New Generation Aircraft And The Reshaping Of Route Economics

Transcript

Garry Kingshott:Okay, new generation aircraft. There are, I guess, 2, 2 big plays happening just about now, and one is on narrow-bodied aircraft with the introduction of The neo, new engine options from Airbus and the similarly lined up Boeing models that are producing much better economics for most airlines, but importantly, delivering whole new long-range alternatives. These aircraft can simply fly further at a much lower price. Or a much lower price per passenger seat. And then there's the widebodies. And I'm not sure we'll get too much time to talk about the newer generation widebodies. And I'm not too certain how much experience the panel has on that. So I don't want to take them into areas where they're are going to feel a little bit uncomfortable. But before we get started, I'm actually going to ask each of them to briefly introduce themselves, and then we'll dig into the topic and see whether we can actually get some numbers on the board as well. So—

Zhijie Wang:Okay, I'm Nathan Wang, and from Spring Airlines, and I'm the President of Spring Airlines. And for Spring Airlines, our colleagues introduced before, and so very So just a brief— so we are pioneer low-cost carrier in China, and right now our fleet size is over 80 aircraft, and all of them is A320. And we bought 60 new aircraft in the coming years. So yeah, that's Spring Airlines. Thank you.

Con Korfiatis:Okay.

Ajay Mehra:Hi, my name is Ajay Mehra. I spent nearly 2 decades, mostly in India, with Airbus. So I've seen the evolution of A320s to what Garry's going to touch upon. And then I retired last year and I got absorbed by Bombardier for their current Q400s and CRJs. And the exciting part of it was that I think we had sold enough A320s and 737s in India together, and there's no new customer to sell to. They had already bought a lot, and we only had to keep delivering to them over a period of time. And yet, with the changes that are taking place in India, there is a market for the Tier 2, Tier 3 cities where the Q400s would be an ideal choice.

Con Korfiatis:Good afternoon, everybody. My name is Con Korfiatis. I'm the CEO for the low-cost airline offshoot of the Saudia Airlines Group in Saudi Arabia. We're called flyadeal. We were launched 13 months ago. We currently fly 8 A320ceo aircraft domestically at the moment, 56 flights a day, and we, we have 3 more coming next month. which we'll build to a fleet of 11. We have a network of 10 routes. We've carried a couple of million passengers already. And this is an interesting discussion we're having on the panel this afternoon from my perspective, because we're in the middle, or actually towards the very end, of a campaign we've been running for larger narrowbodies. So we're looking at the A320neos against the 737 MAXs, and we're looking at an order of 50 aircraft. And that's something we're contemplating right now and days away from a decision.

Garry Kingshott:Thank you, gentlemen. So let's talk about narrowbodies and the new engined options. And I'm going to preface this by saying one of the last things I did at Cebu Pacific when I was holding an executive position there was to place a— I think it was a 30-aircraft order for A321neos. And if I recall, the analysts inside the company had produced data for me to suggest that the seat-mile cost on an A321neo versus an A320ceo was going to be in the order of 17% to 18%.

Con Korfiatis:Wow.

Garry Kingshott:lower seat-mile costs. And if you're an— if you run an LCC and you believe that lowest cost wins, then this was a bit of a no-brainer and had the potential to be quite a game changer if your competitors were operating A320ceos. Now, I'm not there every day now to see this unfold, and I think their first aircraft is delivering this quarter, their first neo, A321neo, is delivering this quarter. So, yet to be proven. But the interesting thing, I guess, is that what we've been seeing in Europe is airlines using this new technology, not just because it produces a lower unit cost, but because it has much more range. And so we're now seeing narrowbodies flying transatlantic, and quite a few of them, and regularly. We don't seem to be seeing that in Asia at this point in time, unless some of the panel or others in the room can correct me. But we're seeing the aircraft being deployed, particularly the 321s, or the— Sorry, apologies to Boeing. We tended to buy Airbus, so I'm— so if I say A321s, think about the Boeing equivalent as well. Flying them as up-gauged aircraft rather than, at this point in time, leveraging the range they have. Con, you're contemplating an order, either Boeing or Airbus. What's driving you to this? Is it the economics, or is it the range that this, this newer aircraft will give you?

Con Korfiatis:That's a good question, Garry. I think you've struck something on both reasons where we're looking at that. Definitely, having spent a lot of time in Southeast Asia before I went to Saudi Arabia, I think it's definitely a case in this region that the extra range of both manufacturers' variants probably offer, you know, fewer options perhaps, you know, geographically speaking, and a lot of what you would have looked to do with a narrowbody would have been covered by the older generation A320s and 737s. From our point of view, you know, our geography is a little bit different. Our current base is Jeddah. We're starting a Riyadh base in the next month. And we do see ourselves having other bases in Saudi Arabia. That in itself is quite important, because if we want to fly internationally to the east, you know, Jeddah is the far west of the country, and it's a good, you know, 2.5-hour flight across to the border to the east. So it's quite a distance, especially in the context of a narrowbody. So for us, it's twofold.

Ajay Mehra:Mm-hmm.

Con Korfiatis:One, we've been flying consistently high load factors. It's a high-volume market, which is why we're looking at the Airbus and the Boeing options rather than some of the more regional jet-type aircraft. So it's a thick market, and an aircraft that offers 20, 30, 40 more seats at a lower seat cost for the depth of the market, the thickness of the markets that we're in, would be very interesting for us. So that's definitely a key factor. But at the same time, the range efficiencies that come out of the new generation aircraft, which are predominantly driven from engine improvements and the new generation engines on both manufacturers, They are interesting for us. From an inbound market point of view, you know, Saudi Arabia, you know, is home to the 2 holiest Islamic sites in the world, and there are huge inbound markets. Some are longer reach markets like the Philippines and Indonesia, which you can't do with a narrowbody out of Saudi Arabia, but, you know, markets like Pakistan and India are incredibly interesting.

Ajay Mehra:Yeah.

Con Korfiatis:And they are entirely within range of the new generation aircraft, whereas with the CEOs and the NGs, we would have had trouble getting to a lot of the markets. So it's interesting from that point of view. So certainly reaching further is important. Certainly a lower seat-mile cost and getting more, a larger aircraft that we think we can fill is important. And I guess lastly, we also see the opportunity for longer range markets that perhaps may not fill a high-density widebody, that the narrowbody with increased range could provide some very interesting economics on.

Garry Kingshott:Nathan, I think you've actually taken delivery of an A321neo. Is that— am I right?

Con Korfiatis:No, no, no.

Garry Kingshott:Not yet. A320.

Zhijie Wang:Not yet.

Garry Kingshott:A320. I'm sorry. I misread a press release somewhere. Was the, was the new engine option for you just a progression from, from the, from buying the A320s? I think you had 70 or 80 of them on in operation. Or was there a conscious decision to step up to the new engine option? And what drove that?

Zhijie Wang:So from my point of view, and for the airlines, Just like us, and for the new engine option aircraft, frankly, I can say I have no option.

Con Korfiatis:Right.

Zhijie Wang:Yeah, because, you know, for the next decade, the new will be more popular and the old aircraft will be obsolete, definitely. So according to My opinion, the new A320neo and the Spring Airlines and the 3 benefits. You just mentioned the unit cost, but I a little bit do not agree with that. For example, A321 compared to A320, that's unit cost, yeah, decrease a lot. But A320 to A320neo, no. Yep, it's fuel saving, fuel saving a lot. 15%, and the conservative rate is 13% to 14%. But these fuel savings, I think, yes, most of them is offset by the ownership of the aircraft. And also consider about the spare parts, consider about the engine repair. Yeah, it's just for the airlines, just very little. The benefit is just very little. I just compared to A320neo and A320ceo. Somebody say, well, the fuel price will increase in the future, even over $100 per barrel. So I think even that happens, the other thing will happen. That means the fuel, the price of the aircraft will also increase.

Garry Kingshott:Yeah.

Zhijie Wang:Because lots of airlines want new aircraft. This is one. The second one, you just mentioned the range. Yes, I— you just mentioned lots of European and also the United States carrier and they open more routes because of the range extension. But for Chinese Because the Chinese are carrier, we do investigate a lot before the purchase. And this range, this additional range for the Chinese carrier, I do not think any additional benefit. Because, for example, if we based in Shenzhen, it's a south city in China, and—

Con Korfiatis:Shenzhen.

Zhijie Wang:The extra range only can touch some island in Indonesia and some northern area of Australia. If we put the aircraft in the west city of Lombok, for example, then the extra range just can touch the East Europe and not far, and some Russia area, some Russian cities.

Ajay Mehra:Yeah, extend.

Zhijie Wang:brings some benefit, but this benefit compared to our counterparts in United States and Europe, it's not enough. So yeah, so the range is good, but it's not good enough for the Chinese carrier. The third one, you just mentioned the unit cost. Yeah, I just mentioned A320neo to A320ceo, it's almost same. But A321 is different story. A321 compared to A320, yeah, it's almost, you just mentioned, it's 16 to 18%, the seat costs are lower. And this is very, very attractive for Chinese customers because, you know, the slots constraining in China is very popular. And if you want to increase some—

Ajay Mehra:Capacity.

Zhijie Wang:City pairs frequency, you just want to enlarge the aircraft. So that's the only one choice. That's why we, yeah, yeah, for the next package of our new aircraft, and almost 20% to 30% is from A321. So yes, that's my point of view to the next generation narrowbody.

Con Korfiatis:Okay.

Zhijie Wang:Okay.

Garry Kingshott:Ajay, I know you spent a lot of time selling Airbus aircraft in India. What's happening in the Indian market in terms of the airlines buying into this, these longer range, new engined option aircraft? I can't ask you about— well, I can ask you about Bombardier, but it's sort of a bit off topic.

Ajay Mehra:I'll tell you, you know, I mean, in my opinion, the— what they call the long-haul low-cost airlines, that is there to stay now, and it's the market. And I will quote 2 examples from 2 leading luminaries in the aviation world, and I'll read exactly what they said rather than being misquoted. Tim Clark, he said, a gathering storm for airlines. Yeah. This is going to come and we need to be ready to deal with it. Now you are seeing Scoot, Norwegian, AirAsia X coming along. I think we are seeing the beginning of an inflection point and that is the way the whole industry is going. Al Baker, on the other hand, said maybe a long-haul low cost will work when the fuel price is $30 a barrel, but once it goes beyond $50, I guarantee it's not feasible. And the whole basis of the low-cost, I mean the long-haul aircraft would be dependent on the low-cost culture, the liberal market access, and the choice of the right aircraft. Now in India, what we've seen is that these businesses are doing fairly well and somebody gave me the statistics of A321 long-range aircraft. It can carry theoretically 240 people. It'll carry with an additional fuel tank. It'll carry you a thousand kilometers, thousand miles more length as opposed to seven thousand in the previous one. But in a long haul, you cannot load it to full density. So you got to make some compensation. So there will be the load penalty that you'll be paying for, and then you got to value it against. Well, can I carry two forty or can I am okay two hundred? Passengers and still cover that range. So between the range, they've got to choose what they actually get. Now, if you take the Indian operations of these ones that will be having the long-range one, they will go to the Middle East on one side, Southeast Asia on the other side, but they are good at Tier 1 city-to-city connections. But if they've got to go to Tier 2—

Garry Kingshott:Right.

Ajay Mehra:I think it'll be cost uneconomical for them. So Tier 2 and Tier 3 cities are the ones that really need to make the business grow and then start pouring in passengers in Tier 1 to be taken abroad. Now, over there, I think even if the A320s and the A737s give you a 5% difference with all the technology change and the seat cost comes down, in the Bombardier model, I mean, just as a comparison, we calculated that— 5%? When we moved from 78 to 90 seater aircraft, and they were good for tier two and tier three cities, that city range not connecting to tier one cities, they were 15% lower in cost per seat. So therefore, I mean, there have been cases where even if you take the wide body long range and you know with the higher density, their cost per seat cannot match. The ones with the 320 and the single-aisle. So therefore, you know, the long— I mean, the low-cost airlines will find it difficult to compete on certain routes with a widebody where they can carry more passengers. So the cost per seat determined will have to work from country to country, but if this low-cost, long-haul low-cost airlines come up, in the West you see them doing transatlantic The ones in the East, we see them doing trans-Pacific. So that's where the business will grow. But it's not going to be common all across the nations, countries, cities.

Garry Kingshott:And in India in particular, and I should know the answer to this, but I, but I didn't do my research. Are there specific airlines that have already bought into the— IndiGo is coming to mind. Have they already bought into Narrow-bodied new engine options?

Ajay Mehra:I think most of them have the neos, right, and they're opting from A320 to A321s, but they have not yet looked at the real long haul because they are at least saying there's enough to cover within India for the time being.

Zhijie Wang:Yeah, yeah.

Garry Kingshott:If I, if I go back to my, my home base of the Philippines, I'm Aware that Philippine Airlines are now operating A321neos on Australia ex-Manila. So they were flying to Brisbane, for example, Manila-Brisbane, for example, via Darwin. They now do it nonstop. I think that's a good point. And so these are one of the few— and they're operating in 2 or 3 classes. So this is not an LCC conversation, because this is not really an LCC conference. But I guess this is one of the few examples that I can think of, of airlines in this region that are actually leveraging the range that these new aircraft give you.

Con Korfiatis:Yeah.

Garry Kingshott:Ajay, you almost sort of segued us into the whole issue of widebodies when you were talking about long-haul low cost. And far be it from me to disagree with Akbar or agree with Tim Clark, because I think either of those things would That would be the wrong thing for me to do at the moment. But there is clearly a different point of view there from 2 of the most visible CEOs in the Gulf region, at least. Jetstar bought into the 787. 787 story very early. And I'm wondering, Con, it's— I know it's early days for you and you're building out your narrowbody fleet.

Con Korfiatis:Yeah.

Garry Kingshott:But do you have aspirations as an LCC to fly a twin-aisle? And And if you did, would you sort of— would you guess at this point in time the sort of aircraft that you might consider?

Con Korfiatis:A difficult question to answer right now. I think certainly what we've seen over the last 5 years is more cases of successful wide-body, low-cost, long-haul operations. And I think if you'd asked me this question 10 years ago, And I think 13 or so years ago, I did run a long-haul low-cost, and back then they just weren't working. None of them were working anywhere, and for a bunch of reasons. So there's cases of this being successful. In the context of ourselves and being in Saudi Arabia, I think firstly, you know, we're still a young and a small airline, and we're focused on this narrow-body order, which is quite significant for us. We think that narrow-body order is about domestic. It's about regional, which would be within, you know, the context of the CEO, the old generation aircraft anyway, or the NG. But similarly, you know, with the range capabilities now, it does bring into play some really interesting markets towards the east, as far as India, towards the southwest into a lot of Africa, nearly all of Africa, and into Europe almost as far as London actually from Saudi Arabia. So it's very interesting. So then you say, what's left? that a widebody can do out of Saudi Arabia that the new generation, you know, longer-range narrowbodies can't. There is. There's a couple of huge markets and probably, you know, the largest Islamic population in the world sits in Indonesia. Indonesia is a huge market for our sister airline in Saudia and it has a huge number of flights and, you know, with the largest 777-300s. that operate into that market with great frequency. But, you know, our view on customer demographic is that, you know, not every customer is the same. And even though, you know, it's largely from an inbound point of view into Saudi Arabia, it's worker-driven, but more than worker-driven, it's religiously driven traffic that comes to Saudi Arabia. But even though that religious traffic has different segments, and there are people that can afford first class, and want first class and people that want business class and people that want, you know, loyal to their programs and the partners or the alliance they're tied into. And then of course there is the really low yielding stuff as well. And so, you know, it could be interesting for a select number of markets, but given the capability improvements in the narrowbodies, it would be a limited number of markets, not necessarily the world. I don't see the US, which is heading in the other direction being something that's of an enormous interest to flyadeal anyway. For Saudia, it would be for different reasons. So I think it would be limited. What aircraft if we went down that track? I think you do have to look at the new generation, I think, and we said we wouldn't touch too much on this, and we haven't studied it yet enough for me to have an informed position on it. But definitely, you know, hearing the rhetoric of both the manufacturers on the wide-body aircraft as well, The technology that's going into the new engine options on the narrowbodies is also going into the widebody options as well. So the new A330neos offer a step-change improvement in fuel efficiency. The 787s are also a big difference to what the 777 was offering. So my guess is if we were looking at a type, it would be a 787 versus an A330, perhaps, analysis that we would do.

Garry Kingshott:And I— apologies if— to any of my colleagues from Scoot are in the room, because Scoot, of course, are a 787 low-cost carrier operating successfully, as I understand it, with that aircraft type. Nathan, you've got such a huge market to serve. And you're already now spreading out internationally. Are widebodies in your—

Zhijie Wang:Consideration.

Garry Kingshott:Your sort of long-term planning as an LCC, or are you going to stay true to the LCC one single aircraft type philosophy?

Zhijie Wang:Yeah, we consider about this issue a lot of times. So we even, yeah, I just can't disclose, and we have a lot of debate in our company for the long-haul aircraft. But I think for the business model, yeah, lots of people say the long-haul business, low-cost business model, the widebody to United States or to Europe, Europe. But in China, the thing is different. No matter you are low-cost carrier business model or full-service business model, for the long haul, you need network. That's my opinion, not directly point-to-point. So for airlines just like us, we are just— we just have history just 10, 15 years History. So we, for the entire one, the first, the biggest city in China, for example, Shanghai, Beijing, we have enough, not enough slots there. So it's very difficult to, to, for us to build a network through sea cities. And for the secondary cities, yeah, we can. We have some slots, so we can build a network, but you know the demand is not enough. So I think it's dilemma for us. We we know that's a that's a huge potential, and I think the demand. But for the low-cost carrier in China, we should be very careful. And for me, I'm very conservative. I think we should stick to the short-haul aircraft right now and do service even to the secondary cities, to secondary cities, even smaller, but not to take a risk to take a long haul. Another thing is everybody knows just the traffic rights. The traffic rights is a problem. And so, yeah, we just keep watch. We are so conservative. We are not just dare just go out.

Garry Kingshott:Well, I actually, thinking about your market and your business model, I think you're actually doing exactly the right thing. Connecting all those secondary and tertiary cities together are going to thicken up your network. You'll own China eventually. I think that makes a lot of sense. Ajay, I'm going to ask you to go back to your— I'm sorry to keep doing this— go back to your Airbus experience, particularly in India. Were you— were the carriers there Particularly the low-cost carriers, because the full-service carriers are— well, there's fewer of them and they're getting much smaller. But the low-cost carriers there, were they thinking about widebodies, this new technology aircraft, the 787s, the A350s, and now the A330neo? Or were they going to stick to their knitting and and build out their narrowbody fleets?

Ajay Mehra:See, they started with sticking to the knitting of theirs. 10 years ago, the LCC market was about 20%. Today, overall, they do about 30%, and we believe in the next 10 years they'll go to 50%. What's happening is that the airports, like he was saying, have a slot limitation. So one of the reasons why these people are moving on to 321s from A320s And the similar one going to 737-9 is that they get more seats for the same city pair slots that they get. I mean, if all goes well and the numbers increase, then they might even take the smaller range of the widebodies then. And I think in this market, the 787-800 has done well. They've overcome all the initial hassles and they're doing a good job. And when they want to fly internationally, they do the domestic round in the same aircraft and get a good load factor. And then they move on to the widebodies. But here they will be limited to just a domestic one of saying same aircraft, same slot, can we carry more passengers? That's what they're looking at.

Garry Kingshott:I want to come to one of the questions that was actually provided in the notes, and I think everyone has this, or has access to this. And I didn't quite know why the question was on the bottom of this page, but the question reads, how will airlines manage and react to the possible I guess it's possible projected downturn in passenger demand coinciding with an expected peak period of OEM deliveries. Now, most of us have been in this business long enough to know that it's highly cyclical. And we're coming off a few good years when fuel prices were pretty low. And of course, that's when airlines get all excited and order lots of new aircraft. And, and of course, the deliveries inevitably come on the down cycle when fuel prices have gone back up and, and there's all new competition and everyone's price cutting and, and things like that. So I'm not sure there's going to be a, a downturn in passenger demand, but there's certainly going to be an uptick in, in aircraft deliveries in this, in particular in this region of the world, in the next 24 months or so. That is going to put some pressure onto a lot of players. And I think we're starting to see the start of that. We're seeing some of that in India now. We're certainly seeing some of it in Europe, driving some consolidation and some closures of airlines and things at the end of the summer.

Ajay Mehra:Yeah.

Garry Kingshott:So is this a question we should be talking about today? Is this a— is there a downturn in passenger demand? You know, I can't believe there's going to be a downturn in passenger demand in China. I know there's going to be no downturn in demand in India. The Philippines, their GDP is still growing at 6% or 7%, and their airline traffic is growing at a slightly faster rate, only constrained by infrastructure. Nathan, you don't see it, right?

Zhijie Wang:It's a good question, yes. So for me, my previous job is the aircraft procurement. So that's very difficult, frankly, very, very difficult. If, for example, if we purchase aircraft right now, we should— the lead time is about 2 years, 3 years, maybe longer. So if you predicted the future, it's no way. So normally for the airlines, why we— it's not based on the prediction, based on So is it the downturn, we purchase more, purchase less? No, no, no, we do not do that. We just predict is stable in the future, and we just do the risk analysis. And for example, we just this morning sent the gentleman to Martin and say, so for example, for Sunjet's purchase, Sunjet's leasing, so we can make—

Garry Kingshott:10 years.

Zhijie Wang:The fleet size is more flexible. And if the downturn happened, and we just return some aircraft back to the lassore, and that keeps the fleet size small, or if the environment is good, and we just extension, for example.

Garry Kingshott:Thank you.

Zhijie Wang:So we keep the fleet size same. You just mentioned, and for China, and everybody is optimistic, and about China is that demand is higher. But one thing you should mention, and it's a high-speed train. High-speed train, and so right now, yes, very— the government is very ambitious about high-speed train. Originally, it's 4 4 plus 4, and right now it's 8 plus 8. So I can see, I can see the competition. Yeah, from Shanghai, from Beijing, for example, to Guangzhou, and Beijing to Guangzhou right now is just 7 hours. But 7 hours, maybe compared to 2-hour flight, is not competitive, but it's on time. So yeah, lots of people just, and also Oh, it's cheap. So yeah, I can see this trend. So we predict, cannot say, I'm not so optimistic. So for the future, maybe the downturn will happen in China. And so, but let me think the solution. No other way, we just keep the same. So just keep the fleet size more flexible. That's my choice.

Garry Kingshott:Now you've mentioned something really, really interesting. We were, we were talking about disruption earlier and TMCs and Uber and Grab and all this sort of, and now you're talking, now you've mentioned the high-speed train, of course, which obviously I knew about.

Ajay Mehra:Can I make a point here? Yeah. You're talking about people taking the aircraft deliveries in India for the last 24 months, they've seen a double-digit growth. Every month in the passenger traffic. And one is being bolstered by the number of aircraft deliveries that are happening every time. So the moment they get an aircraft, there's another city pair being inducted, and that is fostering the growth. And barring the current little dip on that fuel price, oil crude price, and the dollar becoming stronger against the rupee, these guys are feeling the pinch. But I guess We'll overcome that. The deliveries will continue.

Garry Kingshott:Yeah, well, I think, I think in this region of the world, all the currencies are down against the US dollar, and we buy a lot of things in US dollars. Fuel prices up, so everyone's feeling a double squeeze on margin. But your point's right, you, you tend, you add capacity and the, and the passengers materialise. I'd love to come back to the high-speed train as a disruptor. And it may have, but that's obviously for another, another day. Or maybe we'll just have a conversation over a drink. What was I talking about, Con?

Con Korfiatis:You were talking about reduction in passenger numbers.

Garry Kingshott:Yeah.

Con Korfiatis:I think there's, there's 2 ways you could look at the answer to this. I think if you look at the global economies and all the projections about things going forward, there are pockets around the world which might go into a little bit of recession. I don't see any sort of widespread talk about total global recession from that point of view. There's still many emerging markets across the globe in all the continents, and those markets have obviously, because they're emerging markets, have a higher GDP growth rate. Their projected growth rates over the medium-long term, I think I haven't seen an analyst that said any of them are going to go backwards. And, you know, the old airline adage that, you know, traffic, airline traffic growth, it runs at sort of 1.5, 2 times GDP, and in the emerging markets sometimes 3 to 3.5 times GDP. So I see that continuing to grow. I don't see that going, and if there's any temporary downturn in some markets, I think as it washes out across the world, the market will continue to increase. If you look at the emerging markets and the propensity of travel on a per capita basis, the numbers are still very low relative to the mature markets, and these emerging markets is where the large population bases are across the globe. So there's absolutely no doubt in my mind. I wouldn't worry about any decline in the passenger market. The counter though, and this is an interesting question, is the capacity side. And from a capacity point of view, I think we've got record number of aircraft on backlog and on orders. You mentioned narrowbody versus widebody. As a comparison, the predominant number of those backlog orders are against narrowbodies, not widebodies. It's pretty hard to sell a widebody at the moment. People seem to be more interested in the narrowbody aircraft. And if you look back over the last 3, 4, 5, 6 aviation cycles, I think what you'd see is, as we've come off a solid bull run of passenger growth, the airlines do jump on the aircraft orders really quickly at that point. And of course, with the time lag, as Nathan referred to earlier, before these things actually materialize and come into service, you're probably on the downside of the cycle, and you fall into a bit of a period of overcapacity and perhaps retiring some older aircraft early, or reducing capacity, or load factors dropping and the like. And then eventually, because the demand has been over a 30, 40-year period on a lineup, and it'll continue to do so, then they catch up and you go through the same cycle. all over again.

Garry Kingshott:So yeah, and I guess that was my point. I mean, coming off some really good years, most airlines placed orders in the last 3 to 5 years, and they're all now starting to arrive. But Nathan, it sounds like you've got things sorted by just being able to return leased aircraft and manage your fleet that way. I don't know about everyone else in the room, but I'm getting mighty thirsty. So I am going to thank my panel for their contribution today. And if you would like to ask me or any of them any questions, you're free to do that at the, at the bar downstairs in the next 25 minutes or so. So gentlemen, thank you very much indeed.

Con Korfiatis:Thank you.

Zhijie Wang:Thank you.

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