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									08.50 – KEYNOTE SPEECH. HOWARD MILLER, CFO, Ryanair

HOWARD: Good morning ladies and gentlemen. My name is Howard Miller. I
am Finance Director of Ryanair and yes, I have been with Ryanair since the end
of 1991 and I’ve got all the lines to prove it. Maybe I’ll just take you through our
experience. Ryanair is Europe’s largest low fares carrier. We have 45 routes, 11
countries with 7 million passengers in this current year. We are surprisingly the
UK’s second largest airline after British Airways and we’re the 9th largest airline in
Europe. What’s unique about Ryanair? Well we offer the lowest fares in every
market that we serve. In many cases when we launch to a market, we’re
between 70-80% lower in increasing the original incumbent carriers. We’re the
lowest cost operator and we have the highest margins in the airline business.
Unlike a lot of our dotcom and dot co UK competitors, we actually make money,
which is a surprise for the industry. We’re in our 10th year of profits and very
importantly for an airline business; we’re in our 15th year of safe operation. We
are, for these reasons, the Sell West airlines of Europe. Those of you who are
experienced in the travel industry will know about Sell West. And that’s really
where we modeled ourselves. There’s nothing really new in the world. We didn’t
invent low fares, but imitation is the greatest form of flattery and we copied the
Sell West model and adapted it to suit ourselves in Europe. And just like our
colleagues in Cell West, they’ve been profitable for 30 years; we’ve just been
profitable for the last 9 years. And we’ve consistent growth, 20% plus per
annum. Just like Sell West, we use a single aircraft type which is Boeing 737,
200 and our new aircraft 737 800. We have very high utilization, amongst the
highest in the industry. That’s because, unlike most carriers, we fly for an hour
and we turn around our aircraft in 20-25minutes. If you look at many of the major
flight carriers, they fly for an hour and they spend an hour sitting on the ground.
So, not particularly great use of a very expensive asset. We operate mainly to
secondary airports. We find secondary airports are firstly cheaper to operate, but
also, in many cases, are less congested and give you access to the local region.
And as somebody who recently asked a question, ‘well, why do you fly to
secondary airports?’ We’re not flying to the main airports in a lot of cities.
Nobody ever goes on his or her vacation to an airport. It’s used as a gateway
and that’s how we see many of these secondary airports.

Unique for, I suppose, low fares would probably be synonymous with low pay but
that’s quite the opposite. We have high pay and high productivity. About 70% of
our employees are on an incentive scheme and this means that they’re also on a
profit share and involved in a share option scheme. So, this is very, very
important to incentivise employees. We’re number one or two carrier in every
market that we serve. And what we’re trying to get is dominance in each of these
markets, just like the other airlines. Once you get to be a dominant player in the
market you can set the fare, set the seat capacity and ultimately generate profits.
We roll out what we call the Ryanair effect into each route. This is a graph of the
(end of side). …and is still growing. Now what happened in this market is that in
1986 when Ryanair started we launched a set of low fares that were 50% lower
than the incumbent carriers and as a result the market expanded very, very
rapidly. And Ryanair has taken the lion share of the growth in that market. Just
like our friends in the US we also have a Texas, which is our kind of home
market which is between the UK and Ireland. We are the dominant carrier in
every route we serve here which means we set the seat capacity, control the
fares and ultimately generate very substantial profits and cash flow from this

Going forward to our European strategy, from 1997 we’ve started to grow from
Stansted, just outside London and we now have 25 routes across Europe. We
are launching 8 new routes this year. We’re the dominant carrier after British
Airways into the Italian market. We have 9 routes now to Italy. We have 6
routes to France, 5 routes to Scandinavia, we have 2 routes to Germany and we
have 4 routes to the Western part of Ireland. So, our objective here, if you take a
country like Italy, we’re now larger than Alitalia Air from the UK to Italy. We’re
second to British Airways. So you can see the impact of low fares. Low fares
are just not a UK, Ireland phenomenon. It has rolled right across Europe and
there is an insatiable demand for this type of low fares. We went into the
Scandinavian market, we were 80% lower than SAS and people right across
Europe had been paying very high fares for a long time. And when a low fare
carrier such as Ryanair comes into the market, the market explodes but it’s
driven on the back of very, very low fares.

This is also our development. We’re developing a mini hub, ex Scotland. We’re
flying from Scotland, Glasgow to London and Glasgow to Frankfurt, Paris and
over to Dublin. So, we can prove that not only can we develop out of a London
market but we can also develop out of other locations where Ryanair has never
been know, and many of these markets are only in their 3rd year of development.

I just want to talk to you a bit about money. I know this is for the dotcom,
something they don’t like to talk about because they don’t make any money. But
we’re quite happy to talk about it. We’ve been growing at a rate of 20-25% for
the last 8 years. This is for our 4th quarter to the 31st of December. Our results
are out the 20th June, but just to talk about the kind of growth. Operating
revenues up 25%, net profit up 33%, past year volumes up to 17%, which will
allow us to keep on target to get 7 million passengers this year. And you can see
earnings per share growing by 32%. I think the most important thing for most
people is margins. We’ve an average 20% margin. That’s imperative in the
airline industry. Even our friends in South West in the US in their best years can
do about 10% of that margin. So, we have proven that consistently for the last 6
or 7 years, that an awful lot of money can be made in low fares, provided you
have the right product and the right prices and you can drive volume into
destinations and locations that people wouldn’t think you’d ever fly to. Not only
that, we’re generating lots of cash. Our turnover in our coming year will be about
£300 million, about $340 million. Of that we have almost all of that money in
cash. And unlike Boo.com or Boohoo.com as it’s been known in the UK, we
won’t be going backs to market for money. We’re very well financed and we
have 25 new aircraft coming to meet our growth targets.

Just going forward to our balance sheet and we have a lot of assets. We own
every aircraft. We’re unique among airlines. We have very little debt. And as I
said, we have £300 million in cash now. We’ve nearly £300 million in aircraft and
very little debt. So, we’re very, very strongly financed which means that in the
coming global market, or the European market, and the competition that’s out
there, we’re very well financed to move forward and continue to grow the airline
at a very fast rate.

What’s going on in the market? Well, the market is really in turmoil at the
moment. British Airways are reducing seat capacity. They’re talking about
kicking off all those people at the back of the aircraft, and anybody they want to
kick off, we’re quite happy to take because they’re paying such high fares, they’ll
be paying, if they fly to Ryanair, they’ll pay about half the fare they’re currently

What’s happening right across the European airline industry is a lot of the airlines
have lost and are going to lose an awful lot of money this year and are cutting
back capacity. And that gives enormous opportunities, for particularly those
carriers who are continuing to expand and grow. These people, even if they’re
thrown off the back of the aircraft, aren’t going to sit at home at the weekend and
watch TV; they’re going to want to travel. So, with the kind of growth of low fares
right across Europe you’re going to see even more passengers flying. So, we’re
been gifted all of these passengers by all of the major airlines.

In terms of the competitors on most of our routes, all of them are attracting or
indeed withdrawing from the routes. On the Pizza Turin route both Alitalia has
just closed down and gone elsewhere. They don’t seem to like a little bit of
competition. And Denmark and SAS and Oslo SAS have just closed down and
stopped competing with us. And they’ve learned a lesson, that they can’t really
compete with low fares and are better off to stick to their own market which is
generally the business type market. Go, which was British Airways low fare
subsidiary started about two and a half years ago and in it’s first 17 months
succeeded in losing two thirds of it’s turnover. On a turnover of £30 million, they
succeeded in losing £20 million. Not really going anywhere, contracting and
finally withdrawing from routes. It’s not really any longer in the low fares market
because it’s introduced a Saturday night stay and for those of you who travel
frequently will know that the Saturday stay generally means that the fares are
going to be very, very high. Our other main competitor and probably the best of
the other low fare carriers is Easy Jet and they’re not expanding very rapidly this
year. They’re in dispute at Luton Airport. They’ve got no fuel hedging place. Fuel
prices have almost doubled in the past 12 months and they’ve only got one new
route for the year 2000. So, you can see right across the European airline
market, an awful lot of airlines are in difficulty. A lot of contraction and the only
ones who are growing by 20-25% are we at Ryanair.

According to Veltman’s of Ryanair, well, we’re fully fuel hedged and we’ve
decided a number of years ago we weren’t going to take any risk in this element
of our business, so we hedge for between 12-18 months ahead. So, we’ve got
our fuel locked in. We’ve also been buying aircraft since 1994 and a lot of our
aircraft are now fully written off so there’s no charge to profit and loss. I hate to
harp on about profit but it’s something that’s very important to us. We have 5
new aircraft delivering this summer for June and July which means we’ve got the
fleet in place now to continue to grow the airline. We’ve 8 new routes launched
this year which will deliver a further 1 million passengers. We’ve traffic growing
from then from 5.7 to 7 million passengers. And I suppose really what you’re
interested in is what are we going to do at Ryanair.com. We really launched that
in January and it’s now Europe’s largest low fares web site.

Some very interesting statistics about the kind of growth in the market. This is
not our own information but from DLJ: Donaldson, Lufkin, Jenrette. There’s $5
billion we’ve spent on travel sites in 1999. 75% of internet users either visit travel
sites regularly, are spending lots of money on these travel sites and the market is
really set to explode and also, the previous speaker from Expedia, the growth in
WAP technology is really going to push the market forward to a new level. It’s
estimated that $20 billion will be spent on travel sites in 2001. So, we’re in a very
dynamic and growing market.

I suppose really, what have we done? We really launched our Internet strategy.
We had a small web site last summer but we launched a new system from
January and the growth has been absolutely explosive. I would say honestly,
beyond our own expectations. We thought on a year basis we might get
between 15-20% of our business. This slide is actually slightly out of date.
We’re actually over 20% on a daily basis. At some points while running
promotions, we can get in excess of 50% of our bookings on the Internet. I think
really you’re seeing a lot of people going home at night are at work during the
daytime, looking for low fares and there is a huge demand for travel. And the
Internet facilitates people traveling and searching themselves. We’re already the
biggest travel site in the UK. We’ve got 44.4 million hits in March; up from almost
zero in January. We start on the 11th of January. We’re getting at the moment in
excess of 1.5 million hits a day. And we did 9 million page impressions in March.
I was just listening to Expedia there and we come to it in the next slide. We’re
already doing $11 million a month and I think Expedia said it was £12 million for
an entire year. So, we’re doing that really every second month. So you can see
the growth of airlines in this regard. One other thing I should say at this point is
that we are not hosted on Expedia or Travelocity because we’re actually
manufacturing the product. We’re actually manufacturing seats. We’re taking
aircraft on board. A lot of these other Expedia and Travelocity, don’t make
anything. All they do is sell other people’s products and we believe
fundamentally that we’re not going to give them any product because we want to
sell it ourselves. We want to cut out the middleman. Our business has changed
radically over the last 4 years. About 4 years ago, 25% of our sales were direct
and about 75% was true travel agents. By the end of this year we’ll be doing
70% of our business direct. Well in excess of 30% on the Internet and about
35% over the phone. And then travel agents, as I said, down to 30%. So the
business is changing rapidly, the market is changing rapidly and at the moment
we want to continue to bring people into our own site to offer them the lowest
fares in the market. And we just recently set in place a ‘double the difference’
guarantee. And if anybody can find and you’re all welcome here to try, anybody
who can find a lower fair on a competitive route with Ryanair, we will double the
difference between our price and whatever they’re charging. And this is what we
believe is one of the ways we’re going to drive our site forward. We’re going to
guarantee that we offer the lowest fares on the Internet. And unique, again, I
suppose from day one we’ve been profitable because we actually make profits
from this business and we have very low costs for conversions. We did a lot of
the work ourselves. We have a fantastic team on our Internet site and also on
our reservations. So, we’ve changed the whole business model and are making
money from it.

This example is some of the fares I just took a snapshot off. You can see £2
return. So, it won’t be hard to give too many of those away. Looking at some of
the other sites, we’re also giving very significant discounts off already very low
fares and this deal was £15 off a wide selection of our routes. For those of you
from Germany, we had a 50 Deutsche Marc return fare from Frankfurt to London,
Stansted. And this has spear headed our development into the German market.
We have already 2 routes into Germany. Both of them very, very profitable from
day one. And we’re going to launch a 3rd route very, very shortly. So, again,
dramatic leap into the market. People in Germany have a very strong appetite
for very low fares.

Going forward in terms of page impressions. A number that everybody loves but
nobody really understands. We’ve really got close to 9 million. We’ve seen this
growing and the initial couple of months were very, very rapid. Doubling within 2
months. And we see that’s going to, again, grow a little bit more slowly.
Somewhere between 15-20% per month. And these will be our competitors in
our domestic market and the biggest one will be the Irish Times with 7.2 million.
So, from a 3-month start we’re up to bigger than everybody else in our domestic

Going forward, looking at our competitors. Well, it’s very interesting. You hear
an awful lot about e-bookers, but weekly bookings, not very many, just 2000.
We’re doing this everyday. Everyday of every week we’re doing what they’re
doing in a month. Annualized sales $23 million. Travelocity, 20 000 weekly
bookings, $273 million turnover. Lastminute.com, that famous share price, well
they’re only doing 1000 weekly bookings with $4 million annualized sales. We’re
doing 50 000 weekly bookings and $130 million. In fact, if we were selling long
haul seats and had high fares we would be bigger than everybody else and as
we saw from the previous speaker, I think it was $400 million for Expedia on a
global basis. And £12 million in the UK. So, we’re really running an awful long
way ahead of the rest. So, despite what everybody thinks about a lot of the kind
of the booking sites, really they’re not that large. And I suppose looking at the
major airlines, when they really get going, most of these sites are going to be,
really be in a difficult position particularly selling airline seats because unless
they can do a good deal with them, for us we’re not going to do that. We want to
continue to drive volume into our site.

Well, the marketing trends of Ryanair, and whilst the pulling power of low fare
promotions, I mentioned to you the ‘double the difference’ guarantee. We’re
already offering the lowest fares of any Internet site. We’ve got a huge
advertising budget. In many cases it’s our basic internet budget is £5 million,
plus we have another £5 million indirect, so, we’re spending about £10 million
sterling each year in advertising. We’ve halved our distribution costs. We are
allowed to announce, although there are sponsors of this conference who are
going to close down, Galileo. We’re going to be left. We’ve recently been hosted
by Saber. So, we’re going to be distributed by Sabre, Worldspan and Amadeus
and we’re closing down Galileo and the reason we’re closing down, it was too
expensive. It’s not competitive with the market. And there are now an awful lot
of low cost, alternative, including Internet, you can distribute for practically
nothing on the Internet. You don’t pay travel agent commission. We don’t have
any middlemen. So, in many cases it doesn’t make any more sense for us to
distribute to expensive GDS’s such as Galileo. So, we’ve decided that we’re
going to terminate with Galileo and we just announced that last week and from
the 1st of July they’re no longer going to be part of the team. This is the way we’re
going to drive down our distribution costs. We have signed low cost deals with
Worldspan and Saber and this is the way GDS’s are going to have to go forward.
The airlines were, I suppose, really caught by these GDS’s and, I suppose, the
circle has turned full circle and we’re not going to pay these high costs anymore.
And I think you’re going to see this increasingly from the major airlines. Just the
costs of these distribution systems are unacceptable particularly when you’ve got
an awful lot of lower cost alternatives.

What are we going to make? I was going to say £10 million in a full year. That’s
true. Reduction in travel agents commission costs. Elimination or reduction in
GDS’s, so we’re going to add an awful lot of value to the business. What we’re
not going to do is we’re not going to increase our margins. Our margins are
already amongst the highest in the airline industry at 20%. We’re going to re-
invest in our development of our Internet site, also in additional advertising to
continue to push low fares right across Europe. We just also signed up a deal in
January with Sky. So, we’re on 25 times a day on Sky Weather and this is part
of the initiatives we’re going to be driving into the market. We’re going to get our
name up in lights in as many places as we can.
What’s been the impact of Ryanair.com? Well, as I said it’s going to reduce our
host system costs. We previously hosted it on a British Airways system called
BABS. We’re onto a system called Open Skies and the cost is reduced by 66%.
We reduced our agency commission and also reduced our CS fees by getting a
larger proportion of our sales direct. We’ve gone direct bookings from 40% to
over 60%. We’ve eliminated, we’ve gone ticketless since January. So, we’ve
eliminated all those problems that everybody has. You’ve got to get your ticket.
You don’t need a ticket anymore. All you need is your reference number, so all
of that trouble of sticking tickets in the mail, sending it out to you, making sure
you’ve got it. If you don’t have it, you’re lost. All you’ve got to remember is a
simple 6-letter code. So, it’s radically improved the distribution within the airline
and also reduced a huge amount of cost because all that paper had to be
manually pushed around the place. So, it’s inefficient for people to be doing that.
We’ve also reduced travel agents commission. Travel agents, a couple of years
ago we were the leaders in Europe, where travel agents commission we were
9%, we went to 7.5% and a lot of the other airlines followed suit and went down
to 7%. So, we’ve gone again down to 5%. We do see there is a place for travel
agents but really and truly it’s at the right cost level for us. 9% was way too
expensive for what was a very simple seat to sell. We only sell point to point.
We’re not talking about long international travel, complicated itineraries, we’re
selling a very, very simple product and therefore we feel that 5% is the
appropriate charge. Travel agents are a smaller proportion of our business now.
By the end of the year it will be down to 30% of our total business. Also, the
whole Internet side has fast-forwarded clash flows. No longer do we have to wait
a month and a half after a booking has been made through a travel agent to get
our money. We get our money every day at the end of the day through a credit
card settlement. And it’s allowed us to develop ancillary sales and advertising.
Our objective this year is to have £1 million net profit just for our Internet site
advertisements. We’ve signed up a number of deals which I’ll just talk to you
about now in a second.

We’ve radically improved the design of our sites. Like everybody else out there
we’ve been learning the best way to develop it. We’ve started off, we had 2
school leavers developing our site so we’ve put a bit more effort into it recently
and our internet site cost about $8000 to launch. We’ve spent a bit more than
that since then, but not a whole lot more. So, we’re going to invest money in
terms of developing, making it easier for people to use. We’re also going to get
into what we call destination service. So, for every country you fly to, every city,
we’re going to have a list of activities, hotels, restaurants, so it becomes, if you
like, almost a travel, a rough guide to each individual place. We’re also looking
at putting a lot of effort into development. We’ve appointed a commercial
director. We have e-partnerships we’re negotiating. With Jay we have a unique
deal with Hertz available on our Internet sites. You’ll be able to book a flight,
book your Hertz car rental and then move on to then be able to provide you with
hotel accommodation and other things such as travel insurance. So, we’re
starting to develop an awful lot of business and wrapping it around the actual
sale of the low fare. We’ve just recently signed a deal with Air Cell, which is our
local mobile operator in Ireland, and we’re going to have a WAP enabled site
available from the first week of July. So, we’ll be the first low fares carrier in
Europe which will allow people to be able to book all their fares on the WAP site.
We believe this is going to be the next wave. The Internet hasn’t really
penetrated in certain countries such as France and Italy and in some countries,
even though there is quite a lot of Internet penetration there are not many people
actually using it. They generally use it to find information, find what the fare
prices are and then they book. And in some countries, just don’t seem to really
be able to take it on. But an awful lot of countries, particularly say the likes of
Italy where mobile phone usage is enormous, we feel that it will actually leap frog
and we will get a lot of benefit from having a WAP site. And again, we’re going to
have first mover advantage on this to offer an awful lot of very low fares on WAP

So, I’ll come forward to answer questions if you want. What’s the summary of
Ryanair? Well, one, we’re the lowest cost operator. We’re the lowest cost
operator in business. We’re not a start up airline. We’ve been at this business
15 years. We’ve been profitable every year for the last 9 years. We’ve proven
that low fares not only work in the US but works in Europe and we’ve translated
that right across 9 European countries. We’ve established a track record of
profitability. We’ve high and stable margins, amongst the highest in the industry
and we have outstanding balance sheets and we don’t need to go back to the
market, we have nearly $400 million in cash. So, we are well funded to continue
to grow our business and to develop the Internet side of our business. All our
major competitors are in trouble. Many of them are going to suffer huge losses.
British Airways are probably going to announce £300 million of losses next week.
Many of them are either consolidating or reducing their seat capacity in the
market, which is very good for us because it means that all these passengers are
being pushed off aircraft, have got to go somewhere and we’re just ideally placed
to accept them. We’ve got the airports in place. We have deals with a further 20
airports right across Europe to continue to grow the business. And we have a
further 2 new aircraft to come over the next 4 years which will allow us to rapidly
grow the business. And we’ve recently put in a Ryanair.com strategy which has
already substantially reduced distribution costs and will allow us to become
leaders in e-technology, particularly in WAP technology as we move forward into
the end of this year. That’s my presentation and I’d be quite delighted to answer
any questions that you have.

PAUL: Thank you very much Howard. Can I ask you a quick question, Howard?
I had the pleasure of traveling Ryanair last year to Dublin on a couple of
occasions before you had your web site in place. I actually found it quicker then,
booking on Expedia rather than holding on for your call center. But times have
changed. Can you tell me, to reach where you are now with Ryanair.com, how
much you’ve invested in reservations and distribution technology and how much
you might invest in the coming year?

A: Well, as I said, we’ve developed the front end of our Internet site for $8000
and we haven’t spent a huge amount more. We’ve taken on 2 web designers.
But not a huge amount of money. But we have signed up with a company in the
US called Open Skies which has a host reservation system.

PAUL: Which Easy Jet in Europe is pioneering, hasn’t it?

A: Yes, Easy Jet, most of the low fare carriers have it in Europe. Easy Jet, Go,
Virgin Express, and Latterly Bowes in the UK. So, it’s an ideal vehicle really for a
low fares carrier. Not a huge amount of money to run it and it’s a very, very good
system. And it’s really designed for low fare carriers, point-to-point sellers. So,
we believe it’s going to give us a very strong platform for pushing the business
forward. For us it was a major jump because unlike a lot of the other low fare
carriers we actually want to sell through travel agents, we want to continue to
distribute to travel agents and the system had to be specially designed for us so
that we can continue to allow travel agents to access to our major distribution
system, Amadeus World Span, largely Galileo.

PAUL: Thank you. First question.

Q: Luc Carton, Tourismnewsletter.com. I understood that it was very powerful
thing, Internet, for your company. As we can see your figures. My question is
simple. Why were you so late to come on Internet? Because since 4 months it’s
something atypical in the Internet business?

A: Yes, we were late coming into the Internet business basically because our
existing host reservation system was a legacy system. I think it had been
designed in the late ‘60’s, early ‘70’s and it just really didn’t have the capability to
have an internet development layer on it. And so what we had to do was to
source a new host system and we developed a system that could accept
reservations from travel agents as well and we developed this with our American
partners. So, really we didn’t have the technology base, although we had some
kind of a web site last summer. It really wasn’t good enough to enable us to
deliver these numbers. So, once we turned on the tap in terms of getting our
new system in place, well you can see the kind of explosive growth we’ve got
over the last couple of months. I think you’re going to see this more and more as
you get some of the other major carrier who also have legacy systems as well,
driving their business as they move forward onto whatever platforms they’re
moving on or in some cases, spend a huge amount of money developing an
internet site. You have in the UK; a number of airlines are coming together to
develop the kind of major system. I think you will see explosive growth by other
carriers. I don’t think that we’re unique in that. I think you will see other carriers
coming along and having the same explosive growth, which goes back to what I
was saying at the start. If they continue to do that, it means that some of the
other distribution systems will eventually be substantially reduced and you will
get more and more direct sales. I think that’s the way the business is going.

PAUL: I think that the big leap here, Howard, is moving out of BABS and into
Open Skies by the sounds of it.

HOWARD: Yes, I think that certainly gave us the platform to do it.

Q: My name is Jim Steinhart, with PlanetWare. I just wanted to ask you, you’ve
given us the number of hits on the site. Can you give us the number of individual
visitors to the site and also you gave the number of tickets or bookings that you
have. Was that 50 000 bookings per week including, was that a round trip or was
that each leg of booking?

A: That’s one way. So, it’s 25 000 round trips, approximately

QUESTIONER: So, how many visitors came to translate into that 25 000 round

A: We don’t have those kinds of statistics because, as I’ve found recently in the
kind of business, unique visitors, if you take say a corporation like Ryanair, we
would have 800 PC’s. But if I went into somebody’s, because we’re all under the
one ISP number, when you go onto somebody else’s site, even though 50 people
have visited, or many people have visited from the company to other people’s
site, they’re still beyond a one number and therefore be counted as one visitor.
So, using that kind of method is not really a good guesstimate. We have, what
we find a more accurate number is we have a look to book ratio. Very, very high,
about 100 to 1. So that means, for every time we get somebody onto our
booking engine, we only get 1 out of 100, which means that there are an awful lot
of people actually shopping out there. The difficulty for us and a challenge for us
is that we’ve got to convert from every 100 people who actually look through your
internet site and get to your booking engine, we’ve got to get that down so that
we’re getting a better conversion ratio. And that’s, if you like, the challenge for
us. We’ve got to figure out a way of getting from 100 to 1 to 50 to 1. Because
that means that we’re going to at least double the number of bookings per week.
So, I’m sorry I can’t give you a direct answer to your question because the
numbers really don’t make any sense. And as you know with page impressions
and hits, some of the basis of this is questionable. But they’re the standards.
These have been externally audited, they’re not our numbers, but as you know,
depending on where you design the front of your web site, you can have 40 or 50
hits by just looking at one page. So, some of the numbers really here, I think
what you’ve got to get down to is how many people actually bought something on
the site rather than how many people visited. I think that’s the number we’re
focusing on. At the moment we’re at 50 000, we think that’s going to double in
the next 3-5 months.
PAUL: I think we were trying to get your look to book ratio. So, your look to
book ratio is 100 visitors to one booking?

A: Yes.

PAUL: Okay, thank you. Any more questions at all? Just one last one for me
then Howard. If I was an online intermediary, an online travel agent, I’d be
feeling very nervous listening to your presentation. Is there any advise you could
give me to help my business survive and make money?

A: That’s a difficult question to answer. I think there is, if we wanted to we could
have, I suppose, moved forward very, very rapidly and decided that we were
going to sell direct. The fact that we’re publicly saying, we believe that there is a
place for the travel agent. In certain markets within Europe, you take Italy for
example, there’s a very, very close relationship between the travel agent and the
people buying tickets off them. It is very difficult in certain markets to see that
people will maybe move to WAP technology or move to Internet technology.
They will still have a close relationship with their local travel agent. That’s a fact,
that’s reality. We can’t really change that in a very short period. But we certainly
believe that as we fly to more and more new countries with more and more
destinations, that to put the infrastructure in place in all of these countries such
as call centers have done, aren’t going to use WAP or internet is going to cost an
awful lot of money. So, we do feel there is a place for travel agents. Certainly
5% commission, we feel that it is a fair price for a very simple ticket to book. So,
our plan is that we will continue to work with travel agents. We will continue to
promote them, but the reality is that market has changed very, very significantly
over the last year or so for us. And they also have to reflect it as well. I think
travel agents are going to find themselves more as they are in the US, like travel
consultants. Maybe on the kind of very easy fares to book like our own, they
won’t make much money but we will be the business that brings people through
their door. Maybe they’ll buy very cheap fare. They only get 5% commission but
that person maybe will buy hotel accommodation, travel insurance, car rental and
other products. So, we maybe see ourselves as maybe a way of getting traffic
through their door but there may be other ways to make more money out of
actually the whole travel process.

PAUL: Thanks for the advice Howard. Howard thank you very much indeed.
Let’s take a break now until 10:05.

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