Peter Oncken (How to buy/run and sell an airline anywhere)

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In this episode of the Judgment Call Podcast Peter Oncken and I talk about:

• How Peter got to start an airline during COVID
• How Peter got started with his amazing track record of restructuring five airlines in Europe
• Why it is so hard to make money in the airline industry?
• Why low-cost & long haul flying is so hard?
• The amazing success of Wizz Air in Europe?
• Why Peters's newest airline Aero K is starting up in South Korea.
• How Qatar Airways has stealthily become the 'World's Best Airline'?
• Who makes the most money in the aviation industry?
• Will electric aircraft take over soon? What are synthetic fuels?

You can watch this episode on Youtube - The Judgment Call Podcast Episode #36 - Peter Oncken (How to buy/run and sell an airline anywhere).

Peter Oncken is Managing Partner of INTRO Aviation GmbH. Peter has been buying, restructuring, running and selling airlines for two decades including dba, LTU, Cityjet and Corsair.

You may reach Peter via LinkedIn.

Welcome to the Judgment Call Podcast, a podcast where I bring together some of the most curious minds on the planet. Risk takers, adventurers, travelers, investors, entrepreneurs and simply mindbogglers. To find all episodes of this show, simply go to Spotify, iTunes or YouTube or go to our website judgmentcallpodcast.com. If you like this show, please consider leaving a review on iTunes or subscribe to us on YouTube. This episode of the Judgment Call Podcast is sponsored by Mighty Travels Premium. For full disclosure, this is my business. What we do at Mighty Travels Premium is to find the airfare deals that you really want. Thousands of subscribers have saved up to 95% in the airfare. Those include $150 round trip tickets to Hawaii for many cities in the US or $600 life let tickets in business class from the US to Asia or $100 business class life let tickets from Africa round trip all the way to Asia. In case you didn't know, about half the world is open for business again and accepts travelers. Most of those countries are in South America, Africa and Eastern Europe. To try out Mighty Travels Premium, go to mightytravels.com slash MTP or if that's too many letters for you, simply go to MTP, the number four and the letter U dot com to sign up for your 30 day free trial. So you're not around traveling? No, not this time. No more Columbia. They didn't want to let me out of Columbia last time I was there. They didn't let you out or you couldn't get in? No, you know, with all the COVID restrictions, it's usually that you have trouble getting in and they deny your body if you don't have all the documentation right. In the worst case, they don't let you through immigration. But they let me in and but unbeknownst to me in Columbia, they also only spoke Spanish immigration. They still let you in but they kind of accept you to take a COVID test and they want you to take a COVID test if they let you in. And I didn't know that because, you know, I mean, they mumbled something in Spanish. My Spanish is decent, but I didn't realize that. And then I went to the airport and everything was going to just checked in. And then I went to immigration. She's like, you're not leaving. I'm like, what do you mean? I was already through like, shit, they were running after me to the gate. She's like, yeah, you're not leaving. I'm like, what's going on? Yeah, you didn't do it. Take a COVID test. And they just introduced us like a day before I got to Columbia. So I had to like circle back and go back to the city and fly a week later. It was a little annoying. Oh, well, you have your experiences wherever you go. You know, the funny thing is in Europe, I've been to Tenerife. Coming back yesterday, I was there actually on business. And, you know, crossing borders in Europe, you really don't really know what you have to do unless you read the rules which are changing effectively every day. I told myself, listen, I go there. Let's see what happens when I come back. And I was quite nonchalant, to be honest, because I didn't care in this moment. And then people said, well, you have to fill a digital form of the German immigration saying on which aircraft you have been, where you're considering and so on and so forth. And I was told before I was going there that if you're on business in less than five days, and I was there only for three days, you can come back and you don't have to worry about anything. Yeah. I was there and they said, no, that's bullshit. You know, you have to, you fly back, you have to go in quarantine for 10 days, and you can exit the quarantine early after doing a PCR test after five days. So that was really very helpful because I actually have a meeting in Düsseldorf on Tuesday. Now I have to shift everything. But anyway, yeah, within Europe, it's really quite messy because every country has different rules. And they try to make you avoid any trip. Yeah, I think that's become the global pandemic in people's minds, so to speak, the bureaucrats are now telling us what we're allowed to do for every step. And Canada is the worst offender, so to speak, in Australia. But I was actually looking at going to Germany yesterday. And I had to do a 72 hour old PCR test just to transit in Portugal, which is fair enough. But then for Germany, it's a 48 hour test, which can be a different kind of test. And then I actually wanted to go to Prague, which requires yet another test. I'm like, whoa, I'm going to be out $400. It's going to be more than a whole flight just for the testing. I'm like, this is what we mean. But that's a stupid question now, but why would you travel with all these restrictions? It's no fun anymore. I'm in the midst of this business, right? But it really pisses me off so much that they, especially if you cross a border, now they have even closed the border between Bavaria and Czech Republic. And so you're not even allowed to cross the border anymore. The same between Bavaria and Tyrol? Yeah, Europe and a lot of places are going to end up in the 1930s or late 1940s, where you literally couldn't go anywhere anymore. I'm really surprised that Europe was taking that turn. I was in Europe in summer and things looked so good compared to the US. I'm like, holy shit, they're really going to pull it off. And now they're really overdoing it. So I hope it's going to change. Numbers are falling in reverse. It is going to change. I always think of the good things and the good people, call it naive or what, but in the end of the day, it will also for the industry, the bottom line is going to be, it's going to take years. But whatever happens in life and cross the world, I think there's always a good perspective, good thing in it and be it whatever. It's tough. I mean, this is derailing pretty much everyone in the industry. Some places are doing better than before, I feel. So Cancun, I went down to Cancun. And it was $600 a night. It's pretty much every hotel. It was crowded. And there were a lot of Brazilians. So not a lot of Americans, which used to be the 90% crowd down there. A lot of Brazilians came up to Cancun. Any COVID regime you have to follow or just do what you want? Well, there is something in theory. I mean, most countries have a theory. Germany usually is the one country that does take it seriously. But in most countries, there is rules, kind of as a virtue signal to pacify the population. But on the ground, there's minimal. Basically, it is, instead of two chairs, you have one chair on the table. I mean, that's it. And there is kind of a mask mandate. But even most places in the US, I was just in Miami, there is certain masks are worn, but it's, I'd say it's very loosely enforced in the same street for most places in the South of the US. And Florida has very low case counts, low in California, which is a very strong mask mandate. So all these things, they pacify your soul. But I think for the real virus, they don't do much. Seemingly, who knows? I'm not the expert. Well, yeah, we will see. But bottom line is I'm still, we will come out of this mess earlier than later, I guess, depending on the vaccination process. And it seems to pick up even in Germany, even though it's really slow. And, you know, with all these organizations and over effectiveness of Germans, you know, this they mess up, I don't know why. And yeah, I mean, Germany loves their bureaucracy, right? And there's so many layers. And bureaucrats don't suffer from any COVID shutdown, right? They get the same salary, and they want to do what's politically right. So they don't care. Yeah, they can do, they can shut down everything, you know, and the, the taxpayer is taking the bill. It's, it's, it's, it's crazy. But I guess that after Easter, before what we call Kingston, Pentecost, I don't know if you have that in the US. But I guess by then, we will have a pretty quick up, how do you say, drive up of restart a business of passengers coming back. And offer going to be implemented again. But we still it's, it's, it's, it's really low right now, wherever you look at. Well, I, yeah, I really wanted to pick up our conversation again, last time, because we, we talked about the amazing feat that you, you went through, during the last couple of months, you actually started an airline, you got an AOC in the middle of one of the biggest crisis of the aviation industry. Tell us more how this happened. And maybe you can also help us understand a little more about your background, how you got into the travel industry and aviation, in particular, since you've been doing this for quite some time. Okay, let's start with the second first, perhaps. I'm, I'm actually a lawyer by education. I never practiced law as such, but I got into the travel industry through the back door. And I've always been very focused on with the, my professional involvement with restructuring businesses. And at some point in, in, in the early 2000s, I was, was asked to, to restructure IT company. And which was providing software solutions for the airline industry, was revenue accounting and operational software for, for, for airlines and was said, okay, I'm going to do it, but I had no clue about software and about airlines. So I had to quick dive in, I had to quickly learn, which, which I did. And actually, it helped because you should know, I guess, you know, but airlines today's are pretty much IT companies with, with, with, with, with, with, with an airline infrastructure and aircraft and staff and everything, but it's very tech dominated. One would hope so, right? The technology, we just had Nick on Nick Blackwell, who used to run the restructuring team, the IT restructuring team for Cathay Pacific. And he said, well, it was basically a mess of systems from the 70s. No IT business would even touch them. But they have to deal with those. And he said, well, it's basically a mess of systems from the 70s. No but they have to deal with those. Yeah, right. Okay. But normally would assume, and this is how I know it is that you try to, and the, the, the, the business goes so quickly. I mean, why are you, you really have to adapt yourself tech wise as well. So your systems have to be really up to date. And with all the digitization going on, you have to be even, let's say you have to try to be able guard, you have to be quicker than the others, because this is what differentiates you in the end of the day. So this is what I did. And the group which owned the company, then saw that it worked out. And I actually went in as a shareholder as well. So because I saw that things were going well, and I wanted to take the upside of it. And then I was, I was asked by the, by the, by the owner of the group, if, and he was in negotiations, and this group had an airline in its portfolio, which was called DBA. It was the German affiliate of British Airways, which the group took over in 2003, I think. And in 2006, he asked me if I would be interested to, to run the negotiations and the takeover for LTU. LTU on those days was, I think, number three in Germany, had a fleet of 26 aircraft, long haul, were flying into, into continental Asia and North America, and pretty much North African Europe. And I said, okay, I'll do it. And so I ran the negotiations with, with the group which owned it in those days. And then we actually acquired the airline. And then he asked me actually to run the airline to run the restructuring. And that was actually a jump in cold water because I didn't really run an airline before I ran companies. And, and, but it was, it turned out to be a right decision. And apart from the fact that I had, let's say, an external approach, an external view, I was not really coming out of the industry, which helped me, because I, I thought differently. I thought, let's say, pretty much with a blank sheet of paper coming in and saying, okay, what actually needs to be done. And, and there was a good team within the airline as well. So we actually managed the restructuring within, was pretty much a year, until we got back to at least Prekeven. And so, so this was actually my entry process in the, in the travel industry. And then I stick to it, I stayed there. And we, from, from then on, we, we took over a number of, let's say, troubled and distressed airlines in Europe. And, for instance, we took over one in Austria, which unfortunately, we actually failed in restructuring. So we had unfortunately also to close it down. It was your Austrian original carrier. Then we started up a new airline in Germany. And then I, at some point, after we sold the Irish carrier actually said, Europe is not our place to be anymore, because competition and the market was not right for us anymore as a standalone entity. And it was, I thought that we really, with everything going on, we thought we couldn't really provide any added value to, to restructuring, to reorganizing the businesses. So I looked into Asia, because it was new for me that Asia is actually the growth. That would be, would be my first, first question. And we know we're going to get to, to your new venture in a heartbeat, restructuring an airline. It sounds to me something miraculous is going on. So when I think of airlines, there's usually some, some entrepreneurs who, and I think of the case of malware, because a lot of people remember that it's, it's something that is red hot. Everybody knows that there's a lot of marketing. We see a lot of interest in that and then people go to destinations, they wouldn't go otherwise, as it happened with malware. But the biggest problem is, is obviously making money off an airline. It seems there's more in Buffett's quote with this. So the airline world is usually littered with well intended, pretty high flying startups that make it for one, two, three years. And then they, because of their competitive situation in the airline industry, and given there's always an incumbent, always have trouble making money. When you go in restructuring, well, what does that mean? You cut costs, or you, you, you, you change the marketing, is there like a secret recipe that maybe other airlines can learn from? First of all, Warren Buffett is right. You really don't make money running in an airline. You make money by buying and selling an airline. This is how we made money. We also, we were, we were getting to, to, to, to, to situation where we got profitable and, but it's not that you get rich running an airline. It simply doesn't work like that, that way. But you can, you can live on an airline. You can, let's say, make it successful. You can keep it alive. That's pretty much the focus. And everybody who tells me different today, I wouldn't believe them. Because the, the, the landscape is today such it's, it's so highly competitive that the margins are so small that you cannot simply imagine that you can, you can, you can, let's say, miraculously make tons of money with running an airline. But answering your question on restructuring, it always depends. You cannot, while, while I always say that an airline is, it's, it's, it's not really rocket science. In the end of the day, you have to, you have to sell tickets. You have to have your costs under control. And, and the bottom line has to fit. So when, when we get approached that there's an airline out there, which needs either a new ownership or needs a restructure, we really have a, let's say a first look at it. There are many airlines out there where, where I would say there is no reason for them to exist anymore, because the market's so tight that even the best restructuring wouldn't work. So, obviously, we, we look at, for instance, we had, we took over Cozère, which was, it is, it's still existing, it's a French long haul carrier operating out in Paris. So, so, to take a practical example, we, obviously, the French market is highly competitive, it's all out of Paris, it's two airports, it's, it's a strong national carrier, so to say, where they're France, they're actually serving everything. And there are a number of, of long haul carriers also operating out of Oli and, and Charlie Gold, the two airports. And so, but in any case, we, we looked at it, and we saw that there was a, a perspective for an upside. The fleet was highly inhomogeneous, we had Boeing 747s flying, we had A330s, two types, two different types, 200s and 300s flying. And obviously, that was not really helping the bottom line, it was highly cost, cost, costly. And, and, but then again, on the other side, the, what, what brought us to the decision to actually take over the airline was the positioning in Oli, Oli is highly, it's a highly competitive airport. There are scarce slots, we had a high number of slots. So we had, let's say, a perspective of really serving routes, which would really be interesting. And the markets which were being served were, while being really with lots of capacity on the market, it made, there was, there was room for development. So we made our business case ahead of asking going in, and we saw pretty clearly that once we would have harmonized the fleet, once we would have developed the network, and we also took the decision to, to increase our presence in North America. We opened Miami, we opened, we wanted to open New York. So this is all, let's say questionable now with COVID, because the situation is a bit different. And in the meantime, when I come to that, we sold the airline again, because it was clear for us that in, in, in the context of COVID, there, a different perspective would need, but I can tell you a little bit more to that later around. Can you, can you, can you give us an idea of the numbers involved? I don't know if you're allowed to talk about that, but how much does an airline cost when you buy it? Is it more like 5 million or 50 million, just, just to give us a ballpark? Let's say, theoretically, I cannot talk about a specific airline because I'm on, but our approach, and it's, people might say that you need to have balls for that. We, for us, it's important that the airline is cleaned when we take it over. It does not have any liabilities anymore, and it needs to have sufficient cash to run the restructuring. So this is our aim. And this, if, if we pay anything, obviously we pay something for it. It can be a big number, it can be a small number, depends on the circumstances of the airline. But for us, the clean sheet of paper is important, because otherwise you're dealing with the past of the airline, you have to fill holes, which has no interest on us, because we actually want to develop the airline. So, so much to the numbers. I cannot tell you too much about it, because obviously I'm obliged to, to keep a kind of, But, but to give us an idea, I mean, airline sounds like you have to come in with a billion dollars. That's, that's how it sounds, right? So, but it's obviously not the case, but, but just to give us a number, can 50 million dollars buy you an airline in the, in the range of pre COVID, and hopefully one day post COVID in the range of course, air who leases a bunch of planes. We are talking about airlines which were highly loss making, or which are highly loss making. So effectively, these airlines don't have a value. Oh, you could, you could argue that there are assets which have a value, for instance, aircraft, if they are owned or on the balance sheet. There are, sometimes they have it, but you can also assume that why the airline is already in distress. Most of the assets have been monetized by use management or previous owners. So actually you, it's not that you take over much, you take over a running operation, you take over a network, and you just try to solve a problem for somebody who's owned the airline before. So you can imagine where I'm getting to. Okay, okay, we're getting to a smaller number. Yeah, we are getting smaller numbers here. And that's obviously here. That's in the end of the day, we are solving a problem for somebody else. We do it on our own account because we own the airline, but you get that side. There's, there's, and sometimes we also agree on, on models where the seller gets an error when we're successful. So there the number gets smaller and smaller, as you can imagine. But yeah, you're kind of, you're kind of running a Hyatt model in the airline business. You know, Hyatt kind of runs, it doesn't own the most of their hotels, but they manage it. So they tell everyone what to do in terms of what a room should look like, what the staff should do, how it's being presented online and offline, obviously too. But they don't have as much upside in the particular success of the hotel, but they, they do have a staggered fee. So depending on the success of your hotel, they get more or less in their monthly fee. I guess, maybe that's a way to, to, to compare it. Obviously, it's not a good comparison, maybe not a full comparison. We take the risk. I think this is the important thing. You know, the seller gets, gets away with actually getting away with the airlines having having in somebody else else's pocket. And we, we run it and we run our own airline. We run it to our best capabilities and to our best of knowledge and expertise. And we have done so quite successfully in the past. So those who are selling it to us know what they, what they get. And that somebody else is solving a problem they couldn't solve, right? Yeah, you're the, you're the doctor of the airline industry. Since you're the doctor, I want to ask you about, you know, this upside and downside, obviously cutting is one part of that. In terms of upside and selling more tickets, is there like a golden rule you follow? Is there, they're low, low, low and hanging fruit that some of these carriers haven't really ventured into? Because I always feel, you know, when you want to grow the pie, when you want to grow the airline, this is, this is where most of the effort should go into, right, to find either new channels to sell tickets or extended channels or, I don't know, go into a price war. That's kind of what Huawei did with their $69 tickets to Iceland. And they, they told me when I spoke to them, to them at the time, they told me, you know, we can basically give away the seat for free. We make so much money on ancillary fees. And I'm like, that sounds really shaky, because people might not have to go for those ancillary fees, right? They don't go for luggage. They don't go for food. That seems really shaky, because you attract a certain crowd that's obviously already prepared to not pay much and live through the suffering of Huawei, so to speak, and obviously didn't work out for them at the end, but this might not have been the issue. But what do you think is the biggest leverage there in bringing sales up, which seems to be at the heart of the issue? Yeah, well, it's not only sales, but it's a big, big part. And it's the one, it's the part, obviously, because at some point you come to your limits with using costs or having your costs under control is something you have to do anyway. But there's a natural end to cutting costs, right? So it's always the upside in selling. But selling, it's not only the, the from, at least from my point of view, it's not only the channel, it is very dominantly the channel. But first of all, you have to have a product, you have to have a network, which is compelling, which is interesting to customers. And where you have at least a kind of, there are no niches anymore today. I hardly see any niches. So you have to be positioned in a way where you're decently and reasonably competing against somebody else. So it is coming down to how do you, how do you, so what you sell is clear, you sell your tickets, you know what your competitors are charging, you know what, it's pretty much open book today. So ultimately, it is about a combination of having, let's say, a competitive product on this, on the same route, you, you, you serve with your customers, your competitors, and using the right channels and obviously selling through channels, not only your tickets, but I fully agree with the guys from Bioware. Ancillary revenues make up today, around 30% of your, this is an aim you should achieve, 30% of your revenues. And if you do it right, you can, you can, you can make a difference. And this is also where we come in as a restructure. We, we, obviously we look at the network, is the network right? Is the fleet right for what you're flying? Is the cost structure appropriate to the, to the, let's say, to the structure of the airline as such? And then again, how is your pricing model? How do you, do you have a multi cabin, multi class cabin? How do you, how do you leverage on, on, on that? How do you sell, which channels do you use? What is your product consistent of? And, and, and so on and so forth. And this, these are, there is, again, there's no rocket science to that. They, our, I think, our good, a big advantage is that we can focus. We, we see what needs to be done. We don't have a mass of, let's say, discussions to be taken, because we, we are a pretty small team doing what we do. And we decide quickly, and then we implement quickly. We don't lose time. We try not to lose time. And I think this is an important factor to, to what you could call successful in the end of the day. Well, one thing that, that I was always curious about, and I was really excited about that, but it seems to be a story that, that, that didn't end well is, and you, you, you've, you've looked into this with Corsair, I guess, is long haul discount flying, right? So discount, in the sense of it's a lower ticket price, maybe more fees. And it seems to have taken off, obviously, with Southwest, and then Spirit and Allegiant that are really coming back strong now. And then we have that. On the other hand, in Europe, we had the EasyJet and Ryanair, and probably a bunch more by now that don't even know their names. For long haul, Norwegian really tried, it's, and I think they had a spectacular product that was just really tuned in. But it seems to be something that with COVID or without COVID, they struggled way before COVID. It seems to be something that nobody can get right. And I don't know if it's, if maybe it's impossible with the current set, how the airline industry works. But since the 80s has been tried, and it almost seems like it works, and then it just blows, blows apart again. Yeah, I hate to say that, but I think it was four or five years ago. And I was repeatedly asked this question, does long haul low cost work? And it is my conviction that it cannot work. It simply cannot work because long haul has nothing to do with low cost. What they did is effectively a combination of low fare and, and reduce product. But ultimately, the, what you're flying and long haul, you know, the productivity of your aircraft is quite limited when you fly long haul. And you can, you can only make as much money as you, as you can in this moment for, for a certain flight. You have a certain number of, of, of seats and aircraft and the aircraft serving the long haul low cost, currently low cost. We're pretty new aircraft, because otherwise it wouldn't work anyway. But the problem is these new aircraft are quite expensive as well. And then again, you have a pre dominated number of cabin staff, you have your pilots, you have, you have everything else, you know, low cost carrier pays the same fuel price as the others. In most cases, the same lease rates as the others, who actually charge you more. And so it is, even though on certain routes, it might work. I'm not saying that it principally cannot work. But in the, in the, if you consolidate the whole network, it, I'm pretty sure it cannot work. And, and those who are serving it and also in France, there is an airline serving low cost long haul, it's French B. And the management repeatedly tried to convince me that it does work. But you also have to know that there's another airline linked to the same group, it's a carib, and which is not a low cost airline. So, and, you know, there's always a trick of, of, let's say, hiding fees, hiding costs within a group, and then you can shift them or also the aircraft as you wish. And I think if you really would look at a single operator and, and even even Norwegian was not really a single low cost operator on the long haul side, because they actually did work very well on, on, on, on, on the medium haul, the European traffic. And, and so a standalone long haul carrier, honestly, I don't know anyone. Perhaps I miss somebody now, but Asia. One thing. Let's say standalone, it would not work. Well, one thing people, I think, got really hopeful about, and I think we're still looking there quite a bit into the future, is that we've seen that the Happenspoke model has lost a little bit of their, their attractiveness, especially in the eyes of consumers. And we see this in the US a lot, way more than in Europe, is that people are really curious about point to point connection. I think this is what really helped take off Southwest, because they were literally the only airline flying between those two regional airports. And we have a ton of airports in the US, a little, it's a little different in Europe and in Asia. We have all these little airports in Southwest. These airports are not congested. And Southwest was the only one flying and the prices were decent. They weren't super cheap, but they were decent. And nobody else could make it work. And there wouldn't be enough volume to our Happenspoke model. And you see this in Texas, for instance, a lot of you still going from, from Texas to Houston is drama in terms of flying, it's expensive, and shouldn't be right. So you just go to a different airport and then Southwest and then it's 50 bucks and no more drama. And what I think what people were curious about is that we also have the point to point, point to point model of war with the new generation of long haul jets. And I think this is what Norwegian was betting on. We, we get into smaller airports and we have this example here in the Bay Area. We have San Francisco, who was the predominant airport for a long time. It was used to very congested, lots of fog issues. And then he went to San Jose in Oakland and said, you know, we can maybe use that as a starting point, have lower costs, lower turnaround time, we have more of an leverage there. But then the problem was, where do we go in Europe? So in Europe, they flew into the same hops, right? They flew to Oslo, they flew to London, and in Europe, maybe you can go to Orly instead of Paris, but it seems that the number of places you can actually go to the tracks on the same amount of passengers, they seem more limited. And I think it's more of an airport issue. If, if we would have this, this sprouting of airports that accept international traffic, and they are within say six to 10 hours of flying distance, I think there might be a real, a real shot for another low cost carrier. But I mean, now with COVID, obviously, the trouble is that international borders seem sealed for eternity while judging from, from current news. And it might take another 10, 15 years until we go back to this super globalization that we had a couple of years ago. Well, airport is, is a factor. It's, it's, it's an important factor, but it's not the factor. At least for the cost side of it, I'm just talking about an airline, not as a passenger for the passenger. It might be quite compelling to, to, to pay, let's say, a ticket price of, I don't know, 350, 350 euros, or I don't know what they are from, from what you pay from the US and to Europe. But in the end of the day, I look at out of perspective of, of, of an airline and the airline still is, is stuck with, with, first of all, they have to fill the aircraft in a, in a, in a way where it really makes sense for the airline. So they have to fill the seats and, and they, they need to have, and they have been doing a pretty good job in that price structure, which, which makes sense. But the question in the end of the day, is it, is this sustainable? And this is where I come up with my question. Even with all the ancillary revenues they might come up with, is it really sustainable in the end of the day? And I don't see this happening. And what I know that Norwegian tried with, with different staff structures, they had Thai pilots flying out of Ireland. They had made all sorts of, let's say, workarounds in order to make the model happen and successful, that just grows your complexity. You know, you need different, different AOCs, you need to, to get everything on, on, on, on, on the line. And, and the success, a successful airline is in the end of the day, an airline which has as little complexity as possible. And it, it runs against the model of being a low cost carrier, long haul or also short haul. The more complex you get, you lose your, let's say, advantage point. You lose your, your, your cost reduction aim. Because every complexity costs money in the end of the day. Yeah, I think in, in eyes of consumers, we, we expect the airline industry to kind of behave like the semiconductors, like an iPhone, right? It gets double, it doubles in speed every 18 months, and it should be the same price. And it works beautifully with all the semiconductor devices. But with the airline industry, there's no semiconductors behind it. But in consumers eyes, it's a similar thing that we expect should get much cheaper, and it has gotten much cheaper. And it should be basically free. That's kind of the new expectation, right? And it should be a Q sweets Qatar airline business class. Why at the same moment, the costs are going up, fuel is getting more expensive, airports are getting regularly more expensive, then visas are depending on the, on the aircraft type, more expensive. And then you have staff, staff expect to earn more over the course of, of, of, of the timeline. And in the same time, as you just rightly said, the, the, the prices of tickets get lower. So this is an equation, it doesn't work really, in most cases, it doesn't work. So you have to find new, new means of revenues, and where we come back to the interior revenues, and, and, and, and the channels and how to get yourself into the market. And I think this is the important part. And, and, and so being successful in the end of the day is, is, and this perhaps is also points to the, to the question, how can you make money with an airline? That's, that's really the, the, the, the, the big secret some airline, airlines might have. And to be very honest, we have done well with running an airline, but we were not necessarily making heaps of money. So the question is why do airlines like Ryanair or what's a Lufthansa and, and, and, and others make money. It's also very strongly linked to the fleet structure. Yeah, I was, I was, I was curious, but before we get there, and I think this is a, this is a wonderful point, or maybe we can do both. You know, there's these upstarts that seem to really take over the European low cost market right now. This is this air and blue air, right? The blue air comes out of nowhere for me, but they show up everywhere. And then there's this air who has been in a blue air. Sorry, blue air from Romania, right? From Romania. Yeah. And they seem to really grab every route they can right now, just, and then market it because they feel this, they have the attention span now. I don't know if they really have passengers, but you know, you can schedule things 12 months out and then you can cancel it again. I don't know what their secret is, but this air is now expanding to Abu Dhabi and they, this seems to be nothing east of say, Poland, that this air hasn't, hasn't conquered from my perspective that I mean, I live in San Francisco, but I go to Europe a couple of times a year. How do you explain how they are able to be so aggressive in growth? B, it seems like pandemic hasn't really done much to them. Maybe I'm wrong. And C, do you think that's sustainable and they're actually making money with this? Well, actually, the one airline which really impresses me is Wizzair, because Wizzair indeed is, I guess, also one of the very few airlines which have successfully positioned themselves in the, in the low cost market in Europe. And I think there is a pretty simple reason for it because they are coming out of a region where there was high demand in, in traffic, but it was not really tapped. That was Eastern Europe. And they were lucky enough that the competitors in Eastern Europe actually all failed. It was the Hungarian airline, I missed the name, the state carrier, they, they, they failed and so they could actually really tap into a new market for them, where they really could, could develop. They, they had a new fleet, similar to actually what Ryan has done a couple of years earlier. And, but they were strongly focused on Eastern Europe. But then there were also, let's say, with, with the regional airports really opening also to the, to the, to the locus carriers and, and the interconnectivity and the Eastern European countries being part of the European Union, Romania, Bulgaria. So there was a need for, let's say cross border traffic, which was quite easy because we have free, free travel within the European Union. So you just could hop on a plane and fly somewhere else without any, any, any visa or any other restrictions. So they really tapped into this market. And now they, they made themselves a brand, which is quite, I never flew with them to be honest, but for what I hear, they're really, really good. And they're reliable. Their, their on time performance is pretty good. And they're cheap. They're really cheap. Well, I would say that Ryanair was cheap once, but they cannot afford to be that cheap anymore. And they also tapped into a business segment in order really to grow their, to grow their, to their story. So, so they're, they're getting a little bit more like the, the legacy carriers. There are no, not so much low cost model anymore. And, and they're also flying into the major airports now. So this is what Wizair is not doing. They're strictly keeping to their original model. And this keeps them to be successful. Why, Ryanair is successful as well. It's no, no doubt, no doubt about that. But, and, and well, with flying, the world gets pretty, pretty, pretty, pretty small. And with the major carriers, really now it's with COVID, getting into major trouble. This really opens up pretty much a new world for them, which they really can tap into. Do you think the, the, the balance of power that we had at, it was for a long time that Ryanair moved into certain airports, then there was usually a political debate, you know, it was very strong political debate in Germany about limiting the access of Ryanair to certain hubs, certain number of flights. The same happened with the Middle Eastern airlines. So the idea was to prop up Lufthansa and the legacy carriers and keep their, their terrorist structure, their fair structure in place, more or less. Do you think that will, will, will be the same after COVID? Do you think who these political restrictions will, will topple over and anyone can compete, who wants to compete? I think this has changed in the last years. Anyway, Lufthansa has tried to make their share of political influence. And honestly, ultimately, they, they still succeed somewhat with the Middle East carriers, trying to get them into the German market. But with the low cost carriers, all of these being European carriers. Anyway, it doesn't really help them that much to keep them away. So now even Ryanair has entered the Frankfurt base. And, and I guess, I don't know what they're doing with Munich, honestly, but, but it's not about really that these low cost carriers are hindered to, to develop their position in the German market, or across even, even in France, where EasyJet is really strong. And it is, it is today a fact that they are there. It's going to be even stronger because these low cost carriers have, will, will exit the crisis far better than the legacy carriers will have, such as our France, Lufthansa, British Airways. They're really struggling because they have to, to, to, to, to manage their, the bottom line in the end of the day. And with all government money being pumped into these airlines, and actually to my knowledge, Ryanair and, and Whizzer have not asked for, they got support, but not really in terms of, of, of equity, but rather loans. So, so they, they, they are far better off. And I think they are also better prepared to, to, to, to, to again, reposition themselves in the market. Obviously, these, these local carriers have put their feet for large extent on hold, and they have put them on the ground. And, and, but I guess that they are pretty quickly able to, to, to reactivate them. And at some point, this will come and travel will come back. And once, let's say, countries open, open their borders effectively again, and create demand. And I think everybody's waiting for that. So, local carriers are going to be able a better, are going to be better positioned to, to, to, to reactivate and position themselves in market, which were, let's say, pretty much to, to, for instance, in Germany to Lufthansa and New Orleans. And we will surely see, and this also needs to be seen in the, in the context of, of airlines having failed over the last years in Germany, for instance. So we had a, Erbilin, we had Germania, we had, what else did we have? I think we had two or three other airlines which are not there anymore. So there is a need for, for, for, for traffic. And the regional airports here, it's, it's, it's devastating. And there is really demand for connectivity. And Lufthansa alone, even with Eurowings, are not going to be able to provide that. And we are not talking about Germany alone, we have that across all countries in Europe. And so, so we will have to see how this will evolve post COVID. But, but the Hubbot Spoken, you have been talking about the Hubbot, I haven't spoke before. There is a kind of revival of Hubbot Spoken now again, because it, it facilitates the legacy carriers actually to operate. And it makes it easier for them. But it's not surely the solution. And it will not be for long, until long when, when, let's say, there is going to be, it's going to be a shift back to the point of point, point to point connectivity to intercontinental, but also within the continent. Yeah, I only get to you new venture and where you see the opportunities in the airline market. I know that the founder, Neelamand, the founder of JetBlue and Azul, he is starting with the fleet of AT220s. Those are smaller aircraft. They, they, as far as I know, are Embraer aircraft, but the Airbus has, have us as bought them. So the new label has been put on to them. No, no, no, no. Bombardier. Bombardier, my mistake. But it's, it's, I've flown the AT220, it's a, it's, it's a great aircraft. It feels much more, much more spacious than you would expect than a small aircraft used to, to, to feel. I hope they're safe enough. It doesn't go to the route of the 737 MAX. But I felt like this is a, this is a great aircraft to work with. And I think his strategy from what we know, the airline is called Breeze, as far as I know, is to go to even smaller airports and then do kind of a Southwest revival where he goes to, to really small airports, connects them, brings out a $29 fare and hopes for the best. That's what we know, that might be completely, might be completely off or we speculate about. Where do you think Denise right now, and where is your new carrier positioned or where would you like to position it? Coming back to, to, to what you were just referring to, to, to Breeze, I think from, from the American US perspective, it really makes sense. Because you are very, the US is pretty much a close shop within the country. And it's a, it's a huge country where you still, there's a, there's a used amount of connectivity also to the smaller airports. And so that really makes sense from my perspective. It is, and the aircraft, by the way, is a great aircraft. And it's, it's, it's not only very reliable. They had a couple of issues with the engines, but their winner, they were not, it's not a safety issue. It was simply a reliability issue. But this has been solved. So I think the, the, the industry 20 to 20 is, is something which is absolutely fine. And I think today they are already also have, let's say, a cost base, which is, which is highly competitive. The, the other airline you were referring to is, is ROK. We invested in this one, I guess you mean this one, right? Yes, your news baby. Yes. Yes. We invested a couple of years ago into a new low cost carrier startup in South Korea, simply because Northeast Asia was, from my perspective, the only real market where you could assume a really a development, which was, which was what we were looking for, right? They had passenger increases of 10% year on year. So there's a, it's really tapping into the Chinese market. And our, our aim was simply to set up an airline under, under our standards. We supported the management in the setup and the structuring of the airline. And the, the, the, the aim was to connect a secondary Seoul airport capital of South Korea to, to secondary destinations in China, Japan and Taiwan. And the, the, from, from, I didn't know the market before, to be honest, before we entered into this venture, but I flew down there and talked to the people and looked into what, what could be expected. And I was really, really impressed by, by what the Chinese market is, is capable of delivering in terms of passengers, in terms of, of demand. And if you think that today, just 4% of the Chinese population have a passport. And this, from governments, government sources is expected to grow to 12% percent until 2025. You just can imagine what this will have as an effect on, on international traffic. So, and, and South Korea being the number one destinations for Chinese people, it was, for me, it was simple to say, okay, let's go there, because what else can you do wrong? And that was, that was the reason why we, why we entered the market. And so they started actually to fly, they started flying, but still due to COVID on a very, very low, let's say, exposure, because we try, we try to keep it as low as possible until COVID is done. Our competitive advantage of, of having, let's say, a clean financial situation. We don't want to have any, any, any debts or whatever. And all the other carriers you can imagine are highly, highly inflicted by, by financial repercussions from this crisis. Yeah, I think you answered something there. And I was in China in 2019 and flew to basically 10 different secondary and tertiary cities. And I was impressed by the, by the sheer volume of flying that was going on. There's this massive airports in Fuzhou, like 200 gates. And there's like a tiny little airport bus that even that serves the airport. It's very difficult to get to. I mean, obviously you can take Uber and DD. But I was, I was impressed by the sheer size of domestic traffic that's going on. I think the, the trouble that they still have is that the airspace is not open and the, you can see this very nicely on flight stats that they all go through very narrow air traffic control corridors. But the, the, the amount of traffic is go was, was spectacular. And I think when you, whenever, wherever you went in Asia in the last couple of years, it was basically all the growth in tourism came from China. And as you say, it's 10, 15, 20%. And I think Jin Air is the, the household name there, or one of the household names that started with really cheap flights out of, out of Asia, out of China, which I think China is still new to the idea of a low cost model itself. And I don't know if Jin is, was the first one. I didn't see too many there when, when I was there two years ago. And clearly it is the driving force in, in basically just outbound tourism. And what I felt is the greatest challenge is if you can solve getting an AOC in China and fly to China wherever you want. I think it's not that easy. You know more about that. I always felt it's really tricky to market to Chinese consumers. I don't know how you pulled that off. I thought it's coming from a non Chinese world selling in China is really hard. Well, honestly, we had to learn a lot about that as well. And to my understanding, it comes to, first of all, you have great partners in China itself, because really the, the, the, the channels in China are totally different to the ones in Korea already, you know, and, and, and, but, but the, the, there, it is, it is a strongly dominated online channel market. But you still have to have, let's say agents on the ground as well, which are actually managing the whole process. So you cannot do that from South Korea. You have to have partners which help you doing it. And no matter how big you are, because while, for instance, in Germany, we can, we can, let's say, address a market in the UK or Spain or France or Italy, this is not possible in South Korea. And, and obviously an airline in South Korea is also, and you were talking about it, is actually the, the local affiliate of Korean Air. And, and so, so, and so they, they, they all strongly compete into this market. But the really interesting thing for us, and it's not that we came to South Korea and knew how everything worked. We know how it works, but we learned a lot because the, the whole channel system in South Korea is totally different or North Asia, I would say, to what we have known in Europe, for instance, the use of WhatsApp, the use of digital communication in terms of sales, how you use it, how you can really start a booking process out of communication. It's, that's really interesting. It might not be possible in Europe simply because of data protection reasons. But, but we were really impressed and honestly, we learned a lot, we still learn a lot, how you really can tap into customer demand, how you really can motivate people to travel, concrete, concrete on, on, on a, on to get them actually to, to, to, to book a ticket, even though they didn't think of booking a ticket. All this is new. We don't know any of that, how it, perhaps I don't know how it works in North America, but this is very far away to what we know in Europe. And the digitization process of Europe is, it's actually really picking up really quickly now because this is where you can start a differentiator yourself from, from, from others. But we are all the world away from, from where the, the North Asian markets, the Chinese, the South Korean, the Japanese are and Taiwanese are. There's a lot for us to learn. Yeah, I was, I was always so annoyed by the fact that I'm a big fan of WeChat and I was very happy to use it. And it's being used for, as a credit card, literally, as a, as a mobile wallet like Apple Pay. But you couldn't add a non Chinese card to that wallet. I mean, you can, but it doesn't let you tap and you cannot check out. And I was, they were really trying to phase out cash in many places in China, but I also couldn't use WeChat. I mean, I had it all said, I had it on my phone, but if you're in China, it doesn't work for you. No, but because you can't load money to it. So you can't, it has to be backed by credit card, credit card, credit card that works. And even if you have discovered union pay, you know, they're the same, they're the same network. It doesn't accept non Chinese debit cards. So it needs to be issued a card that's issued. Maybe that's just a flaw because nobody really stumbled upon it. I don't think it's necessarily intentional. But you have WeChat and everything you can communicate, but you cannot use it as a payment mechanism. And, you know, Visa, MasterCard, MX are basically unknown, they can only pay in very few places. And so I was stuck to cash and my discover credit card, which didn't happen, didn't work very well. And I think a similar, similar issue must happen when Chinese consumers travel somewhere else. They only have union pay, which is discover, it is rarely, rarely accepted. And then they go through a similar process. So that's one of the last countries, you know, Japan used to have that problem that we couldn't really pay with our credit cards. But that seems to be all solved. You know, why? Why is that? Because friends of mine, they have been to China, they have done a kind of reconnaissance trip, a digital reconnaissance trip to China. And actually, they were pretty blunt, saying they don't care. They don't need the Europeans, they don't need the Americans, actually, to sell more, because they are tapping into a population of, what is it now, 1.8 billion? Yeah, I mean, they don't have Americans or the others, they don't need them. They're not interested. Yeah, they don't need any inbound tourism for sure. I mean, there's more countries that don't need inbound tourism. But China, it's weird because they're phasing out cash, which I understand why they do it. But then also, the electronic part didn't work. So you're literally stuck to, I'd say, half of options that I could have eaten at or museums, I couldn't enter because I couldn't pay. There was no way for me to pay. And I mean, they're very friendly people on that level, at least. But I felt a little discriminated against. So no, I was fine. I was fine. I really liked that the secondary cities are not as overwhelming. I want to stay a little bit in the airline industry. And there's one airline that really impresses me is Qatar Airways, where they've been building a great brand. They've been really succeeding in, it seems, where all the other Middle East carriers even had trouble is building a great product, very competitive. They have a great airport now. They're ready to go. And also during COVID, they haven't really shut down their network as much. Emirates, basically the A380s are out of business. They basically have one in the air now or two per day. And they haven't restarted their flights. They just restarted LA, I think, a week ago. And they want to restart other U.S. airports. So they really have cut down their network 99%. Qatar doesn't seem to have that. They actually expand it. And they might have reduced some frequencies, but generally, they fly to pretty much the same places they did before. Maybe just once a week or twice a week, but they're still up and running. And we know they can afford it, right? They don't really have to make money. But do you think Qatar will get to this? Qatar Airways will get to that point where they come out of this crisis. And it seems to me that happens as their premier brand of airline traffic. And do you think they're going to monetize this and actually monetize this and actually be profitable on a whatever basis we want to call it for the next couple of years? Well, to start with, I don't believe that Qatar ever would be profitable. But I don't even think that this is really their aim to be profitable. Obviously, there's an expectation that the airline does not lose too much money. But I think they are tapping into, let's say, the whole economy there is pretty much linked also to Qatar. So for them, I guess, it's a macro perspective they need to take. And this is also what the other Emirati airlines are doing, Etihad and Emirates. But you're right, they have been quite present. That's true. But obviously, this comes with a cost. And I guess they're not only the airline leadership, but I guess also the government has the expectation that there is a kind of visibility of this airline to be around. And we should not forget that we have the soccer world coming up in two years. Next year, I guess, it's 2020. When is it? I forgot when it is actually. You haven't lost one year, right? You haven't lost one year of memory. This is coming up. And I think for them, it's a marketing positioning. They have a big advantage to the others. When it comes to a long haul, a pretty homogeneous fleet, where they can, let's say, allocate the aircraft pretty well on their network, where they want to fly. And I see this in Europe, where they're flying with the A350, pretty consistently. And it does cost money, no doubt. It is kind of marketing for them, and they are willing to take the bill. And they might be in a position where they can, let's say, mitigate the costs and the effects a little bit through cargo. And some aircraft have been really also used to transport predominantly cargo, also in the cabin. And so this might have an effect that actually my son has been flying with Qatar recently to Sri Lanka, and the aircraft was literally almost empty. And so they are willing to take the bill effectively to flying completely unprofitable. And if this makes sense for them, they have to answer that. I think under commercial, let's say, under commercial perspective, it doesn't make any sense at all. I think we all agree. Well, maybe I'm not so sure, because here's what happened. So basically, the airline world and the marketing in the airline world is completely devoid of any marketing. There's no other brands. There's no confusion right now. So I see banners of Qatar all over LA airport about San Francisco airport. What was the other airport I just went to? And it was full of Qatar, the Qatar logo. Was it Miami? I think it was Miami. Anyway, so if you can be so counter cyclical, and obviously Qatar is not hurting for money, it's never had. Otherwise, they would have started the airline in the first place, right? They didn't expect it to make money in like two years. And there is enough money to go around and they don't have to buy used treasury bonds. They can actually invest it in a real running business. They have control over it. They never know what the US is going to do with their treasury bills. And so the idea, if you have the monetary firepower to invest so counter cyclical, where you are the only one who does any marketing, I think the same is going on with BlueAir. BlueAir is doing so much marketing because they know there is no other airline currently around that does any marketing because it doesn't lead to immediate ticket sales, at least for most of them. And let's assume, and this is a big bet that the market comes back in six months from now. It might not come back for a couple of years. We don't know that. But let's assume there is a speculation that the market comes back in July. I feel like Qatar has outcompeted all the other Middle East carriers at least, and maybe a bunch of European carriers too, because they simply had this disdain power and they've seen as reliable and their marketing branding image is as high as ever from my point of view. I feel like Qatar has reached this Olymp kind of by stealth and it was always behind Etihad for the longest time. And now it's anyone I talked to is in full agreement how beautiful and then great Qatar Airways is and all the other airlines are barely talked about anymore. So I think maybe there's some genius in this nonsense. If there is some genius, I don't know. It's also always a matter of how much are you willing to invest into something like that and do you expect a return on investment or not. But I agree with you. Although I would say the comparison is a little bit unfair because I truly believe that Emirates and Etihad at least are trying to, let's say, bring results which are to the standard of what, let's say, international airlines would expect them to be. And perhaps the rulers in these days simply say, listen, there's a point where there's no continuation in a crisis like that where you simply have to ground some aircraft in order to really mitigate the losses. But I think the rules which we know don't really necessarily apply to Middle East carriers. This has always been like that from the start and they were strongly supported. And that's fine. If the countries can afford it, I think there is no complaining. And everybody has been complaining in the past, most of all Lufthansa, about unfair competition. I don't really see that this point. And if you consider the fact that that every international airline, at least from the Lufthansa has been set up by state money, they have been where they are today. They have been privatized some 20 years ago or so. But until then, they were running on tax figures money. So what is the big difference to what the Gulf Curries are doing today? So I think there is some hypocrisy in all this discussion. But anyway, coming back to your point, Qatar, I also consider Qatar one of the best airlines in the world from product perspective, but also they are quite innovative. And I really always like that with them, that they really try to take a step further and try to really think how how can we improve customer service? How can we, the whole digitization has been actually one of the top priorities of Qatar for many years now. While other European carriers, I guess also in the US, they have still been sleeping. And now everybody woke up, obviously, but Qatar has always been quite ahead of many others. And I think it pays off for them somewhat and but it comes through the cost obviously. Yeah, I hope they can make it work. It's certainly that one airline where it doesn't really matter where I go. I just enjoy the experience so much that it really doesn't bother me. The destination is doesn't really bother me that much anymore. And that is different with pretty much any other airline where I'm really hesitant to go to a place I wouldn't enjoy, but with Qatar the enjoyment is so high. It's strange. And I think this is now shared in the wider aviation community. If you could have a pick at any airline you wanted, right? So there's an, I know you only buy them in special cases and they're kind of restructuring cases and there's a certain determination. But if you had a pick at any airline you wanted to run because you feel there is potential, it's in a good spot and you could with a few screws turn make it much, much better. What is your top three that you, if you would have your pick that you can just choose from? And right now they're cheap, right? Airlines are cheap everywhere. You can basically go to the government of Panama and say, why don't you give me a slice of Copa? Well, to start with, I think Middle East carriers are quite interesting. First of all, they have no unions. So you don't have to struggle with staff representatives and what is good or what is bad and what are the expectations are. So I think this helps a lot. That would be some experience for me because I've never seen that, not to deal with, with pilot unions, cabin crew unions and name them. I always respected them. I had a good relationship with them, but communication with them was always pretty time, time intensive. So a Middle East carrier would, would, would be interesting. There are markets which I would consider interesting, but let's say the regulations within the country makes it highly problematic. And this actually you have in many countries. For instance, I love India. I, I, I'm, I'm a big fan of India. And I always thought of getting involved in Indian aviation, but actually every Indian I was talking to told me to keep away because it was, it was, it would be not only messy, but I would, I would lose my patience within the day and could be. Well, India is a special case, right? It has been, it has destroyed a lot of billions, billions of dollars in