00:52:04 · Ben Thompson, Scott Kirby
[00:52:04] S2: ask one, how'd you decide to run those ads, right? We were already prepared. [00:52:07] S0: We were waiting to actually, we're going to cross the 50% threshold next Friday. And so we're waiting till then to sort of like, if we're going to really push that going, so we're going to do it anyway. But that was a moment to like, because our team is great. Maggie Schmarin, who's our VP, runs that, like it's awesome. And you know, did, and one of things, this is another advice to companies that she tells me is like she did it without, she didn't ask me, she knew she didn't ask me, like no approvals. She's awesome, I trust her. And that creates speed. Companies that, you know, most companies, especially big traditional companies, you know, have 16 layers of approvals. You can't do stuff fast or creative or fun or interesting because it just gets watered down. And she just went out and did it. Knew that she had support from everyone at the company to go do it and did it. You know, I was at a CVS board meeting because I'm on the board of CVS Health and started reading about like, well, this is pretty cool. And people were asking, actually, didn't read it. People were asking me like, this is cool. Like, oh, what do we do? Like, that's cool.
00:53:09 · John Collison, Scott Kirby, Ben Thompson
[00:53:09] S1: As we think about the airline business in The United States, you know, pre 1978, everything was very heavily regulated. Yeah. United flew on routes set by or approved by the government with fares set by the government. So I think people don't realize when they look at those old timey sixties photos of like, you know, someone coming along with a lobster cart and everything so brilliant. It's because at that time airlines could not compete on price and therefore competed on perks. And we're much better off these days when you actually have like a real market and real price competition. One of places where we have less of a free market in air travel is the slot system. Yeah. And there we have very limited number of slots in airports. I actually don't fully understand how slots are granted, but do we kind of have a breakdown of competition in certain airports because you have this, like, wacky slot system? [00:54:01] S0: Yeah, but I think it's sort of at the margins. What's bad for customers is scheduling more flights than an airport can handle. That's what's really bad [00:54:09] S2: for Well, that happen in Chicago though? [00:54:11] S0: It was, maybe it was gonna happen. It happened in Newark historically. And we finally got it effectively slot controlled in the airport. It's now the most Oh, [00:54:19] S1: we wanted slot controlled because it's bad for customers. [00:54:22] S0: It's horrible for customers. Like, I begged the FAA and we finally did it.
00:54:22 · Scott Kirby, Ben Thompson, John Collison
[00:54:22] S0: It's horrible for customers. Like, I begged the FAA and we finally did it. [00:54:28] S2: Well, that's the contrast, right? Chicago, you're making this move that this wacky law. Every year they re... Every year they take flights previously and reallocate the gates. Yeah. But it's kind of a weird thing is it takes a while to move the gates. So it's this weird time delay that's [00:54:43] S0: introduced Yeah, into it created a bad outcome. It's partly how American got to losing a billion and 0.5. Because what happened in Chicago, American wasn't paying attention and lost six gates to us. [00:54:55] S1: But like they weren't paying attention? Like it's like forgetting to renew the internet domain? It's like they [00:54:59] S0: just By [00:55:00] S2: the time they rose to the United had added on so many flights. [00:55:04] S0: Well, no, we hadn't done anything. We went back to our normal pre COVID schedule. [00:55:07] S1: Yes.
00:55:07 · John Collison, Scott Kirby
[00:55:07] S1: Yes. [00:55:08] S0: And American was focused on the Sunbelt and they talked about it public, you know, Phoenix, Dallas, Miami, you know, more demand, leisure demand. That's what they're focused on. So they just didn't add back their schedules. And we didn't do anything special but because they did it, they lost gates to us. You have to have slots for, you know, because it's the only way to manage a limited resource. And they're mostly grandfathered, which it's probably fair, like, you know, if you're British Airways and you've invested billions of dollars in to build facilities and stuff, and then they say, oh, we're gonna say take them away and give them to someone else. [00:55:42] S1: But there's a balance here. You both want people to earn a return, and you want Schumpeterian destruction where British Airways should only be allowed to recoup so much investment, right?
00:55:42 · John Collison, Scott Kirby, Ben Thompson
[00:55:42] S1: But there's a balance here. You both want people to earn a return, and you want Schumpeterian destruction where British Airways should only be allowed to recoup so much investment, right? [00:55:52] S0: Yeah. I think the better answer is to change air traffic control and create more slots. Yeah. That's how you... You can create more slots with better air traffic control. And then you can allocate those in whatever way you see fit. But the other thing that's happened at all these big airports that have slot controls is the government entities that run the airports have made the cost so prohibitive that no low cost carriers can't afford to fly there. The New York airports are now $52 per passenger to fly at the New York airports. Spirit Airlines, before they liquidated, average price, average fare was $58 Like, you don't to be a rocket scientist to figure out if you're paying $52 out of 58 before you buy your fuel, before you buy your airplanes, before you pay your employees, before you do maintenance, that just mathematically doesn't work. The airport authorities and and the big airports in the country are up something like 70% of the expenses since pre COVID to today. Like, they've just priced low cost carriers out of the market. Well, you [00:56:53] S2: price low cost carriers out the market? [00:56:54] S0: We didn't price out like [00:56:55] S2: Well, the you the basic level and you sort of We made that. Of course, we're fine grain cutting We off of the
00:56:55 · Ben Thompson, Scott Kirby, John Collison
[00:56:55] S2: Well, the you the basic level and you sort of We made that. Of course, we're fine grain cutting We off of the [00:57:00] S0: stopped, the low cost carrier business model was predicated on having a price advantage. You know, being able to charge a lower price. We created a basic economy where we could profitable, and we up gauged airplanes so we could profitably be competitive on price most of the time. And, you know, if we're competitive on price, like there's no reason, you know, my joke was people may make the mistake of flying Spirit once, they're not going do it twice. [00:57:28] S1: Why did Spirit go bust? [00:57:30] S0: Because they weren't charging as much as their costs. Were not able [00:57:33] S1: That's to charge a little interesting. [00:57:34] S0: It's pretty simple. I mean, it was simple. Like they weren't able to charge enough. And look, what's happening [00:57:39] S1: Because of cost inflation, basically. [00:57:40] S0: Cost inflation, but there's a whole bunch of things. But fundamentally, what I think has happened to the low cost carriers, there's really one still low cost carrier, successful airline in the world. It's Ryanair. [00:57:52] S1: I was going to ask.