International Competitiveness and Market Access

Transcript

Adrian Schofield:Well, uh, good afternoon and welcome back from the coffee break. My name's Adrian Schofield and I cover commercial aviation for CAPA and Aviation Week. As you can see, we've got a great panel today to talk about the Australian international market. A little bit of a change of pace. We'll be covering a wide range of topics including market demand, Airline plans, fleet and product developments, and of course regulatory and airport issues. We're, we're hoping to have a little bit of time left at the end for audience questions, so if you have something pressing you want to ask, please do send that through on the Slido app. Yeah, anyway, lots to talk about. So by way of introduction, on my left we have Bence Szabo, Airbus Head of Marketing for Asia Pacific.

Stephen Pearse:Hi.

Adrian Schofield:Scott Wilkinson, Chief Commercial Officer for Air New Zealand. Stephen Pearse, Executive Director of the Board of Airline Representatives. And on the end we have Russell Shaw, Fiji Airways Chief of Network, Revenue and Alliances. So once again, welcome gentlemen, and thank you for joining us.

Scott Wilkinson:Great to be here.

Adrian Schofield:Just to, to kind of start off and set the scene, Russell, perhaps if we could start with you. If you could tell us a little bit about Fiji Airways' Australian network and any, any growth plans you might have in this market.

Russell Shaw:Yeah, sure. Thanks, Adrian, and great to be here and glad everyone came back after the break. I heard there was wine and pies, so well done for making it back here. Yeah, so Fiji Airways, look, we fly around 42 flights per week into and out of Australia to Fiji. We fly into 7 ports across Australia, so a pretty good geographic dispersion. We have around 57% market share of seats in and out, and we fly the major cities like Sydney double daily, Brisbane and Melbourne at least daily as well, and then we fly into some of the other ports as well. So Adelaide 3 times a week, Canberra 2 to 3 times a week, Cairns, and most recently we've launched Gold Coast services last month, which timed really well into the school holiday peak, and we've been very happy with the performance of that so far. So it's a very important market for us, Australia and New Zealand. Comprises around 2/3 of the actual tourist visitation arrivals into Fiji every year, so it is a big market, and we, we're growing steadily in the Australian market at around 3% growth year over year over the next 12 months.

Adrian Schofield:Right, any sort of route, new route plans or additional capacity in any particular—

Russell Shaw:Yes, so I mean Gold Coast, we're bedding down at the moment. I think across our network we are seeing stronger demand out of Queensland in I think we have been a beneficiary of some of the geopolitical changes whereby we're seeing probably some substitution of long-haul traffic out of Australia into some safer local closer markets closer to home like Fiji. So I think we are seeing a little bit of benefit of that. But so our passenger demand is up. Lots of, I guess, we're always looking at new route opportunities both in Australia and in the Pacific. And I guess We're looking at the Pacific and New Zealand and certainly having some very good discussions with airports, but nothing to announce just today.

Adrian Schofield:Okay, and Scott, similar question to you. What does your route network look like into Australia at the moment, and do you have any capacity growth plans?

Scott Wilkinson:Yeah, Australia is incredibly important for us as an airline. It kind of serves 3 purposes. It's a strong leisure market, strong corporate market, and strong visiting friends and family. A lot of Kiwis live in New Zealand, so it's our largest Offshore market as well. So in terms of the network size, at its peak we're about 400 departures each week. We serve 22 different route groups, 6 of those are seasonal, and definitely it's a market that we see, you know, really strong strength, you know, both ways, but particularly over the last few years, seen really strong demand inbound into New Zealand.

Adrian Schofield:Okay, any plans for growth potentially?

Scott Wilkinson:Yeah, we've already just recently announced obviously connection to the South Island with Western Australia, so Christchurch-Perth has gone on sale. We're also going to be the first international airline flying into Western Sydney, which we're really excited about, kind of tapping into, you know, new catchment. Hopefully there's a lot of Kiwis and Pacific Islanders that will probably want to connect on through to the Pacific Islands through that network. And then we've got actually the last year, we've about from East Coast Australia into Queenstown, so really focusing on that leisure market, we've seen about 40% growth year on year.

Adrian Schofield:Great. And Stephen, BARA represents a lot of overseas airlines flying into Australia. So from that broader perspective, you know, what do you think, how are you seeing demand into Australia at the moment? And, you know, how has that been affected by the The current geopolitical situation?

Stephen Pearse:So, yeah, look, you're right. I think, and both Air New Zealand and Fiji Airways are members. So something like 44 member carriers of BARA at the moment. Look, demand has been remarkably resilient. I think that sort of tends to be the sort of the overall perspective. Obviously, as a result of the Middle East crisis, there's been A bit of an adjustment of how those flows have balanced into and out of Australia. Obviously, you know, in March, obviously a significant reduction in capacity through the Gulf, and then, you know, gradually that's sort of mostly come back, certainly not completely, and adjusting flows, you know, through other markets. But when you sort of zoom out and look at it on a macro basis, the demand is still strong, and I think we saw a return to some of the themes of this morning, which is, you know, It's good until it's not, and it's always— you're always worried about that tension and that balance. Certainly there are some carriers that have had more impact from fuel supply demand, cost of living, cost pressures, etc., and they have tended to sort of perhaps adjust their services more than others who've been able to, you know, better weather essentially the increase in airfares that's been required in order to sort of So, you know, in aggregate for Australia, it still looks pretty good, but we're always sort of just looking at it with that kind of weather eye. I think if you've been around in aviation for long enough, you know that if there's blue skies, you're always looking for the storm clouds on the horizon because you know it'll come.

Adrian Schofield:Yeah, certainly. It's like lurching from one crisis to another. Are we generally seeing, you know, an increase in the number of airlines and the number of routes from overseas carriers coming into Australia?

Stephen Pearse:There seems to be a steady flow of new entrants. And, and look, much as, um, uh, we had the first panel this morning having, um, you know, some interesting chats with our, our airport friends, um, you know, in that sense, we're all in this together. And, um, you know, hats off to those who have, uh, helped attract, um, new carriers. So Finnair will be going into Melbourne, I think, uh, in northern, um, uh, in the northern winter. Um, Air Tahiti Nui are coming back into Australia. So, you know, Yeah, there's always growth and new carriers that you aren't necessarily expecting sort of come in. So, you know, I think that's really encouraging and very positive and kind of reinforces that perception, or the reality, sorry, that Australia is both an attractive destination and an attractive source market. Just keeping it in, yeah. Australia is quite unique in a way because mostly, at least for the last 20 years, The amount of sales outbound from Australia has been matched almost 50/50 with sort of inbound. Now obviously that varies enormously by route. Bali would be mostly outbound, of course, but on average 50/50. To support that growth through to 2040, that pendulum is going to swing and become more dominant for inbound. Just mathematically it has to, because the Australian growth, whilst it is strong, won't support that That doubling of passengers and capacity over that sort of next 15-year horizon.

Adrian Schofield:Right, okay, very good. And Bence, turning to you, Airbus does a lot of market research. What are you seeing in terms of growth prospects for the Australian international market? I guess a pretty mature market, but still, as Stephen was saying, I mean, is there still potential for growth there?

Bence Szabo:Yeah, absolutely. So we look 20 years out. Because we have industrial setups to build aircraft that far out. We've just released our global market forecast for 2026, and the Australian numbers show a doubling of passenger traffic in the next 20 years. So it kind of aligns with what you're saying, and that's an annual growth rate of 3.7%, which is healthy, but higher for international. So it's about 4.1% per annum. And I think what's interesting there It's the Asia story that we saw earlier from Tourism Australia, and it's secondary markets. So I think that's, that's the interesting story in Asia. If you look at it, Bangkok, Taipei, Kuala Lumpur, Jakarta, they're the big cities, but there's secondary cities coming, and those secondary cities will have services to Australia eventually. And I think that's the next sort of evolution of networks by airlines in Asia and here.

Adrian Schofield:And Yeah, which has fleet implications that we'll get into soon. But yeah, and Russell, you did touch on this, but could you talk a little bit more about how the fuel crisis has affected Fiji Airways and what it's perhaps meant for service levels into Australia and demand?

Russell Shaw:Yeah, look, I mean, fuel has been a huge challenge for all airlines. I think it really At any point in time, an airline will have a portfolio of routes. Some will be performing extremely well and generating a lot of cash. Others might be quite new, and therefore they're still finding their way. And so when you get a fuel price spike as dramatic as what we've experienced this year, you get hits on a multitude of fronts. The cash cows, if you were, that were doing really well all of a sudden are not doing as well, and then that really exposes some of the other It also means when you're thinking about route development opportunities, your hurdle rate for actually going into a market in the first place or expanding your frequencies into a market, they're that much higher because all of a sudden you're thinking that the initial reaction is to try and cut back on capacity in order to— because you have to raise fares and therefore that's going to impact your demand. And with the level of price increases we've had in fuel where We were speaking offstage around how, depending on what kind of airline you are, you know, fuel could be 25% to 50% of your cost base. And when you see that double over the course of 30 days, it's a world of hurt. And you simply don't have the mechanisms to pass that— the entirety of that increase onto your customer base. Never mind the fact that you have pretty much forward sold, you know, 2/3 to 80% of the seats for the next 2 to 3 months.

Bence Szabo:Yeah.

Russell Shaw:So that's a real challenge, and it means you have to make some hard decisions. So from a Fiji Airways perspective, you know, we exited, or we've announced we're exiting Dallas in September. So we're— and again, we're having to continuously, whilst we were looking pretty good, I think, 3 weeks ago from a fuel perspective, all of a sudden we are— we're back in a world where jet fuel prices are back at $150 a barrel, and you have to go and rerun your scenario analysis when you're looking 3 to 6 6 months out to go, well, are the flights that we thought we were going to fly actually going to be viable? So in terms of whilst you can't go back to your passengers and ask for more money, that's not going to fly literally, we have had to look at other discretionary costs. And so things where we had invested quite significantly in where we have a little bit of discretion to tone down at short notice, we've had to do that. So we've had to look at our catering offering and tone that down slightly. To make sure that, you know, we were still trying to maintain the capacity and the network that we were flying and that we were providing to bring tourists into Fiji. And so that's a balancing act of trying to preserve the capacity as much as possible, but trying to find other avenues to cut costs in very short order.

Adrian Schofield:Right, okay. And Scott, similar question for you. How is demand in the Tasman market? And, you know, how have you sort of responded to the price spike?

Scott Wilkinson:Definitely. I think it's demand across the Tasman definitely took a pause at the beginning. I think there was a little bit, much like the way that the consumers across both sides of the Tasman, everyone was a little bit nervous at the beginning. But, you know, once capacity started to settle down, so we made a pretty quickly, we looked at the network we were flying and realised that the economics just needed to change Pretty quickly. And so, you know, we took a considered effort with that. We didn't exit any routes, but we did dial back frequencies where it made sense to do that. And what we've seen is that the market's just gradually started to get its confidence back. And, you know, I would describe it as being pretty steady at the moment. And, you know, once again, you know, because the Tasman serves 3 different market groups— your corporate, your leisure, your I think we've benefited, like people particularly in the leisure market, maybe a holiday and a little bit closer to home, the corporate side of things, you know, that travel still has to occur. So yeah, it's not a disaster by any stretch.

Adrian Schofield:Right, okay. And turning to some fleet issues, Bence, we've heard a little bit about the A321XLR today in a couple of different panels. But interesting to hear your perspective on what, what you think the potential is for the A321XLR on Australian international routes, both, both from, from domestic carriers and from overseas carriers.

Bence Szabo:Yeah, it's so— it's an aircraft that we're very proud of at Airbus, and if I just take a step back and tell you why. It's an aircraft that's built on a very successful platform, the A321neo, and it shows that we continue to invest to improve our products, but also to The A321XLR gives you wide-body range, routes that previously only very large aircraft could fly, but with single-aisle economics. So it's a really unique aircraft, and the airlines that have it can do things that others can't, which gives them, you know, a source of competitive advantage. So we saw very proudly that the Qantas Group, both brands have it. Jetstar's coming, and they're going to do different things with it. And the airlines are going to do different things with it. But they're going to provide frequency, destinations, and versatility. It can fly domestically and internationally. The example that's already public is Qantas flying Brisbane-Manila, and that's a route that Qantas was, or is still today, and will transition to the XLR, but is today operating with a 330. The competition, Philippine Airlines, is flying a 321. So you have, you know, different cost bases. For what is a relatively price-sensitive market. And the XLR for Qantas will allow it to fly up to Manila and then down to Sydney. That's huge. It's a very, very efficient aircraft. So wide-body range, single-aisle economics, and a great cabin. The XLR provides an experience that feels premium or feels comfortable for those long distances. So certainly out of this market, we're going to see a lot of interest Jetstar, I think, can look to replace widebodies if they want, where today, you know, they have to fly a widebody, which will let them fly those widebodies even further and open new destinations. And then coming into Australia, we've got Vietjet, we'll have the XLR, and AirAsia, so low-cost carriers. And they're going to try things. They're going to fly to definitely Western Sydney, if I had to pick it. And they're going to fly to Sydney? But they're going to fly from those secondary markets in Asia. So maybe won't fly from Ho Chi Minh and Hanoi, maybe they'll fly from Da Nang, or AirAsia might fly from somewhere in Thailand. So it's, it's a lot of potential, and I think that's where the second wave of growth will come to get to that doubling of passenger traffic.

Adrian Schofield:Right, okay. And in a similar vein, Stephen, are you sort of hearing much from your members about people seeing opportunities to bring the XLR into Australia and sort of serve that market in new ways?

Stephen Pearse:Look, I think in many respects, you know, Bence has described it very well. I mean, I think we're excited at what the future possibilities will be. You know, it's hard for us to know exactly what the plans of all the members will be, but it is very much these sort of secondary markets, either, you know, filling in frequency or developing markets into Australia that You know, at the moment are not within, you know, are not within the data that you can look at historically. I mean, because if you look at sort of narrow-body, wide-body mix of service into Australia right now, and then if you kind of strip out the Tasman because that's pretty much all narrow-body, and if you take out Bali as being sort of an outbound leisure market, for the majors you're looking at sort So somewhere between 20% and 30% of international capacity on narrowbody. Now that's probably therefore going to increase, and that will, I think, you know, as Bence said, create some exciting opportunities. We don't know exactly which markets they'll be. You know, it could be the examples given, it could be something completely new, but either way, if it brings in more reason to fly to, operate, and visit Australia, and brings more visitation, economic stimulation, etc., That's a good thing.

Adrian Schofield:Right, okay, and Bence, I know you can't talk specifically about any competitions that are underway, but just in general terms, what's the outlook for aircraft replacement and growth needs in Australia?

Bence Szabo:Yeah, so I think it's interesting because some airlines have made some steps. Qantas Group has made some steps, but they still need to buy more aircraft. Airlines in the Pacific are looking at the XLR and other aircraft as well. Air Niugini, I think, is another good example of an airline that a couple of years ago decided on the A220, which, you know, we know from here flying domestically, but they're doing the same thing as Qantas. They're flying domestically and then internationally. That aircraft is coming down from Port Moresby to Cairns and Sydney, and soon Auckland. Why do I mention that? Because its replacement. Air Calan, another airline in our region in Nouméa, has selected the A350-900, and that's coming. So joining Fiji Airways is another A350 operator. It's happening. We're talking to a lot of airlines, and the XLR is coming up again and again because in our region, distance matters, range matters. So yeah, but of course, I can't comment on specifics.

Adrian Schofield:And Scott, from the fleet perspective for you, could you tell us about You know, the timeline for the next 2 787s that are coming into your fleet, the 2 GE-powered 787s, you know, what is that going to enable you to do? And also, if you could talk a little bit more about the Skyness product. I know there's been a great deal of interest in that.

Scott Wilkinson:Yeah, yeah. The 787 for us, you know, it's a mission-fit aircraft. So hoping that that's going to be in the network— I'm not hoping, it will be in the network by the end of the year. And that will carry the new Skynest product, which is the sleeper pods that no doubt everybody's heard about. And that's really exciting for us. That's, you know, Air New Zealand doing what Air New Zealand does, you know, focused on the fact that we are basically one sleep away from a lot of our largest markets and trying to narrow that tyranny of distance to make it feel that little bit closer. So, you know, that 787 is going to have a lot of options for economy class travellers. So you've got the Economy Stretch, you've got the Skycouch, which we've had for many years, that's done a really good job, and then you've got the Skynest. So a lot of options for our customers to be able to make sure they— that one sleep is as painful— as painless as possible. And yeah, we're excited to see what happens. And we're gonna— I think in the next— by the end of next year, we'll have a whole wide-body fleet will have new product nose to tail that's less than 2.5 years old. So that's going to be pretty big for us as our fleet comes back from, you know, the aircraft on ground that we've had over the last few years.

Adrian Schofield:Yeah, right. And so for those that don't know, the Skynest product is essentially like bunks in the sky that economy passengers can rent a sleep period, a 4-hour sleep period, do you think?

Scott Wilkinson:4 hours, yeah, lined up with the circadian rhythm, so 4-hour slots, 2 slots from Auckland to New York is sort of what we're going to start off with to make sure we get operationally everything ironed out. $495 for a slot.

Bence Szabo:US or New Zealand?

Adrian Schofield:Both.

Scott Wilkinson:Simple.

Adrian Schofield:Great.

Scott Wilkinson:Yeah, so we'll see how it goes. We're starting slow, and we'll kind of learn how customers use it, and we'll adjust as we see fit.

Adrian Schofield:Will it go into any other fleets like the 777s?

Scott Wilkinson:Look, it's too early to tell. We want to get it out. This is very much a kind of a test and learn for us.

Adrian Schofield:Okay, I know many people in the industry are watching to see how you go with this since it is pretty unique.

Scott Wilkinson:It's a great offering personally. You know, travelling with— I can just imagine now, you know, your family of 4, you've got 2 kids, they can use the Sky Couch and then the partners can top and tail and Share 4 hours, it would be absolute bliss based off my recent long trip in economy.

Adrian Schofield:Okay, and Russell, turning to you, Fiji Airways has recently been through a pretty major fleet renewal. So looking at the Tasman market, what has it meant having, you know, new product in both your widebodies and narrowbodies in that market? What has it sort of enabled you to do?

Russell Shaw:Yeah, I think certainly from a competitive standpoint, it's It's a real coup for us. We're the only carrier flying between Fiji and Australia using widebodies, and so the A350 really is our halo product. It's designed and optimized to fly all the way to Los Angeles. The fact that people can get to experience that on a 3 to 4 hour sector between Sydney and Nadi or Brisbane and Nadi is really great, particularly when your competition is flying a 737. And also, I think the other I think the most exciting thing that this has enabled us from a Fiji Airways and a brand positioning perspective is historically a lot of Pacific Island carriers would have very old dilapidated aircraft. And so you knew if you were flying to the Pacific Islands, you know, you're likely to get on something which feels like you're in a, you know, you stepped into a time machine. That's certainly not the case with Fiji Airways. We've got, you know, our MAX aircraft are very new. The A350s are very new. It always creates— there's always a— With any new product or new aircraft type, there's always a challenge when you step from a brand new aircraft onto an older aircraft, and that's a typical challenge for any airline. So, you know, the fact that our A350s and MAX products are so good means that now people, when they do sometimes come up on the A350 in one direction and go back on our A330s, there's a stark difference, particularly at the front of the cabin, around what those products look like. So that's now the next piece of information that we're trying The to next get out there. And piece I think that's in a really good point. the puzzle is to look at how to retrofit our A330s and get comparable products across all cabins.

Adrian Schofield:Right, okay. In turning to the regulatory side, Stephen, this would be a good one for you. You know, there's been a lot of talk about the proposed passenger movement charge increase, and I know that you've been pretty heavily involved in that. So can you give us the latest on, you know, where things are up to on that and whether there's been somewhat of a step back from The government.

Stephen Pearse:Yeah. Okay. The PMC. So probably sort of 3 comments to make. The first would be obviously to say that, look, as, as the airline community, we don't think that the PMC is actually a very efficient means of raising revenue and charges, and increasing it from $70 to $80 per passenger is absolutely not supported sort of in that sense. We would certainly argue sort of going back to The notion that, you know, at least half the cabin on every service that comes into Australia is visitation, the spend of those visitors outweighs essentially the increase of the PMC being charged, you know, across. So if you, if you sort of mute demand by having even higher PMCs, essentially you're sort of shooting yourself in the foot from a consolidated revenue point of view. So just that, that's kind of point one, which is, you know, The high PMC is not supported. The second point was then around implementation, which as it was initially announced essentially was unachievable. It sort of was announced as almost a sort of a retrograde tax where airlines were being asked to essentially remit a higher PMC on tickets that had already been sold. So we went straight to government, we had some constructive conversations quite quickly, that was able to be changed. And sort of where it's got to now is that the PMC will obviously be increased once it gets gazetted and given Royal Assent. And on that date, it will then start to apply. So we're working with the government and Home Affairs so that we know what that date is, and we make sure that all of the filings so that airlines are collecting it worldwide will align with that. And then the other thing that we achieved was there's a longer transition period. So essentially there should be no impost for carriers in terms of collecting the PMC, which is absolutely as it should be.

Bence Szabo:Right.

Stephen Pearse:And then really sort of the last point in a way is, okay, well, what's the money for? And obviously we were pleased to see that there is a commitment to remove the inbound, the incoming passenger card. You know, finally, perhaps over the next 18 months or so, the The death of pen and paper for arriving into Australia to be replaced with digital versions, $56 million allowed for that. So look, that's great, and as the industry, we'll certainly work with the government to sort of try and facilitate what's been achieved through the Qantas— the trials with particularly Qantas, which have already been running for about sort of 18 months. So that will be a great first step towards then Yeah, future modernisation of the border. You've got to get rid of the— got to go digital at least on the arrival card first, and then future visions of biometric all the way through the airport and the journey can follow. But until you get that kind of first step done, you're just sort of building sandcastles in the sky. So it's good that that's happening, but there is a huge amount of money raised from the PMC. Most of it goes to consolidated revenue.

Bence Szabo:Yeah.

Stephen Pearse:So it's about time that a decent slug was poured into what it's actually for, the border.

Adrian Schofield:So Scott, I mean, how do you see the increase in the PMC affecting either demand or your own sort of cost base on the Tasman?

Scott Wilkinson:Look, the PMC by itself, you know, a $10 thing may seem quite small, but in reality it's cost upon cost, right? And so the whole aviation ecosystem over the last few years has introduced a lot of cost that, as airlines, we need to do everything we can to make sure that we're being as efficient as possible. Because what the situation we're finding ourselves in is the variable cost for carrying a customer is becoming so high that you're losing that marginal customer because you can't put any money towards covering your fixed costs. So if this continues, the sorts of growth numbers that, you know, Bence was talking about before are going to be very hard to achieve. So I think we've all got a duty as an industry to work together to make sure that we can keep this, you know, sustainable.

Adrian Schofield:And Russell, I mean, how do you see the potential PMC increase, you know, affecting the Australian market for you?

Russell Shaw:Yeah, I think, I think it's very similar to what Scott I'd say in New Zealand, we have a reasonably high departure tax out of Fiji as well. So when you aggregate the PMC charge out of Australia, you're talking around $210 added to every return ticket between Australia and Fiji, and that's before you even start trying to recover any of your direct costs of getting the passenger there. So it does add an impost. You layer that on top of higher fuel prices, and again, to try and keep growing the market and grow visitation into Fiji, it can be a challenge and it will be a challenge because that's another— again, it's a small percentage of the ticket, but that small percentage is typically what we would need to recover the inevitable creeping costs of higher airport fees and higher air navigation charges, all these other cost items which are all going up well north of inflation because of the increased investment That's happening in those places.

Adrian Schofield:OK.

Stephen Pearse:I mean, just one comment. I mean, for some low-cost carriers into Australia, the PMC on its own, not just the increase, but the total PMC, is greater than the fare. It's greater than the airline fare, which is a crazy situation if you're trying to stimulate demand. And I think that sort of speaks to the point well made by my airline colleagues here, which is that if you want to grow demand and grow Economic stimulation through that, departure taxes are not a good way to go.

Adrian Schofield:Right, yeah, because I guess the, you know, having a lower cost base, that fixed cost for everyone is going to be a higher percentage for them, isn't it? Right, okay. And turning to airports, this is open to all of you, could Australian airports be doing more to attract new airline services and/or to de-risk new routes?

Russell Shaw:I'll start. I mean, I think in the last, certainly the last 10 years, Australian airports have come a really long way. The quality of data analysis that they're bringing to airlines is, well, certainly the ones that I've seen are far superior than what they were a decade ago. A decade ago, they'd be saying, well, you know, why don't you fly here and we'll give you a free water cannon when you do your first flight, to a much more detailed analysis of the market, where the drivers are, how they, how How you basically build up the passenger load in the cabin. So I certainly, in having recently joined Fiji Airways and had those dialogues with a lot of airports, I've actually been very impressed at the level of sophistication we have now. It's still a situation where, from a Fiji Airways perspective, we have a finite amount of aircraft, and so whilst we'd like to fly to more airports, we have to work out what's the best ports we can fly to that primarily serve our requirements, which means we're profitable and we're growing tourism into Fiji, and then any connections over and above that just add to the viability of the route. So those are the, the process we go down. I think the airports have come a long way in terms of incentives and things, so no, I mean, from our perspective, we're fairly happy. We just wish we had more aeroplanes to fly and lower passenger movement charges so we could fly more people.

Adrian Schofield:Any thoughts, Scott, on that?

Scott Wilkinson:Yeah, I think Russell's covered it pretty well. The only probably other bits that I'd add, obviously, you know, the data sharing is critical. You also have, you know, the risk sharing up front, but when you're making a decision to enter a route or not, you need to really look at that 2 or 3 years, and so it needs to be sustainable. So we really look for— look to work with airports and partners that are kind of looking at that, how do we bring the ecosystem to develop that market so it becomes sustainable and it's in 2 to 3 years' time type thing. And then also it's got to be a system that works, right? It's got to deliver a great customer service, you know, slots have got to be, you know, aligned with network and hub economics, etc. So those are just 2 extra things that we kind of look through.

Adrian Schofield:Right, okay. Bence, any thoughts on that?

Bence Szabo:Not really.

Adrian Schofield:Okay, fair enough. Well, Stephen, back to you on the fuel supply issue. I know this is something Something else you've done a little bit of work on. What is the current situation with, you know, on the fuel supply topic and what the government is doing to address that?

Scott Wilkinson:Sure.

Stephen Pearse:So obviously when conflict broke out in the Middle East, fuel supply was a huge area of concern. You know, there was a lot of media and a lot of genuine concern about our ability to sustain supply. And so the government stood up a fuel roundtable which had a lot of industry bodies in, ourselves included. Fundamentally, Australia has been in a privileged position, essentially, as a wealthy country, to be able to diversify its fuel supply and pay the appropriate price in order to do so. So after about It was probably 6 or 8 weeks these conversations started, sort of the degree of, the degree of concern or sort of, you know, sort of panic to some extent was dissipating because there was this stability of supply. And that's retained, that's continued to be the case. So Australia is not, you know, as far as we can tell at the moment, in any great concern of a fuel supply issue. The prices, of course, are massively elevated and what that does for airfares and Is the question that will flow through for the next 6 months. Having said that, of course, everything went kind of quiet for a while. Those government meetings were suspended on the basis of not being required. Unfortunately, with the flare-up last week, they've been stood back up again. So, you know, obviously continue to have those conversations. And a lot of those are also around sort of sovereignty issues, fuel supply. You know, we had a couple of slides this morning I think we talked this morning about, you know, the IEA requirement or suggestion is for 90 days of stockholding. That's never going to happen. Australia's like around about 30 for jet fuel. The government has announced that they might like to see that increase to 50, but that's a huge amount of fuel storage infrastructure capacity. You know, the extent to which sustainable aviation fuel may feed into that is still very much up in the air because there isn't enough scale to even make a Make a drop in the bucket as far as that's concerned at the moment. So look, there's a lot of issues. Australia itself won't run out of fuel. Overseas in some other markets that don't have the same capacity to pay, not necessarily the same issue, and there'll be some tension in terms of supply if the situation in the Middle East continues, you know, on and on and on.

Adrian Schofield:Right, okay. And Scott, I mean, how are we doing in New Zealand?

Scott Wilkinson:No concerns on the Very similar to what's played out in Australia. I think we very much look at this in New Zealand as a commercial crisis rather than a supply crisis at the moment. So that's sort of the way, the footing that we are on.

Adrian Schofield:Right, okay. And to you again, just on the competition front, in the Tasman market, you now have fewer competitors there than before COVID Some airlines have kind of pulled out a little bit, but your remaining competitor has been pretty aggressively increasing capacity. So are you pretty happy with your competitive situation in the Tasman market at the moment?

Scott Wilkinson:No, look, it's definitely going to be a market that we start to look to as we get our planes back. So we've been a bit constrained in terms of the growth. We're probably not growing at the rate that we would like to grow over the last 2 or 3 years, but we're coming to the end of that now. So it's going That's going to be exciting. On the other side, the fuel crisis does add a little bit of this bump, does add a little bit of a different dynamic. Hopefully when we're on the other side of it, to be able to inject some of that capacity coming back.

Adrian Schofield:Right, okay. And we're just about out of time. And I didn't— I don't see any questions on Slido. So perhaps one more, one more for the panel.

Bence Szabo:I'm just watching Flightradar. There's an interesting moment about to happen where the A350-1000 ULR that took off from Melbourne yesterday will land in Toulouse shortly, and it's already been in the air 24 hours and 5 minutes. So that's very exciting. Hasn't landed yet, so I don't know what the final time is. So yeah, I just thought I'd pop that in.

Adrian Schofield:Is it going to break the record?

Bence Szabo:I don't know. I don't keep the record, so other people will have to I'd have to validate that, but certainly it's gone the long way around to Europe.

Adrian Schofield:Yeah.

Russell Shaw:Wow.

Adrian Schofield:Okay. Just to finish on a slightly more mundane note, but there's been a bit of talk on the, you know, the introduction of the digital arrival card. I'd be interested to hear your perspectives on what difference that'll make, and what other pain points should we be looking to address, you know, to decrease friction on the airport experience for passengers?

Stephen Pearse:Look, moving to a digital arrival card has a huge amount of benefit. I mean, apart from getting rid of the sort of the passenger inconvenience of having to complete, you know, scribble across a card, you know, at late notice, and for a family of 4, and looking around for a pen, and all the other kind of, you know, things that make arriving in Australia seem very backward in comparison to the rest of the world. And I think that's a really good point. There are actually a whole bunch of other efficiency advantages because obviously the APP data can come across earlier. It's better for risk profiling for, you know, for both Border Force and biosecurity measures. Makes all of those airport procedures sort of— they can take the step towards becoming more efficient, less intervention, faster passenger experience through the airport, both outbound and inbound, but particularly inbound. And at the end of the day, that means more efficient use of the airport infrastructure, which to support the long-term passenger growth is essential.

Adrian Schofield:Anyone else on what more we might— what next steps we should be looking to do to increase the passenger flow experience in airports?

Scott Wilkinson:First up, you know, it's got to work for everybody, so not just the edge cases. But I think one of the things— I've just come back from a trip, and I took 4 flights, and I had to enter the same information 8 times. And I think that's probably the next step that we need to start to look at, is, you know, how do we make that easier so, you know, you give your information once and then it's populated right the way through the journey? I think that's going to be a massive amount of time, because just because you move it digitally doesn't necessarily mean that it's, you know, that you've completely removed the pain point.

Adrian Schofield:Very good point. Okay, that is about all the time we have, unfortunately. So if we could ask Todd to bring his panel up. But, um, in the meantime, please join me in thanking the panellists for a very frank and interesting conversation.

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.