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, welcome back. It’s nice to see you again. Good to see you, Mike. Last we were together, we were in Dallas for a roadshow hosted by Southwest Airlines. For our guests, you can see our interview with Rob Brown online. Thanks again to that great group that showed up in person; it was nice to be together in person for a podcast, wasn’t it? Absolutely, it was good fun.
All right Mike, this is episode seven of our rebooted podcast. We are making our way through the numbers now. Yes, we are, and I’m ready to go if you are. I’m ready to go. We have an amazing episode with a tremendously dynamic leader in the travel space. I cannot wait to bring her on.
One thing I wanted to put out there before we get started is that you and I have been a little busy this past week—well, the weeks leading up to this. We launched a new website for Travel Again. Anybody that’s ever done this before knows there’s a lot that goes into getting you there. For us, it was really trying to pull together all of our content, which now is readily available, including all the history, which is terrific to have in one place. It also highlighted the other capabilities we have, both in terms of things we do that you see in this podcast and our roadshow, but also the advisory practice that’s really the foundation of what we built. We do a lot of work with brands from around the industry on just helping them to perform better and adapt to all the changes in the marketplace.
I’m really proud of it. If you are wanting to go and look at our content, it’s all in one place, readily available, and easy to access. A lot of work goes into it, so great job. It makes me glad every day that I’m partnered with somebody who’s technically savvy as you are because I never could have gotten there on my own. It was great teamwork and I love the output. It was a lot of fun. Great partners working on it with me, and I think it looks great. It has everything we need, including our episodes, our podcasts, our videos, and the latest news. Check it out.
Now for the news. Southwest Airlines is in the news. Elliott takes a big stake in Southwest Airlines. The activist has built a stake of nearly two billion dollars in Southwest Airlines and plans to push for changes aimed at helping to fix the airline’s underperformance. Mike, we were just at Southwest Airlines. What’s your take on this?
Well, this one’s really interesting because I have to say that it doesn’t surprise me in a sense that there’s some shareholder pressure looking at better performance and looking at the opportunities ahead for Southwest to basically take the business they’ve built and maybe make some changes. Even senior leadership alluded to that in the last earnings call. Our friends over at Cranky Flyer also did an analysis that went out this morning which I thought was really poignant. They were getting to the bottom of what’s driving Elliott’s mission here, and it comes down to a few things as it usually does, all related to money.
Basically, you’ve got a business where the value of their planes and assets exceeds their current market cap, combined with the fact that Southwest is low debt with a lot of cash, relatively. That makes them a target. The hard part for me is that I look at their culture. We were just there; they have a very strong culture that’s been built on people working there, staying there—longevity, consistency—going back to the days of Herb Kelleher. At the same time, the marketplace is always changing. You need to adapt; you need to infuse new ideas and people. There’s a balance there, but I would hate to see this company gutted culturally and otherwise. When you look at what American is going through and how they’re going to have to reinvent themselves, to put Southwest through that and have them come out the other side without retaining the culture they have would be a shame for competitiveness in the market. Whether you fly Southwest or not, they’re a force in driving service culture across the industry. It’ll be one to watch.
There was actually a second investment company that also is thinking about investing and trying to get Southwest to restructure. It feels like the vultures might be circling here a bit. Odds on one of these happening, Mike? You a betting man? What do you think?
Well, it’s going to force change; there’s no question. Ultimately, will they be successful in their demands? I hope not. I hope it doesn’t result in all their wish list being fulfilled because I think that would not be good for the industry, but we will see. I went to Vegas and looked up the odds on this happening; the oddsmakers have not put the line out yet, but we will keep a close eye on that.
Article number two: Apple had their Worldwide Developers Conference on Monday. I had to leave you alone while you virtually attended the announcements and the unveiling. I know you live for this. I’ll let you have the floor.
I will happily take the floor. Apple Siri is getting better and there was some actual travel trip planning that was demoed during the WWDC keynote speech. Overall, Apple is taking a second or third attack at this. Apple rarely is first to the business; they’re often second or third, they just come at it and do it significantly better than everybody else. They weren’t the first out with an MP3 player; they just created the iPod. They weren’t the first phone maker, but they came out with the iPhone. I think they’re taking a similar approach. They’re not calling it AI—they never said the words AI in the entire keynote speech. They call it “Apple Intelligence.”
Early reviews from what they showed look very interesting. The one interesting thing that they did show was not about trip planning, but more about journey management. Your iPhone knows an awful lot about you—your personal context, your calendar, your text messages, the emails you received. It showed a demo where your mom had texted you that she’s coming in on flight 1421 on United, and later she emails you that she wants to have lunch after she arrives. You ask Siri through Apple Intelligence: “Track my mom’s flight. Will I have enough time to go to lunch?” It puts all of that context together and provides you the journey management around it. Very cool demo.
My question for you is: do you think when Steve Jobs and Steve Wozniak named the company Apple back in the day that they had the presence of mind to know that someday beginning their name with “A” would be so critical to the Apple Intelligence AI positioning? That alone was brilliant.
It was very smart because, in many ways, AI has some negative connotations right now in the marketplace. It’s mixed depending on who you talk to, between inaccurate results on Google, some hallucinations, and the fact that it could take over the world and kill us all. Apple Intelligence is an interesting way to get around some of that negativity. There is nobody better at it than Apple in terms of marketing. We shall see where it all goes. Now, if they could just get my phone battery life to extend, I’d be really happy. Did they talk about that at all? No, I did not hear any of that, Mike, but hopefully we will get you a new phone soon. I know you’re like six generations behind. No, I’m not. Maybe a few.
Anyway, on to the next article. The next article is about Chase and overall bank travel portals. The headline was “Chase Travel is Growing as Fast as Booking Holdings but Faces Headwinds.” Chase travel grew sales last year at a pace on par with Booking Holdings and far ahead of Expedia Group. What is going on here, Mike?
Well first off, sorry Skift, no offense, but the headline is… let’s just say it for what it is. To compare the growth rate of Chase Travel, which is probably a tenth of the size of Booking, is hardly an accurate comparison. I know it catches the headlines to get people to read, but having said that, in the article are some very interesting topics. One is the reference about Chase Travel bringing Southwest into their booking path and full integration. That’s the first of anything like that. It came in conjunction with Southwest now being in Google Flights where they weren’t before. It was just schedule-only; you couldn’t click to book.
That is actually a big change, but it’s more about the why. The why being because Chase does their co-branded card with Southwest. It built a relationship to a point where these bank relationships—Amex, Chase, Cap One, City—are really growing and becoming a bigger competitive part of the marketplace. They may not all be at the size yet of an Expedia or Booking, but collectively, that part of the market is in growth mode. They’re getting more and more competitive, leveraging their points and benefits. There’s a lot going on there, and that’s going to continue to be a bigger growth part of the market.
The other thing is that we keep hearing these little messaging points about a slowdown in growth. You have to put that in perspective and remember that we are at an all-time high again in terms of travel and travel bookings. It’s different than 2019; the way it’s come back and reconstituted is a different makeup of domestic and international trends. How people book has changed and is changing rapidly, but you can’t sustain the levels of growth that we’ve had since the recovery. That’s just not possible.
The slowdown is relative. When the airlines are doing their numbers and earnings, you have to also step back and have the perspective that it’s a really healthy travel market right now generally. Even a slowdown is still good. We’re going to see a period of slow and steady growth, but the numbers are going to be small in percentage growth compared to what they were, which is going to force companies into a share game. To keep growing or outpace the competition, they have to find ways to take share away from competitors because it won’t be enough just to ride the wave of normal growth. It changes the marketplace, but generally, that’s good for consumers because it means companies are going to be competitive. Bank portals are taking on the OTAs in a big way.
We will be right back with our guest. Today we have a new sponsor, Safe Travel RX. This is an app that takes the worry off your itinerary, providing travel peace of mind with emergency response components, travel security, and risk management, especially for those traveling internationally. It includes 24/7 global concierge assistance. Landed in the hospital in China? Forgot your prescription? Wallet stolen? Safe Travel RX is your prescription for better, safer travel.
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Now on to our guest. Please join me in welcoming Charlene Leiss, President of Flight Centre Travel Group, The Americas. Charlene Leiss has been with Flight Centre Travel Group since the acquisition of Garber’s Travel Service by FCM Travel Solutions in 2007. She has held various leadership roles, most notably as President for Corporate Brands USA. Currently, she is the Managing Director for Flight Centre Travel Group in the United States, overseeing strategic direction for the Americas. Charlene and I worked together for a few years; she is one of the best leaders I have ever worked for.
Charlene, nice to see you. Welcome. It’s great to see you. Thanks Ed, thanks Mike. It’s great to see both of you. I love this podcast, first of all. I feel like I’m kind of on New Heights with the Kelce brothers. We style ourselves after them; we’re just not them. We’re both big Eagles fans, so Ed knows I don’t share that view, but I won’t hold that against you.
Aside from the fact that you two worked together, there’s another connection with Flight Centre. Back when Ed and I were founders in Hudson Crossing, we were actually bidding on Liberty Travel, which was Flight Centre’s acquisition to get into the leisure market here in the states. They made the Garber acquisition where you came in for corporate. We were going head-to-head with them with private equity backing. I always feel this connection to Flight Centre because they ended up outbidding us for it. There are these little touchpoints and connections and one degree of separation on so many things in our industry.
Very true. It’s a small industry. I forgot about the Hudson Crossing connection, but we’ve done a lot of work with Hudson Crossing over the years too. They’ve consulted with us and helped us with other M&A and some of the tech transformation that we’ve done as a business.
Flight Centre globally has been a combination of acquisitions—both ones we know about and other tech-related ones. Now it’s a global company. Give us an update about where Flight Centre is today. What’s unique? What’s your proposition? How do you differentiate?
Flight Centre Travel Group is a global travel business that is really a portfolio company. We have a portfolio of brands across corporate, leisure, supply, and also some niche parts of the travel business. We’re one of the top five globally, which has certainly been helped by some of the consolidation, but we’ve been a pretty large player for a number of years. Headquartered in Brisbane, we’re publicly held and traded on the Australian Stock Exchange. Our founder CEO, Graham Turner, who we call “Skroo,” runs the company.
The company is unique because of our culture. It comes down to the people that lead and our ability to make sure that even though we’re a very large business with the opportunity to invest, we still feel like a small company. We’ve got a family, village, community mentality. Books have been written about our structure and how we work hard, play hard, and celebrate success. We have ownership and accountability in every part of the business. Coming from Garber Travel, which was a family-owned business, I really didn’t think that I would transition to a big global company based in Australia. I thought that was the end of the line for me until I read the book, drank the Kool-Aid, and decided I better stick around. It felt like the culture we had in Garber but on a global basis.
Flight Centre is now top five. You’ve got Amex and CWT combining, BCD is out there, Navan maybe going public next spring, TravelPerk, Steve Singh’s Perfect Trip… it’s gearing up to be a battle of titans. How does Flight Centre win in that environment?
There’s a lot happening. Corporate is about 50% of what we do globally, so it’s quite sizable. We’re in a great place. We’ve always been a bit of a challenger brand, especially in this market, because this is the last frontier for us. We’ve only really been growing across the US for the past 25 or so years. We have this alternative mentality. We own our own platforms and online booking tools. We’ve got a Center of Excellence for AI. We also have that great combination of local service and expertise and owning the customer relationship. The consolidation helps us because those really big mergers are going to take a lot of work to integrate. It allows us to continue to grow and win market share. In this market, we can win market share 20% year on year for eternity and still only have a small piece of the pie.
That’s a good point. The “long tail” of providers came out a lot regarding the next topic: NDC. When you look at what ASTA did to push back on American and what the industry did, it’s nice to say we want everyone to do direct connect, but only a handful of players have the resources to actually do that. Everyone else is completely relying upon those thousands of other providers that represent the long-tail distribution. It’s not Consolidated, it’s not that simple. Despite American’s pivot, nothing’s changed—it’s still full speed ahead. Where do you guys come out on that?
NDC is certainly the future of the industry and there was so much that was antiquated about the technology, so we certainly don’t argue with that at all. We were lucky because we had actually made a strategic investment in TPConnects before the pandemic. They’re an aggregator based in Dubai. We increased our investment over the past couple of years so we are the majority shareholder and stakeholder in that business. We’ve really got a great position when it comes to building direct connects and being able to access NDC content both online and offline.
That’s not a concern for us because we’ve developed the technology and we’ve already rolled quite a bit of it out. It’s more about the commercials—the relationship that we have with some of those suppliers that we want to make sure are mutually beneficial and our customers are looked after. We’re in a great position when it comes to the tech front. At the end of the day, we certainly want to be GDS-first where we can because it just makes sense from a productivity perspective right now and making sure that we’ve got the bulk of the content in one place. But as we continue to evolve and the direct connects and the APIs improve, if we can service the customer better in that way with some of the preferred suppliers, then we certainly do that. GDS-first is still our mentality.
Do you see any difference in terms of what you do corporate versus leisure, or is it that same strategy across the whole? It is different because in leisure we’re not selling as much air-only; we’re selling a lot more package business, cruises, and we have a whole offline industry for our luxury brands which we’re growing quite a bit in this market. Our leisure consultants aren’t just pumping out air bookings the way the corporate side of the business does.
I’ll turn this part over to Ed because I feel like I’ll defer on technology to him.
Charlene, people may not know that Flight Centre was actually an early innovator in the chat space, making a major investment in Sam and then eventually acquiring Sam, which is essentially machine learning in a chatbot in the early days. I saw that you brought Adrian on, one of the founders of Sam, as your head of excellence for AI. Tell us about what the future holds for AI and travel and where you are applying AI across your business.
We’ve been using AI and machine learning in a lot of our tools and platforms and apps for many years. It’s exciting; it’s making us better, more efficient, and more productive. You talked earlier about trip services and easy itinerary building that AI can work with to help our experts focus on the complex. That’s where we see it making us a better company from a service perspective and from a development and engineering perspective—taking some of the more mundane tasks away from our experts so they can focus on what’s more high-touch.
Whenever anybody says that we’re “legacy,” I’m like, how can you say the word legacy? We’ve been ahead of the curve in this area. Jomo, our Chief Experience Officer who runs the corporate side of the business, has been very progressive in this space. We also acquired Shep, which allows us to provide the FCM extension and do a lot more custom work and AI work with the online booking tools. The investment in technology resources and AI specialists is growing at a quicker pace and a higher investment rate than a lot of other parts of the business.
You think Jomo will be jealous we had you on before him? 10,000%! Jomo has FOMO. He may say he doesn’t, but he does.
I read at the beginning of the year you had a 2024 prediction which said, “we will continue to see a shift in the way travel is approached.” Can you elaborate on that? Has there been a shift in how people travel?
Mike actually stole my thunder a little bit because it’s the travel patterns that have changed. It’s traveling for a purpose versus just taking ridiculous overnight flights and coming right back. It’s sustainability and work-life balance playing into it. People are being much more smart about the way they travel, being more efficient on trips and getting multiple things done—visiting with customers, internal travel, etc.
For the businesses that still work with hybrid workforces, getting their teams together is a much bigger part of what we’re doing on the corporate side of things. Team building and bonding trips are continuing. Where leisure initially out of the pandemic was all “flop and drop”—Mexico, Caribbean—now we’re seeing people doing a lot more on adventure travel, European travel, African Safaris, and long-haul. The need to get out and be face-to-face and have experiences has never been stronger. If this pandemic proved nothing else, it is that there will always be a human need to get face-to-face. We have no concerns where that is concerned.
When you look ahead into the future, we always talk about change, but the reality is can you name something that you won’t see changing? What’s always going to remain the same?
I think in our business, the need for customer service—however that is delivered—will remain. We can do a lot of customer service delivery using online chat bots or AI; the way we deliver customer service might change, but the need to have that 24/7 support and that expert on the other end to help when there’s disruption is never going to change. We used to debate 10 or 15 years ago about whether travel was a commodity and if you could treat it like a widget. I really think we’ve proven that travel will never be a commodity. It’s experiential, and even on the corporate side, it’s about delivering amazing travel experiences for the customer on the other end. That will never change.
Thank you so much, Charlene, for coming on the podcast. Charlene Leiss is President of Flight Centre Travel Group, The Americas. Thank you again, Charlene. Anytime guys, thanks much and good luck with the new website! I’m going to go check it out.
We will be right back with headwinds and tailwinds. I want to take a minute and talk about our other sponsor today, BLS. They’ve been a terrific supporter. As a company they provide terrific black car services—everything from a single driver to buses and vans. They are a true global player. They’re also a great family company. It’s really great when you work with companies that have that level of understanding and it radiates through the people they hire and the service they provide. Always recommend BLS if you have any kind of ground transportation needs.
Mike, you’re up first today with tailwinds.
This is an interesting one. Somebody actually wrote about this in Business Insider. It was a really good article about something I’ve been saying a lot more privately than publicly. When people say they can’t believe airfare costs that much, I always shake my head. I have the perspective of having worked in the industry to tell you that you are paying what people have paid for airfare literally going back 30 or 40 years. Even without adjusting for inflation, we can still get inexpensive airfares. You could spend more taking a family of four out to dinner than it would cost for airfare.
You want safety, security, and service, and you want these capabilities at the airports and on the planes. And then it’s like, “oh, I had to pay three or four hundred dollars.” Really? That’s a problem? What we’re also finding is that the issues now are not the cost of flying there; it’s the everyday costs that are mounting up—groceries and living—that are causing some potential economic slowdown. Airfares haven’t escalated nearly as much relatively. There’s still a lot of value in flying. We are blessed with a lot of terrific service despite the issues and complaints. I think there’s still a lot of good value out there traveling. Demand hasn’t fully come back internationally, for example, and you can still get really good value for an airfare to go to destinations you’ve never been to before. Overall, it’s a relatively very healthy industry. Business Insider agrees and says we’re actually living in the “Golden Age of cheap flights.”
I’ve got the headwind today and unfortunately we’re back again talking about potential strikes. Alaska Airlines flight attendants gave the carrier two weeks to reach a contract deal or face a potential strike. We talked about American Airlines flight attendants last week potentially going on strike. Overall, strikes are bad for the industry. I know the head of the union very well and she does a fantastic job, but in general, strikes slow travel down and make travelers concerned. They remove confidence in people’s instinct to travel.
Hopefully they’ll find resolution. These are all cyclical things as contracts expire and hinge off of what pilots or mechanics are getting. It’s about everyone getting their fair share of cost-of-living increases and having protections around the workplace environment. It’s always about the money, but there’s more at stake, particularly with flight attendants who are a godsend given what they have to deal with. They are working hard. It’s a hard job, and the ones that do it well bring a level of service that is a key part of the experience.
That is our show today. Thanks again to our sponsors BLS and our new sponsor Safe Travel RX. We will see you back here next week. We have another interview planned and the hits keep on rolling. It’s a busy summer! Thanks everyone, we’ll see you next week.