TravelSky Technology Limited — Proxy Solicitation & Information Statement 2014

Nov 6, 2014

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 or registered institution in securities, bank manager, stock broker, solicitor, professional accountant or other appropriate independent 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 and reply slip to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0696)

CONTINUING CONNECTED TRANSACTIONS:

EASTERN AIRLINES TRANSACTIONS AND

WAIVER IN RELATION TO EASTERN AIRLINES TRANSACTIONS; PROPOSED APPOINTMENT OF DIRECTOR; AND NOTICE OF EGM

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

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A letter from the Board is set out on pages 4 to 14 of this circular. A letter from the Independent Board Committee is set out on page 15 of this circular. A letter from RHB OSK Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 26 of this circular.

A notice convening the EGM to be held at Conference Room, Prime Hotel, 2 Wangfujing Ave., Dongcheng District, Beijing, the PRC at 10 a.m. on Tuesday, 23 December 2014, is set out on pages 30 to 31 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you wish to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (in case of holders of H Shares) or the registered office of the Company at 7 Yu Min Da Street, Houshayu Town, Shunyi District, Beijing 101308, the PRC (in case of holders of Domestic Shares), 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.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to the Company’s registered office, on or before Tuesday, 2 December 2014.

7 November 2014

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**LETTER FROM **	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
**LETTER FROM **	THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . .	15
**LETTER FROM **	RHB OSK CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
APPENDIX	– GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .	27
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		30

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DEFINITIONS

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

• “associate(s)” have the same meaning ascribed to it under the Listing Rules

• “Board” the board of Directors

• “CAAC” 中國民用航空局 (Civil Aviation Administration of China)

• “Company”

• TravelSky Technology Limited, a company incorporated under the laws of the PRC whose shares are listed on the Main Board of the Stock Exchange and whose American depositary shares are traded on the over-the-counter market in the United States of America

• “connected person” has the same meaning as ascribed to it under the Listing Rules

• “Director(s)” the director(s) of the Company

• “Domestic Share(s)” domestic share(s) with a nominal value of RMB1.00 each in the share capital of the Company

• “Eastern Airlines”

• 中國東方航空股份有限公司(China Eastern Airlines Corporation Limited*), a subsidiary of Eastern Holding as at the Latest Practicable Date, and reference to Eastern Airlines in this circular shall include its subsidiaries and associates unless the context otherwise requires

• “Eastern Airlines Transactions”

• the continuing connected transactions between the Company and Eastern Airlines in relation to the provision of the technology services by the Company to Eastern Airlines and its subsidiaries as set out in this circular

• “Eastern Holding”

中國東方航空集團公司 (China Eastern Air Holding Limited*) which has a shareholding of 11.22% in the Company and is a substantial shareholder of the Company as at the Latest Practicable Date

* For identification purpose only

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DEFINITIONS

• “Eastern Renewal Agreement”

• the renewal written agreement in respect of the Eastern Airlines Transactions for 2015 and onwards

• “EGM”

• the extraordinary general meeting of the Company to be convened at 10 a.m. on Tuesday, 23 December 2014, and the notice of which is set out in this circular

• “Group” the Company and its subsidiaries

• “H Share(s)”

• overseas listed foreign invested share(s) with a nominal value of RMB1.00 each in the share capital of the Company which are listed on the Stock Exchange are traded in HK dollars (Stock Code: 696)

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong Special Administrative Region

• “Independent Board Committee”

• the independent board committee of the Company formed by the Company to advise the Independent Shareholders in respect of the Eastern Airlines Transactions and the Proposed Annual Caps as set out in this circular

• “Independent Shareholders”

• the shareholders of the Company who are not required to abstain from voting in respect of the Eastern Airlines Transactions and the Proposed Annual Caps at the EGM

• “Latest Practicable Date”

• 5 November 2014, 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 of Hong Kong Limited

• “PRC”

• the People’s Republic of China and, for the purpose of this circular, excludes the Hong Kong Special Administrative Region and the Macau Special Administrative Region

• “Previous Waiver”

• the previous waiver from strict compliance with the requirement of having written agreements under Rule 14A.34 of the Listing Rules granted by the Stock Exchange in December 2011 in relation to, among others, the Eastern Airlines Transactions

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DEFINITIONS

the proposed maximum aggregate annual amounts of the Eastern Airlines Transactions for each of the three years ending 31 December 2017

• “Proposed Annual Cap(s)” the proposed maximum aggregate annual amounts of the Eastern Airlines Transactions for each of the three years ending 31 December 2017

• “RHB OSK Capital” RHB OSK Capital Hong Kong Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Eastern Airlines Transactions and the Proposed Annual Caps, and a licensed corporation to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

• “RMB” Renminbi, the lawful currency of the PRC

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

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

• “subsidiary” have the same meaning ascribed to it under the Listing Rules

• “Waiver” a waiver from strict compliance with the requirement of having written agreements under Rule 14A.34 of the Listing Rules with respect to the Eastern Airlines Transactions. Such waiver is for a three-year term commencing from 1 January 2015 and ending on 31 December 2017

• “%” per cent

For the purpose of this circular, unless otherwise indicated, the exchange rate at RMB1 = HK$1.26 has 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.

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LETTER FROM THE BOARD

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(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0696)

Executive Directors: Mr. Xu Qiang (Chairman) Mr. Cui Zhixiong Mr. Xiao Yinhong

Non-executive Directors: Mr. Wang Quanhua Mr. Sun Yude Mr. Cai Kevin Yang

Independent non-executive Directors: Mr. Cheung Yuk Ming Mr. Pan Chongyi Mr. Zhang Hainan

Registered Office: 7 Yu Min Da Street, Houshayu Town, Shunyi District, Beijing 101308 the PRC

Principal place of business in Hong Kong: Room 3606, 36/F China Resources Building 26 Harbour Road Wan Chai Hong Kong 7 November 2014

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS: EASTERN AIRLINES TRANSACTIONS AND WAIVER IN RELATION TO EASTERN AIRLINES TRANSACTIONS; PROPOSED APPOINTMENT OF DIRECTOR; AND NOTICE OF EGM

1. INTRODUCTION

Reference is made to the Company’s announcement dated 28 August 2014. The Company proposed to appoint Mr. Cao Jianxiong as the non-executive Director to replace Mr. Sun Yude, which is subject to the approval of the Shareholders at the EGM.

Reference is also made to the Company’s announcement dated 17 October 2014. The Stock Exchange has granted the Waiver from strict compliance with the requirement of having written agreements under Rule14A.34 of the Listing Rules. The Waiver was granted on the conditions, among other things, that the Company seeks a general mandate with a three-year term ending 31 December 2017 from the Independent Shareholders to carry out the Eastern Airlines Transactions under the Waiver. The general mandate that

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LETTER FROM THE BOARD

the Company proposes to seek from the Independent Shareholders is for a term of three years, commencing from 1 January 2015 to 31 December 2017. In the event that the terms of the Eastern Renewal Agreement to be subsequently entered into between the Company and Eastern Airlines are materially different from those being approved by the Independent Shareholders, the Company will re-comply with the reporting, announcement and/or independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purposes of this circular are to provide you with, among other things, (i) further details of the proposed appointment of Mr. Cao Jianxiong as the non-executive Director and the Eastern Airlines Transactions; (ii) a letter from RHB OSK Capital containing its advice to the Independent Board Committee and the Independent Shareholders on the Eastern Airlines Transactions and the Proposed Annual Caps; and (iii) the recommendation of the Independent Board Committee regarding the Eastern Airlines Transactions and the Proposed Annual Caps to the Independent Shareholders.

2. PROPOSED APPOINTMENT OF DIRECTOR

As proposed by China National Aviation Holding Company, a substantial shareholder of the Company, Mr. Sun Yude (孫玉德) (“ Mr. Sun ”) shall cease to be the non-executive Director and the member of the strategic committee of the Company (the “ Proposed Resignation ”). As far as the Board is aware of, Mr. Sun has retired from China National Aviation Holding Company due to his age.

Mr. Sun confirms that he has no disagreement with the Board and there are no matters relating to his Proposed Resignation that need to be brought to the attention of the Stock Exchange and the Shareholders.

The Board further proposed that Mr. Cao Jianxiong (曹建雄) (“ Mr. Cao ”) shall be appointed as the non-executive Director (the “ Proposed Appointment ”) to replace Mr. Sun. The Board also resolved that Mr. Cao will be the member of the strategic committee of the Company subject to the effectiveness of the Proposed Appointment.

The biographical details of Mr. Cao are as follows:

Mr. Cao, aged 55, is currently the Deputy General Manager of China National Aviation Holding Company and a senior economist with a master degree in economics. He was appointed as the Deputy General Manager and Chief Financial Officer of Eastern Airlines in December 1996. From September 1999 to December 2008, he served as the Vice President of Eastern Airlines. From October 2000 to June 2007, he served as the non-executive Director, vice chairman and the chairman of the strategic committee of the Company. From June 2001 to December 2008, he served as the director of Eastern Airlines. From October 2006 to December 2008, he served as the President and the Deputy Party Secretary of the Communist Party Committee of Eastern Airlines. Since December 2008, Mr. Cao has been serving as the Deputy General Manager and a member of Communist Party Group of China National Aviation Holding Company. Since June 2009, he is a non-executive director of Air China Limited (a company listed on the Stock Exchange (stock code: 0753) and the Shanghai Stock Exchange (stock code: 601111)).

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LETTER FROM THE BOARD

Mr. Cao has confirmed that, save as disclosed above, as at the Latest Practicable Date, (1) he does not hold any other position with the Company or any of its subsidiaries or any directorship in any other listed public companies in the past three years; (2) he does not have any relationship with any director, senior management, substantial shareholder or controlling shareholder of the Company; and (3) he does not have any interest or deemed interest in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)).

Save as disclosed above, the Board is not aware of any other matter in respect of the Proposed Appointment of Mr. Cao that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules or any other matter that needs to be brought to the attention of the Shareholders.

The Proposed Resignation of Mr. Sun and the Proposed Appointment of Mr. Cao shall become effective subject to the Shareholders’ approval at the EGM.

The term of the office of Mr. Cao will commence from the approval of the Shareholders and end on the date of expiry of the term of the fifth session of the Board. The Company will enter into a service contract with Mr. Cao after his appointment is approved by the Shareholders. The remuneration of Mr. Cao will be determined according to the remuneration policy of the fifth session of the Board which has been approved by the Shareholders at the 2013 annual general meeting of the Company.

3. EASTERN AIRLINES TRANSACTIONS

3.1 BACKGROUND AND REASONS FOR APPLICATION FOR THE WAIVER

References are made to the announcements of the Company dated 14 December 2011 and the circular of the Company dated 6 January 2012 in relation to, among other things, the Eastern Airlines Transactions and the Previous Waiver. The Previous Waiver, together with the existing agreements between the Company and Eastern Airlines in relation to the Eastern Airlines Transactions, will expire on 31 December 2014. The Company will continue such Eastern Airlines Transactions after such date. However, the Company expects that Eastern Renewal Agreement between the Company and Eastern Airlines may not be entered into on or before 31 December 2014.

The Group plays a strategic and critical role in the proper functioning of civil aviation in the PRC and the services provided by the Group are akin to public services. It is in no position to stop or even partially cease to provide its services simply for the absence of written agreements, as any such interruption would bring untold inconvenience and financial loss to all market participants including dependent industries such as tourism and hospitality sectors. It also constitutes a breach of its public service covenant with CAAC to provide stable, reliable and zero-interruption booking services for the PRC airline industry.

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LETTER FROM THE BOARD

It has long been the situation that the Company faces a dilemma between, on the one part, the duties to comply with its public service covenant as well as to protect the interests of the Company and its Shareholders as a whole and, on the other part, the obligations to observe certain requirements under the Listing Rules. The requirement of having written agreements under Rule 14A.34 of the Listing Rules has been taken advantage by Eastern Airlines, which is also our connected person, against the Group with respect to its negotiation of agreements with the Group in attempts to extract advantages, including without limitation to bargain for the provision of additional services by the Group free of charges. Eastern Airlines has been used to applying delay tactic in the negotiation process in the previous Eastern Airlines Transactions agreement renewal process as it knew that the Group had little bargaining power due to the time constraint, in anticipation that the Group would be forced to accept detrimental terms offered by the Eastern Airlines for the sake of complying with such requirement under Rule 14A.34. Furthermore, such agreement renewal process may also be delayed due to irresponsiveness of Eastern Airlines, which is beyond the control of the Group. In this situation, the Group is left with little option to force Eastern Airlines to respond as the Group is in no position to stop or even partially stop to provide its services to Eastern Airlines simply for the absence of written agreements.

Therefore, the Company considers that compliance with the requirement of having written agreements under Rule 14A.34 of the Listing Rules would be unduly burdensome and impractical and, in the situation where Eastern Airlines adopts delay tactics in attempts to extract advantages, would prejudice and seriously detriment the interests of the Group as the Group would be forced to accept detrimental terms offered by Eastern Airlines for the sake of complying with such requirement.

In view of the foregoing, the Company has applied to the Stock Exchange for and the Stock Exchange has granted the Waiver from strict compliance with the requirement of having written agreements under Rule 14A.34 of the Listing Rules with respect to the Eastern Airlines Transactions. The Waiver is for a three-year term commencing from 1 January 2015 to 31 December 2017. The Waiver has been granted by the Stock Exchange on the following conditions:

• (i) publish an announcement regarding the Waiver;

• (ii) seek the Independent Shareholders’ approval for (a) granting a general mandate to the Directors to carry out the Eastern Airlines Transaction under the term of the existing agreement for a further term of three years ending 31 December 2017; and (b) the Proposed Annual Cap; and

• (iii) in the event that the terms of the Eastern Renewal Agreement to be subsequently entered into are materially different from those disclosed to and approved by the Independent Shareholders, the Company will re-comply with the requirements of the Listing Rules.

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LETTER FROM THE BOARD

3.2 CONTINUING CONNECTED TRANSACTIONS UNDER THE WAIVER

A. Details of the Eastern Airlines Transactions under the Waiver

Parties: Service provider: The Company

Service recipient: Eastern Airlines

Terms: 1 January 2015 to 31 December 2017

Services:

The scope of technology services consists of the following:

• (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.

Service fees:

The fees for the technology services are as follows:

• (1) the abovementioned (i) “the flight control system services” and (ii) “electronic travel distribution system services” are generally referred to as “airlines passenger booking system” services. The pricing of such airlines passenger booking system services is subject to the maximum guidance prices prescribed by CAAC, being the progressive per passenger booking fee ranging from RMB4.5 to RMB6.5 for domestic flights and RMB6.5 to RMB7 for international and regional flights, depending on the monthly passenger booking volume. The Company may determine the actual prices for airlines passenger booking system services through arm’s-length negotiation with Eastern Airlines having taken into account its passenger booking volume, as long as such prices do not exceed the abovementioned maximum guidance prices prescribed by CAAC;

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LETTER FROM THE BOARD

• (2) the pricing of the abovementioned (iii) “airport passenger processing system services” is also subject to the maximum guidance prices prescribed by CAAC, being (a) RMB7 per passenger for international and regional flights and RMB4 per passenger for domestic flights, and (b) RMB500 per aircraft for load balancing services. The Company may also determine the actual prices for airport passenger processing system services through arm’s-length negotiation with Eastern Airlines having taken into account a number of factors such as the types of the flights, transportation volume, level of services and size of the aircraft, as long as the prices do not exceed the above maximum guidance prices prescribed by CAAC; and

• (3) the pricing of the abovementioned (iv) “civil aviation and commercial data network services” (other than physical identified device (“ PID ”) connection and maintenance services) are not governed by guideline of CAAC or the framework of any other PRC airlines regulatory body but are subject to mutual negotiation between the parties based on the principle of fairness and reasonableness and with reference to market conditions. The pricing of PID connection and maintenance services is subject to the maximum guidance price of RMB200 per PID per month as prescribed by CAAC.

The service fees shall be calculated on a monthly basis and shall be paid within 30 days after receipt of the invoice by cash.

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

B. Internal control and mechanism to regulate the Eastern Airlines Transactions

When determining the pricing terms of the Eastern Renewal Agreement, the Company will generally have regard to historical pricing structure and ensure that the terms are comparable to those provided to other airlines. The pricing terms are also generally tied in with transaction volume of the Eastern Airlines. The Company will also ensure that the targeted revenue deriving from the Eastern Airlines Transactions will conform to the increasing trend of business volume of the entire aviation industry.

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LETTER FROM THE BOARD

Various internal departments of the Company will participate in the negotiations with Eastern Airlines and the review of the terms, including the pricing terms, of Eastern Renewal Agreement. The terms will be reviewed by various internal departments of the Company to ensure that they are in compliance with the applicable regulatory pricing guidelines and, in the situation where no regulatory pricing guidelines are applicable, are comparable to the market conditions or terms provided to other independent third parties. The finance department of the Company will also review the pricing terms and payment terms of the Eastern Renewal Agreement and will analyse their impacts on the Group’s financial performance with regard to the expected costs and revenue of the Group. The Company is, therefore, of the view that the Company has in place effective internal procedures to ensure that the pricing terms of the Eastern Airlines Transactions are on normal commercial terms and in the interest of the Company and its Shareholders as a whole.

To ensure that the Eastern Airlines Transactions are carried out in accordance with the regulatory guidelines and terms as disclosed herein and those to be agreed in the Eastern Renewal Agreement, the Company has in place the following internal control procedures and mechanism:

• (1) the majority type of services under the Eastern Airlines Transactions (including type (i), (ii) and (iii) services and PID connection and maintenance services under type (iv) services) are provided and carried out through the Company’s large scale computerized automated system with pre-set technology parameters and pricing formulas as agreed under the agreement for the Eastern Airlines Transactions, or if such agreement has not yet been entered into, the terms as disclosed in the announcement and circular. Changes of such pre-set technology specifications and pricing terms can only be made after receiving joint approvals from various internal departments of the Company to ensure that the terms of the Eastern Airlines Transactions are adherent and strictly followed; and

• (2) for other types (iv) civil aviation and commercial data network services under the Eastern Airlines Transactions where separate service agreements may be entered into, the entering into of such individual agreements will be scrutinized by a number of internal departments of the Company to ensure that the terms of such agreements will be in compliance with regulatory guidelines, where applicable, and the market practice, and will not deviate from the terms of the Eastern Airlines Transactions as disclosed herein.

Further, the auditors of the Company will conduct annual review of the Eastern Airlines Transactions to confirm that, among other things, such transactions are in accordance with the pricing policies of the Company and have been entered into in accordance with the relevant agreements (if have been entered into) governing the transactions in accordance with Rule 14A.56 of the Listing Rules. The auditors will also carry out annual system auditing on the Company’s computerized

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LETTER FROM THE BOARD

automated system to, among other things, verify the system’s reliability and stability and evaluate the internal control procedures for the authorization of making changes to system parameters and programme.

As such, the Company is of the view that it possess adequate mechanism, internal control procedures and external supervision in place to ensure the terms of the Eastern Airlines Transactions are adherent and strictly followed in accordance with the regulatory guidelines and the Eastern Renewal Agreement, or, if the Eastern Renewal Agreement has not yet been entered into, the terms as disclosed in the Company’s announcement and circular.

3.3 HISTORICAL TRANSACTION RECORDS

Set out below is a summary of the aggregated amounts of the Eastern Airlines Transactions for the three years ended 31 December 2013 and nine months ended 30 September 2014:

				Nine months
				ended 30
	Year ended 31 December			September
	2011	2012	2013	2014
	(RMB)	(RMB)	(RMB)	(RMB)
Eastern Airlines	463,035,320	472,561,570	520,303,200	398,677,470
Transactions	(approximately	(approximately	(approximately	(approximately
	HK$583,424,50)	HK$595,427,578)	HK$655,582,032)	HK$502,333,612)

Note:

The historical transaction figures for the years ended 31 December 2011, 2012 and 2013 are audited figures of the Group and the figures for the nine months ended 30 September 2014 are internal management accounts.

3.4 PROPOSED ANNUAL CAPS AND BASIS FOR THE PROPOSED ANNUAL CAPS

A. Proposed Annual Caps

Set out below is a summary of the Proposed Annual Caps for the Eastern Airlines Transactions for the three years ending 31 December 2017:

	Year	ending 31 December
	2015	2016	2017
	(RMB)	(RMB)	(RMB)
Eastern Airlines	652,668,334	730,988,534	818,707,158
Transactions	(approximately	(approximately	(approximately
	HK$822,362,101)	HK$921,045,553)	HK$1,031,571,019)

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LETTER FROM THE BOARD

B. Basis of the Proposed Annual Caps for the Eastern Airlines Transactions

The Proposed Annual Caps represent an estimated annual growth rate of 12% in the transaction volume calculated based on the Company’s audited full year transaction amount of 2013. The Proposed Annual Caps for the Eastern Airlines Transactions and the estimated 12% annual transaction volume growth rate are determined with reference to (i) the historical transaction amounts of such type of transactions between the Group and Eastern Airlines for the year ended 31 December 2013; (ii) the historical growth of 10% in the transaction volume between the Group and Eastern Airlines for the year 2013 which was relatively high due to the increase in the demand of our services by Eastern Airlines which in turn was a result of increase in its air passenger volume; (iii) the expectation that the historical growth of 10% in 2013 may continue in the next three years ending 31 December 2017 after taking into account the anticipated average annual growth of approximately 11% in the PRC’s gross passenger transportation volume under the “Twelfth Five-Year Development Plan of the PRC Civil Aviation”; (iv) the expectation that the actual transaction volume in the whole year of 2014 may see similar growth as in the previous year given that the three months ending 31 December 2014 may record a significant increase in transaction volume due to (a) the national holidays in October; (b) the APEC meeting to be held in Beijing in November which leads to a six-day holiday for a substantial part of citizens in Beijing; and (c) the Christmas and New Year travelling in December; (v) a buffer representing 2% in the annual transaction volume between the Group and Eastern Airlines to accommodate the unexpected fluctuation in the annual growth of transaction volume.

3.5 REASONS FOR AND BENEFITS OF THE EASTERN AIRLINES TRANSACTIONS

The provision of the technology services by the Group to Eastern Airlines under the Eastern Airlines Transactions is in the ordinary and usual course of business of the Group. The Group will receive service fees for provision of such services and thus such transactions will increase the total revenue of the Group.

The Directors (including the independent non-executive Directors) are of the view that the Eastern Airlines Transactions are conducted in the ordinary and usual course of business of the Group and on normal commercial terms, and the terms of the Eastern Airlines Transactions and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3.6 IMPLICATIONS UNDER THE LISTING RULES

Eastern Holding is a substantial shareholder of the Company. Eastern Airlines, being a subsidiary of Eastern Holding, is an associate of Eastern Holding. Therefore, Eastern Airlines is a connected person of the Company pursuant to Rule 14A.07(4) of the Listing Rules. The Eastern Airlines Transactions constitute continuing connected transactions of the Company.

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LETTER FROM THE BOARD

The Company proposes to seek a general mandate for a period of three years ending 31 December 2017 from the Independent Shareholders in order to continue the Eastern Airlines Transactions under the Waiver. In the event that the terms of Eastern Renewal Agreement to be subsequently entered into with the Eastern Airlines are materially different from those being approved by the Independent Shareholders, the Company will re-comply with the reporting, announcement and/or independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Mr. Cai, Kevin Yang has abstained from voting on the Eastern Airlines Transactions as he is the employee of Eastern Airlines. Save as disclosed above, none of the Directors has a material interest in the transactions contemplated under the Eastern Airlines Transactions, and none of them has abstained from voting on the relevant board resolutions.

3.7 GENERAL INFORMATION

The Group is principally engaged in the provision of aviation information technology services in the PRC as well as provision of accounting, settlement and clearing services and information system development and support services to domestic and worldwide airline companies.

Eastern 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.

4. EGM

The EGM will be held at Conference Room, Prime Hotel, 2 Wangfujing Ave., Dongcheng District, Beijing, the PRC at 10 a.m. on Tuesday, 23 December 2014 to consider and, if thought fit, approve, among other matters, (i) the Eastern Airlines Transactions, (ii) the Proposed Annual Caps, and (iii) the proposed appointment of Mr. Cao as the non-executive Director. Notice of the EGM is set out on pages 30 to 31 of this circular.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you wish to attend the EGM personally, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (in case of holders of H Shares) or the registered office of the Company at 7 Yu Min Da Street, Houshayu Town, Shunyi District, Beijing 101308, the PRC (in case of holders of Domestic Shares), 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.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to the Company’s registered office, on or before Tuesday, 2 December 2014.

Pursuant to the Listing Rules, shareholders with a material interest in a transaction and their respective associates shall abstain from voting on the relevant resolution(s). As

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LETTER FROM THE BOARD

such, Eastern Airlines and its associates, holding an aggregate of 357,298,500 Domestic Shares, will abstain from voting on the resolutions to consider and approve the general mandate in respect of the Eastern Airlines Transactions under the Waiver, the Eastern Airlines Transactions and the Proposed Annual Caps.

Pursuant to Rule 13.39(4) of the Listing Rules, all votes of the Shareholders at the EGM must be taken by poll. The chairman of the EGM will demand a poll for the resolutions to be proposed at the EGM in accordance with the articles of association of the Company. The results of the voting will be announced in accordance with Rule 2.07C of the Listing Rules after the EGM.

5. RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 15 of this circular in connection with the Eastern Airlines Transactions and the Proposed Annual Caps. Your attention is also drawn to the letter of advice from RHB OSK Capital to the Independent Board Committee and the Independent Shareholders in connection with the Eastern Airlines Transactions and the Proposed Annual Caps and the principal factors and reasons considered by it in arriving at such advice set out on pages 16 to 26 of this circular.

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

The Directors (including the independent non-executive Directors) consider that the resolutions as set out in the notices of the EGM are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of such resolutions at the EGM

6. GENERAL

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

Yours faithfully, By order of the Board TravelSky Technology Limited Yu Xiaochun

Company Secretary

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0696)

To the Independent Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS: EASTERN AIRLINES TRANSACTIONS AND WAIVER IN RELATION TO EASTERN AIRLINES TRANSACTIONS

We refer to the circular issued by the Company to its shareholders dated 7 November 2014 (the “ Circular ”) 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 Eastern Airlines Transactions and the Proposed Annual Caps. RHB OSK Capital 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 RHB OSK Capital set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, RHB OSK Capital set out in its letter of advice as contained in the Circular, we consider that (i) the Eastern Airlines Transactions are in the ordinary and usual course of business of the Group, (ii) the terms of the Eastern Airlines Transactions are on normal commercial terms and (iii) the terms of the Eastern Airlines Transactions and the Proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions approving the Eastern Airlines Transactions and the Proposed Annual Caps at the EGM.

Yours faithfully, For and on behalf of the Independent Board Committee Cheung Yuk Ming Pan Chongyi Zhang Hainan Independent Non-executive Directors

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LETTER FROM RHB OSK CAPITAL

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

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12/F., World-Wide House 19 Des Voeux Road Central Hong Kong

7 November 2014

TravelSky Technology Limited 7 Yu Min Da Street, Houshayu Town, Shunyi District, Beijing 101308, the PRC

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

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS: EASTERN AIRLINES TRANSACTIONS AND WAIVER IN RELATION TO EASTERN AIRLINES TRANSACTIONS

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 Eastern Airlines Transactions, being the continuing connected transactions between the Company and Eastern Airlines in relation to the provision of the technology services by the Company to Eastern Airlines and its subsidiaries, and the Proposed Annual Caps, details of which are contained in the letter from the Board (the “ Letter from the Board ”) of the circular dated 7 November 2014 (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.

As referred to in the Letter from the Board, Eastern Holding is a substantial shareholder of the Company. Eastern Airlines, being a subsidiary of Eastern Holding, is an associate of Eastern Holding. Therefore, Eastern Airlines is a connected person of the Company pursuant to Rule 14A.07(4) of the Listing Rules. The Eastern Airlines Transactions constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

The Company proposes to seek a general mandate for a period of three years ending 31 December 2017 from the Independent Shareholders in order to continue the Eastern Airlines Transactions under the Waiver. In the event that the terms of Eastern Renewal Agreement to be subsequently entered into with Eastern Airlines are materially different from those being approved by the Independent Shareholders, the Company will re-comply with the reporting, announcement and/or independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM RHB OSK CAPITAL

The Eastern Airlines Transactions are subject to approval by the Independent Shareholders at the EGM. Pursuant to the Listing Rules, shareholders with a material interest in a transaction and their respective associates shall abstain from voting on the relevant resolution(s). As such, Eastern Airlines and its associate, holding an aggregate of 357,298,500 Domestic Shares, will abstain from voting on the resolutions to consider and approve the general mandate in respect of the Eastern Airlines Transactions under the Waiver, the Eastern Airlines Transactions and the Proposed Annual Caps.

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 (1) the Eastern Airlines 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 (2) whether the Proposed 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.

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. For the last two years up to the Latest Practicable Date, we acted as an independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to its non-exempt continuing connected transactions (details of which were set out in the circular of the Company dated 21 December 2012). Apart from normal professional fee paid to us in connection with such appointment, no arrangements exist whereby we had received any fees or benefits from the Company or any other party related to the aforesaid transactions, and therefore we consider such prior relationship would not affect our independence.

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 and careful enquiries. 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, the Eastern Airlines Transactions and the Proposed Annual Caps as set out below:

• (i) the annual report of the Company for the year ended 31 December 2012 (the “ Annual Report 2012 ”);

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LETTER FROM RHB OSK CAPITAL

• (ii) the annual report of the Company for the year ended 31 December 2013 (the “ Annual Report 2013 ”);

• (iii) the official website of the Company;

• (iv) the circular dated 6 January 2012 issued by the Company (the “ 2012 Circular ”); and

• (v) the Circular.

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

• (i) China Statistical Yearbook 2013 《中國統計年鑑－( 2013年》) published by the National Bureau of Statistics of China (中華人民共和國國家統計局) (the “ 2013 China Statistical Yearbook ”);

• (ii) the report headed “Production statistics report for nationwide transportation airports in 2011” 《( 2011年全國運輸機場生產統計公報》) published on the official website of CAAC on 21 March 2012 (the “ 2011 Production Statistics Report for Nationwide Transportation Airports ”);

• (iii) the report headed “Production statistics report for nationwide airports in 2012” 《( 2012年全國機場生產統計公報》) published on the official website of CAAC on 25 March 2013 (the “ 2012 Production Statistics Report for Nationwide Airports ”);

• (iv) the report headed “Production statistics report for nationwide airports in 2013” 《( 2013年全國機場生產統計公報》) published on the official website of CAAC on 24 March 2014 (the “ 2013 Production Statistics Report for Nationwide Airports ”); and

• (v) the statistics published on the official website of Eastern 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 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 Eastern Airlines

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LETTER FROM RHB OSK CAPITAL

Transactions, 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.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation regarding the Eastern Airlines Transactions and the Proposed Annual Caps, we have taken into account the following principal factors and reasons:

I. BACKGROUND

1. Information on the Group

The Group is principally engaged in provision of aviation information technology services and related services in the PRC. As referred to in the Annual Report 2013, the Group has been devoted to developing leading products and services that satisfy the needs of all the industry participants (ranging from commercial airlines, airports and air travel products and services suppliers to travel agencies, corporate clients, travelers and cargo shippers) to conduct electronic transactions and manage travel-related information. The core businesses of the Company include aviation information technology service, distribution information technology service, clearing and accounting and settlement service for aviation industry, etc.

The Group’s total revenues for each of the three years ended 31 December 2013 is set out below:

	**Year **	ended 31 December	ended 31 December	CAGR
	2011	2012	2013
	(RMB’000)	(RMB’000)	(RMB’000)
	(Audited)	(Audited)	(Audited)
The Group’s total
revenues	3,672,064	4,060,518	4,509,311	10.8%

Source: The Annual Report 2012 and The Annual Report 2013

The Group’s information in respect of the total number of bookings of seats of PRC commercial flights for each of the three years ended 31 December 2013 is set out below:

	**Year **	ended 31 December	ended 31 December		CAGR
	2011	2012		2013
	(’000)	(’000)		(’000)
Number of bookings
of seats	305,729	330,670	366,045		9.4%

Source: The website of the Company

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LETTER FROM RHB OSK CAPITAL

From the year ended 31 December 2011 to the year ended 31 December 2013, (i) the Group’s audited total revenues achieved a compound annual growth rate (“ CAGR ”) of approximately 10.8%; and (ii) the Group’s total number of bookings of seats of PRC commercial flights achieved a CAGR of approximately 9.4%. As advised by the Directors, the growth in the Group’s total revenues and total number of bookings of seats of PRC commercial flights 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 travel industries in the PRC.

2. Information on Eastern Airlines

Eastern 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.

Set out below are the information on the number of passengers carried by Eastern Airlines and the information on the revenue passenger kilometers (the “ RPK ”, being a measure of passengers, which is expressed as the product of the number of paying passengers and kilometers flown) by Eastern Airlines from 2011 to 2013:

	**Year **	ended 31 December	ended 31 December	CAGR
	2011	2012	2013
	(in	(in	(in
	approximate	approximate	approximate
	million)	million)	million)
The number of paying
passengers	68.72	73.08	79.09	7.3%
RPK	100,895	109,113	120,461	9.3%

Source: The annual reports of Eastern Airlines for the years ended 31 December 2012 and 31 December 2013

Based on the above, we noted that, from the year ended 31 December 2011 to the year ended 31 December 2013, (i) the CAGR of the number of passengers carried by Eastern Airlines was approximately 7.3%; and (ii) the CAGR of the RPK of Eastern Airlines was approximately 9.3%. We consider that the aforesaid increases in the number of passengers carried by and RPK of the Eastern Airlines demonstrated the growth of the business of the airlines.

3. The PRC economy and aviation industry

Based on (i) the 2013 Production Statistics Report for Nationwide Airports; (ii) the 2012 Production Statistics Report for Nationwide Airports; and (iii) the 2011 Production Statistics Report for Nationwide Transportation Airports, the number of

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LETTER FROM RHB OSK CAPITAL

passenger traffic of the PRC airports (measured by number of passengers) in the PRC increased from approximately 620.5 million for the year ended 31 December 2011 to approximately 754.3 million for the year ended 31 December 2013, representing a CAGR of approximately 10.3%.

Based on 2013 China Statistical Yearbook, from 2000 to 2012, the PRC’s Gross Domestic Product increased from approximately RMB9,921 billion to approximately RMB51,894 billion, representing a CAGR of approximately 14.8%.

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 total revenues of approximately 10.8% from the year ended 31 December 2012 to the year ended 31 December 2013, the Directors expect that the Group’s total revenues will continue to achieve a stable growth in the coming years.

II. THE EASTERN AIRLINES TRANSACTIONS

1. Background of the Eastern Airlines Transactions

The details on the Eastern Airlines Transactions are set out in the Letter from the Board. The provision of the various services are described in the paragraph headed “3.2 Continuing Connected Transactions under the Waiver” of the Letter from the Board. The Group will receive service fees for provision of such services and thus such transactions will increase the total revenues of the Group.

Similar transactions entered into between the Group and Eastern Airlines for the three years ending 31 December 2014 were duly approved by the independent shareholders of the Company on 22 February 2012. The Eastern Airlines Transactions are a renewal of similar transactions to be entered into between the Group and Eastern Airlines for the three years ending 31 December 2017.

The Directors are of the view that the Eastern Airlines Transactions are conducted in the ordinary and usual course of business of the Group and on normal commercial terms, and the terms of the Eastern Airlines Transactions and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

2. The terms of the Eastern Airlines Transactions

As referred to in the Letter from the Board, the service fees for the technology services are determined in accordance with the existing pricing schedules prescribed by CAAC. We have discussed with the Directors and were informed that the services fees to be charged by the Group are governed by the aforesaid pricing schedules prescribed by CAAC.

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LETTER FROM RHB OSK CAPITAL

The pricing of the “airlines passenger booking system services” is subject to the maximum guidance prices prescribed by CAAC, being the progressive per passenger booking fee ranging from RMB4.5 to RMB6.5 for domestic flights and RMB6.5 to RMB7 for international and regional flights.

The pricing of the “airport passenger processing system services” is subject to the maximum guidance prices prescribed by CAAC, being (i) RMB7 per passenger for international and regional flights and RMB4 per passenger for domestic flights; and (ii) RMB500 per aircraft for load balancing services. The Company may also determine the actual prices for airport passenger processing system services through arm’s length negotiation with Eastern Airlines, having taken into account a number of factors such as the types of the flights, transportation volume, level of services and size of the aircraft, as long as the prices do not exceed the above maximum guidance prices prescribed by CAAC.

The pricing of the “civil aviation and commercial data network services” (other than physical identified device (“ PID ”) connection and maintenance services) are not governed by guideline of CAAC or the framework of any other PRC airlines regulatory body but are subject to mutual negotiation between the parties. The pricing of PID connection and maintenance services is subject to the maximum guidance price of RMB200 per PID per month as prescribed by CAAC.

We have, on a sampling basis, reviewed the services fees charged by the Group for similar transactions with Eastern Airlines for the three years ended 31 December 2013 and the nine months ended 30 September 2014, and noted that they are within the respective price ranges prescribed by CAAC mentioned above. We have also, on a sampling basis, reviewed the agreements for similar transactions between the Group and another airline (being an independent third party), for the three years ended 31 December 2013 and the nine months ended 30 September 2014, and noted that the pricing bases, the unit prices and the payment terms were comparable. As advised by the Directors, the pricing schedules prescribed by CAAC are applicable to all airlines operating in the PRC, and all relevant services are charged within the respective price ranges. Thus, the aforesaid price schedules are the prevailing market prices and are on the normal commercial terms for the relevant services. Based on the foregoing, we consider that the service fees for the Eastern Airlines Transactions, which are based on the price ranges prescribed by CAAC, are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

Overall, we consider that the terms of the Eastern Airlines 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 Independent Shareholders as a whole.

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LETTER FROM RHB OSK CAPITAL

III. THE PROPOSED ANNUAL CAPS

1. The Proposed Annual Caps for the Eastern Airlines Transactions

For the easier reference of the Independent Shareholders, set out below is a summary of the Proposed Annual Caps for the Eastern Airlines Transactions for the three years ending 31 December 2017:

		**Proposed Annual **	**Proposed Annual **	Caps
		**for the year **	ending 31 December
		2015	2016	2017
		(RMB’000)	(RMB’000)	(RMB’000)
Eastern Airlines	Transactions	652,668	730,989	818,707

Source: Letter from the Board

2. The historical transaction amounts of the Eastern Airlines Transactions

For the easier reference of the Independent Shareholders, set out below is a summary of the historical transaction amounts of the Eastern Airlines Transactions for the three years ended 31 December 2013 and the nine months ended 30 September 2014:

Historical transaction amounts

				for the
				nine months
				ended
	for the year ended 31 December			30 September
	2011	2012	2013	2014
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Eastern Airlines
Transactions	463,035	472,562	520,303	398,677

Source: Letter from the Board

3. The comparison of historical transaction amount of the Eastern Airlines Transactions for the year ended 31 December 2013 and the Proposed Annual Cap for the year ending 31 December 2015

Based on the above, we noted that the Proposed Annual Cap for the Eastern Airlines Transactions for the year ending 31 December 2015 is higher than the historical transaction amount of the same services for the year ended 31 December 2013 by 25.4%. Such increase is equivalent to a CAGR of approximately 12.0%.

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LETTER FROM RHB OSK CAPITAL

4. The comparison of annualized transaction amount of the Eastern Airlines Transactions for the year ended 31 December 2013 and the Proposed Annual Cap for the year ending 31 December 2015

The transaction amount for the Eastern Airlines Transactions for the nine months ended 30 September 2014 were approximately RMB398,677,000. On such basis, the annualized transaction amount of such transaction is approximately RMB531,570,000.

Based on the above, we noted that the Proposed Annual Cap for the Eastern Airlines Transactions for the year ending 31 December 2015 of approximately RMB652,668,000 is higher than the annualized transaction amount of the Eastern Airlines Transactions for the year ending 31 December 2014 by approximately 22.8%.

5. Basis of the growth in the Proposed Annual Caps

The Proposed Annual Caps for the Eastern Airlines Transactions are determined with reference to (i) the historical transaction amounts of such type of transactions between the Group and Eastern Airlines for the year ended 31 December 2013; (ii) the historical growth of 10% in the transaction volume between the Group and Eastern Airlines for the year 2013; (iii) the expectation that the historical growth of 10% in 2013 will continue in the next three years ending 31 December 2017 after taking into account the anticipated annual growth of approximately 11% in the PRC’s gross passenger transportation volume under the “Twelfth Five-Year Development Plan of the PRC Civil Aviation”; and (iv) a buffer representing 2% in the annual transaction volume between the Group and Eastern Airlines to accommodate the unexpected fluctuation in the annual growth of transaction volume.

We note that the business growth of the Group, with a CAGR of approximately 10.8% for the Group’s audited total revenues and a CAGR of approximately 9.4% for the Group’s total number of bookings of seats of PRC commercial flights during the three years ended 31 December 2013, is in line with the transaction growth trend between the Group and Eastern Airlines, as reflected by historical growth of 10% in the transaction volume for the year 2013.

We further note that are positive trends for (i) the business growth of Eastern Airlines, as reflected by the increase in number of paying passengers carried by Eastern Airlines during the three years ended 31 December 2013 with a CAGR of approximately 7.3% and the increase in RPK of Eastern Airlines during the three years ended 31 December 2013 with a CAGR of approximately 9.3%; (ii) the anticipated annual growth of approximately 11% in the PRC’s gross passenger transportation volume under the “Twelfth Five-Year Development Plan of the PRC Civil Aviation; and (iii) the economic growth, as reflected by the steady growth of the Gross Domestic Product in the PRC, with a CAGR of approximately 14.8% from 2000 to 2012 based on the 2013 China Statistical Yearbook.

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LETTER FROM RHB OSK CAPITAL

Based on the above, we consider the annual growth rate is fair and reasonable.

We consider that the Proposed Annual Caps for the three years ending 31 December 2017 are fair and reasonable so far as the Independent Shareholders are concerned, taking into account of:

• (i) the Proposed Annual Cap for the year ending 31 December 2015 is based on the historical transaction amount for the year ended 31 December 2013, and the corresponding amount for the nine months ended 30 September 2014;

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

• (iii) the historical growth in the Group’s total revenues and the total number of bookings of seats of PRC commercial flights; and

• (iv) the Proposed Annual Caps would provide an adequate buffer for the Group to accommodate any unanticipated revenue from the Eastern Airlines Transactions. Such, in turn, would facilitate the Group’s business growth for the three years ending 31 December 2017. The average growth rate of 12% is consistent with (1) the business growth of the Group, with a CAGR of approximately 10.8% for the Group’s audited total revenues and a CAGR of approximately 9.4% for the Group’s total number of bookings of seats of PRC commercial flights during the three years ended 31 December 2013, which is in line with the transaction growth trend between the Group and Eastern Airlines, as reflected by historical growth of 10% in the transaction volume for the year 2013; (2) the positive trends for (a) the business growth of Eastern Airlines, as reflected by the increase in number of paying passengers carried by Eastern Airlines during the three years ended 31 December 2013 with a CAGR of approximately 7.3% and the increase in RPK of Eastern Airlines during the three years ended 31 December 2013 with a CAGR of approximately 9.3%; (b) the anticipated annual growth of approximately 11% in the PRC’s gross passenger transportation volume under the “Twelfth Five-Year Development Plan of the PRC Civil Aviation; and (c) the economic growth, as reflected by the steady growth of the Gross Domestic Product in the PRC, with a CAGR of approximately 14.8% from 2000 to 2012 based on the 2013 China Statistical Yearbook; and (3) the CAGR during 2013 to 2015 based on the comparison between the applicable Proposed Annual Cap for the year ending 31 December 2015 and the applicable historical transaction amount for the year ended 31 December 2013.

Based on the aforesaid, we consider that the Proposed 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.

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LETTER FROM RHB OSK CAPITAL

RECOMMENDATION

Having considered the above principal factors and reasons, we consider that the Eastern Airlines 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 Proposed 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 proposed resolutions to approve the Eastern Airlines Transactions and the Proposed Annual Caps at the EGM. We also advise the Independent Shareholders to vote in favour of the proposed resolutions to approve the Eastern Airlines Transactions and the Proposed Annual Caps at the EGM.

Yours faithfully, For and on behalf of RHB OSK Capital Hong Kong Limited Johnny Lam Conrad Cheng Managing Director Director Head of Investment Banking Corporate Finance

Note: Mr. Johnny Lam is a licensed person registered with the Securities and Futures Commission and regarded as a licensed representative of RHB OSK Capital Hong Kong Limited to carry on Type 6 (advising on corporate finance) regulated activity under the SFO. Mr. Johnny Lam has over 15 years of experience in the corporate finance industry and has participated in the provision of independent financial advisory services for connected transactions involving companies listed in Hong Kong.

Mr. Conrad Cheng is a licensed person registered with the Securities and Futures Commission and regarded as a responsible officer of RHB OSK Capital Hong Kong Limited to carry on Type 6 (advising on corporate finance) regulated activity under the SFO. Mr. Conrad Cheng has over 13 years of experience in the corporate finance industry and has participated in the provision of independent financial advisory services for connected transactions involving companies listed in Hong Kong.

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APPENDIX

GENERAL INFORMATION

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

1. INTERESTS AND SHORT POSITIONS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY AND ASSOCIATED CORPORATIONS

As at the Latest Practicable Date, none of the Directors, supervisors or chief executive of the Company had any interests or short positions in any shares, underlying shares and debentures of the Company or any of its associated corporations (as defined in Part XV of the SFO) which are 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 are required to be entered in the register maintained in accordance with Section 352 of the SFO, or are required to be 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.

As at the Latest Practicable Date, each of China TravelSky Holding Company (中國 民航信息集團公司), China National Aviation Holding Company, China Southern Air Holding Company and Eastern Holding had interest in the Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

As at the Latest Practicable Date,

• (i) Mr. Wang Quanhua (a non-executive Director) was an employee of China Southern Air Holing Company;

• (ii) Mr. Cao Jianxiong (a proposed non-executive Director) was an employee of China National Aviation Holding Company;

• (iii) Mr. Cai Kevin Yang (a non-executive Director) was an employee of Eastern Holding.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, proposed Director or supervisors of the Company is a director, supervisor or employee of a company which had an interest or short position in the 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.

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APPENDIX

GENERAL INFORMATION

2. SERVICE AGREEMENT

As at the Latest Practicable Date, none of the Directors or supervisors 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)).

3. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2013, being the date to which the latest published audited financial statements of the Group were made up.

4. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors or supervisors had any interest, direct or indirect, in any assets which had been since 31 December 2013, 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.

5. MATERIAL INTEREST IN CONTRACTS

As at the Latest Practicable Date, none of the Directors or supervisors 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.

6. 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.

7. EXPERT

• (a) RHB OSK Capital is a licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. Its letter of advice to the Independent Board Committee and the Independent Shareholders in respect of the Eastern Airlines Transactions and the Proposed Annual Caps dated as of the date of this circular was given for the purpose of incorporation herein.

• (b) As at the Latest Practicable Date, RHB OSK Capital 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.

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APPENDIX

GENERAL INFORMATION

• (c) As at the Latest Practicable Date, RHB OSK Capital did not have any interest, direct or indirect, in any assets which had been since 31 December 2013, 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.

• (d) RHB OSK Capital 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.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following agreements will be available for inspection at the Company’s principal place of business, Room 3606, 36/F China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong during normal business hours (public holidays excepted) from the date of this circular up to and including the date of the EGM:

• (a) the agreements between the Company and Eastern Airlines in relation to the Eastern Airlines Transactions from 1 January 2011 to 31 December 2013.

9. GENERAL

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

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NOTICE OF EGM

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(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0696)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of TravelSky Technology Limited (the “ Company ”) will be held at Conference Room, Prime Hotel, 2 Wangfujing Ave., Dongcheng District, Beijing, the PRC, at 10 a.m. on Tuesday, 23 December 2014 to consider and, if thought fit, approve the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. The proposed appointment of Mr. Cao Jianxiong as the non-executive director of the Company;

2. “ THAT :

3. (a) the grant of a general mandate for a period of three years ending 31 December 2017 to the Directors to carry out the Eastern Airlines Transactions and all the transactions contemplated thereunder; and

4. (b) the Proposed Annual Caps for the Eastern Airlines Transactions for each of the three years ending 31 December 2017,

be and are hereby approved and that the Directors be and are hereby authorized to take any step as they consider necessary, desirable or expedient in connection with the Eastern Airlines Transactions and the transactions contemplated thereunder.”

By the order of the Board TravelSky Technology Limited Yu Xiaochun

Company Secretary

Beijing, the PRC 7 November 2014

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NOTICE OF EGM

Registered office: 7 Yu Min Da Street, Houshayu Town Shunyi District, Beijing 101308 the PRC

Notes:

1. Details of the above resolutions are set out in the circular of the Company dated 7 November 2014.

2. For the purpose of determining Shareholders’ entitlement to attend the EGM, the H Share register of members of the Company will be closed from Sunday, 23 November 2014 to Tuesday, 23 December 2014 (both days inclusive), during which period no transfer of H Shares will be registered. In order to attend the EGM, all share transfers, accompanied by the relevant share certificates, must be lodged for registration with the Company’s Registrar, Hong Kong Registrars Limited, at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, no later than 4:30 p.m. on Friday, 21 November 2014. The holders of H Shares whose name appear on the Register of Members of the Company maintained by Hong Kong Registrars Limited on or before the above date will be eligible to attend the EGM.

3. Each shareholder who is entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on behalf of him/her. A proxy needs not to be a Shareholder of the Company.

4. In order to be valid, the instrument appointing a proxy together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power of attorney or authority, should be completed and deposited at the Company’s registered office (for holders of A Shares) or the Registrar of the Company (for holders of H Shares), at least 24 hours before the EGM or any adjourned meeting thereof. Completion and return of the proxy form will not preclude a Shareholder from attending in person and voting at the EGM or any adjournment thereof should he/she so wish.

5. In case of joint shareholdings and the shareholder or the proxy attending the EGM is more than one person, the vote of the senior joint shareholder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint shareholder(s) and for this purpose seniority will be determined by the order in which the names appear in the register of members of the Company in respect of the joint shareholdings.

6. Shareholders who intend to attend the EGM in person or by proxy should return the reply slip to registered address of the Company on or before Tuesday, 2 December 2014 in person, by mail or by fax.

7. The EGM is expected to last for half a day. Shareholders (or their proxies) attending the EGM shall bear their own travelling and accommodation expenses. Shareholders or their proxies shall produce their identity documents when they attend the EGM.

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