Spotlight On The Middle East – Middle East Carriers And Outlook for 2019/2020

Transcript

Peter Harbison:I think it might be appropriate if you'd just like to, if you'd like to, have a couple of opening words about— Abdul Wahab, you've had more than a couple of opening words now, but you're also welcome to do it. But, Vincent, if you'd like to just tell us a little bit about Gulf.

Abdul Wahab Teffaha:Sure.

Peter Harbison:before we start. Would you like to do it?

Vincent Coste:Yes. So thank you for having me with you today. Listen, Gulf Air is, is one, I think, of the oldest, if not the oldest airline in the region. You sure you would know, right? We are going to celebrate next year our 70th birthday. So as a friend in this room told me one day, old is gold, and I truly believe that for Gulf Air we have a great past. However, the challenge for Gulf Air today is to reinvent itself because, you know, as you know, we have big neighbors in the region and Gulf Air doesn't have the intention to be another You know, Turkish Airlines or Emirates or Qatar or Etihad. So we have been working over the last few months in redefining our DNA and coming up with an idea which I think matches our ambition and the ambition of the airport, because we have a new airport which is going to be A little gem and coming out later this year. So we looked at the hospitality industry and we looked at the big hotel chains, the Sheraton, the Marriotts, the Hiltons, and all these big hotel chains with high standards, with presence all around the world, and we looked at another model in the hospitality which is the boutique hotel. And, and we worked over the last few months in how do we translate this boutique concept into an airline. So we came up with a bunch of ideas. It obviously starts with—

Peter Harbison:Well, we'll explore those perhaps a little bit in the context of the others.

Vincent Coste:You could have me talk for hours on this, but, but that's, that's the idea for Gulf Air.

Peter Harbison:Thanks. Yeah, an interesting conundrum you've got. Abdul Wahab, are they the oldest in the region?

Abdul Wahab Teffaha:I'm sorry?

Peter Harbison:Is Gulf the oldest carrier in the region?

Abdul Wahab Teffaha:No, actually, but it's— should I? I think I need to open this. Is it on? Yeah. Oh, quite on. Gulf Air is one of the oldest or the most Yes. Known names in the region. The oldest airline in the region is EgyptAir. It was established in 1932, one of the pioneers in aviation. Then you have a number of airlines which were established in 1945: Middle East Airlines, Saudia, Iraqi Airways, 46th Syrian Air and so on. Then probably Gulf Air was the very first airline to be established in the Gulf, followed by Kuwait Airways. In the Gulf, I mean other than Saudi Arabia, this part of the Gulf, followed by Kuwait Airways and more recently, of course, the other—

Rohit Ramachandran:Qatar Airways.

Abdul Wahab Teffaha:airlines of the Gulf. So that's the chronology of the establishment of the airlines in the region.

Peter Harbison:Thank you for that. And of course, Gulf was a big experiment in multilateralism, wasn't it? It was the regional airline representation which then gradually started to erode as the new Gulf carriers emerged. So I did, I flew Gulf Air a long, long time ago.

Abdul Wahab Teffaha:Well, I mean, if I want to say something about Gulf Air from the historical standpoint, it was other than SAS, it was the only airline in the world which was owned by a number of governments because it was established by 4 governments, by Oman, UAE, Bahrain, and Qatar.

Ahmet Olmustur:Yes.

Abdul Wahab Teffaha:It stayed as such for a long period of time until 1985 when Emirates was established and then others followed in establishing their own airlines. For all intents and purposes, Gulf Air used to be, with the model that it used to have then, it was the crown jewel of the airlines from the service standpoint.

Peter Harbison:Yes.

Abdul Wahab Teffaha:I flew Gulf Air recently and still is a crown jewel for me from the quality standpoint and the efficiency and the friendliness of the people, and it's really a great airline to fly with.

Peter Harbison:Good, thank you for that. Now, Jazeera is not so old.

Rohit Ramachandran:Yeah, we're probably the youngest airline on stage today. We began operation in 2004. In a number of respects, it's slightly different. One, we are one of the very few non-government-owned airlines in the Gulf, one of, I think, only 2 or 3 airlines that are listed in their respective stock markets.

Peter Harbison:Mm-hmm.

Rohit Ramachandran:And of course, we're very happy that we're one of the very few airlines that are profitable and have been for several years. Most recently, we announced 7 million KD, roughly $22 million dividend back to our shareholders. But we are still a very small low-cost airline, about 9 airplanes as we speak, moving to about 13 airplanes by the end of the year. All of them are A320s, which with the recent additions being A320neos.

Peter Harbison:Right.

Rohit Ramachandran:We were, I believe, more by accident than design, the launch operator of the A320neo in the Gulf. We have one of the highest aircraft utilizations globally with approaching 15 hours per aircraft per day.

Peter Harbison:That's pretty impressive. Now, you, you were talking to me before because we described you as a full-service carrier.

Rohit Ramachandran:Yes, I don't know whether to take it as a compliment or an insult, but, but there we go.

Peter Harbison:We never, we never insult anybody, so please take it as a compliment. But, but I mean, why that's interesting, I think, is because you, when you started, the model was very much low-cost.

Rohit Ramachandran:Yes.

Peter Harbison:But you had to adjust a little bit to suit the needs of the particular markets you were serving.

Rohit Ramachandran:Yes, I mean, While we have maintained the basic tenets of the low-cost airline bible, we've been entrepreneurial and customized the model for this region. The basic premise still remains, which is make sure that we keep our internal costs low and pass on the benefits to customers in terms of lower fares. And of course, all the main elements that constitute a low-cost carrier, including a large percentage coming in as online sales, high utilization, making sure that ancillary revenue drives a big part of the business, that you have à la carte pricing and passengers pay for, for the add-ons that they buy. They're still a very important part of our business.

Peter Harbison:So what were the particular adjustments you had to make to fit the market though?

Rohit Ramachandran:I think the biggest one would be the fact that we have started distributing through travel agents and also having distribution through GDSs. However, it's not the same full-service agreement that legacy airlines sign up with GDSs. It's more appropriate for low-cost airlines, and we surcharge those fares so that the channel itself is cost-neutral for us.

Abdul Wahab Teffaha:Okay.

Peter Harbison:Right, right. Okay, we might explore that a bit more. Now, Ahmet, Turkish Airlines has been around for a few years. When was Turkish started?

Ahmet Olmustur:Well, Turkish Airlines is one of the oldest airlines in the region. We just position ourselves somewhere between Europe and Middle East. So it was founded in 1933, almost like 86 years ago. 86 years ago. Now Turkish Airlines has been operating with 335 aircraft, including cargoes. And one of the biggest trademarks of Turkish Airlines, we are always underlining its network power in the world. In terms of flying number of countries, we are flying 124 countries in the world. In terms of this ranking, Turkish Airlines is number 1. So we fly 308 destinations. And Not only Turkish Airlines is always just known with its huge network size, but also with the quality of Turkish. We have been awarded by many independent audit companies many times. So just a quick sum-up.

Peter Harbison:And your, your model, I mean, in very simplistic terms, is very different from, say, Emirates, because your reliance on short-haul to connect into long-haul is much, much greater.

Ahmet Olmustur:Yeah, yeah, you're right. Well, as a global network carrier, due to the geographical position of Istanbul, we can reach with narrow-body aircraft to almost like 200 cities. Just if you just make a 3-hour circle just in the center of Istanbul, we can fly in the west of Portugal to Stan countries in the east, You know, almost like, you know, the sub-Saharan countries, then, you know, the north. So yeah, it's a great combination to just mix up the narrowbodies with the, you know, the long-haul flights. So one of the good things we made in the last 15 years, because to be a global network carrier, you should always utilize the optimum rate. So how many— narrowbodies should I have to feed the longer flights? So we made it great in the last 15 years. So the result is now in 2002, we were having only 1 million transit passengers internationally. In the last year, 2018, we already passed the 20 million.

Peter Harbison:Yeah. And that is what proportion of your total?

Ahmet Olmustur:Almost like more than 30%.

Peter Harbison:30%.

Ahmet Olmustur:Yeah, only international to international.

Peter Harbison:Yeah. Yeah, and I mean, just continuing this contrast with the Gulf carriers, you also, of course, have a very big point-to-point market. Yeah, both inbound and outbound. Yeah, which helps to support the transfer traffic.

Ahmet Olmustur:Yeah, you're right. Well, Turkey is one of the most visited countries in the world. Based on the 2015-2016 numbers, we were in the 6th position in terms of visiting countries, so Also, considering all the superconnectors, by your term superconnectors, I learned from you, Turkish Airlines has a unique feature. We have domestic market. So, all in all, well, as I mentioned, 30% international to international, but our local market is always great and, you know, big, not only for Istanbul but also Including all the Turkey markets. So based on our plans, you know, we have 325 aircraft. We're going to have more 200 within the next 5 years. So with the addition capacity of the new Istanbul Airport, we are very happy for that. So we will be continuing to make great growth for the next years.

Peter Harbison:That's pretty, pretty impressive growth, not just for the future but in the past as well. Yeah, you have one disadvantage though. Geographically, you're just a little bit off the best axis in the world, aren't you? I know because you can't fly to Australia.

Ahmet Olmustur:Australia, yeah, we're working on that.

Peter Harbison:But you are a little bit just off the ability to connect any 2 points in the world, aren't you, with the existing aircraft?

Ahmet Olmustur:Right, except Australia.

Peter Harbison:Well, yes, that's a great hole in your network, obviously. Vincent, let's go back to you. Now, having talked a little bit about the different models in the market, you have this dilemma. You were a multinational airline which gradually saw it chipped away, and you're now very much a national carrier based out of Bahrain. You really do have a little bit like Oman in some ways too. You do have this dilemma. Do you try to—

Vincent Coste:Yeah.

Peter Harbison:Emulate to a small extent the connectivity, short to long haul, or do you actually become much more of a niche regional carrier?

Vincent Coste:No, no, so we are clearly a connecting carrier. The boutique model doesn't mean that we don't offer a product on different markets, and we have in fact a very big part of our traffic which is short-haul to long-haul, and we have 58% of our passengers which are connecting passengers. So, and this rate is actually increasing. So becoming the boutique airline of the region means flying to a few long-haul destinations, boutique destinations. So, you know, in priority, premium Europe, premium Asia, a few premium leisure routes and connecting the region to these destinations. And we have a unique opportunity which is the new airport in Bahrain which will be also a boutique airport in the sense that the connectivity will be extremely easy, extremely short. It will be a cozy airport, not like a huge connecting hub. And, you know, for having lived in the north of Italy, I remember that when I had to choose between Munich and Frankfurt when I was flying on a connecting flight, I was choosing Munich systematically. So our ambition in the long run, or not such a long run, is to be the preferred carrier for a passenger who has to connect in one of the big hubs in the region, thanks to the very good product, but this convenience.

Peter Harbison:Absolutely.

Vincent Coste:of Bahrain as an easy, convenient airport for the, for the premium travelers in the region. So we are clearly a connecting airline for sure.

Peter Harbison:So, but you're not the only smaller carrier in this, in this region who wants to become something of a niche operator, are you? I mean, we've talked a little bit about how you differentiate. You're friendlier and you've got very high-quality service. But in, in, in the medium term, when you see a lot of other smaller carriers reassessing their niche networks and their niche operations. How do you continue to differentiate that going down the line?

Vincent Coste:So listen, we have obviously, you know, the classic tools which are a fantastic product, and we have these new Dreamliners which are going to be our only long-haul aircraft since we have this Falcon Gold product or a business class cabin product, we managed to take a lot of market share including on direct competitors between Bahrain and London, for example.

Peter Harbison:Mm-hmm.

Vincent Coste:We have 2 daily flights on Dreamliner which are absolutely full in business class, which was not the case with the former product. We have engaged in terms of servicing into a, you know, strong improvement of our service on board. We want to become within 2 years a 5-star Skytrax carrier. If you are boutique, you have to be perfect in the service, right?

Peter Harbison:How do you do that though? I mean, this is increasingly— we're talking, I mean, we're talking about ancillary products as well, which is basically low frills, and that's where you generate a lot of revenue. This is, this is increasingly a commoditized market, isn't it? I mean, price Whatever anybody says, price is number one typically. I mean, I can, I can love your product, but if I've got another operator who's half the price, I'm going to fly on that.

Vincent Coste:Listen, something amazing is happening for, for us right now. We have with these new Dreamliners 27% capacity increase for the first quarter 2019. So 27 capacity We managed to carry 30% passengers more and we increased our average ticket value by 4%. It's the first time it ever happens to me to increase our average ticket value while we have to absorb such a big capacity in the process. So somehow it seems to work. Of course, this goes with a much more restrictive distribution strategy. Mr. Teffaha, strategy, especially through the travel agent. We've cut a lot of private fares, discounts, etc. We've been much more strict in the way we sell ourselves our fares. But overall, this works. We— I was telling you about this Bahrain-London route. We managed to sell at a higher fare than our direct competition. on this route, and people are buying it. Are buying it, the fare, not the concept, but it's working actually well. But being boutique means that we, by remaining a small airline, we don't have so many more seats to fill, which allows us to play on the quality of the revenue. If we were— if we had like hundreds of aircraft and we If we are growing by 30%, then it would be another discussion.

Peter Harbison:So you're suggesting— Abdul Wahab, I'm going to come to you in a moment because I saw you shaking your head about that.

Abdul Wahab Teffaha:I'm enjoying listening.

Peter Harbison:You were suggesting in there, I think, if I got it right, that distribution is a very important part of that niche operation, that you've got to get that equation right.

Vincent Coste:Well, today we sell only 20% of our tickets Tickets directly, which is very low. Our ambition one day is to be like our neighbors and maybe to go to 50-60%, and we have an entire, you know, focus on the e-commerce, obviously, and ultimately ancillaries. Our ancillaries are doubling compared to last year in terms of revenue, but we We can do much more. We are launching our branded fares by the end of this year which will allow our customers or the company to upsell certain fares by giving more benefits to the upper fares. So it's a mix of— it's a mix of actions, but distribution is definitely this year a big project because when you are full, you'd better look at your distribution So, Abdul Wahab, it's not a commoditized market?

Abdul Wahab Teffaha:To a certain extent, it is, but I'll give you an example of my own travel. There are certain airports in Europe that I'm willing to pay more for my travel to avoid them because of the complexity, of the transit in those airports. Now, luckily, there are airlines which are competing also on the price, so actually making use of the benefit of the facilitation plus the price. But I would say that the highest yield is usually lured by the attractiveness of the whole product. Part of the product is the facilitation product, what the airport is, how does it deal with the passengers, what kind of logistics do you have inside the airport. I like the idea of the boutique airline, boutique airport being Because sometimes when you travel, you want to stay at a boutique hotel because it's more attentive level of service. I'm not saying that everybody is going to be like this, but there is a niche for that. Kudos to Gulf Air who thought that having in the midst of giants around it, To think that, well, we need to have a niche and they created the niche for themselves and the label boutique is a very, very befitting label. Congratulations on that.

Peter Harbison:And good luck.

Abdul Wahab Teffaha:Thank you.

Peter Harbison:So, Rohit, I mean, I guess you've probably got a slightly different take on commoditization and price, the importance of price.

Rohit Ramachandran:Yes, in my view, the front of the cabin and the back of the cabin have different dynamics. And I believe for short-haul economy class travel, that's within 4 hours flying time, a passenger looks for the following attributes: a good price, the schedule, a comfortable, clean airplane and on-time performance. My experience has been that caviar and champagne figure much lower on the list of priorities.

Abdul Wahab Teffaha:Speak of yourself. Caviar is—

Vincent Coste:Yes.

Rohit Ramachandran:So for a 4-hour flying time, I believe these are the attributes that a customer looks So beyond 4 hours, things start to get different? I believe so. Beyond 4 hours, a lot of other attributes begin to gain importance in the decision-making process.

Abdul Wahab Teffaha:You know, Peter, honestly, with my somewhat long experience, what I came to see is there is nothing called One size fits all. There is no size that fits all. Now, what is very important is to find your niche. Which is your audience? What is your target market? How can you provide the customer with the ability to be in the driver's seat? Because the old days of airlines being—

Peter Harbison:Monopolies.

Abdul Wahab Teffaha:commoditizing in terms of this is what you have and you need to take it no matter what are over. Now it's all about what can you offer the passengers so that you can appeal to different kinds of aspirations, different kinds of thoughts, different kinds of behavior of people. It's really about the individuals. Now, the trick is to be able to identify which kind of individuals you want to attract, deal with them the right way, offer them the right product, and then try to complete the circle by having the whole chain of the travel as convenient as possible to them. The marketplace in travel is quite competitive. No airline can claim monopoly unless, unfortunately, you are living in the US nowadays. No airline can claim monopoly over the passengers. Now, unfortunately, and since I mentioned the US because they are always vocal against any possible competition coming to them from anywhere in the world. You know, now you ask the passengers in the US, how do they feel about being controlled, passenger behavior, passenger travel, what do they have, what are they offered, being controlled by a few airlines? They don't like it. Nobody likes it. Actually, it's anti-competitive, and I don't understand why the regulators in the US do not step in and start saying enough is enough. The US is the torchbearer of free market economy to the extent that it is competitive, not anti-competitive. Coming back to the region and including Turkish, including all the other airlines who are competing for that global passenger, I think each airline has identified its own space. It's not a comfort zone because that space is so dynamic to the extent that you need to think about what to do every day in order to address the customers you want to attract. These are the rules of the game of the airline business nowadays. Maybe this is why we're not making so much money.

Peter Harbison:Yeah, well, we won't go down that track just for now. I'm going to come— we're going to finish off this discussion on what each of you think the outlook is for the region. But before we do, I'm at— I mean, that's a good lead-in, I think, from what Abdul Wahab was saying there about the US particularly. I mean, the US has been— and I'm sure there are many people in this room who feel the same way as you do.

Abdul Wahab Teffaha:Yes.

Peter Harbison:the US airlines anyway. And there's a distinction, I think, between the US government historically and—

Abdul Wahab Teffaha:Yes.

Peter Harbison:Developing open skies and the US airlines who didn't actually want open skies. They wanted it just the way it was. But Turkish, you've sort of been able to keep under the radar very much in terms of the assault by the Gulf, the big 3 in the US against the Gulf 3 carriers. But at the same time, You're obviously not a niche carrier, so the whole issue of market access, if you want to continue to grow, is, is just critical to you.

Ahmet Olmustur:Right.

Peter Harbison:So where do you see that going now? And, and, and, you know, first of all, just how important is it to, to you to, to keep feeding what's going to be a much, much bigger hub?

Ahmet Olmustur:Yeah, thanks, Peter. I think we can discuss this issue in 2 categories. The first one, for the hubs especially, we've fly, and for the hub we use as Istanbul Airport. Well, one of the first things we can take into account, especially for the global hubs in Europe, they're all congested, such as London Heathrow, Paris, and Amsterdam. So I can give you an example. In 2015, we bought the slots of Scandinavian Airlines to provide a better connection from London to Far East flights. So when it comes to Amsterdam, you know, Amsterdam is closed at night. We fly 4 times daily to Amsterdam. We change all the types of aircraft from narrow-body to wide-body in order to solve the capacity problem. So as an airline flying to a number of— most number of countries and just providing 100,000 origin destinations in its network, it's so important to get the feeder power of these hubs.

Peter Harbison:So let's just say that again, 100,000 O&Ds on your network. Yeah.

Ahmet Olmustur:So we have to get the power of these, you know, the big hubs in order to feed our flights. On the other side, when it comes to, I think, how can we overcome and how can we solve the problem, I think our own hub, new hub, is a great example for that.

Peter Harbison:How?

Ahmet Olmustur:Let me explain. You know, we just— I'm sure most of you followed earlier this month, we just moved to our new hub, Istanbul Airport. And the old one, Istanbul Atatürk Airport, including all the departures and, you know, the landings of all other airlines and also for Turkish Airlines, we could make only 73 to 74 movements per hour at Atatürk Airport. So, it was congested.

Peter Harbison:Right.

Ahmet Olmustur:So, when it comes to Istanbul Airport, it went up to 80 movements per hour, even at the beginning. So, please take into account that 6 runways has already been projected and the 3rd one is on the way. So, when it will go live, I mean like the 3rd one, we will have capacity of, in terms of, 110 movements per hour. So, not only it solves and not only it does provide provide to, you know, provide a better connection opportunity for Turkish Airlines. I mean, like this increase in the hub of Istanbul, but also for other airlines, they can fly in the right time, in the right slots to feed their network. So, I believe that Istanbul will be a leading hub for the future in the next years.

Vincent Coste:Mr.

Ahmet Olmustur:Teffaha, And also sometimes we just come across these kind of issues. We like to increase the number of flights to some destination, but they ask us correspondingly, I'd like to fly this time in Istanbul, can you just do it? Of course, it is controlled by the government agencies in Turkey, but—

Peter Harbison:Which is influenced by Turkish Airlines, of course.

Ahmet Olmustur:No, definitely not.

Peter Harbison:That would be very unusual if it's not.

Ahmet Olmustur:So at the end of the day, Istanbul has already solved this problem, and I believe that it should be solved by the other airports in Europe.

Peter Harbison:Yeah, but I mean, you're increasing— when we talk like this, you're increasingly a threat to these other airlines, to the established airlines. Do you see that market access of Turkish being able to fly into those other countries with higher frequency, quite apart from the infrastructure? Do you see that as a challenge to your hub status? I mean, are people starting to push back more than they used to?

Ahmet Olmustur:Well, let me give you an example. An African airline and 2 new Chinese airlines, they are going to fly to Istanbul after the new movement because they found a slot in Istanbul. So, we believe if you like to make Istanbul one of the leading hubs world, we like to have more flights from other airlines. So we're not seeing it as a challenge, we're seeing it as a contribution of other airlines. So we like to cooperate with them because I have a meeting for tomorrow, Sichuan Airlines coming from China to Istanbul. So, well, I believe we fly 110 cities in Europe and I need more capacity in China. So If we can cooperate, it's a win-win situation for both airlines.

Peter Harbison:Yeah, I think China's got something like 29 international airlines. Are you going to let them all come in?

Ahmet Olmustur:Well, actually—

Peter Harbison:More seriously though, I mean, the Chinese market and the Chinese airline growth is obviously a big threat. Do you see it as a big threat?

Ahmet Olmustur:Challenge? Well, as of today, mostly the big The 3 giant carriers of China, I mean China Southern, China Eastern, and Air China, they put most of their capacity in domestic routes. Of course, when they just start to grow in international markets, transit markets, they will have inevitably an effect for superconnectors as well as the other airlines. But there's always, you know, the— The competition. Full side of the bottle. I remember from your presentations you made in Singapore or Dublin, where else, you said Chinese tourists spent $115 billion per year in 2017. So it's a different part of it, but as long as the Chinese carriers start to fly your home markets, it's always open to that situation always open to new opportunities in China because, you know, it's the type of that market. So I believe that we are very happy to just hosting the, you know, Chinese carriers in Istanbul. If they would like to fly more, we will be helping them.

Peter Harbison:Yeah, and partner with them maybe?

Ahmet Olmustur:Well, depends. At the beginning it's interline. Yeah, but then continue.

Peter Harbison:You're a Star Alliance carrier.

Ahmet Olmustur:Right, but I mean, like, you know, interline, we believe interline is still, I mean, like, working, especially you have a big network. So we're just going to talk about, I mean, like, you know, the Sichuan and the others about interline options.

Peter Harbison:Okay, interesting. I mean, yeah, niche carriers have challenges, big carriers have big challenges. Yeah, 5 minutes left. Just Just fairly briefly, you know, I cast a fairly perhaps doubtful outlook for— which is obviously a lot to do with the economy, not just with the airline industry. Starting with you, Vincent, what's your outlook for this region? How do you see things? I mean, and translate that into terms of how you prepare for what's likely to happen in the next year or 2.

Vincent Coste:Well, listen, from my point of view, I see great optimism in the outlook, I mean, at least for Gulf Air, and I would say for 2 reasons. First, I see a market that remains, you know, even if you showed earlier this morning that Middle East has reduced in terms of capacity, I think it was January or February, the— This IATA—

Abdul Wahab Teffaha:outlook.

Vincent Coste:I mean, we have carried in the first quarter plus 30% passengers, which shows that there is demand, and I see this demand, you know, I see this demand at least for Gulf Air positively in the coming 2 years. The other thing, the other element that gives me quite hope, quite a lot of hope, is the typology of this traffic because this region has roughly 50% of its population which is less than 30 years old. And this— and I have quite a few of my team at Gulf Air, we call them the millennials.

Peter Harbison:Sorry to interrupt there. I mean, we haven't got much time left. That's the big picture, sure. There's lots of potential, but in the next year, next 2 years, are you taking any specific— Specific action, do you think there's any change in the outlook in the immediate, the short term? No? Business as usual?

Vincent Coste:I mean, for us, we have a capacity growth of +15% for the full year.

Peter Harbison:Pretty good.

Vincent Coste:And in our budget, we are going to fill up this capacity and even a little more, a little above this capacity. So I have to be optimistic, but so far what I've seen in Q1, Yes. The smaller one is— I mean, it's working. What I was mentioning about the typology of this traffic, these millennials, is that their decision to travel, and this is applicable for any of the models around this panel, they— if you trigger the right levers, the right promotions, The right destinations, the right, you know, if you put the right marketing into place, and I've seen it, they are extremely reactive. I mean, if we see in 2 months that we have a gap in forward bookings, we put something in the market and we immediately see some—

Peter Harbison:Okay, so your outlook is pretty positive?

Vincent Coste:Yes, definitely.

Peter Harbison:And I mean, from your point of view, Rohit, are you seeing any shift in the market at the moment? What's your short— I'll come to you last, Abdul Wahab, to give us a final wrap. Are you seeing any changes in the market, any subtle changes?

Rohit Ramachandran:Peter, at the best of times, our business is a very challenging business, and these certainly aren't the best of times. And I think if you just look at the number of airline failures in the last 6 months, including within A couple of hours flying time from here. It tells you that things are not good. And if— I learned very early on from an old boss of mine that the important thing is to run it as a business. It so happens that you are in the airline business, but at the end of the day, it's a business. And I think until a lot more focus goes into cost cost side of things and we don't delude ourselves by just going after seat factors. I think the cost side of things need, as an industry, a lot more scrutiny.

Peter Harbison:Mm-hmm.

Rohit Ramachandran:It's going to be tough. External costs where we have no control such as fuel, not making things easier. So one of the things we have done is to diversify up the supply chain so We actually launched our own terminal for the— to the best of my knowledge, we are the only airline in the world that has funded, designed, built, and now operate our own terminal as Jazeera Airways. And that has the ability to rival the P&L of the airline in due course. I think we need all the help we can get to give our returns to Good luck.

Peter Harbison:Yeah, that's a nice, nice frank answer. And Turkey, I mean, Turkey obviously has some very significant economic problems at the moment, some issues that are really significant. And because you're predominantly a point-to-point market, that's obviously going to have an impact on Turkish people flying internationally anyway. It's helped that it's cheaper to fly into Turkey now. How do you see the, the What is the outlook in the next 2 years?

Ahmet Olmustur:We have different types of passenger segments. Well, if I can count, well, the top 5 is the number one and the most important for us, the international to international passengers, then international to Turkey, Turkey to international as just mentioned, then international to Istanbul and Istanbul to international. So we have lots of options to, I mean, like just to work, I mean, like how we can just, you know, if we see a problem in one segment, so we may just, we just make our plans how we can just, you know, shift from the demand from that, you know, passenger type to other types. So, and also our huge network size is always giving us a huge opportunity to just shifting the capacity from somewhere else to somewhere else. So, because We had some experiences, you know, in the last decade, so how we can just overcome these kind of issues. So for the next 2 years, even the 5 years, I mean, like, you know, we are still having, you know, the great growing plans. I mean, like, you know, almost 8% to 9% ASK every year. So I believe, well, with the, you know, position and the attracting of Turkey, we will be having great results for the next years.

Peter Harbison:Good. Good to hear. Abdul Wahab, in 1 minute, what's the outlook? You've had a bit of a talk about it already.

Abdul Wahab Teffaha:In a couple of sentences, we will get wet. We will dance in the rain. We will get wet, but Having been in the region for a very long period of time is equal to a flu shot. We will not get the flu. We will survive it. We will be dancing in the sunshine again, hopefully in a short period of time.

Peter Harbison:I think that's certainly one thing that among many that most of the airlines in this region can talk about, the resilience. in the face of losing, say, the Syrian market suddenly disappears, or the Libyan market. And it's quite remarkable, as I said before, how it survived. But yeah, well, it's nice to hear, you know, obviously there are some clouds on the horizon. We're all sort of looking optimistically, which is why you're in the airline business in the first place. You don't go in it for logical reasons. You go in because you're optimistic. No, but seriously, there are different issues, as we've seen, facing the different, different types of airline and different responses to it. So I think that's, that's been quite an instructive session. So ladies and gentlemen, if you'd thank our panel for us, and this way.

Ahmet Olmustur:Thank you.

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