Full Transcript for The airline CEO putting Starlink on every plane

talking to people like, I'm switching to flying a regional flight because it's got Starlink. And I was like, holy, free was never the value proposition. Fast is the value proposition. And there's only one option for fast and storing. That is the only option. Scott Kirby took over United Airlines in May 2020 at the height of the pandemic. Refusing to play defense, he's made massive bets on fleet expansion, premium seats, and Starlink Wi-Fi, creating differentiation in the hugely competitive airline market.

So you did a big fleet order during COVID that looked risky. Was it risky? You know, I didn't think it was. Back during COVID, every single expert in the world said travel demand is gonna be down by 50% forever. That's like what everyone said. One other point, like you should ignore the experts in the outside of Two Sigma. In the tails, experts are terrible.

And I just thought they were all wrong. That I thought COVID was gonna be deep and last a long time and travel demand would recover. Everyone else around the globe was shrinking. So we did the biggest, the exact opposite. Like literally every global long haul airline in the world, except for United, permanently retired part of their widebody fleets.

We looked at that and said, we think the premise is wrong. And it's just a huge opportunity to do the opposite, do the biggest aircraft order in history, which we did. And I remember telling our board when they asked, they said the same thing. This seems like a really big risk, like everyone else is shrinking and you're going to do the biggest.

How big was the order? 200 wide bodies and then we did another several hundred narrow bodies. Okay, so pretty big. And those are airplanes that list for, we get a big discount, but they list for like $400 million. And I told our board like, this is one of those cases because everyone else is shrinking, we don't have to be right. We just have to be not totally wrong.

If we're not, so it's just one of those situations where the odds are so stacked in your favor. And like people out here in Silicon Valley do this kind of stuff all the time where figure out something that, you know, you have a different view than everyone else and go big on it. And if it works, the returns are huge. And the downsides are smaller.

And so find those. But to spin the cycle with large capital purchases is actually also a tech story that's relevant with memory. Like Samsung came to downrate memory by systematically investing into every downturn because it's very cyclical. And obviously it's hugely beneficial today. The flip side of that is everyone wants to invest when it's at its peak.

Have we gone full circle and now? Yeah, you want to invest when everyone else, when things are down and not invest when things are up. I mean, for us and probably for memory, it's a little harder too because our assets are so long-lived. But for us, our assets are 30-year. I guess for a chip factory, it's less because the technology moves.

But it's 30-year life. So we're going to go through several recessions and we're going to go through several ups and downs. So it's a little harder to do that. But you get better terms, you get better deals, you know, like we got really good pricing, you know, for example, during the down time. Because you're the only person ordering aircraft.

Because we're the only one in the world. And we sort of launched the market. Like, you know, for Boeing, they kind of could go to other customers and say, look, United believes you should too. Right. So I remember, it's very striking. I remember that period of people over extrapolating COVID. Like the tech version of that was companies deciding that they're going to be fully remote forever.

And a lot of companies decided that and then were like, wait a second, no, that's not right. Why were people so wrong on the travel side of things? Because... There are two things that are human nature that are mistakes. One is to extrapolate the current into the future. Assume that everything that's happening today is going to continue into the future.

And two, trusting people on surveys. Surveys are the absolute worst way to figure out what's going to happen in the future. Because the reason travel experts thought travel, they did surveys and people were terrified. Like everyone's dying. And you ask them, are you going to travel internationally again? No. It's like...

And that was true of what they thought at the time, but once it was over, of course they were gonna go back to traveling again. And by the way, I said this earlier, experts live in the world of two standard deviations. They force fit everything into things that they've already seen, and so when things happen outside two standard deviations, when the tails happen, which is where you create all the value.

The frequency of six sigma events is... That's where I first started. You know, like, you know, VAR, valuation at risk, is the dumbest model in history. It's stupid. Like, you know, things that shouldn't happen in the history of the universe happen once every five years. Because it's a dumb, dumb, fundamentally flawed mathematical model that assumes everything is normally distributed.

It's not. And it's just the perfect... It's really where I had a debate when I was getting my master's degree back in the 90s, this was about black souls. You know, there's such a dumb model for valuing options, like, because it assumes a normal distribution. The world is not normally distributed. The tails are much fatter in everything that matters.

And anyway, that applies to everything, but. Especially in a crisis. Black Scholes has a lot of assume a spherical cow-like assumptions baked into it. Okay, I love hearing you talk about the over-fixation on surveys. But the travel industry, the airline industry, loves surveys. United probably surveys people up the wazoo. And definitely at Stripe, we find we need to deprogram people a bit.

Because in tech, people love running things via metrics. And you can outsource your thinking to the dashboards and the metrics. And so we're trying to encourage people to... I mean, yes, you're... Opinions should survive contact with reality, but the metrics are not going to tell you what to do. It sounds like... Yeah, so we use survey. I like surveys for how did people feel about stuff we've already done? I ignore surveys for what are we going to do in the future.

does not do a lot of focus group testing on the products. They just build the products they want to build. That's the way. Stuff that we're doing right now. Today, we rolled out a Starlink tracker. We didn't ask anyone about that. I sit on an airplane and talk to customers, and I know they're going to think that's cool. And they do think it's cool.

Well, you're getting to the second thing, which is people try to over-measure tiny steps. And it's just like, do the Starlink tracker. If it's not useful, whatever. It doesn't matter. Yeah. And that's like, and especially in a world of AI, you can do so much so fast. Like it's really powerful. I have a different view of what, we'll probably talk about it, but I at least have a different view of where the value is going to be created in AI.

But you can just try so much so fast. And some of it doesn't work and people don't care. Like, I don't need to do it. Like it takes me, take more time to do a survey or a focus group and just do it, see if they like it. And if they don't, stop. And if they do, do it, more of it. Yeah. How important is your ability to do these sorts of experimentation? We talked, you know, eight months ago, redoing your whole tech stack so you could sort of put these things on top of it.

So we, like, I've always been a big believer in technology. I have a computer science degree. You're one of us. Yeah, yeah. But eight months ago when I talked to you, I not yet had my AI epiphany, but... I've always wanted to get on modern platforms. And so during COVID, another thing we did, like in the middle of COVID, said when everyone else is cutting back at airlines, cutting everything, we're gonna double down on technology best.

And we started a several hundred million dollar project to get not just on the cloud, but get everything off of mainframes to build databases that or modern that we can access the data just to really modernize our tech stack. And there was no ROI, there was no payback, which is why companies don't do it. Like it's really hard to do the ROI on something like that.

But what it does is it enables you to move fast and do things like we're doing stuff that other airlines frankly can't do because they don't have the right tech stack and we can do it easy. And doing fast and we started that, you know in 2020 in an anticipatory and it's really paying off today So my AI epiphany that I think has happened within the last month eight months Yes, I don't think a I like summarizing documents and all that kind of crap I think it's like ridiculous like summarize my calendar summarize my day, but I can read my calendar like I don't need to summarize my day but the power of programming so I hired a tutor and took three one-hour sessions and And if

you want me to tell you the stuff I did afterwards. No, we want to see the vibe coded out. So I went, so I'll just tell you what the first thing I did was. I've always been into gambling for better or worse. It helps you make big bets on aircraft, for example. But I, after three one-hour sessions, completely by myself, got up on a Saturday morning, Went down to the home gym.

Worked out. Took my laptop down there. It took about two and a half hours of run time. But I did a full workout. It takes time to run. I did the exact same set at my gym. I actually have an iPad with the keyboard there. And in between sets, I'm just typing prompts. And it's like running. It's perfect. So that's what I did. And

on my own, in two and a half hours. create a web page that had drop-down menus for what sport do you want, what dates do you want, what kind of bets do you want, so four or five drop-downs. And then it would go off four sports books, Kalshi being one of them, not actually a sports book, but... or sportsbook, and it would pull up all the odds, and you could just decide what you wanted to bet, and put the dollar amount in, and then it would go to whichever sportsbook had the best odds, and make the bet on my behalf.

You're aggregating the sports bets. And I could do it with three hours of, on my own could write a program to do that was an epiphany for me. And like, I got, I think I called him on that Saturday, you know, our team and like, we're all in on this. On that point though, he did tell me when I asked him about it, they had this huge switchover coming the following week.

And it went off without a hitch. I was actually flying the next day. It went off without a hitch. And we actually, that one, what we do for those is, I think I told you,

just in case, we canceled several hundred flights on that day. Well, just in case something goes wrong, we're not putting customers in. That was a switch from one of the one of our biggest, most critical mainframe systems that's tied into everything. We felt really good about it. But those things are so big and complicated. Turning off a legacy mainframe system and turning on the new system.

It did go off without a hitch, but we cancel several hundred. We just don't schedule flights during that window so that in case something goes wrong, we're not putting customers in harm's way. How much of the airline issues have been a story of outsourcing? Like you look at sometimes what's needed is some good de-vendorization and bring the tech in-house.

If you look at why Tesla was so successful, they realized that software was important to cars. And, you know, the wing mirror and the wing mirror adjuster is made by the, you know, the sub-vendor that does that. And so you can't centrally control it and you just need to own the tech stack. Have you guys been bringing more in-house? We are.

Which subsystems in particular? We're bringing much more in-house. We have more in-house, I think, than any airline in the world. We're the only airline in the world that owns our own reservation system. Everyone else is outsourced to Sabre and Apollo. You worked at Sabre, right? I did. It wasn't Sabre then. It was called American Airlines Decision Technologies.

But that's a... mainframe system and because we own our, it's a legacy, like we locked into it, like a legacy decisions that we own our own mainframe and because we owned it and we're, because us, Copa uses it too, Copa Airlines in Panama uses it because they're a partner with us. We're the only two airlines in the world that use it. So like eventually, It was EDS owned it and then someone else.

They didn't want to keep supporting it, so we had to. We lucked into it, but we had to support it on our own, but it's been huge. Now we're taking over all kinds of other parts of the tech stack, partly because we do things. It's so much more complicated at United than it is at most airlines around the world. Is that just because of size or what? The size and complexity is just much higher.

But I'll give you another example of one that we're taking over that I got so frustrated about the seat back entertainment screens. I didn't actually realize it until I started complaining about the maps. The maps are terrible. The map, I just want a map to show up. I'm into maps. Go where I'm going. I can zoom in, zoom out if I want. And the stupid map switches to the globe.

I know approximately where I am on the globe. I don't need to see the damn globe. By the time you find the information you're looking for, It switches screens. What I want though is, because you already know who I am. You log in, my name's there, put in my birthday or whatever. I do nothing but have the map on the whole time. I want to have my map preferences.

So we're taking over the map software from Panasonic. They're taking over the whole software. And so there's all kinds of stuff. So one is we're going to know Ben likes them. So it's just going to come up. You can get the other stuff. It's just going to pop up with the map on the screen. Another one, these are little things, but they're...

It comes from this book, Unreasonable Hospitality. One of the things about that book that I took away from that book is try to create memories for people. And so to me, this is another example of a cool thing, which is when you're hitting your two million mile mark, The screen is going to pop up with a little thing at the bottom. I said, congratulations, Will.

It's going to do a countdown. Like, 1, 9, 9, 9, 9, 12, 13, 14. And there's like celebration. And the flight attendants are going to all know exactly when you hit 2 million, where over the country you hit. I mean, it's a little thing, but it's cool. And we could have never done that unless we took over the software. These surprise and delight product touches are quite important.

Yeah. And that's another one that AI makes possible to do things like that that wouldn't have been possible. To know who you are, you know, like, you know, know what you want to drink, you know, do you want a gin and tonic, you know? Do you want your normal gin and tonic, whatever it is? I want your X and Y selection. Yeah, do you want your Guinness? Well, I don't think we have Guinness on the airplanes, but...

We'll work on that. I have a question on this surprise and delight thing, because that is a great thing. You show up and United delivers something I didn't expect. The question is, how do you handle that becoming a feature? So I was traveling this summer, and my flight was delayed out of Madison due to a maintenance issue. But I'm like, it's going to be super tight in Denver, but Connection Saver is going to save me.

And the gates were next to each other. I was totally relaxed about it. And then I get there, and the flight had already closed. I walked to the gate. They closed it early and had taken off. I'm like... If American Airlines does that, I don't care. It's my expectation. I was kind of crushed. So you're surprised it's a feature, but I'd already internalized it as you do this amazing thing.

It's such a large airline. It's hard to guarantee that. You know, we...

we have to get really good at communicating on it. A couple things. First, on something like that, we have to get really good at communicating. The seat back screens now are going to be helpful too. We're going to tell you that, we're going to put it on the screen. So the seat back screen today is completely divorced from the app. Tomorrow, once we take it over, they're going to be the same.

And so we're not going to just have to text you about, we're going to text you and tell you exactly where it is. And if something changes, like what probably happened on that flight is it got delayed by air traffic control. And the time, we didn't have time to hold for it. Oh, no, it was one of those things where I knew, I understand the complexity of airlines.

It was just, I was kind of looking at myself like, why am I disappointed here? No, no, you shouldn't be disappointed. Because what we should do is communicate with you really well on that. Another cool thing that I hope we're going to have rolled out, actually, Well, we're going to roll it out pretty soon. I've told them I want it done by Christmas, for Christmas trouble, because there's weather at Christmas.

Normally, if there's a weather delay coming on one of your flights, all airlines, including United, send you a text that says, oh, there may be weather in Denver tomorrow. And like, great. What are you supposed to do? Yeah, yeah, yeah. Like, what can you do? Yes, it was December in Denver. Yeah. I'm aware. Give you a little shot of anxiety before your trip.

So what we're doing today, already have started, is when we say that, we say, here's other options for flights that you can just switch to. You can stand by for this one if you want, or there's seats available on this one. What we're going to do is send you... the screen on the screen is gonna say, your flight to Denver has a 41, we estimate it has a 41% chance of being impacted by weather.

If you switch to the earlier flight, it's only a 12%. The later flight is a 3%, so that you can have some intelligence about making decisions. But the point on like, how do we,

like keep wowing customers is a really important one. So two years ago at the end of the year officer meeting, I told our officers that their job is wow. And they all looked at me like, what the hell does that mean? And like, we, our job is to do things that a customer gets, they're a frequent flyer that gets on the airplane and says, wow, I've never seen that before.

And by the way, we get credit for that one time. And then we owe them another wow. They should put that in the bank and we should owe them. And it's a cultural that means you can't ever rest, you can't be complacent. What are you doing that's new, that's cool? Because I want every cool thing that we do, a customer to take that for granted.

You should take it for granted. And we do something to surprise you in the future. And that's cultural to try to do. Ben has a theory that I like, which is that

all of the top global airlines lists are just totally missing the point. It's like people talk about benchmarking in AI, where people are kind of optimizing for the wrong things. All the top global airlines which feature heavily the Asian and Gulf airlines do so because they have really nice meals and very well-coiled flight attendants and all these things.

Whereas what you actually care about is the airline having really good tech. So you have things like Connection Saver where it can rebook you. I'm 100% with you. I think those airlines do a good job. I say schedule is the number one reason people pick an airline. But that everything else matters for brand loyal customers and it's it's service product reliability and technology um and the asian and middle east carriers do better than the u.s airlines uh on product for sure and probably service too um i think we do a really good job but they have different cultures for service so they do better on that but i think technology is the differentiator and united that's why i now

believe that in totality is the best airline in the world. And it's because of technology. And it's exponentially getting better. Things like being able to do this for customers when there's a delay and telling them what's going on. We started it this summer. AI allows us to institutionalize this, but if you're gonna have a delay, sending customers weather radar maps.

And in Chicago, there was a day where the weather was over the horizon, but You had to fly, it was sunny at the airport, but you had to fly through this line of thunderstorms, and so the routes were closed. You couldn't. And so we sent half the people the normal weather delay, which they think you're lying, because it's sunny outside, like you must be lying to me.

And we sent half of them a picture with the radar map, and you have to fly through this line of thunderstorms, and the route's closed because it's unsafe. The people with one hour delay, I think the numbers were negative 60 NPS on the normal way of sending it, plus 60 when we sent them a picture of the map. 120 point difference. It wasn't just that they weren't mad, they were actually happy.

Yeah, it was better than their long-time flight. that people can handle like they understand they don't want to do something that's unsafe um but they don't like uncertainty it's like a lot of what you're describing is expectation management and communication being a key part of the experience because this is high stakes for people yeah i would leave the expectation management out of it it's communication um people should expect that we're going to get patients management but why isn't it expectations management Because I don't want to use it as an excuse.

Like, oh, sometimes weather happens, so you should expect it. Like, our job is to try to... It does. Yeah, yeah. But our job is to try to figure out a way to make it the best possible for you. I'll give you another example for weather. Now, this one, we're going to have to get the FAA to help us. But we started running simulations with AI from Denver in the summer.

In Denver, there's a lot of pop-up thunderstorms that happen around the airport. Denver is really your bain-noir. Well, no, it's not. It's actually easier than the other. Newark is the hardest. My two... My two options are Chicago and Denver. It's just a roll of the dice. This will help Denver especially, because winter storms are actually pretty easy.

You know what's happening. Pop-up winter storms are what's hard. The reason is because if lightning strikes within three miles of the airport, the ramp closes for 30 minutes. People are allowed to be outside. Which one is dumb? If

if a storm is moving from the east to the west, and you have, or from the west to the east, which is what happens in Denver, from the west to the east, and it happens west of the airport, you should probably close it. But if the storm is moving west to east, and it happens three miles to the east of the airport, you don't need to close it.

So anyway, using AI, so what'll happen is there'll be a forecast in the afternoon for there's gonna be thunderstorms. And so the FAA just takes the worst case, we don't know where the thunderstorm will be, they close, they limit all the corner posts, all the, and they just pull down the amount of traffic that's coming through the airport proactively.

pick the worst case but when you look at the data like well sometimes the weather is to the southeast sometimes but in most cases you can keep you can use different arrival routes and departure but you can keep the air because there is nothing around denver airport yeah so you have a lot yeah yeah and you can keep the airport running we can probably reduce 50 to 75 percent of the weather impacted delays in denver in the summer by using this kind of technology it's just transformational because that's my point about expectation management instead of just saying Oh, weather.

My previous employer, I had told the operations team, anyone that says the word weather in my presence is going to get fired because I do not want to use weather as an excuse. I know weather happens. I know we're going to be safe. We're never going to do anything that's unsafe if weather does happen. But our job is to figure out how to minimize the impact of weather, and you can't use weather as an excuse.

So that's my expectations management point. I want to have our culture be. We find ways to overcome the challenges to try to manage our expectations. We try to set high expectations and try to meet them. But we do communicate with you. What do you see as the biggest limiter of your business? Is it airport capacity? No, it's air traffic control.

It's by far air traffic control. Air traffic control is 90% of the issue. How do we finally, this is the great white whale, air traffic control modernization. Yeah. Is there a path to, it's like a complex technical project, it's a complex social and political project. Can it be done? It can be done. And look, we have, the president is supportive.

He's the most pro-aviation, you know, he knows about aviation, he likes talking about it. We have support from him. Secretary Duffy is great. I can text him right now and get a response, you know, unless he's in a media, unless he's out, you know, standing up speaking or something, I would get a response within 30 seconds. Brian Bedford's best FAA administrator we've ever had, but it's the government.

It's just so hard for the government. Just take the appropriations process. These are the kinds of capital projects that are five to 10 years to get done. they do an annual appropriations project. So they start at the beginning of the year and it's often delayed because of the government shutdown stuff. So they may be starting two months into the fiscal year before the program, before the budget gets approved.

Then they take three months to, ramp up to start, and then they work for four months, and then they take the last three months to shut the project down, because they don't have authorization past 12 months. It is absurd. Could the airlines fund it? If they would let us. It's super politically controversial to privatize the FAA and air traffic control.

But it's the kind of thing that private enterprise, I think, could get done in two to three years. But you wouldn't need to privatize it. You could just have a user fee system where you're... It's a user fee system today. The real issue is there are several political groups that are opposed to it. The biggest being private jets, who today...

Airlines pay... 100 of the fees that the fa is airline funded we pay 100 and essentially it's free 99 essentially it's free you know to fly private jets they're a really powerful lobby um and i think that's probably the biggest um impediment to modernizing the FAA. But the problem is anything that's done through the government, it's like you go and the government's just not efficient at stuff.

It is the best FAA, best DOT we've ever had. But the conversations they have on Capitol Hill is, well, how many jobs are you gonna put in my district? And so like, think about air traffic control. Air traffic controllers are not, don't need to be at airports. They don't, they mostly sit in basements, look at screens. They don't like to be in a centralized facility anywhere in the country.

Instead, they're like, there's an air traffic control facility in every single district.

for political reasons. And it makes it incredibly inefficient. And one wire gets cut. If you got one big facility, you get it back up. As we saw. But you have 450 of them. Things happen all the time. And it just makes the system inefficient. I'm not actually advocating for privatizing the FAA because it's so politically toxic. But we're doing more than we've ever done.

But it's going to be hard for government to ever be leading edge on this. But what'll happen? Because, like, already certain areas capacity-wise are creaking at the seams, and, you know, air capacity grows 5% a year. We have an unstoppable force in the movable object. There's going to be limited... There's going to be fear of flight. So it's already happened in New York.

The FAA has... put on limits on a number of flights in New York. It happened this summer in Chicago. It's gonna happen more and more places. We hit the limit of what the FAA can manage and then that becomes the limit. That's the limiter. There's more space in the sky, but you've got to have a different air traffic control system and process.

And they're trying to modernize it. They are making good progress. I'm not trying to be totally negative. I'm not being negative. They're making more progress than has ever been made in my career. But they're never going to get to the kind of, like, if the people at Stripe were allowed to run it, like, they'd really increase. More progress would happen.

A lot more progress would happen. If we were allowed to run it, more progress would happen. Because we're not constrained by politics. They're constrained by politics.

Scott has spoken about how some flights take longer today than they did 50 years ago, despite planes flying a lot faster. All because of a bottleneck with air traffic control. Stripe Economics recently looked at a similar paradox with AI. So one study found that while AI can save workers 1.5 hours a week, those savings actually had little relationship with actual work output.

It turns out making individual parts of the system faster doesn't always make the whole system more productive. If you're interested in these kind of topics and you want to read more about AI and productivity or other research about the internet economy, go to stripeeconomics.com.

You said something at the Cranes business lunch in Chicago in August. You've had this sort of battle royale with American Airlines, very pertinent to me since I fly to Chicago the most, where it would actually be better for consumers if United was the dominant airline at Chicago. I wouldn't use the word dominant. If you were the largest airline, had infinite capacity to expand, how is that? And is that just another articulation of the premium strategy because more routes is a benefit outside of cost? It's the basic, it's understanding of how networks work.

So the real reason for that is there's a limited number of flights at Chicago. And so if you're going to add one flight to Milwaukee from Chicago, that means you can't fly. It's not the shortest, but it's short. You can't add somewhere else. And for a hub to work, you have lots of what's called catchment area flying. So United flies, I think, eight times a day from Chicago to Milwaukee on small airplanes.

People aren't going from Milwaukee to Chicago and getting off the airplane in Chicago. They're connecting on other destinations. And that's really important. We have several hundred of those catchment area flights for connecting customers within a few hundred miles of Chicago. American has totally duplicative services on that. Those do nothing for the city of Chicago.

They help support each of our two hubs. But by the way, the same exists in Atlanta and Dallas. Atlanta and Dallas are much smaller cities than Chicago, but they have more international service and more passengers. Like every metric you look at, they're bigger and they drive more economic activity for Atlanta and for Dallas. Single hub airports drive more economic activity.

And this is the reason, because they don't have to waste several hundred of their, Flight possibilities on catchment area flights. They have half as many. In America, there's like 16 flights a day. They have half as many catchments. And so what happens instead of having 16 flights a day to Milwaukee, you have eight flights a day to Milwaukee on bigger airplanes, by the way.

So you carry the same number of passengers. And you add an extra flight to Paris and an extra flight to Tokyo. You get more long-haul flying out of it. And so, like, I'm 100% sure. Like, there's no—Chicago should be— the biggest airport in the world. It's not, and it's because of this. I'm 100% sure it's better for the city of Chicago, and I think it's gonna, I mean, American's gonna lose probably a billion and a half in Chicago this year, and I think it'll eventually get there.

How much is your, you famously were from American, sort of passed over, came to United. How much is your competitive position versus American will drive some of your comments versus your sort of past will drive those comments? And when are you going to actually start taking real aim at Delta? That's the question we're looking for. So everyone thinks that it's personal for me.

I get it. Maybe a little bit. But it really isn't. In Chicago, there's sort of been a competitive battle there. But look at Our market share gains in Chicago, we went from having lower market share than American to basically having double the revenue share. Those are unprecedented kind of share shifts. The market share shift that we've had against Southwest and Denver is even bigger.

The market share shift we've had against Southwest and Alaska combined here in the Bay Area is even bigger. So it hasn't been directed at them. With respect to Delta, I think that what's happening right now with Starlink is the biggest push. That's what we want to get to. Is Ed going to lose his job because of Starlink? He's not going to lose his job over it.

And by the way, I have a lot of respect for Delta. I took inspiration from them. They were the first airline to start down this. building a brand loyal. I don't call it premium because I want to invest nose to tail for customers. Starlink applies to everyone. It's not a premium product. It's for everyone on the airplane. But they've done a lot of really good things.

But Starlink, I think Starlink behind the schedule is the most important thing for customers to choose an airline now. And we are going, today we're at 48% of our flights are on Starlink. In the next week, it's going to be up to 50. Way fewer than your seat miles, though. Why did you start on the little planes and not the big ones first? Because they were certified.

This is the FAA process. You have to get the other airplanes certified. And so we've been getting them all certified. We're doing about three airplanes a day. In fact, it's going to go up by two points in a week and a half. To this Asian airline point, you have a joint venture with ANA. And most people I know who fly over to the Pacific would often choose the ANA flights.

And now going forward, of course they're going to choose the United flights because of Starlink. Customers are going to try United because of Starlink. And then they're going to realize the technology in particular is better than anything they've seen everywhere else in the world. And we're going to get customers that have been loyal to other airlines that try us for Starlink and stay because the technology is better.

So with Starlink, we now have this moment where there's real differentiation between airlines that previously were closer. The differentiation has gapped out. The fact that every airline has not chosen Starlink suggests to me that the economic deal for an airline was not like an obviously, oh yeah, we must do this. It required... You know, there was a case you could have made to not do it because some airlines did not do it.

Can you talk us through how you made the decision to do it? How painful was the decision? It wasn't painful. It was... I thought it would be a big deal to customers and so wanted to do it. Economics were...

Yes, it's more expensive, but it's a whole lot better. You often get what you pay for, and that's true in this case. Mostly in airlines, you look at this like these things are incremental, and so it really takes time to put them on. The easiest way to put it on is to do it in a heavy check. So you got an airplane that's gonna be down, you strip the airplane down, And while you're working on it, you know, you already got the airplane down, you know, put Starlink on.

And that's how we started and, you know, we had, you know, we're only gonna do like 65% of our fleet because planes were retiring and, you know, and once we put it on the first aircraft, we started, we realized like, I just like all these anecdotes. Like I'm talking to people like, I'm switching to flying a regional flight because it's got Starlink and I was like, Holy cow.

I was booking a flight this week, and I was just thinking through it. I had to book around the Brewers game, whereas if I had known for certainty that my flight was going to have Starlink, I would have booked it during the game. And there's such a huge gap between maybe there's Starlink. Congratulations, by the way. Not yet. We're not talking about it right now.

Maybe there's Starlink versus there is definitely Starlink. So it feels to me like you actually haven't reaped any of the benefits yet, because certainty is going to make a huge difference. I think you're right. I think we've got some, but getting to 50% matters. But you're right. So we wrote out a tracker today that gives you a bunch more data.

We're going to put in the app sometime soon the probability that there'll be Starlink on your flight. So at least know the probability

for flights. And it'll be different. Like today, if you're flying on a... Max eight, if you're fine on a max eight, it might be 25%, but if you're booking for Christmas, it's 36%, because we know how many we plan to have done. And so we're going to have that. We also are going to have a bunch of premier markets that we're going to get to 100%.

So our first hub, I'm not going to tell you the date yet, the first hub that's going to be 100% Starlink is Los Angeles. So sometime in the first half of next year, if you're in LA. And is that because that's the most competitive hub? It's a competitive hub, but it also, like, It's also the kind of aircraft that fly there. So our only aircraft that are still a challenge, we have to get Boeing over the finish line on some of the certification work on the 787s.

We will get there. Yeah, we will get there. But, you know, if you've got a market like San Francisco that has a lot of 787s, it's going to take longer because Boeing is slower. Was the CAPEX or OPEX more painful in the economic model as you looked at it?

The numbers aren't that big. Oh, really? Well, I mean... But then, like, why is Delta's strategy rational? Or do you think it's, like, completely mistaken? It was a mistake. Okay. I think at all airlines, even the ones that kind of... If you watch the other airlines that picked it after United had done it, they're sort of stepping into it gradually.

That's just the way we've always done it in airlines. You know, everything is slow. Like, doing aircraft remodification takes eight years. Like, that's the way we've done it. And so I think it's just the way everyone has done it. And if you're thinking that this is like an eight-year project, okay, I'm a year behind on starting, but that's not that big deal.

United will be at 12%. We'll be a year behind. It's not going to be enough to matter. In a traditional way of looking at it, it can feel... I don't think any people, we even didn't appreciate how big it was. We thought it was big, but then we put the pedal to the metal, and SpaceX supported us. Is this going to be the biggest differentiator of all time? I think it is.

I think it's the biggest competitive advantage. And it's temporary. Everybody eventually is going to have high-speed, low-earth orbit. internet connectivity, it's gonna be a must-have. But we are gonna have a few years of being the only airline that has it at scale. And that's our mission, is I think we're gonna convince customers that United is the best airline.

And we're gonna get customers to switch their loyalty to United, get our credit card, switch their loyalty to United. Not because of Starlink. They're going to try us for Starlink and they're going to stay because all the other technology and everything else is better. And the technology in particular is so much better than technology. And it's accelerating because we're out there at tech stack.

And because we're like our gap is getting wider and wider with our technology every day. You have a two to three year window to woo customers. Exactly. Yeah, that's exactly right. What do you think of Elon's strategy of requiring airlines to make it free? We were gonna make it free anyway. Free was gonna be, although in fairness, free is not the value proposition.

Fast is the value proposition. And the truth is like on, I've flown all three of my big competitors who have it free on the legacy systems. And it's terrible. I've flown them each two or three times in the last year. It's terrible because there's not enough. It's physics. There's not enough bandwidth to make it free. I was sad when they started making it free.

Because I'm like, this is going to make my experience worse. It makes it unusable for almost everyone. Free was never the value proposition. Fast is the value proposition. And there's only one option for fast and storing. That is the only option. You can call it the other, fast and free, but it's not. It's like dial-up internet. It's slower than dial-up internet.

So you mentioned that in the long run, everyone will start weak. The technology stack is in theory. Or maybe Amazon, but they'll have low wealth. Right. How do you think about in the long run where... A reason people prefer, say, the Asian Airlines versus the American Airlines is they feel like the soft bits are better. Do you need to circle back around to that in the long run? I want us to be the best at everything.

And I acknowledge that the Asian and Middle East carriers are really good at service and product. Now, it does help that they're quasi-state carriers. entities and subsidize. So we can't do it and lose money. If you get ahead, like you start to have exponential benefits, you can go faster and do more things. I think being in the lead and never being complacent, we're gonna have to keep reinventing things and doing stuff to make it great for customers.

But I think we'll have a big lead. And when you have a big lead too, we'll have the resources to invest. You know, like everyone else is like mired in these, you know, hitting the Wall Street number for next quarter. And the only way to do that is to cut your investments. You know, like they get mired in the short-termism and they don't invest.

And like our constraint on investing in technology is how much can we manage? It is not money. You've talked about airlines being run by operations people where taking cheese out of the pizza is the only move. What has given you more

social permission with your investors, with your board to do things like the big aircraft order during COVID. We're going to do Starlink. It feels like you have taken bigger swings. Is that just you've seen the future better or do you somehow have more permission to take big swings? I think we're better at seeing the future. I guess, I don't know if we talked about it here, but I think reading as much as I do, you know, we talked about the two, like I, I think people that do that, connect dots, can see the things in the tails better than others.

They can spot the opportunity where other people don't. I have a great board who's been supportive. I spend a ton of time communicating with the board and keeping them involved. We talk about what's going on. I have a lot of support from them for doing that. From the external perspective, Wall Street almost always hates the big things we do.

And I don't care. What are some big things they've hated? The aircraft investment. They don't say don't invest in technology, but they want your CASMX, which is your cost per available seat miles. And the only way you can... We can't control airport fees are going up. Union contracts are what they are. The only way you can cut the budget...

is to not invest for the future. And we're going to invest for the future. And in the long run, it works out. And other CEOs, I'll hear other CEOs complain about, oh, Wall Street is short term. And what I say to them is, yes, they are. Stop complaining about it. That is what it is. But what you should do is invest for the long term and do the right thing.

But by the way, if it doesn't work, you ought to lose your job. And you ought to be comfortable with that. You

Make the big bet. If it works, great. Shareholders will like it. But if it doesn't work, you deserve to get fired. And if you're not willing to take that risk, then stop complaining about it. We need more gamblers as CEOs. More gamblers. I mean, everyone in tech loves, or I think a lot of people in tech love airlines. It's super interesting.

But the actual job, like how many employees does United have? 120,000. 120,000, which a wide range of skills and abilities. Some are on the ramp, some are doing route planning. How do you, in all this experience, like what is the key to managing that and getting people excited? You're dealing with unions, all these sorts of things. I think being the CEO of almost any company, but certainly for me, is really 99% one thing, create the right culture.

I was in LA yesterday and I told the whole team what I just told you guys, like the first hub that's gonna get all Starlink, You're going to get a lot of people that are coming across the terminal, which is where Delta is, across the roadway there to United. They're going to try us that are loyalists to another very good airline. Your mission is make sure they know United is the best airline in Los Angeles.

And they're all like, yeah! We can do it. It's fun. People want to win. It's fun. I want to come back to Wall Street. So, you know, you talked about investor perception. Historically, airlines were the...

We're the canonical example of a bad business. You know, the famous Buffett line of, you know, a farsighted capitalist would have shot down Orville Wright as Kitty Hawk. And the fact that airlines had cumulatively lost money until 1992, I think, like the entire industry since Kitty Hawk had lost money on an aggregate basis. That is no longer true.

It seems to have really changed. And now airlines are more robustly profitable. I think Berkshire owned at least some airlines stocks for a while recently. Has the structure changed? Presumably you think yes. And what has changed such that airlines are no longer the poster child? Yeah, well, yes and no.

Yeah, it had gotten better, but like you look at what's happening in the last 12 months and things have gone back. This year, six of 10 US airlines are going to lose money. And much of it's structural. You know, I talked about American earlier. American will lose a billion dollars, a billion and a half, probably going to lose about a billion and a half in Chicago this year.

And like the golden rule of airlines is you can't fly places that lose money. Like, you know, any business, like if something loses money and it's structural, like you have to stop losing money. This is, it's not unique to that airline. There's basically every airline, almost every airline in the country has a place where they lose a bunch of money around the globe.

You know, like some of the losses are like, lots of places that airlines have more than negative 100% margins. which sometimes people think is like mathematically possible because it's revenue, it's possible. And yet they still fly it. So ego is still big.

And ego is the reason those things I think have happened in the past. Ego still exists. But the structure of the industry that's different today is there are basically two winning airlines in the US, United and Delta. and we've created brand loyal customers fly us not just because of the schedule which is the commodity part of the business but because of all the other stuff we've talked about today and so even now with oil prices oil prices for us are up eight billion dollars this year our best year in history made five billion we're not gonna make as much this year as last but we're solidly profitable and it's just a completely different picture hang on so you think

we're still in the the juan trip era of um aviation where it's not being run by bean counters at every airline and they're making

kind of incoherent, irrational decisions based on ego? I wouldn't, it's probably not quite the one trip, but there's still a lot of ego that's happening where people are, you know, adding routes that like, I started as a route planner. I could look at like, you're going to lose, that's going to be a negative 40% margin, you know, between negative 30 and negative 50.

How are you guys doing on routes? You've added a bunch of, we used to add a report to it last week, all these like new cities. Yeah, 10 new international destinations, very cool. How do you make the decisions? Like when you launch Nuke in Greenland, like is that, you have a vibe that it could work? Is this like actually very, is it card counting or poker?

That one, it's different. It's hiring great people. Because I would have never picked Nuke or known Nuke. We got a guy named Patrick Quayle and a great team that are really creative. And they go look for things that are different and outside the norm, not in the data. We talked about data earlier. That aren't in the, because no one's ever done it.

So there's no data to support it. And Nuke has been really, really good as an example. Really? Yeah, people love it. It's a great place to go. We've added, so across the Atlantic, by next summer we'll have We had 23 destinations 10 years ago when I got to United. We'll have 53 next summer. We've only had two that didn't work. But we're also disciplined about it.

When they don't work, we stop. Our assets are fungible. Bergen, Norway didn't work. I think Norway's awesome. I think it should have worked, but it didn't. So we tried it, and it lost a little bit of money. It's not that much. And we just stopped. That's the great thing. We can try stuff and stop. But so the the fellow a Patrick Quaid I've had to quail.

Yeah, I've had a quail and How does he make the decision that? Nuke is ago. He did he has all kinds, you know, they're they're staying really connected to what's happening in the world another example I forget the names of these cities But we added a couple of cities in Spain and Portugal that are but had never even heard of and I don't remember them now the names that are part of pilgrimage trips.

So people, Catholic, they fly to one and they walk, you know, to the pilgrimage to the other, a couple hundred miles apart, and then they fly out of the other city. Oh, so you have to add both of them at the same time. And so we've added, you know, and anyway, he went and like read, somehow read about pilgrimages, went and got some data, how many people do it.

Then he went and found data that said, oh, I can see all these broken itineraries that somebody flew us into one of the cities and they flew another airline out of the other cities. And we added them and they went gangbusters. He, this year, took a trip to Uzbekistan and Kazakhstan. Like we can't fly there today because we can't fly over Russia.

But he's there like, you know. This could work. This could work down the road. So he's doing stuff, you know, he's doing stuff like that. And his team is great.

He'd be more interesting to me for one of your podcasts in the future than me. I'm very interested. Greenland, by the way, is fascinating. I love it. It's a country of 50,000 people, and they're just going gangbusters building airports. It's the only way to get there, to places. Yes, but like, sure, it's the only way to get there. And so an international airport in Nuke maybe makes sense.

They just replaced it and that's what allowed the new route that you guys have. But they're replacing the airport in Narsarskak. There's already a perfectly good airport there. And they're building a new airport there in the south, full jet-capable international airport. They love these capital projects for a country of like... 50,000 people.

It's such a cool, no pun intended, place to go. And, you know, it can drive the economy. 50,000 people, having people come in and, you know, it can drive the economy. I want to talk about the tech for a second. Yeah. So... How should we feel about the last few decades of,

you know, the actual airframe advances? Where everyone likes to talk about, you know, the 737 first flew in 1967. It flew at Mach 0.78. And the 737 MAX today flies at Mach 0.78-ish. Now...

It does burn 50% less fuel, the latest version, so that's a significant improvement. It is 30 to 40 times safer, so that's a significant improvement. But at the same time, people feel like, again, it's one of these examples people trot out of stasis. How do you feel about the rate of technological improvement in airframes? It's maddening that we haven't done more.

In fact, this book... Where is it? Impossible Factory. It's a Skunk Works book. I want to read this. I had not known there's a new Skunk Works book. Clarence Kelly Johnson, you know, and developing, you know, the SR-71, you know, the U-2, you know, in a couple of years from start to finish. I think the fundamental problem is Boeing and Airbus have a global duopoly and they have quietly, not officially agreed, but they have quietly agreed neither one of us will invest in new airframes.

They're pacing the frontier. And if you don't have an option, You know like we need a third aircraft manufacturer to be blunt. Okay, so you think there's basically a breakdown of competition? Yeah, and so like neither one of them their investors don't want to invest and so they just won't do it I've been begging them to both for 20-something years to build a 757 replacement Begging them and they just won't do it.

I am on a 757 going back to Chicago. I'm a little nervous about a great plane Yeah, takeoffs amazing. Yeah, it's a cool. It's a cool airplane. Oh Speed is obviously one thing, and obviously you guys are working with Boom, but speed is also hard and it requires much more fuel. Other than speed, what improvements would you like to see? Well, a couple.

The next generation, I think, of airframes, you could build on the current airframes. I think the biggest thing is probably going to be blended wing bodies. So think of the B-2 bomber. It's a much more efficient airframe. uh for flying and uh so turning that and we're an investor in a company called jet zero uh who's trying is that an airport challenge though too if you're here it's airport challenges yeah it's bigger so airport space but that's really a gate challenge so you got to re-gate i think that's an example of something engine technology i think can uh advance as well another cool thing by the way we're starting the relax road next later this year or next year,

which is in coach, you can put three seats and a bed comes out and you can lay down on them. But we have little United stuffies, airplane stuffies. I've already got some for my kids. My kids love them, but that's another cool United thing. Is that an example of basically a lot of the economic outcomes that you're looking for? I sort of pushed you on this with the premium question.

Yeah. Is how can you take a large fixed capital product and basically deliver infinite numbers of strata of like pricing. Yes and no. Like, I think of this as, I don't think of it that way. I think of we are trying to build a brand. We're trying to build a great brand. And something like Relaxro, I think will be profitable, but it's going to not even be around in our financials.

Right. But it's cool. And it's good to do stuff that's cool. Good for families. I also, I said earlier, I have seven kids, and I think of air travel through the lens of a parent traveling alone with a couple of young kids. How do we make it easy for them? If we can make it easy for them, we're going to make it great for everyone. And Relaxro is perfectly consistent with making it easy.

Starlink is great for them. Seatback Entertainment. I love walking through our airplanes with Seatback Entertainment, which a lot of airlines went away from. And you'll see kids watching, and parents just totally relaxed because their kids are watching Bluey. And it just makes it so much better. I heard you can now watch Shaky Pint on there.

You can now watch Shaky Pint on the Inflash Entertainment. That's cool. That's pretty cool. So people are probably watching this. Maybe I'll watch this. Exactly. You can just put it on. Okay, so when you're saying things like the relax row, social media has almost changed airline marketing where there could be things that are maybe not the...

Biggest from a ticket booking perspective, but if it gets people broadly excited about United that is valuable Yeah, and I do I think I look at we're trying to build a brand You know all the starling stuff that's happening like sure, you know, I feel bad for Ed just kind of you know But like I love it for us like we were actually we had a big push that was coming like we were always an ass one How'd you decide? to run those ads right we were already prepared we were waiting to actually we're going to cross the 50 threshold next friday um and so we're waiting until then to sort of like and we're going to really push like going so we're going to do it anyway but that was a

moment to like except our team is great maggie schmarren who's our vp runs that like it's awesome um and you know she did and one of the things one thing 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 it, like, well, this is pretty cool.

And people were asking, actually, I didn't read it. People were asking me, like, this is cool. Like, oh, what did we do? Like, that's cool. As we think about the airline business in the United States, you know, pre-1978, everything was very heavily regulated. United flew on routes approved by the government with fares set by the government.

I think people don't realize when they look at those old-timey 60s photos of 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. We're much better off these days when you actually have a real market and real price competition.

One of the places where we have Less of a free market in air travel is the slot system. 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?

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 for customers. Well, did that happen in Chicago, though? Maybe it was going to happen. It happened in Newark, historically. And we finally got it effectively slot controlled in the airport.

It's now the most reliable. Oh, you wanted slot controls because it's bad for customers? It's horrible for customers. Like, I bagged the FAA, and we finally did it. Well, but that's the contrast, right? In Chicago, you're making this move that this wacky law, every year they re- What's the wacky law? So every year they take a number of flights previously and reallocate the gates.

But it's kind of a weird thing because it takes a while to move the gates. So it's this weird time delay that's introduced into it. Yeah, it created a bad outcome. It's part of how American got to losing a billion and a half. Because what happened in Chicago, American wasn't paying attention and lost six gates to us. But they weren't paying attention.

It's like forgetting to renew the internet domain. It's like they just... By the time the roads were going on, United had added on so many flights. We hadn't done anything. We went back to our normal pre-COVID schedule. And American... was focused on the Sun Belt, and they've talked about it in public, you know, Phoenix, Dallas, Miami, you know, more demand, leisure demand, that's what they were 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 London to build facilities and stuff, and then they say, oh, we're going to take them away and give them to someone else.

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? Yeah. I think the better answer is to change air traffic control and create more slots. That's how 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 there's There's no low-cost, 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 have 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 the big airports in the country are up something like 70% of the expenses since pre-COVID to today.

They've just priced low-cost carriers out of the market. Well, did you price low-cost carriers out of the market? We didn't price them out. Well, you had the basic level, and you sort of did much more fine-grained cutting off of the seats. We stopped... The low-cost carrier business model was predicated on

having a price advantage, being able to charge a lower price. And we created a basic economy where we could profitably, and we upgauge airplanes, so we could profitably be competitive on price most of the time. And if we're competitive on price, there's no reason My joke was, people may make the mistake of flying Spirit once, but they're not gonna do it twice.

Why did Spirit go bust? Because they weren't charging as much as their costs. They were not able to charge enough. It's pretty simple. It was simple. They weren't able to charge enough. Because of cost inflation, basically. Cost inflation, but there's a whole bunch of things. 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. I was gonna ask. The fundamental premise of a low-cost carrier is flight to low-cost airports. You know, Southwest, when they started flying here, they flew to Oakland, not San Francisco. San Francisco's too expensive. In LA, they didn't fly to LAX. They flew to Burbank in Ontario.

LAX is too expensive. And Ryanair still does it. Ryanair doesn't fly to Heathrow. They don't fly to Charles de Gaulle. They fly to secondary airports because they're low cost. And all in the US, every single one of them, like... abandoned that, and then they went to fly into, I mean, I don't know why. Well, they run out of customers, right? Yeah, and they went into Chicago, and Newark, and San Francisco, and back to the New York area.

You can't charge 58 bucks when you're paying the airport authority 52. You just can't. Is it a chasing growth story? Like, I'm always very impressed by In-N-Out as a business because they don't chase growth. They famously do everything within one day's drive of the refrigeration centers. And so, you know, they are distribution centers. And so they're only in kind of the California West Coast type area.

And they don't feel the desire to go crazy on the menu and like we have the salad this and we have the whatever that. They keep the menu very narrow. And I feel like maybe if they're a public company, they would try to chase growth and we're going to expand this way. And they just do the same thing exceptionally well with a cost advantage.

Is the problem that as public companies maybe or as just like short-term oriented companies, they had this good thing flying to Oakland and flying to the secondary airports and for whatever reason they just got distracted from it? Yeah, I would actually say a little different than just chasing growth. I would say, know who you are, know what your strengths are, and stick to your knitting.

Companies are not good at trying to be something they're not. And in the past, you know, this predated me, but all the big airlines, you know, American, Delta, Northwest, Continental, tried to go compete with Southwest by creating airlines within an airline that were going to try to out Southwest, Southwest. And in Europe, they still do it.

And in Asia, they still do it. They try to out low-cost carriers, low-cost carriers, and they're terrible at it. And every single one of them has been. Nobody does it well. And by the way, Southwest is now trying to... be like us, and they're not gonna be very good at that either.

You've got to stick to the things that you're good at. We aren't gonna ever go try to compete with the Legion Airlines and be a Legion Airlines, because we'd be terrible. They're better at a Legion. If they try to compete with us, The low cost model works, but you have to understand what you are. You've got to stick to it. And you've got to accept that there's limitations.

Like, you know, I'm not going to be as big as United Airlines. I'm not going to fly to Chicago O'Hare. I have a great, Allegiant is an example. Allegiant Airlines, you know, which mostly flies to Vegas. They fall from small cities. They've done a great, you know, they're one of the four airlines that's going to be profitable this year. What else have you learned from Rainer? The guy's entertaining.

Michael O'Leary is entertaining. We would like to get him in the pub here. You got him here? No, no, I would like to. You'll get a few more swear words than you get out of me. He knows his business exceptionally well. He's a very impressive CEO. But they're also like in and out. They have avoided distraction. He's disciplined. They always get asked about transatlantic.

Discipline is probably a better way. It doesn't work because you don't get the low cost advantage when you can't have the number of turns be high enough. They get asked about Wi-Fi 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.

That's a better way of saying it. You have to be disciplined to be successful. And companies get stars in their eyes and they're not disciplined. What's the version of discipline for you? Because it's easy, like United, you guys are a huge global 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 a great wine list. And so what is your version of staying disciplined? For an airline business, discipline is really about where you fly. The foundation, our product starts with the route network. You fly routes that make money. And fly places that make money.

Like every time I go- Like where you less point to point in the domestic. So we don't fly point to point. Ah. And like I hear it all the time in LA yesterday when I do stuff at San Francisco tomorrow the employees like they're always asking wanting to fly You know new routes and point-to-point routes and like it won't work for us. We're an airline that flies to our hubs We fly to our hubs.

That's our strength and a whole bunch of reasons that works And we're not gonna go try to fly point-to-point routes But if you're not first you're last 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. Yeah, like, you know People in Dallas ask me, well, Glenn, are you not a player? Because we'd lose.

America has too much network depth. And 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 Dallas to LA, we can't compete because we don't have any connections. We're competing for 25% of the market. It doesn't work. Does that then mean the little decisions you make are, OK, should we fly from Dallas? Is it New York 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? Rarely. Is the last big hub up like Denver when you grew it hugely? But those were an existing hub that we chose to grow. In my 30-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. And so do you think it's basically impossible to launch a new hub these days, like building a new airport? It just hasn't happened in the last 50 years? Yes, is the short answer. So take the Southeast.

It's the one part of the country where we're We're number three. Because Delta has a hub in Atlanta, American 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 the airport's not big enough. They don't have gates, they don't have runways. You couldn't have 600 flights a day. Trying to do something just because it's a cool vision, we don't do it. We're disciplined. But this would be a big enough deal for a region that could you work with Raleigh-Durham to expand the airport? Expanding airports in this country is like, a decade-long process.

Yeah. More. That's optimistic, probably. Yeah. Okay, so you think it just... I think it's just, you know... Okay, so discipline for you... It's possible someday we'll, you know, at least experiment with going into more, into, you know, a 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 break-even-ish. But they've not lost money. You did, though. This is not a hub at all. But way back in the day, you used to have a hub at Narita. Yeah. And you've added a few connecting flights. There's one from Hong Kong to Thailand. And you're flying to Kaohsiung from Narita now. Is that just more on the margins sort of things? It's on 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, ANA didn't fly there. Wait, that's, I don't believe that. It was only in the summer, but it was a high percentage of people.

For vacation? Yeah. Am I missing something, and I haven't been to Ulaanbaatar, am I? I haven't been there yet. My mom travels a lot. She uses my flight benefits and travels a lot. This is awesome. Awesome. 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... Ulaanbaatar, it was a particular flight that it was 12%, you know, one time a day, at that time of day.

But then we also have all the ANA connections, and so they weren't flying there, Kaohsiung's the same thing. For us... Flight to Sapporo, that'll be fun. Sapporo is booking really well. It's... It's going to be... Is that for skiing? Skiing, yeah. But Japan has become like the hottest destination for... The tech people here in San Francisco.

People just love it. And even like in Dallas, people love Japan. 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. So what I'm taking away from this is that route selection makes or breaks airlines. Yes. And that it broke...

you know, Spirit or the low-cost carriers. It broke American and this, you know, frackeye you guys had at Chicago. Well, they haven't accepted that it broke them, but it did.

And then similarly, success means a disciplined route expansion strategy that understands your strengths. I mean, look, that's pretty insightful. That's like, I tell new CEOs, which many of them call and talk to me, Don't think anybody taking my advice yet, but I tell them the one thing I'll tell you Start with like the route the route network is the foundation if that's broken doesn't matter how good you do it 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&L what you should do You're gonna see a bunch of negative flying and when you ask people about it, they're gonna say it's strategic They're gonna have convincing excuses that well, they're gonna call it strategic. Yeah, I 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, like you have to cancel it. And they don't do it. One of the lies people tell themselves to convince... themselves to stay running a month. What does it mean to be strategic? Corporate customers, something like that.

Yeah, or credit cards. If we're not big in this city, then we just won't get any credit cards. Is that the biggest tail risk, if credit cards ever go away? No, it's not nearly as big as people think. The perception amongst the- Yeah, the perception is big, because people can see the round of revenue that we get. They say, almost all your net profit is coming from credit cards.

Yeah, but there's a cost. We carry over 50,000 people a day. 50,000 people today will fly free on United Airlines by using their credit card miles. So, like, nobody counts the cost. Oh, you're saying they just can't do an accurate contribution process calculation? Yes, all that we disclose is the revenue. Yeah, yeah, yeah. And everyone's like, oh, look at the revenue.

Like, well, 50,000 people a day are flying for free. There's a cost of carrying 50,000 people. Okay, so the whole Twitter meme of airlines or credit card business with airplanes attached, it's just they're holding the financial statement upside down. Well, they're ignoring half. They're looking at the revenue side and ignoring the cost. Ignoring the cost side.

I mean, it's important. It's good. Yeah, yeah. But it's blown way out of proportion. But it's blown way out of proportion. How do you think about changes to the frequent flyer 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— You, in general, just seem to want to keep the riffraff out, like with the Wi-Fi, with the— Ben wants the cutoff to be right below Ben's. Yeah, yeah, yeah. That's right. 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. And I want emptier lounges, so it's all good.

But what's the calculation in that? Delta obviously has gotten a lot of grief from my frequent flyers and the changes they've made. Yours seemed to go fairly well. What do you think that was? So I don't think about it through the lens of the frequent flyer program. I think about how do we build brand loyalty um and the frequent fire program is one of those things um and uh 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 uh to do it and you know clubs are you know how many people are global services member like people love being global service but we limit it um it's exclusive um there was one year

i thought i was gonna make it i mean just january passed and everything was very sad Clubs are another example. This is another thing. During COVID, I'm pretty sure we're the only airline that did this, we doubled down on club investment. So we've doubled our square footage of club space from pre-COVID to more than doubled. And it's going to grow by another 50%.

It was the one time in history, if you close a club, it's complicated, but you close a club, it makes customers mad in the short term. You have to do it sometimes to expand it. but COVID was like the one time in history, like we had no money, but like we had no customers. So like we can get away with doing it. We can do it faster. Like, so expanding club space is what we have.

We're going to do more of that. But those are the kinds of things that we're more focused on. But any changes to the Frequent Flyer program are about trying to build loyalty. And that is just we could deliver a better experience if there's fewer people. Well, sometimes it's that. And

yes, there's only a certain number we're putting more first-class seats on. But at any given time, we only have so many first-class seats on airplanes. And so we're calibrating the program to make it valuable for loyal customers.

You run the Starlines board. Not anymore, unfortunately. Oh, you used to. Carson. I see. What's that like? Because it's kind of an interesting construct, right? It's one of these businesses where the airline business is one of these businesses where these are competitors. I mean, kind of competitors, but you do run some overlapping routes.

But it's better to work together, but then you've got to pick who you work together. How much are you picking based on the vibe of the other CEO versus it's strategic? How much does that change? So we're all kind of locked into lines, and now it's hard to switch. And the real value for customers is being able to connect onto places that we don't fly to.

So when we fly, we fly into Frankfurt and Munich, and I think we have four times as many flights into Frankfurt and Munich as American and Delta combined. But it's because we have a partnership with Lufthansa. And those people, I think 60% of the people on our frequent Munich flights are connecting beyond Munich. And so they're going to Kazakhstan and all kinds of places that we don't fly to.

So that's the value for customers. The downside is, the experience doesn't feel the same as on United. And that's what we've been working to do. And we've made a lot of progress. Like a few years ago, actually, I finally asked and asked and asked other airlines about this. And I finally said, if you don't have seat assignments available for our customers, we're going to turn off our partnership with you.

and that got everyone to do it. We'd been begging them to do it for years, but it just wasn't a priority for them. That other stuff wasn't their priority, and we finally had to say, we're gonna cut you off unless you do it. And so my focus on our partnerships has been how do we make the customer, if a United customer is flying on any of our partners, how do we make it feel to them like it is still United Airlines? I think the other airlines ought to be doing this.

Is that the nature of the partnership? You provide the most customers and so that ultimately- Yeah, we're by far the biggest in the access to have the big hubs. Lufthansa is second. Across the Pacific, ANA is big. There's several big partners, but some of the others are like one of my favorite airlines is Croatian. I love the people. They're small, 21 airplanes.

One, I love Croatia. It's a great country. It's so fun. The people are awesome. I like the CEO. I like the culture. I like the people. It doesn't drive a ton of economic value. But when we try to do new stuff, like we're going to do new technology stuff, they're one of the smallest. They raise their hand every time. And so I appreciate that.

Your career is very much defined by consolidation and doing stuff together. And you've been talking about, oh, we should just buy American Airlines or whatever it might be. Is there any limit in your–

belief in the power of consolidation and delivering a better consumer experience? I was going to start with, thank you for adding it, my belief is delivering a better consumer experience works. We're not in a commodity business. Maybe not true in steel, because it's a commodity. But in non-commodity businesses, doing things that are good for your customers is the winning formula.

And the consolidation dynamic, actually, I hadn't thought about this, the consolidation dynamic that you're referencing is that ultimately, Eliminating duplicative flights in a capacity-constrained airport, which is all the major ones, means that you can have more selection as a consumer. That's the Chicago example. But it's not just that? It's not just that.

The American rationale is, I would like to create an airline that Americans broadly are proud of, that they think of as the flight carrier of the United States. If you go to Dubai, people are proud of Emirates. They may complain about stuff, but they're proud of Emirates. And they recognize that Dubai, the wealthy city-state, exists because of Emirates.

They're hand in hand. Singapore, same thing. Singapore is not without Singapore Airlines. And I would like to create the same thing. We also have a massive trade deficit with international airlines. It's two-thirds of the long-haul seats into the U.S. are from our competitors, even though only 40% of the customers are coming from overseas.

Because they're all state-subsidized, there's a bunch of reasons for it. I'm not complaining about those. But I would like to create an airline that can compete head-to-head with those airlines. And by the way, that doesn't create as many good jobs in the U.S., like a whole bunch of reasons. I would create a great airline in the U.S. that can really compete head-to-head with state-subsidized entities around the globe, not just in totality, but on every factor.

Anything we haven't covered? Well, he does have seven kids. He goes to soccer games, reads a lot of books, and apparently runs a global airline. Yeah. How do you pull that off? I'm very efficient with time management. I... Were you... Was this a post-kid thing? No, I've always been that way. Oh, you've always been that way. I'm like... I got a bunch of weird quirks, if you want to ask.

My wife can tell you weird quirks that are time efficiency. Please, tell us the weird quirks. All right. You can't set that up and then not share. Okay, okay. So, I... The one that people find the most amusing, I think, is... 90% of the time you use a fork, I use a spoon. And by the way, I use a serving spoon. Completely agree. It's so much more efficient.

A salad. Like eating a salad. But the lettuce will fall off, no? No, I cut it up. And then you can mix it all up too. It's tastier because you get all the little bits and pieces on the spoon. And it's like, I watched my wife eat this. She stabs a tomato and eats a tomato. Then she stabs. a piece of lettuce and eats a piece of lettuce. Mine doesn't taste good.

It doesn't taste good and it's faster. And like a salad which has little nuts and cheese crumbles and stuff, you eat it with a fork and all that's left, all this good stuff falls off and is left on the tray plate then. And I presume your wife loves you salad-splaining her like this and telling her how to do it. No, she gets super annoyed with me.

But the bigger things are I... I only have two to three hours of meetings a day. I limit myself to two to three hours. And I don't waste time. And in particular, I'm not on social media. I do write my own stuff for LinkedIn and Instagram, but I don't even know how to log on. And I like I watch other people on tik-tok or YouTube and like oh my god, what are you doing? It's such a time waste.

Yes, and I don't watch TV. Really? Yeah, I don't waste time And if you don't waste time you got time for a whole bunch of other stuff I need to sleep on right and I sleep eight hours tonight. I just I slept over nine. Yeah. Yeah, I do find the the short sleeping contest in American business, a very funny one, because it's like very proven deleterious cognitive effects.

Yeah. And you can watch people in meetings that don't get enough sleep and they're not technically asleep, but their brains are turned off. You can just see they're like, they're zoned out. Like, and I, I've always slept a lot, but it's one of the other things I used to do is count cards. And I particularly realized it When I'd go to Vegas to count cards, I would only sleep like three hours a night because I just wanted to maximize time at the table.

And I realized that when I got tired, like... You lost count? Well, I was having to go back and check. I was like... Normally, I could just glance at a table. I'd done it so much, I'd see it. And I was having to, like... and realized I'm probably making mistakes. I'm maximizing time and losing money. When I get tired, and I stopped doing that, I started just going to bed and getting back to my eight and a half hour sleep.

Are you still allowed back to Vegas or are you blocked? I mean, I'm allowed to go, but I'm not allowed to play blackjack. I went back for the Super Bowl when it was in Vegas and I'd gotten a... credit line set up to play poker. And so I sat down at the poker tables, had to give them my ID. And so they came back, and a manager came over. It was like 15 years ago that I got barred at the Bellagio last time.

The manager comes over and he's like, Mr. Kirby, you're welcome to play any game in the casino, but just so you know, still no blackjack. I wasn't planning to, but okay.

That is like, it's like when you get a little bit older and you buy some booze and they check your ID. That's like the platinum version of it. That's true, that's true. And with card counting these days in Vegas, it's so possible today. Yeah, so are they blocking this with multiple decks and shuffling frequently? Well, they've also changed the rules.

It's like 65 blackjack. The math is- They just subtly changed the odds. They've changed the odds. I don't think it's very subtle. Apparently, people still do it. All right. This has been fun. This is awesome. I enjoyed it. Thank you. Thanks, John. Got deep into a lot of stuff. See you again.