00:00Scott, I remember earlier this year we were talking about how you expected demand destruction
00:04as prices got higher. You didn't see that, neither did other people, and you said you
00:09were surprised that you didn't see more demand destruction. Are you starting to see any signs
00:13of that or at least customer fatigue in pricing? No, we aren't. Demand is incredibly strong
00:21for us. In fact, our fourth quarter yields are booked 14 points higher at this point in time
00:26than they were at the same point in time for 3Q. Corporate demand so far in July is up 30%.
00:33We really haven't. And I think as you sort of take a step back from it and look at what's
00:38really happened, it's air travel share of the travel pie got really, really small coming
00:44out of COVID. And even with fares where they are today, air travel is 13%, the prices are
00:4913% lower in real terms than they were pre-COVID, while hotels are up significantly and cruise
00:54lines and rental cars and everything else is up. And so I think we're just returning
00:58to a normal historic share of the travel pie for air travel. So the total cost of the trip
01:04is staying consistent with inflation. But after under-indexing to airlines, it's now over-indexing
01:10to airlines. And so the total cost of the trip isn't changing nearly as much as just airfares
01:15returning to the normal historical relationship that we've had to the total travel pie.
01:19Oil prices have continued to inflect upward as a result of a new resurgence in the conflict
01:25in the Middle East. And I'm just wondering, is there more room to go with respect to responding
01:30to those extra oil price costs with higher airfares going forward?
01:35Well, you know, like I said, airfares are down 13% in real terms from pre-COVID. So a short
01:41answer
01:41is yes. And in fact, there's been another fair increase this week. There were five or six when
01:47oil prices first spiked. And then when oil came down, you know, they sort of paused. But
01:53there was another one this week. And so demand is strong. The consumer is strong. And it really
01:59is like our overall cost base. It's not just airfares, but our cost base with airport fees
02:04and maintenance and labor, those have actually gone up even more. And so it really is just
02:07a case of recovering all the inflationary cost increases that have happened, you know, and
02:13recovering from the COVID trough in pricing.
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