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- [00:00]
Indiana University Announcer
Indiana University is shaping the future of healthcare. Advancing discoveries that become treatments for Alzheimer's, obesity and cancer and training the providers trusted to deliver them. See how IU solves what's next iu Edu Impact.
- [00:18]
David Neeleman
Bloomberg Audio Studios Podcasts Radio.
- [00:22]
Interviewer
News A major milestone reached by Breeze Airways. The low cost carrier has become the first year US Airline in over a decade to be certified by the FAA as a US Flag carrier. That designation allows Breeze to make international flights, unlocking new growth for the four year old company. Joining us now is David Neeleman, a name that you surely know and are familiar with because he was the CEO and the founder of JetBlue. David, great to have you with us. Thanks so much for joining. Open interest what, what is your plan for expansion of this airline now that you've gotten this incredibly rare allowance?
- [01:05]
David Neeleman
Well, we're up to over 50 airplanes. We're kind of growing every, we get an airplane about every three weeks. We have on firm order about 90 Airbus A2 20s with an option to go to 120. So it's just doing the same thing that we're doing. We're flying mo about 87% of our routes. We have no nonstop competition. So it's a perfect airplane size. We have first class with extra legroom seats. And this international expansion is going to be great for us because Saturdays are a little bit of a down day for, for air travel, but being able to take those airplanes and fly to Cancun and to put the Cana and to Montego Bay, Jamaica is going to be a real great asset for us.
- [01:49]
Interviewer
Well, David, for anyone who's not familiar with your resume, every airline you founded has done something to be disruptive to reshape its home market. Morris with e ticketing, JetBlue with more comfort for reasonable prices, making secondary cities in Brazil connecting them for Breeze Airways. What is the disruption here that you're trying to bring into the market?
- [02:13]
David Neeleman
Well, you know, it's along the same lines of what we've done. I, I always say never start an airline just for the heck of it. You have to start it with, with a reason. And when I looked at the US market, 125 cities had lost more than 25% of their air service over the last 10 years. So the big airlines were forcing people to all their hubs and cities like Charleston, South Carolina, Huntsville, Alabama, vibrant, growing cities. You basically had to get on a plane, fly to a hub. And so we're just taking people and bypassing hubs and going nonstop, but doing it with Lux we're not really like a usa we offer first class, we offer extra legroom seats. We, we offer really low fares. We have a kind of a basic economy equivalent, but then we have these bundles that people love to, to buy up and you know, we've got the highest NPs score I've ever seen of any airline I've ever run. So we are voted by Travel Leisure as the third best airline in the country. Apex number one airline. So it's, it's working. This is combination of getting you there for always. When we started, I said let's get you there twice as fast for half the price. That's kind of our goal. And do it with options to fly first class or extra legroom or have free wi fi and a lot of things you don't see on a US.
- [03:36]
Interviewer
What are your biggest challenges right now, David? I mean fuel prices have come down, but I guess planes are harder to get, more expensive and labor must be, the cost of labor must be rising as well.
- [03:51]
David Neeleman
Well, you know, for a while it was the pilot situation and that's totally been, been solved. We have 1200 applications for, we open it up and we have, we have tons of applications. You know, I think staffing at airports we rely a lot on third party people. So we're really focused on making sure that they're, they're doing a good job and they're keeping us safe. We're coming with a program where we're going to put cameras on all of our gates to, to monitor everything that's going on to make sure the turn is efficient, but also most importantly safe, making sure that there's no damage to our aircraft. So that's, that's really something we're really focused on is, is being efficient. And you know, our on time percentage has just gone through the roof. I think, I think last month we were almost 90% on time. We haven't, we haven't. We didn't cancel a single flight all summer long because we just wanted to get our guests where they're going. So, you know, it's just really focused on the operation. I, I really preach if we, if we flawless operation, then people will come back and fly us more often. And that's what we're seeing. These markets, you know, if we go to a market and we see there's about 15 people a day that travel between two cities, we believe we can turn that to about 100 a day.
- [05:08]
Interviewer
David, it does feel like an indic industry though that is split into the haves and have nots and in the have nots you have spirit, which maybe has its own issue, but serving a lower income market then the big airlines, United, Delta talking about that they're doing well because of luxury. Ed Bastian yesterday at Atlanta Fed conference saying that you have the lower end of the consumer spectrum. It's tough. And then he goes on to say all of the other airlines are basically going to lose money or come close to losing money. Again, talking to airlines that aren't serving the ultra luxury customer. David, do you think he's right?
- [05:43]
David Neeleman
I think he's right to a certain degree. Sure. You know, there's a, you know, you see now JetBlue's rushing to put first class seats in their airplanes. Spirits trying to put first class frontiers adding first class. So yeah, I mean I think people want choice. Southwest Airlines had one product for everybody, free bags, and now they're starting to differentiate. People want to say great for the free bags, but I don't, I don't care about free bags. I just want a lower fare. So you have to give choice to your, to, to our guests and along the spectrum and make them feel good about every, every bundle that they purchase.
- [06:20]
Interviewer
So I've always wondered about investing in airlines because, you know, the prices haven't really risen much since I started buying tickets for myself 30 years ago. Right. I remember going to a, a Grateful Dead concert on the west coast in the 90s and paying about $300 for the tickets. And I could still do the same thing today. Why invest in an airline if it's never going to make money over, over time?
- [06:48]
David Neeleman
Well, you know, trading, trading some airline stocks is, is, is a little bit like trading like options. Basically they're up and down a lot. You know, I think there's a tremendous amount of leverage if you can get everything right. We, you know, we have, you know, some of the highest margins in the industry on, on routes where we have no non stop competition. So, you know, I think our goal is to create something that is not akin to an airline, something that is, you know, because the challenges Spearman into is that their planes got so big they had to overlay Delta, United, American. And that's a really tough business to be in because they could just create basic economy and match everything they were doing. So it's just finding those markets. We, we've looked at those markets that have 15 PDOs and we think there's enough market for about 400 airplanes and we only have 50. So it's a tremendous growth opportunity and there's a lot of leverage there if you can get it right.
- [07:43]
Interviewer
Well, David, you've done it before. We're looking forward to following along your journey with breeze. David Nealman, A Breeze Airways thank you so much for joining us. This morning.
- [07:51]
Indiana University Announcer
Indiana University is shaping the future of health care, advancing discoveries that become treatments for Alzheimer's, obesity, cancer and other rare and complex diseases and training the next generation of providers, doctors and nurses trusted to address health challenges with skill, compassion and purpose. From the lab to the clinic, from research teams to patient care, IU talent is driving medical innovation, improving health outcomes and strengthening communities. See how IU solves what's next iu Edu Impact There are two kinds of.
- [08:25]
Akshat Rathi
People in the world. People who think about climate change and people who are doing something about it. On the Zero podcast we talk to both kinds of people. People you've heard of, like Bill Gates.
- [08:35]
Interviewer
I'm looking at what the world has to do to get to zero, not using climate as a moral crusade and.
- [08:42]
Akshat Rathi
The creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Rathi. Listen to Xero every Thursday from Bloomberg Podcasts on Apple, Spotify or anywhere else you get your podcasts.