Generating Non-Ticket Revenue Streams – Leveraging Retailing And Ancillary Initiatives

Transcript

Patrick Murphy Caravelo:Hello everybody.

Marko Javornik:It's a pleasure to be hosting a panel on ancillary revenues. Let me introduce it in the following way. So, so we are here now for 2 days and we listened a lot about the planes, We listened a lot about how to optimize the costs, how to choose the right destinations, how to keep the cost down to sustain the low-cost business model. We are a partner of Ryanair, the leader of ancillary revenue business model, and I would like to use a provocative provocative statement of O'Leary. So he's known for this kind of statement. So 4 or 5 years ago, when they launched the Amazon for Travel basically initiative, he came up with this vision that in the future you will fly for free and the profit will come from the ancillary revenues. And, and I like to throw this as a challenge because, because we listen a lot how The key for success is to notoriously keep the cost down. But think about it, how do you compete when the price of your product is basically going to zero? So there has to be another component. And it turns out that this component actually not only helps you to survive, but it can also be strategically important. It can also be the power that actually fuels the business model. So it's a pleasure to, to have a great panel that will discuss about this. So some of the champions of airlines that are doing it best in the world and the technology company. So please come to stage and join me. So Claire, I would like to start with you.

Claire Evans:Sure.

Marko Javornik:So you're coming from easyJet. Can you just put it on the map. So how important is ancillary revenue for easyJet?

Claire Evans:Okay, morning everybody. So yeah, ancillary revenue is extremely important to us. We're currently doing 20% share of our revenue on ancillaries, and I can tell you, having just gone through the budgeting process, it's in beggars to borrow next year. But I think it's really important, not just from a point of view of revenue generation, but also about customer offering. So we've talked a lot about customer focus and making sure that your customer centricity plays through. So our philosophy at easyJet is obviously to drive the revenue, but to make sure that it's through a portfolio of customer products that add value and convenience, and that, you know, one size doesn't fit all. So how do we bring something that's relevant to that customer at a great price at the right time when they're ready to book it?

Marko Javornik:Okay, Patrick, happy to have you here back again. You actually opened this topic already in the previous panel. But maybe you can reiterate and a little bit give some of the numbers. I know you have a lot of insights coming from Ryanair now with the Peach and so forth. So how do you see the structures, ancillary revenue? How important is it? Maybe a little bit.

Patrick Murphy Caravelo:Okay, well, one, I do not see a situation where we get to a zero fare. Ryanair's target at the moment is 30% ancillary revenues, currently at 28%. 28%. Peach is at 17%, but we're going for 28%.

Marko Javornik:Mm-hmm.

Patrick Murphy Caravelo:But we have a lot of changes to make to achieve that. But that's the goal that we have to do because we recognize that in our game, it's so competitive on the price basis with the competition between the individual airlines and between the full-cost, the hybrid, and the low-cost that you have to get the focus on the revenue side more than anything else. And if you keep your low fare, which is going to be the pull to get you in, then you must make up that revenue in some other ways, and ancillary is the thing. So being a retailer is far more important. It's not just selling seats anymore. It's being genuine, a retailer.

Marko Javornik:So let me ask you from the other side. So do you see a world where low-cost airlines can still make profit from the core product, or do you think that pretty much the whole product will come— profit will come from ancillaries?

Patrick Murphy Caravelo:Well, I don't see the whole profit, but, you know, but I, I see no reason why it isn't possible to make money as a low-fare, low-cost operator.

Marko Javornik:Mm-hmm.

Patrick Murphy Caravelo:But I think enhancing that and getting into the, you know, the Ryanair margin today, just to put it into perspective, is the biggest in the world, 23% net margin. That's where we'd all like to go, right? We're more like the classic doing well, highly profitable, and Peach in a relatively short time And we've managed to get it into the 10 to 15%, a big little drop last year, but it's holding up, but it's in that range. And that makes us comfortable and enables us to do an awful lot of expansion and development from that base. But getting to higher from than the, the, the 25%, no, I'm not so sure that we can really do that without the benefit of ancillaries.

Marko Javornik:Okay, Jonathan, so you come from a technology company that's basically enabler of ancillary business model. So, so what's your take on it? How do you see this market developing?

Jonathan Newman:Well, firstly, I think airlines, in particular low-cost airlines, are in the very best position to be able to retail far beyond what they currently, what they currently do. The aim of Ryanair is to become the Amazon of of air travel is a fantastic ambition. But considering that airlines are already trusted retailers, i.e., as customers, we put our faith in them to fly us in metal tubes in the sky, why shouldn't we trust these companies to retail us other things as well? The main— the only problem really is the platform. Typically what airlines do, whether it's easyJet, Ryanair, Peach, AirAsia, is They elongate— they extend the booking flow to a point where it becomes frustrating for the consumer in order to put more offers in front of the customer. And then you might have 3 or 4 EDMs following your purchase in order again to put more offers in front of the customers. And what that doesn't build is a customer-centric approach to ancillaries. There are some really engaging proprietary Airline apps out there, but there aren't many of them. But instead, what we're seeing with a number of our partners is actually using new, more intuitive channels such as, such as messenger platforms, whether that's WeChat in China or whether that's Messenger here in Northern Europe, to actually put the right offer to that customer at the right time.

Marko Javornik:Okay, so you're going also already to the next level, so really advanced, but Maybe first let's go with the basics. So Claire, can you run through the basics of ancillary revenue at easyJet? Basically, how do you do it? What's the logic? What are the key components of it?

Claire Evans:Okay, so we split our range into 3 key components. So there is our own proposition, so that's obviously bags and seats, but it's also things like our easyJet Plus project, which is where you can basically purchase a card that allows you to have fast track through the security, speedy boarding, extra baggage. And so it's a convenience product effectively, you know, it's an annual membership and it brings you convenience as frequent traveler. And aside from our own proposition, we also have our partnerships. So we work really hard to try and find great partners, and they can be large and small. So, you know, we work with Europcar from a car hire point of view, but we've also just launched launched with a small company called AirPorter who do a baggage service, baggage collection from your home and take it to your destination so you never see it again. So, you know, finding those partners that actually have something that's relevant to the customer and that actually brings a value to the customer. So partnerships is our second tier, and then our third tier is around our retail. So that's in-flight preorder. And we also now just launched with a company called Flyo where we redeem retail vouchers in the airport. And again, you know, interested to talk to airports about how we can do more of that. And so yeah, so we sort of have 3 key pillars of our, I guess, our ancillary philosophy. And but all the way through that, I guess our underpinning approach is test and adjust. So we'll look to do something as a small trial. We'll do it in either a small airport or where we can do some control around it, test it, merchandise it a bit differently, change the price, pricing, work with our digital platform, see how we can try and, you know, make improvements before we do a full rollout. We've just been working on an IFE trial in Switzerland for the last year on 5 aircraft, testing it, adjusting it, testing it, adjusting it. Now we're looking and we're going to market to look for a full platform rollout. So it's sort of that case of one size doesn't fit all, whether that be through the product or the partner, but it is about test and adjust.

Marko Javornik:Okay, Patrick, can you, can you go a little bit through evolution of ancillaries? So where are we coming from, and then where are we going in the future?

Patrick Murphy Caravelo:From the basic fare and dividing it into 3 packs was the original starting point. We usually had a premium economy, a basic economy, and a deep discount economy, but there were nothing different. The seats are the same, conditions and everything else are the same. That's the original point, but then it became into dynamic pricing so we could alter that price depending on what was going to happen. And then came the— an evolution. Well, right from Peaches, right from the very start, you paid for everything else. You got the seat, but then you paid for everything else. You paid for check-in, you paid for tickets, you paid for departure, you paid for meals on board, you paid for change, you paid for charge for bag, and that's the primary. source of revenue. And again, I'm going back to the early days of Ryanair. We didn't know anything else, so baggage revenue was always included in revenue. It was passenger revenue. Didn't think of it in any other terms. Of course, it's all changed now, but it became drastically. Then came the cross-selling, where you went to sell more product outside of that. And everybody, mainly to do with the lack of technology and the capability, And people like you guys coming into the game. We had to find partners who would promote the product. So we would use a car troller, or we would use someone to get the cars, and we would use one to— Ryanair initially had one car rental company. You could only get a Hertz car, and that was the only thing that was available. Ironically, that's all changed now, right? Then if you wanted to get a hotel, you had to go to a Booking.com or an Expedia or someone who was competent in that. But for Peach, we don't want global coverage of hotels. We don't want the whole range, but we do want the new range of accommodations, particularly back to what I was describing earlier as the target market, which is young people in a particular category who have no problem in staying in hostels, who have no problem in staying in bed and breakfast places, who have no problem in taking rooms in Airbnb or any other place they can.

Claire Evans:Yeah.

Patrick Murphy Caravelo:That has to be part of the product mix, and that's not generally available, so you've got to do it yourself. And you've got to find the partners. Then we have in Asia a lot of distributors who can do it all over Asia, but there's certain markets which it's special. And again, you have to do that in Japan. There's certain things that are unique to Japan, so you have to go and do that directly. But it all has to be integrated, and technology has been a problem until recent years. To be able to do that, to integrate all of those and to link it back into the PSS so that we have the record. So we have e-commerce with a digital data platform that's organized and focused deliberately on getting the ancillaries as part of the product that you're going to offer to the customer. And back to what Jonathan was saying, yeah, why still— I'm going back on Ryanair tomorrow and I even, despite all the sophistication, I got 6 messages already selling me something extra, and I'm not in their category for any of those.

Marko Javornik:Yeah, yeah.

Patrick Murphy Caravelo:So it hasn't— there's still a lot of further— where was the personalization? There wasn't. We have got to get to that person. I know that's the game of Comtrade and everyone else, and we all want to get that. We can personalize by the information we get in the first instance. My Ryanair concept is a perfect one. 45 million People are now members of My Ryanair. They didn't pay a penny to join, but the benefits they get in terms of being a member of My Ryanair are considerable that people have joined up. Now we have profiles, characteristics, credit cards. We have information that we can use to market not just the seat, but the whole range of different things.

Marko Javornik:So you bring a great point. So with technology, ancillary revenue model, which actually 15, 20 years old gets a completely different dimension. So Jonathan, can you, can you, can you go into this? You know, as a technology company, how do you see evolution of ancillary revenue model and, and the role of technology in this?

Jonathan Newman:Well, firstly, I think it's evolved to the point where almost ancillary is the wrong word. It's now really core revenue, whether it's 28% at Ryanair or whether it's 40-plus percent at Spirit in the United States. It's a core part of the business. You know, the fact that there are not just, you know, individuals, but there are huge teams that are working on ancillary revenues around new streams, new ways of distributing it at every airline around the world— that shows you just how core, how core it is. In terms of the evolution of it, it's partly around distributing it, making it relevant to the customer. As you just mentioned with the personalization, airlines typically have done a weak job at doing personalized offers, and that's now becoming whether it's with the likes of My Ryanair, whether it's the likes of clubs and subscription programs for airlines. But there are new ways to actually find out more about about your customers. It's about putting that personalization. Again, right into the right channel so that you can build on it and talk to the customers and make them meaningful, meaningful offers. One of the next steps in terms of further evolution again is going to be around this non-airline-specific retailing. So actually going far beyond. One of the things that we've been working with IATA on is, and a couple of our airline partners, is using NDC to to be able to retail non-airline products, whether that's husky rides or whether that's city tours, but actually being able to put these non-airline products and turning them into traditional SSRs and being able to retail them in the same, the same PNR, in the same ticket, in the same order. That, and that's a, that's a real game changer because then you're becoming much more of a end-to-end retailer than you are just a segment provider.

Marko Javornik:Mm-hmm. Okay, excellent. So personalization obviously is, is, is one key topic, but the other is also, I guess, access to customer touchpoints. So, so Claire, can, can you elaborate from easyJet? Do you see this shift towards mobile and omnichannel and so forth, and how does it work for you actually?

Claire Evans:Yep, so we— yeah, exactly that. So we've been really successful with our mobile app and We've got 28 million downloads at the moment, 600,000 opens a day apparently. And if anybody's got a mobile boarding pass in your Apple Wallet, you probably also have had a push notification about the boutique sale that's on your flight home today. So yeah, we're really using that digital mobile app to try and talk to the customer frequently, give them more opportunities to purchase. And we've seen 60% increase year on year on our in-app purchases, so Our booking time is quite short, but actually if we offer the right product at the right time in that journey, people are more likely to buy it. So don't, you know, to your point, Jonathan, don't crowd them at the beginning of the process. Give them what they want, give them the confidence that it's sorted, and then just leave the conversation open and prompt them either through push notifications or through, you know, choices within their check-in pages. And so using that booking flow, and again, I think similarly to, you know, the conversation about extending the retail journey. How do you, again, from an in-destination point of view, keep in touch with them? How do you allow them to add on to their journey home? How do you allow them to bring that extra souvenir case that they've just bought? You know, there's a lot of opportunities around keeping that conversation open and thinking outside of the airline box, so to speak. So yeah, so I'm a passionate retailer about bringing opportunities and services to them to not just think, you know, this is just what, you know, bags and seats, what we're used to.

Jonathan Newman:So just to add on what Claire said, one of our airline partners, Volaris in Mexico, with one of the products that they launched with us, which is the first fully transactional experience within Messenger, they said they want to get rid of their 9 or 10 step process to make a booking that you have to go through. Do you want insurance? Do you want cars? They wanted to get rid of that and and to enable customers to be able to make a booking with one sentence and a click. So to get that customer in as quickly as possible.

Marko Javornik:Yeah.

Jonathan Newman:To be able to, to then be able to have an ongoing conversation at the right moment about what's relevant for them. And they followed that up with another product called VPass. And VPass is, I think, getting towards your, your point right at the beginning where You know, the, the travel experience will be free and the retail around it will be what actually drives income. What Volaris is doing is getting customers to pay a certain amount of money each month for a certain amount of inventory, from as low as 500 pesos for a guaranteed round-trip journey. 500 pesos, which is equivalent of, I think, $15, $15, $20 for a round-trip journey each month, because then they've got this captive customer, but then they can retail so much more to throughout their— throughout the customer lifetime.

Marko Javornik:So that brings a very interesting point. So, so when you go digital, suddenly business models change, change much, much faster, actually. So the whole, the whole dynamics of the, of the business, you know, who do you partner with, what's your path success, it really gets a completely different dimension. So Patrick, how you see these dynamics? I mean, I was really impressed with this statement before. You said basically the airline people in Peach kind of move away and you bring people that are really— that understand how this business is done.

Patrick Murphy Caravelo:I think understanding what the business is done required retailers to be in the airlines. So we— the management of the commercial side, parts of it, are retail people, never worked in the airline, whereas all the other senior managers came up through the ranks and reached that point. And these people were brought in to change the culture to this orientation towards the retail side. But they can't implement the digital marketing capability. They need to have third parties. As I said, back to Ryanair, and you already referred to it, Comtrade have been working with Ryanair for 5 years, but Ryanair now have, what, 800 people simply doing the e-commerce part of the business? I know you're part of that, but that's how they do it. We're a fraction of the size of Ryanair, so we can't contemplate. So we have to find technology partners that will enable us, and we have been talking to quite a few of them, and we're getting there. We're nearly there, but we want to get beyond the case of saying, We're restricted in what we can do. You know, we still sell hotels today and we still sell car rental, but we have to do it through API connections. It's not through integrated systems. That will come.

Jonathan Newman:Sorry, Patrick, sorry to add to that. I mean, Peach have a very different approach to many other airlines, and that's kind of— they buy in. There was a lot of comments yesterday about fixed versus variable costs. Well, you know, your HR costs, your headcount. Well, that's a fixed— that's a fixed cost. You have, you have these people there, and they might be fantastic developers, but they're not going to be as dynamic and nimble. They're not going to be as easily turn-off-and-on-able as external companies. And you see now, you know, airlines, you're looking into the startup sphere to actually bring in, you know, 2- and 3-person developer teams into their business and incubating them in order to get that new quick thinking that their own teams would take so much longer to bring up internally. And it enables them to have such a low opportunity cost when it comes to bringing new technology in.

Marko Javornik:So yeah, you touch this experimentation kind of approach, you know. Claire, you also mentioned so How do you join this in one company? You know, so, you know, you don't want to tweak engines and try out things, you know, in a way that you want to tweak the digital e-commerce. How do you, how do you combine the 2 very different cultures in one company?

Claire Evans:So I think it's similar to what Jonathan's been saying. You know, we've got quite a few different digital partners that actually we surface through our app through an API connection or through a, you know, live feed. There's, you know, opportunity to do more of that. I think we're very much about— we want to own and control, you know, the piece that is our absolute backbone of our reservation system. But if it's about servicing other products that actually we don't want to own the inventory for, we don't want to have the technical maintenance, you know, issues around that, actually let's find the great partner that's got that product, that platform, and, you know, surface it in the easyJet app. So yeah, don't take, don't take control of the things you don't need to take control of.

Patrick Murphy Caravelo:Okay, but you've just hired— it was in the papers last week— 18 data scientists. Yeah, airline is hiring data scientists.

Claire Evans:Yeah, so, so that's— yeah, I mean, I guess that's part of our new philosophy as well around, you know, data is key to us. So we've, as you say, hired a new Chief Data Officer and a whole team of analysts coming in. I think, you know, we talk a lot about the use of our data and the importance of personalization and knowing what our customers want. And, you know, at the moment we have got lots of disparate systems with lots of different people, and it's how do you really aggregate the power of that data? You know, 100 million customers is really powerful if we know exactly what they're doing so that we can actually make sure we offer them the right product and give them a better service. So yeah, so it's definitely an area of investment. It's a core pillar for our investment strategy for this year.

Marko Javornik:So Patrick, maybe let's move now to To really long haul, you know. So, so I mean, low-cost business model works for short haul. We have the champions like easyJet, Ryanair. We see, we see financially it works very well. In the end, they, they have nice returns, created valuable companies. But how does this then apply to long haul? What, what are the differences? What are the specifics? Does the same equation work, or do Or do you need to readjust it?

Patrick Murphy Caravelo:Okay. There was a study carried out a year ago by Barclays Bank, another one by Deutsche Bank, that tried to do this exercise of short-haul versus long-haul. And they demonstrated, obviously, vis-à-vis the full-service airlines, which tends to be your first step, on the cost side, of course, you can achieve the savings as an LCC, mainly through densification, putting more seats in an aeroplane. through outsourcing business activities and doing as much as you can of that, also by avoiding overnights and those kind of disruptions, and increasing utilization by putting your long-haul in with your short-haul. And we heard a lot about that yesterday. That's the cost side. But you still only get a relative performance that's cheaper than the full service. The dilemma is on the revenue side, right? The full-service airline will always have the first class, the business class, the premium economy, and the economy, and have revenue management systems that can vary that price to get the load factor right. In other words, they can cross-subsidize your target market, right?

Jonathan Newman:Mm-hmm.

Patrick Murphy Caravelo:And they can and will do it. And we've seen history in the past of some other airlines, whether it's Oasis or back to Lakair, that's what was happening, whether it was by working together to achieve it It was done, and the effect was to push carriers out of the game. And that's— you're seeing that right now because the new breed of long-haul is really having a difficult time.

Marko Javornik:Mm-hmm.

Patrick Murphy Caravelo:And— but so what you do is you switch— not switch, you put more emphasis on the non-seat revenue. That's the key. So it's whether it's short-haul or long-haul, that's what the focus has to be. So what I've been saying earlier about it is applies to long-haul as well as to short-haul. Probably more relevant and important in the long-haul. You have smaller markets, you have niches, much more niches that you have to deal with, but you better get the product right. If you're going to, let's say, Denver, Colorado, the only hotels you want are Denver and cars that will go within that region. You don't have that global coverage if that's your operation. And if you're low-cost, it's probably you're going to be doing relatively few destinations, but that becomes the focus. And then back to feeders and everything else, which— that's another story.

Marko Javornik:So Jonathan, what's your take on this? So you do work actually with long-haul low-cost airlines. How do you see the, the concept going from the short-haul to long-haul?

Jonathan Newman:Um, well, we proudly worked with— we proudly work with a number of long-haul low-cost airlines. Scoot was our— one of our original partners. We now do 10 different things for them. And again, that gets back to the point we were making earlier around, you know, being nimble. These are— this is a new concept, right? This is— these are new, typically new airlines that are unencumbered with legacy thinking. They're supported with legacy money potentially and with legacy scale, but they don't have that— they're not encumbered with legacy legacy thinking. And what that allows them to do is to be able to have very different ambitions for the way that they want to sell, for they want to distribute, for the product they want to build. So, so what we do, and other companies as well, is help airlines to deliver on those, on those ambitions. Take Scoot as a perfect example. It's selling its product in a different way, in different channels, than its parent airline would ever, would ever dream of doing. So, and I think that's what, whether it's Level, whether it's the expansion of Eurowings, whether it's, you know, Norwegian as it looks now to, to, to get itself out of its financial problems, is that they've got this, this real opportunity to do completely new things. And whether that's non-ticket revenues, but if it's going to be non-ticket revenues it has to be more than simply selling a pixel, right? Which is, you know, typically what a lot of people talk about when it's non-ticket revenues. It's about, okay, I'm pushing you through to retail somebody else's product, maybe in a white label fashion. So there will be a lot more innovation, especially whether it's from Japanese customers that will look to Peach as they grow internationally, for them to actually guide them on their journey. So for them to actually guide them on their journey, not just to Singapore or to Jakarta, but actually while they're there as well. And that's where airlines like, like Peach and other low-cost on-haul innovators can, can firstly build a better engagement with customers and then deliver more revenues.

Marko Javornik:So Claire, I mean, obviously easyJet is a short-haul player. What are the longest destinations, let's say, that you have?

Claire Evans:So the majority of our flights are less than 2 hours. So yeah, not quite comparable with the long-haul sector, which makes it quite difficult to deliver onboard service since when you've got lots of customers that are wanting food, beverage, and other services. So I think, yeah, on the, on the long-haul, I do think there's an opportunity around leveraging your flight experience as much as in your destination experience. And sorry, and how you can do that, whether it's around, you know, making events out of the flight, whether it's about utilizing your collateral from an advertising, marketing, media opportunity. And I think, you know, when Duncan talked about Rouge earlier on, I'm making that personality really stand out because then it's easier to retail in that aircraft environment. And so yeah, I think the most natural thing is leverage your onboard engagement and have great products that people want to buy, maybe even do it through the pre-order channel or preorder for home delivery. So yeah, I think it's about making it a personal experience while you've got the customers in front of you and utilizing your workforce to be really engaging. And it's like, you know, we had a— we did a fashion show on a Milan flight the other week randomly, and that actually got loads of participation, was all over Instagram. And, you know, okay, it wasn't necessarily a revenue stream, but it was about participation and making memories and getting engagement. And you can easily turn that into a gin festival, or, you know, there's opportunities to, especially on a longer length sector.

Marko Javornik:Do you see some interesting trends when you compare, let's say, 1-hour flight to 2-3 hour flight? Are there some trends that you could notice, or it's pretty much the same business for you?

Claire Evans:Yeah, so anything— so we have a very high leisure bias in our customer base, so any of our longer leisure routes always do phenomenally well on our onboard sales. And exactly what you'd expect. It's a longer flight time and it's customers that are going on holiday and they're in a happy mood, so they want to buy. I think for us is how do we unlock the very, very short sectors. So we, you know, we have some very less than 1-hour flights and actually, you know, trying to do something that's useful, whether that's an onward transfer or whether that's actually, you know, something to take with you and gifting, etc. So yeah, unlocking the short, short flights is really hard. But yeah, those longer leisure flights and And again plays perfectly into the low-cost long-haul customer mindset.

Marko Javornik:And that brings me to, I mean, key advantage. So having like captive audience, let's say 5, maybe 10 hours on a plane, surely there this can be a big advantage. And, and do you think maybe connectivity is the key to unlock this, this advantage for the airlines? How do you see it, Patrick?

Patrick Murphy Caravelo:The whole question of connectivity is is critical, and in-flight movies and everything else is part of the game in the long-haul business. As a low-cost airline, I have a perfectly clear— we want Wi-Fi capability. We want people to enable them to use their laptops and their everything else. One experiment we did 2 years ago, we enabled passengers as they checked in to download a movie or a film or whatever they wanted to download before they ever got on board. That's a great idea. So they have it on their laptop. Yes, you paid for it, back to the principle, pay for everything. Up to now, the whole cost of putting in in-flight systems is just intolerable for the— from a low-cost airline point of view. But we're now getting technology around that's giving us the capability of having a simple box that we can put in the baggage holder in the catering area that will create that Wi-Fi capability. It's a cost.

Marko Javornik:Yeah.

Patrick Murphy Caravelo:The question is, how do we make a revenue rather than just a cost? Yeah, but if you're going long haul, you really have to be producing that capability, at least that download capability, without ever putting in full in-flight entertainment. But it is changing rapidly.

Marko Javornik:Jonathan, how do you see it? I mean, I guess with your investment in the bots, you are thinking about this continuous conversation with, with How do you see connectivity playing? Do you think this is an important part of long-haul?

Jonathan Newman:Yeah, absolutely. I think it's not just an important part of long-haul, but in— but all stage lengths. The point is that once you, once you get on board, and if you've got fantastic crew that are prepared to engage and to actually really sell, as in to actually really try to push customers to try and buy— that's not always the case. You know, whereas if you've got potentially a Bardo, or if you've got a, if you've got a rep, if you've got a digital representation of a pushy salesperson actually on board on the device that they're using connected to you, and you can actually engage with that customer even, you know, and that's another way to potentially monetize free streaming, right, to actually have a bot there that that kind of almost sits in the corner while you're watching it. So there is definitely a way to do that, even if it's just to be able to say, okay, well, I'm traveling on an international flight, and yes, I can buy home delivery. If I'm— we already know what your credit card details are and everything because you're sat in seat 22D. So you can actually— your profile with the bot that you use to buy your ticket, you can then retail while you're on board as well and have it, and have it sent to, sent to your address. So yeah, I mean, in-flight connectivity is going to enable a lot of these things and much more in the future.

Patrick Murphy Caravelo:But for the moment, I think we're stuck with a situation, and in fact in Japan, that the smartphone is becoming critical because that's what you do in the 2 days before your flight. That's where you book your meal or get your fast track or do whatever you want, but you can do it on But you've already made your booking sometime to get the price advantage. Now you're just tidying up. So smartphone becomes critical. Will they grow and expand the capability? Yes, they will, but how much, I just don't know yet.

Marko Javornik:So at this time, I would like to open for the questions from the audience in case somebody has, before we continue with other— so anybody has a question? Is there a mic? Yeah, mic is on the way. So, the gentleman over there.

Claire Evans:Thank you.

Patrick Murphy Caravelo:Hello, my name is Ignacio Melero. I'm coming from SEPLA, and I have a question regarding non-ticket revenue.

Claire Evans:Is—

Patrick Murphy Caravelo:how important Is for an airline to work with the proper NDC? I mean, we're talking about that we need non-ticket revenue streams, but is there any chance for an airline to choose a proper NDC for improve their level regarding the non-ticket revenues?

Marko Javornik:That's the first question.

Patrick Murphy Caravelo:And do those NDCs offer different profiles in order to achieve a better ancillary record?

Marko Javornik:Thank you. Patrick, you want to give a shot? So is NDC critical for you?

Patrick Murphy Caravelo:No.

Claire Evans:Okay.

Patrick Murphy Caravelo:Irrelevant.

Marko Javornik:Short answer.

Patrick Murphy Caravelo:We're doing direct business and we have to be able to do the transactions, so we don't need it. I think NDC is basically for travel agents and traditional type of distribution.

Jonathan Newman:Jonathan? I'll try to answer. I mean, NDC, I'm a big apologist for NDC. I think it's a fantastic step for the industry as a whole. Yeah, however, I mean, talk whether it's Peach or easyJet or other people, especially customers that are based on ticketless PSS, NDC is irrelevant. I mean, there are some benefits of maybe using it, and especially around standardization when it comes to third-party aggregators, etc. But I mean, it's not, it's not a necessary schema for to be able to distribute product when you can already distribute all sorts of things using, using your own pipes.

Claire Evans:Yeah, so I'd probably echo the gentleman, I'm afraid.

Marko Javornik:Okay, so I would like to now move maybe to look at it from the other perspective. So many times we talk disruptions are coming from technology side. You know, I come from technology company. We are always thinking about artificial intelligence, chatbots, and other things. But there's also interesting notion that actually disruption comes from the human side because simply the behaviors are changing. And, and I'll take me as an example, you know. So in the last 5 years, the way I travel changed Completely. So 5 years ago, business travel, I would write an email to my secretary, she would search for the options and then give me suggestions and so forth. I'm so happy that now I don't need to do it, you know. So I have Skyscanner, Momondo, Google Flights. Every break there is, I'm searching a little bit for the flight options. And, and also the way I travel changed completely. So I'm not looking at the home airport, I look like at 5 different airports. So for example, here I actually traveled from Venice, which is like a 2-hour drive actually, with easyJet. I love the fact that I can book a flight ticket on my app in like 30 seconds with, with some of the, the best airlines. I also changed my behavior in the plane, I see. So I'm traveling more and more as a percentage with low-cost, also for business. And I start to like— when I came from Venice morning, I order breakfast. If I go in the evening, I have a glass of wine and so forth. So there's a change in my behavior, how I consume basically the products and how I interact. So how does— how do you see this change? So I mean, maybe I'm not the core target group, let's say, Claire, for you, but how do you see the change consumer behavior, and how important is it for you?

Claire Evans:Okay, so really important for us. I think customers' expectations are ever-growing, and they, you know, want transparency. They want to understand exactly what they're purchasing, and they want trust that what they're purchasing is going to be delivered by a reputable brand. I think we've talked about that a lot already. And so yeah, we do quite a lot of work internally. We have an insights team. We have a whole sort of planning team around customer expectation changes and how we can make sure that both our digital journey and our product delivery in the airport environment matches that. And we've done— I think got mentioned yesterday— we've done a lot of work around self-service check-in. We're actually looking at the biometrics for boarding gates. So, you know, trying to think about what are the things that are going to keep moving customers' experiences forward and make their life easier ultimately. So yeah, we— it's— I think it's going to continue to be ever challenging. I think, you know, connectivity on an airline, I think, is a great opportunity. I'm also quite worried about it because I think, you know, it connects customers to live feedback if they are delayed on an aircraft, and we have to then manage around those things. But yeah, I think, I think there's going to be ever-increasing demands, and we've got to be quick enough, we've got to be agile to be able to respond to it, whether that's my retail product, whether whether that's from an operational environment or whether that's just from a customer service point of view.

Marko Javornik:So Patrick mentioned before social media. So how's easyJet doing regarding, let's say, Facebook, Instagram, and so forth? Is this part of your strategy?

Claire Evans:Yeah, we have a team that look after all of our social media. So we, I guess we do 2 things on social media. We do the outward management. We've just launched our summer program last week. We've done a summer campaign on Instagram which is called Sky Gallery, so you can take your photos in the sky and win lots of flights. So we see it as an opportunity again for that engagement, but we also monitor it strongly around actually what are people saying about us, whether— where are people discontented, where do we have to change pain points. And yeah, we're constantly eyeballing that. I think it's, it's something you can't afford not to be watching.

Marko Javornik:So before we go to the final conclusions, the last statement, So Patrick, so how do you see it? As I said, for me actually now the key brands where the airline travel starts is more Momondo, Skyscanner, Google Flights. Is this good news for airlines? Is this bad news for airlines? So I do find now airlines that I would never travel before and connections and so forth, but on the other side, I guess some of the Brand dilution happens, some touchpoints are missing, and so forth. So how do you see this?

Patrick Murphy Caravelo:Well, it's frankly, it's a threat to the carriers doing direct business all the time because you have to deal with the reality that is the new phenomena that's coming in and how can you find partnership dealings with them that will make it work. So Ryanair and Peach are very focused on saying we're creating a brand in its own right. The confidence that you can make a contact with the Peach or with Ryanair and get the lowest price. Yes, there will be all the additions that come in, but you won't be sure of getting that if you go to Google or to any other operator, right?

Marko Javornik:Mm-hmm.

Patrick Murphy Caravelo:And that's one of the first requirements that you have to get the confidence, and then to offer value in terms of the other things that you can make available because— but you have to have them available and up to now low-cost airlines, well, easyJet is well advanced on it. We're way behind but we'll get there. Ryanair is now well advanced in that whole area but that's all happening, right? And that becomes the critical aspect of it. So you have all those products on your site and you know you don't have to go to Oporto or Agoda or anywhere else, you can go to that. Confident that you will get the product that you want, and you won't be sold millions of other things, whether it's in a TripAdvisor. You simply get, what's your destination? We'll give you the accommodation in that destination, right?

Jonathan Newman:Mm-hmm.

Patrick Murphy Caravelo:And we give accommodation that you can't get on those, as well as having things. And by that I mean, for example, in Japan, we have Ishigawa, which is like Hawaii, and we have Hokkaido, which is ski resorts. and everything else. There are a vast range of different things, but there's no point in giving the whole range of Japanese accommodation to the customer that's checking up. By going with Peach, putting in the destination, you're going to get the product that's right for you. Getting them to come in the first instance, yes, we'll have to continue with the social media, we'll have to continue with the PR, we'll have to continue with all of the other things to make people think about taking these vacations or taking these kind of— But you focus on what they might want, what they I want to do.

Marko Javornik:Good. So I think we're running out of time, so we'll leave with this. So I would conclude based on this, so that the future will be even more exciting, even more dynamic, and, and I believe ancillary revenue will play even a bigger role in the future and will transform the airlines as we know them today. So thank you very much, the panelists, and yeah, happy to go to the next section.

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