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
01:06:45 · John Collison, Scott Kirby, Ben Thompson
[01:06:45] S1: And then similarly, success means a disciplined route expansion strategy I that understands your [01:06:51] S0: mean, look, that's pretty insightful. That's like, I tell new CEOs, which many of them called, talked to me, I don't think any of have taken my advice yet, but I tell them, the one thing I'll tell you, Start I'd with like the route network is the foundation. If that's broken, doesn't matter how good you do at everything else. If you have bad routes that lose money, you cannot make the airline work. It is impossible. And you're gonna hear... You're gonna... If you look through the route P and L, which you should do, you're gonna see a bunch of negative flying. And when you ask people about it, they're going to say it's strategic. [01:07:22] S1: They're going to have convincing excuses. [01:07:23] S0: Well, they're going call it strategic. [01:07:24] S1: Yeah. [01:07:25] S0: And if you hear the word strategic flying, you don't need to know what hub it is. You don't need to know what route it is. You should cancel it. You have to stop flying. Anything that if you default to, it loses money, but it's strategic, you have to cancel it. And they don't do it. [01:07:42] S1: Part the lies people tell themselves to convince themselves to save running a month? Like, what does it mean to be strategic? Corporate customers, something [01:07:49] S0: like Yeah, or credit cards. Like, you know, if we're not big in this city, then we just won't [01:07:54] S2: get Is that the biggest tail risk if credit cards ever go away?
01:07:54 · Ben Thompson, John Collison, Scott Kirby
[01:07:54] S2: get Is that the biggest tail risk if credit cards ever go away? [01:07:57] S1: No, it's not nearly as big as people think amongst [01:08:01] S0: them. Yeah, the perception is big because people look at, they can see the amount of revenue that we get and they say, Oh, almost all your profit is coming from, your net profit is coming from credit card. Well, yeah, but there's a cost. We carry over 50,000 people a day. Over 50,000 people today will fly free on United Airlines by using their credit card miles. So like nobody counts the cost. [01:08:22] S1: Oh, you're saying they just can't do an accurate contribution process Yes, they're [01:08:27] S0: saying all that we disclose is the revenue. Yeah, And everyone's like, Oh, look at the revenue. Like, 50,000 people a day are flying for free. There's a cost of carrying 50,000 people. [01:08:36] S1: Okay, so the whole, like, Twitter meme of airlines or credit card business with, you know, airplanes attached. It's just they're holding the financial statements up... Upside down. Well, they are ignoring half... They're ignoring... They're they're looking at the revenue side and ignoring the cost. Financial statements. [01:08:50] S0: Ignoring the cost side. I mean, it's important. It's good. [01:08:53] S1: Yeah. Yeah. But But it's blown way out of proportion. [01:08:55] S0: But it's blown way out of proportion.
01:08:55 · Scott Kirby, Ben Thompson, John Collison
[01:08:55] S0: But it's blown way out of proportion. [01:08:56] S2: How do you think about changes to the frequent program? You just went to, I think, $32,000 or whatever you call it, points. Yeah. Which I appreciate getting rid of the segment one, because I never qualified on that one, so I appreciate the simplification. But is that a... [01:09:10] S1: You in general just seem to want to keep the riff raff out, like with the WiFi, with the... A real big monster cut off to be right below Ben. [01:09:17] S0: Yeah. Yeah. Yeah. That's right. [01:09:19] S2: I I applaud these changes. I've looked back over the past few years. I've always well exceeded 32,000, so it's no problem for me. [01:09:25] S1: And I [01:09:25] S2: want emptier lounges, so it's all good. But like, what's the calculation in that? Like, Delta obviously has gotten a lot of grief from my frequent flyers and the changes they've made. Yours seemed to go fairly well. [01:09:35] S0: Like, what [01:09:36] S2: do you think that was? [01:09:37] S0: So I don't think about it through the lens of the frequent flyer program. I think about how do build brand loyalty. And the frequent flyer program is one of those things. And so really, like if we're doing something that's going to detract from brand loyalty, like there's got to be a good reason to do it. And, you know, clubs are... You know, how many people are a Global Services member? Like, people love being Global Services, but we limit it. It's exclusive.