Guys, we're going to make a start now. Good day , and good afternoon. Welcome to our 2024 Investor Day. Thank you to those of you joining us here in Auckland in person. It has been a little while since we've had one of these events, so we're really excited to have you all here today. I would also like to extend a big welcome to everyone on the webcast today. My name is Kim Cootes, and I run the Investor Relations team here at Air New Zealand. I'll be popping up every now and again over the course of the day. Before we get started, safety first. For those of you with us, the emergency exits are back through the door in which you came. Once you're out in the foyer, our events team will direct you further.
Bathrooms can be found at either end of the foyer, but you do need to go through the security gates to make sure you grab a pass on your way out. You will also find Wi-Fi and text to coffee details on the little signs on your table, so if you need either of those throughout the day, make use of that. And if you get peckish during the event, we've got a whole host of our amazing onboard snacks available on the table at the back for you to go and grab. As always, we'd like to remind you that over the course of the day, you will hear comments with forward-looking statements that may differ to actual performance. So please take a read of this and make sure you bear it in mind as we go through the day. Right, next we have our agenda.
You're going to hear from several of our exec and members of the senior leadership squad, and you can see more on their bios at the back of the presentation. Getting through the session today, because there's quite a lot of content, we will save the Q&A for the end. Leila is going to facilitate the Q&A. As many of you who know her in the room will know, she runs a tight ship, so make sure you're ready and waiting to go when she comes up. Unfortunately, for those of you on the call, we don't have conferencing capability, but if anyone on the call has a question, please do get in touch with me after the event. And for those of you that are here, we hope that you could stick around for some refreshments after the event concludes.
There'll be lots of people from both the exec and other members of the Air New Zealand team here to ask lots of questions. And with all that housekeeping taken care of, and before we welcome Greg to the stage, we'll kick off with a quick video.
As soon as I put this uniform on, you know I'm part of a team, part of.
Fun with the sense of pride it brings about. It just gives me that sense of belonging.
I'm looking forward to the life jacket, man.
Good day , and good afternoon, everyone and maybe just before I do a few opening remarks, I might just get a few of the team who are presenting just to sort of stand up so everyone can see who you are. So Mike, can you just stand up? So Mike's going to take us through our network strategy. Where's Jeremy? There he is. He's going to take us through commercial. Kate? Thanks, Kate. Loyalty. Nikhil? Nikki? Great. You're going to take us through our people and culture. And Richard? The good news is they've all turned up, so I'm relieved about that. Therese, can you just quickly stand up? I'd like to introduce Therese. She's the Chair of the Board. Thanks for coming today and if I can say, first of all, thank you to all of you.
I know that you've got a lot on, and hopefully we've been able to schedule this around your busy schedules as well as ours, and thank you also to those who have joined online, and just before I do kick off, I just want to say thank you to the team for putting this together, so we've heard from Kim, but Leila down here, many of you will know. She's been instrumental in pulling this together. Jen, you've had your share of work to do, and there's been plenty of others all across the Air New Zealand team that have pulled this together. As you know, we haven't done one for a while. To Olivia and all of your team, there she is. Thanks for running yet another event for us. Terrific, so why don't we jump in and get underway?
You know, a few weeks back, we were voted the best airline in the world by customers. 30,000 of them, actually. It wasn't our survey. It was totally independent. And I thought it was worthwhile beginning with this and just pausing on it for a minute. Because it's not as if we haven't had our share of sort of disruptions in terms of fleets and how that's played out with customers. But, you know, dealing with product, particularly on our widebody planes, which is over 20 years old, and many of you travel on those. And we'll talk about the refresh of that later on today. But here we are, getting that type of award. And I think it says quite a lot about Air New Zealand and its culture. And I am a supporter of someone like Peter Drucker, who says culture does indeed eat strategy for breakfast.
It's part of our DNA. Nikhil will share some more about that with you later on today, about our people and what makes us different, and I would say to you that it creates real sustainable competitive advantage, and we're going to guard that fiercely, and it's why I'm very confident that Air New Zealand can deliver on the plan that we're about to go through. You know, Drucker also said, "There is nothing so useless as doing efficiently that which should not be done at all," and I like that one too, so not only is he telling us that it's pretty important to have good culture, you better have a darn good plan, and importantly, you better know how to execute it.
So you're going to hear quite a lot today about what the things that we're doing, how we feel about the business, and where we see it going. Importantly, you're going to meet many of the leadership team in Air New Zealand. Richard's going to close out today, and he's got a fantastic set of slides that are going to lay out the future financial opportunity. So, in plain English, you're going to see where we're going to play and how we're going to win, and in that order. You're going to see a plan that's going to deliver strong free cash flow and returns for our shareholder. And you're going to see some talent and depth and attributes in this team that are going to give you confidence that actually we can deliver this. It's back. Travel is back.
Seems a strange thing to say, but I can tell you for the first two years I was in this job, I wasn't quite sure what was going to happen. I started on February the 3rd, 2020. On February the 2nd, 2020, which was a Sunday, I got a telephone call telling us, me, that we were no longer going to fly to Shanghai. Good news is I didn't know how often we flew to Shanghai. It turns out that it happened to be, you know, every day of the week. What was interesting is that six weeks later, the only flying we were doing was repatriating Kiwis and moving some cargo. So I can tell you now, if there was ever anything that was going to stop the airline industry, it would have to be something like this. It hasn't.
We ended up doing, this is actually a good fact for you, over 400 scenarios during about a two-year period as we worked hard with Justin and his team in Treasury to pull together the wherewithal to do a capital raise. And you'll see from Richard's presentation, we've got a really good balance sheet now. But let's be clear, demand is back, and we can fulfill our promise of connecting people. And not only that, but we can do it sustainably, and we'll talk a little bit about that soon. About five weeks ago, Therese and I and a couple of others actually caught up with Kelly Ortberg, who's the new CEO of Boeing. He was in the middle of a strike at the time, and I'm very pleased they're back at work.
He had his hands full, but he gave us a day, and we chatted about a whole bunch of things. One of the things he shared with me was he said, you know, we've got about 2,000 aircraft that have not been built over the years since COVID. So we've got an order book, which is pretty full. And I can tell you that Airbus have got the same issue, and so have ATR, and so have all the engine manufacturers. So I think there's no question in my mind that we've got any issue here with demand. And Mike reasonably soon is going to share with you what our growth looks like. And the headline there is it's between 3% and 4%. We think that's a pretty good number. I've had plenty of wise counsel in my time of being a CEO in various different countries and businesses.
One piece of advice I've got I've never forgotten was the three rules of strategy. Maintain market share. Maintain market share. Maintain market share. Sounds simple, but people move away from it. So you can see how important domestic is to us. That's our citadel. And guess what we're going to do in domestic? Maintain and grow market share. Inbound tourism is also a pretty important part of that. We'll make sure we get our share of that. And you know, we're an interesting business because we have to be a bit ambidextrous, don't we? We're not the biggest around. So domestically and across the Tasman and into the Pacific, we're a pretty egalitarian business. We don't get too caught up with business class and all the trappings, and nor should we. So we have to maintain that approach.
At the same time, we're very clear that on our long-haul international routes, we're a premium leisure airline. We understand that well. Through this afternoon, you're going to see how we've adapted our offerings to basically play in those particular markets. You know, over 40% of international travel to New Zealand is on us. Jeremy will talk some more about that. Global demand is strong. We expect it to stay that way, tick. New Zealand demand is strong. We also expect that to stay, tick. It doesn't mean that we don't have a few headwinds to deal with today. These are pretty well documented, aren't they? Whether you're talking about engine issues, whether you're talking about trying to get new aircraft, supply chain, or even chasing down some engineers, a key role for us, we're still having to work hard at all those things.
Quick story. About 18 months ago, these are all the things I've had to learn in this gig. I found out that there were about 40 parts that required your Dreamliner to be AOG, aircraft on ground, before you could order them. So in other words, you just couldn't go out there and fill your distribution center up with reverse thrusters or whatever the part happened to be, simply because you thought you might need one. You actually had to demonstrate to the OEM that the plane couldn't fly. I think one of those, David, was a windscreen at one point. Toilet seat was another one. Go figure. Anyway, that number was 40. About 12 months ago, it changed to 80. About two weeks ago, the number was 794. Keeps us on our toes, I can tell you that. But we stay close to the issues, and we need to.
This time next week, Richard will be getting close to getting off a plane and catching up with our good friend, the CEO of Rolls-Royce. He's a good friend because I've got to know him closely, so Richard and I will enter into yet another discussion on Trent engines with Tufan. The next day, we'll be shooting over and catching up with the CEO of a company called Safran, probably the biggest parts supplier because parts are a challenge. Next day, we'll be catching up with the CEO of Airbus and ATR. Why do you have to do those things, well, you've got to do them because when you're not the biggest and you don't have that leverage, and I have worked in a company that used to be quite large, so I had quite a bit of leverage, I've worked out relationships are really important.
How might that play out? Here's a good example of it. Baden had to go and find us three triple sevens the other day because we needed them. The reason for that is that we've got four 787s that we can't fly at the moment because we ain't got any engines. Now, I can tell you that there are a lot of airlines out there looking for triple sevens. Why do they want a triple seven? Because a triple seven is a bit like a 1986 Toyota Corolla. Likely going to start every time. These GE90 engines on them are something to behold. You don't have to take them off wing every 750 cycles. You can leave them on there for several thousand. We like them. How did we end up getting three? Really good ones. Relationships.
Now, it also helps when you've got a good balance sheet, and it also helps when you have a good engineering and maintenance department that look after these things, but that's one of the ways that we've been able to keep this thing moving along. Most of you will have caught up with the fact that we've gone out with an update to the market. I'll tell you how I feel about things at the moment. I feel pretty good. If you'd have asked me on the 1st of July, which was the beginning of our new financial year, that we could put out guidance this morning saying we'll be between NZD 120 million and NZD 160 million, I would have taken that every day of the week, and the reason for that is that I knew, and so did the team, it's going to be pretty tough domestically.
We've got to spend out of government, which is about -25%, and I'll give you a hint, that isn't going to improve anytime soon. They're going to keep the screws on their expenditure. And that represents a reasonable portion of our domestic business. I can tell you that corporate spend is down about 12%. I think that will gradually start to improve. And we've got plenty of competition still coming in in various markets, the U.S. for one. And I won't bore you with the geopolitical issues that we're dealing with there. Suffice to say that I think traffic between the U.S. and China is still only operating at 19% of pre-COVID levels. So they've got a few extra aircraft that they don't mind sending to Australia and New Zealand.
So you add all that up, and to come in with the sort of guidance that we have, I'll take that every day of the week, especially when you consider that you've got over NZD 1 billion worth of your aircraft sitting on the ground that you can't fly. I think it's a credit to the team that have delivered the result that they have. I'm proud of them. So here's what I would say to you. Like us, be patient. Stay focused. Hold us to account to get stuff done. And I hope that when you finish today, you see that we actually get stuff done. And just as importantly, make no regretful decisions. I've been in plenty of businesses when I see they get into tough times, they do short-term things. We don't do that. We think long-term.
We're building hangars that are going to be really good for another 50 years. We're investing in Christchurch Engine Centre. Why? Because it's a good business and it's one we should be in. We'll retrofit planes because we know it's the right thing to do. And the good thing is we've got 85 years of legacy. Boy, did I inherit something pretty good. 85 years of goodness. And you'll hear some more from Jeremy about how he's thinking about our brand and Nikki about how we're thinking about people. A loyalty program that just gets stronger and stronger. But we now have replatformed it so we can do some pretty exciting things. You'll hear about how we're continuing to simplify the fleet. And you'll also get a sense of how these numbers start to play out. As I said, we haven't been sitting on our hands.
We have a bit of a saying in the place, which is you've got to be able to walk and chew gum. So yep, I get the fact that we might have to deal with a Trent engine that didn't come in or Pratt & Whitney instead of having five AOGs on the 321s, we've got six. I want us to make sure that we are doing lots of things to build this business so it is something that not only we're proud of, but the country is proud of for the next 10 or 20 or 30 years, and this list is by no means exhaustive. In fact, if we'd put everything on it, and you'll see some lists and some of the other slides that are coming up, the font would be incredibly small. As I said, we know how to get stuff done at pace.
Some of these are going to drive revenue, some are going to reduce costs, some you're going to see, and some you won't even see. It's going to happen behind. You know, I'll give you one example. I just came out of a meeting an hour ago, and we just turned on Apple Tap to Pay so we can do a better job of collecting excess baggage fees. We've worked out how to do 100 things 1% better. I'll quite often get out around the business. Why? Because actually, that's where the truth is, the unvarnished truth. You know, when you're talking to an engineer or you're talking to someone checking someone in. I worked out the other day, I think I've checked 20,000 people in. Kate's often with me. We're great buddies often on a Saturday out there checking people in.
We've worked out how to lay the floor out better. We've worked out how to improve the speed through kiosks. Even when you use your app now and you're checking in for a flight, how many buttons do you have to check? One. Thank you, Nikhil. So we're doing a good job on that. You'll hear a bit more about all the things we're doing with people. You know, I was at a Kia Ora Youth Induction Day with Nikki a couple of weeks back. We had about 250 new starters. We do one every six months. Got really low turnover, and she'll tell you about that. But gee, I get excited about the talent that I see coming in the business. This retrofit that we're doing on the Dreamliner, fingers crossed, we get it back in from Singapore circa 10 January or something like that.
We're literally chasing parts every day from all around the world. Relationships matter. But I think you're going to really like what you see on that plane. Do you know we are the first airline in the world to do a major retrofit on a 787? Not only that, we're having to do it using what we call an integrator. So it's not just us being able to work with Boeing. Boeing are so far in the swamp filled up with alligators, they haven't got time to be doing all these retrofits. We've had to work out how to teach them to partner with NAT to get this retrofit done. But the team are doing a terrific job. And then you're going to hear some more from the team about some of the operational work that's getting done.
And to Alex, stick your hand up, Alex over there, she runs our operations. David, you'll all know David. They're into the absolute detail in this business around what's happening with getting flights in and out in time. And Nikhil will share some of the terrific work that he's got underway in terms of the digital pieces to make that operate well. Every business needs a plan on a page. Here's our one. You will hear through the afternoon as the team follow me. They'll take you through each of these pillars and they'll show you, you know, we know how to grow domestic. We think we've got a great vehicle there, a great aircraft in the A321, the most efficient around. They'll talk to you about better regional connectivity and routes, fleet utilization. Jeremy and Mike will talk to you about premiumization of our long-haul fleet.
You'll get into some detail there around why we know we can drive more revenue in those areas. We'll talk to you about some enhanced product offerings. We'll get into loyalty in a new way. You'll see new ways to earn and burn. We'll introduce something to you called variable redemption. Take note on that one. It's a really interesting one. And then, of course, we've got all the aspects down below, whether it's the brilliant basics or our people and our culture, sustainability, and all of it wrapped up in a digital cloak that gives us competitive advantage. You know, here's another interesting point. I think Nikhil raises it, but I'll do it so it will really hit home. I think about 95% of our information is now in the cloud. 95%. So three years ago, we were still running servers all over the place.
In a world where AI is coming at us at 100 miles an hour, you need access to data and you need it accurate and fast. Maybe one of the most important slides in the afternoon. Mike thinks he's got a pretty good one as well. He's going to show you where we're number one in the market in a whole bunch of areas. This is an important one because it really says, okay, so you've got a plan to deliver. I get it, but let's be clear that what we've got on this page is Above and Beyond steady state business, and I would say to you, we're not in steady state business at the moment.
You know, we've spoken about sort of a NZD 100-odd million worth of hard costs that we deal with because we've got to lease planes and we've got to change things and call centers and all the other stuff. This is what we believe we can deliver Above and Beyond steady state business. Now, one thing I've learned in this business, get ready for the next sideswipe. So there will be things that will come our way, but there's also some aspects in our plan where probably we will over-deliver. We've probably been a bit too conservative. But this gives you a sense of how we're thinking about the business. Lots of exciting things that the team will get into now with details around that. And just as I wrap up, last one. You know, the reason why we're focused on delivering these transformational benefits is pretty simple.
It drives sustainable competitive advantage. We know we're a cyclical business. We'll have our ups and we'll have our downs. We won't be immune from getting the bumps, that's for sure, but I can tell you, I am 100% confident that this is a team that understands how to structurally improve this airline and build something to last because that's what we're doing. I often say to the team, you get one point for talking, nine for doing. That's the execution part, but we've developed a muscle, and you'll hear some more about it, around our ability to do just that. Our word is our bond. We've got a solid foundation. We're digitally led because we believe that's where the future is going to be, and most importantly, we have a culture that's going to allow us to deliver this, so Mike, it's over to you, my friend. All yours.
It's been five years we've been waiting for this. So I'm very excited to be able to have a bit of time to talk with you today, and as the slide says, to share a bit about our network strategy. I do have, as Greg mentioned, a good slide coming up. I'll make sure you see that one, but I wanted to really touch on four points through the next 20 minutes or so. The first is that we play in an attractive market, and you'll see that. The second that we've got clear advantages, and it's the combination of those two that translate to us winning in the markets that we choose to play in. And the third being that we have some exciting opportunities for growth as well. I think this is interesting.
Before we get into all of these advantages that I've been talking about, we really have this good combination between a purpose that really drives a lot of the decisions that we make day to day, week to week, and that's enriching New Zealand, and we do that by connecting New Zealanders with each other, but also between New Zealand and the world, and as Greg showed on one of the earlier slides, we are a nation that likes to get out. We're also a nation where people like to come and visit, so we have a really clear role to play, and it's an important job that we do, and then our location as well just reinforces that and puts some meat behind the purpose that we have.
That point there about the 2,000 km, we can travel 2,000 km in any direction, and we haven't quite reached anywhere. We're almost at Australia, I think. And I was looking over the weekend that if you put that same circle, a 2,000 km circle over the middle of Europe, you cover the whole lot. You get all the way, including Moscow. You've got almost Iceland in the northwest, down to Turkey in the southeast, and then even to the south. So we're in a position where we're isolated from the rest of the world, but with a country that loves to travel and a world that loves to travel to us. So we've got an important role to play. And we can look at that, whether it's cargo or connecting passengers, it's all the same.
So one of the things I want to take you through over the next few slides are the features of our network. And there's five here that really stand out. And I'm not going to touch on them all on this page. But you can see that together what they create is our strong right to win. And the first of those is regarding this diversified network. You know, diversification for us is in a few forms. It's not just about where we operate, be it domestically or short-haul or long-haul, but that's important. It's also about the customers that we serve. And Jeremy's going to spend some time really unpacking that. And it's also about the way that we think of the network in totality. So we've got new markets such as New York, JFK, but we've also got markets that we've been operating for many decades.
Of course, those closer to home, but even Hong Kong's been, I think, in the network. Richard knows all of these stats, but I think it's 1978 or so. So we've got this balance of network, of destinations, of customers. And that really provides both balance, but then with that balance comes opportunity. Obviously, during COVID, we had to quickly pivot towards our role as a cargo connector. And New Zealand, again, on that last point, is a nation that trades. 20% of the value of all of our imports and exports is via air freight. And Air New Zealand has about 40% of that value. So that's an important role that we play. But even more recently, what we've been finding is, again, Greg touched on the point that the traffic, as an example, between China and the U.S. at the moment is only close to 20%.
Air New Zealand's actually stepping in and being able to connect with these two markets from an air freight perspective, carrying a lot of e-commerce goods between China and the U.S., just as one example. This is our network. I think you know it well. Many of you probably used it today to get here. If not, I think there'll be many New Zealanders using it over the next few months as we get away for a bit of a summer break. We know it well. One of the reasons that we perform so well is because we know these markets intimately and there's opportunities in each. I think one of the most important pieces of this is the fact that when it comes to the market that we know the best, it's our citadel. It's domestic. We've got an 80% share.
That's something, again, it's a bit like our purpose. We're constantly referring back to that understanding, not only how we protect that, but also how we can grow it. It's not just about looking at competitors domestically. It's also thinking, how do we actually do a better job of connecting customers, both in the way that we serve them on the ground and the way that we connect them with our network. In some cases, and in the future in particular, that could be even taking traffic off the roads and finding more opportunities to connect in a better way, in a more productive way through the air. I'll tell you a quick story as well regarding opportunities on long-haul. Recently, I was with some colleagues visiting our partners in Asia.
I don't know if many of you have been to Shenzhen recently, but it is a mega city, one of China's tier one cities. I actually used to live when I was young. I lived on the border in Hong Kong, but on the border with Shenzhen. Now this is going back some decades. It was a fishing village at that point, but today it's a mega city, unrecognizable clearly from when I last saw it. We actually checked in for our Air New Zealand flight in Shekou at the ferry terminal, took a 30-minute ferry ride to connect right into the heart of Hong Kong International Airport using this ferry, and then on the airside connection, directly transited to our Air New Zealand flight within about one hour transit time once we arrived at Hong Kong Airport.
Now that experience, not only was it great, but it's important and it touches on the opportunities that we have to really develop the network that we already have existing. And that's because Hong Kong's got a population of 7 million, using this example. But within that two-hour radius of Hong Kong, in that Greater Bay Region, there's a population of 87 million. Now that's just one example. We could talk about New York and the fact that when we fly direct, we stimulate this new wealthy catchment that otherwise wouldn't have really thought that New Zealand's a place that they can get to in one sleep. But the point being that we know our network well, there's opportunities for growth and across the board. When we combine this real strong position that we have in the markets with these clear advantages, what we have is a winning recipe.
Now I think this is the slide that Greg was referring to. Thanks, Greg. This is the number one slide, and what we're talking about here when we're talking about number one is the passenger traffic share that Air New Zealand has connecting, for example, Australia and New Zealand, New Zealand and the Pacific Islands, etc., so no other airline connects more people, more passengers between these destinations and New Zealand than what Air New Zealand does, and that's not through luck. That's through sheer hard work and also the advantages that we have. It's through understanding our customers and making sure that we've got a product fit with the markets that we're operating, and Jeremy, again, is going to talk a bit about Seats to Suit. Seats to Suit is a product that we've had in the market on domestic and short-haul markets for 10 or so years now.
And then more recently, others in markets across the world have figured out that this is something that's interesting. It's something that Air New Zealand has been doing for many, many years. We'll talk in a little bit about the fact that on our long-haul network, we're really focused on our premium leisure product. And that, again, translates to a winning proposition and then winning results. Interestingly, if I just talk to Asia for one second, our geography again plays to our advantage. We're not so close to many of our Asian markets that we can be reached with a narrow-body aircraft, which is typically what's used by lower-cost carriers. So we're slightly out of reach, which means that wide-bodies become the primary aircraft to connect New Zealand and Asia, which again introduces the need for a more premium experience, which is where Air New Zealand has an advantage.
Interestingly, what this all means down the bottom is that between New Zealand and these international destinations, we actually have a 45% share of that traffic. I'll touch on shortly, but there's also room for growth there. So the top 20 largest origin and destination markets, Air New Zealand's directly serving 13. And we look at that and say that really means two things. One is that we can do an even better job servicing those 13, such as that Hong Kong example. And secondly, the seven that we haven't directly served in a non-stop sense, which means there's opportunities for further profitable growth. So I mentioned the five features of our network. We're now on number three. This is our cost advantage and the real focus that we have on making sure we compete aggressively from a cost perspective, both domestically and on short-haul markets.
There's a few features to this. Let's just touch first of all on the fact that we are transitioning. We've now got eight A321neo aircraft, which is that bottom aircraft. You can, for those Hawkeye plane spotters, you can see it's got a slightly different engine type versus the A320ceo at the top there. But what this means is to bring it to life is if you were traveling between, say, Wellington and Auckland on a A321neo, there'll be an additional 46 seats on that aircraft versus A320. And together with better engine technology, we can operate those 46 seats with very, very small additional trip costs. But of course, with the 46 seats, we can do either serve a lower yielding passengers, make sure that there's opportunities for that domestic growth that's part of our strategy by offering cheaper seats, for instance, in the middle of the day.
And on peak time flights, we can make sure that we're not spilling very high yielding demand. So really catering to both ends of the market in that single aircraft. And we're very excited that the numbers on the spreadsheets would say that we get about a 1.5x contribution margin using that A321neo aircraft when we're operating them. And clearly, we've still got some work to do to bring them into the fleet as much as we'd like. But when we do operate them, we're actually seeing closer to that 2x contribution margin. But it's not just the aircraft type itself. It's also the fact that we value the simplicity of a single cabin.
Again, to that egalitarian point that Greg mentioned, we've got the ability on these shorter stage lengths, so shorter duration flights to provide a differentiated experience, but without the complexity of having an economy cabin at the back and a business cabin at the front. Then we're talking about premium leisure. So now we're really thinking more long-haul and the way that we're developing that long-haul international network. Premium experiences isn't just a feature of airline travel. I think in any industry that you look at, whether it's events or consumer products, there's this shift towards premiumization. And it's something that we picked up on in some strategy work that was being done in 2018 or so, so well prior to COVID. And it actually came through a question we asked ourselves about how do we best position Air New Zealand to win in this long-haul space.
And it turns out that what differentiates Air New Zealand already is the fact that we can offer those premium experiences. It's not all about the hard product, the seats, the lounges, for example. It's also about the way that we service customers. And that's what makes Air New Zealand special. And Nikki will touch a bit on that later. And so you could see that back then we placed a bet and we said, we think that there's going to be growing demand for premiumization and we need to make sure that we can provide customers ultimately what they're looking for, which is that premium Air New Zealand experience. And so we started to reconfigure our aircraft. We introduced what we call Economy Stretch, which is some more leg room within the economy cabin.
I think, again, Jeremy will share some of the stats we've seen on that as an ancillary opportunity. Right now, if you're in Singapore at the airport, there's a hangar. It's a SASCO hangar where we get some of our wide-body maintenance done. One of our 787s is in there, and that's actually undergoing a retrofit. This is the one that Greg spoke to. We hope by mid-January to have that back in Auckland with our new product on it. Not quite the Skynest, but that will be coming in the future when we get the new aircraft from Boeing. You can see that we have made a decision years ago to head down this premiumization path, and we're excited about the benefits that that will provide. Relationships are key. Greg spoke about that. We also have amazing relationships with really the best airlines in the world, and they allow us to connect New Zealanders with parts of the globe that we don't serve directly. So you can see here, it doesn't matter which region we've got some of the strongest partners. In Australia, we have a codeshare agreement with Qantas. It's a codeshare agreement. It's a very common type of agreement that allows us to connect into their domestic network. North America, we work with, in many respects, the world's largest airline, being United, and we've got an extremely close relationship with them. And then towards Asia, U.K., Europe, we're working very closely with Singapore Airlines and, of course, Air China and Cathay rounding out those Asian destinations. In addition to that, we've also got codeshare partners, as you can see down the bottom right, which provide further connectivity options.
And what this all means is that, first of all, customers get more choice and access to more destinations. Secondly, that we can have capital deployment efficiency in terms of where we deploy our own aircraft. And thirdly, we've got the sales, support, and distribution and marketing support from these large airlines who have strengthened the home market. So translating this into some facts and figures for you. On the left there, this is what I was referring to when I said that customers have more choice. So Air New Zealand can directly travel to 50 destinations. That's where we fly to ourselves with an Air New Zealand aircraft. But if you actually look at where an Air New Zealand ticket with an Air New Zealand flight number can get you, that increases to 320.
So recently, some of us were in India and we were meeting with other Star Alliance partners. I could fly on Air New Zealand to Singapore and then seamless connection at Changi Airport in Singapore to connect to a Singapore Airlines flight to Delhi, for example. But that whole flight has got an Air New Zealand flight number and the benefits of traveling with Air New Zealand, such as lounge access. From a capital deployment perspective, an example to bring this one to life, we work very closely with Singapore Airlines. Right now, actually, we have three to four daily flights between Auckland and Singapore. Now, interestingly, typically airlines would struggle about how these sorts of things could be divided between the various airlines. The depth of the relationship that we have with Singapore Airlines means that we can actually share that third bank.
So we each fly one daily flight and then, depending on the season, either Singapore Airlines or Air New Zealand. And again, that brings to life the sense that we can make the best capital deployment decisions as it relates to our aircraft and our network by working collectively with these partners. And then in the case of Cathay Pacific, again, recently meeting with them in Hong Kong, Cathay actually sells about 1 /3 of all the passengers on our Auckland-Hong Kong flights. And reciprocally, we sell a very large share of passengers onto their Auckland-Hong Kong flights. So the power together means there's benefits not just for each of the airlines, but the customer and also New Zealand as a whole in this case. We're excited.
Excited because, as I mentioned, there's seven of the top 20 destinations that we don't currently connect to directly ourselves with an Air New Zealand flight, and we see that as opportunity. There's two that I can touch on briefly here, one being London, and you would have seen, I think, there's been some discussion and commentary about the fact that we've got an interest in London. It's been a while now since we haven't been operating directly, and one of the things that I think we hear about from customers more than almost anything else is, when are you going to go back? Because as great as it is to be able to connect there with your alliance partners, there's something special about Air New Zealand flying into London and would love the chance to be able to fly there with Air New Zealand.
We listen to all of the feedback, not just on network decisions, but it has made us consider when a possible return could be and what that could look like, so at the moment, clearly with aircraft challenges and engines not being available as we'd like them, we're in a position where we can't quite firm up the decisions, but it's one of those areas where I think we could be looking to share more news in the next months, maybe next year or so. Another market that we're really interested in is India. It's one of the largest growing markets. Air New Zealand, together with Singapore Airlines, already serves that market incredibly well. In fact, I think about 50% of all the customers traveling between New Zealand and India transit via Singapore.
But as that grows and develops further, together with Singapore Airlines, we're really excited and interested about what we could do to serve that market even more efficiently in the future. So more to come in that space. But obviously, our ambition is high, but tempered by the fact that we need to make sure that we do a good job servicing the existing network first. And bringing it all together, really from a longer-term capacity growth perspective, here's what we're expecting to see. The headline is 3%-4% capacity growth over that next period. But really, we need to think about this as a different story, really domestically from what we see internationally. So domestic, it's around 2%-3%. And many of you have been close working with Air New Zealand for a while now.
That's probably a little lower than what we've seen in the past. It's reflective of, in the short-haul, that more difficult trading environment that Greg has referenced with corporate and government spend behind where we'd want it. It also reflects some of the structurally higher cost base that we're going to be working to offset through things like emissions trading scheme, costs, high aeronautical charges, etc. As we look to grow, which we will be looking to do, we'll be obviously calibrating those growth aspirations with the need to make sure that RASK is growing in the way that we'd like it to. We do have some new aircraft coming in the form of ATRs and ultimately new 321s, and that can be used to support some of this domestic growth as well. Internationally, clearly, again, we're a country that likes to explore.
As we add new destinations and grow existing destinations, that will support some of this capacity growth that you'll see. Slightly higher range, 3%-5%, probably weighted a little more towards long-haul international, but again, making sure that we maintain the share and the passenger share premium that we have on those short-haul markets. So that's this network section. There's obviously the chance to have some questions and a bit of a discussion later, but maybe I'll just wrap this bit up by saying with what I started, that we operate in a market where there's a real need for air travel and strong connectivity. We've got clear advantages across those five features of the network that I talked about, and that translates to winning results. And that's exciting.
But also what makes us excited is the fact that we've got clear opportunities to support future profitable growth beyond what we're already doing. So thanks for your time. And I think Jeremy will follow me.
Thanks, Mike. Good day , everyone. I'm Jeremy. I am the GM of International here at Air New Zealand. As Mike's just alluded to, our network and fleet is one of the fantastic foundations we have for our commercial success. But it's not the only foundation we've got. I want to take you through a little bit of why I believe you can be very confident in the commercial returns we're going to be providing as a business in the years to come. We've got three other kind of core foundations to our commercial success. First and foremost, we've got this unassailable home market position. I kind of think of New Zealand to Air New Zealand like Eden Park is to the All Blacks. We're really bloody hard to beat at home. There's a bunch of reasons why that is, and I'll talk to you about that shortly.
Secondly, as Mike alluded to, we are number one for travel to and from New Zealand internationally. That sets us up really well to take advantage of growth in international as we go forward and as a great source of long-term sustainable earnings. Thirdly, we have this appeal across quite a substantive and diverse range of customer segments. We've got in each of our domestic and international markets, three big segments based on reason to travel. Each of them have unique characteristics so that we're not beholden to or reliant on any given market. Let's unpack these bases for our commercial success really quickly. If I think about us at home, there are three key reasons why we're unbeatable at home. The first of them is that iconic Air New Zealand brand. Our brand is well known and it's loved.
We have over 97% of spontaneous awareness among New Zealanders. Pretty much every single New Zealander knows who we are. Not only do they know us, they love us. 82% brand in the New Zealand market. Now, that doesn't mean we're perfect. There's 18% of customers who think maybe we're not so great, and so we need to continue to work on that. We need to always lean into it in terms of developing better product, being better at customer satisfaction, being good with our communications, but that is a very enviable position for our brand to be in and actually one of the leading brands consistently here in the New Zealand market, regardless of industry or category. Part of the reason we've got that great brand position is that we invest ongoing.
We invest around about 2% of our New Zealand point of sale revenue every year on our brand and into our marketing activity. That's around about NZD 40 million worth of investment year after year for us to be able to have that strong sustainable brand position. And we're going to continue to do that. The second reason we're really strong at home is this unrivaled distribution footprint. Based on Google Analytics data, airnew zealand.co.nz is the single largest travel retailer in the New Zealand market. On a monthly basis, on average, we generate around 7 million unique user sessions. Those sessions translate into around about NZD 181 million worth of sales on average on a monthly basis. And it represents around about 62% of all of the revenue we generate here out of the New Zealand market. And that's up from 55% pre-COVID.
So we have this incredibly strong direct business-to-consumer channel that's unrivaled in the market. But it's not just that channel that's important to us. Our trade partners are really important. They represent around about 38% of the revenue that we generate here out of our New Zealand market. And we have strong, enduring partnerships with all the leading trade partners in market. And we do a huge amount of co-branded and co-marketing activity to stimulate travel both within New Zealand and between New Zealand and the rest of the world with those trade partners. The other big thing we've got is really strong business-to-business relationships. We have over 270 contracted corporate clients. Those corporate clients have an entry-level spend of around NZD 350,000 on their domestic travel and about NZD 150,000 on their international travel.
That provides a great sound base for which we can build our revenue across the course of a year. You can't talk about the market here in New Zealand without talking about small businesses. Across our Above and Beyond and our Airpoints for Business program, we have over 40,000 small businesses who are part of one of those programs transacting with Air New Zealand. We've got this really strong iconic brand, an unrivaled distribution footprint. Then we have this amazing loyalty program. Five years ago, I was fortunate enough to lead our loyalty program, and it was a good program. Then Kate O'Brien took it over, and she's going to talk to you shortly. What I can say in the last five years is she's taken it from a good program to now a great program.
She'll talk a lot about the value that we're going to derive out of that loyalty program going forward. The bit that's important from a commercial success perspective is the scope and scale of that program. Around 4.6 million members now across our Airpoints program, 3.2 million of them being Kiwis. That's two in every three Kiwis over the age of 18 who are a member of that program. As I go a little bit more into the builds we're going to be making from a commercial perspective, I'll explain why that's so important. We've got this really strong home market advantage. But as Mike talked about, we're also really strong internationally. In fact, we have a third airline for travel to and from New Zealand.
From a New Zealand perspective, 55% of Kiwis who travel internationally do so with a Koru on the tail of the aircraft they're flying in. And the reason that we were able to get that position is based on that home market advantage I talked about upfront. But that's not the only place where we have preference. In all of our offshore markets, we also have significant brand strength and purchasing intent from customers. 35%, so just over one in three of every single visitor who comes into New Zealand comes to us on an Air New Zealand aircraft. So you combine those two, that's where you get the 45% that Mike talked about. 45% of all travel to and from New Zealand is on Air New Zealand.
Based on last financial year's visitor numbers of about 13 million, that's 3 million more customer journeys than the next biggest airline that services international travel out of this market. Why do we get that from an international perspective? If I look at our offshore markets, one of the things we've always done is we've invested for the long term. We don't launch a market, do a big song and a dance, and walk away. We build sustainable strategies to build long-term demand and partnerships in market, and we invest in people in each of those markets we operate within. In every single one of our direct markets, we have Air New Zealanders employed by us on the ground: salespeople, marketing people, commercial people, and in the front of house in our airports, Air New Zealanders who are servicing our customers.
We do that because no one knows Air New Zealand better than an Air New Zealander. No one cares more about inspiring travel to New Zealand than an Air New Zealander. We put it into our training. It's in our brand. We talk about sharing our Aotearoa. Having those Kiwis and those people who think like Kiwis in market in all of our offshore locations means that we become the partner of choice for selling Air New Zealand and New Zealand. We also have this amazing brand offshore. So if I think about the global brand that we have and our innovation with the likes of safety videos, the one we've just launched with Steven Adams has had over 40 million views globally already.
That helps us to cut through and resonate in all of those offshore markets and kind of differentiates us and helps us stand out from the crowd. The other partnerships that are really important to us are our marketing partnerships with the likes of Tourism New Zealand. We have a joint venture partnership with Tourism New Zealand where in all of our key markets, we're pulling resources and taking a New Zealand Inc. approach, again, to get the awareness of destination New Zealand up, building a long-term pipeline and funnel of people who are interested in coming to travel to the country, and then through our salespeople and our marketing activity, converting them for travel to our country. Finally, I can't talk about what we do in those international offshore markets without talking about our alliance partners.
Mike's talked about the fact that they're incredibly strong from a feed perspective. They bring about 14% of the customers who come into our international network are off those alliance partners. But they're also really important to us from a distribution perspective. If I look at United Airlines, Air China, Cathay Pacific, and Singapore Airlines, in each of those markets, they increase our distribution footprint by about 10x versus if we were there on our own. Again, they enable us to have that really strong international presence when we're looking to encourage travelers to come to this country. The third piece I want to talk about in terms of those core pillars, those core foundations for our commercial success are the customer segments that we have that are varied.
So here in New Zealand, domestically, around about 65% of all passengers we carry across all of our network are passengers who fly domestically with us here. That generates around about NZD 2 billion of revenue on an annual basis. And there are three quite distinct customer segments based on reason for travel. One being the leisure segment, which includes VFR, so visiting friends and relatives. That's around about 50%. 30% is business broadly and can be broken down into subsegments of corporate, government, and SMEs. And then 20% is either international connecting traffic into our domestic network or a traveler who has booked from an offshore location a domestic flight here in New Zealand with Air New Zealand.
Now, the reason that it's important that we've got these substantive and quite varied customer segments is because it can help us withstand some of the changes in demand that any one of those segments might get, and we've alluded a little bit to the slowdown in government spend over the last 12 months, and that's trickled down through into corporate and SMEs as well, and we've had to pivot our approach and look to stimulate a bit more of that leisure market to be able to backfill some of that demand that we've lost from the market. We do that really effectively, and part of that is because of the data we get out of our Airpoints loyalty program. Those Airpoints customers are twice as likely to convert because we're able to put relevant and contextualized offers in front of them.
When we put a leisure campaign in market to stimulate the market here in New Zealand, we see at least a 40% uplift in bookings versus a non-campaign period. From a marketing investment perspective, we have a return on marketing investment of about 20 to one. We can move between customer segments and stimulate demand, particularly in leisure, incredibly well, particularly here in our New Zealand market. Internationally, that represents around about 35% of all the passengers we carry. It's NZD 4 billion worth of revenue. It's good business. It's high-quality business. Again, we've got these three distinct segments. Around about 50% of it is leisure. 38% of it is visiting friends and relatives. Particularly, we're strong there in our short-haul network, Australia and the Pacific Islands.
There's a huge catchment of expat Kiwis coming back to New Zealand from those countries, but also from Pacific Islanders and Australians that are traveling back home to visit friends and family and relatives as well, and then around about 12% of our international passengers are business travelers. One of the things to note that's important as part of what you take away from today is also the mix of cabin that those international passengers are flying in. One in five of our long-haul customers who arrive here in New Zealand on an Air New Zealand aircraft are now arriving in a premium cabin. That's 20% of customers who are coming in from long-haul who are in a premium cabin, and that's a green shoot that we've seen since COVID. It's something that we believe is here to stay, and we're going to really double down on.
And you can see that in some of the investment we're having in our fleet. And I'll talk about that again shortly as well. The other bit that's important to note around customers is we just don't kind of sit on our laurels and do nothing. We're constantly seeking customer feedback in order to see how we can meet their needs better, but also commercially find ways in which we can optimize the different products that we sell and market. And Mike talked about Seats to Suit. And so those of you who have followed Air New Zealand for a long period of time will know that over a decade ago, we introduced Seats to Suit as a way to segment the cabin and appeal to a wider range of customers.
Part of the reason it was introduced is we were really coming under attack from low-cost carriers and fifth-f reedom carriers. So we needed to find a way that we could compete at the very price-driven end of the market. That's when we introduced the Seats to Suit product and a seat-only product that was very much by the seat. And that was anything else you had to add on. What we've found in the last couple of years is that customers were starting to give us feedback that the seat product maybe could be a little bit more generous based on where pricing was sitting at and based on what the equivalent offerings were for them across market. So we did a whole lot of rebundling and repositioning around our Seats to Suit product.
Suit got the addition of IFE, a snack, and also non-alcoholic food and beverage, but it still enabled us to keep it at a really good price point so that we could still compete against those low-cost carriers and Fifth Freedoms. We dropped Seat and Bag, and Bag became a buy-on for Seats to Suit customers. Or alternatively, they could just go into the full service The Works product. One of the major changes we made, though, was to introduce an add-on and affordable flexibility product. So on our short-haul network, you're able to buy up and add on flexibility. And we've seen a huge change in customer behavior off the back of that. First and foremost, around about 30% more customers are now buying up in value to the The Works product.
Between 10% and 18% of customers, depending on the cabin, are buying into flexibility that gives them assurance that they can book early. If their plans change, they can get a full refund. That change in the Seats to Suit portfolio has been received by customers in a way that they're buying up into higher value bundles. The other thing that it's doing is we've seen a lift in our customer satisfaction. We put it into market in July. On the short-haul network, we've seen a 2% increase in CSAT on both the Tasman and the Pacific Islands since we introduced the Seats to Suit product. The second product on there Mike talked about, which is our premium upsell in the economy cabin, Economy Stretch.
Now, again, there was a group of customers that said to us, "We're prepared to pay for a little bit more comfort and a little bit more space, but we don't want to buy up into a premium economy cabin." So can you find us something that kind of sits nicely within the middle? And again, it's classic segmentation, finding where the sweet spot is for different value products in the market. So Economy Stretch gives a customer an extra five inches of legroom, about 39% extra space. And that customer also gets a little bit more comfort. They get premium phones. They get a soft pillow. And they enter that product at about NZD 150 buy-up from standard economy. So we've retrofitted our triple-seven aircraft. They all now have Economy Stretch seats in them.
The aircraft that's currently up in Christchurch, the first of the 787s, has got Economy Stretch being fitted within it. In the next two years, we'll have it across our entire widebody fleet. We think that that's going to give us between NZD 15 million-NZD 20 million increase in revenue by that new product being a premium upsell within that economy cabin. The reason I share both these case studies with you is you're going to hear a lot more from us today about things we're either in the process of doing or we're going to do.
And both of these products have been introduced in the last 12 months and are proof that you don't only get the one point for saying, but actually this is us doing the things that you're going to see for the rest of the day that we're planning to implement through our strategy. So that's why we're sharing it. So really good base foundation for commercial success, a really good platform. And then the exciting thing for us commercially is we've got these five key growth accelerators or opportunities that we're working on in the business right now, in the middle of implementing or about to implement. Those five accelerators are long-haul premiumization. So Mike talked a little bit about that. We're going to be increasing the premium seats across our cabins by 30% by 2030. And there's a lot of benefit we can get from that.
I'll talk to that shortly. We've invested significantly in next-generation revenue management to enable us to get the most we can out of our existing inventory. We've also got this really exciting opportunity with low capital, high margin growth through ancillary. We're going to need to invest a little bit of modern retailing to realize that potential. Within loyalty, Kate will speak a lot to what we're going to be doing to extract additional value and provide better value to customers through our loyalty program. I'll touch a little bit on the data and personalization side of that. Then finally, we're doing a transformation in our cargo business that's substantive and is going to drive significant productivity and efficiency. If I look at our retrofit program, this is what the new cabin will look like across actually. This will be our ultra long-haul aircraft.
The only difference in this versus all the other aircraft that have been retrofitted is the Economy Skynest, which you can see in the corner there. I encourage you to try that out midway through the session today. So NZD 500 million worth of investment in retrofit. First aircraft already up in Christchurch, going to be back here in mid-January flying by February, seven products across the widebody cabin. Now, having seven products gives you a couple of opportunities. One is it gives you an incredible breadth of customer needs that you can satisfy, a huge wide range of customers you can satisfy with that one aircraft. It also gives you a huge opportunity to upsell and cross-sell through modern retailing. We'll talk a little bit about that shortly.
But if I look at the cabin here, the first big product we're really excited about introducing is our new Business Premier Luxe seat. So that seat's right at the front of the Business Premier cabin. It has extra space, extra comfort, and extra privacy. It has its own sliding door. It has a number of amenities that are special to that seat. And that will sell as a buy-up product at NZD 820 for a long-haul flight and NZD 250 for a short-haul flight. So that's a cabin buy-up product that's coming into the fleet. Not only are we introducing BP Luxe, we're having fully new premium economy and Business Premier seats. And then when we go to the economy cabin, we make sure that we've got different value segmentation across that cabin.
So not only have you got the likes of the Skycouch that we've had for a number of years, we're introducing, as I said, Economy Stretch. And then on ultra long-haul, you'll be able to get a session of about four hours where you can have a lie down and a sleep on an ultra long-haul flight in the Economy Skynest. And so a huge range of product that enables us to appeal to a wide, wide range of customers, lots of cross-sell and upsell opportunity. And we believe across our premium cabins that we can get between 10%-15% RASK uplift in driving that premiumization, both increasing the density of the cabin by 30% by 2030, but bringing into play these seven different products that we can sell up customers to over time. So kind of quite exciting from a commercial perspective.
Secondly, kind of the bread and butter of airlines is revenue management. And Air New Zealand has always been an innovator. And around about 2018, we sat down with a startup business called FLYR. And we worked with them to invest in a new revenue management system called Cirrus. Now, the advantage of this revenue management system is it's powered by machine learning. And so machine learning is where an analyst can put their knowledge and their data on what's happening in the market, what they're seeing with inventory, and they can teach the machine to adjust its forecasts in order to keep learning when they see different stimulus inputted and then respond to changing market conditions, be that extra capacity that's been added in, a sudden surge in demand that's happened.
And we can put a whole bunch of parameters around our system that teaches the machine to optimize our inventory settings and our pricing settings at any given point in time around where demand is sitting, where capacity in the market is sitting. So the great thing about this system is it's highly intuitive. And it's got this awesome user interface so that each of our revenue management analysts who previously would be trying to manage every single flight, every single day, at every single time point on every single market, they can actually sit and forget a few parameters within some guidelines. And then if anything falls outside of those guidelines, the system will raise a flag and it will tell them that that market needs attention.
But what it will also do, it'll go, "I've seen this before," and actually here are three ways in which I think you could respond to those changes in demand or those changes in capacity. We believe that the introduction of this new system will deliver us between 1%- 2% RASK improvement across the entire network. It's been implemented across domestic and short-haul already. And we are two weeks away from putting our last two long-haul markets onto the system. And 1%- 2% RASK uplift on a NZD 5 billion business, you're talking between NZD 50 million and NZD 100 million of optimization that you can get out of this new system. And so we're pretty excited about that. And that's driven by better yield and better load factors. The third growth opportunity we've got is this really great capital-like, high-margin growth that we can get through ancillary.
And we've always had some good ancillary product, particularly a direct product where you can buy into the likes of Skycouch. You can add a bag. You can choose a seat. But we're going to be introducing some new products into our ecosystem as well. As I said, the likes of Economy Stretch, the Economy Skynest. We'll be looking at neighbor-free seating on short-haul. And the way in which you get the most out of these new ancillary products is through modern retailing. Nikhil is going to talk to you a lot more about how we're transforming retailing at Air New Zealand. He'll talk about Offer and Order Management.
Rather than having this very analog kind of approach to the customer buying journey, we'll actually be able to almost do a bit of a pick and a mix where a customer can personalize the type of flight product that they want through a range of portfolio of options that we can provide them with. And so that, in essence, is modern-day retailing with Offer and Order Management. And it's going to be critical for us to be able to get the most out of both our current ancillary products, but those new products we're bringing in as well. Our aspiration is to grow that twice as fast as we have in the last 10 years over the next four years and deliver around about 40% growth and turn that business into a NZD 250 million revenue business for us.
So a big growth aspiration, but we firmly believe we've got the ability to bring that to market and to achieve that. The fourth growth opportunity we've got is within loyalty. And Kate will talk a lot more about this. I want to talk about data and personalization. So loyalty is important. Why? Our loyalty members spend, on average, 50% more than a non-member with us. They convert 2x more likely to convert. Why are they 2x more likely to convert? Because of the information we have to personalize and put relevant offers to them. Information like what their preferences are, what are the destinations that they most often buy, do they have an aisle seat or a window seat, do they add insurance to their flight more often than not, what about what the Airpoints balance is?
That might sound kind of really basic, but actually you can avoid a whole lot of wastage by not putting Airpoints redemption offers in front of a customer who doesn't have enough points to redeem. Very simple, one-on-one kind of a marketing perspective, but the ability to have that data can mean that you can put the right level of offer in front of a customer who has the right Airpoints balance to be able to convert. And we also understand a lot about interconnectedness within our Airpoints ecosystem. So the Shairpoints product where you can add family members and friends to your Airpoints account gives us an indication of people who are more likely to respond to package offers or travel together. And so there's so much data that we can use to personalize and provide relevancy of offers.
If you think about kind of all the different products we're going to be offering over time, having proprietary first-party data in order to do that segmentation is critical for us, particularly when around the world we're seeing the demise of third-party data and the ability for companies to be able to access data pools from outside of their own ecosystem. Airpoints becomes a critical weapon for us in terms of that personalization and the relevance that we're going to use. Our fifth growth opportunity, and it's a really exciting one for this business, is our cargo growth. We're investing in cargo for the first time in a while. We've always had a great cargo business. It's always been driven by people who work incredibly hard to meet the needs of customers.
And we saw that over COVID, actually, where our cargo business maintained connectivity between New Zealand exporters and the world, but also brought critical medical supplies in that we needed from a New Zealand perspective. But that was driven by people and the culture here within the airline. The reality is we haven't invested a lot in that business. And that's going to change over these next four years. And we're underway already with three key transformation projects within cargo. The first of those is an end-to-end, front-of-house to back-of-house analog to digital transformation. If you walk out to the cargo building today, you'll see screens of paper printed out on every flight where people are checking off a load manifest and trying to balance up the belly of the aircraft in terms of the inventory that's going in right up until an hour before the flight goes out.
That will soon be fully digitized, and that's going to give a huge amount of efficiency and productivity to those people to be able to do their job a whole lot quicker, but also for us to be able to optimize what we're doing in terms of where that inventory goes within the belly of the aircraft. We're also investing, similarly to what we've just done in our passenger business, into modernization of revenue management, so we're going to revenue manage the belly of the aircraft and that inventory in the belly of the aircraft, so again, great efficiency gains that we can get through better yield through our cargo business and implementing that new state-of-the-art revenue management system, and finally, and really exciting, in about two years' time, we're going to start construction of a new purpose-built state-of-the-art cargo facility within our Auckland International Airport Cargo Hub.
It's going to be incredibly exciting in terms of the ability for our cargo team to be able to have this modern facility at their biggest transit point for cargo into and out of New Zealand. We think that that investment and that focus and the productivity we get from it is going to, over the next four years, improve our revenue streams by about 20% and build cargo to around a NZD 500 million business for Air New Zealand, so in summary, from a commercial perspective, we've got these really strong foundations that provide us with real confidence in terms of sustainable earnings for the business, but on top of that, we've got these five growth opportunities: long-haul premiumization, a premium cabin that's going to be increased by 30% by 2030, and we think that that's going to drive us between 10% -1 5% RASK uplift.
We've got next-generation revenue management, and the implementation of that tool we believe is going to drive us a 1%-2% RASK improvement. We've got low capital, high-margin growth with our ancillary product and offer and order management, and we think that ancillary will become a NZD 250 million per annum revenue business for us. Loyalty is going to continue to enable us to personalize and provide relevant offers so that we can be confident as we look to upsell and cross-sell product. We can put the right offer in front of the right customer at the right time, and for the first time in a number of years, we're investing in our cargo business, and that's going to drive significant productivity and efficiency gains and build that business to upwards of a NZD 500 million business for Air New Zealand, so huge opportunity for growth.
That takes us from what would be underlying 2%-3% growth to actually what we are targeting is 4%-6% growth from a revenue perspective in the years ahead. I hope that's been helpful. I'm now going to pass over to the other O'Brien, Kate O'Brien. She is going to talk to you about the Loyalty Program.
That's very kind, Jeremy. Hi, everyone. I'm Kate O'Brien, and I look after the loyalty business here at Air New Zealand. We have a fantastic opportunity to grow our loyalty business by between 40 million-60 million in EBITDA by 2028. The opportunity is in four parts of the business, so sales of Airpoints Dollars to third parties, our products portfolio, flight redemptions, and our frequent flyer offering.
This will drive benefits to our partners, our members, and Air New Zealand, and is really underpinned by investment in digital data and personalization. So as Greg said earlier, loyalty is one of the three key pillars in the Kia Mau strategy. And the reason that we're choosing to invest in loyalty is for three reasons. Firstly, it's capital and carbon light. The second is it's a source of stable external revenue generation. And then the third is it's a driver of share shift and yield premium to our airline. So our Airpoints program is quite unique in that our currency is pegged to the New Zealand dollar, which means that customers can redeem their Airpoints on any seat, any flight, or through the Airpoints Store for the equivalent of the cash price. And we know that this drives a lot of trust and utility with our program.
This goodwill that we have, partially driven by our program structure, has given us this really strong foundation on which to grow. We can see here, firstly, we've seen really strong member growth. We have more than 4.6 million members now, and that's grown at a rate of 11% CAGR over the last 10 years. Our Airpoints members drive a revenue premium to the airline. You can see as members move up tiers, it shows how much more engaged they become with the airline. Thirdly, the program generates strong and stable cash flows. This really illustrates the breadth and strength of our program on the ground, so beyond flying and how our members are engaging on the ground. There are four parts to our loyalty business and four opportunities for us to grow.
I'm going to go into each of these in a bit more detail in a minute. The first is sales of Airpoints Dollars to third parties. The second is our proprietary products portfolio. The third is Airpoints Dollar redemptions on Air New Zealand. Then the fourth is our frequent flyer program. All of this is underpinned by investment in digital data and personalization. We have recently replatformed the loyalty business. This was quite a significant three-year transformation for us. We now have this brand new platform to power loyalty. This is really important because it gives us the capability to now be able to do a lot of the things that I'm going to talk to you about today. In addition to our new platform, as Jeremy's already spoken to, we have this really rich data set.
And we can use this to better drive loyalty to the airline, to provide our members with a more personalized service, and to give them more relevant offers. So this investment in personalization is really important for us. We've got this really strong member base of over 4.6 million members. This will help us increase or continue to increase the leveling of engagement that we see with our members. So the first pillar of our program is the sale of Airpoints Dollars to third parties. So we've got a really broad range of partners that we sell Airpoints to, and we're looking to accelerate this growth further. So we've got two sets of partners or two types, financial partners and retail partners.
Close to 70% of Airpoints Dollars that are issued are issued by third parties, and 70% of those are issued by four financial institutions, so primarily through card payment products such as credit cards. Airpoints members spend more than 3% of New Zealand GDP on Airpoints Dollars eligible cards. And our benchmarking shows us that this is strong compared to peers, but there is still an opportunity for us to continue to grow in this space. Interchange regulation in 2022 did impact sales of points to third parties, and we do expect if there is any further regulation for that to have an additional impact. So there are three things that we're looking to do to mitigate this. The first is we're looking to expand our partner network and bring on new Airpoints partners.
The second is we're looking to give our members new ways to earn Airpoints Dollars, so moving away from the traditional spend X get Y construct. The third is to grow our products portfolio, which I'll talk a little bit more about in a minute. On the retail part side, we have more than 35 retail partners covering more than 85 brands. This gives our members lots of opportunities to earn Airpoints Dollars on their everyday spend. We've got partners in the key retail categories of grocery, fuel, DIY, and home and living. One thing that we're always looking to do in this space is to grow and bring on new partners. One thing we do is we utilize spend data to understand where our members are spending and therefore which categories we might want to bring new partners in on.
One thing we noticed during COVID and coming out of COVID was that babies and pets became quite large spend categories for our members. So as a result of that, we've added two new partners recently, Pet Direct and Baby on the Move. Everyday Rewards is our newest partner. So that now goes live on the 2nd of December, which is very exciting. This is quite a big deal for us, this relationship, for a couple of reasons. The first is it gives us, while we've already got this really broad partner network, it gives us really strong coverage in a couple of the key spend categories. And a good example of that is grocery. So at the moment, our members can earn Airpoints Dollars when they shop with New World. That will still be the case.
From the 2nd of December, our members will also be able to earn via the Everyday Rewards program at Woolworths. It gives us much greater coverage in that grocery category, as well as a couple of others. The other reason why this is a really interesting relationship for us is it is a move away from the traditional earn setup that we've had. Traditionally, we've required members to show their Airpoints number at point of sale. This relationship doesn't require that. It gives our members new ways to earn, new partners to earn at, but it also opens the door for us to grow our coalition in new and different ways. We have an aspiration to double the earn that we get from this retail partner network.
In order to do that, we are actively at the moment exploring partnerships in insurance, utilities, wealth management, and experiences. The second way that loyalty generates value for the entity is through our proprietary products portfolio. Currently, that consists of the Airpoints Store, our OneSmart travel card, and Koru memberships. The Airpoints Store has grown quite materially since FY 2019. It was traditionally a redemption site for our HVCs that had a small number of products. We have now grown this to a NZD 50 million plus e-commerce platform. We now have the ability for customers to earn and spend Airpoints Dollars. We have over 14,000 SKUs available now. This provides relevance to a far larger portion of our members. At the moment, 4% of our member base interact with the store on average 1.5x a year.
So if we can grow that to even just 6% interacting on average 2x a year, we can double the turnover that we get from this Airpoints Store. So there are three opportunities to grow in the product space. The first is to grow the existing portfolio set, so the store, OneSmart, and Koru . The second is to launch into or grow further into the Airpoints branded or white label space. So that could be things like payments products, insurance, wine. There are quite a few things we could do in that space. And then the third is partner services, so selling data insights and marketing services to our partners. Growth in this space is also a really good way for us to mitigate any further interchange impacts. The third pillar of the loyalty business is Airpoints Dollar redemptions on Air New Zealand.
So Airpoints can be redeemed on any flight, any time with no blackouts. And we know that this transparency creates a lot of value for our members. They tell us frequently how much they value this utility that we give them. And you can see that our members have been increasing the number of Airpoints that they have spent with the airline over the last 10 years. As you would expect for an airline loyalty program, Air New Zealand flights are our most popular redemption choice, with 80% of Airpoints that are redeemed being redeemed on Air New Zealand. Redemptions are as valuable as a cash sale. So because the redemption price is the same as the cash price, and that moves based on demand, we do get a yield from a redemption that mirrors a cash sale.
This pegged currency construct, where a point equals a New Zealand dollar, is quite unique in the airline loyalty program world. We do periodically review whether we should move to a more opaque point-based system like most of our competitors use. There are pros and cons to each of these structures, but the pros of our current system are that it creates a huge amount of transparency for our members. As I said, they constantly tell us that they really value that. What the current structure doesn't offer us, though, is it doesn't offer us the ability to move the price of a redemption seat below that of the cash price. There's a couple of reasons why you might want to do this. One is it helps give a reward back to a member sooner.
It helps reinforce the value of the program by getting a member to a reward faster. That, in turn, creates loyalty and gets that loyalty flywheel spinning. That's the first reason. The other reason is it gives us another tool in the revenue management toolkit to help us optimize load factors. What the team are working on at the moment is a redemption offering that allows us to preserve the dollar-for-dollar construct, meaning an Airpoints Dollars will always be worth at least NZD 1. But it gives us the ability to make Airpoints Dollars offers to customers. That means, for example, if we know Richard likes to go to New York and maybe we have a soft period coming up on our New York flights, we might decide to send him an Airpoints Dollars offer.
That helps to speed up the loyalty flywheel with Richard, and it gives our analysts another tool to help manage our loads. And then the fourth pillar in loyalty is our frequent flyer program. So we have a really good opportunity here to improve the benefits that we offer our HVCs and further drive loyalty to the airline. So there's three things that we're doing in this space. The first is we are going to add a new tier above Elite. So what we know happens is at the top end of the Elite spend, our members reach the ceiling of our program, and we know that they split their wallet between our airline and others. So creating that aspiration for the top end of Elite helps drive loyalty back to the airline.
This new tier will be for our very top end of Elite, all around providing a seamless travel experience for these members. So the second thing that we're working on at the moment is refreshing the benefits that we offer our Silver, Gold, and Elite members. So just to give you a couple of examples, things that have tested really well, which the team are now further exploring, are mid-tier rewards, so giving members rewards within their current tier to keep them engaged. A status point top-up option, so essentially giving members the ability to self-save if they don't happen to, if they just miss out on maintaining their tier in a particular year. And then access to an Elite and Business Class only lounge at Auckland International.
The third part of this tier's benefits refresh is just ensuring that the benefits we already offer today are offered in a really efficient manner, and a good example of that is our recognition upgrade process, so we know that there's more that we can do to make that process more seamless, and that's something that the team are actively working on at the moment, so in summary, we have a really strong loyalty program and a great foundation on which to grow. We've got these four clear opportunities for growth, and we believe we can get an additional NZD 40 million-NZD 60 million in incremental EBITDA by FY 2028. To finish off this section, we're going to hear from one of our Airpoints partners, American Express, as to how they value the loyalty partnership.
American Express and Air New Zealand have a long-standing and valuable partnership that is united by the common fact that our customers love to travel and have unforgettable experiences, and together, we have created the fastest Airpoints Dollars-earning platinum card here in New Zealand that really helps Kiwis get on their next adventure sooner with Air New Zealand. I love speaking to our customers who have been able to take their family on an overseas holiday, explore our beautiful backyard here in New Zealand, or even pick up something from the Airpoints Store simply by turning their everyday spending into Airpoints Dollars with the Amex card, and with Airpoints being such a sought-after loyalty program, our partnership helps us attract new customers as well as ensure that the existing ones receive extraordinary value and benefits from American Express and Air New Zealand.
There are many reasons American Express enjoys working with Air New Zealand. We share a commitment to delivering exceptional customer experiences through our customer-first approach, and both brands have a global presence, and that presents a unique opportunity to partner in the many countries that we operate in. Our team also enjoys the collaboration and commitment to excellence that comes with working with the Air New Zealand team, and that includes the pursuit of innovation in the Airpoints program, which benefits our mutual customers. There are so many exciting opportunities on the horizon for our partnership. Ultimately, our future is guided by the shared values we have and our commitment to our customers, our dedication to providing exceptional customer experiences, and the integrity in how we work together to build meaningful relationships for our customers.
All right, thank you to all of our presenters so far, and thank you, everyone, for your attention. We are now going to take a break. I make it as roughly 20 to three, so we'll come back here for three on the dot. So please have some afternoon tea. It's out the front or there's snacks. Go to the bathroom, do your thing, and we'll see you back at three. Thanks.
You ran the tap and called me over, said it was safe to dive right in, and now I'm drowning underwater, but I would do it all again. A fall so high, blinded eye, lost all my discipline. Your words so strong, your arms so long, there was no way to win. Oh, don't you want to do it? Do it, do it. Don't you want to do it? Do it, do it, do it.
Don't you want to do it? Do it, do it. Just give in to it. Don't you want to do it? Do it, do it, do it. Do it, do it, do it. Just give in to it. Do it, do it, do it. Just give in to it. Just give in to it. Just give in to it. Some days I wish I had a sister. I don't wish for more, but this thought still crossed my mind. I only think it will be different. Another version of me, I'll tell her everything. I shouldn't feel so in the past. Not a piece of me is stuck there. Days I wish I could do over, it'll always be that way. And I wonder what it'd be like if I tried it all again. I'd still want to do it over.
I found myself in other cities, so far from home, and it made me realize life isn't always so pretty. I like this version of me. I'll give her everything. I shouldn't feel so in the past. Not a piece of me is stuck there. Days I wish I could do over, it'll always be that way. And I wonder what it'd be like if I tried it all again. I'd still want to do it over. Take me back in a past life. I never would have wanted that, but I want it so bad. Growing up too fast, closing paradise behind me and I'll still want to do it over. Take me back in a past life. I never would have wanted that, but I want it so bad. Growing up too fast, closing paradise behind me and I'll still want to do it over.
I still want to do it over. I still want to do it over. I shouldn't feel so in the past. Not a piece of me is stuck there. Days I wish I could do over, it'll always be that way. And I wonder what it'd be like if I tried it all again. I'd still want to do it over, it'll always be that way. I'd still want to do it over. I'd still want to do it over. I'd still want to do it over. If I tried it all again. I'd still want to do it over, it'll always be that way. Picky, picky, you can't monitor anything. Get on my roof, you are at their heart. Picky, picky, picking on the rooftop. Ooh boo, you are at their heart. All time free room at their heart. Picky, picky, you can't monitor anything.
Get on my roof, you are at their heart. Picky, picky, picking on the rooftop. Ooh boo, you are at their heart. All time free room at their heart. Time free room at their heart. Cocoro, you're in my mind. Why not get the way you are? The way you are. Cocoro, you're in my mind. Why not get the way you are? The way you are. Picky, picky, you can't monitor anything. Get on my roof, you are at their heart. Picky, picky, picking on the rooftop. Ooh boo, you are at their heart. All time free room at their heart. Time free room at their heart. Time free room at their heart. Time free room at their heart. Cocoro, you're at their heart. Their heart. Cocoro, you're at their heart. Their heart.
Wamatango fiele ya sumu haiyamua. Saa hunima ila opatima lepo. Tukula nwa samo, maefa afia fia.
Efa avae samo, aile ya tua. Kolo ufaasi no mangalenya. Samo haeno ua tundu upele. Pele pea ilo uwagana. Tukula nwa samo, haiya efa afia fia mole au maimoa. Amenela usivyomafaa. Nio wenga taa usafia. Sesema ya lahi ya teni el samo. Taa ulele aingia nenoa. Eeh, ooh, uole samo. Utenita mitaa ile pasa loloa. Tama mateine samo. Iya emana tua. Maluwe mafita moa inga. Aimiseo matua. Awa oso hulu mwanagi matuia. Ema waa igoele fia fia. Iya tuma uile ya tuma fina. Uimelelee isilile amo ita mua. Tukula nwa samo, maiya efa afia fia mole aumbo imoa. Amane ele ela usie kwa mafaa. Nio wenga taa usaafia. Sese ema ya lahi ya teni el samo. Taa ulele aingulia nenoa. Eeh, ooh, uole samo. Utenita mitaa ile pasa loloa. Tukula mwa samo. Maiya efa afia fia mole aumbo imoa. Amane ele ela usie kwa mafaa. Nio wenga taa usaafia.
Sese ema ya lahi ya teni el samo. Taa ulele aingulia nenoa. Eeh, ooh, uole samo. Utenita mitaa ile pasa loloa. Eeh, ooh, uole samo. Utenita mitaa ile pasa loloa.
Avoiding the empty spaces where I know all your things belong. Tearing apart the places where I know all the things went wrong. You know where to find me, babe. Don't throw out the wayside. Don't let this pass by. I keep holding on to hope. Keep holding my breath till there's nothing left. Don't fall by the wayside. Fall by the wayside. Don't fall by the wayside. Fall. I push and I pull the distance, but my edges, they start to fray. I try not to mend the friction, so I sit all alone with this pain. You know where to find me, babe. Don't fall by the wayside. Don't let this pass by.
I keep holding on to hope. Keep holding my breath till there's nothing left. Don't fall by the wayside. Fall by the wayside. Don't fall by the wayside. Fall by the way. Oh, I learned to let go of control like the ocean tide, fighting for your life. And I'll be here through the fall, through it all, till there's nothing left. Don't fall by the wayside. Don't let this pass by. I'll keep holding on to hope. Keep holding my breath till there's nothing left. Don't fall by the wayside. Don't let this pass by. I keep holding on to hope. I'm holding on to hope. Keep holding my breath till there's nothing left. Don't fall by the wayside. Fall by the wayside. Don't fall by the wayside. Fall by the way. Don't fall by the wayside. Fall by the wayside. Don't fall by the wayside.
Fall by the way. Brother Pele's in the back, sweet Sina's in the front, cruising down the freeway in the hot and hot sun. Suddenly, red blue lights flashes from behind. Loud boys booming, "Please step out onto the line." Pele preaches words of comfort, Sina hides her eyes. Policeman taps his shades, "Is that a Chevy 69?" How bizarre. Destination unknown as we pull in for some gas. A freshly pasted poster reveals a smile from the past. Elephants and acrobats, lions, snakes, monkeys. Pele speaks righteous. Sister Sina says funky. How bizarre. Ooh, baby, it's making me crazy. Every time I look around, every time I look around, every time I look around, it's in my face. Ringmaster steps out, says the elephants left town. People jump and jive, and the clowns have stuck around. TV news and cameras as choppers in the sky.
Marines, police, reporters ask where for and why. Pele yells, "We're out of here," Sina says right on. Making moves and starting grooves before they knew we're gone. Jumped into the Chevy, headed for big lights. Wanna know the rest? Hey, by the right. How bizarre. Baby, it's making me crazy. Every time I look around, every time I look around, every time I look around, it's in my face. It's in my face. Ooh, baby, it's making me crazy. Every time I look around, every time I look around, every time I look around, it's in my face. Ooh, baby, it's making me crazy. Every time I look around, every time I look around, every time I look around, it's in my face. And a pretty angel is a war on art that we're dealing.
If the price is right, then it's not stealing all these feelings from your mind. What a clever little girl. She writes those lovely words and makes us feel them. You can smile upon them. I know it's not stealing. We turn bleeding into gold. Sell your soul. Like a teardrop falls upon the page, flipping pages so they know your name. You wonder if you're ever gonna let go, but till this point it's been everything that you know. If the moment never comes, you'll be sober and it's all said and done. Forget it's all about the in-between me. If they had it the other way, you'd be left without the money. I used to know this guy. He was a full-on narcissist. I did not know it. He said, "This is your only chance, so don't you blow it.
And if you do, I'll make you cry. Make you cry. I'll fall asleep and sigh." He sent these angry paragraphs 'cause I had dinner. My friends were on the tour. He was a clinger. Through with him would not take long. Just one song. Like a teardrop falls upon the.
Welcome back, everyone. Looking like it's going on. Can you hear me okay? I do wonder if you're ever gonna let go, but till this point it's been everything that you'll never. Yep. Shall we get started? Sorry. If anyone's in the Skynest, do you mind getting off the Skynest? Good afternoon and welcome back. Hope you're well snacked up. This was a section that needed to come after the break because it's all things digital. If I'd followed Kate, you'd probably fallen asleep. I'm glad you all had a break and have caffeinated yourself.
Look, it's my great pleasure to be able to share New Zealand's digitalization journey with you. It's an area of the business where we've got some great momentum, and some of the positivity you're hearing from all of my colleagues is really underpinned by the success we've already seen to date in this program of work and the plans we have ahead. As Greg mentioned, digital is one of our core pillars in the Kia Mau strategy, and our ambition here is quite genuinely to build the world's leading digital airline, and we're dead set serious about that, and we're well along the way of doing that. Look, there's three things I'm going to cover today. I'll share with you sort of our approach. I'm going to use a couple of analogies to try and make this interesting, but bear with me. It didn't quite work with my wife.
So I'll give it a go anyway. And I'll also share with you some progress we've made to date. Secondly, I'm going to talk to you about our plans ahead for the next two to three years, building on this momentum. And finally, I want to highlight the importance of this program to the fundamental performance and profitability of this airline. So let's get into it. Speaking of our approach, our approach is based on sort of four high-level principles. First of which Greg spoke about, he referred to it as walking and chewing gum. We really need to be ambidextrous, have needed to be, and continue to need to be ambidextrous as we execute this program. Secondly, we have a program here that necessitates us to lean into the complexity that we face. And I'll talk about that in a second.
The other thing is we can't fix what we can't see, so a large part of this program has been about improving our situational awareness, and as an airline, we generate terabytes of data every day, and finally, about two and a half years ago, digitization at the airline became a team sport, so every Air New Zealander has a role to play. It's not necessarily outsourced to me and my team in the digital department to get this work done, but rather, we've all sort of stacked hands and we've said that the ship has sailed. We're already a digital enterprise, so we might as well all play together to try and execute on this program. Using that approach, we have four focus areas. The first one being strengthening our digital foundations. Look, this is where our need to be ambidextrous comes into play.
We've had to solve for this while we're considering outcomes in the other three focus areas to its right. And we've had to do that in a way where we deliver thousands of little changes while we also focus on executing very large, complex, multi-year transformation programs of work. I'll give you a bit of a sense of that in a second. The next focus area is winning on customer experience. This is where our approach of sort of meeting complexity head-on has come into play. Pre-COVID, not just at Air New Zealand, but airlines around the world, the focus was around digitizing the happy path or the sunny day scenario. And when the proverbial hit the fan, we relied on our frontline staff to come in and save the day. They were there to deal with the exceptions.
Post-COVID, when volatility and change is our new normal, we can't get away with that. We really have to lean into the complexity and start digitizing the exceptions as well. The third focus area is maximizing revenue potential. This is where Jeremy's 4%-6% of revenue growth comes from. This is a mega transformation of the industry. And we have some structural advantages that puts us in a very good place to take advantage of it. And I'll share a bit of that also. And finally, last but not least, unlocking operational efficiencies at pace. Not as once and done, but now that it's a team sport and we have digital data design people embedded in all parts of the airline, this could be one where the flywheel continually rotates. So we aren't just trying to find one-off efficiency gains, but continuous improvement across all parts of the airline.
So that's a bit of a sense of the recipe. Now let's get into the dishes themselves. See, this is the analogy coming out. Strengthening our digital foundations. The best way to think about this is this is the pantry. This is what allows us to cook the dishes in the other three focus areas. And the pantry needs to be well stocked. The first two bits, the top two, think of it as the more basic ingredients in the pantry, the salt and pepper. It's not working, is it, Jen? I'm in now. So keep going. So as Greg mentioned, three years ago, only 30% of our infrastructure, the storage and compute that we build everything off, was in the cloud. Today, that's 93%. That's industry-leading stuff. And we've done that with great work internally, but also alongside some global partners like AWS and Microsoft.
The reason that matters is, A, it makes the boat go faster. B, it gives us the agility and adaptability we need. And three, as you've been hearing these snippets of digital transformation from my colleagues, it allows us to execute a program concurrently across all parts of the airline. The airline has nine key domains. And each one of them has the technology size of a large enterprise in the New Zealand context. So there's a lot of moving parts. So that matters a lot. As far as connectivity is concerned, again, there's a lot to talk about there. But maybe the one thing I would say is low Earth orbit or Starlink plays a really interesting role for us as an airline. A, on the ground, it allows us to improve resiliency.
18 of our 20 ports by the 9th of December will be Starlink-enabled, not just to access the internet, but also our all-core internal systems. If they are cut out from the physical network, those airports can operate in isolation. As a lifeline service provider, that's a pretty big deal. In the air, it allows us to give our customers access to ground-like internet capacity while they're flying with us. That allows you to access your favorite media streaming service. Obviously, the relationship with the IFE changes over time. Maybe our domestic A320s now can also fly Trans Tasman, et cetera. But also allows you to do work like you do on the ground, except maybe take those pesky video conference calls. Maybe you might want to avoid that. Two of our aircraft will be Starlink-enabled by February next year.
The bottom two are the more exotic ingredients, and as a sort of critical infrastructure player and a lifeline service provider, cyber and identity is one where we have to be in the top quartile. We get this externally assured regularly, and we have an extensive program in place, and our teams are doing a great job, and it's based on some industry best practice and so on. And finally, I'll butcher this again. Maybe this is not the exotic ingredient in your pantry, but this is the cooking oil. There's no dish that you could cook without data and analytics, and here, again, great momentum over the last few years. A lot of enterprises generate a lot of data, but you can't really use that data because they're trapped in the applications that generate them. Mike Parsons is here, our Head of Data and AI.
Him and his team, along with a lot of our colleagues across the airline, have been busy freeing that data so that it can be used to, A, improve situational awareness, but B, also improve the quality of decision-making, either by humans or by the numerous bots that we have running alongside our staff across the airline. 75% of all the data we generate is now available for insight generation and decision-making. Just so as it happens, when we started this program, GenAI was not a thing. Now it is a thing. And the thing that gets GenAI going is data. These LLMs, large language models, are trained on the internet, but they don't quite understand Air New Zealand. And it's the same data that makes them useful in our context. So these four pillars of our foundations are in pretty good shape.
Under the covers of any enterprise, large or small, these are the same four key pillars that are the sort of unsung hero of digital transformation programs. With that as the pantry, let's start cooking some dishes, maybe. No three-course meal goes well if the entree isn't very good. Winning on customer experience is our ticket to the dance. Our Chair is absolutely having a ball at the back there. Winning on customer experience for us matters because that creates loyalty to the brand. It allows us to monetize that loyalty, obviously. For us, customer experience has two components to it. Number one is to not just meet, but exceed our customer expectations. In the digital realm, our customers' expectations are just benchmarking us against another airline. That said, the United app is very good. We keep a close eye on that.
But actually, benchmarking us against their most favorite experiences. And that bar is much higher. And the teams have been doing a phenomenal job in that space. Post-COVID, we've got a lot of momentum. The second aspect of winning on customer experience is self-service. As far as we're concerned, an airport is a means to an end. And the more we can get you to do outside of an airport, the better. And so a lot of investments have gone into enabling self-service through our digital assets. This, again, is not an exhaustive list. But it is a list where we've either delivered these initiatives or we're working on delivering them as we speak. Maybe the best way I can bring this to life is through the case study of our app. 1.6 million users use this app on a monthly basis.
It's got a rating of 4.7 on the App Store versus 3.5, the App Store rating that our old app had. We decided to build this app as we were coming out of the second lockdown in Auckland. And one of the reasons we did this was to create an ability to communicate in real time with our customers. The old app was much loved. It was not a channel for communication. We needed to get customers to download the app every time we needed to make any change to it. Obviously, when you have a couple of weeks to open the Trans-Tasman border, that's not flexible enough. So we built this app using a framework called Backend for Frontend. What that really means is your app is just a blank canvas. And every time you open it, we paint over it.
It gives us great flexibility to do a bunch of stuff around communication. But one of the other things it allows us to do is to deliver features at a great pace, great frequency. And here's some of the sort of phenomenal stats that we've seen that we've been able to sort of deliver through this new app. The first one is around disrupt management. As I said, the need of the hour post-COVID was to lean into exceptions management, the complexity. Today, the app allows you to self-serve in the context of a disrupt 65% of the time. So 65% of all disrupts we have can be managed through self-service. Three years ago, you would have to queue up at the airport or call a contact center to be able to do that. The benefits, obviously, are significant for us as an airline, but also for our customers.
The other stat may be worth paying attention to is the number of calls into the contact center. Only 12-18 months ago, we were consistently getting 90,000 calls into the contact center, 45,000 of which we would abandon, and if you did get through, you would wait on average about 40 minutes to speak to us. Today, we get 25,000 calls into the contact center. Some of those calls are vaporized because of schedule surety, but we've still got our fair share of disruptions. A large part of those calls have disappeared because of the self-service capabilities we've enabled. Not only do we only get 25,000 calls into the contact center, most of which we answer under five minutes, a lot of which under two minutes, actually. 40% of those contacts are non-voice, and a non-voice contact to us is 3x more productive. That stat is industry-leading.
No other airline in the world can claim that. So just one digital asset, of which we have many, is proving to be a very valuable tool for us to win on customer experience. And we'll continue to do a lot more in this space. Now the main course, maximizing revenue potential. This is a mildly complicated story, but let me give it a go. Look, the airline industry digitized itself quite a way back. So one of our pieces of software here went live in 1973. And we created an airline retailing marketplace quite a long time ago. We called them the GDS systems, the Sabre, the Amadeus, the Travelport, Navitaire, et cetera. But since sort of digitizing the airline retailing paper-based process, so rather than getting a sort of three-copy paper ticket, we now send you a PDF in your inbox or through our app.
So the focus has really been about digitizing that paper process, and we've sort of plateaued out after that. We haven't really taken advantage of the new e-commerce capabilities that are available today, so that's really the sort of revolution that's happening in the airline industry, moving from a digitized paper-based process to real digitalization of the airline retailing space. We internally refer to that as Next Generation Retailing. What does that actually look like? We're all familiar with the left-hand side process. Doesn't matter on our website, at Expedia.com. If you go to your favorite travel agent, apparently people still do, you essentially follow Jeremy is giving me. We essentially follow that same linear process. We search for a flight. We pick the dates. We enter the number of passengers that are going to be traveling, and we go through that process and end up booking a flight.
That happens during the booking flow, and once that's done, we shift you into a travel part of the process. That process, as I said, is digitizing the paper process that we have. Going forward, we are taking advantage of the internet and the e-commerce capabilities that we have all taken for granted when we shop online, sort of the Amazon.com experience, so we're introducing in the airline industry the concept of a, it's not revolutionary, but it is for the industry, a shopping cart, which allows us to do a few different things we haven't been able to do, and that's very much focused around being customer-centric. The first thing it allows us to do is to generate dynamic offers.
Dynamic offers beyond just the airline seat into airline ancillaries, which we've done to an extent, but taking it to the next level and also extending it into first-mile, last-mile transportation, hotels, and other non-airline ancillary products. The second thing the shift to that model allows us to do is hyper-personalization. Jeremy and Kate have talked about that, our 4.7 million members. The data we have not just about your travel preferences, but also how you interact with your ground partners. Using all of that, we can generate offers that make sense to you. Rather than a more ubiquitous sale to Hawaii, if we know you're a road warrior between Auckland and Sydney, we can generate offers that are more meaningful to you, a six-flight package, for example. Finally, what it also allows us to do is the ability to cross-sell and upsell more effectively.
This process on the left-hand side is typically done ahead of travel, and we leave a lot of value on the table by not being able to cross-sell and upsell either at the airport or in the air, so just to bring this to life with a couple of examples, for the road warriors amongst us, especially if you're going back and forth between the same city pair, regardless of how many times you've traveled with us, we still put you through the same process each time you want to book. You might also have a favorite hotel. You might use Uber at both ends of your trip. What we can do with the new model now is, with a click of a button, clone the previous trip and two clicks and book that travel for you, and that would include also the hotel stay that you've got.
The teams are busy prototyping this on the back of some of the early investments we've made. The other thing it allows us to do is the entry point to booking can be very different to what it is today. If you're a family of four looking to go on a holiday, rather than start with the destination you want to go to and search for your flights, you can start with the budget you have for your holiday. We can auto-generate a set of holiday options, including the experiences in each of those destinations. That's the type of stuff that we've been able to prototype. We're starting to work on productionizing, if you will, over the next two to three years. This is what really helps us unlock that 4%-6% revenue growth that Jeremy has been talking about.
Now to the third course, the dessert course, unlocking operational efficiencies at pace. There are three components to this. The first for us is about making sure that our staff are given the right tools to do their jobs more efficiently. The second aspect to this program is ensuring that we improve our situational awareness, and third is to either remove steps in the process or reimagine the entire process through the lens of automation. In terms of tooling itself, for example, we're one of the only airlines in the world where we've issued an iPad or an iPhone to almost every employee. The only two groups where we haven't done that is baggage and ramp, and Kate and I are very busy working through the business case to make sure that they're also tooled.
We're not doing that to make sure that they can take selfies while they're on shift, but rather to use that as a platform for innovation. We've put out about two dozen apps that our staff use today to facilitate air travel, either to deliver a better service on board or on the ground in terms of our airport staff. I'll share one of the examples with you in a second. But in the Flight Deck, this has also had a very interesting impact. We're, again, a world's first, the only airline across all our fleets to have a paperless Flight Deck. Across our wide bodies, narrow bodies, and turboprops, pilots now carry a single iPad. On that iPad is some crucial apps that they need to do their jobs effectively. That's been great in terms of improving operational efficiency, our on-time performance.
From a sustainability point of view, we've taken paper the height of the Sky Tower out of our operations. But also going forward, what that allows us to do is what we call dynamic flight planning. And this is something that Richard, I think, will talk about as well in a second. But this allows us to really optimize how much fuel we're using by, in real time, adjusting our flight plans, either on the horizontal or vertical axis, horizontal or vertical axis. One other tool that I want to share with you that's having a really big impact in our operations is what we call Ops Collab. I've just recently come back from Austin, Texas, where we got to present this to a bunch of our airline peers and Apple and some of the partners. And this app was the talk of town.
The reason for that is this is having some quite significant impact on our on-time performance stats since we've started to introduce it. This app here, Ops Collab, is used during our turn. A turn for an airline is our version of a Formula 1 pit stop. As you guys, as one of our planes pulls in and we dock it at the gate and you start to disembark, grab your bags, and head to your next airport, there are dozens of teams at the airline executing about 2,000 - 3,000 tasks in the case of an A320 in 45 minutes to execute a turn. That needs to be executed with precision for us to have a chance for that aircraft to take off on time for its next flight. This is the tool that we've built to help facilitate that.
Before this tool, our staff relied on two-way radios and a hub-and-spoke model where messages would go to an airline operations center, which then would get broadcasted to the various different parties, and we lost a lot of time in not getting the right messages and situational awareness to the right people across the airline. This tool allows us to do that more effectively. Think of it as a WhatsApp for every flight, and anyone who's involved in the turn of that flight gets to subscribe into that WhatsApp group, and they can communicate with each other in real time. There are three benefits that we've seen from this app. One, obviously, is improved communication and coordination to execute that turn precisely. Two is it's had a massive impact on the psychology of the turn. The turn, historically, is a penalty-based sport.
If the flight is delayed, we try and find the team that we can pin the blame on. So is it catering that was late? Or was it fuel that was late, et cetera? What this app allows us to do is actually flip that on its head and turn it into a reward-based sport. We've taken some inspiration from gaming. We've spent a lot of time designing in micro-rewards. If the cleaner's finished 30 seconds ahead of time, they can gift that to the next group. We can celebrate that. At the end of a successful turn, imagine virtual high-fives flying. People are enjoying the fact that they've now got a way of celebrating each other's success and being sort of moving away from it being sort of a high-stress penalty-based sport.
So more serotonin, less cortisol is what we want when we're executing our turn. And finally, situational awareness. Every step of every turn now is a data point that we can collect. And this is important because then we can use that information to fine-tune what we call our precision timeline, the macro process that defines the sequence of activities that executes a turn. This is an area where we are under stress, obviously, with the aircraft issues, the engine issues, and so on. So having a tool like this has been a bit of a game changer for us. We're targeting 2%-4% on-time performance improvement using this capability. And we're already starting to see progress towards that, particularly in our turboprop fleet. It's been quite a successful launch. And we've just launched this on domestic a couple of months ago.
It's going to be rolled out into our international fleet as well. Look, it's very hard for me to get through every example or every initiative we have in our digitalization program. I wanted to give you a sense of how we're approaching it and sort of the key focus areas for us and the momentum that the teams have been building in this space. In closing, the reason this audience should care about this is because 70%-80% of all of the incremental EBITDA benefits that we've been talking to you about today, and Richard will talk about it a bit more, comes from our ability to execute these programs well. What we've now got is a track record for delivery. We've been scoring a lot of these nine-point tries that Greg talks about, one point for talking, nine points for doing.
We have a very solid plan and momentum to continue to score those nine-point tries. This is a big success area for us. We expect it to continue to be so. All of this is not possible without some fantastic talent. Air New Zealand, as Nikki will talk to you about in a second, has been the employer of choice for many, many years. We get to attract some fantastic talent, not just in the operational parts of the airline, but also in my area, in digital. 35% of our staff are brand new with contemporary skills. We also rely on some global partners who help us execute programs like this. The other thing that's really been helpful for us is our new ways of working.
I think that's a good segue, actually, for me to stop butchering my kitchen analogy and hand over to Nikki Dines, who's going to talk to you about our most important asset, our people, and this way of working I've been sort of alluding to.
Thank you. Hi, everyone. It's great to be here today talking to you about our people here at Air New Zealand, which, as Nicole has said, we consider to be our most important asset in delivering on our strategy. You heard Greg talk earlier about the importance of culture, having the right team. I'll talk to you a bit today about why that is important to us. I'll talk to you also about our union relationships and why they're important and why we invest in them.
I'll also talk to you about our operating model, so what we've done to change the way that we work and the way that we plan for our business and how it's helping us to deliver value faster. Put simply, we think our people are what differentiates us in the market. You look at those awards that Greg talked about, winning the airline of choice, the Condé Nast award that we announced a couple of months ago. First and foremost, that comes down to the people that we have. We think you probably all have had this experience or know of people who say, when you step on a plane overseas and you're greeted with a Kia Ora at the door, it feels like you're already in New Zealand. That is really what we think gives us a competitive edge in the market.
We're often asked about our future, what makes it so strong, and how we've sustained it through some pretty challenging times, particularly through COVID. That's not something that we take for granted. It is something that we really actively invest in. Because we think with a strong culture, we can attract the best talent. You'll see there on the screen there that we had over 1,700 jobs last year and 68,000 people applying for them. That's pretty standard for us. I've been here for 11 years. We tend to get those kinds of rates of applications each year. It also helps us to retain our great people. Again, from the screen, you can see our turnover rate. In New Zealand, you're up around the 17% mark. Here at Air New Zealand, we're at 6.4%. With our talent, we're at less than 5%.
So that's really important to us to be able to really bring in great talent and keep them here and have them highly engaged. We've got a really diverse workforce. You can see that from the screen. We're a very heavily unionized workforce. We've got people located around the globe. We've got quite a range of tenure for our staff. We've got particularly long service in those safety-sensitive areas, like in cabin pilots and engineering. We've got other parts of the organization where we're building back our workforce after coming out of COVID. But our view is that regardless of people's union membership, where they're working, how long they've been here, if we treat them fairly, pay them a fair wage, and we give them opportunities to develop, that's going to translate into a really strong employee experience, which then translates through into our customer experience. And we see that.
We see in our frontline workforce, we have scores of over 86% in airports for customer satisfaction, 91% on board the aircraft, and we know that that is one of the things that impacts the most on our customer satisfaction is that experience that they have with our people, particularly when they're in flight. It also translates into loyalty, so what we saw through COVID was we unfortunately had to let 3,500 people go as we kind of hit into COVID. We built back very rapidly, and we saw over 1,000 people come back and rejoin us. So for us, it was excellent to get that loyalty and that experience back into the organization. You'll see there on the screen we have employee engagement at 71%. And you might ask, why it's not higher than that? We have an aspiration.
We use the Glint employee survey tool to measure engagement here. The global top quartile benchmark is 78%. Now, that includes all sorts of businesses. We are obviously a very heavily unionized, very heavily operational business. So 71% actually scores pretty well when you look at those types of businesses. But it is something that we want to continue to work on. And it does remain a real focus for us. And one thing that's been great to see is actually that's held pretty steady. And the last few years have certainly come with their challenges through the significant ramp-down and ramp-up out of COVID and some of the challenges we're experiencing now. So we're really pleased to see engagement holding steady for us. Something that's important to us is that we really understand our workforce.
So we know what skills we have that we need to have in the organization right across the business now and into the future. We also want to make sure that we don't get caught short because we know that there are some types of roles where it's pretty hard. There's a global shortage of talent, areas like pilots, engineers, digital. So we're making sure we did a piece of work around strategic workforce planning, a very detailed piece of work that every part of the organization did earlier this year. We know we have got some challenges in terms of the global shortage in pilots. So we have introduced, you might have seen in the media, a cadetship program, our Mangōpare program. We've just sent 12 people offshore to get a type rating, their first type rating. We're sending another group off shortly.
And the idea is that ultimately we will bring that program back onshore and run that ourselves just to really broaden out that pipeline of talent that we have through the existing channels of getting people into flying. We've got a really long-standing engineering trainee program. And we've really beefed that up in recent years. So again, we're making sure that we've got a good flow of future talent coming into that workforce. And we've also set up a digital intern and graduate program so that we can really tap into the greatest talent coming out from the universities, but also in the wider workforce where we're seeing people potentially reskill into digital roles. So we want to be able to make sure we can capture that talent and bring them into Air New Zealand.
As well as looking at our talent pipelines, we invest significantly in development, so leadership development. We think our leaders play a really critical role in terms of driving productivity and driving engagement, so we have leadership development programs right from the frontline workforce through to our senior leaders. We partner with TupuToa, which some of you may know about. It's a Māori and Pasifika intern program so that we can make sure that we're bringing in some really diverse talent. We have a real focus on customer service training. As I said, that's really what differentiates Air New Zealand as an airline is that strong customer service, and we've also set up a digital academy, and there's three parts to that digital academy. One is around upskilling those grads and interns that we bring in.
Another one is continuing to build the skills of people who currently work for this organization in digital roles so that we're really continuing to grow and develop their skills. You've heard from Nicole. We've got a really ambitious agenda around what we want to do with our digital workforce, so the third part of the digital academy is actually upskilling the wider workforce, so every single person in this organization knows how to really make use of the tools, the technology that we're giving them. We've given all of our frontline staff mobile devices and access to data that they've never really had access to before. We want to make sure that they can really optimize their use and drive as much value as we can out of using those tools and that data. From a diversity, equity, and inclusion perspective, why is it important to us?
We serve a diverse customer base. We need to make sure that we have a good understanding of what those customers' needs are. We think it leads to better decision-making as well to have diversity of thoughts sitting around the table. We've got 11 employee networks who are very active. We partner with Pride Pledge. We have the Gender and Accessibility Tick. That enables us to audit ourselves and to benchmark to see what else we need to be doing. I'll share a little story with you. For those of you who have got a coffee here today, that's from our café up there, which is our Flourish Café. We've done that in partnership with Project Employ. It's an opportunity for young adults with disabilities to have employment, get their first jobs.
So that's just one of the things that we're doing to make sure that we really bring it to life within the organization. From a safety perspective, as an airline, the most important thing and what is very much front of mind for us in everything that we do, we put a lot of focus on driving a really robust safety culture. So a lot of emphasis on safety training, safety reporting. We have a very extensive and robust safety reporting process. And those efforts in terms of safety saw us recognized as the world's safest airlines this year by AirlineRatings.com. And if we're ever going to win an award, that's the one we want to win most as an airline.
In terms of union relationships, we have a real focus on making sure that we can build really strong and constructive relationships with the five unions who represent people here at Air New Zealand because we think that that can either contribute to enhancing or eroding the long-term value of this business, and you can see that from events around the world, things that have played out for many years now across many sectors. When you don't have those strong union relationships, you can end up in a lot of problems from a cost, a culture, and an operational disruption perspective, so we do prioritize investing our time and our efforts in building those relationships. For those who have been here before, we've talked about our high-performance, high-engagement model that we used. It's pretty unique, actually, in the aviation sector. I think we're the only ones doing it.
We got it from the U.S. healthcare sector about 10 years ago, and we just had a look at that earlier this year. We refreshed it, and we've put in place something called a strategic engagement charter. Now, we as an organization have signed up to that and so have all of the lead teams of each union, and we have a set of core agreed objectives in that charter that we all have agreed are going to be the way that we govern how we act towards each other, and they're around things like superior returns, superior workplace productivity, in return for things like greater job security and superior terms and conditions. Because actually, at the end of the day, our unions and we have the same interests.
We want the business to do well over the short term, but we also want it to stick around and to do well right into the future. So this strategic engagement charter sets us up to be able to work together on productivity initiatives, change, etc., in a way that's really constructive. One of the things that's really key to our union relationships is around transparency. We have a lot of points of engagement with the unions. We engage with them on a day-to-day basis. At business unit level, there are structured monthly catch-ups. We, as an executive team, catch up with the senior members of each union on a quarterly basis. Actually, we've got one later on this week where we will share this kind of information we're sharing with you today.
This is what we share with the unions because it gives us a shared agreed kind of platform. They all have the same knowledge that we do in terms of whether it's the challenges that we're facing or the opportunities that we want to go after. We have partnered with the unions to pursue something that we call sustainable jobs. And that's jobs for people that are sustainable both for the business and for our people. It means that we look at the way that we pay our people. So all of our people are at or above the living wage from a total remuneration perspective. It's also about the tools that we give. You heard Nikki talk about giving our people mobile devices. It's making sure that they've got the right tools that they need to do their jobs really efficiently and safely.
We also take the same approach to collective bargaining because that's kind of where the rubber hits the road often with your union relationships. And it can be quite a disruptive experience going through collective bargaining, or it can go quite smoothly. So we're really transparent in our collective bargaining around our pay offer. We don't kind of hold it to the end and then pull it out. We tell them from the start what we believe is an affordable pay increase for the business. And we base that both on how the economy's doing and how the business is doing. Any pay increases over and above that are funded by productivity gains. So we have a very upfront kind of conversation with the unions right from the outset on that.
That has really enabled us to get through what could be quite disruptive times in the organization in a pretty streamlined way. Simplification is really important. We are a legacy airline. There are plenty of areas where we are looking really hard at how we can simplify. That's right across the board. We have been able to partner with the unions to achieve much simpler terms and conditions in parts of the organization and also working on things like rostering conditions to look at how we can work together to simplify those things. We also have been simplifying processes in the way that our staff access knowledge. A great example of this is in our contact center. You have heard a bit today about what we have been doing in the contact center. You may know that we have had some real challenges in the past.
And now we've really managed to deliver quite exceptional service through our contact center in recent times. We have a situation where our contact center agents can face really complex queries. So they have a family of four that wants to travel to London via LA, Houston. They want to grab grandma on the way. And some of them have got Koru membership. Some of them don't. Really kind of complex queries. So when they ring the contact center or go on to chat, that can take our agents quite a lot of time to look up different sources of information to get the answer to the query. So we have built a GenAI chatbot, which we've called Tui, in the contact center. And that enables our agents to have that complex information at their fingertips straight away.
And what we've seen from that, we're seeing 95% daily utilization of that in the contact center. So people love it. They're using it. We have seen response rates for chat go down by two minutes and voice calls down by over a minute. And we've seen savings already of over NZD 2 million annualized. So those are the kinds of things. It's really simplifying how we give people access to the right kind of information to improve customer satisfaction, cost, and employee experience as well. And just finally, our operating model. So another significant step that we've taken to really unlock value in this business is to change the way that we operate and plan our business. So we were traditionally a kind of a top-down functional operating model.
As we came out of COVID, we knew that we needed to have an operating model that allowed us to move really quickly because, as I know you'll all know, this is an industry that requires it's got a lot of change. It's got a lot of things happening all of the time. We need the ability to respond really quickly to those things. So we took the opportunity to reframe how we work and put in place a more agile operating model. So that's all about having hundreds of cross-functional teams working together to solve problems or go after opportunities, and a good example that you heard Nicole talk earlier about some of the changes we've made to our app. So we've got a team of people that are made up of a number of digital skill sets.
It could be airport staff, design skill sets, all working together to go, "What are the highest priority things that we need to solve for?" And you've got all the skills there together to be able to do it. So we've got hundreds of these teams working across the organization. We've also changed, as well as changing the way that we work, we've changed the way that we plan. So we have a really rigorous quarterly business planning process. We call it our QBR process. So every quarter, as an executive team, we come together. We have a couple of days together where we sit down and we look at, "What have we learned over the past quarter? What do we say we do? Have we done it? What have we learned from that?
And what are we going to do for the next quarter?" And we tie that into value. So we look at, "What are the things that are the highest priority for us that are going to help us deliver our strategy?" We then share that with the organization, and they set their priorities based on that. So quite a change for us. And what we've been able to see through making these changes to our operating model is that we can get things done faster. We can unlock value faster. We've seen teams being able to deploy at 7x the rate that they have been previously. So to summarize, why do we invest in people? Well, quite frankly, it's just good business. Our people are our highest operating expense. They have such a significant impact on the organization and on our profitability.
It makes sense for us to really make sure we invest in our people. We've got a volatile industry. We really want to make sure we have a stable and high-quality workforce, and you can see there on the slide, higher engagement means that we have higher discretionary effort. We get a great customer experience from our people, strong retention, lower training costs, greater productivity, gain greater customer experience, and then also, increased wellness means we get strong focus on safety outcomes, so for us, that is really why we focus on driving the culture of this organization and investing in our people, so I'll hand now to Richard just to bring us home.
Welcome, everybody. Good afternoon. This is the final session. You're almost there. Almost there. Just by way of introduction, it is a really tough operating environment at the moment.
It is hard to understate the operational and economic impact of these engine AOGs. But listening to my colleagues this afternoon, or certainly this afternoon session, is a really good reminder of the incredible work that's going on in the business at the moment to develop and maintain a very strong foundational core. So I take great heart from that. It will pay dividends, literally and figuratively, over time. I wanted to cover three things this afternoon. There'll be other things that sort of crop up. But one is we are in a strong financial position as an airline. And that is underpinned by three fundamental planks. We've got an investment-grade credit rating. We've got a formal capital management framework, which is critical to that. And we've got a large unencumbered portfolio of modern aircraft, which is not something that we've had before.
We've got a modern, young, increasingly simple, not as simple as we'd like it yet, fleet with capital-like growth opportunities, which I'll cover in a bit more detail, and I want to finish just by reiterating our medium-term financial ambitions as an organization, which include top-line revenue growth over and above what we might expect just from capacity growth and a commitment to sort of flat, nominal, declining real CASK. Strong leverage with plenty of flexibility in the business. We do continue to have very modest leverage, particularly given the average age of our fleet relative to a lot of other players. Our leverage ratio at the moment is very low, probably too low. But that is a function of the delayed new Boeing aircraft deliveries, which we now expect to take the first of just over a year's time in early 2026.
We'll get back into the target leverage range, a range that we've occupied with a great deal of consistency, actually, in the post-GFC environment, ignoring the COVID period for a moment. The supply chain remains very difficult. The engine challenges are well publicized. When we do get the aircraft that we've already bought back and operating in the fleet and the new aircraft coming online at the start of 2026, we will see very strong benefits associated with that. I'll come back to those soon. I think one message on this slide that I'd like to leave you with above all else is that we have kept replacing our fleet along the way. We've got strong leverage, young fleet. We've kept replacing them. We're up to date.
Therefore, we're in a pretty good position relative to many peers in terms of that fleet age-to-leverage ratio, which gives us wonderful flexibility as a business. Investment-grade credit rating. Key point here is we are committed to maintaining it. It gives us really good access to global funding markets. We're the only airline - and thank you, Justin, for some of your assistance in this. Actually, we had a few bankers in the room that helped us through this. But we're the only airline to avoid a downgrade or a negative watch since March 2020, which is fantastic, and we benefit as an airline from a long-standing presence in the international secured aircraft funding markets. More recently, we're in the unsecured markets as well. You'd be aware we've got a relatively modest-sized New Zealand retail bond.
But in the last couple of years, we've diversified into the unsecured funding markets, particularly the Aussie medium-term note market. But in a nutshell, we've got great access to funding. And just as importantly, really good pricing on that funding, particularly for an airline our size. Capital management framework, I assume many of you have seen this. We issued this in the middle of last year. Quick summary of the targets. We've got a liquidity target of NZD 1.2 billion-NZD 1.5 billion, which we're toward the top of at the moment. As I sort of stand here today, we've got liquidity just under NZD 1.5 billion. I think we're at NZD 1.45 billion as of this morning. And a net debt ratio and to EBITDAR ratio, as I mentioned before, of 1.2, sorry, 1.5x-2.5 x, which we're trading under at the moment.
But again, expect that to normalize as we take new fleet into the system. This framework is foundational to maintaining the investment-grade credit rating. The dividend payout ratio is linked to earnings, deliberately so. We're in a cyclical business, although we do smooth that somewhat by approaching the 12-month impact calculation that we use on a rolling basis. But we have opportunities to distribute excess cash. Those opportunities exist today. We assess them separately from the dividend payout ratio based on leverage, liquidity, and where we think we're sitting in the CapEx cycle. Growth CapEx is subject to a 10% post-tax nominal hurdle rate. And I'll give you a good example of that in recent action very shortly. And return on invested capital ROIC, we do expect to increase as the average fleet age floats up. As I mentioned before, we've got relatively low gearing relative to our fleet age.
We do think that we can comfortably float the average fleet age from sort of 8.5, nine years up to 12 years over the course of the next five or six years, particularly given that we don't see major, with some exceptions, major advances in current aircraft technology. The 350, the 320, the 787, the Boeing MAX, for those buying it, are sort of at the cutting edge of current aviation technology. So we don't feel like we're going to be forced into the need or suffer a disadvantage by continuing to operate the technology we've got for some time yet. Unencumbered fleet, the third part of the financial flexibility formula. Just a quick comment on this.
If you go back sort of pre-COVID days, we had relatively few unencumbered aircraft, about NZD 400 million worth, typically older 777-200s, ATR 72-500s for those that sort of follow that, and our older 320s. Fast forward to now, we've got NZD 1.6 billion worth of unencumbered aircraft, so a significant change, and they're all modern, so ATR 72-600s, new version of that, 787s, A320neos, so we're in good shape there, and they do form part of contingent liquidity. We don't include them in our liquidity number, but effectively, they do, and you will see, as you probably picked up from the guidance note that we issued this morning, we're taking advantage of a little bit of that at the moment, although for different reasons.
We're in the advanced stages of a sale and leaseback transaction on four of our mid-life A320s, taking advantage, one, of the very strong market values of those aircraft at the moment. And secondly, using that as an opportunity to retire some of our residual value risk on those aircraft further down the track. So that will be an introduction of additional liquidity if this transaction settles before Christmas. That sounds easy. The aircraft have actually got to sort of end up flying out over international waters to avoid a GST problem. But assuming we can manage that, we'll get that transaction completed in the first half of the year. Fleet simplification, we've made a bit of this. Our team's made a bit of this in the talk today.
We've gone from eight different types of aircraft 10 years ago to five on our way to less than that without compromising the mission fit and flexibility of that fleet. The A321, which we've got, we can't fly at the moment, and the 787-10 when we get it, have the best unit costs in aviation, bar nothing else. They are the most efficient airplanes in the year, and we're getting them. Some of the benefits on the 321, in particular, being covered by Mike earlier in the presentation. As I said before, fewer new aircraft programs being rolled out by the aircraft manufacturers, and as a consequence of that, no major improvements on aircraft technology, at least over the next decade from our perspective, so we're happy to float the fleet age up over time. 787 order. Brief update on this, the new aircraft are late to arrive, sadly.
I rejoined the business. I've been here, I joined first in sort of early 2004, rejoined in very early 2021. And at that point, we were expecting to get these 787s in September of that year. What are we now? November going December 2024. We're still waiting. But they will be excellent aircraft when they arrive. So they're GEnx-powered. It's a lighter, more efficient engine. So we're going to get 1%- 2% improvement in fuel burn when those aircraft arrive. And as I think I've mentioned to some of you in the room before, the aircraft come with an increased maximum takeoff weight, which adds about 6 tons of lift to the existing aircraft, roughly half of which we can use for revenue-generating activities. The rest of that capability is used to carry the aircraft around, oh, sorry, in fuel, rather.
We have, over the course of the last six months, made one or two significant adjustments to the fleet plan over the next five or six years. The first of those is a decision to retain our fleet of 777-300 aircraft until the early 2030s. The original intention was to retire those by the end of FY 2028. The reason we're keeping them is because they are very efficient, reliable, capable, ubiquitous aircraft. And secondly, it will help us to mitigate some of the vagaries of the wide-body new aircraft delivery program as well. So it's very capital-light growth and also gives us a bit of resilience over the next couple of years.
We made a decision, the board met last week, we've made a decision as an organization to invest a modest sum of money but significant enough in the premium cabins on those airplanes to ensure that we've got a really good customer proposition to get us out into the early 2030s. The other part of the fleet plan that's still a work in progress is the Q300s, which are an older aircraft now. They're 16, 17 years old now, but actually a very rugged aircraft despite some of the unreliability we've seen recently on the regional network. But they are quite capable with the right investment of operating in the fleet for longer, which will serve two purposes. Again, it's capital-light retention of capacity in the regional network, which is fantastic.
But it also allows some of these new aircraft manufacturers, who are typically starting with smaller aircraft and developing the gauge over time, gives them a bit more of a runway until we get to the point where we need to make a decision on the Q300's replacement. So we'll watch this space. We'll provide you with an update on the Q300 shortly. We have had a team in the room, Greg, a couple of others. I think Alex in the room had been up to the OEM of the Q300, and I brought them to get some confidence in their ability to maintain the fleet over the long term and came back from that particular trip with actually a great deal of confidence in the ability of De Havilland Canada to do that.
So really, the only critical fleet replacement, if you like, that we've got in front of us over the next five years or up to the end of 2030 is a sort of a 777-200 replacement program, effectively, after the event. We retired the 200s during COVID. But as we get the new 787s in, they're effectively going to be growth CapEx units for us rather than replacement. Beyond that, into the early 2030s, there is some fleet replacement that we'll need to lean into. The older A320, A320ceos will need to be replaced in the early 2030s. Again, reiterating a comment I've already made, we're not required to do a lock, stock, and barrel replacement of that narrow-body jet fleet. Again, we expect the technology to be incremental advancement on what we've got at the moment.
We'll be able to replace some of those older aircraft unit by unit progressively over time, which will help the CapEx profile. The Q300s I've mentioned sort of briefly earlier. I'll cover what all this means for long-run maintenance CapEx in a bit more detail at the moment. Lastly, this slide, I'll keep it short because it's somewhat artistic. The point I did want to make here is that we've got a lot of flexibility within the current fleet once Boeing starts to deliver new aircraft. On the Boeing order, just a reminder to everybody, that order was placed in 2019. We've got eight aircraft on the firm order at the moment, but a lot of optionality within that order book to add aircraft should the need arise.
The important thing about that is if and when we exercise options out of that order book, it's on the same terms and conditions as the deal that we struck in 2019, including all the clauses that pertain to price escalation of those aircraft, which I think is pretty important in an environment that's become as inflationary as it has in the intervening period. CapEx, we've got a bit more than usual going on at the moment in this space.
As mentioned, we've got some important investments going on with the 787 retrofit currently, the 777-300 interiors hot off the press, redevelopment at our key hub, and Jeremy, I think mentioned before, an investment in both cargo systems and physical infrastructure at the airport over the next five years, although the new cargo facility at the airport's not expected until financial year 2029 for commissioning. What that means in sort of average CapEx terms is between now and 2029, we think both aircraft and non-aircraft-related capital expenditure in the round will track around NZD 850 million a year over that period.
Nikki discussed the investments that have been made in tools and systems driving lower cost to serve the contact center in particular at the moment, where we've carried a lot of additional resources as we've come out of COVID and floods and various other disruptive events. That includes the live chat functionality that Nikki mentioned before and automated disrupt recovery tools. And engineering and maintenance, we're restructuring the aircraft maintenance packages to improve alignment between those and the sort of rosters and patterns of activity in the engineering and maintenance hangars that will improve labor productivity. In cabin crew, we have cross-trained. We're in the process, haven't quite completed it, of cross-training cabin crew on both wide-body fleet types, so the 787 and the 777, so they can move between those two aircraft seamlessly. That's already quite apart from the efficiency improvements that that delivers.
It's provided some practical benefits to us over the last six years, particularly as we've had to juggle the schedule and the deployment of different aircraft types in light of the Rolls-Royce engine challenges. And pilots right now, there's a sort of a lengthy program of work there, but we are reviewing our domestic regional network and schedule at the moment, again, to make sure that our commercial and operational planning parameters are better aligned, which will deliver much improved reliability and more efficient rosters. And then the airports, Nikhil talked about the Ops Collab tool, but we're looking at precision timelines. We have looked at them and detailed standards. Again, both of those things will better inform airport labor demand. For those of you that were watching Nikki's slide, you would have seen that the FTE in the business at the moment's just sitting just over 11,500.
It was as high as 11,750, I think. So over the course of the last three to four months, we've taken 220-odd FTEs out of the business. Obviously, it's a very painful exercise to go through, as anybody that's been through cost exercises know. But that has been completed very efficiently and well. We've had to do some reprioritization of some of our activities, but that is done. And just to put that in numeric terms, it's about NZD 28 million of annual sort of labor cost, not all of which will hit the P&L. Some of it's what we call OpEx or capital costs that are capitalized to parts of the business. But in a P&L sense, it's NZD 19- million-NZD 20 million of labor efficiencies that have come through there.
None of these things we're talking about in the NZD 300 million-NZD 400 million include the efficiencies that we are going to gain by getting the aircraft that we've already bought back into service. So there's scale efficiencies that come with that, and there are fuel costs and other efficiencies that come with that. So that is separate. So I'll make note that we step back a little bit from all of this. We've got, from a fleet perspective, 787s and A320neos returning to service over the course of the next 18 months. We expect to see the worst of these engine issues overcome in early calendar 2026. And we've got additional A321s, as I mentioned, new 787 GEnx technology on the way. Labor and non-labor overheads, again, will get the scale benefits, economies of scale of growing the network without growing materially the indirect labor cost base.
Just on the procurement side of things, I mentioned some labor cost savings in the last six months, but every year we target roughly, that can ebb and flow NZD 20 million-NZD 25 million of procurement cost benefits. The most recent example of that is in the sort of domestic hotel space where our crew. We spend NZD 10 million a year on crew accommodation across the network, and a chunk of that's in New Zealand. We've taken the team. We've managed to take NZD 2 million out of the hotel budget just in New Zealand over the course of the last couple of months. Those sort of productivity improvements are happening all the time.
So the practical effect of all of these two things, and I'll come back to this in my closing comments, is we're expecting over the next three years to keep CASK as a business flat or very close to flat in nominal terms as a consequence of those improvements. And for the purposes of that statement, we're assuming CPI of 3% next year, 2.2% the year following, and 2% the year following that. The single biggest challenge we've got, and it was alluded to earlier this morning or earlier this afternoon, are the increases that we're seeing in aeronautical charges coming through, which we've sort of called out specifically on the chart here.
What we've done there, they will be what they will be, and we're doing our best to manage them, but they will have an impact on what might have otherwise been if we could have achieved on the domestic network in particular. So we've taken that into account, and the figures might quote it before about 2%-3% compounding domestic growth going forward. Sustainability, very important topic. I'm going to comment on it briefly here. As you all know in the room, we reluctantly withdrew from the science-based target a few months ago as it became apparent that we were too reliant on a lot of external factors in pursuit of that target that we had sort of relatively little control of being met. We do still have the World Economic Forum's clean skies target, which is 10% SAF uplift by 2030.
In financial year 2025, we'll be one-fifth of the way there on that. Just to put the sort of costs of pursuing that target in monetary terms, we're spending $10 million-$12 million extra over and above what it would have cost us to buy non-SAF aviation fuel this year to achieve a fifth of that target. The BETA ALIA airplane that you see in the middle of the screen there, which we've talked about some time, delivers into New Zealand, I think, Baden, in April next year. That's not far away. It's four months away. It's a small airplane. Just to put this thing in context, several hundred kg of payload. I think it'd probably carry four or five passengers. So clearly, we're not going to be able to build a commercial airline around sort of an aircraft of this size.
But what it does for us is allows us to get a really good understanding of the developments that have got to occur in the regulatory environment to support an aircraft of this type or technology of this type, and also allows us to learn a lot about what we need to do from a sort of engineering and operating support perspective to operate new aircraft technology going forward. So while the aircraft itself is not big enough to replace the Q300, it may scale over time. It's an opportunity for us to get familiar with the regulatory and operational requirements of very new technology like this. Lastly, I can't remember who also before I get to that.
Lastly, two things I did want to mention just around fuel burn, which again aren't included in the NZD 300 million-NZD 400 million of sort of big rock targets, but they were mentioned earlier. One of them was there are two developments, tech developments that will help with fuel burn. So this is where we spend a lot of money. On the 777-300 fleet, there is a new, they call it a Sharkskin technology being developed, which is sort of a dimpled surface that you can apply to the aircraft, which improves, I think, Dave, the laminar flow, I'll get my terminology right, of the aircraft, which, if done well, can produce fuel savings on the 777-300 fleet of up to 1%. We haven't signed off the business case on that yet, but the technology is rapidly developing.
Mike did mention new Flight Deck technology available on the 787, which allows the pilots in flight to modify what's called Cost Index on the airplane. So normally that happens as part of the flight planning process before you leave the ground, do the flight plan. You sort of capture what you think the ambient conditions en route are going to look like, plug that in, come up with a Cost Index which dictates sort of how high the plane will fly and how fast you're going to fly it for a given payload, given those ambient conditions. But there's no ability to update that en route if those ambient conditions differ to the ones that were in the flight plan. So that's on the cusp of changing. So you can make those updates in flight. Sounds small, but it's a huge cost.
And again, on the 787, with that properly implemented, there's the opportunity to glean up to another 1% of fuel burn efficiencies on that particular aircraft type as we roll out that technology. So I think Greg mentioned it right in his earlier comments. And the NZD 300 million-NZD 400 million, we've taken a kind of a middle-of-the-road view on that. There'll be some things as part of that that don't deliver all the benefits envisaged. Equally, there are a bunch of things in that, like those two, the two I've just mentioned, that are not included in those calculations that provide a bit of upside. So watch this space. Investments in our sort of growth hurdle rate, as I mentioned before, 10% + post-tax nominal.
As I mentioned earlier, we are interested in investing in earnings diversification, particularly if we can stay focused on our core capabilities and provide that it meets those hurdles. The Christchurch Engine Centre is a good example of this. We were down there a couple of weeks ago launching the GTF capability down there. Just for those bit of background, that's a facility we've been in partnership with Pratt & Whitney with since 2001. In 2004, it became V2500 capable. That's the engine on the A320ceo, which is a hugely popular engine internationally. And over the course of the last 20 years, the Christchurch shops developed a reputation as being one of the best, if not the best shop in Pratt & Whitney's V2500 engineering and maintenance universe. So much so that in 2014, the facility down there doubled in size.
While the GTF is not going, the V2500 is not going away. I don't know how many are in global service at the moment, but it's likely to continue flying out for the late 2030s, early 2040. There was an opportunity, there was an opportunity here to both come up with a product replacement platform for the V longer term, but also do something that can supercharge the earnings or the economic value we get out of the center. So the GTF geared turbofan, that's the engine on the Neo, the PW1100, they do a 1500 as well. $ 140 million getting invested down in Christchurch between us and Pratt's to make that facility GTF capable. We'd expect the first engine to go in in early calendar 2026.
The whole program is sort of self-funding out of the CEC, out of the free cash flow down there, and the IRR comfortably exceeds the hurdle targets that we've spoken about. So quite apart from it being aligned to its great New Zealand Inc story, it's a real testament to the regard that Pratt & Whitney holds the shop in. It's a great investment, we believe. And as a sort of cherry on top, New Zealand will be able to get its own PW1100 engines maintained in that shop, which improves our turnaround times and saves on a lot of air freighting costs. So it's a really fantastic outcome we're excited about. Medium-term financial ambitions, just sort of bringing all this stuff together. So NZD 300 million-NZD 400 million of big rock transformations plus the benefits of the aircraft we've already got coming back in the network scaling back more generally.
So we do expect that the portion of those transformation benefits that pertain to cost plus the other fleet benefits that are not included in that are going to help us with the nominal or flat nominal CASK declining real CASK objective. We've got 4%-6% revenue growth annually as part of those targets. 3%-4% we're going to get through capacity growth. The additional 1%-2% is going to be delivered as a practical consequence of many of the things you've heard about from Jeremy and Kate and others today, attributable to long-haul premiumization in the New Zealand domestic business, upgauging aircraft to 321 over time in growth and ancillary and loyalty revenue. As I mentioned, we've got a very young fleet with strong balance sheet metrics. So we've got a lot of flexibility in terms of growth and capital management.
We can and will return excess cash. Expect us to take a thoughtful and measured approach to that. Tough environment. But just to reiterate everything that's been said today, starting with Greg, we've got a high-performing customer-focused team with really strong values. We're not operating at scale right here right now. 16% of the jet fleet is grounded. But I hope you leave the session this afternoon with a strong sense that we've got a detailed plan and we're continuing to invest in the business foundations, whether that be fleet, ground infrastructure, simplification, and modernization of the digital estate, which Nick will talk passionately about, and people and processes that Nikki again talked passionately about. As I mentioned, revenue growth will be underpinned by premiumization and further new fleet in the international part of the business, upgauging domestic jet and loyalty.
Capital management opportunities exist, but I think in the round we've got real confidence despite the current challenges, real confidence in the platform and the core foundations that we've built and continue to build as a business. And on that note, we'll conclude.
The retrofit process can be very complex. It can also be very straightforward, really depending upon what the airline wants to do. It can be as simple as putting in new seats into a particular class in the aircraft or just repitching. Or it can be something much more complicated, like what Air New Zealand is actually doing with a complete nose-to-tail retrofit of the aircraft, not just seats, but also monuments, IFE, et cetera. This retrofit is the first of its kind that Boeing and Air New Zealand are working together on.
It uses a third-party integrator to oversee the entire retrofit process and then uses Boeing to provide engineering and technical support. Air New Zealand is a fabulous partner. Our history and relationship goes back with them for decades. They were the 787-9 launch customer in 2014. They've been operating the airplane now for 10 years, and they have always been an innovator. They always have a can-do spirit. They push us to be the best that we can be, and we love working with Air New Zealand and look forward to many, many years to come.
That was pretty cool. Could I please invite the whole leadership team to come up to the stage and Jeremy and Kate? I'll just do some quick intros as well to those that didn't speak yet today. So we're really excited to do Q&A. And we will not rush it, but I would just like to let everyone know that after Q&A, we have drinks and refreshments at the Flight Deck and actually some pretty cool things for you to see. I think we've got some touch-and-feel things that Kim surprised us with. So just to round out the introductions for those of you that haven't yet met, Alex Marren, over to my left, is our Chief Operating Officer. David Morgan, who I think everyone here knows, is our Chief Safety and Integrity Officer, also Chief Pilot.
Kiri Hannifin, I think most of you have actually met before, our Chief Sustainability and Corporate Affairs Officer, so welcome and thank you, and just briefly, could all the Air New Zealanders in the room raise their hand? Okay, so just so you know, we can throw questions to you too, and we will because it's a team sport, as Greg said. Good. Okay. Now's the time for questions, and we're really excited to hear from all of you and see what's on your minds. Could you just raise your hand and just wait for a microphone to come to you because otherwise people on the webcast won't be able to follow what you're saying, and when you wait, we'll start with you since you're brave, and please just introduce yourself with your name and where you're from just so that everyone knows. Thank you.
Hi, Wade from Craigs Investment Partners. Given the shift to more premium in the long-haul cabins, what does it do to maintain market share in the economy space? Or is this about maximizing revenue market share rather than seats, if you like?
Mike or Jeremy, would you like to take that?
Yeah, I'm happy to start on that. Look, ultimately, we've got to choose where we think we can best win. And so in a short answer to your question, it's absolutely going after where we believe the best revenue share is for us. We're never going to be the largest, and we're probably never going to have the most capacity. And so therefore, it's about getting those customers that we most want to win and doing the best job against that. And we think that premium customers are where the growth is going to be. And we believe, based on the investments we're making, we're best positioned to win that market share. So the short answer to your question is yes, it's absolutely about going after ultimately the best revenue share that we can get out of that cabin.
Can I add a bit to that and, Baden, get yourself ready? It's a discussion that we have because you've got to be careful you don't pivot too far and then you lose market share, market share, market share. So one of the things the team did before I got here is I think they negotiated an incredibly smart deal with Boeing in terms of options on other planes. And I don't know how much you can say about that, Baden and Richard, because you've got no notice of this question, but say what you think you can.
So the flexibility, as Greg said, that we have on that deal with Boeing that we struck in 2019, as some of the people at Boeing sort of suggest that it's the most flexibility that they've ever put in their deal. I'm not sure that that's 100% true, but it is a lot. And one of the things that we can do with the order is we can make choices aircraft by aircraft as to whether it's a -9 or a -10. So where we have the opportunity to play in the premium market, where we want to protect that premium market, as Jeremy was saying, we can choose a -9 because it might meet our operational requirements quite nicely, and we can fill it with a quite high premium sort of mix. But equally, there might be markets where we're a little more protective of just straight-up market share.
And an example of that might be Los Angeles, for example. So a -10 in the long run, once the 777-300s finally retire, might be the right aircraft for that market. We might be able to use that, or we will be able to use that then to be able to maintain that market share, more economy seats down the back. But then we can have the flexibility of intermixing that aircraft depending on the season with the more premium -9s. So I think it's a nuanced story. I think the general story is we are wanting to play in the premium space because we have the right to win, but we will look at market by market and define our aircraft deployment based on that.
I think, Liv, we have a question right up here. Andy?
Great. Thanks, Leila. So just maybe sticking on that premiumization theme, you're not the only airline in the world pushing premiumization in front of cabin in particular, segmentation of products, getting more out of what you've got on each aircraft, particularly on long haul. How do you see this impacting the industry profit pool and, in particular, the retention of that over the longer term? In essence, do you see it getting competed away, or is this a broader supply-demand issue in light of the fact that we don't have sufficient supply across the industry at this stage?
I might say a couple of words and then hand it to people who know a lot more than what I do about it. I guess I see this playing out in other industries, to be honest with you. I see it play out in retail that I'm reasonably familiar with. And you're not all retail analysts, but if you were, you would say, "Well, who's doing really well?" And I would say to you, "Well, people like Costco are doing well. People like Aldi are doing well. And they're discounters." And I think what I see happening in the world is bifurcation of wealth. Rich are getting richer, poor are getting poorer. Why did Trump do so well in the election? Because there's a hell of a lot of people in America who are worse off after four years than what they were in the previous four years.
We may sit here and say, "Trump this and Trump that," but at the end of the day, if they're worse off, they say, "Well, I don't want to continue where I'm going." So what do I see happening in the airline space? I see growth with Michael O'Leary and Ryanair, and I've met him and got to know him. And that's a pretty simple model, and he's playing that hard and fast. Interestingly, I look at someone like Southwest who's sort of getting a little bit caught in the middle there. But I see the discounters doing well. I see the full-service carriers doing well. I think as the world bifurcates in terms of wealth, which I suspect will continue, providing the premium market doesn't become too oversaturated, then you're probably okay.
You can see both United and Delta playing in that space, American trying to catch up, Qantas playing in that space. I deliberately use the words we're a bit ambidextrous in this country, and you need to be. We're 1.5x the size of Arkansas. We're 5 million people. So let's be clear that domestically, we should continue to be very egalitarian in our approach. Short sector links, it actually plays to the culture of the country. It works pretty well into the Pacific. It works pretty well across the Tasman. We can put a little bit of premium in there because we've got spare aircraft time. When you're flying back from the States, you can use the plane in the middle of the day. Good aircraft utilization. Long haul, most of our flights are over 12 hours.
We're really playing here into a market of, I think, premium leisure travelers. While you don't discount the economy person sitting down the back, you have to decide who your core customer is, and you've got to do a great job with them. A good example of that is McDonald's. Everyone goes to McDonald's, but who's their core customer? It's a mum with young kids who eat chicken nuggets. Be pretty clear, don't leave your core customer. Our core customer long haul has to be the premium traveler and do a damn good job with that with wine and food and a nice entertainment screen and get those business-class seats changed out so they're a great feature. We still will do a great job with economy. I like what we're doing with Skynest, a bit of innovation, a bit of DNA in the organization.
That's what we're good at. But not only that, but improving the entertainment. We're with SPI now in terms of in-flight entertainment. So we've moved away from Panasonic. We're doing something there that not many other airlines have done. We think it's a better system. Nikhil had, I don't know, six, seven people up there working with them for the last couple of months to get them up to speed. So, Andy, that's how I think about it.
Good answer, Greg. Can I just have another question, Leila? Just refreshing here the return on capital desire in terms of exceeding WACC at some stage over the coming years. Can you talk about return on capital in the context of domestic, in terms of Tasman PI, in terms of long haul, how it applies, how we should think about your ability to generate that desired WACC type or WACC plus type return across each of those business segments?
It's a system. It is a network. I remember my old boss, Rob McDonald, used to describe it as a sort of a pyramid where if you start chipping away at the bottom of it, the pyramid sinks or you build on it. So we're not sort of breaking it up by segment and won't do that. So the ambition is obviously, as an enterprise, to exceed those return on capital targets, and the best way to describe it, I think the international business, the long-haul business, arguably has a slightly higher cost of capital. It's sort of an inherently more volatile business than domestic and a very capital-intensive business. The domestic business is the opposite of that. Although having said that, that's essentially an New Zealand Dollar revenue business with a chunk of U.S. dollar costs. So it's not without volatility.
But the targets that we've described today are enterprise-wide targets in the round. And won't go much further than that.
Thank you, Richard.
Nick?
Just following on from that, the return on capital outlook and how far you should exceed the sort of 11% buy, has that moved up a lot with the NZD 300 million-NZD 400 million target? You were talking about that prior to all this transformation and other digital benefits. Should this all be additive?
That's a good question. And I'll have a sort of initial chat at that. So just to, again, put this in a bit of context. So you shouldn't review it as additive relative to the current position. We're not in a normal position, 16% of the deep jet fleet not operating. So it's additive, and I'll put a proviso around that in a moment, to what we would expect in a normal operating environment. Having said some of that, as I mentioned before, a third of those benefits relate specifically to labor cost improvements and related improvements. And they are part and parcel of ensuring that we maintain flat nominal costs going forward. So it's part of that formula. And there may be, particularly on the revenue side, some of those transformational benefits may or may not get competed away.
It's a roundabout answer, but I wouldn't take a sort of necessarily NZD 400 million normal EBIT operating environment and simply add NZD 400 million to that. It's more nuanced than that. But it is certainly incremental to our normalized sort of EBIT performance subject to the vagaries of competition.
Just the other thing I would just add to that is, of course, the denominator or the invested capital base certainly will be improved with the extension of the 777-300s, enabling the 3%-4% growth ambition, but also very, very capital-like way to deliver that. And so as we look towards the end of that four-year horizon and even beyond, I think you're right, Nick, in saying sort of that really starts powering up, at least in our internal estimations.
No, that's great. And just on the net debt to EBITDA forecast you provided to be back in range, does that assume a lot of those EBITDA benefits come through, and does that also assume capital management to get you there, or is that purely the fleet investment?
Correct. Questions. Marcus, over on this table.
Is there any reason why you haven't converted it into a long-term aspiration around profit?
Converted it.
Converted your EBITDA up into an absolute aspiration. The second part of that question is, how are you going to measure success if you don't give us a proper number to benchmark you against?
There's a few reasons. And then please maybe Mike or Richard join in. One is we wanted to--this is something internally that we, first of all, have rolled out for quite some time now, so about 18 months. And when we talk to the business internally, we think in terms of EBITDA because we think in terms of the underlying business performance, separate and above from capital structure and financing decisions. So that's kind of the first thing. So we wanted to share with you how we think about things internally and so that they are aligned because not just talking to you about our plans, our detailed plans and aspirations is important, but having internally 11,500 Air New Zealanders aligned and marching to the same drumbeat is critically important for delivery. Mike, do you want to touch on the other?
I mean, just maybe taking a bit of a step back. We've always had profit improvements and initiatives that we invest in on a basis that we think it will deliver an improvement. I think the thing that's changed, and hence referring back to that 3 - 400, is largely the way that we're going about that now. And Nikki touched on this quarterly business review cycle. So every quarter, we sit down and we look at what's on the plate. That's all based on longer-term roadmaps or plans about what we're wanting to deliver area by area. And so ultimately, what we're sharing today started with internal conversations over the past year or two where we've started to place a lot more emphasis on where we're going to be focusing in order to drive the performance that we're seeking.
And when we're having those internal conversations, we've actually now really rallied the organization around that EBITDA improvement target. So again, Nikki mentioned there's hundreds of these teams set up to look after a particular part of the business. They're all calibrated as well to go after improving that EBITDA performance. In some cases, it's CSAT or operational performance. So that's what we wanted to share. I also think that we couched it as this is the medium-term aspiration. We know, just looking back in the rearview mirror, that there's so many uncertainties that we're constantly managing. What we're sharing is what we view as the controllable elements of this plan. Greg also mentioned that there'll be things where we haven't anticipated something, or maybe even some of those initiatives don't deliver at 100%.
There are other things that, because they're so recent or they're still in business case phase, they're not even included in that 3- 4. So we're looking at that and actually feeling really confident about it, and quite likely, I think in the future, you'll hear us talk about both how we're performing against that 3- 4, but also what the roadmap looks beyond that, call it medium-term horizon.
Max, I'm not sure whether that's an answer to your question or not, but I think Mike raises a key point, which is in a business that's subject to pretty significant externalities, big difference between controllable and uncontrollable. The NZD 300 million-NZD 400 million is sort of a reflection in areas where we can make a real difference from a controllable perspective on outcomes. I think given the influence that macroeconomic factors, including fuel changes in policy settings, sort of CPI has on the business over time, I think it would be a very, very brave sort of management team to put an absolute dollar number on sort of a profit target in three or five years' time. But all of the things we've talked about today, I think, sort of hold us in very good stead.
And we're confident that we will see sort of ROIC improvements over time, profitability improvements over time. And these are tangible initiatives. And the part of your question was to say, how do you measure them? And we can measure them. We can and do measure them. And so I would expect going forward, as we present sort of interim and annual results, sort of announcements to the market, we'll put some energy and effort into sort of specifically identifying the progress we think we've made in those key transformational areas.
Jason in the front.
Just to follow on from Jason Familton from ACC. Just following from the same conversation, I'm just wondering, how are you flowing this into management incentives or STIs or LTIs and how are you guys all going to be remunerated for delivering what you said you're going to deliver today?
That's a hand without three, Mike.
That's all right. No.
From an ESTI perspective, we have a balanced scorecard. We moved to this coming out of COVID, actually. We used to have a 50% basically financial company performance metric and a 50% individual. We've moved away from individual and put it entirely on a balanced scorecard. 50% of that scorecard is based on financial, so return on invested capital and controllable cost over revenue. Then the other half is based on operational safety, sustainability, and customer metrics. There's kind of a clear line of sight between financial performance and hitting on those key parts of our strategy. From an LTI perspective, it is based on benchmarking against NZX and an airline index. Outperforming those.
Outperforming them.
So, we're just a question on loyalty. Just, can you give us some sort of context what 30 million-40 million means in terms of growth on where it is today?
Sure. So we don't report separately on loyalty performance, which I'm sure you know. We view loyalty and the airline as inextricably linked, and we don't separate them out like some others do. The components of that 30-40, we haven't split out, but there are three parts to that. The first is growing the sales of Airpoints Dollars to third parties. The second is growth in our products portfolio. And then the third is benefits from offering this new redemption offer. So being able to manage loads and yields better through Airpoints Dollars offers and the flow-on loyalty effects of that.
Okay, so we've got a couple more.
Maybe, can I just quickly add to that just to help out? There are other airlines who do report this separately, and one thing I'd probably say is when we benchmark ourselves against them on a sort of normalized equivalent basis, we perform as well or better.
That's a question for Mike. I mean, obviously, we're based in Wellington. If we look at Wellington Airport market share, it's 60% Qantas and 40% Air New Zealand. Obviously, the airport itself talked about potential for long-haul flights last week. Can you talk about the rest of New Zealand, potentially not just Auckland?
The rest of New Zealand from an international perspective.
Network and T rans-Tasman competitions.
Yeah. I think David will probably want the mic in a minute to talk about runways and lengths and things like this. But look, we serve all of New Zealand. That's the first thing. And we do that again with the pyramid structure that Richard talked about. The network is designed, when we're designing the domestic network, we're thinking as much about how that connects with the international network, obviously largely out of Auckland, but also Wellington and Christchurch. Just touching on Wellington first, then I'll look at some others. Again, this is one of those frustrations that we don't quite have the fleet that we initially had expected. There's aircraft that will come in the future, the ones which have been delayed and others because of the engine issues, which we'd want to have been placing really out of Wellington. That will come right.
We think when that happens, we will get that market share back in places like Wellington. Same thing really goes with Christchurch on that short-haul perspective. Long-haul, and this is probably the second most frequent question we get after, "When are you going to go to London?" and things like that. Long-haul out of places e.g., Auckland, this is where alliances come to play a big part in the way we think about things. I mentioned capital efficiency and making sure we're deploying those aircraft in the way that makes the most sense. Ultimately, I know we're spending all of our time here, and we like to think and would want to see long-haul routes serviced out of Christchurch, for example. It's just too small.
And it comes at a cost because we wouldn't be able to have that long-haul widebody aircraft based out of Auckland where more of that demand is. The other thing is we don't have things like pilot hubs or bases in Christchurch. But of course, we could partner with alliance partners. So Singapore Airlines and United are all flying into Christchurch. And that's not by chance. That's because we're working with them and supporting them from a sales and marketing perspective on the ground in Christchurch in that instance to make sure that their flights work. And we're as incentivized to support them on those markets as we are our own flights on Auckland, for example. So I think that's a really good example about how we get benefits from working with alliance partners. Maybe a final point. Just prior to COVID, we were operating long-haul from Christchurch to Singapore.
That sort of signals maybe a longer-term intent, and it worked. It went well for us. It took quite a bit to get it to the point where it was working, and we had the network organized. We could look at getting back, and it's something that's on longer-term roadmaps. It all, again, comes back to fleet and making sure we've got the right capital deployment decisions in terms of the network choices we're making. Does that answer that?
Not sure. Using the accepted international aircraft performance methodology, repaving the runway safety area with a frangible surface, which is designed to stop the aircraft in the event of an overrun, does not materially increase the runway length, and therefore, Air New Zealand is struggling to understand how that can be interpreted as an ability to operate wide-bodied aircraft off that runway.
I think Paul in the back, and then Jason, if you have more questions after, we'll pass it back.
Thanks, Leila. Just sort of thinking back pre-COVID, there were tens of millions of Indians and Chinese and other Asian economies getting into the middle class, and 4%-6% revenue growth sounds like nominal GDP if I'm lucky. Is that an ambitious enough target?
Yeah. Kick off to begin with, and others can jump in. Yeah, we think it is, actually. Otherwise, we wouldn't be sitting up here and building a plan around it. There's all kinds of things that you have to deal with in the industry, and one of them is what you believe you can deliver based on the aircraft that are available. I'd have to tell you that we sort of have got, if you like, a trifecta that we're having to deal with at the moment. Doesn't apply to every airline. There's plenty of airlines out there with Airbus, A320s and A321s, but not everyone's got a PW1100 on it. And frankly, if you've got the older engine, which we have on a bunch of them, that's just great. But unfortunately, because we've got a modern fleet, we've got the new one.
Not everyone who's got a 787 has got a Trent. You have a choice. You can put a GE engine on that one if you want. And in fact, the new ones will have that. I can tell you that if you're running an A350 at the moment, you don't have a choice as to what engine you put on it. You put an XWB on it. And here's what I'm hearing about the XWB engine, which happens to be a Rolls-Royce engine as well. They're down to 2,000-2,500 cycles. That's under half of what they expected to get, right, Baden? And there's a few people out there now with A350s that are going, "kind of low, Maybe we've got a bit of a challenge on our hands." Probably with the Trent, once they get new blade approved, which I would think probably six months' time.
It's not actually new blade. It's the same blade they run on another engine. They just have to get approved by the FAA. As those engines start to go through shop visits, we may well find that actually the Trent 1000 starts to come right. Who knows? I'm not smart enough. But at least there's a solve for some of that. So what's happening is that these things aren't shared equally across the industry, and you've got to deal with that. In terms of the 3%-4% growth, we think that's pretty sensible. My lesson in this is you're better to be a little bit under and work the assets hard than to be a little bit over and try and come up with interesting places to fly to. This is a highly capital-intensive business. You measure our success on Return on Invested Capital.
So what do I got to do? I've got to work with this team down here to get these planes, if they're widebodies, flying 14, 15, 16 hours a day. If they're the Airbuses, we want them flying 11, 12 hours a day. So good utilization of those assets makes sense. So at this stage, we're comfortable. As Baden shared with you, if we need to add a little bit more in, we've got some flexibility. We've made a deliberate decision to extend the 777 for a couple of reasons. Number one, I can't guarantee you that Boeing's going to deliver, and neither can they. Secondly, they are a damn good aircraft. That's that Toyota Corolla 1986 that just keeps on going. So we think we've got about the right amount in there, to be honest with you.
You're just on it, just to reiterate. I mean, what we're interested in is profitable growth in some of these markets. And I'll pick on China. It's not always profitable growth. There's lots of volume. It doesn't mean that it makes any money. And so you need to be somewhat selective about what you're doing. And just sort of in a longer-term context, for decades, sort of airfares of any sort, domestic or international, have sort of tracked in nominal terms, declining real terms over a long time. I think actually we've reached an inflection point, given where aircraft technology has got to, where you're actually now starting to plan for real, sorry, nominal growth in yields. And some of it's not related to the airfare. We've talked today about some of the other things we're doing to sort of help drive that.
I think it is an appropriate target, and it is a distinct difference from where the industry has been for a long time.
Shane, and then John after.
Yeah. Hi. Shane Solly from Harbour. I've got a couple of quick questions on that. Firstly, can you just talk a bit more about the economics of flying back to London and potentially picking up India? I want to understand will your customers in a broader sense pay more? Will I get more loyalty? Will I get more ancillary because it's a long haul? Is this your Project Sunrise? I know that's a bad thing to say.
No, and then others would jump in. It's not a Project Sunrise. Two things. If I talk about London to begin with, I'll quickly touch on India. I mean, both of these, we're not announcing a new route today, just to start there. You know that these sorts of discussions often come back with, "We're always looking at new opportunities." Look, London's changed for us in two respects, which is why it makes good sense just to go back and look at it again. The first is we used to operate that with 777s, which was a big aircraft. It still is a big aircraft. We didn't have the benefit at that point of putting a 787 onto the route.
Okay.
So we've got the opportunity now to operate that if we decide to do it with a 787, which is a better size, better configured, better operating economic aircraft to get to London. Yeah, exactly. And it's ready to go. It doesn't require modifications. So that's one big change. Second thing is, like I mentioned, when we exited, of course, we had a lot of work done to look at the impacts of that and where we'd recapture that passenger flow via. Look, a lot of that's worked as we expected, some going via Singapore with Singapore Airlines, some going via the U.S. Obviously, some's gone via the Middle East as well. And actually, quite a few New Zealanders that want to fly to the U.K., some want to Europe as well, travel via the Middle East. We want to reclaim some of that.
Some of the assumptions around how much would travel via Singapore and the US, but it's just not playing out because, as I mentioned, customers want to fly with Air New Zealand. So our job is to give them that choice. So those are two big changes that have really prompted our thinking. And India, it's simply a growth story. It really is booming. I know there's so many ways you could talk about that, looking at trips per capita in the U.S. and how that, sorry, in India, and how that's tracked versus similar markets like China. Some of us have been there quite recently, many times actually in the last couple of years, and seeing the growth in that market, not just from a total population perspective, but where that growth is, the trade links between New Zealand and India, the increased economic ties, cultural ties.
There's a big Indian expat community in New Zealand as well, and so coming out of COVID, there was this absolute explosion of travel. Some of that VFR, that's visiting friends and relatives, but a lot of it increasingly is more trade related, so as we look ahead and we look at government wanting to double exports and a lot of that being linked with India, we look at it as sort of a medium to long-term play with, again, aircraft that are suited to that sort of a, well, it's kind of a shorter and an ultra long-haul mission, but we've got the technology now and the economics to make it work.
Maybe, Mike, one other factor as it relates to London. And Kate, maybe you want to add to this, but we did see the loyalty effect be material. So Kate mentioned that when high-value customers hit the top tier, then they're making decisions to go on the European holiday westbound. And the loyalty effect of that matters. So it's not the deciding factor, but it is one of the key factors. We want HPCs to remain flying on us beyond when they hit Gold E lite.
Thank you. Just a second question then. Obviously, CapEx spending you've talked about for the next five years. Can you break out how much is digital? And is it enough?
Nikhil's probably best to answer that question. We've given them—I think it's NZD 70 million a year or thereabouts in CapEx. Obviously, the digital budget in the realm between OpEx and CapEx is bigger than that. But actually, the team has done a remarkable job of actually working within that envelope. In fact, often we've got the reverse problem, if you want to describe it as a problem, which is we don't quite sort of spend what we've set aside in the budget over the course of the year. But, Nikhil.
Yeah. It's a combination of the right levels of investment, but also the right type of caliber of capability to deliver with precision the outcomes that we want to deliver. And there we've got a fantastic internal team. I mean, for example, our app team is one thirteenth the size of United's app team, even though complexity doesn't necessarily scale down based on size. So we've got some fantastic talent in the organization. And we've recently signed partnerships with Accenture and TCS. And between them, they've got 1.35 million staff. So we're using them as sort of elastic capacity to scale up and down as we execute more of these large big rock transformation programs. Yeah, well-supported program here.
John, and then Grant.
Yeah. John Middleton from Mint Asset Management. Two quick things for me. One, I thought the own versus lease slide was helpful. There's no one really focuses in on it. But I think the comment I'd say there is we've got no context for what all the other airlines do, which makes you look a lot better. But your comment you made about essentially selling down some of those aircraft to generate cash, why do you want to generate cash now?
We don't want to generate cash now, particularly. We're just taking advantage of strong market values for those aircraft and retiring some residual value risk on that fleet because we wake up in five or six years' time. It might not be as strong a market, and what we do with the cash is an entirely different question. It sort of relates and sort of caught up in the capital management discussion with it.
What do you intend to do with it?
What do we intend to do? Watch the space. Well, I'm not sort of announcing any capital management initiatives today. But as I mentioned before, we're looking at liquidity, which is strong. Leverage, which is strong. We are at in the CapEx cycle, which is we're spending a bit of money on 787 retrofits and as 787s deliver. Obviously, there's a bit of capital associated with that. But as I mentioned in my comments, we've kept up with replacement CapEx, particularly around aircraft, pretty consistently over time. So we're in a good position. I think we've got a bit of balance sheet flexibility. We didn't sell the aircraft to sort of accumulate more liquidity.
And then just on, I'm assuming that the new 787s will be the new configuration?
Yes, they will.
Yeah.
Yep. There's two configs, just to be clear. So we've got a 219-seater that was mentioned in dispatches today, which will turn up next year with the new aircraft, the first five aircraft, 787-9, 219-seat 787s. That's basically for those trying to imagine that. That's a 777-300 size Business in premium economy cabin. And then the rest is sort of a smaller economy class. The retrofit aircraft, which is being done at the moment, is a 272-seat airplane. So actually a very similar configuration to scaled for aircraft size to the old 777-200 that we used to operate. So we'll have two fleets in time of 787s to sort of high premium configuration and then a more ubiquitous configuration that we can fly into just about any market.
And then to Baden's point, before or after the fifth new aircraft is delivered, we need to make a decision, but we have the option of taking 787-10 in the configuration of that airplane. It'll be the same seat on the aircraft. So we're not developing anything new, but the seat count and cabin mix may well be different.
And I mean, given you're sort of doing 2/3 of 1 or 2/3 of a 777 going forward in the new configuration, what does that mean for medium-term growth expectations? It feels like you've pared back your capacity growth quite a lot. Does that mean there's more 78s to buy or not?
It may well do. When we say sort of pared back capacity growth, we've got 3%-5% capacity growth on wide-body international as part of this plan, which we think is a sensible starting point. And if we see the need or opportunity presents itself to do more than that, we've got enough flexibility within this Boeing order we've talked about to add growth units to that should we desire. Keeping the 777 has not only given us a bit of an insurance policy about whether Boeing delivers on time, but it also adds some more seats to the network. So it sort of makes sense to do what we've done, which is to hold them a bit longer.
Thanks, John.
Grant.
Grant Lowe from Jarden. Surprised it hasn't come up yet. But just in terms of today's guidance, just to take the step back to the very short term, at the full year, the clear message was that first half, there wasn't an expectation that the difficulties at that time would continue through the first half. We've seen what is effectively an underlying upgrade today. Where has been the improvement relative to what you might have seen two or three months ago?
I'll answer that one. So I think on the cost side, as I mentioned before, the team's done some pretty good work on extracting some labor cost sort of improvements from the system. As Jeremy mentioned, Seats to Suit on the Tasman's been rolled out and actually delivered some good tangible benefits there. And then we've made some incremental improvements in the ancillary revenue space, which has sort of helped drive a modest improvement over the course of six months. I think the domestic environment has not changed a huge amount. We've seen, we mentioned this morning, there are some initial green shoots, I think, around SME, corporate, travel, and domestic. But we just, this is a game of inches, not miles. And we've just done a whole bunch of things a little bit better in the last six months than we thought in February.
Basically, what you're seeing is you're seeing the parts of the transformation beginning to play out. And you haven't got the full year benefit of them at the moment. But exactly as Richard just said, a lot of the things that got discussed today are actually already happening. We just haven't presented, this is what we intend to do on Seats to Suit, or this is what we intend to do on ancillary income. So, for example, if you went on to our site today and you tried to attach a rental car, it is a completely different process now to attach a rental car booking. And in fact, correct me if I'm wrong, but I think we increased the attachment rates by literally double.
Doubled.
It's 100 things done 1% better, the beginnings of all that. Revenue's a bit better, costs are a bit better. Sure, we got a little bit better fuel than what we thought. And then there are those other components that we've called out, such as sale and lease back and some compensation. But the underlying business, as I said to you, I actually think it's a pretty dang good result for what we've had to deal with. I haven't been in this business forever, but when was the last time government spend was down 25% and showing no sign of immediate recovery? Now, very good if you're the government because that's doing exactly what you want to see happening. But those guys book late, buy flexible tickets, and drive good margins. When was the last time you had at the same time that happened corporate spend down 12%?
The fact that we're driving some revenue growth says that the work with FLYR, for example, is actually working. And that's why we've got enough confidence today to actually put that slide in front of you and say, "All right, that's what we think's going to happen." We control some of those. I can't control spare parts. It's bloody hard. If I can't get seat actuators to fix the business class seats that keep breaking down and we get charged basically NZD 50,000 for each motor and there's two of them in there, we're the only ones in the world, by the way, who have that particular part. It's really hard.
Now, next week, we'll go and see the chief executive of Safran, and I'm going to try a full court press on them and say, "Hey, either drop your price or give us the drawings." Because these are basically vacuum cleaner motors. Not that I'm an engineer or anything, but they're about that size. You'd find an Electrolux.
It's a very expensive engine in America.
And you get charged NZD 50,000 apiece.
I can't control that. That's one of the reasons why we will take these 777s that we're now going to extend and we'll rip out those business class seats and we'll put in something. Because if we're going to keep those planes to 2030, 2031, and who knows, maybe even a little bit longer, don't have to make that call now. We'll do it on six of them. Jeremy and team are going to be able to sell all the seats because at the moment, we can't sell all the seats. It's just not a great customer experience when you get on there and it won't turn into a bed or the tray table breaks.
So just with that, there's some green shoots there. You're talking about a lot of positive things, which are obviously to analyze. I know you don't give guidance at this stage of the year for the full year, but I'm hearing a degree of confidence that the business is potentially on the verge of continuing that good momentum into the second half. Would that be a reasonable characterization?
Really hard thing to answer the way that you want me to answer that. What I will.
Go on, I'll try.
What I will tell you is that I hope you go away from this particular session with a couple of thoughts that are in your mind. Number one, do these guys have a plan and is it believable? Did you see stuff today that you go, "I get it. I can see how they can increase revenue. Jeremy went through his five points on what we're going to do, and Kate's explained what we're doing with loyalty." So can I believe that? Number two, do I think they can execute it? Because you get one point for talking and nine for doing. And trust me, I've been around the place long enough to know plenty of businesses. Don't take Northvolt. I shared it with the business today. Sweden's battery maker. What are they running at the moment? 1% production compared to where they expected to do.
Goldman's have had to take whatever, NZD 1.4 billion write-down. Nothing mattered with the plan. It's just they couldn't execute it. We're pretty obsessed here with if you say you're going to do it and we sign off on it, do it. I hope you go away going, "There's a sort of way of working in here in New Zealand, which is coming across as being they're synced up. There's not an internal competition that's going on in this business. Team work together." Number two, they've got a plan and it's believable. Number three, I think they're executing it and they will. That's why I have confidence in it. Now, I can't tell you what other sideswipe is coming around the corner. We're going to get another issue with the Trent Engine.
Are we going to find out that Boeing actually can't deliver the 787s despite all the work that we're doing? I can't control that. No one in the team can. What we try and do is build in enough of insurance policy so we can deal with it. And then we hold ourselves to account for the stuff that we can do. And we are building something here which is going to work really well for a long time. That's why we're doing the hangar. It's why we're doing the Christchurch Engine Center. We've probably spent NZD 40 million-NZD 50 million, Alex, on ground service equipment this year. So if you're out at Auckland Airport, you can see new pushback tugs. You can see new pallet loaders. You can see what else, Kate? Various.
New water trucks.
New water trucks. Stuff we haven't spent money on for a long time, like years and years and years, but it works now, and that's going to help a whole bunch of things in the busi`ness.
I could not have scripted a better close, so I think that I will take the opportunity to thank everyone for the formal conclusion of the Q&A, but just remind you all that the team is here for the next while, and I really, really urge you to ask them all of your unasked questions in a more intimate setting. Again, just wanted to say on behalf of the Air New Zealand team, thank you so much for spending your afternoon with us. We know that it is a lot to take out of your day to listen to a whole bunch of presentations. I'm sure they're much snazzier than others, but still a whole bunch of presentations is a lot and to absorb a lot of information. We don't take that for granted, and we really, really appreciate those relationships.
As Greg said, it all comes down to relationships. So with that, I'll formally conclude the Investor Day, and we will see you in the Flight Deck for drinks. Thank you.