Juicy Peach

Transcript

Shinichi Inoue:Hello everyone, I 'm In oue from Peach Avi ation. Please let me start my presentation, Ju icy Peach. This is a photo of typical Peach customers. Since Peach started flying there, they have been going to Ok ina wa, Every month. Amazing! And they have 60, 000loyal followers of their Instagram accounts. 六 万 人 です。 I recently heard from another customer who told me that she has been to Ish igaki Island in Ok ina wamore than 50 times, 五 十 回, in the past two years.Since Peach launched.There is an emerging Peach insp ired lifestyle movement where more and more people are traveling with greater freedom and frequency, not just for work or vacation, but as expression of who they are or dream to be. We could have imagined 4 years ago— who could have imagined 4 years ago that an airline could inspire such a new lifestyle and that flying could become as simple as stepping on the train. I 'd like to show you the path Peach took to create this lifestyle. Okay, this is what I 'd like to explain today. So, our time is so limited, I 'll go through quickly. Okay, shareholders. So Peach was established as a joint venture of 3 exceptional organizations in 2011 with funds from inside and outside of Japan. Our partners are First Eastern, a private equity fund based in Hong Kong, IN C G, a Japanese investment fund which is passionate about supporting innovative business and AN A Hold ings. Although AN A Hold ings has biggest share of Peach, Peach is not an AN A subsidi ary and our independence is ens ured. True to the diverse— our diverse DNA, our aim from the beginning has been to be a truly global company in outlook, in expertise, And in impact. Okay, let me let me show you our operational result of fiscal year 2015. We ended the the year with a load factor of 86. 7 percent, 86. 7 percent, which amounts to 4. 54 million customers carried, and our completion factor was 99.3percent. 九 十 九 点 三 パ ー セ ント。 I believe that this extremely high reliability has allowed us to gain and sustain, retain more customers. Okay, so we are planning to disclose the financial results of fiscal year 2015 shortly. But comparing to fiscal year 2014, revenue grew by about 100 million, and both operating profit and net profit have more than doubled. Of course, most airlines have benefited greatly from the recent drop in oil prices. However, I would like to make it clear that Peach has attained and sustained profitability since before the price of oil dropped. Under the solid policy of no profit, no business. Okay, as I mentioned, the Peach philosophy is to bridge Asia, that is, to serve as a bridge or platform for promoting the exchange of ideas, information, and cultural understanding between people. Network. In the 4 years since our launch in 2012, we have expanded our network to 10 international and 14 domestic routes from 17 cities. Our main base is K ans ai International Airport in Osaka, and the second base is Ok ina wa N aha Airport. In 2017, we will set Send ai as our new base to contribute to the economic levers of the To h oku region. Next, let me talk about Japanese L CC market. So, okay, we believe that the Japanese L CC market still has great potential. Please look at the figure. As you can see, in Europe, where the L CC market is mature, L CC s have about 40 share. On the other hand, the share of L CC in Northeast Asia is just over 10 %. How about in Japan? Japanese L CC have less than 10 share. That means there is still huge potential in Northeast Asia, including Japan. Of course, Peach is not wasting this great opportunity. While it is true that L CC s in Japan are growing rapidly, I 'd like to emphasize that L CC s are not taking business away from legacy airlines. Nobody believed that, but it 's happening now. Please look at the figures. This indicates a number of passengers at the 3 airports in the Greater K ans ai region. We stayed started our service in 2012, 2012, we only use Osaka K ans ai Airport and no L CC s use It ami or Kobe Airport at the moment. As you can see, the numbers of passengers at It ami and Kobe Airport are also increasing. This illustrates that L CC s are not taking business away from legacy airlines. But stimulating the overall demand for air travel and spark ing the development of new markets. Okay, so we predict that the demand for low cost air travel will increase even more. As you know, the Japanese government doubled the target for annual in bound tourists by 2020to 40million.4000 万 人. The research shows as foreign tourists visit Japan multiple times, they start wanting to visit other regional areas apart from Tokyo, Osaka, and Golden Route. Other research shows that only about 10 of in bound tourists use domestic flights after arriving in Japan. We believe that if the number of tourists visiting Japan doubles by 2020, the demand for domestic flights will at least double. Some say that the demand for domestic flights will shrink due to the decrease of population. Is that true? We believe opposite. Peach has proven that more people are willing to use air if the fare is reasonable, affordable, and reliable. There should be special demand for Tokyo Olympics Par aly mp ics too. This synergy of international and domestic demand should boost the demand for L CC. Const ruct ing rail ways and roads requires massive amount of investment, both in terms of finance and time. How about us? Yes, we airline company can respond to customers more flex ibly and n imb ly. By focusing on these short haul domestic flights, both L CC and full service carriers can achieve success without enc ro aching on each other 's business. Okay, do you know how much economic impact Peach and other L CC s have had on the K ans ai area? According to Emer itus Professor Miy amoto from K ans ai University, 1. 3 million in bound tourists visited K ans ai in 2014 by using L CC s, and the economic impact was about 1. 7 billion to the local economy. Huge. Isn 't this a typical example of how destinations come alive after an L CC launches? The back streets of the N amba area in Sas an Osaka were once very quiet with a lot of closed and rund own shops. After L CC s launched, not just the main street of N amba, but the entire area has become revital ized. Do you also believe that L CC passengers do not spend money at destinations? That is not true. With the budget they save from cheap air fare, their consumption is very active indeed. Okay, now I 'll let you know the secret of how L CC s can become successful in Japan. We shouldn 't become greedy. We shouldn 't make profit just for ourselves. So we should work closely with local stakeholders to facilitate and enhance the travel experience for our customers and everybody should reap the rewards. It has to be a win win situation for everyone in the local economic ecosystem. Airl ine companies bring customers, and airport companies manage airports in a way to fit— match the L CC model, and public transportation companies enhance access to and from airports so that more customers will visit more destinations. Local governments and business communities should invest in this, the K ans ai model, and support new routes and additional flights. Then airline companies can offer lower fa res, which in turn leads to more customers and greater market sustainability. Peach respects the principle of L CC. We also have no advertising policy. Instead of spending a huge amount of budget on that, we focus on working closely with local partners as we expand our business. That resulted in this positive growth cycle. We call this business alliance consisting of 4 business stakeholders as the K ans ai Model. We will implement this model in our new base, Send ai, next year. Okay, so, so far I have focused on potential L CC markets. So however, there are some issues that should be addressed in order for Japan to achieve the goal of welcoming 40 million annual in bound tourists. Okay, on top of these general issues shown on the screen, there are specific issues for the airline industry. It 's imperative that we work on workforce development and the enhancement and expansion of airports. Peach will work hard on the development of human resources. We must, must not just steal each other 's resources in an endless cycle. We must stand up as one to sustain ably increase the aviation workforce together. It is crucial for further prosperity of airline industries in Asia and Japan. And again, so there will be no future for the Japanese airline industry if we keep fighting over these key matters. We have to work on our industrial issues together. So, as you can see from this slide, so recently I was invited to the Prime Minister 's workshop as the sole delegate of airline industry and presented these challenges. They all understood our situation and are willing to actively work to solve them. Okay, so, future plan. We, Peach, continue evolving to achieve our goal of brid ging Asia. Okay, let me show where Peach is going. So on top of network expansion, we will keep growing routes and stimulating markets based on precise research. We have seen many customers who enjoy very unique travel style, which we will work hard to enable. And promote. Okay, diversity is essential for a good work environment. I have already mentioned the importance of working closely with local stakeholders, but we also recruit totally locally in Taiwan, Korea, and elsewhere, as well as in other regions of Japan. Our strength is not only the the quality of our operation, but the diversity of culture and ideas that emp owers it. Since it introduced the L CC concept in Japan, Peach has been innovative and will continue to be so. In addition to all that I have already stated, some interesting points are: our check in k ios k is made of cardboard. Okay, cardboard. The k ios k was not just an amazing cost cutter, but user friend liness and convenience have been greatly improved. And our new in flight meal. Peach 's in flight meal has become well known as being unique. We have supplied K ans ai oriented ok onom iy aki pancake and jazz salad, which once became very popular among trendy passengers. This time, we are throwing in cat fish. Cat fish. Although cat fish is quite popular in some countries, it is not very common in Japan. So we are introducing cat fish with traditional seasoning used for eel to see if we can challenge that. Okay, Peach will continue to lead innovation in the airline industry and enrich the lifestyle of the communities we serve through low cost travel. Peach works hard to continue the expansion of low cost travel to revital ize communities in Japan, and to share happiness both in Japan and throughout Asia. Thank you very much for your attention. Thank you.

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