With an unprecedented crisis come unprecedented opportunities: meet the new entrants

Transcript

Sabine Reim:The last 2 years have demanded a lot of change and adaptation from airlines just simply to stay alive. And we heard a lot about this the last, you know, over the last day or so. What was initially quite a reactive approach as frequent policy changes really through the pandemic almost constantly demanded adaptation. Has now given way to a much more sort of deliberate approach by the established airlines to, to really use the crisis also to create long-term opportunities and implementing a lot of the changes that they probably didn't have to do before or didn't get, get around to doing, or that maybe were even off limits if we maybe think of labor and so on. You know, this approach to adaptation of an established business is one thing, but what we want to look at here, what does this mean when you're starting out really during a pandemic? And what happens when you're in the process of building a new brand or finalizing a concept that is still on paper, possibly during really these very fast-changing times that will no doubt see very lasting changes in the industry. With me here to discuss this are the leaders of 4 startup airlines. Victor Pacheco, executive officer and founder of Arajet, Dominican ultra-low-cost carrier, the first and only ULCC in the country. Startup has plans to connect the nearer and wider region through Santo Domingo. Then we have Stephen Jones, President and CEO of Flair. Flair is a Canadian ULCC that is operating within Canada to the US and more recently announced greater expansion into Mexico. Then we have Ed Wegel, Chairman and CEO of Global Crossing Airlines, Global X. It's operating charter passenger and cargo flights in the US, Canada, Caribbean destinations within Latin America. Recently also applied for an air operator certificate in Colombia and also in Ecuador. We'll talk more about that. And then Tom Hsieh, President and Co-Founder of Northern Pacific, an Anchorage-based proposed long-haul, low-cost carrier that has looked at the ice and air concept on the transatlantic to implement a similar concept across the Pacific. I'd like to kick off with a little bit of a cliché to help us set the scene for today's discussion. If each of you could just give me a little elevator pitch for your company, summarizing just very briefly your underlying business models, your mission and goals, current startup status, and also just a little bit about your ownership. So if we could just start here.

Victor Pacheco:Well, thank you, Sabine. It's very nice to be here with you. Arajet is looking to bring low fares into the Caribbean. We strongly feel that it's about time that the Caribbean market has access to low fares, and we're working, working very hard in order to be able to deliver that. And it's, it's been tough to be able to, to get the business funded. This has been an 8-year journey on chasing and believing that the Caribbean deserves to have an ultra-low-fare carrier. And it's tremendously exciting. Now that, you know, we finally managed to convince the capital that this is a good idea and building the teams and seeing how, you know, your, your office from, from a, from a place of 1 is now a place of 90. And, and you have, you know, a couple dozen pilots and many dozens of cabin crew and 2 aircraft on the ground. And in the last stage of of the certification process, now doing proving flights. So it's tremendously exciting, and I hope that the Caribbean people are ready to start using Arajet with, with our low fares.

Sabine Reim:Stephen?

Stephen Jones:Okay, thanks, Sabine. And for me, I think, you know, you start up at the industry structure, and Canada is an outlier in terms of the world of airlines, and that it just is characterized by a duopoly, you know, and the duopoly has high costs, and as a consequence of the high costs, they have high fares. And when you have high fares in a market, people don't travel as much. And so I guess our job is to change that. So in Canada, you know, typically people have been paying $800 on a, you know, 2-hour flight in economy. Cheaper to fly to Europe than it is to fly to Vancouver. You know, people on one side of the country have never seen the other side of the country. And You know, and this is Canada. It's not a strange country. And so what it's lacking really is an efficient ultra-low-cost carrier. If I think about Canada 10 years from now, I'm sure Air Canada is still going to be there, but I also think that, you know, 35 to 50% of the market will be owned by the ultra-low-cost segment. And Flair's job, I guess, is to make sure that we take our place in that. So we've, you know, to be low fares, you have to be low cost. So we are, you know, we'll be pure ULCC. It'll be very predictable. If you take Ryanair or Frontier or Spirit or Wizz Air and put them into Canada, that's what you can expect. So we, we started with 1 aircraft in April of last year. Today we have 14 flying. We'll have 19 by July, all Boeing 737s, mostly the MAX aircraft. We fly from Victoria and Comox in the west out to Deer Lake and Halifax, Charlottetown, St. John in the east, and everywhere in between within domestic Canada. We also fly to 12 destinations in the US and 3 in Mexico. So the goal is to get to 50 aircraft within 5 years. And that's a goal that's not about sort of counting up the number of aircraft, although I do love them. They're beautiful machines.

Sabine Reim:Mm-hmm.

Stephen Jones:But it's more about the mindset and the thinking about what are the systems and people and processes that we need to be putting in place now to build an airline that can run at 50 aircraft, because that's a decent-sized business. So, so that's where we're at today.

Sabine Reim:That's great. We'll pick up on some of that later on as well. Ed, please.

Ed Wegel:Yeah, thanks, Sabine. Thanks everyone for, uh, for coming today. Uh, Global Crossing started in late 2019, just before the pandemic. We saw an opportunity to put another ACMI charter carrier in the US because of consolidation, and some of the incumbents had gone out of business or had gone into scheduled service, like Sky King became Avelo and some other Difficult to start in 2019. No lessors wanted to talk to us, didn't take our phone call. Then March 2020 came and our phone rang off the hook with lessors who wanted to move some airplanes. So we, we certified the airline through the pandemic. First time the FAA has certified an airline by Zoom, basically coming back, basically coming to the airline at the end to actually get on a physical airplane and fly with us for about 100 hours to get our So we're certified as a 121 flag carrier, domestic and supplemental, and we purposefully got the flag carrier status because we wanted to fly for other airlines. We are in many ways a support for the airline industry in Canada, US, Latin America. So we fly for other airlines. We're flying for another airline right now that just got its A220 on its certificate, and we're providing some additional lift. We're going to fly for TUI in the Netherlands this summer for 2 months. And you're flying for TUI? We just signed a deal with Avianca to fly one of our A321 freighters for them starting in October. And we, we have a bifurcated plan. We saw through the pandemic that the airlines that had the best chance of survival and almost thrived through it were ones that had cargo capability. And so early on, even when we had not even applied to the DOT or FAA to start our certification, we started talking to lessors about A321 freighter, which we knew would be an excellent machine. And the quicker we could get in there and tie some up, the better we would be. In the beginning, everyone pooh-poohed the airplane. They didn't think much of it. We tied up 20 of them before anybody realized what we had done. And now they're all calling us to see if they can get our airplanes. And I politely say, no, you had your chance and you blew it. So we very much are a support to the aviation industry. We were flying— we spun off a sister company in Canada called Canada Jetlines, which is how we got started in business. We took over there. Public entity up on the Toronto Stock Exchange, turned it into a U.S. company, moved to the OTC. We're moving to NASDAQ here shortly. But we spun that out back to our Canadian shareholders and they're about to get their AOC and they'll be flying not in competition with Flair or others, but they'll be flying out of Toronto into the Caribbean and Mexico on charter basis and so forth. So We see tremendous opportunity. We saw an opportunity, and I sometimes am loath to say it because of all of the negative effects of the pandemic, but without the pandemic, we probably would not have been able to start. Airplanes were not available. Pre-pandemic, an airplane would have cost us $225,000 a month to lease. In the middle of the pandemic, we got them for $100,000 a month. 9 months deposit suddenly became 2 months deposit and All of them were lined up outside our door to try to get us to take their airplanes. So in a crisis, there's opportunity, negative effects of the pandemic, of course. So I'm— again, I'm— I hate to say this, but without, without that crisis, it would have been difficult for us to start. We took advantage of the opportunity and we've established ourselves now. We will have 12 airplanes by the end of this year, including 3 freighters, 25 by the end of 2023. And 50 airplanes, which will be a mix of 25 passenger and 25 cargo airplanes by the end of 2025. So we're well established, about to do another round with A321 freighters. We just signed up 2 more, and so far, so far so good, and we look forward to the future.

Sabine Reim:Great. Thank you, Ed. Tom, please.

Tom Hsieh:Good morning. It's so great to be here at CAPA Summit for low-cost carriers. It's because low-cost carriers have been the disruptors for the aviation business for decades. So it's energizing to be in the same room with so many disruptors, with you all. Very exciting. And the, the opportunity that presents itself today is one that, you know, we're also trying to capture on, right? The— we are a new low-cost carrier for Trans-Pacific. Hub in Anchorage, bringing the Icelandair model to the Pacific. And one of the things that we're excited about, and excited about being here, is that the— imagine the collective power. One of the things that goes through my mind as I've been at this conference this week is imagine the collective power we could have if we were to work to come together, right? What more— what greater disruption could we create when we work together?

Victor Pacheco:It's just—

Tom Hsieh:so I'm very excited about that opportunity as a new entrant to find ways to work together to create greater disruption. One of the new disruptive forces that's taking over the world is cryptocurrency. It is going to disrupt every industry, but it just happens that airline rewards is the perfect use case for crypto. And so imagine a crypto reward That takes liability off your balance sheet, right? That doesn't expire, that appreciates instead of depreciates, that is transferable, that's exchangeable for other currencies and fiat, right? And one that pays you, the airline, and the passenger at the same time. Wouldn't that be disruptive? I think so. So, well, I'm here to— As a low-cost carrier new entrant, to invite you to join us. In creating a new global worldwide alliance, loyalty alliance of low-cost carriers, loyalty program based on cryptocurrency. That's my pitch.

Sabine Reim:Thank you very much. I want to start with circling back to you, Stephen. You mentioned about the Canadian industry and new entrants haven't always been warmly welcomed into the industry. However, coming in as a ULCC will probably not sit very well with the established class of carriers. And you mentioned that with regards to fares. But generally as well, the Canadian market is very seasonal. It's generally very outboard when you think in terms of international travel. Now, that sits well for Canadian carriers. Obviously, it's very leisure-driven. Also, the challenge around the— I guess the Canadian government was quite late removing restrictions in terms of when things picked up again. But, you know, there are also a number of other ULCC startups in Canada right now. So there are quite a few that are competing essentially for the same segment of the market. What sets Flair apart from those carriers and how are you positioned to succeed sort of in absolute and relative terms in this brewing competitive landscape that we have in Canada now? Is that more an opportunity or more a challenge?

Stephen Jones:So I think the fact that ULCCs don't exist in Canada is probably a combination of the power of the duopoly because they do have a great set of sort of hard barriers to entry and soft barriers to entry that you have to work your way through. And I think it's probably also around the execution of the players that have tried it in the past. I mean, this— and I think Felix touched on it earlier— people drift off in their business. You know, it's, you know, to be a ULCC, it's a simple concept but really hard to execute because everyone's got a good idea about why you should just add this little bit of cost to grab this extra bit of revenue. Just add some, you know, lounges or connectivity or, you know, and so people drift off and then their costs Costs grow and you get stuck in the middle. And I think, you know, one of the incumbent players there is absolutely stuck in the middle. And if you look at others around the world, that's a— I think Bill Franke described it as a path to hell, which I think is a good way of doing it. So it's all about execution and staying really pure to the model and confidence that the model will ultimately prevail. You know, it's a commodity industry at the end. commodity industries, the low-cost producer prevails.

Sabine Reim:Tom, I want to come, come back to you. And you mentioned the, the Icelandair model and, and, you know, the application to the, to the Trans-Pacific. Now, Icelandair has been standing out as a long-haul low-cost carrier as being successful and not being as, you know, hounded by, by the flag carriers. So I guess the question is, how can you succeed replicating that across the Pacific? The Pacific has been quite challenged generally historically with profitability as well, much more so than the Transatlantic. You know, how is Northern Pacific planning to succeed in that quite a competitive space? A lot of the capacity is going to come back as well as soon as the remaining markets open up as well. How are you planning to phase in your capacity, particularly bearing in mind what's going on with, with the airspace issues as well, and just to be successful in the short term and get the venture going?

Tom Hsieh:So the strategy, the competitive advantage of using the Boeing 757s as our launch fleet, so we launched with a fleet of 10 Boeing 757s, is the, you know, the long narrow legs, right, allows us to service secondary cities that otherwise aren't, you know, wouldn't be well serviced by nonstop flights. So in other words, we're going to create, you know, kind of new markets, right, where we're able to connect cities like You know, Nagoya and Orlando, Osaka and Las Vegas. And so, you know, the opportunities to go into these other cities with a hub, right, that's, that's the competitive advantage, is the hub in Anchorage.

Sabine Reim:Great. Ed, you have a very unique concept. You've grown very fast as well. What are the next steps for you? And making that growth happen and accelerate and be successful?

Ed Wegel:So we— there's a couple of initiatives that we have. The cargo is the main initiative. First airplane, first 2 cargo aircraft will arrive in August. We'll finish the FAA certification with those by October 1st, and we'll start flying the first one for Avianca. And we anticipate making some announcements on the next 3 or 4 airplanes very soon. So that's a very hot airplane. Now that everyone understands the economics of it, everybody wants one. Beyond that, I think, as Stephen said, we— you have to stick to your knitting in a sense, in that you have to keep your costs low. You have to continue to look for opportunities, particularly now that airplanes are still relatively cheap compared to where they were pre-pandemic. That situation is going to change. It always changes. It'll change here. So we're trying to tie up as many airplanes as we can now. at sort of mid-pandemic pricing. You know, our sweet spot is a midlife airplane because we don't get the utilization of a ULCC. We get 6 or 7 hours a day on a good day out of our airplanes because of the charter space. So we're looking for good, cheap airplanes, tie those up, have a steady stream of those for the next few years to fuel the growth. And beyond that, we're You know, we, as you mentioned, we are starting the AOC process in Colombia and Ecuador. We want to be closer to our clients. So by putting an AOC there, we can better support an Avianca. By putting an AOC in Ecuador, we can better support the region. And again, we're not looking to go into scheduled service. We're looking to provide additional lift, additional capacity for the airlines in that particular region. We think we can provide the airplanes when they need them on a cost-competitive basis, and they can turn to us when they need When they— everything from having an AOG to, hey, we're opening up a new route and we need your airplane for 3 or 4 months because we need additional capacity. So we're constantly looking for those opportunities. We think there are a number of them out there. I think airlines are understanding that they can outsource some of this to others for a period of time while they build their own fleet, their own infrastructure. And we are seeking to be that provider of additional capacity for them. during certain times of their, their growth cycle and their development of their own infrastructure.

Sabine Reim:Victor, you have a particularly ambitious project. Not only a little bit, not only are you setting up a new airline, you're introducing a new concept to the region as well. So talk a little bit about that. How are you planning to stimulate the market and, and reaching, reaching the consumer?

Victor Pacheco:Well, the opportunity is there because we've been surrounded by network carriers and the Dominican Republic. One of the reasons why that's been the case is because having an airline in the Dominican Republic, you haven't had the right ingredients there initially. We've had to work closely with government on regulations, legislation, and, and tackling all of these barriers then gives you the opportunity to have an airline there. And be able to offer direct service to many of the different markets that are— that have traffic today. But unfortunately, the length of the trip can be anywhere from 14 to 16 hours. So the opportunity is about low fare, offering low fares, and being able to as well help people save time, get them closer to their loved ones.

Sabine Reim:So we heard a lot about the high costs in the region over the last, last day or so. How will that sit with the low fares, and what's the particular challenge there?

Victor Pacheco:It is very challenging, but in the case of Arajet, we, we, we're sticking to brand new equipment and a standardized fleet. And that helps us be able to produce a very low unit cost that will allow us to be able to stimulate the market with very low fares. We will be very disciplined on how, on how we operate as an airline, and, and we will stick to the ULCC model.

Sabine Reim:Stephen, if I, if I can come back to you, and your growth plans are very ambitious, and you mentioned that as well. Can you shed some light on how that will be implemented and what the plans are there?

Stephen Jones:Yes, so it is ambitious at one level, but at another level it's, it's not really if you think that the total market in Canada might be 200 aircraft narrow-body equivalent if you took 2019 numbers. And if you said a third or half of that should be the low-cost segment, then you get to 100 aircraft pretty quickly. So So our 50 aircraft within 5 years is ambitious in growth, but it's not ambitious in the context of the market. So it really is just, I think you have to be a very process-driven organization. So to keep the costs as low as possible, you have to take variability out of everything. You have to be process-driven and just bring another aircraft, bring another aircraft, deploy it to the market. So the crewing, the— Airport development teams, all of those need to be really process-driven and consistent. So, and then people like it. Everyone loves a low fare, right? And I think in Canada, that's one of the things that's missing. You don't get that spontaneity of travel that you see in Europe. Hey, let's go, you know, $9, let's go to Malaga. You know, you don't see that in Canada. And so we need to train that into the psyche of Canadians as well.

Sabine Reim:Tom, I'd like to pick up on sort of the operational feasibility of your model. And we think of bringing passengers up from the US through Anchorage and then over to across the, across the Pacific. How will you make that work with the small fleet initially and funneling enough passengers through Anchorage? And I think we've seen a lot in the press around how are you going to entertain the passengers while they're in Anchorage. I'd love to hear a bit more about that while they're waiting on their stopovers and this kind of facility.

Tom Hsieh:Yeah, I think I think stopovers would be a great addition to to our business. Business model is not based on the stopovers, right? So what we're looking at is the O and Ds between the destinations in Asia and the lower 48s that we're targeting. We just need maybe about three and five percent of that traffic to to be very successful. The but to build there on top a stopover opportunity. To, to grow our, our other business, Raven Alaska, which is the interstate airline serving Alaska, it provides incredible synergies for us, right? So, so that's why in Anchorage we are investing about $6.8 million in a renovation there that includes the building of a mini IMAX theater. And, and the point with that is when our passengers step off the plane, in Anchorage to make their connection flights. We want them to be inundated with the sights and sounds of what they could be experiencing in Alaska to entice them to, you know, on their return trip, you know, extend that layover or their next trip to take another excursion. And we think that's an incredible part of what we bring to the state of Alaska, what we bring to that economy, and what we bring to our other airline, Rave in Alaska.

Sabine Reim:I want to, want to stick with you for a moment, Tom. I think in the short term you probably have the greatest challenges of all of the participants here thinking about the Russian overflights. How did you have to rewrite your playbook in the short term?

Tom Hsieh:Yeah, and you may have read some of that in, in the news recently. Because of the closure of the Russian airspace, you know, initially we, when we didn't need ETOPS to make our flights. With the closure of this airspace, we will. So, you know, we are— we had to pivot. We're— so we're looking to, to do some wet leases with, you know, a partner that already has that certification to get us started quicker.

Sabine Reim:And I want to just pick up on, on the cargo side of your business. Really, cargo has been the big story of of the pandemic. Just tell us a bit more about what you're going to do going forward with that.

Ed Wegel:And yeah, so we, we identified early on that we wanted to have cargo capability in the company. We saw going through the pandemic and as we started our certification that the, again, the airlines that had cargo capability were able to survive the pandemic better than others. A prime example is Sun Country. airlines in the U.S. that had their deal with Amazon, that if you, if you speak to them, you read some of their public filings, you can see that that was a real— one of the real elements of their survival plan through the pandemic was cargo. So because we operate the A320, A321, our pilots can operate the A321 freighter as well. So we identified that airplane as one that we wanted to go after very, very quickly. And ensure that we had a steady, steady supply of those airplanes over the next few years, because we knew as we compared it to the competition, the 737-800, the 757, this airplane would be— competes very, very well against those. And the economics are better than both of those aircraft. So we tied up a bunch of those. We, we've been out talking to every airline that moves cargo, particularly the ones that have only widebody freighters, because the narrowbody gives them optionality. Uh, in terms of opening up smaller markets or to be able to feed their larger, uh, freighter aircraft, their 330s or 777s at their hubs. Uh, and that has really resonated, uh, through the aviation community. Everybody gets it. Uh, and there's a lot of interest and focus on that. So we're, we're, we're in discussions with a number of parties now about all of our airplanes, basically. Um, and I think that we're going to continue to try to tie up as many A321 freighters as we can. We're really the only Airbus platform in the US that will operate it. We'll be the first one to operate it. And then we will seek A330 freighters at some point in the future. They're impossible to get right now. That situation will ease up over time. But that's one of our focus areas for growth is a widebody freighter as well. So we can, we can provide that additional lift to our clients.

Sabine Reim:So we mentioned at the beginning that the established carriers really had to reevaluate their businesses through the pandemic. Now, I'm wondering whether some of it takes away from your advantages as startups because they're becoming a little bit more nimble, they're thinking a little bit differently. Does that sort of reduce the advantage gap that, that you have as startups because they have to think a little bit more like you maybe and implement different, different processes? So Victor's setting up a new model in, in a region, you know, how safe is your identified competitive advantage?

Victor Pacheco:Well, that is a very good question, Sabine. And from our point of view, we're focused in like our mission and how, and how we're gonna go to market and how we're gonna stimulate traffic. We're not, we're not so much trying to understand what the competitors are, how they're handling the after-pandemic challenges. We think that the fact that they're still there, we know, we believe that they're as strong as they were before the pandemic. So, and even, and as you said, they may be even stronger. So our game plan is to try to avoid competition as much as possible, try to open new destinations, new routes, and, and try to build the business offering the market, as I said before, direct service. And, and there's a lot, there's a lot of opportunities for Arajet from Santo Domingo in that respect.

Sabine Reim:Tom, can you talk a bit more about the contingency plans that you have now?

Tom Hsieh:Contingency plans for anything particular?

Sabine Reim:For the launch.

Tom Hsieh:For the launch? Well, you know, you mentioned mainline carriers, and I want to go back to my initial invitation earlier. And because— so one of the things about loyalty programs, traditional loyalty programs, is that they are essentially an extension of the imperialistic power of the airline of mainline carriers, right? They, they either act like walled gardens that keep low-cost carriers out, or they're essentially leashes around the necks of regional jets to keep them from, from growing too, too much. And, and, and so I think that, you know, in terms of contingency, imagine the power we could have if we were to unite in a global alliance of loyalty, one that, you know, we could co-market credit cards together to create a new revenue stream for us all, right? I think that is an incredible opportunity and contingency and a new revenue stream, a way for us to turn the tables with technology. But who, who, who in the industry is nimble enough, aggressive enough, and innovative enough to capture this kind of disruption? Low-cost carriers. We, the people in this room. And so that's— I mean, I think that is definitely something that we should all work together on.

Sabine Reim:When we look at other regions where low-cost carriers have been successful and grown, they've forced change. And when we particularly look at pricing, revenue management, and how fares are bundled and so on, Stephen, I guess, I, you know, what is your stand on that? Is that gonna happen in Canada if you guys are successful? Is Air Canada— will they have to change?

Stephen Jones:So yeah, I think people have to, they have to react, you know, and you see it across the other markets where, you know, you've got strong ULCCs, Europe and the US and Asia. And so, you know, you fly at the back end of a British Airways flight, it might as well be at the back end of a Ryanair flight. You know, it's the identical product, you buy what you, what you want to. And so I think if we come in and disrupt, they must adapt. You know, there's no choice. It's a relationship. I think they have had the opportunity through COVID to get some of their cost base in order. Like you look at the fleet structures that Air Canada and WestJet have had, they've got rid of a lot of the sort of older aircraft, but they still have a bit of a fruit salad of, you know, 2 of these and 3 of those. And so I think the cost base is the core advantage that we have to keep focused on.

Sabine Reim:So Ed, you're in a quite unique position compared to the others on the panel here, but you must have some challenges. As well. What are the greatest challenges for you?

Ed Wegel:Yeah, we do have such— I just want to make a comment on one of the points you made earlier. So yeah, the, the, the majors that will come out of this may be a bit more nimble, but they also have a very heavily leveraged balance sheet. And so if you've tried to buy an air ticket in the US recently, you've seen how they're going to deleverage their balance sheet, which is to charge the hell out of the consumer. So So all of us on the stage here are in a good position because the majors, the legacies have a lot of debt to pay off. So I think, and even in our case where we're providing charter aircraft, many of our clients are university teams, incentive groups, tour operators. They are finding in this new environment that we're in the cost to charter an aircraft is cheaper than to buy commercial seats, even with a higher price that they may have to pay for fuel with us and other elements. So we're getting clients now coming to us saying, hey, it's cheaper for us to charter an aircraft than it is to fly commercial. And so I said to my marketing team, we're not charging enough for our airplanes, obviously. So, but that's, you know, that's, that's their challenge. I mean, these, these balance sheets are stretched Very thin. So our challenges are, you know, obviously the main ones— pilots in the US. That's a major challenge. We work it every day. I probably spend a third of my day helping to recruit pilots, another third of my day trying to keep the pilots that we have in the company. So pilots are a challenge. You know, talent in general is a challenge. The, the workforce in the US has become sort of privileged. You know, you'd be amazed at what we have to pay to get a, you know, an admin clerk, you know, a data input person, you know, an HR generalist in the HR department. The upward pressure on salaries and, you know, the lack of skilled people to come in and fill those roles is, is, is really apparent in our business. I know it's apparent across a number of sectors. So it's going to be— there's a war for talent, a war on talent. Every day we fight to keep who we have, and every day we fight to go out and get more. So, you know, between pilots and, and staff that can handle the issues that we face every day, that's— those are our 2 biggest challenges.

Sabine Reim:Yeah, sort of as we enter the last 5 minutes of this, I just want to give each of you an opportunity to close and just share why you think now is a good time for startups to succeed. So, Tom, let me start with you.

Tom Hsieh:It's a great time. It's, you know, never let a good crisis go unexploited, right?

Ed Wegel:Yeah, I think it— look, for all of the reasons that Tom just mentioned, but also, look, the population in the US continues to increase for lots of different reasons, which we can discuss, but at another time. But the number of people who have the ability to buy an airplane ticket or to charter an aircraft continues to increase. The number of people who've actually bought an airplane ticket continues to rise, but it's still a fraction of what it should be. So air travel for a lot of our clients is a necessity. It's not a— it's not a, you know, it's not a, you know, aspirational thing. It is something that they do every day, and they will have to do more and more of it in the type of world that we live in now. So, uh, the, the continued, uh, launch and growth of new airlines, uh, startup airlines, low-cost airlines, whatever you want to call them, will continue. The airplanes are available. The limiting factors are people. All the other elements are in place. The limiting factor is the people to operate the airline.

Stephen Jones:Thanks. Um, yeah, I would pick up on what Ed said earlier in terms of, uh, you know, the COVID has actually been a fantastic thing for a startup. You know, we've got decent aircraft available at short notice and reasonable prices. You've got pilot availability. In the early part of the pandemic was fantastic. Our first 50 pilots we picked up had something like 17,500 hours on average of experience. You know, so it's changed a lot more recently. Airports have been willing to do deals. You know, we've got fantastic growth-oriented deals. The competitors have been weakened, the balance sheets, as you said. Mm-hmm. So they've been going through all of their own problems. The only thing missing when COVID was demand, and demand is coming back big time. So, you know, it's— it went through those waves, you know, last July and August were wonderful and we thought this was, you know, where it's going to go. Then Delta came in and we crawled out of that, then Omicron came in, but it really is coming back now. We had our best sales day ever yesterday. It was about 10% higher than the previous record. So I'm very confident about the future.

Victor Pacheco:I think it's the perfect time to start an airline because COVID managed to fear us to death and, and keep us in our houses. And, and people are wanting to go out, wanting to travel. And in the particular case of Arajet, it's even more unique, the opportunity that we're going to give to the people because There's a lot of people that cannot afford to travel, and we're gonna, we're gonna be able to offer fares that will enable them to travel. And in the Caribbean region, you would be surprised the amount of people that haven't, have not had the opportunity to travel. It's tremendously exciting what we're gonna live in the next few years, allowing the people the opportunity to be able to travel with us.

Sabine Reim:I mean, we look back at You know, historically, being a startup airline was very challenging. You'd look at this now and think it must be even more challenging. But it seems that there are actually also a lot more opportunities than there were before.

Tom Hsieh:Yes.

Sabine Reim:Some of that is how the structure of the industry is changing, how, you know, the startups are staffed, how they're funded, but also how consumers behave now and how technology enables you to reach the consumer directly as well. So it's a, it's a very exciting time. It's almost counterintuitive. So thank you very much for your time, and I wish you the very best of luck with your exciting projects. Thank you very much.

Victor Pacheco:Thank you, Sabine.

Ed Wegel:Thank you, Stephen.

Victor Pacheco:It's a pleasure.

Ed Wegel:Thank you all.

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