FLY4 Airlines, CEO, Jochen Schnadt at the CAPA Airline Leader Summit World 2024

Transcript

Jochen Schnadt:We got going early in 2024 with FLY4 Airlines, new airline, as you said, owned by Enterair and by TUI. So 2 great airlines in their own right. Which actually provides a very unique shareholding in the sense that our shareholders are very well-established and known entities in the industry themselves. They also are service providers, but they also are customers. So I think that actually that unique setup is actually quite a novel way of getting going. Our mandate is very clear to provide seasonal capacity to shareholders, but equally to other third parties in the industry. And I think we are at a really interesting juncture where we are at the moment in the sense that before COVID let's say, ACMI was very much a tactical tool used by airlines. I think since COVID we have actually moved into an era where capacity solutions in general are becoming far more strategic. And I think that's the interesting opportunity from the setup in terms of FLY4 saying, yes, we have 2 anchor customers in the same— in the shape of our shareholders. But that we can equally see opportunities way beyond those 2 shareholder customers to say we can equally be relevant and of, you know, of appeal to other customers out there. And I think that's where the excitement lies for creating FLY4 Airlines in the first place. And now, now that it has got started in spring of 2024, to actually, you know, see it growing up and hopefully becoming a really strong player in the industry. For me personally, this is, I guess, the 2.5th time that I'm doing it. The first time I did it was over 20 years ago, and I know I was 20 years younger and I had a lot more hair, but it was definitely a lot simpler as well. It was a lot harder this time round. There's a lot more regulation out there. There's a lot more complexity to work through. So that was a challenge. I think from the moment the board and the shareholders actually agreed to do it, which was late, early summer 2023, to actually push the button, which in our case was 1 July 2023, to having an AOC and having your first aircraft actually operating, it was actually less than 9 months. So, but that of course was the great job of many, both in terms of the support we got from our shareholders, but also in terms of the great team we were able to pull together for FLY4 to actually set it up in such a short time with a real quality set of books, manuals, processes, and that's very exciting. But, you know, just to be clear, this would have been very, very difficult and very, very different than even if our shareholders weren't airlines in their own right. So we operate currently 4 Boeing 737-800NGs. Which we took from— they were originally operated by one of our shareholders. So when those leases expired, we actually took them. The -800 is obviously a very well-established workhorse in the industry right across the planet. I think especially in the current context, when you see where the industry is in terms of some of the challenges, supply chain, I mean, we are hearing a lot of stuff about sustainability and lower fuel burn and everything. But from a total operating perspective and economics, it is a very, very effective and efficient machine. And one of the panelists yesterday was, I think, was almost jubilant in terms of saying he's celebrating now that they managed to get 4,000 hours on wing of their engines on a new type aircraft out there, which sounds interesting because on average, Our engines are probably staying on wing closer to 40,000 hours. So I think that gives you just a scale of the maturity, but also a scale of the efficiency of that aircraft. So we don't see that changing anytime soon. And as a capacity provider, we need to make sure that our cost base, our fixed cost base stays as low as possible. So I think having the right kind of choice in the fleet and, you know, getting that balance right between efficiency But also viable costs from a fixed operating cost basis is key. In terms of the way forward, the ambition is to get to 25 aircraft plus minus in the first 5 years. We need to get to that critical mass because, as you know, whether you operate 1 aircraft or 20 aircraft, it takes pretty much the same effort and it takes pretty much the same overhead. So we want to get to that critical mass as quickly as possible and you know, the business model is one where I'm saying in the current environment, there's absolutely no reason to believe that we can't get there and then some. It is a competitive landscape. You're right. There's a very dominant player out there. But I think people don't like dominance. People don't like monopolies. And I think our approach from day one has to be and was really around the quality. Our focus was always in terms of saying, yes, it has to be efficient, Yes, it has to be cost competitive, but more importantly, it has to actually come at the quality that the customers are looking for. And when I talk about quality, I'm not talking about fancy stuff. I'm talking basics, on-time performance. I'm talking dispatch reliability. I'm talking about completion factor. I'm talking about tidy cabins. I'm talking about crew that actually are speaking the language. So I think getting those hygiene factors right and making sure we can deliver a product that is actually integrating itself seamlessly into that of our customers, I think that's the objective. So I think with that sort of focus on quality while maintaining the cost competitiveness, I think that's the angle we have and the opportunity we have.

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.