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Jim Higgins: Jim Higgins, professor of aviation at the University of North Dakota.
Justin: Aviation, what is going on? And welcome back to the Pilot to Pilot Podcast. My name is Justin Siems, and I am your host. I'm not gonna keep you long because this is a great episode. Jim and I really kinda talk everything that is going on in the aviation industry, and we even have some fun, and we kinda think, you know, what if United and American merge?
What would Delta do? What would Southwest do? So those conversations are fun to have. Leave some comments. You know, let us know what you think could happen.
Obviously, we don't think United and American merger is going to happen or could happen, but it's silly season. As I mentioned before, it is the f one version of silly season in the airlines. Truly silly season is going on. We don't know what's gonna happen. There's a lot of rumors going around.
We're just here to talk about it. So I hope you enjoyed this episode. If you haven't heard about the Pilot to Pilot magazine, make sure to check it out. The Pilot to pilothq.com/mag, the greatest magazine in aviation. Check it out.
But, David, hope you're having a great day. Without any further ado, here's Jim Higgins. Jim, what's going on, man? Welcome back to the Pilot Pilot Podcast.
Jim Higgins: Oh, it's great to be here again, Justin. I I always look forward to talking with you.
Justin: Yeah. It's it's a good time and you know, it's funny every single time I record on them, always like, oh my gosh, we gotta do this again, do it next week. And then I feel like we always find ourselves like three months, two months, like, just way down the line. This last one's on me. I got busy doing, I guess it'd be this one if you're watching on YouTube, that magazine.
Yeah. And I got so burned out after that one. Was like, I cannot talk in a microphone. Yeah. And then all of sudden all the stuff cups starts coming out and it's like spirit's gonna go under.
They think they're gonna have to liquidate. Scott Kirby comes out saying, hey, we're gonna merge with Americans. Like, oh my gosh. Just give me, like, two days so I can talk about all this.
Jim Higgins: Yeah. It's it is it is crazy and, you know, you, it seems we go in cycles like that where, all of a sudden, you know, something happens and, you know, everyone's talking about everything. Of course, it doesn't help that we have a war going on right now that
Justin: The
Jim Higgins: United States is involved. And all that's gonna have it's just gonna cause all kinds of, churn.
Justin: Yeah. Absolutely. Well, we're gonna get into as much as we possibly can. I did warn you that if you see me yawn, it's just because it's like 10PM and I got a four year old, so your boy's exhausted. It's not because I am, not caring what Jim is saying or I think the topic's interesting.
But, let's start out with what a lot of people care about when they listen to this and that's just pilot hiring. Sure. Currently, as we sit, no airline has really I mean, they've kind of signaled, hey, stuff's getting expensive. Hey, you know, maybe with the pullbacks I'm flying here. More so I think kind of international carriers, I think the American carriers have also warned that that could happen, but no one's really hinted at hiring.
No one's ever said, hey, we're gonna stop hiring or hey, we're gonna stop doing this. Where does hiring stand right now? Is it pretty much the same as when the last time we talked where United just gung ho, I think on Instagram, which, we all know Instagram is extremely credible. I saw someone said they're playing on 2,500 pilots this year. I know American wants to hire a ton of pilots and Delta has been sitting in a spot where they have prepared a little bit better, I would say.
Maybe they just started a little bit earlier, but they don't need as many pilots for whether it's people leaving or just hiring for growth.
Jim Higgins: Sure. Well, you know, we've actually had a couple good years historically speaking, you know, twenty four and twenty five of, you know, north of 4,500 pilots per year, which historically is is those are good hiring years at the at the major airlines. Already for this year and I'm using the FAPA numbers, which if you haven't seen that, they do a really good job of tracking that. Already, the the March numbers haven't come in yet, but January, February, right around 1,500 just under 1,500 pilots were hired at the majors, which is a strong start if, you know, if that continues, and it may not. But if that continues, then it could be you know, we we it won't be, like, twenty two and twenty three when we had, you know, twelve and thirteen thousand pilots hired at the majors, but it still would be a very strong year.
So, and you said it right. There are reasons why, pilots are hired. One of them is for growth. One of them is for retirement replacement, and then a smaller number for what we call other attrition, people leaving the industry for for other reasons. They have to be replaced.
And so, those numbers stay moderately high across the the large air carriers, and so I think there's gonna be at least some hiring. But you are right. You know, you you read online on the forums, you know, the incredible news service of Instagram and all the other things that that we read. And, you do, you do see it's fickle. Right?
And one day a company will say we're gonna do 2,400. The next day, they'll say 1,500. And that's reflective of the dynamic reality, how things are changing almost on a day by day basis. It is a little reminiscent of the nineties and early two thousands where we would see, you know, one day, a company would come out and say, we're gonna expand into New York. And then the next day, they're laying people off.
And we used to see stuff like that because, you know, the the cash reserves are not always strong at the airlines and they are a lot stronger now than they have been historically. But still, the airlines can't always afford to wait and see and so they have to sometimes make kind of rapid decisions and, you know, that's what we're seeing play out this week. But I think pilot hiring still seems to be long term anyway, doing well.
Justin: Which to be fair, I don't know how good of a metric that is to use on if they're gonna continue to hire because
Jim Higgins: Right.
Justin: Or if airlines doing well because as most people should know, that airlines will hire up until the minute they decide to furlough. Congratulations. Here's the CGO. Oh, by the way, we're gonna take that back.
Jim Higgins: Yeah. Yeah. It's happened many times in the past. You're absolutely right.
Justin: Yeah. But I mean, it's exciting. Right? Like you want to be in the industry when there is massive growth, when there is all the hiring. We have noted before in the past that majority of pilots like I think we're on the back end of the bubble that we did have of the big, you know, the big peak.
What was it? 2021, I'd say, 2022. That's when the really massive hiring was. But it's still a really good time to get on. I mean, when I say we're past the peak, like you're still probably gonna be a wide body captain or be able to be a wide body captain, but, you know, you're not gonna be number one, you're not gonna be number two, you're not gonna be number 200, but you're still gonna be able to have a really good career.
Jim Higgins: Oh, absolutely. Yeah. We we may not see years like '22 and '23 again. Remember, post you know, during the at the beginning of the pandemic, there were a lot of voluntary separations, early buyouts, you know, A lot of people left the industry. A lot of people retired or quit or whatever or even got furloughed.
And so when the industry recovered as quickly as it did, what ended up happening faster than any of us predicted, they had to cover all those people that they let go and then also handle their their additional Yeah. Growth. So that's I don't that was a perfect storm, a confluence of all these factors that led to, you know, that amount of hiring.
Justin: But Yeah.
Jim Higgins: 4,500 pilots a year, which is what we've averaged since then, and we're on tap at least, like you said, with the caveats you mentioned, we're on tap to do at least that this year. Those are strong hiring years historically speaking. Because if you go back and look, there's years where they didn't even hire a pilot. There were many on furlough, and some years or maybe they'd hire a 100 or or 200 total across the industry. So so it's still a very robust, hiring, you know, line ahead for everybody.
Justin: Is there you know, in your background of working at MEC chair, being an MEC chair, is there any kind of verbiage that you look out for when companies are either making press statements or press releases or are commenting on their earnings? Is there anything that you were looking for specifically that could signal stuff that maybe the natural or the normal person or the normal pilot isn't looking for? And you don't have to remember those words specifically, but have you been reading or hearing those words that could spark a little bit of fear of, you know, not necessarily like we're gonna pause hiring, but like they're just putting it out there that like it it might slow down here. This might slow. This this might be a time for we pause.
Jim Higgins: So it's a great question. And you're right. We you know, I worked when I was at the MEC chair. I was a division of ALPA, you know, a group within ALPA. ALPA has their own economic forecasting department.
We would talk to those folks regularly. A very sophisticated group. There's no doubt about it. Very high high intelligence individuals. And so we would keep our eyes on things.
Certainly, earnings was something we would we would always look at. We would look at all the macro indicators. You know? Fuel prices would be one of them, but we would also look at things like consumer sentiment. And then the other one that used to be really important to the airlines was discretionary spending, consumer discretionary spending.
And, you know, before we learned about ancillary income, which you and I have beat into the ground in previous episodes on how to generate revenue that way, We would lead a downturn in the economy as an industry and we would lag the recovery. We would be the first to be affected and the last to recover. So it was a really bad business cycle, which is why airlines didn't really make a lot of money until we solve this ancillary income model. And now, of course, we've we've smoothed that out. So in your question, do we see anything or any of the verbiage?
I would have to say right now it's a mixed bag. Certainly, when we talk about Spirit, you know, that certainly, that's a different perspective if you're working at Spirit today. But I will tell you, you look at some of the earnings that have come out recently. The most recent one was United the other day. It was one of their best first quarters on on record.
You know? And so, I guess, no, I'm not seeing anything that's causing me to say, oh, boy. We're we better we better get ready. But it's a mixed bag because, obviously, with the increase in fuel and, you know, some of the other macroeconomic things, inflation's always on everyone's mind. We have to always keep our eye on that.
I use this word twice now, but it's it's fickle. Right? It can be one day one thing and another thing the next day. So we do have to watch for that.
Justin: You mentioned fuel prices. We mentioned the war. When you look at kind of, you know, just reading in Europe, they're talking about how, hey, we're like a couple weeks out for not having any more jet fuel. Now, I I personally don't know and I don't think anyone really knows who the person that is counting how much fuel is. They're like, are they actually a couple weeks out?
Is this them trying to put more pressure to end the war? But, you know, that is kinda scary to think about. Like, there is I don't remember the percentage thing. It's like the the Strait Of Hormuz. I'm I'm American.
I butcher pronunciations of that stuff. Hormuz. It controls what? 21 ish percent of the flow of oil. So that is a big deal when it comes to it.
And yeah, technically, some people say we're a net importer or net exporter, some people say we're an importer. So we obviously have the ability to have fuel but, know, I it might be a lag, it might, there might be an issue where there be I guess what I'm trying to say is, is there an issue where this can hit The Americas pretty hard with fuel or fuel shortages more so than just airlines being like, well, hey. This quarter, you know, it's gonna be an extra 2,000,000,000. No. For this whole year, it's an extra 12,000,000,000 or extra 8,000,000,000.
Jim Higgins: Well, you are right. You have to look at the location of fuel delivery, fuel storage, you know, refining, and and all of that. It is true also that the the Strait Of Horebooze and its disruption disproportionately affects Asia, in particular China, but also Europe. Those are the two that that get you know, they get a lot of their a lot of their fuel from that, a lot of their oil from that. The United States does not necessarily get a lot from that.
They get some, but not a lot. And so, I think it depends on the month if we're a net importer or net exporter. My understanding is is we're probably gonna be a net exporter due to the situation, so we're able to find some opportunities as a country to to sell. I don't know that the fuel is gonna get to a crisis here because of our ability to to generate oil, especially with the price. It has to be a little bit higher to make it profitable in The United States, especially when you get into places where I'm at like North Dakota and others.
It needs to needs to be at a certain level before it's profitable for the fracking and all the other stuff. And, but right now, it's there. And so, I think what will happen though is the fuel price sold here is absolutely affected by the price of oil that is in Europe or in China. And so when that goes up, even though it's not a perfect correlation, it certainly does put upward pressure on ours as well just in response to the global marketplace. And so because of that, we will see an increase as well.
It you know, it's it's it's a you know, we've used this analogy before. It's a bad analogy. But, you know, if you're in a swimming pool and and someone goes to the bathroom on one side of the pool, you're not immune from it just because you're on the other side of a pool. It just may may take a little while for that to get over to you. So Right.
So that's kinda kinda what maybe is going on here.
Justin: Sorry. I had to cough off off Yeah. No. It's it's it's something that you think or most likely be like, we're not gonna be in the situation of running out of fuel, but we will not be immune to the high fuel prices which the airlines have been saying. They're not necessarily hinting at running out in The Americas.
They're just hinting at expense and profit and lack of profit. But you would have to think, right, they're not just gonna eat those costs. Well, I say that when I I remember reading my old employer NetJets was like, hey, we're not even gonna pass this these surcharges of fuel onto our customers. We're gonna eat all that fuel, which was just like, wow. They must be absolutely killing it.
So That cheers and net jets.
Jim Higgins: Yeah. And maybe they're maybe they're hedged too. I mean, you know, there's there's a lot of strategies that airlines will use to offset that risk. But yeah. No.
I think that's exactly right. I don't think we're we're in any threat of scarcity here in The US, at least at this point. But, certainly, you will see upward pressure on ticket prices for passengers. I mean, we're already seeing that for sure. Yeah.
And you're gonna see some increased ancillary expansions. We're already seeing that that as well. But, but, yeah, I I think that we'll always, you know, be able to get it. We also have the strategic petroleum reserve that the government can open up, here as well just for situations like this. Goes all the way back to, when OPEC did their their, cartel like, price controls in the seventies.
This in response that we've set this up. So so it's possible that can be released. I think some of it might have already been a little bit released. So so, yeah, I think, you know, right now, we can we can keep our head above water. But Yeah.
It might get a little more expensive and for passengers for sure.
Justin: With the expenses they're talking about for fuel, obviously, that's gonna cause most airlines to not make a profit this year. What happens when they don't make a profit? Like, we've well, all we've in the last couple years are just like, how much money we look how much money we make. Look how much money we made. And outside of profit sharing, right, everyone knows Delta's profit sharing is amazing.
But outside of that, like, what happens? So, okay, we're Delta now instead of making what was 6,000,000,000, we lost 2,000,000,000. Is that immediate, hey, union, we need that money. We're gonna ask for concessions or does it you do they usually give it a year or two? How long does that work before the company is like in freak out mode?
Jim Higgins: Great great question. So so, whatever side need if you're in concessionary or you're in, you know, in, you know, great times, one side's gonna always want a new contract. So when when times are really, really good, of course, the union's gonna wanna do an early opener for the contract if they can because times are good and they want, you know, they wanna go after the money. Times are bad or concessionary times, the company's gonna put pressure to do early openers as well and get some kind of contractual relief. I don't know that you'll see that at, like, a Delta, United, or an American per se just because they can withstand a lot longer.
They have things that they can do to to survive and and, you know, you know, carry that out. That may not be the same at all carriers to, withstand that type of, I mean, I don't know how long the fuel price can stay where it's at. I mean, you know, I know we'll talk about it a little bit, but you're already seeing spirit poor spirit. It's just beaten battered and, seem to be on their way to recovery, recalling people. And then, you know, with within a few weeks of the oil, prices being where they're at, it's it's literally existential now to the company.
Justin: So Well, it doesn't take much. Didn't they sign it like, they had like a whole deal with all the creditors. They are getting ready to get out. Think it was like two weeks after they signed everything, they're like, woah, hang on a second. This does not match with what we wanna give you anymore.
So they had the they had essentially the pill to success success. But the pill to continue for another six months to a year. And then, you know, I got I I pulled out from them.
Jim Higgins: They did. It's completely unfair. I feel horrible for the employees there. Absolutely, just gut wrenching. I do know anecdotally, I'm sure you've heard heard the same.
I have had recent conversations with the people in charge of hiring at at at at American and also a little bit at United, and both of them have told me that they have filled up with a lot of Spirit Pilots. Spirit pilots are known to the Spirit's known to have tough training. So if you're a line pilot at Spirit, you've got a pretty good chance of getting through.
Justin: They get, like, four Sims, and they have to take a check ride. It's like
Jim Higgins: That's what I hear. That's what I hear. It's it's not it's not for the faint of heart.
Justin: No.
Jim Higgins: And, and their their pilots are doing really well. They're getting right, you know, right through training at whatever airline they go to, and they're getting the line without any extra training events, and they're seasoned employees. And so they're they're getting hired left and right by Yeah. The Uniteds, Americans, Deltas. There's no doubt.
So that but that's a little bit anecdotal. But that being said, there certainly are people that didn't leave Spirit that have been sticking with it that would like to make that their career airline or at least stick with them for the foreseeable future. And so you do kinda feel you do kinda feel for them. I mean
Justin: Yeah.
Jim Higgins: It's gotta be very difficult to know from week to week. You know, you almost don't wanna read the newspaper in the morning.
Justin: Yeah. And it's really interesting now because now Spirit's like, hey, can we get a bailout? I would think they actually requested from Trump like, hey, we want a bailout. And I haven't heard like a definitive answer. I've seen, yeah, we're kicking it around.
I've also seen, hey, there's no way. I've also seen, you know, like it's a it's a maybe. Right? But how long can they play that out? Because it's it's literally like, hey, tomorrow could be the last day.
Hey, today could be the last day. Like, are we working with hours or we're with minutes or we're working with days, weeks, you know, like, we were I feel like there's just such an unknown of really when it's gonna happen or if it's gonna happen, if there is a bailout. Also, is a bailout lookout for look like for Spirit? It's not I hate to say this, it's not like the American economy is reliant on what Spirit Airlines does. Right?
There is a portion of people that do rely on the low cost carriers but overall, it's not gonna hurt our GDP. It's not gonna completely crush or keep another airline or marker airline from entering that market.
Jim Higgins: Yeah. Well, look, you're exactly right on a lot of fronts there. You know, an economist will tell you, especially a laissez faire economist, a free market economist. They'll say, hey, these kind of things these kind of things happen. And the airlines that are built to survive these kind of, you know, price shocks and cost structure shocks, Those are the ones that you want to make it.
It's an evolutionary process. So the the the fittest survive in the industry and that's the way it should work. But then on the other side of it, you look at this particular situation and I'm not taking a side on it, but you can kinda see you can kind of I think you can make an argument as to why it's justifiable to bail out Spirit because, you know, but for you know, the lawyers will use that, you know, in their in their cases. But for this war that was started, this airline looked like by all measures, was going to emerge and emerge successfully. But for this war and so the war has caused has caused it.
That being said, you know, some people might say, yeah, but, you know, other airlines had didn't need this. You know? I mean, you know, the c would've looked at what the CEOs and some of the other folks are making for the remuneration package to get through this. You know? I mean, they're know, it's the age old arguments that we've heard before.
So, I don't know. The last I heard and and by the time this this airs, my guess is this will all be decided because it looks like it's happening pretty quick or or will quickly be decided. Last I heard is the Trump administration was supportive of a 500 what they're mentioning, I I was just reading this before we came on. There's a couple different packages. It'd be a 500,000,000 package covered by warrants, which sounds very similar to what happened during the previous bailouts and the stabilization funds, you know, COVID, pandemic, and then also post nine eleven.
It's very similar language what we saw back then where, basically the government will take a a small interest. A warrant is is a way for them to secure some equity long some basically, it acts as debt for a while, but if the company does really well and recovers, it can convert to equity. So they could basically become an owner. It's kind of pretty advantageous for the person making the deal because they get the best of both worlds. They get the best protection in bankruptcy, and they get the best upside if the company does well.
Anyway, all of that being said, it's gonna be for your viewer to kind of decide. I think if you're sitting at Spirit, you're gonna say, hey, come on, man. We've had a lot of goes all the way back to the merger not being allowed with them, you know, and That's some
Justin: bad luck. Right?
Jim Higgins: Yeah.
Justin: The engine merger.
Jim Higgins: Yeah. So so, you know, I I'm pulling for my friends at Spirit. I have a lot of friends there. I know you do as well. And, you know, I hope I hope that they make it.
It's gonna be interesting. My guess is there will be some kind of package that comes out from the government to save them under the auspices that this was beyond the control of the company. The the the oil increased due to the war. That that's that's my guess, but I don't know.
Justin: Could they force you know, this kinda happened in the banking industry back in o eight. I grew up in Charlotte, Wells Fargo, Wachovia. They kinda told, hey, Wells Fargo, you have to take over Wachovia. Like this is this is like you have to buy them. I obviously, I was like 18 years old.
I don't know the exact why that all happened but that's the way I was understood of how that went down. Is there a world where, you know, they're like, hey, American, you have to do this or hey, United, you have to do this. Mhmm.
Jim Higgins: There prior to regulatory reform in 1976, stuff like that did happen because the government completely regulated the industry and told people and told airlines where they could fly and how much they were gonna charge for it and they get subsidized. Since that time, I'm not aware of a single time where the government, ordered that. However, your question's interesting because one of the other scenarios that it comes out of these press releases and these these talking points coming from both Washington and from Spirit is they are considering a merger. You know, like, they they can either merge or we can give so so that that's why your question's interesting. Does that mean that, you know, someone's doing some work in the background telling a JetBlue or or whoever it might be, American, United, Delta, hey.
We think you should buy them and and, you know, are we gonna put a package of money together to encourage that? I I don't know. But it's interesting you say that because there has been some talk, about something kinda similar. I will tell you, I don't think an airline can be forced to merge. I don't know the mechanism that would be used for that.
Also, competitors may get upset over that and could fight that.
Justin: Woah. Woah. Woah. Yeah.
Jim Higgins: We'll take. Yeah.
Justin: Yeah.
Jim Higgins: Yeah. Right.
Justin: Yeah. So we mentioned JetBlue, which is another interesting one because, yeah, they were the ones that are supposed to merge with Spear in the first place. But I don't even wanna say, did JetBlue kind of get off? And are they happy? Because JetBlue's not doing great now either.
If you add in what Spirit was to JetBlue, you would just think that JetBlue would be in the same situation at Spirit Center now. Right?
Jim Higgins: Maybe. You know, we'll never know. Right? But Yeah. You know, when you become larger in this industry, you you get what what an economist will tell you is it's called an economy of density and an economy of scope.
So you get lots of different cost savings. If if you do the merger correctly and you structure your company correctly and you manage it correctly, which is which is always a question mark. There's been examples where that hasn't happened. But generally speaking, over time, you're much more robust because you're bigger. It's it's you can withstand more system shock.
So one school of thought would say, well, no. If the merger would have gone through, if if the companies would have managed correctly through that merger, they may be in a better spot right now. You know, they may be more like JetBlue, which which I know they haven't been turning too much of a profit in recent years either, but they're certainly not facing, you know, you know, retirement and, you know, bankruptcy and things like that. So so I don't know. We'll never know.
It's a great question by the way, but I don't know.
Justin: I did I did see that JetBlue just leveraged 20, I believe, of their aircraft for $500,000,000. Because from what I was told JetBlue owned most aircraft outright, like most people don't use lessors or acquire them other ways. But JetBlue just sold off 20 of their airplanes and I think they raised some 500,000,000 in fear or because they had fears that things haven't been going well for a while. So I don't know if it's bankruptcy or what their future might be. It does seem JetBlue is the popular name for any kind of consolidation though, any kind of merger.
Seems like anyone that you talk about except for Delta. I have not heard Delta in the name of JetBlue, but I've heard American. I have heard United. I guess those are really only the two that I've heard. They seem to be the two hot ones of of who wants to buy who.
Well, essentially, United seems to be the one that everyone talks about who's gonna buy who.
Jim Higgins: Right.
Justin: What's the latest on that?
Jim Higgins: Well, you know, Scott Kirby, the CEO of United, has been in the news recently saying some kind of spectacular, provocative things like, hey, wouldn't it be great if United and American merge? And, I gotta tell you, I received a lot of questions after that came out because it'd be one thing if it's just something you read in an Internet, you know, chat room or something or somebody posts something somewhere. You'd be like, yeah. That okay. Whatever.
But this is the CEO of United kinda joking.
Justin: Pitching it to the president. And yeah. Not just like yeah.
Jim Higgins: So so this has legs as as we like to say or could have legs. That being said, I I guess anything's possible, in politics, you know, and if if if American wanted to happen and by the way, the the leadership's come out and said they're not interested. You've probably seen that. But but let's just assume, hypothetically, if they were to come out and say, oh, yeah. We're interested in that and United States are interested in that, I guess it's possible you could go and, you know, try to barter with the Department of Justice, Department of Labor to try to get through the anticompetitive stuff and the, you know, approvals for it.
I would have told you three to five years ago there's zero chance because one of the things and we've talked about this before. The government's supposed to look at it in a merger is what happens to the consumer. Is the consumer advantaged or disadvantaged? And they'll actually do that on a market by market basis. They won't just look at it like oh, they'll look at it like, okay.
This is primarily in East Coast. This is primarily West Coast. Actually, it should be fine. The consumers are still gonna have plenty of choices. And they'll look at they'll do that type of analysis or or they're supposed to.
I can't imagine a United American merger would ever satisfy that. And and also, I think you kinda run into similar things with JetBlue, and you and I were talking about that. You know, JetBlue's got a very strong presence in New York the New York area. And quite frankly, United does as well in some of that, especially at JFK. And so now you're looking at it would become the predominant, you know, behemoth carrier in that area.
I don't know how that ever gets through either. You know? Yeah. I mean but who knows? I mean, it's a weird political environment, so it's possible that something might get approved, but I don't know.
I and I think the American would run into similar problems as well because of the New York question. I think I think you and I were just talking about that. I I think these are all legitimate things to to talk about and pontificate about. Ironically well, Delta's also got a presence in with the old with the in the you know? So, I mean, I don't know who could you know, New York is such a is such a lucrative area in terms of, you know, pass what passengers pay out of there, the market, variances.
I mean, a lot of people would love to operate in there. And so I I just don't see how you could do that. I'm not trying to tell JetBlue they don't have a chance, but, you know, I I don't know how that will ever get through.
Justin: Yeah. I don't know either. It it seems like there's been some posturing and some a lot of gamesmanship for a couple I would say like a year or so of more from from Kirby and United because we've always heard like Kirby has there's always been the inkling that they want more, they want something else. And who knows what it is? Who knows what the plan is?
But, I mean, we talked about off air. I'm I'm gonna call this the silly season. If anyone watches f one, it's, the silly season is when they come up with contracts and everyone's figuring out who's gonna go race where. But it seems like it's right now, there's just so many rumors about what's gonna happen, you know. Every day you feel like you open something up, it's like, oh, United's gonna do this.
United's gonna do that. United's gonna do this. It it really makes me think like what alright. So let's say United and JetBlue eventually get the okay. They get to do it.
American and Delta have to react. Right? Like, there's no way they couldn't react. And then it's like, alright, so those two, so who do go after? They go after Alaska.
I don't know. I mean, it's hard to see them merging with Southwest, but they go after Alaska someone picks up Frontier. It's like, alright, what does Southwest do? Southwest need to do something. So it just unlocks a huge can of worms.
Right? It's just like something I can't not norm us I mean, maybe not you. You probably played it's like a war game in your head, like, alright. They merge with him. They could do that.
But it would just be absolutely insane kind of what would come after another merger.
Jim Higgins: Yeah. You know, as I mentioned earlier, the, the playbook and management, you know, the fastest way to grow your company in the airline world is through merger and acquisition. It's always been that way. And, you know, you've probably seen those charts and diagrams before that show how many carriers existed prior to 1976 and how they keep melting, melting, melting
Justin: Yeah.
Jim Higgins: You know, into, you know, just, you know, a few large ones. And the question is, will consolidation continue? A lot of people think it will in some form. It's inevitable just because, you know, it keep it does you know, in some cases, it it can keep costs low because the, the bigger you are, the cheaper it is. Unit price is cheaper as I mentioned earlier.
But on the other side of it, that has to be looked at very, very carefully. And then the other aspect of this is the rural part of America. Whenever there's these consolidations and mergers, historically, those smaller, cities, that used to have service, that gets there gets a lot of downward pressure to get out of those markets because, you know, there's not as much competition there, you know, especially with, like, subsidiary regional markets. And so, as a consequence, there are you know, if you live in New York or Los Angeles or Chicago, the consolidations probably are a net net positive for you in terms of, airfare prices. But if you live like where I live in Grand Forks, North North Dakota, it's not gonna probably be a good
Justin: a lot of money to get to Chicago.
Jim Higgins: Right. No. That's exactly right. Yeah.
Justin: You know, one thing that is interesting though is, you know, if you would have told me a year ago that, you know, maybe United can merge with someone in American and Delta, I would probably tell you you're crazy. You know, when I got hired, was probably thought I would never have to deal with a merger, anything like that. But the more and more I look at it, you know, we we've seen Duffy come out and say there's room for consolidation.
Jim Higgins: Mhmm.
Justin: We've seen Kirby talk about it. I've seen an interview with Ed Bastian where he even said, like, well, when things like this happen, it leads to consolidation, it leads to mergers, when there are high fuel charges or high fuel costs, like this stuff just comes to be and it starts to happen. So it seems like and even the press releases that have come out when American came out and said, hey, well, you know, we're we're no interest in United. There was kinda like a vibe that was like, but, you know, consolidation isn't something we're rolling out of table. Like, they didn't say that word for word but it's just Yeah.
That that definitely got picked out of that press release a little bit. So, there's also been releases that I've read from my friends at JetBlue and the same thing there like we can't talk about mergers right now and hinted at like because conversations are happening. So this stuff is being talked about and I feel like it's just one day we're gonna wake up and it's be like, hey, United's buying this. Hey, American's buying this. Hey, Delta's buying this.
Southwest is doing this. You know, it's just gonna be silly season.
Jim Higgins: Absolutely. Well, look, when, so so we have to go back to the the purpose of any business, at least in The United States, is to produce profit for the shareholder. Right? And so if there's a deal out there that makes sense for your shareholders, so even at American, if they're saying we're not interested in United, maybe that's true and it probably is true. But by the same token, they have a fiduciary the the board there has a fiduciary responsibility to evaluate any offer that comes in.
So if there is some back channel conversations coming in, that has to be evaluated. That will all be done under non disclosure and, you know, not a lot of you know, there'll be an initial will this work type of reasonable test. But it's very possible that that yeah. You can say we have no interest in that. But what we really need to say is is right now we don't see it, but if it's good for our shareholders, we'll obviously consider any offer.
Justin: Yeah. And there's one thing to note too, it wasn't too long ago where I think it was either Southwest Pilot Association or Southwest itself partnered with a law firm that specializes in mergers. Yeah. It's like, I mean, just for fun like, you know, is there like a game like a game plan that's like five years out that we just didn't get to see that all the airlines are like, oh cool. Alright.
This is what we're doing. Okay. Cool. It's a script.
Jim Higgins: So there's a little bit more to that. So when you look at when you look at a merger, one of the things that always rears its head is seniority list integration.
Justin: Mhmm.
Jim Higgins: And, you know, ALPA has what we call it's a well defined merger protocol and it looks at a bunch of things and eventually, you might have to go to an arbitrator to get it all sorted out. Sometimes a team of arbitrators, and they'll actually place people on the seniority list. But that's if it's between alpha carriers. It's it's, you you know, it's pretty well they look at things like career expectations and surviving carrier. I mean, there's a there's a whole multitude of of things that go into that document.
However, if you're not an alpha carrier and you're like Swappa or, in American's case, APA, at least for now. Right? Or or some of the others, UPS with the IPA and some of the others out there. And one of the reasons why people think JetBlue went to Elpa is because those that Pilot's groups worry about that. Right?
Because you've got this very well established, very, very large union that is gonna do everything they can to represent their pilots. If you're not on the seniority list yet, they owe you no fiduciary responsibility. Ask TWA the TWA pilots about that, although they eventually won their DFR lawsuit, but it took years. The truth is is, you know, pilots can be pretty ruthless. And if you're big and organized and you have a lot of power behind you, a lot of experience in this, yeah, you you would that would keep you up.
So for Southwest to retain an m and a law firm that specializes in that is not the craziest thing I've ever heard because that is a very complicated, nuanced, a lot of myopic issues that require, you know, very fact specific expertises to to analyze. And so they're worried that just that that demonstrates they're a little bit worried that if something like that happens, how are they best gonna be able to protect their pilots? One of the first questions they're gonna ask their attorneys is how do we force our company as a precondition to any type of merger that there's some kind of protocols for the seniority list integration. Because historically, on an alpha to alpha, and maybe this isn't a 100% fair, but generally speaking, the management's there let the union work it out. But that's alpha to alpha.
They've got their own merger protocol, And it's not as clean when it's not alpa to alpa. Right. You know? So That's why they probably hired that law firm, it'd be my guess.
Justin: But still, you would think it'd have to be like, hey, like, someone's hinting at this. Yeah. Something is hinting at something happening. A while ago too. Think it was a couple years ago or maybe it was last year.
I can't remember. But it's something is I don't know. Just someone had had a a wind below their way. It was like merger. What?
Jim Higgins: You said it earlier. Conversations are always happening. I would put a lot of money a lot of money on, all the major CEOs and all the the higher, senior management groups, from all the different airlines being able to text message their competitors. I I think that they all know each other that well. Yeah.
It doesn't necessarily mean that they're you know, they compete against each other and they're, you know, trying to bludgeon each other every day. But, certainly, they get together from time to time. They certainly can pick up the phone and call each other. And I do think conversations are always always happening. I don't think, you know, Scott Kirby, I know to be I don't know him, but I I know him from watching.
He seems to be a pretty sane person. I don't think he would just throw that out there as something kinda funny to troll to troll all the aviation
Justin: Yeah.
Jim Higgins: Nerds like myself out there. So, you know, my guess is is there probably was something that was mentioned at the water cooler or on a fishing trip or or whatever that, kinda said, hey, let's explore this a little bit.
Justin: Yeah. Well, some people are saying that, you know, it's like, hey, you know, we could we could merge with American and everyone's like, woah. Woah. Woah, woah, woah, that's just crazy. That's crazy.
And Scott's like, oh, yeah, you're you're totally right. You are 100% right. United merging with American is crazy. You know what's not crazy is United merging with JetBlue. United merging with Alaska, United merging with whoever else.
Do you think there's any of that going on?
Jim Higgins: It's possible. I I've heard that same to distraction. You know, I mean, we see that play out in politics sometimes. We see that play out in war. We see that play out in so many different aspects where, you know, we pretend something's the real issue just to get to get to get everyone's, you know, focus and efforts off of what really is the issue.
Right? So, I mean, you know, we're we we can do that. I have heard that same exact theory. I do think someone like Scott Kirby is savvy enough to do something like that, you know, because it does seem on its face absurd that if they don't allow a JetBlue Spirit merger a few years ago that they would ever allow United America merger. It just seems absurd.
Justin: They wouldn't allow any merger in general. Right? After Like if you don't let JetBlue and Spirit go together, why would you let anything else happen? Been talked about so yeah. I mean, I was just gonna bring this up too.
Right? There is a merger that is currently going on that no one is talking about.
Jim Higgins: Alaska Hawaiian?
Justin: Oh, I was gonna talk about Allegiant and Sun Country.
Jim Higgins: Oh, yeah. Well, that one too. Yeah. So so yeah. So because they yeah.
Because Alaska Hawaiian's over. I mean, it's Yeah. You're right. That yours is more topical. Yeah.
And so they do happen. And, you know, remember we talked about that before, like like, why why are some allowed to go through? Why are some not? You know, the official answer is gonna be, as I mentioned earlier, the DOJ is gonna look at a market by market analysis and say this is good for the consumer, bad for the Santa competitor, this is not. And in some cases, they say it's good.
Some cases, they say it's not. Personally, I personally believe there's a lot more macro involved and politics involved. And I think, you know, people probably pay lobbying groups and, you know, do all kinds of things to try to try to get these things to go through and some are more successful than others. I I don't. I'd like to tell you it's antiseptic.
It's in a vacuum that the government's calling balls and strikes and calling it straight down the middle, but I don't think that always happens with these mergers because, you know, sometimes it's just it's not sensical. Well, you know, like, why is that one allowed and not the other?
Justin: So Yeah.
Jim Higgins: I don't know. If you ever figure that out, we can make a lot of money on poly markets. Right now, it's it's it's anyone's guess.
Justin: I'm always wrong, man. Don't don't do it. I do the opposite of what say. What's going on, guys? It's Justin.
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Let's just say, like, United gets their way. They get to buy JetBlue. What do you think happens next? Like, like, can American, can Delta, can Alaska, Southwest, can they just sit by? Essentially, you would think that would just create a super airline in those two because United's already the biggest airline per aircraft from what I remember.
You add JetBlue, even bigger. So that just creates a bigger delta between everyone else. So do they have to react or do you think there's gonna be a mature I laugh when I say that because I don't think that'd be the case. There's a mature like, we're just gonna sit back, see how this goes and we'll just let them do their thing. Or is it gonna be, alright, well, let's buy them.
Let's buy them. Let's do this. Let's do this. No. Let's do this.
Jim Higgins: Every airline leader knows the fastest way to grow is through MNA. And if you want to compete and somebody becomes much bigger than you overnight, it's absolutely going to put pressure on you to figure out how do you keep up with up with that. That being said, it is definitely a case by case, very specific type of because I gotta tell you, there have been mergers before that have absolutely blown things up. I mean, there was a merger that never happened between US Air and United Yeah. Years ago that was just just you know, they thought for years they were gonna merge and it and it never happened, and it was a lot of money wasted.
Some people claimed it led to, you know, financial problems on both sides because when you go through a merger, you basically pull a third of your management off at each airline and make them work on the merger and not work on the core businesses. So if it doesn't go through, there's a lot of damage that's done and lost opportunity costs and excessive expenses and things like that. So it's not one of the it it's it's pretty close to let's put it all on red and hope that we hope that it comes in because if it doesn't, there sometimes it's not very recoverable. So so so to answer your question, yes. I believe there will be pressure to grow.
It might be a little more nuanced, but I do think they will look for that. But that being said, it's not without risk. That's what I was trying to say. It's not it's not without risk. And if they do try to go through mergers, they don't work out.
Even if they're approved by the government, doesn't mean it's gonna work out. I mean, Northwest Republic had just what literally would be studied for years, like, how to not merge. This is back, I think, in the eighties. But, you know, just one day, Northwest told everyone, okay. We're now merged with Republic.
You know, the computer systems didn't work with each other. You know, the crews and the the ground crews and maintenance, nobody had the same procedures. I mean, it literally was like the Tower Of Babel, you know, except between so it's literally how not to do it. And so even though they were allowed to do it, it doesn't mean you should do it. You know?
That's why I said it has to be very fact specific, very case by case.
Justin: You know, it feels like it feels like, college football. It feels like college athletics right now.
Jim Higgins: You know? Transfer portal.
Justin: Yeah. Well, not transfer portal. It feels like expansion with, you know, the Big Ten is gonna go get UCLA now. USC, it's like, what? Yeah.
It's like, alright. Well, yeah. United's gonna try to get American. What? Like, it just feels like expansion, which I guess it is expansion.
Granted, most airlines are in most of the markets. Yes. Some are more dominant. Right? But Right.
I don't know. I was just I was trying to think the other day on one of my flights. I was like, what would really happen? And I am gonna ask you to play a game and I I I know there's like we can't really tell but who would you say works well together? Like what what airlines if you had to think, you know, just I'm not even gonna tell you who to say who, like you come you could be like, oh, Breeze will do this but like who do you think would would match up with each other?
Who do you think would go after each other and who would be successful?
Jim Higgins: Yeah. That's that's a great question. I love I love speculating on stuff like this because it's just fascinating. Right? So I I would offer something that might not be in the text textbooks.
The first thing you need to look at is you need to look at, your company cultures. Do they do they align? Are you, you know, you you kind of align there? If if not, you might have problems from from day one. You know?
And then then after that, you're gonna look at you're gonna look at the actual analytics. You're gonna look at aircraft type. You're gonna look at, you know, is one carrier owned and one carrier leased. You know, you're gonna look at status of employees. You're gonna look at, you know, management.
How much the big savings often comes from the middle management because that's what that's what gets trimmed in a lot of these mergers and acquisitions. That's where you can save a lot of money because you don't need two directors of training. You don't need two directors of maintenance. You just, you know, you have one now. And so that middle management is where you start seeing a lot of that, you know, a lot of that come in.
So given all that, and if I was to throw out, you know, a crystal ball, I think that what you will find is a very large carrier like a United American or a Delta that will look for nice regional and by not not regional airlines, I'm talking, like, geographically, some nice regional asset grabbing, you know, like, maybe someone that is primarily West Coast or has a lot of West Coast and and and, you the larger carriers, you know, maybe more on the East Coast or has more East Coast fortress hubs. They will look for some opportunities like that, you know, for sure. And as we've talked about before, let's take a look at Southwest. I I just as a as someone that would have no problem owning any shares in Southwest, I don't right now as we speak, but I have in the past. You know, for years, they were considered almost like a growth stock because they were always profitable and just juggernaut.
But the knock against them has always been, you know, you're gonna have to figure out how to grow. At some point, you're gonna run up against the cap. When you only have one fleet type, yeah, that fleet type is getting more and more capable and you're getting permission to do more and more things on the international field. It's still very difficult to take a seven thirty seven and compete against a seven eighty seven or a triple seven going to Narita. You know?
I mean, it's just it's just gonna be difficult. You're not gonna be able to get the revenue. So so the question becomes, when you run up against that when you run up against that wall of growth, you know, because I could tell you Southwest isn't gonna go into Grand Forks, North Dakota because it would make no sense for them. And they're probably not gonna add a thirtieth flight to Chicago Midway because that's not gonna make any sense either. And so what else is left?
Well, it's the international expansion. Well, how do you really unlock markets? Well, you have to do it through a code share or you have to do it through a different fleet type. And so one of the fastest ways to accomplish that would be to merge with somebody that has that type of, that type of capability. So, I mean, if we're totally speculating, that's what I would that's what I would see is somebody that maybe isn't as big internationally like a Southwest that wants to find somebody that has a lot more, international reach that would work, you know.
You kinda saw that with Hawaiian because Hawaiian had a had the wide bodies and, you know, and Alaska didn't. And that was one way for them to unlock additional markets, you know.
Justin: What, when you mentioned company culture, my only caveat to that is Alaska. Alaska bought Virgin and they bought Hawaiian. Right. Two of the most different No doubt. Cultures that you could possibly do.
Jim Higgins: Different fleet
Justin: types. Yeah. Different fleet types. Different interview types. Like if you wore a tie to a Virgin America interview, you were kicked out, they cut the tie.
Hawaiian, you were able to have beards. Alaska is finally like, you can't have beards anymore. You know, it's like they it's cultures.
Jim Higgins: They had that rule where if you called them Alaskan during the interview, you were out.
Justin: Yeah. You know what mean? It feels like? It feels very Delta like.
Jim Higgins: Yeah. No. I mean, well, Delta you have to Delta Air
Justin: Lines. Yeah.
Jim Higgins: Well, that's that's
Justin: If you're interviewing with Delta, remember that. Delta Air Lines.
Jim Higgins: If you if you mess that up, there's a good chance that's the end of the end of the interview for you as funny as that sounds. Yeah. I mean, at least that's what I've been told. I you're probably gonna get emails saying that's not true. Tell Higgins he's talking about.
But those have been the those have been the rumors for years, stuff like that. So yeah. You know? And then also, you look at, like, Southwest with AirTran. You know, that wasn't exactly a natural merging of cultures.
But you know what? Knowing the people I know at AirTran, I know a lot of good Pilot sir, it just worked out quite well for them. I mean, it was a nice, way for for Southwest to expand into, you know, the Florida markets more and into the Southeast. And so, it worked out really well for them, and they definitely had different cultures, different outlooks, different ways to it. So so you're right.
And, so far, the Alaska and, Virgin, even though they had different fleet types, I still to this day will tell you Alaska did that to prevent JetBlue's acquisition of Virgin. Percent JetBlue would have just absolutely dominated with the Airbus three twenty West Coast and East Coast Yeah. Put in some transcons. That's a juggernaut, man. That's a tough 100% agree.
Tough company to beat. So I think it was a defensive acquisition.
Justin: Yeah. Because then I I think, if I'm not mistaken, then JetBlue kind of expanded out West and now they're retracting from the West because they can't do it themselves. It's true. Hard.
Jim Higgins: So It's hard. That's another thing, know, we I I I mentioned economies of scope. I think I might have mentioned economies of density. That's very important to an airline because you can't just go into a new market. You have to put infrastructure there.
You have to put people there, or you have to rent it out and buy from a competitor. It was, you know, maintenance. I mean, all the stuff we know about. And if you don't have a big presence there, you know, that's expensive to do. And if you're let's let's take a look at JetBlue going into Minneapolis, for instance.
You know, made sense. It's in the middle of the country. It was, you know, open to market for them. But now they've they've kinda got an island, as an example, kind of in the middle of the country that they have to keep putting resources in. Whereas if they, you know, if they had already built up their infrastructure there, you know, and maybe they serviced a bunch of Midwest communities out of Minneapolis or something, it would make sense.
But here it didn't because you were basically getting the Minneapolis, New York or the Minneapolis, Los Angeles customers, which there were a lot of, but, you know, American, Delta, and United handle that quite a bit. Now, you're going head to head on those thin routes.
Justin: So Yeah.
Jim Higgins: Yeah, that that that's a great that's a great point. So
Justin: I am gonna I'm gonna do a look I'm gonna continue the game. I'm gonna name the airline and you say who you think that they would match perfectly Okay.
Jim Higgins: I'll do my best.
Justin: Alright. I'll start off with an easy one. I think this is easy just because they've been the biggest name in these talks, United.
Jim Higgins: United. So when I tell you I'll I'll talk to you from a shareholder perspective, like, would make the most business sense, I guess, if if that's okay for me to add Yeah. A rule. Not not from a consumer point of view and not necessarily
Justin: For sure. Yeah. This isn't this is just Yeah. Business, what would make them the most money, biggest airline, whatever.
Jim Higgins: There no no doubt that a United American, blockbuster so so American would you know, the South American routes would become completely dominated by a a survived United American carrier. The, Far East as well, Europe, I mean, that would just be you know, the hubs are nicely, not overlapped. I mean, I don't know. I think that that would just be a dream come true from a Scott I think of, see, I don't think Scott Kirby was joking when he was saying this would be a
Justin: great Not either.
Jim Higgins: Yeah. And so at all. So from a purely business point of view, that would make a lot of sense. So that's what I would say. If if I was if I was United, shareholder, I would say, go for well, I probably wouldn't because I don't think it'll ever happen, but but I would say that would be your best dance partner.
Justin: Alright. So then, we'll say that. What would Delta do in retaliate? What would Delta have to do after that?
Jim Higgins: You know, Delta's Delta's got a very unique culture, you know, and so that's gonna be really interesting. I don't know there's anyone else kinda like kinda like them. I'm certainly not gonna say to my Delta friends because we've got a lot of friends there. But but I'm not gonna say that they're that they consider themselves, you know, like, unlike anyone else, but they do have a very unique culture. And by the way, you can't argue with success.
It's been a very, very successful airline to this day. I mean, they make more money than anybody.
Justin: Yeah. If you're making fun of them, it's just because you're jealous of them.
Jim Higgins: There you go. That's a that's a that's a good way to put it. So that being said, you know, who it's it's such a horrible thing to say. Who would be worthy of that? Right?
That's a horrible way to to put that question.
Justin: But do something though. Right? Like, they would have to respond.
Jim Higgins: Yeah. They would have to. Here you go. If you're gonna force me
Justin: Forcing you.
Jim Higgins: Right right right now today, one of the ones that would make a lot of sense to them, it would, really increase their their western, reach. Go give me Alaska, Hawaiian, and and Virgin. I agree. Alaska now. But yeah.
Justin: I think that that's not talked about. I think that they, like they dominate though they'd get such an Asian presence. They would own They could finally stop fighting each other in Seattle. Could finally just be like, we can dominate now. Right.
Absolutely. Especially especially with, Delta now having seven eights or having orders for seven eights and Alaska seven eights. Yeah. Yeah. It's definitely an interesting one.
You don't hear about it too much but I think that that would be a really really big one. Yeah. And Alaska Kudos to Alaska. That's all I wanna say is they have put themselves from being such a niche airline into actually competing with the big four. Right?
Yeah. Absolutely. No one would ever thought that.
Jim Higgins: And and and and listen, Alaska is by far they have the reputation by far of having the most conservatively run airline in terms of, you know, expansion. They're very slow to expand. They study things. But then when you have, a nine eleven or you have a pandemic or some kind of disruption, they're much more able to withstand that. So but they also, from a shareholder perspective, sometimes you're like, come on, man.
Expand. Compete. Get out there.
Justin: Do something.
Jim Higgins: Do something. And they don't as much. So that's kinda interesting. You know, that that would be that would that would be different because Delta is certainly an aggressive airline in terms of going after routes. So so it would be interesting to how that culture would work.
But that that would be my dance partner for them.
Justin: Alright. So we have crazy thing, United American Yeah. Delta Alaskan. Right. Our Alaska guy got fired by
Jim Higgins: Alaska either. I said it
Justin: once too. So what? So Southwest.
Jim Higgins: Well, here's what I'm thinking about Southwest. You know, so the question's gonna be, are they gonna forever be, you know, the July, you know, live or die? That really, it was exposed in these these recent years with all the stuff going on. You know, are they gonna try to go international? You know, I would have and the I would have originally said, you know, an interesting one would have been a Hawaiian Southwest because of the Internet.
You can get some international reach there. Now I can't say that. And so, you know, who who else is left? If they focus on domestic and if they're willing to abandon their fleet type, k. Just go to go to multiple fleet types.
I'm just gonna be a weird one, but I'm gonna throw it out there. Look at like a frontier. Now it does nothing for them internationally. So that's that's the big drawback, and it's a different fleet type. But they both have a low cost type structure, and and and Frontier is definitely more low cost than that.
But I really think you'd get some pretty good synergies, domestically. Ironically, though, Justin, ironically, I think that would almost be impossible to get by the DOJ because even more so than some of the others we've just talked about because I do think it would make some mark leave some markets very thin for the consumer because of all the domestic, you know, the domestic implosion, so to speak. But if I could I can't I'm trying to think of another carrier that would have more of an international presence that would get them overseas. Nothing really comes to mind right now.
Justin: Yeah. No. I mean, you think that if, you know, United was to go after something, you think Southwest would probably have to be pretty quick to go after in Alaska to go I don't even know does Alaska go after Southwest. I don't even know how that comes about like what Right. What airline come because with what Alaska has done with their brand, you'd think Southwest would still be the brand but you never know.
You never know. Yeah. I just I don't know. Because you don't wanna be the one that doesn't do anything because then you're just you're you're sitting duck and you're not gonna make it. Right?
Like Yeah. There is a chance that alright. Cool. So now in this scenario, we have Allegiant Sun Country, we have JetBlue, we have Breeze. Alright.
Cool. Do all three of them, all four of them merged together into one? It's like, well, you're still not gonna touch anything else. So it's like crap.
Jim Higgins: Breeze's business model and it's very successful and, you know, as I've mentioned this before, I'll never count against Neelman. He always seems to run he always seems to make money wherever he goes. It's so unlike anyone else's business model. I don't know how you would merge it. You can't you can't really hub and spoke it because it's not built for that.
It's maybe a little bit more like a like a Southwest model in terms of, you know, the grid and the hub bypass and stuff like that. But it is such a such a square peg. Yeah. I don't know who they would who they would work with. And not to mention their fleet types very different.
Yeah. With a lot of carriers. So so I don't know who they would dance with, but that's a really good question.
Justin: Right. No, I agree. It's wild. Wild times. I I do think Alaska would probably be either the first or the second one to go with whoever has to react.
It's like, alright, well Alaska. It depends on does Alaska want you though. That's the other thing. We gotta court Alaska now.
Jim Higgins: Right. Well, and they've shown they've shown they're willing to move quick. Yeah. I mean, they've shown that in the past and they have been successful with their merger so far. You don't hear a lot of consternation with the groups that have been merged.
I mean, I know several Virgin pilots and don't hear them complain about Alaska management. So I, you know, mean, you know, pilots like to complain.
Justin: Yeah. So
Jim Higgins: I I don't know.
Justin: There is one other kind of interesting. I I didn't watch the full interview, but Ed Bastian did some kind of interview and he mentioned how he wants Delta to be way more international than it is now. Like, he made it seem like the only I don't know the status, only like less than 50% of all people in the world have flown airplanes and he wants to figure out how to get all those people to fly airplanes. Yep. So he wants to be truly in every market.
Is there a world where Delta is like, hey, you know, like, we own x amount of LATAM or LATAM. What if we just fully buy them and we just go international? Like, we could we've done everything that we can do in The States. We're gonna start buying airlines in different countries and call them Delta.
Jim Higgins: Yep. Wow. What a what a fascinating concept that would help them reach overseas quickly, something like that. I'm just trying to think through my mind the regulatory issues and something like that. So so whose certificate would it be on?
I mean, it would probably start as like a code share, an aggressive code share, you know, like alliance plus type of type of setup just to get things right. And then, I guess, you would have to also look like here in The United States, there's foreign ownership rules against, you know, owning a domestic carrier. You'd have to see if that existed as well. Also, lot of these care not not, probably not Lantum, but a lot of them, are subsidized by their home countries. You know?
And so you'd have to see how that would work as well. So I I it it sounds really fascinating and intriguing and, you know, maybe an overnight shot. Because if you are gonna make one criticism of Delta's business model and you really can't make much because they they really do it well. There's no doubt about it. But it would be the international exposure.
You know, that that is one area they could do more of. I know, you'd like to see them more into Asia, for instance. You know, you'd in, you know, Australia and and and and that whole part of the world, Mideast. I think that, certainly, they have flights there now, but you'd like to see them going a lot more frequency and, you know, connect connect to the route structure, not through a code share. So, that being said, so if I if we had to be critical and that would be it, what an interesting idea.
I think regulatory, it would be a nightmare because it's tough enough here in The United States. Now you're dealing with foreign well, maybe it wouldn't. I don't know.
Justin: Maybe it depends on the foreign government. Right? Yeah. Yeah. They're just like, hey.
We're not gonna merge anyone here. We're actually gonna go buy airlines everywhere else.
Jim Higgins: But then with the POI, with the that's interesting. The certificate holder would still be Delta. So I guess I guess it'd be just like you having a base and another yeah. I guess I mean, I I think it could work at least on paper.
Justin: Well, I guess we'll find out. Right?
Jim Higgins: Yeah. Maybe.
Justin: Well, Jim, I've had you for about an hour. I know that we both need to to do our our real job, right, when we wake up. But it's really interesting to think about. It's interesting to play this game. Who knows?
Tomorrow we could wake up to news of Spirit being bailed out or Spirit Spirit actually going under. We might be waking up the news that United's still trying to merge with American or is, you know, we're actually only wanted JetBlue this whole time. Yeah. So Right. It's a it's a wild world and to think of where we started with this, you know, where we started COVID and just thinking that, you know, the end of the industry, not really the end but just like A
Jim Higgins: lot of people thought that.
Justin: Yeah. I was looking really new. People. Yeah. Yeah.
And everyone's like, no one's gonna fly international anymore. That's dead. Couldn't have been further from the truth. Yeah. So to say say anything else, like, we truly have no idea what's gonna happen.
We're just here to report about it. We're here to talk about it. So what a time to be in aviation media. Right? What a time to to have the ability to talk about this.
If someone could listen to this in ten, twenty years, like, wow. They got it all wrong.
Jim Higgins: These guys are nuts.
Justin: Yeah. Jim said, what? No. But it's just super interesting. So I, I look forward to having this conversation again with you and I imagine I In a month, two months, hopefully sooner than that, we'll have the same scenarios and you'll be like, well, yeah, since since United is gonna buy Alaska, now we have to figure out who's gonna you know, so it'll be fun.
Jim Higgins: We'll see
Justin: what we can do.
Jim Higgins: It's always fun to pontificate about that for sure.
Justin: Absolutely. Well, Jim, thanks so much for calling on the podcast. I appreciate it. I'll see you around.
Jim Higgins: Always good to see you, Justin. Thanks for the
Justin: as well. See you, man. That's a wrap on today's podcast. Thank you so much for listening. Shout out to all of our sponsors.
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