Jet2 CEO Steve Heapy: ‘I’m quite happy to put the boot into rivals. Some of them tarnished the entire holiday industry’
Q It’s 20 years this year since Jet2’s launch. Are you proud of what has been achieved?
A When Jet2 started it had two aircraft — two 737s in Leeds. Since then it has grown to what will be, this summer, 105 aircraft in 10 bases in the UK. We’re now the third-largest airline in the UK and officially the second-largest tour operator behind Tui (although we’re the biggest in the Med). We’ve grown organically, not by spending lots of money buying other companies, and we’ve done it while maintaining our exceptionally high levels of customer service.
Q What would you say to readers who say Jet2 is cheap and cheerful and not really for them?
A The perception that we’re cheap and cheerful is misplaced. Well over 50 per cent of our holidays are four and five-star. Our Indulgent Escapes brand is top-of-the-range five stars, and only 118 hotels from more than 4,000 make it into that brochure. Then we’ve got our Luxe Collection, which is hotels that excel in their category but are not quite Indulgent Escapes level; and then we’ve got our Jet2 product for three to five-star hotels. We also offer a city-break product, a villa product, and we’ve got our Vibe product, which is a collection of properties for younger people. They want something a little cooler, a little more contemporary — the sort of place I wouldn’t fit in, being a rather overweight man in holiday clothes I’ve had for 15 years.
Q The cost-of-living crisis is colliding with huge pent-up demand. Which will win out?
A The good thing about holidays is people will always want them. I’ve not been on holiday for three years and I want to go away, and many other people do too. I think people will forgo many things in life before they sacrifice their holiday. It has been a very hard two to three years, and you’re starting to hear about some of the fallout from the pandemic and the mental health problems. I’m bound to say this, but a holiday is very good for mental health. It’s something that’s very important to us, making customers feel like VIPs. Some people spend 50 weeks of the year serving other people — in cafés, bars, shops, restaurants — and they want to be served and looked after occasionally.
Q Are you back to pre-pandemic levels now?
A We’re double-figures up in percentage terms on 2019. We’ve increased our capacity to Turkey, Croatia, Madeira, and massively to Greece. We bought Thomas Cook’s Greek [airport] slots when it went bust, and that’s enabled us to grow enormously. As long as there are no further lockdowns or escalation in Ukraine, it will be a good year.
Q You’ve recently launched your net-zero pledge. Do you really see the environment as a key priority for your holiday-starved customers?
A No, I don’t, but in the next 12, 24, 36 months, and probably for ever, the environment will be something that gains traction and more attention from governments as they try to hit their targets. They could just take the easy way out and go on taxing people, but that isn’t the answer. The UK government raises an enormous amount of money through its carbon-credit scheme, in which airlines have to buy credits. It and the EU collect billions in the name of the environment every year, but don’t spend that on the environment — it just goes into central government coffers. This is something we’re calling for. You might think they’d build the odd wind farm or something, but they don’t — maybe they’re too busy spending it on parties.
Jet2 has increased its services to Turkey
Q Where’s the value going to be this summer, and why?
A The cost-of-living crisis is obviously hitting hotels and their rates — and therefore the cost of holidays — may creep up. Turkey will be good value, though — it normally has quite a sizeable market from eastern Europe, Russia and Ukraine, and will want to act to fill those gaps.
Q How do you look back on the refund saga early in the pandemic?
A When you look at the actions of some of our competitors who either delayed or refused to pay back money — put another way, they stole money — well, I’m quite happy to put the boot into those rivals, because they acted very irresponsibly. They treated their customers with disdain and tarnished the reputation of the holiday industry. Some of these companies should hang their heads in shame. The industry now has a reputation similar to that of estate agents and bankers, and that’s not right.
Q Did things ever get desperate for Jet2 in the peak of the pandemic?
A No, we took very early action. We did two share issues and a convertible bond, going to the markets to raise cash early. You have to raise cash from a position of strength and not wait until the last minute. We were in a very good place, and were able to look after our employees and top up furlough payments etc. We were never in dire straits. I was always very confident that we would come out of the other side of this not limping but sprinting out of the blocks, and we’ve demonstrated that.
Q Is it time to change the way holidays are paid for?
A The trouble is that some companies effectively borrow off their customers; they use their customers’ cash to trade with, and it’s a bit like a run on a bank — when all the customers want their money back, they don’t have the funds to cover that. We don’t do that. We have our own cash in the bank and don’t treat customers’ cash as our own. Trailfinders was another one that acted very honourably and we’re a fan of the trust-account approach they advocate. We internally segregate customers’ money, keeping it absolutely separate, and we are supportive of the Civil Aviation Authority’s proposals whereby customer money will be ring-fenced.
Q But won’t that penalise smaller operators without your volume or cash flow?
A I’d like to see some assistance given to the smaller operators to transition to the new order. It is a big ask when things suddenly change, I understand that. I’m a big fan of competition — some of the smaller agents and operators provide a fantastic service, and they’re a vibrant and innovative part of the holiday sector. There’s a lot of passion there and a lot of expertise.
Increased fuel costs could lead to higher flight prices
Q Will soaring fuel costs lead to a rise in prices of holidays that have already been booked?
A With Jet2 Holidays, if you book a holiday or a flight, the price is the price. We won’t go back to the customers and ask for a surcharge. We hedge our fuel, so we’ve got a pretty certain cost base. The consumer is protected. What we wouldn’t do is raise the prices retrospectively for customers, but we may have to raise the prices going forward, so it does make sense to book early.
Q Punters hate ancillary airline costs, but they’re on the rise. How vital are they for Jet2’s business model?
A The trouble is that people don’t like paying for ancillaries, but the alternative would be to include all those items in the price of a ticket or a holiday, even though not everybody wants them — so you would get a similar amount of noise from people saying you’ve included this in the price and I don’t want it. We start off by having a basic price going from A to B, and if you want to take a bag and have a meal we can do that. But airlines are low-margin, and we do need to be profitable to invest in new aircraft. We’ve just ordered 75 brand-new Airbus A321s and that has a total list price — before discounts — of £10.1 billion, so we do have to make money to invest in new-generation greener aircraft.
Q Jet2 carried 14.4 million passengers in 2019. What’s the target for 2022, then 2023?
A In 2022 we’ll fly about 17 million, and 2023 — we’ve not reached the final number, but it will be higher than that.
Q Any plans to take the company long-haul?
A Not at the moment. We’re already the biggest tour operator to the Med, and I think there’s a lot more we can do there. It’s always very dangerous for a company to get carried away and want to start taking over the world. But never say never.
Blackpool Tower, Lancashire
Get to know Steve Heapy in 30 seconds
Canaries or Balearics?
Côte d’Azur or Amalfi Coast?
Pink Floyd or Ed Sheeran?
Rugby league or rugby union?
Brighton or Blackpool?
Favourite UK airport?
That’s a bit unfair. I’m going to have to say Manchester because it’s my local
Economy or business class?
Economy — we have great legroom
Train or plane?
Plane internationally; train domestic
Cocktail or lager?
Neither — it’s Guinness for me
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