# The airline CEO putting Starlink on every plane Markdown copy of https://realalpha.app/v/3Lc0xfW4r9Q/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. Scott Kirby says United’s edge comes from disciplined route choices and technology investments that improve the customer experience. - Show: Cheeky Pint - Hosts: [John Collison](https://realalpha.app/people/john-collison/) & [Ben Thompson](https://realalpha.app/people/ben-thompson/) - Guest: [Scott Kirby](https://realalpha.app/people/scott-kirby/) is CEO of United Airlines. - Published: Oct 27, 2026 - Length: 1 h 20 m ## The best minutes - [0:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=22) [Contrarian bets pay when consensus relies on bad forecasts](https://realalpha.app/s/contrarian-bets-pay-when-consensus-relies-on-bad-forecasts/) (6 min) - [31:40](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1900) [Starlink wins customers because speed matters more than free Wi-Fi](https://realalpha.app/s/starlink-wins-customers-because-speed-matters-more-than-free/) (6 min) - [57:19](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3439) [Low-cost airlines fail when they abandon cheap airports](https://realalpha.app/s/low-cost-airlines-fail-when-they-abandon-cheap-airports/) (4 min) ## Also worth watching - [1:01:13](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3673) [Money-losing routes should not survive under a strategic label](https://realalpha.app/s/money-losing-routes-should-not-survive-under-a-strategic/) (7 min) - [21:59](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1319) [Air traffic control is the main limit on airline growth](https://realalpha.app/s/air-traffic-control-is-the-main-limit-on-airline-growth/) (4 min) - [10:24](https://realalpha.app/v/3Lc0xfW4r9Q/?t=624) [United takes seatback software in-house to personalize flights](https://realalpha.app/s/united-takes-seatback-software-in-house-to-personalize/) (3 min) - [19:45](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1185) [AI could cut Denver's summer weather delays by up to 75%](https://realalpha.app/s/ai-could-cut-denvers-summer-weather-delays-by-up-to-75/) (2 min) - [44:10](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2650) [United looks for route opportunities beyond standard demand data](https://realalpha.app/s/united-looks-for-route-opportunities-beyond-standard-demand/) (3 min) Skip the Chicago market-share debate, airline-profitability discussion, alliance details, and closing time-management stories. ## Full analysis: Scott Kirby agrees United has two to three years with Starlink - Kirby agreed with a host’s two to three year window to turn Starlink into customer loyalty. - The advantage is temporary, and the episode offers anecdotes rather than measured retention or booking lift. - The test is whether faster Wi-Fi wins repeat choice before rivals catch up. Its 6 sections, what it means for you and what to watch are on [the page](https://realalpha.app/v/3Lc0xfW4r9Q/#analysis), free with an account: - [36:26](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2186) Kirby agrees United has two to three years to convert Starlink users - [1:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=82) United ordered aircraft as rivals retrenched - [12:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=748) In-house software makes service changes possible - [36:39](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2199) Wi-Fi speed is the pitch, not free access - [22:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1329) Air traffic control can cap United’s service gains - [1:07:25](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4045) Route economics discipline United’s growth choices ## Summary Scott Kirby is CEO of United Airlines and took over in May 2020, at the height of the pandemic. He describes leading United’s fleet expansion and investments in its technology stack, including a fleetwide Starlink rollout. Kirby argues that United can win by making large bets when competitors pull back and by investing in aircraft and technology before the payoff is clear. He says route economics and hub connectivity determine whether an airline can succeed, while low-cost carriers struggle when they leave their operating model or fly from expensive airports. He sees Starlink and United’s broader technology stack as ways to differentiate the customer experience. Kirby identifies air traffic control, rather than airport capacity, as the industry’s main growth constraint and says politics slows modernization. ### Minute by minute - [0:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=22) **Bet against the consensus.** Kirby says United ordered 200 widebodies and several hundred narrowbodies during COVID, when other global airlines were retiring widebody aircraft. He argued that travel demand would recover despite experts predicting it would remain down 50% forever, and said United could benefit even if it was only not completely wrong. He also says surveys can capture how customers feel about past experiences, but are poor predictors of what they will want later. - [6:39](https://realalpha.app/v/3Lc0xfW4r9Q/?t=399) **Modern systems enable speed.** Kirby says United began a several-hundred-million-dollar technology project during COVID to move off mainframes and modernize its data systems, despite no clear ROI. He says the investment lets the airline move faster. After three one-hour programming lessons, he built a sports-betting tool in about two and a half hours that compared odds across sportsbooks and placed bets. - [11:36](https://realalpha.app/v/3Lc0xfW4r9Q/?t=696) **Bring customer software in-house.** Kirby says United is the only airline that owns its reservation system, which Copa Airlines also uses. He says United is also taking over seatback map software from Panasonic so it can personalize the experience, including remembering a traveler’s map preferences and marking milestones such as a frequent flyer’s two-million-mile flight. - [15:11](https://realalpha.app/v/3Lc0xfW4r9Q/?t=911) **Make disruptions actionable.** Kirby says United wants to give travelers useful choices during weather disruptions, including estimated disruption probabilities for alternative flights. He cited a test in which sharing a weather radar map moved customer NPS from negative 60 to positive 60. He says AI simulations could help reduce weather-related delays in Denver by 50% to 75% in summer. - [21:59](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1319) **Air traffic control limits growth.** Kirby identifies air traffic control as 90% of the industry’s capacity problem. He says annual appropriations and political constraints slow modernization, while control facilities are spread across many districts for political reasons. He expects capacity limits to lead to fewer flights in more places, though he says the FAA is making progress. - [26:54](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1614) **Hub networks shape city outcomes.** Kirby argues that Chicago could support more long-haul service if one airline operated a larger hub, because competing airlines duplicate short-haul feeder flights that use limited capacity. He says United flies to Milwaukee eight times a day largely to connect travelers onward, while a single hub could use fewer, larger flights and add routes such as Paris or Tokyo. - [30:07](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1807) **Starlink makes speed the hook.** Kirby says Starlink is worth its higher cost because fast, reliable internet—not simply free Wi-Fi—is the customer value. United had Starlink on 48% of its flights and expected to reach 50% soon; Kirby said Los Angeles would be its first fully equipped hub in the first half of the following year. He expects the rollout to give United a few years of differentiation at scale. - [38:23](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2303) **Invest beyond quarterly targets.** Kirby says Wall Street often opposes large investments, but he would rather invest for the long term and accept accountability if a bet fails. He says six of 10 U.S. airlines are expected to lose money this year, while United remains profitable despite an $8 billion increase in oil costs. He credits customer loyalty and differentiation with changing the industry’s economics. - [44:01](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2641) **Route growth needs disciplined bets.** Kirby says United’s route planners look for demand that may not show up in conventional data, citing Nuuk and paired pilgrimage destinations in Spain and Portugal. He says United grew its Atlantic destinations from 23 to 53 in 10 years and stopped flying the two that did not work. He also criticizes Boeing and Airbus for not investing in new airframes, and points to blended-wing designs, JetZero and a planned Relax Row. - [51:56](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3116) **Brand value goes beyond bookings.** Kirby says customer-facing features can build United’s brand even when they are not large revenue drivers, and praised a marketing campaign launched without layers of approvals. He says slot controls can protect reliability when airports are overscheduled, while better air traffic control could create more capacity. He also says American lost Chicago gates after failing to restore its schedules. - [56:06](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3366) **Low-cost carriers need low-cost airports.** Kirby says New York airports charge $52 per passenger, while Spirit’s average fare was $58 before fuel, aircraft, payroll or maintenance costs. He argues that low-cost carriers weakened their model by leaving secondary airports for expensive hubs. He points to Ryanair, which continues to use secondary airports and stays focused on its cost advantage. - [1:01:13](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3673) **Route networks are the foundation.** Kirby says United’s strength is flying through its hubs, not competing on point-to-point routes, and that a route that loses money should not be excused as strategic. He says opening a new hub is rare and difficult: a Southeast hub would need 600 flights a day to compete, but Raleigh-Durham lacks the airport capacity. He also says United adds some Tokyo-connected routes when its data shows demand. - [1:07:38](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4058) **Loyalty includes hidden costs.** Kirby says credit-card economics look overstated when analysts count revenue but omit the cost of carrying more than 50,000 award travelers a day. He frames loyalty programs and club capacity as ways to reward loyal customers, and says United presses alliance partners to make the experience feel more consistent, including by offering seat assignments. He also wants to build a U.S. airline that can compete with state-subsidized international carriers. - [1:15:34](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4534) **Protect time for focused work.** Kirby says he limits meetings to two or three hours a day, avoids social media and television, and sleeps eight and a half hours a night. He also described using a serving spoon for most meals as a time-saving preference and said lack of sleep hurt his accuracy while card counting. ## Transcript Cheeky Pint, hosted by John Collison and Ben Thompson, with Scott Kirby. Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. [0:00](https://realalpha.app/v/3Lc0xfW4r9Q/?t=0) Talking to people like, I'm switching to flying a regional flight because it's got Starlink in it. I was like, holy, free was never the value proposition. Fast is the value proposition. And there's only one option for fast and Starlink. 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 so back during covid um every single expert in the world said travel demand is going to be down by 50 forever that's like what everyone said um it one other point like you should ignore the experts in the outside of two sigma the tails experts are terrible uh and i just thought they wrong, that I thought COVID was going to be deep and last a long time would end and travel demand would recover. [0:55](https://realalpha.app/v/3Lc0xfW4r9Q/?t=55) 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 wide body 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 gonna do the biggest. How big was the order? 200 wide bodies, and then we did another several hundred narrow bodies. [1:26](https://realalpha.app/v/3Lc0xfW4r9Q/?t=86) Okay, so pretty big. And those are airplanes that list for, that we get a big discount, but they list for like $400 million. Sure, yeah. And I told our board, this is one of those cases, because everyone else is shrinking, [1:39](https://realalpha.app/v/3Lc0xfW4r9Q/?t=99) **Scott Kirby:** we don't have to be right. We just have to be not totally wrong. [1:44](https://realalpha.app/v/3Lc0xfW4r9Q/?t=104) If we're not, so it's just one of those situations where the odds are so stacked in your favor. And people out here in Silicon Valley do this kind of stuff all the time where figure out something that 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 there's been this cycle with large capital purchases is actually also a tech story that's relevant with memory. Like Samsung came to down memory by systematically investing into every downturn because it's very cyclical. And obviously, it's hugely beneficial today. [2:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=142) The flip side of that is everyone wants to invest when it's at its peak. Have we gone full circle? 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 away. 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. [2:55](https://realalpha.app/v/3Lc0xfW4r9Q/?t=175) Like we got really good pricing, for example, during the downturn. You're the only person ordering aircraft. Because we're the only one in the world. And we sort of launched the market. 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. Like 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. Like, but, and that was. [3:59](https://realalpha.app/v/3Lc0xfW4r9Q/?t=239) True what they thought at the time, but like once it was over, of course they were going to go back to traveling again. So I ignore, and by the way, I said this earlier, like 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. Famously in finance, 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. [4:35](https://realalpha.app/v/3Lc0xfW4r9Q/?t=275) 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 Shoals, you know, there's such a dumb model for valuing options 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 Shoals has a lot of assume a spherical cow-like assumptions baked into it. [5:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=309) Okay, I love hearing you talk about the over-fixation on surveys, but like the travel industry, the airline industry, loves surveys. You know, 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, your opinions should survive contact with reality, but the metrics are not going to tell you what to do. And it sounds like... Yeah. So we use surveys. I like surveys for how did people feel about stuff we've already done? [5:44](https://realalpha.app/v/3Lc0xfW4r9Q/?t=344) I ignore surveys for what are we going to do in the future. Apple Famousy 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 I, you know, stuff that we're doing right now. Today, we rolled out a Starlink tracker. We didn't ask anyone about that. Like, 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. When you're getting to the second thing, which is people try to overmeasure tiny steps, and it's just like, do the Starlink tracker. If it's not useful, whatever. [6:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=369) 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, 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. It takes 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. How important is your ability to do these sorts of experimentation? We talked, you know, 10, 8 months ago, redoing your whole tech stack so you could sort of get these things on top of it. [6:46](https://realalpha.app/v/3Lc0xfW4r9Q/?t=406) 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. And, 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 going to double down on technology business. 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, you know, that are modern, that we can, you know, access the data just to really modernize our tech stack. [7:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=448) 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 them easy and do them fast. So we started that in 2020 in an anticipatory and it's really paying off today. So my AI epiphany that I think has happened within the last eight months is I don't think AI, like summarizing documents and all that kind of crap, I think it's like ridiculous. [8:00](https://realalpha.app/v/3Lc0xfW4r9Q/?t=480) Summarize my calendar, summarize my day. 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 if you want me to tell you the stuff I did. No, we want to see the Vine Coded app. I don't know if you want it out right now. 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, which 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. [8:37](https://realalpha.app/v/3Lc0xfW4r9Q/?t=517) It took about two and a half hours of run time. But I did a full workout. Like, I go time. You know, it takes time to run. Yeah. I do the exact same set of my gym. I actually have, like, 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 I, on my own, in two and a half hours, created 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 sportsbooks, Kalshi being one of them, not actually a sportsbook, but four sportsbooks. [9:12](https://realalpha.app/v/3Lc0xfW4r9Q/?t=552) 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. We're aggregating the switch points. We're blocking you pretty soon, yeah. And I could do it with three hours of tutoring 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 a mess. 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. [9:46](https://realalpha.app/v/3Lc0xfW4r9Q/?t=586) So I remember that was actually flying the next day. It went off without a hitch. And we actually, that one, you know, we do for those, is, I think I told you, like, we, just in case, like, we canceled several hundred flights on that day. So, well, just in case something goes wrong, we're not putting customers in. That was a switch from one of the biggest, you know, one of our biggest, most critical mainframe systems that's tied into everything. We felt really good about it. We thought, but, you know, like, those things are so big and complicated. Turning off a legacy mainframe system and turning on the new system. [10:18](https://realalpha.app/v/3Lc0xfW4r9Q/?t=618) 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 devendorization and bring the tech in-house. If you look at why Tesla was so successful, they realized that software was important to cars. And the wing mirror and the wing mirror adjuster is made by the sub-vendor that does that. And so you can't centrally control it and you just need to own the tech stack. [10:47](https://realalpha.app/v/3Lc0xfW4r9Q/?t=647) 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. [10:55](https://realalpha.app/v/3Lc0xfW4r9Q/?t=655) **Scott Kirby:** We're the only airline in the world that owns our own reservation system. [10:57](https://realalpha.app/v/3Lc0xfW4r9Q/?t=657) 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. Sure. And because we own our... It's a legacy... We locked into it. Like legacy decisions that we own our own mainframe. I mean, 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. And, like, they didn't want to keep supporting it. [11:29](https://realalpha.app/v/3Lc0xfW4r9Q/?t=689) So, we had to, like, we lucked into it. Like, but we had to support it on our own. But it's been huge. And now we're taking over all kinds of other parts of the tech stack. Partly because we do things, you know, it's so much more complicated at United than it is at most airlines. around the world size and complex the size and complexity is just much higher um but i'll give you another example of one that we're taking over um that i got so frustrated about the seat back's entertainment screens um i didn't actually realize until i started complaining about the maps the maps are terrible like the map like i just want a map to show up like go i'm into maps go where i'm going if i can zoom in zoom out if i want and the stupid map switches to the globe like i know like 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 on my birthday or whatever i do nothing but have the map on the whole time i want to have my map preferences. [12:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=748) 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. You can get to other stuff. It's just going to pop up with the map on the screen. These are little things, but 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, like, 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 on the bottom. And I say, congratulations, Will. But it's going to do a countdown, like 1-9-9-9-9-12-13-4. [13:12](https://realalpha.app/v/3Lc0xfW4r9Q/?t=792) And there's like celebration. And the flight attendants are going to all know exactly when you hit two million, wherever the country you hit. I mean, it's a little thing, but it's cool. and you know 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? I want your excellent wine selection. [13:42](https://realalpha.app/v/3Lc0xfW4r9Q/?t=822) Do you want your gin and? I don't think we have gin and tonic 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 deliver something i didn't expect yeah the question is how do you handle that becoming a feature so like i was traveling this summer and my flight was delayed out of madison due to 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 wasn't 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 taken off i'm like if american airlines does that i don't care it's my expectation yeah i was kind of crushed because i like so you're surprising to like feature yeah but i'd already internalized it as you do this amazing thing yeah um and it's a large airline how do you like it's hard to have you know we've we um we have to get really good at communicating uh on it um a couple things first on something like that we have to get really good at communicating the seatback screens now are going to be helpful too we're going to tell you that we're going to [14:42](https://realalpha.app/v/3Lc0xfW4r9Q/?t=882) put it on the screen so the seatback 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 your connection. 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? [15:08](https://realalpha.app/v/3Lc0xfW4r9Q/?t=908) No, no, you shouldn't be disappointed. Because what we should do is communicate with you really well on that. But 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, is 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? Can I do about that? Like, what can you do? [15:39](https://realalpha.app/v/3Lc0xfW4r9Q/?t=939) Yes, it's December in Denver. I'm aware. We'll 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, it's going to say, your flight. flight to Denver has a 41, we estimate 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. [16:11](https://realalpha.app/v/3Lc0xfW4r9Q/?t=971) 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, their frequent flyer gets on the airplane and says, wow, I've never seen that before. And by the way, we get credit for that one time. I know. 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 like you can't ever rest. You can't be complacent. [16:47](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1007) You can't, like, 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, you know, 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 bench maxing in AI, where people are kind of optimizing for the wrong things. All the top global airlines, which feature heavily kind of the Asian and Gulf airlines, you know, do so because they have like really nice meals and very well-coyed flight attendants and, you know, all these things. [17:23](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1043) 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. And like I say, schedule is the number one reason people pick an airline. But everything else matters for brand loyal customers. And it's service, product reliability, and technology. And the Asian and Middle East carriers do better than the U.S. airlines on product for sure and probably service too. I think we do a really good job, but they have different cultures for service. So they do better on that. [17:57](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1077) But I think technology is the differentiator. And United, that's why I now believe that United 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 and we'll get this, AI allows us to institutionalize this. But if you're gonna have a delay, like sending customers weather radar maps and like 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 uh you couldn't and so we're like why we'll find outside we we sent half the people the normal weather delay which they think you're lying um because sunny outside like you must be lying to me um and we sent half of them a picture of With the radar map, and you have to fly through this line of thunderstorms, and the route's closed because it's unsafe. [18:56](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1136) 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 send them a picture of the map. 120-point difference. It wasn't just that they weren't mad. They were actually happy. They're like, thank you for everything. Yeah, it was better than an on-time flight. People can handle, like, they understand they don't want to do something that's unsafe. But they don't like uncertainty. It's like a lot of what you're describing is expectation management and communication. It's being a key part of the experience because this is high stakes for people. [19:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1168) Yeah, I would leave the expectation management out of it. It's communication. People should expect that we're going to get expectations management. 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. Our job is to try to, it does, but our job is to try to figure out the 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. [19:59](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1199) Denver is really... You're a Bet Noir. Well, no, it's not. It's actually easier than the other. Newark is the hardest. My two options are Chicago and Denver. It's just a roll of the dice. Yeah, yeah, yeah. But this will help, like Denver especially, because Denver and the— winter storms are actually pretty easy. You know what's happening. Pop-up winter storms are what's hard. The reason is because if a lightning strikes within three miles of the airport, the ramp closes for 30 minutes. People are allowed to be outside. Which one is dumb. Like 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 from the west to the east and it happens west of the airport, you should probably close it. [20:38](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1238) 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 will happen is there'll be a forecast in the afternoon for there's going to 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 quarter posts, and they just pull down the amount of traffic that's going through the airport proactively, take the worst case. But when you look at the data, like, well, sometimes the weather is to the southeast, but in most cases, you can use different arrival routes and departure routes, but you can keep the airport running. [21:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1269) Because there is nothing around Denver Airport, so you have lots of space to work. Yeah, and you can keep the airport running. [21:14](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1274) **Scott Kirby:** We can probably reduce 50% to 75% of the weather-impacted delays in Denver in the summer by using this kind of technology. [21:21](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1281) I mean, it's just transformational because that's my point about expectation management. Instead of just saying, oh, weather, like my previous employer, I had told people, 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 have to, you know, we're going to be safe. We're never going to do anything that's unsafe. 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. [21:51](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1311) I want to have our culture be, we find ways to overcome the challenges, to try to manage your 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. [22:24](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1344) And look, we have, the president is supportive. He's the most pro aviation, you know, he knows about aviation, 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, speaking or something, I would get a response within 30 seconds. Brian Bedford's best FA administrator we've ever had. But it's the government. It's just so hard for the government to give the, I mean, just take the appropriations process. These are the kinds of capital projects that are five to 10 years to get done. [22:56](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1376) 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 passed all months. Like, it is absurd. Could the airlines fund it to get around the... If they would let us. I mean, 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. [23:38](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1418) Well, 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's several political groups that are opposed to it. The biggest being private jets, who today, airlines pay 100%. of the fees that the FAA 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. And I think that's probably the biggest impediment to, you know, modernizing the FAA. But the problem is anything, even anything that's done through the government, it's, you know, like you go and like the government's just not efficient at stuff. [24:25](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1465) Like I'm not, 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 going to put in my district? And so think about air traffic control. Air traffic controllers don't need to be at airports. They mostly sit in basements, look at screens. [24:42](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1482) **Scott Kirby:** They can be at a centralized facility anywhere in the country. [24:46](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1486) Instead, 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've got one big facility, you get a backup. 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 will happen? Because already certain areas capacity-wise are creaking at the seams. [25:26](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1526) and, you know, air capacity grows 5% a year, just we have an unstoppable force in the movable object. Yeah, it's, there's going to be limited, there's going to be fewer flights. 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 going to happen more and more places. Like, 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 process. And they're trying to modernize it. Like, they are making good progress. I don't want to be, like, 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. 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. [26:21](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1581) 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. [26:58](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1618) 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've flown in 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. [27:32](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1652) 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. We're not carrying, people aren't going from Milwaukee to Chicago and getting off the airplane to Chicago. They're connecting on to other destinations. And that's really important. And we have several hundred of those connected. you know, catchment area flights for connecting customers within, you know, a few hundred miles of Chicago. American has totally duplicative services on it. 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 the re this is the reason because they don't have to waste several hundred of their [28:37](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1717) flight possibilities on catchment area they have half as many in america there's like 16 flights they have half as many catch 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. [29:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1749) And I think it's going to—I mean, American's going to 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. We sort of passed over at King 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. Like, I get it. Maybe a little bit. But it really isn't. You know, in Chicago, there's sort of been a competitive battle there. [29:49](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1789) 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 in Denver is even bigger. The market share shift we've had against Southwest in 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? He's not going to lose his job over it. [30:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1822) And by the way, I have a lot of respect for Delta. I took inspiration. 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. um 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 because they were certified this is the fa process you have to get the other airplanes certified um and uh and so we're getting we've been getting them all we're doing about three airplanes a day i mean in fact it's going to go up by two points in a week and a half. [31:10](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1870) That's all they've got to do. To this Asian airline point, like you have a joint venture with A&A. And most people I know who fly out to the Pacific would often choose the A&A flights. And now going forward, of course they're going to choose the United flights because of the 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 are loyal to other, have been loyal to other airlines that try us for Starlink and stay because the technology is better. [31:36](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1896) So with Starlink, you know, 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. 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 I wanted to do it. [32:12](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1932) 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 at airlines, you look at this, like these things are incremental. And so it really takes time to put them on. And the easiest way to put it on is to do it in a heavy check. So you got an airplane that's going to be down, you strip the airplane down. And while you're working on it, you already got the airplane down, put Starlink on. And that's how we started. And we had, we were only going to do like 65% of our fleet because planes were retiring. And once we put it on the first aircraft, we realized like, I just like all these anecdotes. [32:49](https://realalpha.app/v/3Lc0xfW4r9Q/?t=1969) 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. No, 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. 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. [33:23](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2003) 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, you know, if you're flying on a Max 8, if you're flying on a Max 8, 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 gonna have a bunch of premier markets that we're gonna get to 100%. [34:00](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2040) So our first hub, I'm not gonna tell you the date yet, the first hub that's gonna 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, but 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 look at it? [34:43](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2083) The numbers aren't that big. Oh, really? Well, I mean- But then why is Delta's strategy rational or do you think it's completely mistaken? It was a mistake. 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, just, like, that's the way we've done it. And so I think it's just the way everyone has done it. And, like, 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. [35:18](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2118) You know, United will be at 12%. You know, we'll be a year behind. like it's not gonna be enough to matter like it's a you can in a traditional way of looking at it it can feel rational i don't think any people we even didn't appreciate how big it was thought it was big but then we put the pedal to the metal and spacex supported us and going is this gonna be the biggest differentiator of all time i think it is i think it's the biggest competitive event and it's temporary like it's not everybody eventually is going to have yeah high speed low earth orbit internet connectivity. It's going to be a must-have. But we are going to have a few years of being the only airline that has it at scale. And that's our mission is we're going to convince customers that It is the best airline, and we're going to get customers to switch their loyalty to nine, get our credit card, switch their loyalty to nine, and not because of Starlink. [36:07](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2167) 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 other, and it's accelerating because we're out there at TechStack, 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. 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, so, you know. Free was gonna be, although, in fairness, free is not the value proposition. [36:39](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2199) Fast is the value proposition. And the truth is, like, 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. free. Because I'm like, this is going to make my experience worse. It makes it unusable for almost everyone. [37:02](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2222) **Scott Kirby:** Free was never the value proposition. Fast is the value proposition. [37:05](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2225) And there's only one option for fast and free. 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 have Star Week. The technology stack is just in theory. Or maybe Amazon, but they'll have low wealth. 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. [37:34](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2254) 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 entities and subsidized. 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 going to have to keep reinventing things and doing stuff to make it great for customers. I think we'll have a big lead. And when you have a big lead, too, we'll have the resources to invest. Everyone else is mired in these hitting the Wall Street number for next quarter. [38:13](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2293) And the only way to do that is to cut your investments. 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, yeah, 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? [38:53](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2333) 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 think people that do that, connect dots, can see the things in the tails better than others. It 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. [39:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2368) 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 Chasm X, which is your cost per available seat mile, to be like, we can't control airport fees that are going up. Union contracts are what they are. Like the only way you can cut the budget is to not invest for the future. And like, we just, we're going to invest for the future. And in the long run, it works out. And like other CEOs, like I'll hear other CEOs. complain about oh wall street is short term and like like and what i say to them is like yes they are like that's like stop complaining about it and that is what it is but what you should do is invest for the long term 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 get paid a lot of money like 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. [40:32](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2432) More gamblers. I mean, everyone in tech loves, or I think a lot of people in tech, love airlines. It's super interesting. Yeah. 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 L.A. yesterday, and I told the whole team what I just told you guys. [41:10](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2470) Like, the first hub that's going to 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 loyalist 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 canonical example of a bad business. You know, the famous Buffett line of, you know, a farsighted capitalist would have shot down Orville Wright at Kitty Hawk. [41:51](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2511) 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 airline 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. So, yeah, it had gotten better, but, like, you look at what's happening in the last 12 months, and things have gone back. [42:25](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2545) This year, six of 10 U.S. airlines are going to lose money. And much of it's structural. You know, I talked about America earlier. America will lose a billion dollars, a billion and a half. They're 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. [42:50](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2570) You know, like some of the losses are like lots of places that airlines have more than negative 100 percent margins, which sometimes people think is like mathematically possible because it's revenue is 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 U.S., United and Delta. And we've created brand loyal customers. 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. [43:29](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2609) And so even now with oil prices, oil prices for us are up $8 billion this year. Our best year in history made $5 billion. We're not going to make as much this year as last, but we're solidly profitable. And it's just a completely different picture. Well, hang on. So you think we're still in the Juan trip era of 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? It's probably not quite the Juan trip, but there's still a lot of ego. that's happening um where people are you know adding routes that like i started as a route planner i could look like you're gonna lose that's gonna be a negative 40 margin you know between negative 30 and negative 50. how are you guys thinking about routes you've added a bunch of we used to add to it last week all these like new cities yeah 10 new international this is very cool how do you make the decisions like uh when you launch nuke in greenland like is that you have a vibe that it could work is this like actually very dear is it card counting or poker uh it's uh that one it's different it's hiring a great it's hiring great people because i would have never picked nuke um or no nuke uh we got a guy patrick quayle and a great [44:38](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2678) 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 um that aren't in the dick because no one's ever done it so there's no data to support it and nuke has been really really good um as an example yeah people love it. It's a great place to go. We've added, so across the Atlantic, by next summer, we'll have 53, 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. That's the great, 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 fellow Patrick Quaid? Patrick Quayle. Yeah, Patrick Quayle. How does he make the decision that nuke is a go? He has all kinds. 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, that I've never even heard of, and I don't [45:52](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2752) remember them now uh the names that are part of pilgrimage trips so people catholic they're passing probably 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 you have to add both of them at the same time and so we knew we've added you know and anyway he went like read it somehow read about pilgrimages went and got some data how many people do it then he went and found data that said oh i [46:17](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2777) **Scott Kirby:** 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. [46:24](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2784) 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. All right. 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. But. He'd be more interested in me for one of your podcasts in the future than me. Yeah, yeah, yeah. 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. Where, obviously... [46:57](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2817) Well, 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 the new route that you guys have. But they're replacing the airport in Narsarskog. 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 It's for a country of, like, 50,000 people. Yeah, they're also going to spend their money on it. But it's such a cool, no pun intended, place to go. [47:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2842) And, you know, it can drive the economy. 50,000 people, having people come in and, you know, it can really 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 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. [48:07](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2887) 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, and developing the SR-71, the U-2. 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 no one had they 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 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. [49:02](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2942) Begging them, and they just won't do it. I'm on a 757 boat, actually, Chicago. I'm a little nervous about a great plane. The takeoff's amazing. Yeah, it's a cool airplane. Speed is obviously one thing, and obviously you guys are working with Boom, but speed is also hard and it requires 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 for flying. [49:35](https://realalpha.app/v/3Lc0xfW4r9Q/?t=2975) And so turning that. We're an investor in a company called JetZero who's trying. Is that an airport challenge, though, too? Here's airport challenges. It's bigger, so airport space. But that's really a gate challenge. So you've got to re-gate. I think that's an example of something. Engine technology, I think, can advance as well. Another cool thing, by the way, we're starting the Relax Row 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. Oh, yeah. But we have little United stuffies, airplane stuffies. I've already got some from my kids. [50:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3009) My kids love them. But that's another cool United thing. Is that an example of like 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 a rounding error in our financials. Right. [50:41](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3041) 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 Relax Row 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. [51:16](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3076) because their kids are watching Bowie. And, like, it just makes hours so much better. I heard you can now watch Cheeky Pint on there. You can now watch Cheeky Pint on the Inflash Entertainment. Yeah, 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. Yeah. 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. [51:46](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3106) Yeah, and I do, I look at, we're trying to build a brand. You know, all the Starlink stuff that's happening. Sure. You know, I kind of feel bad for Ed. Just kind of, you know, getting into a fight with him. But like... Love it for us. Like, we were actually, we had a big push that was coming. Like, we were obviously prepared. I was going to ask one. How did you decide to run those ads, right? We were already prepared. You only have 50%. We were waiting to actually, we're going to cross the 50% threshold next Friday. And so we're waiting until then to sort of, like, we're going to really push, like, going. [52:16](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3136) So we were going to do it anyway. But that was a moment to, like, except our team is great. Maggie Schmarin, who's our VP, runs that. Like, it's awesome. And, you know, she did. And one of the things, this is another advice to companies that she tells me is, like, she did it without she didn't ask me she knew she didn't ask me like no approvals she's awesome i trust her and that is 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 um or creative or fun or interesting because it just gets watered down um 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 cbs board meeting, because I'm on the board of CVS Health, and started reading about it. Like, well, this is pretty cool. And people are asking, actually, I didn't read it. People are asking, like, this is cool. Like, oh, what do 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 set by or approved by the government with fares set by the government. So I think people don't [53:25](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3205) realize when they look at those old-timey 60s photos of like, you know, someone coming along with a lobster cart and everything so brilliant. It's because at that time, airlines could not compete on price and therefore competed on perks. And we're much better off these days when you actually have like a real market and real price competition. One of 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? [54:01](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3241) 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? It was, maybe it was gonna happen. It happened in Newark, historically. And we finally got it effectively slot controlled in the airport. It's now the most 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. They have this wacky law. [54:32](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3272) Every year, they re-sort of- 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. It created a bad outcome. It's part of how American got to losing a billion and a half. Because what happened in Chicago, America wasn't paying attention and lost six gates to us. But, like, 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, they had added on so many flights. [55:03](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3303) Well, no, we hadn't done anything. We just, we went back to our normal pre-COVID schedule. Yes. And America was focused on the Sun Belt, and they talked about it public, you know, Phoenix, Dallas, Miami, you know, more demand, leisure demand. And 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. [55:42](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3342) 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. Yeah. 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 um but the other 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 uh are now 52 per passenger to fly at the new york airports spirit airlines before they liquidated the average price, average fare was $58. [56:30](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3390) 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. Like, 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're sort of much more fine-grained cutting off of the seats. [57:00](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3420) We stocked, the low-cost carrier business model was predicated on having a price advantage, you know, being able to charge a lower price. And we created a basic economy where we could profitably, and we upgaged airplanes, so we could profitably be competitive on price most of the time. And, you know, if we're competitive on price, like, there's no reason, you know, my joke was people may make the mistake of flying spirit once, but they're not going to do it twice. Why did Spirit go bust? Because they weren't charging as much as their cost. They were not able to charge enough. It's pretty simple. [57:35](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3455) It was simple. They weren't able to charge enough. And look, what's happened... Because of cost inflation, basically. Cost inflation, but there's a whole bunch of things. But fundamentally, what I think has happened to the low-cost carriers, there's really one still low-cost carrier successful airline in the world. It's Ryanair. I was going to ask. [57:53](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3473) **Scott Kirby:** The fundamental premise of a low-cost carrier is flight to low-cost airports. [57:58](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3478) You know, Southwest, when they started flying here, they flew to Oakland, not San Francisco. San Francisco's too expensive. In L.A., they didn't fly to LX. They flew to Burbank in Ontario. LX is too expensive. And Ryanair still does it, right? They don't fly to Heathrow. They don't fly to Charlottesville. They fly to secondary airports because they're low-cost. So all these companies' eyes get too big for their size. And all in the U.S., every single one of them, like, abandoned that. Is it ego? And then they went to fly into, I mean, it's, I don't know why. Well, they run out of, like, customers, right? [58:27](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3507) Yeah, and they went into, you know, Chicago and Newark and San Francisco. And, like, back to the New Yorker, you can't charge $58 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 at 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. [58:58](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3538) They keep the menu very narrow. And I feel like maybe if they're a public company, they would be trying 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. [59:28](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3568) 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 carrier, low-cost carrier, and they're terrible at it. and every single one of them has been nobody does it well because that and by the way southwest is now trying to be like us and They're not going to be very good at that either. [1:00:03](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3603) You've got to stick to the things that you're good at. We aren't going to ever go try to compete with Allegiant Airlines and be Allegiant Airlines because we'd be terrible. They're better at Allegiant. If they try to compete with us, they're screwed. 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. I'm not going to be as big as United Airlines. I'm not going to fly to Chicago O'Hare. Allegiant is an example. Allegiant Airlines, which mostly applies 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. [1:00:36](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3636) What else have you learned from Reiner? 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. [1:01:07](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3667) 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. So getting outside, 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? [1:01:36](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3696) In an airline business discipline is really about where you fly. The foundation, our product starts with the routes that work. You fly places that make money. And fly places that make money. Like every time I go. Like where are you less point to point than you domestically? So we don't fly point to points. And like I hear it all the time in LA yesterday when I do stuff at San Francisco tomorrow with employees like they're always asking wanting to fly new routes and point-to-point routes. 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. [1:02:05](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3725) And we're not going to 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. It's not overall. But like, you know, people in Dallas ask me, like, when are you not a player? Because we'd lose. You know, America has too much network depth. And if, you know, when they fly from Dallas to Los Angeles, 75% of the people on the airplane are connecting from other destinations. And if we're just flying Dallas, we can't compete because we don't have any connections. We're competing for 25% of the market. [1:02:34](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3754) It doesn't work. Does that then mean the little decisions you make are, okay, should we fly from, is it Newark to Greenland? 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. It was the last big hub up like Denver when you grew it hugely, like 50 to 20 years old. But those were an existing hub that we chose to grow. JFK. 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. [1:03:19](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3799) 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? Is it 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 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. [1:03:54](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3834) And, you know, like the biggest city that sort of would work that's a big enough city maybe is Raleigh-Durham. 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 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 um but they've not lost you did though this is not a hub at all but way back in the day you used to have a hub in japan in narita yeah and you've added a few like connecting flights as well from hong kong to Thailand and to Vietnam, and you're flying to Kaohsiung from Narita now. [1:05:00](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3900) Is that just more on the margins sort of things, or international? It's on the margins, but there are places, like in Tokyo, we have connectivity with our partner. Right. 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. A&A didn't fly. Wait, that's Yeah, yeah, what's going on there? 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 Ula Batara? Am I missing out? I haven't been there either. My mom went. [1:05:38](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3938) My mom travels a lot. She uses my five benefits and travels a lot. She's awesome. Awesome. But, you know, so we had 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 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 is the same thing. For us. Like to Sapporo. That would be fun. Sapporo is booking really well. It's going to be. Is that for skiing? Skiing, yeah. But Japan has become like the hottest destination for. [1:06:15](https://realalpha.app/v/3Lc0xfW4r9Q/?t=3975) The tech people here in San Francisco. People just love it. And even like in Dow, like people love Japan. Yeah, 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. So what I'm taking away from this is that route selection makes or breaks airlines. Yes. It broke, you know, Spirit or the low cost carriers. It broke American and this, you know, Fracca, you guys had us. 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. [1:06:51](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4011) I mean, look, that's pretty insightful. That's like, I tell new CEOs, which many of them call and talk to me, I don't think any of them have taken my advice yet. But I tell them, the one thing I'll tell you, I start with like, the route network is the foundation. If that's broken, it 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 going to hear, if you look through the route, P&L, which you should do, you're going to see a bunch of negative flying. And when you ask people about it, they're going to say it's strategic. [1:07:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4042) They're going to have convincing excuses. Well, they're going to call it strategic. Yeah. [1:07:25](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4045) **Scott Kirby:** 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. [1:07:32](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4052) 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. One of the lies people tell themselves to convince themselves to stay running a month. Like, what does it mean to be strategic? Corporate customers, something like that. Yeah, or credit cards. Like, you know, 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. Yeah, I was going to... The perception is big because people can see the amount of revenue that we get. [1:08:05](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4085) They say, oh, almost all your net profit is coming from a credit card. Well, yeah, but there's a cost. We carry over 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 for credit cards? All that we disclose is the revenue, and it's like, oh, look at the revenue. 50,000 people a day are flying for free. There's a cost to carrying 50,000 people. Okay, so the whole Twitter meme of airlines or a credit card business with airplanes attached, it's just they're holding the financial statements upside down. [1:08:45](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4125) Well, they're looking at the revenue side and ignoring the cost side. I mean, it's important. It's good. 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 Fire program? You just went to, I think, $32,000 or whatever you call it, points, 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 to cut off to be right below Ben. Yeah, yeah, yeah. [1:09:17](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4157) That's right. I applaud these changes. I've looked back on 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. And the frequent flyer program is one of those things. And so really, if we're doing something that's going to detract from brand loyalty, there's got to be a good reason to do it. [1:09:53](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4193) And you know, clubs are, you know, how many people are global services members? Like people love being global service, but we limit it. It's exclusive. There was one year I thought I was gonna make it. I did this January past and everything, it's very sad. Clubs are another example, like this is another thing, like during COVID, I'm pretty sure we're the only airline that did this. Like we doubled down on club investments. So we've doubled our square footage of club space from pre-COVID today, more than doubled. And it's gonna grow by another 50%. Like it was the one time in history, If you close a club, it's complicated, but you close a club, it makes the customers mad in the short term. [1:10:27](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4227) You have to do it sometimes to expand it. But COVID was the one time in history, we had to spend money, but we had no customers, so we could get away with doing it. We could do it faster. So expanding club space is where 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 can deliver a better experience if there's fewer people. Well, sometimes it's that, you know, and, you know, 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, you know, first-class seats on airplanes. [1:11:07](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4267) And so we're calibrating the program to make it valuable, you know, for loyal customers. You run the Starlines board? Not anymore, fortunately. 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, 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? [1:11:42](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4302) So we're all kind of locked into lines now. It's hard to switch. And the real value for customers versus 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 Frankfurt and Munich flights are connecting beyond Munich and so they're going to Kazakhstan and you know all kinds of places that we don't fly to. So that's the value for customers. [1:12:13](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4333) 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 like I got 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 gonna turn off our partnership with you. And that got everyone to do it. Like I've been begging them, we've 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. [1:12:48](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4368) 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? And 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 gives you the answer. Yeah, we're by far the biggest, you know, and the access to have the big hubs. Lufthansa is second, you know, across the Pacific, you know, A&A is big. There's several big partners. But some of the others are, like, one of my favorite airlines is Croatian. [1:13:24](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4404) You know, I love the people. They're small, like 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 deliver a better consumer experience? [1:13:58](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4438) I was going to start with, thank you for adding it. My belief is delivering a better consumer experience works. Like, 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, I actually 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. [1:14:29](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4469) 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 a 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. [1:15:15](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4515) 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, does it 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 the 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 oh you've always been I'm like I got a bunch of weird quirks if you want to ask my wife can tell you that are time efficiency please tell us the weird quirks alright you can't set that up and then Okay, so the one that people find the most amusing, I think, is 90% of the time you use a fork, I use a spoon. [1:16:09](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4569) And by the way, I use a serving spoon. Completely agree. It's so much more efficient. A salad. Eating a salad with a fork. 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. She stabs a tomato and eats a tomato. Then she stabs a piece of lettuce and eats a piece of lettuce. It doesn't taste good. It does 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, all of its left, all of this good stuff falls off and is left on the tray plate. [1:16:43](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4603) And I presume your wife loves you salad-splaining her like this and telling her how to do this. No, she gets super annoyed with me. But the bigger things are 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 watch other people on TikTok or YouTube and like, oh my God, what are you doing? It's such a time waste. And I don't watch TV, really. I just don't waste time. And if you don't waste time, you got time for a whole bunch of other stuff. [1:17:22](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4642) And you have to sleep one, right? And I sleep eight and a half hours a night. Last night, I slept over nine. I do find 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. And I've always slept a lot, but one of the other things I used to do is count cards. And I particularly realized that 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. [1:18:01](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4681) And I realized that when I got tired, like... You lost the 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 and see it. And I was having to, like, I realized this is... I'm probably making mistakes. I'm maximizing time and losing money. I'm maximizing, you know, when I get tired, I need to... 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. [1:18:34](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4714) And so I sat down at the poker tables, had to give them my ID. So they came back, and a manager came over. It's 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 playing it, 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 this. That's true, that's true. And with card counting these days in Vegas, are they- It's impossible today. Yeah, so are they blocking this with multiple decks and shuffling frequently or whatever? [1:19:11](https://realalpha.app/v/3Lc0xfW4r9Q/?t=4751) Well, they've also changed the rules. So that's pretty much the actual one. It's like six to five blackjack. Like, the math is impossible. They've just subtly changed the odds. They've changed the odds. I don't think it's very subtle. apparently people still do it alrighty this has been fun I enjoyed it thank you got deep into a lot of stuff