Launching an airline in a pandemic: Start-Up Panel

Transcript

Peter Cerda:

Perfect. We'll do it, three, two, one. Good morning, good afternoon, good evening ladies and gentlemen. It's my pleasure to be here with another great session from CAPA. In today's session we're going to be talking about launching an airline during a pandemic. My name is Peter Cerda, and I'm IATA's regional vice president for the Americas. It's my honour to be hosting this panel. On the panel we have two fantastic aviation leaders who will be talking about their startup airlines. The first is Trey Urbahn, the board member for Breeze Airways. The second is William Shaw, founder and CEO of Ultra Air.

Peter Cerda:

What's interesting about this topic is during the pandemic we've heard about so many airlines have gone bankrupt, closed operations. Others have gone Chapter 11. Others have had to significantly reduce their operations. But in the two cases of the two gentlemen that we have today, they're actually starting or have started airlines during probably the most challenging period of aviation of our history.

Peter Cerda:

With that, I'm going to kick it off. Trey, I'll start with you since you're already up in the air. How crazy was it to start or how much of innovation or really being smart was it to start the airline, getting the airline up in the air during that really critical time of the COVID where things were kind of beginning to open up in the US? I think we're getting better, but in the rest of the world, things were really in a horrible state. Then our summer hit. That looked pretty well, but also our numbers of COVID cases began to go up. Why was the decision, "Let's go in the year, let's launch, let's take off in May," and not wait a little bit longer? What was the business behind that? I'll give both of you about five minutes to introduce your respective airlines and talk about that. Then we'll just go into some Q&A.

Trey Urbahn:

My name's Trey Urbahn. I'm one of the founders of Breeze. I work with David Neeleman. We've worked together at JetBlue. We built an airline in Brazil called Azul, which is a pretty successful airline today. We privatised the Portuguese airline TAP. One of the causalities of COVID was TAP. It's still a flying airline, but basically it was forced to re-nationalise. All of the European airlines are really suffering just because the more borders you have to cross, the more serious the pandemic is. As we all know, there's parts of the world you just can't really go to.

Trey Urbahn:

We've been working on Breeze probably for about three years. We wanted to do an airline in the United States. There's been an enormous amount of consolidation in the United States, and the big carriers have really pursued the hub-and-spoke strategy, which works really well. They've up-sized their aircraft size. The new entrants are competing in the big markets, so New York to Florida, big hubs, Spirit, Frontier. Those low-cost carriers cover that ground really well.

Trey Urbahn:

We saw an opportunity to fly to markets that were not being served with aircraft that were smaller. We choose two complementary aircraft types. The aeroplane that we're flying today which is the Embraer 190/195. We've got four 195s and a dozen 190s and more coming. The beauty of this aeroplane is it's sort of out of favour, and it's an aeroplane you can buy basically on a power by the hour. You can lease on a power by the hour basis. So we fly these aeroplanes when there's demand, and we park them when there isn't. So it's really an aircraft that suits a point-to-point flying markets that are really underserved.

Trey Urbahn:

Our aircrafts have 108 seats in them. The 190s and the 195s have 118. The aeroplane that we're going to take delivery of, our first one comes at the end of this month. They will enter service with probably three or four early next year is the Airbus A220. Again, a smaller aircraft designed to serve markets that require low-trip costs and are a smaller aircraft. There's tonne of... The Embraer is a short-haul aeroplane that we fly typically 750 miles or less. It's a point-to-point short-haul aeroplane. The 220 is a much more fuel efficient aeroplane. Just if you compare the asset cost, an Embraer is about a $5 million aeroplane today for a 10-year old aeroplane, and the A220 is a $37 million aeroplane. So very, very different opportunity costs in terms of capital intensity, but they complement each other very well.

Trey Urbahn:

The A220 can compete on a per seat basis on a unit cost basis with A320neo, even an A321. It's a super efficient aeroplane. Again, because we'll have 126 seats in it, we can make money flying 80, 90 passengers. If you're flying an A320 or an A321 or a 737 with 180 seats, you need 130. So if you look at the markets that we're flying today with the 195s, it's markets like Hartford to Charleston, San Antonio to New Orleans, Tampa to Columbus. We're flying markets that do not have nonstop service that require a connection which on a 750-mile trip sector is a very disruptive experience and particularly more so in today's world.

Trey Urbahn:

You asked a question about why now. One of the things that I would say, we were really happy not to be an operating airline when COVID hit. It was devastating for those of you that were in the business. I mean the business came to a standstill basically, and you still had to pay for your aeroplanes . Everybody still had to pay for their pilots and their people. So for the most part, there's been just this enormous bail out of airlines by governments all over the world to keep them alive because operating airlines couldn't operate. The one or two exceptions, I guess, in the United States is one of those because it has a big domestic market. It, obviously, shut down pretty much completely for three or four months but has come back very, very strong.

Trey Urbahn:

We wanted to get up and running this summer. We thought that the market would be strong, and it really was. I think that the airlines pulled back a lot on their capacity, really weren't well positioned to capitalise on a strong summer. So we wanted to get out there. Unfortunately, the Delta variant, the market softened quite a bit in September, but the fall in terms of October and November and forward is looking very, very good. But I know the trans-Atlantic market, international markets are going to lag that. COVID is very real, and until people feel comfortable not flying with masks and stuff, it's not going to be as robust as it was.

Trey Urbahn:

I will say that in many ways it was exactly the right time to start an airline because, as Peter pointed out earlier, the leasing market is fabulous from a buyer's perspective. There's a lot of aeroplanes out there looking for homes. We will continue to acquire used Embraer 190 and 195s. We think it's a great niche aeroplane. We believe we could fly profitably a couple hundred of them if we could get them. It's a very complementary mission. Again, as all of the airlines that I've done with David, we try to build a defensible strategy going in that's based on fleet and the kinds of routes that we're going to serve, product that we're going to offer.

Trey Urbahn:

This is an ultra low-cost product. It's hard to fly point-to-point markets without an ultra low-cost product. We tend to have a higher quality product, I think, than what you would think of. For instance, our Embraers are two-class aeroplanes with a 29-inch pitch. If you want Spirit, you can have a Spirit experience, and you'll pay a lot less. If you want a 34-inch legroom seat, we have that as well. About 40% of the aeroplane is a more comfortable seating.

Trey Urbahn:

The A220s, because that aeroplane, whereas the Embraers are a short-haul aeroplane, the A220s will fly trans-cons. The aeroplane can do Hawaii. It actually can do some trans-Atlantic from the Northeast. It's a very, very versatile aeroplane. That aeroplane, when we launch it, will have 36 two-by-two first class seats in it. So we plan on being disruptive not just by having low price but by offering people the opportunity to buy an up-sold product that suits their needs.

Trey Urbahn:

So far the airline's been pretty well received. As I said, we had a great summer. We've had some operational challenges starting, and the Embraer is an older aeroplane. One of the things we learned is you need to have a couple spares in the fleet, and so we're doing that. Right now we're focusing one really smoothing out on operational excellence. So far we're pretty happy with what we're doing.

Peter Cerda:

Trey, thanks very much. Actually, you've already made me write about six or seven different questions I'm going to follow up with you in just a few minutes. Before we do that, I'm going to pass it on to William so he can just do a brief, as well, introduction of the airline, how he's seen the market. William, you and I have been for many, many wars together in different markets. You started your life in Colombia. You left Colombia, and now you've gone home but was a very different scenery there. You have the incumbents in Avianca, but you have your baby there, Viva, that is becoming stronger and stronger. You have Wingo. You have LATAM and some other carriers there.

Peter Cerda:

When did you go crazy and said, "I'm going back there. Not only that, I'm going to open another airline," and try to do the same thing you've been able to do so successfully in the market with Ultra? Was it just a late night at a pub with some beers, you just came up with it? It's just a big challenge for you to go back in there to a very complex market but one with a lot of opportunity. Colombia is a bustling market both internationally and domestically. Walk us a little bit through the process. Tell us where you're at. Where did you get this illumination to go back?

William Shaw:

Well, thank you, Peter. First and foremost, thank you to CAPA. Thank you to yourself for moderating this panel. Of course, I'm sharing the stage with one of my heroes. Trey and, of course, his partner, David, are the people that I admire the most in this industry. So this is a highlight. This is a bucket list check mark for me. I'm actually on a panel with one of my low-cost heroes. So thank you for that.

William Shaw:

Starting a low-cost airline is complex. Starting an airline is very complex. My thesis from business school was starting a low-cost airline in Colombia in 2009 when I graduated. Remember the world financial crisis we were in then and that there was no money anywhere to be had. Yet, we managed to get it funded. We managed to get it started in 2012. We later sold it in 2016. I then got on to work myself around other projects. I helped another Stanford graduate start another airline in Lagos, Nigeria, called Green Africa Airways, which is now up and running, another low-cost carrier. Kind of dipped my hands in helping out in Flybondi in Argentina. Great market, great experience. I also helped out another airline that's not currently operating but is kind of out there called Arajet, previously Flycana in the Dominican Republic. Then I went to turn around a failing airline that actually passed away during COVID called Interjet.

William Shaw:

Then I came back wanting to sit on the board of Green Africa and take my time to see what I was going to do. Oscar Herrera, my partner in crime who I'm starting Ultra with, we used to go on bicycle rides, long bicycle rides trying to get back into shape. We're like, "Have you seen the price of leasing?" I got a call from [inaudible 00:16:08]. He's saying, "If you want to do another airline." I go, "Oh, Oscar, I don't know. I don't know." There was a lot of unemployed pilots that used to call us, "Please, if you're starting another airline, let me know. I was flying with this carrier in Asia, this carrier in Europe." The first people to be made redundant were expats or pilots that weren't home-based.

William Shaw:

Then the Colombia government pulled two things off, and they did it brilliantly. Number one, they put in an incentive, a very real, very tangible incentive reducing the income tax rate for any new large investments, reducing five [inaudible 00:16:48] income tax rate for any new airlines starting in 2021. That kind of made us run out of excuses.

William Shaw:

Now Trey pointed out that you can get aircraft extremely cheap right now, extremely cheap and we have, and we know most of the leasing companies. You can get power by the hour for a big solid chunk of time in order to start putting that capacity. That way you've progressed. Trey, one of the things that resonated within me of what you said is operational excellence. You need a couple of spares. I've defended to all our investors two spare aircraft from the beginning, from the get-go. So we're going to have five aircraft, two spares from day one because, you know what, a lot of these aircraft are coming out of being in preservation. You're going to find things. There is going to be less than optimal dispatch reliability. Frankly, lease rates are so cheap right now, it's cheaper to just have an aircraft on standby than to actually compensate for any delay you may have. So it's a great financial resource. So thanks for that, Trey.

William Shaw:

The other one is, if you look at the dynamics of the Colombian market, when we started Viva, we took the market from 12 million domestic passengers a year close to 30 million in less than five years. We believe we can continue to grow not at that same rate but probably grow the market to about 50 million in the next five years. That would put you at a one-to-one Colombian two trip per capita. Mexico's almost there. The US is double that, almost triple that. It's the largest market. But look at Brazil. Brazil has extremely successful airlines. Azul is one of the champions of course. They were able to be very successful. Mexico, the second largest market after Brazil, the two low-cost airlines are the airlines that are thriving now. They're number one and number two in terms of market share. The third largest market in Latin America is Colombia with one low-cost carrier. You could say that there's a purple low-cost carrier. That's more trying to protect the Panama hub.

William Shaw:

We believe that there's only one low-cost carrier. We can increase the size of the pie and take a small piece of that pie. If you also consider that that pie is going to continue to grow. The largest incumbent carrier is going through a Chapter 11 filing and restructuring and has announced that they're going to reduce their capacity by 30%. Right now, the Colombian market's already recouped upwards of 85% pre-pandemic levels, and the incumbent carrier that had 50% of the market is going to reduce 30? That's 15 points. That means that the demand is already above what the capacity is deployed in the marketplace. So there's definitely a space for us to come in. There's definitely space for another ultra low-cost carrier and emphasis is on ultra. I'm not as good as picking names as you, Trey, but ultra was out there and we got it. So it is a ultra low-cost carrier. It works good in Spanish and in English.

William Shaw:

But we're happy. We're excited. We're excited about things to come. We saw this industry come to a standstill, to a screeching halt. Some countries like Mexico, like the US, didn't stop airlines from flying. The demand was not there. At least you could fly something. Colombia shut down its airports for five months, shut down the entire industry for five months. History will judge whether that was correct or not at the time. But trying to get that momentum back is proving difficult, but it's happening, and we see the markets continue to grow. International's about 60% of what it was pre-pandemic levels. So we wanted to go with a domestic startup and then move to international in 2023.

Peter Cerda:

Let's talk a little bit about disruption because both of you have mentioned that and certainly both of your airlines look like strong disruptors. In your case, Trey, you were talking about... You consider both yourself in ULCC. Trey, you're bringing something to the market at the front of the aeroplane, a distinguished product service where a Spirit, a Southwest is not providing that. Should we be looking at somewhat of a changing of the ULCCs going down that route, or in the case of your philosophy as an airline, just trying to distinguish yourself as a ULCC but with an up-service?

Trey Urbahn:

Well, I think we believe that people are willing to pay... First of all, let me say this. Our market is the leisure market. We have no interest in serving the business market. The reason is that most of the markets we fly four days a week. Are there some business people that fly us? Yeah, there are because if you're going from Hartford to Charleston, you'd prefer to go nonstop than change planes in Atlanta or something. Having said that, when you think about the traditional network carriers, the first class, the frequent flyer, all that stuff is really designed as an entitlement for their frequent flyers.

Trey Urbahn:

But if you look at the cost, particularly on the 220, which is a five-abreast aeroplane, the cost of going four abreast is pretty low. The cost of offering the product for us is very low. The opportunity to be disruptive because first-class fares in the domestic market are very, very high, and there's way more demand for it than there is capacity. So United, America and Delta have entitlements for their frequent flyers and fill it. They charge high fares to begin with. So we believe that the cost for us on a thousand-mile sector to produce a first-class seat is maybe a $50 upcharge, and we believe people will do that. Everything is a la carte, so the seat is one part of the experience. What you choose to do with bags is another. What you choose to eat on the aeroplane. Again, ours is a buy on board during COVID. We just had a very simple snack service just to minimise the handling of stuff. But we just started buy on board last week, and we'll expand it significantly.

Trey Urbahn:

I believe and I think the foundation of where we're trying to go with this is to offer the customer the lowest price possible but to be able to tailor their travel experience around what they need. One of the things that we were able to do is you basically can't transact with us if you haven't downloaded the app, so it's a very technology-focused platform. We believe very strongly that we want that because that lets us know who you are. When things go wrong, it allows us to anticipate the problem and solve it, and it allows us to offer you things that are relevant to where you are in that trip experience, be it after you first make the booking before you're on trip, why you're at your destination for. Typically four to five days is what our customer stays. Then looping back into a loyalty programme and keeping in touch with the customer.

Trey Urbahn:

I think we believe that being a low-cost producer is always the best place to be. Do you have to produce just a bare-bones product? We don't think so. We think that the largest sector of that market is a bare-bones product. We do offer a Spirit, Frontier lookalike bare-bones product, and that is our entry price point, too. The entry level price point is super cheap. That's what customers want and particularly if you're not using GDSes and intermediary OTA platforms to sell your product. Customers will always find the good price if you have one.

Peter Cerda:

Trey, just two follow ups there. One, where is Breeze's identity? Where is their base? We know Delta's in Atlanta. American is in Dallas. Where are you guys? Where are you focusing your network in a different geography in the US?

Trey Urbahn:

We are-

Peter Cerda:

Secondly... Sorry.

Trey Urbahn:

We fly to 16 cities as far west as San Antonio. The only city we serve in Florida is Tampa. We serve a bunch of cities in the SoutheastCharleston, New Orleans, Huntsville, Alabama. We fly to Pittsburgh, Norfolk, Hartford, Providence. Every route that we fly we're the only nonstop competitor. Markets that are big enough to support nonstop service a couple days a week but can't be profitably flown in a 737 or a 320. Believe or not, there's a tonne of them in the United States. Ultimately, our goal is to be a coast-to-coast airline. We believe that there's 500 plus markets that are under a thousand miles that are well suited to the Embraer just within the domestic market alone. Then when you add the 220, it's a very, very large market because then you can start to do international. You can do Hawaii. You can do trans-con and so forth.

Peter Cerda:

How long do you think it'll take the Frontiers, the Southwests, the Spirits, or even some of the Deltas waking up and saying, "We have to go after you guys," and they'll start putting some of those smaller aeroplanes into your market just to give you a hard time and not make it so easy?

Trey Urbahn:

Well, I don't think it's worth it for them because it's inconsistent with what they're trying to do. They're hub-and-spoke airlines. During the pandemic, most of them diversified a little bit, started flying some point-to-point leisure markets because they're the most easily stimulated. So we saw a lot of capacity going to Florida and places like that. Ultimately, they will go back to doing what they do well, which is consolidating passengers at hubs and flowing them into their long-haul networks. That works well.

Trey Urbahn:

The Frontiers and the Spirits of the world are really focused on their unit costs of operating. They've chosen larger aeroplanes , 321s and 320s, which have fabulous cost structures, but it limits the kinds of markets they could go after. Now, could they go out and buy Embraers? Yeah, they could. I just think it's nichy and probably not really consistent. It's a much higher cost. The cost of flying an E190 is very, very high on a per seat basis. It's really not that consistent with their model. It really only works in markets that you have to yourself. You try to compete flying from the northeast of Florida flying a 190 or a 195 and you're dead because you're talking about $49 fares for a 1,200, 1,500-mile sector. The only aeroplane you can make work are things like A321s at those kinds of price points.

Peter Cerda:

William, from your side, you mentioned, though, the market in Colombia, and it's an interesting time with Viva growing. Wingo is kind of playing a role. Avianca is hurting and restructuring. You also have others, Volaris who is slowly coming in to really focusing on Central America. They've now started some service to Colombia. How interesting is it for you guys to start now with all the challenges that we see in that market, huge opportunity? But they're not going to give you a free pass to get in there. They're going to make it really difficult. So for you, how difficult will it be? Will you focus out of Bogotá? Will you go to Medellín, other markets and start from there? Then how long is it going to take you to start flying international?

William Shaw:

Again, very similar answers. One of the bases of the ultra low-cost model is to not do hub and spoke. You can do organic connections, but it's mostly point-to-point traffic. So we will have a base in Medellín. We'll have a base in Bogotá. We'll have a base in Cali because crews live where the plane sleeps and you don't pay for hotels. There's no need to charge on to a fare the absurd management of crew rest times. If you plan your planes flying at the right time and your crew coming back home and being able to read a book to their kids, they'll be happy. They be happier crew, and they'll be a more productive crew. I don't know about you, but I hate sleeping in a bed that's not mine and I hate sleeping alone, but to join the two, really, really sucks. So crew want to live back home. Crew want to have a much more normal life. We find that the more experienced crew, the pilots, they've flown in Europe, they've flown in Asia, they want to settle down and have a more regular-style job. So we're going to have three bases.

William Shaw:

One of the things that Trey mentions and I'll mention as well, we're not going to treat you badly. A lot of airlines pride themselves in saying, "We're the airline people love to hate." I think that's stupid. I think Michael O'Leary said, "We didn't know that treating people right was profitable." I think there's airlines that have done a great job of actually giving people fair value for what they want, and I think that's a business we're in.

William Shaw:

We sell a destination. People want to go Cartagena. They don't want to sit on a plane for an hour and a half. What they want to do is they want to go to Cartagena in the safest, most on-time way they possibly can and being able to adapt their budget to what they want to do. If I want to take six changes of clothes and, I don't know, a couple cases of tequila in my suitcase, I'll pay for that. That's what I want to do. If I want to go as cheaply as I possibly can, I don't care where I sit as long as I get there on time and safely, then that to my budget. I think that's what low-cost airlines have done around the world. They've understood that people want to get to the destination. It's not about the flight. It's about the destination.

William Shaw:

COVID has given us one great thing, and I love the fact that Trey mentioned, we love talking to you through an app. Technology is out there. We're more technologically advanced than we used to be. We didn't do these kind of conferences virtually. It was also somebody in a big room. Well, you know what? We can now do these conferences virtually. People do pay attention. We can do them. Also, people are less reticent to just technological conversations. We used to want to have to talk to somebody on the phone. Now we're very comfortable writing an email, waiting for a response. Going through the app. Talking even to a chat bot that we know is an automated response but it'll get our problem or our situation solved. I think a lot of technology has come about that airlines need to use, and we're definitely going to be at the forefront of technology in that sense because what we do, we've been doing it for over a hundred years. We just put people in a metal tube and fly them from one city to another.

Peter Cerda:

When does your first flight take off?

William Shaw:

We're aiming for the end of the year. We're currently in phase three of the AOC process. It's a five-phase process. We've already signed LOIs for our first five, six aircraft. Very enthused. The first four have gone off to paint, which is really exciting. I'm sure, Trey, when you finally see the realisation of an aircraft painted in your colours and your design, it's pretty exciting. We're waiting for the authorities. They got to go check air readiness. They have to check the manuals. They have to make sure that we train people according to the manuals that we subscribe. We are 100% in line with our Gantt chart. Everything seems in line for an end of the year start. So we'll see.

Peter Cerda:

For you for next year, what would you consider success, let's say, end of 2022? How much of the market share in Colombia? Are you thinking about international by that time, or are you still focusing locally?

William Shaw:

We'll be launching international by December of next year. We won't be flying in 2022 any international flights. Success would be that every passenger that flew on Ultra will say, "That was a great flight for a great price." That would be success. Of course, financial success, I can give you all the key performance indicators like 85% load factor, margin for our investors. But for me, really it's about the people. I built airlines. I like building airlines. For people to actually recognise it is a good value, solid product, right in line with their expectations and sometimes even beating them is exactly where we want to be.

Peter Cerda:

I'll ask the same thing for Trey in terms of expectations for next year. Where would you like to be? Also, you talk about, again, the issue about disruptors. Do you see yourself looking international, Caribbean, Mexico? Because you'll have the planes, you'll have the range from certain locations. Is that something that you guys will look at particularly the type of passenger you're used to travelling in the future?

Trey Urbahn:

Next year we're introducing... The 220 comes in to service. It'll be a while before we get ETOPS and stuff. So there's a lot of stuff that we'll do within the domestic markets, serving points that we already fly but longer-haul points. We'd love to be able to fly from the northeast of Florida, for instance. It's a huge market. Can't do it in an Embraer. You got to do it in a low-cost, unit-cost platform like a 220. I think international will come. I think there's a lot of opportunity in the Caribbean, Mexico. If you just look at markets in the United States that do not have nonstop service to Cancun, there's hundreds of them. That's a market that could easily substantiate a bunch of flying with smaller aeroplanes .

Trey Urbahn:

Without revealing what we're going to do, and I have to say one of the things that we learned during COVID is to be very opportunistic and take advantage of opportunities as they come along. A lot of that's defined by what your competitors are doing. All of our competitors have a lot of aeroplanes and a lot of people, and they're moving their chess pieces around. Our goal is really to stay out of their way and to serve markets that they don't and can't serve well. It's always better to create your own market rather than try to steal your competitor's lunch. The markets that we've gone into, as I said to you, are all ones that had no nonstop service. Once we've entered them, the traffic has already tripled because people don't want to fly from Hartford to Charleston making a connection or Norfolk to Charleston. They want to go nonstop.

Trey Urbahn:

There's a tonne of markets that we could do. We have very complementary fleets. We will use the Embraer to fly charter in off-peak periods. The Embraer is an aeroplane that's very well suited to the same kind of flying that William's talking about, which is the aeroplanes are based. The crews are based. They start the morning, they fly four legs, and they end up back home. The 220, because it's an aeroplane you want to fly 12 hours a day and is happy flying a six-hour sector, then you start to get some complexity with crews and overnights and those kind of things. But there's opportunity that comes with that as well.

Peter Cerda:

It'd certainly be great to see what happens over the next year. Look, gents, we're very close to coming to the end. It's come really fast. I will end with one last question for both of you all. I'll start with you, William, and it'd be the same question for Trey. What's the one concern that worries you over the next, let's say, eight to 12 months? We have a lot. In some cases, staffing is a major issue. We're seeing in the US where there's a lot of airlines going through hardship because they've lost good people, technical people to other industries. They just don't want to come back. So staffing is an issue. What will fuel do? We'll get more variants in future of COVID, that maybe put more restrictions in place. William, for you, what's the number one concern that could push back some of your plans moving forward over the next year?

William Shaw:

The answer to me is kind of obvious. Not judging from another variant that's going to shut us down. I think one of the things that we've seen in definitely the Latin America is the politicisation of the COVID issue. I understand it's a safety concern. Not many people know about the [HERPA 00:41:31] filters in aircraft. They're the same kind of filter you have in operating rooms around the world. Every three minutes the entire air in the cabin is changed. We've dealt with bio-security for a long time in the airline business.

William Shaw:

My major concern is that governments start seeing that we are coming out of this and start to make the right decisions. We are a extremely regulated industry, and the benefits of deregulation we're seeing. We're seeing more newer life pop up, new opportunities, bigger markets. I'm a Adam Smith kind of economist. I love the way he describes marketsself-regulate by the invisible hand. There is that in the airline industry. Nobody wants to run an unsafe airline. We all want safety to be our primordial sense of being. But then regulators come up with rules that you just don't understand. You have to have an app in order to fly. You have fill out this information. So people are scared to fly internationally basically because they don't know the rules. They don't know what they're going to face when they get to immigration day-to-day.

William Shaw:

I personally travel with a British and an Mexican passport. I usually enter any country with a British passport. Well, I flew to a place in Central America which shall remain nameless, and I entered with my British passport. They're like, "You have to go to a military prison for a 14-day mandatory quarantine because of this new variant that they found in the UK." I'm like, "Ah, here's my Mexican passport." "Oh, you just have to pay a $10 entrance fee." I'm still the same human being. It's not what my passport is. It's where I've come from and the possibility of coming in and spreading the virus. Anyway, I think governments and the regulations that they find around COVID and not being lacked but being absolutely commonsensical, which is the least of the common senses.

Peter Cerda:

You're right. I think one of the biggest challenges is the lack of harmonisation, global harmonisation around the world. Countries certainly do not speak to each other, do not coordinate. It became more of a political/social than on the data and the science, which is unfortunate because our industry was harshly hit because of that considering we're probably the industry that implemented the most types of measures in the world, and we got penalised for that. Trey, I'm going to leave the last word to you in terms of your challenge, your worry over the next year.

Trey Urbahn:

I'm not really worried about COVID anymore at least for the markets that we're flying in. I think you can definitely see the lights at the end of the tunnel, and it's a matter of time before people really are out and about the way they were, but people are flying today. I think for our business, obviously I'm concerned about fuel. I think fuel is a huge part of our cost base. The problem that we have right now, I don't know, something structurally has changed with the labour market. I don't know whether it's people don't want to work anymore. Certainly in our business, the shortage of pilots is acute. There was a period of time when we started the airline, we kind of checked the box and said, "Well, the pilot shortage is over. We don't have to worry about that anymore." Not true. So airlines are having a very hard time attracting and keeping their pilots. That's true of maintenance people. Skilled people are very hard to find. So that threatens the cost structure of the industry because we're going to be competing by having to pay people more.

Peter Cerda:

Gentlemen, thank you very much. It's been truly an honour. 40 minutes have just gone super fast, so some great insight both of you. William, Trey, thank you very much and all the best in your new opportunities that you see and then bringing more value and better prices to the customers. Appreciate it.

Trey Urbahn:

Thank you. My pleasure.

William Shaw:

Thank you, Peter.

Trey Urbahn:

I enjoyed it.

William Shaw:

[crosstalk 00:46:13] was a pleasure. Bye, everybody. Bye, Trey.

Trey Urbahn:

Bye.

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