Launching an airline in a pandemic: Start-Up Panel

Transcript

Alex Cruz:Some of the world's best airlines, busiest airports, leading cruise lines, major travel distributors, and the top oil and gas companies use IBS solutions for managing their mission-critical operations, helping millions across the globe live the future now. Well, good afternoon and welcome to this CAPA Live session. It's the second session that we do on airline startups. Yes, 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 airlines starting. Today we have 3 fantastic projects to discuss, and in alphabetical order, I'll introduce you first to Conor McCarthy, who's the CEO of Emerald Airlines, a seasoned airline executive. He's been around a while. I'm sure it will show when he tells us about this project. Secondly, Frederik Jacobsen from Flycana, CEO. He's currently in Bogotá in Colombia, also extremely well experienced, and we look forward to hearing about your project. And finally, from Connect Airlines, the founder and CEO, John Thomas, currently joining us from Boston. So we're looking forward to hearing 3 fantastic stories, and then we'll have a little bit of a dialogue about some of the common challenges that we have. Now, in order to get started and to get familiarized 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:Thank you very much, Alex, and 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 livery on our aircraft. Instead, you'll see Aer Lingus Regional, which is our franchisor, 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. So introducing Emerald, we are the newest regional airline in Ireland, and 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. 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 cairí, which means heart. And as you can see, the shamrock is in the shape of 3 hearts as well. And 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, where people can really grow with the airline, but who also feel that the airline suits their work-life balance. And 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. And 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. And the young employment market nowadays will put you behind the 8-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 and extremely productive, but also extremely demanding in relation to calling us to question over our values. 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, and we can start a greenfield cost base versus an established cost base after probably 10 years of 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. 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 fail, we've seen Norwegian Air International pretty much withdraw 100% from the Irish market. And we've seen the demise of airlines such as Cityjet, which went into examinership. So there's a huge amount of talent now available, and it won't be there for long. The other thing is we've tried to ensure that we've taken the maximum advantage of cheap aircraft and long-term flexible power-by-the-hour deals. So we've got ourselves a very flexible cost base. For the first time in my experience, I now have aircraft costs in my surplus 1 or direct operating cost line. They're no longer a sunk monthly cost. So these are critical points. 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 3 to 4 months. And we've been doing that since the very start. So the future is certainly uncertain. And therefore agility becomes critical. And we do feel there's going to be a V-shaped 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. And 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 long term. So even our aircraft leases run for as much as 10 years to cover our exposure. Next slide. So we mentioned our 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. And we also haven't only got aviation experience, we've brought in people from wider backgrounds so that they can enrich 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 center and our maintenance control and technical services center. So we have everybody working together in the same environment and under the same roof. And we feel as a small airline, this is an advantage we can play on, and it's one of the things that we have tried to do from day one. Next slide. So the journey to date. 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 5 others as their preferred partner. We then went ahead to start building our airline and we teamed up with some really strong providers of systems and equipment. And so not just ATR and Pratt Whitney Canada on the engine side, but also PDC on the flight crew and operations control side, and Flick Prestanda on the performance engineering side, and Navtech on the chart side, etc. So we've pulled 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 minimize weight, we minimize paper. And our investment rounds have all been completed. We've completed our finance as of 4 weeks ago, so we're fully financed, and we've financed to run right through the start of 2023 without any revenue. And we have already inducted 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. It delivered last night, so Very exciting time for us, the culmination of about 20 different work streams all happening this week. I thought it might be finished last week, so I gave myself time for this presentation, but here we are in the middle of it all. And so we expect to be ready to fly by Q4 of 2021, which is a full year ahead of our commitment to Aer Lingus. But with the demise of Stobart, we do feel that there will be opportunities that will arise now a lot earlier.

John Thomas: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 2 areas that it's far too easy to overestimate before you start your business. So we have gone with a historically low load factor and yield for our network and built a cost base that made sense around those. If we do better, well and good, but at least we've 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. The flight times are around 55 minutes, which is perfectly suited to a turboprop, 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 2 markets that are pretty stable. And less prone to shocks in terms of things that might stop people traveling. So we feel we're moving into a marketplace that's very mature and very resilient. And the only other point worth noting is that we will serve through Dublin— about 20% of our passenger numbers will be traveling 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 through Dublin and do their pre-clearance there before taking their onward flight to the United States. And so we've— we are a pivotal part of that whole operation for Aer Lingus, and we're really looking forward to playing our part in that. And it's one of the reasons that we might get moving a little bit earlier than planned. And I think that concludes our presentation, Alex. That's a quick dive into Emerald Airlines.

Alex Cruz: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 Bogotá. 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:Of course, Alex. Thank you very much, Karim. 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 is really Dominican Wings. It has the AOC Dominican Wings started in Santo Domingo, Dominican Republic about 6 or 7 years ago as a charter airline with one A320. The founder was Victor Pacheco, who quickly realized that perhaps the best option was not to have a charter airline but a pure ULCC. So he engaged with several airline executives about 4 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. 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 to points in North America, intra-Caribbean, Central America, and South America. Obviously, our target market will be the Dominican VFR traffic and the leisure travelers going into the DR. It's really an underserved VFR traffic 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, you know, affected by very high fares. So we see a great opportunity to target the VFR and the leisure market. In the Dominican Republic, there are about 10.5 million people. It's the largest country in the Caribbean. and about 2.5 million living in North America who have, you know, little access to the island because of the very high fares. And the Dominican Republic has about 8.5 million visitors to the DR every year. So we believe that there's a very interesting business case to move these passengers around the Caribbean and into North, Central, and South America. We will launch with 5 737-8 MAXs. In Q1 of 2022. We've selected Santo Domingo as our home base. Normally airlines pick the more leisure destinations as their home base in the DR. We've chosen Santo Domingo precisely because our target market is the VFR traffic. Um, we will be issuing a second round of RFP to get a second batch of aircraft that are going to arrive In Q3 2022 and 2023. We are raising 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 5 years. Our vision is really to become the next generation ULCC and the most important Caribbean airline in the next 5 years. Regarding the, the, 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-centered organization. And it's going to be an airline where, you know, we know, we understand the importance of addressing the needs of all stakeholders. So it's the employees, so that we can deliver the products and services to our customers. But it's also building strong relationship with our suppliers and strategic partners, with authorities, being good corporate citizens. And obviously, if we do all these 4 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 organization that we are building, we want to have people at the center. 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 practices. And all this will be part of what I call the people-centered organization. And there are going to be 3 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 MAXs with a low PAL of 189 with ultra-thin seats. We will be outsourcing most services. We expect to have high aircraft utilization in excess of 40%. 400 hours a month per aircraft, turnaround times of less than 30 minutes, and most sales will be through website and applications. The second lever of our— of this plan is the operational excellence. In my experience, it's fundamental to really delivering the lowest costs 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. And the last thing is going to be innovation and technology, which no longer are nice to have, but it's a required element. And we expect to 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, best passenger experience. And, and that's, uh, pretty much my, my, the summary that I have for, for Flycana. Uh, so thank you very much, Alex.

Alex Cruz:Okay, thank you very much, Frederik. And 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 Walsing 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 scheduled 121 domestic and flag operations. Before the end of the year, subject to regulatory approvals both from the US and Canada, we hope to start operating Q400s from Philadelphia and Chicago O'Hare to Billy Bishop Downtown Toronto Airport, an airport that is in the heart of Toronto, the 4th largest airline market in North America. An airport that provides a far better and, and much more convenient convenient travel experience for point-to-point travelers to and from downtown Toronto. As a US carrier, our initial focus is to bring more US transborder flights to Billy Bishop Airport, as well as— pardon me— as well as to provide Toronto passengers with extensive US and global networks that they will be able to access over our US stations. And as I say, the initial being Chicago O'Hare, and Philadelphia. We've leased our initial 2 Q400 aircraft, which are ex-Flybe aircraft, from Chorus, and have LOIs on our next 3 aircraft for delivery in 2022. However, given the attractiveness of the US-Canadian market, we see this initial route structure as an excellent springboard into a broader domestic US network. Other than Horizon and the Pacific North— pardon me— other than Horizon 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 turboprops 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. Furthermore, on these sectors, the Q400's emission levels run at 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 8 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 5 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. And behind the scenes, again, you'll hear people naysaying turboprops, saying that much people, people much prefer regional jets. Well, behind the scenes, we're working to make the customer experience on the Q400 far superior to that of the regional jet. So we're, we're, we've, we're along with Conor, we totally believe that certainly the turboprop 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 transborder market. And that's really what our strategy is. Thanks, Alex.

Alex Cruz:Great. Thank you very much, John. Now, we're all attending this call living an extraordinary time. COVID, in some countries beginning the recovery, in some others still stuck, in some others just in the recent weeks even slightly worse. Could you give me your short view of your own market, 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 comment a little bit 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 6 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, while not particularly brilliant, is a very sharp recovery in just 6 short weeks. We see Ryanair, who have 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, you know, reflect the marketplace. There are, of course, other carriers, but they would be the main drivers of growth. 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 a load factor 10 points lower than what you were used to. 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. We're going to see a lot of losses getting crystallized 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 would indicate that by May, June next year, we should be back to pre-COVID levels. But that assumes 2 very important things, and we did mention that in our presentation. It assumes there's no reversal on the current progress from COVID and that the current rate of vaccinations, which in Ireland is now over 90% of the adult population 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 does assume 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 replace that capacity they took out of the market. And airlines will only do that when the economic conditions can support it. So these are 2 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 Cruz:That's great. And also, we can hear a few takeoffs in the background of your conversation. Which would suggest that Dublin is alive and kicking and there are actual flights taking place. So that's encouraging as well. Frederik, VFR and leisure around the Caribbean, is that coming back? How is that and how do you see yourself in that?

Frederik Jacobsen: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 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. So we see that the market is going to return very quickly. Hopefully by 2022, we'll start to see 2019 numbers everywhere. Obviously, we— 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, you know, leisure travel of people that have been staying at home for many, many months and that want to get out and want to enjoy You know, summer vacation. So, so we see there's the traffic will, will recover fairly soon if things continue the way they are and vaccination continues to prove successful, as it is happening in many countries around the region.

Alex Cruz:Okay, great. And John, we, most of us follow the US and, and of course Canada, and We followed it with a bit of jealousy really over the last 6 months or so as the domestic markets went up 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 is that picture like? And how do you see it evolving over the coming months?

John Thomas:So Alex, I mean, that obviously was our big, our big uncertainty was when the borders would reopen. But I think credit to Canada. Canada obviously was a laggard on vaccinations. They very quickly actually became a leader in vaccinations. I think they now rank 2nd or 3rd in the world in terms of vaccination levels. 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, you know, our focus is on the business traveller. People are still very nervous about is the business travel going to come back. The US majors are saying they're going to have a soft 3rd and 4th quarter because of business travel. But again, we think that clearly what happened in the summer in the US was that leisure travel bounce 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 market is traveling back again. It's mainly the major corporates that are still the laggards there. So cautiously optimistic. Again, part of, you know, we've had some slippages on the regulatory side, and we're not that fussed about about it because we think sort of giving us a little bit extra, extra space between the restart and, and when we start.

Alex Cruz:Great, thanks. I'd like to pose another question. I think we'll have time for one more question. One of the— in my experience when I started Clickair in 2006, one of the things that we left, and certainly when we merged into Vueling, 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 occupy turf before they came in, etc., etc., etc. Certainly, you must be thinking about these things. And I got questions for all 3 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 Does 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 bucketfuls. As you saw with my last slides, that there were 20 million people flew between Ireland and the UK in 2019. And, you know, the turboprop operators that were there at the time carried 3.2 million of that. So we certainly have a big competitive set. So as we sit here, we have 2 major competitors out of our bases in Dublin and Cork. Ryanair is our single biggest competitor, and you may not have heard 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 true, I'd be smiling more. 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. So when I take a look at the ULCC competition we face, and I worked with Ryanair as their operations director for 5 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 a 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, and 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. And with the Aer Lingus brand, we provide a very good service. And with the Avios 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. who may want lounge access before they fly, who simply like more comfort. We feel that that market is very much a market 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 Cruz: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 a set of tools in their tool chest to be able to compete with the product. Now, that's not the same situation with you, 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, etc., and a couple of other markets. I mean, these are tough cookies. They've been around the block. They've got A320s comparable to, to a 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, I think it's, it's certainly one of the challenges that we have. What we, what we believe is that one of the interesting things that Flycana will have is that we have a very well-diversified network. So we don't compete with any one carrier more than 6 to 8% of our routes. So it's not only— we're not only flying to the US. The other thing is that we are not only flying to the major hubs. We're going to be opening about several point-to-point, new point-to-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. 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. One important point is that the majority of the US ULCCs flying into the DR are flying mainly to Puerto Rico. Punta Cana, and our focus is going to be Santo Domingo. That's why we're gonna be in a different, in a different location. Our focus is going to be the VFR traffic mostly, targeting a lot of the Dominicans living in the U.S., which do not only live in New York, Boston, and Florida, but there are other destinations in the U.S. that we're going to be targeting with direct service. Focusing on this, on these markets.

Alex Cruz:That's great. Thank you, Frederik. And John, with Air Canada that will not die, and Flair and Swoop going around wanting to really significantly take higher chunks of market share in Canada, is your magic potion Billy Bishop? Is it 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 Billy Bishop— sorry, than 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. So we think that, you know, there's a significant opportunity. And even if you shift some of that share by 1% 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 at Billy Bishop if we move that share from Pearson.

Alex Cruz:It'll still be a challenge, I'm sure. Well, gents, it's such a pleasure to be with you. I would have loved to talk a little bit more about aircraft. I noticed the 2 of you are taking aircraft from the same lessors. Frederik, you're standing out on your own. I'm sure they can do a deal. But in any case, we would have talked a lot more about aircraft and perhaps a little bit more about product and such. I'll make one final comment. All 3 of you made reference to people and culture, as the previous startups 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 won't 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, making sure that the rest of the team is also living by that culture that you're setting the values for at the moment. I congratulate you for all the work that you've done till date. I wish you a tremendous amount of luck. And thank you very much for participating on this session with us in CAPA Live. We look forward to seeing you soon.

Frederik Jacobsen:Thank you very much, Alex. It's really a pleasure. All the best.

Conor McCarthy:Thanks, Alex.

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