Can Low Cost Long Haul Airlines Cater To Corporate And Business Travellers?

Transcript

Richard Maslen:Now we've seen quite a lot over the last couple of days, a lot of very interesting conversations, a lot of very interesting insights into what's happening in this part of the market that's, you know, still developing. We're still not 100% sure what's happening. Low-cost carriers have come into the short-haul market and revolutionized what's going on. They've completely changed how we think and how we travel. And, you know, they've emerged and developed themselves. They came in with 1-cent fares with Ryanair that you can stimulate the market, and people that have never traveled before can now travel. You know, Ryanair at times flew to Denmark by flying to Malmö in Sweden. You know, this is not something that a corporate traveler would want. The corporate traveler wants to get there, get to the destination, get there, work on business, and be able to get away. And the low-cost airlines on the short-haul market have Realize that. And easyJet particularly has been very, very, you know, positive on that side in Europe. AirAsia in Asia has also done the same. So I think before we go into the, the long-haul side of things and see how, how we can develop that, I think it's important that we look at what we can learn from what's happened on the short-haul side of things as well. So let me just sit down. And what I'd like to do first of all is to speak to Thomas here, to sort of get a little bit of understanding behind what a company is looking for in terms of people for corporate travel.

Thomas Stoeckel:Well, first of all, let me, let me say, I mean, we are in a, well, low-cost carrier environment here, and from, from a BCD Travel point of view, or from a TMC point of view, and from our corporate customers' point of view, I think, well, particularly our customers, they do not really, well, differentiate. Yeah, what is a low-cost carrier? What does it actually mean? When we started, well, or when low-cost carrier industry started, well, 20 years ago or even more, so it was kind of clear what the differentiation is. Today, I think the lines are really blurred. Yeah, so, well, Our customers, they want to get from A to B, and whether the carrier is called a low-cost carrier or whether it is a traditional or a legacy carrier or a full-service carrier, whatever you say, I mean, well, nobody can understand today what the difference actually is between that. The models, the low-cost carrier model has adjusted so much over the years. Same as the traditional carriers' model changed. They are charging for luggage, they are charging for meals, for seat reservation, and so on. Everything what the low-cost carriers have started 20 years ago. On the other hand, we see low-cost carriers, well, coming up with kind of flexible fares, or, well, even talking to our corporates, talking to our customers about certain agreements. So, I mean, we cannot simply say this is a low-cost carrier. Yeah, we have a variety of Low-cost carriers in place, what they— well, they, they, they in a way can be happy that people perceive them as a low-cost carrier, because— and then people think, okay, this must be, um, yeah, at low cost. But it's actually not low cost for the consumer, it's low cost for the airline. And I can tell you that a consumer, like a corporate traveler, cannot care less of whether the cost for an airline is high or low. And what, what counts for him are a couple of other things. First of all, lower fares, a certain piece of comfort, good connections, things like this, good service and reliable services and so on. But low cost, what is low cost really?

Richard Maslen:So, you know, it is clear there's a blurring of the lines now in terms of particularly at the back end of the aircraft that You know, what you get on a full-service carrier, is it really the same now as what you get on a low-cost carrier? But some low-cost carriers have really sort of adopted and seen the opportunity that there is to sort of get into this premium market. And I know you're now on the airport side, but in the past you were, you were quite positive in terms of changing the way that one of the biggest low-cost airlines in the world thinks about the premium, premium traffic and the corporate travelers. So perhaps, Aboudy, you can give us some idea what you did at AirAsia. Sure.

Aboudy Nasser:Sure. I think we need to separate corporate into SME and multinational corporate, and I think there's opportunities in both, and they're actually very similar. But ultimately what we're trying to do is sell value, right? And if you need to put yourself in the, in the mindset of a corporate traveler, it's about simplicity and flexibility. And so at AirAsia, what we did was we introduced a product called Premium Flex. And essentially, I think it's better than any full-service carrier corporate product in the sense that we had a dedicated check-in desk, fast-track lounge access, seat allocation. So all the things that you'd expect from a full-service carrier, but most importantly, there was the ability to change your booking up to 2 hours before departure. And that's the key, I think, to unlocking the corporate traffic. And when we introduced that, and essentially it was an add-on, so you still had your, your standard fare, your structural fare, and for another $20, $30 on top, you had this premium flex capability. And with that, we then went out to the market. We bypassed the likes of BCD and Amex a little bit, and we then went out and did deals with the likes of Siemens, Bombardier, across the whole of the region. So we were selling value. The other thing was around simplicity and simplicity of booking. So this is where technology becomes very important. So what we developed was a corporate SME portal on the AirAsia website. And what that allowed us to do, or allowed the corporates to do, is to basically go in and make their own bookings in a very simple way, simple format, with all the reporting that a corporate could want, similar to what they would get from a TMC. But very cleverly, I think what AirAsia did was they incentivized the corporate travel, not in the same way that an airline or a full-service carrier would incentivize with hard cash and currency, but because all the bookings were being made on the account, the incentive was credited to the account. So if you think about that, if you're giving a corporate or even a travel agency a 4% commission, right, untargeted, In a full-service carrier world, what does that mean? You're giving money at the end of the year or you're deducting it in the monthly process. By crediting an account, you're essentially— your cost is the marginal cost of carriage because it is not costing you any more than that person using that money to take the next flight. So it allowed us flexibility to go out to both the multinationals and to the SMEs where this was very, very valuable. To say we can do this for you. It's simple. You'll have a lovely flexible journey in the airport, ability to change your tickets, and by the way, we'll credit your account as well so you can use that. So that generated an awful lot of loyalty, and loyalty is the key actually in corporate travel.

Richard Maslen:And what was the uptake with the response to it? You know, did you find that it exceeded what you'd initially—

Aboudy Nasser:Far exceeded, far exceeded. As I said, we signed up some big, big multinationals for their entire Asia-Pacific region and SMEs as well. So it was a hugely successful product. It still exists. And, and also at the same time, we did work with the likes of Amex, had a corporate deal with them and BCD in Asia.

Richard Maslen:So I think we have the proof there that, you know, there is that opportunity and that the industry has adapted to be able to, to see the opportunity from the premium market and But the travelers are changing as well, and we're seeing an increase now of leisure travelers staying on in destinations, you know, and doing business while they're there. Business travelers staying on and spending a couple of days to see the destination and, and sort of enjoy their time away. So, you know, this, this so-called leisure market is really developing now. So I'd like to speak to you, Maribel, about, you know, what— how you see that developing and whether that impacts how we look on things in terms of of selecting flights?

Maribel Rodriguez Gamero:Okay, first of all, the travel and tourism is growing and growing every year. This year grows by 4.8%, and the following— the next 10 years is going to grow above global economy. So that means that we are going to have new customers, new passengers. They will all want to fly for business, for pleasure, for pleasure. So we have to be ready for that. So all the low-cost Traditions, no traditions are going to be really needed. But the trends are that a new demographic is going to be on the market. People from Malaysia, India, Indonesia, they are booming. The Chinese market is booming. Latin American markets are opening their possibilities to come new carriers that up to now they weren't able to do that. So, but putting the customer at the center is is what we have to do, all of us, thinking about what they want, flexibility they want to have. If you are a customer passenger, you really need to have— to be secure, your company as well. So it's not all about the customer, because the customer is the one that is deciding. The travel— the corporate agent, probably they will have to listen to it and to take an action, but it's no longer the corporate—

Richard Maslen:The agent.

Maribel Rodriguez Gamero:agency deciding on behalf of the final passenger or the final customer.

Richard Maslen:Now, Con, you know, you're, you're the airline representative here. You're, you know, it's been a, you know, flyadeal is an emerging airline in the market. You know, what have you been able to adopt within the airline model to sort of cater for changing passenger demographics and to incorporate, you know, a higher yield with more premium traffic?

Con Korfiatis:Thanks, Richard. So, yeah, I mean, we're a year old, so the early focus for us has really been about owning the sort of low-fares airspace and going for almost, if you like, the lowest common denominator in the market. And we thought, you know, that'll be live for a year or two and then we can start thinking about some other things, obviously focusing on the mass market first. What we've found has been quite interesting, and remember we're still short-haul and domestic for the moment. We have aspirations of being international next year and longer haul over time. But in the short-haul context, what we found without actually even targeting this or doing anything about it, we have naturally attracted some corporate market business. And it's the corporate market business which pays for itself. So it's not the guys who work for the corporates where they're under company spend. They want everything they can get for free.

Maribel Rodriguez Gamero:Everything.

Con Korfiatis:And as many frills as they can get with it, so long as the company is prepared to pay for it. But in the SME segment, we're seeing some people who are naturally coming to us, and they fall into a couple of buckets. One, true business travel in the sense that, you know, I used to go jet to Riyadh for business once every couple of weeks, and now I'm going once every week or more often, and, you know, the affordability of the air travel has been a driver for them. The other bucket is is people who are actually travelling out of their pockets, not for corporate reasons, but they may, for example, family home may be in Jeddah, but they're working for a big corporation in Riyadh, and perhaps they used to go once a month back home to see family, and they're flying weekly. And some of them to the point where they tell us, we book on this flight every week, and we pre-book this particular seat, and it's just sort of religious for them in terms of both going back and forth. So that's kind of just come to us all on its own. We are starting to see some interest amongst the corporates to come on a traditional corporate model and say, hey, we'd like a corporate account. A whole bunch of reasons driving that, you know, price obviously being one aspect. Another is load factors in the Kingdom do run quite high, and they're obviously, you know, sometimes they want options to be able to travel with a number of airlines for spill and at peak times of the day.

Thomas Stoeckel:So it's—

Con Korfiatis:What it shows me is there is potential. There is potential to go after it on a structured basis rather than what's naturally coming in. I was in India earlier this year, did a bit of domestic flying there with a couple of the low-fares airlines, and I was blown— and I bought a corporate-type fare, and they've structured corporate fares for the market, and I bought a corporate fare on a couple of sectors, and I was blown away by the proportion of that corporate traffic at, you know, the type— The low fares. times of day you would expect corporates to be moving around. So I think whether you're legacy and full premium with all the bells and whistles, or whether you're the lowest common denominator, there's most definitely corporate potential there and it's significant.

Maribel Rodriguez Gamero:I wanted to comment something referring to you and what I was saying before, that the very important thing is that the passenger has a seamless journey. We are really worried about what the passenger, the customer needs and what is the corporate client needs, but then we can offer a great product, a great low-cost long-haul product, but when it comes to airports, they have to go through security 4 times, they have to wait longer queues, they have to show their passport 5 times, they have to again show their passport when they are boarding the plane. We should all think about how to make this more seamless and being able to to really focus on your product, because now you can have a great product, invest in a very good airline with lower costs and a great experience, and even if they have to pay for their ancillaries, but when they go to the point or the airport and if they have to do all those processes, the experience that you have had and offered to them, maybe they will forget. So we should really also focus on that altogether.

Richard Maslen:Doesn't matter if you are low cost or traditional or I think that brings us nicely on to the airport side, so it's good that you're here on the panel with us. You know, airports have had to change how they work when low-cost carriers arrived. You know, it was a very different need that low-cost carriers had. You know, if low-cost carriers are going to be pushing more now for a premium customer, are you going to have to adapt the ways that the airport can work with them, or is this a new opportunity for you to, to really There's actually 2 opportunities.

Aboudy Nasser:I'll just take my airline hat off and put my airport one back on. Look, there's 2 opportunities. One is within the customer journey within the airport, and one is how an airport can think like an airline. That's something I sort of touched upon yesterday. Within the airport itself, obviously we have a fast track, we have a lounge, corporate customers can use that lounge. The customer can either do that and pay for themselves or through the low-cost booking engines, buy their Fast Track or buy their lounge. We're actually introducing another product which is really very cool. It's called Fast Track Plus at London Stansted. And what we recognize, because we have very good relationships with the corporates, particularly in sort of the Cambridgeshire region in the UK, is the corporate customer really doesn't want to go through the pain of the screening with hundreds of other people and then snake their way around the retail space. You take a good 5-minute walk cramped in. They just want to go straight through dedicated screening into the gate. So we created a new product called Fast Track Plus, which essentially allows the corporate customer, or whoever wants to pay for it essentially, to go to a separate screening area and then directly across corridor all the way to the gates. So you bypass the whole retail experience. So that is something that we listen to the corporate customers, and that's what they said they wanted, and that's what we've implemented at London Stansted Airport. The other way I think that airports really need to wake up— and this is from my 4 months of working in airports so far— is that they need to think like an airline. And so what we've done at London Stansted is we've actually We've recruited a couple of people, and their sole job is to go around the entire East of England region of Cambridgeshire, which by the way is the biotech capital of the UK and Europe. It's the tech hub, and develop relationships with all the travel managers. Now we've got some big companies. We've got Facebook, we've got Google, we've got Huawei, Glaxo, AstraZeneca, all have their, their bases, their headquarters in that region. So we thought, well, let's go and develop those relationships with the travel managers, with the smaller TMCs, so we understand the travel patterns of, of the people, and then work with the airlines when they come to London Stansted to essentially introduce the airlines and act as if we are airline salespeople and introduce the airlines to the corporate market. And that's what we've done, and that's what we're sort of doing now.

Con Korfiatis:Thank you.

Aboudy Nasser:So there's 2 ways. One is in the customer experience, and one is in helping the airlines make money from the corporate customers that exist within the airport catchment area.

Richard Maslen:Obviously, with, with the corporate traveler, it's more of a value proposition than a price proposition. And, you know, there's still some major obstacles there. You know, I personally had one here coming out to Seville that the, the biggest low-cost brand, Skyscanner, offered me a great itinerary itinerary to fly from Newcastle here via Alicante with, with Ryanair and EasyJet self-connecting. And it would have saved the company about £100, which obviously for Peter would be, would be very important. But looking at it, the risk was too high because if the Ryanair flight was slightly late, I would be trapped in Alicante flying home.

Aboudy Nasser:Yeah.

Richard Maslen:You know, similarly, the hand baggage allowance on the 2 airlines was very different, so they didn't marry together. So although there was this great option there, and I looked at it as a business traveler, looked at it and thought, actually, this would work, it was more convenient for me because I could have got home tonight rather than staying an extra night here, which again would save more money. I couldn't do it because I didn't have the trust in those low-cost carriers to be able to fulfill that and allow me to do it. So, you know, the opportunities are there, but do you think, you know, we've talked a lot at over the last couple of days of saying, let's just go ahead, we're not ready properly with these systems, but just get them out there and try them. Are we damaging what we're aiming to achieve for premium travelers?

Aboudy Nasser:Absolutely. And that's something I think we touched upon a bit yesterday, right? So as I sort of mentioned, we've developed a product, a virtual interline product at London Stansted Airport. And again, we've recognized your feelings, right, of that sort of risk of I'm going to be late, I'm I'm going to miss my next flight. I'm having to self-connect. Yes, I can save myself some money, but the risk of not getting to where I want to go is too high. So working with our partners Kiwi.com, working with our ground handling company, and changing the fundamental design of the terminal at London Stansted, we're offering now a virtual interline that allows you to connect, and it's not a self-connect, so you don't have that effort of going out of the airport, coming back in, checking through. It's as if it was a coach here, so you're going straight through into the departure lounge. But most importantly, that connection, we take the risk. So we underwrite it, we insure it such that if you do miss that flight, we will put you at our cost, our expense, on the next available flight, giving you that comfort that you will get to where you need to go.

Richard Maslen:Maribel, you wanted to say something there?

Maribel Rodriguez Gamero:Well, I was mentioning, but basically, that this— the low cost, basically, when it started in my past experience, was the joining dots, going from one point to the other, avoiding hubs, avoiding— and that was also at a certain point very convenient. And where I work, we have a lot of customer clients, customers from corporate, because they were very interested to fly to even Stansted or Luton or Because their offices were there, so it was convenient. What I'm not so sure if going through another point that is not a hub where you are not going to have another connection is going to be working for corporate because you are conscious of your time, you need your flexibility, you need to be in a meeting on time or home on time. I mean, it's very different when you are for pleasure or doing other activities. You really need to have this flexibility and Comfort, because you need to be there fresh, you need to be there perfect, because you are going to be in a meeting. You cannot miss a flight. And then this risk for £100, I don't think it's a worthwhile investment for a company or for even an SME. But if you have a great hub, a great place to go, different connectivity, maybe you can fly with a low cost, but then there is any other frequencies from another companies. I don't know what are the agreements between them, but— giving some alternative to them to be able to book in another flight or before.

Aboudy Nasser:So that risk exists whether you are a low-cost carrier or a full-service carrier, right?

Maribel Rodriguez Gamero:Absolutely.

Aboudy Nasser:So the key then is to understand what are the other options that are in place.

Maribel Rodriguez Gamero:Absolutely.

Aboudy Nasser:And so if you are again going through a standard sort of coach or connection, it's a limited opportunity But if you then have the entire network that sits within an airport and have multiple opportunities to get to where you want to go, whether it's a Ryanair or an EasyJet or anybody else that goes to that destination, that's where you get that degree of comfort that actually should give you more comfort than if you were going through another method.

Con Korfiatis:Perhaps you're onto something, Aboudy, because when the airlines give that sort of a promise and that Connectability and dependability, sort of to check you through option. The airline takes on the risk. In your case, London Stansted, the airport's taken on the risk, and that's because it's not the same airline, the same brand doing it, so you've taken that on yourself. It could be a product for someone out there to go actually establish this and sell it to a bunch of airports and get around the world and go to the airports that really matter to people. You better trademark your idea quickly is what I'm telling you.

Richard Maslen:Thomas, what's your view from the BCD Travel side? You know, are people, do you think, you know, willing to take that risk or do they want to stick with what they established?

Aboudy Nasser:Sure.

Thomas Stoeckel:I can't agree more with what those 2 gentlemen and what Maribel is saying. I mean, no corporate traveler would ever risk that. Yeah, it may be this— well, maybe a very short connection, it may be a cheap connection, yeah, but interlining as such from Carriers who are not really working together, not belonging to the same alliance or have a co-chair or joint venture agreement whatsoever. Well, corporate travelers wouldn't do this. The risk is way too high. So when they travel, they they just want to travel there in a very seamless way, and they want to get there as fast as possible, and they don't want to well risk anything here. So I mean, in Europe, I mean, it traveling. By air is a commodity as such meanwhile. Yeah, it's just entering a plane like a bus. Yeah, and I mean, there's a lot of hassle anyway with all the security and all that stuff. So I mean, this is what travel makes, well, not fun, not that much fun anymore as it used to be. So they need to arrive, also what Maribel said there, on time. They don't have much time at the destination, sometimes even for long haul.

Richard Maslen:Yeah.

Thomas Stoeckel:return the next day or so. So I do not see long-haul low-cost carriers serving that yet very much, apart from, well, those, well, O&Ds like London or Paris to New York where you have daily services. All the others, they do not necessarily serve daily. So why would a corporate traveler risk that? And again, they probably need to arrive after an 8-hour flight in good shape. Yeah, I mean, no, no, no way that they travel in the back. And yeah, why would they do this? Yeah, I wouldn't if I'm traveling on business. And I mean, we can ask the audience— everybody's here for business. I mean, how many came with a long-haul low-cost carrier?

Maribel Rodriguez Gamero:Here?

Thomas Stoeckel:I mean, you cannot get here. You need to, well, go to any other hub and then buy an extra ticket. This is not what corporate travelers would do.

Richard Maslen:So, you know, we've shown here that in, you know, in the short-haul side of things, we, you know, we've not got it right as an industry to work with corporate travelers from the low-cost airline perspective. Now, on the long-haul side, you know, the general belief is a long-haul low-cost carrier will not be able to operate unless it has a premium cabin of some sort. to grab that yield. You know, how can we make it work on the long-haul side? Because if we can't get it right in short-haul, how are we going to make it work long-haul? So, you know, anybody want to answer that?

Thomas Stoeckel:I mean, some carriers do it right. I mean, some, well, belong to an airline group, to a traditional carrier like Air Canada Rouge, for example, this morning, or take Joon from Air France, which is, well, kind of semi-low-cost carrier, whatever. They operate under the Air France flight number. They have a big parent behind them, and they may step in, which may step in in case of any irregularities or disruptions. Some others, and we were talking earlier about Stansted Airport, I mean, sorry to say that, but I mean, this is very obvious. I mean, you had a couple of long-haul low-cost carriers, they're all gone. Yeah, the only one who is there, if I may say this, is Emirates. I mean, is that— well, that's long-haul but not low-cost. I mean, in a way it is, but different. Of course, it's a legacy carrier. And, and, and customers, corporate travelers, they need to have a reliable product. Yeah, I mean, if they just fly seasonal or if they just fly twice a week, it is hard to Well, to attract a corporate traveler, it is very difficult, and particularly when, when you are— when you don't have partners, when you don't have any feeders or defeeders who you are, you are working with as a carrier. I mean, you will not accommodate corporate travelers. They will not risk that, and they will— I mean, who is, who is paying if they miss the connected flight, the connecting flight, when they arrive in New York or Buenos Aires or whatsoever?

Richard Maslen:So, you know, Con, you're just a short-haul airline at the moment. You know, my understanding is you will look to grow into potential low-cost long-haul. You know, how are you going to work to ensure you have some premium traffic to sort of make some routes work?

Con Korfiatis:Well, I think the conclusion that you have to have premium traffic is not necessarily correct. So I think that you start— what you're starting to to get into a debate on now is what sort of— is a hybrid product the right solution? Is a true low cost the right solution and people take the warts that come with being true low cost if you want to use that for business purposes? Or how much up the sort of full premium service chain do you go? I think if you dial back 3, 4, 5 years ago, and I think the first wave of becoming hybrid in the early stage long-haul low-cost airlines, the level of differentiation between their premium product and the incumbents 4 or 5 years ago is probably— is starting to change again. So I think the guys who really excel at the top end of the market, they're investing more heavily in that product than they ever have before, and they're really taking it to another stage. So I think where you've got a very close gap in between, you run a risk of being a hybrid and underdelivering. I think as the real premium guys start to stretch the gap, I think it opens up the hybrid space a bit more to potential. And someone may take sort of a mid-market hybrid product with some risk attached, but not completely throw caution to the wind, and be prepared to pay some sort of premium on that, because if they're not, obviously there's no point putting that product into the market. And so I see some— Perhaps some white space there that things are progressively moving into. If I look within our own group, you know, we're only short haul at flyadeal, but if I look at what our, you know, mothership or sister airline in Saudia is doing, it's also very heavily investing in its product. It's upgrading its product significantly. It does fly long haul markets. So, you know, does that then open up a gap for when flyadeal is ready to look at some of those longer haul markets and potentially operating a larger aircraft of being able to find the right hybrid product that plugs in not at their level, and we're not competing, cannibalizing that product.

Aboudy Nasser:As if I may say, that's an absolutely great point, Con, and I think that's pretty much a theme that I've personally taken over the last couple of days here, right? Long-haul low cost is not short-haul low cost, and I think short-haul low cost then turns into a bit of a cut-and-paste model, and there's not really been any new pioneering done developments in short-haul low-cost for a very long time, right? And so any airline, whether it's the likes of Primera or anybody who just takes a short-haul low-cost product, cut and pastes and plugs it into an airport and then hope that it sells, ain't gonna work, right? Let's be very clear. Long-haul low-cost is a different beast. And I think it's been a wonderful 2 days here where we're really sort of looking into what is the difference and what do we need to make long-haul low-cost work. The cut and paste of a short-haul into a long-haul, wherever you are in the world, will fail.

Richard Maslen:So, Con, what would you say to sort of travel buyers out there and corporate travelers, you know, to them? How would— how could they come to you to make things easier for them in terms of what you can offer back to them?

Con Korfiatis:How can they come to us? Look, I mean, again, you've got to differentiate. I think in a short-haul sense, you know, we're obviously seeing people who are choosing us already for business purposes. We haven't even gone to them and sought that. They're obviously valuing something about what we're doing. So I guess the question for us is we're all constantly looking for ways to migrate up the yield curve as best as we can, particularly with, you know, what average yield is doing across the world year on year. So, you know, certainly listening to the people who are coming on board and we're starting to tap that, we're having some corporates come and bang on the door and say, we want to talk to you. We're asking them, what would you like to see? Because if you come to us and say, please provide us what your sister company is providing us but at your price, well, that's going to be a very short discussion and go nowhere. So, but, you know, as I said, over time what I expect with what's happening with premium product is you might find find some middle ground where they say, hey, here are the must-haves, here are the nice-to-haves, but at the end of the day, it wouldn't matter if you're priced at this point, we'll forego those, but here's a few things that we must have. And then we've got to look at the business case for it to say, you know what, yep, that's great, we're happy to invest in that, or no, you know, we'll settle for what's currently sort of naturally coming in. I think as you— if you start now talking about long haul, you know, again, you've got to look at And you've got to look at the market dynamics and the sectors you're operating, because a lot of this also has to do with the type of traffic between city pairs.

Maribel Rodriguez Gamero:Absolutely.

Con Korfiatis:And they're not all the same, right? And I'll go back to what we were seeing around the Rouge product of Air Canada in the morning. I mean, basically what I see that the backbone of that business has been substituting out a premium product aimed at someone who's prepared to pay for routes where the demographic is like, You know, we're really just interested in the cheap airfare. We're going to have some fun. It's largely a holiday destination. So you couldn't put a premium product on— that doesn't work. And if a high— if a low-cost just puts a lot of money into that sort of product and tries to deploy it on leisure markets, it's probably not going to be a recipe for success.

Aboudy Nasser:The key to unlocking this, in my view, is loyalty, right? And I haven't got an answer to that actually. Yeah, I think that's a great point, actually. And it's quite interesting because as airport people, we travel an awful lot around the world to talk to customers. So my background was in Etihad, which I think is a great airline with a great product. But can I get my team to fly Etihad? No chance. They all want to go Emirates. Why? I think Etihad's product is far better, it's cheaper, but they still want to fly Emirates. Why? Because of the loyalty scheme, right? And so Long-haul low cost has got to find a way to generate loyalty.

Richard Maslen:Maybe.

Aboudy Nasser:Because it is going to be so difficult to move those customers away from the likes of Emirates or whoever else has got a great loyalty scheme. And, and, and, and it's not the cheapest deal of the day. Let's be realistic, right? Corporates could have a policy, say the cheapest deal of the day. I don't know any corporate person that actually books the cheapest deal of the day. They go, who's my loyalty scheme with? I'm going to book with them. Absolutely. How do we crack that is how then we can crack long-haul low cost.

Thomas Stoeckel:And this is where the— where these legacy carriers who have created a low-cost subsidiary have a clear advantage. Those who— well, those low-cost carriers who belong to a group like Level belongs to IAG and G-Unit belongs to Air France, Eurowings to Lufthansa, Rouge to Air Canada, and so on. They have a clear advantage because this is where the traveler can see, okay, do I— can I collect my miles? I'm usually collecting with the— with my preferred carrier. Yeah, and, and this will— this is driving a lot, I have to say. Apart from comfort. Comfort is a big thing, and that's what also what I would like to say. I mean, if you have a— if you have an opportunity to fly on a long-haul on a nonstop basis to your final destination, destination, you may probably do this and prefer this over a connection through any other hub. Like, for example, with Canada, from Berlin to Toronto, Warsaw to Toronto, and where you don't need to change. This is what you may then want to do even in a not fly— not lie-flat bed. But business travelers are so much used to lie-flat that they are even complaining when there is an incline. Yeah, so why would they accept a cradle seat? Yeah, they need to arrive in good shape, particularly on the way back on the transatlantic. They want to do this. So there are things which I can clearly see as a showstopper where the low-cost long-haul can attract business travelers.

Richard Maslen:Okay, so it's quite clear it's going to be a challenge out there. Is there anyone from the floor that's, that's got a question they'd like to ask the panel? We've got a few minutes left. No, nobody there. Can't really see properly. No. So yeah, people know they want to get out to the city or the pool or food. So we'll just finish off. We've got, you know, 5 minutes left, so we can, can just sort of concentrate on a few other bits and pieces. You know, is there opportunities that, that we should, you know, we've not looked at, that we can think outside the box a little bit and say You know how we can get low-cost long-haul to to sort of appeal better to potential premium travelers. You know, is there anything that you think that that we've been missing? Anybody?

Aboudy Nasser:I think we've covered a lot.

Con Korfiatis:I think so.

Aboudy Nasser:So over the last couple of lock it, but yeah, there's there's we've got to just find the magic bullet because nobody's got that yet.

Richard Maslen:So yeah, over the last couple of days, we've we've quite clearly. seen that there seems to be a push towards if you're part of a wider airline group, there are benefits on low-cost long-haul. And I think that is coming in onto the corporate traveler side there as well. So that quite clearly creates some problems for you, Con, if, you know, you're emerging into this market. So, you know, how can you change your strategy to compete with others if suddenly, you know, a big group suddenly decides that, you know, want to take advantage of the potential of the Saudi Arabia market?

Con Korfiatis:Yeah. It's— so much of it does depend on your market. There's no magic pill that's a global solution where you could say this will work everywhere. You've really got to tailor what makes sense and you've got to look at, you know, your market demographics, what's inbound, what's outbound, why are they doing that, what proportion of it is corporate, what proportion of it is leisure. You know, the costs, and then you get to the internal factors. So we're talking— we've been talking purely around the customer element of it, but then there's also the operating— the operator's environment, and what are the obstacles within the markets? What are the various cost bases in those markets? How, you know, how conducive is the territory or the country or the region that you operate in to set up this kind of model and business? be world-class, who are your competitors going to be? And I think, you know, the challenge with long-haul relative to short-haul, it's much easier to answer those questions for a short-haul operation or a domestic operation—

Maribel Rodriguez Gamero:Yeah.

Con Korfiatis:than what it is for a long-haul operation. So, you know, if you said, well, you know, if flyadeal wants to take aircraft that will take us to any point in the world, and we pull up a chart of our competitors as Duncan had on the a slide earlier today, and, you know, you put, you know, coming back, Aboudy, you came out of AirAsia, and if anyone's looked at what the CASK is for AirAsia X, have a debate whether we believe those numbers or not. It's a CAPA number. But the bottom line is it's a damn good cost base, right? It's a damn good cost base, and if you're going to go up against the likes of that and And they've got things on their side of the route which give them advantages that you can't get where you're domiciled. There's all of this stuff that comes into play as well. It's a very, very complicated question. And then, you know, the complexities of long haul and just the pure investment in capital it takes to go long haul, and then how you redeploy things that don't work and you adjust networks. Wow. And I guess that's why long haul has taken so long. So So we're talking first long-haul conference for CAPA, but long-haul has— long-haul low-cost has been around for more than 10 years now.

Aboudy Nasser:Mm-hmm.

Con Korfiatis:And, you know, some people look like they're starting to master it and getting good at it. And, you know, we're drawing it— we're drawing strings around, you know, what's making them successful where others before haven't been. But it's not mature enough yet, I think, to draw conclusions. I'm far more optimistic about it than I've ever been. And, you know, I came from an era and I ran a long-haul low-cost back in 2006, 2007, which ultimately failed, and I know the reasons for that. And probably if you'd gone up and set that business up the same way again, it may not succeed even now. But there are, there are things that are different. I think, you know, I'll put my nose out there and say AirAsia X probably came very close to failing, and, you know, the AirAsia Group probably came very close to pulling the pin on that in its early stages. But now they've found a formula to drive that in a different way that seems like it's bearing some fruit. So it's going to be really interesting to watch this sector develop. You know, low-cost, low— short-haul low-cost has been around for 40 years. Long-haul low-cost has been around 10. We'll all be geniuses in another 30 years on the long-haul low-cost model as well.

Richard Maslen:Let's hope this event is still around in 30 years.

Con Korfiatis:It's going to be a fun ride. It'll be a fun ride and there'll There'll be people that get it right, and there'll be a— I reckon there'll be a large number of people that still get it wrong before we find, you know, a common thread that has a bit more, uh, less risk in it in terms of making it successful.

Maribel Rodriguez Gamero:Just a quick, a quick challenge, because what we are facing here, I mean, about low cost, you know everything, and you know everything about the model, and we all have been discussing about it. But the real challenge now is that we are going to be reaching by 2030 1.8 billion international Travelers, more passengers in IATA numbers, because you are talking about domestic. Of course, we will have to, to have more low-cost and no-low-cost companies. And in terms of corporate, actually, for the 10% of the GDP that our industry represents to the global economy, 22% is corporate travel. So there is a big opportunity in those figures. So it's a question of how to target where to reach our customers and how to create a great product that is appropriate for our potential customers.

Richard Maslen:So we just— we're just running out of time here now, so I'd just like to just quickly ask you all one question, just a quick answer. We're all regular travelers here. If you had an option between an established airline or a new low-cost long-haul carrier, which would you choose to fly with? Would you— which would be your choice, really?

Aboudy Nasser:Depends on the distance.

Richard Maslen:So this distance will be the factor for you? Yeah. Thomas?

Thomas Stoeckel:Well, as a corporate traveler, I would take the best option. Yeah, I mean, I would even say that, well, for corporate travelers, LCC does not really stand for a positive thing. For them, LCC doesn't stand for low-cost carrier. That means for them more less comfort carrier. So I mean, I would take the best option. whatever is available. So it doesn't matter what the airline is called.

Richard Maslen:Okay, Con, would you, would you not differentiate between them?

Con Korfiatis:I would take the one that offers the best value on the basis of what I had to spend, or what I was prepared to spend, I should say, not had to spend, prepared to spend.

Richard Maslen:So price would affect you? Yeah, absolutely.

Maribel Rodriguez Gamero:As a traveller, I will take the best option that gives me comfort out of 2 premium products, one low cost and one low cost. Doesn't matter. it should be an adapted product for my needs.

Richard Maslen:So I think what we've seen here from— take Thomas's words there— is, you know, in the corporate travel world, low-cost carriers are still potentially seen as less comfort carriers, and that's a big divide that we have to break down if we're going to actually embrace the premium travel market in the low-cost area. So just like to thank the panel for their time. Thanks to all the speakers. If you can give them a round of applause, that'd be wonderful.

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