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Airlines Confidential Podcast
326 - Guest Co-Host Henry Harteveldt, Guest: Chris Sununu, CEO, Airlines for America
00:59:27
This week: Guest Co-Host: Henry Harteveldt, Guest…
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- [00:04]
A
Airlines confidential with Scott McCartney is made possible with support from RTX, Collins Aerospace, Pratt and Whitney and Raytheon. Connecting and protecting our world. RTX.com infinity flight the leader in Cadet Academy flight training programs infinityflight.com Ontario International Airport in Southern California state SoCal so Easy flyontario.com the executive MBA in aviation at the University of Colorado, denver business ucdenver.edu 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.
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B
I'm Scott McCartney here to report that March is indeed coming in like a lion, at least in the airline world. We have some major storms and scary violence to talk about. We have blame and confusion at major air travel players. We have breaking news about Spirit Airlines. We have an interesting frequent flyer program strategy to talk about the news like March is just roaring in and no one better to help us sort it out than Henry Harteveld, the brilliance behind Atmosphere Research Group, who joins us just back from a trip to Europe. Welcome back, Henry.
- [01:42]
C
Well, thank you, Scott. I'm very interested in discussing all that we have on today's agenda. In particular, having had firsthand experience with the lack of global entry but the reintroduction of precheck when returning from Amsterdam via LAX on Monday. And speaking of lions or lambs, you and I are going to be talking in this podcast with Chris Sununu. Chris is the former governor of New Hampshire and former prominent moderate Republican Party leader who is now leading Airlines for America, the industry's representative organization in Washington, D.C. we have a lot to talk about with Chris, including how he will lead the airline lobbying and advocacy organization in the political and regulatory world. I think listeners are really going to enjoy the conversation we had with Chris. I certainly did. He brings a very, very different style to a 4A, the proverbial breadth of fresh air. And so I think it's wonderful that we were able to get him to share some of his very precious spare time with us for the conversation.
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B
Yes, absolutely. It was a great conversation and I think listeners are really going to be interested in hearing what he has to say. All right, breaking news, Henry, as we record this on Tuesday, Spirit Airlines just announced that it has a deal in principle with secured creditors to emerge from bankruptcy reorganization later this year. It will emerge as a much smaller airline, and with that, Spirit hopes to reduce costs, get reset both revenue and expenses, and return to profitability. We don't have a lot of details yet. Spirit will be presenting all this to the bankruptcy court. But very interesting. We, we had been assuming that Spirit was going to need a new infusion of, of capital. It looks like they're going to try and do this without that. And so it'd be interesting to see if this reorganization is more successful than the first one. But certainly, you know, Spirit's done an interesting job managing it, Dave Davis and and the rest of the team of keeping it going despite the significant monthly losses that it has been putting up. So we'll see. There may be more to this in terms of the creditors bringing new capital or forgiving a significant portion of debt that may make the finances at, at Spirit better. We just don't know yet. But it is progress, so it'll be interesting to see how all this shapes up this spring.
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C
Yeah. You know, one thing that I noticed, Scott, in a news report that I read written by Leslie Josephs at cnbc is that under the plan, the airline will not only have reduced costs, but it claims it will have cut its debt and lease obligations from $7.4 billion to $2.1 billion now. 2.1 billion DOL. An awful lot of money. We can't, we can't just, you know, say, oh, that's nothing. It's a lot of money, but that's a significant reduction in debt and lease obligations. What's also interesting to me is that it looks like Spirit is borrowing a page from the Allegiant Airlines playbook, which is fly a lot during the busier times of the week and busier times of the year and scale back during the off peak days and months. We'll see if that works for them.
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B
Yeah, very interesting. And I would assume that in exchange for forgiving $5 billion of debt, the creditors are going to get equity in the new company at some point. They'll try and go public to, to get repaid, to cash out. And, you know, it'd be interesting to see if Spirit can make a go of it. To your point about the Allegiant playbook, I think they're getting rid of a lot of airplanes and a lot of the newer airplanes and trying to stick with the older ones, which will be less expensive. And so if the airplanes are less expensive, you can let them sit on Tuesdays and Saturdays or whatever, and it's not so much of a financial burden as an expensive new airplane that you need to keep flying more.
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C
Correct.
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B
All right. In other news this week, Henry, there was some really serious stuff. The industry had to deal with a huge nor' Easter shut down airports in the Northeast at the start of the week. That came after the Department of Homeland Security said on Saturday it was gonna suspend TSA Precheck because. Because of the government shutdown of Homeland Security funding, only to reverse itself on Sunday amid an outcry and the reality that Precheck actually allows TSA to operate with reduced manpower. Saves manpower. Obviously, the administration wanted to ratchet up the pain and pressure to get Congress to approve Homeland Security funding, much as it did with air traffic controllers during the whole long government shut down last fall. Homeland Security, interesting enough, did suspend Global Entry, the Trusted Traveler program at Customs and Border Protection. That one, to me is even more confusing since Global Entry is largely an automated program requiring minimal manpower for the number of people it processes. Once again, I think it's clear the government is using travelers as pawns to gain political leverage.
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C
Yeah, and I have to tell you, obviously the timing is no accident. They announced this just before a lot of the elected representatives in Congress were going to be returning from their recent recess. So undoubtedly hoping that some of them would get snared up in longer lines, they ended the police escort that is provided to these elected officials and some other VIPs at airports with the claiming that those resources could be better reallocated elsewhere. But to your point about suspending Global Entry, my understanding is that Customs and Border Patrol was funded as part of the, quote, big beautiful bill, unquote, that was passed last year. Global Entry and TSA Precheck, by the way, are also both paid for services. They're obviously optional. People opt in to pay for them. And whether they pay themselves or it's paid on behalf of a credit card company or something, someone else, there is money exchanged. The government is collecting money for that. And as you said, Global Entry really makes the throughput of passengers far more efficient through the passport control process. I flew back through LAX yesterday. I was prepared to use the mobile passport control line, but an LAX airport employee who was guiding people to the different areas suggested to me that the regular line would actually be faster because, and this was a surprise to me, the regular line was using facial recognition technology. He said it's very similar to Global Entry in that regard. And while it was a long line, my KLM flight from Amsterdam arrived after a flight operated by Qantas from Australia, Japan Airlines Flight, and several other international inbound flights. The line moved constantly. I waited in line maybe 15 minutes. Not fun, but the line moved and the process itself was swift and efficient and, and that worked. Now there's More serious news, SCOTT Very serious news that we need to also recap. This past weekend there was also violence in Mexico, result of a drug cartel leader being captured. That led to a lot of violence in Guadalajara and Puerto Vallarta, which in turn led to the cancellation of flights both from the US and some domestic flights in and out of both cities airports, and that stranded thousands of travelers. Americans were told to shelter in place. And while we can certainly joke about, oh, it must suck to have to shelter in place if you're at a resort in a beautiful place like Guadalajara or Puerto Vallarta, if you are planning to go home, if you've got kids who are supposed to be back in school, if you've got work that you're supposed to show up for and you can't work remotely, it's stressful. And simply just not being able to get to wherever you want to go or need to go is stressful. US Airlines have begun operating flights into Puerto Vallarta, at least I'm aware of that. And flights to other destinations in Mexico, thankfully were not impacted, at least as of yet, and hopefully it will stay that that way as well. SCOTT In a much less violent dispute, Airbus has softened its output target for 2026. What's also interesting is they publicly blamed Pratt and Whitney over engine supply shortfalls. This has been an ongoing tug of war between new airplanes and aircraft grounded for repair, which should get the fan blades, which in turn are in short supply because of a manufacturing defect. A contaminated coating was used that has forced Pratt to replace fan blades on thousands of engines. Previously, some airlines had complained that Pratt was favoring new engines so that Airbus could get paid for the aircraft that they're delivering. And now Airbus is saying Pratt is favoring the repair of grounded aircraft. Earlier this month at the Singapore Air Show, Pratt said it had reduced the number of grounded A320 and A220 aircraft by about 20% from 2025's peak. And that's good, but there's obviously still a lot left to do. Pratt says the issue will continue until, get this, the end of the decade. You know, we'll see what happens there. Hopefully it will not take that long. Hopefully they will find a way to resolve this and it will be interesting to see how the Pratt and Airbus relationship is repaired.
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B
So, Henry, some big news here at Airlines Confidential. We have a new sponsor, an organization that is probably familiar to many listeners. I'm thrilled to tell everyone that the University of Colorado Denver executive MBA program has become a sponsor of the podcast. As listeners know, Oscar Munoz, Charles Duncan and I are all teaching in this exciting new program. Sean Donahue, who is on the podcast last week, will be teaching as well. The program right now lining up its second class of students, the first cohort is already underway. I think this program can have major impact both in changing lives and advancing careers for students and for creating a wise and talented pool of future airline and airport executives who will bring a lot of learning specific to the aviation business. To an industry that is constantly grappling with some of the toughest problems any business faces. This is a game changer and we are all thrilled to help get the word out about it. So here goes. The Executive MBA in Aviation at the University of Colorado Denver is the first degree of its kind in the world, taught by industry experts and designed for ambitious leaders from across the aviation ecosystem. With classes located at Denver International Airport and week long residencies in Washington D.C. and at airports around the world, students experience a hybrid flexible course structure that balances in person and online classes without career interruption. You keep working classes on weekends. It's just a terrific program. Go to Business ucdenver Edu that's Business ucdenver Edu to learn more. Okay Henry, one more news story I'm eager to get your take on United Airlines said that holders of its co branded credit cards will earn more miles on flights and get lower prices for award redemption. United will do that by reducing earning and increasing redemption prices for customers who don't have a United credit card. And when you go to use your United miles, the airline will show you a price for cardholders and a higher price for non cardholders. So each time customers will see how much they could save if they bought a United credit card. Seems to me this simply reflects the importance and profitability of credit cards in loyalty programs. It also would seem to say that low status people, those who don't fly United a whole lot, aren't important to the airline unless they have a Chase credit card co branded with United. What do you think of all this?
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C
Well Scott, in my career I've actually managed these programs when they were really called loyalty programs and they were about loyalty. And we have to remember loyalty is an emotion and it's a two way street. These transitioned though starting back around 2012 when Delta was the first airline to embrace the revenue based spending model and then incorporated Amex, its credit card partner, as a key component of that. We can't call these loyalty programs anymore and we can't and shouldn't call them frequent flyer programs Anymore. These are travel spend programs. And what United is saying to people very clearly is if you don't carry a Chase co branded credit card with United you literally do not matter as much to us. Your money is not as green as the person who has that credit card or one of those credit cards. That's Uniteds prerogative as the business owner. And they certainly have created a lot of incentives for people to carry the credit card. Now in some ways they copied Delta. Delta and Amex give you a 15% discount on award redemption if you have one of the qualifying Delta American Express co brand credit cards. And in United, United I'm a member of the United States Mileage plus program have been since it started and I have Premier Platinum status with the airline. And what I would get as a non card holder with United is 7 miles for every eligible dollar I spend on United. If I have any card co brand credit card that jumps up to 10 miles per dollar spent. And if I have a United Explorer card I could earn 13 miles per dollar spent. You know I have two credit cards. One is an Amex card, one is a Visa card. I'm not going to discuss which bank issues the Visa card. And that's all I want. That's all I need. That's how I choose to manage my spending and which I use for both my business and personal spending. I'm not going to carry a co brand credit card from any third party whether it's an airline or anyone else. That's my choice in terms of how I choose to spend my money and manage my money. But what this does is feed the decline that we are seeing in our research about brand loyalty to airlines. We had seen in our research that we conduct every year with 5,000 or more airline passengers in the US that it had been hovering around 14%, 13 to 14% of airline passengers saying they are loyal to at least one airline or airline alliance in our 2026 most recent survey that has now declined to just under 12%. So congratulations airlines. You're so focused on the credit cards that you're killing people who might otherwise form loyalty to you. And I consider myself a free agent. I know a lot of other people who consider themselves free agents. And I think that there's a risk some of this might unintentionally backfire on some of the airlines.
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B
That's fascinating. Really is it seemed to me Delta was kind of offering more of a carrot, right? And United more of the stick. United Delta rewards you if you have the AMEX card with Something extra. But United penalizes you if you don't have the credit card. Is that right or am I wrong?
- [20:00]
C
Yes and no. I mean, you know, but Delta is. Delta doesn't give you bonus spending. Well, they may give you bonus spending if you have one of the qualifying Amex cards. But, you know, United has plenty of carrots out there in its offering. I mean, you know, there are people who do play the points game and play it very intensely and very passionately who would look at this and say, if I carry a certain Chase United card, I can almost double the number of miles earned on my eligible spending. And for them, if that's what they value and if it works for them financially, terrific. And that's fine. And they have the carrot in that they do offer lower award redemption levels. Again, that's fine. That, you know, it's how United is choosing to go to market. But there are people who can't or don't want to get another credit card. And there is a risk that some of those consumers may say, well, United just really doesn't value my business or me, so I'm not going to avoid United States, but I won't necessarily seek them out either.
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B
Right. And United would say, well, those people are only flying us once or twice a year anyway.
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C
And again, that's a fair point. Doug Parker, when he was an American, said that roughly 85% of the airline's passengers flew the airline only once a year, and that number is still roughly in that same neighborhood. It's probably the same at United. It's probably the same at Delta. It's probably the same at several other US Airlines, and that's okay. I think what is a concern, however, is especially given the larger affordability crisis that exists, there are more people defaulting on credit card debt right now. There are a lot of other very serious macroeconomic challenges that we face in the United States. You know, I'm just worried that an unintended takeaway from United's new program is that some people who may have considered themselves loyal to the airline may take away that the airline really doesn't want them as a customer, doesn't care if they remain a customer or not. And so they will take their business to other airlines, regardless of what those other airlines are. You know, that ultimately doesn't serve United as a business.
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B
Well, so interesting. All right, Henry, time to thank our other sponsors who make this podcast possible. We want to thank Ontario International Airport, which, by the way, just won a big award from Airports Council International as best airport at departures in North America for among airports their size based on a customer survey. It's a really cool recognition for Ontario Ontario is also 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 the years to come. Visit flyontario.com 1010 to learn the story and find out how you can join the year long celebration of how a decade of local control has turned Ontario into one of California's fastest growing and most economical airports. And 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.
- [24:15]
C
Scott in addition, we sincerely want to thank Infinity Flight Academy, the leader in Cadet Academy Training center programs, for helping us bring the airline's Confidential podcast to you. Whether you're looking to build a custom pipeline or strengthen your existing pilot 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, Infinity Flight has trained thousands of students, many now flying for major airlines around the world. Learn more@infinityflight.com Infinity Flight Academy where future airline pilots take off. And of course we want to thank the good people at 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 their revenue and manage costs and seize commercial opportunities. Visit cirium.com for more.
- [25:23]
B
Okay, let's bring in Chris Sununu Former New Hampshire governor Chris Sununu became president and CEO of Airlines for America in September, taking over from Nick Caleo. Sununu, a Republican, stepped out of politics in January 2025, declining to run for a fifth term as governor. He graduated from MIT with a degree in civil and environmental engineering and worked as an environmental engineer for 10 years, cleaning up hazardous waste sites. He also was in the travel business of sorts when his family took a significant ownership stake in Waterville Valley Ski Resort, and Chris spent seven years as CEO before becoming governor. Welcome to Airlines Confidential.
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A
Governor Sununu well, there's not a whole lot that I get nervous about after all I've gone through, but I'm shaking in my boots on this show. I will do my best, keep it entertaining for the audience and not completely embarrass myself with my nine new bosses.
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B
Yeah, that's right. Well, I'm sure you've already found this is a fascinating business and there will always be lots to talk about. So I hope this is first of many airlines confidential chats.
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A
You bet.
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B
But we always start with what we affectionately call the Baldanza question. Ben Baldanza, former CEO of Sports Spirit Airlines, who had a long career in the airline business and many friends, co founded this podcast and he taught me that many in this business have interesting paths into the airline world. Ben passed away from ALS in 2024, but we carry on the tradition. So the question how'd you get into this crazy business?
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A
Yeah, that's a great question because it has a very bizarre answer. I wasn't looking for it, that's for sure. I didn't. I mean, I'm an engineer, right? So I was at mit and I can probably tell you how an airplane actually stays up in the air a lot better than I can tell you how the airline industry actually runs. Although I'm. These last four months, I'm without a doubt getting a crash course. But this organization was. Was looking for some leaderships. I got a phone call one day. I knew Scott Kirby a little bit. I knew Richard Smith of FedEx pretty well. And, you know, to their benefit, to their credit, I will say I was shocked when they called because I said, I don't know how your industry really runs. I know government. I kind of work with both sides of the aisle. I'm an engineer. I know how to work on big projects. They wanted to start this organization, start thinking outside the beltway. And so we had a few discussions and I said, boy, at first I thought this was a crazy idea on their half, like, why would they want someone like me? But then I really got it and I really started seeing all the potential that's out there right with. And we can talk all the details. But everything from an administration that is pro airline, they're pro. They understand that our national airspace really is this national security asset, that it is a driver not just for the United States, but really for what happens in the rest of the world. The fact that I get to represent the cargo industry as well, commerce, everything from what's happening in tariffs and all of that sort of thing really impact that. And Thinking beyond the beltway of how this, how this industry works and affects things at a localized level, state and local, how travelers think. And then, you know, as you brought up a little bit, I do have a resort background as well. I ran a resort, so a hospitality, what that means, how a customer thinks. I love that stuff. So I just want to bring kind of my, the idea of bringing my engineering process to say, okay, let's whiteboard how maybe things were traditionally done. Let's think not just how this organization should run today, but how, you know, what it can do five and 10 years down the road. And yeah, so it was, it was just kind of a mutual understanding of, boy, this might be a bit of an out of the box choice, this former governor guy. But what I think we're trying to do with this entire industry, I think it, I think it makes sense. And to be honest, I love it. I mean, I really, I really love it so far. I'm a pretty big Cynic of Washington, D.C. well, at least I was. I'm loving it now. I'm really, really loving it now. It's a much better town than I probably gave it credit for. Spent a little time on the Hill, a little time in the administration. I've moved down here. I'm living down here now. So, yeah, if you told me six months ago this is where I would be, I was like, I don't know, that's crazy. I can't believe someone would even have this idea. But again, to the CEO's credit that I and the organization's credit, they had a vision of what they wanted to do being a little non traditional. And that excites me. I like to be creative with things and, and kind of bring both the politics and the engineering to bear with the air traffic control modernization. I mean, that's just a giant engineering project that could go really wrong if it doesn't have strong leadership and metrics of accountability and folks that understand where giant public projects can go bad. I've seen that as a governor. And so, you know, trying to stay right on top of that with folks like Brian Bedford at the FAA and Sean Duffy as the secretary. I mean, these guys get it. They want this thing to succeed. They're doing it a little bit different, which kind of gives it a real chance for success. And I guess at this point, I don't know what you guys think, but it has to succeed, right? I mean, we really don't have an option when it comes to the air traffic control modernization project of it not working because the system, it doesn't want it. It absolutely needs it. So that kind of stuff excites me. So it all just kind of fit together in a very bizarre way. And it's been a hell of a ride for the first four months, that's for sure.
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B
That's awesome. Awesome. So what do you see as the biggest issues that airlines face?
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A
Look, I keep going back. I think the biggest issue really is air traffic control modernization. As you know, you guys have done a ton of on a ton on this, and you can't say enough about how antiquated the system is. It's not broken, but it is on the verge of not working to a certain, certain extent. Now, the airspace is very safe if effectively, we've slowed the airspace down over the past few years to make sure that we can account for the inefficiencies in the system, all in the name of safety. Right. So the public should always know it's always very, very safe. But to modernize it then adds back those efficiencies to speed things up, to get more traffic in and out, to have better coordination between general aviation and commercial aviation. Now you have the drones, right? You have unmanned vehicles that are kind of entering the world. How are those going to be dealt with? You have to have the right technology. And I'm literally looking on my desk at a paper strip from Dulles Airport. I keep one on my desk as a constant reminder that we are still very analog in a lot of different ways. There's a lot of matrix printers, floppy disks, and paper strips still out there. But again, one of the things that excited me about the job was saying, okay, at least for the first three years, I don't know what's going to happen. We have a clock of three years where we're working with an administration and a president. You know, I don't care what you think of the politics and Trump, we all have our opinions there, but this is a guy that really believes in the air industry. He wants it to succeed, and he gets behind. I mean, no other president has ever really talked about air traffic control modernization and the need for it. Like, he has got behind it 100%, said failure is not an option, and said, we're going to go. We're going to go fast. We're not going to let bureaucracy and. And all that kind of stuff slow us down and waste the taxpayers money and have an inefficient air system. And he's behind it. So that's kind of exciting because they're open to new ideas. They're open to new ways of doing things. They're open to making sure the best technologies get implemented. They've got this first round of $12 billion. So I just think it's a key issue for the industry and it's a key opportunity for the industry because they're going. And if it doesn't go well, we only have all of ourselves to blame. It isn't just on Brian Bedford at the FAA or Sean Duffy at DOT or the president or, you know, the, just the private sectors, the controllers themselves. It is a full blown team effort. And one of the things that was pretty cool when I came in, I, I was a little before I got here, Airlines for America. Sharon Pinkerton, who you guys may know, she's just absolutely brilliant on policy and stuff. She really led the charge and put together the Modern Skies Coalition. Well, what is that? It's like 60 plus organizations, organizations that typically have varying points of view. They've conflicted. It's a combination of the airlines themselves, the manufacturers, the labor unions, all the advocacy groups on both sides. Everybody's coalesced together around air traffic control modernization. They all agree on how important it is. And it's really the only time, first time this has ever happened. And it's an amazing galvanizer for the industry because everybody's on board with it has to happen now. This is our shot. We all have to be together. We're going to have little differences on other issues here and there. We're going to have fights, and whether it's on Capitol Hill or with regulatory issues here and there, but on this issue, we're galvanized and we need to show that strength as a, as a group with this Modern Skies Coalition. And it's an incredibly powerful, I won't call it a lobby per se, but a voice on Capitol Hill and within the Department of Transportation. When issues come up and that organization gets behind something, people really listen because they know literally everybody is behind it at that point. And so therefore it must make sense. We got to go. We got to go fast. So the things like that that happened, even, you know, well before I got here, also give me a lot of optimism that it's going to take a lot of work, a lot of management, a lot of metrics of accountability, a lot of standards and goals that have to be met, a lot of transparency. But if you achieve on all that, this could really come out awesome.
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C
So, Governor, it's Henry. You know, I agree with you, Governor, and as someone who spent the past 25 years as an industry analyst with a strong focus on tech. You are absolutely right. I mean the FAA is running on a lot of legacy technology. It's, it's failed before. We, we all suffer when that happens. But one of the things that just illustrates to me also how behind the times some airlines can be with tech is when you're waiting to board the flight and you hear the dot matrix printers gate going and it's kind of like, oh yeah, welcome back to 1982.
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B
Yeah.
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C
So you know, I mean that's obviously airlines decisions in airports, but you're right, the technology issue is massive and it's, it's not an easy problem to fix. And I do share with you the support for this administration in terms of recognizing we have to not just fix, but vastly improve.
- [35:44]
A
You know, legacy systems are huge, are a huge issue across this entire country in every industry. Look, running. When I became governor, we still had computers and I called it the blinking green cursor project. Some of our accounting systems, the card core, legacy systems there had never been turned over because it is not easy to turn all that over. You're turning over data, programming, languages, all that sort of thing. And so when you have something like an airline that is truly a 24, airlines aren't shutting down for a few days, right? Oh, we're going to take a week off and, and rebuild our system and we'll turn it on in a couple of weeks. They're 24 hour day, 365 operations. It's incredibly difficult to transfer over some of those legacy systems. Takes a lot of money, a lot of effort because if there's a slip up, if it doesn't go well, holy cow, are you in trouble. You know, Southwest is a good example, right. It wasn't so much a legacy system change, but a huge operational change when just last month they started having people have assigned seats. That sounds simple to you and me, but holy cow, is it massively complex. And to their credit, they did a great job. I mean very, very few problems that could have gone haywired a lot of different ways. So it's hard, but you gotta do it. You gotta make those investments. The airports look, and I don't wanna pick on the airports per se, but some airports are really great with advancing, not just their look, better restaurants and better shopping facilities and better quality, quality walkways and all that sort of thing. Some airports are really good at the technology, moving that forward. And to be honest, some airports are really antiquated. You know, maybe they're smaller, how they're all managed everything. People always forget they're all, they're all managed differently. Some are owned privately, some are managed by municipalities, some are managed by, you know, airport port authorities, if you will. Some report to the state level, some report to the local level. I mean, some are run by non profit, some are run for profit. So that inconsistency of how such a major aspect of this industry works creates quality control issues at times. And there's no one individual or one group to blame for that. It's just the nature of this thing. Over a hundred years, developing airports kind of popping up here and there, you know, patchwork effectively. Where there was a need an airport would pop up and how that airport would run and operate and the dollars it had to invest in its, its systems, that's just all very, very different. So, you know, I, I think it's hard for, for as a consumer sometimes to appreciate, you know, there's a reason why, you know, o' Hare is, is one way. And you know, I don't want to pick on a, I'm not going to pick a small airport that isn't doing it. Well, I would, you know, I'll let. There's a lot of them out there, right? We all know, we all know some of the smaller guys that, that just maybe don't have the opportunities for expansion. And even at the federal dollars, I mean, that's another thing. So much of the airports get funded by federal dollars. You know, there are airport authorities and groups that are so large they have teams of lawyers and grant writers, they can, they know how to lobby for dollars. The smaller guys don't. Right. The smaller guys are just running their darn little operation and they get left out because the bureaucracy of applying and submitting for federal and state dollars to increase to improve their infrastructure can be so complex, so difficult. It can take literally months to fill out applications to get some of these infrastructure dollars. I know that because I was governor and I saw that in a state that had medium and small size infrastructure, some folks can handle it and some folks just didn't have the expertise and the dollars to pay people to make sure that they were putting into the front of the line. So, you know, it's not just when you see a lack of infrastructure, it's not just because they're not paying attention, is because sometimes the big guys get all, get all the goodies and the little guys and I would argue the smaller airports really have an opportunity or America has an opportunity to focus on them as folks are maybe choosing to use Some of these secondary or ancillary airport opportunities, and not everything is Boston, Logan and Chicago, o' Hare and lax. Right. There's a lot of these smaller guys out there that are sprouting up, but again, they need to have access to those funds and those opportunities that everyone else has had over the years.
- [39:59]
B
Your predecessor was on the podcast, but basically kept a relatively low profile in media. He was obviously very effective at lobbying, but not a familiar face on news shows. Will you be a more public voice for airlines?
- [40:17]
A
Absolutely, yeah. I mean, I don't want to comment. Nick was great. Again, I, I, yeah, he wasn't maybe out there as much, but I'll just say, look, my style is to be super transparent, hopefully be a good communicator and be a, someone who can translate what's happening from the inside to folks that just need to digest it, but not get overwhelmed with, they don't want to get overwhelmed with every detail of air traffic control technology. I mean, that's a you, this podcast is great for that, right? This is kind of airlines folks that really get wonks, if you will, that get into the meat of it. But when I go on CNBC or I go on cnn, it's all about, look, I'm not going to bore you with the lobbying aspects and the battles that are happening necessarily within the Beltway on the shutdown, but here's really where what the American consumer needs to know, here's what the American public needs to know, where it's going, what the expectations are, and not just put a positive spin on it. But I'm a huge believer that when you're super transparent, you can work with both sides with a smile, you can disagree with a smile and all that sort of thing. People might not agree with you, but they're always more willing to go along with hard decisions and understand why certain things are or are not happening. And so it's not just, well, we have these four talking points to say. You got to kind of make sure people want to engage in this issue and understand what it means. And I think one of the areas that this industry has not done a great job on is communicating all the wins that it's had, right? So, for example, when I hear certain senators or, you know, say, well, the airlines are terrible to customers and the airlines don't know what they're doing, and the airlines are just out for huge profits on the backs of, are you crazy? I mean, nothing could be further from the truth. When I got here and I started looking at the, the data, the Average profit margin in this industry is 4 1/2 percent.
- [42:08]
B
When there are profits.
- [42:10]
A
When there are profits.
- [42:11]
B
Right.
- [42:11]
A
It's unbelievable. I mean, God bless Delta. There's. Delta and United do very well with their profit margins. 8.5%, 9.5%. I don't know any industry leaders in major industries in the world that have profit margins that low. Why? Because of the competition. They're creating opportunity. So that's why we have so many families that are traveling now more than ever before, because it's more affordable than ever before. Why the points, the loyalty points programs are so critical to our industry. You're going to take that away from America because so many Americans and get to fly and go see grandma on the holidays or whatever. Why? Because they bought their groceries with the right credit card. They get that. That back in points. And so therefore they can travel like everyone else gets to travel. There's a lot of families that take advantage of that. And the fact that you have guys on Capitol Hill that want to take that away is just, is just insane to me. The fact that you can go through a TSA line in about 90 seconds, you know, as opposed to 90 minutes, I mean, that used to. The average TSA weight has dropped so much over the past 10, 15 years because of pre check and clear and all that kind of stuff. The fact that these airports are beautiful. 25 billion will be spent this year alone and another 27 billion next year, record numbers in improving the quality of infrastructure. Airports, parking, food, service, shopping experience. It's a whole experience to be at an airport.
- [43:27]
C
Why?
- [43:28]
B
Because.
- [43:28]
A
Yeah, because sometimes when your plane is delayed or you have to be there longer than you want to be, you don't want to be sitting in a dingy, old tiny place and all that sort of thing. They appreciate that and they're making a better customer experience. The fact we don't have smokers. How about that? Can we just champion the fact we. When we used to travel back in the 80s and early 90s, people were still smoking on planes. How miserable was. Was that? And you don't have to worry about that, that sort of thing anymore. So there's just so many wins out there. I could keep going that I just don't think this industry has done a great job promoting. And this organization, I think, has an opportunity to do it. Right. Traditionally, a trade association in Washington is about lobbying and all that sort of thing. And that's. That's important. Right. I'm not a registered lobbyist, but I kind of manage the lobbyists per se but there's 85 people here. We do a lot of other things, but that messaging and communication beyond the beltway, it has to be there. You want to win in populism politics, then you don't do that by convincing the senator or the House member that you're necessarily right on an issue. You do it by convincing their constituents about the benefit of the industry that you're representing in the service you're providing. And then the constituents say, well, this is great. Why are you beating up on the airlines? I got to fly this year when I never got to fly before, or going to the airport and parking my car and actually going to the airport wasn't as miserable that it used to be because I brought my young kids, which can be really hard, as we all know. And guess what? We got fast tracked through the pre check line or whatever it might be, because we're making sure if you have a disability or if you have kids or you have additional constraints on your travel. The airlines really are trying, and it's not 100% perfect, but they really are trying more than ever before to make sure that that experience is as smooth as possible. So I just think there's a lot of ways to win the populism battle that's happening here in Washington by focusing outside the beltway. Positive messaging, you know, being super transparent. And yeah, that all goes back to whether it's on being on CNN or CNBC or having good discussions or, you know, I travel a lot. You know, a lot of it's to visit the members. I was out in Washington visiting Alaska Airlines. I'm going to Chicago on Monday and Tuesday to visit our friends at United and spend some time in Texas with Southwest and American. I'll visit all of them. But it's not just to get to know their teams, but, okay, what are those communities like? What are those agents like? What are the, you know, go spend some time talking to the ticket agents because they get, you know, they're on the front lines of that customer feedback. So I just think it's really important to spend a lot of time outside of the norm to really have an opportunity to do things a little different and message this thing the right way and raise the profile of a national strategic asset that I just think is unnecessarily kicked around a little bit too much. And maybe over time, we can actually get to a point where people are really appreciating what these airlines, what the entire industry has built.
- [46:16]
C
Governor, your point about smoking, by the way, just reminded me that Smoking on planes. At one point in the 1960s, TWA decided to outfit its flight attendants with these paper uniforms they wore over the standard uniforms when you could smoke on the plane. You know, whoever thought that was a good idea? You know, I don't know.
- [46:37]
B
You're kidding me.
- [46:38]
C
I, I know that my dad accidentally set at least one of those paper uniforms on fire at least one time. I still got a job at TWA years later anyway. But what I would like to ask you now is.
- [46:53]
A
I'm sorry, I'm sorry, I gotta stop a paper. Explain this to me. A paper uniform?
- [46:57]
C
Yeah. So it was, it was back in the 1960s and TWA had this idea of outfitting their flight attendants in these different outfits to showcase what a global airline they were. And there was one for New York and London and I think Paris and Rome and I'm not sure what else. You know, it's one of those things that probably sounded great to a bunch of men sitting around a boardroom table, but they clearly didn't think through the reality, you know, execution of it. It didn't last very long. I know that surprises you guys.
- [47:32]
A
Know, I wouldn't know. Are there any airlines internationally, obviously not here in the US that still allow smoking? Does anyone allow it? No, I don't think so.
- [47:39]
B
Right.
- [47:40]
A
But you know, sometimes you'll still find some of those older models, the old 737s or whatever that still have an ashtray in the, in the, in the bathrooms. Right? Yeah, yeah, yeah. I find that hilarious.
- [47:51]
C
So, so I would like to ask you a question about the regulatory environment for airline mergers. Right now there's the proposed merger on the table between Allegiant and Sun country country. And most people view this as complementary. They don't overlap very much. And going in, it looks like something that should pass examination, but you never know. But it's possible other mergers could emerge in the next two or three years time. I'm just curious, what do you and your colleagues at A4A see the environment like for mergers? Do you think it is one that is. Would be supportive to mergers overall or do you think it's going to be tougher than people might expect?
- [48:41]
A
Yeah. So I'll tell you my quick two cents is there should have has to be something really devastating to not allow a merger to happen. Right. We obviously don't have monopoly problems here. Right. We have a lot of competition. Prices are incredibly low. The average price of a ticket right now is, rivals that of a 2019 price. I mean it's, it's deflated. It's unbelievable. Everything else in the world has gone up 35%. So you don't have monopolistic issues there. And so I know the previous administration, the Biden administration, obviously, you know, shut down that, that merger between. And the deal between JetBlue and Spirit. And I. That was a huge mistake because it seemed political and unnecessary and probably did a lot more harm than good. So, no, generally speaking, if it makes sense for the airlines that are looking to do it and you're not, it's not, you know, cannibalizing a huge part of the market. You got to let it go. And I think this administration, again, I would never speak for the Department of Justice, and we haven't had direct conversations or anything, because everybody gets involved with these merger discussions. I think they're. They're definitely more open to it than the Biden administration was. I mean, look, I don't want to get overly political, but there was virtually nobody in this industry that would tell you the Biden administration was good for airlines. Oh, my God. I mean, the regulatory brutality. And sometimes I got in and I just started. The first thing I started looking at was all these different rules that had come up between 2020 and 2024, and it was just. It was wacky, wacky stuff. So that administration just didn't want to look and say, well, how do we make the airline system work better? How do we make it a better product for the customers? It was all about lots of regulation, lots of lawyers, lots of fees and fines in an industry that barely makes any money to start with. So, yeah, I just. I would hope this administration would have an. A positive outlook on it, on mergers. You know, every deal is going to be different, so you got to be careful of that. But generally speaking, yeah, I think you should.
- [50:39]
C
You should.
- [50:39]
A
Should always be in the mode of say yes unless there's a really, really huge, stark compelling reason why. Why it's a no. And so far, the last few attempts at mergers I've seen in this industry probably should have all been yeses, frankly.
- [50:54]
B
Well, Governor, this has been fascinating. We really appreciate your time, your efforts, and your voice, you know. Yeah.
- [51:03]
A
Am I going to get emails from the airline industry mocking me? Who the hell are you?
- [51:08]
C
I don't think so.
- [51:09]
B
No, I don't think so. I don't think so.
- [51:12]
A
That's. That's not. You don't think so. That's not true.
- [51:17]
B
Thanks so much for being with us. And we will be right back with more on airlines.
- [51:21]
A
Confidential promotional support provided by the ultimate Avgeek website, theairxiv.net, a vast collection of airline memorabilia, timetables, route maps, rare cabin and airport photos, special flights and more, all@theairchive.net, the hub of air transport history.
- [51:38]
B
Thanks again to Chris. Fascinating discussion and look forward to checking in with him from time to time as things develop in the industry. All right, Henry, in the mailbag this week we have a recent email just on top of the news. Ryan in St. Louis asks about the suspension of the trusted traveler programs that we talked about. At the top, Ryan says, hi, Scott, I'm a longtime listener. I have thoroughly enjoyed the guest co hosts and have loved the tribute you continue to pay to Ben. Thank you, Ryan. I really appreciate that. Ryan says, I have a question regarding the recent suspension of TSA, PreCheck and global Entry. If there is a budget reduction, why does it make sense to suspend programs that are designed to screen more passengers in less time? Am I missing something? Well, Henry, is he missing something? No.
- [52:37]
C
I mean, I think a lot of people are scratching their heads over the decisions that were made to suspend Precheck and to suspend Global Entry. Both are designed to improve efficiency, improve passenger throughput and take some of the stress and strain out of the travel journey for eligible passengers. If anything, we should want more people eligible for pre check. We should want more people participating in Global Entry because they do expedite the process, they do make things more efficient and they free up remaining staff for travelers who may need extra assistance or justify some extra time with a customs officer as they're coming through. You know, none of this makes sense. None of it. Especially because in the case of cbp, it was budgeted. These are paid for services. It's clearly political. It's clearly designed to inflict pain and, and use travelers as, as pawns, as leverage. And it doesn't matter what your political affiliation is. It's wrong to take this out on the, on the general public, you know, so, yeah, there is no logic here.
- [53:54]
B
Yeah. No, I think what Ryan's missing is, is that it is political. I mean, that's the, that's the bottom line to it. I worry a little bit too. These are, these are programs that enhance safety and security. You know, it was described to me long ago, like with, with Precheck, basically, screeners are looking for a needle in the haystack and Precheck makes the haystack smaller so you have more attention paid to the people you don't know anything about. And I would say Global Entry is very much the same before Global Entry. You remember Global Entry was largely a solution to huge long lines at CBP checkpoints at airports. And I sure as heck hope we don't return to those long lines. I do worry a lot about what happens at TSA security screening checkpoints when screeners aren't getting paychecks. And, you know, are they not going to show up for work because they're not getting paid? They will eventually get paid, but, and we've seen this before, start driving Uber for Uber or other things to be able to pay the rent. And is that going to mean long lines at airports? I think the administration is looking for those long lines to pressure Congress into a resolution. But I hate that airports and airlines are the chosen vehicle to apply that pressure. All right, one other item in the mailbag, Jim from Oceanside, California has some reflections on the labor situation at American Airlines. Jim says, my dad worked at AA for 32 years, beginning as a time study clerk at Newark and retiring as general manager at Tulsa. One job he had when American's general office was still in New York was crew scheduling. Imagine doing that without computers. He hated the end of the month trying to staff all the flights. Pilots would not answer the phone. This was before caller id, not answer the phone close to month end or answer only to say they couldn't fly because they'd had a drink. My point is that intractable labor issues have plagued Americans since at least the 1960s. The unions worked around management to force the US merger. The recent no confidence vote is just more of the same. But I agree that Robert Isom, CEO is being too passive. Imagine what Bob Crandall would have done. Interesting comments. What do you think of the American situation, Henry?
- [56:47]
C
Well, you know, look, we know that American Airlines has been focusing on paying down debt and managing costs, you know, to the detriment of the passenger experience and many other aspects of the airline. My hope is that the airline can figure out a way to address these problems. You know, that ISIM and the board realize they have problems, serious problems to fix. And by the way, I believe they know they have serious problems to fix.
- [57:21]
B
Yeah.
- [57:22]
C
So it's not going to be easy, it's not going to be cheap, and it's not going to be fast to fix any of these things. They're taking steps, but they've got to be willing to write big checks, whether it's for new seats or in upgrading technology or, you know, investing in more new airplanes. But they've got to address the corporate culture. It's not where it needs to be. I realize that there are some issues at play between the Allied Pilots association in Alpa and between the Americans Flight Attendant Union, APFA and afacwa, which represents flight attendants at other unions. But even so, American has got to get its house in order. I believe they, they will do it. I know they, at least they, they theoretically they can do it, but wow, they, they can't let it languish like this.
- [58:16]
B
Yeah, no. And there is a real threat here from United in particular that I think they're only going to prevail. They're only going to win back market share if the employees are out there, motivated to really respond and do well and have a plan that they believe in and a company that they provide, believe in management team that they believe in. So a lot of work to do and we will continue to stay on top of it. Well, that's all for another edition of Airlines Confidential. Thank you. Chris Sununu, great to visit with you and welcome to the airline industry. And thank you, Henry. Always great to visit with you. I really appreciate your insights, your research, your, your knowledge, your experience, all that goes into it. I think listeners really benefit from hearing from you. So appreciate it very much.
- [59:17]
C
Thank you. It's always a pleasure to be on the podcast with you, Scott.
- [59:21]
B
Have a great week, everyone.
- [59:23]
A
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