WEBVTT - Airline Mergers and Restaurant Loyalty 0:00:01.280 --> 0:00:05.280 You're listening to the Bloomberg Opinion podcast counts Saturdays at 0:00:05.280 --> 0:00:08.400 one and seven pm Eastern on Bloomberg dot Com, the 0:00:08.480 --> 0:00:11.600 iHeartRadio app, and the Bloomberg Business App, or listen on 0:00:11.680 --> 0:00:13.760 demand wherever you get your podcasts. 0:00:15.760 --> 0:00:19.360 Welcome to Bloomberg Opinion. I'm Amy Morris. This week we 0:00:19.440 --> 0:00:23.280 look at why so many smaller airlines are looking to 0:00:23.320 --> 0:00:26.000 make big deals as M and A is turning into 0:00:26.120 --> 0:00:29.600 a survival tool and then something a bit closer to 0:00:29.680 --> 0:00:34.360 home home ownership. It's getting harder for gen z, so 0:00:34.600 --> 0:00:37.400 where will that leave them? And if you like going 0:00:37.400 --> 0:00:40.360 to a bar or a restaurant where everybody knows your 0:00:40.440 --> 0:00:44.080 name and you receive service that's tailored to you, well, 0:00:44.120 --> 0:00:48.080 you might be interested in a new trend customer loyalty programs. 0:00:48.240 --> 0:00:51.680 But we begin with COVID boosters. They've over promised and 0:00:51.960 --> 0:00:55.160 under delivered. We're learning more that parents would like to 0:00:55.160 --> 0:00:59.160 give their kids RSV vaccines, but not COVID boosters. And 0:00:59.200 --> 0:01:02.080 as for adult it's only eighteen percent of adults in 0:01:02.120 --> 0:01:04.520 the US got the latest COVID shot that says of 0:01:04.560 --> 0:01:08.039 mid December. Let's find out what's going on. Bloomberg Opinion 0:01:08.080 --> 0:01:11.279 columnist Faith Lamb covers science and his host of the 0:01:11.360 --> 0:01:14.759 follow the Science podcast, and she joins me, Now, Fay, 0:01:14.880 --> 0:01:17.319 let's start with the headline of your column. Will want 0:01:17.319 --> 0:01:20.640 to clarify something. It says boosters over promised and underdelivered. 0:01:20.840 --> 0:01:23.520 But your column really is more about the work being 0:01:23.560 --> 0:01:26.319 done to improve these boosters. Yeah. 0:01:26.720 --> 0:01:29.400 Yeah, I mean, I think that that people have become 0:01:29.440 --> 0:01:32.760 sort of resigned to the situation that we have where 0:01:32.800 --> 0:01:35.480 people are getting COVID you know, right and left, even 0:01:35.520 --> 0:01:39.840 though a lot of people are getting boosted. And I 0:01:39.880 --> 0:01:43.000 think that there is actually a lot of research out 0:01:43.000 --> 0:01:46.760 there to try to figure out what's you know, why 0:01:46.880 --> 0:01:50.520 the boosters and the COVID shots aren't protecting us better, 0:01:50.720 --> 0:01:55.360 and even research on better ways to boost people or 0:01:55.400 --> 0:01:58.680 vacciny people so that maybe it won't always be like this. 0:01:59.640 --> 0:02:03.160 So one of the big challenges is the lack of 0:02:03.200 --> 0:02:06.520 a seasonal pattern. You explain this in your column, But 0:02:06.680 --> 0:02:09.280 I wonder is the lack of a seasonal pattern with 0:02:09.360 --> 0:02:12.160 covid like with the flu. Is it because COVID is 0:02:12.200 --> 0:02:14.800 so mercurial and it keeps changing, or is it because 0:02:14.919 --> 0:02:18.560 it hasn't really been around long enough to establish a 0:02:18.600 --> 0:02:20.280 regular pattern. For us to pick up on. 0:02:21.440 --> 0:02:23.560 Yeah, I think it could be some of both. You know. 0:02:23.680 --> 0:02:26.880 One of the things I remember being surprised by covering 0:02:27.240 --> 0:02:30.040 another story a long time ago on flu is that 0:02:30.040 --> 0:02:35.040 scientists don't completely understand why flu the flu season is 0:02:35.080 --> 0:02:37.919 when it is, you know, they sort of have some guesses. Well, 0:02:38.040 --> 0:02:41.120 is because people gather more, they're inside more people are 0:02:41.120 --> 0:02:45.600 inside most of the time in most places anyway, something 0:02:45.639 --> 0:02:49.360 to do with humidity changes, something to do with sunlight 0:02:49.440 --> 0:02:52.880 and the immune system. So scientists don't completely understand the 0:02:52.880 --> 0:02:57.000 seasonal patterns that other viruses seem to have, and so 0:02:57.360 --> 0:03:00.480 it may take a while before it's understood whether this 0:03:00.520 --> 0:03:02.880 one will have a seasonal pattern eventually or not. 0:03:03.520 --> 0:03:06.079 And there's another issue that you brought up in your column, 0:03:06.120 --> 0:03:09.160 and that is that there's a question about the quality 0:03:09.240 --> 0:03:11.160 of the new boosters. They're not going to hurt you, 0:03:11.520 --> 0:03:14.760 it's just perhaps they're not as strong as we had expected. 0:03:14.760 --> 0:03:17.360 What's the issue there, Well, one of the things is 0:03:17.400 --> 0:03:20.840 just the vaccine. I mean, the virus keeps evolving really 0:03:21.160 --> 0:03:26.600 quite fast. So this one was geared to fight a 0:03:26.680 --> 0:03:29.760 version that's now pretty much extinct, and it's been replaced 0:03:29.760 --> 0:03:33.000 by something else. It's a moving target. And so the 0:03:33.600 --> 0:03:37.520 other problem is something called imprinting, by which the immune 0:03:37.560 --> 0:03:42.400 system kind of gets stuck creating antibodies to what it 0:03:42.840 --> 0:03:47.640 was originally vaccinated against, which is the original version. And 0:03:47.720 --> 0:03:52.880 so people are creating antibodies to the parts of the 0:03:52.960 --> 0:03:56.320 virus that the current version and the original version that 0:03:56.320 --> 0:03:58.960 we were vaccinated against have in common. And when you 0:03:58.960 --> 0:04:05.840 boost people, it seems to mostly increase the antibodies to 0:04:05.880 --> 0:04:09.440 the original virus, not the you know, or this sort 0:04:09.440 --> 0:04:12.400 of small cross section that they have in common. And 0:04:12.480 --> 0:04:15.560 so that's that that imprinting problem is something that scientists 0:04:15.600 --> 0:04:18.400 are still trying to understand. There was some sort of 0:04:18.600 --> 0:04:23.320 good news out of China that if people had repeated 0:04:23.400 --> 0:04:27.760 exposures to these newer omicron family of variants that we're 0:04:27.800 --> 0:04:31.520 still seeing, the imprinting became less strong and they were 0:04:31.560 --> 0:04:34.640 actually getting an immune response that was better matched to 0:04:35.240 --> 0:04:36.320 what we're seeing. 0:04:36.839 --> 0:04:39.839 So wait to be exposed to the omicron variants. Then 0:04:40.240 --> 0:04:42.680 would you actually have to get sick or can we 0:04:42.720 --> 0:04:43.880 do that through a vaccine? 0:04:44.480 --> 0:04:48.240 It was both either either by getting by getting omicron right, 0:04:48.480 --> 0:04:51.320 either way by getting a booster that was geared to omicron, 0:04:51.800 --> 0:04:55.160 or by getting omicron, either would be considered an exposure, 0:04:55.320 --> 0:04:59.480 So the more your immune system saw omicron, the more 0:04:59.680 --> 0:05:03.640 it actually did start to mount an immune response, breakthrough 0:05:03.760 --> 0:05:07.160 or override this imprinting effect. It's not clear that that's 0:05:07.200 --> 0:05:09.480 working the same way. There's some papers showing it doesn't 0:05:09.480 --> 0:05:11.840 seem to work as well with the mRNA vaccines as 0:05:11.839 --> 0:05:14.760 it does with the vaccines they're using in China, which 0:05:14.760 --> 0:05:18.880 are a whole different kind of vaccine called an activated virus. 0:05:19.640 --> 0:05:22.520 And we are talking with Bloomberg opinion columnist Faith Lamb 0:05:22.600 --> 0:05:26.520 about the promise of COVID boosters and why perhaps they're 0:05:26.520 --> 0:05:29.800 not gaining the traction that we would have expected. We 0:05:29.880 --> 0:05:32.839 also pointed out in your column that Pfizer is seeing 0:05:32.960 --> 0:05:35.960 the immediate results and effects of this, that people aren't 0:05:35.960 --> 0:05:38.440 getting the boosters as they expected, and they're struggling. 0:05:39.000 --> 0:05:41.760 Some of it is that the main thing that the 0:05:41.800 --> 0:05:45.560 booster shots do is protect people against getting severe disease, 0:05:45.640 --> 0:05:47.720 and so the people who really should take them are 0:05:48.080 --> 0:05:50.520 older people, people with the kinds of health problems that 0:05:50.520 --> 0:05:53.000 put them at risk for severe disease. So one of 0:05:53.040 --> 0:05:56.320 the questions that doesn't get asked enough is, well, eighteen 0:05:56.400 --> 0:05:59.320 percent that actually could be really good if the people 0:05:59.320 --> 0:06:01.240 that need it most are the ones getting it. 0:06:01.480 --> 0:06:02.599 But if there are people who. 0:06:02.480 --> 0:06:05.840 Are elderly and at risk and are not getting it, 0:06:05.880 --> 0:06:09.279 then we have a bigger problem. But I think that 0:06:09.360 --> 0:06:11.359 they may have counted on this being more like a 0:06:11.360 --> 0:06:13.599 flu shot, and there are a couple of reasons why 0:06:14.080 --> 0:06:16.640 it's never going to be like a flu shot. You know, 0:06:16.680 --> 0:06:20.760 you can't the boosting effect apparently only last for about 0:06:20.800 --> 0:06:23.560 four months, and so you'd need to time it to 0:06:24.240 --> 0:06:28.320 when the season was and we don't really have this 0:06:28.480 --> 0:06:33.040 well defined season, so it may be a challenge to 0:06:33.120 --> 0:06:36.080 make it as effective. And people just know they you know, 0:06:36.080 --> 0:06:38.240 they look around, their friends are getting it. Everybody's getting it, 0:06:38.240 --> 0:06:40.279 people who got boosted or getting it, people who got 0:06:40.279 --> 0:06:43.640 the last booster got it. So I think there's this 0:06:43.760 --> 0:06:48.680 sort of feeling from experience that well, I'm not going 0:06:48.760 --> 0:06:51.600 to get protection against getting COVID. I think there'd be 0:06:51.640 --> 0:06:53.760 a lot more motivation to go get a booster if 0:06:53.800 --> 0:06:55.680 you thought it was going to give you a, you know, 0:06:56.040 --> 0:06:58.680 a really strong protection against just getting infected in the 0:06:58.680 --> 0:07:01.159 first place, because people would still rather not get COVID 0:07:01.200 --> 0:07:04.560 than get it, even if the disease is mild in them. 0:07:04.880 --> 0:07:07.719 Let me ask you this. I've always understood the boosters 0:07:07.800 --> 0:07:11.600 from the very beginning weren't necessarily going to keep you 0:07:11.640 --> 0:07:14.080 from getting COVID, but will keep you out of the hospital. 0:07:14.120 --> 0:07:16.040 There's sort of like a seat belt. You're not going 0:07:16.080 --> 0:07:19.080 to avoid the crash, but you're not necessarily going to 0:07:19.120 --> 0:07:22.720 be terribly injured or killed because of it. Right, So 0:07:22.760 --> 0:07:23.720 they're like a seat. 0:07:23.480 --> 0:07:26.680 Belt, Well, yes, a little likeacy belt, except that we 0:07:26.800 --> 0:07:29.600 know that whereas it in your car. You know, anyone 0:07:29.720 --> 0:07:33.280 could get killed in an auto accident. But it really 0:07:33.400 --> 0:07:36.000 is certain high risk groups are likely to go to 0:07:36.000 --> 0:07:39.480 the hospital, and other people are much less likely, especially 0:07:39.480 --> 0:07:42.240 if they've already been vaccinated and exposed to the virus 0:07:42.280 --> 0:07:44.720 have some immunity. That we're not seeing the hospital fill 0:07:44.760 --> 0:07:47.080 up with twenty five year olds who have already had 0:07:47.120 --> 0:07:49.680 two boosters and just didn't get a third one. You know, 0:07:49.720 --> 0:07:53.720 it's really the elderly that need to be targeted. 0:07:54.960 --> 0:07:57.400 Do from your research, have you found if there is 0:07:57.440 --> 0:07:59.800 a better booster coming. They're still working on this, they're 0:07:59.840 --> 0:08:01.560 not done yet. Yeah. 0:08:01.600 --> 0:08:05.280 I mean I talked to Dan Barouche at Harvard and 0:08:05.480 --> 0:08:09.840 he just has a paper out in the journal Nature 0:08:10.280 --> 0:08:14.440 showing that in animal studies they can actually completely protect 0:08:14.440 --> 0:08:19.880 against infection with an inhaled version of the vaccine. Whether 0:08:19.880 --> 0:08:22.120 that's practical or not, I don't know, but it worked, 0:08:22.280 --> 0:08:25.920 and so it is possible that sort of getting the 0:08:25.960 --> 0:08:29.720 protection where people, you know, first, where the human body 0:08:29.760 --> 0:08:34.000 first encounters the virus, seems to offer a pretty strong protection. 0:08:34.200 --> 0:08:36.360 And people are looking at nasal that, you know, they're 0:08:36.400 --> 0:08:40.560 looking at these as something that might actually just prevent 0:08:40.679 --> 0:08:42.640 people from getting infected in the first place, and in 0:08:42.679 --> 0:08:44.280 animals at least, it seems to work. 0:08:44.400 --> 0:08:47.480 So an inhaled version then would target specifically the lungs 0:08:47.559 --> 0:08:52.360 and protect the lungs exclusively or especially yeah, or just. 0:08:52.320 --> 0:08:54.520 The upper respiratory tract. You know, it would sort of 0:08:54.559 --> 0:08:57.120 get around your upper respiratory tract, which is where people 0:08:58.120 --> 0:09:01.920 you know, are accumulating the viral particles. So, you know, 0:09:02.040 --> 0:09:04.760 I don't know exactly why that worked so much better 0:09:04.800 --> 0:09:07.000 than the nasal one. So the nasal one seemed to 0:09:07.000 --> 0:09:09.160 work pretty well, but the inhaled one worked really well 0:09:09.160 --> 0:09:11.679 in the animals, and I think they're still still working 0:09:11.720 --> 0:09:17.239 out why that is and how this might be translated 0:09:17.280 --> 0:09:20.480 into a human trial. There are already some apparently there 0:09:20.559 --> 0:09:24.079 is a trial with an inhaled vaccine going on, So 0:09:24.400 --> 0:09:28.240 there are human studies that have gotten started already. 0:09:28.400 --> 0:09:31.520 So they're trying to improve it to better match the variants, 0:09:31.559 --> 0:09:33.680 and they're trying to improve it to better target the 0:09:33.760 --> 0:09:37.120 upper respiratory tract. And they're trying to improve it. So 0:09:37.120 --> 0:09:38.840 it's not necessarily always a needle. 0:09:39.960 --> 0:09:43.760 Yeah, And I think just to write so that people 0:09:43.840 --> 0:09:46.559 don't keep getting mild infections, which then would mean that 0:09:46.600 --> 0:09:50.920 they're less likely to infect spread the virus to more 0:09:51.000 --> 0:09:53.959 vulnerable people, so that we would see a real end 0:09:54.000 --> 0:09:58.520 to the deaths and the hospitalizations. That it's not necessarily 0:09:58.559 --> 0:10:00.440 something that we would have to live with wherever that, 0:10:00.520 --> 0:10:04.320 I think scientists are still trying to, you know, trying 0:10:04.360 --> 0:10:08.320 to improve the tools we have, the vaccines we have, 0:10:08.480 --> 0:10:11.880 so that we're not resigned to dealing with this situation 0:10:11.960 --> 0:10:12.760 for all eternity. 0:10:13.240 --> 0:10:16.439 So what's your take home message from all of this? Wow? 0:10:16.640 --> 0:10:19.240 I mean, I guess just that I think that this 0:10:19.840 --> 0:10:23.160 people haven't I don't think people have lost interest in COVID. 0:10:23.200 --> 0:10:25.040 I think there's still a lot of interest. And I 0:10:25.080 --> 0:10:28.200 think that that scientists who are doing this kind of 0:10:28.200 --> 0:10:30.800 work should continue to get support, and I think it's 0:10:30.960 --> 0:10:32.880 it's what they learn is going to be useful for 0:10:32.960 --> 0:10:36.120 dealing with the next pandemic and other viruses as well. 0:10:36.240 --> 0:10:40.880 So I think having this this you know, surge in 0:10:40.920 --> 0:10:45.080 new research is really important and that we might see 0:10:45.320 --> 0:10:47.840 some new things coming down the pipe. It's not all 0:10:48.000 --> 0:10:48.680 doom and gloom. 0:10:49.040 --> 0:10:52.360 Faith Lamb is a Bloomberg Opinion columnist. She covers science 0:10:52.400 --> 0:10:55.240 and his host of the Follow the Science podcast. Now 0:10:55.240 --> 0:10:58.040 coming up will take a look at consolidations in the 0:10:58.120 --> 0:11:01.720 airline industry and what is that ten you're listening to 0:11:01.760 --> 0:11:02.760 Bloomberg Opinion. 0:11:12.280 --> 0:11:16.280 You're listening to the Bloomberg Opinion Podcast Contest Saturdays at 0:11:16.280 --> 0:11:19.400 one and seven pm Eastern on Bloomberg dot Com, the 0:11:19.480 --> 0:11:22.600 iHeartRadio app, and the Bloomberg Business App, or listen on 0:11:22.679 --> 0:11:24.760 demand wherever you get your podcasts. 0:11:26.720 --> 0:11:30.479 You're listening to Bloomberg Opinion. I m Amy Morris. Antitrust 0:11:30.520 --> 0:11:33.920 regulators have made no secret of their skepticism toward further 0:11:34.000 --> 0:11:38.400 consolidation in the airline industry mergers at acquisitions, though, like 0:11:38.520 --> 0:11:42.400 Alaska Air's nearly two billion dollar acquisition of Hawaiian holdings 0:11:42.960 --> 0:11:46.280 didn't happen in a vacuum. And throughout the aerospace supply chain, 0:11:46.320 --> 0:11:49.040 power is concentrated in the hands of just a few players. 0:11:49.480 --> 0:11:52.160 So really the only way for companies to hold their 0:11:52.160 --> 0:11:55.600 own is to get bigger. Let's learn more about this. 0:11:55.640 --> 0:12:00.280 Bloomberg opinion columnist Brooks Sutherland covers deals in industrial companies. 0:12:00.360 --> 0:12:02.959 She's been following this from the very beginning. She also 0:12:03.000 --> 0:12:06.800 writes the Industrial Strength newsletter, and she joins me, now, 0:12:07.000 --> 0:12:09.120 brook as always, thank you so much for taking the 0:12:09.160 --> 0:12:11.400 time with me, And I want to start with what 0:12:11.480 --> 0:12:15.520 you describe as a concentration of power up and down 0:12:15.559 --> 0:12:17.880 the supply chain in the aerospace industry. 0:12:17.920 --> 0:12:18.400 What do you mean? 0:12:18.800 --> 0:12:19.160 Sure? 0:12:19.520 --> 0:12:22.000 And so I always think it's fascinating that these airline 0:12:22.040 --> 0:12:25.800 deals tend to get so much public attention and so 0:12:25.920 --> 0:12:30.360 much antitrust scrutiny. But there's been a number of combinations 0:12:30.400 --> 0:12:33.520 that have happened elsewhere in the aerospace ecosystem that they 0:12:33.600 --> 0:12:36.880 just don't attract the same level of scrutiny. And so, 0:12:37.000 --> 0:12:42.360 for example, the former United Technologies Corp. Merged with Raytheon 0:12:42.840 --> 0:12:45.800 to build up this aerospace and defense giant. They also 0:12:45.840 --> 0:12:49.640 acquired Rockwell Collins, which itself had been on an acquisition spree. 0:12:50.000 --> 0:12:52.520 You know, in terms of the airplanes themselves, you really 0:12:52.720 --> 0:12:55.920 have Boeing an airbus and that's it as far as 0:12:56.000 --> 0:12:59.600 you know, major commercial jetliners. And then there was a 0:12:59.600 --> 0:13:03.560 consolidalidation that happened in the aircraft leasing space where ge 0:13:03.679 --> 0:13:08.000 sold its aviation leasing business. And so I just think 0:13:08.040 --> 0:13:10.080 it's interesting that, you know, there's so much fixation on 0:13:10.080 --> 0:13:12.959 the airlines, and perhaps that's because we as consumers tend 0:13:13.000 --> 0:13:14.920 to interact with them more than we do the aerospace 0:13:14.960 --> 0:13:18.760 manufacturing side or the aircraft leasing side. But these deals 0:13:18.760 --> 0:13:22.000 are part of that broader ecosystem. When we have so 0:13:22.120 --> 0:13:26.240 much consolidation, it changes the negotiating dynamics because airlines they 0:13:26.320 --> 0:13:29.160 lease planes, they buy planes, they have engines, they need 0:13:29.200 --> 0:13:32.120 engine maintenance, and all of that sort of adds to 0:13:32.200 --> 0:13:34.120 these pressures that airlines are facing. 0:13:34.720 --> 0:13:36.160 So how did we get here. 0:13:36.520 --> 0:13:39.439 Through a number of deals over the years. I mean, 0:13:39.520 --> 0:13:42.680 you know, Boeing was created through a series of acquisitions, 0:13:43.120 --> 0:13:45.160 and you know some of the deals that it just 0:13:45.200 --> 0:13:50.000 described happened a lot more recently as well, and regulators 0:13:50.040 --> 0:13:51.920 allowed those to go through. And so I think there 0:13:51.960 --> 0:13:55.120 just needs to be a bigger conversation about what is 0:13:55.160 --> 0:13:58.880 the actual competitive operating environment for these airlines. 0:14:00.200 --> 0:14:03.640 Transformative deals have a poor track record, and you talk 0:14:03.679 --> 0:14:06.880 about that in your column on the Bloomberg terminal. So 0:14:07.000 --> 0:14:09.920 would this then really be the only recourse that airlines 0:14:09.960 --> 0:14:12.640 would have to hold their own or even grow a 0:14:12.679 --> 0:14:13.079 little bit? 0:14:13.440 --> 0:14:15.480 I think it is. I mean, just when you think about, 0:14:15.480 --> 0:14:18.880 you know, takeoff slots at airports, those are also restricted, 0:14:18.920 --> 0:14:20.600 and so the only way that you can get more 0:14:20.680 --> 0:14:25.480 is often by buying another company's positions at those airports 0:14:25.520 --> 0:14:29.280 and so, and you know that labor is uh, there's 0:14:29.320 --> 0:14:31.640 not a lot of labor to go around. There's long 0:14:31.640 --> 0:14:34.040 waiting lists for airplanes, and so if you want to 0:14:34.120 --> 0:14:36.880 go ahead and you know, get a bigger fleet very quickly, 0:14:36.920 --> 0:14:38.480 one of the better ways to do it is by 0:14:38.480 --> 0:14:41.120 buying somebody. And I just think that that needs to 0:14:41.120 --> 0:14:44.040 be part of the conversation. It's not just the airlines 0:14:44.080 --> 0:14:46.000 want to go in and consolidate in order to be 0:14:46.000 --> 0:14:48.360 able to jack prices up for consumers. They have all 0:14:48.400 --> 0:14:52.080 of these other pushes and pulls on their finances and 0:14:52.120 --> 0:14:53.320 their ability to compete. 0:14:53.680 --> 0:14:56.280 Well, that's a good question. Then how does this impact 0:14:56.880 --> 0:14:58.840 the consumer, the guy who's holding the ticket. 0:14:59.280 --> 0:15:03.040 Sure, I mean so right now. Actually, there are arguably 0:15:03.040 --> 0:15:06.960 too many seats available domestically in the US, and you've 0:15:07.000 --> 0:15:10.160 seen a number of carriers actually have to lower fares 0:15:10.440 --> 0:15:13.240 in order to be able to fill those seats, and 0:15:13.280 --> 0:15:16.920 they're often not doing so profitably because they're also, you know, 0:15:17.000 --> 0:15:20.240 dealing with rising cost pressures, not just from labor and fuel, 0:15:20.320 --> 0:15:25.240 but infrastructure constraints, supply chain, logjams, weather disruptions cost the 0:15:25.280 --> 0:15:28.280 airlines money too, not just the flyer, their time and 0:15:28.320 --> 0:15:32.760 their patients, and you know, it's it will be interesting 0:15:32.840 --> 0:15:35.600 to see, you know. Jet Blue makes the argument that 0:15:35.760 --> 0:15:38.920 buying Spirit will actually allow them to be more competitive 0:15:38.960 --> 0:15:42.040 with the big four airlines, and that their goal is 0:15:42.040 --> 0:15:44.920 not necessarily to raise prices. Now, part of their business 0:15:45.000 --> 0:15:47.600 plan is to make the Spirit jets look more like 0:15:47.680 --> 0:15:50.160 Jet Blue planes, and what that means is taking seats 0:15:50.200 --> 0:15:52.880 out and making them a little bit more comfortable. But 0:15:52.880 --> 0:15:56.680 when you have seats fewer seats, obviously that means, you know, 0:15:57.600 --> 0:15:59.440 there's a little bit of a change in the price 0:15:59.520 --> 0:16:02.760 dynamic and the fairs. So I mean it's difficult to 0:16:02.960 --> 0:16:05.960 say exactly what would happen with the prices. But I 0:16:06.040 --> 0:16:09.320 just think it's also important to think about, you know, han, 0:16:09.400 --> 0:16:12.760 these airlines continue to survive and compete in a world 0:16:12.800 --> 0:16:15.200 where they're sort of the odd man out on a 0:16:15.240 --> 0:16:16.560 series of oligopolies. 0:16:16.960 --> 0:16:20.120 And we are talking with Bloomberg opinion columnist Brooks Sutherland 0:16:20.120 --> 0:16:22.640 about the only real route for airlines to grow, and 0:16:22.680 --> 0:16:26.320 that just might be M and A brooke. What has 0:16:26.360 --> 0:16:30.400 to change then to give these smaller airlines a fighting chance? 0:16:31.680 --> 0:16:35.360 You know, I think it's difficult to really change anything 0:16:35.400 --> 0:16:37.280 because a lot of this is structural. I mean, you 0:16:37.320 --> 0:16:40.040 can't go back and unwind the deals that created Boeing. 0:16:40.080 --> 0:16:41.480 And at this point, you know, we're not going to 0:16:41.520 --> 0:16:44.880 go back and undo the takeovers that created what's now 0:16:44.920 --> 0:16:47.920 known as RTX or any of the other consolidation that's 0:16:47.920 --> 0:16:49.560 happened up and down the supply chain. And so I 0:16:49.600 --> 0:16:51.640 think then that begs the question of Okay, well, then 0:16:52.160 --> 0:16:54.200 do you have to allow the airline deals and so 0:16:54.240 --> 0:16:56.800 that it's more of a level playing field. It's interesting 0:16:56.840 --> 0:16:59.560 because there was also consolidation that happened in the railroad 0:16:59.560 --> 0:17:03.120 industry were the two smallest players combined, and that is 0:17:03.160 --> 0:17:06.080 a different regulator that's a specialized regulator that looks at 0:17:06.160 --> 0:17:08.639 railroad deals. But they allowed that deal to go through 0:17:08.800 --> 0:17:11.720 along the same argument as Jet Blue is making for 0:17:11.760 --> 0:17:14.919 its Spirit deal, that basically, the market is what it 0:17:15.000 --> 0:17:17.560 is and the only we can't go back and rewrite history, 0:17:17.600 --> 0:17:19.920 and so the only way to introduce more competition now 0:17:20.040 --> 0:17:22.119 is by letting these smaller players combine. 0:17:22.359 --> 0:17:24.560 So where is the government in all of this? Where 0:17:24.560 --> 0:17:27.119 do the regulators come in? Are they turning a blind 0:17:27.119 --> 0:17:28.520 eye to some but not others? 0:17:29.040 --> 0:17:32.520 So the dj has sued to block Jet blues combination 0:17:32.600 --> 0:17:35.320 with Spirit. They just wrapped up closing arguments. We don't 0:17:35.359 --> 0:17:37.760 have our ruling yet from the judge in that case, 0:17:37.760 --> 0:17:40.439 and it's not exactly clear what the timing of that 0:17:40.520 --> 0:17:44.040 decision will be. And then they also the DOJ did 0:17:44.080 --> 0:17:48.280 successfully block Jet Blue's marketing alliance with American Airlines. But 0:17:48.400 --> 0:17:50.199 I guess that gets back to my original point of 0:17:50.240 --> 0:17:53.920 the regulators have taken a very tough stance on these 0:17:53.960 --> 0:17:57.440 airline deals. That is just not happening to the same 0:17:57.480 --> 0:18:00.879 degree in these other corners of the aerospace ecosystem, and 0:18:00.920 --> 0:18:04.400 those deals have unique characteristics and unique qualities that need 0:18:04.440 --> 0:18:07.879 to be assessed under by antitrust regulators, and they certainly 0:18:07.960 --> 0:18:10.199 did look at those deals, but there's just not the 0:18:10.240 --> 0:18:13.840 same amount of public uproar or scrutiny, And I just 0:18:13.920 --> 0:18:16.800 wonder if that sort of shifts how these deals are 0:18:16.840 --> 0:18:19.840 analyzed and they do matter. 0:18:20.080 --> 0:18:22.719 Like they'd pay more attention to those deals that we 0:18:22.960 --> 0:18:25.560 you and I might pay more attention to because we're 0:18:25.560 --> 0:18:26.639 the ones buying the ticket. 0:18:27.720 --> 0:18:29.760 Sure well, they certainly didn't try to block any of 0:18:29.760 --> 0:18:32.440 those other deals, and they're blocking the airlineses deals, which 0:18:32.480 --> 0:18:35.000 I just think is interesting. And you know, it's always 0:18:35.000 --> 0:18:37.800 fascinating me, even taking a step beyond the aerospace sector, 0:18:37.800 --> 0:18:41.720 that there's so much consternation about big tech and the 0:18:41.720 --> 0:18:44.280 amount of power that the technology companies have, which is 0:18:44.320 --> 0:18:46.920 certainly a very valid debate and one that we should 0:18:46.960 --> 0:18:49.960 be having, but nobody talks as much about the consolidation 0:18:50.040 --> 0:18:51.760 that's happening on the aerospace side. And so I do 0:18:51.840 --> 0:18:54.800 think public perception and the things that we as consumers 0:18:54.840 --> 0:18:58.840 pay attention to does sort of affect these conversations. But 0:18:59.119 --> 0:19:01.960 it has to be because everything is interconnected. This is 0:19:02.000 --> 0:19:04.560 all as we learn going through the supplis chain crisis 0:19:04.600 --> 0:19:08.200 of the post pandemic period. Everything is interconnected and depends 0:19:08.200 --> 0:19:11.440 on companies up and down the splashchaing. 0:19:11.200 --> 0:19:13.720 Right, And as you explained that there's no real way 0:19:13.760 --> 0:19:16.600 to undo it. It's all been done, it's all intertwined. 0:19:17.080 --> 0:19:19.880 So then how does this end? Because the way it's 0:19:19.920 --> 0:19:23.159 described doesn't really seem sustainable, at least for some of 0:19:23.160 --> 0:19:23.879 these airlines. 0:19:24.520 --> 0:19:26.720 Sure, and I think that's why you're seeing so many 0:19:26.760 --> 0:19:28.440 of them try to do deals. I mean, if you 0:19:28.480 --> 0:19:31.680 look at it just on face value, and you consider 0:19:31.760 --> 0:19:34.919 the amount of scrutiny that Jet Blue has gotten for 0:19:35.000 --> 0:19:37.400 its two endeavors, you would ask why in the world 0:19:37.400 --> 0:19:39.920 would an airline try to do a deal right now? 0:19:39.920 --> 0:19:42.560 And the fact that Alaska is going ahead with one 0:19:42.640 --> 0:19:46.440 and trying to buy Hawaiian clearly they see somewhat of 0:19:46.480 --> 0:19:49.439 a financial opportunity there as well, just given how beaten 0:19:49.520 --> 0:19:52.560 down Hawaiian shares have been. But I think the fact 0:19:52.560 --> 0:19:54.159 that they're going ahead with this deal at a time 0:19:54.200 --> 0:19:56.159 when Jet Blue Spirit deal is still tied up in 0:19:56.200 --> 0:20:00.000 the courts tells you how important you know, this industry 0:20:00.080 --> 0:20:01.119 views consolidations. 0:20:01.359 --> 0:20:03.000 All right, Brook, thank you so much. We're going to 0:20:03.080 --> 0:20:04.640 leave it there, and we're going to continue to watch 0:20:04.640 --> 0:20:06.560 it with you. Now that we know a little bit 0:20:06.600 --> 0:20:09.160 more about what we should be watching when we look 0:20:09.160 --> 0:20:10.880 at these deals. Thanks so much for your time. 0:20:11.320 --> 0:20:11.679 Thank you. 0:20:12.040 --> 0:20:15.240 Brook Sutherland is a Bloomberg Opinion columnist who covers deals 0:20:15.280 --> 0:20:17.919 in industrial companies. She is also the author of the 0:20:18.000 --> 0:20:22.080 Industrial Strength newsletter. Don't forget. We're available as a podcast 0:20:22.119 --> 0:20:26.639 on Apple, Spotify or your favorite podcast platform. This is 0:20:26.680 --> 0:20:27.600 Bloomberg Opinion. 0:20:38.280 --> 0:20:42.119 You're listening to the Bloomberg Opinion podcast count Us Saturdays 0:20:42.119 --> 0:20:45.280 at one and seven pm Eastern on Bloomberg dot Com, 0:20:45.320 --> 0:20:48.480 the iHeartRadio app, and the Bloomberg Business App, or listen 0:20:48.520 --> 0:20:50.760 on demand wherever you get your podcasts. 0:20:52.800 --> 0:20:56.399 This is Bloomberg Opinion. I Ami Morris. It is true 0:20:56.520 --> 0:21:01.600 for every generation that becoming a financially secure adult is hard. Now. 0:21:01.600 --> 0:21:04.560 A big part of that is home ownership, and last year, 0:21:04.760 --> 0:21:08.439 Vice President Kamala Harris told Bowie State University students that 0:21:08.600 --> 0:21:11.720 home ownership is good for the economy and that the 0:21:11.760 --> 0:21:14.199 government is trying to make it easier for you to 0:21:14.359 --> 0:21:15.320 own your own home. 0:21:15.440 --> 0:21:22.040