International travel – How long until the recovery bubble bursts?

Transcript

Lori Ranson:If you all could just introduce yourselves briefly to the audience before we get started. Thanks.

Carl Schultz:Hi, my name is Carl Schultz. I'm the Chief Revenue Officer for New Terminal One, a new $9 billion project at JFK International Airport.

Hugh Aitken:Hi, everybody. I'm Hugh Aitken from Skyscanner. We are the world's largest travel search site. We have about 130 million unique monthly visitors, 100 million app downloads. We do about 90 billion price searches a day, and ultimately our travelers go somewhere else to book, but we're helping put over 200 million travelers in the air every year.

Simon Hawkins:I'm Simon Hawkins, Head of the Americas for Virgin Atlantic.

Lori Ranson:So last summer was a record year, a banner year in transatlantic travel, and I think there's a lot of sort of discussion about Is that going to be repeated? It's probably not going to be repeated, but do you think that we're settling back into some of the more historical trends in that market during the summer? Hugh, why don't you go first and sort of give us what your take is?

Hugh Aitken:So maybe if I start at a macro level of what we're seeing everywhere, and then I'll talk about transatlantic. So we did a big bit of research amongst travelers. We had 18,000 travelers across 15 markets respond to a survey. And across all of them, we saw common characteristics. So first of all, we saw more intent to travel. So in Canada, 38% of respondents said they'd be traveling more in '24 versus '23, and that's 44% in the US. And secondly, there was an intent to travel more frequently. So the US, for example, is our highest market globally, 3.4 trips per year average. That was 3 in 2023. After that you've got UAE at 3.2% and then India at 3%. So the US is a very frequent travel market as we all know. The third thing is travelers said that they expected to spend more on travel for— and I'll come and give the reasons in a second. So 35% of Canadians said they planned to spend more this year versus last year and 39% of the US travelers. Interestingly, different countries said they would spend more on different things. So in Canada The thing that travelers expected to spend more on was seats on board, so they would trade up to get a better seat. In America, the US, they wanted to spend more on food on board. So about 40% said they expected to spend more on food. So that's remarkable. The final bit is we saw a lot of the travel search patterns. So what I mean by that is the time between somebody coming on to us and search. So Lori, about 60% of people come to Skyscanner Skyscanner not knowing where or when they want to go somewhere. So we're very top of the funnel, people researching and getting inspired to travel. Our most popular destination globally is everywhere. So that's people who don't know where they want to go and they come to us for inspiration. So we saw a lot of the patterns of people coming for that inspiration versus ready to book settling into pre-pandemic. So that's kind of the macro. Transatlantic, we're kind of seeing the demand market relatively settled. We're seeing increases. So for example, I'm looking at numbers I pulled this morning, I've not committed them all to memory yet. So Paris-New York, we're seeing quite a substantial uplift, but generally across markets we're seeing more of a stable demand market. Pricing-wise, we're generally seeing transatlantic positives. So you've got things like New York-Paris is 1% up, Las Vegas-London is 17% up. So we're seeing a bit of variety.

Lori Ranson:Okay.

Hugh Aitken:in the average fares that travelers are paying, but generally it's the fare market staying robust. Demand is stable and fare market is robust.

Lori Ranson:Simon, do you see those same trends?

Simon Hawkins:So yes, definitely. I think we're much aligned on that. I think firstly, thank you to CAPA. It's my first time in Calgary personally, so really enjoying it. And as a Brit, any city that markets itself on blue skies is fine by me, so a big thank you. I think I always look back. So I think, I think everyone can attest to it in this room. The last 5 years have been somewhat fascinating in our industry. And one thing I actually do with my team when we meet on a monthly basis, we go through what we call our close. So we go through the performance as we look back at what is in your iPhone from this time in 2020. And actually, this was almost the week where we started relaunching our flying to and from the US with a single frequency between LA and JFK and London. And at that time it was pockets of customers. It was— I think it was the Mormon Church were industry flyers. And then you had FedEx travelers as well, repositioning their pilots for cargo. I think when you fast forward that surge in demand for us, it was almost like a tap was turned on. It was President's Day 2022 when we really started to see just this surge of particularly US demand come back.

Carl Schultz:Yeah.

Simon Hawkins:Post-Omicron. And I think we closed the year and we're in partnership with Delta, I should probably say, as well. I know there's been a lot of people talking about Delta this morning. They're a 49% equity holder of Virgin Atlantic. But what we always said is at the end of 2022, we had operated— I think we had operated about 75% of our capacity and we're at 120% of our revenue versus 2019. It was extraordinary to see last year the same type of surge. I think for this year, To Hugh's point, we as an industry also, it's hard to manage supply and demand. So there has definitely been a lot more supply and seats put in the transatlantic market. As I said, we're almost half owned by Delta, but then we're also in a joint venture with Delta and with Air France-KLM. So between the 3 of us, transatlantic, we operate around 25% of the seats on the transatlantic market. So we have seen quite a significant increase in capacity. I would say the market from a macro level is Holding, much to Hugh's point. So we're not seeing the substantial growth that we've seen over the last 2 years. But I think at the same time, we're seeing good share growth. And then I'd also go a layer below, and you can talk about the different segments of market, the different parts of the United States especially where we're seeing significant growth. We speak about the Vegas of the world, but also the Floridas of the world, which is significant. And then last but not least, the corporate traveler and the slow but steady recovery of the corporate traveler, which I would say is now going to supplement maybe the flattening off of some of that luxury leisure. So long story short, asked whether the bubble is going to burst, we don't see that. We see sustained, but we see some other segments of the market coming up to support what has been robust volume for the last 2 years.

Lori Ranson:How much would you say corporate travel has recovered in the long-haul market?

Simon Hawkins:So I can speak, I'll speak specifically for the US to the UK. Industry-wise, industry-wide, sorry, we're probably at about 80% passenger recovery. Revenue, the fares are much stronger, so it's about 80% industry-wise. I think within that though, there's a lot of nuances within that. So certainly from an expanded JV, Virgin, Delta, and Air France-KLM, we look at 16 different verticals, banking, finance, entertainment. It's all become— it's all come at very different paces. And it's almost like looking at the news. You can really see where the surge will come from. So technology companies and how they're coming back really strongly now. And entertainment was always strong because the UK is one of the largest international entertainment markets for production. So it's not a single story. It's, it's very interesting how those corporate markets are coming back. In detail on corporates, what we are seeing, and I know I've seen this from— this is widely known as well. You know, the classic for the UK, the corporate market, the business market from the US has always been around 40 to 50% demand because, dare I say, with the lack of blue sky in the UK, it's not always a well-known leisure destination relative to the south, southern Mediterranean. So the UK was definitely exposed a bit more, but it is Coming back and we're comfortable with the position. But also the traffic, about 40% of that historically in 2019 was booking within 30 days of travel. There's quite a difference that took place post-pandemic. You were seeing corporate customers who are booking further out. There's a focus on wellness. There's a focus on sustainability. I was with some corporates recently who have an internal carbon budget, for example, much like a cost budget. They've got a carbon budget. So there are definitely some structural differences to corporate travel, but it is returning.

Lori Ranson:And in terms of the luxury leisure passenger and, you know, some of that premium demand, is that going to balance out between the leisure customer and the corporate customer? As you said, that corporate travel kind of rises up a bit. Do you think that's going to happen, either one of you, Hugh or—

Hugh Aitken:Let me start. So It's interesting, pre- and post-pandemic, our— so we're predominantly leisure, but our premium leisure has doubled. So that's people who are searching for either leisure travel who are either searching business first or premium economy. We've seen that more than double. So, and we see that remaining there. So we still see travelers trading up for experience and willing to pay more for experience. So yeah, that's our observation. And it seems to be sticking, that demand as well.

Simon Hawkins:Yeah, I think, you know, it's, it's well documented, the savings that the American population made during the pandemic. I think it was, give or take, $2.1 trillion of savings and hence the surge in demand. People aren't buying Pelotons, but they're buying, you know, luxury travel packages as well. So we're definitely riding through that. And I think I read this week that Almost that $2.1 trillion is almost gone now. UK was the same, about $800 billion of pent-up demand. So we've seen that surge. And again, as I was saying, I think you will— what we believe we'll see is we'll see the sustained, sustained demand for luxury leisure. And then on top of that, the corporate demand come back. I think where I'm— I think every airline is probably challenged— we're not challenged, there's good opportunity— is How do you revenue manage? So when you really start to see that 0 to 30-day AP corporate traffic come back, how do you make sure you're pricing for that appropriately, but also capturing as much of that premium leisure? But we're continuing to see it. And certainly from the US, the UK is a high-demand market. It's the 3rd largest market, international market behind transborder Mexico and Canada traffic. There's a lot of lift. We at Virgin and Delta are operating 38 flights a day from the United States. States into the UK and beyond. So we're continuing to see really robust demand.

Lori Ranson:Can you talk about sort of that beyond the UK and what demand is like there and how the partners help you all as like a large network grow your passenger base, especially when demand is this strong?

Simon Hawkins:Yeah, I think we recently actually for IATA summer season, we launched Bangalore, Bengaluru. Sorry, London to Bengaluru. So we this winter will have 5 daily services from London to India, and these are morning and evening departures. So they perfectly connect with our transatlantic flying, whether it's on Delta or whether it's on Virgin Atlantic as well. So we're getting feed from the United States and the hundreds of destinations that Delta supports us with in addition to our main trunk routes, and then good connectivity right through to India. Demand for India just continues to surge. I think some of that is also based off maybe some more limited flying that's taking place westbound. So pre-pandemic versus post, we're seeing a lot of West Coast through London to go to India, for example, which actually— sorry, post-pandemic. Pre-pandemic, you were seeing maybe more, as many people going westbound. So we're seeing a really good increase in demand to and from India. We'll continue to invest in India and then You know, we have partnerships with IndiGo down there as well. So we have beyond Mumbai, Delhi, and Bengaluru connectivity as well. But demand is very strong from the US to India, to Africa, and to the Middle East.

Lori Ranson:Hugh, I saw you kind of agree with that sentiment. And can you just sort of tell us about travel trends to India from what you're seeing in the data that you're collecting?

Simon Hawkins:Yeah.

Hugh Aitken:So yeah, I'd 100% mirror what you said. India for us has I can't give you the exact number, but it's now one of our top markets, and a couple of years ago it wasn't. I think you're seeing a couple of things in India. One, you're seeing a strong and increasingly strong economy. You're seeing a stable environment where there's willingness to invest. And you're also seeing the home-based airlines, you know, yeah, Air India, they've got massive 470 or 480 aircraft orders. So they're investing massively in capacity growth. And you've got a growing middle class.

Lori Ranson:Yeah.

Hugh Aitken:So the propensity and the ability to fly is growing massively. And it's just a— so for us, it's a very significant market now. We're seeing demand everywhere. And every airline that I speak to globally, they all talk about how can you help us grow in India, both in terms of the data we've got and in terms of just the visibility in the platform. So India is very big for us. I think if you look at it globally, so Europe is our biggest, about 40% of our business is Europe-based, Europe and Middle East.

Simon Hawkins:Yeah.

Hugh Aitken:And then about 25% Americas, 25% Asia. And then the rest is just Africa and kind of Southern Pacific area. So we saw, so if you look at it, Europe was very robust quickly and we're still seeing demand strong there. Middle East still continues to grow, particularly in Europe down to the Middle East. The Americas, as we've talked about, particularly transatlantic, we see stable Canada is growing a lot for us, partly because we're investing more in Canada, but we just see a good and strong market there. APAC is, as we all know, APAC has taken longer to recover, particularly Northern Asia. Australia was robust very early. Northern Asia has taken a lot longer to recover. It still is, I would say, in that recovery. So if you look at the fares we're seeing there, you know, for example, if you look at Trans-Pacific fares, we definitely see fares down year on year. And that's because of the pandemic. And I think that's reflective of the market recovering and capacity going back into the market, not a weakening of the market, just more that there's more capacity, so that would naturally adjust fares. But we see robust demand there, but still a little bit of a way to go in terms of capacity being restored. So I think there's still a little bit settling in the numbers we see in Northern APAC anyway.

Lori Ranson:One airline management team Describe the recovery in the Trans-Pacific as sort of mid-game. Is that something that you see as well in terms of demand and pricing and capacity as well?

Hugh Aitken:Yes, we certainly see fares easing. So for example, Vancouver-Tokyo is down 9%, you know, LAX-Sydney down 20%, but the demand is still there. So again, LAX-Sydney year-on-year, the redirect, so what we're sending to partners, is 30% So the demand is definitely robust, but I think, you know, we've seen a lot of airlines put extra capacity into the APAC market, both northern APAC and down through to Australia. So I think it's naturally reflective of that.

Lori Ranson:Simon, can you talk about the expansion plans? Does Virgin plan to add any more North American markets in the near future in partnership with Delta, or is the network kind of at a stable place?

Simon Hawkins:I'll give you my piece. That's a really hard line to take. We are constantly evaluating new markets across North America. So we, you know, I think it's all public knowledge. We as Virgin Atlantic, we operate to 11 US gateways or to and from 11 US gateways. We did have 12. So we were operating Austin to London, which ourselves and the blue carrier from the UK were also operating as well. And I think we pulled out of Austin, but we launched Tampa as well. So I think we're, from a network perspective, We're in a good place. I think with Delta as well, we've got so much feed coming onto our flights in addition to the Delta services that operates from Detroit, Minneapolis, Salt Lake as well, that it's hard to see further expansion into new markets, certainly for us for the time being. I think with our antitrust immunity that we have with Delta and Air France-KLM, it is from the US, it's 360. So essentially We work together on transatlantic. So it's not just London, it's beyond London markets as well. So there's opportunities beyond London to feed as many of our US services as well.

Lori Ranson:Carl, I want to ask, because we've been talking about maybe short to medium term, but, you know, as JFK is building Terminal 1 and thinking about the international traveler, can you give us an update sort of on how many slots you have filled?

Carl Schultz:Well, what I'd say is that for us as a terminal operator, and JFK operates a little bit differently, every terminal is a different company that controls and operates, and we're going to be building the only international one. So international traffic is very front of mind for us. And when we engage with the carriers, we're kind of looking at, okay, we're opening in June of 2026 for our first phase. What is your plans there? So it's not just this summer, it's not next summer, it's the summer beyond.

Simon Hawkins:Right.

Carl Schultz:And so when we talk to a lot of those folks, they do have a growth mindset, which is good to see. But, you know, you could take that 2 ways. One, with JFK and the uniqueness of the New York market, is that, you know, going to be spread across everywhere in the United States in general in terms of that growth mindset? Or are they going to be trying to retrench a little bit into those key markets that they know are going to be very impactful, you know, in times of good and bad? So you can kind of look at it 2 different ways. I'm more hopeful that it's a I think it's growth for everybody as opposed to what we're going to be seeing, as opposed to not being growth for everybody. But in terms of the slots and the landing and gate availability and capacity at JFK, you've got 2 entities. One is the FAA that controls the runway, and then you've got the individual terminals that have gate capacity. And so when we engage with those carriers, the ones that operate at JFK now, we really tried to solve a lot of the pain points they have. And while we can't do anything about certain pain points related to federal partners like TSA, CBP, or the FAA, what we can do is address gate capacity issues. And we've heard that is even more of an issue sometimes than the runway slots, is just being able to actually access a gate. So that's front of mind for us. We're going to be— the existing Terminal 1, which we demolished when we opened our first phase, is 10 gates. We're going to be 14. And then when everything's said and done, we're going to be 20. 23 gates, 22 of those widebody, and it's 9 net new for JFK. So we're kind of keeping that in mind, keeping that plan, even though we don't anticipate any relaxation of the runway slots, just because we see the demand for better operations there currently now.

Lori Ranson:And, you know, we've been talking a lot about premium customers, not just in this discussion but all throughout the conference. You know, you kind of have a clean slate And customer expectations for a premium experience also, it translates to the airport experience. So how are you all trying to sort of design Terminal One with that in mind?

Carl Schultz:Yeah, so I think what we want to do is offer very seamless travel for everybody. And there's a couple of different segments of that. So one of the things that we were really focused on was not just focusing on the premium passenger, but all passengers. So one of the things that really Evolved from the relationship with the Port Authority was putting things like passengers requiring assistance lounges at every phase of the journey. And so we've got one check-in, we've got 2 on departures level, we've got one on arrivals. And these are actual lounges. They have, you know, natural light coming in. There's adult changing stations with hoists. There is sensory rooms. There's pet relief areas.

Simon Hawkins:There's—

Carl Schultz:and then the plan is to also have kiosks and other things where those Where people that are using that lounge can then order and have the terminal come to them as opposed to having to go out when they might not be comfortable doing so. So we want to make sure it's for all passengers, but then that extends also into the VIP experience. So we've got a differentiated product for, you know, the customers requiring assistance as well as just your general road warriors that just want to go through TSA as fast as possible and go to the lounge. And then we've got the VIP white glove stuff. So we've got A check-in area that is just for VIPs and first class that airlines can buy into. We've got lounge space with direct boarding access that we are building into our pier system. So there's going to be a variety of different touchpoints that an airline can choose for their passengers. And that extends also to having something like a departures and arrivals lounge for common use. So, you know, an arrivals lounge, I know it's a concept that's been at some airports and has various degrees of success, but we do think that, you New York is such a business market that folks might fly in, want to grab a shower, want to grab some food, and then head into the city either on AirTrain or via Uber, taxi, Lyft.

Lori Ranson:And have you gotten buy-in for these types of projects from the airlines? Do you have discussions with the airlines about what the experience is going to be on a regular basis?

Carl Schultz:Yes, so we do have regular talks with the airlines. We have a good slate of airlines. We've got about 33% of our open-day capacity capacity already signed up or in the process of signing the lease. And then we really want to engage this year on securing as much as we can before the end of the year, just because we know the integration on IT that we're going to have to go through for some biometric issues. But I would say that the airlines have been very receptive, especially because JFK is such a crown jewel in some of their networks, that they do want to have that premium experience for their passengers. And, you know, I would say that we've got a fair amount of lounge space that is in our Phase A. That is all booked right now except for a couple of VIP check-in areas. And then we're really starting to talk to customers about, or airline customers about our Phase B. So Phase A comes in, we demolish the existing Terminal 1, then we build our Phase B. And now we're kind of having lounge conversations on Phase B. And so that demand is there, especially for the New York market.

Simon Hawkins:I think, if I can add from an airline perspective, I think there's been an incredible amount of infrastructure infrastructure investment that's gone on through many US airports, particularly during the pandemic years. So going through LaGuardia is a different experience. Certainly I travel on Delta, so the terminal there is just fantastic. I think I came through Salt Lake City. I came through Seattle recently as well. And then last week I was in LAX as well. So it's really encouraging to see all this incredible investment going on in US airports. And I think— The Revivals Lounge is a great idea. I think there's an airline that probably did that about 25 years ago. No, it's fantastic to see the investment going on. Much needed.

Hugh Aitken:You're just going to have to move terminal to use it then.

Carl Schultz:That's the only issue.

Simon Hawkins:We're with Delta.

Lori Ranson:But supply chain sort of drives everything right now. And as you talk to airlines, how are they thinking about their plans for the new terminal as they're trying to work out what their fleet composition is going to be over the next 5 to 10 years?

Carl Schultz:It's been some interesting conversations because we're opening in June of 2026. And so I think the initial plan back pre-COVID, when this— the deal to do New Terminal 1 was in its infancy and then kind of got knocked down with COVID and then came back and was resurrected, there was a lot more A380 capacity that was built into the original plan for this because of the fleet makeup at that time. And I think it's a good thing and a bad thing that it was part Paused over COVID and reevaluated in terms of, is that really necessary? And engaging with the carriers, it's, you know, a lot of those aircraft are going to be exiting the fleet around 2026, and there'll be carriers that keep them well beyond. But that changed our ability, and we added a couple additional gates in order to carry other widebodies and making sure that we accommodate A350s and the 777Xs of the world, as well as those Group 6 aircraft.

Simon Hawkins:Okay.

Carl Schultz:Because we do know a couple carriers will continue having those for the foreseeable future. But when we talked to them, we really wanted to build in flexibility because it is really geared towards an all-widebody operation. So as long as we have basically every but one gate widebody, and we've got 2 MARS gates that can do Group 6 or 2 Group 3, we maintain that flexibility to service whatever aircraft they use because they're not going to be going out and purchasing new A380s.

Simon Hawkins:Right.

Lori Ranson:Hugh, I want to get your thoughts of when you think the transpacific will be fully recovered.

Hugh Aitken:So I think what we see is, I think, well, APAC itself is mid-80s percent recovered. So I think transpacific was following that trend for us. I think if you look at the— yeah, as I can say, I think we're probably another year away before I think you're also influenced in trans-Pacific by some kind of macro global political stuff as well. And that, I think we're hearing earlier from Air Canada, for example, just that makes a lot of flying challenging, both east and west for them. So that might hold back some capacity. But yeah, generally we'd see— I think we are probably— I think the other big determinant is with China recovery, because we do still see China recovery slightly behind the US.

Lori Ranson:Yeah.

Hugh Aitken:behind, just more in terms of capacity more than anything else.

Lori Ranson:And when do you think China could recover, or is that sort of a multi-year sort of process before we see a full recovery?

Hugh Aitken:Yeah, I think it's relatively soon. I don't think— still don't see it lasting. The demand is definitely there. We don't have a presence really in China, so I can't comment on the demand coming out, but certainly we see demand into China very strong, particularly if you look at Southeast Asia, particularly Singapore's We see very robust demand going to China from those points.

Lori Ranson:And just speaking of fleet, Simon, do you think that Virgin Atlantic has the right fleet for the next few years?

Simon Hawkins:I think, yeah, I think we do. So we started a multi-billion pound fleet transformation in 2019, and we've continued to move through that. So we are— I think our brand speaks louder than that, the actual size of our airline. We've got 40 42 aircraft at the moment. We're increasing to 45 by the end of the year, which actually as a percentage is quite significant. We have a mix of A330-300s. We're welcoming in the 6th neo, A330neo, and we've got A350-1000s, 5 of them, and we're welcoming another 2 of those this year. And then in addition to that, we have the 787-9, which is— I think we were the launch partner for the 787-9, which We have 15 of those. So we've got the right fleet type, the right fleet mix. And also, I think, you know, our average fleet age is about 6.5, well, almost 7 years old now. So we also have a very young fleet. The 787s is the oldest fleet type that we have, and that's definitely up for negotiation as we move through that later on this year. So I think we've got the right fleet type. We're focused on from a sustainability perspective with next-gen, 70% next-gen moving up. 2027, we'll have 100% next-gen. So we've got the right fleet type. And also from a sustainability perspective, we're very confident with the product that we have.

Lori Ranson:I'd be curious to get your thoughts about sort of demographics in the recovery of long-haul travel, either both Simon and Hugh.

Hugh Aitken:I'd probably tackle that. Well, first of all, we over-index on demographics in kind of 18 to 30 age groups, so that demand is very, very strong. I think what's really interesting about it is why people are wanting to travel. So again, our research at the end of last year said, you know, what is inspiring you to travel? And that has changed. Well, we certainly see that evolve amongst that demographic. So it varies by market, but generally There's a bunch of things. One is people go ultimately for relaxation and sleep. So we see a growth in that.

Carl Schultz:I wish.

Hugh Aitken:The second one is people going foodie and going to places for that experience. Third one is just that true genuine experience in a different culture to learn. And you see a big element of kind of the 18 to 30 age bracket that's going for that more immersive cultural experience. The final one is people, and I'm amazed that Taylor Swift hasn't been mentioned so far in this conference.

Lori Ranson:You have the opportunity to do that now.

Hugh Aitken:I know, so here's my plug if you haven't got— no, I don't need to. But we see a big demand for people who are going for the gig economy. So for example, Coldplay playing in Singapore, we saw a correlation to them playing in Singapore from departure points across Asia because there's a residency there. So we see a big group of people going for the gig economy. Final bit, which I forgot to mention, is we also see people going to experience places they've seen in films and TV series. So the power of Netflix and Amazon and those sort of TV series has an influence on travel. So I live in Edinburgh, and you can definitely see the impact of One Day in Edinburgh and people coming, people watch that. And you see that, we see that demand.

Simon Hawkins:We do.

Hugh Aitken:definitely can track popular programs on Netflix with what people are searching for.

Lori Ranson:So Simon, how do you revenue manage for a Taylor Swift concert?

Hugh Aitken:Opt away for a whole year.

Simon Hawkins:You surge price. No, I think very much to Hugh's point, we're definitely seeing all of the generations. You're seeing the boomers, you're seeing Gen X, millennials, Gen Z with some really strong demand. I think the other piece is they're buying up. There's a lot of people looking for premium products and are still willing to pay for that. We spoke about surge of demand earlier. I would add to Hugh's point, Taylor Swift concerts, but also sporting as well. We're seeing a lot of sporting, whether it's going from the US to the UK to watch the real football, not the American football. Controversial, I know. But yeah, so I don't know how do you manage for a Taylor Swift concert, but we're definitely seeing a lot of variance in who's going and the demographic of those individuals.

Lori Ranson:And if I could just ask you about the competitive environment in the long-haul market. You know, you mentioned your capacity growth. Is there too much capacity in the transatlantic over the summer period this year? There's been some concern expressed about that. So I just wanted to get your thoughts about what that looks like as we were kind of embarking on the summer period.

Simon Hawkins:Well, I was reading the Points Guy yesterday or the day before, and it was saying that the big 3 US carriers transatlantic versus 2019 were up 22% in March and April from a capacity perspective on the transatlantic. So there has been significant growth. Is there too much? I think with the demand environment we've got right now, it's holding. So I don't think there's too much at the moment. And I would also say to you that from a expanded joint venture with Air France-KLM, Delta, and Virgin, we're actually winning share as well. So we're comfortable with the position we are in. And again, the demand environment is looking solid for us right now with peak summer. The other piece I'd also say is that with the demand environment, certainly from the US, you're seeing a longer peak as well. So end of May, June peak travel to the UK when— and I don't get the US school holidays. In the UK, it's this, this, and this. In the US, they seem to But we're definitely seeing a longer US peak, which is very encouraging to see, to be honest with you. So I think we're in a solid position. I think actually the whole summer season feels quite peaky now, which is really good to see.

Lori Ranson:Delta mentioned a shift actually in some of the peak travel because in the US kids are going back to school much earlier. And do you think that you have to plan differently within the joint venture for that as well, or? How do you address that? Because I've heard a couple carriers talk about that, how the window has changed.

Simon Hawkins:I think the— certainly from an expanded joint venture perspective, we are lockstep with Air France-KLM and Delta. There is a lot of behind the scenes, a lot of policing and, dare I say, structure and rigor to what we operate under the joint venture. We align on network. There is joint consensus across the board in terms of what we operate. So no, I think we've got the alignment, the peak summer. I think you've got strength across that. And then we move our capacity as well. So we have a big UK to Caribbean operation as well. About 12% of our capacity operates UK to Caribbean. So that winter premium leisure, as we call it, we can switch our aircraft to that as well. So I think we're in a—

Lori Ranson:Yeah, just to speak to that, because some US carriers have seen overcapacity in their Caribbean leisure markets. Have you seen that from the UK? Well, you serve sort of more premium leisure markets, but can you see any kind of competitive changes or changes in dynamics?

Simon Hawkins:So I think the Caribbean is such an interesting region from a tourist perspective because the Eastern Caribbean, the Barbados of the world, that very much Feels like a very heavy British part of the Caribbean, probably from the past. So ourselves and British Airways and actually Norse are operating into Barbados. We're operating up to 28 flights a week from London into Barbados. And I would say the demand for Barbados and up the front and in the middle in our premium or upper class cabins is insatiable. We could probably put way more seats in those cabins.

Carl Schultz:Yeah.

Simon Hawkins:Because it is a premium leisure destination. The other one I'd add is things like the Maldives and also Dubai. Real strength in all of those markets. So certainly Caribbean-wise, we're very comfortable with the position we're in. Last thing we introduced last year was we're now selling the tag. So when we fly into Barbados, we fly on to St. Vincent. Previously, previous to last year, we couldn't sell that sector. Now we can. So we're getting 70, 80, 90 customers who are booking even that sector. Which we're already flying anyway. So there's opportunities to tweak the network, but generally speaking, it's high load factors and doing very well.

Lori Ranson:And you're not worried about low-cost competition entering that market? You mentioned Norse.

Simon Hawkins:Norse, they operate throughout our network. I would say they move their capacity quite a lot, which is quite interesting. I think they're a good competitor. We have price points that do compete against them. But we're not seeing a significant impact of them at the moment.

Lori Ranson:We only have a few seconds left, but are there any questions from— oh, we have some questions here. Is Virgin Atlantic looking to expand to Canada?

Simon Hawkins:Well, so as I said, we, for the US, we at the moment this year, we've got about 11% more capacity operating to the US. So we've got double daily Boston in addition to Delta service. We've got 11 flights a day JFK-London with Delta. And then we've got double daily Miami. So we've added a fair amount of our own capacity to the US. We are constantly evaluating new markets. I joked earlier, but there's no plans to go into Canada for the time being. But it's funny because when I arrived in Yeso, the first sign I saw was a Virgin Mobile ad. So there's definitely a Virgin footprint here in some parts.

Lori Ranson:Okay. Well, unfortunately we are out of time, and, but this was a very good conversation and I appreciate it. So thank you all very much.

Carl Schultz:Thank you.

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