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.
Mike, welcome back. How are you today?
Good, how are you doing, Ed?
Doing good. This is episode two of our rebooted podcast from a different location today, unfortunately. And today’s opening day of Major League Baseball so a very exciting day, and I’ve got my Phillies gear on. We’re off hope springs eternal for a World Series victory this year.
Always the optimist. Although what happened, you got rained out for your opening day, Mike? What’s going on up there in Philly?
Yeah, well, they were a little precaution. They had the extra date of the off day to play with today, so they just moved it to today. Probably a good idea. Rainy day, no fun. They got a good day today, I think. We’re loaded, man, I’m ready. Exciting place to watch baseball in good old C Bank Park there in Philly, so I’ll be making the pilgrimage up, I’m sure.
All right. So Mike, our format, just for a reminder, we’ll start with three or four news stories each week, with insights and bringing clarity to complex issues as we always do. Today we have another two-on-one interview. We’re super excited to bring another guest onto the stage, and then we’ll wrap up with headwinds and tailwinds impacting travel as we wrap up our show. Mike, if you’re good to go, I’m ready to start the news.
Let’s dive in.
All right, Mike, I chose for our first article one of the most major acquisitions in the last period of time: American Express Global Business Travel, Amex GBT, acquires CWT. Let me bring up some news on that. Why don’t you tell our audience a little bit about why CWT and what you think it means for the industry.
Well, it certainly means consolidation, which I think was coming. Amex, in their last quarterly call, talked about the fact that they were looking at acquisitions, so this was clearly in the works for a while. Big deal, took a lot of work to get there. Industry speculation over the years is that they’ve been to the altar multiple times. This is finally getting a deal done that probably everyone expected might happen at some point, and now that time is here.
Assuming approvals go through and everything gets buttoned down, they will certainly get big. The issue is that getting bigger is critical with a lot of airline changes and negotiating, pressure on earnings and commissions, and the business in general. Getting bigger can be a good thing for Amex GBT. It’s a smart move at this stage.
The interesting thing for me is who we’re not talking about, which is Navan, formerly TripActions. Big valuations, big promise, and now radio silence. IPO was supposed to come and hasn’t. It keeps getting pushed out. They’ve been quiet. What does that mean for them? Interesting to see how it plays out as you’re down to a handful of big players at the top end of the market, a range of mid-sized agencies with long-standing relationships, and a long tail of small agencies.
Service is going to make the difference, but at the top end of corporate travel, the ability to make big investments in technology and continued investments is critical. With everything American has done, it’s a perfect example of how it’s really the big players that have the capital to invest. Lots of implications here.
Yeah, I agree, Mike. I’ll be watching to see any customers that decide to leave because some smaller players may come off as more flexible and innovative in terms of being able to do things that the huge giant can’t do because they’re so big. Look out for competition stealing share there.
We’ll see. But GBT’s big growth this past year has been in that small to medium-sized market, too. Some assumptions may not hold true in today’s world, especially with the critical technical investment systems part of the equation that only big players can fund.
Okay Mike, the next article is a follow-up on from our conversation last week about Boeing and their struggles. It was announced that Boeing CEO Dave Calhoun is stepping down in the wake of the 737 Max struggles, as reported in the Wall Street Journal. Add some context for our viewers.
I think our guest today will give us insight, too, but clearly, there are huge issues. It’s not just the CEO stepping down. Other senior leaders are resigning. The work isn’t done yet in terms of changes that have to be made: oversight, quality control, the list goes on. We read about it every day.
For the industry, it’s devastating if they can’t get their act together, get aircraft produced, do quality work. Airlines depend on Boeing meeting production deadlines. They need a transformative leader, not someone who comes in and glosses over issues. They need someone who can rebuild confidence from the entire industry.
This has a headwind impact on traveler confidence. Even though the system is statistically very safe, people are impacted by continued issues. And we need new aircraft in the system. They’re one of two providers. We need a strong Boeing that produces quality aircraft.
Okay, thanks, Mike. Our third and final article today, because I’m excited to get to our guest, is from The New York Times: Visa and Mastercard agree to cap their swipe fees in a settlement. It’s complicated. Break it down for our listeners.
This is one most people will skip over. Big companies, merchant fees, maybe savings, maybe not. But there’s more here. This is about putting limits on what Visa and Mastercard can charge merchants. That funding drives profitability for Visa, Mastercard, Amex, Discover, and others, and it also funds the rewards people are addicted to.
Capping fees could be seen as reform. It probably won’t trickle down to real consumer benefit, but it’s a win for the merchant side and for those pushing reform. It may only whet the appetite for more.
For the travel industry, we need to be careful what we wish for. Reform might make merchants happy, but consumers love perks and rewards, and the travel industry thrives on rewards redemption, driving tourism and activity. Before pushing to overhaul the system, keep an eye on this. This is the tip of the iceberg. More is coming.
Okay, thank you for that context. It’s time for our first commercial break.
Let’s take a minute and talk about our sponsor, a company we’ve gotten to know at BLS. The Okon family has been terrific supporters of Travel Again. They served the entertainment industry as a core business; they do the Grammys and the Oscars. What people may not know is they’ve also served the corporate community for a long time. They’re a terrific provider.
If they can make actors, musicians, and rock stars happy, they can handle corporate customers. They retained their drivers and staff through the pandemic and the writer’s strike, which shut down a big part of their business for months. That stability matters. We know the family, they’re terrific folks. Proud to have them as a sponsor and wanted to give them a shout-out.
Okay, thank you, Mike. It’s time for our two-on-one interview. Today, our interview is with Brett Snyder.
Brett Snyder is the president and chief airline dork of Cranky Flyer LLC. He’s had the airline bug since he was young. He never wanted to fly; he just loved the complexity of the business and has been able to write about that since 2006. As a kid, he never missed a chance to go to LAX and pick up airline tables. His grandmother even took him to an airport hotel for his birthday one year, so he could watch the planes land. By the age of 12, he’d become a travel agent, and soon after, he was volunteering at the traveler aid center. Today, his main focus is the blog Cranky Flyer, along with his Cranky Concierge air traveler assistance service, Cranky Network Weekly competitive network analysis, and the Cranky Network Awards. Please welcome to the stage Brett Snyder.
Hey guys, hey, thanks for coming.
Welcome. So wait, what’s that hat you’re wearing? Oh yeah, you’re a Phillies fan, you’re probably not gonna like that too much.
Listen, it was a good series last year, though. It was a great opening day for us yesterday. Diamondbacks had a nice third inning.
Yeah, you got a good team, no question. It’s going to be this year. Between you guys, the Dodgers, holy crap man, the Dodgers.
I know, but they always underperform, but this is the year.
I love it. You guys with the Dodgers, us with the Braves. Great baseball. Our bats went to sleep with you guys in the NLCS, but it was great. I liked the moves we made this offseason. When you’re in the same division as the Dodgers, you’re not trying to win the division; you just need to get in the playoffs and go from there.
Yeah. The Dodgers are still beatable. Baseball is great that way. You gotta spend, but not necessarily the most. You can’t be the A’s, but you gotta spend something.
I feel so bad for the A’s. Fan protest, it’s horrible. Bad situation all around.
Thank you for joining our baseball podcast.
I had no idea. This is great.
But let’s talk airline. American, I want your thoughts. We were inspired by your analysis. You bring it to life, you’re funny, insightful, fearless, and you back it up with real analysis. Your investor day analysis was really insightful.
Follow the money. American is the largest by passengers, but its market cap is far behind Delta’s. Delta around 27 billion, American around nine. You can understand why they’re being aggressive, but there are strategies, and there are strategies. With the latest mileage play, penalizing agencies, and customers not getting miles unless agencies hit NDC thresholds, it becomes a bad experience for customers and the industry.
Now, distributors might put text on their sites saying you won’t get your miles here. That looks bad for America and the industry. People may book someone else unless they live in an American hub. Your thoughts?
Where to start. America has some helpful strategic vision, but awful implementation and execution. Last year, they said they’d pull 40 percent of fares out of the traditional channel. I didn’t mind the announcement because airlines want to sell via NDC, there’s an opportunity to increase order value and merchandise, and the industry needs to move there. GDSs fought it, agencies fought it, because it’s work and cost.
The announcement shocked people awake and got everyone moving. Sabre started putting real timelines out. But then American did it while firing half their sales staff, taking away the help agencies needed. They got rid of midmarket contracts, shed people they had locked in, and made it harder for everyone to sell their tickets. It didn’t make sense.
When agencies asked for an extension to the end of the year, American should have taken it. They could have made friends with agencies, been a good partner, and given a stay of execution. There are good things about NDC, but the way American handled it made it a disaster and made agencies see NDC as the worst thing to happen. That’s not how it should have gone.
Delta is thoughtful and not rushing. They worked extensively with partners, and they’re staffing up. Night and day.
United is interesting because of its continuous pricing. They say they can’t do it in ATPCO, so NDC is the only way. There are still fares you can’t find through traditional channels, but the rationale makes more sense, and they didn’t fire half their staff. They’re doing things quietly. American is a gift to competitors. If it works, others can follow. If it fails, they just watch.
American underperforms financially, so they think they need bigger steps, but the issue is execution. United uses pricing sophistication to extract more revenue. American is focused on cost, like saving GDS cost will save them. It’s a revenue problem. They hurt themselves. They pulled bundles that could be sold in ATPCO or the GDS, so the upsell opportunity isn’t there. They create their own result.
The mileage thing is stranger. It pushes consolidation. American says it doesn’t, but the preferred agency requirements include increasing NDC targets and having an incentive agreement. If you’re selling through NDC and there’s no incentive agreement, why penalize? It doesn’t make sense.
From the customer lens, you can understand the frustration. NDC has been coming for years. It shouldn’t be an oh my god moment. But this feels like stepping over the line. It’s going to create a mess. There’s a delayed reaction from customers still coming.
They announced preferred agencies but didn’t publish a list. Customers ask if you’re preferred, but agencies don’t know. Either poor execution or evil by design to sow doubt and push directly. Either way, it’s bad. It’s either genius later or crash and burn. No middle ground.
The hallmark of Chief Commercial Officer Vasu Raja is going big. It’ll anoint him as a genius or end his stint at American. Strategy points aren’t the issue. Execution is mind-boggling.
Speaking of moving from one mess to another, Boeing. Thoughts?
I do a podcast called The Air Show with Brian Summers and Jon Ostrower. We did a deeper dive on Boeing. Airlines finally forced Boeing’s hand. They need airplanes, and it hasn’t worked for years. When airlines said they needed to talk to the board without the CEO and needed airplanes, it forced change. But the change isn’t done. They need a strong leader.
Jon thinks they need someone who knows Boeing because it’s so complex. It’s not a huge candidate list. They need someone to fix it. Boeing is too big to fail, with defense contracts and commercial importance, but it’s not healthy.
It’s taken too long. Dave Calhoun was the board chair before the CEO. There’s criticism, and now it’s wait and see.
Airlines are impacted. Southwest is still taking Max 8s. United can’t get the Max 10, supposed to replace 757s and support premium transcon. The FAA relationship is bad. Certification decisions impact airlines. Boeing’s incompetence pushed everything into a corner. It’s bad, and it needs to change.
Switching gears, I watched the video recap of your annual Cranky Network Awards. I enjoyed the insider view. You’re tongue in cheek, but you recognize good performance. People seem to appreciate it. Tell us about the awards and origins.
We started during the pandemic. In 2021, we did a virtual show with Courtney Miller from Visual Approach. We wanted to honor airlines. It’s network planning focused on the U.S. and Canada. Network planners decide where airplanes go. Everyone wants to talk to them. Events often feel like speed dating, where airports and vendors want time with airline planners.
We wanted something for them, where they’re stars of the show, can relax, and enjoy it. Other events matter, but this is for the people doing the work. We get good participation from airline leaders and analysts. They get recognized.
My favorite part is recognizing silent heroes. Travel buyers are similar, underappreciated, dealing with travelers, agencies, suppliers, and executives. Network planners don’t get much recognition during the year. It’s fun to watch the insider moments.
Best moment of the night?
The funniest was the best new destination: Tulum, a new airport. The best new destination is a city getting service for the first time in at least five years with no U.S. or Canada service. We made a joke with smaller trophies for each airline. Unprompted, airlines started riffing: we were first to announce, we’re the largest to Latin America, we’ll be the best. It was a funny moment. The candid moments are the best; we don’t show them all, but it’s a lot of fun.
We’ll be bugging you for an invite next year.
We do have sponsorship opportunities. I’ll connect you with my people.
Brett, thanks for joining us. Love your insight. We’ll probably have you back when American does its next announcement.
I don’t want to come back because that means more bad stuff to talk about. I’d rather everything be great. We’ll come back when NDC is fully implemented and Boeing is fixed.
I don’t think NDC will be fully implemented until they come out with NDC, the new distribution, and then we have to start over again from scratch.
They should call it a newer distribution.
Thank you so much, Brett. Brett Snyder is president of Cranky Flyer LLC. You can catch his weekly newsletter and new podcast. Thanks again, Brett, for being on our show.
Thanks, and go Diamondbacks.
All right, cheers.
Another great guest. Mike, time for a quick commercial break.
Last week, we held another Travel Again Road Show, our second event, again in New York City at the Omni Hotel Berkshire Place. The Omni Berkshire Place is a fantastic location. They take amazing care of everyone. The staff are on top of everything. It’s an iconic hotel in New York. They made us feel so good being there and took great care of us. Big shout-out and thank you to Omni Berkshire for their sponsorship of Travel Again and for making us feel at home.
All right, Mike, now we’re going to wrap up with Headwinds and Tailwinds, where we identify what we think is adding value to travel or taking it away. What’s your headwind, Mike? What’s slowing us down?
Unfortunately, it’s an easy one. I’m going with American and their decision to make mileage an issue. It’s bad for the industry and customers. It’s going to create a negative impact on American. Websites and distributors may put messaging saying you don’t get your miles here. I don’t see how that’s positive. I don’t think it’ll have the desired result. It makes the industry look bad. When it impacts customers visibly, it reflects poorly. Ill-advised move, but we’ll see.
And your tailwind, what’s speeding us up?
United is doing a positive use of AI-type tools, or at least a smart use of tech. When you have a cancellation, disruption, or delay, they’re trying to provide more comprehensive messaging. Instead of just saying delayed, they’ll say it’s delayed because of the weather over Iowa affecting inbound flights, and they’ll keep you posted. More information reduces anxiety and reduces pressure on staff. Delays happen, but informed customers handle them better. Travelers will appreciate it.
Okay, my headwind this week is called AI washing. It’s similar to greenwashing. Companies claim something is AI-powered, but it doesn’t mean anything. Some companies release little features and claim they’re now an AI-powered company, even raising money and higher valuations. We’re nearing the Gartner hype cycle phase of the trough of disillusionment, past the peak of inflated expectations. Buyer beware in the marketplace about what people claim they’re doing.
My tailwind is something reported in The Verge and other places. An aviation startup, Boom Supersonic, took a major step toward returning commercial supersonic aviation. They have a prototype aircraft called the XB-1, and it left the ground for the first time last week. It took a short subsonic flight over the Mojave Desert. Boom is expected to continue to make progress. Startups are working on supersonic flight. Anytime we get to go anywhere faster, that’s a tailwind. I’m excited to see supersonic flight take off again. It’s time we dig in and see what we can do with supersonic travel.
I flew on the Concorde a handful of times. It would be great. Great for the industry to bring it back. It’s not space travel, but it feels aspirational. New York to London in three hours. You could be there for dinner, no jet lag. Great call out. I hope they keep moving ahead. We’ll keep an eye on progress.
Mike, that’s all for our show today. Thanks again to our sponsors, BLS and Omni Berkshire Place. We will see you again back here in approximately two weeks. Thanks again to our listeners. Bye, Mike, and thanks for dialing in from spring break.