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.
Hey Mike, welcome back to the podcast.
Yeah, yeah, great to be back, man. Fun to be doing this some more. Always good to be together. How have you been since our last podcast?
Yep, well, I’m ready, man. I’m ready if you are. There’s been a little bit going on in the industry, so we’ve got a lot to talk about.
All right, so we have a slightly new format. I’ll tell you about it in just a minute. The new format is we’re gonna do the news like we often do, and then we have a special guest waiting in the green room, so we’ll do a two-on-one interview with a special guest today. I’m very excited about that. And then we will end with a new feature called headwinds and tailwinds impacting travel as our wrap-up. So I’m pretty excited about that. Mike, are you ready to get started today?
Let’s dive in.
All right, we’re gonna start with the news today. Our first article comes from the Cranky Flyer, and I’m going to put it up for our viewers. The article is named Armed with Tortured Data, American Takes Its Old New York Strategy Systemwide. There’s a ton of news about American Airlines, but Mike, I’ll put the article u,p and if you would tell us a little bit about what’s going on with America these days.
Wow, well that’s a very complex and certainly front and center issue for the entire industry. I gotta tell you, as a finance major, I do love when somebody digs into the numbers and the facts behind it and really tries to assess what’s going on. That’s in effect what they’ve done in a couple-part series, trying to look at the American strategy, the impact, the validity of it, understand the motivations, and dig into the data provided.
America’s just had their investor day, and that was really the impetus for a lot of the information being put out about their strategy. We saw the impact of their deadlines and approach to implementing new NDC technology, looking at the ways they want to implement pricing, drive direct business, and make the agency community retrofit their systems to fit the way they want to work going forward. There’s a lot at play here.
I was really inspired by the Cranky Flyer article, so I did a little of my own analysis. I went back and tried to bring clarity to what’s really going on. As always, you follow the money. I pulled some 2022 year-end data, looking at the number of passengers flown. American had 199 million, Delta 171 million, United 144 million, Southwest 126 million. So in terms of passengers flown, that’s the order.
You would think profitability and market cap would follow a similar order, but that’s not the case. Delta’s market capitalization is 27.5 billion, Southwest 20.2 billion, United 14.1 billion, and American fourth at 9.6 billion. So why are they taking such an aggressive strategy? There’s your answer.
You may not like the strategy. We may disagree about the philosophical approach to the industry and whether their strategies will work. It’s alienated some parts of the industry but empowered others. There’s a lot at play, but you always come back to the primary motives. Airlines are there to serve customers and grow routes, yes, but they are beholden to shareholders.
What do you do when you’re American to try to change that order? You get aggressive. That’s exactly what they’re doing. We talk about this as if this is all that matters, but at the end of the day, you follow the money and go back to the customer who pays for it.
Do customers want the ability to shop? Do they want advice? Do they want an intermediary? Do they trust going direct? If you’re in an American hub and flying American ninety-nine percent of the time, maybe it’s different than in a competitive market.
And be careful about who the customer is. In corporate travel, when the company is paying, the corporation is the customer. Leisure travel is different. Those are all the factors. Will the strategy work? Modernizing and creating better direct relationships with customers, creating dynamic offers, merchandising products, that can be good for both customer and airline. But we’re in an unprecedented period of disruption around distribution and new technology.
Okay, thanks, Mike, for that perspective. Our next article is from Skift, and it’s titled Biden Signs Law Funding New US Tourism Czar. This is one you and I have been talking about for a couple of years.
I want to give a shout-out to the people who saw this through. I’m proud that if you go back to our Travel Again project during the pandemic, when we banded together and came up with recommendations, one of them was establishing a senior-level travel czar within what was then the president-elect Biden administration. Travel touches every industry and drives commerce, but we didn’t have someone focused on travel at that level.
Shout out to those who got this done. It takes patience, time, and work. To get it done in an election year is impressive. Proud that we teed it up during the pandemic.
All right, nice to see good things happening for travel. Our last article today is from a local TV station in North Carolina about a new safety feature, how to record audio during an Uber ride. Uber has launched a feature where you can request that the ride audio is recorded. Thoughts on this?
I can’t wait to hear what our guest says about it. I have a mixed reaction. I get the safety purpose. The article also mentioned live help with a safety agent, an in-app emergency button, and continuous background checks for drivers. Those features are great.
The recording part feels a little invasive. I’ve been in cars where the driver is recording, and it’s weird. I’m a good rider, good rating, good tipper. It just feels invasive, but I understand the reason. Airbnb now requires hosts to remove indoor cameras. You can see companies addressing privacy and risk concerns.
Okay, that’s our three articles. Time for a quick commercial break. Mike, did you watch the Oscars this week?
I was going to ask you the same thing. I watched Jimmy Kimmel’s opening and then kind of faded off. It’s a lot to watch the whole show. Some people make a party out of it. I’ve got kids and work, so Sunday night I’m winding down. I DVR and move through it faster.
BLS, who we know and work with, they provide black car service for the Oscars and the Grammys. They’re a first-rate family-owned company. If they can handle that crowd, they can handle the corporate crowd. They’re a terrific partner and were a great supporter during the Travel Again project.
Thank you to our sponsor, BLS. I watched the Oscars in short clips on TikTok like a lot of Americans.
Next up is our two-on-one interview. I want to introduce Bruce McIndoe. Bruce is president of McIndoe Risk Advisory and a global leader in risk management and travel intelligence.
Bruce, welcome to the Travel Again podcast.
Let’s just say Bruce knows risk. That’s it.
I gave up on the Oscars when John Cena came out naked. That was it for me.
Let’s talk about Uber and recording.
On legality, there are states with two consent rules. My guess is that when you use the app, you consent in the terms of service. The driver likely consents too. But if you’re having a discussion about a big deal, it makes you wonder. It puts everyone on notice: zip it until you get to your destination.
Let’s talk about the top global risks in 2024 from the World Economic Forum.
Any risk professional looks at this every year. Executives of multinational corporations worry about these risks. Climate change and extreme weather are top. Think of the ripple effects. Tornado in Palm Beach directly impacts you. Cost of living, inflation, gas prices, all of it matters.
What are the hot spots right now? The world has more dynamic risk than in my entire career, probably since World War Two. Ukraine is level four: do not travel. Ten active conflicts in the Middle East. Forty-five active kinetic conflicts in Africa that don’t make headlines. Russia and Ukraine could spill into NATO. Nuclear saber rattling. One human error in Asia could start a conflict around Taiwan or Korea.
All of that is sitting on a trigger. Being prepared is more important now than ever.
You’ve talked about companies not looking holistically at people’s risk.
I was one of the creators of travel risk management in 1999. That was right for then, but not for now. We need people risk management. The asset is the person across all modalities, whether driving, on a train, on vacation, or on commercial travel. Protect the person. Work across silos. Travel intersects the entire organization. Sustainability, HR, insurance, cybersecurity, and duty of care. Step back and optimize travel across all domains.
American Express launched an accessibility service within their travel management service. If you have visible or invisible disabilities, there is a service from onboarding through the relationship. That’s a model we need.
On blended travel, when you’re on a business trip, the company puts you there and generally has responsibility until you return. They can manage risk through policy, but companies often write checks to help employees and family members in emergencies. Think about it ahead of time.
What risks aren’t we talking about?
Climate change expands geography for infectious diseases. Warmer weather spreads ticks and viruses north. That’s not on people’s radar.
AI is everywhere. We need to pay attention to how it’s used and where. Interaction, data acquisition, and facial recognition. But AI can also personalize travel risk briefings based on individual health and circumstances without exposing sensitive information to the company.
Bruce, thanks so much for your insight.
Thanks for having me.
Next week, we continue the Travel Again road show in New York City at the Omni Hotel Berkshire Place. Great location, fantastic staff, iconic hotel. Proud to have them as a sponsor.
Now we wrap up with headwinds and tailwinds.
Mike, what’s your headwind?
Boeing. It’s all over the news. Beyond the tragic aspects, the business impact is huge. Traveler confidence, incidents, and airline growth. United halted their Max 10 order of 277 aircraft. Delta sees delays until 2027 or beyond. It’s devastating to the industry’s ability to replace old aircraft and grow capacity.
What’s your tailwind?
We mapped out recovery timelines during the pandemic, and now we’re here. It shows the resiliency of travel. People said technology would replace travel, no one would travel again. That was nonsense. People want face-to-face. Patterns have changed, but business still needs in-person connection.
Ed, what’s your headwind?
TripAdvisor Plus is shutting down. A subscription service offering discounted rates didn’t work out. I worry this may signal trouble for subscription travel services if they can’t make money.
What’s your tailwind?
Kayak launched an AI image capture feature. You screenshot an airfare, upload it, and Kayak finds competitive fares for that route. It reads the image and attempts to find better rates. It’s not a killer feature, but it’s innovative and shows continued AI experimentation in travel.
That is our show today. Thanks again to our sponsors, BLS and Omni. We will see you live in New York City at our road show on March twenty first. If you haven’t registered, go to our website to RSVP. We’ll be back here at our podcast again in two weeks.
Great to see you, Ed.
Great to see you, Mike. Cheers.