Airline Leader Interview, Qantas Domestic CEO Markus Svensson

Transcript

Oriel Morrison-Higgins:So everybody, I'm very excited to have Markus Svensson. Obviously you all know Markus, the CEO of Qantas Domestic, with us for the first chat this afternoon. Welcome.

Markus Svensson:Thank you, thank you for having me here.

Oriel Morrison-Higgins:Now I'm a bit concerned that I'm calling you by the wrong name. Should I be calling you by Frank or Johan or Markus?

Markus Svensson:Well, call me Markus. Frank or Markus. Markus is my name, but my full name is Frank Johan Markus. And very confusing, being born in Sweden, it doesn't matter. What matters is your social security number. It's true. So only until I moved here I realised all my credit cards, my passports, my boarding passes says Frank, which tend to confuse staff sometimes when I travel.

Oriel Morrison-Higgins:But it's kind of not really fair because it's sort of like having a mystery shopper on the plane. If they don't know the face and they see, oh, there's Frank sitting there.

Markus Svensson:Yes, that's true. It happens all the time. It's actually really good. I'm not complaining.

Oriel Morrison-Higgins:So the other thing that I found out about Markus, I've just found out about Markus, which I think we should share, is Markus likes jumping into rivers in Germany. So tell us about that.

Markus Svensson:Yeah, I've just come back from 3 weeks of holiday and Oriel asked me what's the coolest thing. And I think one of the weirdest and coolest things I did with my kids was in Munich. If you've never been to Munich, the English Garden there has a small stream, a river running through it. People can surf on it, so people get their surfboards on, but also what you can do is just get your swimmers on, jump into the river, and because of the stream, it takes you about 3 or 4 kilometres. Just, you're floating along the river, there's some hurdles along the way, and then eventually you get out of the river, take the tram back in your swimmers, 2 stops.

Oriel Morrison-Higgins:That's great.

Markus Svensson:And we kept on doing that the whole afternoon. It was quite a unique experience and a cool experience for being in a major city like Munich is. And it was me and all the university students.

Oriel Morrison-Higgins:That's how it felt like. That's fantastic. Did you fly Qantas?

Markus Svensson:We did fly Qantas to Europe, yes.

Oriel Morrison-Higgins:Oh, you had to think about that for a moment.

Markus Svensson:No, we couldn't fly Qantas in Munich, but obviously to Europe we did.

Oriel Morrison-Higgins:So Markus, tell me about Project Sunrise. I mean, this is really exciting. First flight touching down. You know, it's been some time coming.

Markus Svensson:Yes.

Oriel Morrison-Higgins:How excited are you? I mean, I can imagine within Qantas itself there must be this palpable air of excitement around.

Markus Svensson:Oh, I mean, personally I'm super excited, and there's a couple of people in this room who's been on this journey because actually it started, I would say, with a 787-900 or 789 when we did Perth-London because that was the first time we kind of tried to do something that then led to Sunrise. So being involved in that, I think 2014, '13, Lyle Scott, who was here, um, being involved in that, doing the business case and then seeing it happening is, is quite cool. And then obviously we tried Sunrise multiple times, but, um, we had COVID in between. So now finally happening and being very involved in making sure the seats are certified, which is a big nightmare for the industry at the moment. Um, so really, really exciting and I, I, I can't wait And it was great to see the aircraft in Melbourne this weekend as well. So yeah.

Oriel Morrison-Higgins:So what's the insight? What can you tell us that, you know, we haven't already seen in the media about the people that were on board and how they felt during that flight? I mean, when you think about flying 20 hours, okay, probably if you're flying business or first, but if you're flying an economy seat for 20 hours, do you think you're going to get people doing that? Over and above stopping in Singapore and having a day off to, I don't know, relieve the pressure?

Markus Svensson:Yeah, I think we just did a survey on a lunch here. I think it's really— we're not going to attract everyone, and we don't— I mean, the size of aircraft, we cannot attract everyone. For me, it's really about finding those parts of the markets who want to do it. So obviously we know for business travel, going direct is a big thing. Personally, I would pick the long flight directly. So if I go from Sydney to to London, I'd rather go via Perth and just have, you know, a short leg on the way home, even if it was in economy. So I think there's a subset of the market, we know that's big enough, and particularly for business travel, particularly for people up the front. But I think the economy is going to do really well as well.

Oriel Morrison-Higgins:Now I just want to mention for all of you out there in the audience today, we will take some questions at the end of our conversation. So we won't have time for very many. If you do have anything, you can use Slido to ask the question, but please do send them through whenever you think of them and we'll get to as many of them as we can at the end. Markus has said yes to that. So what does this look like operationally? Obviously you've had some delays with the delivery of the aircraft, so starting slightly later than originally planned, but what does it look like in the lead-up?

Markus Svensson:So we'll, we'll get the first aircraft in April, but you can't just start a London, Sydney to London with just one aircraft. You need 4. So it will be later that year we will start. I think we haven't really set the exact date, but probably aligns with the seasonal changes you have in the airline industry. But yeah, we've got to get the aircraft delivered. I know some Airbus guys are here as well, so pressure's on. And so far we're doing fine. But yeah, that's, that's, it takes a, you've got to have a small fleet to do it.

Oriel Morrison-Higgins:Mm-hmm.

Markus Svensson:Just given, almost fly for a whole day.

Oriel Morrison-Higgins:Yeah, yeah, absolutely. So talking about fleet upgrades, obviously that's something you're consistently thinking about and updating and changing. Where are we at right now? There have been obviously supply chain disruptions, you know, over the last little while. Where are you at with your fleet upgrades?

Markus Svensson:Yeah, so we're doing— I mean, last year, this financial year we just finished, we had massive progress. Obviously we had our first A321XLR into into service. We have 7 of them now. They're performing really well. Customers love them. It's a great aircraft and we're doing some really cool stuff obviously right now domestically, but we'll start flying internationally later this year. We've got the A220. So we've got 12, we have 12, we actually have 13 tomorrow. So the 13th aircraft is on its way to Australia. Again, another great aircraft, really changing how we think about And I know Scott Seglin from Jetstol, who used to be at Qantas, talked about it in the previous sessions, really changing how we think about the network and the range and the capability of what this aircraft can do, how many more routes you can now fly point to point that in the past you might have had to connect. So which is really favourable, particularly for cities like Adelaide, where you can then have more direct services that you couldn't have.

Oriel Morrison-Higgins:How quickly— I mean, this is all due to, you know, new technology obviously, and the research that's being done on flying and planes, and it brings us to the conversation about AI and how that's changing the industry. How quickly are these things changing? And when it comes to flying and planes, it takes so long once the order's placed to actually get the planes. How do we stay up to date?

Markus Svensson:Yeah, it's a I think there's 2 answers to that. When you look at the fleet, it takes a long time. And I appreciate for the OEMs, it takes a long time to develop a new aircraft. And also for the engine manufacturers, that's a very long process. I don't think that process is going to be AI'd in any shape or form. But I just want to say, I think we have seen— all airlines have seen a lot of challenges getting aircraft delivered. I think that is becoming better and better. I think the certainty we have on our deliveries now, the 220s, the 321s, and even the 350s when they're coming, and 787s as well, getting— it's getting greater. So I'm not sure that AI is going to change. What I do think AI is going to do and has done for us already is really help us to run good operations. That is, we have Flight Focus Flights, which is a kind of a tool, AI-based tool, That really helps us to pick out what's the most critical flights every morning. So we know that these 10, 15 flights, these are the ones we've got to get right. If we get them right today, we will have less knock-on effect in the domestic network or also the Tasman network. So I think AI has a lot of role to play. I'm not sure, and love to hear what the manufacturer says, but I think that's probably, at the end of the day, you've got to build aircraft, you've got it certified, you've got to test it, you've got to make sure it works. So it probably helped the development process, but I think for more, what I see is in the operations.

Oriel Morrison-Higgins:How so in the operations? Because again, this technology is changing so quickly. I mean, what does the overall operational picture look like when you insert AI into it?

Markus Svensson:Yeah, I think we're in a unique industry in the sense that, do I think you're going to get rid of cabin crew and pilots and engineers who's fixing aircraft? No, it's— I mean, we're still going to have to have cabin crew. You're still going to have the amount of crew complement to man the doors. I don't think AI is going to replace that. Where I see is really 3 things where it will help, and it's just not AI. I think it's technology in general. It's AI in terms of using large algorithms to actually help you to optimise your network, being what tail you're going to use or what aircraft you're going to use in that route on that day, depending on winds, depending on where it's located, depending on engineering issues on it, to making sure that in disruption I can re-optimize my network as fast as possible to have the least disruption. So I think that's a great thing. That's more the decision-making or decision support. I think together with AI, what you can do in vision technology, I'm really excited about that because able to use vision technology in terms of enhancing safety so you can pick up things that you think is going to go wrong early on. It's like having a self-driving car but, you know, on steroids. And I think again any type of automation or robotics particularly in ground operations powered by AI is another game changer. So I think it's really different parts of the business rather than everywhere. If you're a bank it'd probably be a different How quickly is it shifting? Really fast, particularly on the decision-based tools. I think about 18 months ago I would say we were a laggard. We've had some amazing teams, it was just really a lot of people doing it on their spare time, coming up with amazing tools how we optimise our flying. And really because As a legacy airline in that sense, we have a lot of old systems that are very siloed and be able to use that to bring that together and then optimise based on that, it's been really good for us.

Oriel Morrison-Higgins:Yeah.

Markus Svensson:So yeah, I think what we're doing now in terms of predictive maintenance, as I said, optimising the network, optimising the network in terms of disruption, making sure we find the best connection for people, huge step forward. But more to go.

Oriel Morrison-Higgins:Is there anything that worries you when it comes to AI?

Markus Svensson:Oh, I went on holiday with my kids and I have a 19-year-old who is at university. So I spent 3 weeks talking about this topic. I probably was a bit more concerned 6 months ago and I spent a lot— I actually think it's like anything in the, you know, In history, we went from being an agricultural society to industrial society, and then there was a lot of upheaval with that. There will be some upheaval, but at the end of the day, I think it'd be— we'll be better off as a human race. But sure, there won't— it won't be right. But I am a— I'm a believer in the sense that I think that there will be some negative unforeseen outcomes, but overall, I'm— I firmly believe it's going to be good. Thank you.

Oriel Morrison-Higgins:So obviously this AI is impacting every single industry, it doesn't matter where you are. And in the airline industry, obviously we're talking about Qantas and the airlines, but it's having a big impact, I think, on airports as well. And there's a couple of airports I wanted to talk to you about. One of them, of course, is Melbourne.

Markus Svensson:Yeah.

Oriel Morrison-Higgins:You know, you've made some recent announcements there about your long-term commercial deal. You're going to have, you know, a sort of bigger capacity there. What does that mean for where you're going to fly?

Markus Svensson:Well, that's the beauty with aircraft. You don't need to make that decision yet. But obviously the capability we have with more 350s who can fly both the Sunrise and what we call a normal, normal version, for better words, and the 321 as well as the 220. So we have lots of opportunities. And it really comes back to the point where what might not have worked with a 330 because a 330 is too big, a widebody, What can I make work with 321s? So we haven't made any decisions, but for me, and the network guys know this, is it's the ability, the capability that you get from the aircraft that allows you to try different things. Because an XLR can easily get up to Asia from Australia, from the East Coast, which is quite something you can't really do with a 737.

Oriel Morrison-Higgins:And the new runway, of course, is going to make a difference there as well. 2031, right before the Olympics.

Markus Svensson:Yes, it's all— well, that's Brisbane. But anyway, it's all about capacity. I think we want growth. I think everybody in the industry wants growth. And I think, you know, we— I think anything, any growth is good. So we're very supportive of that.

Oriel Morrison-Higgins:And then on the other hand, we've got Western Sydney.

Markus Svensson:Yes.

Oriel Morrison-Higgins:And of course yesterday, first freight flight.

Markus Svensson:Yes.

Oriel Morrison-Higgins:Yep. What's the inside knowledge on that? How did that go?

Markus Svensson:It went very well. So we're up and running now. We built a very high-tech automated freight shed, which is a bit of a difference from what we have in other parts of the country. So it's great to start from a clean slate and build something that is highly automated, very efficient. Again, I'm really excited about Western Sydney. There's no doubt that Sydney Basin needs a second airport. But I'm also very cautious in the sense that These things normally takes time. So we are starting with Jetstar in October and then Qantas starting in late March. So really excited. I think the guys built an amazing airport out there. If you've been there, it's state of the art from a design perspective. I think any airport in Australia is a bit jealous because it is very nice. And it will be really good, but all these things takes time. And And I think again, you've got to— when you build a new airport, you've got to make sure you have the connections. So getting the train lines is going to be a big, big thing for it.

Oriel Morrison-Higgins:Well, I was just about to ask you about that. Who do you see using this particular airport? I mean, you said you're starting off with Jetstar, you're going to have some Qantas flights coming out of Western Sydney as well, international, domestic. Who do you see as your, you know, your customers for this particular airport? Because at the moment, the way the transport stands and the infrastructure around the airport, it's, you know, over an hour to get into the city.

Markus Svensson:Yeah, I think it will be— start off as a leisure-based airport. I think all the announcements, even from other carriers, kind of point to that, where you have less— so you're more flexible around schedule, more flexible around timing. I think, yes, if you live in that part of Sydney, there's definitely some business travellers, but again, Business traveller normally wants frequency and schedule, and that's going to take some time. So I think it will start off as a leisure airport, and that's hence why we're starting with Jetstar as well.

Oriel Morrison-Higgins:And do you believe that once infrastructure, the train line, etc., is built and up and running, that that might start to take some of your— might almost cannibalise what's happening at Sydney, or do you not see that as a possibility?

Markus Svensson:I think that for the coming years, I think the Well, there's always a risk of cannibalisation, but I think the point I'm trying to make is Sydney's proposition is quite different. You have so much international capacity comes in that connects to domestic network. To replicate that in Western Sydney, that's a long, long way away. I think Gatwick in London is probably the best analogy. It started off as very much a leisure airport. As Heathrow's getting fuller and fuller, it's getting more and more. It's the same in Sydney. I think that's— we're going to say similar things here.

Oriel Morrison-Higgins:So when we talk about increasing capacity, there's been a lot of discussion so far this morning about the potential of new entrants into the domestic market particularly. There's 3 that's out there now. There's others around the room that are saying there could be 5, there could be more sort of coming in over the next few years. How do you feel about that? I mean, there's— ACCC said this morning, Matthew said there's plenty of room for new entrants? What are your— what's your position on Zink, Koala, Vietjet?

Markus Svensson:I mean, first of all, we welcome competition. And I know it sounds like a bit of a one line, but I think competition is really, really important. It pushes you to do better. My team knows that we are benchmarking our domestic competitors all the time, making sure we perform better. And I think that's what competition does. So I, we welcome competition. Who it's going to be, who do I know? But we will obviously, we will, whoever comes, we'll compete with them and we'll make sure we provide a better service.

Oriel Morrison-Higgins:There's been a lot of airlines that have tried to come in, you know, and compete, and a lot of airlines that haven't succeeded for various reasons. What sort of airline would it take to succeed in this market as a third player?

Markus Svensson:Great. It's a million-dollar question, isn't it?

Oriel Morrison-Higgins:It is. There's people in here that might—

Markus Svensson:Yeah, I'm not sure. I'm not sure I know the answer to that. But I— because lots of different and different types of airline has tried. I think end of the day, whatever model you pick, you have to be able to execute in that model. And in a sense, you've got to be able to have operations. You've got to have to get customers' trust. I think that's probably number one. Then you can pick different models. But if you don't do a good job of getting people from A to B within the time they expect to get there and not losing their bags or not cancelling flights, I think that's actually number one. And then you can work the rest out.

Oriel Morrison-Higgins:You need to start off with more than one or two planes, don't you?

Markus Svensson:Oh, of course. I mean, it is a scale game to some extent. So yes, that's a given. Again, you've got to scale You have to have a plan, a plan to scale.

Oriel Morrison-Higgins:How much time do you and your team spend thinking about competition and the potential for future competition in the market?

Markus Svensson:A lot. I mean, discussion we have in the management team, it's discussion we have with the board. It's always one of the key topics with the board. But we are very— in that sense, we're focused on competition because we know that makes us better. But yes, it's definitely something we spend a lot of time talking about and thinking about.

Oriel Morrison-Higgins:So we started off today talking about the market and how complex it is at the moment, both on the negative side but also on the positive side. I mean, not only is there geopolitics, but what that's doing to costs both domestically and of course internationally as well, what that therefore as a result that's doing to margins, the increasing regulation. You know, there's a lot going on in the airline industry. industry at the moment. And one of the questions I put to the earlier panel was, what is the biggest pain point here? And it seemed to come down to costs. All sorts of different kinds of costs.

Markus Svensson:Yeah.

Oriel Morrison-Higgins:And one of the things that was mentioned this morning was on a particular flight— correct me if I'm wrong— Sydney to Auckland, Melbourne to Auckland, I'm not 100% sure, the flight cost was $200 and something. The airline was getting $50.

Markus Svensson:Yes.

Oriel Morrison-Higgins:You know, that absolutely blew my mind.

Markus Svensson:Yeah. I assume that's a Jetstar flight.

Oriel Morrison-Higgins:It is a Jetstar flight, yes.

Markus Svensson:That was tasked with a passenger movement charge.

Oriel Morrison-Higgins:Yes.

Markus Svensson:That makes sense, yes.

Oriel Morrison-Higgins:Yeah. So how can airlines survive when they take $50 out of a $207 airfare?

Markus Svensson:Well, it's a tough industry. It's a great industry, by the way, but it's a tough industry. And I mean, that's why general margins in the industry have been low because you have a High level of fixed cost, and it doesn't take much change in demand for you to— or fuel cost to put into red. So, um, but I mean, regulation and regulatory costs, uh, or what we call industry cost, is a challenge. It's grown way faster than CPI or inflation since COVID and we're all feeling it. I heard it on the regional panel. We're seeing it. And it's something as an industry I think we need to really think about because we don't want to be at a point where it becomes so expensive to fly that you're destroying demand. And that's the kind of the challenge we have now with fuel prices being as high. You can't just put the fares up as much as the fuel gone up because then there's no demand and people say, I'm not travelling, or I'm driving, or whatever. So you've got to be very careful of getting that balance right. Thank you, Markus.

Oriel Morrison-Higgins:So how do you deal with the fuel prices? Because it's not just the level of the, of the oil price right now and the fuel price right now, it's also the uncertainty that's there at the moment and the geopolitical situation and what could happen tomorrow versus what happened yesterday. How do you deal with that when you're running an airline?

Markus Svensson:Well, that's one of the great challenges, but also what keeps your job very interesting. It's really hard to first— I mean, we spend a huge amount of time to understand demand signals. The fuel price is what it is. We, we can't really affect it. Yes, we can hedge, so that gives you a level of protection. It's really hard to hedge your refiners margin, which is the difference between interplane and what the Brent price is that you see quoted. So yes, you can hedge to some extent, but again, it's just— It's a bit like a hedge fund. It's being flexible with capacity, deploying capacity, moving capacity around if you have to. It's what makes our job, you know, interesting as well. But it is hard, I'm not going to say, and there is definitely not a silver bullet. I think we're doing a good job. I think as a group we're doing a good job. But do you always get the answer right?

Oriel Morrison-Higgins:No. So what is that tipping point where you start to impact demand? I mean, you have to push some of these higher costs through to ticket prices. What's the tipping point?

Markus Svensson:I think that's the Goldilocks zone. We love to hit that. But it depends on market segment. So for Jetstar would be very different, say, from Qantas. So price-sensitive leisure, obviously price-sensitive leisure, it's a way lesser point of it. Whereas for the business traveller, you probably have a slightly less variable demand, so you probably can push a bit more through there. But again, too much, and I don't know what too much is, you'd definitely see demand destruction.

Oriel Morrison-Higgins:So we've got some questions coming through, but before we get to that, what is the role here, especially given our situation now that we've been talking about with fuel prices where they are, for SAF? And how quickly are we moving? I mean, there are new technologies, there's new sort of answers, I suppose, to the Yeah. But it's far from mainstream, and we're not close to that point as yet. So what is the role right now, and who should be taking the lead on this?

Markus Svensson:Yeah, I mean, it's obviously— this is going to need some form of government intervention or incentives, I believe. And it needs investment, and it needs investment in Australia. I think we've got to be very clear about that. We've got a unique opportunity with the landmass and the agricultural base we have to be a leader here, but then you have to have investment in this country. So, um, it's, it's gonna be a challenge, and we've seen that globally. We've seen in the US they had lots of incentives during the Biden administration. A lot of development happened. Obviously, some of those incentives come off now in the new administration, and then the industry industry kind of becomes a challenge, because I don't think it will happen without some level of intervention or support.

Oriel Morrison-Higgins:Or support from the government.

Markus Svensson:Yes.

Oriel Morrison-Higgins:So if you— if we had the support that— well, if you had the support for SAF that you needed, or the industry needed, I should say, what does that look like? What does the timeline look like to actually using SAF on a more regular basis? Yes.

Markus Svensson:I mean, these are investments, and we do invest through our joint investment funds we have with Airbus and Boeing. It's going to take longer than I think anyone would like, just because building this type of infrastructure is years in the making. So it's a long journey. I think the most important is you have a vision of where you want to be. You might not get there in 5 years, it might take you 10 years to get there, but at least this is where you want to get to.

Oriel Morrison-Higgins:Is it the right thing for the industry?

Markus Svensson:Well, we have to decarbonise the world in some shape or form, and we need to do it. I mean, it's not— I think that's a really important point. It's not just about the airline industry. There's so many industries that have to pull their weight in it as well, but we've got to do our bit.

Oriel Morrison-Higgins:OK. All right. OK, we've got a question here from Mike. Well, this goes along from what we've been saying. Thank you, Mike, for your question. Is there a realistic opportunity to introduce electric or hybrid electric aircraft into your domestic network within the next 5 years?

Markus Svensson:I wish I could say yes, but I'll be very honest, I don't think of the scale and the size of aircraft we are flying, I don't think that's going to be there. I mean, there is— we would love the turboprop manufacturers to take that step. I think in the size of aircraft we're operating, it's It's unfortunately way longer than 5 years. Maybe there are some individual kind of 1 or 2 manned kind of helicopters, for better words, that might work. But for us, I see it's way longer than 5 years. I don't have a timeframe, but not within 5 years, no.

Oriel Morrison-Higgins:Hydrogen?

Markus Svensson:Great question. I think that's a big question. I think it's something you should ask the Airbus guys when they get up here later.

Oriel Morrison-Higgins:Is there an Airbus person in the room?

Markus Svensson:Yeah, I know. someone on the panel. I'm putting you on notice.

Oriel Morrison-Higgins:Hydrogen. You're going to get asked the hydrogen question.

Markus Svensson:I think it's more a question for the OEMs than for us.

Oriel Morrison-Higgins:Yeah. Okay. All right. We have a question here from someone in the audience. Given Adelaide's central location and the range of the A321XLR, does Qantas see a longer-term opportunity for Adelaide to develop as a hub for services to APAC? Great question.

Markus Svensson:I would believe that was one of our staff. So when I do roadshows in Adelaide with our staff, we've got about 900 staff in Adelaide, that is by far question 1, 2, and 3. So I think that, but that's the beauty with XLR. It's perfect for places like Adelaide. We've got to get enough of them. We're going to get the one with the lifelike version, but absolutely, do I see that coming at some point? Yes. I'm not the network planner, but for From what I can see, these type of aircraft is perfect.

Oriel Morrison-Higgins:Okay. Alright, Markus, Frank, with the stopping of surcharges, will airfares go up?

Markus Svensson:I'm not sure I understand the question with stopping of airfares surcharges.

Oriel Morrison-Higgins:Does the anonymous person want to elaborate on your question? Oh, credit card surcharges? Was that what was meant?

Markus Svensson:Well, I think that's a— it's not just an airline question, it's a general industry question. So I think we'll see what happens. I mean, when other countries have done what Australia are trying to do in October, it has driven prices up across everything, and probably more than what the surge was in the past. So I don't know, but it's really hard to— it's a general industry— It's a general economical question, not just one for us.

Oriel Morrison-Higgins:Does QF monitor the impact on regional towns after a route termination, like as Adelaide to Mount Gambier?

Markus Svensson:First of all, I'll say, I mean, it's a shame we couldn't make it work. We tried really, really hard, and I was involved in the very first start of that route in 2021. And I know hand on heart we tried really hard to make it work. We couldn't. There's just not enough demand and not enough particularly seat factor on those routes. So unfortunately we're not there anymore, but because we couldn't make it work. I think that's, you know, if we could make it work again and there was something changed, we would be back, but I just can't see it happening right now.

Oriel Morrison-Higgins:What would need to change to make that particular route work?

Markus Svensson:I think it's just demand. And that's a challenge. I mean, it was talked about in the regional panel, is it's really hard in regional market to stimulate demand. And many times your competition is the drive market. So how do you beat the drive market? And it's challenging. It's really hard. And we talked about the cost particularly. That's been absolutely challenging for the turboprop operations more than jet operations.

Oriel Morrison-Higgins:Mm-hmm.

Markus Svensson:It's really hard. But it's about how do you beat the drive market? And how do you stimulate demand from big region— big cities of Australia to go to the regions?

Oriel Morrison-Higgins:So when we look at where you are now and where you want to be in 5 years' time, I mean, Qantas is a world-leading airline. What are the 2 to 3 things that you need to get right in the next 2 to 3 years?

Markus Svensson:I think first of all operational performance. So we— I'm very proud to say that we were the best performing airline in terms of online on-time performance in June, and which I think is— that's where we want to be. We want to be one of the best in the world. We want to provide our customers with that because we know particularly in the domestic market It really matters. And that obviously supports the customer outcomes and we see that in our customer thing, NPS. I think the second point for us, big for us, we are going through a massive fleet renewal from narrowbodies to widebodies. So to get that right is really challenging, not just in terms of getting deliveries but making sure we've got pilot trained, cabin crew trained, engineers trained, all the infrastructure. That's for me to get that right and— And 5 years from now we've been kind of over the hump. We are at the hump at the moment. Domestically, we kind of— this year was probably the hump and then we can come down a bit. International is getting into it. Those probably are the 2 most important things. But if you get those 2 right, you hopefully should be able to provide customers. And I think that's the 3rd thing is just continue to innovate in the customer space. There's a lot of things we can do. Digital is definitely our friend in terms of making sure the journey is as seamless as possible, and particularly in time of disruptions.

Oriel Morrison-Higgins:And this is where technology comes in, is it not?

Markus Svensson:Absolutely. Technology is our friend there, and we've got to leverage it and got to use it as much as we can to, A, minimise the impact of disruption. But if it happens, how do you do it as good as possible and as personal as possible Excellent.

Oriel Morrison-Higgins:All right, we're out of time. Markus, thank you so much. It's always a pleasure to chat.

Markus Svensson:Yeah, thank you for having me here.

Oriel Morrison-Higgins:Ladies and gentlemen, please put your hands together for Markus Svensson.

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