Which Emerging Destinations Are A Hotbed Of Activity In SE Asia?

Transcript

Sandeep Bahl:So before I start, do you need introductions to my panelists?

Riad Asmat:I think so.

Sandeep Bahl:You do? You don't know them?

Barathan Pasupathi:Wow.

Riad Asmat:I'm pretty new, so—

Sandeep Bahl:Yeah, you're pretty new. Riad is pretty new, right?

Riad Asmat:Automotive guy, now I'm in the aviation industry, so Huge difference. Very appreciative about the growth though, you know, being in the automotive industry or property when every year you just look at minus or plateauing and whatnot.

Sandeep Bahl:So, Riad, I want to tell you, Riad, you have come to the right industry. Forget automotives and properties, they made their money. Let's make money in, in this area.

Riad Asmat:Trying to, trying to.

Sandeep Bahl:Yes, so, um, no, welcome to the industry.

Riad Asmat:Thank you.

Sandeep Bahl:I'm pretty sure what you learn in automotive, you know, it's the same thing pretty much. You drive on the road, you fly in the air.

Riad Asmat:It's a factory.

Sandeep Bahl:Yeah, it's a few wheels. So, okay, exactly. Um, anything else you want to tell us about you?

Riad Asmat:No, I'm happy to be here. Hope to be able to answer your questions actually from, from the audience as well as you, but give you a bit of insight of probably what 11 months have taught me actually from a different perspective, maybe not from an aviation perspective outright, but you know, maybe.

Sandeep Bahl:And 11 months is a long time in the aviation industry, you know.

Riad Asmat:I don't know.

Steve Dicdican:No?

Barathan Pasupathi:All right.

Sandeep Bahl:So you understand all the RPKs and the chasm and—

Riad Asmat:Well, I can tell you that I'm accountable for just about anything that could go wrong and would go wrong right now. So yeah, I'm a bit cautious about things. Oh yes, yes.

Sandeep Bahl:No, welcome.

Riad Asmat:Thank you.

Sandeep Bahl:Steve, well done yesterday.

Steve Dicdican:Thank you, thank you. I'm also very recent in the aviation industry.

Riad Asmat:Oh, everyone's coming out.

Sandeep Bahl:Are you listening? Excuses already. Very new in the industry, cannot talk too much. Come on, guys.

Riad Asmat:No, we'll talk.

Sandeep Bahl:You've been flying for when you were a child, right? So that the day you start flying, you became an aviation expert.

Steve Dicdican:Yes, definitely one of the stakeholders. Um, only 2 years in this, less than 2 years.

Sandeep Bahl:No, good.

Steve Dicdican:Aviation industry. As a lawyer, I have a background in finance and economics, have some businesses, but nothing about aviation. I had to learn everything from scratch.

Riad Asmat:All right.

Steve Dicdican:I took up a piloting course though, just to—

Sandeep Bahl:You know, within 2 years, what you have done with Cebu is excellent, you know. And, but I'm just scared, you said you're a lawyer?

Steve Dicdican:Yes.

Riad Asmat:We always need you.

Steve Dicdican:Do you have a problem?

Sandeep Bahl:No, no, I don't have personally any problem. Maybe Bharat has a problem with the lawyers. You never know what's happening in India with AirAsia. He will need some lawyers there. All right, so Bharat is there for a long time, right?

Barathan Pasupathi:Yeah, it's coming to 15 fabulous years. I think many of you know me from Jetstar from the start. Someone was actually mentioning, Hey, Bara, t-shirts are retro. So I decided to not wear a t-shirt today, and I'm in a shirt that depicts the topic of secondary destinations.

Sandeep Bahl:Yes.

Barathan Pasupathi:This is actually a kariyushi shirt. It's a formal wear in Okinawa in Japan. If you meet any Japanese officials in Okinawa, this is formal gear. We love to wear our traditional wear. Our destinations, not only do we bring customers to destinations, but we really bring destinations alive in what we do at Jetstar. Having heard some of the panelists from the start, these guys are probably fresh, fresh coming into aviation. You know, I've spent 20 years in oil and gas.

Riad Asmat:Yes.

Barathan Pasupathi:And then 15 years ago, when I was making the shift to aviation, guys were asking me, are you okay? Are you okay? You're selling jet fuel to airlines and you're moving into a low-cost industry. But I can tell you, having been at Jetstar and seen what we have done as part of the Jetstar Group across Australasia, it's been a phenomenal experience and a phenomenal ride, and I really appreciate CAPA's invitation being here today. Thank you.

Sandeep Bahl:Good. Thank you. So you all heard the great panel we have here. We have expertise from last 15 years. We have lawyers who can tell us what we can talk, or what those— what Riad and Bara can talk. And then we have Riad, who just recently joined, running a great airline, an airline which actually started the low-cost business in Asia. And has a very paradigm shift in the way the business or the aviation industry used to be in, in this region. So with that, I, I just want to start with something very small— what's happened in U.S. with the, with the low-cost carriers and what's happening with the destinations. As you can see nowadays in U.S., you find Southwest Airlines, And JetBlue and all, they're trying to get into what we call hotbed destinations in the US, but they are mostly focused on where there's high-tech industries. They are watching where Amazon HQ2 will be, or whether it could be in one city or 2 cities will have HQ2. And airlines generally watch these things and then they deploy their their metal into those destinations. Most of the destinations still are in and out, O&D traffic based. Cities like Austin, Burbank, they're doing pretty well in recent years. Cincinnati actually is also growing pretty fast because of this low-cost carriers are coming into. When you look at in this part of the world, There are still— we heard, you know, the panel before us, they talked great about long haul. I want to know, great to get into the long haul when we always say the grass is greener further away, but here, Southeast Asia or South Asia, you combine it together, still a lot of destinations that haven't been explored yet. And those destinations are the ones I want to hear from our friends here. What are those hotbed destinations? Some of them also in India. You know, there's AirAsia India started flying to a city called Bagdogra about a year, year and a half ago. And then a lot of other Indian carriers also started going there. Now Bagdogra, not many people have heard. It's Still civil defense kind of an airport, but it has a growth of 50% within a year, 50% growth on the passenger numbers because suddenly all the low-cost carriers have found a new destination to go to. So based on that, you know, I'm gonna start straight away from any one of airline panel here. What are you thinking about Southeast Asia or South Asia as what you consider as a real destination that you want to explore or have plans to explore?

Riad Asmat:I think from AirAsia's perspective, we built our model on this approach— second-tier cities, third-tier cities, so on and so forth. So it's a continuation. Obviously, the challenge right now is to find all these new destinations. Now, are we going to stop? Obviously not. Are there opportunities? Obviously yes. We've, in fact, this year itself, we've looked at about 10 new destinations and majority of it are actually unique to a certain degree or underserved. So I'll give you a very simple example. We just got the approval for Singapore to Ipoh. Acknowledged the fact that there was a need to service that route. And what I've seen in terms of the acceptance of this new service is unbelievable, considering that we could have done this much earlier in that way. But I think, you know, we live in an area of 640 million people, so they want to move. There can be cross-border trades, so on and so forth. So I think opportunity here, this is the hotbed. And as I mentioned, we focus on second and third-tier cities. Ipoh is an example. Recently, last week, we flew to Phu Quoc destination. Again, it's a leisure destination, not business. So we're willing to take that level of risk. But calculated, obviously, in that sense.

Sandeep Bahl:So, Singapore EPO, you never thought of that?

Riad Asmat:Scoot was doing it though, to be fair.

Barathan Pasupathi:Yeah, it's— no, before I cover into Southeast Asia, it's absolutely right. The low-cost, low-fares model is predicated on secondary airports. I think you've seen that in the US, you've seen that with Ryanair, what Ryanair has done in Europe. While we say that, I think the secondary airport's maturity structure in this part of the world has to get to a certain stage.

Riad Asmat:Agreed.

Barathan Pasupathi:Now, I just want to give you a bit of colour from a helicopter view from the Australia-Asia aspect and where operations are in coming to Southeast Asia. I've got one slide if CAPA can put it on. If you look at the Jetstar Group, we have been around for some time, and it's absolutely right. Our model has been predicated by the secondary airport infrastructure, markets that were unserved, markets that were underserved, or markets that were waiting for low-fares affordable airlines to come in to stimulate growth, which the airports love today. If you look at the whole Jetstar Group today, we fly into 85 destinations across Australasia. Right, from Dunedin in New Zealand to Tokyo in Japan. But within those segments, from Rarotonga in New Zealand to Zhengzhou in China, we have 70 secondary or emerging markets. I speak for the whole group here. And those markets have been waiting for a model that LCCs operate to come in, one to serve those markets, serve the markets in a different way that will stimulate the growth, and take it to the next era of growth. And we've seen that with the 5,000 weekly flights we have at the Jetstar Group, we have been able to take that approach. Now then, if you zoom that into Southeast Asia, Jetstar Asia operates close to a dozen secondary markets. Ipoh is a good example.

Steve Dicdican:Yeah.

Barathan Pasupathi:But the caveat I put there Given the maturity of the airports or even the ecosystem around the airport in terms of accommodation, hotel accommodation, hotel rooms, infrastructure, is it just singularly a tourist, one-dimensional tourist destination, or does this have a multiplier effect in terms of multiple segments from families and relatives flying? tourist destinations and business traffic. So we pick and choose our destinations quite carefully, and the motto we have is that we like to have the right aircraft in the right market with the right capacity. And when we use that lens, we're very selective in the destinations we pick, but we've been highly successful in all our secondary destinations that we operate in.

Sandeep Bahl:This really sounds exciting. You have picked up some of the cities which are actually hard to find it in on the map itself, right? A lot of time people don't know where Rarotonga is, or, you know, it's a great destination, but from Auckland you can actually just drive there, right? But not many people globally, if you go, will find these little places. And similarly, Shimizu Island. Yes, it's, it's a great destination to go, But the— my, you know, I come from airline background where airline industry has the same basic challenges, right? Very familiar cyclic nature of our business. We have the slowing down of economies, whether it's global economy or it's just a US or China economy, and uncertainty on the fuel prices, right? Absolutely. And, you know, the technology, like earlier when Kiwi.com was talking about, so good technology is coming in, it's changing the way we do, and the environment, overall environment. But what I'm hearing from you is basically, forget all these challenges, there is something else we can do to make money. So, you know, my question now goes to, like, What is it that you are aggressively going for expansion into these new secondary destinations in Southeast Asia or even in Australasia? What is it?

Barathan Pasupathi:I'll comment on that first. If you look at it, my comments earlier is that we take a very disciplined approach in when we get into destinations. Sometimes, making a destination work is just not for the airline itself.

Riad Asmat:Right.

Barathan Pasupathi:You have to collaborate, and the destination only works if there's a meeting of the minds between the airports, the tourism stakeholders, and the airlines. I'll give you a couple of examples here. We have Da Nang, which we have now been operating for the last 2 and a half years, and before Jetstar actually went into that market, it was underserved In the sense that you had a full-service airline, but the market was waiting for growth to be stimulated with a low-cost airline. And when we got into the market between Singapore and Da Nang, we doubled the growth of that route.

Sandeep Bahl:Mm-hmm.

Barathan Pasupathi:And similarly with Clark, which interestingly, many people when they think of Philippines, they only think of Manila, but you look at Clark and the wider Luzon area, that was also underserved. And what started at a flight 3 times a week, it's now daily, and we even extend that 5th freedom-wise in terms to Osaka from Clark. So we do that as well. So we take a very calculated approach in terms of how we engage the markets, but from what I've said earlier, that market can only work, and if from the cyclical challenge of— we talked about fuel, there's foreign exchange today that we need to take into account as well in terms of how the currencies are performing against the dollar. Yeah.

Riad Asmat:Yes.

Barathan Pasupathi:That markets work in collaboration with stakeholders who have a vested interest to make those markets work. And Okinawa is another beautiful example. If it's not for the Changi Airport Group in Singapore promoting new city pairs from Singapore, we would not have considered that destination. What started as a charter has now become a scheduled service.

Steve Dicdican:Excellent.

Barathan Pasupathi:And we don't only bring customers from point A to point B, We now find Australians from Australia discovering Okinawa. That's through the efforts of the airport in both ways, and that includes OPG, the government in Okinawa as well.

Steve Dicdican:I'd like to disabuse the notion of Cebu being a secondary destination or airport, because I think that's why I'm here. Probably think we are.

Sandeep Bahl:Okay, so it's not a secondary destination anymore, Cebu?

Steve Dicdican:Well, Cebu has always been the top We are the top grosser of the tourism industry in the Philippines.

Riad Asmat:Yes.

Steve Dicdican:So I would consider us as a primary destination compared to Manila, for instance. I'd consider Manila to be our secondary airport. But maybe in the long run, that will be the case. We only could not accommodate flights because we had a limited number of— our terminal was congested. But now that's being solved. We have a new terminal. We're going to build a second runway and a third runway. So eventually, we will overtake NAIA in terms of capacity. And we will eventually see Manila as a secondary destination.

Sandeep Bahl:Excellent. Hey, my airline friends who are listening, we have a new primary destination. It used to be the secondary, but now it's the gateway to Philippines. Can we say that?

Steve Dicdican:I would like to consider it this.

Sandeep Bahl:Excellent. Now, this is how it to go. But I, I have a question for you.

Steve Dicdican:Yeah.

Sandeep Bahl:Um, you know, Bharat just mentioned that they started Okinawa with the support of airport here. What is Cebu doing to get airlines in support the way Changi has done to, to launch in different secondary destinations from a primary destination as Cebu?

Steve Dicdican:There have been several requests from politicians in our country for us to open other airports, secondary airports. Practically every politician wants to have an airport in their district.

Barathan Pasupathi:Yes.

Steve Dicdican:So the difficulty with that is that they're not willing to create the infrastructure that's necessary to support the secondary airport. I'll give an example of Bantayan. Island, which is north of Cebu and within the jurisdiction of our— of my airport authority. They want me to upgrade the existing airport there to reach a standard that would, you know, be considered as a secondary airport. But it's very difficult because the hotels that are there are not really up to par. The beach is beautiful.

Riad Asmat:Beautiful.

Steve Dicdican:The place— there's so many places to go to, but Again, there's just not enough incentive for people to go there. It's very difficult to go there by land, takes around 4 to 6 hours. So it would have been better to really develop that airport. But again, how can you invest so much on a secondary airport if the necessary ingredients are not yet there? But we are doing our part. our best to develop these secondary airports. In fact, by next year, we'll try to upgrade that airport, and maybe within the next 3 years, we'll be able to make it a secondary airport. These plans require the help of all the other stakeholders.

Sandeep Bahl:Yes, thank you. Riad, Changi is supporting a lot to Jetstar. What's happening with you then?

Riad Asmat:I think we are.

Barathan Pasupathi:I just want to correct that. All right. Changi.

Sandeep Bahl:Wait a minute. He's correcting me. Changi, please hear out.

Barathan Pasupathi:Our friends at Changi, they're agnostic. In fact, they support the whole aviation community.

Sandeep Bahl:Yes, I agree.

Steve Dicdican:Singapore.

Barathan Pasupathi:So just want to just correct that.

Riad Asmat:I don't worry.

Sandeep Bahl:I mean, again, just support everyone else except a little bit extra to Bharat. So that's okay. The colors are looking good. Okay.

Riad Asmat:No, I think we've From my perspective, landing into T4 and having the knowledge that it was to a certain degree built with our input, with our engagement, we see the benefits. And I think that's the type of partnerships we're talking about with airports. We need engagement, we need collaboration to get the best out of all of us. And the benefit goes both ways. It's never singular. Now, that's a bit of a challenge, I think, in certain other airports. run by maybe parties that have yet to jumpstart their notion of progress and whatnot, but it's something that we are always open to. So yeah, no harm, Changi. I mean, they've been very helpful to us.

Sandeep Bahl:No, no, you know, we were here last year when CAPA has this summit, and Terminal 4 was just open that time, and it was great to hear what AirAsia has done with the terminal, and you were the launch carrier over there, right, as a low-cost carrier getting into a brand new terminal, which was something great. But I, I still wanted to ask you, like, what Cebu is trying to do besides Cebu, another secondary city airport they, they're trying to develop. What will entice you to consider that airport also to start using?

Steve Dicdican:I think—

Sandeep Bahl:What would you need from Steve to get Using that airport?

Riad Asmat:When we do studies, I think, I mean, I think as others would have the discipline, we have the discipline as well. We evaluate markets accordingly, but obviously then we have to look at the infrastructure, the availability of as simple as the runway length. That's the basis of everything for my aircraft to land, and some airports don't have that, so we work with them and and see how soon they can get things up and running to the requirements of safety, quality, so on and so forth. Then we look at the facility itself. Now, running an LCC business is pretty straightforward.

Barathan Pasupathi:Yes.

Riad Asmat:We always ask for the basics, because whatever cost savings I get from charges, I get to pass it down to my customers. And this is, this is a normal approach if you run an LCC. I'm not looking for this huge airport with Aero bridges and accessibility to 20,000 shops and whatnot. We don't need that. Passengers that fly usually on LCC, it's a choice. 2, they want to get to the destination, they want to enjoy their holiday. So the seamless or the simplicity of just getting in an aircraft and out as quickly as possible, and to be fair, T4 does that.

Barathan Pasupathi:Yes.

Riad Asmat:I can get in and out from the aircraft no less than 10 minutes depending on whether immigration is going to allow me to come in or not. They were nice to me today, so okay. So I mean, simplicity is the best approach. When we go to destinations or we choose destinations, we look at the infrastructure because they need to have a certain standard, obviously, because of the regulations, so on and so forth. But most of the time they do come up and work with us. But as I said, some, not all. Good.

Steve Dicdican:In my experience, Philippines, I think, is one of the best places for the aviation industry because it's an archipelago with so many islands, and the best way to reach those islands is through the air. So the development of airports in these various islands is, I think, a very laudable endeavor. But as mentioned, without the necessary support and infrastructure, it's very difficult. I'll give you an example of Siargao. Siargao is an island in the middle of nowhere. Nobody knew about it until this Frenchman, a former client of mine, came and decided to develop it. So he had to bring all of the construction materials there by boat, by small boats, because there's no other way to bring it there, then slowly build it up. Then he had to develop the commerce.

Barathan Pasupathi:Mm-hmm.

Steve Dicdican:And eventually, he was able to make an airport there. And where is Siargao now? I think it was named as the best island in Asia by the Condé Nast Travelers. That's a classic example of how you develop these secondary destinations.

Sandeep Bahl:A question on the secondary, where Riad just mentioned the need for support from different stakeholders. And I noticed Cebu and your counterparts from Philippine tourism, they collaborate very well.

Riad Asmat:Yes.

Sandeep Bahl:Now, you know, these are some of the secondary airports, they could be the hot destinations. How do you assist airlines to create the market demand? You know, it sounds very nice, there's a beautiful resort, there's a beautiful beach, but creating demand, as we heard earlier, Norwegian coming to Singapore didn't do well because Outbound traffic wasn't there. How you— you want only inbound travelers and airlines will just say, oh, wait a minute. How you develop these cities? How as an airport you will do to get whole city to start traveling?

Steve Dicdican:Yes, it's not just us, of course. But the way we market is we don't market the airport, we market the destination. Yeah, it's— these destinations practically market themselves, like Boracay. For instance, it was, again, one of those islands that there was nobody living there, and somehow everybody heard that the beaches were pristine. And slowly the hotels were being built. Then it became congested. It was even closed down. So these are the— we have a lot of these locations in the Philippines. Now, what we do to market these destinations is that we identify who are the people who are going there. For the people living there, what are their travel habits? So we package that in our marketing programs, and during these conventions, we present it to the airlines so that they can have an easy view of what we offer to them.

Sandeep Bahl:Switching back, the growth that earlier Peter has it yesterday on his inaugural session on Keynote Speak, the low-cost carriers' growth continue in Asia-Pacific. I wanted to ask both of you, as you're flying big way into China, how has this growth impacted the China growth, right? Overall, I see you have almost 10, 12 destinations, AirAsia has about 18 or 19 or 21 cities now?

Riad Asmat:Right, yeah.

Sandeep Bahl:Now, how has this growth impacted your ambitions overall?

Barathan Pasupathi:No, I think we commonly will agree that China is a very important market, given the scale of the market and how not only the middle-income segment is growing, but the outbound travel segment from China is forecasted to grow by 3 to 4 multiples. In the so-called Jetstar world where we fly in, we started with some very early experimentations in China. You know, some of the secondary airports stimulated growth away from the big capital city airports by having charter arrangements. I'll give you one example in Sanya. Our Sanya flights started with a charter flight, and in the end, we have got a scheduled service now once the market is built up. In our hubs where we fly to, we see huge potential between China-Vietnam, China-Japan, China-Australia, given the student population in Australia now from Chinese students or the migration effects that is taking place as well. And even from Singapore's point of view, we are quite happy in the way that we have grown our China links. But the market itself, though it is growing in an enormous way, we are careful in terms of how we apply capacity in those markets. Obviously, you've seen the currency effects of the yuan and we see some cyclical effects on fuel. But in the long term, it is a very positive and optimistic market and you have to be in there.

Riad Asmat:I mean, from AirAsia's point of view, specifically from Malaysia, actually, again, it is a significant amount to not— we cannot ignore the fact that China is a potential growing market continuously. But there's that balance.

Steve Dicdican:Yeah.

Riad Asmat:When we run an airline, I guess we need to have a proper balance in terms of destination capacity, So on and so forth. So not all eggs in one basket. Yes, it shows great trajectory growth year on year, but we're very, very disciplined and careful in that sense. But that being said, again, we fly to 14 cities, and from a group's perspective, obviously, you know, the hub in Thailand or AOC in Thailand also caters to the Chinese movement. We do the same. So the contribution factor to to the group as a whole is significant enough. But again, second, third tier. Yes, we go to Beijing, X flies to Beijing and whatnot, but we choose all the rest, like I've got Nanning, Chengdu, Guilin, cities that I myself have never been to or heard of. But reality is a city in China is 3 times, 4 times, 20 times over the Malaysian population. So, So any accessibility both ways for them to come over, either it's on leisure, business, and vice versa, because Malaysia also does a lot of business in China, it helps. And we are actually connecting to the right cities where commerce actually occurs now.

Barathan Pasupathi:That's actually a good point. You find that some of the cities act away from the center, and they are very interested in growth organically in the city. And we will announce shortly a new destination very early next year into a certain point in China, which we will announce when we can do that. And that only will happen because the stakeholders, the airports, the government, were behind supporting the city and working collaboratively with the airports here as well.

Sandeep Bahl:Yeah, you know, you touched upon a point about not to have eggs in one basket. When I look at one, one of the great studies that CAPA has earlier was on the traffic between Thailand to China, where they had like Bangkok itself has about 117 daily flights, daily flights from Bangkok itself to China, different cities in China, about 40 different cities. Now, some of these cities, as we heard yesterday in one of the panels, where that issue that happened recently in Phuket, then suddenly it's possible that suddenly the traffic will stop.

Riad Asmat:Yep.

Sandeep Bahl:You know, either the, you know, Chinese market is very sensitive to these things, and they can turn on and turn off traffic immediately, right?

Barathan Pasupathi:Right.

Sandeep Bahl:Korea has experienced it earlier. Now knowing that, like, So what if you don't want to put your eggs in this one basket? What are other hot— let me go to hottest destinations. He doesn't want to tell us where he's going, but it's again in China, right? So what other hottest destinations you're thinking about? What else is there? I can see when I draw the map, there's still another 1,000 areas that you can get into.

Riad Asmat:As I mentioned much earlier, ASEAN is big enough. And ASEAN's got many, many countries in there. We fly to all ASEAN countries, but destination within that country, not yet. Many, many. As I said, a week ago we started flying to Phu Quoc, great leisure place.

Steve Dicdican:Mm-hmm.

Riad Asmat:Both we can get traffic in and out because we also have Vietnamese now wanting to holiday in Malaysia or Singapore, wherever it is. So my perspective, the growth is is possible here. The Indochinas are the hotbeds. We need to focus on that. For me personally, from MAA's perspective, it's also domestic. I'm only 40%. It's at least another 10 percentile, 15 percentile that I can take to increase my capacity capabilities in that area. So domestically also is something that needs to be looked at. And I'm just talking about Malaysia. Malaysia is not big, to be honest. You know, we've got Peninsula, Sabah, Sarawak, that's pretty much it. But the potential is there. And obviously with managing capacity, you know, where you put the sensitivities of what's happening around the world right now, you know, so on and so forth, yes, we're going to be very careful. And I still will hold to that understanding that not all in one basket, spread it.

Barathan Pasupathi:And, and I think that's exactly Right, and I also like to add that there's a lot of euphoria in this word growth, that you have to be everywhere, you have to be in every destination, you have to order 600 aircraft. But I think in a very disciplined approach, a lot of airlines are taking today, our shareholders are asking all the right questions. You need to have return on invested capital to a threshold that meets the internal stakeholders' requirements. If you apply that lens, we have actually said no to many destinations.

Riad Asmat:Yeah.

Barathan Pasupathi:We have said no, without naming destinations. We have said no to destinations because they either show initial promises that will whittle in a 2 or 3-year timeframe, because you don't want to be just in the airport and then you have a year's incentive and then you don't have organic growth in the market because of the whole ecosystem I talked about earlier. So today, I think I lost count of the number of aircraft that's coming in this part of the world, in Vietnam, Indonesia, and Southeast Asia. But airlines will be made to look for new destinations when there is a requirement to do so. But growth can be looked at differently by increasing frequencies on the current destinations, growing the markets, and then looking beyond those markets. And the way we look at growth at Jetstar is, from Singapore's point of view, operating in Changi, which is a phenomenal hub, you know, they almost have 10 multiples of the population living in Singapore in traffic. And we coach and interline with almost 30, 32 airlines in Singapore. And for us, growth is a different story. It's not about growing wildly in terms of a huge destination footprint, but growing in a disciplined way, growing traffic, growing yield, growing partnerships and codeshares. And we have done that successfully. And today, with the Qantas hub switch from Dubai to Singapore, we are seeing phenomenal growth in that segment of the market. And we want to take that segment segment of growth and then bring it to secondary markets. I was in Medan just a day ago, and that is— it's a secondary point, you would say, in Sumatra. And the Indonesians in Medan want to get to Sydney, London, Perth, Melbourne, and we allow that through a Jetstar and a Qantas connectivity to Changi.

Sandeep Bahl:This is a great story, right? If you all remember, when LCC started, basically the strategy used to be point-to-point destination. There was no interliners, there was no transfer traffic, and you can see how Bharat has evolved LCC into a way where it's becoming like a network carrier but still defined as a low-cost carrier. And this evolution has also prompted, you know, long-haul LCC carriers, like we heard earlier, to coming into the destinations where short-haul LCCs are going. Now, what do you think? Is this a challenge if long-haul LCC carriers will start coming into your key secondary destination market? What do you feel about it?

Riad Asmat:I mean, again, I work very closely with Ben, obviously. So bottom line is, it's pretty straightforward. Anything below 4 hours is mine, anything above 4 hours is his. Okay, we go on height as well, so he's taller than me, so I think this is a relevant point. But, you know, that being said, that there is an understanding within our group on how we feed each other. Because I can't fly to Japan and I can't fly to the northern parts of China, but these are the markets that want to come into our hubs. So when they come into, for example, Kuala Lumpur, and then they start spreading into other destinations, fine with that. So it's complementary right now, and I think we can maintain that complementary throughout until he starts building more. The idea is for the long-haul to build outwards so that they can bring it in into the smaller sectors like ours, for example. Then we have the hub-and-spoke movement after that, and I think we can supplement the requirements of the passengers and where they want to go and how they want to fly.

Barathan Pasupathi:And, sorry.

Riad Asmat:No, no, I just want to say that for me, because I work, I don't have codesharing and whatnot, my deal is directly with AXE. So we have fly-through programs, everything's connected, We understand seamless in that sense. So it's complementary right now, and it is on the growth perspective for the group. So we know what I need to do within the range that I can do. Anything above that, then it's Ben and his team that needs to bring those guys in.

Barathan Pasupathi:And it works both upstream and downstream. And the way the trajectory that AirAsia has taken is pretty much the way we started as well. We first worked with the group. in the different hubs and the different aircraft, long-haul, short-haul combination of flow-through of passengers. And then we obviously took it to Qantas first 10 years ago. And from that success, we have the likes of Emirates, KLM Air France, Finnair, Jet Airways, Sri Lankan, and we can go on naming names.

Riad Asmat:Yes.

Barathan Pasupathi:These are just, these are codeshares. And the way it works is that In the early days, LCCs were sceptical of this model due to costs, operational efficiencies, costs, on-time performance, reliabilities. Today, we can do it with 60 minutes MCT because we operate out of probably one of the world's most efficient airports in Changi. And the airport and the ground handlers The combination of the collaboration between the stakeholders allows seamless physical movement of customers and baggage. And behind the scenes, in terms of reservation platforms, what we did through IACHI or API connections with our partners, it's all in a single itinerary. It's possible. And today, given the cost per seat on any destinations, you need to do that. You need to collaborate without boundaries.

Steve Dicdican:partners?

Sandeep Bahl:You know, it's, it's a great, uh, when you look at Riad's answers and then Bharat's answers, you see a very key difference. Riad is focused on building his short haul with the support from long haul, but within the group, right? So you are constraining yourself just, or do you You don't want to co-chair with anyone else?

Riad Asmat:No, no, I don't think we're constraining ourselves. I think it's a discipline that we've, we've had since day one, maybe selfishly to a certain degree at the moment, that we like to keep the ecosystem within our reach and control. Anything else, you know, maybe in the far, far future, maybe. But at the moment, we're comfortable what we have, the growth trajectory or the growth progression that we've asked Even asked to do is very specific, where they can fly, where they need to go, so on and so forth, and vice versa on the short haul. So my colleagues in Thailand, Indonesia, Japan, everyone has the same understanding. So it's complementary right now.

Sandeep Bahl:Yeah, no, I'm just saying it's, it's, it's when somebody wants to do a study, there's a clear-cut differentiation between the 2 strategies, right? Where Jetstar is working with As I heard from many other airlines as well, as well as the parent airline.

Steve Dicdican:Mm-hmm.

Sandeep Bahl:Now, looking at this way, what will Cebu Airport will think about? You know, one of the thing is airports are very important, like Riad says and Bharat said, the transfer. If they start getting people there, but they're not gonna come to Cebu as a destination, but they're coming there as a transfer.

Steve Dicdican:You know, we never say no to any route.

Sandeep Bahl:Are you ready to equip it?

Steve Dicdican:But we are developing the airport as a hub. That has always been the concept because we foresee that as a destination, Cebu will also become congested soon. The traffic is already terrible just outside of the airport. So having a hub concept, we can grow the airport without really straining. the infrastructure of Cebu that much. So we welcome the long-haul, the short-haul, all of the other airlines that want to fly into Cebu. We have enough capacity in the airport. You mentioned a while ago about putting all eggs in one basket.

Sandeep Bahl:Yes.

Steve Dicdican:We are very cognizant of that, actually, because in the previous administration, we were not good— we were not on good terms with China. But in this administration, with our current president, our controversial president—

Barathan Pasupathi:Current good president.

Steve Dicdican:We are very good with— we're on very good terms with China. We have a lot of flights. The biggest growth in our market is the Chinese market. But we know that we cannot rely on that. So the good thing with the Philippines is that we can easily cover any shortfall if we just loosen up some of our regulations, like our visa regulation. We can have a visa on arrival. That would certainly have an impact, a great impact on our passengers and our visitors. So I think we have no challenges right now when it comes to routes. I think it's more of regulations that's holding us back.

Riad Asmat:Good.

Sandeep Bahl:On the regulation side, just apprise us, within ASEAN, Does people still need visa to go to each other's country, or that's—

Riad Asmat:Depends on the destination right now. Some are visa-free, some are not. Unfortunately, from China, they are all required to have visas. We're working— I mean, again, we just don't work as an airline, you know, we work with authorities, you know, with enough data information to encourage tourism, so on and so forth. So these are the areas that we try and give input to And try and minimize as much as possible in terms of the movement of people at the end of the day.

Steve Dicdican:Good.

Sandeep Bahl:So now we have a lawyer, he can help us with the government things.

Riad Asmat:Regulation.

Sandeep Bahl:But I would like to ask you, Riad, if you wear your property hat again, for a time, and thinking about the hot destinations and the infrastructure constraint that you mentioned, what would you do If you're wearing the property hat, do you think there is an opportunity for property developers to the new destinations that you guys are planning to go?

Riad Asmat:I've spoken to some of my ex-colleagues actually, and, you know, they're thinking about development, about property development, you know, housing areas and whatnot. I asked them, why don't you just build an airport? Because don't— it's just not AirAsia. We've got many, many other LCCs that will come into a destination if the infrastructure is ready. And more importantly, obviously everyone's supportive, tourism is correct, the products are there, so on and so forth. But yeah, I mean, there is no reason why people can't go into that particular area. I mean, the basics, it's just basics. For us, we run an LCC. A few people will argue with me again, but, you know, for me it's simple, it's PAC steps. I just need to have Room enough to park my A320s or even my A330s. The runway needs to be a minimum of 2 to 2.8 depending on the aircraft that arrives. The facility, immigration, customs, baggage, that's it. And obviously after that, ancillary, you know, you need to have your transportation system, so on and so forth. But all this is not impossible. I've been to small airports that do better than the bigger airports. In terms of accommodating a passenger's needs and wants. So, yeah, sure, if anyone in property decides to say, hey, I'm going to build an airport, yeah, sure, I'll have a chat with them and give them some guidance at the end of the day, because simplicity is the approach. But we want to fly to destinations. Yes.

Barathan Pasupathi:I just want to comment on that. It's a good point. You look at Singaporeans love property. It's, I think, in your—

Sandeep Bahl:We know, we have seen the structures here, yes.

Barathan Pasupathi:And if you look at the flights between Singapore-Penang, Singapore-Phuket, and you look at the profile of how real estate prices have moved in those markets, it's all of this traffic boom that has done it. I just want to overlay that these are open airports, and then look at Koh Samui. Koh Samui is a protected airport. You don't— we can't get there. So there's an opportunity, and just watch development Phu Quoc Island as well. So where airports are open, disregarding whether the shareholders own an airline, and let others fly, you will see phenomenal growth. And that's been represented across the footprint as well.

Riad Asmat:I mean, I think we've seen that. We've gone into airports that were military-based, they grew, you know. I mean, Bandung was a good example. We flew in years ago and no one wanted to fly there. I remember flying in when MAS then came in as well. It was literally a shack, but what it is today, accommodating 13 international airlines, you know, so on and so forth, is amazing. But it just needs that spark at the end of the day, which we're willing to do.

Sandeep Bahl:So, Riad, I tell you, you have taken the right industry then, right?

Riad Asmat:I hope so.

Sandeep Bahl:Because of airlines, the other infrastructure gets developed, and hotels and other things come through. Very good. Questions from the audience? We have—I'm not gonna say we have run out of time or whatever. I think you were all enjoying it, so nobody said stop. But so say you have questions. Bharat is ready to answer with his nice little orange shirt. Yes. And any questions?

Steve Dicdican:Good.

Sandeep Bahl:So you were able to answer all their queries. Hopefully. With that, I want to say thank you. Thank you. I think we had, we learned a lot knowing where the— really, did we learn a lot? New destination? Did we hear any new destination? We didn't, right? Guys, give us 2 or 3 new destinations. Come on. We are restrained by the lawyers. Please close your ears. All right, but we heard Ipoh though. So it's a good one to start with.

Riad Asmat:You'll hear more from us. I mean, again, the mandate is given to me. I need to show numbers and I need to deliver my KPIs. And I think there's very, very much there. It's very exciting, you know, in terms of the aviation industry, especially from Malaysia's perspective. And I think, you know, the potential is there. If anyone wants to be in this industry, it's the right time. This is it.

Steve Dicdican:We have a new airport that's going to open soon in Panglao, in Bohol. It's a very promising destination.

Sandeep Bahl:Yeah, they both are hearing that.

Riad Asmat:Chances are my Philippine counterpart is already looking into going there.

Barathan Pasupathi:And for those who have not traveled to Okinawa, look, you've got a blend between Honolulu and the Japanese culture in one place. You should get there. It's beautiful.

Sandeep Bahl:Good. Thank you so much. Thank you. Thank you for the good audience here.

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