Regional Connectivity, Emerging Asian Markets and Seasonal Optimisation

Transcript

Michael Bell:Well, we have a great discussion coming up. The— it's a big topic, or at least a big title. I'm going to introduce it and then introduce our panel today. Regional connectivity, emerging Asian markets, and seasonal optimization. So hopefully we can cover, touch on all of those as we go. We have a, a very good mix of, uh, of panellists today across the region, but also across different parts of the value chain. So on the far right, Nick McGlynn. Hello, Nick. Welcome.

Nick McGlynn:Thank you, Michael.

Michael Bell:Executive Vice President of Asia covering the region for Qantas Airways, who clearly has got a good pan-regional view. Thank you, Nick.

Nick McGlynn:Thank you.

Michael Bell:Next to him, Kate Holsgrove, Chief Commercial Officer and Commercial and Aviation Officer of Perth Airport. Obviously very important western gateway in Australia. Welcome, Kate. Thank you. Next to her, Kentaro Dobashi, Vice President and Advisor to the Managing Executive Officer of Sales and Marketing for Japan Airlines. Welcome, Kentaro.

Nick McGlynn:Thank you.

Michael Bell:Our wonderful host here needs probably no introduction by now, Keikou Venske, the Director of Aviation Business Development at Hokkaido Airports. Thank you for Thank you for joining us today. Thank you. And next to me, Adison Duan, Chairman and Chief Executive Officer of Cambodia Airways, smaller but fast-growing carrier that we're interested in learning more about, and your plans as well for the region. Welcome, Adison.

Adison Duan:Thank you, thank you, thank you.

Michael Bell:I asked you all to give some thought to the, to the topic and to come with a one-word answer to the following question, which is, that what is the one thing in your mind, in one word, that is most holding back improved air connectivity across Asia? So let's go right to left and get your words here. Nick?

Nick McGlynn:I'm going to say fleet, Michael.

Michael Bell:Fleet? Okay, well, we had a good discussion earlier with, with the Boeing and other OEM perspectives, so we'll have to get further discussion to see why you feel that way. Uh, Kate?

Kate Holsgrove:Mine was also fleet.

Michael Bell:Okay, well, I think you guys know the answer from now on, right? Kentaro?

Kentaro Dobashi:Only one word, right?

Michael Bell:One word.

Kentaro Dobashi:I chose, uh, slots.

Michael Bell:Slots, okay. All right, Keikou?

Keikou Venske:Okay, I have a few, but if I pick one, I say seasonality.

Michael Bell:Which is it?

Keikou Venske:Seasonality. Season.

Michael Bell:Oh, seasonality. Okay, yes, interesting. And Adison?

Adison Duan:For our small airlines, the important thing I think is cash flow.

Michael Bell:Cash flow?

Adison Duan:Yeah.

Michael Bell:Yeah, well, it makes sense. You're a small growing airline.

Adison Duan:It's very important, yes.

Michael Bell:Okay, very good. All right, well, let's, let's get into this, and, uh, let's start with the topic of actual regional connectivity and also infrastructure and how it plays a role in, in either enabling that or not. Um, Kate, I'm going to start with you. Perth Airport, you guys have been embarking on a important one airport, uh, transformation project. Um, tell us about that and how it plays into increasing, uh, the role that Perth Airport plays in regional connectivity. Sure.

Kate Holsgrove:So we are, um, transforming Perth Airport into one airport. We're currently 2 separate airport precincts in sort of Airport West and Airport Central, which are about a 15-minute bus drive away. Um, so we'll be consolidating all of the passenger services into Airport Central. To do that, we're building a new runway, expanded international terminal, new domestic terminal, car park, multi-storey car parks, new pickup and drop-off facilities, roads, hotels, jet fuel, you name it, we're building it at the moment to really fulfill our vision as Australia's western hub. So where we are located on the western side of Australia, we're very closely connected with Asia. We're closer Um, closer to Jakarta than we are to Sydney. We're closer to Singapore than we are to Brisbane. Um, and so we really want to leverage that, um, geographical advantage that we have.

Michael Bell:Closer to Singapore than you are to Brisbane, that's quite telling.

Kate Holsgrove:Yes, and we're in this— we're on the same time zone as Singapore. So we have a, a 2, sometimes 3-hour time difference to, to the east coast of Australia, but we're on the same time zone as Singapore and within a couple of hours of 60% of the world's population.

Michael Bell:So we 18 million passengers, your traffic, international traffic up 12% or so. What's driving that? How much of that is Asia-specific, uh, and is that what you're going after, if you will?

Kate Holsgrove:Yeah, absolutely going after, uh, international growth and, and Asian growth in particular. So Perth Airport's, um, uh, international travel, as you said, sort of 8 to 12%, um, up. It's softened slightly to 8% post the Middle East, um, crisis, um, but, uh, 8 of the 10 top destinations that we have are in Asia. So Asia is really critically important to us in that growth. Some of our highest growing markets are Japan, China, and Vietnam, which have all grown more than 30% on the previous 12 months. Um, and so we see significant growth coming from Asia and our connectivity into the Asian, um, region.

Michael Bell:Well, let's go to the airline in Australia, at least one of them, who is, uh, Obviously Perth, an important market for you guys. How does that play to where you guys see the opportunities for growth for Qantas, if you will? Not just Perth, but other— where are the regional growth opportunities for you guys in the region?

Nick McGlynn:Yeah, certainly in the region across Asia is, is very much— we're very bullish on, on all of Asia, and 62% of our, all our international flying is to Asia. So that puts it in perspective and in how important it is. From a Perth perspective, both from a connectivity to Asia, but also beyond Perth, now we operate London nonstop, we operate Paris nonstop, and we operate seasonally on Rome as well. So Perth's—

Michael Bell:Ultra long haul as well.

Nick McGlynn:Ultra long haul. So Perth has become our western hub, if you like, in Australia, and feeds both Asia and Europe as well. But in this of the world. A couple of standouts, I think, Michael, um, Japan for sure, with more than 1 million Aussies visiting Japan in 2025. That's a huge increase that we've seen. So this market continues to be very, very strong for us. The Philippines is outperforming for us as well. We were quite surprised with that a few years ago, but it really is quite strong. We've added capacity on Brisbane to to the Philippines, and Jetstar, our sister company, has got, um, uh, operations from Perth to Manila, and also we're operating Brisbane to Cebu as well. Um, so Philippines—

Michael Bell:While not traditionally a big, maybe, tourist destination, Philippines seems to be on the rise as a, as a market people are, are turning to, correct?

Nick McGlynn:Yeah, so it's both, uh, inbound to the Philippines, but more, more importantly now, outbound from the Philippines as well. So 30% of our traffic out of the Philippines is going to New Zealand, which is, um, which is substantial. Um, a lot of it is, uh, VFR, but also the, the, um, the shipping movements as well. And it's interesting what the Middle Eastern shipping crisis has done to the movement of, um, of, of sailors that are moving around the globe.

Michael Bell:Created opportunities for you guys.

Nick McGlynn:Created opportunities, absolutely. And then I can't miss India as well, and If I'm honest, we've got the wrong aircraft type on India. The 330 is at its limit, um, to get to Delhi, so we're having to limit the seats on that. But India clearly is going to be a very big market for us going forward, and so, uh, once we get the right fleet and hence the right—

Michael Bell:Okay, so, so let's go to that. You, you said fleet. Why is that the inhibiting factor for you?

Nick McGlynn:Yes, so India being an example, we, we don't— we would have to take an aircraft off another Uh, productive route to put that onto India. And so, um, with India being a, an emerging market, that's a, that's a tough move right now. So we're waiting for new aircraft type to come on that. Uh, and then we look at, for instance, uh, Adelaide to Singapore. Um, the best fleet type for us to do that right now would be the XLR. So we're waiting for that, uh, uh, a single-aisle aircraft on, on a route that's probably probably a bit skinny for a widebody right now. Um, we would develop that up, but we're waiting for that fleet as well. So that, that was my comment on fleet. It's the sort of waiting for the right aircraft, and we— that, that conversation, uh, yesterday with, with Airbus was, uh, you know, the, the 220s, uh, and the XLRs give us a very different footprint into Asia in the future.

Kate Holsgrove:They can't come quick enough.

Nick McGlynn:I know.

Michael Bell:Kentaro. Yes. We hear Japan, huge market for Talk a little bit, and we heard your CEO speak about the interesting plans you guys have as well. Where do you see the opportunities, and why did you say that slots is your number one constraint?

Kentaro Dobashi:Yes, as you know, Japan is currently booming, and we welcome various numbers of visitors from all over the world to Japan. On the other, other side, based on the, the foreign currency exchange rates, the weak Japanese yen, that has been discussed over yesterday and today as well. But we are expecting quite a lot of customers from all over the world. However, the airports are also constrained. And in order for us to also operate overseas, Sometimes. I won't point any fingers to any airports, but sometimes—

Michael Bell:Sometimes not those on stage here, right?

Kentaro Dobashi:Of course, definitely not, definitely not. So there is sometimes challenges on to obtaining, from our perspective, commercially viable slots due to various reasons, I'll say. So however, currently we are trying to manage that as well. And also, as being a former VP of the Alliance Department of our company, I was involved in many codeshare partnerships, joint business agreements. So we are also trying to utilize our partners' assets as well, and coordinating to maximize our revenue as well as increasing the customer's experience. Uh, to welcome, uh, our guests on our flight.

Michael Bell:Thank you. Uh, Keiko, let's talk a little bit about the opportunity here in Hokkaido, right? Uh, come to the seasonality point in a second, is probably most acute in your situation given the big ski market, if you will. But just in terms of broad connectivity opportunities, some of the more traditional markets— Korea, China, Taiwan, Hong Kong— still very present, but It looks like maybe you have opportunities in Southeast Asia, Philippines. Where, where do you see the connectivity opportunities for you?

Keikou Venske:Okay, so the Southeast Asia markets are very important for us. It's also a growing market because of the, uh, middle class is, uh, population is increasing, so people have more money to travel more than before. And then also Japan used to be a very expensive destination for the travelers, but now because the yen is weak and it's more affordable. And so we focus on Southeast Asia because one thing is that our airport, because of the popularity among the traditional East Asia countries, all the flights are arriving in the afternoon. But because of Southeast Asia, because of the flight time is different, so they can arrive in the morning slot and also the afternoon slot. So that They can utilize our facilities much better. So that's also another reason we are focusing on the Southeast market.

Michael Bell:And the seasonality point, maybe just elaborate on that, why that is a big issue for you guys. What is the seasonal flow here and how are you trying to mitigate that?

Keikou Venske:Okay, so the seasonality, so we have a very strong winter traffic. Okay, everybody loves Hokkaido snow winter destination. Australians, everybody loves going skiing here, and we have great powder snow and everything, so people know that. But in the summer, not so many people know about it, unfortunately. In the last few days, everybody saw some video of Hokkaido, and then noticed— I hope everybody noticed how great it is in the summertime as well. So what we really like to do is just promote this summertime.

Michael Bell:Are you working with the tourist bureaus and the like to change that?

Keikou Venske:Yes, and then, so this is not— the airport alone cannot do this. by ourselves. We are working with local government, tourist bureau, and DMOs, and also travel industry stakeholders to promote this in Southeast Asia, and then also as well as East

Michael Bell:Asia. Hopefully, everyone here has had a chance to look around a little bit, maybe tour.

Keikou Venske:This is one of the reasons we hosted this event.

Michael Bell:Yes, see the reason to come back. All right, Adison, let's talk a little bit about your airline. It's a very different carrier than some of those represented here. Take a few minutes just to educate everybody on Cambodia Airways first, just a couple of headline points, and then about why you put cash flow as maybe the, the biggest limitation.

Adison Duan:Okay, uh, as we all know, Cambodia is not a big country. It's a total population only 17 million, and Phnom Penh, its capital, only 3 million. So Cambodia is a very small market, but we have Angkor Wat, very famous, as we all know, a very famous tourist destination, and it was ranked the number 1 landmark by TripAdvisor. Yeah, just so For us, a local or a base air company, the first thing is local market or domestic market. We use— now we use the new ATR, our ATR aircraft fly Phnom Penh to Sihanoukville and Siem Reap. Yeah. I think ATR is perfect. This destination is very near, close together, yeah. But in Cambodia, don't like China, they have no high train, no highway. So we use ATR, is very perfect to this destination. And ATR operating cost is very low, yeah. So— I think for our small company, hold your own market is the first. Yeah, we cannot combine with that big airlines. And in the international routes, we compared with that big airline, we have not so many aircraft. Yeah. No wide route network, even no premium service, but we only use our different paths, like the 5th freedom rights.

Michael Bell:Yeah, so you mentioned that's an opportunity for you. Yes, yes. Tell us a bit about that.

Adison Duan:We use, for example, yeah, in 2023, We opened Phnom Penh flight to Hainan, Hainan Haikou, to Nha Trang, Vietnam. And another route is from Phnom Penh to Sanya to Singapore. These 2 fifth freedom routes is the first routes in Hainan Island. Yeah. At the end of this year, we launch to open a new route The route is Phnom Penh to Sihanoukville to Ulaanbaatar. Yeah, to Ulaanbaatar. Ulaanbaatar. Yeah, we can let more Mongolians come to China and Cambodia in one trip.

Michael Bell:How are you raising the profile of Cambodia Airways to pick up 5th freedom traffic on routes like that? Are people responding to that opportunity?

Adison Duan:Yes, we use many travel agencies And like Trip.com together, more Mongolian and Chinese people can come to Cambodia, come to Angkor Wat. So I think different ways is better for a small company to compete with these big airlines. Thank you. Yeah. In the local company, in local-based airlines, the first one I think is domestic, domestic airline, domestic routes is your cash flow. And then use the different ways like 5th freedom, we can survive now. Yeah. And it's my opinion. Yeah.

Michael Bell:Where is, uh, seasonality an opportunity versus an issue, if you will, a problem? Maybe, Nick, I'm not sure what your thoughts are around that. How seasonal is your Asian network? It's clearly an important part of your business, right? But how do you guys manage that issue?

Nick McGlynn:Yeah, and look, we've, we've changed a lot in the last 10 years. We've got a lot more adaptable on seasonality, um, and I, I I think you're going to lead to the, um, this in a moment, but there's full seasonal, which is what we're doing here in Hokkaido, which is really December to end of March. So that's a full flying season. So that's, that's a big investment versus Chinese New Year out of, say, Hong Kong, or the football final in Australia over the, over last weekend, which is very short and sharp. So, um, the beauty of having a, a mixed fleet is For Chinese New Year, for instance, we've put A380s into Hong Kong, uh, over Chinese New Year, or just add capacity. Whereas the, the long seasonal into Chitose, um, it's a, it's a commitment of an aircraft for a full season. So what do you do with that aircraft then in the off-season? And so you have to be trying to match season for season somewhere else, uh, quite often, uh, and do smart things with charters, etc. But seasonality clearly plays a big part of what we do, and Hokkaido's been super successful for us. We started again after quite a long period of time not doing it last year with 3 flights a week. We've increased capacity by 50%. We have 5 flights a week now and extended that, that service. So what we hope in the future and what we saw in Vancouver is we were seasonal on Vancouver for a number of years for the ski market, but that's now full, full year round. So whilst I'm not promising Hokkaido Airport we're going to be here next year full-time round, our presence here—

Michael Bell:He just made that promise.

Nick McGlynn:I said I didn't promise, but, but what, what we hope is that return visitors— and Australians love to ski, and I'm sample size of one, I'll be here skiing in January, um, and most of my friends are as well— but The more repetitive, uh, we, we become with the visitations here, the more people want to see and explore more. So, um, seasonality gives an opportunity to, to expand markets in the, in the long run.

Michael Bell:Keiko, talk a little bit about that. I mean, one of the opportunities for you guys might be repeat visitation, right? As opposed to, well, I'm coming once a year to ski or once every other year. What— how are you managing that opportunity? And And to what degree does pricing, you know, making the fares affordable for people to come, help with that?

Keikou Venske:So the repeat customer is very important, and this is one of the growth areas. Because if you're the first-time visitor to Japan, they're not coming to Hokkaido for the first time. They may go to Tokyo and Osaka and other major cities. But then after that, we come in as a second visit. And then once they come to Hokkaido, and then they found the beauty and everything, and they'd like to come But that is for the market, it's more like a mature market, like Korea and Taiwan, and they've found that Hokkaido is very attractive, very great place to visit, and they like to come back, keep coming back. But for the new customers that just come here for the first time, for Southeast Asian market, the travelers, they are— we really have to make sure that they're happy with that for the first visit. And that's a big part of the And they have a great experience, and then they come back. So then that's how we like to increase the passenger numbers. And then for the repeat customers, this pricing also comes in. So like when Nick can price the— or I can price the ticket, because I think there is some price elasticity in the market so that if you like to come back, but then if it's cheap, oh yeah, so I'd like to— So it's a good deal. Try in the summertime for the next time, right? But I think that's, um, this, uh, we need to work with airlines to work with that part to make sure that we will, we can grow the market together.

Michael Bell:You, Kate, are investing in infrastructure, maybe build it and they will come, right? But when we, we met, uh, at the cocktail on Wednesday, and, uh, I'd been to Australia but never to Perth, I think you looked at the colleague next to you and said, you see, it may be an awareness issue, or raising the profile of a market like that, maybe not the first place people think to go, right? But how are you dealing with raising the profile of that as an alternate, alternate destination? And maybe, as you said, its proximity to Asia may be an opportunity for people too, right?

Kate Holsgrove:Yeah, it's definitely something that we want to sort of leverage and promote more. People often think about Sydney, Melbourne, Brisbane when they think about Australia. And so we're certainly trying to, you know, working with Tourism Western Australia and the state government, make Western Australia and Perth higher on people's consideration set rather than being a second or third visit to Australia. And there's been some really interesting sort of ways we've been doing that with marketing, but also this state government leaning into events. And so trying to look at leveraging the Asian event calendar rather than Australasian tours. So for instance, a couple years ago we had Coldplay play as part of their Asian tour, and so it was an Australian exclusive to have them in Perth. And it wasn't until, I think, a year or two later that they did their Australian tour and came to the East Coast. And so just trying to, trying to look at some of those—

Michael Bell:Positioning Perth almost like an Asian destination as opposed to an Australian destination.

Kate Holsgrove:Yeah, in, in some ways, definitely just increasing that awareness, increasing that awareness of the connectivity that we have Um, to Asia, and then the opportunity to come in, you know, people when they do want to do Australia, maybe coming in through Perth and going domestically across and then back out through one of the East Coast cities and building that, that sort of full network to enable people to include Perth in either their first trip or in, uh, in—

Michael Bell:Kentaro, you're nodding your head. What opportunities does that present for JAL, and how do you guys look at a market like that, if you will?

Kentaro Dobashi:Well, when it comes to the seasonality, I'll say that it is my personal perspective, but I think it is an opportunity as well, but it's also a limitation that if— I was based in Singapore for 6 years until 2 years ago. In Singapore, July is a school holiday season, and also the last week of November throughout the end of December is also a school holiday. Those periods, we can expect all of our outgoing flights, or from the Japan perspective, incoming flights from Singapore to Japan will be most of the flights are fully loaded. Mm-hmm. However, on the other way around, during those seasons, not necessarily the Japanese tourists will not travel that much. So the opportunity is that we can expect certain amount of demand traveling out of these kind of peak seasons for certain countries, but also it could give us an opportunity to think about what we can do as sales practices. It could be fares or strategic fares or also loyalty program plans providing to the customers so that we can shift the peak demand to off-peak peak as well. And when it comes to the repeat customers, also, again, my experience in Singapore, probably many of you know that the engagement of the government is also, I think, this is my personal perspective, not Japan Airlines maybe, but it is also very important. As you know, the Marina Bay Sands or the F1 race or the Jewel Shopping Mall, or these kind of tourist icons are deployed significantly. So if that is there, it is also workable, but also the gastronomy, the food experience is also based on the culture. Of the destination is also very significant, I think. So, um, as I think Keiko-san mentioned, that focusing on improving the revisit demand too much may not be the right way. But first, we need to bring the customer or the guest at least once and make them feel that they want to come back again. As there's a saying, Rome was not built in a day.

Michael Bell:I'm interested in, to the 2, uh, larger airline representatives here, to what degree, if at all, do you guys think of wet leasing in or out, uh, as an opportunity to manage seasonality? I come from Canada. In the summer, it's east-west and transatlantic, and in the winter, it's north-south. But there are times they have a lot of excess capacity, so A lot of the carriers there have struck arrangements with tour operators in Europe, and they swap airplanes back and forth. Is that an opportunity, or are there regulatory limitations that prevent that from happening?

Nick McGlynn:Yeah, it's a good question, and in fact, we did do just that a couple of years ago with Finnair, uh, and we took 2 of their A330s because Finnair was restricted because of the Russian airspace. Um, so that they were struggling, we needed capacity, we were constrained, so we took Uh, 2 of their A330s. Um, those 2 now have turned into, um, uh, 4. We've purchased those now, so, and, and we'll reconfigure those at some point. So, um, yes, that's a serious commitment though, because you can't wet lease for a season, right? That was a 2-year commitment to, to do that. Um, so you have to be confident that that capacity is going to be usable, um, over a longer period of time. But, uh, it's certainly an option, Michael. Yes.

Michael Bell:Kentaro, is that something you guys look at?

Kentaro Dobashi:Yes, there we did, and some years ago we had our logo on the tailfin on one side, on the other side there was Qantas, many, many years ago, in the late '80s or early '90s, I think. But nowadays, we, as a part of Qantas, we are not that flexible in terms of the fleet. So if even I said there's a certain period that we can expect demand for international routes, we cannot be that flexible in upgauging or back down gauging very frequently. So again, in those kind of cases, we will discuss with our joint business partners in order to maximize the revenue and also adopt all of, uh, accept all of the demands that is required for us.

Michael Bell:So I'm gonna be provocative here again, bring an example from the US where Allegiant Airlines, not many people here maybe know about them, but very, very successful airline, just bought another carrier, Sun Country, uh, great profit margins. Uh, they manage, uh, let's call it seasonality or variability in a very big way. Including day of week. So if you go to a, you know, Fort Lauderdale Airport on a Tuesday, you're going to see 20 of their airplanes just parked, right? They're not flying because a lot of their leisure customers don't want to fly on a Tuesday. So it's easy to do maybe when you're picking up secondary market aircraft and you're not paying through the teeth for operating leases on them. But I'm going to turn that to you, Adison. You have a smaller fleet, but to what degree are you guys Looking to manage cash flow, if you will, by managing when you fly.

Adison Duan:I think the same, yeah. Seasonality, and that's certainly a big problem for every airline. We all hope peak seasons and every flight can make money. Nobody likes low season. But now I think the market is more uncertain. Yeah, different world, different politics, yeah, and our passengers or our customers' demand going down, yeah. So we cannot change the seasonality itself. We only follow the market trend. And in low season, we only can cut some flights. Okay. Must be like this airport says, yeah. And we don't stop these routes because we must keep the market warm. So we only give travel agencies some discount and—

Michael Bell:Try to stimulate.

Adison Duan:Yeah, yeah. And cut some flights, like before we fly 3 times a week, per week, and now 3 times 2 weeks. Yeah. So, I think the cash flow in low season, we must focus the cash flow, how to survive and how to keep the market still Grow up is important for airlines. Yes.

Michael Bell:Thank you. Uh, I'll turn this to the airport representatives on the panel. Um, how does the ownership model impact how you guys think about running your business and dealing with these issues, to the extent that you have a private sector concession, as I know you do here? And I think you guys are effectively Privatized, right? Um, impact that. Kate, you get your thoughts on that. I bring this up because, you know, my home country in Canada, they just announced they're going to probably privatize the 4 busiest airports there, and that's going to have implications for how those airports are run. But over to you.

Kate Holsgrove:Uh, we were privatized about 30 years ago, so we, we're a federally leased airport, so we lease the land off the federal government. Um, and the, the major airports in Australia have been privatised, um, as I said, for about 30 years, um, now. So our shareholders are largely Australian superannuation funds and the sovereign wealth fund. Um, so the, the benefit of that is they're long-term investors with, um, uh, you know, capital infrastructure-heavy sort of appetite, um, which is good, but it's a, a challenge to try and predict the demand, um, We're building long-term infrastructure, but we've got to have some certainty.

Michael Bell:What kind of challenges did you have to get them to commit to, to this big investment you've made?

Kate Holsgrove:Um, well, I think it's— it, look, it's always a challenge. One of the, the things is just the, the construction market at the moment is such an unknown that actually being able to put sort of some real numbers around these mega projects is very challen— is very challenging.

Michael Bell:It's larger and over there.

Kate Holsgrove:Um, so it's, uh, uh, I think that the number will continue to evolve until the point where we actually appoint a builder. So that's— that unknown is definitely a challenge. Making sure we've got the support from our airline partners to effectively fund that through the aeronautical charges over coming decades is, is really important and a big part of the challenge. So we've got to give our investors confidence that there's a recovery model over time in the future and build enough flexibility into the infrastructure to be able to pivot if the demand doesn't come from where we think it's going to come from. So if, you know, if international grows quicker than we expected but domestic's slower or vice versa, and how do you— or different airlines. So there's a lot of challenges in kind of creating that, but the privatisation means that we can also focus really differently on the non-aeronautical side of the business as a a key driver of both the revenue but also the passenger experience and the investment. And a big part of the investment is actually non-aeronautical and is paid for through the retail car parking and sort of ancillary revenues as well. So yeah, it needs to all come together.

Michael Bell:Keikou, I think the concession is fairly new here, right? So that change, what has that meant for how you think about running your business and In the face of these constraints, if you will?

Keikou Venske:Okay, so the concession model is working great for us, absolutely. And then, so we manage 7 airports in Hokkaido, and Chitose is the biggest, and that's a magnet. And we do manage other 6 airports as well. And the great thing about the concession is we can manage this network as one strategy, under the one strategy. And then that's because of Chitose is a magnet, and we get all the passenger flow, but then we can disperse the, uh, those traffic out of the 6 airports and then manage the whole Hokkaido, one Hokkaido. So that, that's just a concession that made it possible to do this.

Michael Bell:It's allowed you to be successful that way. Okay, uh, thinking about the European experience, uh, you know, you look at a Ryanair or Wizz Air, EasyJet, they have Stimulated the market, maybe dealt with seasonality through pricing, right? Low fares, you know, maybe you're working in Western Europe now, you're going to go home to Eastern Europe more than just once a year. You might go 2 or 3 times a year because it's more affordable. Uh, Nick, as you think about Qantas Group now, right, I know you're with Airways proper, but you have Jetstar, etc. How do you guys look at this as a means of stimulating traffic in the region or improving competition?

Nick McGlynn:Yeah, um, and we're lucky we do have the 2-brand strategy, so we, we can interchange. And Korea is a good case in point where we did have the Qantas brand in Korea. Um, it's clearly, to Australia anyway, a more leisure-based product than, than a full corporate and, and, uh, business proposition. So Jetstar is the right airline to be on that route right now. No, but Does that mean that we would never go back to, to Korea as Qantas? No, it doesn't. We can use the low-cost brand to build market demand and, um, and the customer interest as well. So that's, that's an important lever that we're, we're able to play.

Michael Bell:And you guys at JAL, how are you guys looking at low-fare stimulation?

Kentaro Dobashi:Yeah, um, our revenue— I'm a salesperson, so, um, our revenue management Our business division is focused on high yield, to be very honest. However, it is also true that during these off-peak seasons, these strategical fares are a mandate, maybe, and also everybody in the industry has the same situation, so our competition is also doing the same. So we need to do something in order to also secure our market share as well. So that is, there are pros and cons, but there is also, that is what we also do. And also there is loyalty program things that we utilize. Mm-hmm. The customers want to burn their miles, and we have seats. Mm-hmm. So we have in a domestic place, Division, we provide a couple of destinations to the program members. And if they have some destination they want to go, they cannot specify, they cannot choose, but they can use their miles. And after a certain application period, it's kind of winning a lottery, but they have to burn the miles. So It is a win-win situation. The customers can travel with their miles, and also we can utilize the empty seats. So that is also a part of the very low search engine fee. When

Michael Bell:will you guys be launching a loyalty program at Asiana? Is that a ways down the road for you?

Adison Duan:Yeah, I think first I must learn from big airlines, but we cannot copy their business model. Full business model. We only can find different ways like fifth freedom rights that big airlines are willing or able to do. And I think the important thing is for small airlines, don't grow so fast. I think slowly is not so— no chance for me. Okay. I think we grow, we get more experience and resources step by step. With long-term compound growth, I think we can get long-term returns.

Michael Bell:Well, we've seen many airlines disappear because they grew too fast, so it's a wise strategy. We are at time, so with that, I've learned a lot, including that Perth is technically part of Asia now. Maybe soon to become. I would ask you all to join me in thanking our wonderful panel for their time today. Thank you.

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