Can LCCs really compete in the corporate travel space?

Transcript

Peter Harbison:Thank you for being with us, and I hope you'll find this discussion interesting. It's— what I might do, first of all, is just start by allowing each of our panellists, maybe Trevor, you're a pretty well-known quantity at this stage, but just to introduce themselves a little bit and talk about your position in the market, how you generally see your position and low-cost carriers. So maybe, Joanne, if we'd start with you.

Joanne Taylor:Great, thank you. So, Joanne from BHP. I actually head up the travel and expense category globally. I have a team structured around the world, 2 of them based with me in Singapore. BHP, for those that don't know, is the largest mining company, or mining resource company, in the world. We have a very strong footprint, and we actually do work with some low-cost carriers, and some of which are strong partners of ours. I'm going to be a little bit controversial, and I'm just curious to understand in the audience today whether there's any other buyers. I've not come across any myself.

Trevor Spinks:One.

Joanne Taylor:One? Great. Okay.

Peter Harbison:Excellent.

Joanne Taylor:All right. And look, I think it's Just putting it out there, it's certainly something from BHP, and previously I've worked for Rio as well. There's always opportunities for low-cost carriers, so I might just end the statement with that.

Peter Harbison:That's a good place to start.

Michael Valkevich:Yeah. And I'll go next. I'm Mike Valkevich. I'm the Vice President of Sales and Program Management for our business in CWT Asia Pacific. So I always appreciate coming to these things, Peter. Thanks for inviting me back, because before I worked in the TMC space. I worked in airline IT and distribution, and I always enjoyed the subject of LCCs, especially in Asia. So it's good to be part of these conversations and try to see what we can do to make this work better, because I very much agree with Joanne's comment. There's a lot of opportunity for LCCs in the corporate travel space. We are of the position at CWT that there's definitely room for competition and there's room for growth. In corporate travel programs, our main objective is to make sure that corporate buyers and CFOs who invest in effective travel programs can get managed travel visibility, category containment, compliance, traveler experience, and those things that are measured within the category effectively.

Peter Harbison:Thank you very much. Harold, a little bit about MedAire. Very good.

Harold Pradal:Good afternoon, everyone. My name is Harold. I'm running MedAire for Asia Pacific. What we do at MedAire, we support actually airlines, but also BGA clients, mainly everything that flies, with medical and security solutions. We have about 160 airlines globally as clients, and to date about 26 LCCs in this region. We are not exactly to those numbers. In terms of concrete elements that we support you guys with, that is in-flight medical emergencies. I think that is the core of what we do, and that obviously doesn't differentiate between mainline and LCC. We also do a lot more security-type support now, from airports to airspace risk-based assessments to also crew support on the ground. So I'd be happy to exchange with all of you today to understand how can we better support LCC and particularly in the region.

Peter Harbison:And these are all activities which are particularly important in the corporate travel area where there's a duty of care from the employer. So whereas you and me traveling, well, we take a chance and we make our own judgments. But when the duty of care is back on the employer, it's important to have an intermediary who can make assessments and be there to help.

Harold Pradal:Absolutely. We actually, on that point, we, the company, the mother company is called International SOS, and most of you in the room are actually covered by International SOS whenever you travel. MedAire is the aviation brand of International SOS. support directly aviation clients, but bottom line, from a company perspective, supporting their employees is definitely around the duty of care agenda, and pushing their employees to use provider A or provider B will definitely be aligned with the overall strategy of duty of care. So if LCCs are able to demonstrate that from a safety standard, obviously, but also from other aspects of the duty of care, they are able to provide similar services than the mainline, which a lot of you guys do already. I guess it's a lot easier for a company to take the decision to use as a corporate strategy LCCs. Good.

Peter Harbison:And Trevor, I remember Back in the relatively early days of Scoot in Australia, talking to Campbell, who was then the CEO and founding CEO of Scoot, progressively the yield of corporate travellers became more and more interesting. But then as the 777 of Scoot follows the A380 of Singapore Airlines on the tarmac at When you were in Sydney, there's sort of this tension about whether Scoot should be going after corporate travelers or not. Where do you stand these days?

Trevor Spinks:Crikey, where do we start? I think the first 5 years of Scoot was obviously, you're in a startup, you want to get the airline up and running. Then we founded not Scoot, then we founded the Value Alliance, then we merged with Tiger. So of course we want to be in the TMC side of things. But I love being on this panel here as well, because I know that we've not even Touch the icing on the cake in terms of Scoot being able to do that. My time back at easyJet in the early days was, again, early days of online for low-cost carriers. It's all about online sales, and you don't want to touch the TLCs. And they go, oh, but look, the yield's much higher. But you've also got to have the product. You've got to have the frequency as well. And when easyJet started between, say, London and Scotland, 2 flights a day, it's not a corporate product. No one's going to be interested in the slightest. However, when you're flying 30 flights a day and you've got a pretty robust product, everyone knows who it is, it's actually very, very appealing. So you've got that— there's the right time in the right place. Now, when Scoot merged with Tiger now, and it's still a relatively small airline compared to some of the big guys in the region, we've got better frequency now. So still 4 a day to Hong Kong, it's better, but it's still not perfect. You're not going to have those timings that all the TMCs want. It's still— we're going to be growing 15% a year over the next couple of years as well. So how do we offer the guys— how do we commit them to come and work with us? Again, having the parent company of SQ above us, that always opens doors instantly. So that's one of the positives of having obviously that parent company, talking about what we were talking in some of the earlier panels as well. But it's— we don't have everything that you guys want, but there could be a real nice Millions of dollars cheaper if you actually flew with a low-cost carrier than the full-service carrier as well. And that was what happened with easyJet with me sort of 5, 10 years ago as well. So it's that mix, and we're not there yet as Scoot. I certainly haven't penetrated hardly at all into the Singapore market, let alone the other 17 markets that I'm looking after in terms of properly getting into the TM side of things as well. And I've not met these guys before as well, so it's great to sort of come up on stage and say hi to them always. So going forwards, I'm going to be doing this. It's the time for Scoot to now take that next leap there as well. But in terms of how does it overlap with SQ, carefully, I think is the best answer there as well.

Peter Harbison:Well, that was the one I was after. Yeah, I mean, as you said, you're, in your own words, taking the market away from full-service carriers, and of course you do have one right above you. So obviously it's delicate territory. But I guess, I mean, going back to what Gareth was saying this morning, Gareth Evans was saying this morning, You do have that ability to do a sort of segmentation of the market too, so you can actually cater to both. Let's go back to Joanne and sort of let's rewind a bit, Joanne, because I know certainly in the early days, the combination of, as Trevor was saying, the lower frequency and the lower availability of connectivity, of sectors flown and that sort of thing, made low-cost carriers much less attractive. But there were other reasons as well why they were less attractive. Would you like to sort of rewind before you started using them, and what were the things against it?

Joanne Taylor:The thing against it was obviously the contingency side. So the frequency is one thing, but being on time, particularly if it's travelling to whether it's a mine site or whether it's a meeting, the frequency and then the ability to have that contingency, so not waiting a day, I can actually get there within a couple of hours, is certainly critical. Safety in the mining and resources industry is another critical element as well. I am actually going to pick up a point on what Trevor made though in terms of we don't have what corporates want. And I think I'd like to challenge you all to say, have you asked the corporates what we want? Because there's a lot of things, and maybe this is the evolution of working with low-cost carriers, I think there's a lot of assumptions of what a corporate wants. Now if I think about the short-haul sectors that we fly, And it might just— I'm talking maybe a 1 to 3 hour timeframe. A corporate just wants to get from A to B like every other traveller. We heard Gareth Evans talk about how it's all about customer service, but I also heard a lot of the flavour that's coming out today, it's all around leisure. Well, corporates just want customer service as well, and in some ways we may even be easier because there's probably less personalisation required. For us, it's about Safety from getting from A to B. So the answer why we didn't do it in the past was probably there were concerns around— true or not— around the safety, true or not around the contingency plans, customer service, having that recovery, having that ability to rebook, the flexibility. But I think there are particularly those low-cost carriers where you're partnering or you're part of a bigger organisation and you're part of the one umbrella, like Jetstar, You have that ability to pick a lot of these things up, right, and the connectivity that we've talked about. So I guess I would challenge all those low-cost carriers out there to say, come knocking. I think corporates want you to come knocking. It's about cost for us now, particularly on short hauls.

Peter Harbison:Mm-hmm.

Joanne Taylor:You can get from A to B. We're not worried about, you know, as long as there's a reasonable level of frequency, and on those trunk routes you'll probably find that there's opportunity. There's no reason why you wouldn't ask the question, what do you want? And I think you find in some ways it may even be easier than the leisure customers, because we're probably more defined in what we want.

Peter Harbison:Yeah, I think there's still probably a pretty wide perception that, well, all those nice fancy seats up the front are what corporate travellers want and what corporate buyers are buying. Increasingly not the story. But just going back to the price, Joanne, I mean, with unbundling, and obviously low-cost carriers are probably the most unbundled of all, that was an issue, wasn't it, in terms of transparency of pricing? And I'll ask as well also intermediaries in this. But that was an issue, just really knowing, well, what are we actually paying for this? And is my client— is my employee going to get on this aircraft and suddenly find that he or she isn't going to get a meal if they don't pay another $10, $15 for it?

Joanne Taylor:Yeah. And I think you're right. I think that's the past. Now there's different ways in which we manage that, which could be through the travel policy. It could be in terms of cost. So a lot of companies are now under the cost and policies have changed. It's not business class anymore. So every corporate customer will have a different travel policy, and a lot of them are moving towards economy class. So again, to your point, I think it was the past. Now there's other ways around it that become more cost-effective.

Peter Harbison:Thanks. So, Michael, from the intermediary's point of view, and now you're dealing— not only you're dealing with your client, but you're also dealing with the whole array of bookings, of payments, and so forth. What— and if we could rewind again and sort of move up to the future, what were the original issues in dealing with low-cost carriers? Have they been resolved? How are they being resolved? And just what is your attitude and your clients', your buyers' attitudes to LCCs these days? Do they vary much?

Trevor Spinks:They do.

Michael Valkevich:I mean, I think I would agree with your statement, Joanne, that the corporate space is a diverse space, right? A professional services company or an e-commerce company, a mining and resources company are going to have very varied traveler populations and very varied travel patterns. Right? So there's a varying level of openness to using different carriers, but we do see it. I mean, we definitely see a willingness to try different types of carriers for different types of travel programs. There's really not a static template of what corporate travel looks like once you get closer to it.

Trevor Spinks:Mm-hmm.

Michael Valkevich:So without covering the same ground that Joanne covered, I would say the experiential component of it has definitely, I think, Picked up in the past few years. I mean, if we look at— I looked at some data before coming today. Certainly here in Southeast Asia, we've got a decent data set, right? I mean, if you look at 2015 through 2017 calendar years of LCC, or what we call LCC, airlines versus network FSC carriers, there's been an evolution. We've We've seen some change. I think that one effect, of course, is that corporate travelers are also leisure travelers. They experience your brands in their personal lives for their weekend getaways and stuff like that, and they might have a good experience and they'll be willing to try it for work for a simple point-to-point trip, like Trevor pointed out. So without retreading those points that I fully agree with, I think one change that's happened that we've seen What we've seen in the data is, if I can name names, we're all friends here, we've seen Jetstar and Scoot Tiger pick up more of the corporate travel sector in the past 3 years. The numbers are still not huge. I think there's still improvement to be made and ways to go in developing relationships, but we've seen those 2 in particular win more of the corporate travel share in the markets and the routes that that they service. I think part of that has to do with the cabin experience, and I think part of that has to do with distribution. I think a lot of it has to do with the fact that it's what was mentioned in the previous panel, being where the consumer wants to buy, being part of that experience so that the corporate traveler will see in their corporate online booking tool, in their offline experience with the travel consultant, they'll see those brands in front of them in policy and in a comparative display. So we see the booking pick up.

Peter Harbison:So, I mean, this is a question that's too difficult to answer, I guess, but I'll sort of put it out there in general terms anyway. If we're looking at short haul in Southeast Asia, we've got probably 2/3 of all the seats in short haul in Southeast Asia on low-cost carriers. What would the proportion of corporate travel be in that market? Within that region. As I say, it's too hard, because I don't think I could work out the numbers, because you really have to get very granular.

Michael Valkevich:You have to get very granular. And you also have to do a lot of data cleansing. And I did this with the team before coming here today. It's low. It remains low. I mean, I think that the mindshare of corporate travelers on short-haul routes, say ex-Singapore, ex-Hong Kong, ex-Jakarta, Remains fairly low, comparatively low. I mean, in the single digits in some cases, as compared to your network FSC carriers.

Harold Pradal:Mm-hmm.

Michael Valkevich:Some of that is, I think, brand loyalty and the corporate compliance component, and some of that is convenience factor, right? A corporate traveler is going to make an in-policy booking on an online tool in 8 minutes. They are not going to go to a variety of websites and try to have a more personalized experience. They've got work to do. Same goes for an executive assistant or a travel booker. So it remains low, but we have seen improvement.

Peter Harbison:But Joanne, at the same time— and I'm not suggesting you're typical of all the, particularly Singapore companies— but brand loyalty. I.e., frequent flyer points. The status of flying on Singapore Airlines as opposed to Scoot. The fact that I have a nice lounge and I probably travel quite a lot, so I've got a decent lounge status, so I can sit in there instead of out with the others at the gate. These are pretty powerful things to overcome, aren't they? Even if the pricing— and you have to try and overcome that, don't you? Because you want to get your costs down. Yeah.

Joanne Taylor:I think they are and they aren't. So I think Michael again has raised a couple of really good points. Loyalty is important, but when you're on a short-haul flight and it's 1 to 3 hours, you've raised around relationships as well and how long it takes to make a booking and where we really, the travellers, the travel arrangers, or the executives' distance are going. They only probably have, to your point, 6 or 8 minutes.

Michael Valkevich:Yeah.

Joanne Taylor:So it's really important that relationship exists with the buyer or the supplier or the corporate customer to make sure that you're front of mind. And I think coming back to your question, Peter, the budgets— a lot of the corporate customers now are so cost conscious that now it's all about how can we be more innovative, how can we use WebEx, how can we use Sparkboards, how can we do things where we don't physically have to get on the plane versus something like if you think about a typical mining company which is fly-in fly-out or the FIFO workers.

Michael Valkevich:Yeah.

Joanne Taylor:They have to do that to get to work.

Peter Harbison:Yeah.

Joanne Taylor:Travellers in more of a commercial function, they'll be challenged as to why are you flying, right? Their budgets will be reduced. So whilst frequent flyers and lounges are all lovely to have, it may be the difference is, well, you can either get on the WebEx or you can fly on a low-cost carrier. I guarantee you, as long as they get to A to B in a safe manner, And they don't have days wasted on the ground, that there will be a movement across to the low-cost carriers. In actual fact, we do find in those peak periods there are some routes, particularly from Singapore down to Australia, where the capacity is very tight. And from a corporate perspective, whilst it might be out of policy, there is no other choice. So they're trying low-cost carriers. And then from a supply perspective, we get, well, why aren't we looking at low-cost carriers? I just saved myself $200.

Peter Harbison:Mm-hmm.

Joanne Taylor:It was only a 4 or 5-hour flight. Why don't we use them? Right? So the business is hungry for it. Corporate buyers are looking at ways that we can cut costs because we're challenged to do that. And whilst those things are all very nice to have, if it's a difference between travelling and not travelling, I think you'll find people will decide to go low cost.

Trevor Spinks:Can I just add in here then as well then, please? So it sounds like you guys want— there's hunger for this.

Joanne Taylor:Yeah.

Trevor Spinks:There's improvements, but they start from a very low base. But it's the airlines aren't really making it easy. You're not getting the people. And we spoke just before this panel here as well, and she said no one from Scoot's knocked on your door. No one is kind of— and typically in the low-cost model as well, it's not like we have teams of people in each country. We don't. We have maybe GSAs that we work with or something similar.

Michael Valkevich:Yeah.

Trevor Spinks:So what I'm kind of hearing is like, we're not really in your face to actually even have those conversations, to even start that ball rolling. But the fact that we want it because there's higher yield, you want it because it's cheaper costs, so we're kind of hurting ourselves in a way.

Joanne Taylor:Yeah, and it's interesting that not in this market, in a South American market that will remain nameless, there's a low-cost carrier. We actually knocked on their door and said, we want to work with you, give us a corporate agreement, what can we do? No, sorry, we don't deal with corporates. I was astounded.

Peter Harbison:Was this an independent?

Joanne Taylor:It was an independent, a fairly large low-cost carrier. It's a great company though. Can you guess which one? And it's, yeah, there's only really 2 players in the market. And no, we're not interested, which I was astounded. So I think it was just too hard for them to get their head around a commercial model. Funny enough, they've come back recently.

Peter Harbison:Yeah, so they've sort of grown up a bit. A little bit, yeah. Would that have been because the details of your RFP or whatever the conditions were were a bit too demanding for them?

Joanne Taylor:It was actually outside of an RFP. So again, it comes back to the business saying to me, I don't want to fly. I'm focused on cost. I need to get from A to B. The flight's only a couple hours. Joe, we need to save some more money. If we can't get on this airline, we often do this one. It's out of policy. Can you go and talk to them? No, we're not interested. So needless to say, 99% goes on one airline.

Peter Harbison:Mm-hmm.

Joanne Taylor:And the 1% is just overflow. But yeah, so this is why I guess I'm up here challenging all of you to With the corporate customers, you often find that market or that, you know, the head office actually is interested, particularly on short haul. Cost is really a driver at the moment.

Peter Harbison:Short haul being what? I mean, what sort of limits are you putting on short haul? What do you call it, 3 hours, 5 hours?

Joanne Taylor:I'd say anywhere from 1 to 4 myself, but I do get asked for 7-hour flights. People are still willing to go on a low cost. I can't imagine someone going on a Singapore to North American flight Low cost, never say never. But again, if it's a difference between going and not going, I think you'll find the price still—

Peter Harbison:And if they've got lie-flat up front.

Joanne Taylor:If they do things like that, brilliant opportunity.

Peter Harbison:Yeah, I suspect, I mean, for that reason, I mean, corporate's obviously not a big, big part of the total spend market in aviation, but it's a significant part.

Joanne Taylor:Bread and butter.

Peter Harbison:It's bread and butter. Well, it's gravy. But it is there for the plucking in a lot of cases. And as you were saying with easyJet, just never really recognizing it, never really seeing it was there until it was in your face.

Trevor Spinks:When we did easyJet, we hired somebody external who had— that person had the travel management relationships. So straight away, you're in the door, you're talking to the right person. We had the frequency. We just had to offer them the name change, the bag, all the basic stuff that we go, actually, this is easy. And all of a sudden, the routes just went gangbusters. It was just one of the easiest things I ever saw happen. But in easyJet, we were so focused in our own little world. If people are booking it, they're booking it. They can do their own little thing, and they go through the website. It's all about the website. Go through the website. Don't care. LCCs are much, much different now as well. I mean, even Scoot, we're on 7 of the GDSs. And typically, that's not the LCC model anyway. And so we know that's quite key as well. It's really changed, but that person really changed the mindset. But again, it's for the LCC, with me and my small little team, we've got to get out and see everyone at the same time.

Peter Harbison:Would you know, and this is probably confidential anyway, but when the Singapore Airlines Group bids for a corporate contract, would the RFP include all of the players in there?

Trevor Spinks:A couple of years ago, no. And it really was keep Scoot separate, let them do their thing. But now, especially the last couple of years, is where it's really changing. It's not this, we are the full-service premium carrier, hold our head up high, and we're not going to have anything to do with you guys. They know that to be successful, it's the broad spectrum across the premium and the low cost, whether it's corporates who are happy to do one or the other as well. And if you're Singapore Airlines Group and you're about to lose out on a significant corporate deal to sign up for another 3 years or something similar, because Jetstar, for example, are offering this route or something similar, and there wasn't a Scoot. So CAPA have these problems because they don't have the LCC. They go, well, actually, we have a Scoot, we can actually offer you here as well. So at least the money stays in the group. A lot of the conversations we have is like routes and things, there's the cannibalization of routes. It's going to happen anyway, so at least if you can keep the money in the group rather than sort of giving it out to sort of the Middle East carriers It makes sense to do that. And I've seen a lot of changes in the last 2 years in terms of how we're working closer and closer together now. Technology is holding us back a bit in terms of our systems that play behind, but there's a lot of push to get these aligned. So I see Susan down there from Navitaire, et cetera, et cetera. We're always pushing Navitaire. And I think we have something like 70 or 80 open projects on the go at one point to just try and make sure that we're try and close that gap between how the backends communicate between us and the SQ systems as well. So the want's there, the technology is happening as well, it just needs, again, a bit more time. We're still only 5 years old, so we'll get there.

Peter Harbison:I'd like to come back to the technology a bit, but yeah, I was going to come to you, Harold.

Harold Pradal:Yes, sorry, back to your question though, is that every single carrier or group of carriers that we talk to at the moment when it comes to security and medical matters and duty of care for both their staff and their passengers. Basically, it's a whole. We never talk to only the mainline anymore, so now it is always about all, you know, the mainlines plus the LCC if they have one.

Peter Harbison:So that's interesting. So I suppose in terms of, I mean, you're talking 2 things here. One, their own employees, the Flight attendants, pilots, and so forth. And the other is the passengers. So obviously as the group, they've got to cover all of the employees. So it's just a natural progression to—

Harold Pradal:But it was not like this before. Yeah, it used not to be like that. So as you also, all of you know, you have different type of support and coverage for the pilots and for the rest of the crews. And you used to have also different levels and different type of, in terms of granularity of the coverage between the crews of the mainline and the crews of the low-cost carrier. So this is definitely changing, and we see that in this region over the last 3 years. I see fundamental change that we do not talk anymore about covering only the mainline.

Peter Harbison:Can I take you back a bit too and just In terms of, obviously, safety is a big part, safety and security. Rewinding a few years, just what were the attitudes from a medical and security point of view towards low-cost carriers as opposed to full-service carriers? Were there perceived differences in terms of—

Harold Pradal:You mean perception from the LCC towards our services?

Peter Harbison:Well, you as a sort of intermediary in this process, have you seen a shift in terms of The corporates thinking about how—

Harold Pradal:Yep, absolutely.

Peter Harbison:These airlines work?

Harold Pradal:I think that the main, or the most visible, might not be the main service, but the most visible and the most known type of services we provide is management of in-flight medical emergencies, right, that we've been doing for 30 years. This is the core business. This was until fairly recently never provided to LCCs. I'm rewinding 5 years. It was most, actually probably 6 years ago, no LCCs had contracted us for this type of services.

Peter Harbison:And this was a cost thing presumably, they just didn't want to spend.

Harold Pradal:But actually it is not. The reality is that this service and the whole suite of services we provide is a pure return on investment because if you So imagine the cost of an unnecessary diversion, which happens every day around the globe. Unnecessary diversion, one pays for the service for a couple of years, right? And that's why all the mainlines don't even think of not having this type of service, whether with us or with anyone. But not having it is a huge risk because there are diversions every day that happen that are absolutely not necessary.

Joanne Taylor:Yeah.

Harold Pradal:Wrong decision-making process from a clinical perspective, right? So now back, so that was I think an easy step for LCCs to understand, to say look, this actually the return on investments is obvious. Now when we talk about different types of services like security and more so crew support, so we support crews all around the globe whenever they land, With medical issues, obviously security issues as well. And now a lot of teleconsultation. We don't have to send the crew to a medical facility. They can remain in their hotel room and have a consultation with the doctor. We deliver the medicine directly to the hotel. So, but obviously there is always a significant cost component to add this if it doesn't exist.

Peter Harbison:Well, so today though, how many, how many LCCs in this region Actually see it your way?

Harold Pradal:We have 5 in the region at the moment.

Peter Harbison:So it's still a cost, an upfront cost-saving thing.

Harold Pradal:It is, absolutely it is. What's absolutely fantastic, I think, is that we are in discussion with a lot, most of them, but also that we have now services that are particularly well received by the LCC and We just launched emotional crew support. So basically being able to support the crews and to train, actually, maybe in a train-the-trainer type model, to train people inside the LCC to be able to deliver those emotional supports, which somehow LCC face a lot more than the mainline, or at least it is more visible.

Peter Harbison:Yeah. Thanks. Yeah, I mean, it's a whole interesting aspect that I'm sure a lot of people don't focus on at all. And when you talk about unnecessary diversions, I think what you're talking about is you'll actually give in-flight interpretations of when someone's ill. So instead of saying, we've got to divert because he's having a heart attack, you can say, well, actually, no.

Harold Pradal:Absolutely. So this happens every day. Like Singapore Airlines, obviously, flying to London, 3 hours after takeoff, what seems to be a heart attack, and they would call us 24/7. We have doctors that are specialized in aeronautical medicine, and that would basically advise the pilots and flight ops on the ground of our perspective, from a medical perspective, and also from where the aircraft is at the moment. So we have mapped out the globe in terms of medical facilities, Can we land in Dubai? Where is the cardiac facility in Dubai? Can we get an ambulance on the tarmac? How long will it take? Can we get a surgeon there on time? All those sorts of things.

Peter Harbison:I've been in your ops room in Sydney. Yeah, it's pretty impressive. TV screens and maps and everybody sitting around. It's like an air traffic control system. Let me jump back to Michael. I mean, one of the big issues in all of this, and that's one of those unseen things that gets in everybody's way, is the technical side of it. Both in terms of bookings, but in terms of payments. It must make life really complicated for you, doesn't it, as an intermediary in this process? I mean, it's changing. You've got different demands from your— both from your travelers and from the corporate bookers.

Michael Valkevich:It is, but having a bit of a technology background myself, I think it's getting better. So I have no reason not to be optimistic.

Peter Harbison:From being really bad, or just from being bad?

Michael Valkevich:We're consistently improving, I would say. I mean, there's just a lot of stuff that's done better now. It's taken a long time because, I think, as a wider industry, no one was willing to say, you know what, we're going to throw a few billion dollars at this problem and we're going to solve it once and for all. Nobody did that, right?

Joanne Taylor:Yeah.

Michael Valkevich:So I think over time things have gotten better. I think that when you talk about fares availability distribution and then on the back end, Payment, reconciliation, those tools. There's been a lot of steps forward. I mean, I think that, you know, some of the carriers, like we mentioned before, have been early adopters to some of that middle ground distribution technology, like ticketless access or light ticketing type things that make it easier to incorporate into the corporate travel workflow. I think virtual payment has been really helpful in certain cases. It's still developing in our field, in corporate travel. I don't know if you guys are experimenting with that or not. But my take on it is optimistic.

Peter Harbison:It's nice to have an optimistic IT guy. You don't meet many of them.

Harold Pradal:Well, I mean—

Peter Harbison:Well, this is a big problem.

Michael Valkevich:If I want to take a more cynical or realistic approach, I would say it's people and computers, time and money. I mean, anything is technically It's possible, right? So if there's enough interest and there's enough effort— It's gonna happen. It can happen, right? Now, it'll happen quickly if somebody's willing to throw down a huge investment and put a huge team on it and create the next net, whatever. But otherwise, as an industry, if we keep our requirements clear and we continue having these sorts of dialogues, I think that the important things come out. We've seen good headway made in some of these middle ground approaches. I don't know, Trevor, your thoughts about some of the iterations towards better technology and reaching the new audience?

Trevor Spinks:Yeah, so if we just take the payments element for a second, which I think airlines are typically pretty bad at. We, during the merger, we now work with Worldpay to be our acquirer, and it's all the finance side. So I'm on commercial, I just want to bring the money in. There's obviously a lot of savings can And we can waste a lot of money by not having proper acquirers and merchants, et cetera. So we're now working with Worldpay globally. For me, on the commercial side, where the interesting part there is, 17 different countries, there's so many different ways to pay now. And we lose so many customers in the way— and everyone doesn't pay on their credit card, et cetera, et cetera. We're about to launch in Germany. And I didn't realize the credit card payment penetration is actually really quite low. I thought it was quite high, being a European country. But WeChat Pay, hugely popular. Everyone's talked about WeChat. We know they're excellent at what they do.

Peter Harbison:In Germany?

Trevor Spinks:Partly I'm jumping too quickly. But moving across to China, we're going to be one of the first Asia carriers to actually offer WeChat Pay. So again, it's working with another third party out there. Because we know that the Chinese want to pay with— we've got Alipay set up. But we need WeChat Pay on the mobile set up as well. So we're hopefully launching that in the next 30 days. So that side of it in terms of the payments, so 17 countries each with 1, 2, 3, 4 different payment methods, not often the same. It's not MasterCard and Amex and Visa in every single country. So we have to have 30, 40, 50, 60 different payment methods to be in all these different countries. So that's a whole goldmine in itself and a whole world where we could get it wrong. And if you don't offer the right payment methods in a country, you're going to lose half some of the population because They only pay with this way of payments as well. So again, that's— I've seen that change hugely in the last 12 months, and I've learned a lot myself just in terms of that area.

Michael Valkevich:Yeah, I think that's one of the interesting differences in the corporate travel sector, where individual and corporate form of payment is absurdly rare, given how widely disparate and advanced forms of payment are on the consumer side. We still end up doing BSP invoice for a huge number of clients.

Trevor Spinks:Again, as a low-cost airline—

Peter Harbison:Nice and nostalgic.

Trevor Spinks:We didn't touch BSP for a long, long time. I didn't even know it was a thing until about 2 years ago. We now launch BSP in kind of like 13 or 14 of our markets. I've just launched BSP for Germany. We have to do that now as a low-cost carrier. But typically low-cost carriers would never have touched that sort of stuff. You go pay online with your credit card. That's it. It's a very different world.

Peter Harbison:I guess. I want to finish off with pleasure, because I'm sure a lot of people in this room are going off on a bit of pleasuring. Very, very shortly. As I mentioned yesterday, I don't think you were here, but we're doing with ISOS, International SOS, we're doing a webinar later this month and we've also just conducted a survey. So we're in the process of producing a report on it. But, and as I mentioned yesterday, there are some pretty scary things coming out of this in terms of duty of care, in terms of legal liability, and also in terms of the The common practices that we're finding of corporates in terms of, for example, if someone goes off for a couple of days after they've had a business trip and they've gone off in something like 30% of the cases, it's a high-level executive going on some sort of adventure trip, which is risky. In about 40% of those cases, the corporate has no way of contacting them while they're there. These sorts of issues. Start to get sort of— and if you mount up and you take the very opposite extreme where someone's actually on holiday but his or her law firm expects them to be answering emails, are they at work or not? And there is case law to suggest that in fact the company— because when it all comes down to it, it's going to be an insurer suing somebody, and what do insurers do? They go after the people who've got money. They don't go after me, they go after What sort of policies do you have, Joanne? Is it something that's top of mind with BHP?

Joanne Taylor:So it's an interesting question, and I think you're right, there's more and more corporates that are now doing leisure. It really is about how you work that policy and how you communicate it out to the business, and that's where working with partners, the TMC and IOS, is absolutely critical. So whilst you may not know what that individual is doing once they finish their physical work trip, there's a point where they'll come back to pick that up to obviously head home. And it's communicating, and I think this is where the policy is absolutely critical, communicating out that if you are extending, if it is pleasure, you need to make yourself available because there is a health and safety responsibility that the corporate customer has, or the corporate—

Trevor Spinks:The airline has.

Joanne Taylor:Mm-hmm. To the individuals. And that's where it's utilising, you know, the information that we have from the TMCs and then engaging, you know, whether you use ISOS or another provider, but making sure that you can at least say, are you safe? And at the end of the day, that's the most critical piece. There's— it's working, to your point, with the lawyers and understanding where the lines blur. But I think there needs to be some accountability on both the individual side and certainly from a supplier side. supplier side, working with our providers and communicating that with our business. So, and I don't think we're alone in that. I think more and more with corporate companies, it's about trying to create culture. I mean, Jetstar talked about culture this morning. It's trying to attract people, and travel and having that leisure element is a reason that people do want to go and work for a company.

Harold Pradal:Oh yeah.

Joanne Taylor:Just like frequent flyers and lounges and all those sorts of things as well. So it is a focus, and I think it's something that from a travel buyer perspective you need to actually make sure that you look at as part of your policy.

Peter Harbison:Yeah, I mean, I think lifestyle, it's actually snowballing, isn't it? It's not just millennials who want to do it. I mean, and part of the survey is that it's actually quite senior executives who just take it as a matter of course and have always done it, but they do it more now because everybody else does it. From the TMC's point of view, I mean, is this something that you're Is it you're hearing from corporates is an issue, or is it in terms of liabilities, in terms of duty of care?

Michael Valkevich:I think the situation is not new. I think the word, the portmanteau blazer, is new.

Peter Harbison:Yeah, it's a gross word, isn't it?

Michael Valkevich:Gross word. I think the baby boomer term was boondoggle, when you would create a trip and go on a personal component for it. It's always been a topic. It's always been something that we work on, and I think that I completely agree with the previous comments that Joanne's made about making it clear to your travelers what you're obligated to do if you're adding a personal component to a trip. Are you sure that your flights and hotels are on record so that, you know, through either the— like in our case, the mobile app is how we would contact people.

Harold Pradal:Mm-hmm.

Michael Valkevich:The CWT mobile app. If something happens, do we know how to get you out of there? Can we provide support? Do we know where you are? And in the reporting, of course, you know, do we know where everybody is at any given moment? Especially if, you know, you give a very relevant example about tacking on, you know, an excursion in Kinabalu to a trip to Sabah or something like that. Potentially, there's a safety concern of an adventure activity like that. The corporation's going to want to know. There might be an insurance implication. So I think that the key there is communicate to your traveling public what is required of them in these situations. We don't find a lot of our clients forbidding the practice. Frankly, it doesn't cost them anything, right? I mean, if the fare is competitive and the hotels are booked personally, it's not a big deal. The risk is that if you have a lot of people who are doing it, The reporting and the knowing where your traveler is is crucial. That's one thing that continues to— again, like other things— continues to improve. Mobile is an example of where we've had a great opportunity to reach people in a different way, in a more effective way. You might be disconnected for an adventure opportunity, but you're probably not disconnected from Instagram. You probably still have your mobile phone with you.

Peter Harbison:Definitely on Facebook.

Michael Valkevich:So that's been one very useful tool in managing.

Peter Harbison:Yeah, that's an interesting aspect to it too, isn't it? Although there's a privacy issue there as well, I guess. You have to be a bit careful about intruding on that. Harold, I mean, I'm not sure if you're aware of what we're doing with ISOS, but is leisure an issue that comes across your table very often?

Harold Pradal:Yeah, absolutely. I was running international for China for many years actually, so we are very well aware. Indeed, the plan is, I think, for most companies is, of course, the line is very fine now and getting finer by the day in terms of the personal time and the business time, right?

Joanne Taylor:Mm-hmm.

Harold Pradal:With emails basically that we all reply at any time of the day or night, but when it comes to travel, what matters for the headquarters that contract us is that we are in charge of making sure the person that is traveling has a solution, has an option, has someone to talk to 24/7, and someone that will be able to bring some level of help, whether it is to find a dentist in Chengdu, you know, on a weekend day that speaks English, or whether it is a mass evacuation from South Sudan. But I think what is critical is what was just mentioned in terms of how, from a user perspective, from basically an employee perspective that is traveling, he can easily get data, easily get knowledge about this place, and get in touch with someone. And the technology aspect of it is no longer an issue. I think it's very easy for everybody to download this app and to be in touch and be supported. So I guess from a low-cost carrier angle, we see definitely, as I mentioned earlier, a tremendous interest into supporting their crew Better, because they are the ones that are facing the most risks simply due to the intensity of the travels, right? And I think that is a fantastic thing, really, like reaching the standards that are already very high in aviation from a safety and so forth perspective. So duty of care is also something that is, I think, taken into account more Broadly by LCCs.

Peter Harbison:I think that certainly puts us out of time, and it's definitely lunchtime, but thank you very much, Joanne and gentlemen, for a very interesting conversation, and lots more to come, I think. Thank you very much. Thank you.

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