Uriel Holdings and Reward-U/U-Fly Update

Transcript

Andrew Cowen:So Uriel was set up about 15 months ago, and its basic— as I said, it's the parent company of Hong Kong Express— and its basic objective is to provide an end-to-end travel opportunity and range of travel products. So rather than just be limited to providing flights. We are, through Uriel and its associated companies and brands, offering flights, the ability to book hotels, packages, activities through our U-Explore brand, and then so on. We've got a big opportunity. We believe that the passenger who invariably is booking a flight first is then going to be thinking about whether it's a leisure trip or a business trip. You know, a number of other components of the travel. So hotels, ground transport, you know what they do when they get to the destination. So the fact that we've got the customer making the flight booking first gives us a great opportunity to try to continue to do business with them, to continue to make you know other components of the travel journey available to them. And and therefore, really, Uriel's all about you know assembling an ecosystem. You know. Community of travel brands, not just our own. We will partner with a number of different, you know, third parties to give a really very rich and broad spectrum of choices. Reward-U, our loyalty programme, is a very important component of that because we don't want to just compete on schedule availability or room availability or price or, you know, destination or location, but to also, you know, reward travelers who book with us at the various stages and, you know, with Reward-U points, you know, as a means of helping to keep them within our community, within our ecosystem. So that briefly is what Uriel Group is all about. Yeah, so Reward-U was set up about just over 18 months ago, and it has grown really very, very quickly. It's already got to 1.2 million members. And so that makes it one of the biggest loyalty programmes in, in Hong Kong. It's a points-based programme where the, the, the amount of points you earn, you know, is linked to the amount you spend. So, and so that's a much more, in a way, equitable reward scheme than, you know, some of these more old-fashioned mileage-based programmes. And so that's gone down very, very well with our travellers. And not only have we got a very simple scheme, but we've set up a very, you know, big network of third parties where you can earn points. So you can earn points obviously when you travel at the moment just on Hong Kong Express, but we hope to extend it to the other U-Fly carriers. But you can also earn points when you book with our partners such as Hotels.com, Bank of East Asia, when they— well, it's not book with them, but you use some of their products when you book, you know, with Agoda or rental cars or even just shopping in a variety of shops, you know, around Hong Kong. So that's giving our customers the ability to build up their points balances very, you know, very quickly. And they can then, you know, redeem those points, you know, for travel on Hong Kong Express, either a full ticket so that they don't have anything to pay, or just they can pay part cash, part points. So that's obviously very valuable. Our estimates are something like 20% of HK Express's passengers on average are paying for their trip You know, at least in part using Reward-U points. It's a very effective loyalty tool, meaning that HK Express doesn't have to compete all the time, you know, on price. So business has been going very well. The next steps is that we would like to roll Reward-U out to our, you know, Chinese partner airlines in the U-Fly Alliance. So we hope to do that. That would give much greater breadth and scale to the, you know, to the programme. But this is quite a big step, you know, the Chinese market is obviously very complicated and challenging. So as part of that, we're, you know, we're looking to, you know, bring in a strategic investor or strategic investors, you know, to help us grow and develop the programme, not just in China but into a whole You know, a whole range of additional travel-related activities. So that's one of our projects on at the moment. U-Fly Alliance has been running for two years, and we've got five airlines in U-Fly Alliance, which are HK Express, Lucky Air, West Air, Urumqi, and Eastarjet of South Korea. We've made some good progress over over the two years. Most of that. Work has been about how we can start building out the U-Fly branding, you know, just build some awareness on that. And quite a lot of work on where we can increase the interline opportunities between the different airlines. This has been actually a very challenging area simply because in so many cases, the airports that most of the U-Fly carriers are flying to are quite you know, congested. So slot difficulty, you know, slot availability and so on means that some of that, you know, that schedule coordination that would facilitate interline has been, you know, quite challenging. But we've been, you know, chipping away, you know, at that. And, you know, we've had issues like, for example, there was a lot of natural interline opportunity between East Star Jet and, you know, some of the Chinese LCCs. But then, of course, you know, some political problems emerged between China and Korea. So in that sense, you know, progress has been a bit slower than we would have liked. But we've got 3 more carriers have signed up to join U-Fly Alliance. We hope to announce those quite soon. And the other area of particular focus over the, over the, over the past 2 years has been where we are able to serve common airports and to interline, is to put in place contracts with key suppliers. For example, ground handling, and Swissport's a great example where we can aggregate the flights across the U-Fly carriers under a kind of like a volume discount contract. And therefore extract some you know cost you know cost synergies. So there's been a lot of work on that. You know, and ground handling is probably the best example. But we we've got we've done work in really you know most of the you know operating cost areas and contracts you know that that apply at each of the airports that airlines fly to. Certainly China is is a Is a key focus of UFLY Alliance. You know, for us, this is a total no-brainer. All the you know international aviation commentators, I think all agree that the Chinese outbound travel market is you know is the probably you know most important travel theme of the next ten or twenty years. So the we're very focused on how do we build up the you know our our position in that China. A market. How do we— how do we expand the footprint of each of the airlines? But how do we build a very strong U-Fly Alliance platform in China? And that, we think, sort of positions us very well to participate more widely in that— in that China outbound market. It also means that by focusing on China, we actually you know, focusing and building, you know, integration with, in a sense, one country's carriers. You know, it's a lot easier to do if you're dealing with one country, not forgetting Eastarjet, than multiple countries. You know, there's many complexities of organizing, you know, interlining, you know, cost synergies and so on. With multiple airlines in multiple countries. So, you know, that's really why our focus is very much on building that China platform. We think that the, you know, the core of U-Fly Alliance will always be, you know, LCCs and independently branded LCCs and so on. But the objective of U-Fly Alliance is to increase travel opportunities, to, you know, to increase the range of destinations that those airlines can make available to their customers. Realistically, that range of, of, of destinations is not just going to be about short haul. And, you know, many people will do a combination. Many travelers do a combination of short haul and long haul trips, perhaps business and leisure and, you know, and business. So interlining with full-service carriers is a very natural step for us. Hong Kong Express is already interlining with Hong Kong Airlines and is, as you might expect, working on interlining with Virgin Australia. So, you know, they won't be members of the U-Fly Alliance, but they will be friends. And And I think by working together, it means we can sort of stay focused on our businesses, but at the same time offer a much greater choice of destinations and frequencies. And we also realize that in some cases, travelers would be very happy to perhaps do the first short sector on an LCC that's maybe only going to be a couple of hours, But they might wish to, you know, go on a full-service carrier, perhaps in premium economy or something, if they're going to, you know, UK, Europe, Australia, you know, or USA. You're absolutely right that the technology side is a fundamental part of this. In fact, one of the reasons Uriel Group acquired Zuji was to acquire not just an attractive online travel agent brand, but to also acquire its system. And as you're aware, you know, online travel agents, you know, their system is already capable of combining flights and hotels and so on. So we will use the Zouji system, which we're calling Utopia, to link up our travel businesses at the more specific interline level. And we're looking— you know, ABB have got a very attractive product, so that's very interesting. The you've seen the announcement obviously of of Dohop. The technology's evolving. There's some early mover technology developers. You know, we're thinking how best you know to work you know with those to to in a sense really enable a very easy and seamless travel you know experience for somebody wanting to. willing to make an interline bucket. Thank you.

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