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Recorded at CAPA Live February

USDOT: Which aviation policies will (and should) Secretary Buttigieg pursue?

On 27-Jan-2021, the US Senate Commerce Committee approved US President Joe Biden’s nomination of former election rival Pete Buttigieg as the head of the US Department of Transportation (DoT). The original nomination, back in Dec-2020 was met with a slightly quizzical “interest” by those in Washington DC aviation circles.

Buttigieg dropped out of the Democratic Party presidential race to endorse Biden in March-2020 and was always on the list of potential cabinet nominees. Buttigieg, 39, takes on the DoT role as one of its youngest leaders and with no cabinet or government office experience beyond being mayor of South Bend, Indiana, where he grew up.

Many people in the US and elsewhere are still speculating on what Buttigieg will want to do with respect to aviation as DoT Secretary. In this timely discussion experts explore the first stages of the Buttigieg leadership and share their thoughts on what the priorities the newly appointed Secretary should undertake.

Moderator: International Aviation Law, Principal, Kenneth Quinn

Speakers:

  • Hyundai Advanced Air Mobility, Chief Policy Officer, Michael Whitaker

  • Association of Flight Attendants, International President, Sara Nelson

  • A4A, SVP Legislative and Regulatory Policy, Sharon Pinkerton

CAPA Live is the most sought-after monthly global aviation event. Taking place on the second Wednesday of each month, thousands of industry colleagues from across the globe tune in for their monthly dose of aviation and travel news, analysis, and in-depth interviews with industry leaders. Register here to be part of our growing community.

Transcript

Ken Quinn:

So welcome, everybody. This is Ken Quinn, International Aviation Law. I'm in Washington, D.C. We are very privileged, and I'm excited for this CAPA Live event one in a series every second Wednesday of the month, to have a really distinguished, experienced panel. We are joined by some longtime friends and colleagues, Michael Whitaker. I think I knew you, Mike, in the earliest days of when you were a humble lawyer at TWA.

Michael Whitaker:

It's been a long time.

Ken Quinn:

Yeah. Went from that to be head of Alliances and International Affairs at United Airlines. He's been CEO of a travel company in India. He was appointed Deputy Administrator of the Federal Aviation Administration here in the United States. And now, I believe, over to Hyundai and Air Mobility. Is that right, Mike?

Michael Whitaker:

That's right.

Ken Quinn:

Heading up Global Policy. So terrific. He's joining us from a snowy Vermont. Glad to have you.

Michael Whitaker:

Sure.

Ken Quinn:

Sharon Pinkerton, also someone I've known for a long time. A very distinguished background too. She's currently senior vice president of Legislative and Regulatory Affairs at A4A, the airline industry's congressional and lobbying arm here in Washington, D.C. Before that, she headed Policy and Planning International over at the U.S. FAA. And she was also a senior staffer in the House of Transportation and Infrastructure Committee with, I believe, it was Congressman Mica from Florida. Was that right, Sharon?

Sharon Pinkerton:

Right.

Ken Quinn:

And we're really happy to have Sara Nelson who's the international president of the Association of Flight Attendants-CWA. Sara is on her second, I think, four-year term there. Recently recovered COVID patient. So we're really happy to see you on the mandate. I think it was Keith Richard said, "I will be glad to be here glad to be anywhere."

Sara Nelson:

Exactly, Ken. Thank you.

Ken Quinn:

So look, we have just an extraordinary time in the aviation industry in the world. And, Sara, you represent 50,000 or so flight attendants, many of whom are without work, hopefully with some pay with Congress's support. But tell us about how the flight attendants in the airline industry from your perspective is doing now and how we are going to recover from this terrible time.

Sara Nelson:

Well, first and foremost, Ken, thank you for recognizing the people on the front lines. And I stay focused on that every single day. Over my shoulder is a picture of Paul Frischkorn, who was a friend of mine, who was also a longtime flight attendant and the first to die of coronavirus. So this has been in our workspace possibly longer than anyone else because of the nature of our work. And the virus is really the problem. The virus is what we have to eradicate and contain. We've got to get focused on that and we have to do things that are not just cosmetic when we do that, but actually do science-based efforts to get that out of our communities and out of our travel space.

Sara Nelson:

And that starts with making sure that everyone can get a vaccine and continuing to do the layers of security that we do in aviation, so that we can limit the risk of spread. But it has been a very trying time for flight attendants because, of course, the health crisis, that is the biggest health crisis that we've faced in over 100 years, has also been the biggest financial crisis in aviation ever. And if you take all of the previous crises in the airline industry, economic impact, and put them together, it does not even come close to the impact of this pandemic.

Sara Nelson:

We're still right in the middle of it. Although we're very happy that now we have an administration that is working on a plan to get rid of it. And also that we have had the attention of Congress to provide payroll support. We had a disruption from October to December, but we're working to make sure that when the program expires on March 31st, we actually have an extension to get us through the rest of this vaccination process and on the other side of the pandemic.

Ken Quinn:

And are you confident right now that the payroll extension is going to be enacted into law? And how does that work for your members, and how many of them are actually out of work not being paid? Or is everyone covered?

Sara Nelson:

So this covers everyone. The program is really... think about it as an alternative to unemployment. So it's much like the programs that you've seen in Europe where companies are given money from the government to keep people on payroll. And it's a really good solution because in a crisis, you want to have as many simple solutions as possible. So we have payroll systems in place at the airlines. Take, for example, United Airlines with 80,000 employees. If you had 80,000 employees coming to the government and saying, "I can't make rent, I can't make ends meet."

Sara Nelson:

Or you interface with one airline and you get the money to them, continue the payroll system, make sure that everyone is getting a paycheck, stay on their healthcare, which is an added benefit in the United States because that's not covered by the federal government. And we also keep the infrastructure of those airlines intact. So this program specifically, these are the key points of it. The government provided grant money to the airlines to pay only pay and benefits for the workers and to require that none of those workers could be laid off. It also says that there can be no reduction to the hourly rate.

Sara Nelson:

So we don't want to destroy good jobs in the process of this pandemic either. And it also says that service has to continue to all the communities that we were serving before so that we maintain that critical infrastructure. The benefit also of the program is that you keep people current, you keep the people, because the infrastructure of the airlines are the planes and routes, but it's also the people who work on those planes, and fly those planes, and take care of the passengers on those planes. So we're keeping all of that intact through the process.

Ken Quinn:

And, Sharon, are you comfortable with the federal response to the pandemic from a financial perspective? They've certainly have come to the aid, it seems, of airlines and many would argue more than any other government in the world. And kudos to you for your efforts to get the support from Congress.

Sharon Pinkerton:

Well, it's really been a joint effort, and we want to thank Sara for her leadership on the payroll support program. And she's done a great job, I think, outlining the benefits of the program and we're certainly strongly supportive of that continuing going forward. Because as you know, Ken, we had the worst year in our history last year. We lost $32 billion. And the beauty of the PSP program going really, it's a direct task through to our employees, which is fantastic. But to cope with the pandemic, carriers have had to do what I would call some pretty extreme cost cutting. And so we've done a lot of voluntary measures, early retirements, buyouts. So as an industry, had the passenger carriers have still shrunk by 20%.

Sharon Pinkerton:

We've shed 20% of our jobs over the last year. And like Sara said, I mean, these are good jobs. These are high paying jobs. So we really want to get to a place where we're really leaning forward and we are cautiously optimistic that with the vaccine, with continued PSP support, with all of the multi-layered measures that we put in place... Airlines we led the way on first requiring masks, then doing strict enforcement. Now we have a federal mandate, which I think is going to be critical in terms of the government's ability to enforce and assess penalties. That's really going to make a difference. But so we led on the mask measures.

Ken Quinn:

[crosstalk 00:08:43] workers that don't want to put on a mask. I know there was an initial disruption early on and you were encouraging strong FAA enforcement. And I know, Sara, you guys were as well. Is that still a problem?

Sharon Pinkerton:

Sadly it is. But I can tell you kudos again to the administration TFA on Friday announced that they're going to be assessing penalties from $250 to $1,500 for not wearing a mask at the airport. I think that really not having a mask requirement at airports was frankly a bit of a gap in the system. So I think it's critical now that that mandate is in place and it's being enforced. And FAA has a special enforcement program that they've announced as well. And they're doing a lot to educate passengers about federal penalties for not obeying crew instruction. So that's a critical part of this.

Ken Quinn:

And Sara touched on, it sounded like a condition of this payroll support system is to continued service to various communities. Is that wise because that's going to cause you to continue to lose millions of dollars a day. Obviously, traffic has just dropped through. We don't have it in many of these smaller communities. We don't even have it to bigger communities like New York City. So isn't that kind of a contradiction in goals?

Sharon Pinkerton:

No, it is, but we certainly have been supportive of some type of minimum level of service. I think it's critical that as policy makers look at how to interpret that, that they, for example, what the previous administration landed on was ensuring that at least one carrier provided service. It doesn't necessarily have to be every carrier providing service, but that there is some service to some of these smaller communities. It's important, as Sara mentioned, carriers are very involved in distribution of the vaccine. We need to be able to maintain a basic network in order to continue to do that.

Ken Quinn:

And, Mike, are you concerned that, especially maybe your old hat as a deputy administrator of the FAA, Sharon touched upon in terms of currency. We have a lot of airplanes that are parked on the ground in Arizona. We have a lot of aircraft that are flying empty in terms of weight and balance. We have a lot of, I think, Sharon said 25% of employees are gone from the industry through buyouts, early outs, layoffs.

Ken Quinn:

And so the experience factor, the recency, currency, is that a looming threat to the industry that we need to concerned about? And, of course, this is not unique to the United States at all, right? It's all over the world. And some of these places don't have large amount of simulators, and a large payroll, and frankly, a lot of the governmental support to keep people flying. What do you think about that, Mike?

Michael Whitaker:

I think Sara and Sharon have correctly identified the priorities. We have to tackle the virus. But we also need to maintain the system and keep it intact. So as we get past this, the system is able to reboot and provide service. Certainly, currency is a big part of that, but it just needs to be figured into the solution for how we get through this.

Michael Whitaker:

And I think the airlines pretty quickly recognized they need to be in survival mode. I don't think anyone realized this was going to go on as long as it's gone on. But eventually, we're going to get out of this. So part of that planning and part of the aid to the industry has to be focused on keeping it intact so as we come out of this, it can go back and then let the market forces take over and see where it goes from there.

Ken Quinn:

And in your kind of new niche area, things were going very well, right? You had airlines making a lot of money, a lot of employment, and exciting ideas about urban air mobility. A lot of flying cars on the horizon, people thought. Has that dried up? Is that entrepreneurial spirit still alive? We have also seen some of the big players exit from some of their ambitious plans using drones. I've been involved in a number of them, but folks like Facebook and Alphabet are pulling out. They're pulling their stakes and they're leaving it to other companies, perhaps like Hyundai.

Michael Whitaker:

I think if you could go back a year where you had Boeing, you had Airbus, you had GE that was in this space. They've all got bigger issues to deal with now. So you've had a lot of shakeout from COVID, but you also have, by some counts, 300 companies around the world that are building electric vertical takeoff and landing vehicles, flying cars. That's a lot of resources that are going into this space. The battery technology is developing. It's not quite where it needs to be, but-

Ken Quinn:

[crosstalk 00:14:14] I mean, battery technology both for cars, and for aircraft, and urban air mobility seems key. And it's a very difficult thing. I was involved in 787 grounding. Battery technology is evolving at a very fast pace and a lot of speculative investment going on in electric vehicles. Is it really going to pan out? And when is this going to become a reality?

Michael Whitaker:

Well, I think if you look at the car industry, it's actually indicative of how this will play out. So we started with hybrids, they were somewhat of a fringe feature and then move to full electric. Now, every car manufacturer has a selection of electric and hybrid vehicles. And we're moving pretty quickly to all electric. With airplanes, you can't just pile a bunch of weight on them and expect them to fly.

Michael Whitaker:

So it's very different than cars, but it's moving in the right direction. I personally don't think it's going to be darkening our skies in the next five years, but I think if you go out 10, 15, 20 years, certainly this is going to be a very, very disruptive industry with costs that will be dramatically lower than existing aircraft.

Michael Whitaker:

The very few moving parts in electric motors, much simpler to design, much simpler to maintain. So once that develops, it has the potential to disrupt an industry that's been on a course for many, many decades, the hub and spoke system, the larger the aircraft the lower the seat mile cost, all of that is sort of up in the air, I think, going forward, but it's not going to happen very quickly.

Ken Quinn:

Are you worried though that the battery technology especially that can be very heavy and hot? Those two things are not really good for aircraft flying at 500 miles an hour at 30,000 feet?

Michael Whitaker:

Yeah. The hot parts are pretty manageable. It's the heavy that's the real issue right now. It's just really very little margin there for getting the kind of range. And you see it with cars. If you bought an electric car, range anxiety is a real issue, right? You can't go more than 200 miles. You're pretty uncomfortable with that. Right now with electric vehicles, you're looking at very short range and that's going to develop over time. So that really is, I think, the long pole in the tent here.

Ken Quinn:

So the disruptive technology is going to come in. Sara, with the flight attendants now, are you comfortable in the cabin? You have the HEPA filters, you have mask wearing, you have disinfectant, you have cleaning. Are your members truly comfortable? And we point many of us, the flight safety foundation where I'm general counsel included, have pointed to the safety in aircraft. Are you seeing numbers consistent with that message? Or are your members concerned or alarmed?

Sara Nelson:

Well, I'll tell you. I think that we had a leg up as flight attendants going into this pandemic because we worked so hard to get OSHA on our planes 10 years ago, and we got blood-borne pathogens training. And so we were better armed than the general public in how to protect ourselves and limit the risk of the spread of the virus. So flight attendants come to the cabin with that information and do a good job of taking care of themselves. Are we comfortable? We're comfortable when all of the layers of safety exists.

Sara Nelson:

So, for example, the pushback on the masks. So people who are not wearing those, that makes us very, very uncomfortable because we know that not only does that put us at greater risk, but the people that were charged with taking care of are at greater risk. So I appreciate the way that the airline industry has worked with us on putting these layers of safety in place, the mask policies, and enforcement, and announcements, and helping people understand how to wear the mask, and also how to limit the risk when they're taking a sip of water or something.

Sara Nelson:

That's all really important. The HEPA filtration, of course, is important. The cleaning on board, we've never seen our aircraft so clean. We're very happy about that. And also we have worked with our airlines on how to limit contact with other passengers. So service procedures, single contact service is very important. I will tell you that it is really critical that all of those things are working together.

Sara Nelson:

And then we do have a level of comfort, and I think it's important for people to know that when all of those safety layers are in place, air travel is one of the most controlled environments outside of your home. And so there is a comfort there. I think Sharon noted earlier that there wasn't real enforcement on our airports, and that was a real concern. But we also have concerns as flight attendants because this is community spread.

Sara Nelson:

And so not only are we on our airplanes, but we're transiting on mass transit to get to the airport, we're going to and from hotels, we're going to restaurants in different states. And when those sanitation requirements are not the same across the board, or the mask policies are not the same across the board, that does put us at higher risk just in the process of transiting through our work.

Ken Quinn:

And are you comfortable enough to lift international travel bans? And I think, Sharon, I would ask the same question of you. Are we ready given these safety precautions and trusting of other carriers, foreign carriers coming to the United States to lift travel bans? And how do we get through this kind of myriad of travel bans, quarantines, testing requirements to normalize travel, to bring what's back in seats? Sara, first to you.

Sara Nelson:

Well, first of all, I've just been through coronavirus myself. So I know what brain fog is. And I think that there's a lot of pandemic fatigue. But the United States has traditionally been a leader in international aviation. And when we're coordinating with other countries and coordinating our procedures to make sure that we're limiting that risk and everyone is participating in the same way, and we can manage that and make sure of that, then I think that we can open our borders.

Sara Nelson:

We've shown throughout aviation that we can work with other countries in this way to have a standardized process across aviation that keeps us safe. So it's entirely possible. And I think that this administration is capable of that and working with the industry and all the stakeholders on it. And when we do that, we absolutely can get to a place where we are opening those borders and continuing that international travel.

Ken Quinn:

Sharon, what's your take on that? Are we ready to reopen our borders? Are we ready to facilitate international travel in a more uniform way?

Sharon Pinkerton:

Well, I definitely agree with Sara. I think this administration is starting to lead from the federal perspective as opposed to leaving everything to the state. And I think that is really, really important in this effort. And one of the things that has recently been implemented is an international testing requirement. And so what we have said is we believe that testing is the way to open up borders and put it into quarantines.

Sharon Pinkerton:

And when you take it in conjunction with all of these other measures that we've talked about, we absolutely think that that is something that can be used by the administration to lift travel restrictions. Listen, we're just not seeing transmission in the air travel corridor. That's the point. And carriers have done a lot of different demonstrations. We saw United's Newark to London, Delta has done Atlanta to Rome. All of these pilot programs have demonstrated that there are very few people that are showing up and testing negative.

Sharon Pinkerton:

Travel as a whole, travelers, tend to be less likely to have COVID number one. But secondly, providing that layer of protection with the test, we think is a way to lift those borders. And as Sara said, importantly, to start to lead the world in the discussion again about how to lift travel restrictions, because as you know, well, domestic travel has been hit hard where we're only 35% or 40% of what we were a year ago. International travels has been decimated. We're still down at 15% of what we were. So it's not sustainable.

Ken Quinn:

Let's shift for a second in limited time that we have. Someone told me there was a presidential election, and there was a pretty interesting outcome. I think Sara is very excited about that. We've seen a lot of posts pro labor moving into the administration. We have a new, for example, assistant secretary for Aviation International Affairs from the Environmental Defense Fund.

Ken Quinn:

We've heard the new secretary, talk about climate change a lot, not necessarily always in the wheelhouse of a DOT, U.S. DOT secretary, but seems to be very focused on. He's a presidential candidate. So a very ambitious person. So, Mike, is this going to be good for the industry to have a push for higher wages, a push for more rights for workers, a push for climate change to an airline industry that's losing millions of dollars?

Michael Whitaker:

Yeah.

Ken Quinn:

All right. I love that answer.

Michael Whitaker:

I mean, I'm pretty excited about the climate initiatives that we've heard so far. Really, anywhere else in the world, this isn't an issue for debate. This is a very serious problem that needs to be handled by all of government. And I think we're going to start to see that and hopefully start to see it more as a bipartisan issue. In transportation, there are so many ways you can spend money from bike paths to electric energy.

Michael Whitaker:

And I think given the fact that we're going to be looking, I think, at some infrastructure programs going forward to boost the economy, it's really an opportunity to invest in a more environmentally conscious way than has been done in the past. Again, that includes stimulating electric vehicles of all kinds and investing in some of the changes, I think, that we've already seen in COVID as far as how people move through cities and want to build on different possibilities for transportation, including things like bicycles. So I think it's a pretty exciting time and sort of the right moment to have that pivot.

Ken Quinn:

Sharon, is APRA as excited in your membership about the new administration and the changes on the rise and particularly on climate change and the IKO agenda in Montreal.

Sharon Pinkerton:

Yeah. In fact we are. I've worked with Annie Petsonk. Remember being up in Montreal with her when COSIA was adopted by the United States. So it's great to have someone who is that familiar with aviation's commitment on the climate issues, familiar and knowledgeable. So climate is definitely one of our top three priorities moving forward. We've done a lot to work with the administration to try to get further improvements on next gen and operations. We've invested in new planes that are more fuel-efficient, winglets, et cetera. But probably one of the most exciting developments we think is sustainable aviation fuels.

Sharon Pinkerton:

And we've been working on this since 2016. But we recently got a renewed interest on Capitol Hill for potential for a blender's tax credit. And so I think there are no silver bullets and especially when, frankly, aviation has done such a good job so far becoming more fuel efficient. Those efficiency gains become harder and harder, but I do think the staff issue could become a game changer for us. And we're excited to have an environment in which those types of ideas are going to be supported.

Ken Quinn:

Sara, where do you see the major differences then between a Trump administration and a Biden administration in the aviation industry? You got to be pretty stoked about their support for unions, and collective bargaining, and a higher minimum wage, all those things. I know you're also on the executive council at the AFL-CIO. It's a big agenda item for them.

Sara Nelson:

Well, look, I think that in order to do anything, in order to move forward on any kind of innovation and to tackle climate, what we have to remember is where we've gotten stuck is when you leave the people behind and leave the workers behind. And so they're very skeptical about any changes because there hasn't been a focus on workers and maintaining good jobs. So the Biden administration, pairing those two things together is really what's going to make this successful.

Sara Nelson:

And there's no reason to be worried about that when you have an administration that is looking at innovation in a way that is going to make people's lives better. The truth is that if we don't tackle climate change, that's going to be the real job killer because we won't have airplanes that can even take off. We're going to get so hot, for example. We've had flight attendants bouncing around the cabin with increased turbulence. So we're excited about this. We think that the focus on people and good jobs is going to actually help move that innovation forward.

Ken Quinn:

And one of the things about good jobs too, is really needed infrastructure development, right? And it seems like Biden is very committed to that. The new secretary is very committed to that. Talked about it on the campaign trail. Billions of dollars needed and involved in a big JFK project, but where's the money going to come from now?

Ken Quinn:

Are we worried that the financial markets are going to close up on not lend and their big partners, the airlines, are laying off people now? They really don't want to talk about new terminals. They don't want to talk about new runways. They want to talk about survival and government help to them. Not airports spending more money. Sharon, what are your thoughts on that? Where's the money going to come from?

Sharon Pinkerton:

Yeah, well today I think that the approach has been some mix of the trust fund and the general fund. And I think that that commitment needs to be continued quite frankly. I would take a little bit of issue. I think that carriers have worked pretty well with airports in terms of just trying to adjust schedules with respect to these big projects, but our support for JFK and the changes that would wordy it, et cetera, is undiminished.

Sharon Pinkerton:

We're still supporting. The schedule may have changed a bit. But I think that there is, and always have been, and will continue to be a lot of capital available for these projects. And I do think we need to be prudent about the investments. It's not just the air side investments that need to be made, but frankly, our air traffic control system.

Sharon Pinkerton:

If NATCA were here, Paul Rinaldi would tell you our air traffic control system needs some investment. The facilities need to be upgraded. And we need to, I think, do a better job on implementing some of these new technologies continues to send approach, et cetera. Things that are not just good infrastructure, but also good for the environment.

Ken Quinn:

Mike, where's the doh going to come from though, for things like next gen and air traffic modernization. Those are typically not privately funded projects. You could have a car isle putting in a lot of money for a new terminal. That's more private funding, but with the feds spending trillions of dollars on COVID relief, which remains the top priority of the administration. How's these stuff going to get funded? And are aren't you worried that aviation will be left behind?

Michael Whitaker:

Well, I don't really think you have a choice but to fund a lot of these infrastructure projects, because I think we haven't quite realized how badly the economy has been hit by this pandemic. So in some cases, this is just changing your priorities. So instead of spending billions of dollars subsidizing fossil fuel businesses, you take that money and you put it toward a different type of energy, and you take money and put it toward accelerating programs in the air traffic control system that will allow more efficient and thus environmentally friendly operations. You don't want airplanes circling around in the sky waiting to land. So I think it's really a question of priorities and the money has got to be spent or the economy's not going to recover. So I think it just needs to be part of the program.

Ken Quinn:

It seems now deputy secretary, Polly Trottenberg, who has vast experience in federal government and also local government transportation needs. And so are you impressed so far with the team they're assembling in D.C. to deal with transportation overall?

Michael Whitaker:

Well, I would start by saying I think I've never seen an administration move so quickly to populate these key roles. I mean, that's really been a very impressive thing to watch. A lot of people who we've seen before, so a lot of experience who can come in there and know how things work and get things moving very quickly. So Polly and the 30 other people that were appointed on Day 1, I think it's been a really strong start and allows you to just not miss a beat and get to work on things that need to be done really quickly.

Ken Quinn:

Yeah. I think a lot of folks were concerned that DOT was a bit home alone with a lot of these jobs remaining vacant for a very long period of time. And now we have people like Bradman's, an experienced aviation person. We have great diversity and inclusion. It seems in the political appointees in the Biden administration overall, including at the department. Sara, is that something that you folks are happy with?

Sara Nelson:

Yes, definitely. And we need these projects up and running. I'm thinking about the infrastructure work. Think about the kind of good jobs that you're creating by modernizing our ATC program and how we're all going to benefit from that. And at the end of the day, we know that if we have good jobs, then we have people who can afford to buy airplane tickets. It's as simple as that. And you have money that's pumped back into cities and states to maintain these programs locally. So these investments are really going to benefit the larger economy and continue to promote good jobs that allow us to spend back into the economy as well.

Ken Quinn:

Yeah. We're nearing the end, but I want to focus too on the global situation which CAPA Live does. Crises are terrible things to waste, right? And with carriers collapsing, is there not a greater need to take advantage of this opportunity to facilitate consolidation? To inject more health into the global airline industry. And aren't U.S. carriers better poised to take advantage of that with their global reach and sophistication to be able to acquire other carriers? Might that cause labor unions to take a different stance, for example, on foreign ownership and control to facilitate inter country mergers and consolidation, Sara.

Sara Nelson:

Well, I think that we want to maintain our foreign ownership and control laws here in the U.S. to make sure that our jobs are not outsourced. I mean, if you didn't have those, you could literally hire every single pilot and flight attendant outside of the United States. So that is an existential threat if we didn't maintain that here in the United States. But one thing I think that's very, very important as people are moving straight to what is the market determining now because of coronavirus? And what we have to remember is that this has been a massive disruptor.

Sara Nelson:

We have to shore up the system right now and then the market forces will take over and there probably will be some consolidation, and where that makes sense, we would absolutely support that. But I think that we have to be a little bit careful about moving to that too quickly while we're still right in the middle of the pandemic and really just trying to shore up the infrastructure and the jobs right now to get through this and to get to the other side where the market can really start to take place again, start to be at play again.

Ken Quinn:

Yeah. Michael, what do you think about that? Because you were kind of alliances for United. Sara's also United, a great carrier that is probably well positioned if the laws permit it to acquire companies. And Alliance has kind of tiptoed to the water's edge and try to do as much as you can without anti-trust immunity and about things that really are seamless and branding. Is it time to use this crisis as an opportunity to fundamentally change the merger outlook for airlines?

Michael Whitaker:

I used to know the answer to that question. I'm not sure I do anymore. When I was at United, I spent a lot of time advocating to remove those restrictions so that the airlines could become like any other business. But I think we've already sort of become too big to fail in some respects. So by becoming bigger, I'm not sure that really helps us. And I know that this is sort of a once in a hundred years crisis, but so it was the last one in 2009. And so it was 9/11.

Michael Whitaker:

And we've been through a number of these once in a hundred years crises in the last 30 years. And every time the airlines have to receive federal aid. So I'm not sure we want to expand the amount of federal aid that we have to pay out in this situation. So I think it's a worthwhile question to look at, but I'm not sure I come down in a solidly on opening that up as I used to.

Ken Quinn:

Interesting. Sharon, do you have a thought on that? And, Sharon, also I'd like you to address, if you can, the safety side and the certification side. We see IASA perhaps saying we're going to be putting in the FAA certification under far closer review, given what happened with the 737 MAX. And are you troubled by that development? But tell us first about opportunities for merger and consolidation, and then, if you can-

Sharon Pinkerton:

Yeah. Ken, I think it's obviously an interesting question from a policy and maybe more of an academic perspective. I mean, the goals of changing foreign ownership are usually spelled out as access to capital. And one thing that I think is very interesting about the way U.S. carriers have handled this crisis is they've been very nimble, number one, in cutting costs, but also in accessing capital. Our liquidity right now, we got $65 billion of cash and liquid assets. So access to capital is relatively easy right now, interest rates remain low.

Sharon Pinkerton:

So as a practical matter, it's just not something carriers are discussing. [crosstalk 00:37:54]. Definitely troubled about that development. And, again, I think we are certainly going to be advocating for this administration to kind of lead and play more of a leading role at IKO and even in bilateral relationships and multilateral relationships with the Europeans, et cetera. We've just got to regain our credibility. And I think it can be done.

Ken Quinn:

Sara, when are we getting back to whatever normal is? When are we going to see passenger levels at the pre-pandemic levels?

Sara Nelson:

Well, I think if you look at 100 years ago, right after the Spanish flu, what happened, the roaring '20s. What we're hearing from people is that as soon as they have the safety go ahead, as soon as they have the all clear, they are ready to go. So I think conventional wisdom right now is that we're hopeful that we're going to be in a place where we're starting to get back to that clearance by fall. And we're going to see that comeback, I think, come roaring back actually very quickly after that.

Ken Quinn:

Well, leisure and on the business, because a lot of people are worried about systemic changes in travel.

Sara Nelson:

Sure. So on the business side, let's recognize that business travel usually happens because people want to be together to create those relationships and to really expand their business where we talk about conventions that happen on the business side. None of that has been happening. That will all come back, and that will come back as there's places to go to.

Sara Nelson:

So we also require the rest of the hospitality and travel industry to be in place as well so that people have something to travel to. It's all connected. And we're going to need that all clear on coronavirus in order to fully get that back up and running again. But that's directly connected to that business travel as well.

Ken Quinn:

On that happy note, I want to thank Sara Nelson, Sharon Pinkerton, Michael Whitaker for a wonderful discussion. I hope you all enjoyed it too. Please enjoy CAPA Live events second Wednesday of every month. More fantastic conversations like this are taking place. And I can't wait to have that convention and see all of you in person. God bless. Sara, we're very happy you're regaining your health, and safety, and health to everyone. God bless. Take care. Bye-bye.

Sharon Pinkerton:

Take care.

Sara Nelson:

Thank you. Bye.

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