01:00:36 · John Collison, Scott Kirby, Ben Thompson
[01:00:36] S1: What else have you learned from Rainer? [01:00:38] S0: The guy's entertaining. Michael Allegiant's We [01:00:42] S2: would like [01:00:42] S1: to get him in the pub here. [01:00:44] S0: You got him here? [01:00:45] S1: No, no, I would like to. Yeah. You'll get a few more swear words when you get out of Michigan. Knows his business exceptionally well. He's very impressive CEO. But they're also like In N Out. They have avoided distraction where they're... [01:00:56] S0: He's disciplined. [01:00:57] S1: Always They get asked about transatlantic Disciplined's probably a better way. It doesn't work because you don't get the low cost advantage when you can't let the number of turns be high enough. You know, they get asked about WiFi in the planes, and it's like, guys, the flights are short. Just look at your phone for an hour or something. You don't need it on an hour long flight. He's disciplined. [01:01:12] S0: That's a better way of saying it. So getting outside, you have to be disciplined to be successful. And companies, you know, get stars in their eyes and they're not disciplined. [01:01:19] S1: What's the version of discipline for you? Because it's easy, like, United, guys are a huge global airline. Airline. You fly big aircraft. You fly small aircraft. You fly internationally. You fly domestically. And so it would be easy to want to do everything where it's like we're cost competitive, but we have great wine list. And so what is your version of
01:01:19 · John Collison, Scott Kirby, Ben Thompson
[01:01:19] S1: What's the version of discipline for you? Because it's easy, like, United, guys are a huge global airline. Airline. You fly big aircraft. You fly small aircraft. You fly internationally. You fly domestically. And so it would be easy to want to do everything where it's like we're cost competitive, but we have great wine list. And so what is your version of [01:01:34] S0: staying For an airline business, discipline is really about where you fly. The foundation, our product starts with You fly to make money. And fly places that make money. Like, every Like, time I go where [01:01:45] S2: are you less point to point in the domestic [01:01:48] S0: So we don't fly point to points. And like, I hear it all the time. In LA yesterday, when I do stuff at San Francisco tomorrow with employees, they're always asking, to fly, you know, new routes and point to point routes. Like, it won't work for us. [01:02:00] S1: We're airline that flies to our [01:02:01] S0: hubs. We fly to our hubs. That's our strength and a whole bunch of reasons that works. And we're not going to go try to fly point to point routes. [01:02:08] S1: But if you're not first, you're last. [01:02:09] S0: But if you're not first, you're last. And that's true in the airline business. And it's by market, like it's not overall. [01:02:15] S1: Yeah, yeah.
01:02:15 · John Collison, Scott Kirby, Ben Thompson
[01:02:15] S1: Yeah, yeah. [01:02:15] S0: But like, you know, people in Dallas ask me like, when are you not a player? Because we'd lose. You know, American has too much network depth. And if, you know, when they fly from Dallas to Los Angeles, 75% of the people on the airplane are connecting from other destinations. And if we're just flying to Dallas, we can't compete, like, because we don't have any connections. You know, we're competing for 25% of the market. It [01:02:34] S1: doesn't Does that then mean, like, the little decisions you make are, okay, should we fly from, is it Newark to Greenland? Like, that's a little decision. The big decision is, are we going to launch a beachhead and take a new hub? And how frequently do you make those decisions? [01:02:53] S2: Rarely. It was the last big hub up like Denver when you grew it hugely like [01:02:57] S0: We've But those were an existing hub that we chose to grow. [01:02:59] S1: JFK. [01:03:00] S0: In my thirty year career, I've closed three hubs and never opened a new one. It's a hard decision to do. It's very rare that that's... Lots of examples in the airline industry of that not working and almost none of that working in the post deregulation era. [01:03:22] S1: And so do you think it's basically impossible to launch a new hub these days? Is it like building a new airport? It just hasn't happened in the last fifty years?
01:03:22 · John Collison, Scott Kirby
[01:03:22] S1: And so do you think it's basically impossible to launch a new hub these days? Is it like building a new airport? It just hasn't happened in the last fifty years? [01:03:29] S0: Yes, is the short answer. So like, take the Southeast. Yeah. It's the one part of the country where we're number three. Because Delta has a hub in Atlanta, America has a hub in Charlotte. I'd like us to be bigger in the Southeast, it does matter to customers. But there's just simply no airport that's big enough where we can be competitive. We would need to have 600 flights a day to be competitive with American and Delta. And you know like the biggest city that sort of would work that's a big enough city maybe is Raleigh Durham. But you couldn't... The airport's not big enough. They don't have gates, don't have runways, like you couldn't have 600 flights a day. Trying to do something just because it's a cool vision, like, we don't do. We're disciplined. [01:04:08] S1: But this would be a big enough deal for a region that could you work with Raleigh Durham to expand the airport? [01:04:15] S0: Expanding airports in this country is like a decade long process. [01:04:21] S1: Yeah. More. That's optimistic probably. Yeah. Okay. So you think it just it just... [01:04:27] S0: I think it's just you know. [01:04:29] S1: Okay, so discipline for you
01:04:29 · John Collison, Scott Kirby, Ben Thompson
[01:04:29] S1: Okay, so discipline for you [01:04:31] S0: It's possible someday we'll, you know, at least experiment with going into more, into, you know, big city that's not really a hub for anyone, but, and Delta's done some of that, you know, it's been, I think, sort of breakeven ish, but they've [01:04:45] S2: not It did though, this is not a hub at all, but way back in the day, used to have a hub in Narita. Yeah. And you've added a few like connecting flights from Hong Kong to Thailand and [01:04:56] S0: A little bit a car. [01:04:57] S2: And your flight to Kaohsiung from Narita now. Is that just more on the margin sort of things or international? It's on [01:05:05] S0: the margins but there are places like in Tokyo, we have connectivity with our partner. And so a lot of the people that, and like Ulaanbaatar, we realized that something like 12% of the people that were flying us into Tokyo were ultimately trying to get to Ulaanbaatar and it was really hard. And they didn't [01:05:24] S2: fly Say, to well, wait. Yeah, yeah, what's going on there? Their number is way too early. [01:05:28] S0: It was only in the summer. But it was a high percentage of people [01:05:31] S1: For vacation? Yeah. Am I missing something? And I haven't been to Ulaanbaatar. Am I missing out?
01:05:31 · John Collison, Scott Kirby, Ben Thompson
[01:05:31] S1: For vacation? Yeah. Am I missing something? And I haven't been to Ulaanbaatar. Am I missing out? [01:05:36] S0: I haven't been there yet. My mom went. My mom travels a lot. She's in my five benefits and travels a lot. She's awesome. But, you know, so we'd seen that data and we added the flight. But now it's a lot of the people that fly us into Tokyo connect on to Ula Mitar. It was a particular flight that was 12%, you know, one time a day, at that time a day. But then we also have all the ANA connections, and so they weren't flying at Kaishong, it's the same thing. [01:06:03] S2: Us Why to Sapporo? [01:06:04] S0: That's gonna be fun. Sapporo is booking really well. It's gonna be [01:06:09] S1: Is that for skiing or [01:06:10] S0: Skiing, But Japan has become like the hottest destination [01:06:15] S1: for The tech people here in San Francisco. [01:06:17] S0: People just love it. Even like in in Dow, like people love Japan. Like I have all kinds of friends that, you know, like, we went to Japan for spring break and they just... They love the food. The people are great. You know, they just love it. [01:06:29] S1: So, what I'm taking away from this is that route selection makes or breaks airlines. [01:06:34] S0: Yes. [01:06:34] S1: And that it it broke, you know, Spirit or the low cost carriers. Yeah. It broke American and this, you know, frack guy you guys had at... [01:06:43] S0: Yeah. Well, they haven't accepted that it broke them, but it did. [01:06:45] S1: And then similarly, success means a disciplined route expansion strategy I that understands your