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Airlines Confidential Podcast
342 - Scott McCartney with Guest Co-Host and Guest Chris Chiames
01:10:07
Host Scott McCartney with Guest Co-Host and Guest…
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- [00:04]
A
Airlines confidential with Scott McCartney is made possible with support from RTX, Collins Aerospace, Pratt and Whitney and Raytheon. Connecting and protecting our world. RTX.com infinity flight the leader in Cadet Academy flight training programs infinityflight.com Ontario International Airport in Southern California state SoCal so Easy flyontario.com the executive MBA in aviation at the University of Colorado denver business ucdenver.edu and by Cirium, the world's most trusted source of Aviation Analytics. Cirium.com we also welcome your business support.
- [00:51]
B
Contact us at airlinesconfidential.com welcome to Airlines Confidential. I'm Scott McCartney and this is another special edition of sorts. Today my co host is a familiar voice to longtime listeners. Chris Chimes is back with us refreshed and renewed. And today my guest is a familiar voice to longtime listeners, Chris Chimes. Chris retired recently from Carnival Cruise Lines and it's a pleasure to have him back for this episode. I'm looking forward to talking about his career in airlines, his career in the cruise industry and so much more. Welcome back, Chris.
- [01:31]
A
Hey Scott, it's great to be back, to borrow a phrase. I love what you've done to the place with regard to like your new formats. Lots of great guest hosts, your listenership way up. So really proud of what's happened with the podcast. I'm sure Ben is very happy as well and it's great to be back with you.
- [01:50]
B
Well, you and Ben and Seth really, really laid quite a foundation for Airlines Confidential. It's been a privilege and an honor to carry it on and great to have you back. It really is fun. Okay, we've got news to talk about. We've got a full mailbag and with some interesting questions and comments. And I'm really looking forward to looking back on long career in this industry with Chris.
- [02:18]
A
Well, Scott, that's my cue. So let's get right to the news. Last week, senior airline executives and many others met in Rio de Janeiro for the 82nd IATA Annual General meeting. Neither one of us was there, but all reports suggest a fairly subdued meeting. Obviously, with world events, things are going to be subdued right now with uncertainty and diminished expectations due to high oil prices being a key thing theme. I think there were some interesting economic numbers that came out of IATA though. For starters, IATA Director General Willie Walsh, who will be leaving that job soon to go run Indigo in India, estimated that airline fuel bills will increase by 100 billion this year because of the war. That's B billion. B as in boy, that puts oil prices at 70% higher than last year. With that $100 billion in increased fuel costs, IATA's chief economist cut in half the projected profits for airlines this year. IATA had expected the industry to earn 45 billion this year. Now that estimate is a collective 23 billion. There was also talk about more severe financial woes for airlines in Europe and certainly in the Persian Gulf. But around the world, many airlines have been able to raise prices. Some are hedged against high fuel price spikes. And it seems like having to pay an additional $100 billion in fuel costs in past times would have more than wiped out all profits, not just cut them in half. So a bit more perspective this. In 2019, when the industry was really doing well before COVID hit, IATA tallied up 26 billion in total airline profits. So that kind of sounds like 23 billion expected this year, right? In 2019, everything was going right in 2026. There are a lot of things going wrong and yet more or less the same profit numbers. Why? Despite higher airfares, we still have record low factors. We will also have record revenue. We will have a record number of passengers. The number of passengers will be up 10% this year compared to 2019. Revenue will be up 39% overall for 2026. Airlines will spend $350 billion on fuel in total this year, versus 190 billion in 2019. So up 84%, almost double. And yet net profit this year will be very close to 2019. Those are a lot of numbers I've just thrown at you, Scott. Yeah, but try to make sense of it.
- [05:02]
B
Well, I mean, what it says to me, I think, is that this really isn't a commodity business anymore. I think post pandemic there's been foundational change. I think it has been incredible to me to see all the fare increases and yet no decrease in demand. And I think that's because consumers view travel differently. I think consumers would rather travel than do lots of other things and just demand has, has foundationally changed. So I, you know, I think it is a different industry today. We, we talked some last week with Glenn Hallenstein about the decommoditization. And I think that's real. It's. I gave a speech last week in, in Chicago or talked about how this was a huge change in the industry where the demand is different and it's not just airlines putting out products like premium economy or like relatively affordable first class seats or things, or counting on baggage fees. There is a fundamental change here of how consumers are looking at travel as a necessity. And I think it's really Fascinating. So also we're recording this on Monday. There's a lot of talk of 60 day end of the war agreement with Iran. Oil prices are way down. You know, that can change any day. But some of the pressure of high oil prices may have diminished.
- [06:47]
A
Well, and it wasn't that long ago, back in 2020, during the height of COVID where a lot of people were predicting business travel was never going to come back. Yeah, the world had changed, people were working from home. All these things that were predictions back in 2020 and 2021 proved to be false.
- [07:06]
B
Well, yes and no. I mean, I think there was a 20% reduction in business travel, sort of a, you know, a lost time and airlines adapted to that. It's interesting, I think of. You know, we talked about leisure. Right. This idea of mixing leisure in business. I think that's just travel today. You know, I think people still do it and, and they like to do it. And you know, I do, I still hear about people working virtually. People, you know, take the beach house and work from the beach house or work here or work there. And, you know, that's still going. I do think that's a fundamental change.
- [07:47]
A
My only concern is, you know, with this 100 billion in added fuel costs, yes, the industry has adapted, but what's not getting funded? That's on roadmaps. Yeah, I think that's the kind of the overlay here. You know, there will be casualties. Whether, you know, you can argue whether Spirit was the casualty of the war or not. I don't think so. But certainly some European carriers are holding on tight. But it's really kind of like what isn't getting funded? What are people in C suites being reluctant to invest in right now that they need to be thinking about?
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B
Yeah, yeah.
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A
So I think that's an overhang that's going to be around for a while.
- [08:28]
B
Right. And a whole nother discussion about discount airlines. I mean, 100 billion, if you're in a weaker position, you are a whole lot more vulnerable. Right. And, and that, you know, Spirit's problems predated the Iran war. They hadn't made money in six or seven years or so. But when things got ratcheted up, that was really tough. And it's really tough for, for other discounters. You know, I do think they need to find a better model to compete in this world where travel is not a commodity anymore. So all, all fascinating. One other fascinating thing that we heard out the IATA meeting, it was a lot of discussion about problems the industry has been having with engine Manufacturers both in terms of production shortfalls that have slowed airplane deliveries and disappointing reliability of this generation of engines from all three major engine makers, ge, Pratt and Whitney and Rolls Royce. Big picture. Take a step back. The, the big picture I think in all this is the push for greater fuel efficiency has produced engines that just aren't holding up like their predecessors. And I think there are some reasons for that rooted in physics. The latest engines burn hotter because that produces more power from the same fuel. And that has led to engine parts wearing out faster than advertised. Lots of engines have had to be removed to repair an overhaul sooner than expected, and that's crowded repair shops and led to longer time off wing. There have been supply chain and manufacturing woes. And with the particular major Pratt Whitney issue of contaminated coating that was used in manufacturing of thousands of engines. And now those engines, the blades have to be replaced far sooner than planned. United Airlines CEO Scott Kirby weighed in on this. He said he hoped Boeing and Airbus have learned to never release a new airplane model with only one engine option for airlines. That's a, that's a real issue. Both manufacturers have done that and now that has really led to airline frustration. And Kirby ripped Rolls Royce in particular for a lack of support to airlines. He said roles being the only engine option for the Airbus A350 1000, that that was a factor in United deciding to back off an order of 45 a 350s that United had with Airbus. Kirby's big quote was GE is the best. I think Pratt and Whitney is working hard and so I appreciate their attitude and what they're doing. And my sentiment is that Rolls doesn't care. Rolls Royce responded that it looks forward to working through issues with United. I guess that's kind of all you can say with that and one one other Kirby note. Kirby also said again he didn't think mergers were likely soon. And once he said that, that stirred up a whole new round of merger talk in the media. At least I don't think it's happening in the in the boardrooms. Maybe only hypothetically. He did poke more at American. Stirring the pot, so to speak. He said in any merger, unions, customers, shareholders, regulators and management all have to agree a merger is a good thing. On American, he said he thinks he has support of four out of those five, only management is opposed. Kirby says he hears from American customers who wish United would take over the airline. He's heard from American unions, no doubt from American shareholders who have seen the stock stuck below $20 a share for the past four years. And shareholders would love to see some action. And Kirby thinks regulators, at least in this administration with which he has been supportive monetarily, that the administration would be on his side. All that, I think, is to just once again poke a sharp stick at American Management. And by the way, there goes Scott again on the timing. We've talked about this before, how whenever something big is coming up at American two or three days before, Scott Kirby's out there stirring the pot. And this came right before American's annual shareholder meeting, where CEO Robert Isom had to answer questions about why American rejected a merger with United and whether American really did the work to evaluate the idea and what the path forward will look like. I do think Scott Kirby wants to do something big and bold. I don't think he's given up on the American idea. He wants to do something transformative and legacy building. So this is not as dead as you might think. More immediately, perhaps more impactfully, I do think that by stirring the pot, he's making life more complicated for American management and weakening American management. And American Management certainly has its hands full right now trying to run a better airline.
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A
Well, it's nice to see Scott Kirby finally coming out of his shell.
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B
Yeah.
- [14:12]
A
And outgrowing his shyness. Look, first, going back to his comments about engines and specifically Rolls Royce, he's right. But coming out of the cruise industry most recently, we have lots of issues with our engines, too. It underscores the importance of engineering. We all think about the financial aspects of this, but the reliability of what we do is key to success. And the engine problems are at the heart of many reliability issues, as well as cost issues. And it really underscores the importance of that. So I think the industry needs to keep up the pressure on the manufacturers. Yeah. And do it on a regular basis like Scott's done. I'm sure they're doing it regularly during negotiations, but the only way to fix this is to keep the heat on.
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B
Yeah.
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A
With regard to kind of the industry aspects, you know, I think probably the best thing that happened to Scott was getting that job at United and letting him be the master of his domain, if you will, with regard to kind of writing his story and how he wanted to lead an airline. But I'm also pretty sure he wakes up every morning thinking about how he can poke American, and he does it effectively. And I hope the American folks stop giving him reasons to get poked. So they're hard at work trying to run a better airline. But Scott's not going to go away with the comments. And the observations and the things that kind of throw them off stride and they're going to have to figure out how to work around that, I think.
- [15:55]
B
Yeah. And, you know, running a better airline, I do think that's, that's key to it. Right. It's key to winning back corporate customers, key to keeping people in the loyalty program. Key to, key to everything. And, you know, I'm going to talk about an experience I had last week because I thought it was, it was, you know, it's one anecdote, but it's. It was kind of to the point of are they running a better airline? I was in out of Chicago o' Hare and not a pleasant experience. Chicago Air was, was a mess. There were storms all over the east coast last week. I think some of that's continued. The FAA had ground delay programs upon ground delay programs and took the arrival rate at O' Hare down to 20 at one point. Normally 70 something. And it was just a mess. And these were pretty routine. Brief summer storms, one line of thunderstorms in the morning and chaos all day long. In my case, on Monday, it seemed like, I mean, I, I walked to the L. I never saw a drop of rain all day and. But I do think there were, there were storms in the area. There was a storm over Lake Michigan, which would affect arrival and departure routes. So there were storms certainly that would impact it. But things really fell apart for American. My flight got canceled. I was at the airport about six hours before the flight got canceled, and then all of a sudden the plane that was supposed to serve my flight was in the air on its way and it got rerouted. American decided to send it to Los Angeles instead of send it to Dallas. So I get noticed my flight's canceled because of weather and the sun is still shining outside. And that, that happens in this business. I understand it. I tell you this not to slam American, but to remind us that summer travel can really suck. And B, that Chicago o', Hare, with its increase in flights and renewed war between United and American, may be in big over capacity trouble this summer. And even with the FAA flight cap in place, I think this is something to watch. We've talked about a summer of travel hell before the FAA imposed its cap on o'. Hare. But maybe that cap was too generous. We'll have to see. I did ask Cirium for data on o' Hare for five days last week, and the totals for the airport were really ugly. 6% of all O' Hare flights were canceled over those five days. Normal airline cancellation rate is under 2% better airlines under 1%. On time arrivals were around 70% below average for airlines. But worth noting that United perform much better than American. And this really gets to the issue of, you know, is American running a better airline? On my travel day Monday, American canceled more than 14% of its flights. The customer service lines, by the way, in each of the concourses stretched much of the length of the concourse. It was really, boy, a lot of people distressed. Same day, same airport. And United canceled fewer than 6% of its flights. Not great 6%, but a whole lot better than then one out of every seven flights. The 14% American. In terms of numbers rather than percentages, American canceled twice as many departures, 72 compared to 36 for United. According to the Cerium data, American had an on time arrival rate on that Monday of 51% and United 67%. And United has a whole lot more fights at O'. Hare. 645. Five flights scheduled that day compared to American's 507.
- [20:04]
A
Well, so your O' Hare experience was 10 days ago from when we were recording this, right? Sure, yeah, I had one just two days ago. I met my two adult daughters. My wife and I flew from dfw, one daughter from New York, one from Washington into o' Hare for a family wedding. And all of us got stuck in this weather vortex, different things. And o' Hare was a disaster. Like you said, the lines, the customer service lines, the TSA lines, but it was the Uber lines and it was the lines to catch the airport train. And we got to the car rental place and it was backed up there. I mean, o' Hare is just overloaded. And I know there are lots of plans underway to do an expansion, but they have bragged about various expansions over the last two decades and I don't know what's been expanded.
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B
No. And there's construction going on there that has messed up the operation too.
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A
And o' Hare just looks like a very tired airport in general. So I think a lot of it has to do with o', Hare, unfortunately, and the overload going on there. But absolutely, there are different ways to deal with these distractions and off scheduled operations. And some airlines do it better than others. But when you have four or five major hubs, if you will, or major airport focused cities all under the gun with regard to weather and disruptions, at some point just the whole hassle card starts to fall down, right? Yeah, but it is an ongoing issue and you know, we talk a lot about the impact of ATC and we Talked a few minutes ago about fuel costs. What about the fuel costs of an inefficient ATC system and all the delays that happen because air traffic can't also recover from weather very well.
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B
Yeah.
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A
And so there's lots of embedded costs and impact, some of them beyond the airline's control. And where those are going to go, nobody knows. We've been talking about ATC reform, and every administration has announced, again, some version of ATC reform solutions that don't really go anywhere or don't really add any value. So at some point, that has to be addressed. And the impact of general aviation, of business aviation on the overall system have to be addressed in any solution.
- [22:38]
B
Yeah, no, and. And it's a great point about all the hubs and the complexity of the operation and about the con. Constraints that we have with the faa. But, but given all that, it's. It's the same with thunderstorms in summer. We're always going to have thunderstorms in the summer. Right. This is not new. And so the real test for an airline is how you handle that. And I think that's where American really needs to come up with some improvement, because statistically, it does not seem to be. This is not new. This has been the last place in the Wall Street Journal rankings for all of last year. And that was a repeat of previous performance for, for many years. They've got to come up with better management of the complex network.
- [23:33]
A
Well, and it's demoralizing for employees. Yeah, they don't like it. They're impacted, but they don't like not being able to help the customer. And again, you can kind of see it on their faces. It was interesting. On our flight back on Sunday, we had a husband and wife in the. The cockpit crew. She was the captain, he was the fo, and she came into the first class cabin and made a very nice, very heartfelt apology and expressed her appreciation for our loyalty and said, look, you're why we get to do the job that we love. And my wife said, that is the nicest thing I've ever seen anyone from the cockpit do. Yeah, it was very impressive. And it underscored employees don't like this and they don't want to see it happen.
- [24:28]
B
No, it affects them, too.
- [24:30]
A
And if given the tools, they would respond to help fix the operation even more than it's happening now. So again, no one's trying to beat up on anyone because next month it'll be some other airline in the dunk tank.
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B
Yes.
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A
Okay. So there's no doubt.
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B
And we have a question about Southwest operations.
- [24:55]
A
It just happened to be that we flew on American. But like I said, I was also impressed by the ability of employees to try to manage it effectively given so many things beyond their control.
- [25:06]
B
That's good to hear. That's good to hear because it is so tough. I think you, you know, one of the tough things for employees is they have to deal with this day in and day out. And that does wear you down. All right, Chris, time now to thank our sponsors. Would you do the honors starting us off?
- [25:24]
A
Sure, Scott. First, we want to thank RTX for its longtime support 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 and 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. We also want to thank Infinity Flight Academy for its sponsorship. The path to the flight deck starts long before a pilot reaches the airlines. At Infinity Flight Academy, they're proud to serve as a flight training partner for the American Airlines Cadet Academy, helping prepare the next generation of professional airline pilots. Infiniti Flight Academy's training is structured, standardized and built around the discipline today's airlines expect from day one. For future pilots pursuing a career at the highest level, Infinity Flight Academy is proud to be part of that journey. Infinity Flight Academy training tomorrow's airline pilots through the American Airlines Cadet Academy.
- [26:39]
B
Thanks as well to Cirium for making this podcast possible. Cirium offers the most accurate and precise data and analytics to enable airlines to optimize planning, operations and passenger services. The right intelligence drives operational efficiencies, enables you to predict more market shifts, and helps airlines respond quickly to maximize revenue, manage costs and seize commercial opportunities. Visit cirium.com for more. And thanks as well to Ontario International Airport, which just launched the ONT BOLD program, a proposed vision to transform the airport's facilities to streamline the passenger journey while also creating jobs, growing the regional economy and building on ONT's legacy and as a global gateway. The program includes plans for a new terminal, a multi story parking garage, upgrades to existing terminals, enhanced roadways and new utilities. The ONT BOLD program is early in the planning phase. Visit flyontario.com Bold B O L D to learn more and join the journey to ON T's boldest chapter yet. Okay, Chris now take off the CO has. Okay, Chris, now take off the CO host hat and put on the guest hat. And let's start with the Ben Boldanza question. You've probably answered this before on the podcast, but how'd you get into this crazy business?
- [28:09]
A
Well, we're not going to go back to Orville and Wilbur days, but just. Just about that long ago, I actually started my career in politics. I worked on Capitol Hill for about five years out of graduate school, and my former boss represented the San Joaquin Valley in Central California. And this was right after deregulation. And that part of the country was the hardest hit with regard to losing air service.
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B
Oh, interesting.
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A
And at one point, we had, like, eight essential air service carriers operate one by one, go out of business within, like, three years.
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B
Wow.
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A
So I was very involved in aviation. I handled transportation for the Congressman. And the woman who was head of Congressional affairs for the old Civil Aeronautics Board that was still in business during this time was a woman named Linda hall, who later became Linda Dassel.
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B
Yeah.
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A
Former deputy FAA administration administrator. But we came, you know, we were talking weekly, and she was in the office monthly, either to tell me, your airline serving Modesto, California is going out of business, or we have a new airline for you. So whether it be Inland Empire Airlines or Sierra Nevada Airlines or whatever, they were coming through the valley and starting and stopping pretty rapidly. But Linda and I became good friends. She eventually went to the old Air Transport association, now A4A. Then when she was moving on to another job at the Airport Executives Association. I was just getting out of graduate school, a different program, and was looking for a job. And I ended up, at her recommendation and her help, getting a job at the Air Transport association doing government affairs work. Huh. So that was back in 1991. After a couple years, was promoted to run their PR shop. In June of 1995, the Unabomber threatened to blow up an airplane or airplanes, the lax. I don't know if you remember this, but no, it was a huge story. And the airline PR people all got on the phone with me and said, we don't want to be out front on this. We want you to go out to LA and handle the media. And these were the old days of the satellite trucks. And literally the entire horseshoe of LAX were satellite trucks. It was the biggest story in the country at the time.
- [30:47]
B
Wow.
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A
And I spent a couple days on the ground just walking the concourses, talking to tv, talking to media. And I must have made a good impression because about six or eight months later, American Airlines Offered me a job. So that's how I moved from Washington and lobbying into the airline business and spent five years at American. Later went to work for US Airways during that restructuring and eventual merger with America West. Did a lot of consulting back to airlines, worked at Orbitz and Sabre. And I've been around the, the airline and distribution ecosystem, if you will, for a long time. But first days were back in Washington and, and knowing the right people who could recommend me for some jobs.
- [31:39]
B
Fascinating. Fascinating. All right. And eventually that led to the cruise industry, and that's where, when you were doing the podcast with Ben, that's I'm sure what people, people remember. I, I find the cruise business fascinating and not just because I'm doing a cruise this summer with family, but I'm curious, is it similar to the airline world or different?
- [32:01]
A
I had never been on a cruise before I went to work for Carnival eight years ago. There are a lot of similarities, but the cruise industry, believe it or not, is a much more complicated business than aviation. No, I used to think, like, what could really, what could be more complicated than to define gravity tens of thousands of times a day? You have the similarity of the. We talked about engine manufacturers and mechanical. You have the similarity of the mechanical nature of the business operating an aircraft or operating a ship. But, you know, a cruise ship is also doing a lot more different kinds of things other than going up and down and being safe. Right. And again, I'm not diminishing what airlines do every day, but we're manufacturing our own water. We're basically the power. We're creating the power to move the ship. We're feeding tens of thousands of people. We're operating plumbing systems and all kinds of things that they're small cities, theaters
- [33:08]
B
and shows and water slides, security systems,
- [33:12]
A
and people misbehaving and people gambling. And, you know, some of our power outages have been related to, like, slot machines getting plugged into the wrong outlet or whatever else. So there's just a lot more things that could go. Could go sideways that I hadn't really fully anticipated before. So a lot of similarities with regard to kind of processes and systems safety and the focus on safety, but it's just a much more complicated business because you're managing from a PR perspective at least, but also from an operations perspective. You're managing the safe operation of the thing, but then in the cruise industry, you're just managing a bunch of other elements involving humans and human behavior that can distract you. That's fascinating in a way that you just don't see in the airline business.
- [34:05]
B
Yeah, yeah, that's. That had never considered that. That's really interesting. I guess financially there are a lot of similarities. You have very high cost of capital. Right. And you have this, this empty thing that you have to sell the seats on or in this case the cabins. And so dynamic pricing, seasonal and, and you can, the asset can be moved around. So you may correct. You may plan and all of a sudden the competitor dumps three boats in your. On your route or whatever. I suppose there are similarities.
- [34:40]
A
You know, we've, we've copied a lot what's happened in the airline business with regard to incremental and add on pricing and value pricing and up to scale dynamic pricing to purchase what you want want. So you can go on a cruise and basically sleep in an inside cabin and eat the complimentary food and never
- [35:00]
B
spend a dime and call it basic economy.
- [35:03]
A
That's right, there you go. Or you can upgrade and buy the drink package or go to a upscale dining establishment for extra or whatever else. So we have again tapped into those kinds of things.
- [35:14]
B
Yeah.
- [35:15]
A
To expand revenue. But it is, it's a much more, much more complicated business that again, I didn't fully anticipate. One of the things that I really valued though too, that again I think airlines have tried to do but haven't done very well at is kind of the ability to more instantly make things right when things go wrong. And I grew up, my ethnic heritage is Greek and lots of, without stereotyping, lots of families and friends had restaurants and things. And I always, you know, you could always make things right if things went wrong in a restaurant. Right, right.
- [35:53]
B
Yeah.
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A
And you have that ability in the cruise industry to do the same thing, whether it be send a bottle of wine, give a, you know, a free tour, whatever it is. You have the ability when something went really wrong, to instantly acknowledge it and do something about it that, you know, I've seen airlines do sometimes pretty well and other times not in the context of like, you know, I've sometimes been in a really bad situation with a delay and when I land I have a text that I've got 10,000 miles for trouble or whatever else. But that doesn't happen all that well.
- [36:30]
B
Right.
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A
I think. And so, you know, customers remember that.
- [36:34]
B
Yeah.
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A
You know, if you deal with it in the moment, they remember that better. And so I think that's someplace for the airlines to go once they get through the overhang of the Gulf war and, or the Iran war and whatever else. But how do you cap the Customer anxiety and move on quickly versus letting it faster.
- [36:55]
B
Yeah. Interesting, interesting. All right. You worked for several airlines at some really historic times. You worked for some legendary CEOs. What's a favorite experience or two and a favorite boss or two?
- [37:11]
A
I've worked for some really tremendous people. I've been very lucky. I have a lot of affection and respect and admiration for Bob Crandall. He was the first CEO I worked for in the industry. I used to joke when I was at the trade association, I could walk into any committee meeting and not even know who the people were, but pick out what airline they were from because the American people at the time had read the agenda. They came to make decisions, they had firm opinions, they were prepared to go out and execute. And I was. You know, that started with Bob and filtered on down. Different airlines had different personalities. Right. And I'm not going to pick on other airlines that aren't even in business anymore, but you could kind of pick out who they were too, where they're from. So. And you know, Bob, while he had a reputation for having firm opinions, he also always listened to the debate. He may not always have liked it in the moment during the discussion, but he went back and thought about it. It was very interesting. He processed things, and so I always admired him for that. And. And again, this was like, in the early 90s, American was still at the top of the game. We were still innovating in ways that was very important to them. The American culture was, we're the industry leader and we're going to lead. And whether it be from little things, like America was the first to put changing tables in the lavatories.
- [38:49]
B
Yeah.
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A
And that was from, frankly, Bob's kids complaining to him, saying this, why don't. Why do we have to change our kids lap? You know, Bob had never been kind of presented to Bob as an issue until his kids brought it up. But then he was like, well, that makes perfect sense. Right? Yeah. Because again, I'm old enough to remember sitting in the lab on the toilet with the kid in my lap trying to change. Change a diaper, right?
- [39:13]
B
Oh, yeah.
- [39:14]
A
So whether it be little things or big things, they really wanted to lead. And so Bob was a tremendous leader in that regard. My boss, I just left at carnival, Christine Duffy, she was another tremendous leader. And from a communicator, you couldn't ask for a better client. Whatever you needed her to do, she went out and did. She wasn't afraid to take on a tough assignment. She wasn't afraid to be silly. If you needed her. Or two. She wasn't afraid to kind of address the elephant in the room. So, you know, she's really built a culture that is pretty admirable right now in any company. And the loyalty to that is showed to her by the employees is pretty tremendous. I mean, during COVID we were, you know, the cruise industry was shut down for 16 months.
- [40:07]
B
Yeah.
- [40:08]
A
We had 40,000 plus employees around the world. Most of our employees are not US Citizens. And she was recording monthly videos just to keep them informed. And they were sitting around on their phones with their families watching these videos, waiting to hear when they were gonna come back to work. And we didn't know. And at one point I said to her, christine, we need to tell them if they have an opportunity to get another job, to go get one, and we'll call you back when it's time. And, you know, companies don't like to tell their employees to go somewhere else. Right, right. But she knew that was the right thing to do. Like, into like, month four or five of this, and it was another year before we were going to come back to work. And, you know, she still has employees saying, you're telling me that is why I came back to the cruise line afterwards. You're being honest with me? Because they have to support their families and they have obligations as well. And so her ability to be totally enthusiastic but also totally organic with regard to her empathy and her commitment to the employees has been pretty fascinating to watch.
- [41:20]
B
Interesting. Interesting. That's great. All right. Most challenging. And you mentioned Sabre in Orbit. That part of it. I'm curious if you have any thoughts on the state of ticket selling and technology these days. As Maya reminds us, we always have to have a required AI question. So I guess this is the AI question.
- [41:46]
A
I think a lot of noise is made about distribution that isn't all that well deserved, frankly. I don't think airline distribution issues are as important to the C suite and airlines as some people want to make
- [42:02]
B
them to be interesting.
- [42:04]
A
I think there are some people who work for airlines and distribution who want to try to drive that conversation. But at the end of the day, when people put out their credit card, you need to take it and swipe it.
- [42:19]
B
Yeah.
- [42:19]
A
Okay. You don't need to say, go down the street and go buy it. And I think that a lot of noise about distribution is just that. We talked earlier about reliability and running a good airline. I think there's a lot of higher priorities than distribution. And I see a couple people on LinkedIn who post daily about Edifact and NDC and whatever, trying to draw attention to their. Whether it be their. Their consulting businesses or their. Whatever it might be. But I just don't think it's that important. I think it is important, but it's not the issue. And things are going to evolve. AI is going to evolve things a lot quicker than all the other arguments, probably. But at the end of the day, you got to be where your customer wants to be with regard to how they want to purchase things. And I think some airlines who have tried to overplay this have paid the price as well. Corporate travel managers want to use corporate travel agencies to help them manage the business.
- [43:22]
B
Right.
- [43:23]
A
And telling them they can't or they shouldn't isn't listening to your customer very well.
- [43:28]
B
Right. All right. What makes you hopeful for travel, for cruise and for airlines, and also anything about it that keeps you up at night or used to keep you up at night?
- [43:42]
A
Well, I mean, we talked a little bit about this earlier, but I mean, travel is not a luxury anymore. It's an essential part of how we live, how we do business. Certainly for future generations who've grown up traveling, they're going to want to continue to travel. They're going to want to continue to value experiences over things many times. So I think the demand for travel is going to be there and only going to grow. I think the issue is like, you know, as travel continues to grow, how do we not choke on our success? And we talked a bit about, you know, Chicago Hair and. And other airline kind of operational issues, but how do we keep up with this? I don't know how. There's only so much infrastructure that can be built.
- [44:32]
B
Yeah.
- [44:32]
A
And how are we going to continue to streamline things? Obviously, that's a big place for AI to be helpful. Maybe someone should enter the query to Claude, how do we fix the ATC system? But clearly technology is the only way out of this with regard to better efficiency and more infrastructure, because we're not going to build a lot more runways or airports as much as make better use of what we have. And the same thing with highways. And there's all kinds of things that implicate how travel can grow. But I think, you know, lots of people are optimistic and they have good reason to be. Yeah.
- [45:14]
B
Yeah. Okay. You know, one of the stories that I did that I was always most proud of was an idea that you brought to me years ago about the lack of automatic defibrillator machines in hotels. You were, I think at the time, you were the executive director at the Sudden Cardiac Arrest Association. And you noted that while airlines. And I guess it happened while you were at American. The airlines put defibrillators. I remember John Hotard calling me when they started putting defibrillators aboard airplanes. And eventually the FAA required that. But I remember American doing it before it was required. But all that happened in the air, and hotels had no requirement to have them. And in fact, what was happening at the time, the practice in the hotel business was to not have them because management was afraid of liability. What if someone had a heart attack and the battery was dead in the defibrillator? Or the. Or the staff couldn't find the defibrillator? So I think that's story helped mount pressure on hotels. And now you see defibrillators on site at hotels and in so many other places. And I imagine lives have been saved. So I just want to say bravo, Chris. But I'm curious how all that came about, how you ended up at the Sudden Cardiac Arrest association to begin with.
- [46:40]
A
Well, I remember putting the AEDs on the American Airlines aircraft again, one of those things Bob Crandall gave the green light to, again to be a leader. And I remember the first save we had in flight when I left US Airways. I was looking for some other opportunities, and it was approached about running this new startup nonprofit, the Sudden Cardiac Arrest association, which sadly, I don't think is in existence anymore. Maybe they succeeded themselves out of business, but it was started by a group of people who had been saved by defibrillators. Yeah. And I had a family connection to the issue with regard to sudden cardiac arrest and said, okay, I'll help you get started. We're gonna. We're gonna turn this into a PR machine. That's what I knew. I don't want to raise money. I don't want to manage volunteers. I. But let's get started and turn this into a PR machine. And in the process, was able to raise more money and get more volunteers. But I noticed as I was traveling with my frame of reference being aviation and AEDs, and they were readily available by then started asking at hotel front desk, do you have an AED here? Sometimes they didn't even know what an AED is. Or they said, yeah, we have one somewhere. And I'd say, well, where is it? And they didn't know. And so that led to my writing the major hotel chains and saying, like, what's your policy? And I think that's when I came to you, because no major hotel chain even would answer us with regard to what's their policy? And said, I can't get the answer, Scott. So you go, I'm going to turn the Wall Street Journal. And I really think it was that story that shed light on this general issue and their. Their unexplained fear that caused the turnaround, that now they're just standard. You see, everywhere in hotels, more and more big corporate meetings and events would actually put into their contracts. They would not.
- [48:49]
B
Yeah.
- [48:50]
A
They would not book a hotel if they didn't have the proper emergency, the devices to respond to bringing in 5 or 6,000 of their employees. Right, right. To stay at a convention, hotel or whatever else. And so it really turned things around. Now they're just kind of standard. They're not mandated. I think they're. They're standard. They're also seen as best practices with regard to your own employees. If you've got two or three thousand employees.
- [49:16]
B
Right.
- [49:16]
A
Working in a hotel and you want to be able to respond to an event. So that was one of those things that I was very proud of and enjoyed working with you. But again, it was like the incremental nature of it. If you just stay at it long enough, eventually good ideas come to pass.
- [49:35]
B
Right.
- [49:36]
A
Even if there's resistance. And I was really proud of the work that we were able to do there to kind of help promote now just the commonplace, you believe, ubiquitousness of AEDs, everywhere we go, at the grocery store and.
- [49:51]
B
Yeah.
- [49:52]
A
Health clubs. So.
- [49:53]
B
Yeah. No. And you do hear story. I mean, first responders, sometimes their first question is, is there an ad there? Correct. Get it and hook it up. Correct. Yeah, yeah, yeah. All right. Well, you should be very proud of that. Okay. You've worked closely with media for decades. You've seen it change dramatically. We could probably talk for hours about what's happened in the. In the media business. But I'm curious about your basic assessment of airline industry media these days and cruise media as well.
- [50:29]
A
That's a hard question to answer because there really isn't much of an airline media group anymore. There aren't a lot of people dedicated to the beat.
- [50:39]
B
I think that's probably the story, Right.
- [50:41]
A
Yeah, that's. That's the story. You know, I used to be able to, kind of, especially when I was at the trade association and was working across the carriers and across the country. Every major city had an airline beat report, right?
- [50:56]
B
Yeah.
- [50:56]
A
You know, Cleveland and Charlotte and Houston and. And Denver and Phoenix, and they all had dedicated airlines. Beat reporters.
- [51:05]
B
Yeah.
- [51:05]
A
Who were all knowledgeable.
- [51:07]
B
Some papers, more than one.
- [51:09]
A
That's Right. And you could, you know, they were. They wanted to be educated on the issues. You could spend time with them off the record. You could spend time with them on the record. They wanted to understand more of the story. And there was, you know, they certainly had a job to do, but it was a very constructive, friendly relationship. And the same thing with the cruise industry. Like, you know, most of the major, you know, Miami had a dedicated cruise reporter. Now they have kind of someone who covers travel and crime and something else. And so it's not their fault, but they don't have the luxury of really understanding the business like they used to.
- [51:50]
B
Right.
- [51:51]
A
And so it's a much harder job for them and it's a much harder job for communications professionals. It also kind of lends itself to more and more companies have a way of communicating more directly if they're not going to get. I would have conversations with the Miami Herald frequently and say, look, I don't need you to cover this story if you're not going to do it. Well, I have other ways to communicate with our employees and our customers and local officials. Because you're using social media and things on your own too. So it's rather disheartening. It's the nature of technology and the way things are. But I think we're well served by having educated reporters covering the industry just like we are covering politics or anything else, right?
- [52:45]
B
No, I think both. It is a complicated business. So the coverage is better when you have a reporter who can understand the business and know what this means or that means or that it also benefits from having reporters with historical knowledge of what's happened. And that's all true for any business. And the money problems that have afflicted newspapers in particular, but also broadcast media and everybody else, that's. That's resulted in a lot less rich copy and accurate copy in some cases.
- [53:27]
A
I remember when I was an American and we had an accident in Little Rock.
- [53:32]
B
Yeah.
- [53:33]
A
I remember that there were a lot of, you know, non aviation reporters from the greater region who were covering there. Were, you know, all the regulars were there.
- [53:42]
B
Yeah.
- [53:42]
A
From the networks and the major daily papers. They were all there.
- [53:45]
B
Yeah. Well, there were the seven dwarfs.
- [53:47]
A
That's right.
- [53:47]
B
Who went to every craft scratch.
- [53:51]
A
But there was somebody from, you know, the Paducah Times. I don't know where they were from. And he came up to me after a briefing and said, can you explain to me? And this is indicative of kind of people not knowing the business, but can you explain to me. He kept talking about the nose of the aircraft. Which end of the aircraft is the nose? And of course, I wanted to say, God help us all. And so I'm like, you know, the nose, like the nose and the tail, and you figure that out. And so. But I very carefully kind of said, well, the nose is the front of the aircraft. Oh, but that's what happens when you don't have knowledgeable people. Right?
- [54:30]
B
Yeah.
- [54:30]
A
And it wasn't necessarily his fault, although. And you know, nowadays you could hopefully just go on your phone and say, what's the nose of the aircraft? And ask, ask, you know, Claude or somebody.
- [54:41]
B
But.
- [54:42]
A
But it's scary, the lack of knowledge. Yeah, okay. And. And that they're going to have the final word. And so again, you want people who understand. And again, credit him for having the, the guts to ask a stupid question. But I'm glad he did.
- [54:59]
B
Yeah, yeah, yeah. All right. Two things looking back. What were you most proud of? And I also wanted to ask, since we have a lot of young listeners, best career advice for young people getting into this business.
- [55:15]
A
Most proud of my airline days, I have to say the US Airways restructuring. And if you go back to that era, after 9 11, Airways was the first to file for bankruptcy restructuring. So there was no playbook. And there was. This was after the failed merger with United States. And the common conventional wisdom was there's no reason for US Airways to exist. They don't have strong hubs, they don't have this, they don't have that. They should just liquidate. That was the going in proposition by most Wall street analysts and most industry analysts was US Airways has cooked. The best thing that could happen to the industry is they just liquidate and their assets are absorbed for the industry's recovery. And we just stuck to it. We made a lot of tough decisions. We were the first to terminate pensions and change benefits and close hubs and do a lot of really tough things. But at the end of the day, we saved 40,000 jobs. Yeah, okay. Yeah, people lost jobs, but we had to focus on what we were saving. And that enterprise eventually merged with America west, which then eventually merged with American.
- [56:34]
B
Was this the Dave Siegel. Dave Siegel, Ben Baldanza.
- [56:40]
A
Correct. Dave. Ben. Jerry Glass. I was recruited to join that management team, and again, none of it was fun. But we woke up every day knowing what the mission was. And we were very proud of what we were able to do with regard to saving the basic infrastructure, that enterprise. And then, you know, most recently, just sticking with Carnival and seeing their recovery post Covid, you know, 2019 we were talking about the airline industry's successful year in 2019. That had been our most successful year ever.
- [57:14]
B
Yeah.
- [57:14]
A
And by 2023, we were bettering 2019 with regard to record profits and record operations. So the rapid recovery of Carnival and the cruise industry post Covid was something that, again, we're really proud of. As far as career advice, Pay attention to everything. Don't be afraid to get involved in things that you didn't think were your job or you weren't good at. If someone's asking you to do something that you thought was outside your job, they must think you can do it.
- [57:52]
B
Interesting.
- [57:52]
A
They're not setting you up for failure. They think you can do it or they want to challenge you. But especially right now. This is a tough environment to kind of finish school right now.
- [58:01]
B
Yeah.
- [58:01]
A
So as I'm. As I'm talking to, like, new college graduates, and I do mentor Summit, it's like, just go to work, find a job. Focus on what you want to do, and keep moving towards that, but just go find a job. Yeah. If nothing else, your parents will get off your back because they see you out there hustling, and future employers are going to see that you're willing to hustle versus, like, waiting around for 18 months for the right job to come along. Just go find a job and learn from whatever opportunities you have.
- [58:36]
B
Yeah, that's great advice. My friend Jodi Kanter at the New York Times has a book out about starting out right now Young People Inspired by what her daughters went through. And I think she would agree with you completely on that advice.
- [58:52]
A
Yeah. I was just visiting with my nephew who's graduated from college last December, and he might go on to graduate school, but right now he's driving an Amazon route, and I'm like, yeah, I'm like, great, just do that. Well, just do that. Well. Get a couple promotions, whatever else, and, you know, put some money in your pocket and just get out of the house and go, go work.
- [59:15]
B
Yeah. All right. Finally, we did a wonderful tribute to Ben after He died in November 2024. I. I thought it was a lovely tribute. You and. And Seth Kaplan and Chris Sloan did it all together. Any reflections on Ben or maybe how Ben might have seen the loss of Spirit Airlines? Any thoughts on that?
- [59:43]
A
Well, I mean, look, I never flew Spirit Airlines, but I was very sad when. When if nothing else but for Ben.
- [59:53]
B
Yeah.
- [59:54]
A
Because Ben had created, you know, really what was the modern spirit. Spirit had been around for a while, but he really created and. And drove a lot of innovation And I think a lot of us were sad for the employees at Spirit, but also for Ben. So look, Ben had the capacity and the ability to like everyone.
- [60:17]
B
Yeah.
- [60:18]
A
And be liked by everyone.
- [60:20]
B
Yeah.
- [60:20]
A
I only wish I could have a bit of that in me. He was, you know, an amazing friend and amazing leader and his optimism really was infectious and his leadership and his intellect was infectious. So the industry misses him and I think about him a lot.
- [60:42]
B
Yeah. Yeah. Yeah. Well, thank you so much, Chris. It's really fascinating discussion. Appreciate it very much. All right, before we get to the mailbag, I want to take a moment to thank the Executive MBA in Aviation at the University of Colorado Denver for its support of Airlines Confidential 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 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.
- [61:36]
A
Promotional support provided by the ultimate Avgeek
- [61:39]
B
website theercive.net a vast collection of airline
- [61:42]
A
memorabilia, timetables, route maps, rare cabin and
- [61:44]
B
airport photos, special flights and more, all@the archive.net the hub of air transport history. In the mailbag, Andy in Phoenix offered this in the rush to modernize America's air traffic control system, which we've been talking about, we're leaving a critical piece of the safety puzzle in the shadows. And that's a dangerous game. Don't forget, Andy says, the flight standards service. Flight standards is the FAA's boots on the ground, the inspectors who ensure aircraft are airworthy and pilots are truly qualified before they ever reach that shiny new ATC system. But over the past decade, flight standards has quietly shifted from hands on inspections to paperwork audits. They're reviewing operator generated programs instead of actually being in hangars or cockpits. We've basically turned the watchdogs into paperwork auditors. And when inspectors disappear from hangars and cockpits, guess what happens? Mechanics and maintenance providers start cutting corners and pilots feel a little too comfortable because they don't believe they'll be caught. What does that mean for safety? Well, when you stop looking over the shoulder of maintenance crews and pilots, you miss things. The institutional knowledge that once kept risks in check is fading. A shiny new ATC system can't do anything about a maintenance issue that was never caught or a pilot who didn't get enough real world oversight focusing solely on ATC modernization while letting flight standards atrophy is an open invitation for the entire safety net to unravel. If we want a truly safe national airspace system, we need to put the spotlight back where it belongs on the inspectors who keep our skies safe from the ground up. All right, thank you Andy for that important reminder.
- [63:43]
A
And then we have Alex from Washington D.C. who has taken issue with something you said last week, Scott, about Southwest Airlines and their operations. Alex says hi Scott, Love the show, but I question the rosy state of Southwest island operations discussed in the last episode. In May, Southwest was last of eight major US carriers in both on time arrivals and departures. Just 40% of Southwest flights left on time and what was a really good month for everyone else. I appreciate the strides the executive team has made, but this has been a dismal three months for their operation which has left them at the bottom for the year so far.
- [64:22]
B
Well, Alex makes a good point. The operation has been less reliable recently and I do think this bears watching. Last month May, southwest was number 10 out of 10 in on time arrivals in North America according to Syrium, only 70.4% on time arrival percentage. In April, Southwest was number eight out of ten. The ten include WestJet and and Air Canada. So ten majors. In April Southwest was number eight. In March Southwest was number five. In February it was number four. In January it was number one. So you see the decline over the past five months. As Alex points out, for the past two years Southwest is ranked in the middle of the pack in on time arrivals, which seems about right given the complexity of its operation. So let's watch this and see if it rebounds or not from this recent decline. It's also worth noting by the way, that even with the low on time arrival rates at Southwest has continued to lead the industry in lowest rate of cancellations. It has been number one or number two in all five months of this year in fewest cancellations percentage wise and certainly performed well in cancellations in the past. I do think that's important. Cancellations are huge like like JetBlue. Southwest will take a delay but it will get you where you want to go. Crews don't time out as often, airplanes are found to replace out of service aircraft, etc. In May, even with when it struggled with that 70.4% on time arrival rate, Southwest completed 99.62% of its 123,000 flights. 469 flights got cancelled the whole month. Out of that 123,000, Air Canada has roughly 1/4 as many flights as Southwest in the month. And Air Canada canceled close to double the number of flights as Southwest. American canceled almost six times as many flights as Southwest. So yes, on time is a concern, but cancellation rate would say to me that there's still a lot going right with the operation.
- [66:47]
A
Let's squeeze in one more, Scott. And this is from DJ in New York, who has a question about the auction of Spirit takeoff and landing slots at New York LaGuardia Airport. DJ says in your recent episode you mentioned every airline as a prospective purchaser of spirit slots except JetBlue. I know they aren't making money right now, but they do have a laguardia presence and were larger there in the past. They've also been in the Marine Air terminal before. So what gives? I mean, it's not like Frontier is making money or Alaska makes any more sense.
- [67:18]
B
Another good question. I didn't include JetBlue because I don't think JetBlue is interested in LaGuardia right now. JetBlue has really pulled back from LaGuardia to focus on JFK and by the way, on Newark as well with its partnership with United. After the American Northeast alliance was vetoed in court, American took back the slots it was leasing to JetBlue Blue. JetBlue pulled back further and now only flies to three cities in Florida from LaGuardia, Orlando, Fort Lauderdale and West Palm beach, plus seasonal service out of LaGuardia to Nantucket. JetBlue has been shifting its capacity as much as it can to Fort Lauderdale with the collapse of Spirit. So unless there's a change of heart, I just don't think JetBlue wants to spend a bunch of money on LaGuardia. I would also add hearing from airlines that LaGuardia costs really running 60 to $80 a passenger. There's some estimates it'll go as high as $100 a passenger. It becomes really hard with those high airport costs to make money if you're a value type carrier. I've heard big airlines saying, yeah, they're losing money on LaGuardia because it's so expensive, but they have to provide that Service. I think JetBlue certainly is, is looking elsewhere, but I could be wrong and it's a, it's good, good for you, DJ to point this out. Let's see, maybe you'll end up being right that they, they do have an interest. Who knows?
- [68:51]
A
I think JetBlue is all about Lauderdale right now, not LaGuardia. So, yeah, it's a valid observation, but I, I don't think it's going to happen.
- [68:59]
B
So, yeah, the slot auction is going to be really interesting to see. The Port Authority has raised objections about it and the about the process. You know, there may be a really interesting legal fight that'll have ramifications for slot auctions all around. All around the world.
- [69:18]
A
And then. Not a question, but Fred from Columbus, Ohio, also wrote in and said I was Glenn's boss at PeopleXpress and I enjoyed the conversation last week when we merged with Continental. I got him a position in the finance department and he was a brilliant guy before. Sure to tell him I said hello.
- [69:34]
B
Well, thanks for that, Fred. Glenn Howenstein, if you're listening. Fred said solo, but we'll be sure to pass that on. That's all for another edition of Airlines Confidential. Great having you back, Chris. Thanks so much. I'll be back next week with Christina Casodis and lots more to talk about.
- [69:55]
A
Scott, great to be back. Thanks for listening to all of you signing off and have a good week.
- [70:01]
B
So long, everybody.
- [70:04]
A
This podcast is produced by Mass media info@massmedia.net.