Mr. Secretary, welcome back to Washington Post Live.
SEC. BUTTIGIEG: Nice to be with you again. Thanks for having me.
MR. LYNCH: Well, we’re delighted you are here.
I would like to begin by asking an issue concerning the often miserable experience of traveling by air on this country. Particularly this summer, air passengers put up with an infinite variety of flight delays and cancellations. Airline schedules appeared to be really just suggestions about what might occur slightly than any form of commitment for a plane to take off, fly somewhere and land. Are you able to walk us through the aspects that designate this? What happened?
SEC. BUTTIGIEG: So, in a nutshell, what happened was demand got here back more quickly than the airline sector was able to support. On one hand, great news that passengers have the income and the inclination to return to the skies only a yr or two after we were wondering whether the U.S. airline sector was going to survive in any respect, but the issue has been that there has not been enough by means of staffing, resources, and a lot of other issues which have presented themselves as part of those shockwaves which have come because the pandemic first arrived that left the sector unable to handle this increase in demand. And we saw that reflected within the variety of cancellations and delays we experienced over the summer.
So there may be at all times going to be some level of travel disruption. Weather alone is a giant a part of that, and it’s common to have 1 percent or 2 percent of flights cancelled, especially throughout the summer.
What we saw this summer was several busy travel weekends where it was more like 4 percent. Now, I do know the difference between 2 percent and 4 percent doesn’t sound like much mathematically, but it surely makes all of the difference on this planet when it comes to whether the system is capable of catch up, sustain. And it’s really the difference between things feeling pretty very similar to business as usual, and seeing headlines, they use words like “chaos” and “meltdown.”
So, early in the summertime, I got together and asked all the airline leadership to come back together and lay out what may very well be done in a different way and the way my department could help when it comes to ensuring that things move on to a smoother footing. We have seen numerous improvements since then, but as we glance back on the summer, it’s clear that the system remains to be not as resilient because it must be for us to be confident that the passengers be free from these sorts of increase in cancellations and delays that affected so lots of us over the course of this yr.
MR. LYNCH: Fair enough. Then the pandemic obviously was very disruptive. The recovery from this historic episode has been perhaps understandably uneven. At the identical time, taxpayers did pony up $54 billion to support the airlines and presumably prepare them for the resumption of travel. Did we get our money’s value?
SEC. BUTTIGIEG: Well, I definitely think it was the correct move to step in and be certain that the airline industry didn’t collapse in 2020 and ’21. Among the best moments. Among the best moments of the early days that I had on this job was after I got word from the flight attendants union that they in turn had got word to tear up their furlough notices since the American Rescue Plan had passed. There was a really real danger of things actually falling apart in a way that might have been irreversible.
But the opposite side of that’s when tens of billions of dollars of taxpayer money went into supporting this industry, it’s a really surprising, puzzling, and frustrating to get to where, as all of us hope would occur, demand is back, passengers are back, airlines are back, and by the way in which, back into what looks like very profitable territory as we get into the reporting that is coming out on this a part of the yr. And you are still seeing these sort of services.
And I’ll offer you an example of certainly one of the things that I believe contributed to that. These dollars, these taxpayer dollars that went to rescue the airlines, they did have strings attached. When you took that taxpayer money, you could not turn around and fire people left and right, but there have been still numerous early retirements where people, including pilots, they were very hard to exchange. It takes a protracted time to coach a pilot. They were nudged into early retirement or at the very least encouraged to try this in a way that left the airlines without a number of the resilience and readiness they needed to service these routes when the passengers did come back to fly. In order that’s a giant a part of what the airlines have to work on at once is ensuring they’ve staffing levels which can be adequate.
And, by the way in which, that is something that is happened across the system, even inside the department and the FAA. We’re working still to get better from the outlet that covid blew within the training and qualification of air traffic control in order that we will ensure that that is never going to come back up.
MR. LYNCH: So, simply to be clear, do you think that the airlines mismanaged their staffing requirements?
SEC. BUTTIGIEG: Well, definitely, they have to be prepared to service the tickets that they sell, and we didn’t see that going into this summer. A part of that needed to do with staffing levels. I believe also a part of that needed to do with scheduling, numerous schedules that just weren’t realistic.
And so certainly one of the things that I urged the airlines to do and, to their credit, I believe took place over the summer was a trimming of the schedules, a scaling down of the schedules to ensure that they were more realistic and more in alignment with what they might actually support, given a practical have a look at the staffing levels that they’d.
MR. LYNCH: Now, our next guest, United Airlines CEO Scott Kirby, has blamed the Federal Aviation Administration for lots of the delays. How much of the situation legitimately is the responsibility of the federal government?
SEC. BUTTIGIEG: Well, definitely not most of it, and if you happen to have a look at the statistics across the causes of delays and cancellations, I would like to be very clear that nearly all of them aren’t the results of air traffic control staffing, or related issues.
But it surely is true that we have now had constraints on the air traffic control side, again, largely because there was a disruption to the pipeline of getting controllers prepared. That was especially causing issues within the Recent York area and within the Florida area.
So, again, I would like to be clear in our aviation system, not liable for nearly all of the place, but to the extent that has been a problem, we have now leaned into working on solutions and ensure that we have now regular operational communication, all the way in which right down to the day‑to‑day level with the airlines to ensure that we’re aligning our resources the very best we will to satisfy demand and that we’re in contact with them.
Something’s happened that I do not think anybody expected, including demand, for instance, in that Florida market actually returning to levels which can be higher than they were before the pandemic, and Florida unfortunately experienced an ideal storm of issues that included all the things, weather to space launches, military activity, air traffic control issues, and a few of these staffing concerns which have plagued the airlines.
So anytime there’s anything that we will do to be a part of the answer, we will move in a short time to try this, but none of that, in fact, absolves the airlines of the responsibility as they sell profitable tickets to be ready to supply an adequate level of customer support to back those up.
MR. LYNCH: Now, anecdotally, the situation does appear to have improved because the summer or at the very least turn into less awful than it was at that time. What’s your assessment of the present state of play? How satisfactory or not is it? And to the extent that we have now seen some progress, how confident are you that it is going to arise to extend demand over the vacation season?
SEC. BUTTIGIEG: So the excellent news is we’re seeing several steps really bear fruit when it comes to things we have been working on and things that the airlines have done, and a few of that has taken numerous pushing on our side. We’re really doing three things without delay with a view to drive and improve passenger experience.
The primary is enforcement, enforcing the foundations we have now, especially when we have now issues like airlines failing to issue the refunds that passengers are entitled to in the event that they get a delay, a serious delay, or a cancellation, and clarifying the foundations around that.
The second is raising the ground; in other words, improving the foundations as they stand and ensuring that they are tough enough.
And the third is using tools for things like transparency. So one thing that I believe led to numerous improvement was actually quite simple, especially in comparison with the complexity of a federal regulation or rulemaking, which was earlier this summer, we put together an internet site listing the highest 10 airlines and just providing you with a green checkmark or red X next to basic customer support practices that they were committed in writing to do, things like do they promise in writing that they’ll offer you a meal or a hotel voucher if you happen to get stuck and it’s their fault or will they rebook you on one other airline. And after we made that call to place up that website, which only took per week or two to construct, I notified the airlines that it was coming and encouraged them to make use of those next few days to boost their customer support standards.
In that two‑week period, we went from zero to, I believe, nine out of the highest ten airlines committing that they’d at the very least do hotels and meals and went from, I believe, one to 10 out of the highest ten airlines, indicating that they were committed to rebooking you if you happen to got stuck. So those are a number of the improvements that we have seen, and we’ll proceed driving more.
But, on the operational side, we’re not out of the woods yet. There may be more work to do on the airlines in relation to staffing; for us, in relation to getting our air traffic control where we wish and wish it to be, and I believe for the system and the economy as whole. So we’re cautiously watching this holiday period. I believe it is going to be an improvement from the hardest moments we saw over the summer but not perfect as we go into next yr and begin to see a few of these pandemic shockwaves fully work their way through the system.
MR. LYNCH: I don’t need to attenuate the progress that is been made, but I actually have to say after I checked out that online dashboard, I used to be struck by how fairly modest the compensations are which can be provided by airlines, you understand, a commitment to rebook you on a flight on the identical airline and take you where you’ve got already paid to go, possibly a voucher for a meal or a hotel. That is obviously higher than the choice. Except if you fly in Europe, the compensation, when the airlines don’t deliver what they’ve promised, is often a whole lot of dollars paid back to you in compensation. Why am I so higher protected after I travel within the EU than I’m here at home?
SEC. BUTTIGIEG: Well, there is not any easy apples‑to‑apples comparison between U.S. and European regulations, but it surely is value noting that there are additional consumer protections that other countries have, and we’re taking a have a look at that at once.
As a matter of fact, we have now two pending regulations out for comment at once, which implies that if you happen to’re a passenger and you desire to weigh in, you’ll be able to go to our website and share your experiences or make your views known. One in all them has to do with ancillary fees and ensuring there’s accountability when you aren’t getting what you paid for if you pay for fees like baggage or Wi‑Fi and a second having to do with cancellations and delays and toughening the foundations around that. And we may perhaps have reason to go further in that direction.
So what we’re attempting to do is ensure that we implement an adequate floor but in addition encourage the airlines to go well above and beyond that floor, which is a component of why we found transparency has been as powerful a tool because the regulatory side, and we will proceed to make use of each.
MR. LYNCH: Now, as you understand, in August, a bipartisan group of state attorneys general complained that your agency was, quote, “unable or unwilling to carry the airline industry accountable,” close quote, and asked for states to be given recent powers on this area to step in and for the Federal Trade Commission to take over from DOT in some areas. What’s your response to those complaints? And in hindsight, are there things that you think that your department could have done or must have done throughout the worst of this example?
SEC. BUTTIGIEG: I’m happy with the outcomes that we were capable of get, including some actions that we had undertaken before this summer of travel problems even took place. It was before this summer, for instance, that we issued the strongest wonderful within the history of the patron protection program against an airline that was failing to satisfy its obligations when it comes to refunds, and we will keep pushing and keep working to get more results.
We’re also working with states, working with attorneys general to ensure that that their view and their authorities are represented. We now have an attorney general, for instance, the attorney general of Michigan participating in our Aviation Consumer Protection Advisory Committee, which helps to border a number of the road ahead for the work that we do.
I do not think it’s workable to have 50 or 52 different regulatory frameworks for a single national aviation system, which is why we want a robust federal role here, but we do recognize the patron protection experience that numerous attorneys general have and welcome the possibility to work with them on a few of these opportunities.
MR. LYNCH: But are there any specific areas or reforms that you just can be willing to recommend, perhaps working with Congress, to form of toughen up the pressure on airlines to do a greater job of providing the service that they are selling? As you indicated earlier, you understand, in lots of, many cases, the airline schedules were way beyond what they knew they’d the people to deliver, and yet they do not appear to have paid much of a price for that.
SEC. BUTTIGIEG: Well, that is certainly one of the the reason why ensuring passengers get the refunds they’re entitled to is so necessary, right?
In theory, if everybody gets those refunds when their flight is canceled, that implies that there would never be any incentive for an airline to do unrealistic scheduling. They might only be hurting their very own profitability after they did it. That is in theory. We’d like to ensure practice catches as much as theory, and that is a part of what we have been working on, again, in three parallel lines of effort: enforcement of the foundations that we have now, toughening of the foundations so that they are stronger than they were, and transparency around airline practices which we found might be actually a really fast‑acting ingredient toward an improved passenger experience.
Definitely serious about continuing to work with Congress as well on possibilities on what we will do. For instance, we have now a remarkably hardworking consumer protection team, but I believe far, far fewer people than most Americans would expect on this department who handle all the things from drafting regulations to handling the tens of hundreds of complaints that are available in. And, by the way in which, you need to know that as a passenger, that if you happen to’re not being treated appropriately by an airline, you’ll be able to tell us directly, and we will follow up and implement on that. But working with Congress to ensure that our Aviation Consumer Protection Team has the resources and the technology and the staffing that they have to be proactive and never just reactive, which they’ve done with remarkably‑‑remarkably lean resources to this point. That is only one example of something that I actually welcome a probability to work with Congress on furthering and strengthening.
MR. LYNCH: Now, later this week, shareholders of Spirit Airlines are scheduled to vote on the proposed merger with JetBlue, and I realize antitrust questions aren’t your bailiwick. They belong to the Attorney General, Merrick Garland. But I do wonder if you may have a view as as to if these form of mergers will profit consumers, whether there’s sufficient competition within the industry, generally, or whether this consolidation trend an issue.
SEC. BUTTIGIEG: Well, as you mentioned, DOJ has the lead on this, although I should note that we even have some responsibilities in relation to not only consumer protection however the competition side of how airlines are managed on this country, and it’s something that we’re leaning into pursuant to the president’s executive order around competition.
I’m not going to weigh in directly on something that’s being adjudicated at once and that DOJ is working on, but I’ll say broadly that we want to ensure there may be a really rigorous standard for the way we evaluate all of this, because if you happen to return to the history of airline deregulation, you have a look at what was expected within the Nineteen Seventies after we really modified the way in which that the aviation sector works in our economy, most individuals who were advancing deregulation sincerely believed that there can be dozens of competitive airlines competing for market share within the U.S. economy by the point we got into the 2000s. And, actually, what we have seen across the 2000s is fewer and fewer airlines, where now only a handful control greater than two‑thirds of the market. Anytime you may have that sort of concentration, you may have to be especially vigilant about any indications that that’s either depressing the passenger experience or creating upward pressure on prices, and I do know that is something that inside the authorities we have now, my department continues to take a look at. And I trust it’s a giant a part of how DOJ is evaluating things too.
MR. LYNCH: I would like to take a moment to ask you about a distinct mode of travel now, rail and under the heading of infrastructure projects, which I do know is a giant focus of yours. It’s clear our infrastructure across the board needs an upgrade. It isn’t clear that we have necessarily found out easy methods to construct these big projects on time and at an affordable cost, and far as I hate to advertise our competition, The Recent York Times had a superb story the opposite day concerning the high‑speed rail project in California, which has spent billions of dollars and doesn’t have much to point out for it up to now. And things were so bad that a French company that was actually involved in that project gave up and went to Morocco as a substitute, because they said there was less political dysfunction in North Africa than there was in the nice state of California. So, as we prepare to construct out major projects under the Bipartisan Infrastructure Act, how confident are you that we’re not going to see these sort of mishaps, these sort of problems crop up time and time again?
SEC. BUTTIGIEG: Well, that is one reason why we’re very focused on delivery. Matter of fact, we just had a summit on the White House on exactly this topic last week, and it’s a serious focus in my department and all the other departments working on delivering the president’s infrastructure law. And, look, we’re up against an actual headwind that is not only a function of the politics and economics of American infrastructure today. It is a function of mega projects generally. You possibly can go all the way in which back to antiquity and the development of temples and pyramids to see all the numerous, some ways through which very big projects very often take longer and price greater than they were purported to or were expected to. And a lot depends upon us fighting off that tendency because we want to ensure that the American people see $1.2 trillion value of value out of the $1.2 trillion in funding that the president has signed, about half of which is for transportation infrastructure as a part of this infrastructure package.
It’s certainly one of the the reason why we’re engaging very closely with the project sponsors who’re doing the constructing. Notably, that is typically not our department. It’s always a state, a transit agency, a city an airport that is specifically undertaking the project. We’d like to attach them up with the resources they need, not only when it comes to the project funding itself, but when it comes to best practices, technical assistance, attention to the permitting process, and community engagement in order that it happens early, often, and serves to smooth out the project as a substitute of resulting in eleventh‑hour delays, which is basically a matter of getting that sort of engagement right and searching at other things that might be done to create a substitute for the complexity of numerous this.
Even in our own department, just things just like the strategy of grant making, we began consolidating multiple programs from multiple applications into one so that there is less paperwork. That is something we will should proceed to be very vigilant on, especially in an inflationary environment where time is money, and the earlier you’ll be able to get a project done, the cheaper it will be for taxpayers.
And that is true‑‑not to go away aviation, you understand, just to offer one set of examples, you understand, you have a look at the investments we’re making in LAX to enhance the dreaded horseshoe where it might probably take half an hour simply to drop someone off, the way in which that the highway and the road meets the drop‑off area; Denver, where we’re investing in a greater baggage claim system because we all know that is going to assist speed processing there; Atlanta, where Concourse D must be about 20 feet wider than it currently is, and we’re providing funding as a part of the vision of constructing that a reality, airports large and small, all the way in which right down to Chamberlain, South Dakota, where the overall aviation terminal at once is a mobile home and we have now a grant of about $800,000 that is going to assist them have a consistent, everlasting constructing there that meets the needs of that rural community. Even inside the aviation sector, we see so many projects where success is so necessary to the communities they serve, and delivery is so necessary, whether those projects are the success that all of us envision them to be.
MR. LYNCH: Now, within the 60 seconds or in order that we have now left‑‑and I do know you’ve got worked loads on the availability chain situation within the country. That is been a giant contributor to our inflation problem. How do you assess the progress at this point? I do know the queue of ships waiting off the coast of Southern California is way down from its record high, still a bit higher than its pre‑pandemic level. How much progress do you think that has been made? How much of it’s as a consequence of the federal government’s efforts? How much is just a mirrored image of slower production coming out of China and maybe weaker demand as higher rates of interest bite here?
SEC. BUTTIGIEG: So we have definitely seen numerous progress. This time last yr, we were taking a look at something like 100 ships bearing down on the West Coast ports. Last time I checked, it was more on the order of a dozen or sometimes even in single digits. But that doesn’t suggest that the problems are solved. I’m happy with the work that we have done, especially with our supply chains task force, working every end of the availability chain from ship to shore, from the container terminals to the provision of chassis to the support for the trucking workforce, right through to the warehouse, the rail system, which is essential, and ultimately to the shelf and to your own home. So we’re going to be in a dramatically higher position this retail season than we were last yr. Although I might note that last yr, in spite of everything the pain and frustration we went through in, well, months like October, we got through the vacation season with an all‑time record high when it comes to retail sales, and that is often because so many individuals, starting with the port staff and truck drivers and warehouse and rail and other staff stepped as much as deliver.
We aren’t out of the woods on these supply chain disruptions. Let me be very clear about that. More work to be done within the immediate term, which we’re undertaking, and in the long run, which is why we’re making these big infrastructure investments in every a part of our multimodal transportation systems. But we’re in decidedly higher shape than we were and searching forward to more progress within the months ahead.
MR. LYNCH: Great. Interesting. And, unfortunately, we at the moment are out of time. So we’ll have to go away it there. Secretary Pete Buttigieg, thanks a lot for joining us today.
SEC. BUTTIGIEG: Pleasure to be with you. Thanks.
MR. LYNCH: Now, up next, we’ll be joined by United Airlines CEO Scott Kirby right after this video, so please stand by.
MS. MESERVE: Hello. I’m Jeanne Meserve. It has been a difficult few years for the aviation industry, first, the pandemic, then the recovery from the pandemic, after which some recent shockwaves, including labor shortages, high‑energy prices, and the Russia‑Ukraine war.
With me to debate is Larry Culp. He’s chairman and CEO of GE and likewise CEO of GE Aerospace. Great to have you ever with us today.
MR. CULP: Thanks, Jeanne.
MR. LYNCH: So, first, of those challenges that I discussed, which do you see as probably the most consequential, and the way are you coping with it?
MR. CULP: Jeanne, I might say it’s probably the convergence of all of those challenge which have come together here within the last couple of years to make this perhaps probably the most daunting operating environment I’ve seen I my profession. We power at GE Aerospace three out of each 4 industrial departures world wide on a day by day basis. So we’re working very hard with our customers to return to flight, and at the identical time, our airframer [phonetic] customers are ramping production at a slightly dramatic rate, and we’re working to maintain pace with them as well. We’re doing all of that very much using the lean management principles that we have used here during the last several years, which help us enhance the security and quality of what we do for our customers, all of the while improving our delivery and productivity performance.
That is an exciting time, we imagine, within the aerospace industry. We’re pleased to play the role that we do, and we glance forward over the following several years to be a part of that recovery.
MS. MESERVE: You mentioned lean management. You embrace it. You used it to drive GE’s turnaround. For many who aren’t accustomed to the term, what’s “lean management,” and the way are you using it exactly in the present circumstances?
MR. CULP: Jeanne, lean management, because it’s known today, is basically rooted within the Toyota production system, which got here about after World War II as Toyota was trying to administer through a period of great scarcity. Today it’s an exquisite strategy to run a factory but in addition really, I believe, the very best strategy to run a business.
There are numerous elements to lean, but a number of the core principles are a give attention to the shopper, counting on the people who find themselves closest to the work to enhance it, making each day count through day by day management, and solving problems at their root cause.
Now, numerous that’s common sense, and I’ve often used the shorthand of “common sense vigorously applied” to define “lean,” but it surely really does shape the way in which we do the work that we do with our airframer customers, the airlines, and our suppliers to enhance safety, quality, delivery, and price regularly. And it’s really helping us today, not only in our engine manufacturing operations, improve our output, quarter in, quarter out, but in addition in our service operations to scale back the turnaround time required for us to repair or overhaul an engine to get it back up within the air.
MS. MESERVE: Let’s talk for a moment about sustainability. You took part in the primary ever experimental flight with passengers that used one hundred pc sustainable aviation fuel, or SAF. How critical is SAF to reaching the goal of net‑zero flights by 2050?
MR. CULP: Jeanne, I believe most of us within the industry see SAF as playing a critical role as we move forward toward those net‑zero goals.
We were thrilled to have the chance to partner with United Airlines on that first flight, one hundred percent SAF in a single engine. Scott Kirby, their CEO, has really spearheaded their efforts and I believe very much for the industry as well with respect to sustainability.
But it surely’s not going to be just SAF alone, in our view. We’re working with Airbus, for instance, on a hydrogen propulsion demonstrator. We’re doing the identical thing with NASA in and around hybrid electrics with an eye fixed toward powering a industrial airliner this decade, and we’re also updating and advancing traditional propulsion systems. Our RISE program goals to utilize open fan architectures to drive in excess of a 20 percent improvement in efficiency and in turn emission. So there’s loads to do on the trail to 2050.
MS. MESERVE: A few of that’s down the road. What are you doing at once to handle sustainability?
MR. CULP: Jeanne, we predict we’re doing loads today because if you happen to have a look at what GE Aerospace has done through the last several a long time, it’s with each generation of technology, improve efficiency, and reduce emission. When you have a look at today’s engines compared to those who we produced within the Nineteen Eighties, our engines are 40 percent more efficient today, largely through advanced design capabilities and manufacturing techniques like 3D printing and CMCs. That offers us tremendous capability, not only today, but we couple that with our Foam Wash service capabilities along with using software from our GE digital aviation business to assist airlines plan and operate routes in a more efficient and productive way.
MS. MESERVE: Is sustainability also a priority of your military customers?
MR. CULP: Jeanne, very much so, and we see tremendous read across from our industrial business to our military business and at times in the opposite direction as well. We’re working on a next‑generation engine, the XA100 for the F‑35, and improved efficiency and emissions may be very much an element of what the military is driving with that program.
Interestingly, this next‑generation technology, which we predict should drive a 20 percent improvement in capability, also enhances that platform’s mission capability, particularly because it pertains to range.
So all of those objectives are ones that we hope we’ll have the ability to deliver for our military customer.
MS. MESERVE: Larry Culp, chairman and CEO of GE and likewise CEO of GE Aerospace, thanks a lot for joining us.
And now back to The Washington Post.
MR. LYNCH: Welcome back, and for those of you simply tuning in, welcome to Washington Post Live. I’m David J. Lynch, global economics correspondent here at The Post.
I’m joined now by United Airlines CEO Scott Kirby, to proceed our discussion concerning the way forward for aviation.
Scott, welcome to Washington Post Live.
MR. KIRBY: Thanks for having me, David.
MR. LYNCH: Well, we’re glad you are here.
I would like to begin you off with the identical query I asked Secretary Buttigieg which is essentially what happened to air travel this summer. I believe the traveling public, lots of us, still bear the scars from the flight delays, the cancellations that we saw, not only United but all across the industry. What explains the disappointing performance?
MR. KIRBY: Well, David, I believe if you happen to bear scars, you have to have been flying an airline aside from United, because the truth is that at United, we actually had the very best third quarter operating performance within the history of United Airlines, excluding 2020 after we weren’t flying. But we had the very best on‑time performance, the bottom cancellation rate. So I believe this narrative, you understand, it’s true in some airlines, but at United, you understand, despite all of the challenges across the industry and across the globe, it seems that we actually had the very best operating performance that we have had since 2020. And October is now setting even greater and newer records.
So I feel really good about where we’re at United and where we’re headed for the longer term for our customers.
MR. LYNCH: Well, I will need to have been unlucky enough to catch you on a foul day at the tip of July, but I won’t belabor the purpose.
MR. LYNCH: I’m curious, though, concerning the planning assumptions that you just took into the yr when it comes to what you anticipated by means of how the traveling recovery would present itself. What did you expect, and the way different was the set of circumstances that ultimately played out?
MR. KIRBY: Yeah. You recognize, we expected strong demand. It has been even stronger than we began, and certainly one of the things that we modified and certainly one of the explanations the summer was the very best‑‑that doesn’t suggest it was perfect, and particularly, any days that there have been weather delays and we had another unique challenges which we may or may not discuss that actually weren’t United related directly, but‑‑is we pulled the schedule back, and we just decided‑‑we have now 10 percent more pilots per block hour than we had pre‑pandemic. We’re running a lower utilization of our aircraft than we were before the pandemic, and all of that’s to construct more buffer into the system.
One other big change that happened for United is we had 52 of our biggest airplanes, the Pratt & Whitney‑powered 777s, 52 of our largest airplanes that were grounded, that got here online really firstly of the summer, and it takes time to ramp that up. And that has a huge effect that just flows through the entire system.
And so while the third quarter was the very best in our history, each month within the quarter got meaningfully higher. September was by a large margin higher. July would not have been higher. But that 777 issue was probably the most important.
But I believe probably the most significant thing that we have done in a different way is construct more buffer into the system, and look, there’s issues beyond our control.
I do know that Secretary Buttigieg was on earlier. I talked to him, you understand, about air traffic control. That is certainly one of the problems. But the problem that actually is the FAA does a tremendous job, and so they jump through every kind of hoops to maintain the air traffic control system running. But we have now fewer controllers today in the USA than we had 30 years ago, and we have now about triple the variety of operations. Which means there is a system that’s just on the very edge.
And what’s really happened with the FAA is they have been asked to achieve this way more. They’re doing space launches and drones and way more certification work, without a rise of their budget at the identical time, and so those resources have come out of the day‑to‑day operation. And I believe what all of us have to do, is what I told the Secretary yesterday after we spoke, is figure in the following FAA reauthorization bill to get the air traffic control system staffed. We have invested billions of dollars within the infrastructure around this country, and we wind up with air traffic control delays for one or two sick calls which have impact of a whole lot of flight delays or can have impacts of a whole lot of delays or cancellations. And so those are the sorts of issues that I believe still remain to be resolved, and all of us should work together to try this. It’s no person’s fault that we’re here, but we’re where we’re, and we should always work together to actually get the FAA resourced appropriately. And to say that we have now the identical variety of controllers or fewer controllers today than we did 30 years ago just doesn’t pass the smell test for anyone, I do not think.
MR. LYNCH: And so looking ahead, what should people expect as they head out for the vacation season, November and December this yr? How well do you think that the system can arise to the strain?
MR. KIRBY: Yeah. Look, the system is running very well at once. You recognize, I’ve said we’re setting records each day. In truth, our operating team said last week was the very best week in all of our records at United Airlines operations. So we’re running well. The reality is the entire industry is running loads higher. I believe everyone has done, to some‑‑you understand, to greater or lesser degree, what United has done, which is solely fly less, construct more buffer into the system. And we have built that buffer into the system, and that is letting us overcome more of the challenges.
I mean, have a look at the impact, the devastating impact that Hurricane Ian had on Florida and the Southeast. While it had devastating human and toll on buildings and infrastructure, airlines got here back pretty quickly and more so than they’ve ever done prior to now. I believe that is a sign that the industry is just constructing more buffer into the system, and that buffer is letting us get better quickly.
And so I believe‑‑and I believe also, by the way in which‑‑I do know the FAA is concentrated on the vacations, and so they’re pulling more levers, whether it’s additional time or having people are available in for extra shifts with a view to cover for things, and so they’re focused on it. And so I’m hopeful that the vacations will go well.
But it surely is a system that is tight, and in a system that is tight, if you happen to get bad weather or get something that happens, it might probably be difficult. But it surely’s a greater setup than the entire industry had going into the summer.
MR. LYNCH: Now, one thing I believe we have seen throughout the recovery is that leisure travel has bounced back more quickly or more completely than has business travel. To what extent do you think that that change in your customer mix is everlasting, and to what extent is it just taking longer? Will business travel ever return to where it was in 2019?
MR. KIRBY: Well, I believe that is certainly one of the large takeaways. We just released earnings half an hour ago, and we’re going discuss it at our earnings call tomorrow.
One in all the epiphanies that I’ve had recently is there is a structural change in leisure, what we call leisure travel, that’s higher. Persons are going to travel more, and the explanation is because hybrid work now gives them the pliability to travel after they did not have it before.
When you’re working hybrid, it means every weekend has the potential to be a 3‑ or 4‑day weekend. Whenever you were tethered to your desk and needed to be there Monday to Friday, nine to 5, you could not get away for a weekend. Now you’ll be able to leave on Wednesday or Thursday or come back on Monday, Tuesday, or Wednesday and work remotely for one or two days.
And what we saw in September, for instance, September was the third highest RASM a month within the history of United Airlines, and September is the off‑‑most off peak of all months. And for that to be the third highest in our history was remarkable. What we saw is the midweek days‑‑Tuesday, Wednesday, Thursday‑‑had about an eight‑point improvement in load factor, while the weekend days, they’d an improvement, but they were up about 3 percent. That’s all about people taking recent‑‑having the pliability to travel now greater than they did before.
I believe it is a everlasting structural change and in demand because people can now‑‑now are untethered from their desks and have the pliability and the liberty to travel for weekend getaways greater than they ever did prior to now.
MR. LYNCH: Now, airlines like many other industries have struggled to search out enough staff to do the work that should be done. I think United became the primary major U.S. airline earlier this yr to open up a faculty, your individual school to coach pilots. Tell me a bit bit about what went into that‑‑
MR. LYNCH: ‑‑decision and the way well is it working.
MR. KIRBY: Yeah. So, first, you understand, I’d say we’re on the right track to rent 15,000 recent employees at United Airlines this yr. We create great careers. They don’t seem to be jobs. They’re careers, where people can, you understand, earn six‑digit incomes after they have been here a number of years, great advantages, and since of that, we do not even have a challenge hiring at United Airlines. Numerous the infrastructure around us does, whether it’s screeners or the FAA or fuel vendors and others, but we haven’t got an issue.
But there may be a shortage of pilots within the aviation industry, and it has more pernicious effects somewhere else than simply at United Airlines. And we decided throughout the pandemic to be the one airline that I do know of on this planet that founded our own flight training academy. It’s called Aviate. We herald students. They will are available in with no training experience. We give them higher training than they got traditionally in civilian flight schools, including things‑‑we call it “upset recovery training.” But we give them higher training, more training than they get some other place. They usually, in fact, still should pass all of the certification that any pilot would should pass to get through.
But we will take about 500 people a yr through the Aviate Training Academy after which have them within the United Airlines ecosystem with the power to fly, someday fly a United widebody jet.
And never only are we doing an incredible job at training the following generation of pilots, but we’re making a difference on diversity efforts with this. Today fewer than 20 percent of the pilots in the USA are women or people of color. Eighty percent of our students on the Aviate Academy are women or people of color, and if you happen to go on the market, it’s one of the crucial inspirational things you’ll be able to see, to hearken to their stories and talk‑‑and listen to them discuss their excitement for his or her future and the chance that it creates for them.
So we’re really proud. It’s the correct thing to do for us as a business, but it surely’s also the correct thing for us to just do for society at large. And it’s an ideal example of the difference that personal firms could make that transcend just doing day‑to‑day business decisions.
MR. LYNCH: Earlier today I think you participated in the primary Eco‑Skies Alliance summit together with Commerce Secretary Gina Raimondo and several other members of Congress.
MR. LYNCH: What’s that alliance about, and what form of concrete accomplishments do you anticipate from it?
MR. KIRBY: Yeah. Well, United is the leader in global aviation when it comes to sustainability by a large margin, and the Eco‑Skies Alliance is about increasing the dimensions of the tent and partners that may help us invest and add‑‑greater than anything be a megaphone for the sorts of long‑term investments that we want to make with a view to get to one hundred percent green.
United is exclusive, not only amongst aviation, but unique amongst firms in making a commitment to be one hundred percent green by 2050. And that’s different than net zero, which is what most firms say, and the explanation is we have committed to attending to one hundred percent green without using traditional carbon offsets. And the explanation for that’s traditional carbon offsets are mostly about planting trees, and there is nothing improper with planting trees. But the reality is most of those carbon offsets aren’t real. Those are trees that were going to be planted anyway or trees that were never going to be cut down.
But the larger point is that system cannot scale. If we planted every square inch of the planet that would grow trees, it might account for lower than five months of mankind’s emissions. By the way in which, we would all starve to death because we just covered up all of the farms.
But it surely also‑‑since it’s only five months, it’s gone and it’s over, and the actual problem we have now, I believe, in corporate America, not only in aviation, with net‑zero commitments is because they depend on this really small thing, which is planting trees. It’s the simple answer, and the simple answer is not going to get us there. And we have now to do something different.
So, for us at United, the 2 big ones are sustainable aviation fuel and carbon sequestration.
MR. LYNCH: Right. And I believe you have an interim goal of cutting your greenhouse gas emissions in half by 2035. What are‑‑you understand, what makes that difficult? What are the hurdles that you have to clear between at times to make that a reality? And the way widespread or how easily available is so‑called “sustainable aviation fuel”?
MR. KIRBY: Well, the reply to the primary a part of the query is wrapped up within the second part. The one strategy to get there may be sustainable aviation fuel for United and for aviation world wide, and the issue is that industry is tiny today.
United’s commitment to sustainable aviation fuel is greater than all the remaining of the world’s airlines combined, but it surely’s still simply to drop within the bucket of our total needs, and the challenge is we have got to construct that industry. It mainly doesn’t exist today.
The good news is the Inflation Reduction Act had several provisions about sustainability that I believe we are going to look back 15 years from now and say it was one of the crucial consequential pieces of laws passed within the last 30 years, and particularly what it does for SAF or hydrogen credit and for carbon sequestration is basically going to‑‑it makes a whole lot of projects potentially viable that weren’t before. And the secret’s going to be once we start investing in those projects, we will drive the economies of scale and make the economics work on a protracted‑term sustainable basis. It may‑‑it truly is the seed capital to begin to jumpstart these industries, and I think we’ll have the ability to do the identical thing with SAF and with carbon sequestration that happened with wind and solar which, if you happen to went back 20 or 30 years ago, people said were uneconomic, could never compete with coal or natural gas. And today it’s cheaper to supply a megawatt of electricity from wind or solar than it’s from coal or nat-gas.
And the identical thing can occur with SAF and carbon sequestration, and the Inflation Reduction Act really enables a whole lot of projects that weren’t viable before. And I believe that is going to be the important thing to attending to our goals.
MR. LYNCH: And so how quickly can SAF be brought online in a meaningful sense? What form of goals do you may have to get to twenty percent of your fuel consumption, 50 percent, et cetera, et cetera? Lay out the timeline for me to the extent that you just might‑‑
MR. KIRBY: We’re years away. We’re years away. And the problem is basically feedstock, and in order that is, what do you employ to make the fuel? Is it corn? Is it used cooking oil? And all of those are constrained.
One in all the challenges has been that if you happen to’re producing renewable diesel or ethanol, there have been at all times government credits, and so that you were at all times higher off using that corn or regardless of the feedstock was. You are higher off using it to supply ethanol or diesel than you were SAF since you got extra government credit. The Inflation Reduction Act gets us onto a more level playing field. So we could use those.
I believe the most important answer is power-to-liquids, the one strategy to really solve this liquid fuel issue, which is SAF and others, but liquid fuel issue goes be power-to-liquids. Power-to-liquids is taking carbon from some source. It will probably be straight out of the atmosphere, combining it with water and using clean energy, so using wind or solar to make use of that energy to show the carbon and the water into fuel. And that literally is making fuel out of thin air. It takes energy. So you would like clean energy to do it, but I believe that is probably the most promising and scalable technology for the longer term. But it surely’s just starting, and it’s years away from really being scalable.
But it surely’s okay. I mean, this isn’t a‑‑this isn’t going to be linear. When you have a look at the curves, you understand, for any technology like this, they’re very slow and shallow at the underside, after which they hit an inflection point, and so they undergo the roof when you get the technology working. We’re still within the get‑the‑technology working phase.
MR. LYNCH: I would like to go to an issue from a member of our audience. Christopher Bolsinger from Massachusetts asks, “Is decreasing greenhouse gas emissions enough? What disruptive technologies are we exploring to rethink air travel more broadly?”
MR. KIRBY: Well, first, I’m undecided what he means–totally what he means here, Christopher, but what I’d say is, first, I believe it is important that we travel and stay connected with the world. One in all the less talked about casualties of covid was the loss of world connectivity, the loss of world perspective.
The primary time I said this on stage was at COP26 in Scotland, and it was in November of 2021. And I said, look, before the pandemic, United Airlines carried a thousand U.S. residents a day to China and a thousand Chinese residents to the USA, and all that creates bridges and understanding that when things occur and there is a crisis, there’s numerous these bridges and perspective to grasp. It doesn’t suggest we’ll at all times agree, but we’re loads closer because we spend time together and understand one another.
We carried 100 or so people a day forwards and backwards every day to Russia, and everybody said on the time was the world is a more dangerous place because we’ve not been connected, and other people have turn into isolated and lost touch with others’ perspectives. That sadly turned out to be prophetic.
So I believe the primary point is travel is significant. It isn’t just something that individuals prefer to do. It isn’t just necessary for business. It will be important for a worldwide society.
Juan Trippe said, you understand, something early in his profession that his job was shrinking the world when he‑‑you understand, at Pan Am, and that’s true today.
So what we should always do, though, we want to proceed to travel. We’d like to do it sustainably, and if you happen to ask for disruptive technologies to try this, I believe probably the most disruptive thing doesn’t just apply to aviation. It applies to the globe, and that’s carbon sequestration. Like, the one answer that we have now to get the globe to zero, that anyone has today‑‑there’s some theoretical silver bullets like fusion energy, but that is probably not happening anytime soon‑‑but is carbon sequestration. That is only a matter of cost. We are able to sequester as much carbon as we wish.
I personally am an advocate for a price on carbon, for a carbon tax, because if we did that, it might drive the incentives appropriately for carbon sequestration. But if you happen to’re in search of a disruptive technology, it isn’t unique to aviation. But it surely is carbon sequestration.
At United, we were proud to be partnered with Occidental in 1PointFive, in what’s the world’s largest and first industrial‑scale carbon sequestration plant. Others are beginning to do it now. Once we began on carbon sequestration, I had to elucidate what that word meant to people. Many more people realize it today, but if you happen to’re in search of a disruptive technology that may work, carbon sequestration might be your answer.
MR. LYNCH: Now, in a short time because we’re nearly out of time, but I desired to ask you briefly about your plans for electric aircraft. I believe you are planning on fielding them or at the very least getting them within the air by the tip of this decade.
MR. LYNCH: What form of role do you envision for them, and the way much of a difference could they make?
MR. KIRBY: Yeah. Electric aircraft and electric air taxis, these are each going to be great for brief‑haul aviation. I mean, I believe the simplest use case is, you understand, if you happen to’re in midtown and need to get out to an airport, get out to the airport in Newark as a substitute of sitting in traffic, you’ll be able to take an electrical air taxi, be quieter, safer than a conventional helicopter would have been. That is certainly one of the use cases.
The opposite one is brief‑haul airplanes, you understand, flying from Denver to Breckenridge or Denver to Vail, you understand, those sorts of mountain communities, But really, that is really a sort of a distinct segment.
The fact is that the energy density for batteries is nowhere‑‑is way too low for us to ever have the ability to fly big airplanes long distances.
So electric aircraft are going be, I believe, necessary for brief‑haul service, but they are not going to be big airplanes flying even medium‑haul distances. There’s not even any theoretical technology on the drawing boards that might allow that. So it is important, but it will be focused on the short haul.
MR. LYNCH: Fair enough. Well, that does exhaust our time. I would like to thanks, Scott Kirby of the United Airlines, for joining us today. We appreciate having you with us.
And because of all of you for joining the conversation. To see what else we have now planned, please go over to WashingtonPostLive.com.
I’m David J. Lynch, global economics correspondent here at The Post. Thanks again for watching.
