Good morning, ladies and gentlemen. Thank you for coming to this Capital Market Day of IAG. I'm glad to welcome you jointly with the management team and with another full member of our board, Marjorie, Patrick, Alberto, Marc. We are sharing this day and this presentation with you, seven out of the 12 board member of IAG. I'm glad for that. The first thing I want to put in common with you is a wonderful news that IAG was officially granted yesterday the investment-grade status by credit agencies. Moody's awarded the Baa3, and Standard & Poor's, the BBB-. This reflect the continued strength of our business, provide a solid platform to deliver the group financial target, and is giving IAG access to a broader range of financing alternatives and at a lower cost. We're happy for it, and we believe it's a wonderful news.
Just a few remark as far as the economic environment, which, in general, has been in 2018, positive in our core market with some unsurprisingly, part of Latin America showing some softness in the last quarter, in the third quarter. The rise in oil price has been posing a challenge in the company, We have been so far successfully in mitigate this impact with the hedging, with the revenue management, and with the cost control. Perhaps of even more concern is the disruption caused by the tightness of the air traffic control in Europe and the regular ATC strikes in France during the last summer.
As far as Brexit is concerned, Brexit's uncertainty has so far not affected IAG's underlying trading environment up to now, that we're confident that we will be able to operate as normal beyond March 29 next year, contingency plans are in place in the event of no deal. We are engaging with all the governments and authorities related to Brexit in such a way that we remain confident that a comprehensive air transport deal will be agreed between the European Union and the United Kingdom. As a matter of fact, the liberalization of the aviation has been a great success story benefiting millions and millions of people and is of the essence that a kind of agreement has to be reached.
As far as shareholder returns and capital allocation is concerned, we have announced an interim dividend at the presentation of the result of the last quarter last week of EUR 0.145, which means it's 16% higher than the EUR 0.125 a year ago. This demonstrate the board's confidence on IAG financial strength and the outlook of the company. Last week, we also completed the second share buyback program of EUR 500 million to make a total cash return to shareholder this year of over EUR 1 billion. In total, following the recent interim dividend announcement, we will have returned EUR 2.7 billion to shareholders since IAG started paying dividend in 2015. Shareholder cash return in 2018 represented yield of around 8% of the current share price, which is placing us in the top 10 FTSE 100 entities, excluding financial companies.
Regarding the excess of capital, the board is and will be routinely evaluating M&A opportunities versus shareholder return. As far as the governance and the environmental sustainability is concerned, two new members have joined the IAG board since the last Capital Markets Day, having Nicola Shaw and Deborah Kerr. Nicola in January, Deborah in the month of July. Nicola brings substantial experience in the transport sector, public policy, regulatory affairs, and she's currently Executive Director of National Grid and is a former non-executive director of Aer Lingus. Deborah brings invaluable technology and IT experience to the board, including relevant airline technology experience and having spent much of her career in Sabre and Hewlett Packard. She also brings a very substantial knowledge of the U.S. environment.
Finally, as far as the governance of the company is concerned, I'm pleased to share with you that we have been awarded by the top prize for corporate governance in Spain, which is Manuel Olivencia Award. It's equivalent to the Lord Davies of the U.K. prize, which means that the investment community in Spain is recognizing the effort of IAG as far as the corporate governance is concerned. I hope you will enjoy the presentation today. You will have a lot of information from our company. I hand over to Willie Walsh.
Thank you, Antonio. Good morning, everyone. Welcome. As Andrew said, this is our eighth Capital Markets Day, or if I include British Airways, now my 14th, and I think we're getting better at it, so I think you'll enjoy today. We're going to do it slightly different in that we've included a couple of slides in the presentation which set out the investment case for IAG, and you will have seen those slides before, but we're just going to elaborate a little bit on that before we get into the specific presentations from each of the operating companies. Those of you who will have listened to me over the years will remember that I've been arguing that this is a excuse me, a very different industry today than the one that I joined almost 40 years ago now. We've seen a lot of change.
A lot of issues have finally been addressed, and I believe we're now in a position to really look forward with great confidence about investing in this industry. We'll talk a little bit about this as we go through the presentation. Our initial focus will be on the left-hand side of the chart. You'll get the operating companies, we'll talk about their individual plans, and then Enrique will come back and talk about the right-hand side of the chart before at the end of the day, we give you an opportunity to ask us questions. This is a good industry. It's always been a growth industry, but as you can see from this chart, it's never really been, until recently, an industry that creates value. We've talked about this a lot over the years. You can see the performance of the industry between 1947 and 2009.
Very significant growth, but destruction of value. That has changed. I have argued that it changed some time ago, but you can particularly trace it back to behavior in the industry following the collapse of Lehman's in 2008 and the way the industry responded to that crisis, the speed with which it responded, and the approach that was adopted to the rational growth and capacity alignment post that crisis. That has led to a much more favorable position in the period in the past 8 years, 2010 to 2017. Still strong growth, 6% compound, but very profitable. For those of you who say, "Well, that's because of the oil price," you've got to remember, in the 10 years prior to this, so 2000 to 2009, oil represented about 21% of the industry's cost base. During that period, the net losses were about $48 billion.
In the period 2010 to 2017, oil represents around 28% at an industry LEVEL, you can see the profitability. This is an industry that has adapted to the volatility in the oil price and adapted to a higher oil price. I think we've demonstrated that very well from an IAG point of view during 2018 with the financial performance that we have reported to date. What's behind this big change? I think there are a number of issues. We've seen less state intervention. We still see some political intervention, but we don't see financial intervention in the way we did in the past. The weak state-owned airlines either wither or they die, that's a positive, they're replaced by efficient airlines.
A rule of thumb we use is that about 70% of the capacity that they provided gets replaced by efficient airlines, clearly making the industry more efficient. I believe that's going to be an even more important feature going forward. We've seen restructured labor agreements. In the U.S., that's been through Chapter 11. In Europe, it's been through hard work, I think we've demonstrated that better than anybody else. We've seen technology. We've seen a shift in how we engage with our customers, how we engage with, as Stephen would say, our guests. We've given them greater visibility, greater choice, we've reduced our costs. A great example of where cost reduction leads to improved efficiency and better customer service, that's the feature of all of the investments that we make in our airlines today.
You can see, we've looked at additional ways of getting the maximum amount from our customers in a way that gives them the choice. We're responding to consumer-driven demands, we're responding in a way that makes sense and makes profit for our industry. Most importantly, I think we've got a different breed of management, different breed of executives, driven to ensure that shareholders get rewarded for their trust, their investment in the industry in a way that you hadn't seen in the past. That's much more common today. I think there have always been very good airlines. Historically, you look at Southwest, you look at Ryanair, who've always been driven to do that. More and more, we see that as a feature of the industry and a feature of the executives within the industry. Clearly then, consolidation has played its part.
The consolidation is something that we talk about a lot in the U.S. because you've seen significant consolidation there. This shows seat share. You can see the top five U.S. carriers with 86% of the total market. That's been well-documented, and I think has been one of the reasons why the industry in the U.S. has proven to be more profitable in recent years. The industry in Europe is more fragmented, and that's well known. Actually, there has been consolidation too, and it's probably not as recognized the LEVEL of consolidation that has taken place in Europe in the past 10 years or so. You can see here, 63% of the market, again, seats with the top five carriers. More fragmented, but equally a consolidated industry.
Nobody can argue that it's not competitive. I would argue, in fact, that the intra-European market is probably one of the most competitive, if not the most competitive industries around. Yet we have been able to do this and be profitable. To give better customer service, better choice, a wider range of opportunities for customers, and better profitability. If you look at the way that consolidation has taken place, it has been quite interesting. You can see, obviously, going back to 2008, we're at 43% in the top five, now 63%. Clearly, that's been as a result of the consolidation that has taken place, but also a result of the weak leaving the industry. Importantly, although barriers to entry remain relatively low, fewer new entrants.
That's because we see better quality investors as well, no longer prepared to give their money to people who will absolutely destroy it. The industry is a more rational industry. Good growth, 2% compound. The consolidated part of the industry has grown by over 6% compound, and the others have shrunk naturally as a result of that consolidation, but also as a result of the weak leaving the industry. If I look at long haul, it's a slightly different picture, but actually a very interesting scenario that sometimes is overlooked by people who aren't close to the industry. I point to the pink bar here. This is the amount of capacity by the top three. These are long-haul ASK into or out of Europe. It's a very interesting scenario. You can see there the top three non-JBA, 33% to 33%.
What has happened is in the joint businesses, the joint ventures, which is a form of consolidation. Not the most efficient form of consolidation, but it is a form of consolidation, has grown from 1% to 19%. Obviously, another feature of this has been the development of the Middle East, the big Middle East carriers going from 4% in 2008 to 9%. Equally, long haul has seen some consolidation, remains highly competitive, a lot of choice, good value, and significant growth in that market. Indeed, faster growth, 3.8% compound over the period. Consolidation has taken place in the industry and has been part of the solution to the industry's historical chronic loss-making performance. We've played an important part in that. Since we created IAG, we've seen the first full year of the Transatlantic joint business.
That agreement was signed in October 2010, just before the merger and the creation of IAG. We've seen the acquisition of BMI, very efficient acquisition. An important development for British Airways. As you know, it was principally around the slot portfolio that BMI had at Heathrow, giving us 42 net of the remedies, 42 additional slots at Heathrow, which BA continue to maximize. There's still scope for BA to facilitate their long-haul growth, you'll see Alex talk about that later on. We had the Siberian joint business with JAL. We've seen Finnair join both the Transatlantic and the Siberian joint business. Very efficient acquisitions by IAG. First and foremost, Vueling which has been a great success. Latterly, Aer Lingus, I would argue, probably one of the best acquisitions that anybody has ever made. Obviously, I am a little bit biased, but a great performance.
Stephen is here today, I hope you'll join me later on in congratulating him. Obviously, I'm very sad to see him decide to leave. The right decision for Stephen, the wrong decision for us, but I'm really pleased that he has agreed to stay on the board of Aer Lingus and will continue to provide valuable insight in the way he has during his period there. Sean Doyle, who will take over from Stephen, is also here. Many of you will have met Sean, he is here today and I hope you'll take the opportunity to meet with him. We have a joint business. We're the only ones with a joint business with one of the Middle East carriers, that's been very efficient for us.
The scale of activity there may not be very large relative to the other joint business, but there is a lot of scope in that relationship. We acquired the Monarch slots. Again, very efficient form of consolidation for IAG. Recently, just the last couple of days, we've had approval from the Chilean authorities in relation to the LATAM joint business. We're evaluating that to better understand. I'll have to be honest, our focus has been very much on these presentations today, so we haven't really had time to get into that in a lot of detail. We will be doing that in consultation with LATAM, to better understand the remedies that the regulator has identified in relation to that. What is unique about IAG?
You could look at this structure and say, "Well, lots of companies have similar structures like this, so what makes you very special?" Well, I would argue we are very special. I would argue that because we were slightly late to the game in terms of consolidation, we were able to witness what others did well and what we believe others did wrong, and we avoided some of those pitfalls. We have a very solid base. We've got a joint cargo business, Avios, our common currency. We do a lot of activity on maintenance and fleet, there's a lot of value to be unlocked there. I think we do that better than anybody else. There's others who talk about that, we've actually taken it to a different LEVEL and do that very well.
We've got IAG GBS, which delivers very efficient back-office support for all of the airlines. Digital. We set it up to exploit the opportunities that are out there, and you'll see some of those here today and I hope to take an opportunity to talk to the people. Very recently, IAG Connect, and you're going to see some more about that later on. We have very efficient airlines, strong brands, competing in different segments of the markets, the full service, the value, and the low cost. We do that in a way that nobody else can do it. When you look above this, we have IAG as the parent company. I've always been annoyed when people talk about us as a holding company. We're not a holding company. We don't just sit there exercising control over the assets or the shares.
We are actively involved in ensuring that we get the maximum amount of efficiency out of the airlines and the businesses within the group. We are, as somebody put it, I like this, we exert vertical and horizontal influence across the group. That sounds like Irish dancing, actually, but that is what we do. We don't just sit there and take what people give to us. We input into the operating airlines in a constructive way. We do this where we believe we can add value. We do this where we take the benefit of all of the experience around the group, and we do it collectively. That's what's important. We have a lot of experience at the center. We use that experience to ensure that we are getting the maximum amount of value out of it.
We set the long-term vision for the group. The operating companies are very focused on what they need to do to ensure they deliver great service to their customers. That they're clear in terms of the market segments they're serving. You'll get a lot more insight into this in a moment. They've got a real understanding of the competition that they face individually and collectively. They have P&L responsibility. That's very important. They are responsible. They are accountable for the financial performance of each of the operating companies. That creates great competition. It creates tension, which is very positive. Actually, let's be honest, we have a bit of fun around this as well. We are different. We're different, and that difference makes us better and makes us more efficient. That's proven, I think, in the way we operate.
It's a very simple structure. We're based on one of the floor plates here at British Airways headquarters. Some of you will have visited us. It's all open plan. I sit in the middle here. I have visibility on pretty much everything that goes on. People like me to be visible. They can see me, I can see them. This is one of the benefits that we have. It's very efficient. We can get together quickly. We can talk to one another when issues arise. Oh, yeah, sorry. This was a photograph taken the other night. You can see the only people in the office are the IR team over there. I think this was taken at about 10:30 at night. You can see from my desk, I can pretty much see 80% of it. If I'm head down, I can hear the people walking by.
It's a very efficient structure, and it enables us to move fast and to address issues in a quick way. This is the Management Committee. We put this in the order in which people normally sit around the table. These positions here, they're sort of permanent because we're always in early. Then there's a bit of jostling for these positions here as people come in and try and get a seat. But that's normally where people will sit. We meet on a weekly basis. You can see we've got the CEOs of the major airlines and the operating entities like Cargo and Avios, and we debate all of the issues. Weekly meeting normally lasts for about three hours, and then once a week we meet for seven or eight hours to discuss more strategic issues. That, again, is the benefit of this.
We have time to debate the big issues in a way that an operating airline gets distracted by the day-to-day operational challenges. We've seen a lot of those, particularly from ATC, in the past year. Why are we different? Well, I would say parent neutrality is probably one of the keys. We are completely neutral. There are some people who will say I show favoritism towards Aer Lingus. I don't. I have clearly a fondness for Aer Lingus, but I like Aer Lingus because of the financial performance that it delivers. That's why Aer Lingus gets favorable treatment because they are delivering. Now if they don't deliver to the way they are, somebody else will get more favorable treatment. We are completely neutral. This is important because other structures don't have that neutrality. They're dominated by the lead brands.
That is inefficient because that will always lead to investment that is favorable to the brand rather than favorable to the financial performance and favorable to the shareholders. We've seen that. It's the reason we are the only ones who have successfully been able to develop a low-cost airline as a subsidiary of one of the full-service airlines. Iberia Express as a subsidiary of Iberia. Two reasons for that. The first is Luis Gallego, who set it up. He has an interest in ensuring that that is successful. The second is, we at IAG won't allow what traditionally happens, and that is where the parent company tries to kill the young, efficient, low cost. That's historically what has happened because they don't want to see the competition. They don't want to see the difference in efficiency. We love it. We thrive on it.
That makes us different to others who have tried to do this. That makes us more efficient, more targeted, and for you, a better investment. You can see some of the other issues. We've got complimentary hubs. When we did this first, we spelt that complimentary with an I instead of an E, and I said, "I love that. Free hubs." Unfortunately, they're not. We have to pay for them. Plug and play. We can put in new parts to this and get efficiency very quickly. We've got very robust positioning, and I think an extremely attractive portfolio of businesses and brands, and Robert's going to talk about that in a moment. It also, as I said, enables us to move fast. We've got a track record in terms of value creation. I think it speaks for itself.
We set ourselves challenging targets, but targets that we believe are right for the business and can be achieved, and they're balanced targets. We don't drive the business to achieve one target. We have a balanced approach. We ensure that the targets are right, but that they facilitate investment in the right areas, proving that we can make investments that make a proper return. We faced up to the tough challenges. We've talked about the transformation of Iberia, which I believe is an example, probably the best example of true transformation in the airline industry. A fantastic turnaround. As a result of the acquisitions, we've been able to see margin expansion. Efficient acquisitions to date. Speed, we can move fast. The launch of LEVEL I think is a great example of that. We talked about it at our annual strategy meeting with the board in September 2016.
Our original intention actually was to look at launching long-haul, low-cost in 2018, but we believed we could do better than that. We got board approval in February. We announced the launch of LEVEL from Barcelona on the 17th of March. We got flying, the first flight from Barcelona to Los Angeles on the 1st of June 2017. Very short periods, very clear, very concise analysis. Absolutely focused on what it is we wanted to do. Short lead-in time, but very efficient launch, and that's been a great success. We did the same then with LEVEL out of Paris, the second long-haul base for LEVEL, and LEVEL out of Vienna. We can move quickly. We're not afraid to make some mistakes. We learn from our mistakes. We become better. If we get something that we got wrong, we correct it and we move on.
This is a business that's very efficient, facilitated by the structure that we have, and we'll continue to do that. We've got an excellent platform. Synergies can be delivered very quickly. This really does work for you. You can see some of the things that we've done here. Joint cargo to ensure that we get the maximum benefit out of the global network that we have. Very important from a cargo point of view. Going through to the creation of digital, and as I said, you'll see examples of that today. How do we work? What is the process that we follow? Well, actually, it's quite simple. When we look at our business planning cycle, the team at the center in our strategy and finance department get together with the strategy people in the airlines. We agree a common set of fundamentals.
We look at what's the fuel price going to be. We don't have four different fuel prices. We look at GDP growth across the globe, particularly in our key markets. We look at what inflation is going to be. We get a common view on that. This helps then to be able to get a common approach to all of these issues. We start off getting the framework right. At the center, we say, "Here's what we want to focus on this planning cycle." The operating companies go and they look at the size and the shape and the competition. What are their competitors going to do? They would take their first cut at what the network developments would be, the investments that they would require, particularly around fleet, but also non-fleet. They come back, and they present that.
We collectively assess this at the management committee, we share the benefit. It is really important. If you get Iberia flying to Latin America and BA flying to Latin America, they should have a common understanding of that market. Clearly, Iberia has a better understanding of the market, given their presence, their history, their knowledge, their people on the floor there. They can tap into greater sources of information. We share that to ensure that we get to a common position that makes sense. The operating companies understand better what their individual competitors will be doing in each of those markets. It is an iterative process. We bring it back, we debate it, finally, we take it to the management committee, where we, as a group, sign off on each of the plans.
We sign off on the individual operating company plan, we sign off on the collective plan before we bring it to the Board. Normally in September, we spend two and a half days with our Board debating that, discussing all of the issues that we have identified, getting great constructive challenge from our Board members. We go back after that challenge. We finalize it, we bring it back in October, to get approved by the Board, we present it to you. That is the process that we follow. It is very efficient. It does not take up a lot of resources. It maximizes the value of the resources at the center to ensure that each of the individual operating companies do not have to go off and do all of this work on their own. It maximizes the intelligence and the network that we have around the table.
An efficient process, which then clearly identifies where the capital is going to be allocated and allocating that capital in the most efficient way. Cost efficiency. I have always been proud of what we have achieved in improving our cost performance. Some people think cost focus is wrong. It suggests something negative. I completely disagree. To me, this is all about efficiency. This is how do we drive this industry to be more efficient. I think we do that very well, there is a lot more that we can do. The track record is excellent. 11.5% reduction to date, you can see it is not even. We will make investments when investments need to be made. We are not afraid to make investments. In fact, that is the beauty of this.
We know that to ensure that we have long-term value being created in this business, we have got to invest in each of the operating companies today. We have targeted investment knowing that we will get a proper return on those. Investments will be made, but there is a lot more that we can do. Group synergies. We have delivered and exceeded all of the targets that we had set for ourselves. This is very important because people take that for granted. They look at the financial performance of British Airways and they say, "Well, BA is great on its own." BA is good on its own, but BA is great because of the efficiency that BA gets from the synergies that have been created by IAG. BA's financial performance would not be as strong today if it was a standalone entity.
The same applies to all of the airlines within the group. There is still more to come. You've got British Airways Plan Four, which is being developed. Plan de Futuro Part Two that we'll talk about. Vueling. Aer Lingus, fantastic success, this simple value model. Grow the business, reduce your unit cost, use that reduction in unit cost to offer lower fares, drive demand, grow your business, reduce your unit cost. It's fantastic, and it's proven to work. It's been a great demonstration of how we can take an efficient airline that had ambition and allow it to really unleash the potential of the business as part of the group. We'll talk about LEVEL as well. We believe that this is a segment of the market that will be profitable, that can be profitable, that should be profitable, but only if you've got the right model.
Some of the people in this segment have not got a model that will work. We believe we have. If you look at our performance versus some of our competitors, I'm not going to identify them. You're all the experts in this area, so you can identify them for yourselves. It's good. It's a good track record. We have this target of 1% improvement per annum, non-fuel unit cost. It's not going to be 1% every year. It's a target that we believe is relevant and achievable. Some years we'll do better than that, and some years we won't do as well. Some years we'll be making investments, and therefore, that 1% will not be achieved. That investment will deliver the cumulative 1% as we go forward. That's important. We don't look at this on a one-year planning cycle.
We look at this on at least five years, and in many cases longer than five years because many of the investments we will make will be long-term investments for the benefit of the business. A good track record to date relative to our competitors. I know you guys love these charts. We look at it all the time, so we stuck it in there so you can have something to look at during the coffee break. We're well-positioned. Each of the individual airlines well-positioned against their major competitors. I've always said this. Ryanair is an excellent company with a very efficient cost base. We do a lot of things really well, and they do a lot of things really well. We've learned from some of the things they've done.
It's interesting, actually, that I hear them talking about mirroring some of the issues that we've addressed as well. We learn from our competitors, and we're all the time making sure that we're looking at how they've improved their performance and whether there's benefit to us in doing some of the things they've done. Well-positioned in an industry that is well-positioned, in an industry that is different. We are the best in the industry. We are the best because we are unique in terms of how we approach this. We are the best because we've got the best brands and the best hubs, and we have the focus that is required from this industry to ensure that we will have long-term success. I'm going to hand over now to Robert, who'll take you through a more detailed presentation on some of the brand work that we've done.
Thanks, Willie. Good morning, everyone. I'm going to talk about our customers and our brands. Before I get into the customer segmentation and where our brands are positioned in the market, I just wanted to give you a couple of bits of data. First of all, about our geographical mix of revenue. This is the group's revenue split by point of sale. It's probably not a surprise to any of you that the U.K. is our biggest market, 32%. Actually, our second biggest market is North America at 21%. It's a big market for all of our long-haul airlines. After that, obviously Spain, and then the rest of Europe. We are pretty diversified, much more diversified than any of the individual airlines would be by themselves. We're also diversified in terms of the industry sectors of our corporate customers.
This chart here breaks out the mix of our business. You can see there's a large part of our revenue, which is actually in the non-deal, non-premium business. This is largely leisure type traffic. The bit that you are probably most familiar with, which is the big corporations in the financial sector, represents only 2.6% of our group revenue. Although we wouldn't deny that the future of the financial services industry here in London is an important factor for us because we have a very strong position in it. Nowadays, it's wrong to think of that as being the bedrock of the group business. We are very diversified in terms of both geography and industry sector.
About a year ago, we sat down as a management team and with the board and said we want to do a more systematic piece of research to understand our customers, the customer segmentation, and where each of our brands was positioned, and where we wanted it to be positioned. Although the segments that came out of that at a macro LEVEL may look quite straightforward, they're probably what you might have sat down and written if you are familiar with the industry. Behavior, customer choice differs by the trip and the cabin you're flying in, the expectations and the purchasing criteria. The expectations and the purchasing criteria if you're flying in a long-haul business class cabin are very different than if you're taking a one-hour trip in an economy cabin for leisure. Nevertheless, we let this emerge from the data that we did.
We did a very extensive piece of primary market research across all our major markets to make sure we understood both the similarities across the markets and the differences. Actually, we found really an awful lot of commonality across the different geographical markets. One of the aspects that came out of that was what's written here as attitude. Within the economy cabin, even for people flying on leisure, there's actually a split between those that are pretty much just totally price driven and those that are actually making more of a balanced decision. Price, very important, but willing to trade that off against other service attributes. That's what we call here the value mindset, whether you're in a trading down or a trading up mindset.
When you quantify those segments and map them onto a breakdown of the market, you come up with the seven key customer segments or demand spaces, as we call them here. Just to explain the chart, along the vertical axis, you have whether you're traveling for business or whether you're traveling for leisure, and then we've split the leisure travel into the more or less than five hours. That's the point at which the data tells us that the customer behavior, the customer purchasing criteria, really begins to shift in terms of what they're looking for. Interestingly, we don't really see so much of a difference in the business market. Across the page, we have which cabin are they flying in. Right-hand side, you have the premium cabins, so Club World and First in case of BA.
The other two segments split between this value mindset, whether you are essentially pretty purely price driven or whether you're making more of a balanced value decision. Just across the top, we've given you for the market as a whole, how those sort of three big columns break down. Really the point I want to make with this chart is that all of these segments are sizable segments. As a carrier that set itself, or a group that set itself an ambition to be leading in the industry as a whole, we absolutely want to and are players in each of these segments, but with brands and customer propositions and business models that can be successful for the needs of those segments.
One of the other outputs of the work that we did was to really quantify properly what the relative importance of all of the attributes was. Overall, when you look at the typical range of prices in the market from the highest prices to the lowest prices, price drives about 45% of customer buying behavior. Number 2 is network and schedule. Is there a flight at a convenient time? Goes nonstop rather than connecting? That's the second biggest important thing. Brand here is essentially everything else. Brand really stands for both the intangible emotional parts of the brand, but also the functional parts of the experience. What is the seat like? Are you on time and so forth.
Across those segments that I talked about before, and they've lined them up essentially in order of price sensitivity, you can see that the most price commoditized segment of that, no surprise, the short-haul leisure segment, where 52% of the purchasing decision is basically driven by price. Therefore, having the cost base and the right price proposition in the market is absolutely key to success there. Even there, and I think Ryanair has belatedly realized this, actually brand and customer experience is still an important factor, particularly where, as is often the case nowadays, the schedule and the price are the same. That's the point where the brand and the customer experience makes the difference. Likewise, if you go right the way to the other end of the chart, the long-haul premium business segment, there price is still an important component.
30% is still driven by price. Even for our most premium-oriented carriers, making sure that they have the right cost base is still an important factor. I'm going to turn now to the brands themselves. This is all about how the customers perceive brands. Again, this came out of the primary research that we did. This is an illustrative chart just to introduce the concepts that I'm going to talk about in a second. Again, you see the same segments here, the most price sensitive to the most experience sensitive. Examples of a brand, the red brand here would be one that is clearly very oriented. People associate with a classy, high quality, reliable proposition. But you wouldn't go there if you're looking for a cheap seat.
The blue one here is the opposite orientation, where a brand that people strongly associate with value, cheap prices, but not necessarily with top quality. The point in here is that if you try, as many of our competitors do, to serve all parts of this market with a single brand, you tend to end up with a line that looks like that gray line in the middle. Customers don't really associate you with anything. You're a kind of a, "Well, they're an airline. I don't really have any other strong associations with them." We believe that's the wrong way to address the market. We believe that competing with portfolio brands, each of which is targeted properly at the segments, gives us the best overall financial results and coverage. How do our brands stack up?
We start here with all of the brands that were included in our research, which brand came out top? The brand that was associated most strongly with what the customers in that segment were looking for. You can see there, and we did this research in the home markets, so the major markets that we have. Actually, Emirates came out very strongly at the right-hand end of the chart. Probably not too much of a surprise to you. Their marketing is very heavily on the premium traffic. They spend an enormous amount of money to build that brand. They came out as the high point of association there. Again, probably no surprise, if you're looking for a cheap seat, Ryanair's the name that comes most strongly to mind, most strongly associated with price.
Interesting, we see in the long haul frugal space, some of the new airlines like WOW also coming strongly there. A little bit less, a bit more muddled in the middle of the market. Probably easyJet came out the top for the trade up short haul leisure flyer. Actually, Norwegian coming out actually the strongest of the ones we had for if you're traveling on business, but you are on a budget, you're price sensitive, but traveling for the purpose of business. Where do our brands come out? This data is from when we did the research, which is over a year ago now. We're in the process of updating it at the moment. I think it tells you the story of where the brands sit. Brand perceptions change slowly over time. I don't think the positions have changed markedly since.
Our two premium-oriented brands, Iberia and British Airways, came out very strongly, in fact. Again, this is customer perceptions in their home market. Iberia in Spain, British Airways in the U.K. You can see almost only just slightly pipped by Emirates for the leisure indulgence segment, but lagging behind where we wanted to be at the classy business end. Alex will talk more about all the investments we're making to shift the position there. Other note, Iberia came out reasonably poorly on the trade up economy cabin in long haul, and that's really because they didn't have, at the time of this research, a premium economy cabin. About half of the customers in that segment are traveling in a premium economy cabin for long haul, and they didn't have a product. They obviously now launched that.
You can see it out in the foyer, the product they've got in the market. We are starting to see that customer perception shift over time as the product is rolled out. Really, neither of these two brands are the ones you'd want to use if you're aiming for the price-sensitive segment. I often describe it as, if you've got a discount store on the high street, it doesn't matter how good your prices are, how cheap they are. If you put Harrods on the front of the shop, you're not going to sell very many things. The two low-cost brands that we have, Vueling comes out pretty strongly, but with some extra work to do.
LEVEL, this is the perception in Spain, because at the time we ran the research, that was really the only place where the brand was known well enough to get some meaningful results. Vincent will share some more recent results in a second, which reinforce this. Frankly, we got the brand exactly right in terms of the associations that people are looking for in that segment. Aer Lingus is an interesting one. Aer Lingus' biggest and most important market is the U.S. There you can see they come out strongly at the frugal end. They emphasize value, price, and the perceptions are matching that. We put on here by way of just comparison how British Airways is perceived in the U.S. market. Again, not as good as we would like at the far right of the chart.
Also Norwegian, probably the best known of all of the low-cost long haul brands. You can see there that Aer Lingus is just a little bit less associated with price than they are. Probably reflects their positioning. We think the brand and customer experience bit is very important. You've got to get your cost base right. You've got to get your leadership positions and network right, because those are the two biggest drivers of customer choice. Brand and customer experience are crucially important, we believe in having a portfolio that targets between them the different market segments. Although the positioning of our brands is in the right place as to where we want them to be. There's a gap there from we want that first chart where we show who has the best brand for the segment.
We want an IAG brand to be top of all of those segments. The operating companies will talk later about what they're doing with target investment to address that. On the network and schedule point, obviously you get that by having the best network spread of routes, frequency at convenient times, and I'm going to talk a little bit about that now. When we formed IAG back in 2011, we had two brands, Iberia and British Airways, both in the full service carrier space. Over time, through combination of acquisition, organic growth, and organic launch with LEVEL, we've shifted the balance of the portfolio more towards the value price-driven end of the market. As I said, as a group, we believe we can be successful, and we want to be leaders in all of these parts of the market.
Between by today, we've got to the point where actually, almost a quarter of our capacity was actually not in the full service carrier segments. As we play forward the plans that we've got over the next five years, and we'll talk again a little bit later on the growth rates. It's important to recognize that growth is concentrated in that low cost and the value carrier part of the market. So by 2023, if our plans don't change, and undoubtedly plans will have to adapt over that time, but we would see a shift where getting on for a third of the group capacity would be in those value segments. We have great hubs which are complimentary, still with an E, and each can play to its unique strength.
We have Dublin Hub, fantastic positioning from a geographical point of view, some great cost advantages from being the nearest point of Europe to the U.S. We have Iberia with fantastic network positioning for Latin America. Again, the perfect place from a geographical and market point of view. Then we have BA, which I have to put on last, because otherwise you wouldn't see the others. London, a much broader all-round long-haul network from the largest air transport market in the world. We have leadership positions in each of our home cities. I've given you here some data both on a revenue share perspective and on a passenger share perspective as to where IAG sits in each of its main markets.
The difference between the two charts, you can see most strikingly in Dublin, where if you measure by passenger share, which emphasizes the short-haul market, that's the only metric on which we're not number one with Ryanair there being ahead. On a revenue share basis where you bring in the long-haul business with a higher weighting, we're actually the number one even in Dublin. We're not complacent about this position. Only 30% of revenue share in London, our biggest market. We think we can do better over time. As that consolidation story plays out, where the strong get stronger and the weak wither or exit, we believe there's further opportunity. There's a lot of scope there to increase our position in all of our markets. We come with a very good, solid leadership position to build it on.
Between Willie and myself, we've taken you through the top four of these boxes on the left-hand side of the chart. We're not going to talk about innovation just now. I'm going to come back just before the lunch break to talk about that. When we go to the coffee break, which isn't quite yet, but when we do, please, I would encourage you all to go around the corner and visit. We've got four of our startups that we're working with there to tell you about some of the work that we're doing with them in the innovation space. With that, I think I'm going to hand over to Vincent, our newest CEO who's joined the group to talk to you about the LEVEL story. Thank you.
Thanks, Robert. Good morning, everybody. It's a great pleasure for me to be with you guys today. Two months into the role, there's still a lot for me to learn about working as part of the IAG group. I've spent the last two months really getting to understand what LEVEL is all about. We're very much looking forward in future, once I take you through how we're going to do it, to getting that preferential treatment from Willie for delivering the best financial returns in the group. A little bit about me. I think there are two reasons, fundamentally, why IAG selected me for this particular role. The first of those is where I think there's very close alignment between the way that I think about what a low-cost long-haul airline experience should be.
The second part is a combination of different pieces of experience over different parts of my career that were very, very closely tied to the way that the LEVEL model is built. That's low cost, ultra-low-cost experience in Mexico. It's low-cost long-haul experience through the Jetstar Group. It's working in a multi-AOC environment, which I did with TACA, and a multi-brand environment between Qantas and Jetstar. I think that particular combination of global experience with each of those particular different elements ties really, really well into what the LEVEL story is all about. The LEVEL story really is about, I've tried to sum it up in a single sentence, building the customer-centric, technologically enabled airline business model of the future. That to me, for myself and the team, is the particular mission that we have. It's easy enough to say that.
I think every airline in the world would say, "Yes, we're customer-centric." It's very difficult, I think, for an airline to be truly customer-centric when the vast majority of the airline is focused on delivering operational production. The typical vertically integrated model of what an airline is does focus you much more on production and operation than it does towards the customer. As we get to start a new airline model, as we get to build something from scratch, we can build into the design of that business true customer centricity with every element of the business designed around what the customer needs are.
Particularly in the modern world, I'll talk a little bit more about this in a minute, particularly in the modern world, where the customer is being given by technology so much more control than they've ever had before over the way that they purchase and the way that they consume product. Doing that from the design phase of the business is critically important. The technology enables us to deliver a better LEVEL of service, a better LEVEL of product, than historically we would've been able to deliver without that technology. It allows us to lower the cost, but at the same time, allows us to extract more revenue from the consumer than a traditional model. The last part is particularly important. When we think about what an airline is, that vertically integrated model, it's a restrictive structure. It prevents you from being flexible and responsive.
The ship is too big to turn quickly. In the way that we're building LEVEL, we're not building it as an airline, we're building it as a modular structure that enables us to be much more responsive, much more adaptable to change. In the minds of the people involved in the team at least, what we're doing is taking the idea of what an airline is to a whole new LEVEL. It's not about where we are today, it's about where we're going to be in 10 years' time, in 20 years' time as an industry. We want to make sure that LEVEL is the vehicle which is able to grow and be successful in that dynamic environment. Where are we today? Taking into account both our long-haul and short-haul businesses, we have 3 bases and 9 aircraft.
As Willie mentioned, we only started operations in July last year. 15 months into operation, we already have 22 routes, have carried more than 700,000 passengers. Thinking just about the routes that we've operated for a full 12-month cycle that are just in the first few months of their growth, we're achieving a load factor of above 90% on our long-haul routes. I want to take a step back perhaps and think about what was the strategic rationale, where did we come from in terms of building the LEVEL business? At a core, it was really about allowing IAG to target that growing price-sensitive leisure segment. Robert talked about it before as the frugal fun and frugal first segments. Everything that Robert was saying is built into the design of what LEVEL is.
That concept of the full-service brands being able to focus their attention on serving customers who desire and who value that full-service experience. That means that LEVEL can focus on the segment which is price sensitive, and tailor everything that we do to that particular model. Where you have businesses that are much more focused on the specific needs of their customer segments, your probability of success, your probability of achieving above-market returns are significantly higher. That's an experience that I learned personally with Qantas and Jetstar, where we found that where Qantas was competing purely against its competition, Qantas would win the premium segment but would lose the value segment. When Jetstar was competing against exactly the same competitor, Jetstar would win the price-sensitive segment, but would lose the premium segment. In competing against either one of those models, the competitor was doing quite well.
When we combined the two together, when we had Jetstar and Qantas together competing against the same competitor, Qantas won the premium segment, Jetstar won the price-sensitive segment, the competitor was squeezed in the middle between the two. We know that by focusing on those brands, we increase our chance of success. I think there are some other advantages, some other reasons for why IAG would invest in a low-cost, long-haul carrier, part of that is about opening access to new segments of the market. The lower cost base of LEVEL allows us to successfully enter markets that perhaps we could not have entered without such a low-cost vehicle. We are doing it with a brand that has cross-border appeal, that is not tied to any particular geographic segment.
We are doing that in a way that for the rest of the group, we are able to demonstrate what can be achieved with new approaches, new technologies, both in terms of further opportunities to reduce the cost of operation in all of the operating businesses. Secondly, in terms of what we can deliver in terms of ancillary revenue generation by using the technology in a really clever way. I will give you some examples of how we are doing that, how that is working in our operation already. As I said before, LEVEL is not an airline, which is a kind of a strange thing to say for somebody who is part of what would be considered to be an airline group. LEVEL is on one hand a brand and a customer concept. And on the other side is a business model, but it is not specifically an airline.
If you think about the Spanish operations that LEVEL has, they are operated by our sister carrier, Iberia. The operations that we have in Paris are operated by the former BA subsidiary, OpenSkies, which is now part of LEVEL, Fly LEVEL SL. The third part, our Austrian operation, is effectively a franchise operation. The key driver behind that really being the Vueling business, delivering the services to enable those businesses. I am going to talk through each of these two things separately. Firstly, focus on the brand and the customer experience, then I will come back and talk a little bit more about how the model actually works. As Robert mentioned, our focus is the frugal space. It is about meeting the emotional, functional, and technical needs of those particular segments. We started out by saying, "This is what we want to do." Yes, we need to be low cost.
Yes, we are appealing to a price-sensitive consumer group. That is not all they are looking for. If you think about the way that the millennial mindset works, they are looking for more experience-based travel. They are looking for things that are fun and cool, simple. Things that take work away from the consumer and make life easy for them. The way that we build the customer experience is very much tailored to those specific requirements. It takes advantage of some changes, some macro trends that we have seen developing over the last 10 to 15 years. Historically, you think about low cost was considered cheap, a little bit nasty, sort of the historic Ryanair perspective, where we fly them because we are cheap, but we do not really like them at the time that we are doing it.
Compared to premium brands, which were always expensive and always delivered a sense of luxury and a sense of being special, and a bit of a cachet if you could afford to be part of their customer group. It was quite a two-dimensional approach. What we're seeing now is something which introduces a third dimension. We're seeing brands which are very, very specifically targeted to their consumers, which deliver at a very low cost, certain elements of a premium experience. One of my favorites is citizenM, the hotel business. When you experience citizenM, it's every element of the experience is completely aligned with their brand. It's a low human touch business. You check in yourself, you check out yourself. You can experience the entire product without talking to another human being. When you go into the rooms, the rooms are beautifully appointed, very comfortable, but incredibly small.
Really, really well-designed. It is a brand which is set up for a very specific purpose. We see the same thing with a brand like Muji, a Japanese sort of convenient, small travel goods and specialist clothing. Great design done at a very, very low cost, delivering great value to the consumer. We combine that with the macro trends of, as I mentioned in the Jet2.com case, squeezing the middle market. This polarization between the low-cost end and the price-sensitive end versus the premium experience. This trade-off in getting rid of cheap but actually introducing value as a concept. The valuing of experience over possession. You start to then come to what we do with the LEVEL brand, which is standing up for people's right to fly and opening up access to experience the world.
It is a brand which is very much tailored to that millennial mindset. As Robert mentioned, for a 15-month-old brand, we're actually doing extremely well in getting the message out about what we stand for and what you can expect from LEVEL. When we look at the top, we're looking at the French market. The bottom chart talks about how we're playing in the Spanish market. What you see is that in terms of lowest cost, we're performing very, very well. We're also signifying quite strongly on that frugal element. Frugal in this context meaning really, it's a lack of waste. It is getting exactly what I need and want at the lowest possible cost. It's not about just cheap. There is an element to it of meeting the sets of needs which are required. We still have some work to do on fun and modern.
I think that's really something that's going to have to come through in terms of the experience of the brand. There's still work that we have to do on board the aircraft to fully embody those elements of our travel experience. We're starting off on that journey today. You see some examples of how the advertising plays. There's a great sense of energy, a great sense of enjoyment, great sense of fun which comes through in the way that we advertise with a very, very heavy focus on digital. If you think about the customer experience then and how the customer experience differentiates between LEVEL, perhaps a more traditional airline, the first element of that is that easy and economical element which we really achieve by delivering the service digitally.
That's digital involvement in the customer experience, not just through the booking process, which is quite standard and well accepted right across the industry, but also introducing the digital element into the travel experience, the post-travel experience, so that the customer is fully engaged with us digitally across the travel life cycle. We talk about modern and unique. This whole element of the way that we deliver the service is enabled by the technology. When we talk about introducing technology, it's not about taking people out of the loop. You can't fly an aircraft without having cabin crew on board. It's really about freeing those people up to express their personality to the customer, and to make it a very human experience. The technology is an enabler, not just a replacement.
I'll talk more about sort of what's entertaining and cool about the experience, and people might be familiar with this from Virgin America. They had the same concept, but as part of the merger, they've actually lost their ability to do this. This whole new travel experience, by putting the onboard product in the hands of the customer and allowing them to choose how they want it delivered. That's another example, another element inside the LEVEL business, which could only really happen inside IAG. Because the .air retail portal, which is a product created by IAG Connect, one of the IAG group businesses, enables us to deliver a new type of experience onboard the aircraft. It's based on the seat back screen.
Using the seat back screen, the customers can shop for the products that they want on board, compare their telephone to enable them to pay directly from their phone through the seat back video, and have the product delivered to their seat. Now, we're the launch customer for the shopping element of .air. We're still going through evolution of that product to get it fully where it's going. The latest version of the software was trialed on one of our aircraft about two weeks ago. During the trial, what we found was four of the crew were on rest at any particular point in time. The other four crew members were always visible in the cabin.
What happens when you start with this sort of model, one customer, and it only takes one, decides that they want a Coke and a bag of chips during the middle of a long-haul flight. They go to their screen, they order the product, the cabin crew member comes and delivers the product directly to the seat. Well, the person sitting next to that customer suddenly looks at them and says, "Hang on a second. I'm actually feeling that I could probably do with something, too." They make an order. Now you've got two people next to each other who have both experienced product, everybody else around them starts to do the same thing. For the entire flight, four cabin crew members were backwards and forwards between the galley and customers.
What we saw on that flight was a significant increase in ancillary sales, driven not by a change in product, purely by a change in the way that we relate to the consumer and the way that the consumer can control their own purchasing behavior. When you think about a traditional travel experience, you get your meal service at the start, the cabin is dark, nothing happens, and you do not really see anybody for several hours before the next time that they come into the cabin to deliver food, drinks, or any other product. This completely changes the dynamic of the way that people travel and the way that they enjoy the travel experience. Ancillary is a huge opportunity for LEVEL and I think more broadly for the global airline business.
It's one thing to talk about ancillary for short-haul low-cost carriers, we all know that's been a huge driver of their profitability over the last 10-15 years. It's a very different thing when you're talking about a 10, 11-hour flight. You have a lot more time with the consumer. You have a lot more opportunity to sell into them on these long-haul flights than you would on short-haul sectors. From where we are today, we're expecting to see roughly a three times increase in the ancillary per pax with the full deployment of our model. The full deployment of the model really does require having the probably quite traditional product groupings, but delivering those with dynamic pricing and artificial intelligence. I certainly wouldn't be standing here telling you that we've already mastered this. We have a long way to go.
What we do have is IAG's digital capability. We have IAG Connect. We have Hangar 51. All of these group investments in technology are all able to be funneled into LEVEL to help us to advance much more rapidly and to deliver really innovative solutions to our consumers. I also want to talk a little bit, though, about the basic ethos, because at its heart, LEVEL is really focused around that low-cost long-haul segment. I really love the way that the team has already taken what we started with and has moved that to the next LEVEL. Great example being the new catering proposition. We've reduced 50% the single-use plastic that we use, and we've moved to fresh products at the same cost as we have frozen products. Increasing the quality of the customer proposition while reducing waste.
Our new onboard product, which is the blankets, the pillows, the earbuds, amenity kit, et cetera, the new product that we have is significantly better than the original product at an 8% reduction in cost. Continuing to reduce the costs while driving improved customer value. Same thing in terms of our uniform and the service style. The new uniform that we introduced with the Paris launch, 15% lower cost than what we had for the Barcelona launch. We're just in the process now of rolling that new uniform back into the Spanish operation. Continuous improvement in the portal, fare and pay. We've now got single-click purchasing enabled, which in my mind, from an e-commerce perspective, as a consumer of e-commerce, single-click purchase is really the absolute goal in terms of how you want to be able to relate to the consumer.
We've turned on single-click purchase now to make the checkout process easier. Shifting gears a little bit, I want to talk now about the business model that sits behind LEVEL. When I talk to consumers, what they're really interested in is the customer experience and how they relate to it. It's really important, I think, from an investment perspective, to understand the mechanics that sit behind this business. Instead of a vertical chain, when you think about LEVEL as an organization, you have the customer at the center and surrounded by what we call the Airline Management Company, the LEVEL AMC. The ownership of the customer experience sits with the Airline Management Company, and that's our reason for being. We own the brand, we own the customer experience, the distribution, the pricing, the revenue management, how that business actually structures.
Around the outside of the AMC are the production units. It's a very clear distinction now between producing the airline seats and the way that we interact with and relate to the LEVEL consumer. If you think about the corollary, this is the same model which has been used to disrupt a number of other vertically integrated industries. I think one of the best examples of the way that we work is really the Amazon model, where each of the separate elements of our business is completely modular. LEVEL France, at the moment, flies the operations out of Orly to Montreal, Newark, Fort-de-France, and Pointe-à-Pitre in the French Caribbean, but there's nothing that prevents me from utilizing an aircraft out of the Spanish operation to fly routes out of France.
If I can't deliver the right cost base in the French operation, the other production units can take over that production, and we can deploy the aircraft in different ways to ensure that at every point in time, we have the lowest cost of production. That's something which is much more difficult to do in a single large airline, where the cost base is structured around a vertically integrated chain. From a LEVEL AMC, Airline Management Company perspective, I'm relatively agnostic as to the form of the underlying production model. If I talk about those in a little bit more detail, 15 months in and we already have three distinctly different production models already in operation today. The Spanish operation is effectively what we would call a subcontract or a third-party model, where another airline under their own AOC is operating that business for us. It's a fantastically structured business.
It delivers fantastic benefits to LEVEL in terms of its cost base, and is also delivering benefits to Iberia in terms of allowing them to deploy their pilots in a new way and lower the overall cost for their own operation. It's a really competitive cost base delivered by cooperation between different parts of the IAG group. We have a directly held subsidiary. This is more a traditional model, but because I'm mixing that traditional production unit with non-traditional production units, it gives me the ability to introduce competition into our organization and prevent us from stagnating in terms of our cost base. The third element, Anisec, which is another member of the IAG group, is a franchisee of LEVEL. In this case, we're utilizing Vueling's short-haul capability and their cost base to be able to mount an operation in Austria at an extremely low cost.
Utilizing the LEVEL brand, because the LEVEL brand is specifically designed on a Pan-European basis to deliver to that frugal segment. The product mix and the way that we structure it is very LEVEL, but the back end of the engine is very much Vueling tied together through the Anisec vessel. The other great advantage of having this type of production structure is it's almost infinitely scalable, and it's equally not tied to the historical structures that are put in place by bilateral relations between governments that set out how traffic rights work. The ownership of each of the underlying vehicles can be completely different. It doesn't matter that LEVEL is not an African entity. If we chose to work with an African production unit, we could access African traffic rights in exactly the same way.
Not only do we have a broad number of units, each of which can grow a small amount at the same time, but we have the ability to grow the number of production units, creating a more highly and rapidly scalable solution. I want to go back and just think about some of the success factors that we already know about low-cost long haul. People actually ask me, they say, "Your job is to prove the low-cost long-haul business." I say, "No, actually, it's not." My job is not to prove a model. My job is to make LEVEL highly profitable. The model we already know works in certain circumstances. The important thing is to avoid doing the things that break the model. Most important thing is maintaining a maniacal focus on who your core customer segment is and on the cost base.
There is a really important difference between a low-cost carrier and a low fares carrier. If you're a low fares carrier with a high cost base, you just put yourself out of business. Our low costs are there to enable us to provide low fares to the consumer. It's not the other way around. This is a vehicle for growth. If we don't keep the cost base right, if we don't keep our focus on that frugal consumer and pretend to be something that we're not, none of the rest of these things on this list will matter. Second, focus on delivering value to the consumer. It's not about being cheap. It's not about that negative connotation of the word. It's about allowing the customers to believe that they've had a fantastic deal, that they love the experience because they have achieved something which they wanted to achieve.
Invest in technology to lower the costs and to improve the customer experience. At the same time, we need to make sure that we access traditional distribution, and we need to partner with other airlines to provide feed into the long-haul sector. The history of long haul is littered with the carcasses of airlines that did not understand the importance of that short-haul feed onto long-haul segments. Being part of the group, we get access to the distribution capability of all of our sister opcos and the feed from them as well, which gives us a specific advantage. Being part of IAG has allowed LEVEL to become what it is. I firmly believe that if I was not here as part of IAG, that this, what we are doing with LEVEL, would not be possible.
The speed with which this business has been established, and brought up to scale, could not have been achieved without the support of our sister opcos. My team at the moment is made up of 13 secondees from other parts of the business, pretty much all parts of the business, who have been released from their roles in other companies to help support us and get this business moving really quickly. The connections with Iberia, with Vueling, the growing IT department, providing our website and that support, we're able to tie into each of those different parts of the business and be able to access services at scale, even though we're a very small business. That's almost impossible for somebody who's sitting outside of a very large group.
Equally, even if you're sitting in a very large group, this is the one large airline group where you have what Willie was talking about earlier, that parental independence, that neutrality. I'm absolutely given the freedom to do what is necessary to turn this business into a profitable business, which I know from talking to other colleagues in other groups, has not been the case in other groups. IAG is particularly special, but we do have to make sure that we avoid what I call legacy contagion, where we catch a cold by association, we build into our model some of those legacy elements that prevent us, in the long term, from being truly low cost and truly dynamic. I come back though to the core point, which is about customer segment and cost base.
That's the heart and the soul of what we do, is maintaining that initial base. I've talked mainly about the long haul, so just a little bit of a stop in Vienna to talk about the short-haul business. Already serving 14 destinations out of Vienna. It's only three months into operation. The four aircraft at the moment, A321 classics, growing to seven aircraft next year, I think A320s, then significant growth beyond. The Austrian operation is a pure low-cost short-haul business. Even as we grow the long-haul business and the way that we interact with a customer for long haul, what we recognize is the short-haul business will not be the same as the long-haul business in terms of its customer experience.
It has to be specifically tailored to meet what is LEVEL on one hand, but also what is the lowest cost service and what do the customers for that short-haul segment really want. It's tying those two things together, which makes it particularly clever. Rapid growth in this business, and it has great potential for further scalability across Europe as we go forward. As I summarize, there's a phrase I use a lot with my team, designed for success. What it talks about is, if you put the right people, the right processes, the right understanding, the right technology together, you will generate the right results. If you don't have all of the right elements put together, you will not deliver the right result, but it is completely predictable that you will not deliver the right result.
We have to get the foundations for LEVEL right before we start to scale up the business. We've got the right elements in terms of the brand that we have built and the brand awareness, and I'd point out that a recent design blog, quite an influential design blog, has just awarded LEVEL on put LEVEL on this list of the top six iconic airline brands of all time. That's an amazing achievement for a 15-month-old brand. Alongside, not new brands, but the 1967 American Airlines double A logo with the flying eagle, the Qantas flying kangaroo, the KLM crown. It's talking about the design elements and the way that the brand is designed. The combination of earth and sky built into that, but then the concept of taking flying to a new LEVEL flying, stability.
It has a whole bunch of attributes built into this design, which are incredibly clever. By designing the brand in the right way, what we do is make it easy for that brand to then appeal to and speak to our consumers. We've got functional products that are delivered in a creative, cool, and modern way, and we've got personal service, which is delivered by utilizing technology to streamline the way that we conduct the operation. We've got best-in-class costs. We're using efficient technology. That secret ingredient, the fact that we are sitting underneath IAG, leveraging the scale and the benefits of our sister opcos to deliver the lowest possible cost. When you put these six elements together, this is really what creates the future success for LEVEL. Boy, what a success it's going to be. We're 14 aircraft in 2019.
We have aspirational targets to grow to about 42 aircraft by 2023, and undisclosed aspirational targets which have us becoming even bigger than that. The split for next year, you see we continue to grow in all of our bases. We're growing one aircraft in Barcelona, one aircraft in Paris, and another three aircraft in the Vienna operation. That's a moderate LEVEL of growth over the next 12 months, but it really is a moderate LEVEL of growth to allow us time to fine-tune the LEVEL model, to get the foundations for this business right, which will enable us to scale very quickly to profitable growth. I've got a few things I've got to do as the new CEO. Very much, now is the time for us to transition from that project mode into an ongoing operation.
As I said, building out those foundations, standardizing a common product and a common experience, common distribution channels, common website across all of our business units. Developing the case for investment to convince my masters to give me a little bit more money to actually go out and really grow this business very quickly. Working across the group with each of our different partners to really develop a technology platform which will enable us to take LEVEL from being just another airline to being something really, truly special in the global industry. That's all from me. Without further ado, I realize I'm taking up time, pass across to Javier Sánchez-Prieto, CEO and Chairman of Vueling.
Thank you, Vincent. Sharp and fine. Good morning, everyone. During the next 20 minutes, I would like to share with you how we're delivering regarding the plans we presented last year, and also outline what are the main strategic lines of action for Vueling going forward. The main three elements of this presentation and the Vueling plans, first of all, our strategy remains unchanged. We continue trying to develop our customer strategy. We continue to reinforce our operations. We continue fostering all our plans, like we described last year. Second is that we face significant and material headwinds while developing our plans, specifically the ATC state. It's far from ideal. We'll come back to this in a minute.
Also some of our input costs, as you all know, have significantly changed, like the fuel price and also the dollar, in our case, affecting some of our input costs. What are we doing in that regard? Well, first, we are fostering our customer plans and our brand deficit in the marketplace so we can maintain healthy revenues. Second, we are building resilience into our operations. We are investing into our operations. It's an investment that pays off in terms of cost. The third thing that we're doing is that we are reducing our short-term growth. Although maintaining our long-term ambition, we are reducing the growth for 2019, and we are also fostering a better use of our capital. We are increasing the gauge of the planes in our plan so we can have a better use of our employed capital.
Let's just start with the first piece. The first piece is about how we are delivering regarding our plans. The first thing is about the network, where to compete, and we have here some examples of how Vueling is competing better and better in the different markets, and how are we gaining market relevance, and how do we continue with our market expansion. As you can see here in Barcelona is not only just that from 2016 to 2018, we have increased our share. It's our capacity share in this case. It is also that if you look at the last 10 years, Vueling has been, let's say, a major catalyst of the development of the city and the development of the airport. The same applies to Spain and the domestic traffic.
We are now the leaders in the domestic traffic, specifically in the traffic between the peninsula and Balearics and Canaries, the two main focus of tourism for Spain. We are also continuing to fortify our flows to France and to Italy. The good news is that we still see strong opportunities to continue developing our model in different cities and in different markets. This is where to compete. How are we competing? How are we developing our network? Well, it's twofold. First of all, we're trying to be very efficient. If we look at our seasonality, utilization, all this stuff, we're continuing to improve this. We are reducing seasonality. We are increasing utilization. That's good news because we can work better together, we can reduce costs. The second thing is we are trying to have and to do a better use of our capital.
When we look also at our fleet plans, we are proposing to have less planes that the seats grow, that we are doing. The second thing is, I just mentioned, we are increasing the gauge of the planes in our plans, not only because of the cost and the capital efficient, also because it is good for the markets we operate and also it is good for an environment that is really congested. This is how we competing. Here we have a bit the details on, well, what is our plans. This is the 10.4 that was expected for 2019 is now a 7.4, down three points.
Although again, we maintain our ambition on our long-term plan, we understand that this is the kind of capacity discipline that we need to put in place going forward in the light of the new fuel price and the way we are competing in the marketplace. This means that next year we're going to have four less planes than we were expecting. Again, we maintain flexibility. We maintain flexibility to reduce further if that is needed or to grow faster if we see opportunities to grow the business, again, in an efficient and a profitable way. As I mentioned, there has been a couple of main headwinds, I'd like to focus now, not in the fuel. I'm pretty sure you know all the stuff better than me about the fuel evolution. Yes, in the ATC and the state and the situation of the ATC.
When we look at Europe, the situation is really bad, we'll come back to this chart in a minute. When you look also at the position of Vueling in Barcelona and Vueling is heavily affected by Marseille, on one of the worst performance in the air traffic control unit, together with Karlsruhe in Germany. When we look at the evolution We have here the minutes of delay caused by ATC during the summer. This has been dramatically changing over the years. You see that the increase of the delays has been 29% year-over-year. When we look specifically to the last year, to 2018, this has been 79%. Considering our, again, geographical position, this has been even worse than the average for Vueling. It is really clear to me, we have the airport running at full capacity. They don't have headroom.
We have the air traffic control units running below capacity. All the buffers and all the investment has to be made by the airlines, that's what we are all doing. We are investing in building resilience and trying to deliver, to better service, to mitigate the effects of this to our consumers, to our customers. Of course, we are working with that because this situation is unacceptable. We are working with that at different LEVELs, as IAG, with the association, certainly for Europe. We're working with the commission, we're working with the government because this situation needs to stop, needs to be reverted. We're pretty confident that this situation will take some time, this situation will be reverted. We are all, and specifically Vueling, making an investment here because this will pay off. In the future, that situation will be much better.
Unfortunately, it's not only Barcelona or only Vueling. We have here the top 25 airports in Europe. We have, in this axis, the capacity, and the colors is the performance. It is a pity that we don't have any green in the top 25. We have the dark red. We have Frankfurt, Charles de Gaulle, Barcelona, Palma de Mallorca. They're all slightly below 70. We have places like Lisbon below 50, or Stansted below 40. Those are the dark ones. But the light red, they're not much better. We have a lot of Gatwick, Fiumicino, that are slightly above, 62, 63. The average is 63 for the top 50 airports in Europe. It says seven points down last year. It's a lot going on in this area. Just to highlight, we are preparing the airline to perform in this environment. What are we doing then? What are our plans?
As I just mentioned, first thing is building resilience, better operations, better cost. Second, it's customer. We foster a plan to improve our positioning and to deliver the best customer experience to our customers. Third, capital efficiency. We have here some examples of what we are doing in the different areas. For instance, in the network. Well, we are redefining our bases. We are also trying to isolate those regions where we can face more ATC problems. And of course, we continue with the market there, depth, and the versus breadth, and building relevance in the market, because this is good for consumers, but it is also good for operability, because you have more options to recover your operations in the case you're facing a disruption. In the airport, we continue working in automation of the processes, the new boarding group, and the queues.
That's working very nicely, specifically in Barcelona. It's very good, the work that the team has done in that regard. I think that our challenge here is consistency. We are operating in more than 130 different destinations, for instance, from Barcelona. Consistency is one of the challenges where we are working very specifically. The in-flight service. Well, the cabins, there's a lot going on around the cabins. There is a full retrofit of the cabins, with the new slim seats, with the Wi-Fi. But not only that, we are launching a program to refresh our cabins and to have a deep clean of the cabins more frequently. The second aspect is our crew. Our crews are one of the most valuable assets of Vueling nowadays.
When you look at the breakdown of our NPS, and when you look at the different points that we have in the different touch points, that's one of the best. And we will like to maintain that, and not only maintain that, to improve in that area. Unfortunately, we're working a lot on disruption and customer care, because when you have a problem, the customer, they want us to react and to give them the best out of our resources. We have improved a lot the call center and the customer center. It's very good now. It's over 95% LEVEL of attention. If you have any query, any claim with Vueling, our average resolution time is below two days. Of course, you will find people waiting a lot, but not everybody is entitled for what they're claiming. We've launched the self-management disruption tools, also very quickly, very good.
We'll come back to this later. In digital, I think that we're making good progress. We continue making good progress. Just to give you this example. When in March we were suffering a weekly strike in Marseille, we decided to launch a self-management tool in the app. The guys developed that in a couple of weeks. We launched this, the following week, when we faced the new strike, we were able to manage 40%. Well, we, the customers, were able to self-manage 40% of the changes, refunds, via the app. It's a pity that we need to work on that, at least we can respond, and we can offer options to our customers. This is a specific example.
I think we selected that because it's along the lines with Robert and Vincent were saying about how can the different brands and the different airlines be focused on the different segments. One of the things that we did, we decided a year ago, and we have already done, is that we discontinued Our Excellence. Our Excellence was one of our first, because this was a trade fare that we're focused in the kind of business. We decided to discontinue that, because that's not our focus. We've launched new fares , families. Specifically, we bundle a couple of those for what we call TimeFlex and family. Well, family, self-explanatory, is for families. TimeFlex is a very interesting one, because this is for business purpose passenger, but flying in the rear cabin. Business on a budget, in the terminology that Robert has used.
You have here the main things that our customers are asking for. Basically, flexibility, priority boarding, priority check-in, fast track, the possibility of changes. Apart from that, we also unbundle. One of the most valuable characteristics of our planes and what our customers are looking for is the space. This can foster the ancillaries. I have to say that we launched this two months ago, and the results so far are very promising in terms of the pickup of the sales in both aspects. Then digital. Vueling is a digital airline, we continue working a lot. I have to say that digital somehow underpins all the transformation of Vueling. We have different examples of what are we doing. For instance, with the customer, I would highlight that we tend to be where our customers are.
For instance, we're working with WhatsApp. It's the most common messaging tool in Spain. We're working with Facebook. They launched a beta product. We are having our relationship with the customers via WhatsApp. We launched also this week, very recently, Vueling is in Alexa, in Amazon. You can ask for the flight situation, or you can Still, you cannot make changes or make a reservation, this first test is running very nicely. In the marketplace, in the e-commerce, we continue working on that. I will highlight here that we've enabled using artificial intelligence to understand better the demand, we can adapt our ancillaries better to the demand. It's not only that we can increase prices, sometimes it's the other way around.
We can offer better prices, and so we can increase the reach of our ancillaries, for instance, offering bags or things like that. We're using this also, digital, a lot in operations. We have developed ATC forecast models, so we can adapt better our operations and our extra resources, in the light of where we can anticipate as ATC disruptions. As I told you, the customer self-service, but also some models like click analytics, where we are, it's not rocket science, but we're trying to predict maintenance, so we can reduce the fuel consumption using data. Something that it's very clear it's the digital mindset. Changing the whole company, thinking digital, I think it's very clear.
One of the most ambitious projects that we have at a low cost is that we are connecting the aircraft and connecting the crews to the office, so we can have real access to the performance, and we can react, in an automatic way to the things that we are doing and all the situation that we are facing in any moment. Yes, we are as Vueling, we continue supporting the IAG strategy and the IAG objectives, and well, in terms of our objectives, our EBIT continue being sustained results in terms of EBIT and in terms of ROIC, close to the targets, the long-term targets now, and will hit the targets over the period of the business plan in terms of ROIC.
Again, pretty the same or similar growth than last year with flexibility to reduce the growth further if we need to apply this capacity discipline depending on the circumstances, or to grow faster if that is needed. Also the fleet, it's somehow in the number of planes, there will be some reduction. You will see some reduction, because we are increasing the gauge of the planes that we're using. I will highlight to the point of Vincent before, that we are also trying to help and trying to develop the IAG strategy and trying to help the different hub ports in the areas where we can be of some help, like digital or, for instance, helping launching LEVEL in Vienna, where we put in place an AOC in record time, in three months.
That's, I think it's also good news and great credit to the team that was leading that part. I think that the most important message for me today and in front of these results and this, is that the team, and you have part of the team over there, Vueling is fully committed to deliver on those targets and also, of course, fully committed to deliver on our promises to our customers. It's a pleasure to hand over now to Stephen. The floor is yours, and well, good luck in your last presentation.
Thank you, Javier. Good morning, ladies and gentlemen. What I'd like to present today is an investment case for growth justified by best-in-class return on invested capital performance, a compelling competitive position, and above all else, demand-led market opportunity. I hope you're familiar with this, because it has been consistently delivered at capital markets since we were acquired by IAG. Our mission simply is to be the leading value carrier across the North Atlantic, enabled by a profitable and sustainable short-haul network. We have today a profitable, sustainable, and investable short-haul network, independently profitable. All of that supported by a guest focus, a brand and digitally enabled value proposition, delivering above-average returns on invested capital to yourselves, our IAG shareholders. It is a demand-led proposition with value centered on cost, product, and service with an operating model, and hopefully a presentation today that is simple by design.
We believe it's been a virtuous model. That we've built a compelling competitive position. We start with cost. When we succeed in reducing cost, we invest in growth. That growth is enabled by price competitiveness. We drive margin, and we deliver return on invested capital. At the heart of that virtuous circle is NPS. We are a guest-focused business. It's that NPS standout that creates our opportunity. Since acquisition by IAG, we've had the support of the IAG board to leverage our ambition. I think the numbers that you'll see will give you confidence in our ability to continue to leverage that ambition. We've reduced non-fuel unit cost by 18% at constant currency since quarter three 2015. We've grown by 33%. We've created value for our guests by reducing RASK by 9%. We've shared that value with shareholders by doubling our operating margin to 18%.
Since IAG has acquired Aer Lingus, our return on invested capital has doubled to 28%. By any measure, that represents significant accretive shareholder value. We are delivering leading financial performance, sustained by the successful execution of our value model. We've added close to half a billion EUR in revenue, and we will exceed EUR 2 billion top line in 2018. A lot of that incremental revenue has been captured as operating profit. We have sustained an increase in our lease-adjusted operating margin, which has flowed directly through to return on invested capital as we manage an efficient capital base. The 28% is slightly flattered because of a low LEVEL of heavy check maintenance in 2018, but nonetheless, the underlying LEVELs are well in excess of our target of 15%, consistent with what's been delivered over the last three years, and we believe is sustainable into the future.
That sustainability stems from a confidence that we have competitive advantage as a value carrier. We are better positioned and better equipped to succeed than any of the competition. We have the financial strength, not just of the support of the IAG group, but in terms of our operating performance, our balance sheet, our equity, free cash flow, our dollar hedge position, given our point of sale relevance in North America. All sets us apart from the immediate competition. We also have a balanced contribution across all of our operations. We have no cross-subsidization between our networks or on our aircraft. Our business cabin delivers high LEVELs of return on invested capital, as does our economy cabin, as does our cargo hold. We have a network which is far superior, both in terms of internal feed from Aer Lingus short-haul to long-haul, but also in the quality of our partners.
We have a long-standing relationship with JetBlue in North America, which both leverages the commonality of our business models, but also takes full advantage of our co-location in JetBlue terminals in Boston and JFK, enabled by the pre-clearance of Immigration and Customs in Dublin. We also have, this year, initiated a new relationship with Alaska Airlines. Again, very sympathetic in terms of business model, and we're seeing tremendous results along the West Coast, Seattle, San Francisco, and Los Angeles. We also have the support of British Airways in terms of the power of the BA code across the Atlantic, particularly in source market U.K. We have an established North American presence. Our largest point of sale is in North America. We have 34 million self-identified Irish American citizens. We have some of the highest LEVELs of reciprocal FDI between Ireland and North America.
We have a legacy of operations in North America since 1958. We serve primary airports. In 2018, 13. In 2019, 15, and we have the confidence that all of those sustain, not just the existing LEVELs of operation, but increasingly provide opportunity for growth. We are very focused in how we manage our capital, and we are very focused on how we deliver value to our guests. Net promoter score, as I said, is at the heart of our business model. We are conscious that to adhere to our value principles, that any investments need to be guided and need to actually add value. We have a range of initiatives across all touch points with our customers. We attempt to focus on those investments that actually create value for our guests.
There are many things that airlines do, some do well, some not so well, that are irrelevant in driving net promoter score. We survey, we canvas, we get feedback to establish what's relevant to our guests, and with focused, continuous low LEVELs of investment, we drive NPS. We drive industry-leading LEVELs of NPS. The last 12 months on a rolling basis, our NPS is at 47 points. We've received the external validation with Skytrax four-star ranking and APEX five-star ranking. At the heart of our NPS performance is our operational and on-time performance. We are best-of-breed at the Dublin campus by some distance. NPS-driven investments are delivering brand preference. In the home market of Ireland, we have a 75% brand preference relative to the always-getting-better direct competition. We want to replicate that LEVEL of success across all of the markets we serve.
We will be making targeted investments across major guests and brand touchpoints. We will be launching a new branded entity in the first quarter. That is to reflect the airline we've become, the value proposition that we offer, but remaining faithful to the brand heritage and the legacy of 82 years of successful operations serving Ireland. We'll introduce new uniform. We'll make significant increases in investment in brand spend in North America. That investment is on the basis of allowing us, in the first instance, to increase revenue share, and over time as we continue to grow, to increase market share. We'll be making product changes, complimentary alcohol during dining, a new free social media Wi-Fi package for all guests traveling in the economy cabin.
We'll also change some of the service processes as new aircraft join the fleet and as we learn from the experience of other opcos in this instance LEVEL. We continue to invest in mobile web and aerlingus.com technology because we have the ambition to be 85% direct in everything we sell, not only because of the obvious cost advantages, but also because it allows us to personalize the relationship with our guests and ultimately upsell. We will fully deliver with a Pay with Avios function to our AerClub loyalty program. We will introduce AerSpace, which is a differentiated product on our short haul, and we will invest in self-service technology in areas such as baggage tracking. All of this gives us the confidence to continue to successfully and profitably grow our business. Our short-haul business will grow with the market.
Low single digits of seat capacity growth and can be flexed up or down in the context of changing cost or demand conditions. We continue to have confidence based on a track record, based on our capabilities to grow our North Atlantic operations. That growth will increase network connectivity. The hub at Dublin works. We have achieved critical mass. The risk going forward is lower than the risk that lies behind us. 63% of the ASK growth will be in established markets to scheduled debt. Markets that we are already familiar with, markets that we understand the dynamic, and markets that we have an element of certainty with regard to revenue performance, and that will be achieved through seat capacity or frequency increases. The balance of ASK growth is in new markets.
These are substantial demand-led opportunities. The new technology, long-range A321LR, unlocks new city pair opportunities, not uniquely for Aer Lingus, but it is as close to unique as exists today. We continue to develop an improved revenue management capability. We will be introducing new point-of-sale revenue management tools in order to better manage the geographies and the networks that we serve. The fleet investments we will be making will increase the relative business cabin capacity. Business cabin has been extremely successful for Aer Lingus in recent years. The product that we have put into the marketplace is very well accepted, is very competitive, and NPS achieves our average scores in the range of 40-50. We have a load factor opportunity as we continue to combine networks. We continue to have capacity, particularly in off-peak, that we can utilize at very low marginal cost.
That volume will create the opportunity for us to continue with our very successful retail model. All of that is underpinned by an acceleration in our fleet growth. Fleet, as in our business, is simple by design. We will be introducing three incremental wide-bodies, bringing the total to 16 A330s. We will be introducing 10 incremental narrow bodies, bringing the total to 14 A321LRs. We continue to review the opportunities that the potential XLR will bring over time. This growth is CASK-efficient growth. We will increase the average gauge. The A330 platform will transition to the 300 rather than the 200. In Aer Lingus operation, that is effectively 50 incremental seats at close to zero incremental cost. New engine technology of the LRs will protect us and insulate from the worst of fuel cost increases, particularly as they're replacing, in the first instance, Boeing 757 technology.
With both of the A330 as it flies increasingly to the Midwest and West Coast, where a simple sector length will drive utilization. More importantly, with the LR, which when it has done a North Atlantic crossing, will continue through Dublin and serve our European network. We believe that we have found a mechanism where this investment not only increases block hour utilization value to customers in terms of product, but also allows us the capability with confidence to invest, while at the same time reducing unit cost. All of this will be enabled by investments made at Dublin, which is increasingly becoming a congested facility. There's now alignment, not only at the LEVEL of opportunity that exists for Aer Lingus to grow Dublin as a hub, but to the economic benefits for all stakeholders in Ireland.
The new northern runway is on track for launch and completion in the early part of the next decade. A further EUR 1.7 billion of infrastructure has been proposed by the DAA through 2020 and 2024. From an Aer Lingus perspective, an important element of that infrastructure is the development of a Pier 5, which is off of Terminal 2 in Dublin, which creates the ability for us to continue to grow our hub, but to do so in a very efficient manner. Not just from a ground handling perspective, where all of our gates are proximate, but also from a guest perspective, where the transfer experience will be smooth, convenient, and won't in any way lose the time advantages that are inherent in using Dublin as a gateway between Europe and North America. We have alignment of all stakeholders.
We commissioned a report from EY, who've estimated the benefit to Ireland of that investment to be close to EUR 18.6 billion in GDP across the Irish economy, driving upwards of 36,000 direct jobs across the regions as tourists flow through the island of Ireland. We believe we have a compelling proposition for you. Our plans are to maintain above target lease adjusted operating margin. You will have seen from our track record in terms of ROIC that we have the confidence to commit to well above IAG target return on invested capital through the cycle. We have managed growth above and beyond what is targeted over the next five years in the last five. As I said, we are confident that the growth going forward represents less risk. It's still challenging, but it is a profitable growth opportunity which will drive and create shareholder value.
Ladies and gentlemen, I believe we have a compelling case, a leadership team with a proven track record, and I look forward to, in a different role, watching Aer Lingus progress over the next five-year period. Thank you all.
Well done, Stephen. Thanks very much for that. Good luck with your future endeavors, I'm really glad you're staying on the Aer Lingus board so we can benefit from your insights. Not only has Aer Lingus regularly topped the ROIC and Net Promoter scores within IAG, Stephen has routinely, over the last three years, topped the speaker feedback rankings at Capital Markets Day, so maybe that will continue for today. We'll now have a coffee break. As Robert mentioned, in the foyer to the left, there are four stands with examples of our Hangar 51 projects. I'll name them for you. There's a group called Volantio from Atlanta, Georgia. They're developing artificial intelligence capabilities to optimize revenue post-booking. There's Emu Analytics, which is a geolocational big data platform.
There's, I think I pronounce this probably wrongly, Monzo, which is a U.K.-based challenger bank, working with Avios to allow travelers to manage their finances when they're traveling. There's Serafya, which is working with IAG to translate inventory onto tokens that can be stored and exchanged on blockchain. We've got 30 minutes. Please can be back here at 11:40, I'll see you then. Thanks. Can people take their seats quickly? We're now moving on to the next set of airlines, Iberia, British Airways, and IAG Digital and IAG Cargo. Before we get going, can I make an announcement about if you do want to leave the room during the presentation, can you please use this far door on the left here? That's the quietest door. Unfortunately, if you use that door on the right, which says, "Do not use this door." Use another door.
That sets off the other two doors as well makes quite noisy. If you do need to go coming in, can you just shut the door quietly? Thank you very much. I now hand over to Luis Gallego, Chief Executive of Iberia.
Thank you, Andrew. Good morning, everyone. Let's talk now about Iberia. In the Capital Markets Day of November 2012, Iberia announced a profound transformation plan for the company. The plan was a tough plan because it was a very difficult situation, what we had in Iberia. After mediation and after one year of the negotiations with all the collectives of the company, we closed an agreement, at that moment, we decided to launch what we called the Plan de Futuro. A plan precisely for that, to give a future to the company. The plan has had two phases until now. The phase 1 is a phase that we have called the phase for survival. Now we are in the second phase, that is the phase to move the company from survival to Excellence.
Since the beginning, we have structured the plan in five pillars that you have there in the presentation. We are working in the revenues. For example, right now in the second phase, we have 21 initiatives grouped in six projects. In the revenue management side, we are working in a new pricing approach with personalized pricing. New demand management tools, interactive configurator , multi-pricing points. In the ancillaries, we are rethinking products and eliminating complexity. In the digital and direct channel, we are delivering now the new platform, and we are optimizing all the digital marketing performance. In the NDC, we launched in November 2017 successfully the program, and now we are developing the usage of that channel that is very important for us. In sales, we continue with the transformation to further centralization of global policies and strategies and practices also.
In the brand, we are building brand preference according to each market brand goals. If we look to the second pillar, the CASK, the cost, we are working to have a more flexible and agile and simple company. We are working now in labor agreements, in the redundancy program. We work also with GBS, with the procurement side in order to improve the contracts, because in this second phase of the plan, supplier costs are going to be key. We are simplifying also the processes of the company in flight, but also on ground. We continue investing in our fleet with a renewal of the fleet, but also investing in the current fleet. Investing in the network, we will see later what the plan that we have. Also we are developing new alliances.
In that particular case, we consider that the alliance with LATAM that Willie said before is going to be key. We are still analyzing the result of the analysis from the Chilean authorities, but for us, we are sure it's going to be key. We have an airline, but we have other businesses. We have maintenance and we have airports. Now both businesses are profitable. We want them to be sustainable. For example, in the airports area, we want to improve the productivity, and we consider that the new technologies are going to be key for that. We have to take into consideration that we are in an environment where revenues have been decreasing for a long period of time. In the maintenance, we continue with the transformation to try to achieve the IMS objectives that we have established.
The IMS is the project that we have in the group for maintenance to capture the synergies that we can have in a group and to provide to the operators the best-in-class cost that they deserve. So when we reach those objectives, we consider that Iberia can be a provider of reference for the group, and also we consider that we can develop some of the third parties' activities that we perform. In people and digital transformation, this is the part of the plan that is about the change of the culture of the company. We are working to have a digital company where customers and employees are always connected. The plan is transforming Iberia, and we have now a new Iberia. It's a new Iberia if we look at the financial results.
You see here that from losing around EUR 1 million per day in 2012, last year, we were earning more than EUR 1 million per day, a jump of more than EUR 700 million in EBIT. If we looked at the ROIC, we achieved 12% in 2017, and we are on the path to arrive to the 15% that has been established in the group. It's also a new Iberia for the customer, because operations, for example, we are doing very well, and in the year 2016 and 2017, Iberia was the most punctual airline in the world, comparing with the network carriers. This is because we changed a lot of processes, but also it's because of the commitment of the people that we have in the company.
This evolution of the punctuality, plus all the actions we are doing in all the customer area, has improved the NPS, and we reached 30% in 2017. Also, this transformation gave us the four stars at Skytrax. That, for us, is a recognition of what we are doing in the company. It's important, it's not in the slide, but it's also a new Iberia for employees, because in 2012, we were talking about losing jobs, we were talking about survival, and now we are not talking about that. We are talking about development. We are talking about possibilities of career. We are talking about new collective bargain agreements that improve the conditions of the employees. This is a new Iberia for everybody. After all this effort, this new Iberia has an important cost advantage if we compare with the competitors.
We consider that if we leverage our best-in-class cost base, we can strengthen our positioning in our core markets. LATAM is one of the core markets that we have. We want to invest there, but also looking to selected markets where we can deploy also our network. In parallel, we are working strengthening our commercial positioning and brand in LATAM. We have a customer plan, we will see later, touching all the points in the customer journey. We are changing the company through the digitalization, and we want to maintain the best-in-class operations and profitability. If we look at the evolution of the cost, we see that in the period since 2013, until 2018, we have reduced 4% per year, and we are going to continue reducing 1% per annum until 2023. We have achieved this because of the plan, Plan de Futuro, I told you before.
The plan, both phases, the major part of the initiatives are related to cost, but in this second phase, revenues are also key. To compare both plans, for example, in the first part of the plan, employee cost, was 51% of the scope of the plan. Now it's only 15%. Supplier cost, we had 11%. Now we are going to have 29%. If we look to the weight of the revenues, we had 17% in the first part of the plan, and now it's going to be more than 30. 32% of the initiatives of the plan in this second phase are related with revenues, with personalization, and the things that I told you before we are doing. The plan is to continue with the growth that we told you last year.
You can see in this slide that the capacity of the company since 2008 until 2017 is almost flat. That is because in 2013, we reduced 15% because of the transformation plan of the company. In the same way, in 2012, we knew that we were one of the worst, and we needed to reduce our capacity. We consider that now we have done our homework, and we can expand our networks, and we are going to be in a good position to compete. We continue maintaining the plan that we showed you last year. We want to invest in our core markets. 75% of our growth will be in markets where we are operating, but where we want to strengthen our position. The idea we have right now is to grow one-third in the short- and medium-haul, and two-thirds in the long-haul.
This plan, we told you last year, that was subject to the agreements with the different unions of the company. This year, we have closed an agreement with the pilots. 10th of August, the agreement was ratified, and now we have an agreement for an operation of four years. We are negotiating now with the ground people. We expect to close an agreement soon. When we finish that, we will continue with the cabin crew. We are on track, as we told you, to close agreements and to continue developing the company. In this development of the network, Iberia Express is key. It has been key, and it's going to be key. Why? Because Iberia Express, they have one of the best CASK in the industry, below EUR 0.04. They have the best operation. It's not one of the best, it's the best.
They have been, four consecutive years, the most punctual low-cost carrier in the world. They have a perfect alignment with our brand, and also they provide the right tools to compete with the low-cost carriers in Madrid, but also to feed the hub through the hybrid model that is working very well. For us, it's also a laboratory of new ideas. Also, we learn a lot of the operational excellence they have, and we consider it's a pool of talent, not only for Iberia group, but also for the IAG group. We have flexibility. That's important, because we know that sometimes the market doesn't work as we expect. We have a track record of changing the plans if required. We did it in 2016, for example, and now this is the plan that we have.
In the case we see that the market is not behaving as we expect, we have some flexibility. We have flexibility because we are introducing in the company the new 350s, the A320neos, the new generation aircraft that are helping us to reduce the fuel consumption, and also they are very friendly with the environment. We can play with the delivery of some of these aircraft. Also we have the A340-600 that are own aircraft that we have in our fleet. Playing with both of them, we can have a reduction of around 30% in the year 2023. As I said before, we are going to continue investing in the brand. While in Spain, Iberia transformation is well known and is very visible.
The target segments, for example, the premium and trade up that Robert commented before, are working very well and the brand fits perfectly. We still have works to do in Latin America, we are going to increase the capacity there. In parallel, we are going to improve the products and we are going to invest in marketing in the five big countries where we operate there, Argentina, Brazil, Mexico, Colombia, and Chile. You can see there the year where we expect to invest in the brand there. We are investing also in our customers throughout all the journey. We are investing in the aircraft. We have new aircraft, but also we are investing in fleet and in the Wi-Fi of the fleet. We are improving the connectivity, improving also the comfort. We have the premium economy that we said before.
That is important also for the segment of the global getaway that Robert said. I hope you have the opportunity to see the seat that we have outside. We are also looking at the entertainment system. We are improving with virtual reality, and also we are working with IAG Connect portal. We work in the ground transformation. We want Madrid to become a preferred hub for the customers, and we are working in a plan that we call Hola Madrid. A plan to have Madrid as a place to do a stopover. We consider that it is going to work. We are going to launch very soon. We are also investing in the premium experience. For example, last week, we have opened the new VIP lounge that we have in Madrid in the T4.
We opened some months ago the T4 in the satellite, last week, we opened also the refurbished lounge in the T4. We want to maintain the seamless operation, it is true that we are in an environment, as Javier said before, that ATC is causing a lot of problems to the industry. We are suffering also the ATC. We consider that to improve the operation and to manage the disruptions better is going to be also very important for us. In flight, we are working with the cabin crew. They are going to have a more digital framework to work. We are developing a new service with better food quality, and we are going also to improve the customer experience through the digitalization.
Talking about the customer engagement, we want to leverage our customer analytics in order to improve the interaction with the customer in every single point. We are going to launch what we call the customer hub. It is a place where we are going to centralize all the interactions with the customer. Some time ago, it could happen that you are having a disruption in some airport, you receive an email with a promotion. Things like that, with a customer hub, we are going to avoid. We are working also in the new claims portal. Talking about the digital customer journey, we want to be a digital-connected airline, and we are improving the customer operations with the digitalization. Voice, we will see later that we consider is also key in this development. We put here a slide with the premium economy to see what the premium economy is.
You can see the seat. It's a seat and a class that is working very well for us. We can find the seat in the A350s, in the A340-600s, and also in the A330-300. We are flying to 13 destinations in North America and South America. It's improving the customer experience because you have bigger seats, better pitch, you can recline more the seat, and also we have bigger tactile screen, selected gastronomy, and we are also improving the Wi-Fi connectivity. We are having a very good performance. Load factor is around 80%, and the perception of the customer, the NPS, has arrived to around 45%, it's helping to improve the NPS of the company. We have another example that we put here, is that our new chatbot, we call IBot, for selected customer.
We have launched initially and also for several use cases like the ones we have here, flight info, check-in, boarding passes, frequent questions, and flight subscription. We consider that voice, that is growing exponentially, is going to be also very important for us. We are there. Also, we are working with Amazon, with Alexa. We have developed a partnership for the Spanish platform, and we are also partners with Movistar, what they call Aura, Movistar Home. It's something that we consider is going to improve also the customer experience. We can see now an example of the partnership that we are having with Amazon. In summary, Iberia targets are aligned with the group target. We are going to have a least adjusted operating margin in the range between 9% and 15% in this period.
Also we are going to have, through the cycle, a sustainable ROIC of 15% with the plan that we have in front of us. We are going to develop the company, we are going to grow, we have flexibility in the case that we see that the market doesn't behave in the way we are thinking. All this, while we are going to continue investing in brand, in customer, in operation, and in digitalization. Thank you. I'm going to hand over now to Álex.
Good morning, everyone. I'm going to go over British Airways. To start up the conversation, what best than to set the scene by discussing the platform that we're operating on. This is a sustainable financial platform, where we have advanced significantly on our cost base. We have been able to deliver record profits and record ROIC over the last two years. Later on, I'll come back to wrap this up. This is the message that we'd like to start up. We have been building a new British Airways that is able to deliver this investment-grade performance. Today, I'd like to emphasize and talk about three different areas. To start with, growth. Last year, we talked about a particular pattern of growth. I'd like to come back and revisit that.
Secondly, I'd like to tell you about how we have been advancing and what else we're going to be doing from a customer perspective and from a people perspective, our people. Finally, I'll bring that up again with our financial performance. Let's talk about growth first. On the growth side, first, let's take a look at what we have been able to achieve over the last few years. First, British Airways is the number 1 airline in London, first in Heathrow and in City, second in Gatwick, but we're working on it. We continue to be the leader in traffic to the North Atlantic with 34 cities that will be served next year, including the latest additions. More on that in a second.
Finally, we've also been working on short-haul, and it's not just the work in Gatwick, which I'll explain in a minute, but also the refinements and the optimization that has been taking place at Heathrow. Let's talk about long-haul for a minute. From a long-haul perspective, there's been substantial development in terms of destinations, both breadth and depth. We have been moving fleets around, configuring and addressing different types of demand throughout different points in the U.S. and around the world. You see different number of routes have been added since 2014 to try to bring that breadth to the proposition. Beyond that as well, we have been strengthening the number of frequencies. If I talk a little bit more about long-haul, you'll see that we have been deploying, as I was saying before, aircraft.
You'll see the 318 now flying to Chicago or doing double dailies to some other destinations. We have been working with our partners, American Airlines, to try to optimize that. You'll see now American Airlines flying once from Miami, whilst we fly three times, or American Airlines flying from Phoenix. We're talking to them continuously about how we can design the best network across the North Atlantic. We're adding new destinations as well. You've heard about Durban, Osaka, Pittsburgh, Charleston. These are new committed destinations. Durban has just started, but the others will start through the course of the year. We have a fantastic platform, the 787. 30 aircraft, 787s, we'll have by the end of the year. 12 dash eights and 18 dash nines. The dash 10s will begin to arrive from 2020.
The dash eights allows us to come into new markets, reducing the amount of risk and providing the right configuration and capacity to test those markets as we come in. We have to talk about some really good stories like Nashville. Nashville has been a destination that from the onset has been providing a very good profitability position. We're going to take it to daily next year. We've been rejigging the aircraft, the fleet, to be able to go and chase those profitability opportunities. On the short-haul side, three really good stories. On the left-hand side, Heathrow, where consistently we've been increasing our load factors, and we've been achieving this by redesigning our network, particularly on the summertime. We began to do a bit of this on 2015, end of 2015, 2016, now confirmed in 2017.
It has meant that we've actually been able to increase our short-haul profits in the summer by 60% since 2016. Fantastic performance at Heathrow overall in short-haul. We will continue to refine this. We've opened up nearly 15 different markets, new ones, never served from Heathrow in the past. We'll continue to look for these opportunities. Again, short-haul, summer destinations. Gatwick is definitely dominated by our commitment to the Monarch slots, which we acquired at the end of 2017. Since about February of this year, we've been trying to slowly bring them on to the market. The actual growth, as you can see in quarter three, net over the previous year, just over 25%. Incredible growth. 90% of the overall growth has come in Gatwick short-haul from the Monarch slots. I'll come back to Monarch in a minute and Gatwick.
We do aspire to have a 320-based Gatwick operation by 2021. At the moment, there's a mixture of 319s and 320s. Last but definitely not least, on the right-hand side, BA CityFlyer, an airline that has evolved significantly since 2013. You'll see an increase of capacity of 65%, doubling the margin, going from a fleet of 14 aircraft to 22. We'll add another four by the end of next year. Smaller in size, but this is profitable growth. Just a couple of points in Gatwick. Very, very interesting. The Monarch slot bet has paid off. On the left-hand side, you can see that the actual capacity on AS case was an 18% increase during the period since we started to fly in comparison to the previous year. It has delivered an increase in 20% in revenues. This has exceeded our expectations a little bit.
We're very pleased on how that has been going. There is more fine-tuning to be done. The first summer of Monarch was put together in a hurry because we needed to get those slots to work. We are now becoming more sophisticated in refining that capacity. We'll continue to work on it next year onwards. On the right-hand side, if you remember two years ago, I sat here, and I showed you a configuration of a brand-new 777. It was a 777 that had 10 seats abreast in economy. We now have the results. We have five of them flying. We'll have a sixth one by the end of the year. We find ourselves that the extra 57 seats are delivering 20% additional revenues per flight. The same flight, same destinations, same aircraft, reconfigured, 57 additional seats. Not just that.
Because it is a completely brand-new refurbished aircraft, our customer satisfaction is increasing. Yes, absolutely, we have new interiors, so you'll see customers being significantly happier about that, and a new entertainment system. Very happy about that. Also crew. Crew are working in an environment that is newer, and customers appreciate it. NPS coming in from crew is also increasing. This configuration of the 777s is working. We plan to do another seven in addition to the six this year. Next year, with that, we will be done. We're definitely interested in continuing to grow the presence of this 777 in Gatwick over the next few years, perhaps with a few additional units. This is the final picture in terms of growth. Last year, we told you we were looking at growing between 2% and 3% CAGR throughout the five years.
This year, we're going to step that up just by 1 point to between 3% and 4%. Here you see the breakdown in the black columns, how that will be distributed. 3%-4% in the U.S., 5%-6% in Asia Pacific, and Latin America, Caribbean, and then on Africa, Middle East, and Southeast Asia, between 4 and 5 points. This is how we see the distribution of the growth over the next 5 years. Part of the picture of this growth comes together with a growing investment in product and service and people. I'd like to tell you and give you an update about some of the features. Some of these we've talked about before. Let me give you an update about this. First, cabins.
Yes, we are committed to a new Club World seat, which will be available from July of next year when the first A350 arrives. Yes, that new Club World seat, we don't have a picture for you, but it will address all those issues that many of you have actually told me, as well as customers, such as all-aisle access, being able to start watching a movie from the moment you sit down, more storage, more space, more privacy. Our new seat will address that. We'll have 4 Airbus A350-1000 next year with that configuration and 2 777s, which will be completely refurbished and reconfigured in the inside. Couple of interesting pieces of data. That A350 will deliver 331 seats, and it was likely to operate where the current 747 mid-J operates with 334 seats.
We'll go from 4 class on the 747 to 3 class on the A350. We are increasing, a little bit, the Club World seats. We are increasing a lot the premium economy seats, World Traveller Plus, and marginal climb down of the economy seats on the A350 in comparison to the 747s. Very good aircraft. We can't wait to have it. The 777 configuration is also equally quite interesting because it means that a refurbished 4 class 777 with a brand new Club World and an upgraded first class will mean 4% additional seats. We will take, as we told you last year, the number of first class seats from 14 to 8. We will actually increase by 1 the number of Club World seats. We'll increase the number of World Traveller seats at just about the same, and we will increase economy seats on the 777.
In terms of cabins, I've told you a little bit about Club World. We hope to be able to announce it at the beginning of next year. You will be able to start buying tickets on some of those flights before Christmas. We will do a product upgrade on First. The most visible part of the product will be catering and amenities, I'll mention that in a second, but the actual seat also will go through an upgrade. Just like Iberia has done, we are going to also upgrade our premium economy seats. Those seats have had the same type of seats and amenities and food for quite a long time. We're going to come up with a new seat in World Traveller Plus, a cabin that we're quite keen to continue investing on. Finally, all these refurbishments will bring in a more modernized economy cabin.
Wi-Fi on the left-hand side, I'm happy to report that tomorrow we'll have our aircraft number 56 on the wide-body fleet completed. Most of you that have gone to New York recently would have been on an aircraft with Wi-Fi. I know some of you, or at least one of you, has told me that you have been streaming videos. Yes, super fast, incredible in terms of connectivity. Very good product. That rollout process continues. We will be about 80% complete by the end of next year, and there'll be a few aircraft left over in 2020. Short haul continues. It's a little bit faster installation. We should be done by Q2 of next year. We've got three aircraft right now that we are testing really hard. Different product, ground to air, but similar speeds and performance. We continue investing on catering. Won't dwell on this too long.
Catering and lounges, very important. From Robert's study before, when we were talking about the different things that are important to our segment, food and catering, very important. We have been rolling out not just the Club World, which most of you have already gone through and tasted. The World Traveller first phase. Economy, we went through an initial first phase, which immediately drove customer satisfaction up. Beyond that, we've also changed Club Europe, and we continue making modifications in terms of the menu in Euro Traveller . Next year, we will roll out a new proposition in First. We think it's the time to begin to anticipate the new product as we reconfigure the aircraft. We're also going to redo entirely the premium economy catering and amenities.
On the lounge side, you will see all the different lounges that we have been opening over the course of this year and last year. We will continue opening new lounges, and we will be contracting new lounges. As we expand our network, we have found ourselves with some airports where we didn't have an actual lounge proposition. We are contracting those lounges as we come, even if they're smaller frequency in some cases. By the way, we're also improving, as I know some of you have already tasted the catering in our lounges. All of this won't work unless our people are delivering it to the highest of standards and to the highest LEVEL of consistency. We are spending a lot of time, a great deal of commitment, around making sure that the service component also works. Next year, we're going to be hiring about 3,000 people.
Those 3,000 people, about two-thirds of them will be cabin crew. They're going to be going from March onwards through five additional days of training, more than what we have today. Every single customer-facing colleague will be going through an extra additional day of training next year on service. How can we be more consistent and deliver a better service to our customers? We are going to give them tools in order to do this: technology, platform, simplified procedures. Of course, the product. Very proud to be working with a new product on the ground and in the air. Technology continues to be underpinning all of these efforts. We have literally more than 200 different technology initiatives and projects going on within the company. ba.com and the app continue to be a great area of focus. We will continue to deliver more enhancements and more features on those platforms.
This year, the performance of ba.com and the app has exceeded last year's significantly. We're very happy how it is evolving. We know that we can do more, particularly all around as the rest of our colleague airlines are doing on self-service. There are many other projects around technology. We can talk about chatbots and RPA. They are making our life easier. They're making the way in which we service our customers much better. Many of these technologies, we're just trying them together with IAG in digital, but many of them become mature. We don't get tired of talking about the Mototok. It is such a great experience. You don't experience it as much, but we know from an operational perspective, it's not just being more efficient, it's also safety. Last night, we did the first test of the 787-9 being pushed. We already tested the dash eight.
We're taking it into wide bodies. We cannot push back a 747 just yet, but we want to go in that direction. It makes a huge difference from an operational perspective. Yes, of course, we're going to continue working on paperless departures. We just started in T5, and we see a tremendous amount of opportunities there in terms of efficiency, more on-time departures, more control over the operation, better safety overall. Biometric boarding. Statistically, all of you have already boarded a BA flight, I am sure, by just looking at a camera. Doors open, there you go. We're taking that further in the U.S. Now you can do that as you're coming back from Los Angeles, Orlando. The machines are in New York. We believe this is something that makes a huge difference. Would you believe that an A380 boarding, a full Airbus A380, has taken us 22 minutes?
22 minutes to board. So we believe that this technology can make a difference in customer service, and it can make a difference from an efficiency perspective. If there's one initiative I want to just highlight a little bit, it's on the right-hand side, and we call it first contact resolution. This is a big deal, not just for us, but for the industry, particularly in Europe. We are training every single customer service agent in Heathrow to perform every single function that any customer service agent can do. This means that whenever we need resources of a particular type and in a particular location, they will be able to go. They have the skills. They know how to reticket. They know how to look at all the activities of a flight that's specifically more busier than usual. The training program has started. It will be completed by 2019.
As we equip all these agents with devices, you will be able to walk up to any of these agents and tell them any of your problems. And in the majority of the cases, unless you have a really complicated itinerary, they will be able to service you right there and right then. That should and will increase the LEVEL of service in Heathrow an incredible amount. All of this comes together with our strong financial performance. Behind these numbers are a lot of very strong foundations. We talked to you last year about the restructuring program. By 2020, we'll have delivered over EUR 300 million of savings. We've been working in the surface and waterside, 20% more efficient than two years ago. We've been working on back-office functions like sales support. Over 30% increases in efficiency through automation and centralization. And we continue to look at our contracts.
We have had a couple of voluntary redundancy programs. Today, Heathrow cabin crew, 44% are mixed fleet. The new fleet of cabin crew that was created seven years ago. That process continues. If you were to look at productivity of British Airways as MPs, ASKs per MP, you will see a 15% jump over the last five years by the end of this year, which puts us in a very good competitive position with all our European peers and the majority of our U.S. peers. Our objectives, you have the numbers from the rolling 12 months from our Q3 results. We maintain our objectives of 15% plus on the lease-adjusted operating margin. We maintain the objective of 15% plus on ROIC. We commit to this 3%-4% approximately growth versus last year's 2%-3%. Our end of period fleet size will be 316.
My team is here. Hopefully, we'll answer all your questions later. You know, it's difficult as British Airways to come and speak to you today and not mention something, which it is materially important for us and will underpin a great deal of the investment next year. That is the fact that next year we become 100 years of age. Next year, there will be a lot of activities which will be supporting this investment, this colleague engagement, all these training commitments around new uniforms. We'll talk about future airline careers. We've already begun to form new partnerships. We're going to talk about the future of air travel. We believe that British Airways can lead in the aviation industry across a number of topics. Next year, we would like to spend more time talking about it.
I've asked Joanna Lumley to tell you a little bit about this specifically. I'm going to leave you with a video. We'll talk more later. Thank you very much
Back to digital. I mentioned earlier that that was the final part of our investment case for IAG. We wanted to leave it till later in the agenda because a lot of the initiatives and activities that have been going on under digital have been featured in the operating company presentations that you've just received. We've got things going on in many areas, and unfortunately, I don't have time here to talk about all of them. We've grouped them under five basic categories here, and I want to give you an update on three of these. Firstly, around what we're doing in the shop order settle space. This is also referred to as shop order pay.
We actually felt settle was a better summary word for that part of the process. Update you on what's been happening since last year when we launched the new distribution arrangements with the introduction of a distribution technology charge. Secondly, we want to give you an update on where we stand in in-flight connectivity. You've heard some of the specific operating company stories, but we want to tell you about where we're at in terms of the overall group metrics. Finally, I'll give you an update on our innovation agenda under the Hangar 51 banner and related topics. New Distribution Capability.
NDC, which is the acronym that's used, is at the front end of the industry process for getting from people looking for an offer, getting a price, making a booking, getting ticketed, paying for their flight, and then going through the process of checking in boarding pass and the back-end settlement processes. In each of these areas, there's been a lot of legacy in the industry, whether it's around pricing, where prices are filed, list prices are published to the world, distributed through GDSs. In the areas of booking and ticketing with paper tickets and so forth of the past and through all the other areas. The industry over the last several years has been doing a pretty good job of shifting those processes, those legacy processes into electronic forms, getting rid of the paper.
Actually, in many of those cases, the fundamental process wasn't really addressed, and the opportunities that are there from a modern digital redesign from a customer-centric perspective have not been captured. That's what we're setting out to do. It needs to be done in part at an industry LEVEL because we obviously interoperate with other airlines and other travel industry participants. It also needs to be put live in our own operation. As well as being one of the handful of carriers that's really been driving this at an industry LEVEL. Glenn Morgan, who's in the audience here, has been tireless in pushing this agenda.
We've also been putting our money where our mouth is in terms of being one of the early adopters of the technology, and we have things in live or pilot forms in each of these areas. I would encourage you to go and speak to our Serafya startup, if you haven't already, and they can give you a lot more of the detail of how some of these things like the travel grid, some of the basic infrastructure items that are going to support the new industry processes will work. As I say, just about a year ago, we launched a new set of distribution arrangements where we're levying a distribution technology charge on tickets that are booked through the legacy GDS processes.
That's really all about trying to get a shift across from legacy distribution to a modern digital distribution setup where we can do advanced merchandising, dynamic pricing, advanced seat selection, and offer a full range of ancillaries through the indirect channel, mirroring what we can do through our own direct channels. We put in place at that time some transitional arrangements with some of our key agents, because we recognize that this is a tricky transition for everybody. We have a number of temporary commercial arrangements with key agents, which are in operation today, along with working with those agencies about adopting the new technology. We're making great progress on those. The adoption of this is going to really start to rocket upwards over the next months.
We already have a significant number of unique services and content that we can offer today via our NDC APIs that you simply can't get through GDS channels. That ranges obviously from the lower price of not having the DTC levied. Also through this channel and this mechanism, we can offer a much broader range of prices, get away from the fixed price points, and offer closer to a continuous pricing model. We can offer things such as more options for buying pre-seating, pre-ordering catering, rich content rather than just being a green screen description of the offer. Can have movies, pictures, proper descriptions. We can offer also servicing elements, and this is going to be a growth area. For example, if you want to make a name change, you've got a misspelling of your name.
If you booked your ticket through the GDS company channel today, you'll have to call a call center in order to get that changed. Through NDC, that can be changed without having to call a person. We have many more to come. This is an area where we're live. We have an increasingly mature offering here, and we're going to roll out new areas of advantages for booking through this channel. We've partnered with a wide range of technology providers. For agents that don't want to put the investment in to connect directly to us, and we think many will, they can work with any number of other technology providers who can facilitate that process for them. Really this is all about bringing benefits.
Obviously, we see the benefits to our bottom line from this, crucially, it's all about delivering benefit for customers, but also for intermediaries. Those that embrace this technology, and particularly those that are early movers, we think will gain some significant competitive advantages versus intermediaries that really try and remain wedded to the old legacy processes. Where are we? IATA recently published a target for the industry. They wanted to see the industry get to 20% adoption. Of all of the indirect bookings, seeing 20% of them come through the NDC channel by 2020. On a group wide basis, actually, IAG is already at 17% coming via either NDC or the API links that we've got in place. Those other APIs will be transitioning onto NDC technology versions.
We are very confident that over the next couple of years, we're going to be able to smash considerably through the target of 20%. The second topic I wanted to update you on is IAG Connect. This is our in-flight connectivity solutions. In Capital Markets Day three years ago, we went public on a target to get 90% of our long-haul aircraft connected by 2019. We are behind on that commitment. We've had problems with suppliers, with regulatory processes on the air-to-ground side, and problems getting access to airplanes, given the Trent 1000 issues on aircraft. Despite all of that, we are now really hitting critical mass. By the end of this calendar year, we're going to be at 62% on a group-wide basis of our aircraft will be connected, and that's going to rise over the following year up to 79%.
By about halfway through 2020, we're going to be at or around that 90% LEVEL. We didn't set an equivalent target for short-haul back then because the technology was still immature. I'm very pleased to say that we will be expecting on a group-wide basis to be at 24% connected by the end of this year. That's going to rise very rapidly. It's a much easier embodiment process. We're going to be at 73% by the end of 2019, and then matching the long-haul LEVEL by the middle of 2020. I guess my message is, Willie commented that a lot of the investments in this industry are very long-term and long lead time. We've been investing in this technology.
We've been working at it back since 2015. We're really now at the point where we're beginning to get to scale deployment, which is really going to unlock capturing the value that that's going to bring. We talked about .air. This is the in-flight connectivity portal. I won't go through all of the things that that offers. I will just emphasize the first point. This is a service which is a consistent product we've developed centrally. We have one team that has developed this. It's obviously skinned and adapted for the individual airlines in their own colors. I think we are the first in the industry, in fact, the only provider that's managed to get that consistency of customer experience regardless of the connectivity provider that you're using. We have some aircraft which are, we're using Gogo-based services. Others, we're using Panasonic.
On the short-haul side, it's an Inmarsat-based solution. In every other case, every other airline that has multiple suppliers, you get a completely different customer experience, depending on which provider you're with. We've uniquely managed to put in place a layer which enables that to be aggregated and presented in a seamless fashion. We rolled it out first on LEVEL. Vincent talked to you about that. That's been, I think, going really well. We've only just begun to tap the potential of that, as he was saying. We did manage to win an innovation award, which I was going to call out last year, from APEX about the best in-flight entertainment innovation. In terms of going forward, in 2019, we're going to start working increasingly on the in-flight service potential of this platform.
For example, shifting to an on-demand restaurant-style dining, where, again, Vincent mentioned some of this, but this is something we're going to do across a number of the airlines. Aer Lingus is very keen to be an early adopter here. Move from a supply-led catering process, dining process, into an on-demand one where a customer selects when they want to eat and be able to pre-purchase. And finally, on the broader innovation front, we have built a very broad network of partners that we work with across the world. We haven't opened a big lab in Singapore, which I think one of our competitors recently announced. We're taking a much more asset-light approach to this, working with partners across the world to tap into the best of innovation and startup community wherever that is found.
We're also working with some of the leading academic institutions, the Alan Turing Institute here in the U.K., and Berkeley in the U.S. Particularly on some of these areas, such as the application of advanced artificial intelligence processes. This is an area where the marrying of our data and business problem with their academic stuff is really very powerful. If you want to see a happy academic, you land them with a couple of petabytes of data and get them to work on solving a nutty problem like applying machine learning to airline pricing. This is all about our team being able to scout and find the best startups out there in the world, bring them into the business through our Hangar 51 acceleration process. Also to incubate, Mototok is an example of a business that we've done.
Basically, we went with them from the point of complete startup through to what you've seen today. And then in a number of cases, we're also choosing to invest as a business. I'll come back to the investment in a second. On our Hangar 51, increasingly getting very high recognition as one of the best corporate accelerator programs out there. We've reviewed and screened over 1,200 startups through that process since we've been running it. Those applications have come from over 40 countries. We've had 24 companies participate in our programs. And of those participants, 100% of them are still trading, which might sound like a low bar, but believe me, if you know this market, that's incredibly high success rate. 66% of them are classified as high growth, and 8% have actually gone all the way out to exiting and making money.
Exiting is good in this space, just to be clear. I put on this chart some of the categories of the domain areas where these startups are working. Autonomous vehicles. If you were here last year, you saw some of the things we're doing there. Machine vision analysis, I think is a very interesting area. Unfortunately, what the startup we're working with there couldn't be here today. But, if you imagine taking the camera feeds from all of the stands on the airport and having machine vision analysis documenting exactly at what point the steps arrive on all the points of aircraft turnaround and generating that data and storing that data for analysis, or for real-time interventions where we have processes that are going off track. I think there's a lot of potential there. I mentioned artificial intelligence.
I think there are fantastic application areas in our business. Chatbots you've heard about. Robotics. A number of areas. This is the Mototok example we've mentioned a number of times. At the top, that's a geolocation track of where all the pushback tractors, how they used to move around the apron. You can imagine the kind of difficulty of managing that operation and also some of the congestion issues you get with tractors moving around the airport. That was back a year ago. Today, we have a very different story, with a unit devoted to a stand, able to push back and then return back to its base. You have a very cleaned up set of processes. We've seen a 50% reduction in pushback delays, much simplified, safer operations, and significant reduction in emissions.
I mentioned we've also now moved on in our maturity as a group into actually also investing in some of these startups. There are six here that we've invested in. Sorry, three of them. Actually, well, footnote, four of them are outside. Serafya and Deep Air are kind of two halves of the same team. If you haven't had an opportunity to do so yet, I would really encourage you to go and talk to them. The reason we've invested in them is because we think they are a fantastic opportunity for helping to transform our business and indeed the industry. We've done a lot of innovation. We've done a lot of exploration of where digital technologies can help transform our business.
Increasingly, our focus now, whilst continuing with that innovation, is to focus on scale, to deploying these technologies at scale, whether it's in AI, inside warehouses, chatbots, and other topics. We've got a number of areas where scaling went out the point where we're going to really start to achieve value at scale. I'm going to hand over to Lynne now. A number of these pictures on here are actually cargo examples. Lynne is going to take you through how we're actually applying these principles in the real live operation. Thanks.
Good afternoon. There is something quite odd about being in a vehicle that stops at a junction when nobody in the vehicle has touched the brake. That's what's amazing about digital, is it makes you look again at everything that you consider normal and reimagine a new normal and then build a future on the back of that. That was a clip that we shared on social media in January on the back of a trial with Oxbotica. This tech is interesting. It doesn't use GPS, so it can work in buildings and under buildings. It's based on camera and laser, so it learns its environment. By the end of that trial, the cargo pod could drive and say, "That's a truck, that's a truck, that's a truck, that's a human, that's another truck, that's a human." Very successful trial. Since then, we've been doing two things.
Oxbotica, we've linked up with the cargo tug manufacturers to adapt that technology to work from a milk float into a heavy duty vehicle. Oxbotica are building on the learnings from the trial, the little difficulties we found. For example, that is a very polite cargo pod, and it stops when there's a badly parked vehicle and waits for the vehicle to get out of the way. The technology still needs some work, but what is absolutely clear is there's real potential for that technology to make a difference in our business. If IAG Cargo is one example within the group, we're a very strong business, but we are undoubtedly over the next few years, technology is going to make us even stronger. Better asset utilization, reduced costs, more revenue, and just various aspects of our strategy that I want to spend a few minutes on.
Firstly, commercial. This is a well-trodden path for passenger airlines, less so for cargo. At the end of last year, we relaunched our website, new look and feel, new functionality. This year in 2018, our online bookings have quadrupled. It's well established that channel shift drives real cost savings. In the middle of the year, we invested in a head of distribution and an agile web team, and their first functionality was released last month, which is a simple up-trade prompt. Here's the price that you asked for the economy product, but here's a better product if you'd like to buy it. On the back of 21 days of data, this functionality alone is going to pay for the cost of the agile web team five, six times over.
When Willie said we're willing to invest where we think we'll make returns, there are clear examples. But there's a natural cap to how much online booking we can get under current practices. The key thing is about half of our bookings are made at what we call spot rates. This is freight forwarders phoning around, trying to get a best deal, and negotiating, asking for a quote for a specific shipment. We've got a team, a global sales team, who are using their judgment to provide quotes all day, every day around the globe. These people are intelligent, and they are experienced. But in chess, Garry Kasparov is intelligent and experienced, and AI can play chess better than he can. We are convinced that this is an area that is ripe for AI making a difference. We started the journey.
We have completed the stage of replicating the offers that our sales team put out into the market. In January, we'll start the next phase, which is algorithmically produced guidance given to the human. The end game in here is automation. Data-rich, machine-learned, automated spot pricing, consistent no matter who you ask and what channel you go through, optimized. It's beautiful. Moving to the operation. I've said before that cargo only goes by air if it really matters. Automation and digital in the operation is not just about cost efficiency. It's about better operational performance, which leads to better customer satisfaction, which ultimately drives revenue. If we start here, the movement of airfreight is governed by paperwork and masses of paperwork. This is generated by government regulations, customs regulations. It's all initiated by the shippers and the freight forwarders. There's a lot of it.
As you'd imagine, we're working with IATA to try and eliminate this, for example, promoting common data standards so that it can be digitalized. Whilst we still have paper, there's two things that we've launched to help us manage our business better. The first on the left is an e-pouch. This takes scanned documents, uploads them, and therefore enables us to process documents before the arrival. Over here is probably more exciting, and this is where we have used and trialed and now are rolling out optical character recognition to take a paper document and to read it using machine learning, to understand the oddities of cargo documentation so that we can then digitalize all this paper document and turn it into e-documents. E-documents matter. They are faster to process. That's good for customers. They're more efficient to process.
That's good for us and our cost base. E-documents can't get lost, which is good for a robust operation. The tracking technology and tracking devices are now well underway within IAG Cargo. We are now able to carry customer devices across the group network. We are using tracking devices in three areas across the operation. Firstly, trolley tracking in Madrid. Trolleys are the things on wheels that carry the freight around. What we've learned from this is that our trolleys aren't always where they should be. This matters because trolleys are expensive, and we don't want to buy any more of them than we need to. This is the telematics data visualization that helps us really understand how Heathrow is working and how we better manage the day and allocate jobs and resources. The new trial on global ULDs. ULDs are cargo containers.
The management of cargo containers is complex. It's imbalanced directionally. It's global. It's messy. It's a planner's headache. Knowing where they are makes a real difference. If you've got the right containers in the right place at the right time, you can carry all your freight, you can maximize your revenue. Real opportunity here for technology and tracking devices to make a difference. This is Seamus, and Seamus works in our Dublin operation. Seamus doesn't normally wear a hat. What's cool here is the technology in the back of that hat. If you're working in an operational environment, a real-time, live operation, real-time data, real-time information, and communication is key. An outside environment, remote working, noisy, physical work is not conducive to communication. We've teamed up with Mobilus Labs, which were our pick from the Hangar 51 event.
Mobilus Labs are exploring with us some really neat technology, which is hands-free, earpiece-free communications. It works on bone conduction in the skull, effectively vibrations that send messages to your inner ear. I think of it like having a conference call in your head, which allows both team group communication and one-to-one communication in two directions. We're really excited about this. It's early Hangar 51 activity for us. Importantly, Seamus likes it. To my final piece of operational tech, is around BOM checks. Now, if you know what freight is where in your warehouse, and really importantly, if you know freight that shouldn't be there, then that's the way of getting really good high delivery and customer satisfaction and customer performance. Very often we do have freight that shouldn't be in places in the warehouse, and it's really difficult to get at.
BOM checks are notoriously manual, they're very labor-intensive, they're very slow, and they're very error-prone. The cargo environment, with its different boxes and shapes and sizes and labels, is a particularly challenging environment to adapt technology to. That's exactly what we're doing, and we're looking for technology that helps us do BOM checks much quicker and much more effectively. I'd like to share with you a clip from our Madrid warehouse file. These are just some examples of the digital leadership that's going right across the group. We've got more initiatives, but we're not ready to share them with you right now. Digital is unlocking the potential of IAG Cargo. It's energizing our business. It's helping us learn to challenge everything that the business does. It's helping us attract real talent into the business, too.
Ultimately, this is about bottom line profit. We are embracing digital so that we can deliver more value to shareholders. Andrew.
Thank you very much, Lynne. That concludes the strategic investment case part of the day. Coming up after lunch will be the financial investment case. We have 50 minutes for lunch. One of BA's caterers, DO & CO, will be serving a mixture of Club Europe and Club World catering. As I said, it was very popular last year. I hope you enjoy it. If you can remember the faces on that management committee page that Willie put up, then they're all here today. If you've got any questions about IAG, do meet them. We have several board members as well, and also the senior management teams of each of the operating companies. Could you be back here at 1:50 P.M.? Thank you. Can everyone please take their seats? We're about to start the second part of the day.
Unfortunately, I think we've been serving too much and too good a lunch, people are still enjoying themselves. Whilst we wait for the last few people to struggle in, can I remind you that I believe the feedback section of the app is now available or should be soon. If you could start giving your feedback on the app, that would be very helpful indeed. I'll now hand over to Enrique Dupuy, our CFO, to take us through the financial investment case. Thanks.
Thanks, Andrew. Good afternoon, all of you. This is the last session after lunch. I'll try to make it more digestible for you. Coming back to this investment case chart, which I think is very interesting. We've been hearing a lot of interesting messages on the left-hand side of the chart. On our assets, on our values, on how we do things, on our projects, on our programs. All these important bits and pieces need to fit and to feed our machine. What is our machine? Our value-creating machine. When I was doing my internal rehearsal yesterday at home, I was tempted to say, "Yes, this is like a Ferrari." Our machine is a Ferrari. I thought it twice. It's not a Ferrari. A Ferrari is quick, speedy, cool, but it's vulnerable. It's delicate. We don't want to have a Ferrari.
The other extreme was, should I say it's a Land Rover? It's a Land Rover. It's strong. It's robust. A Land Rover is not a little bit too blunt. I think I got the solution. It's like a Range Rover. We would like to combine these qualities that we have in the companies of our group, these values around our brands, with this ability to work on difficult conditions. Not only on difficult conditions. On all terrain conditions. That's something that I would like to explain you, or I'll try to explain you through the following slides. The first one is historical. We are going to go through some historical slides now.
It is showing how we've been improving our operating profit and the operating margin of our different companies through time. Since the merger in 2011, we went through a couple of difficult years, not only for us, for the industry. It had to do with post-Lehman. It had to do with heavy restructuring needed. We went through it. Since 2013, it has been a steady pace of progress. In terms of absolute figures that we have been able to achieve, operating profit figures, EUR million being created, but also in terms of operating margin. That has been for the group, for IAG as an average, but also for the different companies. We see the progression that all of them have been experiencing for the positive in the last three to four years.
Even Vueling, which we see there as a little bit of on a bumpy road, has changed dramatically, and it's much stronger and much more capable now of producing sustainable returns. They've been going through some issues related to disruption, which probably, by the way, they are not falling so much on their side in terms of responsibility. They will be getting there in the following years. Our intention keeps on being to converge into higher LEVELs of operating margin and returns. That's for all of them and for the new ones to come. This is basically, again, historical. It has to do with the strong track record in earnings per share. It's one of our preferred metrics, earnings per share, through the last three, four years. Since 2015, we've been growing in terms of CAGR year after year since 2013 by 40%.
It's an astonishingly high figure. It demonstrates how we've been able to produce a total turnaround of the companies of our group. We are reconfirming again today that our goal is to be above 12% for the next five years in terms of our CAGR EPS growth. Then, again, historically, on our return on invested capital, our ROIC figures, our ROIC ratios. We again can see how they have been improving dramatically since 2013 and for the different companies. Here, I would like to share with you some of the concerns that we have been hearing from you, and we have been having internal discussions about them, on the adequate LEVEL of ROIC that we should be signaling as a planning goal. We need to be able to optimize this delicate equilibrium. We could say, look, you're doing very well.
Why not to aim for a 17% or an 18%? That could be a way to look at it. What would happen then is we would have to restrict our growth alternatives, our growth opportunities, because not every one of the growth opportunities is going to be allowing us to get to the 18%. That would mean that we'll have a smaller and under risk in terms of size of group into the future. Then we have the opposite type of alternative, which is, why shouldn't we be more permissive? Why don't we aim to 14%, 13% because that will allow us to grow faster and to maybe aspire to higher LEVEL of market shares. When we run the numbers, the contribution of that second alternative in terms of value is negative. It turns negative at a point in time.
This is how we value and judge and decide on the right LEVEL of ROIC we aspire for. The 15% sustainable LEVEL of growth through the life of this plan is getting to that right balance. In fact, when we compare our ROIC LEVELs, both IAG and the different companies of the group with the rest of the guys, they look quite nice. In fact, as you will see afterwards, they look nicer than it reflected on the market share price differences. We think we are where we should be in this respect, and we are aiming and achieving the right LEVEL of returns. Again, this is the final test of these assessments that I've been making a little bit on a naive approach. This is just comparing with the same metrics, the same ratios, ourselves to the companies in FTSE 100.
These are the same multipliers that they use. We haven't touched anything. They are not our targets. Our targets, our goals, our ratios are calculated in a little bit more sophisticated way. We don't use return on equity on book value of equity. We think that's a little bit too blunt. This is how it's expressed here. When we go through the figures, return on capital employed, for example, which is also on a very accounting basis. Return on equity, the LEVEL of leverage on net debt to EBITDA. We appear to be on the first quartile. We are high, quite high. On some of the metrics, very high to be an airline. We have included all the metrics which have to do with our progress. How is our CAGR growth in terms of EPS? Then again, we are in position number 20.
People really understand that an airline can be the 19th position in the FTSE 100? Wow. Maybe today, but not five years ago or 10 years ago. It looks quite an achievement. The same in terms of our operating cash flow CAGR growth, on 15th place. I was proposed to bring here the last chart, which is the disrupting one, which is PE, because in terms of PE, we are not on the high first percentile range on the FTSE 100. We are the lowest one. Okay. That's something that I'm going to be commenting a little bit in the next slides, because the reality is the progress that we've made, the group, the companies, IAG, since 2013, 2014, has been formidable. When we talk, for example, portfolio diversification.
We are really much less volatile now than five years ago as a group of companies or even as individual companies. When we follow how our net earnings have been evolving, the volatility, intrinsic volatility embedded, it shows we are much less volatile. This is a matter of elementary risk downgrade. We are also significantly better in terms of profitability. We were around 6%, we are now 13%. We're having a much stronger balance sheet, 1.4. We'll talk a little bit more on leverage and financial resilience in the next pages. We're more flexible.
We have a very type of diversified source of funding and source of, I would say, asset ownership, which allows us to be really very comfortable with the way we deal with flexibility, with the way we deal with residual value management, with the way we deal with tapping the different sources of funds to get the more convenient one through time. We are a much lower cost group of companies than in 2008, of course, but even on 2013, 2014, I think Iberia has been showing us their own performance, which is absolutely astonishing. We can also bring Aer Lingus one or British Airways one, which would be showing a very similar pace of progress. We have a lower type of cash base, but we have also a lower fuel cost environment. 2008, we were struggling with $110, $130 per barrel in terms of prices.
Today, we are slightly more uncomfortable than 12 months before. At that time, I remind you, the percentage of fuel cost on the total cost of an airline could be reaching 35% or even 40%. Now we are under 25-ish. Better again. We have a much better and efficient fleet compared with the one we had 10 years ago or even five years ago. The last one is also very interesting because it's part of what we are today thinking and aiming at, which is we have a higher content of low-cost tools on our toolbox. It's not only Vueling, but it's LEVEL, it's Iberia Express. Aer Lingus is a very type of versatile, but also low cost, low price producer.
The content of that side of the market in our toolbox, in our organization, has been increasing very substantially because we believe that's a growth market, and it's a market where we can do good things. We can earn money, we can participate, and we can expand our presence. This, please take it with care. This is nothing as a projection. This is a pure theoretical exercise. It is fiction, please. We don't want to advise, "Look, this is Enrique. This is what he is saying for next year." Not at all. Not even in five years' time. Okay. As a matter of our own internal procedures, our own internal reassurances, this is an exercise that we do normally. Every year, we test our business plan. And this year we decided to test our business plan with a little bit of a typical example.
Which was, what if we had to face, in the next five years, a situation where the stress on our business case could be similar to the one affecting the industry and ourselves in the Lehman Brothers type of dark September. We run the numbers because they are there. It's pure history. This is facts. It's fictional facts, but it's facts. We have the figures. We replicated how our revenues had dropped very significantly. We replicate how, because of the crisis, the fuel prices dropped. Again, we take the same assumption. We replicate how we manage that type of situation in terms of management actions.
The conclusion is, we would be getting, by the end of that year or the following year, into a situation where instead of having an operating profit of, say EUR 3.1, which is consensus, I'm not saying it's going to be EUR 3.1, it is consensus. We'll be getting to EUR 2. Come on, this means we'll be making money. Bottom line, and we'll be distributing dividends. We would be distributing dividends. This is, again, fiction. It's an example, it's a provocative type of exercise. It shows the strength of the model today. It shows the strength of the companies of the group together with the holding. It shows the range cover. This is someone else telling us pretty much the same. We've been working with these rating agencies for months, even probably years.
I think you know they don't love the airline industry, in terms of If to become investment grade on a different business, they would be requiring adjusted net debt to EBITDA in the range of 2-2.5. For us, it's much less than that. They have a structural difficulty to understand the inherent risks of a business. They've been very tough. Finally, they have recognized our strengths and values, and both S&P and Moody's have been positioning us at the investment grade zone. Remember, that has been one of our type of planning goals. We want to be on the investment grade zone. We are. Tick the box. Now a couple of slides which show a little bit of our frustration. It's, again, maybe a little bit provocative, we don't understand it. Maybe you or maybe someone in the market understands it.
It shows our multipliers. Our multipliers against our peers. We show how across the board, we have been using the multiplier of the group, 5.7 is the case on PE. 5.7. It's poor. When we compare our 5.7 with the peer company, the more comparable companies for each of our companies of the group, our opcos, well, the distance is quite extreme in some cases. Of course, you can always find arguments. When we say U.S. companies, it has been said today, they hold 80% of market share between four, 85% of market share between five airlines. That's a highly consolidated type of market. We are below that, but we are 63, come on. There should be a little bit more of a recognition of our ability to really operate our companies in a rational way in Europe. I think that's the case.
It is being demonstrated. One could say, look, the local airlines have been demonstrating that they are more resilient or more capable of going through difficult periods. That may be the past. I'm not so sure about today. I would argue the contrary, probably. I think I would argue strongly the contrary, we are seeing some late developments on that area that are showing a little bit of this different concept. Okay, it is what it is. If we go into the other relevant multiplier, which is enterprise value to EBITDA, we get to a similar type of scaling down. Well, having showed a little of our frustration, let's come back to our model. Our model really it's basically reflected from the financial point of view in this chart that we tend to repeat each time.
Again, as a summary, this exercise of refreshing our rolling business plans and getting into BEP 2023 has been challenging and showing at the same time opportunities, showing at the same time tasks. The challenges, of course, come from the fuel price. Last year, we were talking here on a reference base fuel price for the period. It was 2022, it was, sorry, in 2017, 2022 of $500 per metric ton of kerosene. Today the figures have been built up with $700. That's a 40% increase. A 40% increase on a cost input that represents slightly above 25% of our total cost base. Rule of some numbers, that is a big hit on our base profitability. That's challenge number one. Opportunity number two.
This, of course, is going to be creating a lot of stress in some of our competitors. Some of them will be successful, others maybe not. We are seeing some reality shows around it. Probably there's more to come. When we say we are planning for a growth of 6%, that means that on that 6%, which is something that we will be monitoring and re-evaluating periodically, that's not a sacred figure. We count on things happening on the markets adjacent, neighboring our basic strategic markets. What is then the third piece? The third piece is this recognition of a task, of a pending task. This pending task is about preparing the group for the new challenges beyond 2022, beyond 2023. That's strengthening the group, that's improving our positioning towards our customers.
We've been hearing a lot of messages in this sense today. These have been the basic three columns that we have been using to rebuild our business plan 2023. With one restriction, you have to make the same money. Free cash flow, the same, EUR 2.5 billion average per year through this five-year period. Not constant. With ups and downs, of course. That has been the frame, and that's why we are going to be talking a little more in the following slides about growth, about CapEx, about EBITDA, about free cash flow and dividends. Growth. Growth, not a lot of novelty. The 5% CAGR growth in the last case that we proposed last year is still there as the basic column. It's about tweaking and improving and trying to take some opportunities that are going to be there.
They have to do with, basically, which shows growth opportunities in Gatwick and also in City Airport, basically in Gatwick. It has to do with Aer Lingus opportunities around exploiting the new A321 extended range. That's a game changer. It's a game changer for Aer Lingus. It's an aircraft that we'll be using through the day in the long haul and in the short haul. The potential value creation of an A321 for Aer Lingus is huge. It's taking, trying to grab also opportunities around Austria, LEVEL Austria or around LEVEL project in general terms. It's a very selective approach. This is not about growing more, it's about growing where we feel we have real opportunities of retaining margins and creating value. Iberia and Vueling are going to be basically keeping their pattern.
Maybe slowing it down a little bit on the first year, 2019, sorry. That's the story about growth. This is a relevant one around the EBITDA. Last year we were saying average for these five years, EUR 6.5 billion. This year we are saying EUR 7.2 billion. That, it's a bumpy road, because it's big challenge. On one side, there is a big negative coming from fuel, as a first real factual impact at $700 per metric ton of kerosene. There is also a very important belief in being able to recover most of it. I don't know if here that it's showing 100%, but it's a very high figure of recovery, very high percentage, through revenue management and through other revenues. That's the basic challenge in terms of margins and EBITDA. Apart from that, we'll be creating more value around growth.
It's going to be profitable growth. It's going to be improving on a net basis our EBITDA figure and also our operating profit figure. Finally, there is also managing non-fuel CASM performance. Here, don't take me wrong. This is not unit. This is absolute, and it's a green or a blue. It means the absolute LEVEL of CASM on an average performance through the five years is going to be lower. It's not unit basis. This is how the growth in terms of ASK is going to be executed. These are our basic fleets in the short-haul and in the long-haul as well, short, medium-haul, and long-haul. As you know, in the short-haul, it's basically around the A320 family aircraft. We are going to be discontinuing. We have already the 767s. It's worth to mention the to be decided line.
The to be decided line shows the LEVEL of flexibility and optionality that we are going to have in the next fleet decisions. It is about 27% in the short-haul by 2023, and it is about 35% in the long-haul by 2023. As an average short plus long, it is about 30% of the fleet that we think we are going to be needing in 2023 is undecided. Good for the aircraft manufacturers to know. Okay. This is a little bit more of detail about the aircraft additions and the aircraft returns. It is bringing new fleet. Again, this is a good reminder. Bringing new fleets, not only for growth, but also for replacement and the rejuvenation of our fleet. And you will see a chart later that shows.
The one I want you to focus here is, again, on a net basis, you see that Italy is our roller coaster. When you ask us every time of our pattern of free cash flow, it is a roller coaster. It is a roller coaster because of this. Year 2018, I was commenting some of your colleagues this morning. Year 2018 has been a very heavy year in terms of net CapEx, 38 aircraft. Year 2019 will be slightly lighter, but then coming back in 2021, and then 2023. This is why we are showing average figures for free cash flow, because on a year by year, there is a huge lot of difference.
Again, here is how it will be replacing older fleets, and bringing new generation aircraft to our fleet structure on this five-year basis, growth of 6%, which will be bringing down the average life of our aircraft from the prevailing 11 years into nine years, which is a big effort for an airline. Remember, an aircraft could be lasting 22, 24 years, maybe even in some cases, longer than that. This is becoming a very young fleet. Again, with this basic format, which is I will be talking about dynamic flexibility. It is flexibility that we keep year after year on our capacity decisions, on our fleet decisions. Both, you see the short-haul and the long-haul.
What we would be doing is deciding on a year by year basis, the more appropriate size of our fleet into the future, into how we see the following years to come. The ability to fine-tune, to bring down the figure, or to use this flexibility and optionality to get some further advantages. Advantages in the way we deal with manufacturers, advantages in the potential deals, M&A deals even, that we are envisaging. This shows a very significant ability to reshuffle, optimize, digest fleet into the future. Net CapEx, and that is something that will appear as maybe a surprise. We were saying last year we were averaging EUR 2.2 billion on this five-year exercise as CapEx. Now we are bringing a figure that is EUR 500 million higher. Of course, it is basically around these two reasons, these two type of use of funds that we have identified separately.
On one side, it's about the fleet requirements, the fleet requirements both for growth, but also for replacement, for making our fleet younger. That could be somewhere in the range of 50%-60% of the total. The rest is basically to deal with this task, this significant type of commitment that we have in terms of improving the strength of our business models, improving the resilience, improving the customer type of proposition that the different brands and companies are announcing and will be announcing. Improving the tools that we'll be using in terms of AI and data management. This is very relevant. It's very important. It's building up the future of the group beyond 2022, 2023. We are absolutely committed to go through it, and to go through it on an efficient basis.
These investments, both in growth, replacement of fleet, and strengthening of our model, will be rendering the increased margins since 2022 onwards. This shows, this is a typical chart that we have been showing every year, again, how the basic balance of the sources of funds that we'll be achieving and the uses of funds that we'll be allocating is going to be working. Again, powerful EBITDA average figures, 7.2, natural type of net financing proceeds from our natural borrowing, keeping our leverage where we want it to be, will be producing additional funds. We have an initial buffer in terms of cash and credit lines, which is very significant. We'll be phasing our CapEx. We'll be phasing our pension and restructure obligations. We'll be paying our lease rates, interest, and taxes. We'll be paying our ordinary dividend, and we'll be keeping a significant headroom above.
This is the other way to look at it. This is, I remember maybe it was a couple of years ago, Willie, when we were just mentioning about showing our shareholders a bit of cash. I think it was 2016 or so. Show me your cash. I think we really were reaching that commitment, is we need to show the cash to these guys. Of course, we need to. This is how we have been doing. We have been showing cash, paying cash, and paying quite sizable amounts of dividends and share buyback. What we are showing here is we kept part of the funds that we generate. Do you know why we kept it? Because we wanted to deleverage the group. That was part of the exercise. We wanted to get financially stronger, and we did it.
We were using these excess funds being produced on the payment of dividend to strengthen the model financially. We don't need to do that into the future. We are already where we want to be in terms of leverage and financial strength. We are not going to be deleveraging more. It doesn't make sense. It's inefficient. Just want to show you the headroom that we have, the headroom that we are going to have into the future. That's the probably unveiled source of potential value that I'm bringing to you today. I think we'll be using these excess funds to create more value, or directly giving back or through appropriate investments that we'll have to explain and get approved at the appropriate moment in time. Thank you.
Okay. Thanks, Enrique. Maybe you'd stay here, you and I can take questions as usual. I think Enrique quoting me saying, "Show me the cash," is one of those fictional facts. We say no more than that. I promise to behave today. Andrew's going to select people. We have two microphones. David has one, Andrew has the other. Please feel free to direct your questions to Enrique or I. Obviously, we have the rest of management team in the audience, and they're happy also to answer some of the questions if it's more relevant directly for them. Andrew, over to you, and if you could
Jamie.
Thanks. Good afternoon, everyone. Jaime Rowbotham from Deutsche Bank. Thanks for the presentations. Two questions from me, one for Willie and one for Enrique. The first one, Willie, I heard the CEO of one of your competitors suggest this week that the whole aircraft system is at the limits of its growth, given airspace and control issues, pilot shortages, infrastructure constraints. Is that something you would agree with? Assuming a weaker macro doesn't provide a temporary solution, could that be an inhibitor of the growth we see IAG targeting today? The second quick one for Enrique would be, as we stand today, what are your priorities for that excess free cash flow that you just showed us on slide 172? Thanks.
I wouldn't agree. I think there are definitely bottlenecks in the ATC system in Europe, and they're specific to intra-Europe. You've seen that we've already modeled that into the growth plans for 2019 with the presentation that, in particular, Javier gave you, showing the scaled back growth plans. We would see those ATC restrictions continuing in 2019 and 2020. With the right focus, and I think there is certainly a focus on this now, both within the ANSPs, air navigation service providers, and at the political LEVEL in Europe to address this. You've probably heard me talk about it. The two real bottlenecks that we see, Marseille, which has a disproportionate impact on Vueling because it hits Barcelona, and Karlsruhe to the north. You've got these two major pinch points. Both of those can be addressed with adequate resources.
As Javier mentioned, what we're seeing today is airlines are investing in resources to deal with the ANSPs failure to invest in resources. That's got to be addressed. It can be addressed, and I would expect it to be addressed in time. I think it's also important to point out that the balance of our growth actually is outside of Europe, and we don't have similar impediments there. The transatlantic growth that you see Aer Lingus talking about and that we'll pursue at LEVEL, we're not seeing any ATC restrictions, and we're not anticipating any infrastructure restrictions that would impact on that. As Stephen said, the growth at Dublin is based on a plan that's coordinated with the DAA, and we're getting good cooperation there.
I have some concerns about intra-Europe, which is going to impact on us, but as I said, that's reflected in the short-term plans that we have. I'm less concerned about growth in the rest of our network.
As we have been saying and commenting very publicly, we believe in consolidation. We review periodically, on a regular basis, consolidation opportunities for IAG. We've been public in expressing interest in some companies that you know well. That's an exercise that will be done on a recurring basis every year. We will be proposing our priorities to the board, and the board will decide the right decision on this respect. It will be this type of M&A opportunities, and if not, it will probably be a way to return shareholders additional money through different options. The ones that we have been using recently because of the low price of the shares of IAG is share buyback. Eventually, we'll be using other ways. That's basically the sequence.
James.
Hi, it's James Hollins from Exane. Three for me, please. The first one's on Qatar. There's been some comments that they are potentially going to leave the Oneworld. I know Willie, you know Akbar pretty well. I was wondering if you could comment on whether you think that's likely, and also the potential impact on your JBA if that were to happen. Also, I think in the presentation you mentioned there was scope for your relationship with Qatar actually getting better. I was wondering what you meant by that and what could be done. The second one, typical analyst, I'm afraid, talking a long-term strategy, but looking nearer term, should we be thinking about 2019 as one of the years where CASK ex-fuel is not down 1% because of some of those investments? Finally, on the sort of LEVEL versus Vueling case.
It feels a bit like Vueling is kind of moved back into the relegation zone versus LEVEL. Is there any sort of thought process that hypothetically another Vienna came up, is it guaranteed you'd use LEVEL over Vueling? Secondly to that, perhaps comment on the performance of Paris and Rome for Vueling, and whether they're at risk of perhaps sort of closing. Thank you.
Okay. In relation to Qatar and Oneworld, yeah, I think it's highly likely that Qatar will leave the Oneworld alliance. I've had regular contact with Akbar about this issue. He doesn't say these things without being genuine behind the comments. He is annoyed with the way some members of Oneworld have responded to them as an alliance partner, and he doesn't believe it's appropriate. As a result of that, I think this is a genuine, if you like, threat. Potentially a genuine decision taken by him. It won't in any way impact on the relationship that we have, and he's assured me of that.
In fact, he's discussed this with me to make sure that we would be happy to continue working with him on areas of cooperation that we've always indicated would be potential areas where we would cooperate, whether he was in the alliance or indeed whether he was a shareholder or not. We see scope for doing that. In relation to the closer relationship going forward and what we could do, we've always looked at the option in relation to aircraft. We have already benefited significantly on a short-term basis from that relationship. The 13th Airbus A330-200 that Aer Lingus operated this year is the next Qatar Airways aircraft. Qatar facilitated Aer Lingus introducing that for the peak summer of 2018 by releasing it early. We flew that in the Qatar configuration. The aircraft was painted, we changed the seat covers, but we effectively used the existing configuration of the aircraft.
You can see it's an extremely efficient use of capital to take an aircraft that you can introduce during the peak summer without any modification. A wide-body aircraft without any real modification. Fly it in their configuration, and it's been very efficient. We are looking at areas of cooperation like that. That's one of the benefits of the relationship. That they have a fleet of aircraft that complements the fleet of aircraft that some of our airlines have. They sometimes will have a surplus of aircraft that they're looking to pass on, and those aircraft can be very efficiently used by us. We're not giving specific detail in relation to CASK ex-fuel today.
As I said, you should have confidence in us, and Enrique demonstrated there in the five-year target, that we will continue to deliver efficiencies through our cost control, efficiency improvement, technology, all the things that we're doing. We're always clear that we're not going to do that 1%. It's not going to be 1% every year. There will be some years when it'll be more and some years when it will be less. Next year, we have identified for you that there are areas of investment, BA being the case that you've seen there to celebrate the centenary of BA. It's a justifiable package of investments that BA will use to strengthen the brand, to strengthen the customer proposition, to do all the things that customers want us to do. It's an ideal platform from a BA point of view to do that.
We'll talk more about specifics as we go in through the year, and certainly, when we release our full year results. LEVEL, I'll let Javier comment, but LEVEL Vienna was an opportunity for us. I think it demonstrates the flexibility in the group, and it's something that we will do where it makes sense for us to do that. I think the performance of LEVEL in Rome and Paris, Javier, please feel free to criticize me or disagree with me if you like here. I think they're good. We're very comfortable and confident about the Vueling performance in Paris and Rome. There may be some other airports where you might want to consider some changes, but Paris and Rome, I think, are two that are working very well for you.
That's exactly the case. I think that it's good maybe to remind that in 2015, 125% of the results of Vueling was delivered actually in Barcelona. While now, this is quite balanced. I have to say that in particular, Rome, not only Rome, but also Florence, they're performing quite well. In France, we're performing quite well. Without disclosing any number, I have to say that in any region, we are making money this year. I think that this is because the network strategy is also paying off in that regard. Of course, we make some fixes. We discontinue some of the routes, and again, we redefine and rewire our network. Today, we're gaining market relevance in those places, and we're making money.
One thing I would say about LEVEL, going to the question about pilots, which I didn't specifically address, I don't see that there's a shortage of pilots. There's definitely a tightening in the market. For some airlines, it's particularly acute, given that there aren't that many captains or qualified co-pilots to be promoted. One of the issues we've had with Vueling, it's a Spanish language AOC. Therefore, to recruit pilots, they have to be able to speak Spanish. That clearly restricts you in terms of the market in which you can compete in for pilots. LEVEL is an English language-
AOC, or Anisec is an English language AOC, which is the norm. To have ambition to be pan-European, you have to have an English language AOC. That's the reality of the industry that we're in. The language of the industry is English. If you want to compete for people in that business, you've got to be able to facilitate recruitment in languages other than your home language. That's one of the issues that gives us flexibility.
It's exactly one of the issues that we try to address. I think that we saw the opportunity when we were in the process of, well, making an offer, actually buying Niki, and then you know what has happened. We saw the opportunity. We saw the market opportunity. There are a lot of people now in this market. I think that this is going to a different end in the next month. As Willie Walsh was saying, with some also strategic value in the auction of Anisec, because we are opening a new window, a new opportunity for the market, but also, as Willie Walsh was saying, also to recruit pilots and to recruit people. That's the case that we're enjoying now.
Thank you. It's Jarrod Castle from UBS. Two questions on operating companies, just one on financial guidance. Aer Lingus, just in terms of the returns it's getting on invested capital, unbelievable. Thinking the next kind of 4 or 5 years, what that means for competition, who kind of look at those returns and that environment, how sustainable are they? On LEVEL, just in terms of when do you think we can get some targets like you get for the other operating companies or some kind of guidance where LEVEL will be in terms of contribution to the 2023 forecast for the group? Quickly on EPS, you've obviously increased your EBITDA average guidance by quarter 10%. No change, obviously, to your EPS growth of 12% plus. Should we be thinking that you're more confident on the plus side given how things flow through? Thanks.
Stephen, I don't know where Stephen is. Stephen's here. Actually, I might ask Sean Doyle to comment on this, given that he's the guy who's going to have to sustain it. Certainly Stephen believes that the ROIC's not at the 28%, and we've always said that. That has particular benefit in the current year. These superior ROICs are sustainable given the model that they have and the focus that they have. We don't believe that this is, if you like, an invitation to new competition, because they're operating in an extremely competitive market as it is today. Stephen, do you want to comment? Sean Doyle, do you want to maybe introduce yourself for those who haven't met Sean Doyle?
With regard to competition, I would make an argument that Aer Lingus is trading the way it is because of the competition. We've competed with Ryanair for 30 years and are doing so successfully. Every legacy, every local across the Atlantic competes at Dublin. We've had to be very disciplined in how we've grown our business, and we've done so successfully as you see. In excess of 90% of our seats are already competed. I don't fear competition. I think it's actually helped to create Dublin as a hub, created an opportunity for us. As long as we remain faithful to that which has got us here, I see the competition as having as much to fear from Aer Lingus as we have from any potential new entrants.
Thanks, Stephen. It's obvious Stephen has set a very high bar, which I'm very much up for the challenge. I would echo his comments. If you look at Aer Lingus's strategy, nothing beats demonstration of results, and the results are phenomenal. If you look at the ability to scale the model, you've got great technology coming in the form of the A321. You've got natural advantages at Dublin in terms of geographic position. I think there's a lot of markets that can be built out to a more compelling schedule with the kind of technology solutions we have in a way that's simple and efficient. I think the strategy that has been outlined today for Aer Lingus is very compelling.
I'm very confident it will succeed. I think my focus will be on maintaining the quality of execution that Stephen and the team have brought to that strategy over the last couple of years.
Thanks, Sean. On LEVEL, we'll include specific guidance on LEVEL at next year's capital markets. We may give you some flavor of it through the year, but definitely by capital markets, next year. Although we are consulting on whether you want to have a capital markets day next year. If we don't have one next year, we'll still give you something around this time next year on the LEVEL performance and LEVEL targets. What we've always said is that, we wouldn't have started that business unless we were confident that it could achieve the targets that we've set for the airlines in the group. That confidence remains, but we'll talk more and give specifics. I know Vini is keen to do that and to compete for more capital, I think is what I heard him say, and be the favored child next year.
Yeah. A little more flavor on our figures. Remember we are keeping ROIC type of a guidance goals, planning goals. We are keeping the operating profit margin guidance as well. We are growing slightly above. We'll be having probably additional CapEx. The combination of those facts will be creating ability to improve EPS target. Our headrooms probably will appear today slightly more comfortable than last year. We are not changing the pattern. Maybe assuming a slightly more comfortable LEVEL of headroom.
Stephen.
Stephen Furlong, Davy. Two questions. I'm just wondering how you think the industry over the next year or so is going to pay for fuel, either through fuel surcharges maybe, or weaker players cutting capacity. Second question is, how important is the investment grade for you? Would you be willing, for example, to go below that for the right inorganic opportunity, for example? Thank you.
Okay. On fuel, we're pleased with the way the industry has responded to the fuel price increase. If you look at it at an industry LEVEL, obviously it's been better for some airlines within the industry. Ultimately you hear everybody saying the same thing. Fuel is something we all have to pay for, and that has to be paid and reflected in the ticket price in some form or another. What we are seeing is, while it may not be in the fare, it's through ancillary or a combination of both. There's more and more evidence of that it's being recovered through some form of additional revenue generation.
In fact, there's probably more evidence to suggest that people are targeting additional ancillary revenue to offset the increase in the fuel. We really don't mind. As we see it's the total revenue that we're interested in. How we do that can be different from airline to airline. We're pleased with our performance, and we're pleased with what we're seeing from an industry point of view as well. On investment grade-
Yeah. We are keeping this concept of investment grade zone. That's the one we had before. Now we have had the ticking of the box type of element. The concept is the same. Being frank, we have been having an open conversation with the rating agencies because our intentions are public. The way they operate in these situations is a grace period. Okay? If you're sticking to your medium-term goals in terms of investment grade, but you need to go through or beyond certain LEVELs on our metrics through a time or a temporary basis, we'll keep your rating. If you don't comply with the expectations, we'll act, react.
It's not something we die in a ditch over. We think it's good to reflect the performance of the business. I think credit to the treasury team who've engaged with the rating agencies to do this. As you know, most of the debt that we've raised is asset-backed, where the credit rating has not been significant. It's the rate, if you like, the credit, the asset's rating more than anything else that has been relevant.
At the holdings LEVEL, it does make a difference.
Damian Brewer, RBC. Two questions. First of all, coming down to cargo. Historically, the industry's largely lost control of cargo to freight forwarders who will make their own sort of 5%, 7%, 8% margins on it. With what was described today, how much scope is there to reclaim that ground and take that margin back into IAG rather than to third parties? The second question on the passenger side. Within the presentation, noticed the Iberia NPS was 30, Aer Lingus was 47, and yet at the end of last year, you disclosed a group-wide NPS in the teens. Clearly there's an underperformer in there. Also when I look at the Iberia slide, you've switched EBIT by about half a billion EUR as that's gone from almost nil to a 30 NPS.
How much opportunity is there within the underperformers, whether it's BA or Vueling, to mirror that kind of performance going forward as you get the brand positioning right, you get the digital product right, and you get the sort of product to market right?
Yeah. I'll let Lynne comment on the cargo. Let me address the NPS. You're absolutely right. NPS and the way we measure it, we debate whether we measure it, because we weight it to passenger numbers, so therefore, if you like, it's more weighted towards the short-haul and non-premium, and therefore, the likes of Vueling has a big impact on the NPS, the global target. As Javier has said, the correlation between on-time performance and positive NPS is almost perfect. Because of ATC issues, Vueling's on-time performance has suffered. They're actually doing better than the competitors, but the customers aren't really interested in that, and they don't really want to hear that it's not our fault, that it's ATC. That can be corrected.
I'm very confident that the investments we're making and the work that BA is doing, for example, will respond very positively in NPS performance. We're already seeing that. I commented at the third quarter results, the area of greatest improvement is in British Airways, across the group when we look at it. The performance is very much aligned with the targeted investment, and we expect that targeted investment to continue. I'm very confident personally, and I know my confidence is shared by Alex. I can't see where Alex is at the moment there, but I know Alex shares the confidence. In fact, is probably more confident than I am given that he's living this day to day. We measure NPS on a daily basis, on a flight basis, on a route basis.
It is a valuable tool that I think we are exploiting extremely well and does help to focus and balance the debate that we have around the management committee. Lynne, do you want to comment on cargo? We've talked about cargo a lot in terms of the structural difference between cargo and passenger, where there's definitely an imbalance between the supply of cargo space and the demand for cargo. Specifically in relation to the-
Yeah, in terms of freight forwarders, first of all, we have very strong relationships with the freight forwarders. They're customers of ours, the sources of a lot of our revenue. I'm often asked, do we see freight forwarders in the same way as, example, travel agents in the passenger side of the business? I do think the freight forwarders play quite a unique role in many respects. They deal with aspects of shippers' logistics that we as air carriers wouldn't want to deal with. They consolidate freight that we wouldn't want to be consolidating. I think there's a role for the freight forwarders that will be sustainable, and they will continue to add value. What I do think will change is the way in which technology makes that added value of the freight forwarders more transparent.
I think there is some opacity in the way that contracts are signed and prices are generated today that technology will put a spotlight on. I think the challenge for the freight forwarders, therefore, is to be able to identify and justify the added value that they do in the chain. I see a relationship ongoing with them.
Great. Thank you.
Roshika.
Thank you. Good afternoon. It's Richa from Barclays. Three questions as well, if I may. The first one on LEVEL, to use the terminology that you used in that it's not an airline, it's a combination of production units and production modules and a brand. I guess that makes a lot of sense right now in that it's allowing you to scale up very quickly. If we were to fast-forward 5-10 years, is that sort of model likely to then have too much complexity and will need simplification into being just an airline? I'd be interested in your thoughts on that. The second one on Aer Lingus, can we just get an update on where we are in terms of potentially joining the transatlantic joint venture or not, and when we are there?
Thirdly, on Vueling, to come back to the topic about air traffic control, capacity constraints, and so forth. I understand that you've obviously slowed down the rate of growth for next financial year, how come you haven't done that for the five-year period? These sort of problems don't seem to disappear overnight. Airport capacity constraints, air traffic control capacity constraints are going to take years to fix. Therefore, why haven't you changed the five-year plan for Vueling? Thank you.
Okay. I think the LEVEL model, as Vincent described it may appear complex on paper. It's actually relatively simple in operation. Certainly from our point of view to date. It's a model that was debated quite significantly well before Vincent joined us. We debated this structure of the AMC and multiple operating companies or multiple AOCs providing lift. We think it works. We think we can manage it without too much difficulty. Obviously, the great thing about it is we can test it. If it doesn't work, we can try a different model. Vincent, do you want to comment on this? Certainly based on everything we've seen so far, it's a very efficient model that allows you to move quickly into markets and allows you to move very efficiently where opportunities exist.
Does give you opportunities in terms of traffic rights that wouldn't exist with a single AOC or may not exist with a single AOC. We've seen that in the low-cost model as well, where there are low-cost airlines with multiple AOCs to take advantage of some of the traffic rights. Our industry can be a bit complex at times, and sometimes we put structures in place that would appear unnecessarily complex, but they're actually designed to give us opportunities, and that's what we think the structure will do for us.
I think you explained that extraordinarily well, Willie. I think the one piece that I would probably add on the top, I call it production units for a very specific purpose, which is that it's not necessarily an AOC. It is just a different way of approaching part of the production equation. If you like, if you look at a different airline type structure, what you see is that airlines build bases of different sizes in different cities under the same AOC, but it's not a dissimilar concept. By keeping the production units small, we encourage competition between the different units, but also we ensure that the management of those units is able to have direct personal relationships with the individuals who are flying as part of that operation. It gives you better management control by having reasonable size units sitting underneath it.
For that reason, I really do believe that this is part of the long-term structure for LEVEL as we go forward. As Willie says, anything which doesn't work in the way that we deploy the model, we're going to go back and change it and do something completely different.
At one stage, in fact, it's interesting, at one stage a couple of years ago, BA was operating with four AOCs. Today it operates with two because BA CityFlyer is separate AOC to British Airways. We have done this in the past, and I think we know how to do it. In relation to Aer Lingus, we're waiting on the regulator. This is an ongoing process. It does require regulatory approval to bring Aer Lingus into the JBA. I don't know, Chris, if you want to comment. I don't have any view in terms of how long that is going to take. The good news is it's not in any way distracting or preventing Aer Lingus fully exploiting the opportunities that they see outside of the JBA. That's the way we're operating.
Aer Lingus will come into the JBA at some stage subject to regulatory approval, it's not going to in any way slow down the plans that Aer Lingus has today.
No, the only thing I'd add, Willie, is a couple of things. The process of the DOT and regulators generally is becoming pretty onerous in terms of information requests and econometric data, that sort of stuff. There's quite a lot of work of that sort going on. Then obviously there's no statutory timetable with the DOT, so I'd anticipate through 2019. Obviously to some extent you're dependent on the DOT and their own priorities.
You heard Stephen in his presentation saying the relationship with JetBlue and the relationship with Alaska Airlines, they will continue and clearly aren't dependent on regulatory approval. On Vueling, what we're doing, again, Javier can comment on this, to reflect the ATC problems that we've encountered, it's more predictable today than it has been. You heard Javier saying we're using AI and machine learning to adopt a new schedule and change the network so that we can build in some additional buffers in anticipation of the ATC delays that we have encountered and are likely to encounter. We're confident about the ability to grow. It will be a different shape around the growth than we had in the past and that we had in our original plans. Javier.
Yeah, I will comment maybe a couple of things. Well, first is when we look at our operations, our operations are different depending on the way the network is shaped on where we fly to, where we fly for. For instance, in Barcelona, we have similar punctuality like the airport, but in places like Bilbao or Sevilla or the Canary Islands, we have 80% punctuality. It's different depending on the environment you're facing too. What we are doing is by reshaping the network and first we are taking into consideration those places. When we're thinking about growing, it is true that we are factoring that in. It's not that we are growing in the same places, maybe that we will be growing in a different ATC environment. The things that we are doing are very simple.
In fact, when we said that we are building some resilience into our operations, basically that we take the pain points of our networks and we put some buffers there. Some buffers sometimes is that we need to operate these with more crews, or is that we need to have a turnaround time that is a bit longer. That's the kind of investment that we are referring to when we're saying that we are investing in building resilience in our operations.
One of the advantages we have, Eamonn Brennan, who's the Director General of Eurocontrol, is very open sharing data with us. We've got a much richer data available to us, not just our own data, but data provided by Eurocontrol, which identifies the bottlenecks and has given us the ability to look at what happened, not just to our own operation, but to others as well. They're assisting airlines in predicting where bottlenecks are likely to exist as well. We've a lot more information available to us to address this. It still tells us we need to scale back the growth, and in some areas, we're not going to pursue growth in certain routes, if you like, because we know that they're the ones that are going to be particularly hit.
It's a different shape of growth that we'll pursue, but certainly, we're confident that we can manage that.
Our next question is from Daniel Roeska.
Thanks. It's Daniel Roeska from Bernstein. I'll stay on consolidation and maybe have a multi-part question. It seems a little bit with fuel high, capacity growth still continuing, you're keeping the pressure on the market and banking on some consolidation out there. Could you comment a little bit on whether you see consolidation and disruption from consolidation more likely among bigger carriers, let's say the top 15 out there, or rather in the long tail? Which of those two benefits the group more? What will you be looking for? Maybe also just a brief comment on what would need to change, what you'd like to see with the ongoing, let's say, discussion with the Nordics or the not ongoing discussion with the Nordics and what's happening at Norwegian.
Lastly, since Vincent presented LEVEL a little bit as this new operating model, a virtual airline, do you consider that to be a potential vehicle for consolidation? Some of your competitors have used it, but that also may distract a little bit from what LEVEL's actually trying to do. Just a little bit of thinking around how LEVEL or if LEVEL fits into that consolidation game for you.
No, we don't see LEVEL being one of the instruments we're using in terms of consolidation. LEVEL is for organic growth, and we're very clear. It's a simple focus that we've given the team. This is an organic platform to grow into markets that we believe are attractive, that are currently underserved, and where we can compete in a profitable manner. In terms of consolidation, what's been helpful from an industry point of view, the failures of a number of the weaker carriers, it does benefit us marginally. The collapse of Primera and Cobalt had a very slight benefit to us directly. In the case of Cobalt, we added capacity from Heathrow to Larnaca. I think a second service, second daily service, replacing the capacity that they would have had. Clearly, that's a positive for us.
Primera, there was a little bit in the markets. It didn't come as a surprise to us that they failed. I don't think it came as a surprise to anybody that they failed. Seeing carriers like that have tried to talk big, but actually do very little, disappear is definitely a positive. Consolidation, I think, is going to take place in many forms. I think there will be some M&A activity. I think there will be failures. They will principally be the smaller airlines on the regions. All of this benefits the carriers within the group and gives us opportunities that we're in a position to exploit.
The one thing I would say, I think we said earlier, I think this is the eighth Capital Markets Day for IAG, and I did six for BA, and I think every single one of those people expressed concern about capacity. This isn't a new theme. I think during every one of those, we said we're confident and we're comfortable with the capacity that we see. We're very comfortable with the capacity that we're putting in the market, because you can see where we're putting it. It's targeted, it's in areas where we've got proven opportunity, and it continues to deliver above industry returns, whichever way you want to measure that. We're very flexible to be able to adjust capacity, and that's one of the beauty of IAG.
I think we're probably going to be faster than anybody, given our experience, to respond to what we might see as a weakness in demand or increases in demand in certain markets. That flexibility is absolutely key. You should expect us to continue to fully exploit those opportunities and to adjust capacity. People expressed concern about capacity last year, and look at the performance of the business. They expressed capacity concerns the year before, and look at the performance of the business. We're not putting capacity in there because we think there's an opportunity to grow. We're putting capacity in there because we think there's an opportunity to grow profitably. That's the difference. We're very focused on the returns that this capacity will generate for us.
In the presentations that you've seen, I think you can appreciate that it's very targeted capacity growth into markets where we know very well and where we know we can continue to deliver the returns that we've been delivering. In relation to the Nordics, I've nothing new to report, to be honest with you. We continue to watch. We continue to have an interest. Obviously, as I said before, the interest wanes over time. We'll wait and see. There's a lot going on there. I'm getting sort of updates on an hourly basis now. I don't know who keeps sending them to me, but people keep sending me updates in terms of what's happening. There's a lot happening in that company, and it's fun to watch. I've nothing new to add to what I said earlier.
We believe when we talk about consolidation, it is an opportunity, particularly if you look at the short-haul network and further consolidation in that short-haul network. It is probably the best opportunity for us. We would only do it if we felt that that would generate returns that can match the returns that we have set for the airlines in the group. Nothing new to say. We will keep you informed if there are any developments. At this stage, I have no new news.
Neil.
Thank you. Neil Glynn from Credit Suisse. If I could touch on two topics. The first one would be following on from the profitable growth forecast or, sorry, focus. On your long-haul business and thinking about route selection going forward, there was an interesting slide earlier on where you highlighted of 97 long-haul routes, 70 of them are non-overlap routes. How do you think about selecting routes going forward in terms of maximizing your hold on a market and the margins therefrom? Should we expect more overlap from opco to opco going forward? The second question on the distribution strategy. I guess we are a year on from the change. Can you help us understand the 2% unit revenue growth so far this year to what extent that was influential there?
As we think over the next five years, should we expect linear improvements, or how do you think about the profile of distribution strategy improvements? Finally, on that same theme, do you need to make a decision soon on the booking engine's future in terms of what it looks like?
On the booking engine, no, we do not need to make a decision soon, and there is a lot of work. Robert touched on some of that last year and hinted, but there is work going on behind the scenes. No, we do not have any immediate need to address anything in terms of booking engine. I will go back to the route overlap. Actually, there is potential, particularly on the North Atlantic. Some of the destinations that Aer Lingus actively pursuing are already served by one or maybe more airlines in the group. Some of the destinations that they are looking at, while they are not currently served could also be of interest to BA, for example, because as I have said on many occasions, there are many destinations in North America that we believe we can still serve either from Dublin, from London, or from both.
At the moment, I'm trying to think through Stephen's list of airports. Most of those, as you've seen before, not all of them, but most of them are in the sort of northeast of the U.S. They're all over the place, actually, Stephen, aren't they? With the A321, you've seen the range profile of that aircraft. In the process of going out to airports in North America to see what interest they would have in a direct service by Aer Lingus, actually, we were surprised at the number of airports that came back that were outside of the range of the A321 that expressed a strong interest in having a direct service to Dublin.
There are some that are being actively considered by Aer Lingus, and that's why Stephen mentioned further growth in the A330 fleet as well because there's opportunity there. Some of those destinations are already served by BA. We know we can do them, and we've demonstrated this. We can do this and be profitable in both. I think it reflects both the nature of our business, serving the different customer segments, feeding people over the different hubs in different ways. On distribution strategy, it has had an improvement. I don't know, Robert, maybe you want to comment. It has had an improvement on the unit revenue. It's not what I would consider to be something that would be significant at this stage. It probably won't be linear.
Yeah, I'd agree, Willie. There is a beneficial effect but probably pretty much in the noise of what you would see. The area where we've had some more measurable upside is around the ancillary sales.
Yeah.
The changes that we've made, we've seen some good shifts towards our growth of our direct channels, that comes with a better opportunity for us to drive ancillary revenue. In terms of the shape of the change, as I mentioned earlier, we've been quite careful to try and make sure that this is a transition that happens smoothly. We would expect the same to continue growth in that channel but happen in a way that isn't causing warfare.
Hi, it's Alex Paterson from Investec. Three questions please. Firstly, load factors are very high by a historic standard. Is there much more that you can achieve on that? Is there an optimal LEVEL that you can target? Secondly, in terms of allocation of capital, should we assume that you allocate capital in a way that the returns ultimately converge across your airlines? Obviously, in the short term, you've got other reasons to invest in BA. There are capacity constraints in other areas, ultimately, would you expect that to be the case? Lastly, would you be happy if the Italian State Railway, and if you excuse my Italian, Ferrovie dello Stato, invested in Alitalia?
Okay. I used to say that probably the Italian post office was a better investor than Etihad. Italian Railway is probably a better investor than the Italian post office. It's another one of these Italian solutions to an Italian problem. We're staying well away from it. The good news is that the longer this goes on, the more opportunity there is for us to pursue an organic growth plan, and we're doing that, and it's been very positive for Vueling in Italy. Load factors, there is scope for higher load factors, and I think certainly Álex commented on it in terms of the BA performance both at Heathrow.
The Gatwick load factors, I think are pretty good, but there's some scope there as well. Indeed, at London City, I think there's some scope. I know Stephen has talked about load factor opportunity at Aer Lingus as well. I think there's definitely room for us to get a better performance. I do always caution people when they look at our reported load factors against some of our low-cost competitors.
We report on a different basis, this is one of the things we have talked about. The likes of Ryanair report on sold seats, whether they're occupied or not. BA only reports the commercially occupied seats on the aircraft. It's not a like-for-like comparison. There is definitely scope for BA to improve short-haul seat factors at Heathrow in particular. I think that reflects the shape of the network that BA has been pursuing at Heathrow as well. Capital. Do you want to talk about capital?
Yes, convergence. Yes. Yes, of course. We seek convergence of returns on our different capital allocation positions on companies, on new projects, et cetera. At the same time, we leave time. Huh? The moment to reach those LEVELs of required returns may vary, and it does vary very significantly. It's on purpose. Hm? When we do that, it's because we have a target to accomplish. After the target is accomplished.
We take a return.
The return will come. Yeah.
Thank you.
Over here.
Andrew.
Hi, it is Andrew Lobbenberg from HSBC. Can I ask on BA and Álex's fancy new seats, what is the timeline on getting the fleet embodied? To make it commercially valid as a marketable thing, you will need to get them in quickly, and they now cost a lot of money, and you will need to take planes out of service. How does that play out? In terms of network, there is remarkably little discussion through the day in terms of Asia. I do not know whether it is something to do with your strange fixation on profitable growth. I do not know.
A lot of people there, a lot of growth there. How does Asia play into your thinking? Just in terms of the return on capital work, what changes with the IFRS 16 and changing of the capitalization structure? You are going to give us a complete new set of numbers at some stage, or how does that play out? Thanks.
Okay. Álex, you can comment on the seat. The one thing we know about seats is that seat supplier, yeah. We have a program that we believe is deliverable, and we are staying in close contact with the seat manufacturers. Again, we have learned from the mistakes that others have made, where they roll out with big fanfare the new seat that nobody sees because they have not been able to deliver it. Álex, do you want to talk about your plans?
No, this is one of the items that we struggle the most. We need to make sure expectations are managed correctly. This is not going to be a quick rollout. It is over 100 wide bodies that need to be reconfigured. We will see probably at this stage in finalizing the tail end of the plans, the last aircraft being done in 2023. Yes, bulk 2020 and 2021, beginning in 2019, but there will still be some aircraft in 2022 and probably a few remaining in 2023. This is a manufacturing issue more than anything else. If we had the seats ready, we would try to install them very quick, and we are ready to put aircraft on the ground to make those installations, but it is more of a supply chain issue at this time.
Asia, yeah, you're right. Asia is about 8% from a group point of view of our capacity. It's principally BA, and it's from memory, Sean, you could correct me if I'm wrong here, it's about 13%-14% of BA's ASKs. I think in the presentation there, you're looking at 5%-6% growth in Asia. We're not ignoring it. I think our experience with Asia, where we've sort of dipped our toe into the secondary city markets in China, has not been very encouraging and therefore, we're not saying we won't do it, but I think we're more cautious. We have launched Osaka. I don't know, Sean, do you want to give that if it's still one of your areas of responsibility until-
Yeah. Indeed, I think Osaka is launching next April, four per week. As an example to the 788 opening up kind of markets that wouldn't have been feasible five or six years ago. You got to remember as well, we successfully reentered Seoul and Kuala Lumpur in the last four years. We've added more frequency to Shanghai.
I think the big cities in China, as capacity in airports opens up, we would look to build in more frequency and more depth of schedule there as well. Our plan does include about 5%-6% growth, and that will probably include another new destination on the map, a number of which we're evaluating.
Okay. Was there a third question in there?
On IFRS 16.
IFRS 16. Yeah, sorry.
Well, some preliminary findings, which are encouraging. On one side, our leverage. Our debt ratios that we were using pre-IFRS 16, adding to the balance sheet LEVEL of debt, a multiple of the rents to undertake a notional amount of the operating leases. General practice, that was the old days. The new days, with a new accounting model for operating leases, the figure is going to be very similar. The liability side is going to be similar. Leverage is going to be similar. The asset base that we are going to be using is going to be similar. We still have to make a final decision on the specific metric that we are going to be making for ROIC. Again, the preliminary outcomes is about very thin range between the different options. We don't see nothing exceptional happening. It's more about continuity of the type of figures that you have been seeing today.
We love debating this one. We spent hours and hours at management committee. I wish I'd recorded it because it's a fascinating discussion. There's been more time spent debating IFRS 16-
Any other issue.
Yeah. It's great fun. We love these accounting changes.
Thanks. Gerald Khoo from Liberum. Three from me, if I can. Starting with LEVEL and the sort of virtual airline. What consideration has been given, if any, to using AOCs or production units that don't sit within IAG? Certainly, there was talk about Aer Lingus using A321LRs transatlantic and then turning them to use them on short haul. The immediate thought is the other airline that can do that is JetBlue, and there have been suggestions that it might be looking at transatlantic. What are your thoughts in terms of them as a competitor or potentially a partner instead? Finally, on Gatwick, following the acquisition of the Monarch slots, could you elaborate a bit on what the sort of longer-term strategy is? Clearly, in the short term, the focus has been on slot utilization in terms of short-haul flying.
Presumably there's more to it than that over the longer term. Thanks.
We already use other airlines to provide capacity. Aer Lingus does this with the 757s, which is, in effect, a wet lease providing capacity on the transatlantic for Aer Lingus. BA has used, and will use at London City, some airlines provide capacity. It's not a new change. It's not necessarily a model that LEVEL is pursuing because there's other opportunities. There's no objection to using capacity provided by somebody else, if it makes sense. You've got to have the right relationship. I think the Aer Lingus example of the 757s is a perfect relationship. It works extremely well. Our experience is that these can work well in the short term. Getting one that works well in the long term is a challenge, but we have franchise operators in Aer Lingus, in Iberia, and these are longstanding and have been very efficient and successful relationships.
Over time, those relationships can become stressed. On a short-term basis, it is an opportunity, and we would use it. JetBlue, I'm going to ask Stephen to comment on this because Stephen has a very good relationship. We know the JetBlue people very well. We've listened to their comments about transatlantic for several years now. It's been anticipated that they might do something. But again, it's just a Well, Stephen, why don't you comment?
Thanks for that one, Willie. As Willie said, we've had a very long-standing relationship with JetBlue, and it's of mutual benefit, reciprocal benefit. That's why I think that whatever decisions JetBlue may or may not take, I think the likelihood of being able to maintain a commercial partnership with them is high. There's a small matter of 200,000 guests that we exchange between each other. We've been helpful to JetBlue at Boston, for example, in building out their ambition at Boston. We have co-located terminals. We have strong relationships across our businesses. We would look to continue to work those relationships, and I'm pretty confident that they're of a similar mind.
Yeah. I would say JetBlue is not a low-cost operator. It's a good airline, good brands, good quality service. I don't think there's anything there that we should be concerned about. We know how to compete, and we know how to compete with new entrants, existing entrants and pretty much anybody else. If they do, there's certainly room for them. It's a good market and a growing market that we would see, but it's not something that would be of any particular concern, and we'll see what they actually do. Gatwick slots. I'm going to let Alex and Sean maybe comment on this.
Sure. Just to confirm that, yes, as I mentioned earlier today, we will look at some additional long-haul aircraft for Gatwick over the coming years.
The focus of Gatwick continues to be leisure. We see an opportunity there. There's the particular type of market that has been served there for a long time. We know it quite well, we'll continue to work on it, both short-haul and long-haul. However, you will see us flying all of a sudden to Cape Town or New York from Gatwick. There are opportunities to optimize the whole network, including Heathrow at times, complementing Heathrow with some of those destinations. It is amazing how we're planning 3 different airports into San Francisco, two different airports in Miami. Yes, you can go to Fort Lauderdale, come back from Miami, and giving that flexibility in the schedule helps a lot. Primarily leisure, and secondly, complementing the product from Heathrow.
Hello. Guilherme Sampaio from CaixaBank BPI. If I remember well, BA was the launching customer of Amadeus Airline IT Systems. In one of the slides, you mentioned the possibility of working with no PSS at all. How do you see your relationship with these large GDS airline IT players evolving in the future?
Yes. Go ahead.
The second question is now a different topic. Compared to last year, you're stepping up the capacity additions, whereas fuel price is also higher, which theoretically would mean that some of the routes become less profitable. This would mean that you probably are more optimistic regarding demand, or is there the LEVEL growth, or is there any other thing?
Yeah.
Thank you.
On GDSs, we believe there is a role for GDSs going forward, despite all the changes we'll make. We want to have a relationship with them. What all we've said, and we've been very consistent on this, is the relationship can't be one that's based on the historical relationship, which doesn't work. It doesn't work today, and it certainly won't work in the future. We've been encouraging the GDSs to respond to the changes in the market and to respond to the needs of our customers and of the airlines, and to do business with us in a different way. I've been pleased that actually the response has been better and more constructive than I had expected. My concern was that they would dig their heels in. They have actually responded and are working reasonably well with us.
We want to have a relationship because we know that for distribution on a global scale, we do need to have some reliance on GDSs, and we want to continue to work with them where it's relevant to us, but not based on the relationship that we've had in the past. I see a role for them. I see, hopefully, a constructive dialogue continuing with them. Ultimately, we're very clear in terms of where we're going, and we want them to come with us on that journey. If they don't, ultimately, it's a journey that we will pursue on our own. I expect them to continue to work with us and to join us on that journey. The fuel is extremely volatile. We were just looking.
Yeah.
I think the forward curve is-
The forward curve, for example, for the 5 years ahead, the years on the business plan is yesterday $699 per metric ton of kerosene. Which is by the way, the figure that we have used on our assumptions. On a type of short-term basis, the way it has been moving has been absolutely incredible. In the last two days, fuel prices and kerosene prices have been falling by 4%. It's really difficult to make assessments to plan, to manage. That's why the hedging program has a huge sense. We need to smoothen this type of behavior because if not, it becomes unmanageable. For the purpose of the plan and the short term, we are comfortable now with the assumptions that we made, $700, maybe slightly higher in the first year. That's where we are. That's the type of fuel cost increases that we have been suffering in Q3 or Q4.
Yeah.
We know how to manage them. Of course, if it was doubling the price, we'd have a huge problem and some opportunities.
Yeah.
For the time being, they're there.
As I pointed out earlier, if you look at that period, 2010 to 2017, at an industry LEVEL, fuel was 27% of the industry's cost base.
Yeah.
That was the most profitable period in the history of the airline industry. The industry can adapt. It takes us a little bit of time, but we can adapt. During that period, there was very strong growth in the industry as well. The predictions, if you looked at, whoever you want to look at, but even IATA was talking about 2% compound growth out to 2037 in Europe. That's in the face of questions about fuel, the economic environment, everything. That's not their high case scenario. That's what they consider to be a business as usual scenario, factoring in the high fuel price. We're confident that we can manage in that environment, and we can manage well.
Just to follow up, because my first question was not exactly related with the GDSs, but more with the airline IT part of the GDS. What's powering the NDC platform? How are the flights distributed through travel agents?
Sorry, I missed that bit. How is?
My first question was more related to the airline IT part of the distribution, not with the distribution itself, not with how you are going to deal with the GDSs. More, how are you powering your airline IT systems to continue working with the GDSs-
Yeah.
-or not?
We're doing a lot of work. Glenn, who's up behind you. I don't know, Glenn, do you want to comment on this? This is an area where we're spending a lot of time and considering how we change our business model and how we exploit technology that's existing today and is likely to become available to us in the short term.
As Robert put a chart up today talking about just the opportunities around that. NDC is one component. We're looking at the offer. The next phase and across the industry is the order component, which is what you classically know as the passenger name record or the PNR, that six-digit reference. What we're aiming across the industry, and it is an industry effort, so it's not just IAG as a group. We're leading that. It is looking at how we can move us into the more retailing aspect. You're seeing the ancillaries growth, all of those areas, and that's a key target area that we want to address over the future.
I'm conscious of the fact that we're eating into the time that we have.
I think we should call it today.
... Made available for some drinks and
Yeah. Absolutely. Thank you, Enrique, Willie. Thank you to all our speakers today. Thank you all for coming. A special thank you to our organizers today, Angela, our newest team member, and Sarah, whom I know some of you know. Thank the rest of the IR team of David and Irene and the strategy team. We're serving drinks outside, so please do join us. Thank you.