Australia’s domestic market going into high gear

Transcript

Adrian Schofield:Thanks a lot, Marco. Yeah, we do have a great panel today to talk about some of the trends and issues facing the Australian domestic sector. We'll be taking, also taking a closer look at the Queensland market and some issues like implications of the new aircraft types that that are coming into the network at the moment, and talking about also some of the new players on the scene, such as Bonza. So just by way of introduction, on my left we have Queensland Airports Chief Commercial Officer Adam Rowe. We have 777 Partners CEO Manish Raniga. And on the end we have Brisbane Airport Executive General Manager for Aviation Ryan Both. So, um, welcome and thanks for joining us.

Adam Rowe:Thank you.

Adrian Schofield:I thought if we could start on the, the broader sort of view of the Australian domestic market, um, could I, could I ask you, what is the, uh, the general state of domestic demand in Australia? Uh, is it, is it softening, and, um, if so, why? And what are we seeing with capacity and fare levels in the So Adam, you start with that.

Adam Rowe:I can start with that. Thanks, Adrian. So from our point of view, we, we see the domestic market not necessarily softening, but more normalising. You know, I think we went through this, this really strange period as the state borders opened up and people could move again, where that whole notion of revenge travel was, was very much live. And so we saw demand just grow at almost an exponential pace. Coming out of the COVID period, and that was very hard for the industry to actually manage. You know, we've all seen very well-documented evidence around that fact, and so now we seem to be well and truly kind of through that revenge travel phase and into something that's looking more normal. So we're seeing fare levels in the domestic market come down to more reasonable levels, still not, you know, 2019, but we've heard about the oil price, we've heard about some resource challenges. So there are still some reasons behind a bit of an elevated fare setting, but they've certainly come down from those peaks. And so from a demand point of view, just starting to see that those usual elements of segmentation, the usual booking profiles of leisure a bit further out, business travel a bit closer in, really starting to become apparent across the markets that we're in.

Adrian Schofield:Right, okay. Manish, any thoughts on that?

Manish Raniga:I think it's been really, really interesting for us and in terms of our journey as well. And whilst we're only 8 months in, the trends that we've really seen emerging is that it's really proven out the thesis in terms of connecting places that were previously not connected before, really stimulating traffic at the right price point, and really creating a whole new segment which wouldn't otherwise travel, to be quite frank with you, because it was cost prohibitive. And what we're also seeing in terms of our trends is that there are a number of first-time flyers. And those that are not first-time flyers, they are infrequent flyers. And so providing a pathway and a platform for those customers to be able to enjoy and see more of their backyard is really what we've seen through our own experience, but certainly how we see our network sort of evolve going forward as well.

Ryan Both:OK. Ryan? Maybe just adding, I suppose, Recovery has been inconsistent, and we've seen a different trend in travel, as we've all talked about over the last day and a half. The increasing blend between leisure and business travel has been spoken about. I think what that's doing is it's affecting different routes differently. So, you know, Sydney-Melbourne is still quite soft, particularly the day return trips between Sydney and Melbourne are quite soft. And yet Brisbane-Sydney is a smaller market, but On a percentage recovery terms, the day return trips have come back a bit stronger. And we've seen a bit of that underpin from corporate mining FIFO traffic connecting across Queensland and then down to Sydney and Melbourne has been reasonably strong. But in general, I agree with Adam. I think normalising is probably a better way to describe it. Market structure is still there though. I mean, the yield premiums for Qantas are still pretty strong. Market structure is pretty stable. Qantas one side and Jetstar the other side, Virgin in the middle. That all seems to have settled into a pretty good rhythm, as everyone has stated in their strategies and what we would expect. And I mean, fares in August are still holding up to what they were in June. So even though loads are just a tiny bit soft, fares are still there. So it's not really a weakening, I'd say. It's a normalisation, like Adam said.

Adrian Schofield:OK, great. So more normalising than softening?

Manish Raniga:Yeah.

Adrian Schofield:And you all sort of did touch on this, but any more thoughts on how domestic demand has come back differently since the pandemic, you know, in terms of leisure and premium and booking curve and that sort of thing? Anything else you want to add on that?

Adam Rowe:Just picking up a little on what Ryan just mentioned around the different ways of travel, we're certainly seeing that in terms of those really early flights. You know, normally out of a port like the Gold Coast, we'd have a very, very strong cohort of commuting traffic and day return traffic at your 6 AM and your 7 AM departures down to Sydney and Melbourne. And we're actually seeing that shift quite a bit towards your 8, your 9, your 10, your 11 AM. People are travelling less of the day return and more of the going down at a more human hour, more reasonable hour, staying the night or maybe even staying a few nights. We've still seen that persist for maybe a little longer than we had anticipated.

Adrian Schofield:Interesting. Anyone else?

Ryan Both:Ryan? Look, days of week is another thing I'd add. changes between days of week. Um, you know, Monday mornings are still incredibly busy. I mean, at DART, our 6 AM, you know, departure wave Monday morning is materially higher than it was prior to the pandemic. And, and, um, that's really— it's been a result of everyone being able to, you know, blow away and then rebuild perfectly all the, all schedules and hub banks and everything. And, and so we have more overnighting aircraft than we used to and, and a much stronger 6 AM than we used to have, but particularly on a Monday. And then we see that trend then throughout the balance of the week of, as Adam was describing, of this mixed travel and a bit more of a spread across the week, particularly arrivals and departures in the afternoon, mid-afternoon, early evening. What we also see is less demand in the later evening because of the weakness in the day return trip. So we don't see that 6 AM out and, you know, 8 PM back. We'll see people mixing days or nights and then coming back in the mid-afternoon or something like that instead. Great.

Adrian Schofield:Manish, 777 Partners is the backer for Bonza, obviously. Can you tell us just in general terms what makes the Australian domestic market a good investment opportunity for you?

Adam Rowe:Sure.

Manish Raniga:I think taking a step back, we came into the Australian market looking for very specific macroeconomic trends and dynamics. Certainly from our experience in Canada, we saw that Canada was a— it's a big country, very geographically spread. Its population centres are basically east and west, with a spread in the middle as well. Very strong seasonality, unlike Australia. But with the entrance of Flair in Canada, and certainly our investment in that space, we saw some trends that we were able to pick up on in terms of Canada had high income per capita relative to other nations around the world. We saw that low-cost penetration was extremely low. And at the right price, we were able to create new traffic. We were able to create, you know, new demand across different sectors as well, and albeit doing things differently from a route structure perspective. Applying that in the Australian context, there was a lot of similarities that we saw between Canada and Australia, but at the same time, we saw that Australia was also, you know, quite unique as well. And having some of the local knowledge on the ground, we were able to then determine saying, hey, we actually think that Despite Australia having a lower population than Canada and other places, but Australians tend to punch above their weight when it comes to the willingness to travel and the desire to be upwardly mobile as well. Coupling that with the fact that from a market dynamics perspective and competition, that you basically have 2 major groups that are servicing the vast majority of the domestic market, and of course, you know, Rex with regional, We saw there was an opportunity to come in as a serious player and to disrupt the market, not so much from the perspective of what others have tried and tested in the past, but looking at an opportunity to actually stimulate the market more so from the perspective of creating new demand, looking at areas that were underserved, looking at some of the trends coming out of the pandemic as well. We've seen We've seen a massive decentralisation out of major cities. We've seen that massive migration of people come up to Queensland, living in Southeast Queensland, better weather, great lifestyle. And we saw that as really sort of proving out the thesis in terms of people wanting to work from home, hybrid roles, like the one that I'm currently doing at the moment. And we saw that to say, hey, these people who are moving across into other centres, into regional places, They still need an opportunity to also connect with major centres as well. And I think that's where really that sort of, you know, that philosophy, that thinking was really embedded in, in terms of, hey, you know, we've got something really unique here.

Ryan Both:Correct.

Manish Raniga:In terms of a route network and the opportunity. But I think beyond that, it needed something much more compelling as well. And that is from, of course, we're a low-cost, ultra-low-cost carrier. We're looking at it from a perspective of we're looking to stimulate based on price. We're looking to offer things which are uniquely different from other airlines as well. And when you sort of, you know, combine that with our route network, with where the gaps are in the market, that's where we really saw, you know, the investment opportunity.

Adrian Schofield:Okay, great. Thanks a lot. And we will turn back to the issue of new players a little bit later, but looking more specifically at Queensland and And you did touch on this, but how is domestic scheduled demand and capacity recovery going in Queensland in particular, and maybe versus the other states?

Adam Rowe:From our perspective, so we serve 4 airports in Queensland, so Gold Coast, Townsville, Mount Isa, and Longreach. And so we've got a fairly large range of different markets that we're serving and different communities that we're serving as well. So we've seen a bit of a different reaction or a different market dynamic happen across those 4 ports. Starting with the Gold Coast, scheduled demand for domestic is exceptionally strong. So we're seeing 110% of pre-COVID levels in terms of that scheduled capacity for FY24, very much assisted by, by our good friends at Bonza as well with, with 2 aircraft starting mid-November and mid-December. So very much looking forward to, you know, these new markets really being unlocked because the latent demand across a lot of these markets was already there. And we already saw significant demand for travel from From Gold Coast to Townsville to Launceston. You know, there's markets where Bonza are able to just pick up that market size and really just move from there. And then, as Manish mentioned, there's that stimulation aspect as well. So this is people travelling from within Queensland, particularly to the Gold Coast or vice versa, where we just haven't had that direct connectivity before. And anyone travelling on the M1 between Brisbane and the Gold Coast, it is a bit of a slog sometimes. And so having that direct connectivity from Gold Coast Airport for us, been really, really powerful. From a Townsville point of view, so just touching on our other large port, that was the one that bounced back the quickest, you know, in terms of that pandemic recovery. And so we're now well and truly into that growth territory since pre-COVID, and in a mix of your RPT traffic as well as, you know, FIFO and charter demand continues to be quite strong.

Adrian Schofield:Great. Ryan, anything to add on that Queensland demand?

Ryan Both:Yeah, look, so we serve 6 60 destinations across Australia, 52 RPT and a few more charter ports, and there's a few more little odds and sods besides as well that we have infrequent services to. And I think that across, as Adam's describing, there's a fair bit of diversity across that network. 30 of those destinations are in the state of Queensland, so that's been really resilient. The intra-Queensland traffic, obviously given the dynamics of how state borders operated during the pandemic, continued and was quite strong, and that's held up really well. So, you know, whether it be for essential reasons like fly-in fly-out travel or other reasons, essential services to regional cities, we see that demand remaining, it has remained and will remain really strong. And then as I described earlier, the softness we see is then in the bigger markets. on the triangle. It's interesting that it was nice to see a bit of experimentation coming out of the pandemic. There was a few, because of the lack of international borders, there was a bit of experimentation that happened domestically, not just Bonza, but there was some carriers that wouldn't normally throw capacity at different types of routes had a bit of a go, and it was really nice to see. And pretty much all of that has stuck. So it's, you know, we've got some, some more capacity across the network now that's, it's not just from our airport, but some connecting business cases that had been on the shelf for a long, long time that didn't really get a willing ear, and the pandemic provided that opportunity to try it out, and most of them have worked. So yeah, it's been a good, good time, good recovery, and we've got a better domestic network as a result.

Adrian Schofield:Great, okay, and again from the Queensland perspective, what sort of domestic network growth trends are you seeing in the state. Which airports are particularly thriving, and for example, how is the growth at Sunshine Coast affecting other, other ports?

Ryan Both:Yeah, maybe I can just briefly start. I mean, you know, I think we all know Sunshine Coast is at about 160 or so percent, somewhere in that region, of its pre-pandemic volume, and as Adam described earlier, Gold Coast is up on volume. So certainly that early Leisure-driven trend that did support that was really strong. But I think what we've seen, we talk about the fact that one person moves to Southeast Queensland every 5 minutes, and they're moving across the whole economic corridor and migrating into the corridor between Noosa to Byron, as we like to think about it. And so that entire corridor is growing, and that's resulting in good news for everyone, basically.

Adrian Schofield:Mm-hmm.

Ryan Both:It's lifting, the rising tide floats all boats, and it's It's resulting in increased demand across all the ports in Southeast Queensland, and that's good for everyone.

Adam Rowe:The 2 largest population centres in terms of growth over the past 5 years, you know, the major ones, Gold Coast and Brisbane. 9.04% growth for Gold Coast over 5 years and 9% growth for Brisbane over 5 years. And so that population change that we've seen, it's an exacerbation of a shift that was always occurring. You know, your overseas arrivals would would land into Sydney or Melbourne, and then we'd have resident population in Sydney or Melbourne would move to Southeast Queensland. It's the pace of that change that we saw really, really move up through the, um, through the pandemic and then even beyond, because people are realizing that this is actually an amazing place to live, lifestyle coupled with, with big city at the same time. And so as you get that new resident population come in, the business cases for these new domestic connections really just starts stack up. So as Ryan said, you know, they might have been on the shelf for a little while, but when you add in another 10,000 or 20,000 or 30,000 population for a certain geographic region, all of a sudden it makes sense.

Adrian Schofield:Manish, anything on demographic changes maybe?

Manish Raniga:So before I touch on demographics, I mean, when you actually just sort of double-click into Southeast Queensland, I mean, you've obviously got your 3 major airports, and we certainly shouldn't forget about, you know, Toowoomba as well. And as there is more demand for people Moving to Southeast Queensland and even travelling to Southeast Queensland, we've actually seen some really remarkable trends. And with Sunshine Coast as our first base, we've been extremely pleased, and our partnership with Sunny Coast has been absolutely phenomenal in terms of connecting more of Queensland as well. I would have never thought in my wildest dreams that Sunshine Coast and Cairns would actually be one of our top routes, but in fact, there is a very, very strong demand. Going to, you know, going towards, you know, demographics, that there are people who travel very far and wide to go to Sunny Coast, not just the natural catchment area of the Sunny Coast or of North Queensland as well. A lot of young travellers, a lot of, you know, families that are, you know, connecting for the first time. The interesting thing that we have at Bonza, of course, we have an app-first strategy. We're able to get a lot of information about our travellers. And that information has been really, really revealing in terms of, you know, not just sort of, you know, understanding just the demographics, but it also reinforces what we're actually trying to do and what we're trying to connect as well. A lot of young travellers, a lot of families. The average booking, you know, is 2.5 people, you know, per PNR. It is actually, you know, quite eye-opening in terms of what we're actually seeing in terms of that travel and that market.

Adrian Schofield:Great, okay. And just changing tack slightly, um, what, what do the new aircraft types coming into the market mean for the Australian domestic sector? You're thinking like the, the A220s coming in soon, more E190s, um, the, the newer narrowbody types, the MAXs and the A321LRs and XLRs. What's been the impact of these, these new types domestically?

Manish Raniga:So I think, um, from a— I mean, look, from a, from a Bonza perspective, and, and certainly You know, Virgin Australia are also inducting the same type of aircraft as well. I think the MAX for us has been, has been really, has been really important in terms of both range, capacity, obviously the economics of, you know, lower fuel burn, much more quieter. It's a quicker aircraft as well. And I think that's really going to, you know, form not just the backbone of of our network, but I think when you actually look at the Australian landscape completely change as well, and regional centres, particularly ones that are a lot more smaller, there is going to be a demand in the future for different types of aircraft and not the existing older generation aircraft that you actually see servicing some of these regional centres as well. Of course, the A220s, they're a great aircraft. I see a very strong role for that aircraft to provide connectivity. But at the same time, I see that also as a pipeline of moving up the value chain and actually sort of moving up to higher capacity as and when markets start to open up, as and when you start to stimulate different markets and get people to travel more before people can actually move to other aircraft. In terms of what I'm seeing in, say, for example, the A321, LRs and XLRs. I think this is more for, not so much for domestic unless it's east-west, is pretty much what I'm seeing. Certainly not from a Bonza perspective in terms of what our thesis is, but certainly in terms of the broader landscape that there is a role to play for all of these other aircraft types.

Adrian Schofield:Thanks. Yeah, Ryan, I know you've got some thoughts on the new aircraft types.

Ryan Both:Yeah, look, versatility is probably the word I would use. It's That's the thing that changes. So if we take an F-100 or a Boeing 717, those aircraft have relatively short range, and you swap that to an Embraer 190 or an A220, and all of a sudden you can do the domestic routes or the regional routes that used to be performed, and you can also fly to New Zealand or across to Perth or something that wasn't possible before. And so that versatility allows our customers to arrange the line of flying or the day the aircraft will perform in a very efficient way and mix and match lots of different combinations of routes, which is fantastic. So it's also great to see that those aircraft result in reduced emissions, reduced noise, reduced cost in terms of variable operating cost. And yeah, that's a fantastic story. I would add to that that The transition we haven't yet seen occur, but is only a couple of years away, is the electric and hydrogen aircraft that are then going to come. And so, you know, for us, we see a very significant role for those aircraft types, you know, in their fixed-wing form and reinvigorating what used to be a very strong general aviation sector and small regional sector that has died slowly over the years as cost base and regulatory change and other things have caused it to—

Manish Raniga:Yeah.

Ryan Both:to suffer under cost pressure and lack of scale. And now this technology significantly reduces mechanical complexity and costs of operating. We saw David Ozarsky earlier talking about their aircraft, for example. You put that into the mix, and then we've got this really interesting blend of more versatile, longer-range types that can do interesting things. And then at the same time, The shorter range missions can be done with zero emissions and maybe with a lot less passengers because the cost base is lower. So that really changes travel patterns a lot. So it's a, it's a good time to be in the industry. I think it's exciting.

Adrian Schofield:Adam, any thoughts on the new aircraft types coming in?

Adam Rowe:Yeah, I mean, from our perspective, they hit all 3 in terms of what we want. It's frequency, it's capacity, and it's connectivity. So depending on the aircraft type, so your A220s, you know, that kind of 100 to 130 seat That connects dots on the network that weren't previously viable. So we've seen it already in terms of Qantas launching an E190 on Townsville to Adelaide, for example. So the market was there, but it wasn't a 180-seat market, it was a 100-seat market. We've got a similar proposition with Townsville to Perth, where the E190 actually just can't make it. So the A220 would be the perfect vehicle for that market. From a Gold Coast perspective, those smaller ones give us the frequency that we would need. You know, there's one carrier where the frequency levels are maybe not quite meeting that corporate demand, that business traffic that we see on the Gold Coast. And so by increasing frequency, but at a lower capacity unit, they're able to actually meet that market demand where it is without flooding the market with capacity and ruining their bottom line. So that ultimate versatility really exists. And then for the larger aircraft like the 321s, from our perspective, they're amazing for the volume market. So Gold Coast-Melbourne, Gold Coast-Sydney, getting 230 people in that domestic peak, so between 10 AM and 2 PM at Gold Coast Airport, that's when all of our leisure arrivals are coming in. And that as a vehicle is absolutely wonderful for stimulating demand into what is Australia's favourite playground, Australia's favourite tourism destination. And so our job is to maximise how many flights with that type we can actually get into. Great.

Adrian Schofield:I'd like to talk a little bit more about how the new players in the domestic market like Bonza and Rex with the jet services have affected the domestic market. Any thoughts on that?

Adam Rowe:Certainly starting with Rex, I mean, so we, we started with Rex still in the pandemic really, we were just kind of coming out of it, and so as they were expanding to the jet services, great opportunity to come on to Gold Coast markets. They've been a long-standing partner of ours with the regional services out of Townsville, Mount Isa, and Longreach, and so to see them service Gold Coast with their expansion into jet operations was, was fantastic, and certainly Putting themselves into a place in the market, you know, somewhere in that middle and really able to drive a new demand, a new demographic that's, you know, not necessarily looking for the frequency every single hour. They're just going for that good value fare at a certain time of day. And their onboard offering is fantastic. But then moving to Bonza, and this is, you know, really, really exciting from our point of view because we are opening up new markets where the demand is there. The stimulation potential is there, and seeing it now happen, and, you know, we've seen it with the 3 Townsville markets that have been operating since February, and just the initial sales that the Bonza team are telling us around the Gold Coast markets. There are new people coming into the Gold Coast spending money that would have otherwise gone somewhere else. You know, that connectivity wasn't there. Someone in Albury, the price of a regional connecting airfare into Sydney and then up to the Gold Coast, sometimes a bit cost prohibitive. You put a Bonza aircraft on with a direct service, and that whole market just opens up. And the economic value is measured in the hundreds of millions of dollars.

Adrian Schofield:Great. Ryan, any thoughts on the new players?

Ryan Both:It's great to see competition. You know, I think, you know, clearly Bonza and Rex are important in the story. We'd like to see a little bit more balance in the market over time. You know, it's— we used to have a market structure where we had a ULCC by the name of Tiger, It was quite a large carrier. Adam knows that reasonably well. He used to work there. So there's a proven role for a different offering to what the 2 major groups offer. And certainly Jetstar plays an important role in offering low fares. But being part of the Qantas Group, that's, you know, it's a group strategy often. And so it doesn't have that same competitive dynamic as when you've got someone agitating in the market. And, and, uh, you know, we saw that with the early, you know, moves that Virgin Blue made when they were making waves in the market and doing different things. Um, used to be Ansett and Qantas chasing each other, various iterations of Compass and all the other carriers over time. Every time you get these, um, iterations of competition, it stimulates new activity in the market. People chase each other, then the market settles into a rhythm. But the market's always different.

Adrian Schofield:Mm-hmm.

Ryan Both:As a result of that. little battle that happens. And so yeah, competition is great, access is great, and as has been spoken about on the panel here, when we can give people opportunities to travel in a cost-effective way, in a streamlined way, they take them. So it's really clear airfares are still elevated for a good reason. People are still travelling, they want to travel. So yeah, competition's great, let's give people opportunities to travel.

Adrian Schofield:And Manish, a slightly different way of asking that question to you. I mean, 777 Partners has a very large stable of MAXs and MAX orders. So has Bonza proven the case for fleet growth? I mean, you've got a lot of other places you can put those aircraft, but is Bonza proving the case to bring them here?

Manish Raniga:Absolutely.

Adrian Schofield:Look, we—

Manish Raniga:when we set out our mission to start Bonza, Our aspiration was not to be a 4-aircraft airline and to have 2 bases. We wanted to obviously have scale and presence. At the same time, we don't have aspirations to be as large as the 2 large groups. We want to fill a spot where we believe that both we can provide a meaningful service at the right price to the consumer, but at the same time, We are a business and we, and we do want to be viable and we do want to be profitable as well. Where we see the expansion opportunities is obviously there's going to be growth in, in fleet, and that is an absolute given. And, you know, next year is going to be a very exciting year for, you know, for Bonza. There's lots of big decisions that needs to be made in terms of, you know, in terms of, you know, new routes and new announcements. But what I'm also more excited about Bonza is, is beyond the fleet. Is how our business model continues to evolve as well. And today we may be an airline, but tomorrow we want to be known for more than just a, just an airline in the, in the Australian marketplace. And this is where some of our, our partnership strategies, the way that we leverage our brand, the way that we engage in, you know, with the consumer in different ways, our app-first strategy and using the app to then promote, you know, other products and services as we sort of build more of an e-commerce style of business. That's really where we see the business evolving above and beyond just being a core airline.

Adrian Schofield:Great. Okay. We are starting to run out of time, but there are a couple more things I want to touch on briefly if we can on different topic areas. Regarding the travel bottlenecks that we saw in Australia, particularly last year, in terms of at the airport and with the airlines, some of the mishandled baggage, the queues in the airports, all that sort of thing. To what extent, you know, has that improved, and in what areas are you still seeing some friction in the travel experience that still needs to be addressed?

Adam Rowe:I mean, I think we've touched on it a fair bit through this past couple of days, but aviation is a complicated business. And so for all the different sectors of that supply chain, you know, whether it be the Security staff, pilots, cabin crew, getting those people back into the industry and training them up and getting them certified, that takes time. And so seeing those bottlenecks that we did last year, it was for all the, all the right reasons. From our perspective, security was probably the number one challenge. You know, getting people recertified takes about 3 months to put someone on a security screening point. Pleasingly, we are now back to 100% coverage. You know, we're not seeing Shifts needed to be stretched too much. That said, we still need a bit more resilience built into the system. So, you know, we're out of the woods, but we're certainly not in that comfortable position. So, you know, still recruiting, still hiring from an operational level, from a head office level. Pleasingly, some of those recruitment drives are moving beyond the BAU and just keeping the operation going and actually into the growth and the opportunity phase. So that's really nice to see as well.

Adrian Schofield:Great. Manish, any thoughts on the bottlenecks?

Manish Raniga:Yeah, look, I think it's been very interesting for us because there's a number of ports that we fly to which has actually never seen a jet before. So developing that infrastructure from scratch, working with the airports, working with the councils, the tourism authorities, working with key suppliers to actually build up those level of skills. Of course, there has to— there had been, you know, obviously, you know, longer lead times, and we continue to partner and work with them. But I think it both provides an opportunity in the regional centres for employment and growth opportunities, but certainly is something that we're obviously advocating for if we do want to grow our frequency and if we do want to connect to those same destinations from other points as well. I think Albury has been a remarkable example of connecting the Sunny Coast to Albury. And pretty soon we'll be connecting the Gold Coast to Albury as well. Again, what we did, how we worked with Albury Airport to actually build and to scale up their infrastructure has been really a part of our journey in terms of trying to overcome and address some of those challenges as well.

Ryan Both:Right.

Manish Raniga:Avalon, again, another great example and a beautiful partnership that we've got with Avalon Airport to help us really sort of work partner hand in hand to actually sort of build the capability to be able to, you know, service our aircraft and to have the support infrastructure.

Adrian Schofield:Right, okay. Ryan, what's your perspective on the bottleneck situation?

Ryan Both:Yeah, look, we talked a bit about the loss of experience. I think that's, that's a really important point. We had a really good session with Airservices Australia a few days ago, and we've seen resource shortages in air traffic control and the en route airspace teams, and That's led to quite a few delays and short-notice ground delay programs being issued at Brisbane Airport and for the en route airspace that affects travel between the southern states and Queensland, and then also en route to North Queensland. And that's been really problematic. Yeah, that's kind of the new focal point, I think, at the moment, is we're beyond the sort of security screeners and baggage handlers type conversations. But what we've really noticed I think collectively is that the loss of experience in the industry has led to a less resilient industry. It doesn't recover from operational disruptions as well as it used to as a system. And so, you know, when there's bad weather in Sydney, it always causes delays because the slot regime is such that you can't catch up because Sydney's not allowed to exceed its quarter-hour throughput rates based on weather or any other criteria. And so that always causes delays, but the industry used to be able to recover, do tight turns and get things moving again quickly. And that's what we've really seen is that the lack of resilience now in the system, and that it's a bit of an enduring issue for us all to focus on. And we, I think we, you know, heed the words from the industrial panel earlier today about focusing on your people, and I think we, we really do need to focus on the experience of the workforce and building that capability again. how to do these things, and that's something we're talking about a lot as a group. Right, okay.

Adrian Schofield:Slightly thornier question, but I think it's good to acknowledge the, the current Qantas controversy. How much do you think that the issues with ticket sales and refunds that we're hearing a lot about now has dented the public confidence in air travel generally?

Adam Rowe:I mean, how's it impacting other I think James Goodwin mentioned it earlier. We're all here at the pleasure of the customer. And so aviation is certainly in the spotlight, has been a fair bit over the past month. And so the reputational impact, you know, I think it's more of a highlighting of some issues that have maybe always been there. Again, it's complicated to sell a ticket, to cancel a ticket, to refund a ticket. It's complicated to do all of that. I think it's important to note that refund a ticket, you know, the systems involved in that, the different layers of agents and direct bookings involved mean that it's not just a straightforward process for an airline. So highlighting those issues maybe spurs on some further innovation in that sense. So I see it as a really good opportunity just for the industry to step back and remember that we are all here because of the customer, and so therefore if we're able to serve them better, then Then that's a good thing.

Adrian Schofield:Great. Any thoughts, Manish?

Manish Raniga:Look, you know, it's not just bad for Qantas, it's bad for the industry, and I think what it challenges us to do is to think more about how can we not just simplify our business, but how can we have a bit more of a transparent and meaningful relationship with the consumer as well. So everything from, you know, fare rules, for example, or the way that we actually price tickets, the way that the price is actually displayed, making sure that, you know, when events happen and when refunds events need to take place, that they happen in a very timely manner. And I think what we have sort of taken away is how can we invest in technology to actually make that happen, to make that process as seamless as possible, to make that also self-service as possible, so our customers are not either waiting around at the airport or having to wait on a online on a call centre, but rather we enable technology to actually facilitate. Because, you know, to be frank with you, changes happen. Cancellations do happen, whether it's, you know, whether it's on the airline or whether it's, you know, weather or whatever it is. And we just need to sort of find a pathway to create those customer experiences and those services, even when the airline is at its most vulnerable moment as well. And I think that's really the true testament of what a good airline is. And for me, So our thesis is, you know what, we're going to invest in technology. We're going to make sure that we're going to utilise the best of technology to be able to solve those problems.

Adrian Schofield:Right. And finally, Ryan?

Ryan Both:I don't think— there's no incentive for any player in the industry to disappoint or disrupt a customer. For everyone involved, that costs money. It costs in terms of loyalty and unused, very expensive capacity, whether that be aircraft or staff or, or infrastructure. So, um, yeah, there's no incentive, um, from that respect. But I think that the thing I would call out, as I've mentioned earlier, is that we might be busy, but we're not fit as an industry. And, and I think we've come out of a very trying period, and, uh, we're back, but we need to get fit again, and we need to focus on As an entire system, all the little things, the list of 20, 30, 50 things that all combine together make a difference to be able to get the performance back to where it needs to be as an industry. And I think if we, if we're all doing that together, all doing our bit, then we can deliver what customers expect. Great.

Adrian Schofield:Well, those are some fantastic threads of conversation. Unfortunately, that's That is all the time we have. So, um, please join me in thanking the panellists very much for some great insights.

Adam Rowe:Thank you.

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