WEBVTT - Trump Not Satisfied with Iran Proposal; Spirit Shuts Down 0:00:00.080 --> 0:00:10.160 Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg 0:00:10.240 --> 0:00:15.920 This Weekend Podcast with David Gura, Christina Raffini, and Elisa Matteo. 0:00:17.680 --> 0:00:20.560 Thanks for joining us for today's selection of conversations from 0:00:20.600 --> 0:00:20.959 the show. 0:00:21.200 --> 0:00:23.479 You can listen to our favorite discussions right here on 0:00:23.520 --> 0:00:25.800 the podcast, but also make sure to join us live 0:00:25.960 --> 0:00:28.960 every Saturday and Sunday morning, starting at seven am Easter. 0:00:29.160 --> 0:00:32.760 We're on Bloomberg Television, Radio and the Bloomberg Business App, 0:00:33.040 --> 0:00:37.600 bringing you unique takes and in depth interviews on news, politics, 0:00:37.680 --> 0:00:39.120 lifestyle and culture. 0:00:41.479 --> 0:00:43.160 All right, it's been a little over twenty four hours 0:00:43.200 --> 0:00:46.800 since Spirit Airlines ceased operations after thirty four years in business, 0:00:46.840 --> 0:00:50.040 sending passengers scrambling to book flights on other carriers. 0:00:50.240 --> 0:00:52.680 Ticket counters are now dark at nearly one hundred airport 0:00:52.720 --> 0:00:55.920 locations where Spirit once flew. In addition to travelers, some 0:00:56.080 --> 0:00:59.120 seventeen thousand employees, contractors and pilots are. 0:00:59.000 --> 0:00:59.640 Out of a job. 0:01:00.080 --> 0:01:02.360 Join us now, Chris and a new president and CEO 0:01:02.480 --> 0:01:04.120 of Airlines for America. 0:01:04.200 --> 0:01:05.600 Thank you so much for joining us. 0:01:05.920 --> 0:01:08.200 First of all, I guess the big question is how 0:01:08.240 --> 0:01:11.959 do Spirit going out of business impacts the airline industry overall. 0:01:12.000 --> 0:01:13.560 What's the biggest thing we're going to see coming out 0:01:13.560 --> 0:01:13.880 of this. 0:01:15.920 --> 0:01:17.319 Well, I think two things. 0:01:17.319 --> 0:01:20.240 In the short term, I think everyone's scrambling to say, Okay, 0:01:20.240 --> 0:01:21.759 how do we take care of those customers? 0:01:21.800 --> 0:01:21.959 Right? 0:01:22.040 --> 0:01:23.800 And how do customers get their money back? 0:01:23.840 --> 0:01:25.520 And they can go to the Spirit website to get 0:01:25.520 --> 0:01:29.320 their money back. And then you have folks like United Airlines, Southwest, Jet, Blue, 0:01:29.319 --> 0:01:32.560 Delta American. They're all providing capitated rates, so they want 0:01:32.600 --> 0:01:35.280 to get those customers taken care of that have plans 0:01:35.280 --> 0:01:36.039 over the next month. 0:01:36.160 --> 0:01:38.000 How do the employees get taken care of? 0:01:38.360 --> 0:01:42.720 They also get preferential treatment with all the existing airlines 0:01:42.760 --> 0:01:45.360 in terms of new jobs and new opportunities there. And 0:01:45.400 --> 0:01:47.920 then in the long term, it's really about making sure 0:01:47.960 --> 0:01:52.200 that the airspace as a whole, which America has the 0:01:52.240 --> 0:01:55.040 strongest airspace in the country. We're rebuilding our air traffic 0:01:55.040 --> 0:01:58.360 control system that again that is robust for the customer. 0:01:58.880 --> 0:02:01.040 And I mean not to go too far afield, but 0:02:01.360 --> 0:02:04.120 we've had two government shutdowns, right. We saw the TSA 0:02:04.240 --> 0:02:06.840 lines because Congress could get their act together. We saw 0:02:06.840 --> 0:02:09.840 the air traffic controllers not getting paid for six seven, eight, 0:02:09.880 --> 0:02:12.680 weeks back in the fall. That system has to work 0:02:12.720 --> 0:02:15.480 as well to make sure that all these other pieces move. 0:02:15.680 --> 0:02:17.359 And unfortunately there's a lesson. 0:02:17.040 --> 0:02:19.639 Here, right So when the merger was going to happen 0:02:19.720 --> 0:02:22.720 between JetBlue and Spirit, that would have put almost four 0:02:22.760 --> 0:02:26.920 billion dollars into Spirit, and the Biden administration crushed it 0:02:27.000 --> 0:02:29.600 and they got political with it, and that was again, 0:02:29.639 --> 0:02:32.359 hopefully the lesson there is when a business comes calling, 0:02:32.520 --> 0:02:34.880 look at the financials, look at the business case, look 0:02:34.880 --> 0:02:36.560 at how it's going to affect the customers, and make 0:02:36.600 --> 0:02:39.840 your decision based on that, not on politics. So some 0:02:39.960 --> 0:02:42.919 lessons learned. I think the industry is responding very well. 0:02:43.000 --> 0:02:45.240 We just want to make sure that folks feel comfortable 0:02:45.400 --> 0:02:46.720 preparing for their summer. 0:02:46.520 --> 0:02:48.520 Deby let me ask you about what might happen next. 0:02:48.520 --> 0:02:51.320 And there's been speculation to other ultra low cost airlines 0:02:51.320 --> 0:02:53.359 are going to be in a pinch as well. Obviously, 0:02:53.400 --> 0:02:55.880 the Spirit situation was unique in many ways. You had 0:02:55.880 --> 0:03:00.720 the Transportation Secretary yesterday batting down calls for their bailouts 0:03:00.800 --> 0:03:02.480 or the need for bailouts, and it's something that your 0:03:02.480 --> 0:03:04.000 group has opposed as well. I'll read a bit from 0:03:04.000 --> 0:03:06.440 a statement that you all released government or invention on 0:03:06.480 --> 0:03:08.760 behalf of those airlines would punish other airlines that have 0:03:08.840 --> 0:03:11.600 engaged in self help in order to deal with increased costs, 0:03:11.680 --> 0:03:14.840 reward airlines who haven't made those tough decisions. That is 0:03:14.919 --> 0:03:17.639 not a level playing field. So we see your opposition 0:03:17.680 --> 0:03:20.480 there to these government bailouts. Are you worried about the 0:03:20.480 --> 0:03:23.680 industry broadly, especially at that lower range of affairs? 0:03:26.320 --> 0:03:28.840 No, I look at competition works, right, and so when 0:03:29.120 --> 0:03:31.560 we have a lot of different carriers there, it's Frontier, 0:03:31.680 --> 0:03:34.320 it's sun Country, it's our velow. Breeze is actually a 0:03:34.360 --> 0:03:37.400 new entrant there. Breeze is a very interesting airline with 0:03:37.480 --> 0:03:39.280 a lot of opportunities. They don't use kind of the 0:03:39.960 --> 0:03:42.680 primary airports, that use some of the secondary airports, providing 0:03:42.680 --> 0:03:45.560 a low cost option for those customers. So, look, if 0:03:46.400 --> 0:03:48.280 the Breezes of the world and some of these others 0:03:48.280 --> 0:03:50.920 weren't doing okay, you can make I think you could 0:03:50.920 --> 0:03:53.400 make that case. But there has to be competition at 0:03:53.440 --> 0:03:57.120 that level, right, And those models can't be kind of 0:03:57.160 --> 0:04:00.760 an older fashion type type models. 0:04:00.760 --> 0:04:02.440 They have to compete in this new world. 0:04:02.760 --> 0:04:06.080 Now again, a lot of these problems financially were happening 0:04:06.200 --> 0:04:09.480 long before the fuel crisis and the jet fuel crisis 0:04:09.760 --> 0:04:11.480 of the last couple of months. I mean, Spirit was 0:04:11.480 --> 0:04:13.760 in trouble years and years ago, so it's not a 0:04:13.760 --> 0:04:16.640 function of that. But when you have the high fuel cost, 0:04:16.880 --> 0:04:19.800 these massive new labor costs. I mean, right now, the 0:04:19.880 --> 0:04:22.320 industry as a whole has about a four to five 0:04:22.400 --> 0:04:25.719 percent profit margin. That's it, four to five percent because 0:04:25.720 --> 0:04:29.479 they've kept their cost solow for the customer, so you'll 0:04:29.480 --> 0:04:29.960 see some. 0:04:29.880 --> 0:04:30.840 Of those move a little bit. 0:04:30.880 --> 0:04:33.039 They have a lot of options now that they didn't 0:04:33.040 --> 0:04:35.400 have before. So as a customer, you can get that 0:04:35.440 --> 0:04:38.880 basic economy seat super cheap, even on the Deltas and 0:04:39.000 --> 0:04:42.000 United and Americans, you can choose to whether you know 0:04:42.040 --> 0:04:44.279 you want to pay for baggage, you can choose for 0:04:44.320 --> 0:04:46.000 that upgrade of that extra legroom. 0:04:46.080 --> 0:04:47.400 So they're giving the customer. 0:04:47.640 --> 0:04:50.159 The new models give the customer a lot more flexibility 0:04:50.200 --> 0:04:53.400 in designing their product and their price point, and everyone 0:04:53.440 --> 0:04:55.000 has to kind of come along with that. So I 0:04:55.000 --> 0:04:58.719 think it's just a faction of getting those ultra low 0:04:58.760 --> 0:05:02.040 cost carriers to maybe update their models a little bit. 0:05:02.279 --> 0:05:05.240 But overall, the industry is very strong. There's a lot 0:05:05.240 --> 0:05:08.400 of opportunity for customers out there. So, yeah, you gonna 0:05:08.440 --> 0:05:12.080 have ebbs and flows here with different carriers, but at 0:05:12.080 --> 0:05:13.600 the end of the day, the customer is going to 0:05:13.640 --> 0:05:14.360 win out. 0:05:14.800 --> 0:05:16.719 But let me ask you, because I know that for 0:05:16.760 --> 0:05:18.440 a lot of airlines, a lot of the bigger airlines, 0:05:18.440 --> 0:05:20.480 a lot of those economy seats are they're flying at 0:05:20.480 --> 0:05:22.479 a loss. Where they're really making money is in the 0:05:22.480 --> 0:05:24.520 front of the plane, and that's why we're seeing additions 0:05:24.520 --> 0:05:28.280 of higher cost seats, business class, economy plus things like that. 0:05:28.600 --> 0:05:31.120 So when you're getting the squeeze on these cheaper airlines, 0:05:31.480 --> 0:05:33.880 is it really fair to say that these other airlines 0:05:33.880 --> 0:05:35.320 are going to pick up the slack and add more 0:05:35.360 --> 0:05:37.200 of these cheaper seats because they're not making money off 0:05:37.200 --> 0:05:39.560 of them. 0:05:39.800 --> 0:05:41.800 Well, again, they have to look at at what their 0:05:41.839 --> 0:05:44.719 customers are looking for, what the typer product is, and 0:05:44.760 --> 0:05:47.640 so they have the ability to add higher end product. 0:05:47.880 --> 0:05:49.839 And again, their higher end product might look a little 0:05:49.880 --> 0:05:52.440 different than some of the other carriers products, but that 0:05:52.480 --> 0:05:54.760 product has to has to kind of fit the model 0:05:54.800 --> 0:05:58.880 of what they're doing. Now, Yes, the larger carriers basically 0:05:58.960 --> 0:06:02.520 only make money going internationally, I mean even domestically. Some 0:06:02.600 --> 0:06:04.440 of the higher end seats make a little bit of money. 0:06:04.480 --> 0:06:08.400 All the economy seats effectively can lose a bit of money. 0:06:08.440 --> 0:06:11.040 So again, you have to look at your product that 0:06:11.320 --> 0:06:13.640 you're placing. You can't just provide the same products that 0:06:13.680 --> 0:06:16.719 you were doing back in twenty sixteen, twenty seventeen, twenty eighteen. 0:06:16.720 --> 0:06:18.000 You have to update those models. 0:06:18.000 --> 0:06:20.839 And for the carriers that didn't update that kind of 0:06:20.839 --> 0:06:24.160 stayed with the old fashioned way, Yeah, they're probably suffering 0:06:24.200 --> 0:06:26.880 a little more. Everybody's moving forward and kind of looking 0:06:26.880 --> 0:06:28.520 at that product spectrum. 0:06:29.040 --> 0:06:31.279 I'd like to ask you about the interface between airlines 0:06:31.360 --> 0:06:33.440 and the administration. Play a bit of sound here from 0:06:33.480 --> 0:06:36.360 Sean Duffy, the Transportation Secretary, who gave a news conference 0:06:36.440 --> 0:06:39.000 yesterday at Newark Liberty International Airport. Take a listen to 0:06:39.040 --> 0:06:39.679 what he had to say. 0:06:40.120 --> 0:06:43.520 Now, you've heard that other airlines have talked about requesting 0:06:43.560 --> 0:06:46.680 a two point five billion dollar bailout. I am in 0:06:47.200 --> 0:06:49.600 continual contact and my team is in contact with all 0:06:49.600 --> 0:06:53.120 the CEOs of the airlines. I would say that at 0:06:53.120 --> 0:06:56.160 this point, I don't think it's necessary. They do have 0:06:56.200 --> 0:06:59.000 access to cash. If they want to come to the 0:06:59.080 --> 0:07:03.039 US government, we would be a lender of last resort 0:07:03.120 --> 0:07:06.160 if they can find dollars in the private markets, I 0:07:06.200 --> 0:07:07.320 think that's better for them. 0:07:07.839 --> 0:07:09.600 Governor, I'd love your reaction to that. I think of 0:07:09.640 --> 0:07:13.360 you as a traditional Republican, New Hampshire Republican, New England Republican, 0:07:13.720 --> 0:07:15.640 and you hear him talk about the government being a 0:07:15.680 --> 0:07:18.680 lender of last resort to these airlines. Obviously, this conversation 0:07:18.720 --> 0:07:23.400 about bailouts, the continued conversations between the administration and executives 0:07:23.440 --> 0:07:25.120 as well. How do you feel about that? Are you 0:07:25.200 --> 0:07:27.160 Are you comfortable with the government playing this role at 0:07:27.160 --> 0:07:29.680 a time and we have seen the administration taking a 0:07:29.720 --> 0:07:31.280 stake in many private companies. 0:07:33.280 --> 0:07:35.800 Yeah, well, I think a Secretary Duffy is spot on. 0:07:35.880 --> 0:07:38.200 He's saying, look, the government isn't here just to bail 0:07:38.240 --> 0:07:41.440 everybody out when a business needs money, right if there 0:07:41.480 --> 0:07:43.560 was a crisis situation. I mean, that's why he kind 0:07:43.600 --> 0:07:46.400 of used the term lender of last resort. But it 0:07:46.440 --> 0:07:48.320 isn't just we're going to be the government should be 0:07:48.360 --> 0:07:51.640 a lender there if they are extranuating circumstances or something 0:07:51.680 --> 0:07:55.000 like that. What he's really referring to is, yes, spirit 0:07:55.080 --> 0:07:58.400 came for a bailout, which made no financial sense whatsoever, 0:07:58.720 --> 0:08:01.320 because they had no assets, they had massive amounts of debt, 0:08:01.480 --> 0:08:04.119 and then all the other carriers, just the low cost guys, 0:08:04.400 --> 0:08:05.760 just said, oh yeah, by the way, how about we 0:08:05.760 --> 0:08:07.800 get two and a half billion two even when some 0:08:07.840 --> 0:08:11.200 of them didn't need it. It really didn't make a 0:08:11.200 --> 0:08:13.880 lot of sense. It was more of an opportunity, as 0:08:13.920 --> 0:08:16.840 the secretary pointed out, than a real need into the industry. 0:08:16.880 --> 0:08:19.240 So no, I'm not a big believer of these bailouts 0:08:19.520 --> 0:08:20.280 by any means. 0:08:20.800 --> 0:08:21.600 I think the government. 0:08:21.680 --> 0:08:24.960 I think President Trump deserves some credit for trying with spirit. 0:08:25.160 --> 0:08:26.840 I mean, he said, let's take a real look at it, 0:08:27.160 --> 0:08:28.720 let's see how we make sure the customers and the 0:08:28.720 --> 0:08:31.400 employees are taken care of. But it made no financial 0:08:31.440 --> 0:08:33.560 sense because its assets had been so gutted. 0:08:33.559 --> 0:08:35.400 They didn't even own their own planes, right. 0:08:35.400 --> 0:08:37.520 They had billions and billions of debt and they had 0:08:37.640 --> 0:08:40.400 virtually no assets to back it up. So again, I 0:08:40.440 --> 0:08:43.160 give the president credit for trying and the administration at 0:08:43.240 --> 0:08:46.480 least taking a look. But to Secretary Duffy's point, the 0:08:46.520 --> 0:08:48.880 government just isn't here to save your business when you 0:08:48.920 --> 0:08:51.880 have a bad business model, save something that doesn't have 0:08:51.960 --> 0:08:55.120 real value or isn't part of that national strategic need 0:08:55.559 --> 0:08:57.839 that might be out there. So no, it's whenever the 0:08:57.880 --> 0:08:59.959 government gets involved, you better be again. 0:08:59.800 --> 0:09:03.720 Really really really really really really cautious, and they're going 0:09:03.800 --> 0:09:03.920 to be. 0:09:08.520 --> 0:09:11.480 Okay, I'm being a little bit of the politician there, 0:09:11.480 --> 0:09:15.079 because yeah, these bailouts, I mean, it's a domino effect. 0:09:15.440 --> 0:09:17.679 When when does it stop? Right at that point? 0:09:17.760 --> 0:09:20.560 So, now businesses need to update and advance the models, 0:09:20.559 --> 0:09:22.360 and a lot of the low cost carriers have done 0:09:22.400 --> 0:09:23.400 that for their customers. 0:09:23.400 --> 0:09:24.080 I think it's great. 0:09:24.280 --> 0:09:27.079 They're looking at maybe trying a little more international, they're 0:09:27.120 --> 0:09:29.400 look at they're looking at trying to upgrade the front 0:09:29.400 --> 0:09:32.520 of their planes. Look what Southwest just did, right, Southwest 0:09:32.520 --> 0:09:35.760 now has the assigned seating. The upgrades they're doing phenomenal 0:09:35.840 --> 0:09:39.640 over there. United Airlines has made and Delta made some huge, 0:09:39.800 --> 0:09:44.640 huge advances American as well. So everyone's adapting, everyone's modifying 0:09:44.679 --> 0:09:48.640 that what they provide based on the needs of the business. 0:09:48.720 --> 0:09:50.920 And and that's the way business should work, right, that's 0:09:50.960 --> 0:09:53.840 the way competition works. When when the Biden administration got 0:09:53.880 --> 0:09:56.320 involved and said, oh no, we're not gonna help, We're 0:09:56.360 --> 0:09:59.160 not gonna let a merger take place, a private merger 0:09:59.520 --> 0:10:02.480 take place for competition. They just didn't even try to 0:10:02.520 --> 0:10:05.560 look at the business case model and understand what the 0:10:05.640 --> 0:10:06.080 need was. 0:10:06.160 --> 0:10:06.280 Right. 0:10:06.320 --> 0:10:07.959 They weren't asking the government for money. They were just 0:10:08.040 --> 0:10:10.640 has some government for permission to let businesses do what 0:10:10.679 --> 0:10:13.320 they do best. And you know, a typical case of 0:10:13.320 --> 0:10:15.320 the government thinking they're smarter than everybody else. But they 0:10:15.360 --> 0:10:17.520 were dead wrong on this. And you know, you saw 0:10:17.559 --> 0:10:20.920 that Spirit customer there, she's nervous. You know, sure the 0:10:20.960 --> 0:10:23.560 airline she used to use is now gone because bad 0:10:23.600 --> 0:10:26.120 government got involved. So look, the good news is there's 0:10:26.120 --> 0:10:27.640 a lot of other carriers out there. There's a lot 0:10:27.640 --> 0:10:31.120 of opportunities out there, low cost, higher and international. There's 0:10:31.120 --> 0:10:33.600 a lot of product there for folks to dive into. 0:10:33.640 --> 0:10:35.800 And I think what the other these airlines are doing 0:10:35.920 --> 0:10:40.040 right now today for those Spirit customers with their capped 0:10:40.120 --> 0:10:44.120 rates is a huge opportunity. I think United has. Just yesterday, 0:10:44.320 --> 0:10:48.600 unitedd twenty seven thousand Spirit customers. Southwest did over twenty 0:10:48.720 --> 0:10:51.920 thousand move those customers seamlessly over in less than a 0:10:52.000 --> 0:10:56.520 day to their carriers to make sure that those folks 0:10:56.600 --> 0:10:58.640 were taken care of at a limited rate. So I 0:10:58.640 --> 0:10:59.680 think everyone's pitching in. 0:11:00.000 --> 0:11:00.440 All right, Governor. 0:11:00.480 --> 0:11:02.120 Before we let you go, you talked about these airlines 0:11:02.120 --> 0:11:04.520 needing to adapt their business models. One thing it is 0:11:04.559 --> 0:11:07.680 hard to adapt two or four is the current price 0:11:07.760 --> 0:11:10.960 of oil and fuel, and that's really was the nail 0:11:10.960 --> 0:11:13.199 in the coffin. It seems like force spirit and could 0:11:13.320 --> 0:11:15.520 cause trouble for a lot of these other airlines. How 0:11:15.559 --> 0:11:18.720 long can they sustain this current pricing and what do 0:11:18.800 --> 0:11:20.320 they do if it doesn't go down by the end 0:11:20.320 --> 0:11:20.680 of the year. 0:11:22.640 --> 0:11:25.360 Sure, So I got to be clear the fuel price 0:11:25.559 --> 0:11:27.040 was not the death nail of spirit. 0:11:27.120 --> 0:11:29.120 It had nothing that you did say it was in 0:11:29.160 --> 0:11:29.640 his statement. 0:11:29.640 --> 0:11:31.080 I did say it was a year was a part 0:11:31.080 --> 0:11:34.720 of it. He talked about the mergery. It would say 0:11:34.720 --> 0:11:37.000 in his statement the fuel prices were a compounding factor. 0:11:40.280 --> 0:11:42.760 I'm just telling you then they wouldn't have been filing 0:11:42.760 --> 0:11:45.520 for bankruptcy two years ago, right. I mean that it 0:11:45.679 --> 0:11:48.040 just we're in a death spile of losing their assets, 0:11:48.360 --> 0:11:51.560 the labor costs, the supply chain issues post COVID, I mean, 0:11:51.559 --> 0:11:53.280 there's a lot of other To your point, there's a 0:11:53.320 --> 0:11:55.840 lot of costs bearing down on this industry that for 0:11:55.880 --> 0:11:57.920 the most part the airlines just kind of eat it. 0:11:57.920 --> 0:12:00.800 They lose profit on it because trying to provide that 0:12:00.880 --> 0:12:04.000 competitive aspect for the customer. Will we see prices move 0:12:04.040 --> 0:12:07.040 a little bit, yeah, maybe five or six or seven percent, 0:12:07.200 --> 0:12:10.000 but not like the doubling of prices that would probably 0:12:10.120 --> 0:12:13.440 justify the doubling and tripling of fuel costs of jet. 0:12:13.200 --> 0:12:14.439 Fuel that we're seeing out there. 0:12:14.600 --> 0:12:17.560 So what happens kind of in the short term, the 0:12:17.640 --> 0:12:19.640 airlines can withstand this, you know, at least for three 0:12:19.760 --> 0:12:22.679 or four months. As you know, as oil prices go up, 0:12:22.960 --> 0:12:25.080 they go down. When they finally start going down, they're 0:12:25.080 --> 0:12:27.800 going to go down slowly, right, It's not like if 0:12:27.880 --> 0:12:30.600 the straight of horn Moose open tomorrow everything comes back 0:12:30.640 --> 0:12:33.320 to normal. It is going to take some time, both 0:12:33.400 --> 0:12:36.920 in the trucking industry, the airline industry, pretty much anybody 0:12:36.920 --> 0:12:39.360 that uses fuel in any way. It's going to take 0:12:39.400 --> 0:12:41.640 some time to get back to some normalcy on that. 0:12:42.240 --> 0:12:45.080 But again, the airlines are resilient, right, They're willing to 0:12:45.080 --> 0:12:47.160 eat a lot of that cost. They're willing to always 0:12:47.160 --> 0:12:49.760 provide a better product for their customer. And again, the 0:12:49.760 --> 0:12:52.760 customers have so many other choices out there between the 0:12:52.760 --> 0:12:55.760 airlines themselves that there is a lot of variability that 0:12:55.920 --> 0:12:58.280 allows the customer to make good financial decision. 0:12:58.400 --> 0:12:59.520 Okay, we're gonna have to leave it there. 0:13:00.160 --> 0:13:02.760 Former republic Governor of New Hampshire and president and CEO 0:13:02.880 --> 0:13:04.439 of Airlines for America, thank. 0:13:04.280 --> 0:13:05.120 You for taking time to dress. 0:13:05.160 --> 0:13:06.520 Thank you for your time. I'm going to just reference 0:13:06.559 --> 0:13:08.319 that statement that I mentioned here again, this was from 0:13:08.360 --> 0:13:08.920 Dave Davis. This. 0:13:09.040 --> 0:13:11.040 I appreciate the backup from my coaker remember here. 0:13:11.559 --> 0:13:14.720 Yes, he did cite the restructuring the issues bondholders said. However, 0:13:14.800 --> 0:13:16.920 the sun and sustained rise and fuel prices in recent 0:13:16.920 --> 0:13:19.520 weeks ultimately has left us with no alternative but to 0:13:19.520 --> 0:13:24.480 pursue an orderly wind down. Stay with us for more 0:13:24.640 --> 0:13:39.120 on Bloomberg this weekend. Right after this, customers of Spirit 0:13:39.160 --> 0:13:42.040 Airlines across the country are in the process of rearranging 0:13:42.400 --> 0:13:44.480 their travel on this Sunday morning, and in some cases 0:13:44.480 --> 0:13:46.800 they're trying to get their money back after Spirit closed 0:13:46.800 --> 0:13:49.240 down over the weekend following the company and its creditors 0:13:49.280 --> 0:13:51.880 and the Trump administration failing to reach an agreement for 0:13:51.920 --> 0:13:53.480 a bailout on deadline. 0:13:53.640 --> 0:13:56.640 Now there's concern about other low cost carriers that are 0:13:56.679 --> 0:13:59.480 also grappling with fuel prices. Of course, those prices of 0:13:59.480 --> 0:14:02.120 spiked matically since the start of the war with Iran. 0:14:02.520 --> 0:14:05.160 Joining US now is a member of the House Transportation 0:14:05.200 --> 0:14:09.720 and Infrastructure Committee. Congressman Kevin Kylie, who represents California's third district. 0:14:09.720 --> 0:14:12.000 He was elected as a Republican but is running for 0:14:12.080 --> 0:14:15.400 re election as an independent. Charsman, thank you for joining us. 0:14:15.440 --> 0:14:17.680 I just want to start off, what is the government's 0:14:17.760 --> 0:14:19.920 role here? What should the government be doing? Should the 0:14:19.960 --> 0:14:22.760 government be doing anything to help these airlines given the 0:14:22.800 --> 0:14:23.920 cost of fuel right now? 0:14:25.240 --> 0:14:28.720 Well, it's certainly true that the cost of fuel is 0:14:29.360 --> 0:14:33.760 a major input for airlines, and it's something that is perceived, 0:14:33.840 --> 0:14:37.800 as I believe in reality, going to be temporary. And 0:14:37.920 --> 0:14:41.920 you know, once we have a sustainable resolution to the 0:14:41.960 --> 0:14:46.200 Cono brand, you should see prices come down across the board. 0:14:46.280 --> 0:14:49.120 And so if this is sort of the limiting factor 0:14:49.800 --> 0:14:53.240 right now and one which will be short term, then 0:14:53.280 --> 0:14:56.440 perhaps there's an argument to be made that, you know, 0:14:56.520 --> 0:15:02.600 you don't want enterprises to collapse systematically based upon what 0:15:02.720 --> 0:15:06.320 is a temporary condition. So if that's the situation, it's 0:15:06.320 --> 0:15:08.680 a very different one than if you have an enterprise 0:15:08.760 --> 0:15:11.240 that you know, just has a totally unsustainable balance sheet 0:15:11.400 --> 0:15:12.240 or isn't viable. 0:15:12.600 --> 0:15:14.640 You've had a number of these ultra low cost airlines 0:15:14.680 --> 0:15:16.840 going to the White House, going to the Transportation Department 0:15:16.920 --> 0:15:19.800 saying their situation is a bit precarious. Here you have 0:15:19.880 --> 0:15:23.560 had a front row seat to the effect that the 0:15:23.560 --> 0:15:26.560 pressures on low cost airlines have had. So Spirit flew 0:15:26.560 --> 0:15:28.760 out of Sacramento. I think until October of last year 0:15:28.760 --> 0:15:32.200 they ended those those routes out of Sacramento in National Airport. 0:15:32.720 --> 0:15:35.160 How acute is that pressure? How worried are you about 0:15:35.360 --> 0:15:37.280 having that low end of the spectrum there when it 0:15:37.280 --> 0:15:38.040 comes to carriers? 0:15:39.360 --> 0:15:42.520 Yeah, I mean obviously, you know, people rely upon these flights, 0:15:42.720 --> 0:15:45.200 folks who are on a budget and need to go 0:15:45.320 --> 0:15:48.400 visit their relatives or need to travel for whatever business 0:15:48.480 --> 0:15:51.920 or personal reasons. And so if you have that, you 0:15:51.960 --> 0:15:54.560 know that part of the market that is going to 0:15:54.560 --> 0:15:57.240 be much more limited or you know, is not going 0:15:57.240 --> 0:15:58.840 to be an option for a lot of people. That 0:15:58.960 --> 0:16:00.760 is a big issue I've read. Actually, you're right, we 0:16:00.760 --> 0:16:04.560 did have a Spirit flight out of Sacramentos which I've taken. 0:16:05.200 --> 0:16:07.920 So I think that you know, it is very concerning 0:16:07.960 --> 0:16:09.640 if you start to see more of some sort of 0:16:09.720 --> 0:16:10.680 domino effect here. 0:16:11.200 --> 0:16:13.880 I think it all just goes into affordability, and we're 0:16:13.920 --> 0:16:15.320 going to talk about some of this pulling later in 0:16:15.360 --> 0:16:17.760 the show. But Americans more and more just feeling like 0:16:17.800 --> 0:16:20.240 they're really getting the squeeze kind of everywhere. And I'm 0:16:20.240 --> 0:16:23.800 wondering going into November, what you're hearing from your constituents 0:16:23.840 --> 0:16:25.880 about the cost of living and who they think is 0:16:25.960 --> 0:16:27.680 responsible for those prices going up. 0:16:29.120 --> 0:16:31.880 Yeah, well, it's absolutely the number one issue for folks 0:16:31.920 --> 0:16:35.080 that I represent in folks throughout California. And I should 0:16:35.080 --> 0:16:37.560 mention that California has the highest cost of living in 0:16:37.600 --> 0:16:41.080 the country. We're just talking about fuel prices. California's fuel 0:16:41.080 --> 0:16:44.360 prices are about a dollar eighty the national average. They're 0:16:44.360 --> 0:16:47.920 a full forty some cents higher than the next closest state, 0:16:48.000 --> 0:16:51.320 which is Hawaii. And it's not just fuel prices. Electricity 0:16:51.400 --> 0:16:53.840 rates in California are higher than anywhere in the country, 0:16:54.040 --> 0:16:58.040 Housing costs and water bills close to the top, groceries 0:16:58.120 --> 0:17:00.560 second or third highest in the country. So it's an 0:17:00.600 --> 0:17:03.840 acute problem for my constituents. Now, as to your second question, 0:17:04.040 --> 0:17:06.840 who's to blame? You know, I think that that question 0:17:07.160 --> 0:17:10.159 is not always you know, constructive when it comes to 0:17:10.160 --> 0:17:13.480 actually trying to address the problem. If I really had 0:17:13.480 --> 0:17:16.400 to answer, I'd say there's plenty of blame to go around. 0:17:16.560 --> 0:17:19.119 In Sacramento, we've had a number of policies that have 0:17:19.520 --> 0:17:22.160 increased the cost of living across all of these dimensions, 0:17:22.760 --> 0:17:26.000 and they're live in Washington, DC, you know, in recent 0:17:26.080 --> 0:17:29.359 years that have done that as well. So i'm, you know, 0:17:29.440 --> 0:17:32.440 the one independent member of the House of Representatives. I've 0:17:32.480 --> 0:17:34.800 said that that gives me a unique ability to hold 0:17:34.840 --> 0:17:38.360 folks accountable both in Washington and in Sacramento, as well 0:17:38.400 --> 0:17:40.480 as to work with people on all sides of the issues. 0:17:40.520 --> 0:17:43.000 So I've proposed a number of measures to lower the 0:17:43.040 --> 0:17:45.960 cost of living through some of the regulations that have 0:17:46.000 --> 0:17:48.359 gone way too far for California that have made our 0:17:48.359 --> 0:17:50.520 state in the most expensive state in the country. But 0:17:50.640 --> 0:17:54.360 it is certainly a nationwide issue that people are feeling everywhere, 0:17:54.400 --> 0:17:55.720 and I think there's a lot more we could do 0:17:55.800 --> 0:17:56.720 in Congress as well. 0:17:56.800 --> 0:17:59.080 If you wouldn't mind t up our next conversation, your 0:17:59.119 --> 0:18:01.639 colleague from the House, Clearfield's Democratic Louisiana is going to 0:18:01.680 --> 0:18:03.480 join us and his district is the center of the 0:18:03.520 --> 0:18:06.600 Supreme Court decision that we got this week, which could 0:18:06.600 --> 0:18:09.600 hollowed out Section two the Voting Rights Act. You have 0:18:09.640 --> 0:18:12.840 been very outspoken about the way that jerrymandering is being 0:18:12.920 --> 0:18:16.000 used as a political weapon by both parties here going 0:18:16.000 --> 0:18:19.640 into the midterm elections and beyond. You mentioned you're an independent, 0:18:19.640 --> 0:18:22.040 now you are Republican. California, of course, is being carved 0:18:22.080 --> 0:18:24.879