Resilient small island state aviation and tourism development – building aviation connectivity and tourism in the Caribbean

Transcript

Dave Appleby:Welcome back, everybody. Hope you enjoyed your coffee break this morning. So I'm Dave Appleby. I'm Director of Air Service Development Consulting for ASM, and it's a pleasure to welcome you to today's panel discussion on resilient small island state aviation and tourism development, building Aviation Connectivity and Tourism in the Caribbean. The topic we're going to be exploring today sits at the very heart of Caribbean economic development. For island nations and territories across the region, aviation connectivity isn't merely a convenience. It's actually the lifeline that powers economic growth, enables tourism development, and connects communities. The Caribbean region derives approximately 15% to 30% of its GDP and employment from tourism, With aviation serving as the primary gateway for international visitors. This interdependence between aviation and tourism creates both unique challenges and opportunities that our distinguished panel are going to explore today. In recent years, we've witnessed how external shocks from hurricanes to the global pandemic can dramatically impact these vital sectors. Yet we've also seen some remarkable resilience and innovation emerging from the region. Today's discussion will focus on sustainable strategies for building robust aviation networks that can withstand these challenges while creating long-term prosperity for Caribbean destinations. Now, I think the best way to start the panel— I'm going to move over to this side here, but I think I'm going to ask each panelist probably to introduce themselves, and that's the best way to begin the panel. Garrett, if you want to start by introducing yourself.

Garret Malone:Eric Manon, Chief Operating Officer at Arajet in the Dominican Republic.

Adam Scott:Adam Scott, the founder and CEO of Bermuda Air.

Peggy Croes:Becky Cruz, Senior Vice President of Aviation Market Development, Curaçao International Airport.

Claudio Buncamper:Claudio Bunkamper, Chief Commercial Officer, Sunrise Airways.

Dave Appleby:Okay, well, thank you very much. So during the, the session today, we're going to explore 4 key themes that are critical to building resilient aviation and tourism ecosystems in the Caribbean. We're going to look at the current state of Caribbean aviation connectivity, assessing where we stand today, identifying critical gaps, and understanding how the post-pandemic recovery has reshaped regional networks. We're also going to look at the business models that effectively serve the island markets, and we're going to delve into the synergies between tourism development and aviation growth. We're also going to focus on building resilience, exploring strategies that airlines, airports, and destinations implement to to create sustainable growth that withstands those external shocks I've just mentioned before. We will also have a bit of time at the end as well for questions and also the Slido system as well, in case you wanted to ask a question anonymously, and it will appear here on our screen, and I'll gladly ask the panel. To start with, looking at the current state of Caribbean aviation connectivity, I'm going to start with Peggy. Peggy, as she just mentioned, represents the airport of Curaçao. Peggy, from an airport perspective, what are the most significant challenges you would say are facing the Caribbean aviation connectivity today?

Peggy Croes:Thank you for the opportunity. The Caribbean is a conglomerate of about 7,000 islands with so many— not all of them are inhabited, but with so many different factors playing. Some are more reliant on tourism, Others are less reliant on tourism. In general, the challenges a lot of the destinations have is that we are dependent on leisure travel for the majority of it. Some islands are very dependent on one particular market rather than being diverse. Those are 2 things that you have to take into consideration when you're looking into the Caribbean as challenges, is the demand. It's a very volatile industry. We're usually in the ripple effect of any event That happens in the world. That is also something that has us very cautious that we are not overly dependent on a market, but that we also understand that the discretionary income is what will drive demand to our region. Yes.

Dave Appleby:Thank you. Thanks very much. Claudio, how, in your opinion, has inter-island connectivity landscape evolved in recent years? Obviously, you from the airline side, how are you seeing things?

Claudio Buncamper:Well, on the airline perspective, I think the largest challenges are more the high cost of operations in the Caribbean and also challenges with actually connectivity. On an airline perspective, there are quite a lot of airlines operating in the Caribbean. We have more seats now than 2019, but still, it's very difficult sometimes to get from A to C. People sometimes still have to go to Miami to get to sea. There are many reasons for that. It is the airlines, all of the airlines not working with each other, so not having interline agreements, and also sometimes the high cost of connecting through various airports, different airlines. It becomes more expensive than maybe taking another carrier via Miami.

Dave Appleby:Absolutely. Garrett, as well, just in your opinion, how has the region's aviation recovery progressed in your opinion post-pandemic? Where are we still seeing, in your opinion, the largest opportunities for growth, speaking here about the Caribbean as a region?

Garret Malone:Slightly surprised to find out that Peru hasn't come back as much as planned. We found this out over the last 2 days. In the Caribbean, For us in particular, aviation in Dominican Republic was— it's a fly-to destination. People know Punta Cana. Most people would know Punta Cana more than they know Dominican Republic. Even myself, I thought Punta Cana was the capital. So for us in particular, we've really grown. Now over 2 million passengers flown with ourselves into the Dominican Republic. 20% of those are connecting. So like we're really seeing and bringing more connectivity and more passengers into the region. Unfortunately, within the Caribbean per se, as Claudia was saying, it's not as easy to fly to as many destinations. You have to go point to point.

Dave Appleby:Yeah.

Garret Malone:An open skies agreement in the Caribbean could be really good to go and drive traffic because otherwise you're having to go and connect with everybody else. We currently fly a route, for example, Aruba, Curaçao, back to Santo Domingo, but we can't bring passengers between Aruba and Curaçao. So we fly the leg and there's a lot more we can do there. It's a little more protectionist still at this stage because they want to protect the smaller airlines, but there's a lot of great airlines, great talent, and if we kind of open that up, we could really develop much further and much faster.

Dave Appleby:What do you think are the principal barriers though in terms of that open skies accord between all islands? Because I've been coming to these conferences for so many years and it's always spoken about but it's never achieved. What do you think needs to happen?

Garret Malone:Excuse me.

Adam Scott:Fear.

Garret Malone:Protecting their own industry as opposed to seeing like we have airlines in Trinidad, in Bermuda now with airlines and growing fast, but it's trying to keep that talent.

Kamal Hadad:Protectism.

Dave Appleby:Adam, as well, the same question to you. How have you seen the recovery of the region's aviation market since the pandemic, and are you still seeing a lot of opportunity for growth too from your airline's perspective?

Adam Scott:We literally just celebrated our 2nd anniversary last week. I think we're seeing opportunity to grow where we can extend the traditional shoulder seasons, make Bermuda that much more accessible as a year-round destination. We're seeing opportunities where the business community is developing and growing, and so there's opportunities there. I think for us, there are big challenges operating in our market. We're very isolated, and so we have very high costs of operation. Part of this is protectionism, protection of certain job classes, protection of what they—

Garret Malone:what the—

Adam Scott:I guess the governments see as a special industry. I think we need to work together with partners elsewhere that have experienced this to put pressure on reducing the barriers to entry, the barriers across our markets, lowering the costs wherever possible, and making the markets and making our communities that much more competitive. I think we're seeing good opportunities. We're also having to be very nimble and moving capacity around, which is what you've seen with the launch of Anguilla Air. We're working within the confines of those restrictions that we have, which is a big issue, of course, is that seasonality challenge.

Dave Appleby:How's the experience been for Bermuda over these last 2 years? You've gone into a lot of different markets in the North America market. How's that? How's it been for you for these last 2 years?

Adam Scott:It's been great. It's been a lot of hard work, but we've got a fantastic team, and I can't say enough about it. I think the great thing for us is, you know, we have a very entrepreneurial mindset, and so— and that extends across the organization. And I think that, you know, we are— we've seen what's— what what's happened in the US with some domestic politics, let's say, that has had, you know, serious ramifications for us in terms of we've got a massive growth opportunity in the Canadian markets. And so we, you know, in the last few years we've launched Toronto, Halifax, and Montreal most recently. You know, so it's been a great ride for us thus far, and we're looking forward to to many new markets in the future as well.

Dave Appleby:How do you go about that sort of identification of new markets? How do you identify the strategy for new routes?

Adam Scott:Yes, I think it's 2 things. You know, obviously we look at— our whole model is point-to-point, so we look at where there's been historical traffic and where we see the opportunity to enter into a market and to capture some of it, and obviously then it's to develop that market. And, and so when we look at our route network now, I just mentioned Halifax, for example. There's a lot of historical connection and touchpoints between Halifax and Bermuda. You know, people go to university there, they study there, they have families there. You know, businesses have their back offices and whatnot there. So we focus on something like Halifax, which is otherwise underserved, and that's been a great opportunity for us. Other markets we look at where we can get people, where we can attract people to the island as well. Halifax is— it's just a great example because Bermuda is the closest palm tree for anybody in Halifax, right? We'll look at that, but we'll continue to identify other markets. Again, an interesting element for Bermuda, unlike the rest of the Caribbean or most of the Caribbean, I'd say, is that about 40% of our traffic originates in Bermuda. It's a very interesting, it's a very wealthy space, and people do want to get off the island and go to other markets too.

Roxana Puente:Brilliant.

Dave Appleby:Garrett, as well, keeping on this airline business model line, Arajet's been extremely successful these last few years. Do you want to talk a little bit about how you've gone about achieving that success and being, I would say, possibly the first true LCC in the Caribbean region that's that's operating right now. So do you want to speak a bit about the experience there?

Garret Malone:It's been great fun. I'm sure Adam's had the same experience because normally when you start up an airline, you have the opportunity to kind of test it out on a domestic market and then go international. But we don't have domestic flights. The island is half the size of Ireland. So basically from day one, you're flying international. We now have 28 routes in 16 different countries, which kind of adds to the issue too of getting out there and marketing because you're not marketing one whole market, you're now marketing 16 different markets with 28 routes. So it has definitely been challenging and again as I say most people didn't know what the Dominican Republic was at this point, that Canada knew very well and we started in Santo Domingo so we've had great fun, great success, actually thanks to CAPA in 2023 we got their best airline startup of the year which was great fun. We keep telling everybody even now it's 2025, we're waiting for the next award to come, not sure what that will be. But again, we're talking in the Dominican Republic where you have not had real serious aviation volume for 25 years, so there is not very many technicians, there's very few pilots, and we can go out and hire those outside the island. But the national authority— you were saying yesterday that you have a good authority in Bermuda— our authority is really old. A lot of our inspectors are over 60 years of age, and they just don't— they have to hire Dominicans. There's nothing they can do about that by law. So the talent pool they have to choose choose from is very reduced. And again, it's kind of bringing them with us to kind of go from 1 or 2 aircraft to what we have today is 12 at the end of this week and 30 in 2 years' time.

Dave Appleby:Brilliant. And do you foresee a day in the future where you might look at the Caribbean and try and sort of connect more dots between the islands?

Garret Malone:Yes, so we currently have 5 routes in the Caribbean, but some of the islands like Barbados are relatively small, so it's more of a case of cooperation with other airlines who will feed into our network. So we started as an LCC, we're kind of moving now towards a low fares more than LCC model. I think the best way to think of it is all companies have to be LCC and Starbucks is one of the best examples. They're very low cost but they're high product and high quality. So we're kind of, as an airline industry, we're kind of moving that way. We've seen the trouble of the LCC operators in the United States so everything's kind of shifting that way across. So we started doing connecting flights pretty much from month 8. We're now going to be certain to find ourselves all going to plan end of this month, IATA. We sent everything through to IATA. If not, start of next month. Again, it opens up the whole connecting interline with other carriers in the region and abroad.

Kamal Hadad:Brilliant.

Dave Appleby:Thank you very much. On the elements of seasonality, which you touched on before, Claudio, how do you balance seasonality challenges with your operations?

Claudio Buncamper:Well, in Sunrise, we're 3 airlines, all right, and a group of companies. Our seasonalities are different. In the Eastern Caribbean, we deal with a lot of connectivity passengers, but also VFR traffic. Seasonalities is different for both of them, but in the Eastern Caribbean, for instance, in our slow periods of times is where we put our aircraft in maintenance, training of pilots, and so it works out. pretty good because we have a reduced schedule, say, in September and October, and then we expand. But say in Haiti, where we have a lot of domestic travel, there's no real off-season right now in Haiti, actually. Even though we have a lot of challenges in the country, at present, the demand is so high because of the challenges in the country. You can't drive from A to B, so actually, We're not able to fulfill the entire demand in Haiti. For us, it is different, but we do know our seasonality and we plan accordingly to that.

Dave Appleby:Okay. Peggy, as well, from a Curaçao perspective, how do you manage that seasonality issue?

Peggy Croes:In the winter season, of course, we have a little more capacity, but we work with our airlines in a manner that when we have the shoulder periods, Typically May, June, September, October, that they reduce frequency but don't eliminate frequency. You balance that because if there's one thing that's very challenging for destinations like us that are dependent on tourism, if you take away the season or you take away the service completely, you also lose consumer confidence because they're not very sure what's going to happen in the market. From the tourism side, then, what we do is we ensure that we have festivals in those months. You know, so you go for a different type of clientele rather than your leisure FITs. You go for group business. You go for events, because that's now a hot thing. Of course, we haven't had Taylor Swift on our island. That would have been great, but those type of concerts do attract a following now that make it a whole experience. That's what you focus on in those shoulders and you manage that.

Dave Appleby:Staying on that tourism angle as well, one of the points I wanted to ask about on this panel was about the synergies between tourism development and aviation. From the Curaçao Airport perspective, how do you collaborate with your tourism authorities? How do you go about developing new markets, new routes?

Peggy Croes:In our situation, it might be good to just highlight that we have a private company managing, operating, and developing the airport facilities for the government of Curaçao. We have a concession agreement with them. We're accountable and responsible for complying with the requirements in the DOMA agreement, as it's called. Together with our tourism partners, then, we have strategic meetings. I'm sorry. To ensure that we're on the same line, because with all due respect to tourism authorities, sometimes they really envision this whole route, for example, already. But you need to, you know, go about it in steps, in coordinated steps together with the airline partners. We ensure that we have a good business case, so we have all the data. We pull the data from the markets that we're interested in. We have the tourism data together with. that, and the hotel association. We make a complete package, and we also, when we go and visit the airline partners, we go as a team. Here's the destination. Here's your airport. Here's what the destination offers, and this is the tourism product that we have. It is imperative that you work together, especially in the Caribbean, especially in our region, because you're so dependent on tourism. You need everybody on board to embrace it. Remember, we can sell it, but the whole destination needs to buy into it as well, to deliver on our promise. That is very, very important to us.

Dave Appleby:Absolutely. Thank you. Claudio, how do you, from an airline perspective, do you work a lot with the tourist boards as well, and how does that impact your decision-making?

Claudio Buncamper:Yes, it's very important. Working with the tourism offices and the airports is very important in any type of route development. As an airline, we cannot do everything, but for instance, with partners and so, you can. A good example when we were speaking about seasonality, September, October seasonality from the US, which is the biggest market in the Caribbean, is slow, but from Latin America, it's not. It's now getting— how do you get that connectivity from Latin America with maybe, say, one of the larger airlines to connect now to the various islands. Working with the tourism offices, the airports, and your other partners, it's very important that you can get it out, because if you're on a different track, you're going to go different ways. To me, to us, that's a waste of resources.

Peggy Croes:That's a very good point, Claudio, because if you don't have that synergy, and sometimes you have to have those candid conversations, In our case, before COVID we were about 70% reliant on traffic from Europe, which in any business case is not a healthy business case. Something happens there, you have a problem. We've worked very diligently on spreading that reliance in North America, USA, and also in South America, that if there's something that happens, there's a little bit of wiggle room that you can go to one of your other markets, talk to your airline partners, and that's something very important too. You need to have that trust relationship with your airline partners that you can have candid conversations and very open, honest conversations with each other, hold each other accountable as well.

Dave Appleby:Yeah, absolutely. Adam, also from Bermuda's perspective, I would imagine you work with the tourism authority on island as well. But do you also work with the city tourism offices of those points that you're flying to?

Adam Scott:Yeah, absolutely. In fact, in many regards, we get more engagement with our destination airports. I think it's very interesting because, of course, there is a draw from Bermuda as well. It's not just, as I mentioned, mentioned before, going to Bermuda. And so we have a— we get a lot of support because the markets that we operate into, we're really focused on the point-to-point traffic. And, and so there's always going to be synergies, there's always going to be opportunities between those. And, and very frankly, we've had great reception by all the markets that we've been into. But again, working, working with them is is especially important. It's especially important for us. We work very closely with the hoteliers on the island in Bermuda as well, because we collectively are trying to solve these seasonality challenges. It's an amazing thing. When I first went to Bermuda, the hotels, they keep their prices almost constant year-round, but of course, their heads-on-beds drops to very low percentages in the winter months. And we want to, you know, work with them to fix that so that we get bums on seats and they get the heads on beds. And so I think for us, the biggest and the most important relationship has been probably with the Hotel Association and with the hotels. And we've also been able to launch Bermuda Air Holidays. We're doing the same with Anguilla as well, with Anguilla Air Holidays, actually working collectively with the hotels to promote the island. Thank you.

Dave Appleby:Do you think the average daily rates of Bermuda, though, harm tourism in any way to the island? Because they are quite high, aren't they?

Adam Scott:It's an expensive island for sure, and I think the ADRs are high, but, you know, in comparison to some of the other islands, they're actually not that bad. I think that, again, it's really working with them. The reality is we're the first airline in Bermuda, and so the— our Bermudian partners have never had that opportunity to work with an airline who is actually focused on that market. And so now all of a sudden we have developed these fantastic relationships with the hotels and with other parties on the island as well, with other strategic partners, where we actually collaborate on actually how do we fulfill all of our objectives. And very frankly, it's It's also just about making the island that much more vibrant as well. We have 7 golf courses, you know, some of the best in the world. They're historically— they're empty in the offseason. But, you know, it's— I said yesterday, a cold Tuesday, wet Tuesday in January, it's a great place to golf. And so, you know, we just have to promote that and get that out there.

Dave Appleby:And I think I'm right in saying the There's going to be an increase of 25% of rooms with the reopening of the Fairmont Southampton, isn't there, as well? That should help as well in that regard.

Adam Scott:There's a bunch of new hotels in the pipeline as well, but of course, the Fairmont Southampton is a big one for the island, 700 rooms, which is big.

Dave Appleby:Garrett, as well, from an Arjep perspective then, you've entered a lot of markets in South America, etc. Do you work a lot with those tourism boards as well on the other side of the route? And also, what's the sort of dynamic between the airline and the tourist board of Dominican Republic itself?

Garret Malone:Oh, definitely. So we're kind of more than a low-cost carrier in Dominican Republic. We're kind of considered the flag carrier of Dominican Republic. So we work very closely with tourism there, both in the region and also in Europe and North America. Obviously, when we're going to open new routes, One of the good things about having problems with getting fleets and all the delays in aircraft is there's a lot more demand than there is capacity today, so we are able to go out and kind of choose and negotiate with different airports. Even with Curaçao Airport, we have a great relationship on how we're driving passengers in there, small numbers at the moment, and then kind of using Curaçao to fly into us and then connect throughout the rest of the region. So it's very important that we work with your authorities.

Dave Appleby:Brilliant, thanks, Chris. That's great. Now moving on to the topic of resilience in island aviation. Peggy, what, in your opinion, infrastructure investments are most critical for improving aviation resilience in the region? What do you think needs to be done?

María del Sol Velázquez:Region?

Peggy Croes:Putting me on the spot, but in the region. I think we need to be aware of the developments. There's one thing about aviation is that it's constantly evolving, and we need to ensure that once we make those investments that they are timely, that they're efficient, that they serve the purpose. Most of us, you know, you have your peak hours. If you build only on peak capacity, we will have airports as large as islands, which of course defeats the purpose there as well. So I think good understanding of technology— there's a lot of talk about electric flying or alternative flying and AI, the way technology is evolving very quickly. All those things need to be taken into consideration in planning phases. For example, if we look at electrical flying in the future, we've talked about it a little bit in the Dutch Caribbean airports, actually. You would have to have the same similar equipment. Would the airlines be able to finance? How? What is the costing? All these things come into play because at the end of the day, somebody has to pay for all of this. So you need to again have those partnerships in which you can have candid conversations to make sense of what you need and what timeframe you need it, and how you're going to be building that and accommodate. Because of course, passenger experience. most important things, not only from the airline side, but also from the passenger itself.

Dave Appleby:Thank you. Claudio, from a Sunrise perspective, what specific strategies have you implemented to ensure operational continuity during seasonal challenges, disruptions from hurricanes and things like that? What have you done there?

Claudio Buncamper:The one thing that I must say that Sunrise, especially because of our challenges in Haiti, All right, we're very resilient.

Adam Scott:We're—

Claudio Buncamper:as an airline, we are very easily able to change. If I take Haiti as an example, within the last year, March, when the first time they shut down Haiti, within like 3 weeks, we were able to move our hub from Port-au-Prince to Cap-Haïtien. When it happened the second time in November, within 24 hours, we were in Cap-Haïtien operating all of our scheduled flights. We're pretty resilient with that. In the Eastern Caribbean, I think the more challenges are the hurricanes. That's something that you cannot predict because it all depends on what happens where. As airline, I must say we're pretty easily able to adapt.

Peggy Croes:Thank you.

Claudio Buncamper:We do not have a huge operation. Yes, we have like 16 destinations, but they're different operations. Maybe what happens in Haiti has no impact on, say, in the Eastern Caribbean. For us, it's pretty easy to adopt, but we're dependent, like say, on airports and all of that. We just had the case on Sunday, St. Maarten Airport.

Adam Scott:Yes.

Claudio Buncamper:shut down for 24 hours because of an incident. What do you do in this case? Of course, we had to adjust schedules. I think we're pretty capable of handling those situations.

Dave Appleby:Adam, from a Bermuda perspective, any specific strategies you've put in place there also to build operational resilience in that environment?

Adam Scott:Actually, I think I think we're very resilient as well. Actually, I think we excel when we have hurricanes, if it makes sense. We actually— our launch was delayed by a day because of a hurricane, and then we had 2 more in the next 2 or 3 week period. One thing that I'm really proud about that the team's been able to achieve is that we're typically the last aircraft out and the first aircraft back after a hurricane.

Kamal Hadad:That's great.

Adam Scott:When the other airlines just cancel to Bermuda because they're worried about the winds, whatever it might be, we're much more active and focused on it. I think that's something that's been very well received by our island specifically. I think it's just the ability to move quickly and certainly get back up in the air.

Dave Appleby:Thanks, Adang. Garret, how does Arajet approach risk management as well?

Garret Malone:Very carefully. So we actually had the same. Our second day of operation 3 years ago, we had to cease all operations because a hurricane called Fiona, ironically an Irish name, came across the island. So, but for the Dominican Republic, hurricanes isn't as big an issue. We get about 1.5 storms per year. Miami and Bermuda get a lot more than we do, but we have a dedicated resource both for operational and corporate corporate risk management, especially when you're operating from the whole way from Canada down to Chile. You have a lot more geopolitical issues. So for example, in 2023, when we were flying 3 times a week to here, to Lima, to Peru, and we decided, okay, route's going great, let's go to 5 times a week. We announced it, I think, on the Monday, and then on the Wednesday, the president escaped the country, got stopped on his route, and everyone took to the streets, there were burning cars and whatnot. So We take it very seriously, and so we look at both from the corporate and from the operational point of view. Obviously, when you have geopolitical issues, we can shift quickly to reduce frequencies there and move that capacity elsewhere.

Roxana Puente:Understood.

Dave Appleby:Okay, well, we're running out of time here, so I don't know if there's any questions from the floor before I ask the final question here to the panelists.

Peggy Croes:No?

Dave Appleby:Okay, so the last question then, I think, for each of you, if you could just give us a minute or so. So looking ahead to like 2030, what do you believe will be the most significant changes in Caribbean aviation connectivity, and how should stakeholders across the region be preparing for that transformation?

Garret Malone:Hopefully we start moving towards deregulation and open skies agreement, which can really help the different airlines in the islands kind of work together and fly back and forth. Like, there's no reason why I can't fly to Turks and Caicos and someone else brings passengers on into Barbados. So I hope that's the way we're going to move towards.

Dave Appleby:Adam?

Adam Scott:Yeah, I agree with that, and I think that certainly if we can work together to, you know, share some of our challenges and learn from each other and take from that, but also to apply pressure in the right places to drop some of these barriers, because there are such high costs for us, and costs for us as well that not necessarily the big guys in the continental US and Canada, for example, experience in the same way. I think working together, lowering some of these barriers, and promoting interconnectivity is where we need to go.

Dave Appleby:Great. Thank you.

Mitzi Berberi:Peggy?

Peggy Croes:I echo what you're saying. It's the connectivity within the Caribbean. It's such an amazing place. All these islands are uniquely spectacular, and people are missing out just because there might not be that connectivity, that inter-island connectivity to reach from one destination to another destination. I really look forward to having one more, one big happy Caribbean area welcoming so many passengers, and especially from South America. You guys are on the rise with us, so we appreciate that very, very much.

Dave Appleby:Great. Claudia, how does Sunrise see the future?

Claudio Buncamper:At Sunrise, we see it— I mean, again, the barriers that are there are going to have to change. I mean, we cannot continue as is, but for us as airline, I think the partnerships are going to be the most important part of it. The partnerships between the countries, the airlines, and all of them, and, you know, get out of this mindset that, you know, I can do it alone.

Kamal Hadad:No.

Claudio Buncamper:You know, in the Caribbean, you know, like Peggy said, we're— There's so many islands, so many different airports, so many different cultures. Every island is different. There are over 40 million people in the Caribbean that can travel. If you just take 5%, you're at 2 million people. All of the airlines that are there cannot withstand that amount of passengers. Again, I think partnerships, and at Sunrise, I'm glad to say, if I take the The carriers that are registered in the Eastern Caribbean, we basically have agreements with most of them, to the exception of one or two, which we're working on. Our goal is that a passenger should have the choice to get from A to C on whichever carrier. We should think about a carrier, I mean, about the passenger. How can he get from A to B? Why does he have to go through Miami? Why does he have to go to through Canada. I mean, it should not. I believe if all of the airlines say, okay, we can work together, yes, you're going to be partners and competitors, but at the same time, it can work. Briefly stating, in my previous airline, we formed many years ago Carib Sky Alliance with 3 airlines, which pretty much covered the entire Caribbean.

María del Sol Velázquez:It worked.

Claudio Buncamper:The 3 airlines code-shared and interlined together.

Neil Glynn:Yes.

Claudio Buncamper:Then yes, we had some overlapping routes, but at the end of the day, the passenger was able to travel from any dot to any dot within one day and not having to overnight, and the airlines were able to sit down and treat this looking at all aspects. I think with open skies, like Garrett said, that is something that definitely we need to work on because there's too much protection, and the airlines together, seen how they can, you know, make the connectivity work.

Dave Appleby:That's brilliant. Well, thank you very much, Garrett, Adam, Beggy, Claudio. A round of applause, please, for the panelists.

Peggy Croes:Thank you.

Garret Malone:Okay, thank you, panel.

Dave Appleby:We've just got to make a little bit of a stage change here, so we're going to come in and do that and continue our discussions with a bit of a regional focus.

Garret Malone:Obviously, we just had a look at the Caribbean, and we're now going to turn our attention to this beautiful country that we're in, Peru. and look at the tourism and inbound tourism and the role that aviation plays in bringing that to Peru.

Claudio Buncamper:With that, I'd like to welcome to the stage Neil Glynn, who's Managing Director of Alvarez Marshall, to introduce his panel.

Mitzi Berberi:Thank you.

Peggy Croes:Thank you, Hello everyone.

Neil Glynn:Sorry, I hope the volume's okay. So my name is Neil Glynn, and I'd love to invite my fellow panelists to the stage, please. Great, have a seat everybody. So thank you all for your time. So our panel is focused on inbound international travel. My name is Neil Glynn, I'm a Managing Director at Alvarez Marsal, and I'll hand over to each panelist to introduce yourselves. And I think it'd be a great idea to highlight a fun fact about your career to help everybody get to know you if they haven't over the past couple of days.

Rocky Lo:Hello, everyone. Hello, everyone. Hello. Here we go. Hello, everyone. Good afternoon. My name is Rocky Low. I'm the Managing Director for International Sales for Air Canada. Myself and my team look after all points of sale outside of Canada and USA into Canada and USA. Fun fact about me, the first time I came to Peru, It's 20 years ago, I was a cabin crew for Air Canada, and I have opportunity to flew to Lima as a cabin crew, and I have 48-hour layover. Fast forward 20 years after, I get to come to this beautiful country again, and this time around it's also 48-hour, but I get to attend this very informative CAPA conference and also getting ready for our nonstop direct flight that we'll will be starting in December from Lima to Toronto and Montreal.

Neil Glynn:Thank you, Rocky.

Mitzi Berberi:So my name is Nikki Burberry. I'm the Chief Business Development Officer for Kiwi.com.

Kamal Hadad:We're not done with the show itself.

Mitzi Berberi:If I speak louder—

Peggy Croes:there we go.

Mitzi Berberi:Is this working? Is this working? Okay, super.

Roxana Puente:Right.

Mitzi Berberi:So my name is Mitzi Burbury. I'm the Chief Business Development Officer at Kiwi.com. We're an online travel agency, for those of you who don't know us and have been wondering why your lanyards say Kiwi.com. Fun fact about me and my career. So I started in this role on July 1st, and unlike most of the people that I've met in the industry who've been in travel for 10 years plus. I'm only on my 3rd year, so I'm hoping this is promising in a very long career where we can spend more time together coming up.

Kamal Hadad:I am Kamal Haddad, Vice President of Network Planning for LATAM Airlines Group. I've been with LATAM for 20 years. Something interesting about me, I am Chilean. I was born in Brazil. My family is from the Middle East, and I've been traveling a lot for 20 years because I work in the airline industry. So always when I go to the US, they have a lot of questions about me and my history of traveling and everything. I'm from Brazil.

María del Sol Velázquez:Hi, I'm María del Sol Velázquez. I am the Director of Promotion at PROMPERÚ. PROMPERÚ is a tourism board that promotes tourism, exports, and investment of Peru. Something funny about me, I cannot think about something, but hopefully you may understand or could understand my English, so I'm very sorry if I'm not that clear.

Roxana Puente:Go ahead. Hello, everyone. My name is Roxana. I work at the WTTC. The WTTC is the only body that represents all the private industry at the include all the ecosystem of our industry, from airlines, airports, but also hotels, OTAs, etc. A fun fact about me, maybe, well, I started my career working at the Mexico Tourism Board, and from then I, then I worked at Destination Canada. So I went to work with the competition, which was very valued in Canada, and now I'm working for an international body that works with all the ecosystem of the industry.

Neil Glynn:Great, thank you all. And to hold up my end of the bargain, so I'm currently working as a consultant with the US company Alvarez Marsal, albeit based in London. This is my 3rd different segment of the aviation value chain. I started in aircraft leasing, then moved into investment banking, and it's now consulting. So we've heard over the course of the last couple of days some very interesting perspectives. We've heard that travel or traffic is still below pre-COVID levels. We've heard a number of parties comment on the high level of taxation, but we've also heard about very strong and compelling growth opportunities for traffic. So I thought I'd start with We have 4 different segments of the value chain represented across our 5 panelists. I thought it'd be interesting to start with what Peru means to each panelist and what differentiates it from the rest of the region. Rocky, maybe to start with you.

Rocky Lo:I think when we evaluate Peru as a destination that Air Canada wants to fly to, we see a mix of traffic in this in this place. Obviously, no surprises, there's a lot of leisure demand. Lots of tourists love to come here to see all the historical attractions like the Mitsubishi. We also see corporate demand from Canada coming over here, specifically the mining business, as well as the VFR traffic, which is also a very resilient segment of traffic, especially during COVID We have seen that when all the leisure travellers, corporate travellers are not travelling, the VFR traveller is still travelling. Obviously, there's a huge Peruvian community in Canada, USA, as well as Europe. When we decided to launch our Lima, Montreal, and Toronto flight, we actually set our schedule to be very timely connected with our flight to Europe.

Mitzi Berberi:That's great.

Rocky Lo:When I look at this winter, we do serve over 2 dozen destinations into and from Europe. Customers can easily connect via our Toronto and Montreal hub to come to Lima or come from Lima to go to Europe via Toronto and Montreal.

Neil Glynn:Thank you. Mitzi?

Mitzi Berberi:All right, is this one working?

María del Sol Velázquez:No, it's not working. There you go.

Mitzi Berberi:It is? Okay, perfect. We're back on. So what Peru means to me.

Neil Glynn:What Peru means to you and what differentiates it from the rest of the region.

Mitzi Berberi:I would say that I associate Peru with excellent food. I thought about it before and then even when I got here, I realized that it's not just a myth, it's actually a reality. Then from a business standpoint, I would say I was very surprised when I looked at the numbers and how important the Lima-Cusco route is for us. I would say it's such a huge trip, I think, like you were saying, to go to Machu Picchu. That's the number one destination that people pick when coming to Peru. The fact that we have that connectivity that goes from Europe to Lima and then enables people to then live their dream And discovered the nature and the beauty of Peru. That's probably what I associate it with most.

Kamal Hadad:For LATAM, Peru is very, very important. Lima in particular is our second biggest hub after São Paulo Guarulhos. We have here in Peru more than 50 aircraft. 14 narrowbody, 10 widebodies. We operate our hub here to connect international. We cover Caribbean, USA, Madrid, and also we have an important presence in the domestic market. In domestic market, we have 65% of the capacity share in domestic Peru. Lima-Cusco, by far the most important route. We operate more than 25 frequencies per day in the Lima-Cusco, so I hope If you are going to Cusco after the conference, you travel with LATAM.

María del Sol Velázquez:Well, what can I say? I work for the promotion agency that promotes actually Peru. I guess for us, for the Peruvians, Peru is unique. It's unique because of our diversity, because of our gastronomy that you had a chance to try probably, because of our living culture that we And we believe Peru actually has everything in just one territory. You have coast, you have the Andes, you have jungle, so you can find it all here in just one destination. Probably you have to—

Mitzi Berberi:there.

Roxana Puente:Thank you. So Maria just mentioned one of the things that I was going to mention as well, but Peru is one of those places that makes you feel welcome. I think all destinations have a unique magic, and one of Peru is that it has everything, but it also makes you feel welcome. So when people come to Peru, they enjoy all the things that they are doing along the day. It's one of the magics of being here.

Rocky Lo:I think also Peru, strategically, from a South American perspective, is located right at central west of South America. Especially for some of the long-haul travelers from Canada or from Europe, they will not just come to Peru for a weekend. They will come to South America for a week or 2 weeks trip.

Kamal Hadad:Yes.

Rocky Lo:They will be able to come to Lima first, Peru first, and then they can connect for the rest of South America and tour around the rest of South America. rest of South America. So the location itself, from a geographic perspective, is also very strategically located.

Neil Glynn:Absolutely. And just, I'll take the opportunity to highlight that we can see Slido, so if anything prompts a comment or if you have any questions that arise through the session, we can try to weave it in. Otherwise, we can also handle that at the end, so please feel free to contribute to Slido. We'll move on then in terms to sources of travel. traffic, sources of demand. Maybe to start with Maria at the origin, how do you approach stimulating demand into Peru and what's your strategy or PROMPERÚ's strategy?

María del Sol Velázquez:Well, as you all know, right now we haven't reached yet the numbers that we were supposed to reach after pandemic. We have to reach the tourist What they— the cost, right? We have lots of strategies going on right now. The first one is sustainability. The second one is bring to Peru events of this type of events so you can know what's Peru about, impact events. It's diversification of the offer of Peru. Peru has so many things to offer, not only Machu Picchu, but it's well known as Machu Picchu, as you may know. But there's much more to see. That's one of the other strategies we have going on right now to make that— to grow that tourism. Also, like I mentioned, high-impact events. We are actually working together with the airlines, with the airport, to impulse connectivity, because as you know, Peru is still battling that that problem of connectivity. We're going to events where we can promote connectivity. We're bringing events of connectivity too. We're working with airlines, with strategic alliances, giving them some incentives with promotions so they can see our destination that is attractive. As you may know, Peru was one of the countries that actually opened late after the pandemic. That's something that actually brought us to where we are right now, because most of the countries, they opened much earlier, so the airlines decided to go to routes that were much more— they had much more of an economic impact, of course. The routes were much more rentable. When Peru opened, the airlines were already— they already decided which routes they were going to operate. Peru wasn't undermined. What happened after that, there's a lack of aircraft, as you know, as they mentioned yesterday. If we want to have more connectivity, most of the airlines tell us, you know what, we don't have enough aircraft right now. Not only that, also we have a lack of connectivity intra-regional. We have 21 routes regional that come from Lima to all the destinations inside of Peru, but only 5 routes that connect intra-regional.

Roxana Puente:Mm-hmm.

María del Sol Velázquez:So if we bring the tourists, they have— they can do different routes inside Peru, but they have to come back to Lima, and that actually is not such a good experience for the tourists. I mean, they want to go to Cusco, and from Cusco, probably they want to go to Iquitos, to the jungle directly. They don't want to go through again to Lima, and that's something that we have to work on that. So those things are the problems that we're having right now.

Neil Glynn:Yes, understood. Moving on to the airline side, maybe starting with Kamal. How does LATAM approach whether to place an extra aircraft in Peru versus other options, given that you cover the entire region?

Kamal Hadad:LATAM is a group of airlines, so we have the benefit of the diversification. Also, of course, profitability and the future opportunities that we see in the markets that I think we're going to discuss further later.

Neil Glynn:Rocky, re-entry into Peru is obviously the flavor of the day for Air Canada. Can you give us a bit of background in terms of how you think about Peru now being re-added to your network?

Rocky Lo:I think it's a very exciting addition. within our global network. As I mentioned, coming out from the pandemic, we start to rebuild our network, and we are very strong on our transatlantic operation. We do have a joint venture with United and Lufthansa Group, and we do fly to a lot of destinations ourselves over the transatlantic. During the wintertime, traditionally, there's not a lot of demand compared to summer for transatlantic traffics. However, adding Lima into our roadmap and the rest of all the expansion we are doing in this region, we are seeing growing demand from this region to Europe and from Europe. Again, even for Peru itself, the middle class clearly is rising based on the data we are seeing, and Peruvians want to travel abroad. During the summer, we all know when you go to Europe, it's full of people, hotel prices very expensive, and it's very crowded. In the wintertime, actually, it's a perfect timing from a price perspective, from a logistic perspective to go to Europe. Having, again, having Lima on our route map is going to help us to connect the customer not just to and from Canada, but it's also to the rest of our European network.

Neil Glynn:Great. Mitzi, just following on that connectivity point, what's Kiwi's perspective on Peru.

Mitzi Berberi:Yeah, so in terms of connectivity, they really don't like me today. I think I'm on. It's good. Thank you. In terms of connectivity, I think we've had different viewpoints. One is connectivity domestically and within the region. The other one is with Canada. Then what Kiwi prides itself on is virtual interlining, essentially. It's really connecting Europe to the region here and Peru You can do it through airline relationships, or you can do it through an OTA. And I'd say probably what we want to add to it is the customer viewpoint. So yes, we're the travel agent, but we also are the ones that help promote the region and help with connectivity between airlines and bringing people from Europe down to Latin America and Peru specifically.

Neil Glynn:Great, thank you. And Roxana, you obviously focus across the whole region, so how does Peru fit in from your perspective?

Roxana Puente:Yeah, and from my perspective and also, well, from WTTC, we always encourage the public and private cooperation. But here in the region, from a long time, we have been encouraging trying to work together as destinations. Everyone was talking about a regional focus, and mostly destinations don't tend to work together. Mostly in Latin America, they see each other as competition, but your neighbor is not always your competition. It can be always someone who can help you grow. As an example, and a very clear example, is Europe, who has grown as a circuit together, and once it has become more and more popular, of course, the traveler tries to look for different places within different countries. However, this is something that has not grown that much Latin America. In the recent years, or lately, I have been speaking with different destinations that understand that and are talking and working together, or trying to work together among destinations, but I think it's basic to work together among the different destinations.

Neil Glynn:Great, thank you. So we've heard, as I touched on earlier, we've heard about high taxes, over the last couple of days. That's a segue into the next topic in terms of enablers of traffic growth as well as the opposite, the detractors or preventers of traffic growth. Maybe to start with Maria, what do you feel are the key enablers required to stimulate the next leg of traffic recovery within What's holding it back?

María del Sol Velázquez:What's holding it? For Peru, I believe connectivity, lack of infrastructure regionally from us as a destination, and investment, but also incentives. I think it's very important, talking as part of the government, of course, but the promoting side, If we want to bring more airlines, if we want to bring more events like this, normally this is called the MICE segment, which brings Congress and events, they require incentives. The government has to give those type of incentives to the airlines, to this type of segment, different things that allow us to growth in non-regional carriers. not only in tourism, but as a destination, as Peru as a country. I think that's the main problem right now for us, for tourism, and for the arrivals, is the lack of destination, not only international, which is not that much right now, but yes, inter-regional. Like I mentioned, we are not doing that well. We have also— we have a huge airport here in Lima, which is amazing, but it's not responding the same at the regions. Our airports regionally, they're not as— well, of course, they're not going to be that big, but there's a lack of infrastructure. Sorry for my English. It's not that good. If we want airlines to come, they don't have all— I mean, they don't have the infrastructure to get there. The connectivity also between the attractives. If we want to promote and diversify the destination. We need to get to those attractive, but together you need to have the roads well done, you have to have the services. Those are the things that we're battling right now to promote. We're promoting, we're diversifying, but we need connectivity and we need the government to work on the infrastructure of airports and roads.

Neil Glynn:I see a question on Slido just focused on Trade offices within Peru. Is trade a key enabler of incremental passenger connectivity into Peru? Do you see slower government appointments as an issue?

María del Sol Velázquez:Well, that's a tricky question right now. I mean, we are having— we have OSCEX in diverse destinations, and we know there is There's still where we need to get more. There's, I think, 5 or 6 places that don't have AUSEX right now, which are the trade offices. The problem here is that there's so many regulations as a state to have done before we appoint those officers. That's another problem that we have as a country, the bureaucracy and all the small steps that you have to get done to have something done. I mean, something that should get 1 month, 2 months, it takes you 6 to 8 months to get something done. This is something actually because it's funny, but depends on many ministers, not only one, which is I work for the Minister of Tourism and Commerce, but to appoint the trade officers, you also need the permission of our Minister of of Foreign Affairs. It's difficult to answer that question. We're working on that. It is important to have our trade officers, yes, but for us, for tourism, what we'd also need is those trade officers to be specialized on tourism. We believe right now, as a tourism board, we have trade officers that are more expert on commerce than in tourism.

Peggy Croes:Understood.

Neil Glynn:Thank you. Kamal, on the subject of taxes, or other costs of doing business or costs of growing within this region. How does that influence your network strategy?

Kamal Hadad:Yesterday, I think we talked about the enablers that develop the traffic. We say government policies, airport taxes, infrastructure. In the case of the inbound, it's important For example, entities like PROMPERÚ does. Then you need the competition on the airline developing that I think in particular in Peru, we have really good competition here, good airlines flying. The potential actually is there. I was looking yesterday at some numbers. When you, for example, compare number of visitors—

Peggy Croes:Mm-hmm.

Kamal Hadad:In Peru and in Latin America in particular, is around 5 million per year. That's the number of visitors that we have in Latin America in each country. If you compare to countries like France, Italy, 80 million, 70 million. And one number that is surprising, for example, Iceland, 3 million, very small country. So what Peru or Brazil or Chile, for my opinion, has much more than many of those countries, so the potential is there.

Peggy Croes:Thank you.

Kamal Hadad:and we need to work in the neighbors for the traffic to develop.

Neil Glynn:Thank you for keeping the questions coming on Slido. There is one here which is maybe a bit provocative for Kamal. Isn't LATAM protecting its hubs too much? What other new route like Lima-Milan would LATAM launch in the short term?

Kamal Hadad:Thank you, Pedro, for the question. Lima hub is gonna— with the new terminal, the capacity is going to grow 50%. That's the endgame with everything included. So my opinion, there is space for anyone who is interested to enter to Peru to come here. We are not protecting, we are competing in all the markets. We have 2 airlines in the domestic, both of them really good, that we are competing with them. And in terms of the Lima-Milan that you're asking, yeah, we agree. Actually, if you compare our position to Europe and Brazil, we fly 8 destinations from Brazil to Europe, and here in Peru, we only fly Madrid. So there is a potential to grow more— Barcelona, Milan, some other destinations that we can fly in Europe. But the problem in our case is widebody. If there is a scarcity of aircraft for the narrowbody, In the case of the widebody, it's even worse. It's more about timing than there is no potential, in my opinion.

Rocky Lo:Those questions are interesting. A lot of people often ask, when are you launching this new route? When are you launching that route? Obviously, from an airline perspective, we evaluate demand. We look at, do we have enough demand to support that direct nonstop route? In many cases, we cannot get the math right. That example of the Lima-Milan, you know, we actually, by us launching the Lima-Montréal route, our timing is well connected to our Montréal-Milan route. So customers can easily, you know, with a one-stop connect to get to Milan via Montréal. And again, when you are doing connection in Toronto and Montréal, it's all under one terminal. And we are seeing, you know, some of the customers may consider not to transit in US for whatever reason, you know, given given the current situation. That is another reason why we think there's opportunity for people to connect via Canada to get to places like Milan.

Roxana Puente:Yes.

Mitzi Berberi:That's an excellent point as well. It's something I think that we try to promote is that connectivity between different airlines in order to allow more traffic to come to the destination. Yesterday, we heard also about this generation being quite anxious and stressed about everything. Stress comes from price. They're really very price conscious. We heard a lot also yesterday about how these taxes have a negative impact on customers and potential passengers choosing a destination over another. Another one is security. That's, I think, a big piece to look at. Connectivity actually plays to that. In case there is an issue, people want to know that they can get home easily. The fact that there's a good network and connectivity in terms will relieve some of those anxieties. I think through these partnerships, through different ways, virtual interlining and just resolving those anxieties, we would see an uptick in traffic to Peru.

Neil Glynn:Great. Thank you.

Garret Malone:Yes, come on.

Kamal Hadad:Sorry, may I say something else? In our case also, Lima, we have a hub-and-spoke strategy. Every Lima-Milan that we launch is going to be to connect, not only for Lima, it's going to connect Montevideo, it's going to connect Asunción, and so on. And we compete— Lima competes with other hubs, with Bogotá for Europe, with Panama for the US. And passengers are not going to pay $20 more because they want to connect in Lima. They don't care. They want to go for the cheaper price available, and it's going to be through Bogotá. So the discussion about the connecting fees and all of the discussion that we have in the previous panels is really important in the— as you were asking, Neil, before, of deciding where to put the aircraft because of the competitiveness of the hubs.

Neil Glynn:Absolutely. Thank you. Roxana, just keeping on the topic of enablers, within your work across the region, are there any lessons that Peru could learn from other countries in terms of enabling Yeah, actually, and I was just thinking about that because before this I was seeing the numbers.

Roxana Puente:I was 2 years ago here for another conference, and I was seeing the numbers. Back then we were taking as examples Colombia and Dominican Republic because those were the 2 countries that got to recover first from international visitors. So those are the 2 countries that got to, to to get more, even more international visitors than domestic. I was looking at the numbers from Peru, and even when they are recovering, and of course it's not more international visitors now, but in the recovery from 2 years from now, it's been on 7%. But it caught my attention that I was also seeing on the visitor spend, and it had, and comparing to last year, is at 22% up from last year. So I think that is a very good opportunity, and I see a very good opportunity on who is visiting and who Peru is attracting. Because from what I'm seeing, or from where— from our perspective, they are— that is the dream for a lot of destinations, to attract more travelers who tend to spend more, right?

Rocky Lo:So that is a really good number for the I think for any new route to be successful, at least from an Air Canada perspective, what we have seen in the past is we do need to work very closely with our tourism board partner, like in this case will be PROMPERÚ, because the tourism board partner is trying to get more visitors and stimulate more demand. I think the key is to make sure that you have the right partners. demand to grow the market size. From an airline perspective, we're trying to fill our seats profitably, right? We need to work hand in hand to promote the destination, to promote the route in order to get more visitors to come visit a new destination.

Neil Glynn:Great. I'm just conscious of time. We've just less than 9 minutes left. If there are any questions anybody would like to ask in the room, please just raise your hand. I don't want to run out of time, but we can— I'll ask again in a few minutes just in case. Thank you, Rocky. You've actually touched on my next topic, which is partnerships. Clearly a lot of stakeholders within the room. The need for everybody to work together to produce an optimal outcome is very apparent. Maybe to start with Kamal on your own partnerships. partnership with Delta and how that's impacting your growth and connectivity strategy.

Kamal Hadad:With Delta, you said?

Peggy Croes:Yes.

Kamal Hadad:Yes, we have a joint business agreement in Peru in particular and in South America as a total with Delta to operate the routes between South America and the US. We are really happy with the joint business that we have that is completing 3 years this October, actually. In terms of the numbers, actually, when you compare October '22 versus what we are going to fly October 2025, we have grown 60% in terms of the number of flights that we are flying as a whole South America.

Peggy Croes:Wow.

Kamal Hadad:We have grown 9 new routes. One route that I love to always talk about the potential for us in Latin America is that We are flying Lima Atlanta as LATAM. That without Delta will be impossible because actually seventy percent of the traffic are connections. But when you see the traffic that we are moving in those aircraft, eighty percent are people from the U.S. So are inbound tourists coming to Peru, going to Cusco, and visiting Latin America. So that's for me. benefit that we are getting directly from the JVA to our countries.

Rocky Lo:I fully agree. Partnership, especially for airlines, is so important. As mentioned earlier, we're only going to start Lima in December, but today, even though we don't fly into Lima directly, we actually have codeshare partner with Avianca via Bogota. In this region, we have codeshare partner with Avianca, GOL, and Azul. We also have partnership with Sky because we don't fly to Cusco ourselves, but we do know there's demand of customers that want to go to Machu Picchu via Lima. We need to work with other airlines that provide a service within this region in order for us to capture those demand.

Neil Glynn:Maria, how would you describe your approach to partnership with airlines in particular, but also your additional partners beyond the airlines?

María del Sol Velázquez:Well, for us, working with the private sector in general is very important as a state. I mean, we couldn't have anything done if it wouldn't be for the private sector. If we're talking about airlines, we have our strategic alliances with them, and what we intend is to help them promote our country. They have to present a plan of marketing and different type of marketing marketing tools, and that's very important for us because we promote the destination with them. They help us bring actually the tourists, of course, but we also are doing this type of work, these strategic alliances with airports too, not only with airlines.

Peggy Croes:Mm-hmm.

María del Sol Velázquez:We're working with LATAM. We're working with other airports internationally to promote the destination abroad. It's very important, and also we work tightly with the private sector here in Peru. Because they're the, as we said, the motor, the drive that actually help us convert. I mean, we can promote, but we need to convert. We need to bring the tourists here, and the private sector is the one that does it for us.

Neil Glynn:Mitzi, you mentioned virtual interlining earlier. How do you think about the most effective partnerships?

Mitzi Berberi:I think we come complement what the airlines are doing. We're here to increase the reach of airlines, so where those partnerships exist, that's great. Then where they don't, virtual interlining is there to help customers and passengers get to their destinations. We were looking at numbers earlier today, and about 60% of the traffic to Latin America and Peru specifically is from Europe, and then 60% of that is through virtual interlining.

Peggy Croes:Wow.

Mitzi Berberi:We're not here competing with airlines. We're really helping to fill that gap where it doesn't exist. I think they go hand in hand together. Great.

Neil Glynn:Roxana, your perspective?

Roxana Puente:From my perspective, and I would like to also set an example on this one, because we are talking about how destinations can work and incentivize and encourage people to invest or attract people to come to their destinations. One of the best examples we have seen, and I'm proud to say that it's in the Caribbean with Dominican Republic, that the government from the pandemic and from that time opened a lot of incentives to encourage investment on infrastructure, etc. A lot of hoteliers decided to build new hotels. It now has more connectivity. We all know that Arajet has been pivotal on growing this along with the government. They have a kind of a structure where they are all working together, and that is an example where we can see private and public cooperation. I think that is one of the clearest examples. Another thing is that the private industry has a very good communication with the public industry. So that is one of the best examples I have. But I would like to mention that there are also— that is not the one. Not all people have to follow the same lead. There are different examples that are good for different destinations. There are many other examples, and working together with other destinations can also make you see what are the best possibilities of doing a good Thank you.

Rocky Lo:I think that's the beauty of our industry. We often call this industry like a sport team. The whole ecosystem, you need to work together hands in hands. It doesn't matter if it's the tourism board, the airport, our OTA partner, travel agency partner, or other airline partner, our friendly competitor. You need to work together in order to carry that demand and to Absolutely.

Neil Glynn:Just final check whether there's a question in the room.

Garret Malone:No?

Dave Appleby:Great.

Neil Glynn:Pedro?

Kamal Hadad:Sorry.

María del Sol Velázquez:Please.

Neil Glynn:Oh, mic. We've got one coming.

Adam Scott:No, no, we've got one coming, Pedro. Actually, my question is thanks for answering.

Garret Malone:I wanted to ask you, I don't know if you're aware of this, but there are content creators in the region. In this case, for example, we have the YouTube creator called Levi from Spain, you know, where the whole local crowd has been driven by a world of breakfasts, you know, where Peru is actually one of the finalists.

Adam Scott:So actually, I want to ask you what you, your organization, or better said, how the travel ecosystem can tackle this user-generated content from us into more travel sentiment.

Roxana Puente:From our organization? So what we do is work together along— well, we as an organization, and as most of you know, have as our members almost 200 more important companies and also destinations around the world. We work— we don't only work for the destinations that are part of WTTC, but we tend to work along with all different destinations. So for example, in Peru, one of our members is Urbanova, and we have different members in different countries, but we work along together with all different countries to try to make the best standard regulations for everyone to travel to different countries. For example, another thing we advocate for is, of course, investment and different countries also creating new opportunities to investment in infrastructure, et cetera. An example of that is we have a yearly event that we have in different regions, and that is a decision that we took because, of course, having it on a very different region every year brings opportunity to different— to the region, to the countries, et cetera, to bring the focus of all these stakeholders that go to our event and bring new opportunities There's a lot of examples on the things that have— that our summit has brought as benefits for the places that we have been in, and not only for the specific place or the specific destination that we've been in, but also the neighbors or the different destinations that are part as well of the region that we are taking Great.

Neil Glynn:Thank you. We're at time, but I thought I'd just check whether Maria would like to make a final statement.

María del Sol Velázquez:Well, actually, that probably I haven't mentioned, even though we haven't reached yet the numbers of tourists arriving to Peru, it's good to mention that we have reached the expenditure— I don't know if that's the way you mention it in English— of the tourists. We're already on 109% above 2019. What does it mean? The type of tourist that is coming is different. It's a tourist that is staying more time. It's a tourist that probably has another way of seeing the experience of tourism. It's a more sustainable tourist, and that's what we want as a destination. We don't want to be a massive destination. We want to bring quality because we want not only we want our country to be known and to be already positioned as one of the best countries in the world because of its culture, its heritage, its nature, but we want to be sustainable on our patrimony and natural attractive, right? So I think that's a good conclusion saying that probably you don't. You don't need big quantity of tourists. You need the right type of tourists that brings you an economic growth that is even to the whole country.

Neil Glynn:Great, thank you. And thank you all for listening, and thank you to each one of my panelists.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.