ch-aviation interview: Paul Graham, CEO FlyPelican

FlyPelican, in its current incarnation, has been flying for just over two years, but is already building a strong business on Australia’s east coast. Part of that comes down to the strength of its people, says CEO Paul Graham, who sat down for a chat with ch-aviation journalist Nat Newman. Paul talks about the long pre-history of the airline, its current business model, and the personal commitment needed to build a successful regional carrier.

Nat: So let’s start at the beginning: the history of Brindabella, and Aeropelican, and now FlyPelican.

Paul: Myself and the two other directors are owners of FlyPelican. We use FlyPelican as a marketing brand name, although the registered business name is Pelican Airlines Pty Ltd. We decided to keep the Pelican in the name because the three of us were ex-Aeropelican. I started with Aeropelican in 1994 when it was based at Belmont down at Lake Macquarie airport (which some people call Pelican airport). Back then, we were affiliated with Ansett, and we operated four Twin Otter 19-seat aircraft mainly to Sydney. We were carrying up to 100,000 passengers a year from Newcastle to Sydney.

Prior to me starting there, Aeropelican started in about 1974, with Navajos and the older Twin Otters, and then got the 300 series Twin Otters. And we were very successful around this area, the Hunter area. We were renowned for reliability and punctuality and on-time performance and generally a really good service. So we were very proud to be working with Aeropelican.

Then there was the Ansett collapse in 2001-2002. The company was sold while it was still at Belmont to a company called International Air Parts, and they took over the whole thing. I was an engineering manager then; I’m a licensed aircraft maintenance engineer. So I was running the hangar and the Twin Otters. And they took it over and the CEO left, and I was put in the position as CEO. And we looked after the whole apron and fuel farms, you name it. The tree lopping, the lighting, the runways. Everything. And it was a pretty good experience.

We kept that company operating in Lake Macquarie for a further four years or so and then sold the Twin Otters and moved up to Williamtown, which is a RAAF [Royal Australian Air Force] base and a civilian airport. Back then it was probably 300,000 passengers a year. Today it’s about 1.3 million passengers a year. So it’s expanded and is soon to be international. But it’s still a RAAF base and it still has only one runway, so there are some restrictions.

We moved up here and got some different types of aircraft – we had Metroliners, we had Bandeirantes, and then we got the Jetstream 32s – and carried on very successfully as Aeropelican up until another company in 2008, a British consortium came in, and bought Aeropelican. I carried on running as CEO up until about 2010, which is when they then bought out Brindabella Airlines, which were a Canberra-based airline. They used to operate Newcastle-Canberra, Canberra-Albury and some other routes, while Aeropelican was operating more Newcastle-Sydney and at the time even around Mudgee, Narrabri, the regional airports.

In 2010 everything moved to Canberra, the whole lot, so I took a redundancy rather than move to Canberra. But being an engineer, I set up under my own company working for Brindabella and Aeropelican in Sydney as an engineer, for about three years. Unfortunately, over those three years I watched this new company, I saw the whole demise of Aeropelican/Brindabella over a period of time. Which was sad to see. But ultimately in 2013, they ceased operations.

Brindabella at the time had Jetstream 41s and Metroliners, and Aeropelican had the Jetstream 32s, which is what we have now. So in December, all the aircraft were sent back to the lessors and everyone was out of a job. Everyone was redundant and I came back up here from Sydney.

The owner of the Jetstream 32s was still International Air Parts, they were the lessors of the aircraft. I had been working with them for a number of years, back from when they took over Aeropelican at Belmont.

And the owner approached me and said, “we’ve got four aircraft back here now and no work for them. Brindabella/Aeropelican have finished operating. Is there anything we can do, or you can do?”

So I got together with a few of my ex-colleagues and we had a number of pilots who were out of work, a number of engineers who were out of work, and we had enough of the key personnel that we required for an AOC, for a Regular Passenger Transport (RPT) AOC even. But we decided to then look at trying to get a charter AOC, because for an RPT you needed a full safety management system, a quality manager, a safety manager, a head of operations. All of these key persons to run two to three aircraft, when we didn’t have any routes or anything, was not going to happen.

The easy option was to get a charter AOC, which was a little less restrictive. Then the three of us spent six months in back offices re-writing manuals, a full suite of AOC manuals. We then sent all of that to CASA and went through all the processes and were eventually granted our charter AOC in June 2014.

We started doing charter operations – we did that for about six months. In that six months we also sent a Jetstream over to Tonga, and we supported that whole venture. It was a new aircraft type for Real Tonga. So we ferried the aircraft over there and sent over training pilots, we did all of the endorsements with their own crew, we did the engineering training. We actually supported them with spares and aircraft for a six-month period which was really good, because that kept us afloat. FlyPelican continued operating as a little charter organisation, where we had ad hoc charter work for six months.

It got to the stage where we were employing ten or twelve staff and we had a bit of work here and there, but realistically the aircraft would have been better off positioned in the Northern Territory or Western Australia where there was more mining work at the time. Whereas over here in NSW you might get five managers or CEOS who want to go somewhere, from point A to point B, and it might be a $3000 – $4000 charter proposition. But ultimately it wasn’t enough to retain the business.

At that time the person who owned the aircraft was supporting everything financially, employing us. So in October 2014 he then came back to me and said, “we’re either going to have to shut the door, or I can hand this over to you guys.”

We knew that if it was handed over to us and if we took on a little bit of debt in the company and all the liability, we knew that we had the foundations to actually go to that next step, to RPT, Regular Passenger Transport services. So we decided to take that offer. We thought, why look a gift horse in the mouth when we had everything ready? Obviously pegging everything on the line, personally, to make that happen, it was a massive step. Part of that was to go and talk to the likes of Newcastle and Canberra, they hadn’t had a service in over two years.

Nat: That was your first service?

Paul: First service, yes. That and Sydney to Mudgee, which also hadn’t had a service in two years. We went and talked to the airports at Canberra, and here at Newcastle. We looked at some better offices, we had to expand a little bit. We needed a financial injection. So we went and talked to the Mid-Western Regional Council – which is Mudgee, effectively. And after three or four months, they awarded us with a financial program to give us a little bit of a kickstart, mainly with employing some more staff that we needed.

So we set up our Safety Management System, and employed a Quality Control and Safety Manager for our organisation. They also came to the party with an in-kind payment which was a contra-arrangement with flights over a period of time. In the end it was probably half a million dollars that they contributed, half in cash and half in kind, towards mounting a service.

They hadn’t had a service for two years and the previous service with Aeropelican had been very successful. I had been heavily involved in setting that up originally as well, with the previous mayor and the previous general manager of the council. So they knew us, they knew that we were not tyre-kickers, that we were serious. And that we could do what we were saying we could do. And hence, two years later, they have had a service for two years twice a day. Monday to Friday and on a Sunday. So they’re very happy and thankful. Our on-time performance there is something like 96%. So they’ve been very obliging with assisting us. And vice-versa, I guess.

So from December 2014 through to June 2015 we worked very hard towards getting our RPT AOC, which we did. And then we started Newcastle – Canberra and Sydney – Mudgee in June 2015 as FlyPelican. And that’s a little bit of our history.

Nat: So what did you learn from what happened with Aeropelican? And how is FlyPelican, your business model, different to that?

Paul: It’s very similar. As I say, I headed up Aeropelican so I knew that the 19-seat market is a niche, unique market for an airline in NSW. Because we are the only ones. The next stage up is another carrier that has 60 aircraft. So we’re not into competing with operators of that nature. What we were looking at and what we knew from the statistics and historical research was that some routes which had previously been operated by Brindabella or Aeropelican were very successful. That being Canberra-Newcastle and Sydney-Mudgee. We also operate Newcastle-Sydney, which is the only route on which we’re in competition with another carrier.

But because we have everything based here, this is our own headquarters, we don’t have any outstations, any bases anywhere else, all of our aircraft are here, all of our crew are here, all of our offices and staff are here. And everyone wants to be here. Everyone wants to live in Newcastle. It’s such a nice place to live. People would much prefer to live here. It’s easy to get people to come and work here from crew to any kind of staff. So that makes things a lot easier. Hence, I didn’t go and live in Canberra. I love Canberra, but it’s not my cup of tea.

But really, we were not like a fresh new airline. We had a lot of experience operating similar size, or the actual aircraft that we’re operating now. Same capacity, same sort of frequency, same sort of size, operation and aircraft.

Nat: So why do you think Newcastle-Canberra is such a successful route?

Paul: It’s high yield. Newcastle-Canberra is our bread and butter. With a 19-seat aircraft, we’re not a low-cost carrier. We can’t be. There’s a certain cost to operating a 19-seat aircraft, when you’ve only got four of them as well. So the economies of scale aren’t there. So you need to find routes that are supported by people like Defence Force and government travel.

Nat: Because of the RAAF base?

Paul: Absolutely. There’s a huge market; probably 30% of our passengers on Newcastle-Canberra are defence. I think there’s about 7,000 people that are on this base, so there are a lot of people moving between Canberra and the military area. Up here is a RAAF base, and also obviously there’s the government, state government, Federal government, politicians that are travelling backwards and forwards.

Prior to that, in that two-year period, when there were no services, they would either drive to Sydney and catch a flight from Sydney to Canberra, or drive all the way through. Which really made more sense to drive all the way through, because then you’re looking at a five-hour, six-hour drive, depending on what time of day you were to leave here.

Our flights are one hour, and we’ve got three a day. Three return services. So that’s why Canberra is definitely the best service that we have.

Nat: You also have a Newcastle-Dubbo-Canberra service?

Paul: Last year, we started a Dubbo service which we do 7x a week. There was a lot of demand for Newcastle to Dubbo. There hadn’t been a service previously from Newcastle to Dubbo, but Dubbo is the third biggest regional airport, I think, in NSW. Around 250,000 passengers a year or so. There’s a lot of flights that come in and passengers that come in from Sydney, and they also have links to Melbourne, and they also have links out to Broken Hill, etc. So that feed from Newcastle was never present.

We did a lot of research with Dubbo City Council and with Newcastle as well to see whether it warranted the service. And we decided that we would start and we put in a service last year. Part of that service was to ultimately look at maybe linking Dubbo with Canberra. Mainly because it wouldn’t be such a service as Newcastle-Canberra, but definitely it merited having a service with the government-type work. So it’s not a leisure market. Newcastle to Dubbo is a lot more leisure. But Dubbo-Canberra is a lot more corporate, business, government work.

In February 2017, we linked Dubbo to Canberra and back to Dubbo, and then Dubbo to Newcastle. This also gives us another avenue for people to go from Newcastle to Canberra, via Dubbo. So on a Monday morning, for instance, if our flights are full, and we have good utilisation and patronage on a Monday morning, people can still get to Canberra, but they go via Dubbo. It’s a cheaper service, because there’s a very quick stop, but they’re still there within an hour and 45 minutes. It’s another option. It just gave us that extra bit of flexibility in providing the capacity.

Nat: And so do you have any other network or route expansion that you’re considering at the moment?

Paul: This year we’re consolidating. We now have our fourth aircraft and this allows us to schedule maintenance in the week whilst operating the other three.

We had a very heavy maintenance period over the December, January, February period, with some new avionics equipment that had to be installed on each aircraft, the ADS-B. Which is around $130,000 per aircraft. So it was a huge expense for us but that’s all done now.

In December 2016 we started Byron Bay services from Newcastle with direct services. So with those, along with Dubbo and Dubbo-Canberra, we’ve just about got our schedule where it’s optimal. Obviously governed by slots and timings, in particular ports, such as Sydney.

So this year we have just settled down a little bit and are trying to do what we do and do it even better.

Nat: You spoke a bit about which segments are more leisure and which are business. Overall, for the whole business, how does it skew? Business or leisure?

Paul: Business. Again, because we’re not a low-cost carrier, our average fares have to be – and it’s a very broad term, saying your average fare – but across our whole network, our average net fares have to be up around $150. So our average flight times, most of our flights are around one hour. But then we do have Newcastle to Sydney which is 25 minutes.

On average, our flights are about 50 minutes. So it’s simple maths. We know where we need to be per minute of operating. And that may be the direct operating costs, which is whether you operate with a passenger or not, your fuel costs, your en route costs, your turnaround fee, etc. And then you’ve got your fixed costs on top of that, all your other ancillary costs, your offices, your insurance, your staffing, wages, all that sort of thing. So we know where we need to be.

It’s not cheap operating a 19-seat aircraft. So we need to be pushing and swaying always towards the business end of the market where we’re providing a service where time is of the essence to people who are travelling. The business man that needs to get to Canberra and back in a day and doesn’t want to do ten hours of driving, they’re prepared to pay the higher fares and support a small regional airline.

Nat: Do you do any cargo or FIFO or charters?

Paul: We’re quite capable of doing charters. We have that available on our website. We’ve got full charter capability within Australian territories under our AOC. We can go anywhere as long as the runway, the airport can take a Jetstream 32.

With the 4th aircraft available we have been operating quite a lot a charter services. But we need to manage the risk of having a spare aircraft when we do charter. Because generally if we’ve got a spare aircraft it’s on maintenance. Every other week, we’ve got an aircraft on maintenance, for base maintenance, in the hangar.  So the other week, when we don’t have maintenance, we’re trying to push for charter all the time and we do get quite a bit.

Freight, we are capable of doing freight. Currently, we don’t carry a great deal of freight, but we are in the midst of discussions with some freight handlers.

Nat: And do you think that model will change much? You’ll continue with the occasional charters every second week?

Paul: To be honest, the optimum number of aircraft for us without getting too big would be five. Because that would then, with the hours that the aircraft would be doing weekly, we would have one aircraft on maintenance all the time. So, the Jetstreams have got a 200-hour cycle for base maintenance, where they go down to Bankstown, and they go in the hangar. It’s like your car going in for a service. It’s obviously preventive maintenance which is being done. So if we had five aircraft and we were doing 200 hours a week on the other four, then we can really utilise much better the four aircraft. So that’s our goal, at the moment, is to achieve the fifth aircraft. There are some other Jetstreams that will be coming available.

Nat: Is that with the same lessor?

Paul: Possibly. We’ve got two different lessors at the moment. But possibly one of them.

Nat: Well, let’s talk about fleet. They’re getting on in age. Do you have any plans for swapping the Jetstreams?

Paul: Not unless I win the lottery! No, they’re fairly old in calendar time. But they’re actually fairly young in hours and cycles. We’ve got one Jetstream which has only got 14,000 hours on it. Which effectively is very young. Another one has only got 17,000 cycles on it. The other ones are up around 18,000 hours. So they’re still fairly young. And they still have a lot of life on them. The finite life on the aircraft, they’ve still got another 20 years on them, the way that we operate them. And we’re doing good utilisation, as well. So the finite cycle life on them, which is every landing, pressurisation cycle, there’s plenty of time left on them. So we’re not really looking at that. We’re probably looking at getting some more Jetstreams and using them before we get to any stage of being able to look at renewing aircraft types. Certainly the 19-seat area, capacity, is what we’re really trying to maintain.

Nat: So you’re not looking at going bigger?

Paul: No.

Nat: You said you don’t want to compete with other carriers directly?

Paul: Well, look at NSW – there’s only a couple of other carriers anyway, and one of them has 60 aircraft. There are other companies like JetGo which operates jets, Embraer 135s and 140s. They’re not operating in this area, so we don’t have competition at the moment. That’s not to stop someone starting up a 19, 20-seat aircraft market and competing with us. Sydney-Mudgee is not regulated anymore, so it’s not licensed like it was previously to one operator. And a lot of those licenses now have ceased. So, there’s always that potential that someone could come in and go straight over the top of us. But we’ll keep trying to work smart and wise and just do what we do well.

Nat: And what about opportunities to link up with other operators?

Paul: Potentially. Nothing has come about yet, but certainly every door is open.

Nat: Are you cooperating with Virgin or Qantas at all in any shape or form? Or are people mostly just self-connecting.

Paul: There’s no affiliation with any other airline.

Nat: So people sort out their own connections?

Paul: Yes.

Nat: Do you expect any more route opportunities to open up? Or as you say, you’re consolidating?

Paul: There’s always things on the radar. We’re always looking at potential opportunities. There’s nothing being locked in at the moment, but we’re certainly in discussions with councils all over NSW, especially. As I say at the moment, we are looking at consolidating this year, and try and do what we’re doing at the moment to a higher standard.

Nat: Many regional carriers are struggling, especially the smaller ones with smaller aircraft, but you seem to be doing okay in the market now. So what do you think is different now than it was before?

Paul: The only way that we survived is the top five or six people in this company wear lots of different hats. We don’t have the luxury of employing 20 different people to cover 20 different jobs. So we are very, very streamlined. I’m an engineer. I might be out changing a wheel on the aircraft in a minute when you go. I might come back in and hire a pilot, I might come back in and fire a pilot, I might come back in and look at the accounts for the day.

And that goes for our Head of Airworthiness, too. He actually also looks after our marketing. He’s got someone else who works with him, but he’s the person who does the marketing. One of our pilots looks after all of our IT. Our Head of Operations is also a pilot, and he also looks after who is on call for operations and things. So there’s lots of multi-tasking that goes on here.

But like I said earlier, the biggest thing for us is through our experience with the type of aircraft that we are operating, our knowledge on the routes that we operate, the historicals that we know about the routes that we operate – that makes it almost so that we can keep ourselves afloat. It’s very – I won’t say it’s cutthroat, because we don’t have competition – but it’s a fine line between keeping things going and ceasing operations, it really is. And I think to be fair, and I’ve seen other operators which have been very successful in the way that they operate, and I’ve also seen other operators, and previous operations that I’ve been with that have gone downhill very quickly.

It’s a good question. And I ask myself every day. We’ve got a pretty high turnover. We operate 110 flights per week. That goes back to also looking at how many aircraft we’ve got as opposed to the sort of revenue you’re getting on each flight, the type of flights that you’re doing, and the costs that you can cut, and in areas where you can get assistance from airports and councils. In some cases we still don’t pay landing fees. There are still some places where councils underwrite some of our fees. So you’re always pushing for those sorts of things to assist in keeping your fees down to put the bums on seats.

We also recently joined Virgin Australia’s Velocity Frequent Flyer program and now our passengers are able to earn Velocity Points on all flights with FlyPelican. We are hoping that this will boost our profile and awareness.

Nat: Why do you think many Australian independent regionals are able to survive, while in other areas of the world it’s been more difficult?

Paul: Australian regional airlines, how many are there? There’s only a handful. There’s only really three in NSW. There’s obviously QantasLink and VARA – Virgin Regional, which are kind of the next level above. But they’re still regional operators. But the small regional operators, the ones that have only got four, five, six, ten aircraft, there are only a couple around. The other ones like Skippers and Sharp, which are down south, there are a few of us around.

But again, I think it just depends on the type of client that you have, the sort of other work that you can get. If you can get some charter work to support your whole operation, and economies of scale in areas where you can make savings. But I look at Europe and Asia and there seems to be a new airline popping up every half a day.

Nat: But they are also closing down pretty quickly.

Paul: I’m sure they are. But I can only really comment on what’s happening in Australia. I’m from the UK, I worked for flybe. for eleven years. Back then it was Jersey European. I saw that company build very slowly and gradually – when I started they had Bandeirantes and Twin Otters, it’s where I got my regional experience from – into being one of the biggest Dash 8 operators in the world, which they are now. I’m sure we won’t be there. We might be one of the biggest Jetstream operators, you never know.

Nat: You never know. And that’s a good time to look to future plans. You already said what you’ve got for this year. Do you plan to move into New Zealand, for example, or even outside of NSW?

Paul: Certainly, I wouldn’t shut the door on operating out of NSW. And obviously we operate to the ACT, to Canberra. We’ve done charter work in Queensland. The big thing for us is that we need to be very conscious of not trying to compete with anybody outside of our territory, as well. There are other operators – Regional Express operate pretty well throughout Queensland, NSW, all across Australia. There are operators up in Queensland as well.

In our market, we need to look at places that are maybe 15,000 passengers a year where we can offer 2 return services a day. A double daily. So anywhere that is up around 30,000 passengers a year, most of those cities or towns are already taken care of. The ones which are at 15,000 are too small for the bigger operators, the bigger regional airlines. So they’re the ones which we are in discussions with, and that’s where our potential is. So unless someone comes in with 19-seat aircraft, then those townships are still going to be without airlines until such a time as somebody does come in and operate with a 19-seat aircraft. Simply because they’re just not big enough to support larger aircraft.

Nat: So you’re hoping to get a fifth aircraft.

Paul: Hopefully this year.

Nat: Great. What sort of factors would hinder your growth?

Paul: Fuel prices. Fuel prices at the moment are about the lowest they’ve been for a number of years, and it does help considerably.

Crewing, pilots, especially the more mature senior captains. We can pick up first officers, cadets, to come through FlyPelican very easily. But to maintain some of our older breed of captains, who are all starting to get fairly old now, a lot of them have come from Aeropelican, so we actually handpicked, literally handpicked the crews that we wanted. Certainly in the flight examiner roles.

We’ve got our own training and checking organisation within the company. So we can take somebody from the commercial pilot’s license, give them an airline transport pilot license with an endorsement on a twin-engine turboprop aircraft, being the Jetstream. So we make people very employable to bigger airlines or the big jets, or going overseas, international, whatever it may be. So we’re very much a stepping stone, a training ground, and a very sought-after training ground for the likes of Jetstar, Qantas, Virgin, or overseas.

A lot of people have gone through – not just through here, but Aeropelican – operating with Emirates, Etihad, you name it, they’re all there. And this is the first, this is the pre-requisite that they’re looking at, the big airlines, to get to them. So that’s always a concern. Although we do have a fairly high turnaround, that’s expected, because we are a stepping stone to get to the big operators. So to retain the older mature captains, generally the ones which will probably be going through the last five years before they retire, that’s difficult.

Nat: Do they sometimes come back? They go off to the big airlines and come back?

Paul: It has been. In fact, our most senior flight examiner was, not with one of the really big airlines, but he was with a large airline in WA, and came back home to Newcastle to retire and we snapped him up and he’s been with us for seven years. And he’s close to 70 years old.

Nat: And would you consider mergers again, after what happened with Brindabella?

Paul: I’d consider anything. You know, we put anything on the table and have a look at it. I think we’ve got enough knowledge and experience to make good educated decisions on the way this company goes forward. The difference is now this company is ours. The three of ours. So whatever we do, whatever we spend, is straight off of our bottom line. We’re not working for somebody else. It’s all in our best interest. We’ve all taken a lot of personal, not just financial hits, but our whole personal lives over the last two years, put everything into this company to make it a success. I feel that we’ve got to the stage now where we’ve got all the platforms built. All the building blocks are there to consolidate, hopefully, and really start seeing things get better with what we’re doing.

Nat: So it’s only been two years since you’ve been operating?

Paul: Two years since FlyPelican.

Nat: And does it feel like a long time, a short time?

Paul: In a funny way, it seems like a long time, because I was involved with Aeropelican since 1994. So I’ve been involved with these aircraft, in these offices, at this airport with a lot of the same people for a long, long time. And in a same sort of a position. But there’s a big difference when it’s yours and you’re not working for somebody else. That’s a huge difference. And that’s the same with myself and Marty and Emil, the other two who are here today. Look, we’re pretty happy with the way things are tracking at the moment. But like I say, it’s a very small line between making or breaking.

Nat: What are you doing to protect your particular market niche?

Paul: It’s hard to protect what we’re doing. We protect our slots, for instance, in Sydney. We’ve got four absolute prime time slots in Sydney every day. Two in the morning, two in the afternoon, and there are no slots available in Sydney. Our slot is the same as an A380 slot. Obviously there’s a regional ringfence of slots that’s available to regional airlines. But we’re the smallest allowable aircraft that can go into Sydney Kingsford Smith. 19-seat. It was based on the old Metros and Aeropelican days, actually. So you can’t go in there RPT with smaller aircraft. So those slots are like gold for us. We operate from Newcastle to Sydney and we get in at 6:40 in the morning. There are no slots between 6 and 9 in the morning. Nothing. Full capacity. And from about 4:30 in the afternoon until maybe 8pm. If you want to go to Sydney at the moment then it needs to be anything after 10pm and before 4pm. So we protect those, and they are invaluable to us.

As for the competition, as long as our on-time performance and reliability are right up there and we’re keeping our passengers because of those two factors, then we shouldn’t have a problem. And our prices are right.

Nat: Yeah. I have to say, I thought the prices were pretty good.

Paul: Fortunately with our fares, like any airline, we have basically four or five different fares which serve us on each sector, route. They range between the general use-it-or-lose-it type fare. We have saver fares, as well. Essentially if you buy that fare and you don’t use it, you lose it. You can’t change it, you can’t name change, you can’t refund, you can’t do anything with it, you have to use it.

And then that goes right up to our fully flexible fare, which is normally purchased by the business type clients. Because they have right up to one hour before departure that they can get it refunded, they can change the name, they can change the day, they can do literally whatever they want with it. Have their money back. Up to one hour. So that gives the flexibility for the people that might be going to have a meeting that gets cancelled. So there’s a big variation in the fares, but I think there’s a fare that’s attractive to most types of people.

Nat: I’m just being nosey here, but what’s your sales system? Do you have an integrated sales system or is it all in house?

Paul: It’s all in house. Our website, which we look after here ourselves, when you go into the booking, that goes in to the back end, the Internet Booking Engine, IBE. That then goes to a reservation system that is the backend reservation. So that’s all looked after remotely, by a company.

But as for the structure and yield revenue management of each flight, we do that ourselves. I look after two of the routes, and Marty looks after two, and Emil looks after one. So we do that every day, we’ll be tinkering with what fares are available on each flight. And it’s again, through experience we know particular flights on particular days, particular sectors which potentially you can sell a full flight of full-flex fares. And you might know another flight where you wouldn’t sell one, you have to sell 19 of your cheapest fares just to get bums on seats. But that’s something that we all learned and have been very proactive in over the last couple of years, using our prior experience as well.

Nat: Just on that, you said that the reason you’ve stayed successful is because you’ve got a good team who wear lots of hats. So perhaps one of your biggest risks is losing someone in the team?

Paul: Absolutely. The main key people that are here, obviously the three of us who are the owners, we’re the key persons, from a regulatory point of view as well. So I’m the Accountable Manager for the AOC. Marty is the CAM (Continuing Airworthiness Manager) which we have to have, you can’t operate without one, and he is also an avionics engineer. And we then have Emil, who is the other Director/Owner, and he’s the operations director.

So we are vulnerable in the fact that either one of those positions, if one of those people were to leave, we have to have a deputy. Fortunately, we do have a deputy. Either one of us can deputise in another position. That doesn’t mean that you’d want to keep that position for too long. We’d have to be looking for somebody else. And they all, generally, would be highly paid positions relative to Australian positions.

Because it’s our airline, three of those positions are us and we pay ourselves a reasonable wage that keeps cost down. The other higher end positions, hopefully, we can only hope that people enjoy living here, they enjoy the atmosphere, we’re like a family. They’re people, not just numbers, and that’s what keeps people here. That’s also a big part of being a small regional airline. That’s how Aeropelican used to be. Especially when we moved up here in 2003 or 2004 up until when I left in 2010, I like to think we had a very good team, and that team made the whole airline work like clockwork. All I did was look over it and make sure everyone’s doing a good job, which they were.

Nat: And now you’re a lot more hands on?

Paul: Yeah. I mean, every hour that I do as an engineer working on an aircraft is an hour I don’t have to pay another licensed engineer to be working on our aircraft. I’ve got to manage that obviously. I’ve got to manage my time and my responsibilities and through CASA’s eyes, as well, make sure that I’m not overloading. Which I’m not. I’m fine at the moment. But it can be stressful. But that’s what we decided to do. And hopefully over the next few years, things will be like a well-oiled machine.

Nat: And as a last question, do you get much support from Newcastle airport? It’s much bigger than it used to be, and you’ve got all these other operators.

Paul: We’ve had good support, really, from all the airports that we operate to. We are Newcastle’s only local airline that’s based here. There’s no other airline based here, hence we’ve got the nice offices. But Newcastle airport have been very proactive in making sure that we are successful, with advertising, marketing assistance. We have a meeting weekly with Newcastle airport senior management just to see how things are going. It’s in their best interest as well. We operate the most number of destinations out of Newcastle. We certainly don’t operate the most number of passengers, but destination wise we operate directly out of here to Sydney, Dubbo, Ballina and Canberra. Four different destinations out of Newcastle, which is pretty big. So they’re very supportive and we’ve got a really good rapport with them.

Nat: Thanks so much for having a chat.

Paul: No worries.