Jet2 boss: 'Independent travel agents are very important to this industry'

I'm very well, Lucy. And you?

Huh, I know. It feels like it, and obviously an awful lot has happened since then.

Yeah, well we've had a very strong demand throughout last year and in January this year, and we're taking a look at our booking position. Given the demand we've got, the bookings we have, we've increased our ATOL license to 5.85 million customers. I think I've been saying for a long time that our performance during the pandemic, our refund record, and last year operationally we didn't fail to recruit enough staff, and we were fully staffed for last year, and the disruption with Jet2 Holidays was a lot less than other companies. I think people have realized that we are really a package holiday company they can trust, and people are coming to us in droves. Perhaps abandoning their previous holiday provider for someone that they know will give them a good service.

Yeah, some people didn't get a refund when the holiday didn't happen, some people had to work for months, some people were given a credit note and had to spend the money with that company. But we have a very healthy balance sheet, we have positive net cash, and we thought refunding the customers for a product that they didn't receive was the right thing to do. I think because of that, trust has grown with us.

No, no, it wasn't deliberate at all. There's no point in doing that. We took a view as to bookings received so far, and forward bookings, and the rate of sale, etc., and that's a number that we think we'll achieve. We've not engineered it like that at all. We've never had an ambition to be the biggest; we've always had an ambition, which I think we continue to realize, to be the best. And because we're the best, I think hopefully that's why we've become the biggest. It sounds rather arrogant saying we're the best, but you look at the awards we've won over the last few years, your own awards, plus UK Institute of Customer Service, TripAdvisor, etc., we are recognized as being the best holiday provider.

Yeah, I mean, 12, 13 years ago Jet2 Holidays was doing 38,000 passengers a year, and our customer service scores now are actually better than they were when we were that very small company. So we have kept the principle that's absolutely core to our business, which is to give the customers the best experience possible.

They are. We've got very strong relationships with independent travel agents. They've supported us very well, and we feel we've supported them very well during the pandemic. We refunded them quickly, we didn't mess them about, and we tried to build relationships that are built to last a long time. It sounds a bit corny, but we really believe in win-win relationships, and we do what we can to make sure that both parties get a good result. They are very integral to our business, and hopefully we are to theirs, and we'll continue to work on strengthening those relationships.

It's pretty much across the board. Everywhere is open and operating as normal now for the first time in perhaps three years. All the destinations are seeing very strong demand. Some destinations have had a greater capacity increase than others, Turkey, Greece, etc., but everywhere is seeing a boost in demand at the moment. Obviously Turkey bookings are down a little bit over the last few days for well obvious reasons. I guess people have seen the news and are thinking, should I book? What's happened is terrible, but it's a long way from the holiday resorts, and at the end of the day, the Turkish economy is going to need tourism to help it recover on the back of this. So it will recover.

Yeah, they've been a bit worried, saying, you know, is it safe to go, etc.? And some of them perhaps don't realize that from some of the resorts in Turkey, the distance to the earthquake zones is like from Edinburgh to the south of France. It's a long way away. But people are understandably upset and nervous. These things unfortunately happen, and we're doing what we can to help, as is everybody else. I hope that the holiday season remains unaffected, because they need the economy.

Yeah, absolutely. Well, before we move on from that, you mentioned about doing what you can to help, but you did make quite a significant gesture at the end of last week in terms of a big donation for supplies and aid to get there, and also you have mobilized your fleet of coaches. Is that right, Steve, to help transfer that aid around to the affected areas?

Okay, all right. Well, brilliant. We'll definitely keep us posted on that. But I think a hundred old coaches you've sent, which is fantastic.

That's right. Yeah, founded 20 years ago by our founder and chairman, Philip Meeson, who's still in the business. Two aircraft from Leeds, and we've got to where we are today, which is going to be 115, 116 aircraft this year, and of course we've got up to 146 brand new aircraft on order from Airbus as well. So things have really taken off from humble beginnings at Leeds Bradford Airport with two aircraft. But there's a long way to go and a lot to do. One thing we'll never do is get complacent. I'm a big believer that success can breed complacency and it can be a company's biggest enemy. So we've got to stay alert and keep providing great customer service, and if we do that, we'll continue to grow.

Well, the aircraft we've ordered are the Airbus A320, A321neo aircraft, which are not designed for long-haul operations. They're perfect for our current sphere of operations, which is the Mediterranean, etc. And there's a lot more to do there. We're getting more hotels all the time – hotels that have been in long-term exclusive relationships with other tour operators and they've had enough, they want to be freed from the shackles of exclusivity. And we're getting lots of demand, we're getting customers that want to go to new places, to new hotels, and we continue to serve that. People, a holiday is such an important purchase for people. When you're spending that amount of money, that proportion of your disposable income, you want to make sure you get a good time. People want to be treated like a king or a queen, and that's what we try to do. Go on holiday and forget about things.

Well, we obviously look at opportunities all the time. At the moment, we're happy with our 10 UK bases. We've got a pretty good spread throughout the UK, and there's a lot more we can do there. You look at the number of aircraft we've got in bases and the catchment area of that airport, there's a lot of people still that don't fly with Jet2.com or go on holiday with Jet2 Holidays. So there's a lot more to do. People want a product they can rely on, that's what we provide, and more and more people are discovering Jet2 and Jet2 Holidays for the first time. Those that have been before tell their friends, and we're continuing to grow and take brand new customers on holiday.

Oh yeah, we've got a constant fleet renewal program, so some aircraft will be retired from the fleet and those will be replaced by some of the new aircraft, but a big proportion of the new aircraft, as I said, up to 146, will be for growth. So we'll continue to put capacity to places where people want to go.

Well, who knows? I would hope so because it means we're continuing to grow and delight our customers. But one step at a time. As I said, we've never gone out to be the biggest, we've just wanted to be the best, and I think we are the biggest because we've been the best and continue to be so.

I think it's a trend that has been ongoing for several years. It accelerated during the pandemic because if you're a hotel in an exclusive relationship, you basically have one customer. So it's not great for the hotel. It was definitely a really popular thing for a long time because they had that guaranteed stream of business, but it's not great for the hotel when you've got one customer, and it's not great for the customer because exclusivity is a monopoly, and monopolies tend to charge quite high prices for things. So I think hotels are realizing that a more stable business model is one where you have lots of customers. So we're getting a lot of hotels that are now asking us to work with them, and we're increasing our hotel portfolio. We offer a very wide range of hotels. Oh, thank you very much, someone just brought me a cup of coffee. Thank you, that's very good.

Yeah, so I think there's a trend for hotels to want to strengthen their business model. They're attracted by Jet2 Holidays, a company that has the trust of their customers, a company that doesn't cancel thousands of flights because they fail to recruit enough staff, a company that pays them on time and in full. Look at our payment record on the UK Government payment practice website and compare it with other companies. If you're a hotel, why wouldn't you want to deal with a company like that? And that's what we're seeing.

Yeah, two lots of 4% compounded, that's 8.14%, 8.16%, and then 9% this year. We gave everybody a thousand-pound thank-you bonus, which for some people was a reasonable percentage as well. And of course we have our profit share scheme as well. We're very grateful for the support that our staff have given us over the last two or three years. Things seem to be getting back to normal now, and we want our colleagues to share in the success. We thought it was only right to thank them and reward them. I think 8% last year was pretty much the biggest increase in the industry, and I don't think 9% this year so far has been matched. We want to say thank you to our colleagues, and we want to attract the best and retain the best.

It's an extra day this year. An extra day, sorry. Yes. So I think money is very important to everyone, particularly in the current environment, but obviously work-life balance and people going on holiday – we work for a holiday company, I think everyone should experience holidays and recharge the batteries. That's what they're good for. So we've tried to do that as well. We want to try and generate a happy set of colleagues.

Yeah, absolutely. But it's the right thing to do. And you said it's great for retention because you want to reward loyal staff, but also it helps you attract the best people. Are you finding you're getting people knocking on your door and wanting to work for you? Are you recruiting at the moment as you grow?

Okay, all right. Let's – you mentioned 2023, let's talk about that. Obviously it does appear that everyone's got off to a flying start, which is fantastic. But only last week we were reporting the chief executive Mark Tanzer talking about the road ahead. He said it has been a great start, but we can't defy gravity. The economy is looking to remain stagnant for years, we're not going to see growth in the economy overall. The cost of living challenge is hanging over people with energy bills. So what have you seen, because you've got a customer base that perhaps could be more affected by financial pressures? Tell us what you've seen and what your outlook is for this year, Steve.

So are you seeing that? Are you seeing a bit of that?

It's becoming slightly more polarized. Self-catering is up slightly, and all-inclusives are up slightly. In the middle, people are tending to go for one or the other. The main thing is people want to go away. It is quite challenging times at the moment, but we believe we've got the right product for today's times. We offer flexible durations, we've got flexible payment methods, people can pay in installments, etc.

Yeah, people pay the deposit and then pay in either three installments or as much as they want really. There's some operators that have had zero deposit or very low deposit, but you have to read the small print because you have to pay the full deposit a couple of weeks later, it's not really much benefit. But we try to keep things simple really. £60 deposit, paying in installments, it's up to you. We're letting the customer decide. As always, the customer is king or queen.

Yeah, I think we've got the right product for today's times. We're strong, we're financially stable. Look at our accounts, compare them to our competitors if you're into accounts. I think given the climate we have in this country, people will always want to book holidays. I feel like at the end of the year I deserve a holiday, and I think that's how people think. You've worked hard, you've been in the country for however many weeks or months, you deserve to get away to a foreign climate, have a rest, relax, be treated very well, and get away from life's normal routine. That's what people do, they feel like they deserve a holiday. And we're very happy to take them away and give them the experience they deserve.

Well, it quite surprised me that airports are warning of disruption. They know that this summer is going to be a big one, they know when volumes increase, they can see what flights the airlines have scheduled, and they have to be ready. I don't think the public will accept any excuses this year. The European entry system isn't going ahead, that's been delayed, which is good because that would have caused big disruption. Of course we've got the possibility of air traffic control strikes, that always happens. But when there are air traffic control strikes, other companies cancel flights, we don't. We battle on and get people to their destination. We've got people that work with air traffic control and get people there. Next time there's a strike, watch the number of cancellations other companies do, look at what we do, we don't cancel.

Yeah, because people have bought time off for a holiday. If you ask people, would you rather have your holiday cancelled or get there a few hours late, I know which I'd rather do. And you've got the commitment the other end with the hotel, you don't want to let them down. It's not great for a hotel if the airline says, oh there's a strike on, it's a bit hard to get people there, so just forget the booking. That may happen this summer, but I'm hoping it's going to be a strong year. Yes, it is tough in terms of the economy, etc., but we're very resilient. Customers want to get away, and I think those companies that provide great customer service, look after the customers and respect them, which we have a track record of doing, they will do well. Those that messed their customers about during the pandemic – one company even wrote to customers and told them not to book a holiday. I mean, what's that about? Customers remember this.

Well, there's a few things. First of all, you want to pick a company you can trust, that doesn't mess you about. Secondly, you want to pick a company that will fit around your requirements rather than you fitting around what the company wants. If someone wants to go away for 9 nights, 4 nights, 13 nights, 24 nights, then pick a company that can do that. That's us, we offer flexible durations. And then cost is important to people, and how they pay for the holiday. So £60 deposit, it's been like that for 12 years now, £60 deposit, never changed. We don't have gimmicks, it's just £60 all the time, and people can pay in installments. So with that combination, and of course we offer the widest range of hotels, our travel agent partners should ring my colleagues in the contact centre, our travel experts, and they will find a holiday that suits the requirements of their customers. And they should be out marketing and stuff. I know we talked in the pandemic about how tough it was because they couldn't be in their shops, and you were very complimentary actually about how agents have been really resilient and have found ways around things even though they were working from home. But most are now back on the high street, but some have stayed hybrid. So are you encouraging and supporting agents to go out and market and use your resources to help?

Brilliant. Now I'm conscious of your time, Steve, because I know you've got a meeting to go to.

Yeah, well we launched our sustainability policy about 15 months ago, we're on track with that. I can talk about that another time if you want. But you're on track? In terms of lobbying, we do speak to the government regularly, and sustainability is one of the big issues that I talk about because it is in the long term a significant issue for the industry. The government, not only here but in European countries, continues to increase taxes in the name of sustainability. Not one penny of those taxes is ring-fenced for sustainability projects, and all it's doing is putting the cost of flying and holidays up and up. If prices continue to go up because of increased taxation, then it automatically follows that demand would drop. That's supply and demand. What we're asking for is that the government has a very sensible approach to sustainability, and not just keep taxing customers, asking them to pay more and more, because at the end of the day that just becomes demand management, and the policy of the government therefore becomes to reduce demand, to make flying something for the rich and privileged. That can't happen. I'm not a self-flagellating, hair-shirt-wearing apologist for working in the airline industry. I'm very proud that the airline industry is a force for good. I'm very proud to work in the airline industry and to represent it. Everybody in the industry is, and it gets quite a raw deal from the perception. There was a survey done, and members of the public were asked what percentage of global CO2 emissions do you think the airline industry is responsible for. The average answer came out at 22%, but it's 2.4%. So there's a real mismatch between perception and reality. It becomes a whipping boy when it really doesn't deserve to be. The airline industry is very much derided by members of the green lobby as being the major contributor. It's not. Crop burning, cement, construction, livestock farming – they produce much more carbon dioxide than air travel. But you wouldn't think that looking at the news. That's one thing that we've got to be very careful over in the future, and make sure that the airline industry doesn't get landed with more than its share of taxation. We are as an industry trying to improve things and become greener, but we are reliant on technology, which the government needs to fund that research.

Steve, that would come to the end, and I don't want you to miss this budget meeting. A lot of people would be very annoyed if I hold you up.

It's very orange, Lucy. I'm not at easyJet. Travel Weekly had a choice of four rooms, and actually there is a red one. So perhaps next time, please, the red room.

Well, thank you. And thanks to our independent travel agent partners. We've always said we will change as a company. I don't believe we have in the last 12 years, and we won't change in the next 12 years. We'll always treat them with respect and work for solutions that benefit us both. Independent travel agents are very important to this industry, and they have a very bright future.