Changing traveller patterns remain a challenge for evolving airline network planning strategies

Transcript

Dave Stroud:Well, good morning everyone. And first, thanks to Marco for the grand sales plug there. Marco, appreciate, appreciate that. And I guess before we start, I'd just like to add my thanks to, to the team from Puerto Rico for such a fabulous event last night and for all their work in hosting this. It's It's been a great experience. I hope— hopefully you've all enjoyed it. Um, I'd like to welcome our panelists who I'll introduce shortly. This session, um, is talking about the, the changing traveler patterns that we had, that we experienced as we, as we went through COVID and the pandemic and are coming through into this recovery period and, and getting into the detail of what does that mean for network planning, for route development and air service development decisions. Much of the conversations that I think we've, we've heard over the last day or so have been very strategic, very sort of corporate level of, of, of airline management. But I think this is— we want to get into a bit of the granular decision-making that you guys are, are involved with. And we have many airports and many destinations in the room, so I think it's going to be a really interesting exercise to think, well, how is that world changing? What's happening now as we, as we move through into, into a new era? So we've got a great panel with us. On my left, we have Rikke Christensen from Virgin Atlantic Airways. We have Bert Van Der Stege from Swoop Airlines. And we have Vagner Ricardo from Embraer. So we have the OEMs. We have low-cost airlines. We have— would I call you a legacy airline? I don't know. You're a global airline. Representing different geographies, different experiences. And I think we will all learn a lot from that. I guess to start off, a question that we'll sort of pose to everybody really, but it's useful to recap where we've been, but I just want to get a sense of this place in recovery that we think we're at now and what your kind of experience has been. So Rikke, if we could start with you from a Virgin perspective, where are we now in this evolution?

Rikke Christensen:Yeah, we definitely— we're in recovery, that's for sure. And it comes, of course, with some challenges, but it's It's nice to see that the aircraft start filling up. The 8th of November last year was a milestone for us because we are long-haul carrier only, and more than 60% of our capacity is in the US, 12% in the Caribbean region, and then the remaining in the rest of the world. So when the border restrictions got lifted, we really could see— and what we've been planning for during the pandemic is to build back our transatlantic network. And We have steadily been doing that. Right now, at the moment, we are 6% down on 2019 in terms of sectors. In ASKs, it's slightly more, and that's coming from the fleet changes we've done. Like most other carriers, we retired the fuel burners and the old aircraft during the pandemic, so our iconic 747, the 340s. So of course, in terms of ASKs, more down, but in sectors, minus 6%. And That is, then we are expecting to be back on 2019 levels by October time. So really ramping up the recovery right now and taking advantage of that pent-up demand that I think we all see and also come with a lot of challenges. It requires a lot of coordination internally, particularly the operation team, crew planning, pilot training, and all of our suppliers, and that we see all the problems right now with waiting times and so forth.

Vagner Ricardo:Mm-hmm.

Rikke Christensen:at the airport. But we're getting there and hopefully we'll get better. But it's hard work but fun to see, and so nice to see that we, uh, we start to see the recovery.

Dave Stroud:Yeah, yeah. I think, but we were saying before, it's, it's still one of these early events of, of meeting together. We shouldn't, we shouldn't forget that it wasn't that long ago that we, we couldn't be in person. But you, you as a Swoop Airlines, I guess, started— the airline was launched just before the pandemic, I guess, a year or so, so before. So Is recovery the right word for you, or are you just still on your growth trajectory?

Bert Van Der Stege:That's it. That's it. Yeah. Last year was the year of recovery for us. We got all our aircraft back in the air pre-peak summer last year, started growing, investing in the fleet, investing in growth in the fall of last year. So this year is all about growth for us. We're growing 60%. The demand is there. And to your point, Dave, I think for most in the room, it is either the first, second, or third conference that we're attending again in person. The second one for myself, I was at Routes Americas in San Antonio in February, where I saw the industry collectively coming together and, you know, just so much joy to see each other again and meet in person. I've noticed since coming here that one thing's changed. The first thing everybody spoke about was How difficult was it for you to get here? What was your airport experience like? Did you miss your connection as well? That type of conversation. And I think as we talk industry recovery, that's what we've got to start focusing on for sure. We're seeing massive, massive challenges within the aviation ecosystem. And as an industry, I think we've got to— we've got to focus on that. Now, I've just actually learned there is an airport going There's a conference happening just across the road here, and it's called Airport Investment. So I hope they're listening to us and are willing to invest a bit.

Dave Stroud:Well, as I've spent a bit of time in the room, I can assure you they can hear you from here.

Bert Van Der Stege:Perfect.

Dave Stroud:So they probably—

Rikke Christensen:I'll speak up.

Dave Stroud:Vagner, you're, you know, from the OEM's perspective, the manufacturer's perspective, I guess watching, watching the airlines rationalize fleet, Going through major changes of necessity of restructure. I mean, how, how, how was that for you, and how do you see this sort of immediate period of recovery that we're in?

Vagner Ricardo:First of all, I think definitely we are— the worst is behind us. We are in the recovery path now. It was like very challenging years for everybody, for all in the industry. We need to readapt to this new reality, reality in terms of passengers, in terms of deliveries of aircraft for the OEMs. But now we are definitely on a recovery path, especially here in the Americas. Especially we have so many countries with huge domestic markets that are basically at the same level in terms of RPKs that they had before the pandemic. And so it's good for us. We need to look forward to see how will be the future. However, it's important to mention, though, that this pandemic has shown us the importance of flexibility. The airlines that have flexibility in terms of fleet, fleet with different capacity, they could adapt more to this new reality, which was a huge change in terms of demand for everybody. And although there will be growth going forward, there are still a lot of challenges. So it's important for airlines to make decisions going forward in network, in fleet, joint ventures to have clever decisions that have been— for them to be— could respond to new fluctuations that can be in the future and new realities that we can face in the future.

Dave Stroud:Okay, so it's— so look, it feels like an optimistic time we're in now, but as we've already said, not, not without challenges. I think we need to come back to, to some of those issues and some of that perspective as well. as we talk through this. But before we do that, I just— I want to explore the fundamental of passenger demand and, and what are consumers looking for. Rikke, you talked about pent-up demand, and we know you, you know, both you've been growing very strongly in your business, but try and describe what, what passengers are demanding of us now. Is it, is it, is it as simple as we've been starved of travel and we're out there again, or Is it more nuanced and different to that? Rikke, what are you seeing?

Rikke Christensen:So it's, it's very different. It's different depending on the segment. If we look at the leisure segment, then Virgin Atlantic, we are a premium carrier, and we see particularly the premium leisure segment, the very strong pent-up demand. And it's probably also coming from that during the pandemic and lockdowns, we did some savings No excess savings that we're now spending to treat ourselves. So we see particularly the premium leisure really strong demand, very strong demand in the premium cabins. So our strongest load factors are in the upper class and in our premium. That's where we have the strongest load factor. The booking curve itself is still compressed, but we do see on the premium premium leisure more confidence into that you can actually go, there won't come travel restrictions. We, we start seeing a bit more mid and long-term bookings there. Where on the US routes, where we have a higher share of corporate demand, and we have restarted all of our US destinations, but the profile of the customers that's sitting there is different. There are certain industries where the corporate demand is back to 2019 levels. There's also some that are far from there. So we really see the mix of passengers very different there, and the booking curve extremely compressed. Overall, from a Virgin perspective, 2/3 of our bookings, people are traveling within 3 months. And if you think about it, as a long-haul carrier, that's really extreme still. So we're not there yet where we are back to the old booking curve and the old pattern. But in terms of segments, then the premium leisure is the one where we start to see the first coming back more back to a normal booking curve. Still compressed. The VFR and the US still very compressed, but strong demand. And I think overall from a US perspective, there's still restrictions in place. And once those get lifted, you need a test to enter. There will be even more pent-up demand. And I think particularly the corporate segment there is penalized at that at the moment. So there's definitely still opportunities. And Far East, there's still very much restrictions in place. So trying to manage your network into this world where we are, yes, in recovery, we see good trends, we see pent-up demand, but the profile of the customers sitting on the airplanes is different. And a fun example of that is, for instance, our Clubhouse, which is a lounge, although from a Virgin, it's not a lounge, it's a clubhouse. And if you've ever tried it, you'll know why. But our staff there were complaining that the type of customers that's coming there now is coming much earlier, and they're drinking way too much champagne. So it's simply less corporate travelers and more, you know, leisure travelers. There's no— the holiday starts there, and they're treating themselves. So our amount of champagne has gone up.

Bert Van Der Stege:What's your no-show rate at the gate?

Dave Stroud:See, I thought during lockdown most people upped their drink intake. I didn't realize there was pent-up demand for that as well. Vagner, there was one of the conversations that happened through COVID was point-to-point versus hub, network carrier versus low-cost carrier, all of these things. But again, from an OEM view, we know there's been a kind of an increased share for LCCs, but is that Was that a kind of a myth conversation, really? Is our network still there to be as strong as they were before, and point-to-point, or do you see a shift, or do you see something different there?

Vagner Ricardo:There is no doubt about the huge role of the LCCs to promote aviation, to stimulate traffic, and to be able to fly routes that in the past were only available in connecting through hubs through this stimulation, and they will continue to be. There will be other opportunities, but there's no doubt about it. However, if you take some, some numbers, for example, in the United States, more than 90% of the regional destinations people fly from A to B are with less than 50 passengers per day. So the vast majority of them, we need to reduce a lot the price to stimulate to a level that would make sense to fly point-to-point. So both the hub-and-spoke and point-to-point will continue to be in our aviation industry and serve the market that is required. The level of connectivity that we need, especially the level of connectivity that we have now in the US, they need both operations.

Dave Stroud:OK. I'm interested also in performance management of routes and what you're seeing. As Rikke said, the booking profile seems really compressed and things. How is the measurement of success changing? Is it, you know, what are you seeing in terms of route performance and how it translates?

Bert Van Der Stege:Perhaps first of all, just to answer your first question, like, I think it's pretty simple in terms of what the consumer is looking for, and that is fair fare and the reliability. And I think as an industry we were struggling with the, the reliability piece again within the aviation ecosystem. When it comes to the actual commercial side of the business, what we're seeing is a good healthy mix from a revenue management perspective between people booking very, very early and And knowing or anticipating that prices are going to increase, in particular over the peak summer. And yet for us, the key challenge obviously is to not, to not allocate too many seats at too low a fare too early. So, so simple basic revenue management. We've had to focus a bit more on that. Quite frankly, throughout the pandemic, I'm sure it's the same for everyone in the room. I got asked, I don't know, a million times, what do you think is going going to happen, and I was wrong a million times probably. So it's been very, very difficult to predict, very difficult to plan. We're starting to see some significant things change, others aren't. Let's not forget we're an industry where we're going to probably go back to, you know, the good old days, and here's what we were doing previously, but certain elements are changing. Just don't forget the 2 key elements. What is it the customer wants? They want a fair fare and they want reliability. And that's what we've, I think, got to focus on now because, yeah, as I've said it before, we're really, really struggling. And for us as a ULCC, every single minute of a delay at an airport is costing us a fortune and, and quite frankly disrupts the rest of the day for that aircraft, for that crew. So it is, it is the key focus for us and something that we've actually started focusing on throughout the pandemic. Yes, it's tough. Yes, it's challenging. There is a lack of demand, lack of passengers. What is it we can now do to set ourselves up for that growth spurt we're seeing and get better and work with our partners as best as we can to, to prepare for growth?

Dave Stroud:Okay, so do you think there's a danger of There's clearly pent-up demand, but as you said before, if you went around the room here of just people trying to get, get to the event, which in normal circumstances is not a complicated process for us in the industry, lots of travel disruption, lots of high airfares. Do you— are we complacent about this? Is, is this going to bite us soon if we don't sort these operational issues out? I think it's a very good question. quickly if we don't get fares back into our system? Or is it, is it just the pressures that are on many airlines and airports as well around indebtedness and recovering lost profits and things in that? You know, where are we? Have we got this? Is this going to carry us through or are we going to hit a problem soon?

Bert Van Der Stege:I think for us as an industry, the challenge will be peak summer, and let's get through peak summer first. But your point is very valid. I think especially being a ULCC, as you know, it's all about stimulation. And if we don't get things back on track, you know, there's just going to be the perception of travel. Yeah, it might be cheap and affordable, but it's, it's a hassle. And testing is just— I can't believe that in order for me to get here from Canada, I still had to get a rapid test done. And at the airport I left Canada from, they charged $90 Canadian for a rapid test. I mean, those are some of the most simple things that have to stop. When I fly back into Canada tomorrow, I will be asked by CBSA officers, our equivalent of CBP in Canada, a bunch of questions about my, my travel. And we're still treating the COVID virus as a risk, and travel was a risk. And Obviously, that's not helping any airport process at the moment.

Dave Stroud:Rikke, do you, do you feel fear for the complacency, or do you think it's a wave that we're just going to ride and, and, and, you know, that passengers will tolerate that? We've got the goodwill of passengers on our side, do you think?

Rikke Christensen:I am— I think, first of all, I think there are some scary stories out there in the media, so I actually think most passengers come early to the airport, they don't know what to expect. We read about the long queues and so forth. And there is probably a difference of being a long-haul carrier than an LCC or a narrow-body operator because they tend to have more sectors per aircraft per day where we have one. So we really put up operationally a lot of effort into— and we measure our performance on D0 and A0, not D15 and A15. So you're not A15. And so, and I have to say from our point of view, we don't see the same number of delays. Now I do think from an airport point of view and suppliers, they are aware of this problem. They are aware of it. And I think they've put a lot of effort in to try to correct things during this summer. Will we make it during the summer peak, which at least in Northern Europe Is the summer months? That that's a question. There's lacking staffing everywhere. There's a lot of people that's left this industry from from our airports team and suppliers and so forth. But the feeling I'm getting from talking to our partners around the supply chain as well is there's a lot of focus on this. It's not what the airlines wanted right now. Let's be honest. When during the pandemic we've been waiting for when we could. Recovery would happen. Now it's there and we're having these complexities, but we just need to work on this together and make sure that we do the planning together. And the best to do that is really dialogue and then trust in that we will get this sorted and try to take care of our customers. It's a phase, as I said also before. We will get there. We will make— we will have a disrupted summer. It could be. I hope not. It's not what the industry needs. But I do feel there's a lot of focus on it in the industry.

Dave Stroud:Yeah, Vagner, are you seeing the same feelings, or how do you read this disruption in this period? Is it— is it—

Vagner Ricardo:It makes everything challenging. I know, from the passenger perspective, you don't know the route, you don't know what to expect. So even with all the The efforts that we are doing, try to stimulate traffic to price reductions, have a good product, but still from the passenger perspective, sometimes he simply gave up to travel because he doesn't know what he needs to do. If he needs to do a test or not, if he needs to fill out a form and the risk to get positive on the test, so maybe he prefers to fly on a domestic flight rather than fly international because of it. So there are a lot of uncertainties that jeopardize the recovery of the industry.

Dave Stroud:Okay.

Bert Van Der Stege:I think, Dave, if I may, we've— I think as an industry we've done a phenomenal job responding to COVID 2 and a half years ago, entering that phase of hibernation, reducing our costs. Now collectively we face the challenge of ramping up and growing to be pretty significant. And inflation, labor shortages, none of that makes it any easier, of course. But I think Rikke had a very valid point. Let's, let's have that dialogue and, and honest conversation about the challenges and what we can do. And at the end of the day, make the overall traveler experience so much, so much better. Because that is, that is what, what is worrying me, especially Especially after we, we've been through the peak summer and start entering a shoulder season.

Dave Stroud:Okay, okay. Let's, let's move this on to destinations and the places that you're serving or looking to serving and how that's, how that's changing. And I guess in, in light of some of these outlook things that we're thinking about, what, what do we need from them? So I guess there's a, there's a general question around what sort of destinations or markets that you're looking for now that may have been different from before, or how are you approaching that evaluation of new markets? So that's kind of part one. And then the second part is, what do we need from them? How, how do we need to work together to make a route work, be sustainable, be profitable, be valuable for both sides? So I guess, you know, Rikke, I think you announced or launched Austin, was it, the other day? I think, you know, so So another new one, and I know you're faced with the challenges of the Asia market and the market to the west, but what has that been like for you of evaluating markets and what are you looking for?

Rikke Christensen:So first of all, we've seen the— and I know you all know this— the VFR, visiting friends and relatives, has been extremely resilient throughout the pandemic. We launched 3 routes to Pakistan doing it, the premium leisure. Segment. We have launched new routes to, you know, St. Lucia, you know, in the Caribbean. We have St. Vincent, Bahamas. So we put our capacity differently. And then when the US border opened, of course, we see some of these industries where the recovery, particularly in the corporate demand, is strong, but also where we get strong support from our partners. So from a Virgin Atlantic perspective, We have, of course, our joint venture partners, Delta, Air France, and KLM, where you have ability to use each other and more power in selling it. So a route like Austin, strong with the tech, that is a tremendous development that's been in the entire Texas region. So these markets is where we've kind of been shifting our capacity to. It doesn't mean that our other and our own routes are not coming back. They are. We have restarted all of our US destinations, but we are ramping up particularly multi-frequency destinations a little bit slower in line with our expectations of COVID demand. And that's actually where we see right now. So when we're looking right now, we're actually overperforming from what we thought, which is very good news. But in terms of forecasting and what we're looking at, we can't go back to pre-pandemic tools. We've literally— before the pandemic, we were using QSI models. We can't use that right now. It doesn't reflect the world we're in. The customer mix is different, the booking profile is different, the entire— you can't— the market sizes are different, and a lot has happened. If we look at from a US perspective, there's certain states, I think Texas, Florida, is the ones that had a lot of people that has moved away from the big cities. And suddenly people are, you know, living and working in different states and in different cities. So we kind of— we created during the pandemic our own models and adjusting them to the world that we're seeing. And I kind of see the pandemic and also where we are right now, because it's not over. It's coming in phases. Phase 1 was the disruption where we ramped everything down. 2021 was was probably the most challenging year because we thought that with the vaccine that now our industry would restart, but instead it got replaced with travel restrictions and we had to manage opening and boarding closer and each end of the route and so forth. Those learnings of how you see your customer is behaving in their booking trends, their preference, the booking curve, that's what we put into our own, our own models and how we forecast, and that we have been fine-tuning as a part of coming out of the pandemic as well. So really, we're not back to— we have our tools, we're not really using them. We use more the old and comparing the market sizes, but then we are adjusting completely outside of it to our own learnings from what we've seen. And, and of course, one day, and hopefully, you know, we can go back to using our tools. But the problem is we don't know what the new normal is. Yet we are still in that recovery. So that's something where we just constantly as an industry need to sit and learn and see, monitor your network, what's performing, where do you need to do adjustments. But I think we've learned, all of us in this pandemic, to be extremely agile during this pandemic, and that's, that's just what we keep, keep have to do.

Dave Stroud:You probably— that expression new normal probably will never exist. We will always be looking for We're all looking for the new normal. It will never be there. But Vagner, you know, you in your role, you're advising airlines on strategy, you know, for obviously the purposes of fleet sales and fleet deployment. But again, is that tone that Rikke said of, actually, we just, we're seeing these different patterns in markets, we can't rely on this, again, is that, is that what you're seeing? Are you having to adjust how you advise the airlines?

Vagner Ricardo:Yes, definitely. The world has changed a lot during the pandemic, and especially during the worst periods of the pandemic, have seen that when the demand was really low, that airlines that that have different fleet size, fleet capacity could recover their networks before. But because they could deploy the smaller, smaller aircraft according to the demand, and when demand was recovering, they could switch to the biggest. Aircraft. And what we see now, and Rikke mentioned, that business traffic not only reduced but is more spread towards other cities because we have this urban decentralization, people living in different places. So there's a completely different traffic flow that we will see comparing to what we had before the pandemic. So as Rikke mentioned, the airlines need to be prepared and to have this flexibility to be more agile, to open routes according to the new demand and apply their capacity, their fleet capacity according to the new demand realities. It's a completely different world and maybe the new normal will always be changing and this agility is important. That's what I mentioned at the very first beginning. Flexibility is key to our industry, even more than in the past. Great.

Dave Stroud:Bert, you've, you've had a rapid expansion from your start base and opened various new routes that perhaps— and you were telling me the other night of markets that have never been served before. And how have you approached that evaluation of markets and building your own cases to make these decisions?

Bert Van Der Stege:Yeah, good, good point there, Dave. We obviously, being in Canada, we're very much impacted by the weather. Canadians like staying at home in Canada in the summer. As soon as winter arrives, and depending on where you are, but that can start as early as September, people want to start flying south. When we prepare for summer this year, for our peak summer, we knew there was a, that pent-up demand that everybody's been talking about, and b, so much desire to reconnect with particularly family and France. And low fares is what really makes that difference. On pretty much every Swoop flight I'm on, and I, I fly on our network every week, I meet first-time flyers. Just the other day we launched a flight to Charlottetown, Prince Edward Island, which is a good example of our strategy for this summer. Popular leisure region and Atlantic Canada, great weather, fantastic beaches. Yeah, the season's very, very short. There's only 8, 9, 10 weeks of summer type of weather we're having here today, but it is a very, very popular region for us. We're launching 11 new routes just in that region at the moment. And when I was on the inaugural there, a number of first-time flyers, people coming to me thanking me for bringing affordable travel to to the island because, as somebody said to me, for the first time in her life she was actually able to leave the island, just not able to afford leaving the island before. So we're seeing on the one hand that pent-up demand, and like I said, tremendous opportunity for revenue management to benefit from that. But at the same time, we pride ourselves in, in offering more than half our seats for under $99 Canadian. And that will be very, very important. It's just that, like I said earlier, we then have to deliver as an airline, as an industry, working with our partners.

Dave Stroud:Okay, okay. So, so some guidance for the destinations in the room, and I'm sure like most conferences, the minute you step on the stage, someone's going to come over and start pitching you, pitching you a case. Well, what do they need to present to you? You're grappling with new data, new traffic patterns. You've got You can see this unfolding for you. How does a destination market here or an airport translate that and present to you in the right, the right way? What do you need from them?

Rikke Christensen:So I actually want to go a bit on what you said with seasonality. I think that's something airlines have become much better to. I think if you look at it as an airport destination, understand that airlines now probably do even more extreme seasonality. You don't follow the IATA seasons. You might be flying, like you're saying, 8 weeks. Understanding when is your peak and when you are entering, particularly as long-haul, when you're entering a new market, it's better it's a success and it's not as long a season as perhaps the destination would like to. That's one. It is to— if there is no existing service, it is to explain how is the demand and the customer profile that you're seeing, bringing in insights from your hotel industry, hotel partners on islands. What are you doing in terms of events? Bringing in that kind of information. Where are you right now in the recovery? Are there any requirements, testing requirements? Because it has an impact on demand. And it's this information where you can bring your insights as your destination into what is the The hotel capacity, the hotel development. How have you seen your other markets developing in terms of how have you been in your recovery? The airport capacity starts to become more important, gate availabilities, generally staffing availability at the airport, and then the insights you have into— that's the information the airline needs. And then of course it's discussions around where do we see the opportunities. When is it? Because airlines have become more agile and we, we are all of us having backup routes in our pocket that this pandemic has learned us to, that we need to be this agile. If we see something is not working, we need to have another candidate. So it doesn't mean that if an airline can't confirm right away that we're not taking it seriously. We are all looking at constantly have that, you know, potentially new routes looking or additional frequencies in our back pocket so we can quickly shift and adjust our capacity to where we now see this new normal is coming.

Dave Stroud:So Bert, is it the same for you?

Bert Van Der Stege:Yeah, absolutely. And just to add on what Rikke said, I think what I'm looking for is a good healthy conversation around how airports, destinations are dealing with the immediate challenge. There's no point, quite frankly, in offering a $99 fare to a destination when hotels are charging $600 a night and there are no rental cars available at the destination, or if you're lucky and you can actually get a rental car, they charge $1,000. Quite frankly, it's, it's obviously not going to work. It's not going to assist in the recovery of the tourism industry. So we're looking for partners that are willing to acknowledge the challenge. That's a struggle sometimes. And B, work with us to then optimize the right amount of capacity and adjust to the seasonality.

Dave Stroud:And Vagner, I'll be interested to get your perspective. You're probably not sitting in some of the cut and thrust of meetings between airports and destinations and airlines, but, but, you know, one of the questions that always comes up is support and incentives and the financing. And we've had an industry that's Airports have suffered hugely in all quarters of, you know, lost revenues, lost profits, or greater losses, greater debt taken on. The financing question of this, how do you interpret that? What do you think airports, destinations, airlines need to do to build successful, sustainable routes?

Vagner Ricardo:During this probably worst crisis that we ever had in our industry, all the stakeholders suffered. All the stakeholders need to negotiate and need to do something for the industry to survive. So we've seen, like, for example, airports negotiating with the airlines, postponing for fees, leasing companies the same way. And now as we see recovery in our industry, But the airlines in general, generally speaking, have huge debt, so they cannot afford to have CapEx investment, for example, for fleet decision, to renew fleets, to think in the future to have more economical fleets in the future. So then it comes to, again, to the financiers, to the leasing companies, all the the support to enable the airlines to sustainably grow again, to sustainably invest in their growth, in the fleet renewal, and to open new markets with lower possible risk and lower possible cost. So we still need to work together. That's the point. It's not one thing that only the airline or only the OEM or the airport— if you don't work together, together to negotiate the best deal for everybody, the industry will not recover as it could be.

Rikke Christensen:If I can add to that, I think it's a really good point, and at least for a long-haul carrier, it's also about that you— it's a partnership. And when you're talking about support incentives, particularly for new markets, as an airline you come in and you do— it's a risk. There's no There are no incentives that will cover and take that risk away from the airline completely. I mean, the majority of the risk and financial risk is still with the airline. The incentives and the support that can come in different ways is part of the sensitivity. And it lowers a little bit of the risk, which is why it's important to understand that it's a partnership we have together. The airlines still do, if even if the support or incentives available, it's still a huge investment for the airline to go into a new market. And that's just sort of show the commitment that we need to do together in making it work.

Dave Stroud:Okay, but incentives, what does that mean for you?

Bert Van Der Stege:Yeah, they obviously, they've always been important for us airlines, but with the rising cost of living, the rising cost of fuel in particular, this is, this is absolutely Absolutely key for us, finding the right route and deploying the right capacity.

Dave Stroud:I think there's, you know, in my view, I probably represent the airport and the destination side of this, but the comment about working together is vitally important. There is no actor in this journey that hasn't been heavily financially affected, and cities and regions have to balance incentives and the economic benefit from an air route Versus other things that they spend on. So I think it's critical that we have that engaged conversation so that they understand your needs better, you understand their needs better, and you work these things through in this kind of agile and volatile world that we're seeing.

Bert Van Der Stege:But tripling your average rate for a hotel night isn't going to assist you in the recovery of the tourism economy.

Dave Stroud:OK. Look, we've got a couple of minutes to go. Are there any questions? From the floor, I can see Vicky, I think.

Bert Van Der Stege:And no time left for the question.

Rikke Christensen:Okay. Good morning, Ricky. I have a question. You talked about the forecast model that you had to create because QSI obviously isn't functional anymore. Are your partners on KLM, Air France, and Delta also using the same type forecast model that you created? No, good question, and I should probably— no, it's actually homemade, homemade. And I think it's because, I mean, let's take— and I'm not speaking behalf of— but KLM, a good example. They have a lot of connections with their hub structure in Amsterdam. We each have come out of this crisis very differently, and how we see our market sizes— I mean, London, it's the biggest You can say kind of like market size in Europe, the strength of the local market. So we kind of all of us been forced to doing our forecasting in what we've seen that works for our home market. The restrictions we've been in UK have had probably I think from a European perspective some of the most severe travel restrictions with every third week they they updated the list where you could go and and what at least I hear from the destinations and the airports is they see an even stronger pent-up demand from the UK simply because that 2021, it was basically very difficult for the British and the travelers to go anywhere. So we all kind of have to build our models to where we've been in and how we've seen a recovery into our network.

Dave Stroud:Okay, any other questions from there? I'm looking out, but I— given the spotlight, I actually can't see anybody. Okay, well, let's, let's— we're nearly out of time. I think just, just to, to finish off, perhaps one quick word or one thing that you feel as we're navigating this recovery of this next phase that we need to do to make sure we develop successful routes, successful partnerships. Vagner, what would it be for you?

Vagner Ricardo:I hope that next year when we return here, we'll talk more about how we'll have a sustainable growth growth for the aviation, how we will invest everybody— new fuels, airports, OEMs, airlines— to really achieve this growth, net-zero carbon growth, and not talk anymore about the pandemic. The pandemic really to be in the past.

Dave Stroud:Okay, that's Bert. What's the, what's the one thing for you that we need to do?

Bert Van Der Stege:Likewise, um, how can we find the right balance Yes, we all have to deal with debt. We all have to try and regroup some of the losses we've incurred during COVID But how can we do that wisely, efficiently, and effectively, and hopefully be here a year from now and talk about a few examples where it's really worked for all stakeholders?

Dave Stroud:And Rikke?

Rikke Christensen:I hope that we are not having travel restrictions, that when we talk about air and we can kind of put this behind us, whatever that new normal is. And then hope profitable growth for aviation.

Dave Stroud:Excellent. Well, thank you very much. It's one of those topics we could talk about for, for many hours, and lots of opportunities, lots of problems to solve. But by starting the conversation, that's the, that's the way we'll do it. So if we can give a round of applause for our panel.

Rikke Christensen:Thank you.

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