No Plane No Gain

Susannah: Hello, and welcome to Switch Your Money On from Hargreaves Lansdown. I'm Susannah Streeter, the Senior Investment and Markets Analyst here at Hargreaves Lansdown. And as usual, I'm with Sarah Coles, our Senior Personal Finance Analyst. So Sarah, the holiday season is well and truly upon us. I mean, I seem to have spent hours packing and repacking the car in the last couple of weeks to get in sleeping bags, surfboards, paddleboards, a dozen cuddly toys.

Sarah: Blimey, it sounds a little bit like a cross between the generation game and a game of Tetris actually. It all sounds really stressful even before you start getting into holiday traffic, but it could have been worse. You could have been flying.

Susannah: Yeah, it's a good job we are such experts at queuing isn't it Sarah. People's patience was certainly put to the test with all of those mass cancellations and absolute chaos at airports over half term.

Sarah: Yes it wasn't really the return to business as usual that either airlines or the passengers were hoping for. Just what will all of this mean for the airline industry? Will the vastly increased demand mean airlines are back in business or will the image of them creaking at the seams, keep down their recovery? And that's what we're focusing on today, in an episode we're calling no plane, no gain.

Susannah: Yes we'll be finding out what it's been like operating through the pandemic and over a rather rough couple of weeks, and take a look at the prospects for the sector over the medium-term, with Oliver Smith, Head of Sales at SaxonAir Charter. Oliver, I'm pleased to say you've flown in to be with us today. It's been a week of ups and downs to say the least hasn't it for the industry?

Oliver: It has indeed. You know, it's been very up and down. We've had lots of people wanting flights, not enough aircraft to do the flights, things like crew restrictions and not enough crew to man the planes when we've actually got the planes. So yeah, I think very similar to the general aviation. It's been very tricky, but it's been a good time for the industry on the business side, but you know, very tricky to get things across the board.

Susannah: So a real headache?

Oliver: That's right.

Sarah: Well, we are looking forward to finding out a lot more detail later on. We'll also be chatting with Sophie Lund-Yates, HL's Lead Equity Analyst about how companies are coping as the industry recovers, including TUI, which had some really difficult headlines over half term. Sophie, I hope there'll be some good news in there.

Sophie: I'll also be looking at British Airways owner IAG and easyJet. I'm afraid to say I can't promise you an awful lot of very good news. It's been a really challenging time for airlines and tour operators.

Susannah: Well, we'll find out more, a little bit later. Thanks very much Sophie. Also, we're going to catch up with Emma Wall, our Head of Investment Analysis and Research, who's been speaking to Peter Meany, Head of Global Listed Infrastructure at First Sentier Investors. And it's what you've been waiting for, we will have the quiz and we're talking about all things flight related, which is my specialist subject after all.

Sarah: Yes of course. I should probably be calling you squadron leader, shouldn't I, or ma'am or something like that.

Susannah: Well, squadron leader retired. My RAF reserve days are behind me, but I do still have a pretty keen interest in what's going on in the skies above, and it has been an incredibly difficult few years for the industry. The pandemic caused huge problems across the airline industry, not just companies themselves, the airlines, but airports, catering, ground service and manufacturers too. The exceptions were Freight forwarder and Cargo airlines, which has really gained from the rise in air cargo. Now 2020 saw of course, enormous restrictions introduced, when aside from a brief window in the summer international travel was pretty much thwarted on all sides, making it the worst ever year for passenger demand. Total revenue losses for the industry during the year have been estimated as an eye watering, 20 billion pounds. So cancellations right at the start of the pandemic, brought a huge financial headache for airlines who are faced with having to issue enormous numbers of refunds at a time when they were still having to cover the cost of staff and aircraft. Now, many of them pushed for customers to rebook and accept vouchers instead of getting their money back, which meant more customer dissatisfaction, which didn't help build our confidence that it was safe to book.

Sarah: Yes and even in 2021 air travel was 71% lower than before the pandemic. And part of the problem is the traffic light system that the government introduced to try and determine extra COVID controls on some flights to different destinations. It ended up changing believe it or not 15 times, and sometimes with very little warning, which was incredibly difficult, not just for passengers to adapt to, but for airlines to cope with as well. So the transport committee of MPs concluded that these changes were arbitrary, opaque and incredibly damaging for the industry. So airlines, as a result, they've responded by cutting back on routes and staff. So Airlines UK estimated in September last year, that over 30,000 air crew had lost their jobs, which included 10,000 at British Airways alone.

Susannah: Yes so of course, things have picked up this year and as far as commercial aviation is concerned, the industry appeared to be flying back into calmer skies. The number of UK daily flights rose again in mid May and it's now up by just over 350% compared to the same period last year. People are really keen aren't they to jet off to sunny climates once again, having been pretty much starved of foreign holidays during the pandemic. However, the turbulence is far from over it seems, with the number of daily flights still 15% lower than pre-pandemic levels and the process has not been smooth. We've had the sorry scenes of chaos at airports up and down the country, not just at Easter, but now at half term too and it wasn't just getting out of the country that was an issue, but returning as well. With pupils and teachers among those held up as airlines cancelled and delayed flights because of a labor shortage, particularly among ground crew.

Sarah: Yes airlines are desperately trying to play catch up and they're trying to recruit more staff as quickly as possible. So British Airways is said to be offering signing-on bonuses for their ground crew and ground handlers at Gatwick airport are reportedly getting pay rises of 10%, but recruitment and training just can't happen overnight, you can't just turn a tap back on and fill planes and airports with staff. So unfortunately, there's every chance that things won't be anywhere back to normal by the time the summer holiday rush comes along.

Susannah: There's a bit of a blame game going on with the government saying airlines shouldn't have taken the bookings if they didn't have the staff. Meanwhile, in late April this year, the transport committee criticised the government's attempts to blame the industry for chaos over the Easter holidays and said that the aviation sector was reeling from restrictions and a lack of certainty offered by ministers during the crisis. There's also the spectre of Brexit overhanging this issue it seems, with American Express Global Business Travel among the industry players pointing out that airlines relied on EU citizens for up to 30% of their workforce pre-Brexit, so that labour pool no longer being available, adds to the challenges. Now the transport committee called on the government to review the process relating to recruitment and training, to give airlines more flexibility over hiring for the summer.

Sarah: And of course for all those who were caught up in all of this, the price of flights is rising as well. So the cost of flights has risen over 12% in the last 12 months. Partly because so many more travellers are now competing for fewer flights. For now, people are prioritising their holidays after so long when they just couldn't go anywhere, but we'll have to see how well demand holds up into next year. Anyone who spent their lockdown savings on a 2022 holiday, may well be wrestling with a rising cost of bills and they may not be able to find the same kind of cash for a break this time next year. Now there might be people who borrow to travel at that stage because they just can't face another year at home, but there will be those who've already borrowed to the hilt to cover the cost of living or they're too worried about the prospects for the future to take the risk of borrowing. So it is gonna be interesting to see what happens to travel patterns as we go through the next 12 months.

Susannah: It certainly is. Well, while the industry seems to be picking up a bit of a following win this year, there are still an awful lot of challenges to face when getting back into the skies. So let's get an idea of just what it's like to operate right now. I'd like to bring in Oliver Smith from SaxonAir Charter. So Oliver, tell me a bit about your business, who you ferry to and from what are your favorite destinations? And what's booked up to the hilt right now.

Oliver: It's very tricky. You know, we have lots of people wanting to fly. Lots of people who've come out of lockdown who previously, you know, hadn't flown privately and have now either saved up some money over lockdown through not traveling or just said, do you know what, I don't want to be traveling through a busy airport with thousands of other people and sitting on a plane with 300 other people. So now they're looking at private flying as well. You know, you walk through a tiny terminal and go straight out to the aircraft. Key destinations I would say out to Portugal is very popular. After the pandemic it was very tricky because regulations were changing all the time on which countries we could go to and what you needed to do to get into certain countries. So people had to be alert, whereas now, the borders are a bit more open and the normal holiday destinations out to the Balearics, Portugal, the south of France. These are the key destinations we're currently flying to a lot.

Sarah: You had to change your business didn't you, in order to sort of cope with some of these challenges around the pandemic. Can you tell me a bit about that?

Oliver: Our main focus is passenger charters. Whereas through the pandemic, we had to look at doing cargo. So flying in supplies, which normally we wouldn't have on the aircraft, both helicopters and the jets, you know. Generally owners don't want to have boxes of things on their nice new seats. However, these aircraft were sitting on the ground, not making any money and costing them money. So we had to look at ways in which we could, we could still try and bring in some money during lockdown and keep the doors open and keep people in jobs, and that was a way forward for us.

Sarah: And in terms of the ownership of the planes, did you have to make changes there too?

Oliver: So, yeah, we actually used to own two jets ourselves as a company. We then sold them during lockdown, which put us in a very good position coming out of lockdown. You know, these aircraft, as I said, were sitting on the ground and costing us money, so we made the decision to sell them at a good time in the market for actually selling of aircraft, because now you have a lot more people looking at getting into private aviation, both on the charter side, but also in the ownership side.

Susannah: And you said that you shared some of the problems that other airlines, the big airlines have been experiencing. Can you tell me a little bit about that? For example, the labour crunch that the industry is facing right now, how are you navigating that?

Oliver: It is tricky. You know, we're a small family owned business. It's a bit like the chicken and the egg situation. Do you employ the people for the future demand or do you hold back and keep what we've got and manage it as best as we can at the moment? You know, I think we've all seen what was going on in the world and recession gets mentioned quite often and it's the fear, ok do we need to employ all these people and suddenly everyone stops flying again. So it's a risk we have to look at and we have to really manage our workflow and our teams accordingly to represent what we think is going to happen in the world. But currently people are flying a lot. We've had just had a record month on the sales side for the charter. People are getting away and businesses flying again.

Susannah: So do you think you're seeing people ring-fence their budgets for experiences say going on holiday, making those special occasions again, much more say than spending on other items?

Oliver: I think so. I think because we weren't allowed to, and it wasn't possible that people are now saying, ok, I've got a bit of extra cash to spend, you know, I know what it's like to be in lockdown, it wasn't nice, let's really treat ourselves. And we do have people, new customers who say, ok, do you know what, looking forward I've got a budget of this much, what can I do. Ok, that works out at four trips to, and from my favorite destination. So I will do that privately now rather than commercial. And it's just as you say, people ring-fencing the budget and saying let's make the most of life because lockdown life wasn't much fun for anyone.

Susannah: Are you affected by the chaos we've seen at airports?

Oliver: Yes. So, you know, without getting too technical, we have a lot of issues with slots and handling. You know, that the benefits of flying privately generally is that you can choose exactly when you take off and land. So you say, I want to leave London at 10 o'clock to arrive in the south of France. And suddenly we are looking to land in the south of France and they're saying, sorry, you can't land here for another six hours. There's not the slot time. So then we have to revert back to the customer who of course has paid a lot more money than he would commercially and say, I'm really sorry you can't have that time you want, and it does cause issues. Some clients are really understanding about it because they've either flown previously and had these issues before. But then lots of the new clients aren't really familiar with it and they would expect that paying that much money, they should get the slot they would like.

Sarah: We are recording this in the week of Ascot, presumably you are seeing quite alot of demand. How does it reflect pre-pandamic levels?

Oliver: So generally the big events are normally very busy for the helicopter side of things, especially the races. People want to fly in and this can be groups of friends, families going for a day out to the races, or it can be people just popping in to see their horse race. Our helicopters are all booked out. They start about four seater and go up to seven seaters and so these are, these are fully booked over the Ascot period and they get booked up way in advance. You know, on the horizon we've got Glastonbury and we're pretty booked up for Glastonbury already.

Sarah: And do you see a different type of, of customer or do you see the same sorts of people who've always booked helicopters of these sorts of events?

Oliver: I'd say it's always quite varied because you do get the people who go excuse the word, but go out for a bit of a jolly, you know, they fly out in the morning have a great day out, come back a bit more inebriated than when they left. And you know, that's a good day out. But you do have the professionals, you know, the race horse owners who are flying out just for the reason of seeing their horses, and it's a very transactional process they're in, they see the race and then they want to get out.

Sarah: I mean, do you have an idea of, of how this current stage is gonna play out. Do you think that we will get sort of everything sort of returning to normal over the next few months or do you think some things have changed forever?

Oliver: I think lots more people have come into private aviation who previously wouldn't have because of COVID. And I think they will remain because, if you can afford it once you've had a taste for it, it's very hard to then go back. Having to turn up for your flight 20 minutes before your flight, being escorted through a private lounge. Sometimes you can even drive up to the aircraft in your car, you know, get out your car straight into the plane, or even, you know, what SaxonAir can offer, we can pick you up in your back garden in the helicopter, fly you to the airport, you get out the helicopter, you go straight into the jet and you fly off to your end destination. And the other end we can do similar. So then having to go back to queuing at Heathrow for three hours and getting delayed, and then passport control taking ages because they haven't got the right number of people on. It's a very hard step to take back. Generally, once people get involved, they generally stay in private aviation. If they, if they can still afford to, if it's not just a flight they've done as a special occasion or treat.

Susannah: And just before you go, what's the most unusual cargo you've had to carry over the past two and a half years?

Oliver: Knicker elastic, which was a bit of a random one. But when you think about it, it came in for masks. It's normally, can you take my golf clubs up because I want to play golf this weekend and I left them at home. Whereas now it's actually bringing in things that are essential.

Susannah: Very elastic demand I imagine for that product in particular. Really great to have you on the show. And, and it's certainly a really interesting and pretty tough time for the whole sector.

Oliver: Thank you very much for having me. It's been a pleasure.

Susannah: Well, let's bring in Sophie Lund Yates our Lead Equity Analyst here at Hargreaves Lansdown. And Sophie, you've been looking at some of the listed companies operating in the sector, let's start with TUI.

Sophie: Yes so starting off with a big one. TUI has been caught up in the cancellation chaos that we've been talking about, and this is exactly the kind of bad press TUI doesn't need. For all the airlines, right now is the time it's meant to be about rebuilding resilience after the pandemic not fighting further fires. Like most of its peers, TUI really struggled during the pandemic. But I would say that zooming out from the current chaos, things are looking much brighter. Second quarter revenue has mushroomed from 0.2 billion euros last year, to 2.1 billion euros this year. So that is as demand is ramping back up again, as we've been talking about. Also the group operated 71% of pre-pandemic capacity in the same period. So things are definitely on the up. As always though, there are a couple of things to keep in mind. TUI doesn't just run flights, it has a much wider holiday package business, as a lot of our listeners are going to be aware. In some ways that makes TUI more defensive, you know it has more to offer and plenty of cross-selling opportunities. But getting capacity back up to full whack is a much higher priority. The drains on cash when you have planes and huge hotels to fill are enormous. TUI has said that hotels and resorts, that's the name of that main segment, delivered a third consecutive quarter of positive underlying operating profits since the start of the pandemic. Occupancies and average rates are expected to, and this is a quote from them "develop strongly through the second half". Now this all sounds great, but we need proof of a solid summer trading period. TUI has also announced a capital raise of up to 162.3 million shares, which works out at around 10% of the group share capital or about, 400 million pounds as of the value before this announcement was made. That's as it looks to reduce debt and government funding. Now, again, this is a step in the right direction in my view, but there is still an inherent liquidity risk, which won't be extinguished until operations are back up and running at full speed unfortunately.

Susannah: easyJet has also been grabbing the headlines, hasn't it?

Sophie: Yes as you've said, another name facing the wrath of some very angry customers with mass cancellations is easyJet. The crux of the issue is, that the group can't meet the surges in demand after cutting back its workforce so drastically during the pandemic. And obviously this isn't a good look. It does point to a positive, and that is that easyJet has seen demand rebound strongly. I mean, half year pre-tax losses were 545 million pounds compared to 701 million pounds in the same period last year. Now that was at the better end of expectations and reflects an increase in revenue from 240 million to 1.5 billion pounds. So that's obviously, you know, good news there and capacity as well, and another interesting stat here. Capacity was 30.3 million seats, up significantly on 6.4 million last year. There's a broader point I'd also say that a focus on short-haul travel puts easyJet in a better position than its long-haul rivals when it comes to capturing returning passengers. UK beach and leisure routes looks set to benefit from pent-up travel demand in the aftermath of omicron and that is showing. There's also an argument that the cost of living crisis isn't having as much of an effect as feared. You know, the importance of holidays is so much greater this year and I know that personally, I'm desperate. I'm going away in two weeks and cannot wait. But a full blown recession would see holidays put on the non-priority list. That is something to to keep in mind. All in things are looking up for easyJet, especially because of its focus on profitable Western European routes within major airports, and that's an approach that sets easyJet apart from other low-cost carriers, who kind of trim costs by flying in and out of smaller, less convenient airports. Last we heard back in mid May, easyJet plan to fly 90% of pre-pandemic capacity in the current quarter, which is testament to that strategy. Now it's ability to meet this target rests on how fast the group can ramp up its operations back to where they need to be. I'm cautiously optimistic, but that probably means I've jinxed it now.

Susannah: And what about the owner of British Airways IAG, what's it looking like?

Sophie: So yes, poor IAG, which as you've just mentioned, owns British Airways. I have sympathy because now is such a hard time to be a long-haul carrier. I think I've talked about IAG before, so I won't go on for too long here. Operationally IAG's current airport chaos stems from the same reasons as everybody else. The real kicker is that IAG is looking at a longer road to recovery in all likelihood. It will be a while before business class cabins to Chicago are filling up compared to say a short hop to the likes of Paris. So really the story is the same, a lot is resting on the crucial summer season for IAG. I'd argue that British Airways' strong brand gives the group some real firepower, but there is work to be done. We'd previously heard IAG plans to be profitable in this current quarter. So long as there wasn't further disruption, that was the wording. So we'll find out soon how much damage these cancellations have caused. The group had tried hard to avoid this scenario by holding back on capacity expansion, following previous disruption. As a bit of context for where IAG is, IAG reported an underlying operating loss of 754 million euros in the first quarter. Now that is an improvement though, on last year's negative 1.1 billion euros. Definitely one to monitor.

Sarah: Thanks Sophie. Some really mixed fortunes for the industry, and it'll be interesting to see what happens to these companies over the coming months.

Susannah: Just a reminder, before we move on, that it's the quiz coming up later and I've got a teaser for you just to mull over the next, uh, few minutes. Now, back in the 1980s, American Airlines famously saved tens of thousands of dollars a year by getting rid of a single item in their airline food. What was it? Answers coming up later!

Sarah: Oh, I got my thinking cap on already, but now I'm gonna bring in Emma Wall, our Head of Investment Research and Analysis here at Hargreaves Lansdown. She's been talking to Peter Meany, Head of Global Listed Infrastructure at First Sentier Investors.

Emma: Hi Peter.

Peter: Hi Emma.

Emma: Thanks very much for joining us from down under. Appreciate you taking the time, despite the time difference. We're talking about travel and in particular about the mess in the moment in Europe, within the airline industry. Now you run an infrastructure fund and, and have airport holdings. How are you analysing the current disruption within the industry?

Peter: Yeah, I guess with airports, you really need to take both a long-term perspective and be aware of the short-term. The long-term case for airport investments is very positive. You know, there's been structural growth in passenger volumes, typically two times GDP or economic growth over the long-term. The structure of airports in terms of the way that they make money, typically around about half of the airport earns a regulated return on the runways and terminals like the air side of the operations. So that can be a steady return through the cycle. And then the other half, you know, things like hotels, duty free shopping, logistics, parks, cargo around the airport, can earn exceptional returns in the right regulatory environment. So we really like airports as an asset class, but in the short-term, there's no doubt that event risks such as September 11 and SARS, and COVID, you know, can create a lot of volatility in the short-term. So it's a matter of balancing those two impacts.

Emma: And of course COVID created significantly less demand. What we've got now as an issue is too high demand for supply staffing issues. We've had, you know, over the last couple of weeks in the UK and across Europe flights being grounded, delayed, cancelled entirely. How do you sort of look through that because that obviously will have an impact on the airports themselves. Is this just transient, do you expect this to improve? Do you remain focused on the kind of long-term attributes as you just previously mentioned?

Peter: Yeah, we're certainly focused on the long-term and I think when we're making investments, we'll typically look for a three to five year investment horizon. But there's certainly stocks that we've owned for the full 15 years that our strategies have been running in listed infrastructure. But, you know, I think as an active manager, there's opportunities here to take advantage of that volatility. I think back to March and April of 2020 when COVID first struck, you know, this was an unprecedented impact on airports where volumes, you know, went to zero. It was not something we'd seen since, you know, World War II. And you know, that was very unsettling for a number of stocks, airport stocks around the world. Thankfully going into that crisis, you know, airports was our biggest underweight position in the portfolio. So it gave us an opportunity, uh, to take some profits on things like utilities and wireless towers that had done very well and recycled that into some stocks like Auckland airport in New Zealand. Aena the Spanish airports, were able to pick up some high quality airports at, at very depressed levels. We've now seen a very strong recovery in some of those airports and I think in recent months, the market had probably got a little bit too optimistic at the pace of recovery. And yeah, we could see some growing pains. I myself was traveling around Europe for two weeks just a few weeks ago and observed, you know, through Dublin airport, um, you know, Paris, Frankfurt, Zurich, you know, there, there's definitely some capacity constraints that are coming through.

Emma: And then looking forward into next year, you know, you started our chat by talking about the growth that you can typically expect in airports that nothing is guaranteed is, is linked to economic growth. Now, the economic forecast for 2023 doesn't look too bright. How are you playing those figures as your sort of forecasting of returns given that we are expecting, or many people are expecting to see a pullback in economic growth, even in a recession, across large parts of, of the globe next year?

Peter: Yeah we probably need to break the airport drivers into a few key areas to think about this. I think the first one is we've been sceptical through this COVID period on the degree to which long-haul, you know, intercontinental business travel would return. There's no doubt that video conferencing, podcasts, whatever it might be and now much more effective. The technology is much more effective than it's been in the past. And I think, it's now more accepted to communicate with customers around the world virtually. Now I still think it'll be important to do face-to-face meetings and we're definitely getting out on the road again, but our expectation broadly is that we'll only get back to about 80% of 2019 levels for that long-haul, you know, business type traffic. The second thing to think about is leisure and visiting friends and relatives. Our view there is that there's a massive pent-up demand for both of those things. People definitely want to go on holidays again and perhaps experience the sun, particularly if you've been in the UK through a lockdown. And they wanna visit their family and friends that perhaps they haven't seen for three or four or even five years, just because of the timing and extent of COVID. So we are seeing a strong recovery in that part of the market. Aena the Spanish airports, for example, announced that they were back to 90% of 2019 levels in the month of May. We think there's good signs for a full recovery, if not an overshooting of demand. The Mexican airports, like Cancun with US travellers back out in, out and about, they're up to about 120% of 2019 levels, because of that very strong leisure travel. The third one quickly to think about is the Chinese traveller. And maybe I could put in there the Russian traveller as well. Why this is important is, if we look at some of the structural growth that occurred in the sort of 10 or 15 years prior to COVID, the Chinese passenger was a very strong driver of that growth. Depending on the airport around the world and its location, somewhere between 25 and 50% of the growth was driven by Chinese passengers, that middle class discovering the world. There are also very high spenders, Chinese passengers spend about five times an average passenger. So the return of those passengers will be very important.

Emma: Finally Peter, how do you think about ESG as an investor within the leisure sector? You know, thinking about lines in particular and their sort of carbon emissions, but airports too as the facilitator of airlines. How do you factor that into your decision making and indeed what pressures is that putting on you as an asset holder from clients?

Peter: Yeah, no, it's a very important question and airports do have some real challenges on ESG. Some obvious areas are environmental as the carbon emissions from jet fuel and aviation. You know, the takeoff in particular of an aircraft consumes an enormous amount of energy and in-turn carbon. Now there are a lot of efforts being made, particularly by the airlines to aircraft manufacturers to improve the efficiency and they've made significant ground over a number of decades, and there's plenty more to do. From an airport perspective specifically, what they can be doing first of all is reducing their own emissions. Solar panels on the roof of airports to provide their own electricity needs, developing sustainable aviation fuel, storage tanks that the airlines can use in the future. Immediately that will be a blending of fuels, but you know, perhaps long term, will get aircrafts that can work wholly on, on sustainable aviation fuel. On the social side, it's about noise issues would be a critical one. And, you know, Heathrow has certainly been challenged by that key issue. So it's about working with communities to, I guess, find a sensible middle ground. We want airports to be able to grow and, and offer, you know, new destinations and new services. But there has to be a limit to the impact that they can have on you know, their surrounding communities. On governance, you know, I think what's critical is a lot of airport stocks that are listed around the world, particularly in Europe, still do have a significant level of government ownership. You know, Paris, even Aena and Zurich, for example, you know governments will hold about 50% of those airport assets. So we, as minority investors have to think very clearly about whether our interests are aligned with you know, the direction that those companies are taking.

Emma: Peter, thank you very much.

Peter: Thank you.

Susannah: Emma Wall, our Head of Investment Research and Analysis at Hargreaves Lansdown talking to Peter Meany, Head of Global Listed Infrastructure at First Sentier Investors on the 10th of June, 2022. Now please bear in mind that these are the views of the fund manager and are not individual stock recommendations. You're listening to Switch Your Money On from Hargreaves Landsdown.

Sarah: And finally, it's time for the quiz. And Susannah tells me she's been exploring some of the strange effects about flying. You know, it's actually been so long since I've been on a plane. You could probably catch me out by just asking something simple. Like, I dunno, like whether your carry on luggage is bigger or smaller than a loaf of bread nowadays.

Susannah: I'm sure in some cases it's smaller than a bread roll, but don't worry. We'll steer clear of luggage allowances. Let's stick with food. In the 1980s, American Airlines famously saved tens of thousands of dollars a year by getting rid of a single item in their airline food. I trailed this earlier, Sarah, so you've had plenty of time to think about it. Was it a single olive, a strawberry or a bread roll?

Sarah: I've actually heard of this one because it was such a massive saving from such a small change. I actually think it was the olive.

Susannah: Yes, it's become a bit of a poster fruit for cutting the cost that people don't notice. Ok, let's stick with airline food now and generally this type of food is considered to be pretty grim, but that's partly because our taste buds are suppressed at 30,000 feet. So we taste things like sugar and salt, less strongly. Now, as a result, airline food is really pumped full of both in fact, around 20 to 30% more of both, but on a typical long haul flight, just how many calories do you think you'll be served? Is it around one and a half thousand, two and a half thousand or three and a half thousand?

Sarah: Well, I can't imagine it's three and a half thousand. I think even my teenage son would draw the line at getting through that many calories in that period of time. I mean, it feels like two and a half thousand's too much as well, but I'm just, I'll take a risk. I'll go down that one. I'll pick two and a half thousand calories.

Suannah: I'm sorry. No, it's an incredible three and a half thousand. That has to be a really horrible statistic for anyone who flies regularly. You've really gotta increase the size of the seatbelt. Ok, I think we might have had enough of airline food. I'm afraid this one is slightly darker, quite literally. Do you know why they dim the lights on a plane for takeoff during the evening and night? Is it to encourage you to sleep to get you used to the dark? Or is it so the pilots aren't distracted by the light pollution?

Sarah: I do love the idea of pilots getting really grumpy about light pollution. It is like when my kids switch the lights on, in the back of the car at night without warning me, but I don't think it's that I, oh gosh, I have no idea. Um, I'll say it's to help you get to sleep.

Suannah: Nope. Sorry. It's actually to get you used to the dark in case of an emergency. So if the plane loses power and lands, they want your eyes to be more accustomed. So you're not trying to find the exits in darkness. It's actually why they want to check to see that the blinds are all open too. Ok, let's get back to something lighter now. So back in 2017 City airport revealed the items that were most likely to be confiscated from hand luggage. Top of the list was snow globes, believe it or not, which is odd enough, but which food stuff was most likely to be removed? Was it jam, pickles and chutneys or Marmite?

Sarah: Oh blimey. Well, I can't think of any destination you'd end up in where jam was unavailable. So it can't be that. And I suppose if you love a particular brand of pickle, you might panic if you'd have to go a week without it. But no, I think surely it must be Marmite if you love it, you couldn't possibly spend your holiday without it.

Susannah: Very true. I certainly couldn't. Well, maybe I could for, for a week or two, but I'm afraid you are wrong. It was jam. Although the others did feature in the top 10, along with toiletries, olive oil and Nutella, it's so odd, isn't it? What we feel that we can't live without on holiday, although it does, of course explain all the things I was trying to cram into the car last week. I think actually we did have a pot of each at some point over the journey.

Sarah: I'm actually attempting a trip this summer with, with only hand luggage. And it's really, it's only just occurred to me that I won't be able to pack the Nutella.

Suannah: It sounds like grounds for cancelling the trip entirely, Sarah.

Susannah: Well, that's all from us for this time, but before we go, we do need to remind you that this was recorded on the 13th of June, 2022 and all information was correct at the time of recording.

Sarah: Nothing in this podcast is personal advice. You should seek advice if you're not sure what's right for you. Investments rise and fall in value so you could get back less than you invest and past performance isn't a guide to the future.

Susannah: Yes, this is not advice or a recommendation to buy, sell, or hold any investment. No view is given on the present or future of value or price of any investment and investors should form their own view on any proposed investment.

Sarah: And this hasn't been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

Susannah:Non-independent research disclosure is not subject to FCA rules, prohibiting dealing ahead of research. However, HL has put controls in place, including dealing restrictions, physical and information barriers to manage potential conflicts of interest presented by such dealing.

Sarah: You can see our full non-independent research disclosure on our website for more information. So all that is left is for me to thank our guests, Oliver, Peter, Sophie, Emma, and our producer Elizabeth Hotson.

Susannah: Thank you so much for listening. We'll be back again soon. So if you enjoy this podcast, please do let us know what you think and do subscribe wherever you get your podcast. So get a fresh new episode in your inbox as soon as it's ready. Goodbye.