SriLankan Airlines, CEO, Richard Nuttall at the CAPA Asia Aviation Summit 2022

Transcript

Richard Nuttall:I don't think anybody really knows. I think it's very different also by different parts of the world. But at the moment, you know, you've got all of this pent-up demand and you've also got constraints with infrastructure and these kinds of things. So there will be a time when you know, the, the infrastructure catches up with the demand. But I think that's going to be different in different parts of the world. So maybe it's going to happen in domestic US, certainly before it happens in Asia. I mean, a lot of Asia hasn't even really opened up yet. So, yeah, I don't know the answer, but I suspect that certainly for a small carrier like ourselves, you know, if you, if you look at where we are flying to Europe, you know, we've done really well out of the pent-up demand. But, you know, tourism is still to come. But we suspect that maybe 6, 9 months the yields will start to soften a little bit. But by then, hopefully, you know, Asia is opening up a little bit more. India is coming back to Sri Lanka and China is opening up. So difficult to know. But, you know, I think we could find, depending on where we are in the world, that it's still pretty good for the next 18 months. I think it's different for every airline, although I'm actually not sure how many people have really made money flying to China. I think they have during COVID because it's been so constrained. But if you look at normal times, you know, I've worked for a number of airlines that have flown to China and yeah, it's been okay, but not great. So I mean, there's a lot of demand there, but I think it's quite competitive. I mean, you've got all of the Chinese carriers. So yeah, we'll see. For SriLankan, You know, the Chinese market was 3 years ago pre-COVID, and I wasn't around at the time, but I understand that it was actually quite good for SriLankan. So we'll see. If you look historically, it's probably been 65% point-to-point, 35% connecting. Recently, it's probably been a little bit higher connecting, but traditionally there's been a lot of labor traffic from India to the Gulf, some of it blue-collar, some of it white-collar. And also connecting to Europe, but that really is is very competitive. You know, you've got the Gulf carriers with their own economic models, and there's also been connectivity, particularly from the Indian subcontinent going east. But I think that's where it needs to grow. So I think you know in time we'll we'll gradually move the sort of center of gravity of that connecting traffic a little bit further east. So you're going to have the Indian subcontinent going east, and I think we also have an opportunity. If we can grow the fleet longer term for East Africa and the Indian Ocean. So, you know, if you look at somewhere like Nairobi in Kenya, at the moment there's limited direct capacity to the Far East. There's some, but it's limited. And most of the via is going via the Gulf. Well, if you fly to the Gulf, you fly 5.5 hours from Nairobi and then 4.5 hours later you're flying over Colombo. Why not just fly 5.5 hours to Colombo and then, and then go on? So You know, I think a bit of East Africa and a bit more of the Indian Ocean also, in addition to that, that Indian traffic.

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