WEBVTT - Breeze Aviation CEO David Neeleman Talks First International Flights

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>A major milestone reached by Breeze air Ways, the low

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<v Speaker 2>cost carrier, has become the first US airline and over

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<v Speaker 2>a decade, to be certified by the FAA as a

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<v Speaker 2>US flag carrier. That designation allows Breeze to make international flights,

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<v Speaker 2>unlocking new growth for the four year old company. Joining

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<v Speaker 2>us now is David Neilaman, a name that you surely

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<v Speaker 2>know what are familiar with because he was the CEO

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<v Speaker 2>and the founder of Jet Blue. David, great to have

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<v Speaker 2>you with us, Thanks so much for joining open interest.

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<v Speaker 2>What is your plan for expansion of this airline now

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<v Speaker 2>that you've gotten this incredibly rare allowance.

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<v Speaker 3>Well, we're up to over fifty airplanes.

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<v Speaker 1>We're kind of growing every We get an airplane about

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<v Speaker 1>every three weeks. We have on firm order about ninety

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<v Speaker 1>AIRBUSA two twenties with an option to go to one

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<v Speaker 1>hundred and twenty. So it's just doing the same thing

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<v Speaker 1>that we're doing. We're flying about eighty seven percent of

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<v Speaker 1>our routes. We have no nonstoft competition, so it's a

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<v Speaker 1>perfect airplane size. We have first class, we have extra

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<v Speaker 1>legroom seats and this internationalist faction is going to be

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<v Speaker 1>great for US because Saturdays are a little bit of

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<v Speaker 1>a down day for air travel. But being able to

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<v Speaker 1>take those airplanes and fly to Kancun and to Puta

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<v Speaker 1>Khana and to montego Bejamaica is going to be a

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<v Speaker 1>real great asset for US.

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<v Speaker 4>Well, David, for anyone who's not familiar with your resume,

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<v Speaker 4>every airline you've founded has done something to be disruptive

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<v Speaker 4>to reshape its home market. Moris with e ticketing, Jet

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<v Speaker 4>Blue with more comfort for reasonable prices. Youle making secondary

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<v Speaker 4>cities in Brazil connecting them for breeze airways. What is

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<v Speaker 4>the disruption here that you're trying to bring into the market.

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<v Speaker 1>Well, you know, it's along the same lines of that.

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<v Speaker 1>I always say, you never start an airline just for

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<v Speaker 1>the heck of it. You have to start it with

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<v Speaker 1>the reason. And when I looked at the US market,

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<v Speaker 1>one hundred and twenty five cities had lost more than

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<v Speaker 1>twenty five percent of their air service over the last

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<v Speaker 1>ten years. So the big airlines were forcing people to

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<v Speaker 1>all their hubs and cities like Charleston, South Carolina, Huntsville, Alabama,

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<v Speaker 1>vibrant growing cities you basically had to get on a

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<v Speaker 1>plane flight to a hub, and so we're just taking

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<v Speaker 1>people and bypassing hubs and going NonStop, but doing it

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<v Speaker 1>with luxury. We're not really like a ULCC. We offer

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<v Speaker 1>first class, we offer extra leg room seats, we offer

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<v Speaker 1>really loaf airs. We have a kind of a basic

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<v Speaker 1>economy equivalent. But then we have these bundles that people

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<v Speaker 1>love to buy up. And you know, we've got the

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<v Speaker 1>highest MPs score I've ever seen a d airline I've

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<v Speaker 1>ever run. So we were voted by tribal Leisures the

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<v Speaker 1>third best airline in the country picks number one airlines.

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<v Speaker 1>So it's it's working. This is combination of getting you

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<v Speaker 1>there for always. When we started, I said, let's get

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<v Speaker 1>you there twice as fast for half the price. That's

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<v Speaker 1>kind of our goal, and do it with options to

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<v Speaker 1>fly first class or extra leg room, or have free

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<v Speaker 1>Wi Fi and a lot of things you don't see

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<v Speaker 1>on a UOCC.

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<v Speaker 2>What are your biggest challenges right now, David. I mean,

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<v Speaker 2>fuel prices have come down, but I guess planes are

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<v Speaker 2>harder to get more expensive, and labor must be the

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<v Speaker 2>cost of labor must be rising as well.

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<v Speaker 1>Well, you know, for a while it was the pilot situation,

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<v Speaker 1>and that's totally been been solved. We have twelve hundred

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<v Speaker 1>applications for we open it up, and we have we

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<v Speaker 1>have tons of applications. You know, I think staffing at airports,

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<v Speaker 1>we rely a lot on third party people, so we're

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<v Speaker 1>really focused on making sure that they're they're doing a

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<v Speaker 1>good job and they're keeping us safe. We're coming with

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<v Speaker 1>the program where we're going to put AI cameras on

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<v Speaker 1>all of our gates to monitor everything that's going on

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<v Speaker 1>to make sure that the turn is efficient, but also

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<v Speaker 1>most importantly safe, making sure that there's no damage story aircraft.

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<v Speaker 1>So that's that's really something we're really focused on, is

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<v Speaker 1>being efficient. And you know, our on time percentage has

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<v Speaker 1>just gone through the roof. I think I think last

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<v Speaker 1>month we were almost ninety percent on time.

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<v Speaker 3>We haven't we haven't.

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<v Speaker 1>We didn't cancel a single flight all summer long because

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<v Speaker 1>we just wanted to get our guests where they're going.

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<v Speaker 3>So, you know, it's just really focused on the operation.

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<v Speaker 1>I really preach if we if we all less operation,

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<v Speaker 1>then people will come back and fly some more often,

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<v Speaker 1>and that's what we're seeing these markets you know, if

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<v Speaker 1>we go to a market and we see there's about

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<v Speaker 1>fifteen people a day that travel between two cities, we

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<v Speaker 1>believe we can turn that to about one hundred a day.

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<v Speaker 4>David, it doesn't feel like an industry though, that is

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<v Speaker 4>split into the haves and have nots and the have nots.

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<v Speaker 4>You have Spirit, which maybe has its own issue, but

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<v Speaker 4>serving a lower income market. Then the big airlines United

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<v Speaker 4>Delta talking about that they're doing well because of luxury

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<v Speaker 4>at Bashing yesterday at Atlanta FED conference, saying that you

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<v Speaker 4>have the lower end of the consumer spectrum, it's tough,

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<v Speaker 4>and then he goes on to say all of the

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<v Speaker 4>other airlines are basically going to lose money or come

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<v Speaker 4>close to losing money again talking to airlines that aren't

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<v Speaker 4>serving the ultra luxury customer. David, do you think he's right?

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<v Speaker 3>I think he's right to a certain degree.

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<v Speaker 1>Sure, you know there's a you know, you see now

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<v Speaker 1>you have Blues rushing to put first class seats in

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<v Speaker 1>their airplanes, Spirits trying to put first class frontiers adding

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<v Speaker 1>first class.

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<v Speaker 3>So yeah, I mean, I think people want choice.

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<v Speaker 1>Southwest Airlines had one product for everybody, free bags, and

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<v Speaker 1>now they're starting to differentiate. People want to say, great

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<v Speaker 1>for the free bags, but I don't care about free bags.

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<v Speaker 3>I just want to lower fare.

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<v Speaker 1>So you have to give choice to your to our

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<v Speaker 1>guests and along the spectrum and make you feel good

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<v Speaker 1>about every every bundle that they purchase.

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<v Speaker 2>So I've always wondered about investing in airlines because you know,

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<v Speaker 2>the prices haven't really risen much since I started buying

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<v Speaker 2>tickets for myself thirty years ago. Right. I remember going

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<v Speaker 2>to a Grateful Dead concert on the West Coast in

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<v Speaker 2>the nineties and paying about three hundred dollars for the tickets,

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<v Speaker 2>and I could still do the same thing today. Why

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<v Speaker 2>invest in an airline if it's never going to make

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<v Speaker 2>money over over time.

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<v Speaker 1>Well, you know, trading some airlines stocks is a little

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<v Speaker 1>bit like trading like options.

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<v Speaker 3>Basically they're up and down a line.

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<v Speaker 1>You know, I think there's a tremendous amount of leverage

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<v Speaker 1>if you can get everything right. You know, we have,

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<v Speaker 1>you know, some of the heightst margins in the industry

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<v Speaker 1>on routes where we have no NonStop competition. So you know,

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<v Speaker 1>I think our goal is to create something that is

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<v Speaker 1>not a kin do an airline something that is, you know,

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<v Speaker 1>because the challenge that Speamenting too is that their planes

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<v Speaker 1>got so big they had to overlay Delta United American

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<v Speaker 1>and that's a really tough business to be in because

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<v Speaker 1>they can just create basic economy and match everything they

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<v Speaker 1>were doing. So it's just finding those markets. We've looked

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<v Speaker 1>at those markets that have fifteen p ts and we

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<v Speaker 1>think there's enough market for about four hundred airplanes and

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<v Speaker 1>we only have fifty. So it's a tremendous growth opportunity

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<v Speaker 1>and there's a lot of leverage here if you can

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<v Speaker 1>get it right.

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<v Speaker 4>Well, David, you've done it before. We're looking forward to

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<v Speaker 4>following along your journey with Breeze. David Nielman of Breeze Airways,

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<v Speaker 4>thank you so much for joining us this morning.