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Airlines Confidential Podcast
325 - Guest Co-Host Christina Cassotis. Guest: Sean Donohue, Fmr CEO, DFW Int. Airport
01:27:09
Guest Co-Host Christina Cassotis. Guest: Sean Don…
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- [00:04]
Host/Producer
Airlines confidential with Scott McCartney is made possible with support from RTX, Collins Aerospace, Pratt and Whitney and Raytheon. Connecting and protecting our world. Visit rtx.com infinityflight the leader in Cadet Academy flight training programs infinityflight.com Ontario International Airport in Southern California, SoCal so easy Florida flyontario.com and by Cirium, the world's most trusted source of Aviation analytics, cirium.com We also welcome your business support. Contact us at airlinesconfidential.com welcome to Airlines Confidential.
- [00:51]
Scott McCartney
I'm Scott McCartney and I want everyone to know I have canceled the party balloons ordered for this, our 325th episode. No need to worry about government lasers shooting them down. And fortunately, I suppose there won't be any celebratory balloon launches over American Airlines headquarters in Fort Worth, Texas anytime soon. More on that in a bit. But first, welcome back. Christina Cassotis, Chief Executive officer of Pittsburgh International Airport. Did any balloons get laser beamed out of the sky when you opened your new terminal?
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Christina Cassotis
We know we did not have that. And by the way, congratulations on 325 episodes. Amazing.
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Scott McCartney
Yeah, it is amazing. Many people made that happen.
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Christina Cassotis
Yes, well, but you have been the glue. So congratulations and congratulations on getting so many great people to participate. Now when we opened the terminal, we had a bunch of, bunch of events, but none of them included big balloons that would be released into the, into the atmosphere.
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Scott McCartney
Yes.
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Christina Cassotis
So no balloons, no lasers. But I am celebrating the discussion you and I will have with Sean Donahue, the former chief executive of Dallas Fort Worth International Airport, talking about airports and airlines since Sean's worked for both and he brings some great insights and interesting stories. So I think listeners are going to enjoy hearing, hearing from him and hearing our conversation.
- [02:24]
Scott McCartney
Yeah, absolutely. Always like talking to Sean. Such a knowledgeable guy and just has great insights into this crazy business that we all love. So in news this week, Christina, I think we have a bunch of very interesting but anticipated news items on Spirit and Frontier, American and Southwest. And then there's the news that no one saw coming. The closure of airspace around El Paso, Texas. As best we know from reporting from major news outlets and there was a lot of reporting on this, the Pentagon approved lending a high powered top secret laser weapon to Customs and Border Protection. What could possibly go wrong? This happened because of concerns of drone use by Mexican smuggling cartels. Those of you who know El Paso know the airport shares a Runway with Fort Bliss, a major military installation. And it's all right by the US Mexico border. So CBP took the laser beam and blasted it at what it thought were drones, but turned out to be helium field party balloons and worse. Neither CBP nor the Pentagon told the FAA that this was happening. When the FAA found out, FAA administrator Brian Bedford was understandably very pissed. And thank goodness he was. Thank goodness somebody who was the adult in the room and was concerned about safety of aircraft with high powered laser beams shooting off into the sky near the airport. And by the way, this comes at a time when the FAA is already at odds with the Pentagon about military helicopter traffic around Reagan national airport in Washington, D.C. right. But there was big issue that led to that crash about communication and. And afterwards when the. The Pentagon didn't want to move its helicopters and the FAA wanted them out of there. So anyway, Bedford had the FAA announce an immediate closure of El Paso airspace for 10 days. 10 days. Unprecedented. No warning to local officials, no warning to airlines. This just isn't a matter of convenience or even economic impact. This really is a matter of life and death. From what I heard, there were medical helicopters that were grounded, for example, and obviously there was a big uproar. Things got squared away in Washington, we hope, and the FAA reopened the airspace. I have to say, you just can't make this stuff up, can you?
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Sean Donahue
No.
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Christina Cassotis
And I really appreciate that you said what you said about it being a matter of life and death. I say this all the time and that it really does matter that we operate 24, 7, 365, no matter what. And there are medical flights at every single airport. There are helicopters coming in with either organs or transplant teams or somebody who needs something done that's going to save their life. And when something like this happens, it has an enormous effect not just on the people in the immediate vicinity or somebody who might be flying in that moment, but somebody trying to get in or, you know, en route. And it really does. It makes a big difference. And I really appreciate you saying that. I mean, it's. I was at the airport CEO conference when this was happening, and we were all just like, who? Everybody was looking around. I mean, there's always somebody in the room who knows exactly what's going on, and nobody knew. So, yeah, yeah, you definitely can't make that up. There is another government issue, though, that's worth watching for travelers. And that's, of course, the partial government shutdown that threatens to once again withhold paychecks from TSA staff. Not clear if they're going to get paid on time and if they don't, what happens with call ins and no shows. Because when that happens, and it does. In some airports. You see long security lines at checkpoints, so stay tuned. The Department of Homeland Security has a lot of money for the year, but it's not altogether clear if the money appropriated for one agency can be redirected to another to make payroll payments. So that's something I know that we're all watching, and I'm sure travelers are as well. So this is something you and I have been talking about and you've been talking about for a long time, which is from shutdowns to step downs. Two of the five Elliott management directors are stepping down from the airline's board, significantly reducing the activist investors clout at Southwest. All of which was anticipated since Elliott has been reducing its ownership in the airline. With Southwest's recent share price rise, Southwest said it won't replace the Elliott directors. So the board is going to drop from 13 to 11. A much nicer number, I'm sure, for CEO Bob Jordan. And he's one of those 11. So Elliott will have three of the 10 directors who would vote on whether or not Bob Jordan will keep his job. And clearly he will, as long as he wants it.
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Scott McCartney
Yeah. Yeah. I think it's really interesting, and I think Southwest wanted it this way, that the two directors stepping down are the two who could have been candidates to replace Bob if Elliot carried through on its threats. Right. It was Greg Saretzky, the former CEO of WestJet, and David Kush, the former CEO of Virgin America. So it's no coincidence that those were the two that were pushed off the board. It's still not clear what's ahead for Southwest leadership, but I do think it's clear Elliot management won't be making that decision. As Oscar Munoz said the very first time we started talking about Elliot's investment in Southwest, Oscar said they're there for a good time, but they're not there for a long time. And that is clearly true. They're cashing in on Southwest gains and, you know, take those earnings and go stir the pot at some other company.
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Christina Cassotis
Oh, and I'm sure everybody's waiting, right, to see where they. Where they go, where they go next and if there's another airline in their sights. Yeah, I actually loved Oscar's statement. So another important story this past week, Scott, is actually two stories, but sort of the same story. So Spirit and Frontier Airlines said they're shrinking fleets. It's significant shrinking of the discount airline sector, which is a really big deal for airlines and competition and fairs. Not surprising, of course, but still interesting. Spirit said it's selling 20 Airbus jets for about $533 million. Those planes weren't in service, so this doesn't really impact a Spirit schedule, at least not the current one. It's also not clear how much breathing room this gives Spirit in its attempt to restructure since we don't know how much is owed on those 20 airplanes and whether Spirit will get any cash out of that at all. Yeah, Frontier, yeah. Last week announced fourth quarter earnings of 53 million, about the same as a year earlier. And Frontier said it was shrinking its fleet some. We've talked about Frontier's inefficiency with too many aircraft flying them only an average of 8.6 hours a day in the fourth quarter now down from 9.6 a year earlier and just way too few hours per plane for a low cost carrier. Frontier said it's sending 24 A320neos back to the leasing company AerCap and it's pushing delivery of 69 new planes from Airbus out several years. Delivery on those 69 planes was scheduled to start next year, but Instead will begin five years from now in 2031, assuming there's a place for them to go as intended. So I think that's, that's, it's big news and it's big news in the ULCC sector.
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Scott McCartney
It is. And, and I think, interesting, you know, this, the, the shrinking is, is significant but we've been talking about, Frontier had too many airplanes. And, and so, you know, I think it's, it's, it's good to see them taking action that will shore up, you know, make, make the company more efficient and, and you hope more profitable.
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Christina Cassotis
This is where we all sit there, you know, as airport directors, just sort of like holding our breath because when they make big changes to schedules, Spirit, Frontier, any airline, they can move an airplane in as long as it takes to, you know, get off the Runway. And we have, you know, we've got gate and infrastructure issues that we're trying to plan. 30 years out like this is always the rub in figuring out capacity at your airport, but also just total number of passengers because those tend to drive your non aeronautical revenues which have everything to do with how much it costs to fly into your airport. It's a, it's a very, it is definitely the right thing to do for Frontier and Spirit, but there is always, there's always a, a big kind of gasp when something like this happens because we don't know how it's going to affect us. Right? No, it's in the short Term, it's
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Scott McCartney
a, it's a great point and a great, great differentiation between the airline industry and the airport industry. Right. You're like the hotel company that, you know, Marriott can't move its hotels around. Yeah. And so for airports to, you know, build gates and everything else. Anticipating. Yeah, yeah. Boy, that's a great point, Christina. Thank you for that. One other note on Spirit, the airline also said it's recalling 500 of the 1300 flight attendants furloughed in December. Sounds like good news. But again, I think it's not really, it's not that Spirit suddenly is expanding. It's not, it's really a reflection of many Spirit employees bailing out on the struggling company. And, you know, I think the struggles are continuing. I mean, we just don't know yet if there's, they need a deal with somebody and there hasn't been a deal yet. And so you hope there's going to be a deal. Otherwise, you know, everybody anticipates they will have to liquidate.
- [13:03]
Christina Cassotis
Yeah, well, it's, it's, we are, it's sort of announcement to announcement. We all just are wondering where, you know, what happens, where does this go? And you know, Spirit is a, we've had great success with them. They've been a great partner. And yeah, we're, we're hopeful that there's, there is a future, but we just, we just don't know. And I will say, from ULCs to network carriers, we haven't mentioned yet some of the hottest news of the week. Scott? Yeah, this is going on at American Airlines because things are getting hotter. They got hotter. Flight attendants were out protesting at headquarters last week, calling for CEO Robert Isom's, well, proverbial head, not literal. Pilots were complaining that American was ignoring their request to meet with the company's board of directors. And Robert recorded a five minute video sent to employees outlining the company's strategy and trying to project confidence. And you know, union protests are common at airlines, especially when labor negotiations are going on, but they don't have open contracts. This is what's interesting. American doesn't have any open contracts. So this is really starting to look serious for American. Pilots and flight attendants are upset about how the company handled Storm Fern and they're also concerned about how American is performing financially compared to Delta and United. And I don't think that they see that it's great performance, relatively speaking, which obviously hits them in the pocketbook since they get a share of profits which were puny last year for American. While Delta earned more than 5 billion. And employees essentially got an extra month's worth of pay in profit sharing. So I'm really interested to see. You're in Dallas, you're right next to the action. What do you think of all this?
- [14:57]
Scott McCartney
Yeah, I do think it's significant. I said last week that I thought Robert Isom had a chance to rally the troops and hang onto his job. I still think that he's a smart guy. He's been a problem solver throughout his career, but at the same time, history has always been in this business that once you lose labor, it's over. It may take a year or two, but it's essentially over for the CEO. Are we there yet at American? You know, I think. I think maybe we are, unless Robert really steps up. And that's what I think can happen. But we'll have to see. It didn't happen in the last week with the video that he put out. Curiously, by the way, the average tenure. I went back and looked the average tenure of a CEO at American Airlines since Bob Crandall is six years. And Robert Isom's been in his job coming up on four years next month. So I think, you know, I think he has more time to turn this around, but he's got to get on it. And I don't think he did himself any favors with the video. You know, over the past year or 18 months or so, it seems to me Robert's been really absent, and that's left the impression that he isn't doing so much now. I'm looking at it, you know, sort of in the public vein, and maybe there's a lot more going on with employees that we don't see. But that's not what you're hearing. It doesn't feel that way. I think a great example is what's going on in Chicago. Americans under attack in Chicago. Why isn't Robert Isom up there declaring in front of employees, in front of TV cameras, talking to customers? Why isn't he up there saying, American's not going anywhere. Tell. Tell the customer American cares about them. Tell the employees American cares about him. Because rallying the frontline employees is how you're going to fight United. And, you know, United's taking customers away from them. And there's got to be some energy in the response. United put up billboards, you know, sort of shaming American. And so, you know, they have declared war. So where's the response? You know, even at good news events over the past year, I was surprised. I was at the introduction of the new 787 Premium airplane last year. Robert wasn't there. There were other senior executives there for American and it's nice to, you know, let them be in the spotlight. But I think the frontline workers want to see a leader out there leading. So the, the video, I saw the video, I thought, I mean, some people I've talked to about it, you know, he, he's pretty good in front of the camera. He certainly was very good in front of the camera. After the DCA crash. I thought he, he came across with,
- [18:04]
Christina Cassotis
he did a great job.
- [18:05]
Scott McCartney
Did a great job with that. This was not his finest moment. I thought he looked awkward, that, that he didn't really help the cause. He kind of looked nervous. There were these sort of pauses between everything. He was clearly reading and just did not seem comfortable in this role. I thought it really lacked energy and enthusiasm. I mean, he kind of said, you know, we're going to get excited about the next year. And there wasn't much excitement. In the statement, he talked about free wi fi and schedule improvements in new airplane interiors and refurbishing clothing clubs. But he didn't thank employees for all their efforts through the storm. He didn't apologize for problems the company had communicating with and taking care of employees. And man, I thought that would, would have been the first thing right. You know, hey, we have had a hard week and thank you all for getting, you know, working above and beyond the call of duty and stuff. There was none of that. Even if he thinks American handled the storm perfectly, the perception is that it did. And the perceptions, perception is reality in this case with his employees. You know, you just hear talking to some flight attendants recently and they, you know, they, the stories are circulating of flight attendants who had to sleep on airplanes or couldn't get hotel rooms or were on hold for eight hours or whatever. You know, whether fair or not, that's, that's the perception out there. Robert really didn't try and rally their spirits or engage them in the competitive fight against United and Delta and just saying, hey, we're going to have free wi Fi, that's just not going to do it. The pilots union president posted his own video critiquing Robert's video. He noted that it took about four minutes into the five minute message to even really mention frontline employees. There were some scattered references here and there, but union president Nick Silva said American had the quote was blown. Another golden opportunity to articulate a real vision for the future of our company. And I have to say that was kind of my first impression, too. As I've said before, I do think American has a serious cultural problem internally. A morale problem, a customer service problem. Frontline employees, not always, but some of them do seem indifferent when it comes to delays and disruptions and service failures. They're frankly too used to it. Right. Happens too frequently. So for them, it's nothing new. For customers, it may be horrible. Right. There may be serious consequences of that. And you just don't get the impression that they're motivated to fix the problem quickly. So they're just as disappointed and just as impacted by the unreliable services as customers are. I think America needs a reset. I think free WI Fi and more premium seats on aircraft just isn't going to win back market share. And it's got to be frontline employees getting engaged in battle with enthusiasm and commitment. So, you know, that's, that's my thought.
- [21:29]
Christina Cassotis
Well, I, you know, I, I'm always fascinated at first of all, to your point, I mean, Robert Isom is a smart guy, and we saw that when he was, you know, really moved with what happened in Washington, because who wouldn't be? He was able to show up and he was able to project genuine concern as well as, you know, concern for everybody involved. Right. For the passengers, for staff, for the people, the rescuers, for everybody. He was. So it came across, his, his feelings came across. And I think that one of the, the hardest things as a CEO is when you're, you know, dealing with lots and lots of different issues on a daily basis, because you are. And running that airline is, is a huge feat. I think it's critical that everybody remembers that frontline staff and your own staff, they are your first line of defense always. And you've got to give them, you've got to give them the, in your case, where you're talking about battle, you've got to give them the armor to protect themselves. Because people are saying to them what's going on, and if they don't have an answer, that makes them feel, you know, like they're not getting what they need. And I think that's a really tough place to be as a leader is, is facing a group of disgruntled staff who you really don't know what to say to. And, and candidly, that's why you have lots of comms departments who make sure that it's not in minute four, it's in minute one. So I, I don't know what happened, but, yeah, that.
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Scott McCartney
That didn't happen.
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Christina Cassotis
They've got, they've got A team. People listen. You know, people love to, they, they want to feel proud of where they work. They want to feel proud of what they do. And it's like if your coach doesn't believe in you, I mean, you know.
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Scott McCartney
Yeah, you.
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Christina Cassotis
Right, that's, that's not good. And I don't think that's true about him, but it didn't come across. And that's the issue is you want to get people feeling good. Like, okay, we made some mistakes, but we, and we might not have the whole plan, but we are working on it and we're going to get this fixed because, because we're a great airline and we do great things and it matters what we do. And I think that was what everybody wanted to hear and it was missing and that's tough.
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Scott McCartney
Yeah. And I think they need to hear more from them.
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Sean Donahue
100%.
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Scott McCartney
I was recently with two former airline CEOs who had incredibly successful runs. And one of the things we talked about was communication and the new huge, huge and constant. And you know, just regularly meeting and riding in the, on the jump seat. So you're talking to pilots and you know, there's so many things. But I hear from, from a lot of CEOs, one of the surprises of the job is how much time you spend communicating and it's in internal and external.
- [24:26]
Christina Cassotis
So I think it's actually, I think it's the most important thing you do because you've got, you've got. I always think of rings of influence, right. And there's your, there's the people who work at the airline and then you go out to, you know, their friends and family. You go out and that's just because you give them the tools to, to take that message out. But it's also, you know, it's obviously it's the shareholders, it's the people in the communities around, you know, the places where the planes fly. It's the businesses that are relying on you. They all want to know that they're backing a winner and they all want to know that, that, that the company is looking out for their interests. Because at the end of the day, travel is really important. It comes down to people needing to get places and that, that affects their day to day lives. So you just, I think it's, I think it's the most important thing. And communication to me is it's not what you say, it's how. It's who you say it to when, in which order. Right. With which messaging and what you're highlighting at that particular moment. That makes people feel like, oh, you're talking to me, I get it. And you're. If you're taking care of me, I can take care of you.
- [25:32]
Scott McCartney
Right? And I got to believe that you have a good plan. I mean, right? The Seattle Seahawks believe in their head coach, right? That's right. You got to believe that the game plan is good.
- [25:46]
Christina Cassotis
That's right.
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Scott McCartney
And I'm not sure American employees feel that right now.
- [25:49]
Christina Cassotis
That's why we all loved the Bad News Bears, right? Because everybody is going to back the underdog, right? So if you're not out front, then you just give. You get. Rally everybody into like, okay, but we can do this. And that's why I think what you're talking about in Chicago is like, come on, come engage us. We're ready. They want to.
- [26:08]
Scott McCartney
Yeah, yeah, no, absolutely. Absolutely. And get some excitement going because we are in a fight here. And let's not back down from it. All right? Speaking of communicating, time now to thank our sponsors for making this podcast possible. We want to thank Cirium. Cirium offers the most accurate and precise data and analytics to enable airlines to optimize planning, operations and passenger services. The right intelligence drives operational efficiencies, enables you to predict market shifts, and helps airlines respond quickly to maximize revenue, manage costs and seize commercial opportunity. Visit cirium.com for more. We also want to thank Ontario International Airport, which is celebrating a decade of local control. Thanks to public support, the local community reclaimed Ont, revived it as a vital gateway in Southern California and ensured the airport is ready to soar even higher in years to come. Visit flyontario.com 10 to learn the story and find out how you can join the year long celebration of how a decade of local control has turned Ont into one of California's fastest growing and most economical airports.
- [27:22]
Christina Cassotis
And in addition, thanks to RTX for helping make Airlines Confidential possible. RTX believes no challenge is too great, no question too big, no answer out of reach. That's why RTX never stops striving. The RTX Global team works across Collins Aerospace, Pratt and Whitney and Raytheon to inspire, innovate and drive progress for generations to come. RTX pushes the boundaries of known science and finds new ways to connect and protect our world. Visit rtx.com to learn more. And we want to thank Infinity Flight Academy, the leader in cadet Academy training programs, for helping us bring this podcast to you. Whether you're looking to build a custom pipeline or strengthen your existing cadet program, Infinity Flight Academy delivers consistent airline ready results. And for those of you listening? Who've always dreamed of flying or know someone who has, and we all do. Infinity Flight has trained thousands of students, many now flying for major airlines around the world. Learn more at infinityflight.com, infinity Flight Academy, where future airline pilots take off.
- [28:29]
Scott McCartney
Okay, let's bring in Sean Donahue. Sean Donahue was chief executive officer of Dallas Fort Worth International airport for nearly 12 years until his retirement last summer. Before that, he was chief operating officer for virgin Australia for three years. And before that, he spent 25 years at United Airlines in a variety of roles, including operations, sales and and commercial startups. He ran United's TED Low Fare airline within an airline. Sean's a native of Massachusetts and a graduate of Boston College and just a great guy. And, Sean, we are thrilled to welcome you to Airlines Confidential.
- [29:08]
Sean Donahue
Well, I'm delighted, Scott, to join you, and it's great to share the platform today with Christina and, gosh, I think one of the first times I met Christina was when we were doing a TED rollout in Denver, and you were with. I forget, the consulting company. She.
- [29:29]
Christina Cassotis
Yeah, shne.
- [29:30]
Sean Donahue
Yeah, shne. And I think that might have been the first time we met or first time I remember. So great to be part of the conversation today. Awesome.
- [29:40]
Christina Cassotis
Hold on, Sean, weren't you also the United station manager in Boston?
- [29:44]
Sean Donahue
Oh, yeah, yeah, I was from Boston.
- [29:48]
Scott McCartney
Christina was at Massport, right?
- [29:51]
Sean Donahue
Oh, that's right.
- [29:52]
Christina Cassotis
I think we met in Boston, but we didn't know it because I remember when you got the job in Dallas, Tom Kenton called me and said, you remember, Sean? He was the United station manager when you were here. And I thought, okay, so we might have met even years before. Denver. Yeah.
- [30:12]
Sean Donahue
Wow.
- [30:13]
Scott McCartney
Wow.
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Christina Cassotis
Small world.
- [30:14]
Scott McCartney
Yes. Yes.
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Sean Donahue
That's aviation for you.
- [30:17]
Scott McCartney
Yeah.
- [30:19]
Sean Donahue
All right.
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Scott McCartney
Well, Sean, we always start with what we affectionately call the Ben Baldanza question, because Ben taught me. It was a great opener. And the question is, how'd you get into this crazy business?
- [30:30]
Sean Donahue
Well, it's interesting, and I'm guessing the two of you might agree. I'm not sure. I've met a lot of people who have said yes. I wanted to get into aviation. I knew all the time when high school and college I wanted to get in aviation. You don't meet many people like that, maybe, except for pilots or mechanics or something like that. And certainly that was the case with me when I graduated BC I was loading trucks for UPS on the midnight shift. And, you know, my girlfriend at the time, who I did not marry, but she went out to work for United in Chicago, and I Said, hey, I'll go out there, too. And I started as an accounting clerk in Chicago at Elk Grove Village. And a lot of your listeners won't remember this, Scott, you and I probably remember it. Christina's younger than us, probably, but it took me up until about five years ago for that red carbon from the back of the tickets to wash off my fingertips.
- [31:38]
Scott McCartney
Yes, yes, I remember it. Well, we forget the whole manual processing of tickets. Right. They collect your ticket and it would go in a bundle. Off to Sean in the accounting department.
- [31:56]
Sean Donahue
That's right. And I flipped a lot of tickets, I'll tell you that.
- [32:00]
Christina Cassotis
I remember those tickets. My dad was a pilot for Pan Am and then actually went over to United, Sean, when United bought what we then called the Far east routes from Pan Am and said to some of the seven, four captains, look, if you'll keep flying the Far east for us, we'll let you keep your pension. And my father was smart enough to know that Pan Am wasn't going to make it. And so I had flat flight benefits, which was amazing with Pan Am. And before United and I would go to the ticket office and they'd run off tickets, and I thought it was a blue back, but you're right, it was red. I remember those.
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Sean Donahue
Definitely red.
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Christina Cassotis
Yes. No, I hear you. It's very funny. Yeah. So I have a question, because I don't do this. And you, and you did for a long time. Tell me. You know, you're running a large hub, meaning you're, according to the FAA's definition, you're carrying a very large percentage of the domestic traffic in the United States. You're a Category X airport, or you were the CEO of one at dfw. So what did you feel was the most challenging aspect of that? I mean, especially because you came from an airline. How did you find, I mean, you'd never run a medium or small hub, but what do you think the challenges are that are unique to, you know, large hub CADDX airports?
- [33:24]
Sean Donahue
Sure. I, I, you know, I think it's important to highlight that the, the large airports like dfw, Atlanta, o', Hare, we're very, very fortunate because we have, you know, tremendous resources. You know, take DFW, seven runways, 17, 000 acres. I mean, really, really fortunate landscape and environment to operate in. But to your question, Christina, unquestionably, the biggest challenge for a large hub is when the operations go off the rails and it can get really ugly. And obviously, we've seen that in the last couple of weeks, and not just the Last couple weeks. I mean, we all know examples of this happening could be weather, could be technology, it could be a lot of things. But, you know, when a hub goes down because of some type of event, it's. It's tough. It's tough to recover. It's tough on the customers, it's tough on the employees. And, you know, that. That's clearly, in my mind, the, the biggest challenge is, is when you have one of those events to deal with.
- [34:44]
Christina Cassotis
Well, it's. It's really interesting that you say that because, you know, that is especially. Dallas is what, the fifth. The eighth largest airport in the world?
- [34:55]
Sean Donahue
I think it's third. When I left, it was third.
- [34:58]
Christina Cassotis
Post Covid. Post Covid. Okay, so. Right. So great. Third largest airport in the world. So if something, it's a little bit like you get a cough and the rest of the world is catching the flu because you're so connected into the rest of. I mean, to me, this is sort of the, you know, the, the global asset nature of any airport is that, okay, we're in Pittsburgh, we have, you know, a fraction of the passengers, but a lot of them are going through Dallas to get somewhere or coming home. So there's going to be an impact on almost anywhere in the world. If Dallas has a major issue, how many did you have? A lot of them.
- [35:35]
Sean Donahue
You know, the ones we typically had. And, you know, I'm sitting up here on Cape Cod and I. And I feel like I've jinxed everyone in Massachusetts. It's been the coldest and snowiest winter for many years. And I keep looking at the weather down in Dallas, and today it's probably 75. But as we all know, a couple weeks ago, it wasn't.
- [35:58]
Scott McCartney
Yeah.
- [35:59]
Sean Donahue
And damn. You know, it seems like once a year you get an ice storm in the Dallas Fort Worth region. And I always told the team down there, I would rather have a foot of snow than an inch of ice.
- [36:15]
Christina Cassotis
And 100%. Yeah. What, what?
- [36:18]
Sean Donahue
You know, a lot of people don't understand, and this clearly happened a couple weeks ago. You know, when it comes to de icing aircraft, and obviously that's an airline responsibility, the absolute worst precipitation is freezing rain.
- [36:33]
Christina Cassotis
Yeah.
- [36:34]
Sean Donahue
And because it gives you no holdover times, even. Even with all the type 1 or type 4 DE icing fluid, and, you know, there's quite a bit of freezing rain this time, and it just seems like it happens all the time. The other aspect of it, though, in DFW that I was kind of shocked about, although I understand it now, the Communities around there do not have equipment. They don't have snowplows. Of course, there's no. There's no snowplows in Texas. Well, there are a few, but there's not a lot. So the community shut down.
- [37:13]
Christina Cassotis
Yeah.
- [37:14]
Sean Donahue
The roadway system shut down, and then employees have a really, really hard time just getting to the airport. So you. You actually might be into the second day of an event. You know, airports open, runways are open, but employees can't get to work. And, you know, I was talking with Chris McLaughlin, who's the CEO there, and he said, you know, four or five days after the storm, schools were still closed and it was 65 degrees outside.
- [37:48]
Scott McCartney
Yeah.
- [37:48]
Sean Donahue
And so it not only impacts the airport when you have these ice events, it really impacts the community, and then it just takes so long to recover.
- [38:01]
Christina Cassotis
It's interesting you mentioned that. And one of the things that is interesting, having moved from Boston to Pittsburgh, is, you know, we had this really big, the biggest storm we've had in 16 years. And one of my team said, you're coming out. I said, I grew up in New Hampshire, in the Boston area. I know how to drive in the snow. And the thing is, is that there are people who don't. So even if there's, you know, even if. And we've seen this in Atlanta, we see it in areas that aren't used to getting snow. There is a. To your point, there's much longer recovery time, because even if there was the equipment, people are nervous about how to operate in it because they didn't grow up doing it. I mean, we were all taught how to drive in the snow.
- [38:42]
Sean Donahue
Exactly. And, you know, we learned. We learned it by doing donuts in the snow. And that made us a better driver, Right?
- [38:51]
Scott McCartney
Yes. All. All true. And in Texas, there inevitably is, you know, some idiot in a pickup truck who comes bombing along at 60 miles an hour, and you just know you're going to go over the hill and see him hung up on the guardrail, which happens all the time. But there is a reality that I, you know, I grew up in Boston. I can drive on snow, you know, really? Well, I can't drive on ice. Nobody.
- [39:17]
Sean Donahue
No, I know.
- [39:17]
Scott McCartney
Nobody can.
- [39:18]
Christina Cassotis
Nobody can. Yeah, you're 100% right about that.
- [39:23]
Scott McCartney
Yeah.
- [39:23]
Sean Donahue
And that's the thing with. There's just something about that part of northern Texas that, you know, every time there was a storm coming, I'd say novena, saying, just give me snow. Just give me snow. And they never worked. It was always getting ice.
- [39:39]
Scott McCartney
Yeah. So, Sean, it's interesting about the idea of disruption and the challenges of running a big hub. How much of that did you consider the airport's responsibility and how much the airline's responsibility or the hub carrier? I mean, I do remember, and this may have predated your time at dfw, but when. When tarmac delays were the big issue, I remember DFW taking the. The little satellite thing off of Terminal E and just had been closed and opening it up to have gates to just unload people because there were all these aircraft sitting there and they didn't have gates. So why not take a couple gates and just, you know, run one airplane in after another to just unload them and then push them out of there. And it was interesting to me that the airport took that initiative and said, you know what? These are our customers, and we're going to take care of them, even though they're the airline's customers. What do you think?
- [40:46]
Sean Donahue
It's a good point, Scott, And I would say it's a shared responsibility. I arrived in DFW late October 2013, and about six weeks later in December, we had an ice storm, and we at the airport miserably failed. I mean, we were not doing a good job with the runways and the taxiways, and that was on us. And, you know, when we kind of did the forensics on it, we just didn't have enough equipment. We only had enough equipment, really, to keep, you know, one side of the airport, either the east or west, open, and shame on us. And, you know, we made a huge investment now. We got plenty of equipment, we got plenty of people trained. I. I go back to my airline days, and, you know, people can debate this, and I'm not saying I'm right, but I always felt when I was at United, you know, running Boston, and there was a snowstorm coming, a significant one, you know, let's say 12, 14 inches. I would always talk to the, you know, the IOC back in Chicago, and I'd say, listen, pull us down. I mean, pull us down by 80 or 90%. Don't send any airplanes in here overnight, and we will recover within 36 hours. And, you know, sometimes they listened to me, sometimes they didn't. But I really feel that the best thing an airline can do, and I know you can point to experiences where you expected this weather, it didn't materialize, so you pulled down a schedule and you blew it. I understand that can happen, but if you think of it from a customer perspective, and you think of it to Christina's point of the impact it has on the network. You know, pull it down, let the customers know 24 hours ahead of time, get the crews where they need to be or at least not have them stranded, and then you can start up a lot faster. And I think the disruption is less. But, you know, I think we've got this, you know, this mindset in aviation that we train and we got equipment and we know how to de ice and, you know, we're going to handle this. And the track record is we don't really handle it that well. And that's always been my view. But it, you know, I think each airline looks at it differently.
- [43:27]
Christina Cassotis
Yeah, it's really interesting. In this last storm, we had, you know, a couple of airlines just cancel all departures out of Pittsburgh. And that's. It's very interesting because, Scott, to your point, a lot of people don't know whose decision that is. And I'm sure, Sean, you have felt this both as an airline executive and an airport executive. Sort of what the general public doesn't understand about how the system works is always interesting. Right?
- [43:58]
Scott McCartney
Yeah.
- [43:59]
Christina Cassotis
So the question is, well, why didn't you cancel the flights? And I say, well, I'm not allowed to camp. That's not my job, actually. I don't have that kind of power. And, and so, you know, our job is to make sure that we're holding the, you know, the training calls and checking in with all the airlines, and so we understand what's coming in. We've got the stranded passenger plan and all of those things. But I'm sure you faced this, Sean. It's. You're still going to get asked why.
- [44:25]
Sean Donahue
Oh, absolutely, absolutely. And then, and you know, what you'll kind of read typically is, you know, DFW imploded. And I'd read that, and I'd say, yeah, that's really not accurate. But, you know, I get it. And you know, to your other question, Scott, I remember I went to American, I don't know, four or five years ago, and I said I can build a terminal with probably 8 to 10 gates, and it will be a standalone facility and all we will do is we'll use it during a regular ops. So we'll put some concession errors in there. You can let people off the airplane. And I never was able to get American across the goal line on that. Now, to their defense, as we three of us know, if you're an airline that dominates a hub, additional gates that aren't in your control.
- [45:30]
Christina Cassotis
Oh, yeah, nobody wants that.
- [45:32]
Sean Donahue
Nobody wants that. Right. But it was strictly just for that. And that was less for snowstorms that was much, much more intended for the. The thunderstorms that, you know, Scott, that roll through dfw. You have all these diversions, and, you know, it's a reliever valve, but I wasn't successful on that one.
- [45:57]
Scott McCartney
Yeah. I mean, as a DFW traveler, it's too bad, because without that, you end up with 10 planes in Austin and 10 planes in Lubbock and 10 planes in Oklahoma City. And then it's a real challenge to get them all into DFW in a safe, metered way when there are gates available for them and all.
- [46:19]
Sean Donahue
Absolutely. And the other thing that happens, you know, during the recovery, you have tremendous gate compression challenges at the airport. And again, you know, some type of reliever valve, I think, would make good sense.
- [46:32]
Scott McCartney
Yeah. Yeah. So what's the most surprising or interesting aspect that listeners might not be familiar with?
- [46:40]
Sean Donahue
Well, and I'd be interested in Christina's thought. You know, when I got to dfw, one of the first things that really surprised me was the economic impact that the airport had on the community. I never paid attention to that when I was on the airline side. You know, for example, there are over 50,000 people that work at DFW Airport. And then if you look at indirect jobs, you know, I think there's a couple hundred thousand more. The payroll for all those direct and indirect employees is billions of dollars a year. Probably the biggest one that I don't think a lot of people understand is about airports. DFW, on an annual basis, generates to the state and to the local communities over $5 billion in taxes. But most importantly, we don't get a dollar of tax receipts. Every tax that's collected on the airport, we don't see a cent of that. So we don't, you know, we don't get tax receipts, but we generate enormous tax revenues. You know, airports have this huge, huge economic impact on the community. And I, you know, I actually think the airlines could do a better job of articulating the incredible economic impact they have on, you know, dozens and dozens of communities. Aviation is this economic engine that is just incredible. And, you know, that was. That was a learning for me when I got to dfw.
- [48:26]
Christina Cassotis
Don't you think, Sean, don't you think that aviation is now so ubiquitous that people sort of take for granted that it's. It's just there, and so they don't really understand the value of it? I mean, I think this is one of the things that you Know, is frustrating to me. For example, you know, the. The money that. That goes into the federal coffers from the 911 fund is supposed to be sort of helping fund security systems at airports. Right. And checkpoint to infrastructure. And it doesn't. It goes into the general fund, so.
- [49:01]
Sean Donahue
Exactly.
- [49:02]
Christina Cassotis
And we see this happen in the uk, you know, the departure tax, you know, that. What is it, a couple hundred bucks. Right. That doesn't go back to the airports. So it's, it's really interesting that as an airline, you understood, you sort of came in as an airline executive, came in and said, oh, wow, look at the economic impact of these airports. Or, you know, any airport is hugely important to its own local economy, but to the system, system, all of them working with the airlines. It's. It's. It's how economies thrive, national economies thrive. Right.
- [49:36]
Scott McCartney
I mean.
- [49:37]
Sean Donahue
And global now.
- [49:38]
Christina Cassotis
Yes, yes. Yeah, yeah. We need this to be competitive as a country, and we need it to be healthy so we can keep moving people and goods effectively and efficiently. Yes. It's interesting that you didn't know that until you got to the airport.
- [49:55]
Sean Donahue
Right, right. You know, the other thing I would add is from being on the airline side and the airport side, I know travel can be really hard. I know it can be challenging. You read stories literally every day about, you know, something on some airline or at some airport that, you know, went wrong. And I get it. I get it. And, you know, we can all do better, obviously. But I compare aviation today versus where it was 40 years ago in 1984 when I started with United. And, oh, my God, if someone went back and looked at the economic impact of aviation from 84 to now, especially globally, you know, when I started at DFW in 13, you know, we weren't even on the radar screen with international service, and we would go on trips to Europe or Asia trying to promote the airport. And I kid you not, we'd be in London and they'd say, where are you from? And I'd say, from Dallas, Fort Worth. And they'd say, oh, I love that show Dallas. And I would say, if that's what you think about Dallas Fort Worth right now, you know, we got a brand issue here, and I'm talking more about the community than the airport. But, you know, now, you know, we basically serve every global city in the world with the exception of Singapore, because there's not an airplane that can make it there. And that type of connection for communities, I think, is just incredible, too.
- [51:43]
Christina Cassotis
And by that you mean there's just not an airplane yet, right, Sean?
- [51:46]
Sean Donahue
Correct. Correct.
- [51:48]
Christina Cassotis
Because that's what's so fascinating about what's the difference between 84 and now. In 1984, everything would have needed a 747 to serve your market and mine globally. And technology has changed. There's been all of these amazing advances. But we just listened to ACI World and I, you know, listen to folks at IATA and A4A and they'll tell you that air travel is going to double in the next 20 years. I mean, we got more to do. So. Yeah, we need this.
- [52:23]
Sean Donahue
I was thinking about your dad when you were saying flying for Pan Am when we bought Pan Am specific routes. And you probably remember this too, Scott. We had the 747 SP. I mean, it looked like a pregnant airplane.
- [52:37]
Scott McCartney
Yeah.
- [52:38]
Sean Donahue
And it had the worst economics maybe of any airplane in the history of aviation because it didn't have
- [52:49]
Scott McCartney
the orange brainiff one. That was Fat Albert.
- [52:52]
Sean Donahue
Yeah. So, yeah, we've come a long way.
- [52:58]
Scott McCartney
Yeah.
- [52:59]
Christina Cassotis
So talk about changes because I think that that's, I mean, I know that you're not actively running an airport day to day, but because aviation, you know, jet A is in your blood and you've been in this industry for a long time, what do you think the most significant changes have been in recent years, anywhere in the system?
- [53:20]
Sean Donahue
Well, if I was to look at it in recent years, Christine, I guess maybe two things jump out at me. You know, post Covid, we all underestimated, or at least I know we did, and I think a lot of people did just underestimated how quickly travel would recover. I mean, if you remember back in 22, 23, I mean, travel just exploded and you know, we were all kind of trying to get back up to speed and I, I actually think airports did a pretty good job across the
- [53:56]
Christina Cassotis
system in this country, not right in Europe. They, they struggled. But.
- [54:00]
Sean Donahue
Yeah, true, true. But as the three of us also know, the supply chain is still, you know, a mess. And you know, talk about aircraft or engines or, you know, aircraft components that are not engines. I mean, there's some I don't remember in 40 years, the supply chain being such a challenge as it is now. The other one that again, I've been wrong on this is the explosion in premium travel, especially the people traveling on leisure who are now willing to spend more money to travel in business class or premium economy. And I keep waiting for the other shoe to fall, but I've been wrong. But man, you look at some of these business class cabins on the deliveries coming, I Thought I saw United on their new 787s that were going to take delivery. I think they might have like 70 business class seats. I mean, just an extraordinary number.
- [55:07]
Scott McCartney
And, well, American's new premium configuration has
- [55:11]
Sean Donahue
a whole bunch over 50. Over 50, I think.
- [55:14]
Scott McCartney
Exactly. Yeah.
- [55:16]
Sean Donahue
So big, big bets being made that that demand will continue and I hope it does for the industry. It'll be interesting whenever we hit the next recession and we will obviously hit a recession. What happens, but more importantly for the industry is, boy, you better have a good experience for these people that are paying all this money now. And you know, at DFW and I, I never paid attention to this at United and I would, I would argue United, Delta, American, you know, their lounge products up until about six or seven years ago were awful. I mean, the United Red Carpet Club, oh, my God.
- [56:01]
Christina Cassotis
Well, there was no competition. They didn't have to be great, right.
- [56:05]
Sean Donahue
But when I, when I worked over in Australia and I saw what Qantas did and then what they kind of triggered us to do at Virgin Australia in terms of the quality of the lounge experience, when it came to dfw, I said, you know what, I don't know what the airlines are going to do on the lounge products, but we're going to do something. And you know, Amex, Centurion, Capital One, Chase, Sapphire, I think opens hopefully in the next couple of months. We got PS opening, we've got Plaza Premium. So, you know, from an airport perspective, making sure you can improve the airport experience with enough lounge space, I think is really, really critical. As long as all, you know, in addition to all the other investments to make, you know, the customer journey through the airport important. But if people are going to continue to keep buying these expensive tickets, we all need to make sure we're meeting those expectations.
- [57:13]
Scott McCartney
So, Sean, I'm curious how running an airline compares to running an airport, at least in your experience. Did airline management prepare you for airport management or are they really different?
- [57:26]
Sean Donahue
It's another good question. And I, when I came to dfw, I said to myself, listen, I know airports. I've run airports for United, obviously had all of operations at Virgin Australia, had airports all over the world at United when I left. So I said, hey, I know airports. And yes, I kind of knew the operation side of airports and the 24, 7, 365, the FAA requirements, the safety, the safety management systems. Yes, I knew that. But what I didn't understand was the diversification of airports. And that's what I really, really enjoyed at my time during DFW. I mean, the concessionaire program at DFW is a $600 million business annually on a standalone basis.
- [58:30]
Scott McCartney
600 million. Wow.
- [58:32]
Sean Donahue
Yeah. Now that's obviously gross receipts. The airport doesn't get all of that. Ground transportation, $200 million annually. Infrastructure. God knows we know how to spend money at airports when it comes to building things that I really, really enjoyed in terms of the planning and the design and holding all of our partners accountable for delivering projects on time and within budget. Commercial development at dfw. Again, I mentioned how much land we have. I believe Amazon is up to 5 or 6 million square feet of logistics warehouse space on DFW Airport. You know, we. I. And this was before my time. Jeff Fagan and his team deserve the credit for this. You know, the Grand Hyatt Hotel in Terminal D, which I think is still one of the best airport hotels, and they just finished a $30 million renovation before COVID because DFW owns that hotel. We built it with our capital and our money. It was the highest margin business on the whole airport.
- [59:52]
Christina Cassotis
Yeah, that was brilliant.
- [59:54]
Sean Donahue
So my point is, I thought I knew airports, but I really didn't know airports. And learning all those different aspects of the business was really, really enjoyable.
- [60:07]
Scott McCartney
That's fascinating. I mean, we think of it as the airport business, but you are. You're in the hotel business, you're in the shipping business, you're in the warehouse business, You're.
- [60:17]
Sean Donahue
Yep.
- [60:17]
Scott McCartney
You were in the natural gas business, too.
- [60:20]
Sean Donahue
Right. And that again, the team, they made a decision, Gosh, that was probably 25 years ago. Brilliant decision. When they, you know, it was discovered that there was gas underneath the airport, I believe they got a $180 million upfront payment because, you know, back then, gas prices were much, much higher than they are today. And when I left, I think the royalties were a couple million dollars a year. So that's nothing to sneeze about. But when they made that decision to get a big upfront payment, that was really smart.
- [60:57]
Scott McCartney
And Christina's running a whole utility, right?
- [61:01]
Christina Cassotis
Yes. And. And. And again, I credit the. You know, the county executive, before I got there, he did the deal, but they got. There was a $50 million upfront payment in. In Pittsburgh, Sean. So, you know, and that's. That's a fraction of the. Of the. Of what you have in Dallas. But it has been a lifesaver because at the time after US Airways left, I mean, you know, Pittsburgh was struggling just to keep the lights on. It was.
- [61:27]
Sean Donahue
Sure.
- [61:29]
Christina Cassotis
We just lost so much of the traffic that would have paid the bills.
- [61:34]
Scott McCartney
So
- [61:36]
Christina Cassotis
you talked about challenges and obviously sort of some of the surprises about running a really big, important, foundational, critical airport, part of national critical transportation infrastructure, but also a global network of economic activity and inspiring a lot of activity. What did you, you said you talked a little bit about what you liked learning. What did you like about the job? I mean, like, what did you really love about the job?
- [62:08]
Sean Donahue
Well, I've always been someone during my airline days and during my days at dfw, I get the most pleasure out of our people. And you know, DFW had a great, great, still does, great group of employees take tremendous pride. You know, I remember this was probably back in 17 or 18, remember when a decision was made to not accept any more refugees on inbound international flights. And literally the decision was made when airplanes were in the air heading to the U.S. and you know, we probably had 2 or 3,000 people come out and pick it at the airport. And they just converged on the international terminal. And I remember our police force. And again, talk about a enormous benefit at dfw. Police, fire and security are our own employees. They're not city. And I remember seeing one of our sergeants out in this mass of people just making sure customers coming out of the FIS could get through. And he's out there giving out bottles of water to the protesters, talking to them, calming everyone down, helping people come out of the fis. And I'm in the IOC and I'm watching this, and at the same time the chief of police says, whoops, we have a jumper. And I said, what? And you know, the crossover bridges at dfw, we had someone who was about to jump off the bridge onto the highway below. And I'm looking at on closed circuit TV and I see one of our other police folks come up. They're talking to him, trying to calm him down. Finally they grab him and take them off the bridge and keep them safe. And. And I say to myself, gosh, you know, we've just got great people. I remember when Air Force One came in and I'm just talking about Air Force One, I'm not talking about administrations or anything like this. And it parked, you know, on the tarmac and you know, our frontline employees were so proud to be out by that airplane and doing anything they could to help. And you just remember things or I do about our employees, what they do every day, how they take care of customers, how they take care of each other. And then I guess the last thing I would say Is. It's reassuring to me, and I do take pride in that. Of probably the six largest airports in the U.S. the CEOs at three of them, you know, were part of my team at DFW in the last 10 years. So for them to, you know, move on to taking on greater responsibilities and running airports, you know, I feel good about that.
- [65:21]
Scott McCartney
Yeah. Great stories.
- [65:23]
Christina Cassotis
Alumni Association. Yeah, yeah, yeah.
- [65:29]
Scott McCartney
The, the Greg coach, Greg Popovich of airport.
- [65:33]
Sean Donahue
No, he's in a class himself, obviously.
- [65:37]
Scott McCartney
Yes, he is. So, Sean, airport costs are obviously a big issue these days, particularly with the major rebuilding of America's big airports underway. LAX is this massive rebuilding. O' Hare is modernizing. DFW is all torn up. There's a $12 billion program underway. There's. Christina just opened her new terminal. I'm not sure. I don't think cost is the big issue there, but it's going to be. It certainly is in New York. It's going to be in la, it's going to be in other places. Is it going to make travel more expensive? Since local communities, we talked before about the economic impact and all that, but local communities don't really invest in airports anymore. They want travelers and airlines to pay for it. So are ticket prices going up because of airport costs?
- [66:34]
Sean Donahue
I would say yes and no. And the reason I say that, Scott, is I look at the quarterly earnings and annual earnings of airlines, and I look at what percentage of costs for an airline are airport costs. And it's usually under rent. And there's other, you know, there's other associated costs in there. And I, I think this is accurate. You know, it's probably in the 5 to 7% range of total costs for an airline. So, yes, it's material, but it's obviously, it's not labor, it's not fuel, it's not aircraft leasing and things like that. But costs are going up at airports. You know, as you mentioned, there's capital programs and investments being made. What I always focused on at DFW was this, you know, we love at airports, we love to say we, you know, DFW, we got a $12 billion capital program. We love to brag about that. But one of the things I learned from our infrastructure team is you build a new terminal, let's say it's a $2 billion terminal. And over the lifetime of that asset, you will actually spend more money over 30 or 40 years on the O and M costs of that asset than what you put into it. So what I always tried to focus on at dfw Was in general our total O and M costs. And we were not perfect, but I felt like we did a pretty good job there. American felt, I think they, they felt that we were credible. They felt like we were focused on, on those costs. You know, we typically our, our budget might increase 3, 4, 5% a year on the O M side or, you
- [68:35]
Scott McCartney
know, and O and M. You mean operating and maintaining operating.
- [68:39]
Sean Donahue
Yeah, right, yeah, right. And the other thing we would do is if we were actually doing better than budget, I would share those revenues back with the airline. So towards the end of the year, if we were doing better, you know, I'd waive landing fees for two months, which landing fees monthly at DFW are like 7 or 8 million dollars. So my point is, yes, costs are going up. Some of that on the margin might increase the cost of a ticket. But as long as the airports are being good stewards of that investment, because as the three of us know, the airlines pay all the operating costs of an airport, I think the model still works really well. And I think it's just important Christina does this at Pittsburgh. A lot of other airports do this. The airline's got to have confidence that you're making the right investments and you're doing a good job kind of on the day to day expenses. I remember last year at the annual J.P. morgan Conference in New York, Scott Kirby was talking about airport costs. And he looks at me in the audience, he wasn't complaining, he was just talking about airport costs. And I must have smiled or something and he says, oh, and you know, there's Sean in the audience, he's smiling, he knows what I'm talking about. And it is an important issue. But we have to make the investments. We got a lot of aging infrastructure. As Christina said, travel's going to double in the next 18 or 20 years, whatever the number is. But as long as we're all, as I said, being responsible about how we manage those costs, I think it works for everybody.
- [70:39]
Christina Cassotis
User fee generated facilities, right. The airlines back the bonds and make sure that everybody feels good about taking out the debt. Passengers pay for parking and the burger and all that stuff. And we're all part of a huge, huge, huge system that needs both the airports and the airlines so it doesn't behoove us to waste money and have them pay for stuff that doesn't benefit the system. But at the same time, you know, there's always a robust conversation, I think, when it comes to capital, and I think more so today because so many airports need so many Upgrades. Right. You, Sean, you have money to your point, you've got great resources and a hub airline that is bringing in lots and lots of passengers. So, you know, if you're, you know, that's, that's a $12 billion program is amazing. Ours was, you know, under two and. But if you start taking a look at, there's just so much that has to be upgraded, you know, in this country and, and costs are going up everywhere. So I don't know, I, I'm going to be interested to see where, how it flows through. On the other hand, you know, airlines price based on competition, so I'm not sure where it.
- [71:56]
Sean Donahue
Yeah, that's why I said I think it's on the margin in terms of airport costs. You know, the last point I'd make on this is we made a decision probably four or five years ago because we were starting to build new terminals back to the O and M costs of a terminal over the life cycle of using this digital twin technology and all the terminals. So you digitalize with sensors, all your mechanics, your mechanical systems, your electrical systems, your baggage systems so that you get alerts, so that you can be much, much more predictable rather than reactive. And I had the team put in our strategic plan by 2028. Now the question is, is it still in there? But that O and M costs for the, for the terminals would be reduced by 20% because you had to put a little skin in the game. You know, you got to have accountability for your own expenses and costs and plans. So, you know, and I think most airports do a good job of that and are responsible on that. And, you know, I get kind of tired of people using the term gold plated airports. You know, other than, other than the Middle East. Yeah, I have seen a lot of gold. I haven't seen a lot of gold plated airports.
- [73:30]
Christina Cassotis
So what's next for you? You are still young enough, you still know a lot about this industry. And so what, what, what are you going to do these days? What's happening next?
- [73:41]
Sean Donahue
Well, you know, I'm, I'm sitting here like Fred McMurray and my three sons in my cardigan sweater. I'm only kidding. Only kidding.
- [73:51]
Scott McCartney
You know, you're making me jealous
- [73:55]
Christina Cassotis
only
- [73:55]
Sean Donahue
because I'm freezing my, you know what off. But when I retired, my wife Susan said, sean, you've been leaving the house every morning for 40 years. Let's not ruin a good thing. So I kind of took that as a signal. And so I'm on three boards. I just joined and had my first meeting next week, the board of Auckland Airport, New Zealand. So I'm really looking forward to that. You know, I've been on an energy company board in Dallas. Scott, you would know Atmos, the gas company. Yep, Great, great company. I joined an Australian technology company and then I just was lucky enough to join BCG as a senior advisor. So hopefully I'll figure out the balance because we have grandchild number two coming in about three weeks. And congratulations. Thank you. All five kids are up here and obviously want to maximize the family time.
- [75:07]
Scott McCartney
Awesome, awesome. Well, we appreciate your time. It's been great just hearing the two of you talk airports. I just love that we could pull this together. So thank you so much, Sean. It's been a delight.
- [75:21]
Sean Donahue
Well, thank you, Scott. Christina is always great to catch up with you.
- [75:25]
Christina Cassotis
Always good. Congratulations on everything, all your success and what you're doing going forward. It's exciting.
- [75:32]
Sean Donahue
Thank you. And Scott, great podcast here. Someday maybe Christina and I can talk you into airline and airport confidential, but I won't hold my breath on that.
- [75:44]
Scott McCartney
Okay. All right. Maybe just airport. We'll start a second one Airport combination. Who knows? Awesome, awesome. Thanks again, Sean. Been a delight. We will be right back with more on airlines confidential.
- [76:02]
Host/Producer
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- [76:18]
Scott McCartney
Thanks again to Sean. Christina. I just love hearing the two of you geek out on airport stuff. Any reflections on it?
- [76:27]
Christina Cassotis
Well, yeah, one thing, it's so funny. In my former life, I consulted to airports and worked on areas of competitiveness, and I spent a lot of time Dave touched w was a client of mine before Sean, and for a little while, while Sean was there before I got to Pittsburgh. And I just want to say that Sean's done a great job of leading that airport and, you know, helping to build international flights and service. And I remember that in 2012, 2013, 2012, Emirates started serving Dallas. They picked up service to Sydney. They had service, I think at the time to Tokyo, a couple of destinations in Europe, and a lot into, you know, Central and South America. So I would say that he's done a great job of expanding that and that DFW had had a good running start into international. So I just want to make sure that. That. Yeah, you know, that's. That's my perspective on things. That's all.
- [77:35]
Sean Donahue
Right.
- [77:36]
Scott McCartney
Right. There was a lot there. He did expand it a lot. There was a lot there to start.
- [77:40]
Christina Cassotis
So from talking to another airport CEO to the mailbag, Scott, there have been some interesting notes from listeners about major airline liquidations. Matt from Denver, for example, says regarding the talk of the largest airline shutdown from the last few decades, Braniff was mentioned from the 80s, then Midway and Eastern from 1991. But what about Pan Am, also in 1991? Airline near and dear to my heart. So, Scott, since you're teaching airline history right now in the aviation MBA course at the University of Colorado, Denver, what do you say?
- [78:18]
Scott McCartney
Well, I think Matt has a very good point as I've been teaching this history. Pan Am ultimately was a liquidation. To Matt's point, it was a much smaller airline by the time it was liquidated, right? It had sold off Asia, it had sold off Europe, it had sold off South America. So there wasn't much left. But Matt's point is well taken. There was still service in the Caribbean and other places and certainly they still had some domestic flights. There were other liquidations too about this time. ATA Airlines, for example, and Aloha Airlines. But I think the point is a big liquidation hasn't happened in a long time. Except for tiny Silver Airways last year, we just haven't had a major liquidation in a long time. If Spirit ends up liquidating, which as we talked about before is a possibility unless it cooks up a deal with Frontier or another investor, that would clearly be the biggest in some years. Christina, I know you have a personal connection to this since your dad flew for Pan Am, right? And then he moved to United when United bought Pan Am, specific routes and aircraft. So I thought of that when I got this in the mailbag from Dennis from bluebell, Pennsylvania, who writes about his airline career that would seem few pilots can duplicate. Fortunately, Dennis says, hello, I really enjoy listening to your show on my drive to and from Newark. It definitely passes the time. Your recent show talked for a couple of seconds about the demise of Midway Airlines and it possibly being the last significant airline to liquidate. Leave it to my wonderful experience to set the record straight. Midway went out of business in November 1991. Pan Am went out of business one month later and decided to December 1991, I was a pilot for Pan Am then, Dennis says, and lost my job. What a loss that was. Dennis goes on. In April 2008, ATA American Trans Air shut down and liquidated. Remember them? Guess what? I was a pilot for them too, for 14 years, a Boeing 757 Captain. I loved that job. Dennis says the funny coincidence here, not, he notes, is that ATA and Pan Am were the last two major airlines that went out of business and liquidated, and I was a pilot for both of them. So where am I now? Dennis says, you guessed it, Spirit. I've been a spirit pilot for 13 and a half years. Captain on the A320. A321. Dennis says, I would like to thank Ben Baldanza for making Spirit an airline that opened the opportunity for me to restart my flying career at age 50. It's been great, and I love flying here. I won't state the obvious of what might happen to me again, except that I only have one year left until mandatory retirement, and I hope that I can reach that date still employed. We'll see. I'm one of many Spirit employees who wants to keep their jobs and careers here. In the meantime, I enjoy every trip I fly. Yes. Even out of Newark. The people there are great. Thanks to all of you for the really good shows you put on. Dennis, thanks to you. I feel your pain, but I appreciate your note a great deal.
- [81:54]
Christina Cassotis
Well, there's a memoir in that. I mean, if you've been. You know, I think that. Dennis, keep your notes and write a book. And thanks for pointing out how much you care about the airlines that you've flown for. I think that makes the point from earlier. Right. People are invested in the companies they work for, and in this industry, it's not hard to feel like you have a real purpose. So thanks, Dennis, for being a great member of the industry and for your service to three airlines that have done good things for lots of people. What a career. Wishing all the best to Dennis and all the employees at Spirit going through this very challenging reorganization right now. And I want to talk about one thing. Someday in the future, Scott, and I'm going to see how you react to this. But I'm thinking that the Dallas Metroplex, maybe those two airports should be governed under the same organization, like in New York.
- [82:55]
Scott McCartney
Oh, wow.
- [82:56]
Christina Cassotis
I mean, think about this. Yeah, think about this. Right? Why compete? You've got Love Field and dfw. You've got two major airlines who are really engaged in either airport. And I just wonder if there's an economy of scale in running them as one organization. I mean, DFW is number three. It could go to number two. Why compete against the airport down the street?
- [83:23]
Scott McCartney
That's a really interesting question, and an interesting time to ask the question is actually the local politics. And I'm no great student of local politics here, but historically, there was Always the competition between Dallas and Fort Worth. The city of Dallas would not want Fort Worth involved in running local airport. The Dallas area. So there's a regional transportation system and several of the larger suburbs are threatening to pull out of it. And that's a different issue. But I think maybe, you know, sort of in the same issue of now, different parts of the Dallas Fort Worth area doing their own thing. So that might suggest not the right time to think about a regional airport authority when your regional transportation authority is kind of falling, potentially falling apart. We don't know what, what's going to happen. I don't know that that's kind of my initial thought, but I don't know.
- [84:25]
Christina Cassotis
I mean, look at Chicago. If you look at Chicago, right, you've got, you know, you've got Midway, you've got O'. Hare. New York is, you know, Newark, LaGuardia and JFK. It, there's just, to me, there's something to be said for the, the economy benefiting from more focus and a strategy that takes into consideration the entire region as opposed to bifurcating it and having it compete against itself.
- [84:52]
Scott McCartney
Yeah, yeah. The experience in Los Angeles was. Was interesting. I mean, there was a time when law. Los Angeles World Airport in Ontario.
- [85:02]
Christina Cassotis
Sure, right.
- [85:02]
Scott McCartney
Ontario. Right. And there was a whole idea of, hey, we'll have a regional transportation plan and we'll build big terminals in Ontario because it'll be the, you know, because we can't expand lax. And then Los Angeles decided, no, we do want to expand lax, so we're going to put all the money there. And Ontario said, hey, wait a minute, we're not getting our fair share of the deal. Yeah, but look.
- [85:26]
Christina Cassotis
Right. But Love Field is right downtown and these guys are busting at the, you know, they're, they're busting of the, the. I'm confident that an unconstrained forecast of Love Field would see that there's an opportunity for that to grow because of its location.
- [85:41]
Scott McCartney
Yeah.
- [85:41]
Christina Cassotis
So. And, and, you know, in the, in the beginning, the right Amendment was all about making sure that DFW wasn't going to. Going to be impacted significantly as it grew. Well, it hasn't been.
- [85:53]
Scott McCartney
We don't need to worry about dfw.
- [85:55]
Christina Cassotis
We don't need to worry about it. So I don't know. I just, I think there's something that would be interesting to look at. And, you know, the Port Authority, you've got three different airports, actually five if you count Stewart and Teterboro.
- [86:07]
Scott McCartney
Right.
- [86:08]
Christina Cassotis
They all play a role. And I think there's something to be said for a system that works together.
- [86:13]
Scott McCartney
Yeah. Yeah. And you have that in Pittsburgh, right? You don't just have Pittsburgh International, you have.
- [86:18]
Christina Cassotis
No, we have, we have our, we have our ga. Corporate aircraft, but that's not commercial service. So. But I do think. But we do have a system and I think that there's, there's something to be said for that. So.
- [86:27]
Scott McCartney
Yeah.
- [86:28]
Christina Cassotis
Anyway, it's just something to maybe.
- [86:30]
Scott McCartney
All right, great. Great subject. Let's talk about it more and I'm sure we'll hear from listeners, too, about that. That's all for another edition of Airlines Confidential. Thank you to Sean Donahue. Thank you, Christina. It's always wonderful and interesting to talk about airlines and airports, so appreciate it very much.
- [86:53]
Christina Cassotis
Well, thanks for having me. It's always exciting to be on. And Dennis from Pan Am and ATA and Spirit. Good luck.
- [87:02]
Scott McCartney
Yes. So long, everybody.
- [87:05]
Host/Producer
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