The airline CEO putting Starlink on every plane

Scott Kirby, CEO of United Airlines, joins John and Ben Thompson to break down the airline business and United’s contrarian bets shaping commercial aviation. Scott details United’s massive COVID fleet expansion while competitors shrank, why customer surveys are useless for predicting the future, and rolling out SpaceX’s Starlink across the entire fleet. They also cover in-housing seatback software, why low-cost carriers fail, air traffic control bottlenecks, and Scott’s weekend vibe coding projects. Timestamps (00:00:00) Introduction (00:00:26) Buying planes while the world shrank (00:06:35) Owning the airline tech stack (00:22:02) Aviation’s biggest bottleneck (00:26:21) Stripe Economics (00:26:59) Hidden economics of airline networks (00:30:19) Starlink (00:38:28) What Wall Street gets wrong about aviation (00:43:43) It’s the routes (00:55:44) Why Spirit failed but Ryanair works (01:15:38) Kirby’s unusual time management hacks Scott’s reading list: Unreasonable Hospitality – Will Guidara The Impossible Factory – Josh Dean Freedom’s Forge – Arthur Herman The Sleepless Ape – David R. Samson Sea of Tranquility – Emily St. John Mandel The End of Eternity – Isaac Asimov Tolkien and the Great War – John Garth

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Talking to people like I'm switching to flying a regional flight because it's got Starlink. And I was like, holy, free was never the value proposition. Fast is the value proposition.

• 0:08Speaker 01

  Yes.

• 0:08Speaker 00

  And there's only one option for fast and Starlink. That is the only option.

• 0:11John Collison?

  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?

• 0:32Speaker 00

  You know, I didn't think it was. So back during COVID, every single expert in the world said travel demand is going to be down by 50% forever. That's like what everyone said. At one other point, like you should ignore the experts in the outside of two sigma. The tails, experts are terrible. And I just thought they were all wrong, that I thought COVID was going to be deep and last a long time. And then travel demand would recover. Everyone else around the globe was shrinking. So we did the biggest, the exact opposite. Like literally every global long haul airline in the world, except for United, permanently retired, part of their 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, like, they said the same thing.

• 1:16Speaker 00

  This seems like a really big risk, like everyone else is shrinking and you're going to do the biggest.

• 1:21John Collison?

  How big was the order?

• 1:22Speaker 00

  200 wide bodies. And then we did another several hundred narrow bodies.

• 1:26John Collison?

  Okay, so pretty big.

• 1:27Speaker 00

  You know, and those are airplanes that list for, that we get a big discount, but you know, they list for like $400 million. And I told our board, like, this is one of those cases because everyone else is shrinking. We don't have to be right. We just have to be not totally wrong. If we're not. So it's just one of those situations where the odds are so stacked in your favor. And like people out here in Silicon Valley do this kind of stuff all the time where figure out something that, you know, you have a different view than everyone else and go big on it. And if it works, the returns are huge, you know, and the downsides are smaller. And so find those.

• 2:08Speaker 01

  But this been the 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. The flip side of that is everyone wants to invest when it's at its peak. Have we gone full circle and now?

• 2:29Speaker 00

  Yeah, it's a, 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 like memory, it's a little harder too, because you know, our assets are so long life. But for us, our assets are 30 year. I guess for a chip factory, it's less because the technology moves. But it's 30 year life. So like, we're going to go through several recessions and we're going to go through several ups and downs. So it's a little harder to do that. But you get better terms, you get better deals, you know, like we got really good pricing, you know, for example, during the downturn.

• 3:00John Collison?

  You're the only person ordering aircraft.

• 3:01Speaker 00

  Because we're the only one in the world. And we sort of launched the market, like, you know, for Boeing, they kind of could go to other customers and say, look, United believes, you should too.

• 3:10John Collison?

  Right. So I remember, it's very striking. I remember that period of people over extrapolating COVID. It's 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 we're like, wait a second, no, that's, that's not right.

• 3:27John Collison?

  Why were people so wrong on the travel side of things? Because?

• 3:30Speaker 00

  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 not 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 true of 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 sort of like, experts live in the world of two standard deviations. They force fit everything into things that they've already seen.

• 4:14Speaker 00

  And so when things happen outside two standard deviations, when the tails happen, which is where you create all the value.

• 4:19John Collison?

  Famously in finance, the frequency of six sigma events is?

• 4:22Speaker 00

  That's where I first started, you know, like, you know, very, you know, VAR, valuation at risk is the dumbest model in history. It's stupid. Like, you know, things that shouldn't happen in the history of the universe happen once every five years. Because it's a dumb, dumb, fundamentally flawed mathematical model that assumes everything is normally distributed. It's not. And it's just the perfect, it's really where I had a debate. When I was getting my master's degree back in the 90s, this was about black shoals. You know, there's such a dumb model for valuing options, like, because it assumes a normal distribution. And the world is not normally distributed. The tails are much fatter in everything that matters. And anyway, that's, that applies to everything, but especially in a crisis.

• 5:04John Collison?

  Black shoals has a lot of assumispherical cow, like.

• 5:07Speaker 00

  Yeah, it's, you know.

• 5:08John Collison?

  Assumptions baked into it. Okay. I love hearing you talk about the over fixation on surveys. But like the, 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.

• 5:37Speaker 00

  Yeah. So we use survey, I like surveys for how did people feel about stuff we've already done? I ignore surveys for what are we going to do in the future?

• 5:46John Collison?

  Apple famously does not do a lot of focus group testing on the products. They just like build the products they want to build.

• 5:50Speaker 00

  That's, that's the way I, you know, stuff that we're doing right now. Today, we rolled out a Starlink tracker. Like 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.

• 6:01John Collison?

  Well, you're getting to the second thing, which is people try to over measure tiny steps. And it's just like, do the Starlink tracker. If it's not useful, whatever, like it doesn't matter.

• 6:10Speaker 00

  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, what I talked 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. Like, I don't need to do it. Like it takes me, take more time to do a survey or a focus group and just do it, see if they like it. And if they don't, stop. And if they do, do it, more of it.

• 6:35Speaker 01

  How important is your ability to do these sorts of experimentation? We talked, you know, 10, eight months ago, redoing your whole tech stack so you could sort of put these things on top of it. Is that?

• 6:46Speaker 00

  So we, like, I've always been a big believer in technology. I have a computer science degree and.

• 6:54John Collison?

  You're one of us.

• 6:55Speaker 00

  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, nothing 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. 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.

• 7:35Speaker 00

  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, you know, in 2020 in an anticipatory and it's really paying off today. So my AI epiphany that I think has happened within the last eight months is I don't think AI, like summarizing documents and all that kind of crap. I think it's like ridiculous. Like summarize my calendar, summarize my day. Like I can read my calendar. Like I don't need to summarize my day.

• 8:06Speaker 00

  But the power of programming. So I hired a tutor and took three one hour sessions. If you want me to tell you the stuff I did.

• 8:13Speaker 01

  No, we want to see the vibe coded out.

• 8:16Speaker 00

  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 like big bets on aircraft, for example. But I, after three one hour sessions, completely by myself, got up on a Saturday morning, went down to the home gym, worked out, took my laptop down there. It took about two and a half hours of runtime, but I did a full workout. Like I go time, you know, it takes time to run and.

• 8:43Speaker 01

  I have the exact same setup in 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.

• 8:51Speaker 00

  So that's what I did. And, and I, on my own, in two and a half hours, created a webpage that had dropdown menus for what sport do you want, what dates do you want, what kind of bets do you want? So four or five dropdowns. And then it would go off four sportsbooks, call she being one of them, not actually a sportsbook, but four sportsbook. And it would pull up all the odds and you could just decide what you wanted to bet and put the dollar amount in. And then it would go to whichever sportsbook had the best odds and make the bet on my behalf.

• 9:22John Collison?

  Aggregating sports.

• 9:26Speaker 00

  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 like, I think I called him on that Saturday. You know, our team are like, we're all in on this.

• 9:40Speaker 01

  At that point, though, he did tell me when I asked him about it, they had this huge switch overcoming the following week. And it went off without a hitch.

• 9:47John Collison?

  That was actually flying the next day.

• 9:50Speaker 00

  And we actually, that one, you know, what we do for those is, I don't, 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, 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. It did go off without a hitch, but we canceled 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.

• 10:27John Collison?

  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 is important to cars. And then, you know, the wing mirror and the wing mirror adjuster is made by the, you know, the sub vendor that does that. And so you can centrally control it and you just need to own the tech stack. Have you guys been bringing more in-house?

• 10:49Speaker 00

  We are.

• 10:50John Collison?

  Which subsystems in particular?

• 10:51Speaker 00

  We're bringing much more in-house. We have more in-house, I think, than any airline in the world. We're the only airline in the world that owns our own reservation system. Everyone else is outsourced to Sabre and Apollo and.

• 11:01John Collison?

  You worked at Sabre, right?

• 11:02Speaker 00

  I did. It wasn't Sabre that, it was called American Airlines Decision Technologies. But, you know, that's a mainframe system. And because we own our, it's a leg, like, we lucked into it, like, legacy decisions that we own our own mainframe. And because we owned it and we're, because us, Copa uses it too, Copa Airlines in Panama, uses it because they're a partner with us. We're the only two airlines in the world that use it. So, like, eventually it was EDS owned it and then someone else, like, they didn't want to keep supporting it. So we've 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, our, you know, it's so much more complicated at United than it is at most airlines around the world.

• 11:46Speaker 01

  Is that just because of size or what?

• 11:47Speaker 00

  Size and complexity, the size and complexity is just much higher. But I'll give you another example of one that we're taking over that I got so frustrated about. The seatback entertainment screens. I didn't actually realize it 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.

• 12:15John Collison?

  By the time you find the information you're looking for, it switches screens.

• 12:19Speaker 01

  What I want, though, is, because you already know who I am, you log in, my name's there, put in my birthday or whatever. I do nothing but have the map on the whole time. I want to have my map preferences.

• 12:27Speaker 00

  And that's just, so that's what we're, 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 we're good, so like, one is, we're gonna know Ben likes them. So it's just gonna come, you can get to other stuff, it's just gonna pop up with the map on the screen. Another one, like, these are little things, but they're, what I've, we have started, it comes from this book, Unreasonable Hospitality. One of the things about that book is, 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 2 million mile mark. The screen is gonna pop up with a little thing at the bottom, they say, congratulations, Will, but it's gonna do a countdown, like.

• 13:09Speaker 00

  One, nine, nine, nine, nine, twelve, thirteen, and there's like celebrations. And the flight attendants are gonna all know exactly when you hit 2 million, where over the country you hit. I mean, it's a little thing, but it's cool. And, you know, we could have never done that unless we took over.

• 13:25John Collison?

  The surprise and delight product touches are quite important.

• 13:27Speaker 00

  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, you know? Do you want your normal gin and, whatever it is?

• 13:42Speaker 01

  Wine selection.

• 13:42Speaker 00

  Yeah, do you want your Guinness? I don't think we have Guinness on the airplanes, but.

• 13:46John Collison?

  We'll work on that.

• 13:46Speaker 01

  I have a question on this surprise and delight thing, because that is a great thing. You show up and United delivers something I didn't expect.

• 13:52Speaker 00

  Yeah.

• 13:53Speaker 01

  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 a maintenance issue. But I'm like, it's gonna be super tight in Denver, but Connection Saver is gonna save me. And the gates are 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, I'd taken off. I'm like, if American Airlines does that, I don't care, it's my expectation. I was kind of crushed, because I, like, so you're a surprise and delight feature. But I'd already internalized it as you do this amazing thing.

• 14:26Speaker 00

  Yeah.

• 14:27Speaker 01

  It's a large airline, how do you, like, it's hard to get.

• 14:30Speaker 00

  You know, we've, we, we had to get really good at communicating on it. A couple of things. First, on something like that, we had to get really good at communicating. The seatback screens now are gonna be helpful, too. We're gonna tell you that, we're gonna put it on the screen. So the seatback screen today is completely divorced from the app. Tomorrow, once we take it over, it's good, they're gonna be the same. And so we're not gonna just have to text you about your, we're gonna text you and tell you, you know, 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.

• 15:02Speaker 01

  Oh, no, it was one of those things where, like, I knew, I understand the complexity of airlines. It was just, I was kind of looking at myself, like, why am I disappointed here?

• 15:08Speaker 00

  Yeah, but no, no, you shouldn't be disappointed, because what we should do is communicate with you really well on that. For, another cool thing that I hope we're gonna have rolled out, actually, well, we're gonna roll it out pretty soon. I've told them I want it done by Christmas, for Christmas, because of the 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.

• 15:37Speaker 01

  We're supposed to brush our fingers?

• 15:38Speaker 00

  Like, what can you do?

• 15:39John Collison?

  Yes, it's December in Denver. I'm aware.

• 15:41Speaker 01

  Give you a little shot of anxiety before your trip.

• 15:43Speaker 00

  So what we're doing today, it 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, the screen, on the screen is gonna say, "Your flight to Denver has a 41, we estimate it has a 41% chance of being impacted by weather." If you switch to the earlier flight, it's only a 12%, a later flight is a 3%. So that you can have some intelligence about making decisions. But the point on, like, how do we, like, keep wowing customers is a really important one. So two years ago, at the end of the year officer meeting, I told our officers that their job is wow. And they all looked at me like, what the hell does that mean?

• 16:25Speaker 00

  And like, we, our job is to do things that a customer gets, their frequent flyer gets on the airplane, says, wow, I've never seen that before. And by the way, we get credit for that one time.

• 16:37Speaker 01

  I know.

• 16:37Speaker 00

  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, 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, and 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.

• 17:01John Collison?

  Ben has a theory that I like, which is that all of the, all of the top global airlines lists are just totally missing the point. It's like, people talk about benchmaxing 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-choy flight attendants and, you know, all these things. Whereas what you actually care about is the airline having really good tech. So you have things like Connection Saver, where I can rebook you if you.

• 17:29Speaker 00

  I'm 100% with you. I think the, those airlines do a good job. And like, I say, schedule's the number one reason people pick an airline. But everything else matters for brand loyal customers. And it's, it's service, product reliability, and technology. And the Asian and Middle East carriers do better than the US airlines on product for sure, and probably service, too. I think we do a really good job, but they, you know, different cultures for service, so they do better on that. But I think technology is the differentiator. And United, that's why I now believe that United in totality is the best airline in the world. And it's because of technology. And it's, like, it's exponentially getting better, you know? Things like being able to do this for customers when there's a delay and tell them what's going on.

• 18:13Speaker 00

  We, we started it this summer, we'll, 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, you couldn't.

• 18:37Speaker 01

  So we're like, why? We'll find outside.

• 18:38Speaker 00

  We sent half the people the normal weather delay, which they think you're lying. Because it's sunny outside, like, you must be lying to me. And we sent half of them a picture of the, with the radar map. And you have to fly through this line of thunderstorms and the route's closed because it's unsafe. The people with one hour delay, I think the numbers were negative 60 NPS on the normal way of sending it, plus 60 when we sent them a picture of the map. 120 point difference.

• 19:07Speaker 01

  It wasn't just that they weren't mad, they were actually happy, they're like.

• 19:10Speaker 00

  Yeah, it was better than an on-time flight. The people can handle, like, they understand, they don't want to do something that's unsafe, but they don't like uncertain.

• 19:20John Collison?

  It's like a lot of what you're describing is expectation management and communication being a key part of the experience? Because this is high stakes for people.

• 19:28Speaker 00

  Yeah, I would leave the expectation management out of it, it's communication. People should expect.

• 19:33Speaker 01

  We're gonna get expectations management.

• 19:35John Collison?

  Why, isn't it expectations management?

• 19:37Speaker 00

  Because I don't want to use it as an excuse, like, oh, sometimes weather happens, so you should expect it. Like, our job is to try to, it does?

• 19:43John Collison?

  Yeah.

• 19:44Speaker 00

  But our job is to try to figure out a way to make it the best possible for you. I'll give you another example for weather. Now, this one, we're gonna 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.

• 19:59John Collison?

  Denver is really your Benoit.

• 20:00Speaker 00

  Well, no, it's not, it's actually easier than that. Newark is the hardest.

• 20:04Speaker 01

  My two, my two options. Are Chicago and Denver. It's just a roll of the dice.

• 20:11Speaker 00

  This will help, like, Denver especially, because Denver and the, winter storms are actually pretty easy, you know what's hap. Pop-up thunderstorms are what's hard. The reason is because if lightning strikes within three miles of the airport, the ramp closes for 30 minutes, people aren't 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 in Denver, from the west to the east, and it happens west of the airport, you should probably close it. But if the storm is moving west to east and it happens three miles to the east of the airport, you don't need to close it. So anyway, using AI. So what 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 corner posts, all the

• 20:55Speaker 00

  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. Sometimes it's, but in most cases, you can keep, you can use different arrival routes and departure, but you can keep the airport running.

• 21:10Speaker 01

  There is nothing around Denver Airport, so you have lots of space.

• 21:13Speaker 00

  And you can keep the airport running. We can probably reduce 50 to 75% of the weather impacted delays in Denver in the summer by using this kind of technology. 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, you know, we're going to be safe. We're never going to do anything that's unsafe. And weather does happen. But our job is to figure out how to minimize the impact of weather and you can't use weather as an excuse. So that's my expectations management point. I want to have our culture be, we find ways to overcome the challenges.

• 21:57Speaker 00

  Instead of trying to manage your expectations, we try to set high expectations and try to meet them. But we do communicate with you.

• 22:02Speaker 01

  What do you see as the biggest limiter of your business? Is it airport capacity?

• 22:05Speaker 00

  No, it's air traffic control. It's by far air traffic control. Air traffic control is 90% of the issue.

• 22:11John Collison?

  How do we finally, this is the great white whale, air traffic control modernization. Is there a path to, it's like a complex technical project, it's a complex social and political project. Can it be done?

• 22:22Speaker 00

  It can be done. And look, we have, the president is supportive. He's the most pro aviation, you know, he knows about aviation, he likes talking about it. We have support from him. Secretary Duffy is great. I could text him right now and get a response. You know, unless he's in immediate, unless he's on, you know, standing up speaking or something, I would get a response within 30 seconds. Brian Bedford is best FAA administrator we've ever had. But it's the government. It's just so hard for the government to give the, just take the appropriations process. You know, these are the kinds of capital projects that, you know, are five to 10 years to get done. They do an annual appropriations project. So they, they start at the beginning of the year and it's often delayed because of the, you know, government shutdown stuff.

• 23:05Speaker 00

  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 the way. Like, it is absurd.

• 23:23John Collison?

  Could the airlines, could the airlines fund us to get around the?

• 23:26Speaker 00

  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.

• 23:38John Collison?

  Well, you wouldn't need to privatize it. You could just have a user fee system where you're.

• 23:42Speaker 00

  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, 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.

• 24:25Speaker 00

  Like, I'm not, it is the best FAA, best DOT we've ever had. But like the conversations they have are, you know, on Capitol Hill is, well, how many jobs are you going to put in my district? And so like, think about air traffic control. Air traffic controllers are not, don't need to be at airports. They don't, they mostly sit in basements, look at screens. They don't like be in a centralized facility anywhere in the country. Instead, they're like, there's an air traffic control facility in every single district for political reasons. And it makes it incredibly inefficient. And like one wire gets cut, you know, if you got one big facility, you get a backup and you know.

• 24:58Speaker 01

  As we saw.

• 24:58Speaker 00

  But you have, yeah, you have 450 of them. Like, things get, happen all the time. And it just makes the system inefficient. It's just, it's, I'm not actually advocating for privatizing the FAA because it's so politically toxic. But it's, 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.

• 25:20John Collison?

  So, but what will happen? Because like already certain areas capacity wise are creaking at the seams. And, you know, air capacity grows 5% a year. Just we have an unstoppable force in the movable object.

• 25:33Speaker 00

  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 the 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 and 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, 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.

• 26:11John Collison?

  More progress would happen.

• 26:12Speaker 00

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

• 26:21John Collison?

  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.

• 26:58Speaker 01

  You said something at the Crane's business launch in Chicago in August. You've had this sort of battle royale with American Airlines, very pertinent to me since I fly out of Chicago the most, where it would actually be better for consumers if United was the dominant airline at Chicago.

• 27:13Speaker 00

  I wouldn't use the word dominant, but.

• 27:15Speaker 01

  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?

• 27:25Speaker 00

  It's the basic, it's understanding of how networks work. So the real reason for that is there's a limited number of flights at Chicago. And so if you're going to add one flight to Milwaukee from Chicago, that means you can't fly. It's not the shortest, but it's short. You can't add somewhere else. And for a hub to work, you have lots of what's called catchment area flying, flying from 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. They're connecting on to other destinations. And that's really important. And we have several hundred of those connect, you know, catchment area flights for connecting customers within, you know, a few hundred miles of Chicago. American has totally duplicative services on that. Those do nothing for the city of Chicago.

• 28:10Speaker 00

  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, this is the reason, because they don't have to waste several hundred of their flight possibilities on catchment area flying. They have half as many.

• 28:41Speaker 01

  In America, there's like 16 flights a day.

• 28:43Speaker 00

  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.

• 29:03Speaker 00

  The biggest airport in the world, it's not. And it's because of this. I'm 100% sure it's better for the city of Chicago. And I think it's going to be, 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.

• 29:17Speaker 01

  How much is your, you famously were from American. We're sort of passed over, came 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.

• 29:35Speaker 00

  So I, everyone thinks that it's personal and, you know, for me, like, I get it.

• 29:40Speaker 01

  Maybe a little bit.

• 29:41Speaker 00

  But, but it really isn't. You know, there, they were, you know, in Chicago, there are, so sort of been a competitive battle there. But in, look at our market share gains and our market share gains in Chicago. We went from having lower market share than American to basically having double the revenue share. Like, those are unprecedented kind of share shifts. The market share shift that we've had against Southwest and Denver's even bigger. The market share shift we've had against Southwest and Alaska combined here in the Bay Area is even bigger. So it hasn't been directed at them. With respect to Delta, you know, I think that what's happening right now with Starlink is the biggest push.

• 30:16Speaker 01

  That's what we want to get to is Ed, is Ed going to lose his job because?

• 30:20Speaker 00

  He's not going to lose his job over it. And, and by the way, I have a lot of respect for Delta. They've, you know, I took inspiration for what they, they were the first airline to start down this building a brand loyalty. I don't call it premium because I want to invest nose to tail for customers. Starlink applies to everyone. It's not a premium product. It's for everyone on the airplane. But they've done a lot of really good things. But Starlink, I think Starlink behind the schedule is the most important thing for customers to choose an airline now. And we are going, today we're at 48% of our flights are on Starlink. In the next week, it's going to be up to 50.

• 30:55Speaker 01

  Way fewer than your seat miles, though. Why did you start on the little planes and not?

• 30:58Speaker 00

  Because they were certified. This is the FAA process. You have to get the other airplanes certified. And, and so we're getting, we've been getting them all certified. 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.

• 31:10Speaker 01

  Well, to this Asian airline point, like you have a joint venture with A and A. And most people I know who fly out of the Pacific would often choose the A and A flights.

• 31:17Speaker 00

  Yeah.

• 31:17Speaker 01

  And now going forward, of course, they're going to choose United flights because of the Starlink.

• 31:21Speaker 00

  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.

• 31:36John Collison?

  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. Can you talk us through how you made the decision to do it? How painful was the decision?

• 32:03Speaker 00

  It wasn't painful. It was, I thought it would be a big deal to customers and, and so wanted to do it. Economics were, yes, it's more expensive, but it's a whole lot better.

• 32:17John Collison?

  Yeah.

• 32:18Speaker 00

  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's really, it takes time to put them on. And the easiest way to put, put it on is to do it in a heavy check. So you've got an airplane that's going to be down. You strip the airplane down. And while you're working on it, you know, you already got the airplane down, you know, put Starlink on. And that's how we started and, you know, we had, you know, we're only going to do like 65% of our fleet because planes were retiring and, you know. And once we put it on the first aircraft, we started, we realized like, I just like all these anecdotes. Like I'm talking to people like, I'm switching to flying a regional flight because it's got Starlink. And I was like, holy.

• 32:54Speaker 01

  We got into the whole thing. 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.

• 33:06Speaker 00

  Yeah.

• 33:06Speaker 01

  And there's a, such a huge gap between maybe there's.

• 33:09Speaker 00

  Congratulations, by the way.

• 33:11Speaker 01

  We're not talking about it right now.

• 33:14Speaker 01

  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.

• 33:22Speaker 00

  I think we're, you're right. I think we've got some, but you know, getting to 50% matters. But you're right. So we were at 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, it's if you're flying on a Max Eight. If you're flying on Max Eight, it might be 25%. But if you're booking for Christmas, it's 36% because we know how many we plan to have done. And so we're going to have that. We also are going to have a bunch of premier markets that we're going to get to 100%. So our first hub, I'm not going to tell you the date yet, the first hub that's going to be 100% Starlink is Los Angeles.

• 34:06Speaker 00

  So sometime in the first half of next year, if you're in LA.

• 34:09Speaker 01

  And is that because that's the most competitive hub?

• 34:11Speaker 00

  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.

• 34:23Speaker 01

  Oh.

• 34:23Speaker 00

  We will get there, but, yeah, we will get there. But, you know, if you've got a market like San Francisco that has a lot of 787s.

• 34:32Speaker 01

  Yep.

• 34:33Speaker 00

  It's just going to take longer because Boeing is slower.

• 34:36John Collison?

  Was the CapEx or OpEx more painful in the economic model as you look at it?

• 34:42Speaker 00

  The, the numbers aren't that big.

• 34:44John Collison?

  Oh, really?

• 34:45Speaker 00

  So, well, I mean.

• 34:46John Collison?

  But then like, why, like, why is Delta's strategy rational? Or do you think it's like completely mistaken?

• 34:50Speaker 00

  It was a mistake.

• 34:51John Collison?

  Okay.

• 34:52Speaker 00

  I, 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 do an 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. 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. You know, United will be at 12%, you know, we'll be a year behind. Like, it's not going to 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 people, we even didn't appreciate how big it was. It's not as big, but then we put the pedal to the metal and SpaceX supported us and going.

• 35:36Speaker 01

  Is this going to be the biggest differentiator of all time?

• 35:38Speaker 00

  I think it is. I think it's the biggest competitive, and it's temporary. Like, it's not, everybody eventually is going to have.

• 35:44John Collison?

  Yeah.

• 35:44Speaker 00

  High-speed, low earth orbit internet connectivity. It's, 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, I think we're going to convince customers that United is the best airline. And we're going to get customers to switch their loyalty to United, get our credit cards, switch their loyalty to United. Not because of Starlink, they're going to try us for Starlink and they're going to stay because all the other technology and everything else is better. And the technology in particular is so much better than technology at 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.

• 36:23John Collison?

  You have a two to three-year window to woo customers.

• 36:26Speaker 00

  Exactly.

• 36:26John Collison?

  Yeah.

• 36:27Speaker 00

  That's exactly right.

• 36:28John Collison?

  What do you think of Elon's strategy of requiring airlines to make it free?

• 36:31Speaker 00

  We're going to make it free anyway, so, you know, it, free was going to be, although, in fairness, free is not the value proposition. Fast is the value proposition. And, and the truth is like on, I've flown all three of my big competitors who have it free on the legacy systems and it's terrible. I've flown them each two or three times in the last year.

• 36:51Speaker 01

  No, I was. It's terrible because there's not enough, it's physics. There's not enough bandwidth to make it free.

• 36:56Speaker 00

  I was sad when they started making it free.

• 36:58Speaker 01

  Yeah.

• 36:58Speaker 00

  Because I'm like, this is going to make my experience.

• 36:59Speaker 01

  It makes it unusable for almost everyone.

• 37:02Speaker 00

  Free was never the value proposition. Fast is the value proposition.

• 37:05John Collison?

  Yes.

• 37:06Speaker 00

  And there's only one option for fast, it's Starlink. That is the only option. You can call the other fast and free, but it's not. It's like dial-up internet.

• 37:12John Collison?

  Yes, yes.

• 37:12Speaker 00

  It's slower than dial-up internet.

• 37:13Speaker 01

  So you mentioned that in the long run, everyone wants Starlink, the technology stack.

• 37:17Speaker 00

  Or, or maybe Amazon, but they'll have lower.

• 37:19Speaker 01

  Right. How do you think about in the long run where a reason people prefer saying 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?

• 37:31Speaker 00

  I want us to be the best at everything.

• 37:34Speaker 00

  And acknowledge that the Asian airlines are really, 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 than other. I think being in the lead and never being complacent, we're just going to, we're going to have to keep reinventing things and doing stuff to make it great for customers. But I think we'll have a hot, a big lead. And when you have a big lead too, we'll have the resources to invest. You know, like everyone else is like mired in these, you know, hitting the Wall Street number for next quarter. And the only way to do that is to cut your investments, you know, like they get mired in the short-termism.

• 38:19Speaker 00

  And they don't invest. And like, our constraint on investing in technology is how much can we manage? It is not money.

• 38:27John Collison?

  You've talked about, yeah, airlines being run by operations people where taking cheese out of the pizza is the, is the only move. What has given you more social permission with your investors, with your board to do things like the bigger aircraft order during COVID? We're going to do Starlink. It feels like you have taken bigger swings.

• 38:47Speaker 00

  Yeah.

• 38:47John Collison?

  Is that just you've seen the future better or do you somehow have more permission to take big swings?

• 38:53Speaker 00

  I think we're better at seeing the future. I, we, I guess, I don't know if we talked about it here, but I think reading as much as I do, you know, we talked about the two, like, I, I think people that do that, connect dots, can see the things in the tails better than others. It can see, 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, like, and I don't care.

• 39:30John Collison?

  One of the big things they've hated.

• 39:31Speaker 00

  The aircraft investment. They, you know. They don't say don't invest in technology, but they want your CASM X, which is your cost per available seat mile to be like. And the only way you can, like, we can't control like airport fees are going up and like, you know, union contracts are what they are and like, the only way, the only way you can cut, 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 and do the right thing.

• 40:12Speaker 00

  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. Yes, yes.

• 40:30Speaker 01

  We need more gamblers as CEOs.

• 40:32Speaker 00

  More gamblers.

• 40:32Speaker 01

  I mean, everyone in tech loves, or I think a lot of people in tech love airlines. It's super interesting.

• 40:37Speaker 00

  Yeah.

• 40:37Speaker 01

  But the actual job, like, how many employees does United have?

• 40:41Speaker 00

  Hundred twenty thousand.

• 40:42Speaker 01

  Hundred twenty thousand, 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.

• 40:56Speaker 00

  I think being the CEO of almost any company, but certainly for me, is really ninety-nine percent one thing. Create the right culture. I was in L.A. yesterday and I told the whole team what I just told you guys, like, the first hub that's gonna get all Starlink. You're gonna get a lot of people that are coming across the terminal, which is where Delta is, across the roadway there to United, they're gonna try us, that are loyalists to another very good airline. Your mission is make sure they know United is the best airline in Los Angeles. And they're all like, yeah, we can do it. Like, it's fun. It's fun. People wanna win, it's fun.

• 41:33John Collison?

  I wanna come back to Wall Street. So, you know, you talked about investor perception. Historically, airlines were the, were the canonical example of a bad business. You know, the famous Buffett line of, you know, a far sighted capitalist would have shot down over Rite as Kitty Hawk. And the fact that airlines had cumulatively lost money until nineteen ninety-two, I think. Like, the entire industry since Kitty Hawk had lost money on a negative basis. That is no longer true. It seems to have really changed.

• 42:03Speaker 00

  Yeah.

• 42:03John Collison?

  And now airlines are more robustly profitable. I think Berkshire owned at least some airline stocks for a while recently. What has, has the structure changed? Presumably, you think yes. And what has changed such that airlines are no longer the poster child?

• 42:17Speaker 00

  Yeah, well, yes and no. Yeah, it had gotten better, but like, you look at what's happening in the last twelve months and things have gone back. This year, six of ten U.S. airlines are gonna lose money.

• 42:29Speaker 00

  And much of it's structural. You know, I talked about American earlier. American lose a billion dollars, billion and a half, probably gonna 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 places where they lose a bunch of money, around the globe, you know? Like, some of the losses are like astron, and lots of places that airlines have more than negative hundred percent margins, which sometimes people think is like mathematically possible, because it's revenue, it's possible. And yet, they still fly it. So ego is still big. And ego is the reason those things, I think, have happened in the past. Ego still exists.

• 43:11Speaker 00

  But the, the structure of the industry that's different today is there are basically two winning airlines in the U.S., Amer, 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. And so even now with oil prices, oil prices for us are up eight billion dollars this year. Our best year in history made five billion. We're not gonna make as much this year as last, but we're solidly profitable. And it's just a completely different picture.

• 43:41John Collison?

  But 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

• 43:51John Collison?

  kind of incoherent irrational decisions based on ego?

• 43:55Speaker 00

  I wouldn't, it's probably not quite the Juan Trip, but there's still a lot of ego that's happening. Where people are, you know, adding routes that like, I started as a route planner. I could look like, you're gonna lose, that's gonna be a negative forty percent margin. You know, between negative thirty and negative fifty.

• 44:12Speaker 01

  Oh, you guys do a lot of routes. You've added a bunch of, we usually added a route last week, all these like new cities.

• 44:16Speaker 00

  Yeah, ten new international destinations, it's very cool.

• 44:19John Collison?

  How do you make the decisions? Like, when you launch Nuke in Greenland, like, is that, you have a vibe that it could work? Is this like actually very, is it card counting or poker?

• 44:29Speaker 00

  It's, that one, it's different. It's hiring a great, it's hiring great people. Because I would have never picked Nuke, or no Nuke. We got a guy, Patrick Quell, and a great team that are really creative. And they go look for things that are different and outside the norm, not in the data. We talked about data earlier, that aren't in the data, because no one's ever done it. So there's no data to support it. And Nuke has been really, really good, as an example.

• 44:55John Collison?

  Really?

• 44:56Speaker 00

  Yeah, people love it. It's a great place to go. We've added, so across Atlantic, by next summer, we'll have fifty-three destinations. We had twenty-three destinations ten years ago when I got to United, we'll have fifty-three 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. Like, that's the great, you know, our assets are fungible. Like, Bergen, Norway didn't work. Like, I think Norway's awesome, like, I still like it.

• 45:20Speaker 01

  It's incredible.

• 45:20Speaker 00

  I think it sort of worked, but it didn't. But so we tried it and, you know, it lost a little bit of money. It's not that much, lost a, and we just stopped. That's the great thing, like, we can try stuff and stop.

• 45:30John Collison?

  But so the fellow, Patrick Quaid?

• 45:32Speaker 00

  Patrick Quell.

• 45:32John Collison?

  Yeah, Patrick Quell. How does he make the decision that Nuke is a go?

• 45:39Speaker 00

  He did, he has all kinds, you know, they're, they're staying really connected to what's happening in the world. Another example, I forget the names of these cities, but we added a couple of cities in Spain and Portugal that are, that I'd never even heard of, and I don't remember them now, the names, that are part of pilgrimage trips. So people, Catholic, they're Catholic pilgrims, 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.

• 46:06Speaker 01

  Oh, so you have to add both of them at the same time?

• 46:07Speaker 00

  And so we, we've added, you know, and anyway, he went and like read, somehow read about pilgrimages, went and got some data, how many people do it? Then he went and found data that said, oh, I can see all these broken itineraries that somebody flew us into the, one of the cities, and they flew another airline out of the other cities. And we added them and they went gangbusters. He, this year, took a trip to Uzbekistan and Kazakhstan. Like, we can't fly there today because we can't fly over Russia.

• 46:34John Collison?

  All right.

• 46:34Speaker 00

  But he's there like, you know?

• 46:36John Collison?

  This could work.

• 46:37Speaker 00

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

• 46:42John Collison?

  But, um.

• 46:43Speaker 00

  He'd be more interested in me for your, one of your podcasts in the future than me.

• 46:46John Collison?

  Yeah, I'm very interested. Greenland, by the way, is fascinating. I love it, where it's a country of fifty thousand people and they're just going gangbusters, building airports. Where, obviously.

• 46:57Speaker 00

  Well, it's the only way to get there, to places.

• 46:58John Collison?

  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 us and that's why they added the new route that you guys have. But they're replacing the airport in Narasquahque. There's already a perfectly good airport there. And they're building a new airport there in the south, full jet capable international airport. They love these capital projects for a country of like fifty thousand people.

• 47:18Speaker 01

  They'll spend their money on it.

• 47:19Speaker 00

  But it's such a cool, no pun intended, place to go. And, you know, it can drive the economy, fifty thousand people, having people come in and, you know, it can really drive, drive the economy.

• 47:29John Collison?

  I wanna talk about the tech for a second.

• 47:31Speaker 00

  Yeah.

• 47:31John Collison?

  So how should we feel about the last few decades of, you know, the actual airframe advances? Where everyone likes to talk about, you know, the seven thirty-seven first flew in nineteen sixty-seven. It flew at Mach point seven eight. And the seven thirty-seven Max today flies at Mach point seven eight-ish.

• 47:51Speaker 00

  Yeah.

• 47:51John Collison?

  Now, we, it does burn fifty percent less fuel, the latest version. So that's like a significant improvement. It is thirty to forty times safer, so that's a significant improvement. But at the same time, people feel like, again, it's one of these examples people trot out of stasis. How do you feel about the rate of technological improvements in airframes?

• 48:11Speaker 00

  It's maddening that we haven't done more. In fact, this book. Where is it? Impossible Factory.

• 48:20John Collison?

  It's a Skunkworks book. I want to read this.

• 48:21Speaker 00

  Yeah.

• 48:22John Collison?

  I had not known there's a new Skunkworks book.

• 48:24Speaker 00

  Clarence Kelly Johnson, you know, and developing, you know, the SR71, you know, the U2, you know, in a couple of years from start to finish. I think the fundamental problem is Boeing and Airbus have a global duopoly. And they have quietly, not officially agreed, but they have quietly agreed neither one of us will invest in new airframes.

• 48:43John Collison?

  They're pacing the frontier.

• 48:44Speaker 00

  And if no one, if you don't have an option, you know, like, we need a third aircraft manufacturer, to be blunt.

• 48:50John Collison?

  Okay, so you think there's basically a breakdown of competition?

• 48:52Speaker 00

  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. Begging them, and they just won't do it.

• 49:03John Collison?

  I am on a 757, but actually, Chicago, I'm a little nervous about it.

• 49:06Speaker 01

  Great plane, the takeoff's amazing.

• 49:08Speaker 00

  Yeah, it's a cool airplane.

• 49:09Speaker 01

  It's a cool airplane.

• 49:11John Collison?

  Speed is obviously one thing, and obviously you guys are working with Boom. But speed is also hard and requires much more fuel. Other than speed, what improvements would you like to see?

• 49:21Speaker 00

  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 B2 bomber. It's a much more efficient airframe for flying. And so turning that, we're an investor in a company called Jet and Zero, who's trying.

• 49:40Speaker 01

  Is that an airport challenge, though, too?

• 49:42Speaker 00

  There's airport challenges, yeah, it's bigger, so airport space. But that's really a gate challenge, so you got to re-gate. I think that's an example of something. Engine technology, I think, can advance as well. Another cool thing, by the way, we're starting the Relax Row next, later this year, or next year, which is in coach, you can put three seats and a bed comes out and you can lay down on them. But we have little United stuffies, airplane stuffies. As I already got some for my kids, my kids love them, but that's another cool.

• 50:10Speaker 01

  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.

• 50:17Speaker 00

  Yeah.

• 50:18Speaker 01

  Is how can you take a large fixed capital product and basically deliver infinite numbers of strata of, like, pricing?

• 50:26Speaker 00

  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 Relax Row, I think will be profitable, but it's going to not even be a rounding error in our financials.

• 50:41Speaker 01

  Right.

• 50:41Speaker 00

  But it's cool. And it's good to do stuff that's cool. Good for families, like, I also, like 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, like, seatback entertainment, like, I love walking through our airplanes when we have, you know, with seatback entertainment. And, which a lot of airlines went away from. And you'll see kids watching, and parents just totally relaxed, because their kids are watching Boeing. And like, it just makes.

• 51:20Speaker 01

  I heard you could now watch Cheeky Pint on there.

• 51:21John Collison?

  You can now watch Cheeky Pint on the in-flight entertainment, so it's pretty cool. So people are probably watching this.

• 51:27Speaker 01

  Maybe I'll watch this, I'll probably.

• 51:27John Collison?

  Exactly. You can just put it up there, yeah. Okay, so when you're saying like, with things like Relax Row, social media has almost changed airline marketing, where there can 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.

• 51:46Speaker 00

  Yeah, and I do, I look at, we're trying to build a brand. You know, all the Starlink stuff that's happening, like.

• 51:52John Collison?

  Sure. You're into it, you're feeding it.

• 51:54Speaker 00

  I kind of feel bad for Ed, just kind of, you know, getting into a fight with him. But like, I love it for us, like, we were, actually, we had a big push that was coming, like, we were obviously prepared.

• 52:04Speaker 01

  How'd you decide to run those ads, right?

• 52:06Speaker 00

  We were already prepared. We were waiting to, we were waiting to, actually, we're going to cross the 50% threshold next Friday. And so we're waiting till then to sort of, like, we're going to really push, like, going, so we're going to do it anyway. But that was a moment to, like, except our team is great, Maggie Schmarin, who's our VP, runs that, like, it's awesome. And, you know, she did, 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. Can't do stuff fast, or creative or fun or interesting, because it just gets watered down.

• 52:49Speaker 00

  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 CBS Health, and started reading about, 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 did we do?

• 53:08Speaker 00

  That's cool.

• 53:09John Collison?

  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 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.

• 53:45Speaker 00

  Yeah.

• 53:46John Collison?

  And there, we have a 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?

• 54:01Speaker 00

  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.

• 54:09Speaker 01

  Well, didn't that happen in Chicago, though?

• 54:10Speaker 00

  It, it, maybe it was going to happen. It happened in Newark, historically. And we finally got effectively slot control in the airport, it's now the most reliable.

• 54:19John Collison?

  You wanted slot control because it's bad for customers?

• 54:22Speaker 00

  It's horrible for customers, like, I bagged the FAA, and we finally did it.

• 54:28Speaker 01

  Well, but that's the contrast, right? In Chicago, you're making this move, that this wacky law, every year they re.

• 54:33John Collison?

  What's the wacky law?

• 54:34Speaker 01

  So every year, they take another 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.

• 54:44Speaker 00

  It created a bad outcome. It's partly how American got to losing a billion and a half. Because what happened in Chicago, American wasn't paying attention and lost six gates to us.

• 54:55John Collison?

  But like, they weren't paying attention, like, they, it's like forgetting to renew the internet domain, it's like, they just.

• 55:00Speaker 01

  By the time they rose to doing that, they, United had added on so many flights.

• 55:04Speaker 00

  We hadn't done anything, we just, we went back to our normal pre-COVID schedule.

• 55:07John Collison?

  Yes.

• 55:08Speaker 00

  And American was focused on the Sun Belt, and they've talked about it public, you know, Phoenix, Dallas, Miami, you know, more demand, leisure demand, that's what they were focused on. So they just didn't add back their schedules. And we didn't do anything special, but because they did it, they lost gates to us. You have to have slots for, you know, because it's the only way to manage a limited resource. And they're mostly grandfathered, which is 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.

• 55:42John Collison?

  But there's a balance here, you both want people to earn a return, and you want chumpetarian destruction, where British Airways should only be allowed to recoup so much investment, right?

• 55:52Speaker 00

  Yeah. I think the better answer is to change air traffic control and create more slots.

• 55:58John Collison?

  Yeah.

• 55:59Speaker 00

  That's how you, you can create more slots with better air traffic control. And then you can allocate those in whatever way you see fit. But the other, the other thing that's happened at all these big airports that have slot controls is the government entities that run the airports have made the cost so prohibitive. That there's, there's no low-cost, low-cost carriers can't afford to fly there. The New York airports are now $52 per passenger to fly at the New York airports. Spirit Airlines, before they liquidated, average price, average fare was $58. Like, you had 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.

• 56:41Speaker 00

  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.

• 56:52Speaker 01

  Well, did you price low-cost carriers out of the market?

• 56:54Speaker 00

  We didn't price it out.

• 56:56Speaker 01

  You had the basic level, and you sort of, much more fine-grained cutting up of the seats.

• 57:00Speaker 00

  We stopped, 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 profit, and we upgauge airplanes, so we could profitably be competitive on price most of the time. And, 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.

• 57:29John Collison?

  Why did Spirit go bust?

• 57:30Speaker 00

  Because they weren't charging as much as their costs. They were not able to charge enough. It's pretty, it's simple. It was simple. Like, they weren't able to charge enough. And, and look, what's happened-

• 57:39John Collison?

  Because of cost inflation, basically.

• 57:40Speaker 00

  Cost inflation, but, uh, there's a whole bunch of things. But what's, fundamentally, what I think has happened to the low-cost carriers, there's really one still low-cost carrier successful, successful airline in the world. It's Ryanair.

• 57:52John Collison?

  I was gonna ask.

• 57:53Speaker 00

  The fundamental premise of a low-cost carrier is fly to low-cost airports. Uh, you know, Southwest, when they started flying here, they flew to Oakland, not San Francisco. San Francisco's too expensive. Um, in LA, they didn't fly to LX. They flew to Burbank in Ontario. LX is too expensive. Uh, and Ryanair still does it. Ryanair didn't fly to Heathrow. They don't fly to Charles Town Hall. They fly to secondary airports, uh, because they're low-cost.

• 58:15John Collison?

  So all these companies-

• 58:15Speaker 00

  And all, in the US, every single one of them, like, abandoned that.

• 58:22John Collison?

  You're gonna say the ego?

• 58:22Speaker 00

  And then they went to fly into, I mean, it's, I don't know why-

• 58:25John Collison?

  Well, they run out of, like, customers, right?

• 58:27Speaker 00

  Yeah, and, um, and they went into, you know, Chicago and Newark and San Francisco. And like, you, uh, back to the New York area, you can't charge 58 bucks when you're paying the airport a 42. Uh, you just can't.

• 58:39John Collison?

  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 a one-day's drive of the refrigeration centers. And so, uh, 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. It's gonna keep the menu very narrow. And I feel like, uh, maybe if they're a public company, they were trying to chase growth, and we're gonna 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, uh, airports, and for whatever reason, they just got distracted from it?

• 59:21Speaker 00

  Yeah, I, I would actually say a little different than just chasing growth. I would say, know who you are, know who, what your strengths are, and stick to your knitting. Companies are not good at trying to be something they're not. And in the past, you know, this predated me, but all the big airlines, you know, American, Delta, Northwest, Continental, tried to go compete with Southwest by creating airlines within an airline that were gonna 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. Cause that, and, by the way, Southwest is now trying to be like us. And they're not gonna be very good at that either. Um, like, you've got to stick to the things that you're good at. We aren't gonna ever go try to like-

• 1:00:07John Collison?

  Right.

• 1:00:07Speaker 00

  -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-

• 1:00:13John Collison?

  The low-cost model works, but you have to understand what you are.

• 1:00:16Speaker 00

  You gotta stick to it. And, and you gotta accept that there's limitations. Like, you know, I'm not gonna be as big as United Airlines. I'm not gonna fly to Chicago, O'Hare. I have a great, Allegiant is an example. Allegiant Airlines, um, you know, which mostly flies to Vegas. They fly from small cities. They, they've done a great, you know, they, they're, one of the four airlines is gonna be profitable this year.

• 1:00:36John Collison?

  What else have you learned from Ryanair?

• 1:00:38Speaker 00

  The guy's entertaining. Michael O'Leary is entertaining.

• 1:00:41John Collison?

  We, we, we would like to get him in the, uh, in the pub here, but, um-

• 1:00:44Speaker 00

  You had him here?

• 1:00:45John Collison?

  No, no, I would like to. Um, uh, he's, and he-

• 1:00:48Speaker 00

  You'll, you'll get a few more swear words than you get out of me.

• 1:00:50John Collison?

  He knows his business exceptionally well. He's a very impressive CEO. But they're also like In-N-Out. They have avoided distraction where they're all-

• 1:00:56Speaker 00

  He's disciplined.

• 1:00:57John Collison?

  They always get asked about-

• 1:00:58Speaker 00

  They're disciplined. Discipline's probably a better way.

• 1:00:59John Collison?

  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. You know, they get asked about wifi in the planes, and it's like, guys, the flights are short. Just look at your phone for an hour or something. You know, you don't, you don't need it on an hour-long flight.

• 1:01:10Speaker 00

  He's disciplined.

• 1:01:11John Collison?

  Yeah.

• 1:01:12Speaker 00

  It's, uh, that's a better way of saying, so getting outside, you have to be disciplined to be successful.

• 1:01:16John Collison?

  Yeah.

• 1:01:16Speaker 00

  And companies, you know, get stars in their eyes, and they're not disciplined.

• 1:01:19John Collison?

  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?

• 1:01:35Speaker 00

  Uh, for, in airline business, discipline is really about where you fly. The foundation, our, our product starts with-

• 1:01:41John Collison?

  You fly routes that make money.

• 1:01:42Speaker 00

  Um, and fly places that make money. Like, every time I go-

• 1:01:45John Collison?

  Like, where, where you less point-to-point the domestic-

• 1:01:48Speaker 00

  So we don't fly point-to-points.

• 1:01:49John Collison?

  Ah.

• 1:01:49Speaker 00

  Um, 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, you know, new routes and point-to-point routes. And like, it won't work for us.

• 1:02:00John Collison?

  We're an airline that flies to our hubs.

• 1:02:01Speaker 00

  We fly to our hubs, that's our strength, and a whole bunch of reasons that works. Um, and we're not gonna go try to fly point-to-point routes.

• 1:02:08John Collison?

  But if you're not first, you're last.

• 1:02:09Speaker 00

  If you're not first, you're last. Um, and that's true in the airline business. And, and it's by market, like, it's not overall.

• 1:02:15John Collison?

  Yeah, yeah, yeah.

• 1:02:15Speaker 00

  But like, you know, people in Dallas ask me, like, why don't you not fly here? Cause we'd lose. You know, American has too much network depth. Um, 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, like, we can't compete, like, cause we don't have any connections. You're competing for 25% of the market. It doesn't work.

• 1:02:35John Collison?

  Does that then mean, like, the little decisions you make are, okay, should we fly from, is it Newark to Greenland? Uh, uh, like, that's a little decision. The big decision is, are we going to launch a beachhead and take a new hub? And how frequently do you make those decisions?

• 1:02:53Speaker 00

  Rarely.

• 1:02:53John Collison?

  Is the last big hub up, like Denver, when you grew it hugely, like 50, 20 years ago?

• 1:02:57Speaker 00

  But there's already existing hub that we chose to grow.

• 1:02:59John Collison?

  JFK?

• 1:02:59Speaker 00

  In my 30-year career, I've closed three hubs and never opened a new one. It's a hard decision to, to do. There's very rare that that's-

• 1:03:13Speaker 00

  Lots of examples in the airline industry of that not working. Um, and almost none of that working in the post-deregulation era.

• 1:03:22John Collison?

  And so, do you think it's basically impossible to launch a new hub these days? Like, building a new airport, it just hasn't happened in the last 50 years?

• 1:03:28Speaker 00

  Uh, yes, is the short answer. Um, so like, and take the southeast.

• 1:03:33John Collison?

  Yeah, yeah.

• 1:03:33Speaker 00

  Uh, we, it's the one part of the country where we're, we're number three. Uh, Ameri, because Delta has a hub in Atlanta, American has a hub in Charlotte. Um, I'd like us to be bigger in the southeast. It does matter to customers. But there's just simply no airport, um, that's big enough where we can be competitive. We would need to have 600 flights a day to be competitive with American and Delta. And, you know, like, the biggest city that sort of would work, that's a big enough city, maybe, is Raleigh-Durham. But you couldn't, the airport's not big enough. There aren't enough gates, not enough runways. Like, you couldn't have 600 flights a day. Trying to do something just because it's a cool vision, like, we don't do. We're disciplined.

• 1:04:08John Collison?

  But this would be a big enough deal for a region, that could you work with Raleigh-Durham to expand the airport?

• 1:04:16Speaker 00

  Expanding airports in this country is like a decade-long process.

• 1:04:21John Collison?

  Yeah, more. That's optimistic, probably.

• 1:04:24Speaker 00

  Yeah, yeah.

• 1:04:25John Collison?

  Okay, so you think it just, it just-

• 1:04:27Speaker 00

  I, I think it's just, um, you know.

• 1:04:29John Collison?

  Okay, so, discipline for you?

• 1:04:31Speaker 00

  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 money.

• 1:04:46John Collison?

  You did, though, uh, this is not a hub at all. But way back in the day, you used to have, uh, a hub in, in, at Rida.

• 1:04:52Speaker 00

  Yeah.

• 1:04:52John Collison?

  And you've added a few, like, connecting flights, as well from Hong Kong to Thailand and, and to Vietnam. And you're flying to Kaohsiung from, from Rida now. Is that just more on-the-margin sort of things, or international?

• 1:05:04Speaker 00

  It's on the margins, but there are places, like, in Tokyo, we have connectivity with our partner.

• 1:05:10John Collison?

  Right.

• 1:05:11Speaker 00

  Um, and so, a lot of the people that, and like, Ula Batar, we realized that, um, something like 12% of the people that were flying us into Tokyo were ultimately trying to get to Ula Batar, and it was really hard, and they didn't fly there.

• 1:05:25John Collison?

  Wait, that's, yeah, yeah, what's going on here?

• 1:05:27Speaker 00

  That number is way too much. It was only in the summer, but it was, but it was a high percentage of people-

• 1:05:31John Collison?

  For vacation?

• 1:05:32Speaker 00

  Yeah.

• 1:05:33John Collison?

  Um, am I missing something? And I haven't been to Ula Batar. Am I missing out?

• 1:05:36Speaker 00

  I haven't been there yet. My mom went. Uh, my mom travels a lot. She uses my five benefits and travels a lot. Uh, she says it's awesome. Awesome. Um, but, you know, so we'd seen that data, and we added the flight. But now, it's, a lot of the people that fly us into Tokyo connect on to Ula Batar. It was a particular flight that it was 12%, um, you know, at one time of day, at that time of day. But then we also have all the ANA connections, and so, they weren't flying. The Koshun is the same thing. Um, for us-

• 1:06:03John Collison?

  Fly to Sapporo. That's gonna be fun.

• 1:06:05Speaker 00

  Sapporo is booking really well. Uh, it's-

• 1:06:09Speaker 00

  It's gonna be.

• 1:06:09John Collison?

  Is that for skiing or?

• 1:06:10Speaker 00

  Skiing, yeah. But Japan has become like the hottest destination for.

• 1:06:15John Collison?

  The tech people here in San Francisco.

• 1:06:17Speaker 00

  People just love it and even like in the, in Dallas, like people love Japan. Like I have all kinds of friends that, you know, like we went to Japan for spring break and they just, they love the food, the people are great, you know, they just love it.

• 1:06:28John Collison?

  So what I'm taking away from this is that route selection makes or breaks airlines.

• 1:06:34Speaker 00

  Yes.

• 1:06:34John Collison?

  It broke, you know, Spirit or the low cost carriers. It broke American and this, you know, fracas you guys had us.

• 1:06:43Speaker 00

  Yeah, well, they haven't accepted that it broke them, but it did.

• 1:06:46John Collison?

  And then similarly, success means a disciplined route expansion strategy that understands your strengths.

• 1:06:51Speaker 00

  I mean, look, that's pretty insightful. That's like, I tell new CEOs, which I've many of them called, talked to me. I don't think I even have taken my advice yet, but I tell them the one thing I'll tell you. I'd start with like the route, the route network is the foundation. If that's broken, it doesn't matter how good you do at everything else. If you have bad routes that lose money, you cannot make the airline work. It is impossible. And you're gonna hear, you're gonna, if you look through the route P and L, which you should do, you're gonna see a bunch of negative flying. And when you ask people about it, they're gonna say it's strategic.

• 1:07:22John Collison?

  They're gonna have convincing excuses.

• 1:07:23Speaker 00

  Well, they're gonna call it strategic.

• 1:07:24John Collison?

  Yeah.

• 1:07:25Speaker 00

  And if you hear the word strategic flying, you don't need to know what hub it is. You don't need to know what route it is. You should cancel it. You have to stop flying. Anything that, if you default to, it loses money, but it's strategic, like you have to cancel it. And they don't do it.

• 1:07:42John Collison?

  What are the lies people tell themselves to convince themselves to stay running a month? Like what does it mean to be strategic? What corporate customers, something like that.

• 1:07:50Speaker 00

  Yeah, or credit cards, like, you know, if we're not big in this city, then we just won't.

• 1:07:54Speaker 01

  Is that the biggest tail risk? If credit cards ever go away is.

• 1:07:57Speaker 00

  No, it's not nearly as big as people think because.

• 1:08:00John Collison?

  The perception amongst.

• 1:08:01Speaker 00

  Yeah, the perception is big because people look at, they can see the round of revenue that we get. And they say, oh, almost all your profit is coming from, your net profit is coming from credit card. Well, yeah, but there's a cost. We carry over 50,000 people a day, 50,000 or 50,000 people today will fly free on United, free on United Airlines by using their credit card miles. So like, nobody counts the cost, so.

• 1:08:22John Collison?

  Oh, you're saying they just can't do an accurate contribution process calculation.

• 1:08:27Speaker 00

  All that we disclose is the revenue.

• 1:08:29John Collison?

  Yeah, yeah, yeah.

• 1:08:30Speaker 00

  And everyone's like, oh, look at the revenue. Like, well, 50,000 people a day are flying for free. There's a cost to carrying 50,000 people.

• 1:08:36John Collison?

  Okay, so the whole like Twitter meme of airlines or credit card business with, you know, airplanes attached, it's just they're holding the financial statements upside down.

• 1:08:45Speaker 00

  Well, they're ignoring half, they're ignoring, they're looking at the revenue side and ignoring the cost. Ignoring the cost side. I mean, it's important, it's good.

• 1:08:52John Collison?

  Yeah, yeah.

• 1:08:53Speaker 00

  But.

• 1:08:54John Collison?

  But it's blown way out of proportion.

• 1:08:55Speaker 00

  But it's blown way out of proportion.

• 1:08:56Speaker 01

  How do you think about changes of the frequent flyer program? You just went to, I think, $32,000 or whatever you call it, points.

• 1:09:02Speaker 00

  Yeah.

• 1:09:03Speaker 01

  Which I appreciate getting rid of the segment one because I never qualified in that one. So I appreciate the simplification, but is that a?

• 1:09:10John Collison?

  You in general just seem to want to keep the riffraff out, like with the wifi with the.

• 1:09:15John Collison?

  Ben wants to cut off to me right below Ben.

• 1:09:17Speaker 00

  Yeah, yeah, yeah.

• 1:09:17Speaker 01

  That's exactly right. I applaud these changes. I've looked back at the past few years, I've always well exceeded 32,000, so it's no problem for me. And I want emptying lounges, so it's all good. Um, but like, what's the calculation in that? Like Delta obviously has gotten a lot of grief from my frequent flyers and the changes they've made. Yours seem to go fairly well, like what do you think that was?

• 1:09:36Speaker 00

  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. Um, and, uh, and so really like if we're doing something that's going to detract from brand loyalty, like there's gotta be a good reason to do it. And, you know, clubs are, you know, how many people are Global Services member? Like people love being Global Service, but we limit it. Um, it's exclusive.

• 1:10:00Speaker 01

  There was one year I thought I was gonna make it. I mean, this January passed and everything was very sad.

• 1:10:06Speaker 00

  Clubs are another example, like this is another thing, like during COVID, I, I'm pretty sure we're the only airline that did this. Like we doubled down on club investment. So we've doubled our square footage of club space from pre-COVID today, more than doubled. Um, and it's gonna grow by another 50%. Um, like it was the one time in history, if you close a club, it's complicated, but you close a club, like it makes the customers mad in the short term, like you have to do it sometimes to expand it. But COVID was like the one time in history, like we had to spend money, but like we had no customers. So like we could get away with doing it, we could do it faster, like, um, uh, so expanding club space is what we have a bit. We're gonna do more of that, but those are the kinds of things that we're, um, we're more focused on. Uh, but any changes to the frequent flyer program are about trying to build loyalty.

• 1:10:51Speaker 01

  And that is just, we could deliver a better experience if there's fewer people.

• 1:10:54Speaker 00

  Well, sometimes it's that, you know, and, and it, you know, yes, there's a, only a certain number. We're putting more first class seats on, but at any given time, we only have so many, you know, uh, first class seats, um, on airplanes. And so we're.

• 1:11:08Speaker 01

  Calibrating the program to make it valuable, to make it valuable, you know, for loyal customers.

• 1:11:14John Collison?

  You run the Starlink board?

• 1:11:17Speaker 00

  Not anymore, fortunately.

• 1:11:18John Collison?

  Oh, you used to.

• 1:11:18Speaker 00

  Carson.

• 1:11:19John Collison?

  I see.

• 1:11:20Speaker 00

  I run today.

• 1:11:21John Collison?

  What's that like? It's kind of an interesting construct, right? It's one of these businesses where, uh, the airline business, one of these businesses where these are competitive, I mean, kind of competitors, but you do run some overlapping routes. But it's better to work together, but then you gotta pick who you work together. Like, how much are you picking based on you like the vibe of the other CEO versus it's strategic? How much does that change?

• 1:11:42Speaker 00

  So we're all kind of locked into lines and now it's hard to switch.

• 1:11:44John Collison?

  Okay.

• 1:11:45Speaker 00

  And the real value for customers is being able to connect on to places that we, we don't fly to, you know? So, uh, when we fly, you know, we fly into Frankfurt and Munich. And I think we have, you know, four times as many flights into Frankfurt and Munich as American and Delta combined. Um, but it's because we have a partnership with Lufthansa. And those people, I think 60% of the people on our Frankfurt 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. The downside is, um, the experience doesn't feel the same, um, as on United. Uh, 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 asked and asked and asked other airlines

• 1:12:30Speaker 00

  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. Um, and that got everyone to do it. Like I'd been begging, we'd been begging them to do it for years, but it just wasn't a priority for them. That other stuff wasn't their priority. And we finally had to say, we're gonna cut you off unless you do it. Um, and so my focus on our partnerships has been, how do we make the customer? If, 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? Um, and, uh, and I think the other airlines, you know, ought to be doing.

• 1:13:03Speaker 01

  Is that the nature of the partnership? You provide the most customers and so that ultimately.

• 1:13:07Speaker 00

  Yeah, we're by far the, we're by far the biggest, um, you know, and the access to, you know, have the big hubs. Lufthansa is second, you know, across the Pacific, you know, A and A is big. There's several big partners, but some of the others are like, one of my favorite, um, airlines is Croatia. You know, I love the people, they're small, 21 airplanes. The one I love Croatia, it's a great country, so fun, people are awesome. Um, I like the CEO, I like the culture, I like the people. I'm like, it doesn't drive a lot of ton of economic value, but when we were, when we try to do new stuff, like if we're gonna do new technology stuff, like they're one of the smallest, they raise their hand every time. Like, and so I appreciate that.

• 1:13:44Speaker 01

  Well, your career is very much defined by consolidation and doing stuff together. And you would talk about, oh, I, we should just buy American Airlines or whatever it might be. Is there any, is there any limit in your, uh, belief in the power of consolidation and delivering a better consumer experience?

• 1:13:58Speaker 00

  My, I, my, I was gonna 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 commodity. But in non-commodity businesses, doing things that are good for your customers is the winning.

• 1:14:12John Collison?

  And the consolidation dynamic, actually I hadn't thought about this, the consolidation dynamic that you're referencing is that ultimately eliminating duplicative flights in a capacity constrained airport, which is all the major ones, means that you can have more selection as.

• 1:14:26Speaker 00

  That's the Chicago, that's the Chicago example, but.

• 1:14:29John Collison?

  But it's not just that?

• 1:14:30Speaker 00

  It's not just that, like my, the, the American rationale is, um, I would like to create an airline that Americans broadly are proud of, that they think of as the flag 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. Like they're hand in hand, Singapore, same thing. Singapore is not.

• 1:14:57John Collison?

  Yeah.

• 1:14:57Speaker 00

  Without Singapore Airlines. Um, and, uh, and I would like to create the same thing. Um, we also have a massive trade deficit with international airlines. Um, it's two thirds of the long haul seats into the US are from our competitors, even though only 40% of the customers are coming from overseas. Um, because they're all state subsidized, you know, there's a bunch of reasons for it. I'm not complaining about those, but I would like to create an airline that can compete head to head with those airlines. And by the way, that's, does it create me good jobs in the US? Like a whole bunch of reasons. I would create a great airline in the US that can really compete head to head with state subsidized entities around the globe on every, not just in totality, but on every factor.

• 1:15:37John Collison?

  Anything we haven't covered?

• 1:15:38Speaker 01

  Well, he does have seven kids, uh, he goes to soccer games, reads a lot of books and apparently runs a global airline.

• 1:15:43Speaker 00

  Yeah.

• 1:15:44Speaker 01

  How do you pull that off?

• 1:15:45Speaker 00

  Uh, I'm very efficient with time management. Uh, I.

• 1:15:48Speaker 01

  Were you, was this a post kid thing?

• 1:15:50Speaker 00

  No, I've always been that way. I'm like, I, I got a bunch of weird quirks, if you want to ask, but my wife can tell you even weird quirks that are time efficiency.

• 1:15:57John Collison?

  Please, tell us the weird quirks. You can't set that up and then not share.

• 1:16:01Speaker 00

  So I, uh, the one that people find the most amusing, I think, is 90% of the time you use a fork. I use a spoon. And I, by the way, use a serving spoon.

• 1:16:11Speaker 01

  Completely agree.

• 1:16:12Speaker 00

  Because it's so much more efficient. A salad, like eating a salad.

• 1:16:15John Collison?

  The lettuce will fall off, no?

• 1:16:17Speaker 00

  But you, no, you, I cut it up and then you can mix it all up too.

• 1:16:20Speaker 01

  It's tastier because you get all the little pieces on the spoon.

• 1:16:23Speaker 00

  And it's like, I watch my wife eat, it's mad if she stabs a tomato and eats a tomato. Then she stabs a piece of lettuce and eats a piece of lettuce, like mine's all mixed up. It doesn't taste good and it's faster. And like a salad, which has little nuts and cheese crumbles and stuff, you eat it with a fork. And all that's left, all those good stuff falls off and is left on the tray.

• 1:16:43John Collison?

  And I presume your wife loves you salad splaining her like this and telling her.

• 1:16:46Speaker 00

  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, three hours. And I don't waste time. And in particular, I'm not on social media. I do write my own stuff for LinkedIn and Instagram, but I don't even know how to log on. And I like, I watch other people on TikTok or YouTube and like, oh my God, what are you doing? It's such a time waste.

• 1:17:15Speaker 01

  Yes.

• 1:17:15Speaker 00

  I don't watch TV, really.

• 1:17:16Speaker 01

  Yeah.

• 1:17:17Speaker 00

  I just don't waste time.

• 1:17:18Speaker 01

  Huge one.

• 1:17:19Speaker 00

  And if you don't waste time, you got time for a whole bunch of other stuff.

• 1:17:22John Collison?

  And you have to sleep on, right?

• 1:17:23Speaker 00

  And I sleep eight and a half hours a night. Last night I slept over nine.

• 1:17:26John Collison?

  Yeah, yeah. I do find the, um, the short sleeping contest in American business a very funny one, because it's like very proven deleterious cognitive effects.

• 1:17:37Speaker 00

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

• 1:18:04John Collison?

  You lost the count?

• 1:18:05Speaker 00

  I, well, I was having to go back and check. I was like, normally I could just glance at a table. I'd done it so much, I'd see it. And I was having to like, I realized this is, I'm probably making mistakes.

• 1:18:15Speaker 01

  I'm maximizing time and losing money.

• 1:18:16Speaker 00

  I'm max, 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.

• 1:18:23Speaker 01

  Are you still allowed back to Vegas or are you blocked?

• 1:18:25Speaker 00

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

• 1:18:53Speaker 01

  That is like, it's like when you get a little bit older and you buy some booze and they check your ID.

• 1:18:59Speaker 00

  Yeah.

• 1:19:00Speaker 01

  That's like the platinum version of it.

• 1:19:02John Collison?

  That's true, that's true, yeah. And with card counting these days in Vegas, are they?

• 1:19:06Speaker 00

  It's impossible today.

• 1:19:07John Collison?

  Yeah, so are they blocking this with the multiple decks and shuffling frequently?

• 1:19:11Speaker 00

  Well, they've also changed the rules.

• 1:19:12John Collison?

  Oh, so, so that's.

• 1:19:14Speaker 00

  It's like 65 blackjack, like the, the math is.

• 1:19:17John Collison?

  They just subtly changed the odds, so.

• 1:19:19Speaker 00

  They've changed the odds and.

• 1:19:20Speaker 01

  I don't think it's very subtle.

• 1:19:22Speaker 00

  It's apparently people still do it.

• 1:19:24John Collison?

  Yeah. Alrighty.

• 1:19:25Speaker 00

  Alright, this has been fun.

• 1:19:26John Collison?

  This is awesome.

• 1:19:27Speaker 00

  I enjoyed it, yeah.

• 1:19:28John Collison?

  Thank you.

• 1:19:28Speaker 00

  Yeah, thanks, John.

• 1:19:29John Collison?

  Got deep into a lot of stuff.