Navigating Turbulence: Strategic Priorities for Airline Leadership in the Americas

Transcript

Alex de Gunten:First of all, I want to thank CAPA for inviting me to moderate this great panel. We have a great group of people. I've been participating in CAPA events for many years when Peter Harvison was still around. And also, it's great to be here and see a lot of old friends from my LAN Chile days. I will not mention how long, not to embarrass Fred Thom, but it's been a long time in the industry. As you know, in this panel, we're going to be talking a little bit about the challenges of the industry, the opportunities of the industry, but I want to make it as interactive as possible. So I believe you all have access to the Slido. That's for the people who are shy or do business with these companies and you don't want them to know that you're asking them that question. For those who are not shy, I believe we also have the microphone, so please feel free to use it. To start, I'm going to mention some regional statistics provided by IATA. And Peter, this is your free plugin, and next one I charge. So these are numbers from IATA to highlight and show the importance and the opportunities in the region, the large opportunities. One number that struck me when I saw it was that 75%— 75% of the international passengers in the region correspond to extra-Latin American traffic. So only 25% of the international traffic within the region comes within the region. 75% is coming from the US, from Europe, from other locations. To give you comparisons to that, in intra-Latin American traffic versus intra-Europe traffic, and both continents have similar populations, about 700 million people.

Audience:We had—

Alex de Gunten:sorry, we have 50 million people in intra-Latin American traffic versus 700 million people in intra-European traffic. So again, a great opportunity for many of the airlines that we— for the airlines that we have here. And that's with 10 times less— It's 10 times less With similar populations. And another statistic that's interesting is the per capita flights. In Europe, they have 2.5 flights per capita on a yearly basis. In the region, we have 0.6 flights per capita, so it's less than 4 times less. Again, another number that shows the, the opportunity. And last one, that 80% of the people in the region have never taken a flight. So if you look at that in the US and Europe, the numbers are— it's so different. So there's great opportunities. We have a great panel and we have limited time, so I'm going to ask— their introductions are going to be very short. I'm not going to go through their CVs, but I'm going to ask each of them to tell me, to tell us, one, to mention their name and position, so CEO, etc., of what company, but also tell us something that is not on their CVs, that is not on their normal social media, that the PR people don't have, something that is interesting about them that is not common out there. So, and I'm going to start, I'll start at the very end.

Garret Malone:Professor Raúl.

José Raúl:Good morning, good morning everybody. Thank you, CAPA, for the invitation. Well, you need something that nobody knows, something like that about my life?

Alex de Gunten:Exactly, something nobody knows about you.

José Raúl:I love to run. I love to do some trail running in the highlands. So that's my best time, my best physical. Escaping the crowds. Yes.

Alex de Gunten:Estuardo?

Estuardo Ortíz:Thank you, Alex, for coming to be with us at this panel. And thank you, CAPA, for the invitation.

Audience:For sure.

Estuardo Ortíz:My name is Estuardo Ortíz, and as I said, it's not my fault I end up usually as Eduardo. We'll see how that goes today. I'm definitely not going to tell you something that no one knows, not in this panel, but I would share that I'm a bartender and I like making cocktails, and I think they're not that bad.

Alex de Gunten:Okay, well, now if you see him at the bar, You can hire him. Manuel, perdón.

Garret Malone:Garrett, we swap seats.

Estuardo Ortíz:Yes.

Manuel van Oordt:Oh, I'm sorry.

Garret Malone:No, I just spoke to me, sir. Garrett Malone, the Chief Operating Officer at Arajet. So something most people don't know is that I love to go diving, scuba diving, and those that do know it probably don't know the why. And so I dislike fear of water, but I'm quite stubborn. I don't like things getting in the way, which kind of part reason I came to this talk. of the world also to set up low-cost aviation here over the last 15 years. So kind of my stubbornness got me to go diving, and what I love most about it is our telephones don't work 12 meters underground, so it's peace and tranquility, and the problems are waiting for you when you get back up.

Estuardo Ortíz:Great.

Garret Malone:Manuel?

Manuel van Oordt:Well, good morning. I'm Manuel van Oordt. I'm the CEO for LATAM Airlines in Peru. Thank you to CAPA for the invitation. Thank you, Alex. I was a DJ for many years. For about 16 years, I loved to drink the cocktails while I was DJing. But that's my passion, music. Music is still my passion.

Alex de Gunten:That's excellent. So I can see there's some trend here that you have to be in the late-night business to make it in aviation.

Estuardo Ortíz:Sounds more interesting to talk about cocktails and driving than airlines, I think.

Alex de Gunten:Absolutely. Unfortunately, we have to get into reality. and the reality of the panel is aviation. I'll start with you, Estuardo.

Manuel van Oordt:With me?

Alex de Gunten:Because I know you for a very long time.

Estuardo Ortíz:All right, let's do it.

Alex de Gunten:I'm not trying to make you feel old. We've just seen the numbers, lots of opportunities, but lots of challenges. Tell me one, the biggest one for you right now in terms of your airline? What keeps you more awake at night? What is the first priority in terms of your challenges in the industry right now?

Estuardo Ortíz:Well, I think, you know, we, as we go into this business, and we were just talking about with some of my team this morning, everything changes so quickly that we always have something happening. I think the region has been through an adjustment period that ended up being a positive one. In the past 2, 3 years. I guess we all think about what's going on in the world. Fuel prices, I guess, got us a little concerned this year, but they seem to be stable, so that's good news. Hopefully we see interest rates come down before the year ends. I think that's something that we had to bear. The cost of financing has been pretty different since COVID Again, many political changes in the region this year. I think we have elections in a few countries that might have some impact on our business. But for me, I mean, for JetSMART, at the end, it's really about always focusing on cost. I think that's the one thing we do regardless of where we are. We know that through cost, we can offer low fares. Through low fares, we can incentivize traffic. You were saying at the beginning, Rightfully so, Alex, how little the trippers' capital remains in the region. But I've been hearing this for a long time. Every time we meet at this conference, we talk about it and then we talk about it. It doesn't seem that we can finally get it on to move forward as we want. So hopefully, through more changes and more support, I would say, from the government in creating policies that really stimulate traffic, we can finally see—

Alex de Gunten:Yeah.

Estuardo Ortíz:That those numbers come up. So yeah, I guess plenty of things happening.

Alex de Gunten:We're going to get back to the government role and opportunities on that. I didn't hear you mention anything about fleet. Is that an issue, getting access to aircraft nowadays for JetSMART?

Estuardo Ortíz:In our case, particularly, since we signed a couple of deals directly with Airbus, then we have deliveries ensured all the way to 2031. But that doesn't mean that the industry has not gone through serious issues, right? The supply chain has affected delivery schedules for all of us, has affected— the tariffs is another thing recently coming up as a potential issue, whether that's going to be affecting Airbus or Boeing or both. And to what degree, probably still to be seen, something that we have to deal with right now. And of course, engines, that's been another. So I do think that after the pandemic, we thought these issues are gone, but they're not. They're still around. And certainly there's going to be some changes, I believe, in the next 2 or 3 years. I mean, we are very cyclical Industry, as we all know, so we go ups and downs, and production is stepping up in Airbus, production is trying to step up in Boeing. How is that going to meet demand, and how is it going to be changing supply? I think that's a big question.

Alex de Gunten:José Raúl?

José Raúl:I will say for us, the main challenge is infrastructure. As it was told before, Let's use Lima as an example. Now we have a huge airport with many challenges, you know, and it's not at full capacity. But besides that, when you want to fly from Lima, as an example, to any region, you have many constraints in what we call provincias, in regional airports in Peru. And it's almost pretty much the same in Chile and Colombia.

Garret Malone:Yeah.

José Raúl:You don't have 24-hour airports, you don't have the right capacity, runways, and so on. For us, it's always a huge constraint to forecast what is going to happen, where can we put our planes, because of the lack of adequate capacity, adequate infrastructure.

Alex de Gunten:The infrastructure, there's a disconnect. Between the building of an airport that tends to take 10, 20 years. We just heard from Roberto that even when it was planned for 2005, it took an extra 20 years to get finished, but a very long time to plan and capitalize that airport. Then the governments change very quickly, so there's not a long government that has an interest in creating that infrastructure. Is there something the airlines can do together to try to say, hey, we need an airport in this city with this capacity by this year? Is this a role for the airlines, for the associations? How do you match that disconnect?

José Raúl:For many of us, we are here for a long time. We've been talking with authorities, different governments, And I will say it's pretty much the same. It's very slow movement. You know, there is a lot of frustration, you know, but it is what it is here in South America, especially here in Peru. We can talk for hours regarding that issue.

Alex de Gunten:Manuel, you share the same landscape as José Raúl.

Manuel van Oordt:Let me put it a little bit in numbers. 30 million passengers is what The number of passengers that will fly into Peru and around Peru this year. 17 domestic, 13 international. LATAM has been in Peru for 25 years. We celebrated 25 years last year. In 25 years, the traffic in Peru has grown 7 times. Times 7. There was 4 million passengers in 2000. There is 30 million passengers today. Today, if you keep that trend in the next— pick how many years, 5 years, 10 years, 15 years— we will be here sitting in 2040 with 150 million passengers. So infrastructure is key, not only the airport in Lima, all of the airports in the rest of the country. But let me add another ingredient. Let me put in also labor. There's another part of the aviation community that needs to develop. Air traffic controllers, the whole infrastructure needs to be up to date, updated, and upskilled to handle that massive amount of traffic. So we need to work together with the governments, with the airports, with the concessionaires, to not only have the infrastructure but have a service approach. We tend to think that infrastructure is about building airports, but it's much more than building airports. It's about operating them and having customers with great service. Today we have a new airport in Lima, but there is fewer jet bridges that are being used than there was in the old airport. So We need to get that up to speed. We need to finish those jet bridges. We need to use them. We need to make sure that they operate at the times that the customers want to operate. The jet bridges at night are only for domestic traffic, but the domestic traffic doesn't travel at night. It travels during the day. So we need to work together to have those problems solved and be able to build infrastructure and have the customers use it in the right way and be aware of service. Airports don't track NPS. Airlines track NPS. So we need to share those common goals. We need to share the goals of servicing customers together.

Alex de Gunten:But it goes back to the question as to, okay, is there something more that can be done as an industry to address that, or are we going to, like you said, keep pushing, keep pulling, and Trying to get them to listen.

Manuel van Oordt:No, we need to keep working together. We need to keep working on developing training programs for traffic controllers. Most of the constraints that José Raúl was talking about is there are airports in the provinces in Peru, but the air traffic controllers don't have enough people to staff all the shifts. The working hours are reduced. We need to work together to make sure that we are developing the industry as a whole.

Alex de Gunten:You mentioned manpower. I'm going to go back to that in a second, but I wanted to finish with Garret. You're in another side of the region. What are your challenges? Is it also infrastructure or anything you want to add?

Garret Malone:Infrastructure is definitely an issue we all have here. Even from Canada the whole way down, we had nightmares just 2 years back with the construction market in Canada. But instead of just going back to the manpower issue, that's the one I'd like to jump on straight away, and Manuel brought it up. It's especially relevant to us in a small Caribbean island. It's 12 million people, but still relatively small population-wise. The Boeing forecast says we're going to need 37,000 pilots in the next 20 years, 42,000 pilots Or technicians just in Latin America. And at the moment, nobody really wants to come and work in aviation for different reasons. Everyone— this is the generation, everyone wants to be YouTubers and influencers as opposed to pilots. We were growing up, everyone be a pilot. When I came here 15 years ago, these conferences, I'd be one of the youngest people here. I'm looking around and, no offense, unfortunately I'm still one of the youngest people here. We need to see how we can bring and make this industry, which is so exciting and does so much, and it's Maybe a case of going back and resetting the purpose behind it. It's not just moving people from A to B. There's a whole purpose behind the connectivity and kind of getting that into people. So as an Irish person, I've seen what aviation did for Ireland. We were a small, backward potato-growing country in the 1980s. Ryanair came in at low cost to give real serious connectivity, and now we've changed to being like one of the powerhouses, the Celtic Tiger in the '90s, the fastest growing economy Even today in Europe, where people are looking at 1% and 2%, airlines are growing 3% and 4%.

Alex de Gunten:And you get going to manpower or having the right people, and you very wisely highlighted that, you know, we're not— we used to be the exciting industry to be, oh, you work in aviation, everyone's excited. Today it's boring. Sorry, we people, the young people think it's a low-tech industry versus other industries. What are you doing in your companies to try to attract this new generation, not only young people, women, all the different options to make sure that we have an excited— I mean, Roberto, I think, mentioned also how important it is to have excited people working, to have them in the industry. Any programs? Do you work with universities? Any programs to ensure that we have new young people into the industry?

Garret Malone:So I might jump in there quickly. So when we came here many, many years back working in Colombia with Viva Colombia, we started doing a lot of social responsibility, My First Flight, which is bringing young people from disadvantaged areas on aircraft for a flight around Medellín and other people up to the coast. It sounds terrible, but see the sea before you die, because most people lived in the interior, they'd never traveled. A bus journey in Colombia to the coast was like 15 to 20 hours if you got there because of mudslides or all the other different challenges Colombia had then. We're now doing similar in Dominican Republic where every second month we bring children from the ages of 3 up to 15 to come in and touch the aircraft, to meet the crews, meet the pilots, to really— and also let them know that opportunity exists for them. Because we haven't had serious aviation in Dominican Republic since the demise of the in aviation, I said, 25 years ago. So people don't realize how the opportunities are there. For maintenance technicians, we're going to have a new MRO opens up on the island at the end of this year. We're going to need 500 technicians in the next 3 years. Most people have no idea how to kind of take advantage of that. So it's going into the high schools, not even the university, the high schools, and saying, learn English. Not to go and work in the hotel so you can get tips, so you can become an aircraft technician and get the more high-paying quality jobs Perfect.

Estuardo Ortíz:What I could share probably would be that I think the pandemic changed a few things in this regard. And I believe, at least in our experience in JetSMART, it's been how to identify those changes, those expectations from the talent that you want to have, and you got to make sure that you get a strategy that works for the team that you need on the, let's call it airline expertise, that you need to have guys who know very well flight ops or maintenance and engineering. But the challenge also comes when you got to have great guys in IT and e-commerce and they can do whatever in any industry they want. And so it seems to me like the companies that have adapted to the expectations better In our experience, we have been able to attract and retain that talent. We've been growing really fast. You know, we are almost quadrupling the airline in 3 years. That's a lot of growth. That's a lot more people coming in. And let me give you an example. There was a big debate back 2, 3 years ago. Do we go full home office or do we go, you know, full office, or where's the right mix between those things? And When you're growing an airline that quick or any company, you need to make sure that your culture sticks. ULCC culture is very specific and the one we have at JetSMART even more so. We have noticed the fact we need to have people at the office to see how do we behave, how do we manage the business, how do we approach aviation. But on the other hand, people want to also spend more time at home and balance their lives better. We, in particular, don't have any offices at JetSMART, zero office, no closed, not even I have a closed office, because I wanted to have the airline to be very approachable and very horizontal. But it has disadvantages because sometimes you want to sit down and concentrate and you want to have certain meetings in private. At the end of the day, we found a good balance of 3-2. Maybe it's very common for many companies, but it seems for us to work. I think that's become one of the adaptations. The other thing that changed in the pandemic, in my view, would be that travel in a region became even more so wanted than it was before. We've seen in the US, for example, a lot of change to premium demand from economy demand. In our countries where disposable income is small, what we have seen is a lot more people willing to travel. So for example, our operation in Colombia, we started March last year. We've seen the highest number of new flyers we have ever seen in any of our new operations, or Chile, Argentina, Brazil, Peru, anything. And that's interesting to note in a country that has 0.7 per capita, so it's bigger than others, still a lot of people. So I also believe that travel has become appealing and sort of sexy for a certain group of employees and potential employees. If you put it in that perspective, you know, you got to live your life and you got to travel and you got to enjoy. So my view differs a little bit from your statement that I have seen actually aviation become very appealing to youngsters as well.

Alex de Gunten:Manuel, you wanted to add?

Manuel van Oordt:Yeah, Alex, I will also disagree with you a little bit. Luckily and very proudly, LATAM Peru is one of the top employers to attract talent in Peru by several polls and rankings. So we're very proud of it and we're very happy. We attract a lot of talent. We are gender— we're equally divided among gender, 50/50. Of course, some of our professions are more biased towards women. We have 70% of our cabin crew are female, and we are striving and we're making a lot of efforts to attract more young women to work, for example, in maintenance with us and in crews and pilots. I think we're doing something or we're seeing very— we're very happy with the results there. We have been able to— we're working very closely with technical institutions. We're developing some scholarships for young women to join us in our maintenance team, and we have been very successful there. We have attracted still few, but about 15 young girls to work with us in the maintenance teams in the last couple of years, and they're very happy to be able to work in the very high-tech environment that modern-day planes and engines and fleet allows you to work. So I think there's a lot of potential. I think airlines have to do more to attract more women into the professions that have traditionally been very male-dominated in the airline industry.

Alex de Gunten:Absolutely, absolutely.

José Raúl:In Sky, as many airlines, people is crucial, you know, and considering that we need some technical skill, we decided a couple of years ago to develop our own training school, you know. It's the best way to introduce the culture, you know, besides procedures and all, you know, no. Right now we are also giving services to some other companies and other airlines. We are very proud of that regarding cabin crew, mockup technicians, maintenance technicians, and so on. And we are doing good, but we have a problem, and that I will say as region, and we saw in the pandemic times that we have very good skill, technical skill. I will say, I will talk about pilots and maintenance guys. And when the industry, you know, Europe, Middle East, and US and so on, need to grow, you know, they look to South America because we have very good people, you know. And that's a big challenge. We work a lot in our culture, in our proposal to these guys, but it's always a challenge to retain the good skilled people. And we'll see what happens in the future, but on and off it happens and happens Estuardo, are you having the same in Chile?

Alex de Gunten:You have companies from—

Estuardo Ortíz:Yeah, I think it's totally right. I mean, but the reality of the matter is you're going to lose some of your guys. Maybe it's not that bad in the sense that they got to follow their careers and you need to make sure that you do have a team that is willing to step up and trust. Sometimes you get to sort of leap of faith to give opportunity to others that—

Alex de Gunten:And they might— I come back and say life in Delhi, the money was good, but it's better to live in Santiago than in New Delhi or some of the other locations as well.

Estuardo Ortíz:Yeah, I think that's true. I wanted to touch something that, going back to your earlier question, if I can, Alex, quickly. We were talking about infrastructure and I wanted to bring up a point for the guys to see what they think, or you guys, what you think. Which is, I've always thought, especially in the past few years as we started to expand, that the issue, the root cause at the end, it's about how do governments and how do we as an industry have allowed the ecosystem of the infrastructure to be based upon a model that charges $30, $40, $50, $70, $80, $90, $100 for a passenger to board. The next wave of market stimulation seems to me it's not us anymore, it's not airlines. Look at this panel, brand new fleets, excellent safety and operational record, etc. There's not much that can be done. We all start selling tickets at $12, $15 one way. It's really about the out-of-pocket of the consumer to fly, and the out-of-pocket, it's 50, 60, 35, depends, percent taxes at the end.

Alex de Gunten:Yeah.

Estuardo Ortíz:That has not changed since we've been talking about for a long time, with a few exceptions. I think those exceptions we need to also think as good precedent. Brazil has done it right, definitely the lowest Airporting fee we have. We have Colombia or Argentina, to a certain degree Peru as well. So we said to the concessionaire, here's 10, 12, 15 years, 20 years of concession of the airport, and here's all the cash flow comes from passengers, which strangles the traffic because it's too expensive. And on top of that, a big portion of it, 45, 50, 60%, goes back to the government.

Alex de Gunten:Yeah.

Estuardo Ortíz:Who wants to incentivize tourism, putting a lot of campaigns in Spain or England to bring people. If you think about it, it's just so messed up. It would be better off to bet on volume with a lower airport fee and then generate that more revenue, and that will probably bring more tourists to Peru or to Colombia or to any other than, like you said, I was looking at these numbers as well. Listen to this, to this fact. In the international traffic in South America, you know, there is 1 trip per 20 people, 1 trip per 20 people within South America. That same 20 people are 50 trips in the US and 100 trips in Spain.

Garret Malone:Yep.

Manuel van Oordt:Why?

Estuardo Ortíz:Because of cost, because of the price, because it's too expensive to travel from Peru to Buenos Aires, Lima to Buenos Aires, not to say to Colombia, you know, and it's not us, it's not airlines anymore, it's the airport fees. So if you ask me, the number one problem we have to make that number grow is airport fees.

Alex de Gunten:Well, that's a great point. I'm going to give a heads up to Peter who's sitting over there. If they can give me my microphone, I'm going to go to Manuel, but then I want to know what Altaniata, what can the industry, what can everybody do to help on this? Manuel?

Manuel van Oordt:No, just to— I totally agree with Estuardo, and I think just 2 data points to illustrate more Estuardo's point. In the last 15 years in Peru, the airlines' fares have gone down 30% on average.

Estuardo Ortíz:That was the airport.

Manuel van Oordt:In just nominal— can you hear me now?

Alex de Gunten:Yes.

Manuel van Oordt:In nominal terms, they have gone down 30%, but the airport fees have doubled. So the impact to the consumer is far less. It only— the consumer only feels that the rates have gone down 10, 12% because the imbalance in the Fares going down and the airport fees going up. We still have a job to do in terms of attracting tourists in Peru. Peru's tourists are 30% below the pandemic. We still need to attract more tourists to come into Peru just to catch up with 2019. So it doesn't make sense that having a new airport in Lima, the intention of this government and the airport authority is to tax, to collect an additional tax for transfer passengers. We are working with one part of the government on having a stopover in Lima, and we're very proud and we're very happy that we have an agreement with PROMPERÚ, with the hotels, with the airport to work together on that. Nevertheless, the rest of the passengers, the ones who don't stop over in Lima, will get charged. $25 for transferring in Lima. That just doesn't make sense if you want to attract more customers into Peru, if you want to make tourism grow. So it doesn't make sense to build new infrastructure and just try to charge more to use it because we will just chase customers away.

Alex de Gunten:Absolutely.

Audience:Alex.

José Raúl:And let me say something because I agree with Manuel and Estuardo. And on top of that, you also have congresspeople. And congresspeople want to, I don't know, they have some initiatives, they think considering the preferences or needs of the passengers, and they start, I don't know, trying to force airlines to give luggage, free seats, and so on.

Alex de Gunten:Yeah.

José Raúl:Good intentions, but if you consider that the passenger is the one who should decide what kind of product to buy, it's more and more difficult to try to lower fares and having more passengers flying.

Alex de Gunten:For those who don't know, Peter Cerda is the head of IATA for the Americas and ALTA The LATAM organization, the Latin American Air Transport Association. Can you tell us a little bit, you know, this is, I'm sure, a priority for your organizations. What can airlines do? What can we do to change this?

Audience:Hello?

Garret Malone:Yeah.

Audience:So, Alex, you're taking the thunder away from my next 2 panels, okay?

José Raúl:Oh, sorry.

Alex de Gunten:Give us the 2-second version. Sorry, 2-second version.

Audience:The panelists have said it, and Roberto said it in his previous discussions. This is a region of tremendous opportunities, and we're seeing it. We're seeing a region that you have international airlines wanting to fly more. You have international passengers that want to come for tourism. They want to come to invest. We're seeing growing markets. We're seeing some governments that are actually opening their borders. And we have to, I think, look at those countries that are doing it right. In places like Panama, places like Guatemala, places like Ecuador, where you have a combination of governments, airports, airlines, tourism working collectively for a common goal, where it's a win-win for everyone and not a win for one area. That's where we're seeing the success. Why is Panama successful? Because you have the key stakeholders all working with one common agenda, one common goal, and everyone flourishes. And when we see a country like Ecuador, which traditionally was a small market, very little connectivity, when you had government doing the right things and making the country competitive, reducing taxation, giving more opportunities for airlines to grow with a travel and tourism agenda, which was supported from the very top at the government, you see a country that begins to see more stimulus. It's about collaboration. We've talked about it many times. The problem is the hidden agenda, the one agendas that deviates from the common goal. We have to think this is the moment for the region to take advantage. We have wars around the world that are not impacting us. We have tariffs and And economic, you know, back and forth challenges and arguments, which is to the most part been somewhat off us except for Brazil. So we have some stability. We have some governments that are going to go through political changes. So this is a moment that we really have to take advantage to really create more connectivity. I think someone said it. In our region, we have 0.6% of the world's GDP.

Garret Malone:That's right.

Audience:0.65 trips per capita. That's still very low. Only 3 or 4 countries in the region have more than 1 trip per capita for family members. When you look at a country like Spain, it's close to 4. When you look at the US, it's 2. So we, we still have to make great strides. Brazil is a great example. It's a country of 200 million passengers, less than a quarter of population actually travels. We have a huge threat there, which is our largest country in the region. They may implement a 26% VAT. If they do that, that's an industry that we're going to shrink as an industry. We'll have less connectivity. That will have an indirect impact for the rest of the region because Brazilian—

Alex de Gunten:Mm-hmm.

Audience:Because it's near size and importance. Less people will travel. It's about the collaboration.

Alex de Gunten:Thanks, Peter. Hopefully, I didn't— you still have a couple of things to say in your panel after. That goes back to— and Estuardo, you touched on it a little bit— the issue of the governments and regulations. How can we work with them, especially when they keep changing? You go You've lived in the markets. You go from a government which is very conservative and very restrictive to one that's very liberal and liberal. How do you plan through that?

Estuardo Ortíz:I don't know. I think it's just like you said, it's not easy since there's changes and you want to have an aviation policy that sticks around for 15 years or more. Some countries have probably done better than others in that. The conversation usually ends in the same place, right? It's about the economics and where is the money actually coming from to finance this restructure. I don't know, it's just maybe we need to think about one win. Maybe that's what we need to do, just get together because we all want the same and pick one. Pick one example, pick one government that is willing to do the change, and let's use it as an example for the others, because if you want to change everything, I think we're going to be as we have been in the past 2 decades, 3 decades.

Alex de Gunten:I mean, Peter mentioned Panama, which is a very good example of the airlines working with the government, and it's become— the little airline from Panama has become a very major player in the world. So there are positive examples of this. Before we cut off, we've got a couple of questions, Lido. I'll go to the first one. How do you see AI helping airlines not only improve operations, but also retain current talent and attract the next generation to work in aviation? So AI, what is it going to do for us, for you guys? Who wants to jump to it?

Manuel van Oordt:Everything.

Estuardo Ortíz:I think it's going to change a lot.

Manuel van Oordt:It's going to do everything.

Alex de Gunten:Like, give me an example.

Estuardo Ortíz:I think there's going to be some jobs that are going to disappear, some that are going to evolve, some are going to be created. And I think it's a huge opportunity for the industry. We have so much data, so much opportunity and efficiency, and both on the commercial and ops side, that this is going to be a tool that is going to truly transform many things in our business, lower cost, Increased conversions, and the nature of the jobs are changing as we speak. I know we're running out of time, but we already seen it, already seen it.

Garret Malone:And the big thing here is at the start, everybody has a fear of AI, what's it going to do? But the big one for us is it's definitely going to improve the passenger experience from the whole way through, from their set at home booking a flight, going to say, I wanted to— I have $3,000, a family of 3, I want to go ABC. That's going to really put pressure on some of the more original, like the Punta Canas where we are. I have to see it as a total cost. It's going to put pressure back on the governments to bring down their cost.

Manuel van Oordt:I think that airlines, I mean, the whole industry has so much data that AI is just absolutely fit for anything, any process that you want to look in the airline industry. I mean, every single process or every single I don't know, job that you do, because of the amounts, the incredible amounts of data, it's absolutely optimizable or can be optimized through AI. And a lot of us are working already in that. We're seeing very, very encouraging results.

Alex de Gunten:Perfect. Well, the time has ended, but before I let the panel go, and we touched a little bit on this, I want to ask them each and A question in terms of getting the next generation into the industry. If you had to give advice to your godchild or to the son of a best friend or daughter of a best friend, what job would you suggest they should go for in the industry? And it cannot be your job, so don't say— Can be any of yours. Can't be my job. What do you think, what would be the job that you would recommend them to go to? We'll start with—

José Raúl:Good question. First, I don't know if it's a very sexy industry, you know. I am not a pilot, so I will say to try to fly, you know. It's, I think it's the best experience you can have to be at the cockpit, you know. I would love to have one of my kids flying.

Alex de Gunten:Pilot. Excellent. Estuardo?

Estuardo Ortíz:I don't know why my kids are working in this industry, but maybe they—

Alex de Gunten:But you still disagree that it's an industry where kids want to go?

Garret Malone:I love it. I love it.

Estuardo Ortíz:I love it. But no, seriously, I think this industry has so many complexities that any of the areas that are complex, they're going to learn so much. I think the tech ops is particularly interesting, but I would recommend to do digital experience. I think it's just going to grow so quickly that if you are master of that area, you could probably get yourself into any industry across the board.

Alex de Gunten:Garret?

Garret Malone:I'm going to go with cabin crew. And the reason— cabin crew, because it really reminds us of what we're doing. You're on board the aircraft, you see the grandparents going to visit visit their grandchildren. You see the small businessman going to sign a contract, going to keep business and jobs in his hometown. It also gives you, starting out of course, maybe you want to become the CEO afterwards, but it gives you great insight on how the entire airline works, how the crews think, which is something they always tell us afterwards, that you have no idea how cabin crew think, how pilots think, how they interact in the airport infrastructure, what works, what doesn't work. And they see firsthand what we do in the back office on what we believe is going to be good for the client and how that really is going to Come down to them. So I said cabin crew.

Alex de Gunten:Cabin crew, great. Manuel, you close the panel.

Manuel van Oordt:I think that the industry is just fascinating. I think that any job is extremely attractive. I think everything that's touching digital right now is just amazingly attractive.

Audience:Perfect.

Alex de Gunten:Well, thank you everyone. Thank you for your patience and thank you to the great panelists and the panel.

Manuel van Oordt:Thank you.

Garret Malone:Thank you, Alex.

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