Brainstorm Tech 2024: An Entirely Different Kind of Flying
David Neeleman, Founder, Chairman, and CEO, Breeze Airways Interviewer: Jessica Mathews, Fortune
Category
🤖
TechTranscript
00:00So, we both decided backstage that we're going to go on a bike ride after that.
00:03We were really inspired.
00:04Well, I'm wearing my glucose monitor, so it's kind of cool to see.
00:10I get updates, but it's good to see lactose, too.
00:14I'm excited to get that approved, and the more wearables, the better.
00:19Yeah, definitely.
00:20Well, look, so Breeze is based out of Salt Lake City, so have you seen an uptick in flights
00:26this week for Brainstorm Tech?
00:30We actually have flights into Provo, and we serve a couple times a day from Orange County
00:37Airport, so I think there's a lot of tech down there, so I'm sure we had some people
00:40coming in.
00:41Do we have anyone here who took a Breeze flight in?
00:44Okay, yeah, we got a couple people.
00:47Going over there.
00:48We don't have a lot of service out of here.
00:49If we were in Charleston, then a lot of fans would go up, or we're in Providence, Rhode
00:53Island, where we have big bases of operation.
00:56Got it.
00:57So, David, we're really excited to have you today.
01:00As Andrew mentioned, you have founded several different airlines, and I guess my first question
01:06would be for you, why start a brand new one?
01:13What's different about Breeze?
01:16So after I left JetBlue, I was born in Brazil, and my parents were living there, and my dad
01:25was a journalist, and so I had the opportunity to be born there, and then I went back as
01:32a missionary for a couple years and speak Portuguese, and I always wanted to make a
01:36difference for Brazil and the people, and today it's an amazing company.
01:43Azul has 1,000 flights a day, we move 100,000 people.
01:46So I was there.
01:47That was the airline you founded right before Breeze, right, Azul?
01:50Yes, yeah.
01:51When I look back to the U.S. after 15 years, that airline started 15 years ago, and today,
01:56like I said, we have 1,000 flights, we fly 100,000 people, we deliver 200,000 packages
02:02door-to-door, I just look back at the U.S. market and I said, you know, there may be
02:08an opportunity here.
02:10What's different about the U.S. airline business today than when I started JetBlue is it's
02:15a heck of a lot better.
02:16I mean, Delta, you can, partially because of JetBlue, you can sit down and there's live
02:22TV and you have your free Internet and the flights go on time.
02:28It's a much better product than what it was back when I started JetBlue.
02:32Also, Delta, United, everyone went through bankruptcy, so they were able to clean up
02:36all their legacy costs.
02:38So it was a much different market and a much better market, but the trends that I saw,
02:44because the costs had started going up, is that the big airlines were forcing everyone
02:48through hubs.
02:49If you lived in places like Hartford, Connecticut, if you lived in Huntsville, Alabama.
02:57I live in Bentonville, Arkansas.
02:58If you lived in Bentonville, Arkansas, you had to always go to a hub.
03:04You had no really other choices to do that, or if you lived in Huntsville, the other option,
03:09you could drive to Nashville, two hours.
03:11So Providence, you could go to Boston, but you couldn't have the flights out of Providence.
03:15So we thought if we could just get you there twice as fast for half the price and do it
03:24with a different product mix than the traditional ULCCs, we call ourselves an NLCC, a nice low-cost
03:30carrier, and have options.
03:33What's different today, Jessica, about the industry is about 25% of the people want an
03:38upgraded experience.
03:40One of the reasons the Southwest is kind of struggling today is that kind of this scramble
03:44for seats, and it was cool back in the 70s and 80s and even the 90s, but today when Delta
03:50is so much better, when United is so much better, people don't want to fight for a seat.
03:55They want to pay a little extra to have extra legroom.
03:58They want to be able to pay a little extra for a first-class seat, a lot extra for a
04:02first-class seat.
04:03So on our Breeze airplanes today, first of all, we have about 200 routes.
04:08We serve 60 cities, and about 90% of our routes, we have no non-stop competition.
04:16And then when you-
04:17And you're outside of the hubs always.
04:18Got it.
04:19Yeah, we're always outside.
04:20So Huntsville, Alabama, we fly Huntsville to Las Vegas, to Los Angeles, to Tampa, to
04:26Orlando, places people want to go.
04:28They don't have to connect through Dallas, so they don't have to connect through Atlanta,
04:33for example.
04:34So we can get you there a lot quicker.
04:36Let me ask you, so you started this company at a very interesting time in the market.
04:43So you started building it right before COVID happened, and then you launched it in early
04:492021, which is arguably one of the most devastating periods for airlines.
04:54So how was that?
04:56No, it was rough.
04:57It was really rough.
04:59And it was not only because, I mean, the business was coming back, but it was really the supply
05:06chain.
05:07It was being able to hire people.
05:09During COVID, a lot of people decided they didn't want to go back to work, or they wanted
05:13to work a lot less, or they wanted to work from home.
05:16And so it was really, really tough.
05:18And the big airlines had laid off, not laid off, they had bought off 7,000 pilots.
05:24The most expensive pilots, they took some of the $53 billion they got from the US government
05:30and said, how about you guys all retire?
05:32And then when the business came roaring back, they said, holy crap, we got to hire 7,000
05:38new pilots.
05:39So they started going into the regional carriers, and the regional carriers couldn't fly.
05:43The FAA had staffing issues to certify stuff, so it was a really challenging time to get
05:49it going.
05:50But thankfully, now we're really hitting our stride, and a pilot issue has been resolved.
05:56We can hire anyone we want to.
05:58We have over 800 applications for pilots right now.
06:02Is the pilot issue totally resolved now?
06:04It is, mainly.
06:06There's still kind of a captain issue.
06:08You have to fly 1,000 hours to become a captain, so captains are a little sparse.
06:13You know, it's interesting, the bigger airlines, the first officer pay has gone up so much
06:18that a lot of these people don't want to upgrade to captain because it affects their quality
06:21of life.
06:23So you may have a, sitting in Miami, have a great line, and then they say, you want
06:28to be captain?
06:29You can be on reserve in Newark if you want.
06:30And they're like, no thanks, because I'm making 200 grand sitting here in Miami, and I can
06:35make 350 in New York, but it's not worth it to me.
06:40So it's kind of the marginal utility of money, you know, has forced a lot of people not to
06:45want to upgrade to captain.
06:47So I don't think we can have a conversation today about the airline industry without talking
06:53about safety.
06:56There's been whistleblowers at Boeing.
06:57They've had a lot of safety issues with their Boeing 737s.
07:01People I talk to, including myself, think a little differently every time you get onto
07:05an airplane now.
07:07And so every airline carrier is having to think about that.
07:12You are in an interesting situation because you're also a startup where your brand is
07:15less known.
07:16And so how do you approach safety and how do you get customers comfortable with flying
07:23breeze in today's day and age?
07:25You know, safety is traveling by air, be it on a 737 Max, an A220 that we fly, it is incredibly
07:38safe.
07:39I mean, it is unbelievably safe.
07:40I mean, it's really hard for anyone to think of the last accident of an airplane, a large
07:48transport airplane in the United States.
07:51It has been so long.
07:54You know, I think, well, there was a regional plane that crashed in a Buffalo.
08:00That was maybe ten years ago.
08:02Before that, it was like American Airlines out of JFK was like right after 9-11.
08:09I mean, it was a long, long time.
08:10But losing a door during your flight is also very terrifying.
08:12It is, but it shows the amazingly engineered engineering on that airplane that you lost
08:19a door and nobody was injured and the plane was able to last.
08:23Obviously, things happen.
08:25Tires fall off airplanes, but the ability for these airplanes to withstand that kind
08:30of stuff is really incredibly.
08:32So, does that feel like a non-issue for you at Breeze?
08:35Is that something that customers don't seem to be very worried about?
08:36Well, obviously, I can't dismiss people like you and everybody else, but it really is a
08:40non-issue.
08:41But, you know, safety is our number one value.
08:44Every time I start an airline, we create values and safety is always at the very top.
08:49And so, we talk about safety.
08:52Safety is part of our culture.
08:55Everybody can stop an airplane at any time if they feel like it's safety.
08:58So, it's ingrained in our culture and because of that, and because of the work the FAA does,
09:03and because every time there's an accident or something, you close that, something that
09:10caused it.
09:11And so, that's why it's really so incredibly safe to fly.
09:16Another thing that I feel is top of mind to many of us is customer service.
09:20And I'm thinking back in 2022 when Southwest had that insane scheduling crisis.
09:26And I think we can all relate to one of the most frustrating things in the world is if
09:31your flight gets canceled or delayed and you can't get a hold of a human on the phone.
09:37I know that Breeze is very digital first in its approach to dealing with customers, delays,
09:44issues.
09:45Have you rethought that at all in terms of having people interact with the chatbot versus
09:52a human?
09:53Yes.
09:54You know, we just hired a brand new chief customer officer.
09:59And she is in charge.
10:01When did she join?
10:02She started last week.
10:03Oh, okay.
10:04She's incredible.
10:06And she is in charge of any customer contact position.
10:09So, she's in charge of all of our airports, all of our flight attendants, and all of what
10:14we call our guest empowerment agents that work at home.
10:17So, anyone that has contact with a customer, she's in charge of.
10:21So, you know, her priorities are to, A, make us the most on-time airline in the country.
10:30I'm not content until we're 90% on time.
10:33We already we operate we cancel one in every thousand flights.
10:39So we hardly ever, ever cancel a flight, but sometimes we have to overnight it or run late
10:43or something.
10:45So that's, you know, her number one priority.
10:46And it's 90% on time?
10:47It will be.
10:48Okay.
10:49Today we're around 70.
10:50We need to be better.
10:51Okay.
10:52So what about for those three out of ten people that are?
10:54So then the second thing is our get agents.
10:56Right now it's digitally.
10:58We talk to you by digitally.
10:59We don't have a big call center.
11:01Everybody works at home.
11:02So, one of her jobs is to be quicker to call people.
11:05So if somebody contacts us, it's interesting that my daughter actually works for the company.
11:10She's in Dayton, Ohio.
11:11Okay.
11:12And she goes, does all the NPS stuff.
11:15And she told me the other day, dad, there's a couple of people that were blind that said
11:18they can't deal with this.
11:19How do we deal with them?
11:20You know, and I said, well, we need to call them.
11:22So, you know, we're going to be much quicker to be able to, we can interact with them,
11:27but then we can say, we'll call you.
11:29And so that's a much quicker.
11:30So you are incorporating more humans into the customer service.
11:33Exactly.
11:34Exactly right.
11:35Okay.
11:36As it goes through, you know, using the technology and the AI to determine who really needs to
11:40be called, then we're quicker to call them.
11:44And then we're also going to have more people, our people at the airport.
11:48Right now, a lot of that's contracted.
11:51And the beautiful thing about having those two things combined is that somebody can actually
11:57work from home a couple of days a week, and then they can come to the airport and work
12:00a couple of days a week.
12:01So it's a much more attractive job than having to go to the airport every week or stay home
12:05all the time.
12:06So we can mix those two.
12:07Okay.
12:08So I think we only have time for one more question.
12:09So I'm going to ask you to keep your answer brief so we can fit it in.
12:12I'm watching the clock myself.
12:15So you have been in this industry for a really long time, have founded so many different
12:20airline companies.
12:22What do you think this industry is going to look like in the next five years, particularly
12:25after JetBlue said earlier this year it was terminating its proposed acquisition of Spirit
12:32Airlines because of antitrust issues?
12:35What is the next five years going to look like, in your opinion?
12:38Well, I think, you know, it's I think AI will play a huge part.
12:45AI in the operation of our airplanes for a better fuel economy, for predictive maintenance
12:51so we can predict when parts are going to fail quicker so we don't have less cancellations,
12:56a better really more connected super apps that understand you and know you better and
13:02can serve you up relevant stuff instead of just blasting out e-mails all the time.
13:07And so I think AI is going to change the experience dramatically, make it better, make
13:12our costs lower, and really communicate better with our customers and lower our marketing
13:18costs because we'll know our customers better.
13:20You know, today we have an upgraded experience.
13:23You know, you can go and say, you want to buy the $49 fare?
13:26No, I want the $99 fare that has the extra legroom and the free bags.
13:31Or I want the $149 fare that has the first class seat.
13:35And so we have that ability, like, you can't get on Spirit or Frontier, and we can take
13:41you to a bunch of places that people don't fly.
13:43So there's a lot of exciting times.
13:45That's all the time we have today.
13:47Thank you so much for being here.
13:48Thanks, Jessica.
13:49Thank you, everyone.
13:50Thanks, everybody.