Launching an airline in a pandemic: Start-Up Panel

Transcript

Alex:

Good afternoon. And welcome to this CAPA Live Sessions. It is the second session that we do on airline startups, is we're going through quite a tumultuous process and period of time through COVID-19 recovery. But yet, there are many exciting projects around the world at the moment, with new airline starting.

Alex:

Today, we have three fantastic projects to discuss. And in alphabetical order, I'll introduce you first to Conor McCarthy who is the CEO of Emerald Airlines, a seasoned airline executive. It's been around a while, I'm sure he will show when he tells us about this project.

Alex:

Secondly, Frederik Jacobsen from Flycana, CEO. He's currently in Bogota, Colombia. Also extremely well experienced. And we look forward to hearing about your project.

Alex:

And finally from Connect Airlines, the founder and CEO, John Thomas currently joining us from Boston. So we're looking forward to hearing three fantastic stories. And then we'll have a little bit of a dialogue about some of the common challenges that we have.

Alex:

Now, in order to get started, and to get familiarised with your projects, will you tell us a little bit about each one of your companies and we'll start off first with Conor. Please, Conor, if you can tell us a little bit more about your fantastic Emerald Airlines project.

Conor McCarthy:

So thanks very much Alex. Thank you everybody for joining and good afternoon. So as Alex said, my name is Conor McCarthy and I'm the founder of Emerald Airlines. Unlike the other airlines that are showcasing this afternoon, our airline is a franchisee. In other words, you won't see the Emerald Airlines logo and Liberty on our aircraft.

Conor McCarthy:

Instead, you'll see Aer Lingus regional, which is our franchiser. And we will be taking over the Aer Lingus regional routes from next year. And, we will operate a fleet of ATR 72 turboprops, and we hope to have 14 aircraft flying, by the end of next year. So next slide please, Alex.

Conor McCarthy:

So introducing Emerald, we are the newest regional airline in Ireland. We have just signed a 10 year deal with Aer Lingus, part of the IAG group for their regional network, which is for exclusive operations between Ireland and the UK, and also between Ireland and Northwestern France. And that franchise continues until the end of 2032.

Conor McCarthy:

Aer Lingus being a premium airline, it's a premium brand that we're serving. And therefore quality and the legacy market, if you like high-frequency business travel and VFR travel become very important as our marketplace. We have a set of values which are crucial, and we feel starting a new airline, these values become really important. As somebody says, culture eats strategy for breakfast. So we want to start this airline with a very strong culture and we've used the Gaelic word chroí, which means heart.

Conor McCarthy:

And as you can see, the Shamrock is in the shape of three hearts as well. We've tied in all of this into our brand and our values. And our whole objective here is to make a family like airline where people belong or people can really grow with the airline, but who also feel that the airline suits their work-life balance. That doesn't mean the work will be easy and we'll have a nice, kind of easygoing roster, but what it does mean is that, we will do everything we can to make work enjoyable and to make sure that the obstacles to work are taken out of the way so people can get on with their work nicely.

Conor McCarthy:

We also value some key issues such as sustainability and diversity, and we feel that these are no longer nice to haves in a modern environment. Young employment market nowadays will put you behind the eight ball when they ask you, what are you doing for the environment? What are you doing for diversity? And what's your purpose in addition to being an airline. And we found this with the new generation of employees who are extremely smart, extremely productive, but also extremely demanding in relation to calling us to question over our values.

Conor McCarthy:

Obviously the timing, born out of the pandemic, some people would ask, are you mad? Are you insane? Trying to start an airline. All we read about is airlines in trouble. Well, actually, we believe now is probably the best time to start an airline, when you consider that the competitive set has all been weakened, balance sheets are pretty much negative in the established airline market. We can start a Greenfield cost-based versus an established cost based after probably 10 years of a profit growth amongst the legacy airline group, where they've had a chance to build up good profits, but they've also allowed their cost base to expand and to grow in line with that.

Conor McCarthy:

We also see some really attractive talent pool now because we've had a number of casualties here in Ireland. We've seen Stobart Air fell. We've seen Norwegian Air International pretty much withdraw 100% from the Irish market. And we've seen the demise of airlines such as Air CityJet, which went into examinership. So there's a huge amount of talent now available, and it won't be there for long.

Conor McCarthy:

The other thing is we've tried to ensure that we've taken the maximum advantage of cheaper aircraft and long-term flexible power by the hour deals. So, we've got ourselves a fairly flexible cost base for the first time in my experience. I now have aircraft costs in my surplus one or direct operating costs line. There are no longer a sunk monthly cost. So, these are critical points.

Conor McCarthy:

The big question mark of course is the future. None of us know what it is. If you ask people a year ago, when the pandemic would be over, most people would have estimated three to four months. And we've been doing that since the very start, so the future is certainly uncertain, and therefore agility becomes critical. We do feel there's going to be a V-shape recovery, and that will bring with it a struggle to attract the right resources. We think the overhang in terms of planes and people will be swallowed up fairly quickly. And we will probably see some pretty dramatic cost inflation, which is the big fear for most of us nowadays.

Conor McCarthy:

So we have built a sustainable employment model, which we believe we can achieve and continue to fund. And we've also locked in whatever costs we could for the longterm. So, even our aircraft leases run for as much as 10 years to cover our exposure. Next slide.

Conor McCarthy:

So we mentioned people first because that's absolutely critical to us. We have a diverse team from multiple backgrounds. Our key management team has over 250 years experience. They come from a range of airlines. They come from Aer Lingus. They come from Ryanair. They come from Stobart, CityJet and Norwegian. So we have a nice mix of people from different airlines, which will help us create a unique culture because it won't be from any one particular airline background.

Conor McCarthy:

We also, haven't only got aviation experience. We brought in people from wider background, so to take in enriched the aviation mix that we have. And the other thing we've done, we've opened up a brand new headquarters here in Hangar 5 in Dublin airport, where we have everything integrated and co-located. So our line maintenance are here, our finance team are here, our people and culture team are here, as is our operations centre and our maintenance control and technical services centre. So, we have everybody working together in the same environment and under the same roof. We feel as a small airline, this is an advantage we can play on. It was one of the things that we have tried to do from day one. Next slide.

Conor McCarthy:

So, the journey today, this week, we hope to complete all of the work involved in achieving our AOC, which will culminate in a proving flight with the Irish Aviation Authority. We were born in the second quarter of 2020. And we pulled together a management team and a business plan, with some partners from day one, and presented a very coherent and compelling business plan to Aer Lingus and to the IAG group. And we were selected ahead of five others as their preferred partner.

Conor McCarthy:

We then went ahead to start building our airline and we teamed up with some really strong providers of systems and equipment. So not just ATR and Pratt and Whitney Canada on the engine side, but also PDC on the flight crew and operations controls side, fleet pre-standard on the performance engineering side, Navteq on the chart side, et cetera.

Conor McCarthy:

So, we've put together a very nice suite of system applications. And that's all being housed on our own EFBs where all our flight and cabin crew will have electronic flight bags. And again, we minimise waste, we minimise paper. Our investment rounds have all been completed. We've completed our finance as of four weeks ago. So, we're fully financed and we finance to run right through the start of 2023 without any revenue. We have already adopted our first crew in terms of flight and cabin crew. So we have 12 of each. And we have our first aircraft sitting outside the door delivered last night.

Conor McCarthy:

So very exciting time for us. The culmination of about 20 different work streams all happening this week. I thought we might be finished last week. So I gave myself time for this presentation, but here we are in the middle of it all. So we expect to be ready to fly by quarter four of 2021, which is a full year ahead of our commitment to Aer Lingus. But with the demise of stonework, we do feel that there will be opportunities that will arise now a lot earlier. Next slide.

Conor McCarthy:

So just in terms of the network, what you see on the screen here, all the people would represent the total number of people flying between Ireland and the UK annually. It's almost 20 million passengers. If I look at the particular routes that Emerald is going to serve, in 2019, we saw 3.2 million passengers use those routes. And, that was mainly carried by Stobart and Flybe, both of whom are now no longer flying. And we are targeting 2 million passengers a year on those routes. So we have gone in with a very conservative business plan with a conservative number of passengers, and we've also been more conservative by assuming lower yields and lower load factors. And as most people in the airline business would know, these are the two areas that it's far too easy to overestimate before you start your business.

Conor McCarthy:

So we have gone with a historically low load factor in yields for our network, and built a cost base that made sense around those. If we do better, well and good. But at least we have our downside hopefully covered. The Irish and British markets are hugely connected markets. You can't travel there by road obviously. So you only have air and sea connections.

Conor McCarthy:

The flight times are around 55 minutes, which is perfectly suited to a turbo prop and it means that we should be able to get this market moving very quickly as we move fast out of COVID. There's a strong business market and we also see a strong visiting friends and family market. And there are two markets that are pretty stable and less prone to shocks in terms of things that might stop people travelling. So we feel we're moving into a marketplace that's very mature and very resilient.

Conor McCarthy:

And the only other point worth noting is that, we will serve through Dublin about 20% of our passenger numbers will be travelling onwards to North America on the Aer Lingus network. And, what Aer Lingus have done over the last 10 years is they have built up a very strong product where you can clear US customs and immigration formalities at Dublin. So, a huge number of people both to and from the UK will now connect to Dublin and do their pre-clearance there before taking their onward flight to United States.

Conor McCarthy:

So, we are a pivotal part of that whole operation for Aer Lingus. And we're really looking forward to playing our priority in that. And it's one of the reasons that we might get moving a little bit earlier than planned. And, I think that's concludes our presentation Alex. That's a quick dive into Emerald Airlines.

Alex:

Thank you very much Conor for the introduction. And I think it gives us a very good view of where the project is. Next on the list is Frederik from Bogota. Tell us a little bit about Flycana. What's in your mind. Is it Colombia. What's the market like please. We look forward to hearing from you.

Frederik Jacobsen:

Yeah, of course Alex. Thank you very much Green. It's really a pleasure to be here today. And, greetings to all the audience. First I'd like to start by a small history about Flycana, which in fact, it's really Dominican Wings. It has the AOC. Dominican Wings started in Santo Domingo, Dominican Republic, about six or seven years ago as a charter airline with A320. The founder was Victor Pacheco who quickly realised that perhaps the best option was not to have a charter airline, but a pure ULCC. So, he engaged with several airline executives about four years ago. And, we really started to look into how to build a strong ULCC airline in the middle of the Caribbean. It is important to mention at this time that, we will probably announce in the next few weeks a change in name and livery.

Frederik Jacobsen:

So, Flycana will be part of the past. But, it's really the airline that started it all. Some of the key elements of our business plan, in terms of the coverage, being based in the DR, we will be able to have a very well diversified network, two points in North America, into Caribbean, Central America and South America. Obviously, our target market will be the Dominican VFR traffic, and the leisure travellers going in into the DR. It's really an underserved VFR truck market in the DR for many years, there hasn't been a successful airline in the Dominican Republic. And, the majority of the leisure market has been affected by very high fares. So we see a great opportunity to target the VFR and the leisure market.

Frederik Jacobsen:

In the Dominican Republic, there are about 10 and a half million people. It's the largest country in the Caribbean. And about two and a half million living in north America. We have a little access to the island because of very high fares. And the Dominican Republic has about eight and a half million visitors to the DR every year. So, we believe that there's a very interesting business case to move this passengers around the Caribbean and into North, Central and South America.

Frederik Jacobsen:

We will launch with 57378 maxes in Q1 of 2022. We've selected Santo Domingo as our home base. Normally, as airline speak, the more leisure destinations as their home base into DR. We've chosen Santo Domingo precisely because our target market is the VFR traffic. We will be issuing a second round of RFP to get a second batch of aircraft that is going to arrive in Q3 2022 and 2023.

Frederik Jacobsen:

We are racing in excess of $60 million and the funding round is almost complete. We expect to have an announcement soon. And, we aim to be moving around 6 million passengers a year in five years. Our vision is really to be the next generation ULCC, and the most important Caribbean airline in the next five years. Regarding the operating model, I'm kind of going to echo some of the things that Conor said. And it's really, we believe very much in building what I call the people centre organisation. And, it's going to be an airline where, we understand the importance of addressing the needs of all stakeholders.

Frederik Jacobsen:

So it's the employees, so that we can deliver the products and services to our customers, but it's also building strong relationships with our suppliers and strategic partners, with authorities being good corporate citizens. And obviously, if we do all these four things well, we're pretty sure we're going to deliver the returns that our shareholders are expecting. So really at the core of the organisation that we're building, we want to have people at the centre. And one important aspect of this as well is being an ESG company. We really believe the importance of being environmentally friendly, socially responsible, and with good corporate governance practises. And all this will be part of what I call the people centre organisation.

Frederik Jacobsen:

And there are going to be three levers that in our view are critical to being, to successfully delivering our business plan, and is, we are a ULCC, so we will operate a single fleet with brand new 737 maxes with a low power of 189 with ultra thin seats. We will be outsourcing most services. We expect to have high aircraft utilisation in excess of 400 hours a month per aircraft, turnaround times of less than 30 minutes. And most sales will be through website and applications.

Frederik Jacobsen:

The second lever of this plan is the operational excellence. In my experience, it's fundamental to really delivering the lowest cost and to be running a dependable airline. So operational excellence will be an important part of this, with safety as priority number one, but also to be able to deliver the key operational metrics like on-time performance, schedule, reliability, baggage handling, and really a seamless airport experience for the passenger.

Frederik Jacobsen:

And the last thing is going to be innovation and technology, which no longer are a nicer house, but it's a required element and we expect to become obviously a paperless company, environment friendly, using all kinds of innovation and technology to really leverage our growth and deliver our customers with the best passenger experience. And that's pretty much the summary that I have for Flycana. So thank you very much Alex.

Alex:

Thank you very much Frederik. Moving on to John from Boston. Tell us a little bit about Connect please.

John Thomas:

Thanks Alex. And hi everyone. Connect Airlines is an airline brand of Waltzing Matilda Aviation, or let's just call it WMA for short. An existing successful jet charter operator based in Boston, Massachusetts that actually started operations over 13 years ago. WMA is currently changing its existing USDOT economic authority and upgrading its FAA AOC from unscheduled 135 operations to schedule 121 domestic and flag operations.

John Thomas:

Before the end of the year subject to regulatory approvals both from the US and Canada, we hope to start operating Q400 from Philadelphia and Chicago O'Hare here to Billy Bishop Downtown Toronto Airport, an airport that is in the heart of Toronto, the fourth largest airline market in North America. An airport that provides a far better and much more convenient travel experience for point to point travel as to and from Downtown Toronto.

John Thomas:

As a US carrier, our initial focus is to bring more US transporter flights to Billy Bishop Airport, pardon me, as well as to provide Toronto passengers with an extensive US and global networks that they will be able to access over our US stations. And as I said, the initial being Chicago O'Hare and Philadelphia. We've list down our initial two Q400 aircraft, which ex fly B aircraft, from chorus and have LOIs on our next three aircraft for delivery in 2022. However, given the attractiveness of the US Canadian market, we see this initial root structure as an excellent springboard into a broader domestic US network.

John Thomas:

Pardon me, other than horizon in the Pacific Northwest and silver in the Southeast, the US has lost the benefits of turboprop flying, and given the significant environmental benefits of turboprops over regional jets. Just like Conor had mentioned before, we believe that there is going to be a real resurgence in the use of turbo in the US domestic market. And to put that in context, in the US pre-COVID, there is something like 165 million passengers per year, that fly on sectors less than 400 nautical miles, where the economics of the Q400 are far superior to regional jets.

John Thomas:

Furthermore, on these sectors, the Q400s emission levels run on approximately 40% of those of regional jets, a huge reduction in CO2 levels. The Q400 also provides the most reliable and certain path to zero emissions with the work currently being undertaken by universal hydrogen to change the power system on the dash eight series of aircraft. So part of our core of our business model is a 60% reduction in carbon emissions today, and a total elimination in five years time, which we think is a real game changer to the industry, that frankly has struggled to come up with a credible and meaningful environmental response. And all this at much better economics.

John Thomas:

And, behind the scenes again, you'll hear people nay saying, turboprop saying that people much prefer regional jets or behind the scenes, we're working to make the customer experience on the Q400 far superior to that of the regional jet.

John Thomas:

So, we're along with Conor. We totally believe that certainly, the turbo prop is appreciated in the European market, but we think it needs to come back and there's going to be a real resurgence in the US and transporter market, and that's really what our strategy is. Thanks Alex.

Alex:

Great. Thank you very much John. Now, we're all attending this call, living an extraordinary time through COVID in some countries beginning to recovering, some other still stuck, and some others just in the recent weeks even slightly worse. Could you give me your short view of your own markets, where it is and how do you see it recovering over the coming year? And is that an opportunity or is that a real challenge for you? It'd be great if you can come and deliver on that again, if Conor could start, that'd be great.

Conor McCarthy:

Thanks, Alex. So as we stand, Ireland released and relaxed its travel restrictions in the middle of July. So, we're a little over six weeks since Ireland has reduced or eliminated its advice to non-essential travel, to stop non-essential travel. In fact, at the main airports here, we had police checkpoints to ensure people's reason for travel was not a non essential reason. So, there was a huge deterrent to fly. So in that time, we've seen the market recover to about 50% of its 2019 levels, which, well, not particularly brilliant is a very sharp recovery in just six short weeks.

Conor McCarthy:

We see Ryanair who had been very aggressive with pricing get to about 60% of their pre-COVID levels. And Aer Lingus are running at about 40%. And between them, they more or less, reflect the marketplace through our, of course other carriers, but, they would be the main drivers of growth.

Conor McCarthy:

So what we are seeing is an increased propensity to fly. And once people have flown once and particularly with intra Europe and Ireland-UK travel, their propensity to fly more comes back very, very quickly. So we're quite happy to see that. However, our business is a very marginal business. Aviation is a very marginal industry. So just achieving 50% of your numbers is by no means appropriate, nor is achieving load factor 10 points lower than what you were used to.

Conor McCarthy:

So what we're seeing is some strong yields in the market for close in bookings, and we're seeing some very attractive deals for bookings that would be further out. So, this is particularly driven by the low cost carriers, where they're trying to incentivize people to make a commitment to travel. And, we would think that by certainly by next summer, we're going to see a strong level of maturity in the market.

Conor McCarthy:

We're going to see a lot of losses getting crystallised among the airlines. But hopefully, their balance sheets at the same time will start recovering with the revenue flows that will come from advanced bookings. So our current estimates is, would indicate that by May, June, next year, we should be back to pre-COVID levels, but that assumes two very important things. And we did mention that in our presentation.

Conor McCarthy:

It assumes there's no reversal on the current progress from COVID. And that the current rate of vaccination switch in Ireland is now over 90% of the adult population, and has been fully vaccinated. And 90% of the population over the age of 12 has had at least one vaccination. So we've had a very strong vaccination campaign, but that it feels assumed that we don't get a reversal. And the second point, which is crucial, and a lot of governments don't seem to understand this or airports, is that the airlines replaced that capacity they took out of the market. And airlines will only do that when the economic conditions can support it. So these are two big questions. But from our point of view, we remain optimistic that by next summer, we'll be back to strong pre-COVID levels.

Alex:

That's great. And also, we can hear if you take offs in the background of your conversation, which would suggest that Dublin is alive and kicking, and there are actual flights that are taking place. So, that's encouraging as well. Frederick, VFR and leisure around the Caribbean, is that coming back? How is that and how do you see yourself in that?

Conor McCarthy:

Yes Alex. It is coming back. In fact, a couple of weeks ago, I was in Santo Domingo meeting with the airport with aerodrome. And, they're getting very close to 2019 numbers. So Santo Domingo Airport is really gaining a lot of ground in the middle of this very big crisis, but also the leisure travel. And being the Dominican Republic, so close to the US, and being the tourism sector so important to the Dominican Republic, there's tremendous investment going on in terms of building hotels and creating new leisure destinations within the island.

Conor McCarthy:

So, we see that the market is going to return very quickly. Hopefully by 2022, we'll start to see 2019 numbers everywhere. Obviously, I think we share the concerns that it really depends on, if there's not a resurgence in COVID, and that the countries continue to open their borders. It is the case in the Dominican Republic. There's hardly any restrictions to go into the island. And obviously there's a lot of interest from both VFR traffic to visit their relatives in the island, as well as leisure travel of people that have been staying at home for many, many months, and then want to get out and what I enjoy summer vacation. So, we see there's, the traffic will recover fairly soon if things continue the way they are and vaccination continues to improve, successful as it is happening in many countries around the region.

Alex:

Okay great. And John, most of us follow the US, and of course, Canada. And we followed it with a bit of jealousy really over the last six months or so as the domestic markets, were not so high. But then there's been some lack of confidence, maybe over the last few weeks. And then of course, Canada has been going through a slow reopening. What does that picture like and how do you see it evolving over the coming months?

John Thomas:

So Alex, I mean that obviously was a big uncertainty, was when the borders would reopen, but I think credit to Canada. Canada obviously was the leg out on vaccinations. They, very quickly actually became a leader in vaccinations. I think, they now ranked second or third in the world in terms of vaccination levels.

John Thomas:

We do think that obviously that the borders will stay open. Again, if you look at our areas, where we're going to be operating, it's those states in the US that have the higher vaccination levels. And so we think that between, on our routes in particular, we should be fine. And there's obviously, our focus is on the business travel of people are still very nervous about is the business travel going to come back?

John Thomas:

The US majors are saying they're going to have a soft third and fourth quarter because, business travel. But again, we think that clearly what happened in the summer in the US was that leisure travel bounced back very strongly. We just think it's a timing issue. We think that business travel will bounce back just as strongly, obviously less so with the corporates. But again, our focus is probably more in the SME market. And the SME markets travelling back again, it's mainly the major corporates that are still a lag there.

John Thomas:

So, cautiously optimistic, again, part of, we've had some slippages on the regulatory side, and we're not that fussed about it because we think sort of giving us a little bit extra space between the restart and when we stop.

Alex:

Great. Thanks. I'd like to pose another question. I think we'll have time for one more question. In my experience, when I started click here in 2006, one of the things that we lift, and certainly when we merged into airline was our competitive environment, who our competitors were, where they were flying, what they were thinking, how they were making decisions, how their product was evolving, and ultimately how we could gain, on their turf or occupied turf before they came in and et cetera, et cetera, et cetera.

Alex:

Certainly you must be thinking about these things. And I got questions for all three of you in many respects. And starting with you Conor, I guess my first question to you Conor is, do you have any competition? Yes surely. Aer Lingus has a competition, but that Emerald Airlines have competition per se. And, how do you look at the competitive angle of your business?

Conor McCarthy:

Yeah. Well, the answer unfortunately is yes. We have competition in Belfast. As you saw with my last slide, there were 20 million people flew between Ireland and the UK in 2019. And, the turboprop operators that were there at the time carried 3.2 million of that. So, we certainly have a big competitive set.

Conor McCarthy:

So as we sit here, we have two major competitors out of, our base is in Dublin and Cork. Ryanair is our single biggest competitor. And, you may not have heard of about them anywhere else. They're not that well known, I guess. But, they're one of these low cost carriers that might not succeed. But unfortunately, if that were only through, I'd be smiling more.

Conor McCarthy:

Yeah, they're a very aggressive and a very strong competitor. And, in the north of Ireland where we plan a base in Belfast, we have a competitor in Belfast International Airport, easyJet. And, we would also be competing quite strongly with them. In addition to some competition from some of the local regional carriers from Scotland, but there are not so many, and they're not so strong.

Conor McCarthy:

So, when I take a look at the ULCC competition we face, and I worked with Ryanair as their operations direct for five years. That airline works on the basis of having very low fares widely available, leveraging very, very high load factors, and using its cost base to deliver on that and deliver profit. The good news with both Ryanair and easyJet is, they're both in the market to make a profit. And, they're not in the market to do silly things, and they're not in the market to fly a flag for some country. They just want to make profits. So, what we would see is that their market is very strongly leisure. They would certainly like to play in the VFR market, and they do. But with our capacity and our frequency, we provide a very strong product.

Conor McCarthy:

With the Aer Lingus brand, we provide a very good service. And with the obvious points from IAG, we provide a very attractive, loyalty scheme. So, it's very much about delivering for that market, and for people who are more discerning about the quality of product they want and the quality of flight they want, you may want a lounge access before they fly, who simply like more comfort. We feel that that market is very much America that we can take home. But we know we're not in the low fares, stack them high, sell them cheap market, and we will avoid that.

Alex:

And certainly I shouldn't comment too much on it, but certainly when we see your model elsewhere in Europe, where it is more successful indeed is in the space that you're coming in, where you're feeding a hub and where you have a partner that already has the set of tools in their tool chest to be able to compete with the product. Now, that's not the same situation with you.

Alex:

Fred, I guess I think about your market. And I think about some of the ultra low cost carriers already existing in the US, call it maybe less so frontier, but more spirit. And then of course the, perennial JetBlue, which has such an incredible connection with Orlando, with New York, et cetera, and a couple of other markets. I mean, these are tough cookies. They've been around the block. They've got three twenties comparable to 738 max. So, how do you see that? What is going to be your competitive edge? How do you equip yourself to compete against all of these guys?

Frederik Jacobsen:

Yeah, I think, it's certainly one of the challenges that we have. What we believe is that, one of the interesting things that Flycana will have is that we are, have a very well-diversified networks. So we don't compete with any one carrier more than six to 8% of our routes. So, we're not only flying to the US.

Frederik Jacobsen:

The other thing is that we are not only flying to the major routes. We are going to be opening about several new point point destinations. And, if you are in the US sometimes flying with these carriers, what will happen is that to connect to the DR, you end up paying very high fares and the transit time to the DR can take as much as 10 hours.

Frederik Jacobsen:

So, what we will aim to do is offer direct service, which will lower the time of travel, and obviously offer fares that are substantially lower than what is being offered today. And also again, what I'm saying is that, we will have a very well diversified network.

Frederik Jacobsen:

One important point is that the majority of the US ULCC is flying into the DR are flying mainly to Punta Cana. And our focus is going to be central. I mean, that's why we're going to be in a different location. Our focus is going to be the VFR traffic mostly, targeting a lot of the Dominicans living in the US, which do not only live in New York, Boston, and Florida, but there are other destinations in the US that we are going to be targeting with direct service, focusing on these markets.

Alex:

That's great. Thank you Frederik. And John with, and Air Canada that will not die, and fares and swaps going around, wanting to really significantly take higher chunks of market share in Canada, is your meshy magic potion, Billy Bishop, is at the airport that makes the difference above all?

John Thomas:

Yeah. And, I think Alex obviously, pardon me. There's a great operator at Billy Bishop Porter Airlines, which has been there from inception. To us, this is actually competing more with Pearson than with with Billy Bishop. Sorry, then with Porter. Our business model is actually on taking share of that point to point traffic out of Pearson and putting it into Billy Bishop, given the attributes of the Billy Bishop Airport.

John Thomas:

So, we think that, there there's a significant opportunity, and even if you shift some of that share by one or 2%, the numbers are pretty staggering in terms of, let's just say there'll be plenty for both us and Porter to have a Billy Bishop if we move that shift from Pearson.

Alex:

That would still be a challenge, I'm sure. Well, John it's such a pleasure to be with you. I would have loved to talk a little bit more about aircraft. I noticed the two of you are taking aircraft from the same list, so Frederik, you're standing out on your own. I'm sure they can do a deal. But in any case, we would have taught a lot more about aircraft and perhaps a little bit more about product and such. I'll make one final comment.

Alex:

All three of you may reference to people and culture, as the previous startup did as well. I know that you're very super experienced operators already. If I can share with you, remember that this people aspect starts with you, with you knowing the first names of a lot of the crews. Certainly at the beginning, you want to know them a year from now or after a year, because there'll be way too many, but setting that culture and sticking to it throughout is what will make a difference in the execution in making sure that the rest of the team is also living by that culture that you're setting, the values for at the moment.\

Alex:

I congratulate you for the work that you've done today. I wish you a tremendous amount of luck. And thank you very much for participating on this session with us in Capital Live. We look forward to seeing you soon.

John Thomas:

Thank you very much Alex. It's really a pleasure. All the best.

Conor McCarthy:

Thanks Alex. Nice to meet you John and Fred.

John Thomas:

Yeah. Good to see you. Take care.

Alex:

Okay guys. Thank you very much. That was excellent. Thank you for your, we'll stay in touch one way or the other and best of luck.

John Thomas:

Thank you.

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