Welcome to Travel Again presents the weekly travel Roundup covering the headwinds and Tailwinds impacting the business of travel. Please welcome our hosts Mike McCormick and Ed Silver.
Hello Mike, how you doing?
Good Ed, how you doing, man? I see you’re in all Phillies gear today. What’s going on here?
Well, as you know, the Phillies clinched the NL East last night. We’re playoff bound and working to have the best record in baseball over this last week, so pretty exciting times. I know when our guest comes on, we can banter about baseball for the first half hour and then cover, I don’t know, something about the airline industry. I don’t know. But yeah, it’s a good time. Football’s winding up and baseball’s in full bloom. It can’t get any better.
It really is fantastic. The Red October will be in full bloom for sure. Mike, it’s season two, episode two of the Travel Again podcast. Last week we had a fantastic guest with Tobias Ragge. That interview is up. Should anyone have missed it, please go check that out. It was a great one. And speaking of great interviews, we have our first repeat guest on the podcast today.
Yeah, we haven’t had that before. Our first two-timer.
Yeah, it’s like Saturday Night Live when they have the five-time jacket, right? If he gets to five, we’ll get him a jacket, but he’s got a ways to go. I think it’ll be a Phillies jacket, of course, but not sure he’ll wear that. But all good. Well, what do you say we get rolling with episode two, Mike?
Let’s dive in.
All right, onto the news, Mike. We’re going to start out today with hotel strikes. New hotel strikes in San Francisco are part of a larger labor action that could involve up to 40,000 US hotel workers by year-end. This was reported in a number of places. I’ve got the Skift article up. Mike, give some context here. What is going on?
Well, we covered a little bit last week or last episode. It is, I guess, not surprising, but at the same time, this is the first time we’ve really seen this kind of really coordinated hotel strike and labor-related actions. The airline industry was somewhat used to them, right? They come and they go as pilots, flight attendants, etc., do their thing. But we got a different environment right now. You’ve got striking happening at Boeing. You got hotel workers that are really looking to get conditions for them restored back to kind of pre-pandemic work rules and looking, of course, for a little better economic situation as well. But it’s one that again, these are things that have a real dramatic impact on the industry and things we have to pay attention to as people who work in and around the industry. So, we’ll be paying close attention to see how it all comes together and how it works out. But certainly, this is not an isolated labor situation. It’s growing, and more markets are being impacted as we go.
Mike, any connection with these strikes that we’re seeing with the current political climate as the elections get closer, or is this unrelated?
It’s hard to say. I think some of it’s just timing because of things. The economy is kind of leveling out in a sense in a good way in terms of there being a more stable economy now. Inflation has gotten… the inflationary factors are less impactful now. I mean, we’re still seeing a higher cost of living than we’re used to, but that’s again some of the just the things that happen in the economy with the gives and takes as we recover through the pandemic. So, I think it’s more about the timing of the recovery, the pandemic, and the stability of the economy than it is the election per se. But who knows whether it will become an election issue or topic or not. We’ll see.
Okay, Mike. On to our next article, it is about Canadian airlines. Canadian airlines will be billed $790 per customer complaint resolved, the transportation agency proposes. Some speculate the Canadian Transportation Agency’s proposed fees would encourage airlines to drag out customer complaints rather than settle them early. Got an article from the Globe and Mail. Give some context here. What’s going on?
Well, I think on the surface, as always, I think smart legislation and/or policies, governmental policies related to protecting consumers, is a good thing. We’ve talked about this certainly as it relates to the DOT and the airline industry. I keep going back to the rule that we really were a part of creating and very close to, which is the three-hour tarmac rule for the airlines here in the states. It was a very good policy. It was fair. It was equally applied across the board for all airlines. So, ultimately, it was good for the consumer and it’s one where you take some of these issues and you make them… basically take them out of the hands of it being a competitive issue and really put policies in place that help the consumer and give them protection.
This one doesn’t seem to really fit that description very well. I think it’s overreach. It looks like it’s a bit of a misguided attempt to create, let’s say, a more favorable consumer protection policy as it relates to airline complaints. Again, I think the mission is worthy, but you have to be really careful about the implications and the unintended consequences of the policies you create. This one seems kind of going into that category of being overreach and one that needs to be rethought. Now again, it looked like it was more of a proposal and it wasn’t necessarily something that’s being put in, but I think it’s one, as an industry, we have to pay really close attention to. We really rely then on our, certainly the lobbying efforts by the various nonprofit association groups primarily to kind of stand up for the industry and say, “No,” or “Maybe there’s a better way.” So, I think this one falls into that category.
Okay. Last article today, we’re going to cover some airlines. AA is in talks with Citigroup. American Airlines in talks to pick Citigroup over rival bank Barclays for crucial credit card deals, sources say. American has been working with banks and card networks on a new deal with the aim of consolidating its business with a single issuer, sources tell CNBC. So, what’s going on here, and maybe our guest can come in on this one as well?
Well, look, we didn’t pick this one because of the specific issue or report about American Airlines and their specific negotiations. It was more what struck us and what we talked about and what I really think is that the underlying issue here is these types of programs involving the airline points, their card, co-branded card opportunities that they have, are a big driver of the economics of the industry. But not just for the airlines themselves or the hotels and car companies, because everybody has those programs. And for the banks involved, it’s the downstream also impact, positive impact, that these programs have on generating points. Consumers then go use those points, but then they spend when they’re in market. It’s the whole rippling effect positively of what travel and tourism does. But the key of this is that those points and those earned points in various ways, including all the co-branded card applications, really drive that engine.
So, this in and of itself, it’s like, yeah, that’s a negotiation between vendors and they have to make those decisions. But the fact that it’s even being reported on tells you how critical it is, not just to American Airlines’ economics, but how it impacts the whole industry. So, anything that is going to ultimately have a negative impact on that whole formula is something again we just always keep an eye on those situations. I know there’ve been, for another day, right, there’ve been different forms of legislation that have been proposed, different things that would have a negative impact on that whole point system. And we have to be really careful again about the not the intention but the unintended consequences of what could be done if these programs don’t continue in earnest.
Okay, thanks for that perspective, Mike. And we will be right back with our guest.
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No, as always, a terrific product. And again, with the level of risk that’s out there as you travel, particularly internationally but really generally, the testimonials for use of this product are terrific. People need that level of support. And again, something that, I guess best case you’ll never need it, right? When you need it, you really need it. But it’s also reassurance for family members, too. When you have something like that, people know when you’re out on the road you have that level of support. And again, it’s a really terrific product at a price that is unbeatable in terms of what you pay. Even for their most upgraded version, it’s just… let’s just put it this way: all the streaming services you buy cost more than the cost of this by a long shot. So, it’s worth the investment for sure.
Okay, all right Mike. Now onto our guest. Please join me in welcoming Brett Snyder, CEO of Cranky Flyer. Brett is the president and chief airline dork of Cranky Flyer LLC. He’s had the airline bug since he was young. He just loved the complexity of the business and he’s been able to write about that since 2006. Today, his main focus is in his blog along with his Cranky Concierge air travel assistance service, Cranky Network Weekly competitive network analysis, and the Cranky Network Awards. We love his free spirit and voice about everything air and travel. Please join me in welcoming Brett Snyder.
Hello, hello Brett. I don’t want your jacket. You can keep it. It’s not… listen. Teal October, maybe? Teal always fun to say. The hunt for the Red October is always so much fun to say.
Ah, yeah, that’s fine. Look, you know, congratulations. You guys, maybe we’ll beat you again this year. It’ll be fun.
Ah, I know. Down, ouch. It was a tough game seven for you.
It was, yeah. So, we get a half an hour on baseball, you said, right?
Yeah, we start there. We’ll cover all the teams. We’ll do the analysis for the playoffs and then, you know, then maybe we’ll get around to something airline at the end.
All right, sounds good. Edit cut here.
So, well hey, I was really, really interested. I saw the photos online about your Cranky Dorkfest and the event. Tell us a little bit about that just before we dig into the airline world. I’m just curious, how did it get started? What made you want to do it? You had a nice showing for the event.
Yeah. Well, you know what, it started, and I never actually remember exactly which year it was, but was probably about 10 years ago, maybe 12 years ago, something like that. But it really started where I was just saying, “Hey, why don’t we meet up in person? If anyone wants to come hang out, go to the park across from In-N-Out at LAX, watch airplanes, eat burgers, talk shop.” And only a handful of people showed up the first time, and then it just sort of exploded.
And yeah, we get hundreds of people now. There’s multiple events. And now it’s turned into a whole weekend thing because we now make sure that we set the weekend with NYC Aviation. They have their SpotLAX thing, so all these people come out from the East Coast, too. And so they have Friday night and Saturday night and Sunday morning, they have all these different events. And mine still remains the old school like 11 to 1 at the park across from In-N-Out.
But now there’s also a morning event where LAX has opened up its ramp to go hang out. This year they even had a static display, had a couple airplanes we could climb on. So yeah, it’s a great weekend. It’s a lot of fun for most people. For me, it’s work, but it’s tough, man. Because we also do the raffle with the airlines where everyone gets a free raffle ticket and they give away models and some tickets and stuff like that. So, it’s exhausting to coordinate it all. And then of course there’s hundreds of people that I can talk to for 30 seconds a pop. So, fun, but very tiring. But it’s it’s really nice to have that chance to see the same people over and over every year. It’s a lot of fun.
That’s great. Well, hey look, good for you, man. And just again, fun things for the industry and for, like you said, people who have an appreciation for interest in aviation. Those are great. And I saw the kids, a bunch of kids running around too in the photos. It’s great for that too. It’s fascinating for them. But nothing beats going out in person and seeing things live.
Yeah, for sure. And LAX is such a great place to see just so many different airlines and different huge international carriers. I mean, look, it’s no Philly where you’re like, “Oh look, American!” And you’re like, “Oh wait, oh wait, no, it’s American again.” So, that’s the fun part about an LA… “Oh wait, that’s an old American plane!” Ah, okay, that’s right. Every so often you get like the retro plane and you’re like, “Cool!” But LAX every… it really is like an ideal spot. And we do it in September when the weather’s always going to be good for it. Like, there’s never… you’re never going to have like torrential downpours or anything like that. And this year was great. We had the nice marine layer in the morning, kept it cool, and you know, so that’s part of the fun.
That’s great. Well, so a little bit going on in the airline industry as always. I’ve got a laundry list. Maybe we’ll just throw at a topic and then we’ll kind of just go around about it. But maybe start with the Alaska-Hawaiian merger. It was approved. They’re going forward. Pros and cons, what are you thinking? What’s your view on the merger? Is that a good thing, or is it concerning?
I’ve been in favor of this one since before it happened, actually. Wrote something up with someone years ago with Courtney Miller, who’s my partner on Cranky Network Weekly. We wrote something up before talking about how this could be a really interesting merger. This is one where there’s not a ton of overlap. I mean, sure, you’ve got some West Coast-Hawaii where you have some overlap, but these are also markets where they were the only two competitors and then Southwest ended up coming into a lot of them when it launched its Hawaii service. So, in some of these smaller West Coast markets, it probably has too much capacity anyway. So this kind of gets it back to the two competitors it should have.
But at the same time, it just gives them a lot of opportunity. Hawaiian as a brand is great. They’re going to keep the separate brands, so we’ll see what they actually do with that. But it’s a good tourism, aspirational brand. It’s a nice… when you go on vacation, your vacation starts about five hours earlier if you’re flying from the West Coast because it’s when you get on the airplane, which is nice. And so Alaska can do something with that.
They can create huge opportunity for the people of Hawaii. Today, if you talk to people that live there, of course they fly Hawaiian Airlines because it’s Hawaiian Airlines, and especially inter-island, West Coast, whatever. But Hawaiian can’t get you to everywhere, and with Alaska now, it opens up much of the rest of the country. So, creates new opportunity there. They’ll join OneWorld now as well, so they’ll have that. So people who live in Hawaii, this should be good for them.
And then for Alaska, the question is, “All right, what do you do with these airplanes? Do you take those wide bodies to Seattle and do you take them to the East Coast so you have flatbeds from the West Coast?” There are a lot of things they can do with that. So, I think it’s good. I think that if you’re looking at it from a Hawaiian perspective, they have been dealt probably one of the toughest hands of anyone throughout the pandemic and beyond. They just keep getting hit by one thing after another. Even with the pandemic gone, you’ve got the Maui wildfires in Lahaina, and then you’ve got… the yen is so weak that all that Japan inbound traffic is just not there right now because it’s too expensive. So they just keep getting hit. And if you’ve got to be taken over, Alaska is the best option you could hope for because it’s an airline that already does the same type of thing in Alaska, in the state of Alaska, and understands the importance of that. So that’s how I feel about it.
Well, it’s all great perspective and I think, again, couldn’t agree more with any or all of it. I just even down to culturally, dealing with both airlines, it feels like a good match, a good alignment. I wasn’t really thinking it exactly the way you were, but now you say it too, it’s like it is kind of one of those: if they were going to go anywhere in terms of preserving the good parts of the airline and that kind of connection back to Hawaii, it’s definitely the best place. Because anybody else would have probably been more of absorbing the airline more than it is part of creating a CO, you know, a joint, all that, right? So 100%, 100%.
And I think you see this reflected: look at the political leaders in Hawaii. They are like, “Yeah, we… this is great, let’s do it.” You don’t see that with mergers very often. No, but they were all behind it. They are like, “This is great. This is going to be great for Hawaii and it’s going to be great for the state.” So, go figure when that happens. You know something is going okay.
Well, so then you referenced the competition that they have in terms of Southwest. Let’s head over there to… wow. I’d say maybe not that I didn’t see it coming, but I didn’t see it coming certainly maybe proactively with the chairman resigning. And now, seemingly, it’s not like anything is resolved. We are still waiting for the plan about where they are going to go and how they are going to address the issues that Elliott has been railing about.
Yeah, we don’t know. I mean, we know some of what they want to do. We know—I don’t know when you push this live—but we are two days before the investor day as we record this. So, we will know more maybe in a couple of days here. But yeah, they are trying to figure it out. I mean, I think the game for them, and I think the game for remaking the board and getting rid of Gary Kelly, is you are never going to make Elliott happy. Elliott is a shark. They come in and they are completely focused on the plan they have decided is what needs to happen. They don’t care about anything else.
The only thing that may change their mind is if Southwest stock does end up doing well without them, and then they can just sell it and move on. But I don’t think that’s happening tomorrow. This is a longer-term thing. So, if you are Southwest, you just have to figure out: what does everyone else that’s invested in me, what do all the other big investors want? Because Elliott can’t do anything on their own. So, if Southwest can make the rest of the investors happy, then Elliott can’t do anything unless they want to buy a majority share in the airline, which I’m not thinking is likely to happen with them. And so, I think that’s what we saw with the board stuff. We’re going to hear a lot more about that at investor day. It’s kind of tough to talk about it right now because we just aren’t on the other side of it yet.
But this is the kind of thing that I think we are going to really have to wait and see if they can appease everyone. I thought I saw something this morning saying Elliott is going to try and call a special meeting like as soon as next week or something. So, we should know pretty quickly where the rest of the investors stand if it does come to a vote. But yeah, what a mess.
Any predictions at all? Premium lounges coming for Southwest, anything like that?
Oh God, lounges? No, I can’t… I mean, that would be a “jump the shark” moment there. But for an airline like Southwest—I mean, look, if you have an international business class… we saw JetBlue just announced they are doing lounges, right? But they have Mint. This is an overarching product. I mean, for Southwest, that’s not something that would make sense for them. I don’t see how it would unless they dramatically change their entire strategy, which isn’t going to happen with the team that’s running it now.
It is a really tough one, right? Because all the things that worked for them over the years as the kind of contrarian choice and all that—as we know now in this environment and certainly with their footprint—it is not working anymore. Not the way, not relative to their peers. And so now, if you lose the culture and you lose the whole formula and you just become yet another… you become another American or another… then what, I guess?
Well, I think that’s what the current management team is trying to address. They are not like, “Let’s throw it all out.” They are like, “All right.” I think under Gary Kelly for two decades, you had someone who was too beholden to the past and wasn’t willing to make those changes and invest in the same way and all that. And the airline got behind. It wasn’t until COVID, the shock of COVID, that it really exposed everything as bare.
But you think about this—like I always think back to the Great Recession when Southwest did great. Well, yeah, they had these hedges in place before fuel spiked up and it masked their problems. And I remember writing about that at the time: like, this just masked their problems. It looks good now, but it doesn’t make them fix anything. And so, I think it was just a matter of time before it caught up. Now it has caught up, and the question is: can the existing management team modernize and change enough while also just fixing stuff that was neglected for so long?
You have… like, they talk about all the money they are investing in tech. Well, yeah, it’s because they spent way too long not investing in it. And they talk about all the money trying to fix the operation. Well, yeah, because the last COO let the operation go to hell. I mean, this is an airline with basic stuff. They are running it for a smaller airline, and you’ve got what, 750 airplanes, 800 airplanes, whatever it is that they’re going to get toward. You have to change things.
And so, a lot of it is fixing that, which doesn’t even really help you commercially and all that; you’ve just got to fix it. Then you’ve got to fix the commercial side. It is a very tall task, and now you’ve got Elliott breathing down your neck. So, it’s just a giant mess. And I have no idea if Bob Jordan is up to the task as CEO. I think you’ve got Andrew Watterson, who runs the operation and the commercial side. I like Andrew. I think he is good at this. But you can’t necessarily do everything you want because it is Southwest and you have to—you know, not completely… it’s a delicate balance to figure out how you deal with it. So, I don’t envy anyone in that position because I don’t think it changes quickly. It is going to be something of a slog, and Elliott doesn’t seem to have patience for that.
No, they are—to your point—they are just… it’s a hedge fund financial position. They don’t care about the culture. Their pitch to employees is, “You should be making more money on profit sharing,” because it’s all about the money. There is nothing about long-term value either. It is all about: for them, it’s “We just want to hit our share target price and then we want to get out and make money for our investors and be done, and we don’t care what the long-term impact is.” So, you know, and that’s fine. I mean, that is bad for Southwest, but as a business for Elliott, nothing wrong with them wanting to do that.
So, are we going to do the Wall Street Gordon Gekko flying now? “Greed is good.” A little Blue Star Airlines going on here?
All right, so moving on to… you referenced another airline that is doing a remake, which is JetBlue. Adding international, adding lounges, adding a new international product, which I’ve heard mixed reviews about. Seemingly doing the good… the first things they’re doing, what they’ve been doing, seem to have been working to some degree. But again, back to longer term: what’s the outlook for JetBlue?
Yeah, that’s the billion-dollar question, I guess, is where we are now. I mean, JetBlue has done a lot of bad, not smart stuff over the last few years, and there is a reason that they don’t have that CEO anymore. But they were so focused on “We have to either become a business airline with American and New York and Boston, or we have to go leisure by buying Spirit.” Or, “Oh yes, we need to go to Europe,” which… that’s like a rounding error at the end and it just creates this whole extra mess you have to deal with. And then we’ve got LA, which we couldn’t be bothered to get out of. And we’re going to try Philly at one point during the pandemic, and Raleigh Durham, and who knows—like just whatever. We’re all over the place. And they can’t decide what they want to do and everything just sucks. And Delta starts passing them in Boston because they take their eye off the ball there and all that.
So now you’ve got the new management team which, of course, Joanna was president under Robin, but it is pretty clear that she didn’t have too much leverage there because she cleaned house and made changes pretty quickly. As soon as she got the keys there, it was hours and days, not… you know. And then you’ve got Marty St. George coming back. You’ve got all—Jamie Perry came back to travel products. Daniel Shurz came over from Frontier. You’ve got all these people coming in with ideas. And they’ve done a lot, and already the outlook is better than what it was.
But what they’ve done is said, “Okay, we’ve got to go back and put more into Boston again because we already blew that.” We’ve got to fix New York up because they had kind of reoriented for the Northeast Alliance which can’t happen, so now we’ve got to fix that up. And then we’ve got to go back and focus on Fort Lauderdale. Orlando has pulled back a little bit. But… fix San Juan; they had let the ULCCs eat their lunch there, they are trying to come back in. Get rid of the West Coast—great, that’s fine. But then where is the growth once you fix it all and you say, “We are a Northeast and Florida/San Juan airline”? Okay, but then what? That’s other international markets, maybe, where I don’t know. It’s tough.
I don’t know that anyone has a good answer for that, even the really smart people running the place right now. But it could very well be: “We’ve got enough to keep us busy for a few years, and we just have to keep our eyes open and be ready to act if something happens.” I mean, look, if Spirit goes under, there is your next opportunity is to roll in there. Right. So you’ve just got to keep yourself nimble and be ready to pounce, and in the meantime just keep focusing on the stuff that is going to make you money. But I don’t know that there’s an obvious path forward.
Well, and then now that’s a good segue into Spirit/Frontier. What is the outlook there? Are they going to… is Spirit going to make it, or are they teetering on the brink?
Yeah, I mean, Spirit is in the toughest place because they just have a lot of debt coming due and then they’ve got these… you know, that the credit card holdback could be a problem. They just got an extra month reprieve, so they are working hard on trying to refinance the debt and get everything done. But it is hard to know how that’s going to come out. I mean, they are not doing well. They are losing a ton of money. They are not growing, so their costs are going to probably keep climbing as they figure this out. It remains to be seen what happens there. And it—I mean look, if they go away, a lot of airlines are happy. Oh yeah, it’s great for Frontier, it’s great for JetBlue. They will backfill that in like about 10 seconds. Gladly. Take the airplanes too while you are at it.
In a funny way, stepping back from the specific companies, but in a lot of ways maybe it’s—maybe it’s the best in terms of the health of the US airline industry. It might be the best outcome.
It’s possible. I mean, there is the argument to be made of Frontier and Spirit merging and let them deal with that, but I don’t know that you could get that through. Maybe you could with Spirit on death’s door; hard to say. But in the ULCC space, I mean you have two airlines that are basically now copying each other with the bundles they are selling. Everything is pretty similar. A few changes—Spirit has the Big Front Seat, Frontier doesn’t—but ultimately you are looking at the same kind of deal here. And at best there’s probably a need for one of those to exist.
So could it be merger, could it be failure? It could be any of those things. It is probably the debt holders that will decide the fate there. But Frontier is in better shape financially. They can last longer. They’ve been crowing about how everything is great right now, but that’s kind of their job. So I don’t believe anything yet. They’ve got some time to prove that they’re able to actually make things work the way they’re supposed to work. Who knows? We’ll see where this ends.
One thing—I mean just in general—I’m always a bit confused about when these various combinations get declined. You referenced JetBlue/American and their attempt at doing the alliance, the various combinations involving Spirit… it just to me like it’s a frustrating thing. Because look, I feel like with the policymaking, once you did the first Northwest/Delta merger and then you did United and Continental and you started… the dominoes start falling. It’s like: how do you at this point say, “Oh no, not now, we can’t”? Because really, you are talking about… there is only so much competition you can have given the overall framework of how everything is put in place. It just seems to me a little bit of like… I don’t get the… when you say it’s going to hinder competition, I don’t see how. I mean, I think if anything you are trying to prop up some decent combinations that are going to allow competition beyond the Big Three airlines. I mean, or four.
Well, I thought that about JetBlue/American in New York. And the only reason I really liked that was because you have finite space. They have failed New York. The infrastructure is ridiculous. There is a need for more and it’s full at the end, and Stewart doesn’t count. So anything you can do to create a more level playing field between the carriers that have stuff, then that’s good because there is no real opportunity for them to do it on their own.
But elsewhere, I understand it. I think the real problem that we’re running into now is that you have the big guys that only make money because of their insanely rich credit card deals. And you have the little guys that are probably similarly unprofitable to the big guys in terms of what they make from airline operations. But Delta has got six billion dollars of AMEX that it’s rolling in, and United has got whatever Chase, and American is working on their new deal now as you guys were talking about earlier, and we’ll see what that is.
But it doesn’t matter if you’re JetBlue alone or if you’re JetBlue and Spirit, you are never getting the kind of economics that the really big guys get. And so no matter what, your arm is tied behind your back. And then what? That really is what creates the “haves” and “have-nots” here. I don’t think you necessarily need these mergers… and I know what you’re saying: once you’ve let one, you have to let them all. But I don’t think that’s necessarily the case. But there’s no equal playing field that’s possible because no one wants to pay for the Spirit credit card deal the same way they want to pay for the Delta credit card deal. It’s just impossible, and you can’t make that up on selling extra legroom or something. It helps, but it’s just not the same thing.
Well, so with the majors between Delta, United, American… anything of substance to report right now? It has been… other than the CrowdStrike/Delta mess. But I mean just in terms of the industry, it seems like American has been strangely quiet. I guess they wanted some alone time.
Yeah, they’re licking their wounds right now. That’s what we talked about the whole episode last time: our friend Vasu. I mean, look, you can say what you want about Vasu, but Vasu was energetic and prone to action. The rest of American is none of that. And so you’ve got American now just trying to fix the pieces, but there is no engine driving that thing. It was Scott Kirby, then it was Vasu, now there is no engine. And so, I don’t know where they go. They’re just kind of circling the wagons a little bit right now and trying to figure out what’s next, but they’ve been awfully quiet publicly.
Given again, maybe in a different way, I’m just wondering how long until there’s more pressure on them both in terms of share price and everything, but just on “where is the plan?” because there… hopefully they’re putting one together, but who is going to be the face of that plan? How are they going to capture the attention of the industry, of consumers? I mean, what business people like… the bread and butter… what are you going to do for them that’s going to make it…
Well, I mean right now, I think how they’re capturing the attention of the business traveler is by buying knee pads and begging for forgiveness. That seems to be the plan: “We’re so sorry, our bad, please come back.” But those are behind-the-scenes conversations, right? I mean, that’s not public. So they are trying to gain that back and look, it’s a long road. They burned a lot of bridges and you take a big hit—trust hit—with the brand. That’s a tough one.
And you know, being in our industry, our industry tends to have long memories when it comes to that type of stuff.
You say that, but I don’t believe that the same way. I think, look, if they come with a rich commission deal or a big discount, they come right back. Historically, they’ll just do it, and it’s to their own detriment. Agencies are the problem, though, right? Oh my God. I usually use more inappropriate language to describe the way this works, but it drives me up the wall. You can’t just go chasing a contract. You are not teaching the airlines anything. If you are a big agency or big company, you’ve got to teach them that there are consequences, and so many times there just aren’t.
Now, I don’t know how big of a deal American is going to come back with. I have no idea what they’ve said to some of these different companies or the biggest of agencies, but certainly they are trying to dip their toes back in and see what they have to do without ruining some of the progress they made. Because they did make progress on NDC; they got Sabre to actually do something amazing. But I don’t know if this will be different this time. You’d like to think it would be. This was such a much bigger and more terrible and horrible experience that agencies and corporates had to go through than in the past where they just, like, cut commissions and you fix that. So I don’t know. Will they hold their feet to the fire in the long term? I really don’t know, but I hope they will because otherwise, if they don’t, then what stops anyone from doing this again and then just coming back when… I mean, it happens. It’s happened so many times, so cyclical, and I find it pretty frustrating being in the industry just seeing them kind of let them run all over them.
Well, I guess another thing we’ll see certainly as we roll into next year and agreements. We’ll likely have some special guests on that are from some of those aforementioned agencies and get the latest greatest from them too. But I think the quiet speaks volumes in a sense that all the folks that were highly vocal about their concerns are strangely now very quiet. So it sounds like they’ve certainly all—at least financially—made amends, even if the trust takes more time.
And we’ll see. I mean, Q3 will be interesting to see what the results are. Vasu was gone in May, right? So Q3 maybe you start to see some shifting. But if there are green shoots for them, they’ll talk about September maybe as being a, “Oh, we saw corporate climb” or whatever. Those are the things I’m curious to see, and then of course Q4. You stop running out of excuses once you start getting further away from when they changed. So we just need to keep seeing what they say about that and then that’ll give us the insight onto if corporates really are coming back or not. But if you are a corporate or an agency and you have not fully come back yet, stay strong. Punish them for doing this because that’s the only leverage you have. You have no leverage otherwise.
Otherwise they just do it again, and this is the cycles that we get into all the time. It’s wild. The cycle of abuse. And I can’t fault the airlines because the agencies, they are just like, “Yeah, okay, well you’re back? Okay, we’re back.” No, break the cycle. There you go. That’s how you get your leverage.
I don’t… I think the only other thing… it was actually kind of minor, but I just started seeing… I guess I was recently in a LATAM aviation conference so I was maybe tuned in more to it. But between AeroMexico, Arajet, others… talking about expanding service. Arajet trying to potentially be able to fly to the US. I know that’s always at play. Is there anything LATAM-related that we should be paying attention to, or is something shifting, or is it just kind of more of the business opportunity?
Well, I mean LATAM is broad, right? So there is a lot going on there. But on Cranky Network Weekly, actually we just… it used to be Canada and US, we’ve now started covering Mexico because the Mexican market is actually really interesting right now. You’ve got huge impacts on capacity because Volaris and Viva Aerobus both are really big on Neos with the Pratt engines that have had them grounded. So that has been a real big issue, and now they’re starting to fight each other. Viva is huge in Monterrey, Volaris is huge in Guadalajara. Volaris just went big in Monterrey, put a bunch of stuff in there; Viva is now doing more in Guadalajara. So there’s a lot of fighting going on, and it’s a lot of fun.
And AeroMexico is Delta South; they do that. But even they’ve been making a little bit of noise in the US trying to do a little bit of winter expansion. So the Mexican market is really interesting. The Caribbean, though… you can talk about Arajet like: how many times have we seen these airlines pop up, try something, go away? So I don’t know about that. Puerto Rico is always interesting as a domestic market but also a Caribbean market. A lot of people have moved to Florida over the last several years, so huge back and forth there. So I always find Puerto Rico interesting, but the rest of the Caribbean is… it is what it is, I think.
And if you’re talking South America, Brazil is pretty interesting these days. You’ve got Gol bankrupt, you’ve got Azul almost bankrupt. So you have a little bit of a reorganization shaking out down there. But the most interesting market in all of South America was Colombia and then it imploded when Viva failed and you had what was the other one—can’t even remember anymore—but there’s the other low-cost operator that failed and it’s back to Avianca and LATAM doing their thing. So to me Mexico is the most interesting right now; Brazil is pretty interesting as well. It is always fascinating in that region.
Wrap-up question: what’s your guilty pleasure when you’re on the road? You travel a lot, you document your travels, which are always interesting to read about. What do you do to… what’s your guilty pleasure when you’re out there traveling?
Guilty pleasure? See, I thought the wrap-up question was going to be about baseball, but okay.
Hold on, is that a Notre Dame football? We’ve got to talk about that.
It is. So I think Buffalo is now better than Notre Dame. Is that how that works with last week?
Stop. We took a week.
I know, wow.
Listen, I went to George Washington, we didn’t even have football. And I grew up a UCLA fan and it’s unclear if they have football this year. Anyway, back to your question. Guilty pleasure… that’s a good question. You know, I don’t know. I don’t really have… like for me, the guiltiest pleasure is just like lying quietly in a bed alone with no kids or anyone or anything and just like watching TV or a movie or something good. Anyone? It’s not very guilty.
No, it’s an expression of course, but it does seem… I hear that from parents a lot. Just like, “If I have like an international flight, I’m eating a meal and there is no distractions. I just get to without guilt watch a movie and take a nap.” It’s like: yeah, the best thing ever, right?
Yeah, seems to be the alone time is nice. But then you know when I feel guilty is that I should be doing something else. That’s where the guilty part comes in. But yeah, I’m not that exciting when I travel.
Well again thanks for coming, man. Appreciate always your insight. Love the way you and your team really follow the industry and bring some real grounded insight about what’s happening and what’s not happening, which I think we draw off of. Certainly enjoy our relationship with you. So again thanks for coming back for a second time.
Thanks, only three more till the Phillies jacket.
There you go, our first second-timer. Thank you to Brett Snyder. Brett is President and Chief Airline Dork of Cranky Flyer LLC. Brett, we’ll see you out there and hope to have you back soon.
All right Mike, we will be right back with headwinds and tailwinds. Do you want to spotlight Mike again?
Yeah, I wanted to talk a little bit about Spotlight. We previously did one with Guyan which was really well received. I can’t say enough how much this product could really help a lot of companies and leaders in the space. We basically do a seven to 10-minute interview; we focus on either company’s leadership, your brand, if you’re releasing a product, or something that you want to get out to the industry. We produce it and create a nice outcome for you to really showcase something that you’re looking to promote or talk about. If you’re interested in doing it and leveraging our network and our influencers, reach out to us at Travel Again Advisory.
All right Mike, thanks for that. And now we will wrap with headwinds and tailwinds where we identify what we think is adding value to travel or taking it away. I’m up first today with a headwind.
Got a headwind?
I’ve got a headwind and this comes from The Wall Street Journal. I’m actually going to show this article because I think it’s a fascinating article: “Electronic Warfare Spooks Airlines, Pilots and Air Safety Officials.” If you get into the meat of this article, it is fascinating. There is a 777 flying and one of their automatic alerts screams “PULL UP, PULL UP,” but the pilot clearly knows this can’t be true and is actually being alerted by a fake signal from militaries using this fake signal alert in the area.
This is about people over machines, making sure they make the right decisions. But maybe even more concerning is that this is happening on a regular basis now. The pilots really have to be aware of what’s going on as GPS signals are spoofed during wartime in these areas. This is not good for the industry. It is important that the pilots are aware of it; they do get briefings on a regular basis. But still one to watch out for as a headwind, because it could get scary out there if the pilots are not paying attention and do get fooled by this.
I was going to say our very first guest in season one, Bruce Mondo, talked about how the number of conflicts that he sees now throughout the world is the most he has ever seen in his long career. When you have an expert like that making that statement, that’s pretty telling. Things like this are more commonplace than we probably know. My reaction—you touched on it a little bit—was more like: man, am I glad there’s a human pilot in the cockpit. This idea that everything will become automated and driven from technology—it’s like great, but you also need the human overlay to say, “No, this isn’t… this is basically a false positive here.” That’s what we’re seeing. Training alone… there is no program in the world that is going to detect that in the way that we’re envisioning. Little concerning, but just things that do impact the industry. When we talk about the cost of flying and this and that, then you think about this, it’s like: “No, we’re getting our money’s worth, trust me.”
So there was that. And then I’ll take the Tailwind just because we always like to end on a positive note. This one isn’t necessarily a positive thing, but it is hilarious and it did make me laugh. It is about the Scandinavian Airlines flight where someone opened their meal and a mouse popped out. I can’t even imagine. It’s like something out of a Saturday Night Live skit. The reaction on the plane—I can only imagine as they’re figuring out what’s going on and then having to land and then the embarrassment over this. We’ve all seen a mouse before, it’s not like it’s any… but coming out of your in-flight meal? Of all our years in the industry, that one’s a new one. I got a big laugh. So maybe it’s a Tailwind for the wrong reason.
Well, you have to read the rest of the article: “Passengers reportedly remained calm and the route took only a few extra hours.” So there you go. There is a mouse in the house! There is a mouse on the plane! At least it wasn’t Snakes on a Plane, it was just a mouse.
Not this time. All right Mike, thanks for that Tailwind. Mike, and that is our show today. Thanks again to our sponsor Safe Travel RX, and we will see you back again next week with another episode of Travel Again podcast.
Awesome. Have a good one, Mike. See you.