CEO interview with Volaris, CEO and Founder, Enrique Beltranena

Transcript

Peter Cerda:Good morning, good afternoon, good evening to everyone watching us here from CAPA. My name is Peter Cerda. I am IATA's Regional Vice President for the Americas. It's my sincere pleasure to be interviewing One of our industry leaders, pioneers, Mr. Enrique Beltranena, the CEO of Volaris. Enrique, hello, how are you?

Enrique Beltranena:Fine, very well, Peter. Thank you very much for having me here, and thanks for being with all the CAPA audience again this year.

Peter Cerda:So let me— just for those who may not know too much of you and Volaris, since we are on a global scale, When I talk about one of the industry leaders, and you've been around for 33 years is your career, um, 15 of those years as CEO, founder of Volaris. You started in Central America with Aviateca in Guatemala, were part of the senior team that brought the Grupo TACA all together to make what— TACA was one of the true pioneers of our industry, and then later And it's coming together with Avianca. Let's just start before we really get into the nitty-gritty, a little bit of Volaris from your perspective, from the founder CEO. Who is— what is Volaris? What's the intent of the airline? And what have you been able to do till now?

Enrique Beltranena:So basically, I started Volaris 15 years ago. We created the company out of 4 investment funds at the beginning. In 2014, we became public. We are a registered company in the New York Stock Exchange and the Mexican Bolsa. The airline today has transported more than 150 million passengers since inception. We've been growing in the domestic market. We are clearly an ultra-low-cost carrier with a point-to-point operation. 2019, we managed 22 million passengers. Year, I'm calculating another 25 million passengers after the pandemic. We are a company of about 5,700 ambassadors. I don't call them employees. I think they are all representing a brand and representing what we are trying to achieve in the market. And today we have grown up to the level that we are about 42% of the domestic market share and about 12 to 13% in the international market as a total.

Peter Cerda:Don't you know you're in a pandemic here, or we're trying to get out? We've been in crisis for 18 months, and I'm looking at your numbers here. Just last week you announced your second consecutive quarter of profits. Your net income's more than doubled compared to the 3rd quarter of 2019 during a global crisis. What have you been able to do that others have been struggling just to stay afloat? And in your case, Enrique, not only are you expanding— and we'll talk about your— the ambitious goals that you have south of the border of Mexico— But how successful you've been to keep an airline not only functioning but growing during this time pandemic? What's the ingredient you use? Because I think you could probably sell it to many, many airlines.

Enrique Beltranena:I think the answer for that question, Peter, is lucky and a lot of work. And I guess all my colleagues are doing it, but I think we were lucky. I mean, the Mexican government hands-off attitude certainly helped by preventing demand from being further suppressed or through border closures or either travel restrictions. Having said that, something very important is the Mexican government on one side didn't intervene in these kind of things, but then on the other side they didn't provide us any financial support. So the company in reality has been managing itself because of its structure, I would say. And I would say about because of that advantage that the company had at the beginning of the pandemic. We were in a very good cost position. We today, Peter, are probably the lowest cost operator in the world.

Peter Cerda:Okay.

Enrique Beltranena:If not among the top 3. And then the second thing which is really important is our financial balance sheet structure at the moment of the pandemic was really strong. And then the third thing that I would say, Peter, is we were a company that was lucky to have suppliers, lessors, bankers, etc., that when I personally went to ask for support during the crisis, They all together supported Volaris in an amazing way, and I want to be very clear here, I'm very grateful for that.

Peter Cerda:Enrique, talking about government, because we've seen, and you've seen it throughout the world, the region, how many governments took many unilateral types of decisions. Obviously, we know how severe the COVID crisis had, it had huge impacts from a social perspective. Affecting families' lives, etc. From your perspective, what you just gave is an overview. What was better, the government's hands-off approach in letting aviation continue to what it's intended to do, fly passengers and cargo one place to another, or would it have been better to have that financial support?

Enrique Beltranena:Look, it depends. It depends really on the different territories, but to be honest with you, I think the government being hands-off from the industry was really important for us, okay? And I think— I also think, Peter, that we in the industry were responsible enough to take the measures that we needed to take, okay? I mean, here in Mexico, no one did close borders, or no one— I mean, yes, the the land border was closed between the US and Mexico, and it's closed until November 8th. But I mean, flying from the US to Mexico, or flying from Mexico, or within Mexico was never stopped. And what we did as an industry is we behaved very responsible. I mean, stopping when we had to stop, finding out how to manage our biosecurity in general protocols.

Peter Cerda:Yeah.

Enrique Beltranena:managing ourselves in a very responsible— Peter, our fleet is entirely equipped with HEPA filters, et cetera. So I strongly think that hands-off was really important. When I think about aid and when I think about support from the government, I guess it was important to have support. I mean, in our case, for example, our labor contract allows us to basically switch off capacity And since we pay the people based on a variable compensation on a per-hour basis, the company managed its variable cost structure to go down. But yes, people were affected. But then on the other side, when I see the recovery and when I see what's going on in the US, and I mean, the difficulty the US carriers are having for the people to come back and work back, and the way the government issued the support to their families, I think that that's not helping the industry, especially in the recovery. I mean, I did have— when I requested the people to come back to work, they were back immediately here, okay? And we did go down from 450 operations a day to 15 operations a day during the second quarter of last year. But in June, when I called all the Volaris ambassadors to come back, they were all present here.

Peter Cerda:Wow.

Enrique Beltranena:And yes, I mean, they were afraid. Yes, they were concerned. Yes, they were. But Peter, I think our biosecurity protocols, and this is just an example of how well the industry can manage this. I didn't have one single person in my 5,700 family of employees in Volaris that passed away during the crisis. That tells you that protocols and management of the protocols and the way we manage the biosecurity as an airline, And Enrique, you make a great point.

Peter Cerda:I think that's a tribute to the entire travel tourism sector in Mexico, because it was the airlines, the airports implementing these measures, as well as the hoteliers in places like Cancún, Puerto Vallarta, where you, you did begin to see a boom, people wanting to go and they were safe. And we never had huge outbreaks of the virus, which would have, you know, really scared people away or even had killed the recovery in such a way like it did in Mexico City. And the same thing with the people.

Enrique Beltranena:Absolutely. I mean, think about what happened in the world, Peter. I mean, the US basically closed borders with Europe. The traffic in terms of tourism that's been happening basically since September of last year has been managed by our hoteliers in the different beaches, in the different destinations, again, in an impeccable way. I mean, we haven't heard a full hotel being closed because of a pandemic problem, okay? We haven't heard about the problem, which was a major problem from that perspective. And that tells you managing responsibly the biosecurity measures and allowing the private industry to manage the problem, it's of the essence. And then you need to support them in the ramp-up. And I think supporting in the ramp-up, it's not just about financial support for employees. Yes, we needed that and I really missed But on the other side, it was really important for the government not to intervene and leave a plain surface for competition and recovery, which was absolutely great.

Peter Cerda:It's critical, and we're seeing that here in the United States, how large airlines are suffering now with huge amounts of cancellations because they just don't have enough manpower to recover on that demand. So, Enrique, on one side, successful Mexico. You're almost back, you're back at 2019 numbers. You're growing, you continue to expand throughout the country. But then you take one another bold statement in the region, another bold decision, and that's opening Volaris El Salvador. And, you know, and again, we're in COVID and you decide to take the strategic decision to move forward. The timing, uh, it couldn't be any better. Was— why the timing now? Uh, did you have any concerns about opening, um, El Salvador? And what's the opportunities? Because we've been together and we've discussed the Central American opportunities, which are quite significant and certainly underutilized at this point.

Enrique Beltranena:Let me start a little bit step back from, from, from, from where you are asking. I, I think there are 4 or 5 things which are very important within Volaris, uh, traffic structure. The first one is, is the fact that we are— Volaris capacity falls under domestic and short-haul international, which are the fastest recovery geographies. The second thing is the traffic segments, okay? I would say over 70% of the network is deployed in visiting friends and relative and leisure routes, which are the fastest recovery passenger segments. Okay. And third, I think within the region, and I'm talking about Mexico, I'm talking about Mexico to the US and within Central America and Mexico to Central America, we did see a, I would say, capacity hole because of the reorganization, restructuring, or or whatever you wanna call it, from the different players or the disappearance of one important player in Mexico, which was the case of Interjet. So there were some holes that we needed to fill. And there's a 4th thing which you probably do not realize because this is not the typical airline in the world. 41% of the capacity of Volaris does not compete with airlines. It competes versus buses and bus traffic, okay? And, um, and, uh, there what we saw is, is the bus traffic melting down and shifting towards, towards the airlines and flying in, in, in airlines. Um, so having said that, I think we did set up a stage A, because of the traffic segments. B, because of which traffic segments are recovering better. Third, because of the restructuring of the markets. And fourth, because of the, of the bus switching process. We did have a stage which allows Volaris not only to recover back from the pandemic, but really start growing. And we've been growing. I mean, this year the company will end up the year with a growth in the ballpark of 30% of ASMs versus the 2019 ASMs. And it's been within the domestic market in Mexico, it's been launching operations like Volaris El Salvador in Central America, expanding to territories like Colombia, or expanding to Honduras in the way we did in Central America.

Peter Cerda:Let me talk about the buses and the domestic Mexico before we shift to Central America and further south. So you've competed with the buses for a significant 41% there. You have the domestic airlines. What more can be done? Uh, what, what's, what's the vision of Volaris moving forward in Mexico? Uh, have you captivated all the traffic that you can with the buses of pulling those passengers away from the buses. What more can Volaris do? What more is the industry needing to do in Mexico?

Enrique Beltranena:Let me speak from different perspectives. Let me start from what is the number in terms of air trips per capita in Mexico. When you look at air trips per capita in Mexico, Peter, We're still at 0.44 versus Colombia, which is probably higher. Panama is certainly higher. Chile is certainly higher. And the number for the US is 2. The number for Europe is 2.4. So, I mean, there's— the air trips per capita in Mexico still remain low. Okay. And this is something important. So the question should be, I mean, why it remains lower and why it remains lower versus economies or versus countries which are similar to Mexico. The first and most important reason is bus switching. I mean, the bus transportation in Mexico, Peter, just to give you an idea, it's a 3 billion passenger market, okay? 3 billion. Wow. Okay, it's humongous. I mean, the total domestic traffic in Mexico is about 44-45 million passengers in 2019, was in 2019, and it's recovering now. I mean, obviously our competitors are not recovering at the pace of Volaris, but it is important to say that that's a market that really needs to be worked out and really needs to focus. Okay, so the question is, why are people using the buses? Well, it's been a tradition in Mexico, and the bus transportation in Mexico and the roads and the infrastructure in general around buses was phenomenal when we started back 15 years ago. Okay, what we have done is to bring a lot of those passengers into airplanes. To give you an idea, I mean, when we started back in 2020— in, in, in 2006, this was a market of 22 million passengers. 58% of the growth of the market in the last 15 days has been attributed to Volaris and the fact that we are applying low prices to those markets and, and attacking the structure of the bosses frontally. Is it exhausted or not? No, by no means. I mean, we're still a 44 million domestic passenger market. We are still 0.22 in terms of air trips per capita. Clearly, it's by far not exhausted and we need to continue. I mean, this year we are targeting more than 30 million bus travelers that we have segmented and we have focused in terms of targeting. The second thing which is really important is the structure of the Mexican aviation industry in the last 15 years. I mean, if you remember, Peter, when we started back in 2005, 2006, we had more than 12 carriers that have disappeared in the process of this, and it has consolidated back to now maybe I would say main 3 main trunk airlines, one smaller regional airline, and there's been consolidation. Sorry to say it by attrition, okay? But there's been consolidation, and I think this process is happening and it's moving. But still, there's there's cities that. Need service. Okay, I mean, what we see with the network from Volaris is we are probably flying to almost every airport in the country other than 2, 3 airports that we don't fly. Um, and, and, and, and, but what we need to do is to continue connecting point to point. So that's the second thing. The first one was the bosses. The second thing is, is, is they— is, is closing the gap in terms of connecting The dots. Okay, but there's a third thing which is really important. It's the initial participation of an ultra-low-cost carrier in Central America. Central America, when we— I remember it back 34 years ago when we start— when I started working in the industry, and I remember Federico Rock, I remember Roberto Creed, um, and all my colleagues in TACA speaking about the hub-and-spoke process and the need of creating hub and spoke. And by then it is important to say that those markets had the need of a hub and spoke operation because they were very thin markets and tiny markets of 34, 49, 50 passengers per day. The middle class in general, both in Mexico and in Central America, has developed. Just to give you an idea, 15 years ago when we started in Mexico, the middle class was about 22% of the total population in Mexico, a population of 118 million inhabitants. Today the middle class accounts for almost 45% of the, of the population in Mexico. So what you have is an explosion in capacity of expenditure, and this same phenomenon is happening in Central America. The phenomenon of buses is happening in Central America. How many Nicaraguans live in Costa Rica? There are more than a million Nicaraguans that live in Costa Rica that move from Nicaragua to Costa Rica in buses. Okay. The most important transportation between Honduras and Guatemala is buses. The most important transportation system between El Salvador Guatemala is buses. And then you have the same phenomenon of the middle class exploding and growing faster in those countries. So the need of moving to air transportation is really needed. It's not happening sometimes because of taxation, because of costs, and we can talk about that at length.

Peter Cerda:Well, let's talk about that a little bit because that's one of the biggest challenges that we have in the region is these, uh, government restrictions. They don't make it very easy to start operations. Once you're in, the cost to operate is very high. So in, in a highly regulated industry like ours, where unfortunately we're still perceived as that industry of the rich, as an industry that's a cash cow, instead of really being considered as what you're trying to do is Make it the, the most used mode of transportation for everyone, public transportation for everyone. How much of a challenge is that for you when you have to make a decision to open, uh, a Volaris El Salvador, or as you expand throughout the region in the future, that we do have these obstacles that the buses don't necessarily have? You have to have a safe environment. Uh, you're going through the IOSHA, you're going through stringent regulatory procedures, which is very important. But then when you have taxation, you have regulatory entry barriers. How difficult is it for you?

Enrique Beltranena:It's really difficult, Peter, but I think in the last, I would say, year, we have done tremendous progress in several countries. Let me give you several examples. And let me start with fuel, for example. A year ago, I went into Costa Rica and I presented the government what was the comparison of the fuel cost in Costa Rica versus the rest of the countries? It was 40% more. Okay, I mean, how can you develop an industry and how can you develop a local airline in Costa Rica with a 40% increase in, in fuel? I mean, fuel for Volaris represents 38% of the cost structure, Peter. Okay, think about if you expand that 38% by a 40% overprice on fuel. We went back to the authorities in Costa Rica, we explained them, we gave them a comparison of the structures, we benchmarked against a lot of countries. I was able to convince the president and I was able to convince the Ministry of Transportation that it was ridiculous. We started working on it and we were able to restructure, not for Volaris, for the entire industry, the price of fuel in Costa Rica. In El Salvador, for example, a year ago we used to pay value-added tax on fuel, and, and this is ridiculous. I mean, by the way, let, let me tell you, we were absolutely out of competition versus the US carriers because the US carriers, when they sign a bilateral with, with, with our countries, They prevent this taxation, which is which is which is normal. Okay, we went back. We spoke with the government. We litigated. We did everything we had to do, and today we have both Avianca in El Salvador and Volaris who have the certificate of operation without paying value added tax in El Salvador. Two months ago, three months ago. The President of Honduras calls me and asks me to start flying to the country. I said, Mr. President, I cannot fly to Honduras. And he asked me, I mean, why? Well, you have the most expensive aviation cost probably in the entire Latin America. This is how it comes. Well, explain him what the fuel cost was. I explained to him what the airport taxes were. I explained him what the immigration processes to enter to Honduras were, etc., etc., etc. A month ago or a month and a half ago, we were able to pass through the Congress a low-cost incentive law to support the development of the industry in that country. Okay, so I'm giving you 3 examples that if we are proactive as industry leaders, if we are effective in the way we present the obstacles of flying in our regions to the several, to the several people working around us, they get into the process and they accept that we need to do changes and they accept we need to move on. Having said that, Peter, there's still a lot of barriers that we need to break, not only in Central America and Mexico. We do have a lot of barriers in terms of taxation to aircraft, in terms of taxation to rentals, withholding taxes, etc., etc., that we still need to bump and we still need to push down so we are effective, competitive, and we can really introduce the model of ultra-low-cost carriers into regions. Let me give you 2 examples which are very important. The average fare for Volaris— you need— this is a public number— it's $55 per segment. Okay, taxation in terms of airports in Central America sometimes is higher than the average fare of Volaris.

Peter Cerda:Are governments understanding how important aviation is to social and economic well-being? Because you just said $55 to fly an hour, hour 45 minutes, probably one of the cheapest fares there are out there because of the crisis. Are you— and you interact with the governments at a very senior level, Enrique— are they finally understanding What you bring to the table in terms of social and economic well-being for their nations?

Enrique Beltranena:I think they are understanding it once you present it, Peter. I think we as leaders in, in the industry need to be much more proactive. I mean, the studies that IATA produces, okay, of how much the industry represents in terms of GDP, the participation of the industry in terms of development of the economies, etc., has been fundamental for myself to present myself in front of the governments. But it's not only presenting that, it's telling them how the road blockers that we need to remove are important and convince them that we need to move ourselves towards that process and the way we need to change the industry. But I think, Peter, the combination of IATA together with the industry and the way you guys are supporting ourselves, because I mean, we have been doing things like, I mean, provoking ourselves with IATA forums, aviation forums, like with the one we did in Honduras, where we really challenged the government and the president was in front of us and we were there speaking about the roadmap blocks that we need to remove. That has been fundamental in the process of— in the processes that we are, uh, doing. We are, we are applying and, and trying to, to make changes. Okay, still a lot of things to be done, yes, but capacity to do it. And I would say the people at the governments really conscious that they need transportation It's really important. Let me give you one little example. What does a what we call a small medium-sized company in El Salvador? I mean, El Salvador is a five five six million inhabitant country where an entrepreneur creates a small company, goes out to the market, and he will very very if he has the right product and if he has a good product, he will be at the end of 2, 3 years with a cap, which is very important because the market doesn't give the size to him to continue growing the small company. Okay, and then you confront yourself that you cannot travel because, I mean, going out from, from in, in, in Central America, the average fare within Central America in the last 8 months has been above $452 per round trip. How can a small company climb on an aircraft, fly, and promote its product if you, on top of $452, you add more than $122 of taxation to a ticket? Okay. And how can the, the, the, the, the the GDP of the country evolve if they don't have cheap transportation, if they don't have efficient transportation, and if they don't help and support their small and medium-sized companies, which by the way are the most important drivers of the, of the economy on emerging markets.

Peter Cerda:And again, no doubt, and the, the pandemic COVID has certainly shown how important aviation was during this pandemic was transferring, uh, doctors, medical equipment, the same vaccines. The only way we were able to bring this to our communities was through air, air transportation. And certainly that will be the number one priority for the entire industry moving forward in really engaging our governments because they will play a very important role in the future. We only have a few more minutes, so Enrique, you probably were the pioneer of ULCCs in our region, not only Mexico, but throughout the entire region. Today, we're beginning to see many ULCCs do what we never envisioned. JetSmart signing commercial agreements with American Airlines. We have Viva in Colombia with Viva Airbus doing interlining. Our industry continues to evolve, and ULCCs are now Doing these type of partnerships, you, where you started in Mexico, you have now gone into Central America, you're now flying into Bogotá. How far can you go south? Will you continue to move south? Will you think about maybe even partnering with some of what you, a couple years ago, would be your adversaries, which are the legacy carriers? The evolution of our industry, is it— is that the course that's taking us, or is it just A regional novice that's occurring in this part of the world?

Enrique Beltranena:No, I think it's not, it's not something that's happening just in this part of the world. When we look at Asia, when we look at Europe, I mean, look at the change of the market in Europe in the last 20 years. I mean, the dominant carriers are now the low-cost carriers in, in, in that short-haul distance, okay? So I think, uh, I think in general, um, in, in the world, um, the, the aviation is changing towards ultra-low-cost carriers or low-cost carriers, especially in the short haul where we are by far much more cost-effective than anyone in the industry. Having said that, okay, There are countries, there are regulations, there are, there are a lot of things that will be changing and will be evolving in the following years. I remember a conversation I had with yourself 3, 5 years ago when we were talking about IATA, and I was telling you, I mean, where are the low-cost carriers in IATA? And I make you that question today again. Where are the ultra-low-cost carriers in IATA? Okay, because on one side here we are recognizing the capabilities of the ultra-low-cost carriers and the low-cost carriers changing the map and changing the markets in the way it has happened in Asia, in Europe, now in Latin America. And, and we, we in IATA still don't have the low-cost carriers or enough low-cost carriers to represent the industry in IATA. That's something very important. The second thing which I think is the more we move into these middle-class markets and the more we move into point-to-point operations and the better the middle class is in our countries, the more the need of aviation transportation is going to be there. The more need of cargo transportation is going to be there, and the more of effective pricing it's going to be needed in the industry going forward. I don't think you can— there's no way. I mean, what is happening is, yes, on one side we still have people, especially the governments, that consider ourselves and air transportation a luxury, okay? But then on the other side, what we're seeing is this middle-sized, this small-sized and the evolution of the middle class within our societies is dramatically changing, and it's moving towards flying and transporting themselves in aircraft to be effective in business, to be effective in their visiting friends and relative relationships. And obviously there is a big change, Peter, which is tourism. Leisure is changing dramatically in our regions because, I mean, they used to be doing internal leisure. There used to be ground transportation to go to the beach, to go to the destinations in their own countries. Look at Costa Rica. Costa Rica, which is a great phenomenon in terms of the aviation and the people that travel to Costa Rica. I cannot think probably of any other country in Latin America that has more capacity from that many airlines in the world bringing tourism to a single spot than Costa Rica. But what happened with the people inside of Costa Rica? When we implemented the ultra-low-cost carrier model in Costa Rica, markets like, for example, Costa Rica-Guatemala duplicated in a matter of 6 months. Okay, so so I think it's very difficult to stop that trend. I think it's very difficult to change that trend. Having said that, yes, there are more participants. There are more things that are happening. There are fascinating alliances that are having happening. I I think the alliance of American Airlines with JetSmart—it's a very interesting alliance. Okay, because it combines the power of JetSmart. In the domestic market with an international carrier in a country which has a very high potential in terms of tourism, business, et cetera. Okay? Yes, it's changing. Yes, it's modifying. Okay? How I see it myself, it's really important within that world. For Volaris to have an alliance or to have a partner, We really need to be absolutely clear that it is cost-effective. Okay. And here again, Peter, we get into distribution systems.

Peter Cerda:Yeah.

Enrique Beltranena:Here again, we get into the cost of distribution systems. Here we go again into the capabilities of using distribution systems in several geographies and having a commonality in terms of distribution systems. For me, one of the major stoppers for for for for Volaris to make an alliance are two things which are really important. The first one is the mentality that we are a low cost and that we operate with low fares and very effective low fares because in the last five years, Volaris has reduced its price index in more than than thirty percent. Versus the original price level 5 years ago. So the base fares continue eroding and we continue moving and pushing down the fares to make the aviation effective. But then on the other side, we need the systems and we need the capabilities to be as aggressive and to be as effective in the way we charge for ancillaries. I don't know if you're aware, but Volaris' level in terms of ancillaries is now 44% of our total revenues, okay? And it's climbing. And I would just want to remind you, in Mexico, we need to give by law the first baggage, okay? So, I mean, think about where we would be. We would be probably the number one airline in the world in terms of ancillary revenues, if not for that restriction. Okay, so the problem here is Volaris has a DNA which is really important: low cost, low fares, and the capability to execute distribution with ancillary revenues that are important for us. Okay, if we are able to manage our model, if we are able to manage our, our, our system, To achieve that, yes, alliances are feasible and are possible, but so far we haven't found anyone to do that other than Frontier, with whom we have a codeshare. And they're very similar to us.

Peter Cerda:And you're absolutely right about the ULCC, the value that they've done in Europe and the value they're bringing to Latin America, particularly the point-to-point. It's permitting more people to travel that were accustomed to going on buses, or if lucky, maybe one trip a year or even less than one trip. So the ULCC has dramatically changed the way of life for our society in Latin America, and we'll continue to do that. We're just about at the end of the program, but I, I don't want to end, uh, without talking about climate. This week, uh, the major global climate event is taking place in Glasgow. Enrique, you're a board member of IATA, so you know you're setting the tone. We just talked about the importance of more ULCCs. You are ULCC representing an up-and-coming region on the Board of Governors, and no doubt that it's going to bring big value. But you are in an airline, uh, you saw what we, uh, at the IATA AGM, the resolution that was approved by the members. You are an airline has deep roots on social responsibility, particularly to the environment. Just in a few minutes, just can you give us what is Volaris doing? What is your mindset? What is the responsibility that you put on yourself as CEO of Volaris and a senior, you know, leader of a large country like Mexico on, on this topic?

Enrique Beltranena:So Peter, I, I think again it's not just a matter of what you do, it's a matter of what you can get others to do. Okay, and this is important. The first thing I need to tell you is I am absolutely supportive of what, uh, that we achieved during the Boston meeting in IATA. Okay, I think— I strongly think we need as an industry to go to that level of reduction of emissions, um, by year 2050. That's the first thing. Having said that, I don't think sustainable aviation fuels are there to be used in a commercial way and in an effective cost way, which is really important. But within that, I mean, the new engine technology has evolved dramatically. Some years ago when I spoke about the CEOs and the new engines on airplanes, I was giving a conference and someone criticized me because I said every 15, 20 years we have a big change in the aviation that makes, that marks aviation in terms of change. I think the new technology engines, both the engines for the Boeing aircraft, so for the Airbus aircraft, the 2 brands in general did a fabulous favor to the industry with the production of these new engines, which will reduce dramatically the CO2 emissions, the fuel burn, the nitrogen emissions, and the noise emissions. Okay, and it was a quantum effect. So having said that, the fossil Biofuels are there not are not there yet for for for commercial purposes, and and recognizing that I think the challenge for for the airlines in general it's going to be a to start developing themselves or start moving into the new technologies that we have. Just to give you an idea, when when I analyze our incorporation of the NEOs in Volaris from 2015 down to 2030, okay, we'll be producing 36% less emissions by 2030, okay? And we have committed to that. So the first part is moving to the technologies that can support it. The second thing is leaders need to be conscious about this, okay? It's here to stay. It's here to move. It's here to— for us leaders to really contribute in the change of the climate, in the change of conserving the— in general, these things. And I think the challenge is not only here. I mean, the challenge is, yes, the whole thing of contamination, and it's here, but it's also the other parts of ESG.

Peter Cerda:Yeah.

Enrique Beltranena:I mean, how are we going to manage our companies in terms, in terms of governance? How are we going to manage our companies in terms of equality for people? How are we going to manage, especially in a region like ours, okay, how are we going to manage the support to our communities, etc.? So I think there has to be leaders and there has to be people that are leading our industry recognize that within our cost and that within the, the importance of being effective, profitable, and sustainable throughout the time, we also need to be conserving the planet. We also need to support our communities and respect the people that work for us and the people that fly with us.

Peter Cerda:Enrique, our 40 minutes are You've done a fantastic job. Always a pleasure being able to spend quality time with you. You are, again, one of our tremendous leaders in our region, continuing to innovate and bring— like I've said numerous times, you, you're one of those leaders that is thinking about how our society can improve, how we can have better connectivity in our regions, and bring overall better economic prosperity. So thank you very much for your time, and we're very appreciative.

Enrique Beltranena:Thank you very much, Peter. But let me clarify something. I am a manager, and I am a director of this airline that has an amazing team below myself. And it's my team that makes the changes and the success of this airline. And it's the team that makes me change the way I think, the way I succeed, and the way I process everything in this company. I'm surrounded by a total amazing team which are more intelligent than myself, and I want to thank them because of that, because they make me a better CEO and they make me a better aviation citizen in the world.

Peter Cerda:Thank you, Enrique.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.