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- [00:00]
IBM Executive
So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business IBM
- [00:33]
Bloomberg Announcer
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:55]
Kailey Leinz
President Trump just concluding answering some questions from reporters at the White in the East Room for a meeting of the Trump Kennedy center board. Thank you for being with us on Bloomberg TV and Radio. This is Balance of Power and I'm Kailey Leinz. No surprise that the President faced a number of questions there pertaining to the war with Iran, which is now in its third week. The president suggesting that Iran wants to make a deal that they are talking to, quote our people, though he also said it is not clear who the leadership is in Iran at this point. He says we don't know who Iran's leader is. He also said he does not know if the new supreme Leader, Mustafa Kamani Hamani, of course the son of the late Ayatollah, is dead or not. He said people are saying he may have lost his leg or is dead. No confirmation from the President either way on that as he also spent a good deal of time talking about the Strait of Hormuz after calling on other world powers to help the US and reopening the strait. He says that it takes two to tango on the Strait of Hormuz and that ships need to want to go through. They need to feel safe doing so. He thinks the ships would be okay to pass at this point and he thinks the Strait of Hormuz will get going, quote, very soon now. Also interesting that the President said he will be putting out a list of countries who are willing to help on the Strait of Hormuz and those who are not going to be cooperating nations. He said that he would not be very happy with, though he did say, and this is a quote, we don't need them going on to say that the US has all the oil it needs. And he said that when this war is over, oil prices are going to go down very rapidly. Of course, that is not the case now. We are down on the day, but Brent is still up over a hundred dollars a barrel. So we want to get more on the latest from President Trump now as we go live to the north law of the White House, where we find Bloomberg Washington correspondent Tyler Kendall. Tyler, obviously President Trump covered a lot of ground there. Just walk us through what else he told us.
- [02:45]
Tyler Kendall
Yeah. Hey, Kelly. Well, as the president gave this update on Iran, he did confirm that the US and Israel have hit more than 7,000 Iranian targets and said that he thinks that the Strait of Hormuz will get going, quote, very quickly. President Trump, as you mentioned, called out some allies in Europe, also South Korea, Japan also mentioned China. They are urging them to send military assets to the straits to get the critical waterway opened. He went on to say that many of them have told them that they're, quote, on the way, but that others aren't as enthusiastic about helping the U.S. in his words, he said that one or two countries he thinks will not commit to the US that they will surge assets, adding, quote, my attitude is we don't need anybody, as you well know, at least publicly. We've heard from some allies that they are wary at best about sending naval escorts to the region while the conflict is ongoing. For example, we hear from the German Chancellor Mears last hour saying that the NATO alliance alliance is a defense alliance, it's not an intervention alliance. And his words appearing to echo what we heard from UK Prime Minister Keir Starmer earlier today, who seemed to rule out the potential that we could see a NATO naval mission sent to the Strait of Hormuz, though people familiar with the matter do tell Bloomberg News the UK Is looking at some other potential options to put on the table in talks with the US including deploying autonomous drone mine hunting drones to go after any potential mines that may be left in the strait. Really importantly here from President Trump, he did indicate that the threat of targeting energy infrastructure in Iran does remain on the table, saying, quote, one simple word and carg island pipelines will be gone in reference to the US Going after military targets in Iran's top oil export hub. That would be considered a major escalation in the war if the US Started targeting energy infrastructure. But Kelly, at the end there, President Trump maintaining that oil prices will go down, he says, once the conflict comes to an end. As you well know, the Interior secretary Doug Burgum told us on balance of power last week that in the meantime, the administration is, quote, leaving no stone unturned in its bid to help lower costs for consumers.
- [04:55]
Kailey Leinz
Well, and also at the end there, Tyler, we heard from President Trump talking specifically about Israel, which of course is with the US in these operations as we speak. He says he's also spoken to Israel about its operation in Lebanon against Hezbollah. He says specifically they are looking at the section where Hezbollah is. He also was asked if Israel would use a nuclear we in against Iran at some point. He says they would not. But do we have a sense of whether or not there is any daylight emerging between the US And Israel as these operations continue? If President Trump wants to pursue an off ramp, is it necessarily that the same would go for Israel?
- [05:30]
Tyler Kendall
Right. Well, this seems to be the main question that we've been trying to glean some sort of answers to, as President Trump has repeatedly suggested in the last few days that there could be a potential negotiated off ramp here. You'll recall over the weekend, he seemed to suggest that it was because of him that he didn't like like terms that had been put forward that he would agree to a deal with Iran, saying that he needs to see in total terms that Iran would abandon its nuclear ambition. Still, Iran came out, as you well know, and denied that there had been any outreach. And at this point, it's unclear exactly who is exactly speaking with who. As President Trump even said in this, in this presser that it's unclear what the leadership looks like in Iran today. But as President Trump maintains this, he it is raising those questions about what may be the differences between the US And Israel. Kelly, last week we saw perhaps one of the most public disagreements between the countries when Israel went after oil infrastructure after the US had repeatedly said that it was not going to go after energy infrastructure. We'll see how that involves as President Trump just renewed that threat in this press conference earlier today, that that could be an escalation on the table.
- [06:43]
Kailey Leinz
All right, Bloomberg's Tyler Kendall live at the White House for us. Thank you so much.
- [06:47]
Show Host/Producer
Stay with us on balance of power. We'll have much more coming up after this.
- [06:55]
Malcolm Gladwell / Airlines for America CEO
Hello.
- [06:55]
Natasha Hall
Hello.
- [06:55]
Malcolm Gladwell / Airlines for America CEO
I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business?
- [07:11]
Arvind Krishna
My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah.
- [07:43]
Kailey Leinz
Wow.
- [07:43]
Arvind Krishna
So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology. It's getting people to accept that there's a different way to do things.
- [08:01]
Malcolm Gladwell / Airlines for America CEO
To listen to the full conversation, visit IBM.com smarttalks.
- [08:13]
Bloomberg Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa.
- [08:29]
Kailey Leinz
Play Bloomberg 11:30 we are monitoring the developments out of the White House. President Trump having just concluded a news conference ahead of a meeting of the Trump Kennedy center board at the White House, spending a great deal of time giving a status update on the combat operations in Iran, which of course are now in their third week. Here's part of what President Trump had to say.
- [08:50]
Malcolm Gladwell / Airlines for America CEO
Since the beginning of the conflict, we've struck more than 7,000 targets across Iran, and these have been mostly commercial and military targets. We've achieved a 90% reduction in their ballistic missile launches and a 95% reduction in drone attacks. The missiles are trickling in now at very low levels because they don't have too many missiles left.
- [09:23]
Kailey Leinz
The President went on to say that Iran wants to make a deal, that they're talking to our people, that Iran has people who want to talk, but we don't know who because we don't know who Iran's leader is. So for reaction to all of this and more on what we can expect as this conflict is ongoing, we turn now to Natasha hall, who is associate fellow at Chatham House and is here with us on Bloomberg TV and Radio. Natasha, it's good to speak with you again. As you hear the words of the President today, talking about what the military operations have already accomplished, though not signaling that they're any closer to necessarily reaching a conclusion. The idea that maybe Iran wants to talk even though Iran says otherwise, where is the likelihood in your mind of any viable off ramp of, of some kind of solution to this conflict, or at the very least something that could bring us to a cessation of, of the strikes.
- [10:14]
Natasha Hall
Thanks for having me on. You know, I think the administration has been a bit all over the place and there are strategic reasons for that, but we continue to see a lot of confusion in President Trump's words that the, the conflict is going to come to an end, but then threatening many, they don't come to help that are reliant on the energy supplies from, emanating from the Strait of Hormuz. And so I think that there's a lot of off ramps. I think the question for me is, then what? Then he talked about 7,000 strikes on Iran. We've also heard about regime change. Well, you can degrade Iran's capabilities to a large extent, but it seems like they could produce drones forever. And so it's unclear to me then the, then what? We have a lot of mistrust now between the Gulf states and Iran that had some kind of detente, at least beforehand. Europe is still fighting this war with, you know, Russia and Ukraine. There's, there's a lot of different fronts that have been forgotten about with this war. And the question for me is, is again, what then, what has been accomplished aside from really, I think, emboldening the Iranian regime? And as you said, there's, there's a lot of questions with regards to transition in terms of the Iranian government too.
- [11:38]
Kailey Leinz
Well, so if we focus on that for just a moment longer, what are the odds that we reach a conclusion here that both the US And Israel would decide enough is enough. We are done here. We've accomplished what we want with the son of the late ayatollah still in power.
- [11:55]
Natasha Hall
I mean, I'm very skeptical of that. I think that there could be a short term cease fire, much like we saw in the summer, but that ultimately the war continues and Iran is really trying to establish deterrence here so that that doesn't happen again. And what they've done is they've simply eliminated all of the leadership, including the more moderate elements of the Iranian regime, through many of these airstrikes. So it's unclear who they're going to negotiate with at this point. I think what is clear to me is that Israel wants to see a sort of mow the lawn strategy that it had incorporated into with Gaza to the rest of the region. And I think the question for the United States and for the American people is do we have the appetite, do we have the bandwidth for that kind of strategy in the Middle east moving forward?
- [12:46]
Kailey Leinz
Well, and the president was asked moments ago specifically about Israel and potentially greater ground operations in the north, in Lebanon, to go after Hezbollah. He said that is, they're looking at the section where Hezbollah is. He certainly wasn't critical of that decision making. By Israel, even if he wasn't outright endorsing it. Natasha. And I wonder what you of that aspect of this conflict, that this is no longer just about strikes directly with Iran, that there are other fronts here to consider.
- [13:13]
Natasha Hall
Yeah, there are many other wars that are sort of being, you know, continuing and deepening under the COVID of this larger war with Iran. And one of those, as you mentioned, is Lebanon where Israel is preparing for a ground invasion to essentially displace those south of the Latani river. We're talking about 300 to 400,000 people here. We've already seen upwards of, you know, 800,000 people displaced in Lebanon. We're talking about a fifth of the country's population. And you know, Trump's comments, he mentioned that these are isolated areas with Hezbollah supporters. The reality is that these people are sleeping out in the streets in, in downtown Beirut. This is going to encompass the entire country. And so I think that there's, there's something missing in terms of the what then piece of this. There's a lot of cheering on, of, of tactical winds and airstri, but there's not really a strategy long term in terms of what's going to actually happen after this war or after this current phase of the conflict concludes
- [14:19]
Kailey Leinz
as we consider airstrikes. Natasha, I want to return to something President Trump spoke about once again in his remarks, which is the strikes that the US did targeting at Carg island, specifically military infrastructure, not Iran's energy infrastructure there. Yet of course, we know Car island is critical. It's where the vast majority of Iranian oil passes through. It seems as though the President is trying to use those strikes to get Iran to, to back down in some way. But I wonder if you think it might actually have the opposite effect than its intent.
- [14:52]
Natasha Hall
I think a lot of this could backfire. And that wasn't the first strike. I mean, there was, there was also strikes on oil depots which caused basically black rain to fall on Tehran earlier this week. So I mean, I think that they're trying to destroy Iran's infrastruct structure, its ability to sustain its population as well.
- [15:11]
Rick Davis / Jeannie Shannon Zaino (Political Analysts)
Right.
- [15:11]
Natasha Hall
So this is sort of the more regime change elements of these operations. I think the question is if you're not going to have a ground invasion, if you're not going to have something after this in a few weeks, and what you have is a really wounded tiger, which doesn't really mean good future for the Iranian people or for the rest of the region moving forward. So, you know, I think this is all part of those weakening the regime more broadly strategy of this, of this offensive. But I think the question is for the longer term, how does this affect global oil markets? How does this affect the Iranian people and, you know, internal dissent more broadly. But for sure, you are angering the Iranian regime even further.
- [15:58]
Kailey Leinz
All right, Natasha, such valuable insight. We appreciate you joining us. Natasha hall is an associate fellow at Chatham House here with us Balance of Power. And we want to keep this conversation going as we turn now to our political panel. Bloomberg Politics contributors Rick Davis and Jeannie Shannon Zaino are with me. Rick, Republican strategist and Stone Court Capital partner Jeannie and Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. To the point Natasha was just making on what could happen with energy prices, Rick, around this question around Carg island and whether or not the US Might actually decide to go after Iran's oil infrastructure specifically, I wonder if you think the greater deterrent to that is the idea that that would be escalation and could prompt even greater retaliation from Iran or that it actually could potentially have a more dramatic impact on global oil prices and therefore prices at the pump here at home.
- [16:46]
Show Host/Producer
Well, I think it's a little bit of the both. Iran is very, very good at sort of asymmetric warfare. They don't need to match our missiles with their missiles. The president said earlier in the press conference that they have significantly scaled down on their attacks in the Gulf and Israel. And that's true, could be husbanding their resources. But it only takes a few missiles into the Strait of Hormuz or, you know, a set of drone strikes to destabilize the entire oil trade. And as we've been discussing on this program, there's much more to getting conditions precedent in the Strait of Hormuz to allow insurance companies and tankers to want to sail. So I think this is expected to be destabilized for a long time. I mean, you know, General McRaven, who is quite an expert on the region, has said recently that even under the rosiest of scenarios, it could take months to get the necessary equipment in to Demine and to to be able to create the conditions, to be able to open up the Strait of Hormuz to commercial traffic. And even Netanyahu has been very clear that he's got three more weeks on a bombing campaign that he's going to prosecute in addition to whatever the United States decides to do. So I think that at least for the next month, I can't imagine a scenario where we have conditions in the Strait that are commercially viable.
- [18:17]
Kailey Leinz
Well, so when we consider that commercial viability. Jeannie and the president spoke to this when answering questions from reporters about the Strait of Hormuz. He was asked, you know, if we've destroyed all these mining vessels, then why isn't the strait open? And he said, it takes two to tango. And he specifically spoke to the idea that the operators of these vessels need to be willing to go through the strait. We obviously have seen the president use whatever leverage he can be tariffs or other kind of economic statecraft of do where to will to try to change the behavior of countries that he, he would like to see behavioral changes for. But is he able to do the same in this instance for private companies that are making risk calculations about their crew and cargo?
- [18:58]
Rick Davis / Jeannie Shannon Zaino (Political Analysts)
The answer in one word is no. Or how about to absolutely not. We've seen the president do this for the last two weeks of this campaign, go on Fox News, for instance, and say, hey, guys, just put the ships through there. It'll be okay. It's not that dangerous. Then he turned to offering risk insurance as if, you know, I've got terminal cancer. Now do you want to give me insurance? That was a nonstarter. Now he's making these cases to the private sector again. He's also threatening our allies that they better help us. The reality is, is that when you listen to the president, what struck me so much was his chastising, making fun of, if you will, the prime minister of the UK Keir Starmer, for checking with his cabinet for consulting people. And Donald Trump sort of bragged and said, I don't need to do that. I don't know why he needs to do that. Well, the answer is, Mr. President, because we've learned all these lessons before. You get alliances, you build your life raft, if you will, before the ship starts to sink. He didn't do that. And now he's going on threatening allies. You're going to, if you bomb Iran, threaten the Strait of Hormuz, they'll be able to close it and you don't have any way out of that. So many of these lessons we've known and had the president bothered to check with excerpts experts rather, as opposed to pushing them out of the State Department in a doge effort, he may have gotten some advice that he desperately needs and not be in the position he now he is in now to be sitting up and making these statements.
- [20:34]
Kailey Leinz
All right, Jeannie, Shan Zaino and Rick Davis, our political panel today, on balance of Power. Thank you so much. And we have more Coming up here on Balance of Power as we turn next to the CEO of the Airlines for America organization as the Middle east disrupts air traffic and also the Department of Homeland Security shutdown, creating some issues at airports. That's next on Bloomberg TV and Radio.
- [20:54]
Show Host/Producer
Stay with us on Balance of Power. We'll have much more coming up after this.
- [21:02]
Malcolm Gladwell / Airlines for America CEO
Hello.
- [21:02]
Natasha Hall
Hello.
- [21:02]
Malcolm Gladwell / Airlines for America CEO
I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business?
- [21:17]
Arvind Krishna
My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah. So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology. It's getting people to accept that there's a different way to do things.
- [22:08]
Malcolm Gladwell / Airlines for America CEO
To listen to the full conversation, visit IBM.com smart talks
- [22:15]
Arvind Krishna
foreign.
- [22:19]
Bloomberg Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30.
- [22:38]
Kailey Leinz
Kailey Leinz in Washington. Where where you might not really want to be right now. If you've been watching the weather, it's going to be pretty gnarly this afternoon. We're talking winds of some 80 miles per hour. We're under tornado watch in the D.C. region until 7pm Eastern time. It's going to be pretty brutal out there. And it's for that reason that the House of Representatives decided to go ahead and just cancel planned votes for today. The Senate, though, is beginning their work week this afternoon and they do have a lot of work to do as we are expecting them to take steps forward on trying to, though likely not succeeding, to pass the Save America act voting ID legislation that, of course, the president is heavily pushing and says he will not sign any other legislation into law until he can put his signature on that particular piece of legislation. So there's that effort. We're expecting a hearing, a confirmation hearing for the man he has tapped to succeed Christy Noem as Department of Homeland Security secretary. Senator Mark Wayne Mullen will be testifying come Wednesday. There's questions swirling around whether a supplemental funding request will be coming to Congress anytime soon as it pertains to our ongoing military operations, operations and war against Iran. And then there's the little matter of the fact that the Department of Homeland Security is still shut down. It's been about a month that that agency is gone without funding, and there's no sign yet on a path forward to get it reopened. So we want to get into all of this now as we turn to Jonathan Tamari, who's a senior Washington reporter for Bloomberg Government, and joining us now here on Bloomberg TV and Radio. So, Jonathan, obviously there's a lot of different directions that we could go. Let's begin with the Save America act, because it does seem that that's what the Senate is going to prioritize first and fore how, how messy is this going to get? Is there any real chance that the president gets what he wants and the Senate decides we're going to do away with the filibuster, do a talking filibuster to avoid any Democratic pushback to this bill?
- [24:27]
IBM Executive
Yeah. What it looks like right now is that it's going to be a Senate failure, only slower and more painful than usual. There does not seem to be any path towards either getting the 60 votes required to pass the bill through the Senate or even to changing the filibuster with rules with the majority. There are a number of Republicans who don't want to do that, don't want to change the filibuster rules. Senate Majority Leader John Thune doesn't want to change the filibuster rule. So this is an attempt by Republicans to show the president that they're trying to pass his top priority, but that there's not really a pathway to do it. It could take a number of weeks. They might let this sit on the Senate floor for a week, two weeks, maybe even more as a way to show that they're really making an honest effort at it. But nobody seems to think that there's a way where this finishes, where it actually passes the chamber and becomes law.
- [25:22]
Kailey Leinz
Okay. So if that's an uphill climb, I wonder if it'll be a similar uphill climb for any supplemental funding the president might request from Congress. As we know that this war with Iran has already cost billions, billions and billions of dollars. There has been reporting that a supplemental request could be in the tens of billions, if not $100 billion. Jonathan, I don't know if you have any insight for us on the potential timing or size of that. But what about just the idea of it in and of itself? Is it going to be difficult to get through both chambers, or could we actually see Democrats supporting this measure if not for anything else other than in the name of the American troops who are in theater?
- [25:57]
IBM Executive
I think, I think both of those things could be true. I think it could be very difficult because I think there are a lot of Democrats who are going to say, you know, we haven't been consulted on this war. We're going to, we're not going to vote for something where we've had no input onto it. And then the president doesn't seem interested in our input. The chamber hasn't formally voted on it. So I think it's difficult in that sense. But I do think you make a point. It could this is the kind of thing where maybe a handful of Democrats could cross over and vote vote for it anyway, because in the name of supporting the troops, supporting a military mission, regardless of whether they necessarily agree with the president on it, just in the name of supporting military members who are there fighting. But I think that still remains to be seen. I think we'll have to see exactly how much money they're asking for and what, if any, input they take from Democrats. Do they accept any kind of strings attached to this money or do they just say we want a blank check? I think that could affect the posture of those handful of Democrats who maybe might be willing to cross over and vote for it. Again, probably talking about a very small number, but it only takes seven, eight, maybe nine, depending on the Republican votes of Democrats crossing over to potentially get that through the Senate. I do think it could even be tricky for Republicans, though. I think there are a number of Republicans who might not necessarily want to be on the hook for this war, that they're content to let Trump kind of weigh, lead the way and carry, you know, the burden of it politically. And with the vote, with the public voting for the money would essentially be endorsing it. And I think there are probably some Republicans who might be a little wary of that, too.
- [27:38]
Kailey Leinz
All right, Jonathan Tamari of Bloomberg Government, thank you so much, Jonathan. Of course, speaking with us about the idea of Democrats crossing over on a vote on supplemental funding. But we also saw Democrats last fall crossing over in the name of reopening the government after the longest shutdown in history. And of course, we are in the middle of another Long partial shutdown as we speak. It's been about a month and the Department of Homeland Security has gone unfunded. And you're starting to see the real world effects of that. Specifically, if you've been trying to travel by air in recent weeks. As we're looking at TSA lines with those agents going unpaid that have gotten longer and longer at airports, it's starting to become a real problem. And we want to get into it now with Kristen Nounu, who's the CEO of Airlines for America. He's the president there as well, of course. He also is the former Republican governor of New Hampshire, and he's here with me in our Washington, D.C. studio. Governor, great to see you.
- [28:26]
Malcolm Gladwell / Airlines for America CEO
Great to see you as always.
- [28:28]
Kailey Leinz
We know the situation's not great at airports right now. How much worse could it get if this shutdown continues?
- [28:34]
Malcolm Gladwell / Airlines for America CEO
Well, believe it or not, right now we're managing.
- [28:36]
Arvind Krishna
Right.
- [28:36]
Malcolm Gladwell / Airlines for America CEO
So you have maybe a dozen airports where there's hot spots that could be a 30 minute, 60 minute. We've seen some on a couple of weekends ago, upwards of two or three hour waits. And you've seen some of those long lines. For the most part, they're managed in that the TSA has emergency deployment teams. They kind of move into place. They can add some and supplement with where the call outs might be on and where the higher traffic, especially given spring break, might be. So again, it's been managed, folks. We tell everyone, don't cancel your flights. You might have to give yourself a little extra time going to some of these airports. But at end the, the end of the day, the issue is really about just, you know, the federal government paying their own employees. I mean, we've talked about this before. It's common sense. It's the most basic thing that you have to do. And remember, DHS isn't unfunded because of the big beautiful bill that ICE and CBP and parts of Homeland Security. They are funded because they've gotten billions of dollars. It's really TSA that takes the hit. And these are some of the lowest paid employees that have been going on. They just got a zero paycheck. They're going into their fourth week of not being paid. Imagine averaging $35,000 a year. Three or four weeks is a lot, right? If you're a single mom and you're working, you know, you're TSO and you're working and all of a sudden you're not bringing a paycheck home for four weeks, well, yeah, that's real pressure on the system and that will continue to build. So I don't think we're in crisis mode. Hopefully we don't get to crisis mode. I think there's huge opportunities, opportunity for folks here in Washington to say, okay, you know, they may not have liked Secretary Noem. Fine. The President said fine. He moved around, he capitulated there. They wanted more body cameras. They're installing those. They wanted some calmness and some stability to bring, to be brought into Minnesota. They've done that. So I think the Republicans have actually done a pretty good job of saying, okay, we'll give in on these issues, but we got to fund this thing. You know, as a whole, Democrats aren't moving right now. Leadership is not talking. And that's probably the most frustrating part. It's not that they disagree on major points. They're literally not entering the room and having discussions at the table. That's, that's hard.
- [30:36]
Kailey Leinz
Well, we know that typically when it comes time to difficult negotiations like this, they like to operate on a deadline. Usually there's the deadline of the whole government's going to shut down at midnight if we don't do this. Now. This is obviously much smaller in scale. So I wonder if you see any kind of deadline. You mentioned spring break break. Easter's coming up. I, I'm supposed to travel with the seven month old over Easter. I'm a little nervous about that right now, I gotta say, given what's going on. Is, is that a realistic deadline, do you think, or is a problem right now that there is no.
- [31:04]
Malcolm Gladwell / Airlines for America CEO
Because there's no deadline.
- [31:05]
Kailey Leinz
Right.
- [31:05]
Malcolm Gladwell / Airlines for America CEO
It's when, when the crisis hits, maybe Washington will, will finally do their job. So that's this arbitrary moving target. Yeah, it's not going to be what we saw in October. October you had air traffic controllers, you had delayed and canceled flights. You don't have that this time. Flights are taking off and landing just fine. The airspace is terrific. It's just literally getting into the door of those airports. So the crisis, if there is one, would only be a regional piece. It would be this airport there or that airport there, and you just don't know when or how it's going to come. Would that be if we had an issue at one airport four weeks from now in the Midwest somewhere? Is that enough to all of a sudden get leadership to start talking again? That would be a very weird thing. So they have to be proactive about it. Both sides need to actually say, okay, what do we need to, to need to do to end this? The new secretary, Mark Wayne Mullen hopefully will be in in early April. Maybe that's an opportunity. And then just in the next couple of weeks, hopefully he doesn't get there. But that could be an opportunity because he is a former senator or will have been a former senator at that time. He has friends in the Democrat side. They know how he works. He respects and understands that process. Another opportunity, I think, for both sides to come together in a leadership position in Sen. You know, here's our, here's our discussion points. But right now it's not even really clear what they disagree on because they're so close, if you will. It's all very blurry. And at the end of the day, who suffers? The American public. The traveling American public goes, you know, what should I be doing with my travel plans? The answer is keep your travel plans. You might just have to give yourself a little extra time. Maybe look ahead, see if your airport is one where the lines are a little longer, you know, 30 minutes, 60 minute wind. All that data is available online. If you go to the airport website, that's usually there. So I think the folks at TSA are doing a tremendous job. Please say thank you, by the way. Have some patience. You know, they're under as much stress as anybody to move folks through that line quickly. The last thing they need is, again, as a customer, you can be frustrated. It's not their fault. It is not their fault. In fact, we need to thank them for all the hard work they're doing. I think Ha McNeil who really runs TSA, Rodney Scott, who runs CBP, they're doing a tremendous job keeping morale up, keeping their staff moving forward. They deserve a lot of credit as well. So things are moving in terms of management. They're just not moving in terms of, you know, that, that Capitol Hill building that, that sits behind you there. It's a little frustrating.
- [33:24]
Kailey Leinz
Yeah, I'm sure it is. As we consider as well that all of this is happening against a backdrop of war in the Middle east, there's questions about whether or not there's domestic threat, threats that could be inspired by the war against Iran. But we have also seen for airlines specifically, it having a very disruptive effect. And what are global airline hubs? We saw Dubai's airport have to close down just today. What is the cascading effect of that?
- [33:46]
Malcolm Gladwell / Airlines for America CEO
Well, believe it or not, the number one cascading effect is the price of oil. Right. So remember, the folks that are flying today probably bought their tickets six or 12 weeks ago. So they bought that ticket based. There's a Lag in the price.
- [33:59]
Kailey Leinz
Right.
- [33:59]
Malcolm Gladwell / Airlines for America CEO
What we're going to see is a pretty big disruptor across all the different airlines in terms of as price of oil goes up 50 to 100% on jet fuel, whatever it might be, you'll see some potential price increases. Let's say a month, a month down the road. Right. If we don't get the Strait of Hormuz really secured, I'm going to give it till about mid May before Memorial Day because remember more Memorial Day. Right before Memorial Day they come out, say the price of gas, the price of oil is X and this is how it will affect summer travel. If by that time we haven't seen any substantial security of that supply chain of one fifth of the world's energy source, then you could be looking at some long term price increases. Right now the price increases could be, hopefully they're temporary. They're just bumps in the road. They're nothing that really impact people's desire to travel. But as we hit those summer months, months, what happens with FIFA, right. We have this amazing American opportunity of all these international folks coming in, you know, both in terms of safety and security. Again, I think CBP and TSA are doing a great job doing as much of the technology innovation and implementation for those security protocols that have to happen around the FIFA World cup where you'll see, you know, maybe millions of people come in across the world for that great opportunity. We don't want to miss it. So on the price of oil, I think we're going to hit a little bump in the road. Unless we get to around Memorial Day, then it could be a little more of a long term impact. But remember, flying domestically is still the most affordable thing you can do. The average price of a ticket today is less than it was in 2019. It's not just bucked inflation, it's actually deflationary. I think the average price of anything else has gone up about 26, 30% since 2019. Our prices have gone down 3%. So what happens? More families are traveling before. More opportunity for folks than ever before. We're seeing record numbers. To have politics disrupt that for the American people is so silly and such a terrible sign of where our system is politically.
- [35:59]
Kailey Leinz
All right, we have to leave it there. But Governor, thanks for joining us. The former governor of New Hampshire, now President CEO of Airlines for America.
- [36:05]
Natasha Hall
I know.
- [36:05]
Kailey Leinz
Pray for me. I have a few more weeks to hype myself up for it.
- [36:08]
Malcolm Gladwell / Airlines for America CEO
Prioritize families in the airline.
- [36:10]
Kailey Leinz
Oh, fingers crossed it all goes okay. Thanks for being here. On balance of Power. I'll see you again for the late edition at 5:00pm Eastern time right here on Bloomberg TV and radio.
- [36:23]
Show Host/Producer
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at Noontime eastern@bloomberg.com
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Kailey Leinz
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Kailey Leinz
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Show Host/Producer
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Malcolm Gladwell / Airlines for America CEO
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Show Host/Producer
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