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Speaker 1: Last week one of the listeners to the Greek Foreign

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Speaker 1: Interview were the good folks at Jetstar four and is

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Speaker 1: on his way out. Of course, some of the changes

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Speaker 1: on problems he faced in his time, he claimed, will

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Speaker 1: be sort of by the time he leaves in October.

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Speaker 1: The debate remains. They are around pricing and especially regionally

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Speaker 1: in this country, with the Finance Minister keen on the

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Speaker 1: market studying the Prime Minister not so much. Jet Star

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Speaker 1: is the cheap alternative, of course, it also the airline

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Speaker 1: with a reputation that isn't that reliable. It also picks

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Speaker 1: the roots it competes on, reminding us that a population

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Speaker 1: of five million, maybe maybe one of the bet airlines

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Speaker 1: is all we can basically handle. Anyway, let's talk aviation

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Speaker 1: CEO of jet Star out of Australia this morning, and

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Speaker 1: Stephanie Tully, who is with us. Very good morning to

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Speaker 1: you morning, Mike.

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Speaker 2: Are you doing very well?

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Speaker 1: Indeed, I've been reading some interesting reports out of Australian

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Speaker 1: aviation that was I think what they referred to as

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Speaker 1: a white paper, and that we're talking about the border

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Speaker 1: security in the last couple of days. Is there an

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Speaker 1: angst in general terms? Around aviation and Australia, the price

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Speaker 1: of tickets getting from A to B, getting in and

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Speaker 1: out of the country, and all of that. Post COVID.

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Speaker 2: Oh look, I think there's a cost of living pressure

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Speaker 2: so that everyone's feeling both in Australia and New Zealand.

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Speaker 2: And I guess that's where jet Star becomes a great

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Speaker 2: choice because you know, everyone at Jetstar works together to

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Speaker 2: make travel more affordable and accessible. And I think what

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Speaker 2: we've seen with Jetstar and with our operational performance and

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Speaker 2: our brand improving over the last few years, we've seen

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Speaker 2: a lot more people choosing jet Star. So I think

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Speaker 2: there's always that pressure in the environment when you've got

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Speaker 2: higher inflationary pressures. But you know, that's where jets Star.

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Speaker 2: I think our whole purpose for being becomes very relevant

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Speaker 2: because consumers still want to travel. We've seen since COVID

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Speaker 2: people you know, prioritizing travel over spend on other things

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Speaker 2: after what they went through. So I think travel remains

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Speaker 2: really key for Australians and New Zealanders because of where

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Speaker 2: we're placed in the world, and I think it's in

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Speaker 2: our DNA to want to travel. So I think that's

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Speaker 2: why we think Jetstar plays such an important role.

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Speaker 1: Some of the American airlines I note, and some of

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Speaker 1: the cruise lines are now suggesting that the post COVID

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Speaker 1: madness is peaking or has peaked. Are you seeing any

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Speaker 1: of them?

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Speaker 2: Yeah, I mean, I think we went through a very

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Speaker 2: big peak post COVID of just you know, demand out

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Speaker 2: stripping outstripping supply as airlines got back on their feed

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Speaker 2: and consumers were desperate to travel not only for holidays

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Speaker 2: but to see family and friends that they had not

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Speaker 2: been able to do during COVID. We still see it

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Speaker 2: heightened from pre COVID levels, So we think there's been

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Speaker 2: a structural change. And I think for New Zealanders and Australians,

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Speaker 2: you've got you know, you're far away from from the

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Speaker 2: rest of the world, You're essentially Irelands. So I think

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Speaker 2: that is not only historically in our in our DNA

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Speaker 2: to wanna travel, but I also think COVID might have

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Speaker 2: structurally changed that that you actually prioritize that travel and

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Speaker 2: you're mailling to spend on travel than you know, consumer

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Speaker 2: goods and other things. We see that in our insights

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Speaker 2: and we think that that's still heightened.

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Speaker 1: Is your model the same internationally? It is as it

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Speaker 1: is domestically in terms of it is cheap.

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Speaker 2: Yeah, how we want to be low fares leader in

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Speaker 2: the markets we operate. We are focused on our cost

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Speaker 2: base wherever we can to make sure we can keep

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Speaker 2: you know, delivering low fares. It's absolutely what we're trying

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Speaker 2: to do in New Zealand. We've been working really hard

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Speaker 2: as a team. I think, you know, we employ over

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Speaker 2: four hundred people over there to just make sure that

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Speaker 2: we're reliable so that people want to fly Jet Star

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Speaker 2: and I think what people are looking for is great

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Speaker 2: value and Jet Start. Really it's about offering low fares,

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Speaker 2: being reliable, and also giving people choice in the way

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Speaker 2: they travel, so they can choose the extras if they want,

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Speaker 2: but they don't have to if they don't want, So

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Speaker 2: you've got that option. And I think we don't see

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Speaker 2: ourselves MIC is half an our line. We see ourselves

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Speaker 2: as a full air line, you know, offering a real choice.

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Speaker 2: We don't take for granted that Kiwi's every time they

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Speaker 2: travel have a choice of who they fly with. So

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Speaker 2: we want to be in that. In that choice consideration,

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Speaker 2: whether you're traveling for work or for leisure.

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Speaker 1: You would concede though that you cheery pick the roots,

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Speaker 1: and you cheery pick the roots that you think you

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Speaker 1: can make. That's fair, isn't it?

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Speaker 2: Here? Absolutely absolutely, because we have had experience in the past,

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Speaker 2: so we've operated on some of the thin roots and

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Speaker 2: we just were losing money, you know, and it's difficult

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Speaker 2: with a strong national carrier you're competing against. But we

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Speaker 2: I mean, we definitely see room for more growth over there.

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Speaker 2: We're concerned about some of the cost pressures over there,

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Speaker 2: particularly Auckland Airport, but you know, we see there's room

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Speaker 2: for potentially us putting more aircraft over there. We've had

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Speaker 2: a lot of growth on the trans Tasmin. We've got

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Speaker 2: you know, three new routes launching a couple of weeks

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Speaker 2: to Hamilton and Dunedin, and we're excited for more growth there.

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Speaker 2: We've just got to make sure that you know, we're

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Speaker 2: getting the best cost environment that jet stuck and.

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Speaker 1: Keep Auckland dearport aside. I don't excuse Auckland report as

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Speaker 1: far as I can get. No one likes Auckland Airport,

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Speaker 1: but cost pressures that going. Are we doing something cost

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Speaker 1: pressure wise wrong in this country? That needs to be

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Speaker 1: attended to.

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Speaker 2: Yeah, I mean I think there's a couple of things

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Speaker 2: where we're on I think, you know, the airport costs,

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Speaker 2: particularly Auckland, as you say, are high. We think their

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Speaker 2: development is overdone. So it's good that it's you know,

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Speaker 2: the prices we're reduced following the Commerce Commissions report, but

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Speaker 2: we think it's still overspect and overdone. And I think

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Speaker 2: you've got to be really careful, you know, with infrastructure

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Speaker 2: spend that you're spending the right amount. You know that

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Speaker 2: travel still remains affordable whilst delivering what you need. So

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Speaker 2: where we think New Zealand's tourism sector is still recovering,

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Speaker 2: we think there's more we can do with the government

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Speaker 2: around some of your fees. So we're working with the

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Speaker 2: government on how, you know, how we make sure that

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Speaker 2: New Zealand's tourism sector thrives like it should. I think

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Speaker 2: there's some disproportionate fees in place, and we want to

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Speaker 2: make sure that particularly the gateway between Australia and New

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Speaker 2: Zealand and some of that more short haul Pacific Island

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Speaker 2: travel is not disproportionately affected by fees compared to some

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Speaker 2: of the longer haul travel as well. So there's things

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Speaker 2: we're working on to try and make mark that environment better.

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Speaker 1: Just reputationally speaking, Stephan, I don't expect you necessarily coming

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Speaker 1: on in New Zealand, but you'll be well aware of

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Speaker 1: how many New Zealanders view in New Zealand at certain times,

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Speaker 1: and sometimes it's their fault and sometimes it isn't. Compare

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Speaker 1: it with Quantus, who's gone through something similar. Our airlines

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Speaker 1: just easy targets for people to get angry with.

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Speaker 2: And I think people are passionate about airlines. It's something

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Speaker 2: people love to do, is to fly and travel, and

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Speaker 2: therefore they love to talk about it. So I think,

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Speaker 2: you know, it happens. I think you've just got to focus,

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Speaker 2: you know, on your own race, and we've been focusing

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Speaker 2: in New Zealand particularly on just being good and being

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Speaker 2: a good competitor and making sure that any history New

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Speaker 2: Zealanders have with the Jet Star brand, we can prove

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Speaker 2: that we are a reliable, great offering and a choice.

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Speaker 2: So I think, I mean, I think it is just

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Speaker 2: something people love to talk about, and you've got to

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Speaker 2: take not take that for granted.

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Speaker 1: You would say that, wouldn't you, because you're the CEO,

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Speaker 1: But have you hand on heart, genuinely gone through that

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Speaker 1: it's in the past. Jets are a bit une liable.

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Speaker 1: Not many planes may turn up, might not.

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Speaker 2: I think so if you look at our operational performance

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Speaker 2: like the last six months, we're pretty much equal to

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Speaker 2: a New Zealand. In fact, in March we were more

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Speaker 2: reliable than them and we had a really low cancelation

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Speaker 2: ratear I'm proud of everything everyone's done over there to

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Speaker 2: just be focused on it, and I think we see

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Speaker 2: it in our insights that you know, our brand has

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Speaker 2: improved and people are seeing it as a genuine choice.

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Speaker 2: And there's lots of commentary online. I can see, for example,

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Speaker 2: for the next three months that we're usually around fifty

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Speaker 2: percent cheaper, and I think that's it's hard to ignore

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Speaker 2: and it's a genuine option for New Zealanders, and I think,

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Speaker 2: you know, with the precious people are feeling, it's it's

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Speaker 2: I think we've become a great alternative and a great

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Speaker 2: option to fly with it, and the reliability is much

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Speaker 2: stronger than it was historically. So we'll keep working at

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Speaker 2: that because you know, we know that's so important to

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Speaker 2: people when they're flying us.

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Speaker 1: Can you make money doing what you do. The reason

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Speaker 1: they asked that question as Emmerates came out the other

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Speaker 1: day and they're making record profits for the third year

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Speaker 1: in a row. Quantas are making huge profits, Singapore making

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Speaker 1: massive profits. Is that is that? Is that a model

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Speaker 1: based thing or can any align if they do it right,

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Speaker 1: make money?

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Speaker 2: Yeah, you can. I think, I mean, Jetstar is on

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Speaker 2: track for a record result this year. And I think,

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Speaker 2: you know, for us, it's harder because the margins are

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Speaker 2: thinner with low cost carriers. You've got to be really

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Speaker 2: focused on keeping your cost based low. But we also

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Speaker 2: you know, don't offer sort of all the bells and

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Speaker 2: whistles that cost money to airlines. So there's proof around

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Speaker 2: the world that that that both models, the full service

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Speaker 2: model and the lo cost model can be very successful.

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Speaker 2: And I think, you know, we were the first low

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Speaker 2: cost carrier into Australia. We are the only low cost

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Speaker 2: carrier in New Zealand. And I think it's you know,

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Speaker 2: I think it's there's been a lot of growth for

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Speaker 2: demand for that type of travel and we can. I mean,

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Speaker 2: I commute between Melbourne and Sydney. Over here, I see

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Speaker 2: every week people flying for the first time ever because

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Speaker 2: of Jetstar, and I think it's you know, it's unlocked

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Speaker 2: travel for people that otherwise wouldn't be able to afford it,

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Speaker 2: which is just we're really proud to play that role

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Speaker 2: to be able.

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Speaker 1: Well, which is interesting because there's no shortage of reading

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Speaker 1: from major airlines who cannot spend enough money at the

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Speaker 1: other end of the plane front loading business and first

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Speaker 1: and upgrading you to caviat and showers and massages, and

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Speaker 1: there's clearly money in that, there's margin in that, and

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Speaker 1: you're arguing your model works as well.

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Speaker 2: Yeah, I think they both can. I see it working

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Speaker 2: for a Jill Brown carrier with Quantus, but the different

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Speaker 2: you've got to work on different things. I think for

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Speaker 2: Quantis it's about, you know, how do you deliver value

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Speaker 2: that allows it allows the premium. For jet Star, it's

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Speaker 2: how do you manage your costs so you can keep

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Speaker 2: fares low which drives demand at this end of the market.

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Speaker 2: So I think, you know, they're different business models, but

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Speaker 2: both can be successful if done well.

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Speaker 1: I know you didn't like the half airline. What I'm

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Speaker 1: suggesting to you and you've seen it Australia, Quantus, Jetstar,

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Speaker 1: Virgin Rex is gone. Is that Australia. That's what Australia

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Speaker 1: can handle. Therefore, in New Zealand at an ear New

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Speaker 1: Zealand and the JIT Star, that's about it.

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Speaker 2: Yeah, I mean, I think the thing you need to

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Speaker 2: do as airlines is balanced the demand for travel with

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Speaker 2: the supply of the airlines that provide that travels. So

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Speaker 2: you know, I think if you outstrip supply versus demand,

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Speaker 2: there's going to be economic problems for airlines. So I

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Speaker 2: think you know, they're not big countries, you know, and

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Speaker 2: so probably in New Zealand two carriers feels right in

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Speaker 2: Australia similar but I think you know, we want to

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Speaker 2: be over there just a genuine second carrier and provide

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Speaker 2: options where we can. And we are looking Mike for

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Speaker 2: growth where we can as well, because we think there's

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Speaker 2: there's opportunity and if you look at it, you know

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Speaker 2: trans Tasman, you know there's opportunity for growth there, we

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Speaker 2: think in Pacific Island as well. So we'll keep looking,

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Speaker 2: you know, for opportunities to do that, like we've done

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Speaker 2: with christ Church and Hamilton and Dunedin as well.

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Speaker 1: Great Stuff's definitely good to have you on the program.

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Speaker 1: Appreciate your time. Go well Stiffane Tully, who is the

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Speaker 1: Jetstar ce oh with us out of Sydney this morning.

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Speaker 1: For more from the Mic Asking Breakfast, listen live to

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