WEBVTT - The Trick to Flying Cheap 0:00:15.316 --> 0:00:23.996 Pushkin. Airfares are through the roof. You know this, and 0:00:24.236 --> 0:00:27.116 of course a key driver is the price of oil. 0:00:27.596 --> 0:00:31.196 But you know oil is not the only cost for airlines. 0:00:31.596 --> 0:00:34.756 Airlines have to pay staff and buy or lease planes 0:00:34.836 --> 0:00:38.596 and acquire customers. So it seems like right now is 0:00:38.596 --> 0:00:41.276 a great moment to take one of my favorite questions 0:00:41.316 --> 0:00:44.876 in general and apply it to the airline industry, how 0:00:44.876 --> 0:00:48.156 do you use technology to make stuff cheaper? And for 0:00:48.236 --> 0:00:50.796 today's show, I found the perfect person to answer that 0:00:50.916 --> 0:00:58.476 question for airfares. I'm Jacob Goldstein and this is What's 0:00:58.516 --> 0:01:01.556 Your Problem, the show where entrepreneurs and engineers talk about 0:01:01.596 --> 0:01:03.796 how they're going to change the world once they solve 0:01:03.836 --> 0:01:08.036 a few problems. My guest today is David Neilaman. David 0:01:08.116 --> 0:01:13.236 has founded by airlines, including most famously Jet Blue. Also, 0:01:13.316 --> 0:01:16.436 he founded a Brazilian airline called a Zool, where he 0:01:16.556 --> 0:01:20.756 is still the controlling shareholder, and most recently, David founded 0:01:20.836 --> 0:01:25.356 a new US discount airline called Breeze. David's problem is this, 0:01:25.956 --> 0:01:28.996 how do you use technology to drive down the price 0:01:29.116 --> 0:01:33.236 of air travel. Most of my conversation with David was 0:01:33.276 --> 0:01:36.276 about what he's working on at Breeze, but when I 0:01:36.276 --> 0:01:39.196 asked him about technology, he couldn't resist going back to 0:01:39.236 --> 0:01:41.636 the beginning of his career for just a minute. He 0:01:41.716 --> 0:01:45.476 started out booking package tours. Then in the early nineteen eighties, 0:01:45.596 --> 0:01:48.596 he launched an airline called Morris Air. And one of 0:01:48.636 --> 0:01:52.036 the first things he noticed was how inconvenient and inefficient 0:01:52.156 --> 0:01:57.516 paper tickets were. Tickets were like negotiable documents. They were 0:01:57.516 --> 0:02:00.756 like checks, and they would be issued and if you 0:02:00.876 --> 0:02:04.316 lost that thing, haven't forbid. Basically, they'd say, well, we'll 0:02:04.596 --> 0:02:07.396 have to wait one hundred and eighty days or longer 0:02:07.396 --> 0:02:09.796 to see if anyone uses your ticket. I don't use it, 0:02:10.516 --> 0:02:13.476 then we'll give you a refund. And so I can 0:02:13.516 --> 0:02:16.036 still remember, there's this guy named Stuart Thatcher, and he 0:02:16.076 --> 0:02:17.676 walked to my office and he said, we had all 0:02:17.676 --> 0:02:21.956 these people upstairs putting tickets in envelopes and mailing them 0:02:21.956 --> 0:02:24.956 out to people. He said, why don't we just give 0:02:24.996 --> 0:02:27.836 them a confirmation number, and then we'll put it on 0:02:27.876 --> 0:02:30.476 these little things that we can run through a machine 0:02:30.716 --> 0:02:32.516 and he can fold it quickly, and we'll just mail 0:02:32.596 --> 0:02:34.836 him a confirmation number. And then I looked at him 0:02:34.836 --> 0:02:36.436 and said, well, why would you give him a confirmation 0:02:36.516 --> 0:02:41.276 number over the phone. You sort of invented the Yeah, 0:02:41.436 --> 0:02:45.516 tickless travel, tickless travel. Yeah, I mean Southwest when they 0:02:45.596 --> 0:02:48.996 purchased Morris Aera, they didn't really realize what a great 0:02:49.036 --> 0:02:51.596 thing they did. So okay, so that's the forty years 0:02:51.636 --> 0:02:54.356 ago story. What is the thing you're doing now that 0:02:54.476 --> 0:02:56.716 forty years from now you're gonna be like, back in 0:02:56.836 --> 0:03:00.876 twenty twenty two, I was doing X. What's X? Well? 0:03:00.916 --> 0:03:04.516 I think what X is is taken a page from 0:03:04.556 --> 0:03:08.596 Amazon and from Lyft and from Airbnb. You don't ever 0:03:08.636 --> 0:03:10.516 want to talk to anybody. You want to have an 0:03:10.516 --> 0:03:12.916 app that people can do everything on and if they 0:03:12.956 --> 0:03:16.156 can't and if they get like frustrated, you want to 0:03:16.156 --> 0:03:18.836 have the ability for someone to ask you a question 0:03:19.516 --> 0:03:22.716 in writing that you can get back to them and 0:03:23.036 --> 0:03:25.076 the goal is in less than ten minutes and solve 0:03:25.116 --> 0:03:27.476 any issue they have so that you never have to 0:03:27.516 --> 0:03:30.876 have a call center. And that's cheaper for you than 0:03:30.916 --> 0:03:34.196 a call center because because it's asynchronous, because you can 0:03:34.196 --> 0:03:38.156 be talking to six people at one time. Huh. So 0:03:38.196 --> 0:03:40.396 you have six people at one time, you can be 0:03:40.396 --> 0:03:42.796 dealing their issues because not not you know, what's your 0:03:42.796 --> 0:03:45.236 confirmation number? They have to go find it or whatever 0:03:45.636 --> 0:03:48.076 that takes time. Okay, so that's a good one. So 0:03:48.076 --> 0:03:51.236 so having people basically text instead of call, that's a 0:03:51.476 --> 0:03:53.956 technological innovation that's going to lower your costs. What else, 0:03:53.996 --> 0:03:56.356 what's another one, Well, it's well, it starts with the app. 0:03:56.476 --> 0:03:58.276 You know, you have to have an app that's completely 0:03:58.916 --> 0:04:01.836 functional so you can self help. So if we said, 0:04:01.956 --> 0:04:03.476 you know, you want to change a flight, change your 0:04:03.476 --> 0:04:05.876 own flight you want to. You know, if we we've 0:04:06.036 --> 0:04:08.916 canceled flight on you because of whatever reason, you know, 0:04:08.956 --> 0:04:10.876 we can send you the option push this button to 0:04:10.916 --> 0:04:12.636 book on the other flight we have you on, or 0:04:12.676 --> 0:04:14.956 push this bent to get a full refund and credit 0:04:14.996 --> 0:04:17.476 for your next flight. It's all the self help things 0:04:17.516 --> 0:04:19.996 where you're taking care of yourself and you don't need 0:04:20.076 --> 0:04:21.756 to talk to one of us to do anything, and 0:04:22.156 --> 0:04:25.036 only when you get frustrated then you actually text us. 0:04:25.036 --> 0:04:28.076 But having a functional app that does all the stuff 0:04:28.116 --> 0:04:31.476 that an Uber app does or an Amazon app does. Yeah, 0:04:31.476 --> 0:04:33.316 so right, So in the same way that Amazon, say, 0:04:33.396 --> 0:04:35.596 makes it really easy to return things. Right, So I 0:04:35.596 --> 0:04:37.276 don't have to call if I want to return something, 0:04:37.356 --> 0:04:39.796 I just click a couple of buttons, print out the thing. 0:04:39.996 --> 0:04:41.836 And it's done. I don't have to call them. It's 0:04:41.876 --> 0:04:43.716 like that. If I want to change my flight or 0:04:43.716 --> 0:04:46.356 anything like that, an app with full functionality as much 0:04:46.396 --> 0:04:48.436 as possible, and then we can add on to that. 0:04:48.516 --> 0:04:50.036 And one more thing I want to mention. You know, 0:04:50.196 --> 0:04:53.796 if you book, if you book through Expedia or you 0:04:53.836 --> 0:04:58.436 book through one of these other online travel agencies, we 0:04:58.476 --> 0:05:01.796 don't have your information. They keep it because they guard it. 0:05:02.396 --> 0:05:04.556 You can't book a reservation with us unless you give 0:05:04.596 --> 0:05:07.036 us your cell phone number or your email. You have 0:05:07.076 --> 0:05:09.836 to give it to us. So that way, if there 0:05:09.916 --> 0:05:12.556 is a disruption or when there's boarding time and all 0:05:12.556 --> 0:05:15.116 that stuff, we can communicate directly with you all the time. 0:05:15.516 --> 0:05:19.356 Interesting and usually airlines about forty or more, they don't 0:05:19.396 --> 0:05:21.836 have that information for their customers and we have that. 0:05:22.396 --> 0:05:25.276 So that that's another important factor that we just decide 0:05:25.316 --> 0:05:27.916 to start. It's hard to change that once you're going, 0:05:28.236 --> 0:05:30.316 but once you start from a clean white piece of paper, 0:05:30.356 --> 0:05:32.796 you can do that. And so presumably that not only 0:05:32.836 --> 0:05:35.556 allows you to whatever, text me updates about my flight, 0:05:35.836 --> 0:05:39.076 but it also allows you to text me updates if 0:05:39.076 --> 0:05:41.516 you have a discount on that flight in six months 0:05:41.636 --> 0:05:44.516 or whatever. Right now, I'm in the system. Yeah, you're 0:05:44.556 --> 0:05:47.236 in our database. We can do some data mining and 0:05:47.276 --> 0:05:49.556 figure out, you know, what you like, what you don't like, 0:05:49.636 --> 0:05:52.196 and make sure that we target market instead of just 0:05:52.276 --> 0:05:54.556 blast out crap that you don't want to read. Everything's 0:05:54.556 --> 0:05:58.156 relevant to you. So there's this there's this trade off 0:05:58.196 --> 0:06:02.756 I've heard you describe from when you were launching jet 0:06:02.796 --> 0:06:06.116 Blue that was super interesting to me, and I'm curious 0:06:06.116 --> 0:06:07.996 to hear you talk about that, and then I'm curious 0:06:08.036 --> 0:06:11.916 to learn whether there's any kind of analog in launching Breeze. 0:06:12.316 --> 0:06:15.676 And the trade off for Jet Blue was having live 0:06:15.716 --> 0:06:20.996 TV and not having meals. And this was a time when, ay, 0:06:21.116 --> 0:06:23.836 you pretty much always got a meal on a long flight, 0:06:23.916 --> 0:06:27.516 and b live TV on an airplane was like science fiction. Right, 0:06:27.516 --> 0:06:30.596 It's twenty years ago. Netflix was DVDs in the mail. 0:06:31.076 --> 0:06:33.596 You couldn't watch TV on your computer. So I remember 0:06:33.636 --> 0:06:36.636 it was wild having live TV. So tell me about 0:06:36.716 --> 0:06:40.036 launching an airline at that time that had live TV 0:06:40.116 --> 0:06:43.516 but non meals. You know, it was a simple mathematical equation, 0:06:43.676 --> 0:06:45.716 you know, I have It's well known that I have 0:06:45.836 --> 0:06:48.996 add and I just get I used to hate to 0:06:49.036 --> 0:06:50.796 travel on airplanes. Because it was hard for me to 0:06:50.836 --> 0:06:53.836 read a book. It was hard to just sit there, 0:06:54.476 --> 0:06:56.676 and I just wanted to be entertained. I didn't have 0:06:57.236 --> 0:06:59.436 I didn't have a smartphone, I didn't have an iPhone, 0:06:59.436 --> 0:07:01.196 and I was kind of going crazy at the time. 0:07:01.636 --> 0:07:03.276 And so I was sitting in my office and I 0:07:03.316 --> 0:07:05.316 was trying to figure out if we could have movies 0:07:05.756 --> 0:07:08.356 in the seatbacks, and there was a couple of different 0:07:08.356 --> 0:07:10.636 outfits that were doing that. And then you know, one 0:07:10.636 --> 0:07:12.836 of our people walked in with this brochure and said, Hey, 0:07:13.036 --> 0:07:15.836 there's live television on these are on these private jets. 0:07:16.116 --> 0:07:17.876 Why don't we put that on our airplanes? And it 0:07:17.956 --> 0:07:21.636 was just like boom, that light went on and we 0:07:21.676 --> 0:07:24.196 talked to them and it was about a dollar a 0:07:24.236 --> 0:07:27.516 passenger per flight, and the other guys were paying about 0:07:27.516 --> 0:07:31.556 five bucks for mills for meals. Yeah, it's like five 0:07:31.596 --> 0:07:34.596 bucks for mills or one buck for live TV, you know. 0:07:34.636 --> 0:07:36.676 And I can just have baskets to snacks that cost 0:07:36.796 --> 0:07:39.396 less than a dollar. What's going to be more impactful 0:07:39.436 --> 0:07:41.556 with my brand new airplanes? And it just kind of 0:07:41.556 --> 0:07:43.956 blew everybody away. It was it was something that was 0:07:44.076 --> 0:07:48.036 so new and so exciting and it changed flying right. 0:07:48.076 --> 0:07:51.716 It was so unexpected, especially for what was basically a 0:07:51.756 --> 0:07:56.996 discount airline at launch, Like so you gotta move like that? Now, 0:07:57.156 --> 0:07:59.556 what is that? But for Breeze, you know, I think 0:07:59.596 --> 0:08:02.356 I think just getting on and flying first class for 0:08:02.436 --> 0:08:05.836 fifty percent more than coach, having streaming, you know, internet 0:08:05.876 --> 0:08:09.636 being served at flemingon Sandwich. So first class first class 0:08:09.636 --> 0:08:11.476 for about how much? Like give me an example of 0:08:11.476 --> 0:08:14.996 a first class fair on a route. Well, because the 0:08:15.036 --> 0:08:17.396 configuration the airplane, we only have to get fifty percent 0:08:17.476 --> 0:08:19.276 more for the ticket. So if we have a ticket 0:08:19.316 --> 0:08:21.276 for two hundred bucks, for an next one hundred dollars, 0:08:21.316 --> 0:08:23.356 you can go first class. So people right now are 0:08:23.396 --> 0:08:26.316 flying what's a transcontinental route you have going? Right now? 0:08:27.036 --> 0:08:29.756 We fly to Charleston, San Francisco. So are people right 0:08:29.836 --> 0:08:32.676 now flying from Charleston to San Francisco first class for 0:08:32.796 --> 0:08:35.396 three hundred dollars? Yeah, three hundred bucks each way? Okay, 0:08:35.396 --> 0:08:38.476 six hundred bucks round trip? Still very good. I will 0:08:38.476 --> 0:08:41.396 admit I'm going to California and I paid six hundred 0:08:41.436 --> 0:08:44.556 bucks more to fly coach, So I find that a 0:08:44.636 --> 0:08:47.716 compelling offer. So the cheap, cheap, relatively speaking, first class 0:08:47.756 --> 0:08:49.596 ticket is a big move. How do you do that? 0:08:49.796 --> 0:08:51.516 How do you get the cost down so you can 0:08:51.516 --> 0:08:53.956 do that? Well, we have you know, fuel fishing airplanes 0:08:53.996 --> 0:08:57.396 that are perceied, the most fuel fishing airplanes in the sky, 0:08:58.316 --> 0:09:01.596 you know, having less overhead and less not thousands of 0:09:01.636 --> 0:09:04.956 IT people, but you know, tens of IT people, and 0:09:05.076 --> 0:09:07.996 just trying to you know, be efficient and use technology 0:09:08.036 --> 0:09:10.756 every step of the way. So is the place where 0:09:11.116 --> 0:09:15.156 your costs are lower than other airlines? Not so much 0:09:15.996 --> 0:09:19.196 the on the plane part, not so much the pilots 0:09:19.236 --> 0:09:22.236 and the flight attendants, but rather having fewer IT people, 0:09:22.356 --> 0:09:25.636 fewer fewer customer service people. That's where you're hoping to 0:09:25.996 --> 0:09:29.716 really drive down costs. Yes, but it's really technology that 0:09:30.196 --> 0:09:32.676 the drives all that. And if you start with a clean, 0:09:32.756 --> 0:09:34.636 right sheet of paper, it's just a lot easier to 0:09:34.676 --> 0:09:37.036 do that than if you stuck with a bunch of 0:09:37.076 --> 0:09:42.036 legacy systems. I want to talk about routes now. I 0:09:42.076 --> 0:09:44.156 feel like routes are like kind of part of the 0:09:44.196 --> 0:09:47.276 like fun inside baseball of how what's actually going on 0:09:47.356 --> 0:09:49.756 with airlines? You know, we get dazzled by a TV 0:09:49.876 --> 0:09:52.156 in the seats, but there's these weird route choices that 0:09:52.156 --> 0:09:54.996 seem to make a big difference. That's another one where 0:09:54.996 --> 0:09:57.476 maybe it's worth just briefly to talk about Jet Blue 0:09:57.516 --> 0:10:00.116 because I feel like that was also clearly one of 0:10:00.156 --> 0:10:02.996 the big moves there, and in particular was the first 0:10:03.116 --> 0:10:08.156 route at Jet Blue flying out at JFK to Fort Lauderdale. 0:10:08.516 --> 0:10:11.876 Like that, it was a clever strategic move, right, tell 0:10:11.876 --> 0:10:15.316 me about that choice. Well, you know, JEK was interesting 0:10:15.356 --> 0:10:18.396 because jeff K was pretty much an abandoned airport. So 0:10:18.436 --> 0:10:20.996 you'd you'd go JFK to LA, you'd go to London 0:10:21.036 --> 0:10:23.676 and Paris, all around the world, but you wouldn't fly 0:10:23.876 --> 0:10:27.196 to Miami from JFK. I like, why not? It was 0:10:27.236 --> 0:10:29.516 funny because when I was running, I was raising money 0:10:29.516 --> 0:10:32.476 for jeff Blue in New York City. I'd meet these 0:10:32.516 --> 0:10:34.676 people and say and they'd say, I live in Manhattan. 0:10:34.676 --> 0:10:36.196 I'm never going to go to jeff K to go 0:10:36.276 --> 0:10:38.956 to Florida because it's so much farther than LaGuardia because 0:10:38.956 --> 0:10:41.156 it's an hour instead of a half hour. Right, LaGuardia 0:10:41.196 --> 0:10:42.996 is a half hour at jfk' is an hour hour 0:10:43.036 --> 0:10:44.356 and a half. Yeah, it depends on where you live 0:10:44.396 --> 0:10:46.916 in Manhattan. But it was it's eight miles. Well, hey, 0:10:46.916 --> 0:10:49.956 miles in New York City could be a lot miles. Yeah, yeah, 0:10:49.956 --> 0:10:52.396 it could be a lot. So I said, I don't 0:10:52.436 --> 0:10:55.756 care because people leave from their homes. And I got 0:10:55.796 --> 0:10:58.716 five million people that live in Queens and Brooklyn and 0:10:58.796 --> 0:11:02.716 Long Island that are closer or as close as LaGuardia, 0:11:02.756 --> 0:11:04.476 and I'll take care of those people. I don't need 0:11:04.516 --> 0:11:07.636 anyone from Manhattan. But you know, obviously, when we had 0:11:07.676 --> 0:11:10.436 the light TVs and leather seats, Manhattan Night's spent that 0:11:10.516 --> 0:11:13.516 extra thirty minutes coming out to JFK. So was the 0:11:13.636 --> 0:11:17.596 idea that it was cheaper to get a gate at 0:11:17.676 --> 0:11:20.356 JFK in the middle of the day than it was 0:11:20.356 --> 0:11:22.316 at LaGuardia because nobody was flying out of there then, 0:11:22.356 --> 0:11:25.276 I mean, was that the core sort of thing. Well, 0:11:25.356 --> 0:11:27.556 LaGuardia was slow controlled, so we couldn't fly to there 0:11:27.556 --> 0:11:29.796 if we wanted to at the time. So it was 0:11:29.836 --> 0:11:33.476 all full. So it's okay, all full. The national growth 0:11:33.516 --> 0:11:37.876 and air traffic was exponentially more than New York was. 0:11:37.996 --> 0:11:40.156 New York was being held down by really high fares 0:11:40.236 --> 0:11:42.996 because nobody was adding service out of JFK, and that 0:11:43.076 --> 0:11:45.156 airport was pretty well during the day, you could shoot 0:11:45.156 --> 0:11:47.236 a cannon down the runway and not hit anything, So 0:11:47.956 --> 0:11:52.436 you know that was available, and it was less delayed 0:11:52.436 --> 0:11:54.676 flights at the time, and all of that stuff that 0:11:54.716 --> 0:11:57.156 made it such a compelling story, not to mention all 0:11:57.196 --> 0:12:00.676 the people that lived closer to JFK than lived closer 0:12:00.716 --> 0:12:05.796 to LaGuardia. Yeah, so it's really Manhattan centric bias that 0:12:05.836 --> 0:12:09.396 you were overcoming. That was the real move there. Yeah, well, 0:12:09.756 --> 0:12:12.156 I notice. So, so let's talk about Breeze now and 0:12:12.196 --> 0:12:15.156 the routes you've chosen for Breeze. Right, in terms of 0:12:15.156 --> 0:12:19.116 New York where I live. I noticed you fly into Westchester, 0:12:19.556 --> 0:12:21.916 which is the suburbs north of New York, and I Slip, 0:12:21.956 --> 0:12:23.916 which is basically the suburbs east of New York. But 0:12:23.916 --> 0:12:26.436 you don't fly into Laguardi or JFK or New Work. 0:12:26.956 --> 0:12:30.876 Your inaugural flight was Tampa, Florida to Charleston, South Carolina, 0:12:30.956 --> 0:12:35.156 which is unexpected to me. So, like, tell me what's 0:12:35.156 --> 0:12:37.116 going on, Well, like, tell me about the route strategy 0:12:37.196 --> 0:12:41.156 for Breeze. Well, in so at long fact that every 0:12:41.196 --> 0:12:44.516 airline has to put all of their data into and 0:12:44.596 --> 0:12:46.836 send it to the DOT, and the Dot puts it 0:12:46.876 --> 0:12:49.836 in a database to the Department of Transportation Transportation, so 0:12:49.876 --> 0:12:55.476 we know who flies between what routes an annual basis quarterly, 0:12:56.236 --> 0:12:58.756 and what they paid or they paid for their ticket. 0:12:58.876 --> 0:13:02.836 Oh great, So it's like complete competitive intelligence is available 0:13:02.876 --> 0:13:05.196 to anybody wants to mind it. So we look at 0:13:05.236 --> 0:13:10.156 it and and we say, what's the largest market from Richmond, GA. 0:13:10.276 --> 0:13:13.516 That's an unserved NonStop and what's the average person paying? 0:13:13.916 --> 0:13:16.396 And it was San Francisco. So all these people were 0:13:16.396 --> 0:13:20.156 flying whatever Richmond to Salt Lake City to San Francisco, 0:13:20.276 --> 0:13:23.596 or Richmond to Charlotte to San Francisco. But there was 0:13:23.716 --> 0:13:27.796 no direct flight, Yes, no direct flights. And so we 0:13:27.876 --> 0:13:29.996 have our own little special sauce that we use in 0:13:30.036 --> 0:13:33.236 our little formula that if we say, if we can 0:13:33.276 --> 0:13:35.756 take someone NonStop, if we can, you know, the fair 0:13:35.916 --> 0:13:39.276 is down thirty percent and we go NonStop, we can 0:13:39.436 --> 0:13:41.516 x times the size of the market. We can make 0:13:41.516 --> 0:13:44.516 it four times bigger, five times biggers, in some cases 0:13:44.556 --> 0:13:47.116 twenty times bigger. So you're saying, if you make it 0:13:47.236 --> 0:13:51.076 cheaper because you're cheaper and more convenient because it's NonStop, 0:13:51.236 --> 0:13:55.196 lots more people will do it. Yes, we'll do it. 0:13:55.236 --> 0:13:57.516 And it's more convenient and they just go more often. 0:13:58.156 --> 0:14:01.276 And so I mean the core move you're making is 0:14:01.316 --> 0:14:07.396 flying NonStop out of and often between kind of second 0:14:07.396 --> 0:14:10.436 tier cities market, right, I mean that's the core thin 0:14:10.516 --> 0:14:14.476 you're doing, flying between cities that don't have NonStop service basically, 0:14:14.556 --> 0:14:17.916 and it you know, those are would more likely be 0:14:17.956 --> 0:14:22.396 a secondary market. And so is this I mean, why 0:14:22.476 --> 0:14:25.396 wasn't anybody doing this before? Like it seems like very 0:14:25.436 --> 0:14:27.676 straightforward when you put it that way, like there's just 0:14:27.756 --> 0:14:29.876 money on the table, is it. Well, if you don't 0:14:29.956 --> 0:14:31.916 have to do it and you can make people drive 0:14:31.916 --> 0:14:35.556 down to JFK, you know, from Connecticut where I lived, 0:14:35.676 --> 0:14:37.716 or you can make them drive down and you have 0:14:37.756 --> 0:14:39.516 to do it, why do it? You know it just 0:14:39.556 --> 0:14:42.516 splits up your market? Is some part of this? Like 0:14:43.036 --> 0:14:45.956 it seems like there's a pendulum. There's been this pendulum 0:14:46.076 --> 0:14:49.956 in American commercial air over the last I don't know, 0:14:49.996 --> 0:14:52.116 twenty years or something, where first there was this period 0:14:52.116 --> 0:14:56.396 of consolidation where airlines were going bankrupt getting acquired, there 0:14:56.436 --> 0:14:59.196 was less and less competition, and now it seems like 0:14:59.196 --> 0:15:00.876 we're going back the other way. There are lots of 0:15:00.916 --> 0:15:03.076 new airlines doing things like you're doing. I mean, is 0:15:03.116 --> 0:15:06.596 that is this that story? Is this like you know, 0:15:06.836 --> 0:15:09.556 sort of the market working as intended, where people go 0:15:09.676 --> 0:15:11.676 to business and there's opportunity, and then you come and 0:15:11.716 --> 0:15:13.796 start an airline and be like, oh, there's an opportunity 0:15:13.796 --> 0:15:16.076 to fly from Westchester to Las Vegas. I mean, it's 0:15:16.116 --> 0:15:18.436 that a way of framing the story. I think it's 0:15:18.516 --> 0:15:22.036 more that, you know, kind of as the airlines got 0:15:24.676 --> 0:15:27.676 higher costs, and you know, after their bankrupt season, then 0:15:27.676 --> 0:15:31.596 they started building costs back up again. They started saying, well, 0:15:31.636 --> 0:15:33.316 we can make a lot more money if we just 0:15:33.476 --> 0:15:37.636 fly to our hubs. So if we can take everyone 0:15:37.636 --> 0:15:39.916 to our hubs and we can connect them, and if 0:15:39.916 --> 0:15:42.116 we can go up to a two hundred seed air 0:15:42.156 --> 0:15:44.356 plane instead of one hundred and thirty seed airplane, that 0:15:44.436 --> 0:15:48.516 works better. And you know what's happening today with the 0:15:49.036 --> 0:15:53.356 pilot shortage. You know, regional airlines can't hire pilots, enough 0:15:53.396 --> 0:15:56.276 pilots stuff, And there's about three hundred of those airplanes 0:15:56.876 --> 0:16:01.996 that are grounded. So cities like Richmond and Charleston and 0:16:02.156 --> 0:16:04.356 used to always have these little spokes that would go 0:16:04.436 --> 0:16:06.796 to the hubs. A lot of those are not they're 0:16:06.836 --> 0:16:09.796 canceling service to those cities. So it's a combination of 0:16:09.796 --> 0:16:11.756 the focus on the hubs not being able to fly 0:16:11.796 --> 0:16:16.356 the regional flights that has really created a really great 0:16:16.356 --> 0:16:23.436 opportunity for us. In a minute, speaking of the pilot shortage, 0:16:23.836 --> 0:16:26.716 what's going on with air travel this summer? Why is 0:16:26.756 --> 0:16:29.516 everybody suddenly warning us that flying is just going to 0:16:29.556 --> 0:16:38.916 be one problem after another. That's the end of the ads. 0:16:39.356 --> 0:16:42.196 Now we're going back to the show. Let's talk about 0:16:42.316 --> 0:16:45.476 the pilot shortage and staffing more generally. I know you 0:16:47.316 --> 0:16:50.956 had to postpone launching some new routes. It seemed like 0:16:51.036 --> 0:16:53.956 kind of at the last minute recently. Is that partly 0:16:53.996 --> 0:16:56.596 because you can't hire enough people fast enough. No, it 0:16:57.076 --> 0:16:59.396 has nothing to do with that. We have plenty of 0:16:59.436 --> 0:17:03.396 people that we've hired, and it was more an issue 0:17:03.396 --> 0:17:05.996 of training and had a little bit to do with 0:17:06.036 --> 0:17:10.036 the FAA. We had a certification process for our new 0:17:10.076 --> 0:17:13.436 aircraft that was supposed to take six months. It's always 0:17:13.476 --> 0:17:16.356 taking six months. This took eight months, you know, because 0:17:16.396 --> 0:17:18.756 of COVID and all that. You know, the staffing issues 0:17:18.956 --> 0:17:21.716 at the FAA. So we ran into that two month 0:17:21.716 --> 0:17:24.836 delay and we finally just ran out of runway, had 0:17:24.876 --> 0:17:26.876 to push it back and now we're we're we're in 0:17:26.916 --> 0:17:28.996 good shape now. But you know, it was painful, and 0:17:29.676 --> 0:17:31.876 you know it's it's never gonna happen again, for sure. 0:17:32.156 --> 0:17:35.236 It's just for us. It's a training pipeline. And now 0:17:35.836 --> 0:17:38.516 we got a lot more analytics, and we brought in 0:17:38.556 --> 0:17:41.076 a whole new team, a new CEO, a new president, 0:17:41.516 --> 0:17:44.876 you know, new chief people officer, and they're you know, 0:17:45.276 --> 0:17:47.196 doing a heck of a lot better. So did you 0:17:47.236 --> 0:17:50.756 just reorganize the company a year after you started it? Yeah? Uh? 0:17:50.796 --> 0:17:53.476 What went wrong? You know, because you know, we weren't 0:17:53.476 --> 0:17:56.676 doing a good enough job of you know, anticipating and 0:17:56.916 --> 0:17:59.676 doing the analytics and making sure that you know, the 0:17:59.716 --> 0:18:03.876 communication between operations and our commercial side, making sure that 0:18:03.916 --> 0:18:06.316 it was just you know, flawless. And you know, we 0:18:06.356 --> 0:18:08.996 just can't disappoint our guests anymore. You know, we have 0:18:09.156 --> 0:18:11.196 to run. We have to be flawless on everything we 0:18:11.236 --> 0:18:14.036 can control. There's enough that we can't control, but we 0:18:14.076 --> 0:18:15.916 need to be perfect on on what we can't control. 0:18:16.276 --> 0:18:19.236 There is it happened in this broader context, right, everybody's saying, 0:18:19.316 --> 0:18:20.996 like if you could not fly the summer, don't fly 0:18:21.036 --> 0:18:23.756 this summer and there's too many people and not enough pilots. 0:18:23.876 --> 0:18:26.196 Is that not the case for you? Do you think 0:18:26.196 --> 0:18:28.556 that's not the case for anybody? Like, help me understand 0:18:28.556 --> 0:18:30.676 that sort of broader context of the way people are 0:18:30.756 --> 0:18:32.916 talking about air travel right now. I don't ever remember 0:18:32.956 --> 0:18:35.316 people talking about it quite like they are right now. Well, 0:18:35.476 --> 0:18:37.636 you know, I think COVID really put a dent in 0:18:37.676 --> 0:18:40.836 the in the industry from a training perspective, because the 0:18:40.876 --> 0:18:43.476 first thing that happened was, you know, the airline's got 0:18:43.476 --> 0:18:46.516 paid fifty three billion dollars, you know, to kind of 0:18:46.636 --> 0:18:49.796 keep people on staff. But what they decided to do 0:18:50.356 --> 0:18:53.196 was to use some of that money to retire pilots, 0:18:53.236 --> 0:18:57.036 the most expensive pilots. So there was about seven thousand 0:18:57.076 --> 0:19:01.396 pilots that left. So they left the industry seven thousand. 0:19:01.436 --> 0:19:03.596 Give me, I don't have any context. What's the denominator 0:19:03.836 --> 0:19:05.476 to how many or how do I parse that number? 0:19:05.516 --> 0:19:08.476 I would guess probably at the big airlines, you know, 0:19:08.516 --> 0:19:12.116 fifty and pilots or less. So it was a big 0:19:12.196 --> 0:19:15.156 chunk of what they had. But it created this trickle 0:19:15.196 --> 0:19:18.876 that effect because you know, when you have to train someone, 0:19:18.916 --> 0:19:21.196 it takes two months to train someone for a new airplane, 0:19:21.236 --> 0:19:23.996 and then they have this initial operating experience and if 0:19:24.036 --> 0:19:26.596 you've got five or six aircraft types, you're you're really 0:19:26.596 --> 0:19:29.156 just doing a lot of training to backfield for those 0:19:29.196 --> 0:19:32.316 seven thousand and then you pull from your regional airlines, 0:19:32.356 --> 0:19:34.156 you call, you know, you go to SkyWest and you 0:19:34.196 --> 0:19:38.076 go to Republican Higher, all their pilots away and then 0:19:38.116 --> 0:19:40.876 you put them in and everyone's changing airplanes and the 0:19:40.876 --> 0:19:44.876 whole process is just is very time consuming. And you know, 0:19:44.956 --> 0:19:48.516 they just saw the demand coming back and put flights 0:19:48.556 --> 0:19:52.116 on as we did. And you know, the training is 0:19:52.156 --> 0:19:55.516 really what was the hiccup? The training is get that 0:19:55.676 --> 0:19:59.476 in a similar way to getting you, it's getting everybody. Yeah, 0:19:59.476 --> 0:20:01.756 are there things you've tried to figure out either at 0:20:01.796 --> 0:20:04.676 Breeze or at previous airlines you've started or run that 0:20:04.716 --> 0:20:07.076 you haven't figured out yet that you're still kind of 0:20:07.076 --> 0:20:09.436 working on. Is there some sort of you know, problem 0:20:09.436 --> 0:20:11.196 you're still trying to solve that you haven't quite got 0:20:11.276 --> 0:20:13.356 right yet that you that you're returning to or you 0:20:13.396 --> 0:20:18.436 want to return to. I think you know the challenges 0:20:18.516 --> 0:20:20.836 you've got, and I'm not I haven't looked at it recently. 0:20:20.876 --> 0:20:23.516 But you have a company like Priceline that has booking 0:20:23.596 --> 0:20:25.916 dot Com and they, you know, at one time they 0:20:25.916 --> 0:20:28.556 were worth one hundred billion dollars. You go on to 0:20:28.596 --> 0:20:31.836 book a hotel and they're worth more than all the 0:20:31.836 --> 0:20:34.396 airlines combine. If you add them all up, they're worth 0:20:34.436 --> 0:20:37.556 more than one company. So well, airlines are famously a 0:20:37.596 --> 0:20:40.476 really bad business, right like you got to you gotta 0:20:40.476 --> 0:20:42.396