Agreement, the Directors consider it is beneficial to the Company to enter into contracts of these types for a longer duration Details of the views of China Merchants, the independent financial adviser, on the contract duration of the CE Airline Services Agreement are set out in the Letter from China Merchants on pages 12 to 25 of this circular.

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.

8. 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 23 November 2007 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 34 to 35 of this circular.

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.

— 8 —

LETTER FROM THE BOARD

9. VOTING ARRANGEMENTS

Under the Listing Rules, the Continuing Connected Transactions and the Annual Caps are subject to the approval of the Independent Shareholders. Accordingly, CE Holding, CE Airlines and their respective associates will abstain from voting on the resolution to approve the Continuing Connected Transactions and the Annual Caps. As at the Latest Practicable date, CE Holding, CE Airlines and China Eastern Air Wuhan Company Limited (中國東方航空武漢有限責任公司) (which is owned as to 96% by CE Airlines and is therefore an associate of CE Airlines) were interested in 226,746,000 domestic shares of RMB1 each in the issued share capital of the Company, representing about 12.76% 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 CE Holding, CE Airlines and their respective associates abstaining from voting. The voting results will be announced after the EGM.

10. 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.

— 9 —

LETTER FROM THE BOARD

11. RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 11 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 12 to 25 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 resolution approving the Continuing Connected Transactions and the Annual Caps at the EGM.

12. 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

— 10 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(Stock Code: 0696)

10 October 2007

To the Independent Shareholders

Dear Sir / Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular (“ Circular ”) issued by the Company to its shareholders dated 10 October 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 resolution 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

— 11 —

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 October 2007

TravelSky Technology Limited Raycom InfoTech Park, No. 2 Ke Xue Yuan South Road, Haidian District, Beijing 100080, the PRC

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

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS: THE CE AIRLINE SERVICES AGREEMENT

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with respect to 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 October 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.

— 12 —

LETTER FROM CHINA MERCHANTS

As referred to in the Letter from the Board, CE Holding is a promoter of the Company and thus a connected person of the Company under Rule 14A.11(3) of the Listing Rules. To the best knowledge and belief of the Directors, CE Holding was interested in approximately 59.7% of the issued shares of CE Airlines as at the Latest Practicable Date. CE Airlines, being a subsidiary of CE Holding, is an associate of CE Holding. Therefore, pursuant to Rule 14A.11(4) of the Listing Rules, CE Airlines, being an associate of a connected person, is also a connected person of the Company. Given that CE Airlines is a connected person of the Company and the Percentage Ratios for the Continuing Connected Transactions on an annual basis exceed 2.5%, the transactions contemplated under the CE 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.

In addition, since the term of the CE Airline Services Agreement is longer than three years, we will explain why a longer period for the CE Airline Services Agreement is required and advise whether it is normal business practice for contracts of such type to be of such duration.

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 CE Holding Technology Services and Ancillary Support Agreement;
(ii) the CE 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;

— 13 —

LETTER FROM CHINA MERCHANTS

(v) the interim report of the Company for the six months ended 30 June 2007;
(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 website of Electronic Data Systems Corporation, a technology services company which is principally engaged in the provision of IT and business process outsourcing services;
(v) the information published on the website of Satyam Computer Services Limited, a technology services company which is principally engaged in the provision of IT consulting and IT related services; and
(vi) the information published on Bloomberg, a global and multimedia based distributor of information services, combining news, data and analysis for financial markets and businesses.

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 CE 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.

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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 IT 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 IT 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 IT and related services to the Chinese commercial airlines, it also distributes commercial airlines products and services and provides IT 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

From the year ended 31 December 2004 to the year 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 mainly 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 counterparts. 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 IT 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 e-commerce 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 turnover for that year.

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LETTER FROM CHINA MERCHANTS

The Group has been focusing on product lines like seat management, distribution IT solutions and fare solutions for commercial airlines, to perfect and improve its AIT and extended services. The Company’s self-developed electronic ticketing system has been adopted among the major Chinese commercial airlines, including CE Airlines and China Southern Airlines Company Limited.

3. Information on CE Airlines and CE Holding

CE Airlines is a company listed on the Main Board of the Stock Exchange (stock code: 670) and is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services. CE Holding is a promoter of the Company and an investment holding company.

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.

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, the Directors expect that the Group’s turnover will continue to achieve a stable growth in the coming years.

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LETTER FROM CHINA MERCHANTS

5. The CE Holding Technology Services and Ancillary Support Agreement

Pursuant to the Technology Services and Ancillary Support Agreements, the Company has agreed to provide a number of airline services promoters (including CE Holding) various aviation IT services and ancillary support, 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 information;
(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.

As referred to in the Letter from the Board, the Company and CE Holding entered into the CE Holding Technology Services and Ancillary Support Agreement on 16 November 2005 for a term of three years from 16 November 2005 to 15 November 2008. It is provided in the CE Holding Technology Services and Ancillary Support Agreement that references to CE Holding therein shall include its subsidiaries and associated companies. The transactions of CE Airlines with the Company in respect of the Technology Services have been covered by the CE Holding Technology Services and Ancillary Support Agreement by virtue of itself being a subsidiary of CE Holding. The transactions between the Company and CE Airlines under the CE Holding Technology Services and Ancillary Support Agreement were approved by the independent Shareholders at the 2006 EGM.

Set out below is the amount of revenue derived from services provided by the Company to CE Airlines, and the Group’s total revenue for the three years ended 31 December 2006:

	Year	ended 31 December	ended 31 December
	2004	2005	2006
	(RMB million)	(RMB million)	(RMB million)
Revenue derived from
services provided by the
Company to CE Airlines(a)	152.2	190.6	228.8
The Group’s turnover(b)	1,282.9	1,496.8	1,711.7
(a) / (b)	11.9%	12.7%	13.4%

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LETTER FROM CHINA MERCHANTS

From the year ended 31 December 2004 to the year ended 31 December 2006, the Group’s revenue derived from services provided by the Company to CE Airlines achieved a CAGR of approximately 22.6% per annum. The revenue derived from services provided by the Company to CE Airlines accounted for approximately 11.9%, 12.7% and 13.4% of the Group’s turnover for the three years ended 31 December 2006.

II. THE CE AIRLINE SERVICES AGREEMENT

1. Reasons for and benefits of entering into the CE Airline Services Agreement

As referred to in the Letter from the Board, as CE Airlines has been the sole recipient of the Technology Services under the CE Holding Technology Services and Ancillary Support Agreement, CE Airlines considers that it is more appropriate for it to enter into an agreement in respect of the Technology Services with the Company in its name, and therefore it entered into the CE Airline Services Agreement with the Company.

It is not provided in the CE Airline Services Agreement that it will replace the CE Holding Technology Services and Ancillary Support Agreement, and the CE Holding Technology Services and Ancillary Support Agreement is therefore still valid on its term (i.e. for the term of three years from 16 November 2005 to 15 November 2008). However, as the future transactions between CE Airlines and the Company will be governed by the CE Airline Services Agreement, the CE Holding Technology Services and Ancillary Support Agreement will be effectively replaced by the CE Airline Services Agreement. The term of the CE Airline Services Agreement will be from 1 January 2006 to 31 December 2011.

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

Given the significant revenue contribution to the Group attributable to the services provided by the Company to CE Airlines, we consider that a longer contract duration of the services provided by the Company to CE Airlines, if secured by the Company, would be beneficial to the Group since it could (i) derive revenue from a reliable customer over a longer period; and (ii) benefit from the expected growth of the aviation industry in the PRC in the Relevant Period.

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LETTER FROM CHINA MERCHANTS

2. The terms of the CE Airline Services Agreement

Period of the CE Airline Services Agreement

As referred to in the Letter from the Board, the Company entered into the CE Airline Services Agreement longer than three years (i.e. the term of the CE Holding Technology Services and Ancillary Support Agreement) because CE Airlines agreed to enter into an agreement with longer duration. As the Company will generate income from the transactions contemplated under the CE Airline Services Agreement, the Directors consider it is beneficial to the Company to enter into contracts of these types for a longer duration.

In addition, prior to the entering into of the CE Holding Technology Services and Ancillary Support Agreement by CE Holding in 2005, the predecessor of CE Holding and the Company had entered into an agreement regarding provision of the Technology Services for a term of five years, details of which were disclosed in the Company’s prospectus dated 29 January 2001. Upon expiry of such predecessor agreement, CE Holding entered into the CE Holding Technology Services and Ancillary Support Agreement for a term of three years because it was the then internal proposal of CE Holding that its subsidiary and the recipient of the Technology Services, CE Airlines, would enter into an agreement regarding provision of the Technology Services directly with the Company in the future. CE Holding considered that it was unnecessary to enter into an agreement with long duration. Taking into account the background of the CE Holding Technology Services and Ancillary Support Agreement, the Company considers that the term of the CE Airline Services Agreement need not be the same as that of the CE Holding Technology Services and Ancillary Support Agreement. Instead, it can have a longer duration so long as CE Airlines agrees.

We noted that the period of the CE Airline Services Agreement would be six years, in contrast with the existing term of the CE Holding Technology Services and Ancillary Support Agreement of three years from 16 November 2005 to 15 November 2008. As referred to in the Letter from the Board, the terms of the CE Airline Services Agreement were determined after arm’s length negotiations.

As advised by the Directors, the Company has entered into certain airline services agreements with China Eastern Air Wuhan Company Limited, China Southern Airlines Company Limited, Hainan Airlines Company Limited and Shanghai Airlines Company Limited of more than three years, details of which were set out in the 2006 Circular. As advised by the Directors, the nature of the services provided in such transactions is similar to that of the transactions contemplated under (i) the CE Holding Technology Services and Ancillary Support Agreement; and (ii) the CE Airline Services Agreement.

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LETTER FROM CHINA MERCHANTS

As such, we consider that the aforesaid transactions, being IT services provide by the Group to other airlines in the PRC, are comparable to the CE Airline Services Agreement, and the period of such transactions are suitable for our assessment of the fairness and reasonableness of the period of the CE Airline Services Agreement. Set out below is a summary of the terms of the airline services agreement entered between the Company and the airline services promoters:

	Date of agreement /	Number of years of
Name of airline services promoter	renewal agreement	term of agreement
China Eastern Air Wuhan Company Limited	1 November 2004	Five
China Southern Airlines Company Limited	23 January 2006	Four
Hainan Airlines Company Limited	25 October 2004	Five
Shanghai Airlines Company Limited	5 November 2004	Five

As illustrated above, each of China Eastern Air Wuhan Company Limited, China Southern Airlines Company Limited, Hainan Airlines Company Limited and Shanghai Airlines Company Limited has entered into similar arrangements with the Group of more than three years. As such, we consider that it is not uncommon for the Group to enter into agreements with airlines in the PRC in relation to provision of IT services for a period of more than three years.

As advised by the Directors, the Group is currently the only provider in the PRC in respect of the Technology Services in relation to PRC domestic airlines so far as the Directors are aware. As such, the Directors are not aware of any other comparable agreements entered into by third parties in the PRC market to which reference can be made regarding whether or not a duration in excess of three years is within the normal business practice of the industry in the PRC. In light of the above, we conducted a research of international IT services providers which have provided IT services to airlines, so that we would be able to assess the fairness and reasonableness of the period of the CE Airline Services Agreement, and formulate our opinion with regard to whether a term in excess of three years is in line with the normal business practice.

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LETTER FROM CHINA MERCHANTS

Through our searches via the Internet and Bloomberg, we have, to the best of our knowledge and information, identified not more than seven international IT service providers which are also engaged in the business of the Group, i.e. provision of IT services to airline operators. Out of the identified international IT service providers, we noted that Electronic Data Services Corporation, International Business Machines Corporation and Satyam Computer Services Limited have provided IT services to airlines for a term of more than three years. Set out below is a summary of the terms of the technology services agreements entered into between the aforesaid IT service providers and airline operators from 2006 to 2007 which involve agreement terms in excess of three years:

				Term of
		Year of		agreement
IT service provider	Principal business activities	agreement	Airline	(years)
Electronic Data Systems	A global technology services	2006	United Airlines	10
Corporation_(Note 1)_	company and is listed on the
	New York Stock Exchange.
	It delivers a broad portfolio of
	IT services to clients
	in many different
	industries.
International Business	A global integrated IT provider,	2006	Delta Air Lines, Inc.	Seven
Machines Corporation	with expertise in hardware,
(Note 2)	software and services.
	It is listed on the
	New York Stock Exchange.
Satyam Computer Services	A global consulting and IT	2006	Qantas Airways Limited	Seven
Limited (Note 3)	services company, and is listed
	on the New York Stock
	Exchange. It provides
	a range of expertise,
	such as IT outsourcing and
	systems integration.

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LETTER FROM CHINA MERCHANTS

Notes:

The transaction was disclosed on the website of Electronic Data Systems Corporation (www.eds.com) in the article headed “EDS signs contract with United Airlines to upgrade computer systems and service to reduce IT costs” dated 17 January 2006.
The transaction was disclosed on Bloomberg in the article headed “IBM wins 7-year agreement to run Delta’s reservations system” dated 21 August 2006.
The transaction was disclosed on the website of Satyam Computer Services Limited (www.satyam.com) in the article headed “Satyam wins multi-million dollar Qantas deal” dated 9 November 2006.

As illustrated above, each of Electronic Data Services Corporation, International Business Machines Corporation and Satyam Computer Services Limited has entered into similar arrangements with airlines of more than three years. In addition, the period of the CE Airline Services Agreement, which would be six years, is not longer than the longest period of the similar arrangements as illustrated above (being 10 years).

Based on the aforesaid, we consider that (i) the longer period for the CE Airline Services Agreement is required and it is normal business practice for contracts of IT services provided to airlines to be of such duration; and (ii) the term of the CE Airline Services Agreement of more than three years, which would enable the Group to derive revenue from CE Airlines over a longer period, is acceptable.

Pricing basis

As referred to in the Letter from the Board, the service fees for the Technology Services payable by CE Airlines under the CE Airline Services Agreement are the same as those payable by CE Airlines under the CE Holding Technology Services and Ancillary Support Agreement (details of which were set out in the 2006 Circular). The service fees 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 currently the services fees to be charged by the Group under the CE 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, CE 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.

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LETTER FROM CHINA MERCHANTS

In addition, the fees payable by CE 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 CE Airline Services Agreement. We noted that the service fees to be charged by the Group pursuant to the CE Airline Services Agreement are within the respective price ranges prescribed by CAAC.

Based on the aforesaid, we consider that the pricing basis of the CE 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.

III. THE ANNUAL CAPS

Set out below is a summary of the Annual Caps of the Continuing Connected Transactions for the Relevant Period:

			Year ending 31	December
	2007	2008	2009	2010	2011
	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)
Annual Caps	297,388,000	386,604,000	502,585,000	653,360,000	849,368,000
Annual rate of increase		Approximately 30%	Approximately 30%	Approximately 30%	Approximately 30%

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LETTER FROM CHINA MERCHANTS

We noted that (i) the 2007 Annual Cap is based on the revenue derived from the services provided by the Company to CE Airlines in 2006; and (ii) the Annual Caps represent an annual growth of approximately 30% per annum during the Relevant Period. In assessing the fairness and reasonableness of the Annual Caps, we have considered the following factors:

1. The 2007 Annual Cap

The 2007 Annual Cap represents an increase of approximately 30% as compared with the revenue derived from the services provided by the Company to CE Airlines for the year ended 31 December 2006 of approximately RMB228.8 million.

We consider that the 2007 Annual Cap is fair and reasonable so far as the Independent Shareholders are concerned, given that (i) the 2007 Annual Cap is based on the revenue derived from the services provided by the Company to CE Airlines for the year ended 31 December 2006; and (ii) the positive outlook of the aviation industry in the PRC and the historical growth in the Group’s revenue derived from services provided by the Company to CE Airlines justify a higher cap for the year ending 31 December 2007, which in turn would offer buffer to cater for the Group’s business growth and development in that year.

2. The increase in the Annual Caps

The Annual Caps represent an annual growth of approximately 30% per annum during the Relevant Period, which is (i) higher than the CAGR of the Group’s audited turnover of approximately 15.5% per annum from the year ended 31 December 2004 to the year ended 31 December 2006; and (ii) higher than the CAGR of the Group’s revenue derived from services provided by the Company to CE Airlines (the “CE Airlines Services Growth Rate”) of approximately 22.6% per annum from the year ended 31 December 2004 to the year ended 31 December 2006.

We noted that the CE Airlines Services Growth Rate amounted to approximately 22.6% per annum, which is slightly lower than the annual growth rate of the Annual Caps of approximately 30% per annum. We consider that the annual growth rate of the Annual Caps of approximately 30% per annum during the Relevant Period is fair and reasonable so far as the Independent Shareholders are concerned, after taking into account the following:

(i) the annual increase in the Annual Caps, being approximately 30% per annum, would provide buffer to cater for the Group’s business growth and development in the Relevant Period;
(ii) the positive outlook of the aviation industry in the PRC;
(iii) the historical growth in the Group’s turnover;
(iv) the historical growth in the Group’s revenue derived from its AIT services;
(v) the CE Airline Services Growth Rate of approximately 22.6% per annum;

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LETTER FROM CHINA MERCHANTS

(vi) the annual growth rate of the Annual Caps is only higher than the CE Airline Services Growth Rate by approximately 7.4%; and
(vii) the revenue derived from services provided by the Company to CE Airlines accounted for more than 10% of the Group’s turnover for each of the three years ended 31 December 2006.

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. In addition, we consider that the longer period for the CE Airline Services Agreement is required and it is normal business practice for contracts of such type to be of such duration. 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

— 25 —

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

Notes:

(L) — Long position
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, 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.

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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
	Class and		percentage of	Percentage of
Name of	no. of		respective class of	total share
shareholder	securities	Capacity	share capital	capital
	(Note 1)			(Note 2)
Oppenheimer Funds, Inc.	42,467,220	Investment	9.65%	2.39%
	H shares of	Manager	(Note 3 and 10)
	RMB1 each (L)
Platinum Investment	5,656,276	Investment	1.82%	0.32%
Management Limited	H shares of	Manager	(Note 4 and 10)
(Formerly known as	RMB1 each (L)
Platinum Asset	22,820,650	Trustee	7.34%	1.28%
Management Limited)	H shares of	(other than	(Note 4 and 10)
	RMB1 each (L)	a bare trustee)
Matthews International	28,239,000	Investment	9.08%	1.59%
Capital Management,	H shares of	Manager	(Note 5 and 10)
LLC	RMB1 each (L)
J.P.Morgan Fleming	22,199,000	Investment	7.14%	1.25%
Asset Management	H shares of	Manager	(Note 6 and 10)
(Asia) Inc.	RMB1 each (L)
J.P.Morgan Fleming	22,199,000	Investment	7.14%	1.25%
Asset Management	H shares of	Manager	(Note 6 and 10)
Holdings Inc.	RMB1 each (L)
JF Asset Management	22,199,000	Investment	7.14%	1.25%
Limited	H shares of	Manager	(Note 6 and 10)
	RMB1 each (L)

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GENERAL INFORMATION

APPENDIX

Templeton Asset	50,236,000	Investment	8.08%	2.83%
Management Limited	H shares of	Manager
	RMB1 each (L)
Plantinum International	15,809,650	Beneficial	5.09%	0.89%
Fund	H shares of	owner	(Note 7 and 10)
	RMB1 each (L)
China TravelSky	198,496,500	Beneficial	34.38%	22.35%
Holding Company	Domestic shares of	owner
	RMB1 each (L)
	(Note 8)
China Southern Air	116,460,500	Beneficial	20.17%	13.11%
Holding Company	Domestic shares of	owner
	RMB1 each (L)
	(Note 8)
CE Holding	109,414,500	Beneficial	18.95%	12.32%
	Domestic shares of	owner
	RMB1 each (L)
	(Note 8)
	5,317,000	Interest of	0.46%	0.29%
	Domestic shares of	controlled
	RMB1 each (L)	corporation
	(Note 9)
China National	89,433,500	Beneficial	15.49%	10.07%
Aviation Holding	Domestic shares of	owner
Company	RMB1 each (L)
	(Note 8)

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 OppenheimerFunds, Inc. filed on December 6, 2006. However, the number of H shares held by OppenheimerFunds, Inc. stated in such notice was 42,467,220, which, if correct, represents 13.66% of total H shares of the Company based on the total 310,854,000 issued H shares of the Company. 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 (10) below.

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GENERAL INFORMATION

APPENDIX

(4) Such percentage is shown in the corporate substantial shareholder notice of Platinum Investment Management Limited declared and filed on April 11, 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 (10) below.
(5) Such percentage is shown in the corporate substantial shareholder notice of Matthews International Capital Management declared and filed on August 5, 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 (10) below.
(6) Such percentage is shown in the corporate substantial shareholder notice of this shareholder declared and filed on April 1, 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 (10) below.
(7) Such percentage is shown in the corporate substantial shareholder notice of Plantinum International Fund declared and filed on April 11, 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 (10) below.
(8) 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.
(9) These shares are held by CE Airlines, a subsidiary of CE Holding. CE Holding is deemed to be interested in the shares held by CE Airlines by virtue of the SFO.
(10) 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 remains 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).

— 29 —

GENERAL INFORMATION

APPENDIX

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.

(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	China Southern Air Holding Company	RMB1,505,000	22.74%
Cares 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	RMB625,000	12.50%
(湖北民航凱亞有限公司)	Wubei Branch 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. (重慶民航凱亞	(中國國際航空股份有限公司)
信息技術有限公司)
Cares Chongqing	Chongqing Airport (Group) Limited	RMB2,401,000	24.50%
Information 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)

— 30 —

GENERAL INFORMATION

APPENDIX

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)
InfoSky Technology	Sociètè Internationale de	US$1,225,000	49.00%
Company Limited	Tèlècommunications 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. (西安民航凱亞	Group Company (陝西省機場
科技有限公司)	管理集團公司)
Civil Aviation Cares of	China Eastern Airlines Northwest Company	RMB1,600,000	32%
Xi’an Ltd. (西安民航凱亞	(中國東方航空西北公司)
科技有限公司)
Civil Aviation Cares	China Southern Air Holding Company	RMB735,000	24.50%
Technology 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	Xinjiang Airport Group	RMB735,000	24.50%
Technology of Xinjiang Ltd.	Company Limited
(新疆民航凱亞信息	(新疆機場集團有限責任公司)
網絡有限責任公司)

— 31 —

GENERAL INFORMATION

APPENDIX

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.

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.

— 32 —

GENERAL INFORMATION

APPENDIX

9. 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 and is the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the Continuing Connected Transactions and the Annual Caps. 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.

10. GENERAL

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

11. DOCUMENT AVAILABLE FOR INSPECTION

Copy of the CE Airline Services Agreement, the CE Holding Technology Services and Ancillary Support Agreement and the Technology Services and Ancillary Support Agreements 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.

— 33 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [417 x 62] intentionally omitted <==

(Stock Code: 0696)

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, 23 November 2007 to consider and, if thought fit, pass with or without amendments, the following ordinary resolution:

“THAT:

(a) the form and substance of the agreement (“ CE Airline Services Agreement ”) dated as of 30 June 2007 (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 China Eastern Airlines Corporation Limited (中國東方航空股份有限公司) (“ CE Airlines ”) in relation to the provision of the Technology Services (as defined in the circular (“ Circular ”) of the Company dated 10 October 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 CE Airlines by the Group (as defined in the Circular) and all the transactions contemplated thereby; and
(b) the Annual Caps (as defined in the Circular) for the transactions contemplated under the CE Airline Services Agreement for the five years ending 31 December 2011 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 CE 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 October 2007

Registered office:

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

— 34 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

The register of members of the Company will be closed from 25 October 2007 to 23 November 2007 (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 October 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 4:00p.m. on 24 October 2007 to entitle the transferee to attend the EGM.
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.
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.
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.
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 2 November 2007 personally or by mail or fax.
Since the transactions referred to in the resolution 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 resolution proposed at the EGM will be voted on a poll pursuant to Rule 13.39(4) of the Listing Rules.
As at the date hereof, the board of the directors of the Company comprises:

Chairman: Executive Directors: Non-executive Directors: Independent non-executive Directors

Mr Zhu Yong;

Mr Zhu Xiaoxing, Mr Ding Weiping and Mr Song Jinxiang; 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; Mr Yick Wing Fat, Simon, Mr Yuan Yaohui and Mr Chua Keng Kim

— 35 —

AI assistant

TravelSky Technology Limited — Proxy Solicitation & Information Statement 2007

49402_rns_2007-10-09_b03b0f8a-34ab-4fc6-beef-40aa6a0a1602.pdf

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EGM

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

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

# Non-executive Directors

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EGM

1. BACKGROUND

2. CONTINUING CONNECTED TRANSACTIONS

Background

CE Airline Services Agreement

LETTER FROM THE BOARD

Service fees

3. INFORMATION ON CE AIRLINES

4. HISTORICAL TRANSACTION RECORDS

Annual caps for the transactions contemplated under the CE Holding Technology Services and Ancillary Support Agreement

5. ANNUAL CAPS

6. REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

7. LISTING RULES REQUIREMENTS

8. THE EGM

9. VOTING ARRANGEMENTS

10. POLL PROCEDURE

11. RECOMMENDATIONS

12. GENERAL

CONTINUING CONNECTED TRANSACTIONS

Independent Board Committee

CONTINUING CONNECTED TRANSACTIONS: THE CE AIRLINE SERVICES AGREEMENT

INTRODUCTION

LETTER FROM CHINA MERCHANTS

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. BACKGROUND

1. Information on the Group

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

3. Information on CE Airlines and CE Holding

4. Economy and aviation industry in the PRC

5. The CE Holding Technology Services and Ancillary Support Agreement

II. THE CE AIRLINE SERVICES AGREEMENT

1. Reasons for and benefits of entering into the CE Airline Services Agreement

2. The terms of the CE Airline Services Agreement

LETTER FROM CHINA MERCHANTS

Pricing basis

III. THE ANNUAL CAPS

1. The 2007 Annual Cap

2. The increase in the Annual Caps

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

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

3. SUBSTANTIAL SHAREHOLDERS

APPENDIX

APPENDIX

APPENDIX

4. SERVICE AGREEMENT

5. LITIGATION

6. MATERIAL CHANGES

7. INTEREST IN ASSETS

8. MATERIAL INTEREST IN CONTRACTS

9. EXPERT

10. GENERAL

11. DOCUMENT AVAILABLE FOR INSPECTION

“THAT:

Registered office:

More from TravelSky Technology Limited

TravelSky Technology Limited Proxy Solicitation & Information Statement 2007