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Aviation and COVID-19 in Saudi Arabia: As seen by flyadeal CEO

Con Korfiatis:

Well, we don’t have very old aircraft. We were blessed to kick off the airline with brand new CEOs. So, our oldest CEO is not even four years old and then the youngest is around two. So, a little bit early to exit them from the fleet their great aircraft and they’ve been doing really, really well for us. And really with the growth profile we have planned for the airline, we actually need them. If we went for a one for one replacement at this stage for a really small airline it would keep us really small. And we do need to get some more economies of scale in the business it’s always been the plan, the market is there both domestically and internationally.

And I know the issue will be another tough year for us, but hopefully we’ll be looking certainly from a domestic and a shortfall international, I think to a better ’22 ahead of us. But those future deliveries will facilitate that growth that we still seek. I think our original plans, pre COVID and pre change in narrow body order we would have been perhaps a 30-aircraft airlines today instead of 12 already. So, we’ve got a lot to make up for and make up for it as quickly as the market is coming back. So, no they’ll fly alongside each other and the CEO’s will probably exit our fleet roundabout ’25, ’26 somewhere there.

Richard Maslen:

Okay. And what did the NEOs offer to you ahead of the CEOs in terms of not just saving cost, but in terms of configuration, in terms of general operational aspects?

Con Korfiatis:

All right. So obviously from a performance point of view, one of the most significant differences is the fuel cost and having our first NEO in the fleet, we’re seeing even in really short haul sectors which Saudi domestic is that that aircraft really has very material fuel efficiency relative to the CEO. So that’s a positive from the business point of view. Lower costs translate to lower airfares for the customer, so there is something in it for them as well. From a product on board point of view because obviously with configurations, you can do different things, still playing down that DNA of being a true low-cost airline. We’re all about maximizing the density on board. Our CEO’s were one of the few that were delivered in 186 seats. So, we’ve gone for that Space-Flex galley, we have that extra row we always have had, that same one 186 seat count will carry through to the NEOs.

But being our own audible we’ve for the first time, being able to sit down and look at the interior of the cabinets and say, “Right, what do we do want to do with seating? What do we want to do that’s really a flyadeal personality as opposed to aircraft that have come from the lease markets and a bit traditional?” And there’s been some interesting developments in terms of interiors over the last couple of years. So, I don’t want to say too much yet because we’ll do that closer to the first delivery of the aircraft, but the interior of the aircraft will be different to what we’re flying right now, new seat concept, new not number of seats but a new look and feel inside which will be the long-term flyadeal brand. And we’re really excited about that actually it really brings some significant comfort innovations, particularly in the area of the seating we’ve selected for the new aircraft. So looking forward to see the first of those aircraft in April this year.

Richard Maslen:

Okay. I think that will be interesting for us all to see and dates to put in our calendars to mark off when it comes. Now, obviously with your low-cost model, perhaps you’re not too worried about these longer range versions of these narrow bodies, though a lot of people now I believe have a much stronger place in the market given that demand is subdued slightly. Is it something that you would consider moving forward getting a say A321LR or an XLR to use on some really specific routes I would guess.

Con Korfiatis:

Yeah. So, we’ve done only very early investigation into this. I think the sort of short medium term will be staying a little bit closer to home on the international front. But we’ve mapped out a mid long-term view market potentials for starting with the 320neo to be honest with you, and then looking at the 21 and the 21LR and a 21XLR preliminarily. And there are markets out there, which I think that size aircraft makes sense for. I think if you start getting five, six, seven hours out it’s a thick market, you’ll struggle to compete with a wide body, but there are thin markets out there, which I think from a Saudi Arabia point of view and the Middle East, GCC point of view are relevant and could be interesting.

I’ll give a little bit of way to say that the vast majority of those we can deal with are either the 20 or a 21 or a 21LR given geography. The extra range the XLR offers, I think depending on where you sit geographically in the world and the missions you need to fly, I can see why it’s a fantastic aircraft for some airlines. At this point for us we’re not sure whether it’s marginal or whether an LR would be good enough given where we sit, and how far away we would like to go from Saudi Arabia from the bases we have here.

Richard Maslen:

Okay. Okay. Another key thing we have in there, obviously, health and hygiene is an important part now of travel. You said about your middle seat policy now the government’s pushed you to not sell those middle seats. But there’s an even bigger push more to technology, a push to incorporate in more technological advancements. What are you doing as an airline to meet with that and to support the needs of your passengers?

Con Korfiatis:

So, some of our launch business model has played into this quite well, just fortunately, not through good planning because no one could have foreseen what came last year but we’ve always said we’re a digital first airline. So, we launched in the market purely digital marketing, purely digital acquisition, a robust internet booking engine, a robust mobile booking platform and really trying to be as touchless as we can. More than 60% of our bookings come through the mobile app, people can download their mobile boarding pass and use that at the airports and scan. And we don’t see them at the check-in desks unless they’ve got a bag they want to drop off. And a big proportion of our customers do that they go straight to the aircraft, we don’t see them in the check-in area.

So, we’ve had that kind of technology that we’ve played on and we’ve led that way. We’ve moved technology, particularly through the lockdown last year. We’ve innovated in other ways, in terms of the customer front technology around how we deal with the call center, a lot of self-serve options being available we’ve even… We had to close the call center, so we thought, “Well, how do we keep some semblance of that going to the extent that we’re servicing customer needs.” And we did that through building them the mobile. Our customer engagement centers we call it because actually it’s multipurpose, it does quite a few things, not just a call center. Our staff can work from home permanently, and we’ve put all of that technology in place. I think onboard the aircraft for a period of time, we’ve removed on-board catering we’re looking to reintroduce that.

We’re looking at some technology where we sell through a mobile platform on board as well, so it becomes cashless. People aren’t picking up magazines and brochures to read through anymore, that’ll all be digitally so we’re moving down that track. You spoke about COVID measures perhaps just a little bit to touch on that as well, outside of not selling the middle seat the aircraft is completely sterilized on each turn actually after every sector, not just at the end of the day. And our crews we’ve got them appropriately PPE-ed in masks and glasses and gowns and the like, and all of that stuff available for our customers on board as well. I think I see some more developments coming in the era of the airports, the airports here are finally being upgraded, we’ve got a beautiful new terminal in Jeddah. Most of the world doesn’t know about it because it wasn’t open for that long before we went into COVID, but in time people will get to know it.

And there’s more being invested in the infrastructure, the airport infrastructure around the kingdom and some big new terminals in the pipeline as well in different parts of the country. And that’s really exciting, and I know because we’re engaged with the airport authorities around just how much they want technology to be a driver through the whole airport experience. So, we’re coming from a little while back, but we’re going to be applying some catch up pretty quickly, but we aren’t seeing the fruits of all of that yet but it is coming soon.