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Airlines Confidential Podcast
327 - Guest Co-Host Maya Leibman. Guest: Charlie Sultan, President Concur Travel
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Guest Co-Host Maya Leibman. Guest: Charlie Sultan…
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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.
- [00:59]
B
I'm Scott McCartney and I'm joined this week by Maya Liebman, former executive vice president and chief information officer at American Airlines. Maya, March has come in roaring like a lion in geopolitics and in the airline business, and we have a lot to discuss. Welcome back.
- [01:17]
C
Hi, Scott from London. I'm super excited to be back. And you're right, March, what a crazy week this has been. But turning to the airline industry specifically, I'm really looking forward to catching up with our guest this week, Charlie Sultan, who is the president of Concur Travel. So Charlie and I work together at American many times and he's just such an awesome guy and he's gone on to major roles on the distribution side of the business. So we're going to talk with Charlie about everything from like, you know, his take on the state of business travel today on distribution, like what AA got right and maybe got wrong about their distribution strategy. We're going to talk about AI because apparently that's now required by federal regulation in every conversation that you have. But, you know, if you work for an airline or you sell travel or you're a curious traveler, you're going to want to hear what Charlie has to say about how the travel business is changing and developing. I'm really looking forward to. And it's going to be a fun conversation.
- [02:18]
B
Yeah, I'm too, too very much. All right. In news this week, Maya, we certainly had more travel disruption as listeners all know, because of attacks by the US And Israel on Iran. Flights headed to the Middle east and the Persian Gulf were turned around midair. Lots of airspace is now closed and maybe closed for some time as this goes on. There have been attacks on major airports such as Dubai. You know, it's good to remember something like 10% to 12% or more of world international traffic now connects in the Persian Gulf. And so there's a lot of disruption to this. I'm sure hundreds of thousands of people rerouting flights or canceling trips or whatever. It's a rapidly developing situation, and we just hope all those involved and all impacted stay safe.
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C
Yeah. Hear, hear.
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B
All right. Turning to industry news closer to home, Elliott management has adopted the Southwest Airlines point to point model of stock sales, easing out of its position in short hops rather than one big long haul widebody sale, if you will. This past week, the activist investment company sold about 8 million Southwest shares. It's the second batch of share sales since Southwest share price has run up this year on strong earnings expectations. Elliott sold this time at prices above $50 a share, producing a nice return for the company that bought into Southwest below $30 a share. Of course, Elliott has turned Southwest upside down and inside out, pressuring the company to lay off employees, push chairman Gary Kelly out early, charge baggage fees, reconfigure airplane cabins, move to assign seats with fee fees for extra legroom and seat assignments, and remake its board of directors. And now Elliott is saying mission accomplished. Its ownership in Southwest is down to about 9%, and you can certainly expect more sales as Elliott moves on. Speaking of stock sales, last week was a rough one for airlines, and that's before the war started, where higher oil prices and increased flights cancellations and everything else will certainly depress airline stock prices more. But last week I thought was so interesting. It's a turbulent market across the board with uncertainty swirling around and some disappointing economic numbers last week. But overall, The S&P 500 was essentially flat last week, and the Dow Jones transportation average was down less than 1%. But airlines were a whole different story. American shares were down 4%, Southwest and Delta down 5%, United down 6%, JetBlue down 7%. But the big news, I thought was Frontier Airlines, which saw its shares lose almost 15% of their value last week. Not good. And the reason for the weaker investor confidence is in Frontier seems pretty clear.
- [05:36]
C
Yeah. Before we get to Frontier, let's. I just want to go back to what you were saying about Elliot. You know, it's, you said mission accomplished. And I guess, you know, is it. It's like, it was like, what, a year, maybe two years or something that they've been, you know, at Southwest. I mean, clearly the market believes that this new strategy will work and Elliot's being paid on that promise. But, you know, we've always talked about, everyone knows that the workforce is the secret weapon for Southwest. And they've gone through, you know, real cultural upheaval. The first layoff, you know, and so the question is, you know, will these Human costs show up later. You know, they've turned the airline into, you know, just like every other airline in terms of their offering. I just don't want them to become just like every other airline in terms of, you know, their attitude and. Yeah, like that.
- [06:27]
B
So that's a great point. And when I say mission accommodate, I mean from Elliot's point of view, Elliot was only there to make money. I mean, that's, that's all they really care about. Right, right. So they're making money from, from their point of view, Southwest shares were underperforming. The market's saying, that's right. But you're right. I, you know, I, I, I'm on Southwest every week now while I commute to North Carolina. And it's interesting. I think employee attitudes are really holding up pretty good, and everybody's adjusting to the new stuff. They're making changes as we speak in boarding groups and overhead bins to adjust to all that. And the attitude seems pretty good. I've been sitting in row four because you can get assigned seats, and I'm booking way in advance. And that's. So I'm right up front where there have been some battles over overhead bin space. Well, now they're boarding the first three rows in group one and then four and back in group two. But the flight attendants are reserving bins over row four and five or so for those people to get on. So here I come. I'm in the back of group two, and I'm thinking, oh, I'm in trouble with my bag. And the flight attendant standing there with her hand over the bin, and she says, you're in row four. Here's your bin space. It just couldn't have been nicer. I was so appreciative that she reserved that, and she was doing it all with a smile on her face. It seemed like no different in terms of Southwest service. So who knows? One example, and what you said was down the road and how does this hold up? That is the key question. Right?
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C
Yeah. Well, that's awesome. That's a great story. And, you know, that's, that's exactly what that workforce is, you know, just great at delivering the customer service.
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B
Yeah.
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C
So, yeah, hopefully this turns out to be a win, win, win for everyone. Going on to what you were saying about frontier being down 15%. Yeah. That's clearly, you know, what you and Henry were talking about last week in terms of Spirit Airlines coming up with their third life, if you will. Yeah, maybe, maybe they won't get nine lives, but it does look like they're going to pull off an act. Three Investors clearly saw the Spirit resurrection as bad news for Frontier, which had been hoping it will be the sort of the one big low cost carrier in the US and somehow they would benefit from Spirit's demise. But Spirit said it had a new agreement with some key creditors to emerge from bankruptcy recently reorganization in late spring or early summer as a standalone airline again. So the deal is preliminary and it's going to have to be approved by a bankruptcy court judge after a hearing. It doesn't cover one big part of Spirit's borrowing. That's the revolving credit line, which Spirit had tapped fully before it made its second bankruptcy court reorganization filing last year. So negotiations are underway on that. Spirit Citigroup is managing the revolving credit facility. But assuming Spirit can work that out, the company says they will have shed about 5 billion of its $7 billion in debt and lease obligations. It's shrunk by more than half. And Spirit says its fleet costs are going to be reduced by 65%. Listeners are going to remember that Spirit renegotiated contracts with its labor group, so payroll costs will be a lot lower as well. So it's like basically a new airline half the size of what it was. I'm going to call it the. We've got an opportunity to rebrand it here as the Ozempic airline and claiming to be healthier for it. So we'll see if customers find it more attractive this way.
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B
Love that. Yes, yes. Yeah, the Ozempic airline. And you know, one big question to me it seems is, is there any new money coming in with this? You know, we don't know yet, but it's this deal with the creditors. Are the, are the debtor and possession creditors going to put more cash in? Because I don't think Spirit's going to stop burning cash overnight. And so, you know, they're, they're going to need cash to, to make this work, especially as they talk about becoming more of a premium airline, which is, seems to me that's going to be a hard sell. They have such a reputation in the marketplace. You know, they're the butt of the late night jokes and everything else to all of a sudden flip the switch and say, oh, first class and premium economy and good service and all on Spirit. That's going to be, you're going to have to spend a lot of money marketing that.
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C
Yeah. And if they aren't able to raise through this, this restructuring, additional capital, like who's gonna loan them money? I mean, They've just, you know, we just said that they shed about 5 billion of its $7 billion in debt. I mean, there are people who were owed money who aren't gonna get it now. And it's like, you know, I, I'd think twice if I was a previous Spirit creditor to be loaning them more money.
- [11:47]
B
Yeah, yeah. On the other hand, I guess the creditors look at it and say, well, if it's, if it liquidates, you know, I mean, nobody, they're, they're worse off. I just don't know. I mean, Spirit obviously has been for sale and certainly looking for a savior and nobody's come forward. So.
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C
Yeah.
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B
Yeah.
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C
Hopefully they can get by with just three lives and don't need this.
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B
Yeah. So one, one thought for Spirit, you know, unsolicited advice for, for the airline. But I'm reminded of something else Henry Harteveld and I talked about last week. And I'm really curious to get your thoughts on this, Maya, since it's a loyalty program issue and you ran Americans loyalty program for a number of years. You know this stuff. Henry and I talked about the changes United Airlines is making in its program to give preference to members who have a United Co branded credit card and disadvantaged members who, who don't have the credit card when it comes to both earning and burning miles. Henry made the observation that these really aren't loyalty programs anymore. They're revenue recognition programs. Right. You're earning based on what you spend and more significantly, really these days, what you spend with the airline's credit card partner. So the idea of loyalty, emotional as that is, is sort of been replaced by a simple payback for, for spending. So that got me thinking. Are loyalty programs the area where big airlines are now actually vulnerable? And low cost carriers could take advantage to create an effective differentiation, because if they don't create some kind of differentiation, they're going to have a tough time surviving. We've talked in the past about, hey, the low cost guys had a good model and the big guys figured out how to address that with basic economy and a whole lot of other changes. And now kind of the ball is back in the low cost guys court to come up with something that will entice customers back to them. Because big airlines are matching prices and amenities and providing better service than these guys in many ways. I don't think trying to be a mini Delta, that seems to me to be a losing strategy. You got to offer something different, something to entice customers to fly you instead of Delta or American or United. So here's my idea. Offer an old school loyalty program that gives out free tickets after a set number of round trips. Southwest Airlines did this for many years to much success. Pre1996, it was a free round trip ticket after eight round trips within a year. I believe it was originally called the company Club, then rebranded Rapid Rewards. It was simple. You flew 161 ways and you were mailed a paper coupon for a free round trip. Wherever Southwest flew back in the day, they didn't fly very far, right. But you could arbitrage it a little bit. There are a lot of, I did a lot of trips between Dallas and Houston and then use that as a ticket to go to California or whatever. But the loyalty generated went a long way toward winning customers. So imagine if Spirit comes out and says, fly us for eight round trips over say two or three years because they have a lot of occasional travelers and you get a free ticket and maybe make that free ticket comparable to whatever you buy so you can have an incentive for people to buy up. So you buy extra legroom seats on every leg and you get a free ticket for an extra legroom trip. Or you check one bag every trip and your free ticket includes a checked bag. I think you can create a meaningful attainable reward for the occasional traveler. That's the prime Spirit customer. And that's also the customer that United with its credit card, you know, devaluing miles and points unless you have the credit card, that's the customer. United is saying, well, we're not, we're not caring about you so much. So, hey, if I take Spirit this Christmas, I'll get a free ticket. People will game the system a lot of short trips between Fort Lauderdale and, I don't know, maybe Atlanta and then use the free ticket to go to Lima, Peru. Great. So what, you know, please, customers game the system. Fly Spirit. That's the, that's the whole point. But they, they need to offer something the big guys can't match or won't match. And the big guys have saddled their loyalty programs with so many rules and requirements and cheapened the value of their miles and points so much that I think this is now the area that low cost carriers could exploit. They need to keep it simple, they need to keep it rewarding. But giving people real incentives to buy tickets on your airplanes could, could really help them win back customers and build real loyalty. I don't know. Am I crazy? What do you think, Maya?
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C
I don't know, Scott. I think a little crazy. All right. Here's what I would say. So first, like a little history lesson. So originally these loyalty programs really were revenue based programs because they came right around the time of deregulation. So advantage, you know, the first loyalty program was like I think 1981. So just a couple of years after deregulation and, and during regulation, basically the fare that you paid was super correlated to the distance that you flew. So you would, like the original programs, you flew a mile and you earned a mile. So the longer you flew, the more miles you got, but the more you paid for that ticket. So even post deregulation there was still a pretty high correlation. But then over time that paradigm sort of got broken because now in a deregulated environment, the fare paid was based on the competition on that route rather than sort of the distance of the flight. So now you would have a cost. A flight from Dallas to El Paso would cost more than a flight from Dallas to la. So now the value of the rewards was not commensurate with the value that the airlines were receiving. And so what business would do this, this, you know, and the only reason I think it took so long to convert back to a revenue based program was because, number one, it was a decent sized internal effort. You know, there was a lot of things that needed to change internally to be able to recognize revenue and reward somebody based on revenue rather than, you know, the, what was really simple, which was fly a mile, earn a mile. And of course, you know, the customer pushback that people didn't want, you know, it's like, wait a second, you told me it was 25,000 miles per, you know, and I get a free ticket. So you can't change the rules of the game on me now. So they started as revenue based programs. They kind of fell away with from that just simply because of the nature of fare changes. They went back to the revenue based programs. And I think that you don't want people to game it. Flying, you know, from Fort Lauderdale to Atlanta eight times and then using your ticket to go to Lima is really a bad, you know, proposition for them. For them. So it's like losing proposition. Yeah, that's why Starbucks doesn't, you know, why you don't do a punch card. You know, your local cafe doesn't have the means to do something. But you, you know, you get this punch card so that the person that bought the 79 cent drip coffee, you know, gets the same REWARD after buying 10 of them that the person who bought the $5 latte does. But at Starbucks, you know, the rewards program is, you know, your stars are based on what you're spending. So the, at least I think it is the. Yeah, yeah, it's complicated. I've never really actually looked at it, but anyhow, so I don't agree with your great idea, except to the extent that one, I do think there are things that Spirit should look at doing that the majors aren't doing to set itself apart. And two, I do agree with trying to keep it simple. What I like and what I really don't think the majors would ever do is this idea of pooling. So your family of four. Like you said, these spirit travelers are generally occasional travelers. So getting them to fly 161 ways or something, I mean, that's a lot of travel. So the challenge there is like, I'm price sensitive. I'm on Google flights, I'm sorting by fare and I find spirit, so that's why I take them. But next time I could find Frontier or Legion or somebody else who's cheaper and I would just go with them. What I want to do is keep you on Spirit, even if I'm $5 more. And so I need to make it so that even if you're traveling infrequently, you're going to get a reward sooner than you know, because it just takes too long for 16, you know, flights. So let's pool so your family of four all count together. You don't all get a free ticket after, you know, you, you, you can pull it, pull it together so that the next. So let's say you're flying twice in a year with your family of four. Now after your second trip, you, one of you gets, you know, you get sort of that pool gets one free ticket. But that's still, you know, it's better than waiting, you know, four years for that. And, and I think it, it's exciting. You could put together a group of friends that every year you're going to do a different trip and every year someone's going that trip for free, you know, over the course of four years. And it's just, I think there's a lot of fun things that you could do with that.
- [21:49]
B
Yeah, I love that idea. Yeah, I mean, I think, I think that's great. But yeah, I mean, even if, even if they end up losing money on it, I think in the, in the long run they're going to gain because you got to get people not only flying Spirit, trying your product if you are offering better service or whatever, you know, you went over some, some customer loyalty. But I. I don't know. I. You know, I think, I think the big guys did really well for a long time with people gaming the system. And I, and I think Spirit's in a tough hole and when you're in a hole, stop digging. Yeah, they got to do something different. So. But I, I love the pooling idea. I think that's great.
- [22:35]
C
We've solved it. We've solved.
- [22:36]
B
Okay, good. Never, never thought we'd say this. We save Spirit. No. All right. Time now to thank our sponsors who make this podcast possible. Thanks to rtx. 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. 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 the 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, 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.
- [23:53]
C
In addition, thanks to Cirium, Cirium offers the most accurate and precise data and analytics to enable airlines to optimize planning, 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. Okay, let's bring in Charlie Sultan.
- [24:19]
B
Charlie Sultan is president of Concur Travel, the travel management arm of software company SAP. Concur, as I'm sure listeners know, provides expense management software as well as booking tools to companies. Charlie has an undergraduate degree from Wharton and an MBA from Northwestern. His 28 year career has been split between SAP Concur and American Airlines, where he held leadership roles in revenue management, financial planning, corporate and distribution, strategy, loyalty marketing, and more. He's now leading Concur's new strategic alliance with American Express, GBT and the launch of a new solution called Complete, which is billed as a quote, revolutionary new travel tool and expense platform. He and Concur are involved in developing artificial intelligence tools for travel. In short, Charlie has been involved in the airline business from many different sides. And it's a pleasure to. To have you join us on Airlines Confidential.
- [25:21]
D
The pleasure's all mine, Longtime listener, so thanks for having me.
- [25:25]
B
Great, Charlie. We always start, as you know, with what we affectionately call the Baldanza question. Ben Baldanza, co founder of this podcast after stepping down as CEO of Spirit Airlines, loved hearing everyone's story of how they got into the airline business. So how'd you get into this crazy business?
- [25:44]
D
Yeah, the. The famous Baldanza question. I actually. I love hearing everyone's answers to this one because for the most part, it seems like no one really plans to get into the airlines. You just sort of fall into it, and then you're, I think, lovingly stuck for life with it.
- [25:55]
C
Yeah, you get sucked in and then you never get out.
- [25:59]
D
Pretty much. Pretty much. You know, it's funny. I think the first thing I ever wanted to be in life that I remember was an air traffic controller. And I don't know why I heard it was high stress, but you got to work with computers. It had something to do with airplanes, and so I thought that was cool. And as I got older, I kind of had forgotten a little bit about that. But I was actually an undergrad at Wharton, going through the business program there, looking for a marketing job. And American Airlines had come recruiting on campus, and there was a posting in the system, but it only said MKT analyst, which in my mind was a marketing analyst. And so I thought, cool, I'll go do marketing for American Airlines. Well, I didn't really read the job description too much. It turns out it was a market analyst, not marketing, but a job in pricing and yield management. I interviewed with Rob Borden, who had come to campus. He actually picked me to go back to interviews in Dallas. And it's funny, I had interviews in New York with American Express where I had interned. I had interviews up in White Plains with General Foods. I think that was in the process of being merged with Kraft. And so I went to New York, and, you know, it was a one of the stereotypical 35 degrees, kind of wet, rainy days. You're kind of going through the hustle and bustle of the trains and people trying to hand you stuff on the streets. And then I think a week later, my interview was in Dallas. I got flown down in first class. I got an ice cream sundae. I landed in Dallas. It was like 72 degrees. The birds were chirping, the skies were blue. I interviewed with some great people who just sounded like they were working on really Challenging, fun sounding projects. You know, they were figuring out how to deal with startups like Vanguard and AirTran and Ata and what they were going to do with the pricing schemes. And the other thing is, at the time, American was hiring probably about 10 new undergrads and 10 new MBAs a year into the pricing and yield management group and into the finance group. And so it had a really good collegiate vibe to it. And I sort of discovered that airlines are this amazing mix of customers and regulation and people and data and analytics, psychology and chaos, really. And. And I was just hooked. And before I knew it, I was deep into the pricing and yield management. And I think, like we said at the beginning, airlines just have a way of getting your blood. And eventually I met my wife there and most of my close friends there. So you really do get sucked in.
- [28:08]
C
That is so true. You and I joined American kind of around the same time. And one of the things that was so great about it was that it was an organization that really valued a breadth of experience, and you were really encouraged to look around the whole airline. So, I mean, you have had a career. You did work in pricing and yield management, in distribution and sales and finance and loyalty and strategy. And now you're in travel expense and booking. You know, just like, it's so broad. Was there anything that really stood out to you? Like, this was my favorite job ever, or, you know, something that really appealed to you?
- [28:54]
D
Yeah, geez. You know, I think it's funny because all those things that you talk about are things that, as I would go on recruiting trips over the years, you would talk to people on campus and you would go to classes, and I got to teach a few classes here and there. And it was the breadth of how you got to move from one department to the next and really learn the business from all the different angles. It was a huge selling point. And I would say I always liked being close to the decisions that mattered and I wanted to influence the outcome. And as you know, each of those departments at American was very heavily quantitative. And I would say that probably while I was doing each job, each one seemed like my favorite, really, except for financial planning, I think, where we were definitely in the heart of things. But at the time I was there, we were running a cash model every day to see if we needed to file for bankruptcy. How long we had, you were listening to capital requests. That seemed very reasonable, but you knew that you had to conserve cash. But it was great in that place to get to work with Brian McMenamy and see Tom Horton and Bev Goulet and Candace Irving and Peter Warlick and Michael Thomas. How, how they operated, how they thought pricing and yield management, though they got rebranded to revenue management, was such a great place to start and learn the business. And apart from the collegiality of it all, you really, you guys dedicated a whole episode with Professor Doug Parker on this. And I would say that really only scratched the surface, really, the vast amounts of data, the analysis, the decision making, working on low cost carrier strategies, the. The annual revenue forecast. I would say that that was probably really formative. I got to work with Elizabeth Jenninger early on, who taught me how to be an analyst, and Kathy Bonanno. The domestic group when I first started was being run by Craig Krieger. And so just to be able to see him operate and how he ran an all hands meeting, how he communicated, how he ran the department, you know, I think that was a foundational learning point for later in my career. As I mentioned earlier, I met my wife there. I got to work with Jim Butler, who you guys have had on earlier, and Derek Dacross and Kurt Stachi, and people have become my lifelong friends. So, you know, at the time, that was a highlight. And then after I went to grad school, I came back into the airline profitability, or what is now, I think the strategic planning group. And that was awesome because we got frequent exposure to the CFO and the CEO and got to hear what they were thinking about and what they were worried about. And we got to analyze which routes were profitable and look at potential mergers and strategic relationships and weighed in on what routes they enter there. I got to work with Kenji Hashimoto and interact with James Beer and Tom Horton, Gerard Arpi and Ralph Richardi and all these guys who are all very different, but you got to sort of see how their brain work. And I think in that group, I was working for Varas Vahidi. And so you got to see how he sort of masterfully operated and sort of kept everything moving and how he went through it. But I would say I probably love my roles in sales and Advantage the most. Um, you know, in sales I got to work with David Kush and Maria Sebastian and, and Jill Cerdic and Chris de Grode and Patrick Quayle and, and Vasu and Cory Gardner. And man, that. That was such an all star team. And of course in Advantage partner marketing, I had this amazing boss in Maya Liebman.
- [32:07]
C
I was waiting for that one. I mean, 100 of my favorite people, but I was waiting for Mine?
- [32:13]
D
Well, you know, I, I, I, I met you sort of really early on in my career, but I think that was the first time we really worked together. And that was so much fun. Fun. And I learned so much from you as well. And you pretty much would always have. It didn't matter what audience you were talking to, you had them eating out of the palm of your hand. You were so considerate and you were so kind and you were so thoughtful and it was great to sort of work with you. And you took feedback and you listened for opinions. I got to learn a lot from Bridget Blaise Chemai and Suzanne Rubin and just a lot of really fun customer facing projects in that group and thinking about the customer, and that was fun. And loyalty, really, it looks like it's a marketing program from the outside, but it's really just a balance sheet business that's disguised as a customer program. And I think what those roles and sales and advantage had in common was getting to work with the external parties. So meeting with corporate travel buyers, working with travel management companies, getting to revise the commission structures, the corporate discounts, negotiating with Sabre, negotiating with Expedia, creating a new credit card with Citibank. All those things were just so much fun. And really, I think sort of as you talked about it, what I enjoyed most of my career is working across the functions. And once you start sitting in enough different places, you start understanding how your decision impact other groups and how the decisions ripple through. But I guess long, really long answer to a very short question. But if I had to pick one, I think my favorite was probably Advantage.
- [33:39]
C
Yeah. You know, I might actually say the same thing. And God, that was so great listening to all those names. It's such, they're all such quality people. And we had so much fun. But I get why you didn't love the finance role. You're like one of the most creative idea guys I've ever met. And that kind of thinking in finance is what lands you in jail so that you got out of there pretty quickly.
- [34:08]
D
You know, I think it was David Kush at one point who had said, hey, if you want to succeed in this world, you have to learn how finance works at a company. And he was right. I mean, the skills you learn running the budget for a company of that size, running the capital planning, going through the bankruptcy process, planning process, you do learn a lot. And so it was sort of one of those, you know, take your medicine, learn a lot. But not something that I really relish and want to do.
- [34:33]
B
Again, Fascinating, fascinating. Love, love hearing you guys talk about all of that. So, Charlie, it seems like there's a lot of change going on on the distribution side of travel. Amex GBT doubled in size last year by buying CWT for $540 million. Travel technology company Sabre has been struggling of late. What's your take on distribution in general? What does the disruption mean for the industry?
- [35:02]
D
Yeah, it's a really interesting question. I think if you take a step back, distribution is probably going through exactly what you'd expect when the system that was built decades ago is being forced to modernize. Let's talk about Sabre and Travelport Amadeus. The GDS is first. I think those guys were the original platforms before being a platform became a very sexy word in technology. They offered a system where most of the necessary content was there. It responded almost instantaneously looking at so many different permutations. And that really allowed for travel agencies to scale and operate using the GDS technology. A travel agency could use them for their profile, the shopping, the booking, the servicing, you know, and, and pretty much became the one, one stop shop to be able to create an agency. I mean, the interesting thing is as they, as the GDSs were being founded mostly by airlines that they realized that the switching costs were going to be high for people to migrate from one to another. And, and so they went out with this model that they would incentivize the travel agencies to start using them by paying them signing bonuses, by giving them a fee every time they made a booking, and pretty much by outfitting the agencies with the hardware. And really it's sort of now, as you look at it, it seems like an absurd business model where the agency actually gets paid to use someone's technology. And so, you know, the GDS takes money from the airline, then gives a portion of it back to the TMC to encourage them to stay with that gds. And in some cases they take a portion of that money now and give it to the corporate buyer as well to encourage them to use the gds. So they've put themselves in a really difficult position because I think even if they wanted to change the model now, they have so many financial commitments to these agencies and it's such a competitive landscape and one that served them well for so long that they sort of don't know any better, right? They grew their market share this way and they got to a point really where they just couldn't keep up with the necessary investments to, to deliver. But you know, I'll tell you, the airlines are also to Blame. I remember I was running our distribution strategy group, I think sometime in 05 and 06, and I remember having meetings with Sam Gilliland and Tom Klein, who were running Sabre at the time. And you know, we brought them into a room and we're like, hey, we need you guys to invest, we need you guys to modernize. We have all this low cost carrier competition and your system doesn't allow us to differentiate our product because you're not allowing us to show enough attributes. And we end up sort of matching fares, even though our product is a lot better and we don't have a way to upsell people. And then in addition to that, we're making large investments in product overall and we have no, no ability to showcase this. But so the message we told the GDS is, hey, we need you guys to invest millions in your platform to make it better, to modernize it. And we'd like to pay you less than what we paid you in the past. And so sort of, in retrospect, it's not difficult to understand why they weren't jumping at that opportunity. And, and so, you know, I think that the GDSs were sort of trying to milk the cash cow as long as they possibly could. And so now I think that they're paying the price for it. I think on the agency side, I think we've seen massive consolidation in the travel agency space, honestly, some of which was actually probably funded by some of these GDS bonuses. And so as you said in the, in the US market now you have amex GBT that after their CWT merger is huge and you've got bcd. And so probably those two guys now account for almost two thirds of the managed travel business. And it's ironic because the airlines, the hotels, the travel suppliers really help to accelerate this. Right? The bigger you are, the better commissions you can negotiate, the better the GDS inducements you can negotiate. And so as a larger tmc, you sort of look at some of these smaller agencies and you can actually make a pretty robust ROI of just buying them based on the fact that you can probably get 10, 15, 20% higher revenues from each of the suppliers just by putting your name on it. And then you do have a lot of duplication of technology that over time you can get rid of. And so you can get some synergies on the cost side. So, you know, I'm not surprised. And I say the suppliers accelerated the merger activity because I think that the tech angle would have also forced this to happen. Right. And you sort of Got to an environment where the GDSS could no longer provide everything that was needed. And so the agency needed to invest some of their own in some of their own technology and some of the other players. And I think you've reached a point really where the investments that are needed to maintain and run an effective travel agency are so big that you really need a large base of customers and transactions to be able to defray those costs over. So I think you're going to continue to see consolidation of the long tail, the regional players, other geographies maybe that haven't experienced it yet. And so I think the consolidation continues.
- [39:34]
B
Interesting. So interesting. And with that disruption, I think this kind of ties into this, the disruption discussion. But Vasuraja, you mentioned before, famously pushed companies to book directly with American rather than booking through those travel management companies. It cost American a lot of corporate business. But, you know, in some ways, people, a lot of people have suggested that American was directionally correct, just wrong in its timing and wrong in its tactics of how it went about pushing this change. What do you think? Will that ultimately be the future, especially as AI tools take on more and more management of travel?
- [40:14]
D
Yeah, it's an interesting question. I think a couple things. One, I think the strategy obviously of wanting to accelerate to have technology providers display the product, display the attributes, allow airlines to not be treated as commodities. I think you had a guest on earlier where you guys talked about that. I think that strategy is right. I think ndc, the new distribution capability allows for attributes and things that are not WET. The traditional GDS and the traditional 26 letters of the Alphabet and the closing and opening of buckets that Doug talked about in a prior podcast. So I think the desire to want that, to accelerate was valid. We've seen airlines like Lufthansa that started charging a distribution cost surcharge to try to create pain, honestly, and to try to say, hey, if you're still going to access things through this channel, it's going to cost you more. And to try to motivate people. And we've seen Qantas and other airlines take continent away to, to try to do that as well. But none of that really seemed to be moving the environment as fast, I think, as, as American wanted the environment to move. And I think the reality is that the travel agencies, the corporate customers, the online booking tools, the GDSs, they all wanted more time. And partially I get it, because the more time you give people, the more time they take and the longer everything takes. And so American wanted to create the Urgency. And so I understand that desire, but I think in their quest to drive urgency for the tech providers, they really caught their customers in the crossfire. They really soured the relationships with the TMCs, with the tech providers, because the underlying technology that people wanted to use, the gdss, wasn't ready to do it. And then on top of that, I think you layer in the fact that the people from American that had the relationships with the travel buyers, with the TMCs, that could have explained the strategy, that could have defended the behavior, that could have made the process less painful, all of those people were pretty much let go at the same time. And so it's sort of tough to undertake that large systemic change and not have people there to explain it. And so the people who were left to explain it were the travel agencies who were not very happy with the, with where things were going there.
- [42:22]
C
Yeah, well, I also think there was some context, you know, it was, I think that American, we saw an opportunity with sort of the tail end of COVID when there really wasn't a lot of corporate travel. You know, was this finally the opportunity to do what needs to be done, which is rationalize this crazy business model. And, and so I think that that led to a little bit of the urgency behind it all. But moving on from that, just tell us what your take on sort of the state of travel overall is. You know, we've got international issues. There's, you know, we talked about corporate political issues, all sorts of things happening. What, what's, what's going to happen with travel?
- [43:04]
D
You know, I'd say, I guess my answer to this is probably formulated without really taking into effect the full effects of sort of all the stuff that's happening in the Gulf over this past weekend. But I think, you know, travel demand has been remarkably resilient. And I sort of kept looking at the data, expecting that we were going to see, you know, international travel be way down over the course of the last few quarters and that hasn't happened. It's held up a lot better than most people expected. And I think corporate travel is probably, you know, it's a little bit more nuanced. Obviously, you know, there are things that people are now doing over, you know, over virtual meetings. And so I think the meetings now are more intentional. Maybe it is fewer trips, but more important ones. I know in my case, you know, I, I'm really, when someone comes and asks me to go speak at something for a 45 minute session, to go to, you know, to, to go take a Plane ride for three hours to do it or to go to Europe to do it. I just, in the past, I may have done those things. Now I either turn them down or I figure out if I could structure a series of other meetings around it. So I would say travel now is a lot more intentional. Companies are scrutinizing the roi, the sustainability impacts, maybe more so in Europe than here in the US and the traveler experience as well. And so I think the days of like, hey, just book the trip and go are gone. And that's probably a good thing. But I think that one thing people did recognize in Covid was I can do, I can do enough with virtual meetings, but ultimately I need to go build and foster a relationship with you, and I can't do that over a computer screen. And so if I want to start a relationship, if I need to nurture a relationship, if I need to figure out what's really going on, so much of that happens face to face. And so I think that travel is still here and haven't really seen it diminish.
- [44:50]
C
Yeah, I think that's right. And when you look at sort of the demand for aircraft based on what people are forecasting for the future of travel, it really feels like it's going nowhere else but up.
- [45:03]
D
Yeah, I think you're right.
- [45:05]
C
Okay, so since it's federally mandated that we talk about AI in every conversation, what's your take on AI in the context of corporate travel?
- [45:16]
D
I've got a few hot sports opinions on AI, but I think, as most others, I do think it'll be transformative. I think you have a few flavors of it, but it is moving fast. Right. And so like at concur, we've been using some flavor of AI for over a decade. Audit expense reports to help itemize hotel expenses. But what we've seen is using the latest technology and even applying it to those use cases, we've seen very large improvements in success rates. And you know, it's funny, over two years ago, we did a survey of travel managers and we were asking them what their thoughts were on AI, and they were like, oh, it's interesting. They were a little bit more worried about it. They were worried how it was going to go. And I would say this past year it was almost like a check mark item where we were just being asked by companies, you know, how, you know, they, they were being asked themselves how they were using AI. And so they were coming to us because they wanted to check a box that say, oh, yeah, I'm using vendors that are using AI. And I do think the reality is that you have different flavors of it, right? Some of it. Some of it, you know, we can call AI, you know, we used to, we used to call it. Other words, I would say, you know, whether it was big data or whatever in the past. And I think some of that, if done right, the traveler doesn't even know that it's AI, right? And so one example is we've started recommending flights to the traveler and the booking tool based on their history, their loyalty numbers, their company preferences, the policies. And so now travelers, they still have all the options, but if they don't want to keep scrolling, they're seeing more relevant things at the top because we're using a lot more data and we can access a lot more data faster. To make the recommendations more personalized, more relevant. We created a jewel booking agent which allows you to access it from any SAP application. So you don't have to just come in to concur. You can be in your CRM tool, you can be somewhere else and just ask the booking agent to help you find a flight from Dallas to London. We launched something like a meeting planner, again, which allows you to do multiple things at the same time. So now if I want my assistant to, to help me plan a team meeting, she doesn't have to figure out, you know, in the past it'd be like, okay, how much is airfare from LA and from Seattle and from Atlanta and from San Francisco and should we do it in Dallas or should we do it in Denver or should we do it in whatever? And so now she can just put the parameters in and the search tool will do all of that. And so that frees up her time. But I think to me, the really cool thing that is coming is really with agentic AI, right, and having effectively these agents that could effectively talk to other quote, unquote virtual agents on your behalf. And so, you know, I think for the traveler it could mean stuff like, oh, I see that you put a conference on your calendar that's in Vienna and you live in Denver. Do you want me to look for flights that get you in the day before? And hey, I know that you, I know from your profile and your background that you normally stay at Marriotts and Hyatt's, and so here's the closest one to the convention venue, you know, do you want me to book them for you? And I see in SuccessFactors or whatever your vacation management system is that this is at the end of the year, you're gonna have three vacation days that are still unassigned. Do you want to extend your trip by three days and use your vacation days? And do you want me to automatically go to the system? And so I think there's a lot there. You know, from a traveler perspective, I think for the finance and accounts payable groups, this could also become a real game changer. Funny, back to the financial planning days. I remember a very standard thing that we see happen a lot of companies is this notion that the CFO comes out and says, hey, we need to cut our spend by 8% and everyone gets an 8% reduction in travel and whatever else. You could see a situation in the future where the tools, if these agents are talking to the different pieces of the platform and they're not siloed, the system can easily go in and say, oh wait, the Western division is actually underspent on budget. And their attrition forecast show that these key accounts are up for renewal. And you haven't visited these accounts in over a year. And our competitive intel system tells us that a new player emerged in that market. And so we actually think you should increase your budget to the Western division. And hey, while you're actually out there visiting those accounts, visit these three other accounts as well because they're nearby and they're sort of due to be visited sometime soon. And so I think these pieces of data that are in different systems that you would have normally asked an analyst or someone would have said, hey, why don't we also do this while we're there? The systems would be able to do that. So I do see a lot of opportunities for better interconnected decision making. And I see these tools giving recommendations without the analyst maybe even needing to ask the question. So I think if you've got really good data, you've got really good data security. I think that all plays in very nicely together.
- [49:38]
B
That's so interesting. And you mentioned some customer facing stuff. I think disruption is an area and disruption can get complicated when you're on corporate managed travel and the airline says, no, you got to call your travel agency, not your travel management company. Could AI be, hey, my flight just got canceled until tomorrow or whatever. Airlines try and offer alternatives, but it seems really weak at this point. But I need a hotel room for the night, I need a new flight out in the morning, and I don't want to call two different entities managing my travel.
- [50:26]
D
Yeah, I think that's a great point because I think most of us airline geeks and my first stint at American was in this day of Departure group where we were effectively trying to figure out what was going to be delayed and what was going to be oversold and where we could accommodate more people. And so when I travel, I'm still a geek and I'm looking at these flights and so I'm actually looking, hey, where's my inbound airplane coming from? And is that flight going to be delayed? And sometimes you look and you see that, right? And you realize, hey, the plane that I'm supposed to be on is actually going to get in, you know, maybe after the boarding time, but they haven't updated the boarding time yet. And what you may not know is, hey, are they planning an aircraft swap or something else? But you could actually be more proactive than even what you're discussing, Scott, which is you can look and see, hey, it looks like that inbound plane is late. It looks like this weather system is going to be over the airfield when my plane is supposed to land. And so I can actually start predicting the likelihood that your flight is going to be delayed and start looking, and start looking at, hey, you know what, you're already at the airport. There is actually a flight that's going to leave. You know, you thought that flight was supposed to leave an hour earlier, but that one's delayed by 20 minutes. Let me re accommodate you on that one. And so again, I think that these large language models, I think that the agents can now just talk to each other. And the fact that we now each have a device that we carry around with ourselves that allows someone to prompt you. So very easy for any app to now prompt you and say, hey, Charlie, this is United. It looks like you're somewhere in the terminal in the B concourse. If you just go to gate B23 right now, we can get you on this flight. Do you want to switch flights and click yes. And to your point, if not, if you're already on the plane, hey, you are going to be delayed, you are going to misconnect, you need a hotel, all of that stuff. Agents can now, basically, you know, the technology is growing to be able to have all these agents talk to each other and sort that out for you. So I think there's a great use case there.
- [52:11]
B
Yeah, yeah. So concur. Since its inception, has worked across all TMCs, but with the new strategic initiative with American Express GBT, maybe that's changed. Can you talk about what the new initiative is and why you abandoned sort of the Switzerland agnostic view of all TMCs are created equal?
- [52:36]
D
Yeah, I wouldn't Say we've abandoned the all TMCs are created equal. I think we haven't moved away from working with everyone, we still do and we want to make sure that our customers can still be supported by their partners of choice. But one of the things that we saw Scott, is as we were rolling out the new Concur Travel over the course of the last couple years, we couldn't move as fast as we wanted to move because we worked with so many different TMCs who each had their own mid office, their back office, their processes, the different reporting things that they had integrated over time. And as we wanted to make changes they rightfully each wanted the chance to test and certify and modify and see all the downline impacts. And so the problem to that is that we would be out there talking to customers and telling them about some great new feature that we had and they're like, yeah, I don't have it yet. Yeah, my TMC is not ready to move yet. And so we were in a frustrating position where we had competitors who had maybe a better looking UX at the time or had features and functionality that we didn't have in our legacy system and we couldn't get customers turned on even though we had it. And so some of those customers were looking at potentially changing tools because of that. And so we needed to figure out a way to move faster. And so we said, hey, we need a partner who can move fast with us, who's motivated to do that. And we want to make sure obviously that we're always meeting the needs of the market. And obviously for us, GBT is one of the Premier TMCs out there who could also inform where the market is moving, who also has thoughts on how we can help enhance and accelerate. And so we decided to partner with them so that we could still continue to build new Concur Travel and continue to modify that, but on top of that have additional resources and additional people working on this new view that maybe matches what we're doing. I sort of, I describe it to people, I don't know if you guys remember years ago that Eddie Bauer and Ford partnered to make an upscale suv. And so it didn't mean that Ford wasn't still making the other models, it just meant that there was another model that they were co branding with Eddie Bauer and working on together. That's sort of what we're doing here. We're still working on new Concur Travel, but we have sort of another version of it that we work with GBT where, where A lot of the things are going to launch first with them where a lot of the things we're going to be able to work closely together to incorporate AI and incorporate some of the other streams that in the past we might have just tried to do with committees or try to do over a long term period without understanding as well the downline impacts.
- [55:02]
C
That's a pretty interesting approach. It sounds like you're trying to get sort of the best of both worlds.
- [55:09]
D
So yeah, I think that that's exactly it. And I think we're, you know, one of the beauties of this really is, you know, we were talking earlier about kind of the American strategy and this is really common across most airlines. Distribution strategy is you create, you want things to happen in your world and so you sort of throw things over the fence at other parties and have them deal with it. And I think this was an effort to say, hey, instead of us throwing stuff over the fence, how about if we iterate together on this? How about if we pre plan together and create our roadmaps together so that I'm not launching NDC with Qantas while you're busy working on NDC with Singapore? And so I have it on one and you can't support it and you can support another one, but I don't have it. How about if we better coordinate so that we're in task and you know, so 50, at least, at least all of our customers can take advantage of that as soon as it's available.
- [55:58]
C
Yeah, fair enough. All right, last question. Charlie, tell us, do you miss the airline industry after all this talk of distribution?
- [56:07]
D
Yeah, well, distribution is one of those funny things. It's also like the airline industry. I think once you get sucked into distribution, you sort of never, never shake that bug either. But if you can't hear that, the passion and the excitement in my voice just talking about this stuff, I mean, I, I definitely miss the people. I miss the pace, the adrenaline, the chaos, the challenges. You know, you're sailing along, running your business one day and all of a sudden the airspace over El Paso is closed or the Caribbean is closed, or a volcano, ash clouds closes a corridor over the North Atlantic or the bird flu hits. And so I think that the fact that you never knew what was coming, right, and you had this perfectly planned out strategy and you're executing on it, and then a weather event comes for three days and displaces everything and sort of throws everything. But I think that's sort of what makes it addictive, right, Is you can make 10 good decisions, and then that weather event just wipes them all out. So, listen, I think there's many days where I'm grateful that I'm not directly in the industry. I think during COVID I was very happy to be sitting at a technology firm and not at a travel provider. And I still get to be very tangentially involved and I get to work with a lot of great people at the airlines and hotels and car rentals and sort of get to see the business from their perspective. So I think I've tried for the last 12 years to convince myself that I don't really miss it. But, yeah, I definitely miss being in an airline, being in the airline industry, driving the strategy. And I think that's actually one of the reasons why I really enjoy listening to this podcast. Right. Is I get to feel like I'm still plugged in and still get to hear what's going on.
- [57:42]
C
Yeah, I hear you. It's hard to shake the bug.
- [57:46]
D
It really is. And there's just so many great people and so much fun in the industry that personally I've met so many great people through it that are lifelong friends. So an awesome place.
- [57:57]
C
Yeah, I hear you.
- [57:57]
D
Highly recommend.
- [58:01]
B
Well, Charlie, this has been fantastic. We do hear the passion for both distribution and airlines and just absolutely love it and appreciate all you've done to improve travel in your career. So hope we can check in again as things progress. But love having you on the show. Love having you as a listener as well. Thank you so much.
- [58:26]
D
Yeah, yeah, no, this has been a thrill for me. So thank you so much for having me on and thanks for keeping the legacy alive and keeping the podcast going.
- [58:33]
B
All right, we will be right back with more on airlines confidential promotional support
- [58:38]
A
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 transportation history.
- [58:53]
B
Thanks again to Charlie. Great conversation. Really, really appreciate all the insights. Before we get to the mailbag this week, Maya, we want to thank our other sponsors for making it possible to produce and deliver the podcast free on all platforms for all listeners. Thanks to Ontario International Airport, which is celebrating a decade of local control. Thanks to public support, the local community reclaimed onto 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 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 ont into one of California's fastest growing and most economical airports, thanks to our newest
- [59:46]
C
sponsor, the Executive MBA in Aviation at the University of Colorado Denver. The Executive MBA in Aviation at CU 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. Go to business ucdenver.edu to learn more. That sounds so cool. I wish that existed when I was
- [60:25]
B
really is a very cool program.
- [60:26]
C
Yeah. Okay Scott, what's in the mailbag?
- [60:29]
B
Well, first Maya, Steve from Canton, Ohio is going to solve an interesting airline mystery for us. Steve says hi Scott, longtime listener, second time mailer. I absolutely love the show. During your conversation with Chris Sununu from A4A last week, he made a joke about old 737s having ashtrays near the lav. These ashtrays are actually a requirement on all aircraft operated in the US on new and used aircraft due to AD 7408 09. My understanding is that this airworthiness directive is a result of a laboratory fire on VARIG Flight 820 that resulted in many passengers perishing from smoke inhalation due to a suspected cigarette in a lavatory trash can. As a former director of maintenance, I get asked about these silly ashtrays a lot and wanted to take this opportunity to educate the flying public that they're there for a reason and when they come up missing, it can ground the aircraft. Thank you, Steve says. Well, thank you Steve. Great information. I looked up varig 820 and you're absolutely correct. Of course that was a 1973 Rio de Janeiro to Paris flight on a Boeing 707 that made an emergency landing in onion fields about two and a half miles short of Orly Airport in Paris due to smoke in the cabin. 123 people died. There were 11 survivors and the cause was indeed thought to be a lit cigarette thrown in bathroom trash. The airworthiness directive that Steve mentions is, as he said, still in force. When I looked it up, it said Last revised in 2012, it only applies to aircraft with paper or linen trash receptacles. So I think that's probably why you don't see it on every airplane.
- [62:29]
C
Well, that is very illuminating. First off, how sad is that? I didn't Know about that, that 123 people died in that flight.
- [62:38]
B
It was interesting. And 707. And you know, one of the main safety changes that's happened over the decades is materials that burn much better, much less resistance to burn. And when I looked up that crash and the 707 didn't have that advantage, those people all died of smoke inhalation, carbon monoxide, and very quickly, because of how the smoke spread through the cabin, how the fire spread, airplanes today much more equipped to be survivable in those kinds of accidents.
- [63:13]
C
Oh, okay, well, that's good to know. But speaking about present day, like, wouldn't you hate to be the pilot? Like, let's say something's wrong with that ashtray. That has to explain that the flight isn't going to go because of a ashtray in the lav. I think people would lose their minds. Wait a second. Not only can I not smoke, I absolutely can't smoke smoke in the lab. So yeah, I would go nuts. Like, are you serious? This is why the flight's not going?
- [63:41]
B
Yeah. No. Take a glass and tape it to the door and say ashtray.
- [63:48]
C
Okay, here's another one. Scott, this is John from Rochester and he says. Hi, Scott, love the show. Look forward to it every week. If we had a magic wand and were able to fix the ATC system, we. What changes do you think we would see because of it? Would flights be shorter? Would airline profits dramatically increase? Would safety be improved? I'm sure there are other benefits I'm not aware of. What do you think? Thank you, John. Now I just have to say. Scott, are you John, did you.
- [64:19]
B
No.
- [64:20]
C
You stuck this letter in. I know it. You have been preaching about this for at least a decade now. I'm sure you are, John, but go ahead, give us your answer.
- [64:32]
B
Well, no, I'm not John, and I do not plant mailbag questions. But I do love the question.
- [64:42]
C
Yes, I know you do. Okay, I withdraw the accusation.
- [64:46]
B
Well, probably not. You're probably not the only one who suspected that.
- [64:52]
C
But if you were to plant a question, this is the one that you would plant.
- [64:56]
B
Yeah, no, exactly, exactly. So, okay, my thoughts. So, John, you would definitely see safety improvements and that's the most important things. The skies are crowded now and they're going to get more crowded. You hear predictions that air travel is going to double over the next 10 or 20 years or whatever. Skies are going to get a lot more crowded and the technology has to keep up. And it's not as we saw so painfully in the mid air Collision near Reagan national airport in Washington, D.C. we need better technology to help pilots and controllers. That technology is available now, as the NTSB report made clear and as other nations are demonstrating by installing really great safety enhancements as they have modernized their air traffic control systems and we haven't, and it's just a crime needs to happen fast. Second, you would see a dramatic reduction in cancellation and delays. And it's not just from capacity increases, although that's important. The ability to space airplanes closer together safely, for example, would reduce cancellation delays. But more importantly, you would see the reduction from having greater flexibility in the system. And by the way, yes, that would save airlines money and travelers time because it is expensive. Delays and cancellations are really expensive both to airlines and to their customers. Today, highways in the sky get closed when there are bad storms on that route, for example. And there's very little flexibility built into the system to to route around that. With a better system, you can actually move the route that planes are programmed to fly around the storm. So J41 is closed down. It's the name of a jet route. Just as an example, let's move it 50 miles south. And if there's a conflict with another route, we move that 50 miles south. You get the idea. Redraw the lines. And that can be instantly uploaded into not only air traffic control systems, but also the computers in the cockpit. So that's one possibility. One way you can have a better system that can be done in real time and you can have more routes in the sky available for use. A lot of the problem is, hey, we routes get shut down. You know, everybody going in New York either over Cleveland center or Washington Center. Well, if Washington's closed down, Cleveland can't handle all the traffic. So we've got to figure out a solution to that. All right, Another delay reduction example. Today the US Mostly spaces landings by distance flights three miles apart, for example. But what matters is time on the Runway. When you have headwinds, it takes longer for a plane to travel three miles. So you have unused capacity on the Runway. And because you get fewer landings in each hour, delays cascade. Right? But there are systems available that safely space flights by time instead of by distance. And you benefit from that all the time. Maya, at London Heathrow Airport, that's where I first saw this in use years ago at the approach control center at Heathrow. These systems are in use in Europe and other locations. And the FAA has been trying to implement time based separation with I think, very limited success. Like most FAA modernization projects, it just hasn't made it to prime time here. We could really reduce delays at airports by taking strong headwinds out of the delay picture. One other area you can have smoother flights. How? Well, improved communications so that pilots can text controllers with altitude requests and controllers can see the requests come in as red, green or yellow, depending on what the system sees as conflicts. Approval can be made with one click. Today, radio frequencies get jammed with so much chatter it can be hard for a flight to get to a better altitude. This first went into use over oceanic regions where there weren't radio communications, but certainly satellite based communications. You're coming across the Atlantic heading to the US and you've gotten light enough with fuel burn where you can go up to a higher altitude, get a better ride. But if you're over, you know, water, used to be you had to get on high frequency radio to make a request. It was a real problem. Now systems are set up so you just send an email, basically a text to the controller, as we do in so many other uses. I think, you know, other ideas. I think there would be fewer equipment outages with modern equipment that's been an increasing problem in the US There would be less burnout among controllers if they have better tools. There would be more capacity for already slot crowded sectors and airports and the huge safety improvement. There are just so many future benefits available today and more in the future. And I am really hopeful that the current administration, which has really bought into this and has a three year timeline, will make progress in those three years. History would say good luck, but we have to change the course of history here.
- [71:02]
C
Preach. Brother Scott.
- [71:03]
B
Yeah. Amen. Can I get an amen from the congregation?
- [71:09]
C
Sure. Amen. I've got nothing to add. We just need to go and do it.
- [71:13]
B
Well, it is a huge issue, hugely important. I think it would be hugely beneficial for the industry and for travelers. And no reason why we can't get this done in this country just as we got this podcast done. That's all for another edition of Airlines Confidential. Thank you, Charlie Sultan. Thank you so much, Maya.
- [71:35]
C
Yeah, I really enjoyed it. Thank you, Scott. Have a great week, everyone.
- [71:39]
A
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