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Airlines Confidential Podcast
330 - Guest Co-Host Charles Duncan. Guest: Robin Hayes, CEO, Airbus North America
01:19:07
This week: Guest Co-Host Charles Duncan: Guest: R…
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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, 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 and I've got a serious case of March Madness. No, not because of the ongoing NCAA basketball tournament, though this year certainly isn't disappointing in March Madness. I'm mad as hell about the incompetence of Congress to pay TSA agents and what that is doing to travelers. Two hour waits for screening at Atlanta Hartsfield. Worse in Houston. Problems cropping up all over the country. The government threatening send in ICE agents to airports to just add to the chaos. It is mind boggling and ought to be criminal, but all because Republicans and Democrats can't compromise. We'll have more to say on the TSA situation. But first, let's welcome back Charles Duncan, who I know has his own case of March Madness. Welcome back, Charles. And thanks for joining us from the Loire Valley in France.
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C
Hey, Scott, great to be here as always. Thank you. Yes, I am dialing in this week from France and listen a couple things before we jump in. First, I did quite a bit of travel last week and I must say I was clearly fortunate but didn't have any long TSA lines. And I made a point of just acknowledging and thanking the TSA officers, not for being there, but just for being professionals. And you know, the attitudes I saw were good and positive, but I know they're under a lot of strain and just, you know, I think we all, we all appreciate them and I echo your sentiments there on just the incompetence of Congress. So that's one March Madness. Well, I'm almost but not quite prepared to wish your Blue Devil success now that they've we're recording this. Made it through to the round of sweet 16 almost let me get back
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B
up off the floor. Holy smokes.
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C
But my Tar Heels lost in the first round, as you were kind enough to not point out. And lots of rumors that our head coach may resign or even be fired here. So it's definitely been a tough March Madness. I've shifted my attitude or my direction on basketball, my high school player son is actually playing in a competitive tournament in France this week, which is what brought me to France. And so I'm going to just shift my basketball focus from the US now that my target route to high school basketball in France. But listen, besides France, I was in Panama last week and spent some time with Pedro Heilbron and the team at copa. And listeners will remember we did a great interview with him last year. And I have not been to Panama sadly for a couple of decades and I was blown away by copa, the airline, the presence, the airport, the hub they have built in Panama. It's one thing to read about it, but to see it in person, it really, really was very impressive.
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B
I'm eager to hear more about that someday. I'm going to Panama myself in May. Henry Harneveld and I and others are on the board of Cirium's on time Performance Advisory Group and we're having our annual board meeting in Panama because Copa is one of the leading airlines. They are, well interesting to hear about their operation and the airport and everything else.
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C
I know we talked about their superior financial performance and they're on time. They have a decal at the boarding door of all of their aircraft and they have a special livery and in both cases that highlighting the cerium recognition of 10 years of consecutively being the top on time airline in Latin America. So they're certainly playing that up and, and I again I the scale of what they have built in Panama in that airport and frankly the city and other things too, it was, it was truly impressive. It was something to behold. And just an on time all my flights, I mean all I took two but they were on time, great performance and service and you still see the, you know, the legacy ties you feel back to the old Continental and airlines like just you know, some of the color palettes and patterns and schemes although they certainly moved away and I think we're kind of creating a bit of independence for themselves from those old days with Continental. But anyway it was just fun to connect with Pedro and I appreciate him. And in fact I met one of copa's board members and as I was sitting down to have a meal with him, you know what he said? Charles, tell me your Ben Baldanza question, which I thought was fantastic.
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B
So airlines Confidential reaches international far and wide. Indeed. North, south, east, west, indeed.
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C
But listen, the other thing. Prior to Panama I was in D.C. and attended the JP Morgan's Industrials Conference hosted by Jamie Baker and Mark Streeter who've been on the podcast. And a little bit later here in the episode, I'm looking forward to giving our listeners a briefing on all that I heard, or at least the highlights. There was a whole lot over the full day. And I'm also eager on this episode to hear your interview. I wasn't able to join, sadly, but with Robin Hayes, the CEO of Airbus in North America and the former CEO of JetBlue, a great interview and I know our listeners will enjoy that. And if that weren't enough for this week's episode, we've got some listener reaction to Professor Doug Parker's root profitability course from last week, which I listened to and enjoyed a lot myself.
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B
Excellent. Excellent. Well, I'm really eager to hear about Jamie Baker and Mark Streeter's conference. You know, really one of the important events of the year and often airlines come in and make news. And I guess this year, I mean, we'll hear more about it, but there's so much uncertainty, you know, kind of what, what can you do? But I think it'll be, I'm really looking forward to your briefing because, yeah, it's important stuff, Scott.
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C
I'm happy to jump into it, you know, in a minute here. But you know, it's funny, I don't know what with the timing of the calendar, but you know, this was the conference in 2020 where Scott Kirby, la, you know, his vision for what the pandemic was going to become that largely proved to be right and it was just coincidence being in March. This was the same conference 12 months ago where the Southwest team unveiled, you know, baggage fees and seat assignment fees and so on. And so this is quite often a news making conference and this year was certainly no exception. So.
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B
Right, right. And first public outing, if you will, public exposure of the new CEO at Frontier and lots of things to talk about.
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C
Yes.
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B
All right. First, let me run through some important news of the past week. I want to talk about the TSA situation, as we said now, apparently there are negotiations going on, so the situation could well change before we drop the podcast Wednesday morning. And there's certainly growing pressure to get this resolved, especially get this resolved before Congress takes an Easter recess, for crying out loud. But given what I think is abject cruelty shown by alleged leaders, I'm really doubtful that they're going to come up with a budget. TSA workers who have starting salaries not much more than $30,000 a year and typically make only about $50,000 a year, they're being asked to work while missing paychecks. It's insane. And really is cruel. And many aren't working because they have to work other jobs to put food on the table, to pay rent, to buy. It's becoming a bigger and bigger problem for airlines and their customers. And by the way, we all pay for at least part of their services. And airline tickets. About two thirds of TSA screening funds come from the security fee every airline traveler pays for domestic flights. The money's still coming in. It's not about money. It's about Congress being unable to lead and zeroing in on the most high profile retail government service to try and gain leverage. And it's just so unfair to everyone. It's unfair to the workers and it's unfair to travelers, both of whom, all of whom are caught in the middle. So here's my proposal. Here's my, my rant of the week. I'm afraid I'm becoming known for my rants, but you know, the times require this.
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C
Okay, Scott, we want to hear it.
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B
Bring it on. So besides simply locking these alleged leaders in a room without lobbyist lunches until they reach a compromise, I think we should do two things. One, legislation saying any essential worker, air traffic controllers, TSA screeners, for example, must be paid during government funding shutdowns. Taking away leverage means taking away the incentive to shut down without compromise. We send these people to Washington to run the government. Run it. And you know, this has, this, this idea is not new. It comes up, comes up. One side proposes that, the other opposes it and it goes back and forth. Right. Because neither side wants to give up their leverage. And that's just not right. Number two, no pay for Congress while pay is being withheld from any other federal employees. Simple, fair. Take your own medicine, take leadership. And yes, and if Congress won't hold itself accountable, I think somebody should start a constitutional amendment movement to withhold pay from Congress. If Congress doesn't approve a budget on time, it would be the 28th amendment. And honestly, when I started doing research on this, I was surprised. Honestly, this would not be really hard to do. It might be pretty easy to do. The 27th Amendment, ratified in 1992. I don't remember it. I think it just kind of happened. But it was about congressional paychecks, so kind of the same thing. Right. And that amendment exempted Congress from increasing its own pay before the next election. That way voters could get a say in the matter. If you want a pay raise, put it to the voters. In essence, the voters get to weigh in before the raise goes into effect. Kind of a fairness idea. Two, Thirds of the states need to approve an amendment at a constitutional convention, assuming 2/3 of both houses of Congress won't do this to themselves, which, given their history, I don't think they would. But the states can do it, and then three quarters of the states need to approve it. Reining in congressional misbehavior ought to be awfully darn popular. So the 28th amendment, simple wording. If Congress doesn't get a budget approved and causes a shutdown of part or all of the federal government pay is withheld until a budget is approved. And if we really want to go all Pete Buttigieg on Congress, we'd say for any delay, Congress should also be fined, paychecks docked, and the government has to compensate those impacted. But I digress.
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C
Wow, Scott, I love it. Firstly, and I don't know how unique she is, but my congresswoman in the second district of Virginia, certainly in the government shut down in the fall, did not receive a paycheck and made sort of a show of that. So I know we'd have at least one vote in favor of this. But the broader point here, I mean, I am just, and clearly you are, too. I think the whole industry is just sick and tired of air travel. In this case, the TSA was ATC back in the fall. But I mean, it's being used as a political football for leverage to advance political negotiations that have nothing to do with it. And, you know, I think seeing Secretary Duffy, in both instances, going on TV and threatening, you know, the flight cancellations last fall and now, you know, shutting down small airports, you know, for lack, potentially for lack of threatening that for lack of TSA staffing is, is just terrible. You know, so, so love this. And I think your suggestion will hopefully be, well, you know, would certainly be effective, I think, in being a lever there. So love the amendment idea. And, you know, and look, you didn't even mention as well, I mean, a couple of news stories that have trickled out here over the last couple of days. I mean, you know, Elon Musk has been rumored to be offering to pay the TSA officers out of his own pocket, which again, isn't even necessary given the T funding that's coming through from ticket taxes. And, and, you know, there are news reports now as well that ICE may be deployed to airports to assist TSA staffing. And I just can't express in words how crazy that all sounds to me that, you know, we can't pay the TSA officers, but the ICE officers who are being paid and have no experience in transportation are going to be deployed from their duties to go to airports. So.
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B
Yeah, and by the way, let's put people with guns and masks on in airport.
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C
Yes.
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B
I mean, that just seems like a security issue. Some guy who wants to cause trouble walks in with a mask on and military fatigues with a gun and is not going to stand out. I mean, that is a real risk to me and.
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C
Absolutely right. And ultimately these are just gimmicks that don't fix the issue. And let's hope some adults do get in these negotiations you talked about, get it solved. And hey, one other thing too, and there's another parallel to the air traffic control system here as well. You know, I'm sure you're aware there are 20 airports in the country that have effectively a privatized screening force which is overseen by TSA. And the largest of those 20 is SFO. And they have been pretty vocal. San Francisco has about, hey, our officers aren't, you know, employed by the TSA and we don't have any irregularities in line weights. And so that would be another potential solution here would be to expand and extend the privatization of the TSA screening workforce, if you will, to more airports around the country. And that could also get it out of this political gamesmanship around staffing.
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B
Right. Well, it's a lot of parallels to air traffic control. Let's make TSA an independent agency, privatized or not just separate it out. Let's make the FAA a separate agency so that in this case they're not caught up in the political. Yeah.
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C
Well, anyway, one other bit of news to note, Scott, before I get into the JP Morgan conference, and that is that the the DOJ gave its clearance for the Allegiant sun country merger to proceed. This was the antitrust review. I don't think anybody thought there would be a problem with DOJ clearance for this merger. There was only one route from Appleton, Wisconsin to Fort Myers, Florida. You know that these two carriers both serv. And it seasonally at that. But it's always a relief for the people involved to get that clearance. And it's, you know, an important milestone in the process. So congratulations to the folks in Vegas and you know, I wish them luck. I'm excited. I think this is a good thing, the merger for both of those airlines. So good news there. And let me now just shift gears and talk about the J.P. morgan conference. And you know, this has been covered and I appreciate when the episode drops. It will have been over a week since the conference took place. So A lot of the headlines have already been covered so I'll try to touch on maybe some of the other elements that have, that I've not seen picked up in other outlets. But firstly I was in the room there on Tuesday and want to thank Jamie and Mark for letting me be there. But over the course of a day I was able to see effectively the CEO and generally CFO and other top officers from Delta, American, Southwest, Allegiant, United Frontier, Alaska and Air Canada. So it was quite a day and a couple of different formats but each of them had a chance to kind of present on their own and interact with, with the audience and Jamie and Mark. And so firstly what has been covered and I think there are two overarching themes and remarkably I think every single airline presenter covered these two, you know, pretty much the same. The first is that the current year first quarter demand is just off the charts. I believe Allegiant said it was quote unquote, you know, demand is inexplicably strong. United mentioned that each of the 10 weeks in 2026 has been a record setting revenue booking week and other carriers had similar sort of statistics about the strength of corporate travel and number of record sales.
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D
Days
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C
is and has been red hot. I mean I think at all levels, ULCCs to network carriers, they all had a similar message. And then the second theme coming in is that fuel costs are definitely an issue and the big question is that no one knows how long it's going to last and I'll just kind of maybe just, just stop there. I mean other than just, you know, you have this really, really strong revenue environment and there's concern around fuel and concern around costs but you know, nobody except for United and I'll come back to United was taking any action at the point in the conference or last week, you know, regarding, I think most, in fact all of the other airlines were taking pretty much kind of a wait and see approach to, to fuel and what actions they would take though, you know, I think there was just a sense of a, you know, we've, as you guys talked about last week, you and Doug, airlines can have, have operated with $100 oil and this is not going to be an existential sort of threat but certainly if it's sustained for a long period of time, carriers will need to take action, you know, either, you know, reducing capacity, you know, higher fares as a result, you know, weaker carriers will feel stress, you know, and so forth. So those are the two big themes. And then let me run through just kind of Maybe airline by airline. I won't hit on all of them, but sort of some of the other points that I think were worth noting. You know, the first, and this is in no particular order, but Robert Isom from American came out and there were, there were two big comments that he had in addition, you know, to the over, you know, overarching themes. The first, and this was clearly a response, well, it ties into Doug Parker's flight profitability review, but also, you know, the accusations from United around O' Hare losing $700 million or more for American. Robert Isom and their CFO came out and said, first, all hubs cover their cash expenses, meaning all hubs are, quote, unquote, profitable. And they kind of walk through a little bit at a higher level of how they measure flight profitability. So in effect, the story was the impact of any losses. And they did say, clearly some of the hubs at American are losing money, but that's in the overhead allocations, if you will, that all of them on their own are covering their variable or cash expenses. The other thing Robert said that I thought was interesting and also ties back into this o' Hare market share battle. He said that United's growth at o' Hare for this coming summer was, quote, unquote, reckless and was going to effectively, if not unchecked by the dot, you bring the airport to a grinding halt operationally. So just, just full stop. Actually, both Robert Eisenman, Scott Kirby were appreciative of the DOT stepping in. And I think both also expressed that they thought the DOT was going to be fair in its determination, you know, around flight reductions and allocations of that. But, but those are kind of two interesting points for American that, that I heard. So just to go sort of directly respond to that, when Scott Kirby was asked to respond to this reckless message, you know, he said he heard the remarks, he flew up that morning and he said he took Robert's comment, comments as a compliment that, you know, his being reckless, a compliment. And he didn't expand on that, you know, any further. But I thought that was interesting and sort of worth calling out and sharing. And then Scott went on, on this other point to say, you know, that, that Robert and the team from American did not refute the United claims regarding o' Hare losses, you know, that, you know, in effect, o' Hare could be cash positive, if you will, along with all of her hubs and still have a $700 million loss, you know, as overhead is allocated. So I thought that was interesting. And then the, you know, by the
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B
way it is all interesting. Nat Pieper, the chief commercial officer, and
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C
he was there as well.
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B
He was in the States. Yeah. And he gave. I don't think it was at the conference. I can't remember where I saw it, but, but sort of a lesson in hub profitability in response to a question was very much not nearly as detailed as Doug's response, but right in line with it. I thought Doug really opened my eyes to a lot of things in that. And Scott Kirby can say, oh, you're not profitable. And he's got his, you know, I'm sure, inflated estimates of how much money American can be losing or whatever. But then you look at things like, like Doug pointed out, like $6 billion in Citibank revenue.
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C
Right.
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B
How much of that is going to people in Chicago? You know, you need those people in your, in your system. And so you know what? That should be factored in. There are, there are so many factors into this, but I think the, the bottom line is American can't afford to lose Chicago. They're going to fight for it. And I think Scott knew this. And to me, the summer schedule, it was all posturing. I'm not sure the same thing wasn't happening in Newark. Right. Hey, if you know that your competitor is going to increase flights, throw a whole bunch of flights in, scare the faa. FAA is going to come in and force reductions. Well, if I've got an inflated schedule in I, you know, it's a negotiating ploy. I'm, I'm better off. Sure, I'll give up, you know, a couple, a point of capacity or, or whatever. But, you know, it really wasn't real to begin with.
- [24:10]
C
Yeah, well, and we'll see. And certainly. Well, just, just two thoughts on that directly, Scott, I should have mentioned, but it's good, you know, here as well. I mean, Robert Isom was very clear, very emphatic that there is no way America's leaving Chicago. You know, so he was very firm in that affirmation. And I guess we'll never know if your theory is right there. What I would say, too, the other thing that was really interesting is that Scott was the only CEO, only airline of the group to say he wasn't going to wait to see what was happening with fuel prices. In fact, he kind of positioned it to say he would rather start cutting now and have, have cut too much than, than to have not. Than to not be taking action. And, and, you know, and he went on to say, and we've also seen some employee communications that they're not stopping long, you know, their long term strategy and long term investments. But on Tuesday at the conference he announced that he was cutting 1% of capacity in the second quarter. And he was calling out Tuesday and Wednesday flights and red eyes as being weaker revenue. But then even by the end of the week he had upped that to 5% capacity cut in the second and third quarters. And you know, he also said at the conference that he was modeling a scenario that was pushing, you know, crude oil prices to $175 a barrel and ending the year I believe at 120. And so he was stress testing, you know, different scenarios and saying, look, I mean, you know, you know, fuels high fuel is here, don't know how long it's going to last. But I'd rather take some action now than sit on my hands and hope for a better outcome.
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B
Yeah, no, this is also interesting. I mean some of the capacity cuts, you don't have any choice. United's flight to Tel Aviv and United's flight to Doha, they're not going. So that's a significant amount of capacity because it's wide, long routes on wide body airlines, lots of ASMs. But the $175 barrel oil, I follow an economist, Mohamed El Erian, who's former president of Queens College, he's now professor at Wharton, he's on CNBC a lot, I'm sure a lot of people recognize the name and know him and I think he's really astute and really level headed about the economy. And his note for this week was really sort of alarming to me in the sense that he's really calling out that what happened last week were attacks on energy infrastructure and that has long term economic implications. And when you take, you know, Qatar said 17% of its gas production was affected or, and, and oil refineries were bombed and obviously the Strait of Hormuz is flashpoint and closed. And so you take significant supply out and the price is going to go up and it doesn't matter if the oil comes out of the hole in West Texas or it comes out of the hole in Saudi Arabia or whatever, the price is going to go up. Right. And that's going to slow down the economy. So it's fascinating. I mean this demand off the charts idea, does that all come? Are people buying tickets in advance in anticipation of higher prices ahead? But as we know, airlines can only raise prices if there's demand for that. So if demand falls off the cliff, either because people have pre bought tickets so much or because the economy globally slows down and there's less travel, I think, you know, there could be a lot of trouble ahead. Don't not like sounding the alarm bell, but I think, you know, there's a lot of bad stuff going on that is going to affect the industry.
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C
Yeah, Scott, I agree with all of that. And it was really hard to kind of reconcile these two very disparate messages. You know, doubling down on your point around, you know, the production impacts for oil and so forth. You know, I came away from the conference and I've got a few more things to share as well, but. Yeah, but you know, with this sense that, you know, the US economy, you know, and I'd say the US as a, you know, as a net energy exporter, but the U.S. consumer and the airlines here in the U.S. kind of, you take all of them, we're kind of operating in a different universe. And I'll give you a couple of examples of why I say that. When Allegiant spoke at the conference, they said every time there was a negative headline in 2025, they saw a demonstrable drop off in traffic to their website and also a lower conversion rate of that traffic to sales. Every single event in 25, they said in 2026, consumers are buying and the bad headlines, and we've had plenty of them in 2026.
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B
Interesting.
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C
Had no impact. You know, it really is. Now Ed Bastian, you know, did mention that the European point of sale on the transatlantic book, 20%. And he said this has been a continuation of an ongoing trend for many years or for several years, I guess, you know, pointing back to Covid. But he also kind of wrote it off and said, you know, that's a de minimis. I think he said that was 2% of their overall revenue and the US strength is more than offsetting that. So he was dismissive. And only Ben Minicucci from Alaska acknowledged that he thought there might be some pull forward in the demand, you know, in effect that consumers, when they saw the Iran, you know, war and bombing happen and the oil prices spike, that booking people may have accelerated plans for, you know, travel in Q2 and Q3 and booked them now before rates went up. So he was the only one who said that. But look, you think, I mean, there's been a lot of headlines. I'm sure a lot of our listeners have seen all of these. But of course the Gulf carriers are directly impacted. But you know, there are now real supply concerns for the European carriers. The air corridors over the Middle east are getting you know, truncated. I mean, you know, you just get the sense that airlines all over the world, in fact, there was a, there was an Airlines for Europe event late last week and I was watching some of the coverage for that on CNN. And you know, the European airline CEOs were much more bearish than what I'd heard the same week from, from the US Side. So it feels like we're on a little bit of an island here in the US and other parts of the world in economy are certainly feeling the pain and seeing negative signs first.
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B
And I guess I just Worry about the US economy too. We lost 92,000 jobs in February. Inflation's been sticky.
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C
Yes.
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B
I don't know. Normally those would be signs that would concern you.
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C
Absolutely. Right.
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B
We also know this industry is a lagging indicator. Right. It's not a leading indicator. Indicator.
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C
Right.
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B
So maybe there's some, some lag in this, but let's hope not.
- [31:29]
C
So. Hey, just a few more things. One, there was a consistent theme and probably most aggressively or assertively posited by Ed Bastian from Delta, of course, and Scott Kirby at United. But just this notion that whatever happens in this turmoil, the weaker airlines, really meaning, you know, anyone without Delta or United in their name are going to suffer more. And both Scott and Ed went on to say that they expected under every conceivable scenario that their earnings were going to improve and increase next in 2027, no matter what happens in 2026. And so kind of that, you know, high oil prices, strain for the, for the weaker performers is only going to mean good things for them and they're not going to be distracted. So that was interesting. And then look, just a few other things to call out. Bob Jordan and the Southwest team were there and, and they were more relaxed, more confident and you could just tell that they are executing, they have their mojo back. I'll just put it that way. It was fun to see them present, especially compared to last year and a couple of years ago. The body language, the mood, the tone was much stronger. You mentioned Jimmy Dempsey from Frontier. It was first time for many people to see him. He was impressive. Just his command of the airline, his strategy. He was just a good speaker who was compelling and knows what they are about and as one example, talked about sale and leasebacks and that they're not going to be using those to sort of fund losses going forward. I mean, it's a legitimate financing strategy for the fleet, but they're changing tack, if you will. I thought Joanna Garrity from JetBlue also was a confident presenter and just had a good grasp of her company and where they're going. And certainly both Minjet Blue and Frontier are losing money right now, and they acknowledge that. But you kind of got a sense that both of them are focused on what they have in front of them. And then just the final observation I thought was just sort of interesting. Of all the airlines it presented, and I think for all the airlines in North America, Air Canada is the only airline with a fuel hedge in place. And I also learned they have a lot of stored fuel capacities, so they actually have enough stored fuel to get them through the first quarter. And, and they've hedged most of their fuel needs, you know, for this year. So, so I think that that was, was just interesting. Of course, no, everyone else is paying prices, but Air Canada has been hedging and, and so on. So anyway, there were, there was more there, Scott, but I think I at least hit the highlights, you know, from, from my end of what, what, what struck me as I was leaving after a long day on Tuesday.
- [34:17]
B
That's. Charles, that's. It's so helpful, so informative and really appreciate it. And I know, you know, you've been attending this for, for many years and, and I love to get, get your perspective on it. I think the, you know, it's not just what they say, it's also the body language. So.
- [34:35]
C
Right.
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B
Thank you. Thank you for that. There was one, one bit of data from last week that I wanted to mention that comes from Cerium, and I think it's sort of in line with what Ed Bastian was talking about, transatlantic travel. So Cirium compiles data based mostly on bookings through online travel agencies and traditional travel managers and advisors, corporate agencies. What they don't have are bookings directly with airlines, but it's about half of the universe and it's a good indicator of what's going on in the marketplace. And we talked about this earlier this year because the booking data showed a drop in transatlantic bookings for summer travel this year. I think we had that back in February. Well, Cirium updated those numbers and now it includes two weeks after the war against Iran started. So interesting to see how the war may be affecting bookings, at least for transatlantic travel travel. Right. And what it showed was, and this is for travel in July, it's gotten weaker. And so in line with what Ed Bastian said, the booking window that they're surveying is bookings from October 7th last fall through March 14th, the most recent period compared to the same Period of those booking days a year earlier, bookings from Europe to the US are down in this sample, more than 15% year over year. And from the US to Europe, back the other way, down 11%. In February, Europe to US was down 14%. So kind of close and. But the US to Europe only down 7%. Now it's down 11%. If you drill down into it, not all parts of Europe are the same. I thought this was interesting. Bookings from France to the U.S. are down 35%. You'll have no trouble getting home, Charles. But London Heathrow was only down 8%. So, you know, 35% versus 8%, really quite a, quite a distinct difference.
- [36:48]
C
And I think too, I mean, and this is really before any consumers feel the pain, if you will, you know, at the gas pump or in energy prices and so on. So, yeah, you know, we'll see. I mean, I think Ed made the point that, you know, when you have war, you know, happening in your backyard, people tend to stay home. And that's really makes sense. But we'll have to see what happens this summer with the World cup and a lot going on in the US Hopefully.
- [37:12]
B
Yeah. And you know, you think there might be with the, with the Gulf carriers shut down effectively, not completely, but effectively they carry so much connecting traffic that you would think that U.S. european, Asian airlines would pick up some of that. Right. You're not going to go through the Persian Gulf, but maybe you're going to connect to Europe or connect through Europe or connect through Asia and European carriers are picking up some of that traffic. But to your point, at the same time, you know, a lot of people say there's a war going on, I'm not going to travel.
- [37:47]
C
Right.
- [37:47]
B
So bit of a mixed bag on that, but the cerium numbers show a pretty stark bottom line, at least for July bookings. All right, speaking of sponsors, let's take a note to thank. Thank our sponsors for making it possible to bring you this podcast for free on all platforms. Thanks to Ontario International Airport, which is celebrating a decade of local control. Thanks to public support, the local community reclaimed ont, revived it as a vital gateway in Southern California and ensured the airport is ready to soar even higher in the years to come. Visit flyontario.com 10 to learn the story and find out how you can join the year long celebration of how a decade of local control has turned Ontario into one of California's fastest growing and most economical airports.
- [38:40]
C
In addition, thanks to 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.
- [39:21]
B
And Professor Duncan, your class will be coming up in that program.
- [39:27]
C
I'm still about a year away. Believe it or not, it's an 18 month program, Scott, and so I know you now have completed your round one and I'm patiently waiting.
- [39:39]
B
Turned in my final grades yesterday.
- [39:41]
C
Okay. But I know you and I both will be keeping tabs in the program and supporting it. And it is a privilege and a pleasure to be supporting it personally.
- [39:51]
B
Yeah, just a terrific program. I think it's already making a difference in the industry and creating an incredible opportunity for people interested in airlines and airports. All right. Also thanks to RTX for its longtime sponsorship of airlines. Confidential RTX rallies more than 180,000 innovators around a powerful vision to create a safer, more connected world. With industry leading tools and technology. The RTX Global team works across market leading businesses Collins Aerospace, Pratt Whitney and Raytheon to drive progress for generations to come together. RTX pushes the boundaries of known science and finds new ways to connect and protect our world. Visit rtx.com to learn more. All right, let's bring in Robin Hayes. Robin Hayes is the Chairman and CEO of Airbus in North America. He's responsible for Airbus commercial aircraft and commercial services businesses throughout the Americas, as well as coordination with Airbus Helicopters and Airbus US Space and Defense. Prior to joining Airbus, Robin served as Chief executive officer of JetBlue Airways for nine years. He joined the airline in 2008 as chief commercial Officer, became President of the airline in 2014, and then JetBlue's third CEO in 2015. Before JetBlue, Robin spent 19 years at British Airways where he ascended to Executive Vice President for the Americas from 2020 to 2022. Robin was the chairman of IATA's board of governors where he championed the Air Transport Association's commitment to achieve net zero carbon emissions by 2050. Robin graduated from the University of Bath with a Bachelor of Science in Engineering and a Master's in Electronic Engineering. Robin, it is great to have you with us. I find this hard to believe because you had Ben Baldanza on your board at JetBlue, but this is the first time you've been on airlines. Confidential and we're just thrilled to have you with us.
- [41:55]
D
Thanks, Scott. Really great to be with you. And yes, I don't know why it's taken us so long, but you mentioned Ben, and I do want to start by just remembering Ben. What a wonderful person. And, you know, when I became CEO of JetBlue in 2015, you know, we had a lot of kind of criticism of our focus on costs. And, you know, were we really as focused on that as revenue and innovation and some of the other things we were doing? And so I managed to persuade Ben to join our board. You know, he met all the board members. They loved him. He joined the JetBlue board in 2018 after, you know, very successful career before that. And he was just so wonderful and such a. Not just a wonderful human being, but so thoughtful and really helped us get through Covid and. And do all some of the other things. And, oh, my goodness, his passing, you know, his passing was just so awful and so sad. But it's so wonderful that you and others are continuing this Airlines Confidential, because I know he was very proud of it. So thank you.
- [43:06]
B
Yeah, no, it is an honor, really is. And we love that we've been able to continue it. And he guides us in so many ways still, I often think about what Ben would say, what Ben would want the podcast to do. So I appreciate you mentioning that very much.
- [43:27]
D
Well, he always had that way of speaking, wasn't he? He would be very measured. He would speak quite slowly, and then you realized where he was going to go and you think, oh, my goodness, why didn't I think of that?
- [43:40]
B
Exactly.
- [43:41]
D
He had all these amazing insights.
- [43:43]
B
Yeah, no, the smartest guy, but smart about understood human behavior and consumer behavior and strategy and game playing and so much about the airline business, the. That he could put it all together in ways that often we can't. He also taught me that. A great first question to start. You know, I've interviewed people for a long time, and Ben said, well, why don't we start with this question? And it was always so interesting. So we've now called it the Ben Baldanza question. And we always start with asking people, how'd you get into this crazy business?
- [44:26]
D
Well, actually, you know, you covered this in your opening, but I studied engineering at university. And then the big thing that you did back then was go to America and get a job in the summer. And so we're talking late 80s, just like hundreds of thousands of British students. So I got a summer job working at Boston in Terminal Sea, and my job was to take the duty free onto the airplane, you know, into the jet bridges and make sure that people had it before they got on the airplane. And sometimes you'd have to get onto the airplane because people would walk past you and you wouldn't be able to give your duty free bottles or cigarettes to them. And weekends I was working over in Terminal E and I ended up, for some reason, a lot of British Airways passengers never picked up their duty free and the jet bridge. So I'd always be going on the British. British Airways airplanes. And the crew were so nice and they'd always make me a cup of tea and I thought, what a great airline to work for. And so I ended up ditching my engineering career. I was not very good at it anyway and applied to work for British Airways. And that's how I started out. And actually my first job was working in Glasgow airport for British Airways up in Scotland. And then I, I just was lucky enough to do many different roles, sales, marketing, operations, and spent 19. In fact, I ended up at British Airways for longer than my time at JetBlue, believe it or not.
- [45:57]
B
Yeah, yeah. What a great story. That's amazing. How fun. It's always interesting how this business kind of sucks us all in, right?
- [46:11]
D
It's not for everybody. And as a previous boss of mine, Dave Barger, used to say, it's not for the faint of heart, but it's incredibly rewarding and there's a sense of purpose that you feel when you see all these airplanes flying everyone around the world to connect with friends and family, to get business deals done, to connect culturally with different communities. And just the complexity and the responsibility of doing that safely, that I think all of us in the industry feel. So it's very demanding, but a great sense of satisfaction, for sure.
- [46:46]
B
Yeah, yeah, absolutely. Well said. So the aircraft market has been a real challenge both for manufacturers and for airlines. Demand's gone up and down. The volatile politics of the past year, the war in Iran over the past several weeks, before that, and through that, supply chain issues and engine issues. Not only Pratt and Whitney, but also CFS International. So first, where do you see demand right now? Are customers pressing for more? Are they pausing on new orders because of the war or the economy or just because more planes are becoming available from struggling airlines? What's demand like right now?
- [47:32]
D
Demand remains really good, Scott. In 2025, we delivered 793 commercial aircraft, which was 4% more than the year before. This year, 2026, we're looking to build 870. That's a big step up. Most of our product lines are sold out through to the next decade and it's been a busy start to the year. We've already seen Delta place a firm order for 31 wide bodies, Air Canada as well, eight 350s. And Delta also converted a number of their 321 NEO options. So look, demand remains really strong and it's really the supply chain that I think remains the largest challenge that the OEMs have right now.
- [48:19]
B
And is that easing up a bit or is that just going to continue through the decade?
- [48:25]
D
I would say it's becoming more specific, Scott. So after Covid, as you know, everything ramped up so quickly. If you remember back in 2020, whether it was airlines or manufacturers, we were all looking, scratching our head saying, is this industry ever going to be the same again? And we weren't sure. We wanted to be optimistic, we wanted to believe. But then things came back with a vengeance. And you remember around 2022 we were talking about everyone kind of making trips they hadn't been able to make for two years. And the demand came back very strongly and we were all struggling. The airlines were struggling, the manufacturers were struggling and so certainly the supply chain was part of the manufacturers struggle. But it's been persistent and it's probably been more persistent than any of us expected. And so whilst back then the supply chain constraints were more broad based, now they're more specific in particular areas and you know, those are issues that we have to continue to work through.
- [49:30]
B
Yeah, yeah. And the engine issue is, I know there's tension, always tension around the Pratt and Whitney issue of hey, they have an installed base they have to fix and they also have to deliver new engines to you and there are only so many engines. And so is that still causing. That's that you guys called that out recently that is causing you to deliver fewer airpoints than you'd like to.
- [50:01]
D
Yes. So for 2026, that's, that's true. Gu F covered this on the call where we disclosed the annual financial results back in February. So yes, Pratt is not getting us the number of engines for this year, for 2026 that, that we need and you know, that is having an impact on our guidance for the year and our ability to ramp up. But there's challenges in other areas too. You know, BFE or Buyer Furnished Equipment to not use an acronym. That's been another complicated area as we've seen more NEOs delivered and more airlines wanted to customize their premium products. That's created again both manufacturing and certification and complexity. So again, a more specific area, more specific areas of concern now than the sort of broad based supply chain weakness. But Airbus has had to change as well. So Scott, we are much more active now in the supply chain than we ever were. Having teams embedded with our suppliers, having a lot better early warning systems when we're starting to see issues so we can get a better handle on it earlier. An airplane will have millions of parts to. You only need to have one of those missing and you have a late airplane. So the focus is so important.
- [51:27]
B
You've seen this market for a long time now and Airbus, you mentioned the 793 planes delivered last year. Boeing had delivered about 600 or so. Does it matter that Airbus is consistently outselling Boeing right now or is there still balance of power, if you will, in the the duopoly?
- [51:50]
D
Well, I think we have enough to worry about as Airbus. You know, we had our own challenges at the end of 2025, as you know, with our ELACs, our flight control computers. So, you know, we can't take our eye off the ball for a second. You know, one of the things that I used to hear from Airbus people before I joined Airbus when I was still at JetBlue is, you know, a healthy Boeing is important for the industry. And I always wondered, are they just saying that? Do they really mean it? Actually, it's true because again, I go back to the biggest constraint. The biggest constraint we have is the supply chain. And a lot of these suppliers, they're supplying both of us. And so it's better for them when both companies are doing well and delivering and we know the demand is there. So yes, look, supply chain remains our largest challenge. And to the degree that the industry is healthy, our suppliers can be healthy and we all benefit from that.
- [52:52]
B
Okay, good, good. I'd like to get your take on sustainability. It seems like the industry goal of net zero additional emissions by 2050 is going to be really hard to achieve at this point. It'll take a new generation of aircraft and that seems to to keep pushing out. Airbus has slowed down development on hydrogen power, for example. Where is Airbus with new aircraft and do you think the 2050 industry goal is attainable?
- [53:24]
D
Well, look, Scott, this is very important for me personally. I was actually chair of IATA when we passed the net zero emissions commitment by 2050. In 2021 that was done. And we knew then it was not going to be a walk in the park. We knew then that there were lots of questions that had to be answered that we didn't necessarily have answers to. And one could reasonably argue that when we look at where we are today, it's got even harder versus where it was in 2021. But we absolutely can't give up on it. It is absolutely vital that this is an industry that continues to focus on sustainability. And you know, interestingly, that when we're talking about more fuel efficiency, when we're talking about more efficient airplanes, where Those are the NEOs we have today or the next generation singular that we're working on, you know, the business case for sustainability is great, isn't it? Because airlines are going to save money and operating cost and we're going to burn less carbon. So that's always been a win win. So I think you're going to continue to see airlines invest in new aircraft and that's good for everybody. We don't spend enough time, in my opinion, talking about operational improvements, particularly here in the US and as we know, Scott, the air traffic control system is something that has been talked about for a long period of time, whether it's staffing or technology. And that's why I'm really encouraged by the work going on at the moment with the administration, which we are supporting as Airbus as a key leader in the US Modern Skies coalition. Because if we get a more efficient air traffic control system, if we can get the system fully staffed, that's also going to drive significant improvements in operating performance, lower carbon emissions, lower cost for airlines. So. So all of those things are good. Saf, obviously, is something sustainable. Aviation fuel, we spend a lot of time talking about that probably has been slower going than any of us would like, but again, we have to stay focused on it. We can't walk away from it. And then hydrogen, this is still an area of great interest to Airbus. We're continuing to invest in it. There was a bit of an adjustment for timeline in terms of moving to the right, but I would say that was more about challenges to the ecosystem. You know, when we bring an airplane to market, then we need to make sure that the economics of that airplane work, that it has the right levels of performance and there's an ecosystem in airports that can manage it. So all of those, you know, all of those things and more are going to have to be delivered in order to achieve this very ambitious goal.
- [56:17]
B
So it wasn't like there was some finding that, oh, hydrogen's just not going to work.
- [56:22]
D
No, I mean, there's still a. Again, we're still doing a lot of research on it. Yeah, it does certainly present a lot of, you know, technical challenges. But, but it, but it has to work. You know, if once you have the technology to work, once you have an airplane that can work, if the economics of that airplane have to be good in terms of operating costs and in size and operating cost performance, and then you have to have places that you can fly it. In other words, you have to have hydrogen capabilities at the airports that it would fly into. So look, it's still something that has to be on the future roadmap for our industry.
- [57:04]
B
Speaking of future roadmaps, what do you see as the future of smaller airlines in the US obviously you thought JetBlue needed to get bigger and made the offer to acquire Spirit, which the judge blocked. But what do you think is ahead for airlines trying to compete against the big four of the U.S. well, Scott,
- [57:25]
D
you're bringing back some memories there.
- [57:26]
B
Yeah, sorry about that. I'm sure not happy ones, but look,
- [57:31]
D
yes, I mean I personally believe that you're going to continue to see consolidation in the the US amongst the smaller and medium sized airlines. I mean, if you think about the cost structure of an airline and the mix of fixed and variable costs and if you think about how naturally the larger airlines are always going to have a fixed cost advantage, the small airlines historically had had a variable cost advantage, but a lot of that converged since COVID And in addition, when you look at how some of the best performing parts of the business right now are things like the credit card and premium and those tend to be areas that smaller airlines get less benefit from as a percentage of total revenue. So yes, I do think you're going to see that. You know, we saw Alaska Hawaiian merge successfully and now you've seen the announcement from Allegiant and sunk countries. So I think this is a trend you're going to potentially continue to see over the coming years.
- [58:36]
B
Yeah, yeah. I think I have to ask, were there regrets about the Spirit acquisition attempt?
- [58:45]
D
Yeah, of course. I mean, I feel that, we really felt that taking the best of JetBlue and taking the best of Spirit, we could create a really competitive and unique airline in the US with a more national presence focused on leisure customers. And, and again, by merging those airlines, you would get a lot of the fixed cost benefit that the smaller airlines need to need, need to get. So of course there was, you know, there was regret. We knew, you know, we knew obviously it was going to be would get some regulatory pushback. But yeah, but you know, these things happen and you have to, you have to move on and that's what both carriers have done.
- [59:28]
B
Yeah, yeah. So, Robin, what's the biggest challenge you've faced in your airline and aircraft career? The highest hurdle, the toughest challenge. What would you say?
- [59:41]
D
You know, I think the thing about our industry, Scott, is you never know what's around the corner. If you look at the industry that we're in, there's a surprise that's always around the corner, and usually it's not a very good surprise. So look at the last few weeks in terms of what we've seen with the military action in the Middle East. And so there's always something. And I think one of the biggest challenges for leaders in the industry is how do you keep teams motivated to inspire and perform when there's so much hitting you that you don't directly control? The revenue environment is very linked to gdp. Fuel costs are a big input cost. Geopolitical tension has a big impact on airlines very quickly. And so I think it's more the collective impact of all of those things to try to just keep teams focused, engaged. Particularly our frontline employees, who really have the toughest jobs in the industry. They're dealing with delays, they're dealing with the upset customers, and again, so much like weather that they don't control. So it's just a tough industry. It's very rewarding. There's moments when we reflect on successes, and every time you see an airplane take off full of people, you're so incredibly proud of everyone's efforts. But there's also a lot of tough times as well. And I think probably the COVID period was the most stressful both leading up to it, because before we got the assistance from the US Government, we weren't quite sure if we would be able to get through it. I mean, we really went from doing rather well to having 3% of our volume in weeks. And then actually the ramp up was even harder because certainly I can only speak for myself, but I really underestimated how quickly things would ramp up and how hard that would be. And some of the challenges on hiring, I mean, we were hiring people and they were leaving within two months to. To get other jobs. And we had a lot of challenges. And some of probably my toughest days at JetBlue particularly, were in that period where we didn't deliver the level of operating performance that our customers needed us to deliver.
- [61:58]
B
Interesting. Yeah. So we have a lot of listeners who either want to get into the business or just starting out. And I'm curious, kind of the question is, is it more fun running an airline or More fun selling airplanes. But for somebody starting out, what would you encourage them to pursue?
- [62:19]
D
Well, my first piece of device, actually. It's taken me quite a long period of time to be able to realize how important it was. But I've been so lucky to get an opportunity to join a company like Airbus and spend some time on the manufacturing side. Honestly, I wished I'd done it before. So having a chance in a career to spend some time both on the operating side and the manufacturing side, if you get that chance, take it. Because it is so incredibly helpful to see all of the perspectives. It is very different manufacturing an aircraft to flying an aircraft. More different than you think in terms of jobs. I mean, look, AI this, AI that. Everyone's concerned about how AI is going to sort of just take down a lot of jobs. And I'm sure there will be a lot of jobs that will be significantly impacted by AI. But this is an industry where there's still going to be so many opportunities. And how do we get more people today? Think about aviation and aerospace as where they want to spend 30, 35, 40 years of their. I mean, Scott, you and I go way back in this industry. So we know it's hard, but it's fun. And, you know, we need more engineers, we need more aerospace engineers, we need more. Airlines will need more pilots, airlines will need more maintenance technicians. There are so many opportunities. And also on the manufacturing side, I mean, manufacturing aircraft is actually very hard to automate. You know, you've got very large sort of pieces and of assemblies or fuselages that need to come together, and that's pretty hard to automate, at least at the moment. So I think it's a tremendously exciting industry. As you know, Scott, our industry grows, doubles every 20 years. As a. As a rule of thumb, I see no reason why that's not going to continue. So we're going to need more and more people. We're going to need more and more airplanes. Airlines are going to grow, and so many jobs in this ecosystem will be helped by AI, but won't be replaced by AI. And I think that's something we need younger people to think about as they think about career choices.
- [64:33]
B
Interesting, interesting. How about mentors? Who's been important to you in your career?
- [64:40]
D
Well, I've been lucky enough to work with some great people. I don't know if mentors is the right word, because what I try to do is, is steal a little bit of everybody that I've, you know, that I've worked with and worked for. But you Know, I joined British Airways very early on in my career, and they used to have a program back then called welcome to BA for all new employees on the first day. And I remember Colin Marshall as he was then later to become Lord Marshall, coming to present. And then I had, you know, I had a few more interactions with him. I was lucky enough over the years, and I think I always felt, you know, he was such a calm, you know, calm, collected, thoughtful person. And I, you know, when I watched him in action, I'm like, you don't have to scream and shout at people to get things done. And, you know, he had such a kind of care for the employees that always, you know, carried through and, you know, I mean, I could read out a list of many, many people. I used to love working with Joanna. Joanna Goetty, who now runs JetBlue. She. We all used to joke that she was the longest person. She worked for me longer than anyone else at my time at JetBlue and survived to tell the tale. She would say, but I love working with Joanna because, I mean, she was very different to me. But she always told you what she thought. She never tried to second guess what you might want. She always kind of laid it out. And she was also so inspiring with our employees. So I used to learn a lot from. I don't think she learned anything from me, but I used to learn a lot, a lot from her and many other people as well. You know, Dave Barger was a. Was a great boss, so. And even Guillaume today at Airbus, you know, just his knowledge. And, you know, I say. I said, say to him, you know, he leads through his knowledge rather than his job title. And I think those are, you know, some of the most inspiring leaders that you want to be around. But I've called a few people out, but honestly, I can list another 10, 20 people as well. Our industry is full of really caring, compassionate, and kind people, isn't it?
- [66:47]
B
Yeah, it really is. Really is. And you're one of them, Robin. This has really been delightful. Really appreciate it and it's great to catch up and look forward to doing it again.
- [66:58]
D
Yes, my friend, thank you so much. And I look forward to seeing you in person. And I still miss the middle seat. Maybe one day we can tempt you out of retirement.
- [67:11]
B
Absolutely. Well, no, but I'm having too much fun. All right, thanks again, Robin.
- [67:18]
D
Take care. Cheers.
- [67:19]
B
We will be right back with more
- [67:21]
A
promotional support provided by the ultimate Avgeek website, theairchive.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 traffic transport history.
- [67:36]
B
Thanks again to Robin. Always great to get his perspective. You know, he knows the industry so well from the airline side, from the manufacturing side. It's just I thought it was an
- [67:49]
C
important conversation and great to hear his tribute and perspectives on Ben as well. That was very cool in the opening.
- [67:57]
B
Yes, yes, absolutely. Before we get to the mailbag, 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 somebody 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
- [68:33]
C
airline pilots take off and we want to thank Cirium. Cirium offers the most accurate and precise data and analytics, as we've heard in this week's episode, to enable airlines to optimize planning, operations and passenger services. The right intelligence drives operational efficiencies, enables you to predict market shifts, and helps airlines respond quickly to maximize revenue, manage costs and seize commercial opportunity. Visit cerium.com for more. Okay Scott, what is in the mailbag this week?
- [69:08]
B
Oh, lots of things, Charles. We love to hear from listeners, so keep stuffing the mailbag full. It's really, really fun. First were several notes of appreciation for Professor Parker's class last week.
- [69:26]
C
Week. Way to go Doug.
- [69:27]
B
Yeah, no, it was really tremendous. I learned a lot. I think we all learned a lot. And he had just a great way of explaining a lot of complicated stuff very clearly and very succinctly. Just really appreciated it, as did Scott from Manila. The Far Reach of Airlines Confidential Scott from Manila wrote. Hi Scott, Just listened to Professor Doug Parker's in your fantastic route and hub profitability episode. Doug's explanation for revenue proration was spot on. I previously worked with the flight profitability system at a US Carrier helmed by a good friend of Doug's. This airline had experienced several years of disappointing results, largely due to a strategy that deprioritized short haul domestic flying in favor of long haul international. What helped justify a change to the network strategy? Sky? Scott from Manila asks. He says it was an updated revenue proration methodology. We previously allocated ticket revenue based on flight stage length rather than prorating the sum of the local fares. Remember that fares do not increase one to One with distance. Right. The latter showed that short haul domestic routes were significantly more profitable and important to the network than previously thought. I believe this was Scott Kirby's most important early contribution at United. Okay, we have outed the carrier in question, but a fascinating point. And he concludes, just goes to show, measure what matters and it matters how you measure. Cheers, Scott. So great note, Scott. Thank you for that. And Alan from Wichita, Kansas sent this. Scott and Doug. I enjoyed Professor Doug's previous school of airline pricing lesson, but this week's Route and Hub Profitability was one of my very favorite episodes. And after listening to at least 95% of the episodes. God bless you, Alan. I have quite a few favorites. As an accountant and a longtime airline geek, I have often wondered exactly how airlines analyze route profitability. I must confess that as an accountant, never in the airline industry. I was sure beyond revenue had to be included connecting traffic. Right. But I limited my thinking to these reports somehow reconciling to the financials. The actual method makes perfect sense once it was carefully explained. I hope Professor Doug will be up for additional lessons in the future. I have more questions in this area and plan to make a list and submit them in the near future.
- [72:20]
C
Oh, goodness.
- [72:21]
B
Thanks to you both and all of the outstanding co hosts, Alan from Wichita, which he notes is the air capital.
- [72:29]
C
Lovely.
- [72:29]
B
So I look forward to your list, Alan. Please do submit it. And Doug is not off the hook yet.
- [72:36]
C
It doesn't sound like it.
- [72:39]
B
He was hoping he would be, but we'll, we'll work on that.
- [72:43]
C
Well, hey, hey, listen, before we get any more from, from the, the mailbag, I mean, I want to say too, I mean, I enjoyed the episode as well. And like Alan and Doug clearly love to kind of geek out. I mean, what sort of struck me is having never worked at the same airline as Doug, I've used different systems. The acronyms at the airlines I've worked for have all been very different. But I could translate what they were. And gosh, I mean, you know, there are so many decisions that have to be made, you know, that, you know, no two airlines are going to measure their flight profitability or their hubs the same. Even as we got into the discussion around o', Hare, you know, a few minutes ago. But, but I'll tell you one, one aspect I found really interesting, just give you a sense of these differences. Doug said, I think if I understood him right, that in, in his world, which would be the American Airlines, you know, US Airways model, they. The driver, the cost driver for aircraft ownership was the current market value of a, of a lease of that aircraft type. So yeah, flying a 737 go out and what would it cost a lease a 37 now. And, and that I've never heard of or seen before. What I'm. What I would be more used to is what are, what is your airline actually paying and recognizing? It's going to be a combination of owned aircraft with depreciation and some leased aircraft where you have monthly payments and just lump all of those together for a common fleet type and then allocate based on hours. You know, is more sort of the actual, you know, kind of call it, you know, quote unquote cost of flying versus the hypothetical. If I were to go reconstruct my fleet, what would it cost me from a lessor. So I mean I understand if you were adding an incremental flight where the value of that could be. But I thought it was really interesting that.
- [74:29]
B
Yeah, no, if you, if you're in growth mode, you got to go get an airplane. That's a more accurate representation, right?
- [74:35]
C
Yeah, yeah. If you're growing. But if you're a steady state. Anyway, just, just as one reaction example. But yeah, ye. I had fun listening to it. And anyway, let's hope we can get Doug to throw on the professorial cap at least one or two more times when we have more topics for him to discuss. And now it's my turn. Scott, I've got a letter here from us from GEO in Texas and he had some comments on your rant from last week about fair share, you know, in terms of paying for air traffic control services. And so geo, I bet you had many. So anyway, GEOS is perhaps one sample. So GEO says. Scott, as a former air traffic controller, thank you so much for bringing light to the issue of business jets essentially getting a free ride from the ATC system. The other listener saying that business jets use less services is quite frankly uninformed. Throughout my entire career, the one constant was the business jet taking off from the middle of nowhere airport, going to the major airport and coming completely screwing up a sequence. Is it fair that I have to give a delay to a 737 carrying 200 people versus the G650 that is doing a repositioning flight or carrying the owner's cat? I don't think so. Is it fair that we have to pay to staff these tiny airports with towers in ski destinations that controllers don't want to live in just so a billionaire can have their winner getaway? I don't think so. This is a major issue and something that all controllers have to deal with. Please keep bringing this issue up as well as ATC staffing. This is something that was not mentioned by Mike Huerta a couple of weeks ago. And I think it is a much larger issue than upgrading ATC technology. The system desperately needs more controllers. Thank you. Well, Scott, what do you think there?
- [76:40]
B
Well, very grateful to Geo and totally agree with him on ATC staffing and we've talked about this before, but when you have a system where high stress jobs and there's mandatory overtime required and six day work weeks and all of that, the staffing is a huge part of the problem.
- [77:02]
C
Towers understand.
- [77:03]
B
Yeah, no, absolutely. And you know, in the DCA crash, you got one controller doing two positions and it just, we need to fix that. And I think the administration's working on it, but it's going to be slow. But I look forward to, you know, tracking it and seeing progress and hoping for some accountability. But Gio made great points and certainly, you know, the cost of living in Vail or Telluride or, you know, whatever is, I'm sure tough for air traffic controllers and, you know, a lot of issues here. But I think the bottom line is we need to do better. And that was certainly the message I was trying to convey.
- [77:52]
C
Right.
- [77:53]
B
So thank you to geo, thank you to Alan for his note and Scott for his note and, and thank you all for listening. Thanks to Robin Hayes and thanks to you, Charles Duncan, above and beyond the call of duty of interrupting your adventure in France. Good luck to your son's basketball team and look forward to hearing more about it. Good luck to you. To your travels three continents in the last week. Wow. I'll be back next week, which will be April Fool's Day, with another special treatment. Two legendary sales guys, both named Dave, will be together talking, no doubt about competing against each other and probably some of their exploits too. No fools, either one of them, but we might cook up some April Fools fun. So looking forward to that. Thank you again, Charles. Have a great week and safe travels, everyone.
- [78:50]
C
Thanks, Scott. I always enjoy it and I think I know both of those days and we're in for a great episode next week. It will be entertaining for sure. And with that, so long everyone and hope you all have a great week.
- [79:04]
A
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