Surviving and Thriving in Modern Air Travel

Transcript

Ken Quinn:Ready to have some fun this morning? We're going to be rapid-fire. I'd invite my panelists to come on up here. I'm going to do a brief, very brief introduction of each of them. They're all a mostly inexperienced group. They've been around just a couple of years. I think they're going to be able to add just some Some insight to you. Do we need a bigger couch for you guys if you want to relax and stretch out?

David Neeleman:Kirby's not here, so we're okay.

Ken Quinn:Kirby's not here. Told you we're going to have some fun. By the way, I'm going to be out there with you. I was raised by nuns, so I'm going to go behind you, and if people are talking on iPhones or texting or playing with your laptop, I'm going to call on you. I reserve that right, and I do do it. Our first gentleman to my far left has had a very difficult time holding on to a job. He started with Morris Air, then sold over to Southwest. He was at— helped out for WestJet in Canada. Then he was restless and started something called JetBlue and was a CEO chairman over there, I think, for over a decade, then continued to be restless, looked down south and started Azul, the Brazilian carrier. And today, as you all know, David Neeleman is running Breeze Airways, which has grown already to be highly profitable and successful and highly rated. Airline, 170 routes with 50 cities and growing, I think, David?

David Neeleman:89 cities and 124 routes— 324 routes.

Ken Quinn:His bio's out of date already.

David Neeleman:You blinked.

Ken Quinn:By the way, behind every great man is a wonderful woman, and I hope his bride Eva is here. Where is Eva?

David Neeleman:She's right over there.

Ken Quinn:All right. Next we have my friend Steve Creamer. Steve is the president and CEO of the Air Traffic Control Association. I've known Steve a long time. I'm an FAA former employee. Steve had the highest-ranking job for a career person at the International Civil Aviation Organization, heading the Air Navigation Bureau. So I think that was for about 5 years or so, I think.

Stephen Creamer:Almost 10.

Ken Quinn:Almost 8. Okay. And I think before that, maybe 33 years at the FAA, going through various levels of air traffic. So if there is anything you want to know about air traffic, ATCA services a lot of the OEM manufacturers, a lot of people in the service industry, a lot of the operators, and of course they coordinate with a lot of air navigation service providers all over the world in CANSO. Next to him, Johnny Thorsen. Johnny is a VP of strategy, works with Serko, a— he said global I think tech and transportation evangelist. So God knows the airline industry needs prayers. So we welcome him to the table. He solves business travel and expenses. So if your organization is going to challenge your Bordeaux bottle last night, talk to Johnny. He's going to help us. Next to him, a longtime friend. I think I met you probably 30 years ago. We have with us Steve Johnson. Steve is the Executive Vice Chair and Chief of Strategy at American Airlines, one of, if not the largest airline in the world. He was Executive Vice President, Corporate Affairs. He started way back when, not— with GPA as General Counsel, one of the leading aircraft lessors of the time, sold out to GE. Capital Aviation Services, and as you know, the story goes on in Ireland today. Before that was America West and heading up corporate there. So among these 4 people, you have some of the most distinguished airline and air traffic executives and business travel, corporate travel people in the world. So I'll join you out there, and I'll start with a soft one to David.

Stephen Creamer:Thank you.

Ken Quinn:Spirit went out of business. Why'd they go out of business? Was it good or bad for the industry?

David Neeleman:Well, you know, there was just a filing in the bankruptcy court that said that, you know, Spirit's margin was so bad that if they would have had free fuel, they still would have lost money. For every dollar of revenue they took in, they had $1.61 of expenses. So obviously, it was a little bit disconcerting that the government may step in and say, oh, it's because of fuel, we got to save these guys, and it would have not been a good thing for the industry.

Ken Quinn:You didn't want to have them, the government, pay $500 million to Spirit?

Mark:Why?

David Neeleman:Yeah, well—

Ken Quinn:It's an unreasonable amount.

David Neeleman:Because if you're spending $1.61 for every dollar, and even if your fuel would have been free, you're still losing money. That's not a business model.

Ken Quinn:You could have had your hand out though too. Maybe the whole industry gets free Wi-Fi.

David Neeleman:Well, yeah, we were in line to get some if that was going to happen. But I think more importantly to your question, you know, the big airlines, sometimes they take a while to kind of get it together, but eventually they do. And what they determined, and it was a— They just determined that if— well, first of all, Spirit, Frontier, their whole thing's about chasm. If we can just go bigger, 319, 320, 321, stuff more and more seats in an airplane, our chasm will be cheaper than anybody else's and no one can ever touch us. So the big guys said, well, yeah, that makes sense. Let's go 319, 320, 321, MAX 9 going to MAX 10. And we'll take those incremental seats that we have, 30 seats on every flight, and those seats we have cheaper than you have, Spirit. And basically, we can do it 8 times a day. You do it 1 time a day. And what they said is, we don't know a single person on Earth that would fly Spirit if they could fly American, United, or Delta.

Ken Quinn:Why? Just because of the superior service offering?

David Neeleman:Yeah.

Ken Quinn:Not charging you for everything?

David Neeleman:The brand. The credit card, which the frequency, the reliability, knowing that if your flight gets canceled, you can go on the next flight. I mean, everything, right? It's all there. And so they said, our seats are cheaper than yours, and we're just gonna— we are going to turn the tourniquet on you. And because Spirit went bigger and bigger and bigger, they had to go in markets where they were overlapped.

David Neeleman:Right.

David Neeleman:And by the time they failed, they were overlapped on 97% of their routes by one of these carriers that were using basic economy to basically match their fares so that they couldn't survive.

Ken Quinn:So who's going to benefit the most? Your former colleagues at JetBlue coming into Orlando and Fort Lauderdale?

David Neeleman:Well, certainly going to help JetBlue a lot, you know, especially in Fort Lauderdale. The question now is— the big question is Frontier. And is there room for a ULCC? There wasn't obviously room for 2, but is there room for one that's in that model of ULCC?

Ken Quinn:Can Frontier survive alone?

David Neeleman:And they're 95% overlapped, same way.

Ken Quinn:Can Frontier survive alone, Steve Johnson?

Steve Johnson:Sure. I think there's a difference between Frontier and Spirit. I mean, I agree with David that the principal problem that the ULCC carriers have is not higher costs, which people generally mention, or— but just that the large— larger carriers have learned how to compete really effectively with them in the way David described. But let's face it, I mean, Spirit had some real bad breaks over the course of the last few years that That I think impacted it in a way that Frontier hasn't been impacted yet. So yeah, I'm not gonna—

Ken Quinn:What do you mean by that? What do you mean?

Steve Johnson:Well, let's start with, you know, a couple of years in antitrust purgatory, you know, that I think significantly weakened the airline and its ability to be able to survive on its own after the merger was enjoined. That's probably the biggest—

David Neeleman:They got $600 million for it, though, or $700 million.

Stephen Creamer:Well, their shareholders—

Ken Quinn:It was a good breakup fee.

Steve Johnson:David, their share— I mean, that's part of the problem is that, you know, we— We think about making decisions about taking antitrust risks in mergers and mitigate that with a potential breakup fee paid by the larger carrier if the deal's enjoined. In this case, the breakup fee was almost, you know, 90% of the breakup fee or something was paid directly to the Spirit shareholders. So Spirit didn't actually get that breakup fee as a way of—

Ken Quinn:Was the Biden administration wrong to challenge the merger?

Steve Johnson:Yeah, absolutely, I think. I mean, I, there, Judge Young gets a lot of grief for his opinion, and I'm, well, I'm not gonna endorse that opinion. I, you know, I kind of understand how he got to that conclusion, and indeed, you know, kind of in the run-up to the decision about with whom they were gonna merge, the Spirit guys were very vocal about the antitrust risk associated with that. I think the problem was that the government decided to bring the case, and not just bring the case, but bring the case in a court courthouse where, you know, they, they could have a high degree of confidence that they were going to get the outcome that they, they needed. And they did this at a time when I think the outcome was really foreseeable. I mean, this wasn't something— this wasn't a lawsuit in, in 2018. They filed this lawsuit in 2023, um, you know, after they'd seen the impact of the pandemic and, and in circumstances where they knew, you know, that, that Spirit was going to be in pretty rough shape, you know, if the government had succeeded. And, you know, from my perspective, the government's role in aviation is to create an environment that where, you know, there's a real sense of competition, a real competition throughout the industry, not to focus on individual carriers or individual mergers to try to determine, you know, with, you know, in a narrow perspective about the competitive impact of that.

Ken Quinn:So was the government wrong to challenge your Northeast Alliance with JetBlue? Oh, for sure, yeah.

Steve Johnson:Yeah. That one, I can't even come up with the antitrust rationale for charging. That was a fabulously pro-competitive, really successful joint business that I think worked for JetBlue's customers, worked for our customers, created a viable competitor in New York that didn't really exist before. There was just nothing about that that, you know, violated the antitrust laws, except for, you know, this super narrow point that Judge Sarokin reached out to that said that You know, that JetBlue and American used to be competitors, and now they're not competitors in the Northeast. But yeah, that was a very big mistake to challenge that. And whereas I'm probably gonna give Judge Young a little bit of credit for his, you know, for reaching the conclusion that he did in the Spirit-JetBlue case, I can't find anything good to say about Judge Sarokin's conclusion in the American-JetBlue case.

Ken Quinn:Anything good to say about a merger between you and United Airlines?

Steve Johnson:That was fun, wasn't it? Well, I mean—

David Neeleman:That took about 5 minutes.

Steve Johnson:Exactly. Well, David, I'm sure, is going to have something to say about this too, but, you know, Scott is a really close friend of mine. We've, you know, we started working together at America West in 1995, and it's just been, you know, an important part of— that relationship has been an important part of my career, and he remains a good friend. And I think of Scott, you know, brilliant guy, definitely one of the industry leaders, And he's made his mark on the industry by doing, or trying to do, in a couple of cases unsuccessfully, really big stuff, you know, and in several cases, things that people thought were impossible, and he's pulled some of them off. And so I give him credit, and he's, you know, at a point in his career where—

Ken Quinn:Did he help pull off the US Air American merger?

David Neeleman:For sure.

Steve Johnson:Yeah. I mean, and indeed, I think at our closing dinner, the best thing I can say about this is Doug Parker was, Making remarks at the US Airways-only closing dinner, and, you know, his final comment was to congratulate Scott, and, you know, he said, Scott, this was always your deal. And Scott, you played a very significant role in the design of that and in convincing all of the constituents, you know, the American employees, the American creditors, the American Creditors Committee, you know, and ultimately, I think, the board of directors of American. I think Scott played a really significant role in that. But, you know, we obviously talked to them about this idea, but, you know, just like all of you, pretty quickly confirmed, you know, that, you know, that there was just no way that this was ever gonna get antitrust approval.

Ken Quinn:Isn't it open season in the Trump administration? Well, is antitrust really challenging anything these days?

Steve Johnson:Look, I mean, we don't know. I mean, it certainly is a more permissive more facilitative approach in general. We haven't actually seen an airline deal, you know, that the Trump administration has had the opportunity to review. They have said, and Secretary Duffy has said, that they're open to deals. So we'll see. And I—

Ken Quinn:But they did reopen, right? The Northeast Alliance was actually approved, wasn't it? It was not challenged, and then it was challenged in the subsequent administration.

David Neeleman:Changes.

Steve Johnson:No, I mean, I think that originally the NEA was Approved by the DOT.

Johnny Thorsen:Right.

Steve Johnson:Um, and then challenged by the DOJ. But, but I, so, it's one thing to say that the Trump administration is gonna take a more permissive view of antitrust or be more facilitative of, of, of mergers, um, but quite another thing to suggest that a merger of United and American makes, you know, would pass muster from an antitrust perspective.

Ken Quinn:Johnny, are you worried about corporate travel in the context of consolidation in the industry in the U.S.?

Johnny Thorsen:So on average, the corporate travel buyers definitely prefer to have competition and have options. I don't think the Spirit kind of shutdown has not really impacted corporate travel, especially not in the large managed travel segment. But if you look at corporate buyers right now, they are nervous about lack of competition on a number of key routes. But I think that's been a long-term problem. Buyers will always prefer to have more options if possible, but at the same time, as the airlines know, right, the buyers will have travelers who gravitate towards a given airline in a given market, and they stay ultra loyal with their local airline in most cases. I think what's happening on the buyer side right now that's quite interesting is they're trying to upgrade their technology to become much better at at buying in the dynamic market. So the idea of having this negotiated fare that stays for 6, 12 months out, a lot of buyers are now looking at a much more aggressive AI-driven kind of ability to find the best fare at any given point in time.

Ken Quinn:But isn't it kind of weakening your buying power when you have a consolidated larger airline in terms of corporate travel discounts?

Johnny Thorsen:It is in one way, right? But at the same time, buyers will Their travel is driven by the business they're in, and they have to accept the fact that airlines will operate a city pair when it makes money, unless there's government funding behind somewhere in the worldwide.

Ken Quinn:David, is this a big part of your, your kind of vision for Breeze in terms of corporate travel, or are you more focused on leisure markets point-to-point?

David Neeleman:You know, it's, it's, it's more, it's more focused on leisure travel, obviously, but there are pockets of areas where people have really a hard time getting to. You know, we— SpaceX wanted a flight between Brownsville and Orlando because they wanted— they didn't want to connect through there. So we put on some flights, and, you know, now they're flying their people back and forth. So there are pockets of isolated instances where, you know, we started the airline by saying, we'll get you there twice as fast for half the price. And that's a pretty compelling thing even for a business travel— traveler. I mean, we lack the frequency that you would get flying on American Airlines, for example, but if it's a specific mission, you know, it really works. You know, I think the big— the bigger issue, I think, is— and I don't know if, you know, if I was in the policy position, I'm not sure exactly what I would do about it. And we just had to navigate ourselves to create these opportunities.

Johnny Thorsen:Yeah.

David Neeleman:But if you took below the Southwest Airlines line of airlines, there's, you know, we're the 10th largest airline now in the country with a, you know, billion and a half sales this year, which is interesting.

Ken Quinn:Amazing.

David Neeleman:But, you know, there's, there's a lot of struggling going on, you know, and Allegiant's kind of an outlier. You know, they're, they're doing well, and they, they basically have gone into markets where you don't, you Was that strength to strength with Allegiant absorbing Sun Country? You know, I think so. I mean, they think there's some synergies there. They don't— you know, when you have mergers, it's really revenue synergies plus cost synergies. They don't really have a lot of revenue synergies because they didn't really overlap, and, you know, costs, headquarters, and all that. It was a great deal for Jude. You know, I told him the other day, he got 2 bites at the apple. So, you know, it's, you know, I think it's minimal. But if you take the number of routes we fly plus the number of routes that Spirit— I mean, not Spirit, Allegiant together with Sun Country, it's 1,000 routes that we fly. I mean, we fly more routes than JetBlue does. For example, I think JetBlue's at 274 and we're at 336. So, you know, there is a place for what we're doing, but if you're kind of outside that, You know, Frontier and JetBlue and, you know, others, even Alaska, you know, had kind of a tough quarter. There really is the haves and the have-nots.

Ken Quinn:Is Alaska done acquiring entities after Hawaiian?

David Neeleman:I think, you know, they're, you know, every time you acquire something, there's obviously a lot of work to do in digestion. So, you know, I don't see You know, I don't see on the horizon for them anything that they would want to do because they're busy with the 48th and 49th states, you know, with Alaska and Hawaii. And they're, you know, they're a great-run airline, so they'll figure it out. But they had bad luck with floods in Hawaii and unrest in Mexico and high fuel prices in California, you know, kind of hit them all at the same time in the first quarter. But I'm sure they'll do—

David Neeleman:Yeah.

David Neeleman:Great. Go ahead.

Ken Quinn:You mentioned SpaceX. So Steve Creamer, SpaceX and others are doing an exponentially large amount of launches, particularly out of Florida, Houston, even New Mexico. We have space debris issues. We have congestion and capacity. And now we have this so-called brand new air traffic control system. Big announcement, everybody got together, we're not going to talk about air traffic control privatization anymore, apparently. Are you buying it? Is this really going to happen? It's all going to be done, I think Secretary Duffy said, by the end of 2028. Yes or no?

Stephen Creamer:Well, the pieces that have been funded will be done by '28, '29. There's a lot more that still needs to be done. And actually, when you, when you take apart all the different mandates that the FAA has today that have been, you know, institutionalized through policy and law by Congress, They have a requirement to, um, look to promote commercial space operations, to develop the techniques for airspace management so that those operations can occur across the United States in the manner that they want. They have a responsibility to support vertical takeoff, the advanced air mobility industry, and develop certification or rulemaking capabilities there, and then to design some sort of an integration methodology to where those operations can occur in the same spaces All of the airline operators, and do it in a manner that doesn't impact airlines, you know, in a negative way, right?

David Neeleman:Of course.

Stephen Creamer:So that's, that's a lot of complexity that requires a lot of brainpower, a lot of tests, a lot of risk acceptance to be able to identify the risk and then mitigate it effectively, and then do that in a manner that I think has to happen more quickly than has been done in the last 25 or 30 years. So a caveat on the yes. I think they're going to get the, the refresh of technology done in that 3 years. That was what was funded by Congress last year. There's a consolidation piece that is being discussed to take the 21 centers in the United States and consolidate them down into some lower number. That's much more problematic politically because those facilities all have a lot of jobs. They are dispersed across the congressional districts in the United States in a way that makes it very very difficult to consolidate them. But there is a way to go forward and do that, and that work has to be done across the government. That's not just the FAA. Congress has to support it. The administration has to be an active player. The modernization itself, I think, is— we have—

Ken Quinn:Haven't we heard this before? I mean, come on. NextGen, NowGen. Does the FAA really have a good record at living up to the promises that I joined the FAA in 1981.

Stephen Creamer:It's kind of an inauspicious year for the agency.

Ken Quinn:Is that packed or not packed today?

Stephen Creamer:Today we operate 3 times the traffic that we operated in 1981. We do it with 3,000 fewer controllers. Think about that. So there has been a technological insertion across the FAA over that period of time that has enabled that capability. And for non-safety-critical decision-making, There's been an enormous modernization that's occurred, especially over the last 3 or 4 years with the introduction of machine learning, artificial intelligence. I think the administrator has a very aggressive vision for what he wants to do to integrate the planning process with the various airline planning processes. And in a single airline vision of that, that makes a lot of sense to me. When it becomes competitive, where you maybe have 2 airlines that are looking at trying to optimize into one single airport, that's going to be much more problematic.

Ken Quinn:Yeah.

Stephen Creamer:But it provides an opportunity to do that in a digital way with a lot more data that's going to be very effective at helping the marketplace evolve. So I think there's policy that has to come with that.

Ken Quinn:That's a lot.

Stephen Creamer:And there's a lot that comes with that. So I think the hardware piece, yes, it's going to happen in that timeframe. The policy pieces take much longer. The Administrative Procedures Act, the rulemaking processes, All take years. The United States delivered the, the Automatic Dependence Surveillance Broadcast Network in 2012, at the beginning of NextGen. The rulemaking component of equipping airplanes with ADS-B Out so that they could take advantage of that network took another 8 years to come into force.

Ken Quinn:So we have— tomorrow we're going to have a whole panel on air traffic control, and at this point I'll say y'all since we're in Charleston. You can raise your hand at any time, and we'll bring you into the audience. And let's put Mike Miller on the spot first. Please identify yourself. Can we get a microphone? Anybody? Over here. Just identify yourself, ask the question. If it's too long, I'm going to cut you off.

Stephen Creamer:While that's happening, let me just add that the component that made the BNACS real was the accident at DCA last year.

Ken Quinn:All these acronyms, BNACS.

Stephen Creamer:The Brand New Air Traffic Control System. So that modernization, the money that came from Congress, came because of a safety crisis.

Ken Quinn:We're going to talk about that, but isn't it— I mean, is that the difference between NextGen? Now they're actually— Congress is funding to a very large number the procurement and consolidation. Mike?

David Neeleman:Hi, Mike Miller with Miller Air Group. David, question for you. I've heard Ken wanted me to ask you about you being in Charleston because you're buying the 787, but I have a better question. I have a better question than that. At the current Breeze operation, you have you and Lucas and a great team. You have the, the A220. You have the route network, which is different, filling some gaps out there. But focusing on the A220, since not every airline has it, how much success do you think Breeze's success is attributed to the A220, and why?

Ken Quinn:Thanks.

David Neeleman:Yeah, good question. As long as you brought up Charleston, I'd be remiss if I didn't say That this group here, led by Helen Hill, who— this is our first— you know, today is the day we flew our first flight 5 years ago.

Ken Quinn:Today.

David Neeleman:Today. And we came to Charleston, and this is, you know, going back to your 220 question. You know, we're going to announce a couple new destinations for Charleston, which will take us to 30 nonstop destinations from here. You know, Helen was remiss when she showed that route map. She should have said, well, led by Breeze has the most nonstop destinations, but she paid for— No, it's Breeze's. She paid for dinner last night, so all's forgiven there. It was a fantastic dinner. So, which you can't— which you get here in Charleston. The 220 is unique, and, you know, I talked about the challenges of Spirit. Spirit, bigger, bigger, bigger, chasm, chasm, chasm, chasm. That's all they cared about. When we looked at the E2, and we have the E2 in Brazil, we love that airplane, and Embraer done a great job with that. But when we looked at the E2 side by side with the 220, and we were kind of lucky in a sense, but we were, you know, I already had this premium idea 7 years ago when we ordered the airplane, and it's become a much bigger thing. But the ability to go from, you know, 36 first-class seats to 12, back to 16, to 20 and not have to mess with the overhead bins, and/or is, is really a critical component of the 220 because we get a lot more for our first-class seats than we do the rest of the seats on the airplane, and that is one of the things that drives our profitability.

Ken Quinn:Hey, let's, let's shift for a second.

David Neeleman:And then there's the range issue, you know. I mean, we can go from Providence to LAX, we can go from Charleston to LAX. Having a 25% lower trip cost is critically important. Allegiant's decided to go bigger. They decided to go to MAX 8s. Now they have— had 200 seats on it. Now they have 190. They don't have first class. They don't have Wi-Fi. It is a perfectly tailored— we did analysis. If a market has Tampines in it, we can make it work.

Ken Quinn:Let's— I need to shift, David.

David Neeleman:And that's 4,000 routes in the United States. We think we— the market size is about 400 airplanes for the 220 size. Yes, Ken.

Ken Quinn:Steve raised the issue, uh, the reason why BNATS is really where it is is because it came from a safety issue. Secretary Duffy's first day on the job, uh, we have the midair tragic crash, uh, so lots of fatalities in the, in the Potomac. Situational awareness and the funding issue, legislative mandates, ADS-B in, ADS-B out. I told people I was going to call on anybody at any time. I'd like to ask the president of the Airline Pilots Association, what do you think about what should have happened and the BNAT's approach to increase safety and situational awareness? Jason.

Jason:I didn't know this was coming. I was going to cover all this tomorrow, so—

Ken Quinn:We will cover it again.

Jason:Welcome. Thanks for having me here.

Johnny Thorsen:Thank you.

Jason:Look, first, our thoughts are with the families and friends of those that were lost. That certainly was an avoidable tragedy over the Potomac. The goal now is obviously to make sure it never happens again, and it needs to be an all-of-the-above approach, obviously with a brand new air traffic control system, updated technology, more controllers, obviously the staffing issue there. But we need to have an all-of-the-above approach where we're integrating technology. You know, right now there's a fight in D.C. between rotor versus alert. Act, which is you know takes a different approach to collision avoidance technology, and it shouldn't be an either or; it should be an all of the above. You know, the NTSB has has wanted or has recommended ADS-B in technology for you know over a decade when when they originally wanted out, and you know now we're at a point where this is readily available technology, and we can we can make it happen. So you know for It's painful when you see something that was completely avoidable and, you know, for whatever economic reasons we don't want to do it. It's the right thing to do to avoid another tragedy like that, especially when we're in the light that we have all these new entrants that want to be part of this. We want eVTOLs. We want these cool airplanes that are right out here. You have all these different things in our airspace. We have to have the technology to help avoid those.

Ken Quinn:Steve, how about commenting on that and American's position in terms of the equipage issue?

Steve Johnson:I mean, I agree completely with Jason and Steve. I mean, and have, you know, as, you know, in our government affairs efforts over the course of the last 10 years fought for modernizing the air traffic system over and over again and fought different issues, you know. Funding issues, issues about the airlines having control of the system, all in an effort to try to find a way to get a breakthrough. And it's tragic that 5342 was a catalyst for this, you know, but we definitely need to move on. I think I'd say, as somebody who's been thinking about this for for 16, 17 years now, I've probably never been more excited about the prospects. I mean, as Steve said, you know, we do have an appropriation. We are investing. We do have a leader and a team at DOT and FAA that is really committed to addressing this problem. So, I mean, well, just—

Ken Quinn:But is there a cost impact that's disproportionate that maybe you can afford it?

Steve Johnson:I mean, no. I don't think anybody in the system can afford not to have technology improvement.

Ken Quinn:Steve, your thoughts on collision avoidance, on increasing situational awareness, and also, are we having a capacity problem here, both in the air and on the ground? And disclosure, I'm involved in both of these crashes, but— Where we don't know where people are, and with increased congestion and no new runways, no new airports, are we worried that capacity and congestion is not just going to lead to delays and cancellations, but the safety margin is being eroded?

Stephen Creamer:I think somebody said all of the above. You have to be dealing with all of these things in, in Like, they're all different aspects of the system of systems that makes the capacity and efficiency that we get out of our system, which is incredibly good. And, you know, I was in the worldwide space for about 10 years at ICAO, and the thing that's interesting about the global system is that it's much more structured than the U.S. system, because the U.S. has the general aviation, the business aviation component, and the military component. So you have a much more complex airspace in the United States. It's also still the largest market in the world. So to solve for all of the different needs that different operators have in the system, we have to be a little more creative than the global community has to be in order to have a structure that solves for the capacity needs that we want alongside the training needs that the military has. Alongside the diversity that people want to have with, you know, point-to-point, with advanced air mobility, with other aerial services, and now with unmanned aircraft and unmanned inspections, space launch. Think about all of that is happening and has actually come to an accelerated pace over the last 10 years.

Ken Quinn:Is that alarming to you that uncrewed aircraft, eVTOL, short takeoff and landing systems without established flight corridors can pose a risk to commercial aviation in particular?

Stephen Creamer:Well, all operations pose risk. So the first thing you do is you identify those risks, and then you mitigate and manage them. And that's exactly what the established industry does every day, 50,000 flights a day. The emerging market players are learning how to do that. A lot of them came into the industry with the Silicon Valley mindset of we can just break it and build it and break it and build it and we'll solve those problems more quickly. That works as long as you don't put people on the aircraft. And that's why unmanned aircraft expand so quickly.

Ken Quinn:Well, no, not if they're flying in airspace that has people on aircraft.

Stephen Creamer:And so they've been segregated by the rule set so that they are not sharing the same airspace. The developmental drone deliveries that are occurring in the Dallas-Fort Worth area all occur in airspace that's segregated from manned flight. But they do want to encroach on manned flight, and in order for that to happen, the unmanned traffic management systems have to integrate with the cockpit-aware systems, and they also have to integrate with the air traffic management system. And that's—

Ken Quinn:So it's doable, you're not concerned?

Stephen Creamer:Say again?

Ken Quinn:It's doable and you're not concerned?

Stephen Creamer:I am not concerned that it has to be done. I think the challenge is getting all of the stakeholders around the table to solve the problems in a manner that don't pose an unreasonable burden on any one player.

Ken Quinn:So David, some people have argued that the last administration focused unduly on non-core safety, security, efficiency issues, but more on DEI, sustainability. Is that a fair criticism?

David Neeleman:Yes. No, it's— You know, I've been really vocal on SAF. Yeah, I thought it was the biggest scam that has been ever perpetuated. You know, it's—

Ken Quinn:you know, we have a problem about that.

David Neeleman:We have a problem in our industry, and that is the distillates. You know, we compete with diesel.

Ken Quinn:What do you mean by the distillates?

David Neeleman:Well, if you have— if you take heating oil, diesel fuel, and jet fuel, it's virtually the same thing. It's called a distillate. And so when you refine a barrel of oil, There's only about 30— depends on who you ask— 25 to 33% of that barrel that can become a distillate. And so as more and more things go electric and the gasoline consumption goes down and refineries, you know, if it were to happen, start to close, then we are going to have a problem with distillates. When they talk about a barrel of oil going from $50 to $100 a barrel, or $60 or whatever, that's only part of the equation. What's killing us right now is the crack spread of the refining costs of that jet fuel.

Steve Johnson:Mm-hmm.

David Neeleman:And so what should have happened in the SAF thing is said, we're not going to do this scammy SAF thing where you spend more in carbon to create it than you actually have and take from the food supply. That's all. What we should have said is, how can we help trucking and other consumers of distillates move quicker? Because they— it makes economic sense for them to do it because they're rolling something down a road instead of suspending it in the air.

Ken Quinn:Are we going to meet—

David Neeleman:So that's where our focus should be is how can we eliminate the consumers of distillates as an industry and figure out how we can— Have that for a reasonable refining cost.

Ken Quinn:Steve, are we going to meet net zero by 2050? And should we also be more concerned about the consumer protection issues that the Biden administration— Johnson, Steve Johnson.

Steve Johnson:Well, we've— the 2050 goals, I think, were always kind of an aspiration and—

David Neeleman:Made by CEOs who will never be there in 2050.

Steve Johnson:And, and, and let's face it. Well, the first thing I'd say is I agree with, I agree with what David just said. I'd frame it slightly differently, is that, um, uh, the planet is getting warmer. There's, you know, I don't think there's any real debate about that. Um, we do as a society have to reduce our carbon footprint. We do as an industry have to reduce our carbon footprint. Um, but to David's point, it's a lot easier in 2026, uh, based on existing technology for ground transportation to reduce its carbon footprint and harder for the airlines.

Ken Quinn:By doing electric vehicles?

Steve Johnson:Pardon me?

Ken Quinn:By doing electric vehicles on the ground?

David Neeleman:Yeah, exactly.

Steve Johnson:Electric vehicles on the ground or also the ground transportation versions of SAF, you know, clean diesel, that sort of thing, are, you know, further along and more available and better supported by the government. But we— the airline industry does have to find solutions. Those solutions are, I think, you know, largely going to be some sort of synthetic aviation fuel, which I think, in my sense, really has to come from technology. Some of these water-into-wine technologies that you've heard about are the only way we can create enough SAF at scale to actually run the system. So all of that work is yet to be done and, you know, eventually will be done, whether that's 2050.

Jason:Yeah.

Steve Johnson:You know, I don't know. I'm not an expert.

Ken Quinn:What about carbon offsets?

David Neeleman:I mean, basically, the AI has saved us.

Steve Johnson:Yeah.

David Neeleman:Really, because AI is going to consume— it's going to pass the airline industry like it's standing still here next year.

Ken Quinn:How so, David?

David Neeleman:Because of all the power generation that they're having to come up with and the carbon that they're, you know, having to expend to do it. Unless we start, you know, coming up with mini nuclear power plants everywhere, Then AI is going to create a lot more carbon than we ever thought of it.

Ken Quinn:Let's bring somebody else.

David Neeleman:Because it was always the argument that—

Johnny Thorsen:This is where it's so interesting. If I put my corporate travel industry hat on, what you guys just said as airlines is completely counter to the buyer position. They want to see action.

David Neeleman:They want lower costs. They don't really care.

Johnny Thorsen:Well, they are actually prepared to fund some of it if they know that the extra funding goes to dedicated—

David Neeleman:I don't believe that at all.

Ken Quinn:Are they buying carbon offsets?

David Neeleman:We have a carbon offset. Yeah, you know, hey, spend $5 and plant a tree in the Amazon jungle, and nobody does it. Nobody does it.

Johnny Thorsen:The credit does not go to the buyer, right? It goes to you.

Ken Quinn:Johnny, why does nobody do it? Why, if you're offered carbon offset and people are pro-environment, nobody will pay for it. Is anyone paying for it?

Johnny Thorsen:So, so worldwide, the best airline in the world in terms of having voluntary contribution at booking is Air New Zealand. They reached 1%. And they have done an amazing job, but it's still so little, it doesn't matter. Is it Blackbird? What's true about it is that I'm biased.

Ken Quinn:Let's bring somebody else in the audience in.

David Neeleman:It's got to have solutions that make sense. I mean, if you can go get a Tesla Semi and you can— and it's autonomous, so you eliminate the cost of labor and the cost of diesel fuel, and it can stop along the way, that makes tons of economic sense. What I'd rather do than spend in Europe 10% SAF, if you took that money and you said, hey, anyone who wants a semi, we will take that billion dollars and we'll help subsidize your semi. That's a much, much better use of money than creating something where you're taking up acres and acres, thousands of millions of acres of food producing crops.

Johnny Thorsen:Which is why synthetic SAF is the solution, right? We need an industry-wide investment to accelerate that because net zero in 2050 is not happening.

Ken Quinn:What about the government, Johnny? Government, should they be pitching it?

Johnny Thorsen:Governments are run by politicians who are focusing on being reelected, right? And therefore, we have not— even in Europe, we haven't seen any real initiatives at political level for saying we will now allocate 1% of the ticket price, whatever the number, for an industry—

David Neeleman:But they're doing carbon purchases. Let's hear from Steve Perry.

Ken Quinn:Steve, jump in, jump in because you've got— Isn't more efficient navigation also an answer here?

Stephen Creamer:So more efficient navigation is 7 or 8% of the solution. But ICAO agreed with the airline community that they go to zero carbon for international emissions by 2050, including market-based measures. SAF, of course, is supposed to be the early achiever in that regard. But I think one of the other things that's incumbent on all of us is to argue for the value of the mobility and the worldwide trade that comes from the aviation industry as a key component of why it's important to sustain the growth in the system. ICAO agreed that market caps would not be part of the solution. In other words, they would— they wouldn't do what Europe wanted to do of saying we're going to cap the airline industry and go to rail for everything.

Ken Quinn:Yeah, but Europe is now mandating carbon emissions, which is going to put them at a competitive disadvantage, won't it, Steve Johnson?

Stephen Creamer:It would drive the cost way up.

David Neeleman:Well, the pendulum's swinging back the other way.

Johnny Thorsen:It's a relatively small increase, right, if you look at the relative cost of flying. There's a number of issues with the babies.

David Neeleman:It's a small margin of business, though. I sat in a room in— I was on a panel with Willie Walsh, the CEO of KLM, and he sat there and he said, yeah, when we go totally SAF, it's going to add $164 billion cost to the industry. that makes like $20 billion a year. And I said, Willie, you sound like— you sound crazy. I mean, there's nobody in this room that will have a job if that happens, you know. And, and then he went to Phoenix and he was singing a completely different song. And now I'm sure at Indigo he's going to be singing a completely different song.

Ken Quinn:But where's it even going to come from in terms of production of SAF? Steve Johnson?

Steve Johnson:Technology.

Johnny Thorsen:Technology.

Mark:Yeah.

Steve Johnson:I mean, and, and David was, um, uh, beating up on AI. I, I AI is—

David Neeleman:No, I love AI.

Steve Johnson:AI is going to be, I think, part of what helps us—

Ken Quinn:It will help us find a solution.

Steve Johnson:I mean, it'll help us find a solution for the SAF that I described.

David Neeleman:I'm going to ask Quad, how do we make synthetic fuel? And he'll tell me, and then we'll be good.

Steve Johnson:I mean, it's just the reality. We talk more publicly about healthcare solutions that AI can create miracles in, but I think you're going to see the same thing ultimately in the industry. Technology is going to solve this problem. It's going to solve the SAF problem, it's going to solve the propulsion problem, it's going to solve the, you know, the problem that is, you know, created by an inefficient air traffic control system.

Ken Quinn:Let's switch to propulsion for a sec. Propulsion, electric aircraft. Let's get Mark, the head of Electra, that's demonstrating, I think, their product here. Is electric really part of the solution here, or is it just on the margins?

Mark:The Socratic method thing is going to give me a flashback to law school in first year. Look, real briefly, David Neeleman, I think, hits it exactly right, which is it has to make sense, has to make economic sense. And so we've always said that the electric architecture is going to happen, right? Pistons were real, they gave us flight. Turbines were real, they made it global and large. But now what does electric propulsion do? It brings solutions to regional mobility. And so these are solutions where it is economically feasible, where there is an emission savings, where there is a noise savings, and that's capability. And so if you harness the electric architecture to have unconstrained airplane designs, things you can't actually build with turbines and pistons, you've got something that wins. So it's got to make economic sense. That's how you win.

Ken Quinn:But do you have the power density to really go far?

Mark:1,000 miles. Is that far enough? You know, regional mobility, the sweet spot is 50 to 250 miles. All right. And so we talk about the lav— the lavatory break is basically the break line for the kind of regional mobility that hybrid electric will solve. That's 50 to 500 is the full market, but 50 to 50 is the—

Ken Quinn:This is like the business plan of Beta and Archer and—

Mark:No, they go 30 to 40. They go 30 to 40. We're talking about real travel. It has to be hybrid electric to go anywhere meaningful, and that's 50 to 500.

Ken Quinn:Well, and maintenance and noise, I assume, better?

Mark:55 decibels at 500 feet, if you like that. That's an electric toothbrush. It's a dishwasher.

Ken Quinn:So why aren't we investing more in businesses like Mark?

Mark:It's scary. You know, we've all here run, or we do currently run, businesses that are generating large profits, that are steady, that are solid state. When you look to the innovation edge, you're going to have to take a risk. You're going to have to take a gamble. You're going to have to ask yourself, is this a market that's going to explode and give me a payback that makes the capital risk worthwhile?

David Neeleman:Well, there's also an issue of electricity, right? Because, you know, there's a big controversy in Utah where Mr. Wonderful came in there and wanted to build a huge data center, and it's like, we're going to consume more electricity in that one plant than the whole state of Utah together. And, and then water, you know, to cool it down and all that. So it's great, we can push everything to electricity, but we got to figure out how to create electricity because everything's competing now for electricity. And so if it's nuclear, micronuclear power plants or whatever, but that, that energy has to come from somewhere.

Mark:Yeah, exactly. That's why it's got to start hybrid electric. I don't for a second believe that all-electric can deliver real capability that makes economic sense. But hybrid electric burns jet fuel. But what you've done is you've now installed an electric architecture in your propulsion system, and whether it's LNG, whether it's hydrogen, whether it's something else in the future, you've already put in place the bridge to that electric future. So you get value now, you get capability now, and you have a bridge to the future. It's, you know, A to B.

David Neeleman:Yeah.

Ken Quinn:All right, take that microphone away from that guy. Steve, are you buying this? And are you literally buying this?

Steve Johnson:For sure. I'm a big believer in technology and investment and exploration around all forms of propulsion. I think we're going to solve David's where does the power come from crisis with, you know, ultimately with more adoption of wind, more adoption of hydroelectricity, more adoption of nuclear.

Ken Quinn:Nuclear.

Steve Johnson:I mean, some politics in the United States to get around there, but I think that's going to come, and we're going to find that, you know, these giant, you know, AI-producing buildings are actually going to be required to provide their own power. So I think that problem is going to be overcome. But I agree completely with Mark. I mean, you— we have to— and I'd say it this way too— we need to make small electric airplanes before we can make big electric airplanes. It's just the way the technology evolves. And I'm I think that there is a fair amount of investment going into that now. You know, Mark has competitors. Some of them have displays outside in the hallway, and that's going to accelerate as we have breakthroughs. I mean, I— we've— everybody talks about how batteries are too heavy to power airplanes. Yeah, right now they are, but, you know, the battery technology has improved really significantly over the last 10 years, and that's going to continue to accelerate. So we are going to find technology solutions to these problems.

Ken Quinn:Can you compete on that basis that you're more environmentally friendly? Because you're going to step into greenwashing.

Steve Johnson:I don't think so. I mean, at the end of the day, I've, you know, the privilege of being a director of a company in Europe, of an airline in Europe, and so I spend, you know, a lot of time thinking about—

Ken Quinn:Director at Wizz Air.

Steve Johnson:Emissions from, you know, European perspective. And people in Europe feel more strongly about this than people in the United States. Customers in Europe feel more strongly about this than customers in the United States. But it still doesn't provide a basis for competing. I think we're going to compete based on all of the same criteria that we compete now— price, customer service, customer experience, reliability.

Ken Quinn:But aren't airlines commoditized services anyway?

Johnny Thorsen:But reliability shouldn't be a competition.

Steve Johnson:Exactly.

Johnny Thorsen:It's a mutual goal for everyone.

Steve Johnson:Yeah, maybe that's a really good way to say it. I mean, we as an industry really are, I think, profound in our view that we don't compete on safety. I think, you know, ultimately we're going to not be able to compete on this. This is going to be something that we as an industry are going to have to work together to, you know, to create solutions and adopt those and implement them, build them into the system and grow. And again, I just say it again, I'm just really excited about exploration and investment in experiments around all forms of propulsion because I think that there is going to eventually be a breakthrough there.

Ken Quinn:Are we going to have a breakthrough and get some darn reliable Wi-Fi?

Steve Johnson:Sorry, did you—

David Neeleman:Wi-Fi. Reliable Wi-Fi on airplanes.

Ken Quinn:Low Earth orbit, right?

Jason:LEOs.

Ken Quinn:We're going to—

David Neeleman:LEOs.

Ken Quinn:Is it going to happen?

Johnny Thorsen:Yes.

Jason:Starlink?

Steve Johnson:Yeah.

David Neeleman:You just signed a big deal, right?

Steve Johnson:We just signed a big deal yesterday. We'll equip 500 airplanes with with Starlink. I hadn't experienced before, but my partners at Alaska Airlines gave me a ride from Seattle to Orange County last week, and it was on one of their Starlink-equipped aircraft. And it was Friday afternoon, so there wasn't much going on at the office, and I got to spend 2 and a half hours putting it through its paces. I mean, it's really remarkable.

Johnny Thorsen:It is incredible, much better than—

David Neeleman:plus installation is easier.

Steve Johnson:And, you know, I don't want to pay for it.

Ken Quinn:Will you charge people for that?

Steve Johnson:It seems like, you know, as the industry evolves, that to compete, you're not going to be able to charge people for Wi-Fi. I think it's going to be something that people expect and require, and the industry is going to provide that without fail. Fortunately, the better Wi-Fi creates a better entertainment environment and more opportunity to engage with our customers. It's, you know, advertising opportunities and marketing opportunities which are helping us—

David Neeleman:Offset the cost.

Steve Johnson:Cover some of the cost, but no, I don't think we're going to ever see charging for Wi-Fi again.

Ken Quinn:What about the whole travel agent distribution, Johnny? In terms— is there still disintermediation going on trying to cut out the GDSs, trying to cut out corporate travel—

Johnny Thorsen:Obviously the—

Ken Quinn:Travel agents, OTAs and stuff.

Johnny Thorsen:The airlines, of course, continue to try and look at alternative distribution models. There's, in the corporate travel, there's an incredible focus on NDC, which is actually now 12 years old. So it's not exactly new anymore, but it looks like adoption has stalled around the 20-25% mark when you look at the leading kind of corporate buyers. What's now interesting to see is a lot of airlines are coming up with new product bundles, new service bundles, more kind of fragmented pricing, and those services are not really available in the corporate channel. So once again, we're seeing buyers being frustrated by the lack of distribution support for, for these new products.

Ken Quinn:And what do we see, David, with OTAs in the future? It seems like there's been a huge consolidation. You used to have all these independent travel— Orbitz, of course, and Expedia and all the rest. And is there not just a consolidation, and wherefore the future of OTAs?

David Neeleman:You know, AI is gonna change a lot of that. You know, it was funny, Bill Gates read— wrote some book a long time ago that talked about roadkill on the information highway and talked about Sabre as being the number one that was gonna die, but they're still around. You know, they're still a powerful distribution channel.

Steve Johnson:They've—

David Neeleman:But, you know, I, I, my, my planning team doesn't really like Me to— I mean, whenever I go in there, they're like, they're a little nervous, like, you know, why are you asking so many questions about why we don't fly here? So, you know, all the technology they have, you know, I don't have total access to it. But now I just go home on Claude and I ask, how many PDUs are there between these 2 markets? And I can come in and say, look, I've been doing the research on it myself. And I can, you know, I have access to data and the customer is going to have the exact same Same thing. You know, everyone goes to Google Flights today, but I think all that stuff's gonna kind of go blend into an AI question of, you know, any question you want to have, and you'll have more accurate data than you have through any of the OTAs or anything today. You know, the thing that drives me crazy as kind of an airline guy, when you want to go on a trip, the first thing you do is you book your flight, and then you go book your hotel.

Jason:Right.

David Neeleman:Why is Priceline worth $160 billion? Worth more than American, United, Delta, American, everyone together. So the integration of being able to kind of get some of that revenue and having it all blend together using AI models, I think is gonna— is a real bright side for their—

Johnny Thorsen:And I completely agree, right, that there's new technology available for airlines to become a full distribution player in all the other categories, right? And that's how you will probably evolve.

Steve Johnson:Yeah, it's going to be driven, Ken, I think, by our customers, and I see 2 distinct waves that are going to happen really quickly. The first is the one that Johnny described, where there's this divergence between what we can provide through the ADFAC system, which is primarily the way that the travel management companies access our inventory, and what we can provide through modern channels, MDC, and particularly our own websites. Just, you know, much more flexible, much more—

Jason:Yeah.

Steve Johnson:robust way of engaging with customers, and customers are going to continue to demand that that be available. But that is going to— and I think that really will change the way things work for about 5 minutes, because right behind that is agentic AI. I mean, there's already— you see rudimentary versions of this. And we had a leadership conference at American, and I told the story about, you know, 5 years from now, to go to David's point about how you book a trip, I mean, you're not going to do what you do today. You're not going to visit 5 websites. You're going to plan your lifetime trip to London by sitting down with your, you know, and talking to your phone or your computer, your Genetica, and say, hey, you know, I'm turning 50. I want to have a fabulous trip to London. I want to go on the very best airline, you know, in the very best seat. I want to stay at that new Swish Hotel on Grosvenor Square that used to be the, uh, you know, the United States Embassy. I want to see Hamilton for the 17th time. You know, Gordon Ramsay's my favorite chef.

Jason:So good.

Steve Johnson:I want to make sure I go to dinner at his restaurant. And oh, by the way, I've always wanted to have a custom-made suit made on Savile Row, so can you recommend a tailor? And then you're going to go pour yourself a drink and come back in 5 minutes, and the trip is going to be completely planned for you. And if you've given your agentic AI, you know, access to your payment methods, it'll actually be, you know, to the extent that you needed to make advance payments, all of that'll be paid in advance. And that, that is—

Ken Quinn:Isn't this against everything that you guys wanted to do? I mean, you created Sabre and spun it off, but then you wanted to drive customers to your site and then upsell them and then get rid of the OTAs and others that were trying to do One-stop shopping, but now the industry and the internet and AI has changed all of that. Is that what you're saying?

Steve Johnson:We have to change strategy. I mean, I'm sure I speak for David. We want to do what our customers want us to do. We want to engage with our customers in the way they want to engage with us.

David Neeleman:We want to make it easier for them.

Steve Johnson:What's easier for them? What's more effective? What addresses their needs in a better, you know, faster way? That's what we want as an industry, I think.

Ken Quinn:We're on the—

David Neeleman:Yeah, and we can participate in it. Today we're kind of on the outside looking in. Everybody makes money but the airlines. And so to the extent that we are the first place they go before, you know, to, to start that trip.

Ken Quinn:Yeah.

David Neeleman:You know, I, we, we have all of our customer data in Snowflake and I have an AI layer on top of that and I can go in and ask any single question about any single, uh, guest at any, you know, any preferences they have or what their tendencies are, all that kind of stuff. And then we can, get to know them in a way that when they come to us, we can serve them up things that they actually want. And that helps them book their flight because they know that Hamilton's playing, you know, in Charleston during this week or whatever. And so, you know, it's just knowing— being the first stop, we have enormous advantages that we've never taken advantage of.

Johnny Thorsen:Yeah, that's also where the OTAs have basically commoditized the airlines in their model, right? Because you've been become a secondary product in an OTA environment.

Ken Quinn:Yeah, airlines no longer commoditize. We're differentiating ourselves.

Stephen Creamer:But I think you want to make sure that while you're investing in all these really cool things, you make sure that you do what you need to do on the foundational infrastructure of keeping all of that moving and having consistency in delivery.

Ken Quinn:Speaking of foundational infrastructure—

Stephen Creamer:One hiccup, one snowstorm, and you're done.

David Neeleman:But how about staffing? I mean, short-term, we talked about all this fancy technology, but Why can't Jacksonville Center be staffed, for example?

Stephen Creamer:I think staffing is one of the biggest challenges the agency has is they've turned that job into a crush. You know, you're working a schedule that comes in Monday afternoon at 4 in the afternoon, comes in Tuesday at 1, comes in Wednesday at 8, and Thursday at 7, and comes back that night and works a midshift. It's been like that for 40 years.

David Neeleman:Because of shortage of staffing?

Ken Quinn:A lot of people wash out.

Stephen Creamer:It's the most efficient. It kills them. They can't do a 20 or 25-year career. There's not enough staffing, so they've been in 6-day weeks for the last 5 years, and there's no end in sight with the staffing models that they've enacted.

David Neeleman:Is it helping with what Duffy did, Secretary Duffy, with opening it up to Embry-Riddle?

Stephen Creamer:They're hiring more people through the academy. They're starting the ECTI, the controller training initiatives at the universities. That's a—

David Neeleman:they're hiring gamers that are really good.

Stephen Creamer:That's a small pipe, but it takes a long time to grow a controller. It takes a long time to grow the management that leads those controllers. And so that's going to actually be the crunch in '28, '29, is whether they've actually gotten close to catching up with the preliminary hiring and then developing the skill and the acumen to deliver what you all want.

Ken Quinn:We're on short final here.

Stephen Creamer:We're on short final.

Johnny Thorsen:The issue with Canada is with the Copa travel.

Ken Quinn:Neeleman's already taken over control. I can't let you go.

David Neeleman:I mean, that's a big issue, right? You didn't talk about Jackson Center staffing.

Ken Quinn:We have some time, but, you know, aren't we going to be able then to look at a private system? A long time ago, I fought the creation of TSA. People are now talking about a P3 and going back so we don't have 1,000 people standing around. We actually have hire-fire swings, be able to adapt to changes in traffic. What's wrong with the separation where the regulator is a regulator and the operator is something else, and we can have competition, we can be more agile, we can be more nimble in both TSA and what is increasingly the model for our navigation service providers all over the world? They're privatized, Steve Creamer.

Johnny Thorsen:Why not?

Stephen Creamer:You can do it. It's a political question.

Mark:Yeah.

Johnny Thorsen:It's a national security—

David Neeleman:Came close.

Stephen Creamer:It's been a, it's been a question where I mean, I think the— think about it this way. In 2018, the National Air Traffic Controllers Association was supportive of spinning off the air traffic organization and making it a government-held corporation or a separate agency, and it should have been. It's not because the discussion then shifts about how that's funded, and then the question is, is that general appropriations, or does that come into some fee-for-service model that the operators have to pay?

Ken Quinn:But haven't we seen ridiculous congressional shutdowns funding, we have to notify who's an essential worker, who's not an essential worker. It's just absolutely absurd, is it not?

Stephen Creamer:It's the game we've been dealt. It is absurd.

Ken Quinn:Steve Johnson, how about just privatizing all of TSA?

Steve Johnson:Well, I agree with Steve.

Ken Quinn:I mean, the Israelis are private.

Steve Johnson:You can. I'm sure that we could find a solution. I actually think that TSA is one of the great stories.

David Neeleman:I do too.

Steve Johnson:I mean, it just— the TSA agents and the TSA capability has increased. They've been very quick to introduce new technology that certainly for the lion's share of the regular traveling public that has TSA PreCheck or now TSA Touchless, I mean, security has just become, you know, a much easier, much less invasive way to go through.

David Neeleman:But make them essential.

Mark:Yeah.

David Neeleman:Because we had to buy so many—

Steve Johnson:I mean, that of course is an issue.

David Neeleman:We had to buy so many pizzas for all the TSA.

Steve Johnson:Exactly, yeah, yeah, yeah. But I mean, you could do it, but it's— if you think that's a better political solution. But boy, if I was going to privatize things in the US government, TSA would be down the list because I think they do a really incredible job.

David Neeleman:As long as they're essential.

Johnny Thorsen:Yeah.

David Neeleman:And they get paid during shutdown.

Ken Quinn:You guys are essential. Please join me in a wonderful round of applause for a great panel.

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