348 - Guest Co-Host Charles Duncan. Guest: Dr. Jeremy Stone, CEO, EERO Group

0:27Thank you. SoCal, so easy. FlyOntario.com. The Executive MBA in Aviation at the University of Colorado, Denver. Business.ucDenver.edu. And by Cerium, the world's most trusted source of aviation analytics. Cerium.com. We also welcome your business's support. Contact us at AirlinesConfidential.com. Welcome to Groundhog Day on Airlines Confidential. I'm Scott McCartney, and I'm back this week with the ever-popular and always-informed Charles Duncan doing double duty. Even better, Charles is with me in person in Dallas this week, broadcasting to you from my humble home office. We have a very special guest this week, and we're also going to play a new game, What Does This Number Mean?

1:26Should be fun. Welcome back, Charles. Hey, Scott. It is great to be here. First, for listeners, your office is not humble. It's very cool. It's my first time. It's great to actually record with you, and I can kick you under the table, and usually we're a couple thousand miles apart. So it's great to be here. Thanks for having me back, and I hope listeners don't mind hearing my voice two weeks in a row. But listen, in the spirit of numbers and the numbers game, I've got a number for you, Scott. I've got 93. Any idea what 93 might be a reference to? 93, the age of something.

2:09I'm going to let you off the hook. Okay. So, you know, I'm down here in Dallas in your fine home. And I must say, I stepped off of the airplane and felt like I was in a blast furnace. And at 10 p.m. at night, it was 93 degrees Fahrenheit here, which, you know, for me from the East Coast was a bit of a shock to the system. Yeah, no, it's been hot. Over 100. And as one of the local weather people says, the gates of hell are open. And yeah, 100 degree temperatures. The heat humidity index is really high. But that's August in Texas. There you go. Well, listen, we do have for listeners a really special guest and a friend of mine.

2:50His name is Jeremy Stone. He's an entrepreneur and has a really interesting project related to the people movers that people either love or hate at Dulles. And so I think listeners will enjoy our conversation with Jeremy here coming up on the episode. And it's really more than just people mover. It's really about rethinking the airport experience, but also rethinking airport costs because airport costs are a big issue. So I think listeners will be really captivated by Jeremy's ideas. Fantastic. And we did last week, we talked about a few airlines with earnings and we had a few more report earnings last week, Scott.

3:31Yeah, that's right. JetBlue and Frontier. JetBlue saw revenue increase nearly 15 percent and expenses increased nearly 21 percent. That's never a good formula. The result was a net loss of$247 million compared to a net loss of$74 million a year ago. So never a good formula to be losing money in the busy summer season when you should be putting money away for the long winter. JetBlue paid$407 million more for fuel this year than last year. And there you have the net loss. JetBlue CEO Joanna Garrity said two years into the jet forward plan, the company was making progress. And she said the Fort Lauderdale expansion following the collapse of rival Spirit Airlines was producing results.

4:23But it's all hard to see under the crush of higher oil prices. To that end, JetBlue said it would be profitable in 2028. That means not this year, not next year, 2028. Predicting 2028 earnings seems like a huge stretch when you have no idea what oil prices are going to be doing next week, let alone next month. let alone next year, let alone 2028. So to me, that was all a stretch and kind of an exercise just to placate Wall Street or something. But, you know, JetBlue's got to start making money at some point, and I hope it's before 2028. Frontier Airlines posted more impressive numbers, really.

5:11JetBlue's revenue was up 15%, but Frontier's total operating revenue was up 38%. Operating expenses increased by a similar amount, but that's to be expected, of course, with higher fuel prices. The net result was a loss of$90 million, worse than the$70 million in net losses Frontier suffered a year ago. Similar, really, which I think is somewhat of a victory in this high fuel environment. Frontier's fair revenue per passenger was up 54 percent. Kind of a shocking number. Indeed. Ancillary revenue per passenger fees, right? That was flat. But for those keeping score at home, interesting numbers, I think, as we talk about numbers.

6:01$68, that's the average per passenger in ancillary revenue for Frontier in this just completed second quarter. $63 per passenger,$5 less. That's the average fare. So people pay more, as we know, from the ultra-low-cost carrier model. And that's held up even with the fare increases we've seen. Frontier grew capacity 8 % as it sought to capture ex-spirit customers. That's a lot, 8%. and also gave back some airplanes. So, you know, we've talked before about the lack of utilization, the sort of flabby utilization of Frontier's fleet, and that seems to be improving, although the numbers didn't advance a whole lot from where it was last year in terms of aircraft utilization per day.

6:55Frontier seems to be winning the race to capture as much of spirit as it can. Frontier also raised its estimates for the third quarter. So, Charles, what did you think? Yeah, Scott, let me unpack a little bit, and we'll play the number game as well. But maybe let's start with Frontier. Does the number 47 million mean anything to you? 47 million? No. So$47 million is what Frontier made in the quarter from sale leaseback gains. Oh, there you go. Those were embedded in the numbers you called out. And I think also kind of portend some of the challenge. We talked about it last week with Greg Anderson.

7:37Ultimately, this is cash in the door now, badly needed, very helpful cash to Frontier. But it's ultimately then creating a lease liability and higher lease rates, payments. Right. The tradeoff is higher cost. That's right, down the line. Down the road. Yep. And there's another number,$100 million, that jumped out. This actually came out in some research from JP Morgan's Jamie Baker. And that$100 million figure was Jamie's estimate of how Frontier is underpaying its pilots relative to competition. And it's an annualized number, to be clear,$100 million annually. Jamie guesses Frontier is underpaying because Frontier is the last airline, I believe, who has a pre-COVID, pre-pandemic pilot contract.

8:25Yeah. So listen, I do think overall that Frontiers got some positive momentum, really good revenue numbers, taking advantage of Spirit. There's some good stuff there, but they do have some headwinds, still losing money, sale leasebacks, pilot contract. I mean, there's still some heavy lifting to be done there. Yeah. And look, I think Joanna, from my reading of the transcript from their call, I mean, they struck a bullish tone, but there's a lot of work to be done. there for the folks in Long Island City as well, upcoming. And so we'll be watching those. And you didn't mention it, Scott, but as you know, I watch Canada very closely.

9:04And there was some interesting news last week out of Air Transat, which is sort of the weakest performing of the Canadian airlines. The federal government in Canada has a fuel cost loan program in place. And so Air Transat has drawn on that. It's open to all Canadian airlines based on year-over-year fuel cost increases. And Transat's getting a$125 million loan from the federal government in Canada, a four-year loan term with an interest rate of 3.91%, which I thought was very interesting. Air Canada says they don't plan to take advantage of this. And WestJet has said that they believe it's a market manipulating move and that the government should stay out of market competition in that sense.

9:53But I thought that was just really interesting news from Canada. Yeah, very interesting. And speaking of interesting, there was a bit of news to note last week, Scott, related to Jet Zero. And, you know, the Wall Street Journal reported that the blended wing aircraft maker, and I think we've talked about this, you know, in weeks past on the podcast, but they have a preliminary deal with the U.S. government for$3 billion. That's a billion with a B worth of export, import bank, Ex-Im Bank loans and guarantees. And this is part of the administration's Make More in America initiative, and it will give Jet Zero the money it needs for a giant factory in Greensboro, North Carolina.

10:38Jet Zero broke ground on the factory in May, and the first prototype of that blended-wing aircraft is set to fly by the end of next year. And the first commercial airplanes are planned to come out of the factory somewhere around 2030. Jet Zero has support from 20 commercial airlines as well as the U.S. Air Force. So just reactions to that, Scott. I know you've been watching it. How do you think Boeing is going to take this? Yeah, I think Boeing can't be happy. $3 billion is a lot of money, especially at this early stage where they don't even have a prototype aircraft. But, you know, the technology is solid.

11:21A lot of the technology comes from NASA, right? The blended wing idea. They're, for the most part, using existing technology, existing engines and things like that. So I think this is really a sign that Jet Zero really is real. Not that we doubted that to begin with, but this is a really interesting sign. And if the government's kind of putting its thumb on the scale for Jet Zero, I don't know what that means for Boeing. You know, just we look, we know the president is not happy with Boeing over Air Force One delays. I'm not sure this isn't intended to be a sharp stick in the eye of Boeing just because of that issue.

12:11But I don't know. I think, you know, we talked in recent weeks about Boeing's reluctance to launch a new aircraft program, right? Airbus seems further along and pushing that faster than Boeing. This is another factor in that that may push Boeing into a new aircraft program sooner than it anticipated. Or, you know, ultimately maybe Boeing's sitting back and saying, let Jet Zero do the development work. And if it works, maybe we'll buy Jet Zero. Or Jet Zero will buy Boeing. I don't know. Who knows? But, you know, Ex-Im Bank doing this is interesting and really noteworthy as well. because, I mean, they fund, they finance the deliveries of Boeing aircraft to customers all over the world, non-US customers.

13:01And I'm not an expert on the bank by any stretch, but I thought they only financed deliveries of aircraft and those kinds of exports, not a factory, not construction in this sense. So it just struck me as odd. You know, that's a great point, because I remember back in the day, Boeing used to file complaints about European government subsidizing Airbus. And Airbus's response was Boeing's getting subsidies from the Export-Import Bank, which is financing sales and basically subsidizing it, right? So, you know, that was kind of a standoff. But but you're right. This is much more of a government subsidy than just loans for for, you know, cheap financing on airplanes.

13:48The way you get two point nine percent financing on a new Chevy truck or something. Indeed. All right, Charles, here's here's another number for you. Eighty eight million. Any idea of the significance of that? You know what? I sincerely don't. Rather arbitrary. Yes. Yes. So it's it's the auction price for spirits company headquarters. Oh, wow. OK. And and only interesting. I mean, look, this is not necessarily an airline story, except that I think it is very much part of spirits collapse. gaps people forget um 88 million um that number goes with 250 million wow and you'd say well what's the relationship well 250 million is what spirit said it was investing in its headquarters back when it first announced it in in 2019 we don't know exactly what the company ended up spending but we do know that the land in dania point florida was purchased for 32 million that's a that's a good chunk sure and then spirit built four buildings um and so but now it's worth 88 million um spirit broke ground in january 2020 and officially opened the campus in april 2024 it was a more than a four-year project seven months after the campus opened spirit filed for bankruptcy the first time seems to me that all adds up to one of the worst financial decisions decisions um you know i look the the competition in airline history of bad financial decisions is uh is robust um but this is this is up there spend 250 and it ends up only being worth 88 and i you know spend to me spending that much on fancy headquarters when you aren't earning money as spirit hadn't earned money since 2019 and this is a very tough very turbulent very low margin world And I just think a discount airline shouldn't have a fancy headquarters.

16:02It sends the wrong message to employees, to investors, to everyone. And Scott, I'll just jump in. I mean, I think that point is very fair and valid and really applies to all airlines, not just low-cost ones. This headquarters building, I never visited, but I looked at it online over time. And it was a corporate office, but also a training center with, you know, flight simulators and a training and so on. And a dormitory for the crew who were there on site for training. You know, it looked beautiful, but definitely far more, you know, than spirit needed. And, of course, we have the benefit of hindsight.

16:41But there are other airlines with fancy headquarters, you know, around. And, you know, I think this is such a tough, low margin business that it sends the right signal at all kinds of airlines to have something simple and basic and focus the spending on the customer and the service. And, you know, it reminds me being here in Dallas. I spent a little bit of time earlier this week at Dallas Love Field in the Southwest headquarters. And it was fantastic. You know, and I must say, I mean, you know, beautiful, lots of history in the wall, but certainly wasn't luxurious or ostentatious in any way. And I think kind of set the right tone.

17:18And one other thing you didn't mention, but what I love about Southwest's headquarters is it's at the airport. You know, far too many corporate headquarters in our industry are downtown somewhere and disconnected from the product and the service that's being delivered. I think that's a problem. Yeah, totally. So hats off to Southwest for doing it right, even after all these years. Yeah, yeah. No, when I was thinking about the Spirit thing, I was thinking back to Ben Baldanza's headquarters at Spirit. In Miramar. You know, just as cheap, low-budget, basic, and no receptionist in the front. You know, a telephone, dial the extension you need, and a sign that said something like, we save five cents on every airfare because we don't have a receptionist or something.

18:03In a nondescript industrial park in the back of Miramar. Yeah. No. So you send the message for everybody who comes through there that we are a discount operation. All right. Before we dive into more numbers, I want to thank Infinity Flight Academy for its sponsorship of Airlines Confidential. The path to the flight deck starts long before a pilot reaches the airlines. At Infinity Flight Academy, they're proud to serve as a flight training partner for the American Airlines Cadet Academy, helping prepare the next generation of professional airline pilots. Infinity Flight Academy's training is structured, standardized, and built around the discipline today's airlines expect from day one.

18:48For future pilots pursuing a career at the highest level, Infinity Flight Academy is proud to be part of that journey. Infinity Flight Academy, training tomorrow's airline pilots through the American Airlines Cadet Academy. And thanks to Serium for making the podcast possible. Serium offers the most accurate and precise data and analytics to enable airlines to optimize planning, operations, and passenger services. The right intelligence drives operational efficiencies, enables you to predict market shifts, and helps airlines respond quickly to maximize revenue, manage costs, and seize commercial opportunity.

19:29Visit cerium.com for more. And Scott, speaking of cerium, you've got some numbers from cerium and others you want to share, don't you? Yeah, since it's numbers week, let's start with the numbers I watch closely, on-time arrivals and cancellations. There's been a lot of bad weather lately and glitches like reduced staffing in New York air traffic control and an American Airlines technology outage. I've had a lot of friends and associates who have had long airline delays or cancellations. So I just thought it would be a good time to, you know, we're seven months into the year, past the halfway point.

20:09Let's take a look at how things are going. How does it stack up compared to last year? Who's doing well and who's lagging? So Serium ran some numbers for me. Here's the first set, Charles, 77.5 % and 77.4%. Any guesses? Okay. You know, it feels like it might be, you know, on-time numbers. You mentioned arrivals and Serium. I'm going to say, I'm going to guess because, you know, you and Henry are often talking on the podcast about travel problems and challenges. So I'm going to guess that's your and Henry's respective on-time arrival numbers when you're flying on American. How about that? Well, close.

20:50Very close. Now, actually, and these numbers were surprising to me. This is the on-time percentage for the industry so far this year, 77.5%, and the on-time arrival percentage for the industry last year. The same time frame, 77.4%. Nearly identical, slightly better. Nearly identical, slightly better. I would have thought with all the hard weather, really fierce storms we've had this year in particular places. Chicago's been hit several times really hard, and that's moved east all through the northeast, creating havoc. But, But it turns out that weather's actually been a little bit better than last year.

21:36The on-time arrival numbers got me thinking, OK, how can we look at evaluating the weather? So I reached out to the FAA, and they count ground stops, and they count ground delay minutes. And ground delay minutes, this is the surprise to me, they were down in the first six months of this year, according to the FAA. The average delay was shorter and the number of delays has been fewer. And when you drill down into the FAA numbers a bit more, the percentage of delays caused by weather is down a bunch. 60.4 % this year, 60 % of delays are caused by weather compared to 69%, 69.1 % last year. Volume delays are up this year.

22:24So congestion, and I think we know that, we see that. That could be worse absent the aircraft shortage issues and high oil prices that have kind of kept capacity in check, not to mention the collapse of Spirit Airlines, which has kept capacity in check some. But even with that, volume delays are up this year. And a category called other slash staffing, I would put the emphasis there on staffing, FAA staffing, ETC staffing, because we've heard several times shortages of controllers have led to delays. Well, in fact, the numbers are there. 15.3 % of all delays so far this year are due to that other slash staffing category compared to only 9 % last year.

23:16So up significantly, even though it's a relatively small part of the delay picture, but certainly significant and sizable. Wow. All right. So, Scott, one of the benefits of being here shoulder to shoulder, you know, is I can look over your shoulder at these numbers. and not all airlines are performing alike. And so, listen, it looks like three airlines for this period, year to date, are below 73 % in their on-time arrival rate. And those three are Frontier, JetBlue, and Southwest. Allegiant is sort of right there, just a smidge better at a 74 % A14 on-time arrival rate. Last year, Southwest was at 77 % at this point in the year.

24:06Delta, Alaska, and United are all performing strong this year and last year. And, you know, it's worth calling out as well that America's doing a bit better. You know, they're up, and I wouldn't have guessed that, that their on-time arrival rate is 77 % year-to-date versus 76 % at this point last year. Yeah, really, I think fascinating. I agree with you. Indeed. I was surprised at American and certainly pleased at Americans doing a bit better. And, you know, we've talked before about Southwest and, you know, average or so last year, but well below average this year. So I think from what I understand, the main problem for Southwest has been boarding.

24:51And boarding, when they made the changes to assign boarding and the different boarding groups and all that, I think things went pretty well, but they had some issues with overhead bins and stuff and worked through that. But the main thing was unhappiness with A-list preferred, the top frequent flyers, who were either in Group 1 or Group 2. And so you could be A-list preferred and you could end up at the back of the Group 2 boarding. First world problem, right? You sound bitter, Scott. You sound very bitter about this. I'm fine with it. I am A-list preferred on Southwest. You know, I get it. But what Southwest did for its A-list preferred was create a new boarding group.

25:37So, you know, the screen says ALP, A-list preferred, they board first. There's also a fair amount of boarding that goes on between wheelchair people, military, active duty military get to board first. There's a pre-boarding group. The point of all this is that the whole process has slowed down a bit. So Southwest is still working out boarding in the new assigned seating world. I think they think the second half of the year is going to be better. American, I wouldn't be popping the champagne corks just yet because I looked at cancellation rates as well. Right. And to me, American was shocking on this.

26:29So far this year, American has canceled more than three percent of its flights. Now, American's going to say that, you know, weather has a lot to do with that and all the industry average is close to two percent. And two percent was always the standard I had heard. The airline shouldn't be canceling. I think of a one percent. Honestly, Scott. Yeah. Yeah. No, absolutely. But, you know, the industry kind of averaged 2%. Anyway, American at 3%, I think that's a problem. Southwest, interestingly, is around 1%, right? And so even though they have an on-time issue, they're still completing flights. And I think that's in many ways more important to customers.

27:13Get me where I'm going. Just don't cancel on me. JetBlue also has a high cancellation rate. 3.7 percent jet blue is usually low in cancellations that is astounding yeah because seven months it particularly jet jet blue always sort of operated with the philosophy of we're going to get you there it's just you know we know we're going to be late going into kennedy right but we're going to do what we can to not cancel that flight delta's cancellation rate also interesting above average this year uh for delta traditionally delta operates at ridiculously low cancellation rate so a change there there's been a lot of change in operations management at at delta so something to watch and we talked about it a bit before i i'm gonna you know watch it closely for for the industry the number of flights canceled is up 44 percent uh and remember ground delay minutes are down.

28:12So I'm not sure you can blame weather for that, but you probably can blame congestion, right? We saw an increase in volume numbers, the concentration of flights at big hub airports. Certainly, you know, Chicago has been an issue there, but Dallas is much bigger, even though they've spread the banks out in Dallas. America's concentrated a lot there. You know, Delta in Atlanta, how airlines are dealing with irregular operations these days. Some of the new tools they have for recovery, I think, do favor canceling so that you get airplanes, you have airplanes in the right place for recovery the next day.

28:58And that may be part of what's going on here. So you have a lot of experience in this. You ran United's hub at Chicago O 'Hare. You fly almost every week. What do you think is going on? Well, Scott, yeah, there is a lot going on. I wish I had access to more data and to do a deep dive on all of this. In fact, as you were talking, I was reflecting back on Professor Doug Parker speaking about flight profitability as an example. And we can actually do the same thing. Listen, I think you mentioned the time, and for four years I was the general manager, VP for United at O 'Hare. And I remember very distinctly you can get lost in the macro numbers.

29:46And so our message was we want to win in both on-timer rate and cancellation rate in O 'Hare. So we'd look at our competitor across the hall at American, and we could be in the worst weather event ever. But if we were a few percentage points better than American, we'd call that a victory. You know, we would watch in real time and manage our operation in that sense because we wanted to win. It's a competitive business in that sense. And so that's sort of my first reaction. And I know airlines will do this. They will compare themselves in the New York, you know, airspace and, you know, and how is United doing in Newark relative to JetBlue and Delta in JFK, for example, and those sorts of things.

30:27I would also love all or most of the airlines tag each delay with a delay code and attribute it to a reason. And it would be very interesting to sort of look at those delay codes and see on the airline reporting side internally what's driving these things. But there are so many levers that can be pulled here, Scott. And this is not even going to be comprehensive. We talk a lot about block time and airlines can pad the flight schedules, adding more minutes to be more on time. We don't talk about this as much, but airlines plan the ground time. How long is an airplane planned to be on the ground for the turn in the hub?

31:05And there'll be standards, and an airline will have a minimum turn time, a minimum service time. And what percentage of their flights are they planning at that minimum time? Because you can't have them all at the minimum. Within crew scheduling, there's all kinds of opportunities here. And it occurs to me as wage rates are increasing, there's a pressure, maybe a tendency by the airlines to get better, higher utilization, not only out of the airplanes, but out of the crew. And then they put some pressure. And so all of a sudden now they may not have an hour of legal time to extend because they've been pushed in their planned schedule because the airline wants – it's just a precious time resource and a dollar resource.

31:48You can look at what are known as MCTs, minimum connecting times for both passengers as well as connecting crew, you know, have times. And so airlines can create buffers and plan for crew to have maybe an hour in the hub or two hours or maybe as short as 30 minutes to sprint to the next plane. There are plans around taxi times out and in. Hub airlines think about and model the number of spare gates they hold back in a schedule. If you've got, as we had when I was at O 'Hare, 88 gates, I would fight with a network planning team to keep three or four unscheduled because there would always be a maintenance delay or some reason, have a couple of extra gates available, and we would always use them.

32:30Hub airlines will have reserve crews, pilots who are on call and scheduled and in the hub, along with flight attendants as well, to pick up trips. Right, and that would be a great issue to look at Because those pilots got expensive, right? More expensive. And so are you trying to operate with lower reserve levels? And that's why you have to cancel more flights. I'm absolutely right. And then just a couple of other things come to mind. Airlines plan maintenance touch time, just literally the number of hours in a day and a week that each aircraft gets where the technicians can get to the airplane and fix anything that's broken.

33:08And airlines have planned spare aircraft to pick up if something breaks unexpectedly. And then you and I spoke with Dave Seymour, the COO at American Airlines, a few months ago, and he highlighted then that they were shifting from nine banks at Dallas-Fort Worth to 13 this summer, which was meant to make them more resilient. And I, you know, it feels like a mixed bag from their results. You didn't report out on DFW specific numbers, but overall American is slightly up and on time, but worse in completion. And I've been hearing anecdotally that the performance is better is improved in Dallas as a result of those banking changes.

33:47But, again, we could break down every one of those things that I identified and sort of, you know, what is sort of the push and pull. And there's a cost. I mean, all of these things are really buffers and investments, if you will, that the airlines make to strike the right balance and have a good, clean, on-time operation. Yeah, yeah. All right. Well, let's plan on a class. Listeners, let us know if we should do a class. All right. I'd say right now, let's bring in our guest from from here to talk about people movers. British born Dr. Jeremy Stone is founder, CEO and chairman of Aero Group. He has spent more than 30 years in aviation strategy, operations and finance.

34:30He wears many titles, physician, pilot, astronaut selectee, venture capitalist, aviation structured finance bank owner, competitive strategy expert, AOC owner operator and aircraft lease company owner. For more than 25 years, he's been chairman of High Bank Capital, a family office advisory and investment group. Jeremy, it is a delight to have you with us on Airlines Confidential. Thank you, Scott. It's nice to be here. And Charles, it's always good to see you. Likewise, Jeremy. It's great to have you on. We've been talking about this for a long time, and it's great to sort of introduce your concept to our listener audience.

35:11We always start with what we affectionately call the Baldanza question, a name for Ben Baldanza, who was CEO of Spirit Airlines and a long airline career before that and co-founder of the podcast. And Ben taught me that this was always a great opening question because people have really interesting stories about how they got into the business of aviation. So how did you get into this crazy business? Well, I think my story is probably one of the more eclectic ones. I come from a family that's half aviation and half health care. I had uncles who were pilots. One of my very close uncles was an avionics engineer, worked on Concorde, worked on missile systems, and then made a pivot into aircraft seating.

35:57So as a kid, I would go with him to the shows. I would sit on flight lines. I was looking back through my late mother's collection of things some years ago, and I found a book I wrote when I was about five all about airplanes. I think I'd even managed to spell aileron correctly. It's in my book. Not as you didn't know. I just always loved it. I can't really explain the passion, but it's a passion alongside medicine that's really sustained and enthused me all my life. Very cool. And just just knowing your background and the number of different ventures that many of which have an aviation bent or theme, it all makes sense for sure there, Jeremy.

36:36I think, you know, the common there are common threads. I'd like to think in what I try to do and where I've worked. So as a physician, you get taught and trained to form a diagnosis. You look for data, you form an opinion. And my research as a physician in aviation medicine was about flow, about friction, about velocity, about rigidity in arterial trees, in venous trees, what that meant in health and disease applied to patients and also applied to astronauts and applied to fast jet pilots. And maybe this is a little bit of a tenuous link, but I think in what I try to do now and have done is trying the same.

37:15It's let's find a diagnosis, but let's look where there is problem with flow or friction or velocity and rigidity. And from that, see whether maybe treatment. That's fascinating. I'm reminded of one of my favorite Gordon Bethune expressions, which was the sickest patients need the best doctors. Yes. Which is a great way of describing aviation often. Yeah, I'm afraid so. That's right. Jeremy, tell us about your company, Aero Group, and what your vision for the company, for the business is. Well, what we've tried to do is to look at what we see as the genius of Iro Saarinen, whom worked in the late 50s and early 60s, died very early, but left an astonishing legacy.

38:06And what Iro did was to look at this problem of flow, to look at the problem of velocity, is how did you make design focused around humans? in particular and he's most famous for his airport terminals at dallas and twa and they're very different terminals but we believe certainly my lifelong love of sauron was because these were inspiring buildings they created an excitement in the glamour era of travel but without falling into what i would say now is one of the problems which is building more and more and making the experience less human. At the same time, it's making the experience more expensive and less flexible.

38:50I go back to my flow and flexibility analogy. So what we have done is start with a diagnosis. Let's look at problems. Let's look at where maybe opportunities to reduce friction, improve flow, increase velocity, but in a way that doesn't discount the human dimension, whether that's an able-bodied or a disabled passenger, and engineer solutions for that. Saarinen's genius, which of course is very provocative, was not only the head house at Dulles, but also the mobile lounges, which given the week's events I know we're going to talk about later, have become incredibly evocative and also incredibly annoying to many people.

39:33So we've we've really centered around that. And Eero has thought about how could we carry forward Saarinen's vision and genius, but with technology and need of the modern era. Is it Sarian? Eero Saarinen. And Saarinen was the son of a great architect, Eliel Saarinen. His father was a prolific architect. They moved from Finland to America. Saarinen's career was incredibly short. He died at the age of 51. Interestingly, after a flight from an airport where I've just visited to talk about what we're doing, St. Louis, on his way back to his home in Michigan. And his work was then carried on by his partners, Dinkloo and Roche.

40:18But the legacy is astonishing outside of aviation as well. If any of you are fans of the TV series Severance, the building in which that is set is a Saarland building, the old Bell headquarters. And more and more you look and you see this incredible relevance and this incredible history, even in now the new OGT terminal being planned at O 'Hare, in which Gene Gang and the architectural firm I was with yesterday, SCB, give credence to Sauron's inspiration. So let's talk about that inspiration more for Dulles. Has it held up over time? And let's talk about the people movers specifically, because I think the idea there was convenience and make the trip faster and reduce walks, right, that people would have through airports.

41:11And now we see walks getting longer and longer. But what's your view of how Saarinen's vision held up over time? I think it's held up in part. I am a fan and therefore my views are probably not completely objective. But the head house is still to me a magnificent, magnificent piece of architecture. It's inspiring, uplifting. It's light, it's airy. And yet it has that mood, the oeuvre of the mid-century. Does it function well now? No. It was built in an era when Saarinen designed this so you could walk from your car in your trilby and trench coat 200 feet direct to the airplane. That was his goal.

41:51Instead, now Dulles has the third longest walks in the United States. So in terms of the Saarinen system, which was the combination of the head house and the mobile lounges, no. By any absolute test, the system does not work. It's not fulfilled the promise. And I think there are a whole raft of functions and reasons why there were 50 million people traveling when Dulles opened in 1962. And now there's 850 million continuing to grow. No airport can sustain that level of growth without development. And I think the other key point about the mobile lounges is that was the technology of the era. in the same way that you probably wouldn't choose to drive a 1962 Ford today as an economical, safe, reliable, pleasant day to drive.

42:41Why should those vehicles do the same? And I think there's the challenge is that we see what we see. What Saarinen, if he were designing today, would do, I think might have a lot of the similar components, but he'd have the benefit of today's modern reliable chassis, electric vehicles, advanced driver assistance systems, huge amounts of sensor in safety, low cost and a capacity to take away a lot of the things that I love and hate about the current mobile lounges. Well, let's dig into that a little bit deeper, Jeremy. You know, it's funny, as you know, I live in the state of Virginia. And so the Dulles Airport is the closest hub to my home.

43:25And I'm in and out of the airport a lot. And I agree with you that the hen house, the architecture is still now, gosh, what, 60 years on, still very inspiring and beautiful. But I can tell you, too, I don't think there is well, I can't think of anything more polarizing than the people movers at Dulles. And whether it's travelers themselves or just avgeeks, you know, among our listeners in the podcast, you either love them or you hate them. And I don't think I've ever found someone who is sort of neutral. You know, there's sort of no middle ground one way or the other. And I would also my observation has been that the haters seem to outnumber the fans, the supporters of the mobile lounges by a pretty significant margin.

44:19I mean, just just my own informal sort of observation. So what makes you think that there's a market for this? I understand the technology has changed and improved and so on over time from 1962. But tell us more about why you think airports and the market need people movers. I agree with the polarization. I probably sit in the middle because it balances out my extreme love and hate. I do love them. I've traveled on them for 30 years and they always give me a slight but wry smile when I board one. If it's off an international flight, then I'm not so happy. But remember that they don't fulfill the purpose for which they were principally designed.

45:02They were principally designed to be able to go from and to the airplane. There is a wonderful 1958 film made by Saarinen and by Charles Eames called The Expanded Airport. And if folks have seen that, I would recommend because it is a beautiful snapshot of a different era. And it explains very elegantly why and how the Saarinen system was designed. and arguably why now it doesn't work. But its goals and ambitions were elegant. Why do I think now that there's the need? Well, we identify the demand for 44 ,000 of the Euronexus vehicles around the world over the next few decades. And the reason for that is various.

45:49Some of it is about cost per emplanement. Some of it is about pouring concrete. Some of it's about emissions. Some of it's about turn time efficiency. Some of it's about the quality of the service you offer for able-bodied and disabled passengers. And some of it's about the entrance markets, the emerging world where we've identified 310 airports to be built over the next 20 years. And the cost of building as it's accelerated means some of those airports will not get built, which means some of those airplanes won't fly and people won't get the chance to travel. What we've seen and we can model in quite some detail is the capacity to drive down cost per employment, whether that's at an established airport, but especially at a green field, because there's a green field, places like Africa, Middle East, in Asia, you see a phenomena potential similar to that that you saw in Africa with mobile phones that you can skip go into expensive copper and go straight to sell and here's the same opportunity is build what Saarinen foresaw this tight small compact high retail footfall environment and then take people from that to and from the plane and remember that he also foresaw and this is where the operational benefits get so interesting, the capacity to board and unboard at multiple doors.

47:21Now, Saarinen built in a time when it was very genteel. You walked or got on the lounge to the tarmac. It was 80 people. You were served roast beef from a lovely silver platter. That doesn't sound like aviation to me now, sadly. It's very different. And the pressure to turn and burn aeroplanes means that time on the ground is money wasted. That's where we think the opportunity is. And if you're, let's say, Indigo, biggest backlog of new deliveries, what does Indigo want? Indigo wants to be able to get its people at the lowest cost into the air as quickly as possible, turn the airplane and repeat.

48:00The European low-cost carriers, Ryanair is a great example, is averaging a 25-minute turn time on a 737-800, even on the 737 MAX. How do they do that? Well, they board front and back, they turn quickly, but they use buses and stairs. And with all of that, the negatives that come with it. So yes, we see huge demand. I think that's reflected as well in the very many conversations that we're having well into the 20 airports and many airlines to whom we're speaking, who are asking the question, why are we paying for higher and higher CPEs? and we're not seeing the benefits. So this capital crunch, and going back to my introduction about velocity and friction, more money, more spending on concrete is showing all the evidence of actually reducing the efficiency and making the experience worse.

48:58So that's the, I think, is why we're at a crunch time in the industry. All markets reach this point, all reach a point where you spend more and you get less. And I think that's the point at which we've now reached. So take a moment to describe the vehicle for listeners. And what would it replace? It would negate the need for trains to concourses and things like that? Yeah. Look, you know the old expression, you've seen one airport, you've seen one airport. There's no absolute read across here. And what we've tried to design, and we've had four years in stealth of doing this with input from a vast range of airport, airline, con ops, irops experts, is creating this tool that increases your optionality and your flexibility.

49:49And that's flexibility of design. Can you create very small compact terminals or satellites? Can you get rid of expensive trains up the road from us in Denver? We know all the problems that the new train system is causing necessitating you to have to build tunnels. That's odd. We shouldn't have a new train that's causing network ripple effects. And the opportunity here is to look at things differently. This is not a silver bullet. It doesn't solve all problems. And there are certainly, we think, many, many stronger positive externalities than there are negative of externalities, but it gives the many architects with whom we're working, the airlines and the airports, a way to say, actually, could we do things differently?

50:37Can we think a little differently rather than just assuming that building more will deliver more? Because it wasn't. So the vehicle is fully electric. It will be driven in its early variations, but it's fly-by-wire. we're working with some really interesting highly experienced manufacturing partners who specialize in moving people and very expensive or delicate materials like radioactive wakes or rockets that cannot be damaged they have to be moved very very carefully you have to have speed variation you have to be able to tank turn and crab crawl raise the cabin from the ground level so people can access it, if it's a bus gate or if they're in a wheelchair, right up to a wide body or anything in between, and of course adjust as the plane loads and unloads.

51:31And if people want to see it in action, there is a simple website which is at aero.nexus forward slash direct. That'll show some images there, what we're releasing at the moment, not the final engineering drawings, But we'll give a flavor of what the art of the possible is and also show the work that's been done to accelerate turn time. And as we know from an airline side, getting the airplane back up in the air is vastly important. Thank you for that, Jeremy. I would definitely encourage listeners. It's hard. You know, the audio did a great job describing the vehicle. but encourage folks to go to the website and take a look if you're interested at the images, because it is very, very different from the mobile lounges that we know and either love or hate today.

52:21But it certainly is a very different look and feel and experience coming in. And the design is very much to be the opposite of everything that the current mobile lounges represent. There's no strap hanging. Everybody's seated, up to 100 people. we're working with some very interesting we'll be revealing them shortly interior designers to create something that is this fantastic surprise and delight i i i want to get onto a vehicle like this and i want to be reanimated about the joy and the glamour of travel i don't want to get onto a bus and have to strap hang and be hit face to face by somebody crowded on or have somebody driving it who came out of the tank core it should be smooth it should be beautiful And all of that is possible with today's technology and with the materials that we're using.

53:12So why should it not be that this is a wonderful experience? It's all possible. It's all possible because the materials and the technology of today make that possible. Whether, again, you are a family with kids, whether you are elderly, whether you're in a wheelchair, or whether you're able-bodied. This is about creating an egalitarian, enjoyable experience with plenty of surprise and delight. And we expect, we certainly hope, that Instagram pages will be full of pictures of these vehicles. We were talking, I'll give you a little strange analogy. I was talking with our design group on Monday, and we're talking about the use of sound in this vehicle.

53:55How do you create something that does have a sort of Jetsons or Star Trek-y feel to it? Why not? Why not introduce a little bit of whimsy? We're talking to a fantastic company based in Philadelphia who make Solari boards, the split flat boards. I love split flat boards. I think they're fantastically evocative, but they're also a call to action. I love the noise. I love the experience and the opportunity then to create branding and customization that supports the particular airlines for whom we might be servicing that flight. Let's bring back some of that whimsy that I'm afraid has been rather lost, rather sterilized now in airports.

54:36Tell me what split flat boards are. So the Solari board, Solari Odini, the big Italian company who used to make these fantastic, massive split flat boards, the TWA terminal in JFK, the Saarinen Jet Center. You know, that beautiful hood-like structure.

54:59I've actually got one and Vienna comes up. In fact, you still see in the TWA hotel and JFK, they still have that. That's exactly. I'm going to give you, hang on a second, guys. I'm going to give you the sound effects as we're on audio. Wait for it.

55:22There it is. I love it. There we go. Love it. OK. So I want to take a step back. It's it's it's such a well, you know, an irony or pure coincidence. But keen listeners to the program will be aware that the president last week had a big announcement in the Oval Office attended by many dignitaries to unveil a new plan for Dulles Airport. And you and I have been talking about coming on the podcast for many, many weeks. This was scheduled long before the president's announcement. But, you know, I believe the president had some bad things to say about the people movers. And this new$22 billion plan for Dulles appears to be planned with conventional trains and an underground walkway connecting the concourses.

56:14So given the sort of late breaking news or what's being planned now for Dulles, how do your new people movers fit into that plan or not? Or how are you adapting or reacting to that? I would really welcome the president's attention to Dulles because it needs work. And the president launched this on December 2nd of last year after one of the many accidents with the old vehicles. So we welcome that. And we think that there's a bold and much needed initiative to shine a spotlight on the state of Dulles and its need for growth and enhancement. I think we wait to see what the results are. There is a lot of discussion, a lot of debate.

57:01And I think I go back to where I started as we began to speak about cost per employment. I know, Charles, you wrote about this some weeks ago, asking about how plans would translate into a CPE. Yes. And CPE is one of the great benchmarks, the bellwethers for success or failure of an airport and the airlines it serves. Lower CPEs generally drive demand. Higher CPEs do not. And the problem that I haven't yet seen answered is how do the Dulles plans create this flexibility, this experience, but they do it with a CPE that not only draws in the volume you need to pay for these expensive projects, but also creates a avoidance of a capital trap because somebody pays.

57:52Now, it may well be guaranteed by the Metropolitan Washington Airport Authority, by the states it serves. Ultimately, that flows back to passengers and passengers have to pay. But we're in an environment where raising vast amounts of money and the current cost of capital is challenging. in. So I think my question is that very much the jury is out, that we look forward to seeing how this develops, how the old lounges undoubtedly need to go and celebrate Secretary Duffy and President Trump's overt statements, because they have to go. Beautiful things. We actually have some fun ideas of what you could do with them.

58:38But the need is to certainly improve. We would say improve with a CPE that's tolerable to airlines, tolerable to the bond markets, tolerable to passengers. And if you can resolve that, then we look forward to seeing the results. That's so fascinating. We've talked a lot about CPE on the podcast and just a big problem for, Or, you know, all the airport rebuilding has been necessary. But you see airports like LeGuardia where CP is going up so much. Airlines are reducing service because you just can't afford to fly particularly leisure passengers in and out of there. And, you know, a place like New York, the big airlines are going to have to serve.

59:25But it becomes sort of a loss leader because you've got to serve it for business travelers. But that all affects air service. There are always oddities. So people will always want to fly into New York. People will always want to fly into Heathrow, two of the airports that are facing some of the most crushing potential rises in CPE. we were in Chicago yesterday Chicago has the planned new terminal and it involves roughly a 12 billion spend well maybe it's 12 billion maybe it'll be more it adds about 15 percent more gates that's that's art that feels to me like it's a very expensive addition during the construction period of which the major tenant there, we estimate, will lose 39 gates.

1:00:17And that's where we see this vehicle has potential, because as an interim solution, it gives you that flexibility to manage transition. And we're having discussions all around the world with airports who are going, how do we manage through growth when we have to knock old buildings down? Chicago, again, another example, it has a lot of de-icing pads. It has a lot of parking spots. At the moment, for 90 % of the year, they stand vacant. But this vehicle allows you to open those up immediately as gates. So if you bring the jet bridge and terminal experience to an existing flat bit of terminal that you're paying for already, whilst you manage growth, then you've added this optionality and flexibility.

1:01:04Again, we're just a tool to people who really know what they're doing in designing airports. We don't come with all the solutions, but we say to you, look, these are the problems that we see you're facing. We can benchmark the costs, the problems with velocity, the expense in the bond markets. Think about this as a way to expand the range of possibilities, not just the end game, not just your CPE, but how you manage through periods of interim change. one of the airports we're talking to and i think is looking like they will go forward is a future olympics airport and there that they will have burst capacity well these vehicles can be because they're mobile they can be put in to incite you and they can be removed and our business model which is to install them at large airports at no or low cost they in some airports actually become a revenue contributor through the concession income, give you the opportunity to say, well, you need this vehicle for six months because you have the Olympics, you have a major event, you have a particular IROPS problem.

1:02:10How do we solve through IROPS? That's the flexibility. One of the airlines we're speaking to, in fact, they grasp on two things particularly. One was IROPS, irregular operations and all the cascades that flow out of that. How do you get people off an airplane. So you don't burn crew time. You don't get people stuck and missing connections. Secondly was around this question about flexibility and then CIP and VIP service. We've designed this so the cabin is open. It's a beautiful cabin. It can either be 100 seated people or it could be 20 people in a palace on wheels. And the capacity to take that through the variable docking geometry to the front right-hand door even.

1:02:59So imagine you come direct from a CIP lounge to that front door. It's a very different experience to that you get in almost any airport at the moment, even places in the Middle East where you have magnificent lounges, but you often then either have to co-mix or get on a little bus to get to the front of an airplane up the external stairs. Again, flexibility and optionality. Totally fascinating. And I don't know if this was the the Olympics host airport you were thinking, but I could certainly see these running around LAX and making a major improvement there. LA is an interesting one. And I'm restricted a lot by what I can say on various airports, as you'll understand.

1:03:45I mean, the fun thing for LA, I flew into LA the other day. We were about 200 miles out. And suddenly, the airplane starts making S turns. So I go, I know what's happening here. We're at 37 ,000 feet. We can't really slow down. So how do we build time into the block time? We do some S curves. Why do we S turns? Because there's a problem on the ground. And there's almost always a problem at LAX. LAX's problem, like many airports, is not runway capacity. It's ground capacity. It's this flexibility, velocity, flow problem. And sure enough, we landed and then we sat for about 20 minutes and there was a lady sitting next to me who, classic ripple effect of these delays, she was getting more and more anxious and saying, well, I've got to get on a flight to Sydney.

1:04:35And it's not just the Sydney flight. It's when I land in Sydney that then I have to get on a flight that only runs every three days out to a Pacific island. I don't know if she made that flight. This is the ripple effects that come out of these very, very complex systems. And I love L.A. We've got some fun plans for L.A. Probably won't happen for the Olympics. But the capacity to change that airport and make it more flexible, remove some of these ripple effects and build it a lot more cheaply is all within grasp. So tell us where your business is from an entrepreneur's perspective. I presume you're fundraising now.

1:05:20Now, I'm curious about it with all the potential, all the discussions you're having, curious whether this is going to sort of take one airport to take a risk, pull the trigger, and then others can see it actually happening. But maybe everybody's nervous about being the first. How is the business development going? It's going great at the moment. It's really, really exciting. And we'll be able to reveal more. I think if we were having this call in about a month's time, then I could open the kimono a lot more. But it's at a very exciting stage. And you're right about that adoption curve. So I describe this as being like a meerkat market, those fascinating animals that all huddle together and stand on their back legs.

1:06:05When one of the meerkat bolts, then everybody bolts. The other way of looking at it, and my colleagues are probably sick of me saying that there are three phases to innovation. And phase one is you're mad. Phase two is, well, maybe. And the third phase is I thought of that. And we're at phase two to phase three with quite a lot of airports and airlines. So, yeah, I think this is a difficult, it's a difficult canyon to cross because it is so contrarian to what's been assumed to be best practice for so long. And it's not to say that contact gates will disappear. They won't. Of course, there's massive value to contact gates in some environments.

1:06:53But the ability to supplement and the ability to enhance is where we come in. And sure, for Greenfield, that's the biggest opportunity. So, yeah, our market is predominantly not in the Americas. Our market is outside of that where a lot of new build and Greenfield presents itself and cost is a sensitivity. In terms of fundraising, business like this, you're always fundraising. But what is pleasing because of our business model and because, and I refer back to my old airport aircraft leasing days, this is a very aircraft leasing type model. That it has a long asset life. It has a quantifiable consumer and income stream.

1:07:36And that makes it easy to finance without having to keep raising money. The discussions we're having are exactly along those lines. And whilst I can't today tell you about them, I can say that the momentum and the investor base that we've built and are building is really strong. Really, really interesting. You know, Jeremy, maybe we'll have to take you up on that and have you back when you have some more news report. And I'm sure our listeners will be following this. It really is a fascinating journey you're on and sort of mind bending, you know, when you sort of think about, you know, Aero Saarinen's original vision and so forth.

1:08:14And, yeah, anyway, just wish you, you know, all the luck in the world. And you've got certainly a big challenge ahead of yourself. I mean, I think about the airports, the airlines, and even, you know, consumer perception, you know, around hard stands and how this can potentially be better and superior. But, you know, changing perceptions around all that. It's just really a very fascinating discussion. And so thanks for sharing it with us. Well, thank you very much. It's a great pleasure. It's always fun to talk about this and to be able to explore the possibility. And the fun thing about it is that you never stop learning that even in discussions that I had yesterday with an architectural group, invited new comments and questions.

1:08:57That's the nature of this industry and how and why it's so very fascinating. him. Yes. Good luck with it all, Jeremy. Thank you so much. Thank you, gentlemen. And we will be right back with more on Airlines Confidential. Promotional support provided by the ultimate avgeek website, the archive.net, a vast collection of airline memorabilia, timetables, route maps, rare cabin and airport photos, special flights, and more all at the archive.net, the hub of air transport history. Thanks again to Jeremy. me. Before we get to the mailbag, I want to thank Ontario International Airport for its support of Airlines Confidential.

1:09:35ONT just launched the ONT Bold program, a proposed vision to transform the airport's facilities to streamline the passenger journey while also creating jobs, growing the regional economy, and building on ONT's legacy as a global gateway. The program includes plans for a new terminal, a multi-story parking garage, upgrades to existing terminals, enhanced roadways, and new utilities. No word on whether plans will include Jeremy's people movers, but we'll see. The ONT BOLD program is early in the planning phase. Visit flyontario.com slash BOLD, B-O-L-D, to learn more and join the journey to ONT's boldest chapter yet.

1:10:20And thanks as well to the Executive MBA in Aviation at the University of Colorado Denver for its support of Airlines Confidential. You know, Charles, I met recently with Marcy Armstrong, an acclaimed marketing professor at Southern Methodist University in Dallas, who will teach marketing in the CU Denver program. And I think I was very excited. Marcy's been a consultant to many big airlines on their biggest projects and challenges. Her course sounds fantastic and learning in a real hands-on way, students are in for a real treat. Love that. The Executive MBA in Aviation at CU Denver is the first degree of its kind in the world, taught by industry experts like Marcy, like you, Charles.

1:11:06And like you, Scott. And designed for ambitious leaders from across the aviation ecosystem. With classes located at Denver International Airport and week-long residencies in Washington, D.C. and at airports around the world, students experience a hybrid, flexible course structure that balances in-person and online classes without career interruption. Go to business.ucdenver.edu to learn more. We also want to thank longtime sponsor RTX. At RTX, a century of aerospace and defense innovation shapes a unique perspective. It takes more than technology alone to rapidly advance the future of flight and strengthen global security.

1:11:50It takes the vision to see what's next, adapting expertise and scaling manufacturing capability to deliver where and when it matters most. Perspective is everything. RTX. Visit rtx.com to learn more. All right. great uh charles in the mailbag a question from a listener that i think you are well suited to answer because of your o 'hare experience bring it on uh all right alex from chicago says there's been a lot of hoopla around gate constraints at o 'hare it's led united and american to fill the schedule with flights that don't seem commercially viable an faa order capping the airport's daily operations, a lawsuit from American against the city, and so on.

1:12:38I'm wondering if you can explain why this is such a hard constraint. As I understand, this is Alex, what's at stake here is how much linear footage each airline gets. My question is about why we can't create more gates per foot of terminal wall. Just a few ideas. Longer jet bridges so the same frontage serves aircraft parked deeper on the ramp. Dulles has United Express wing on the lower concourse level of concourse A, where a handful of gate positions handle a whole bank of regional jets. And Houston has done a similar thing in Terminal B. Could O 'Hare do that somewhere? And three, what about hard stands?

1:13:21Boy, Jeremy is going to love to hear this. What about hard stands? Though I understand they're generally complicated in the U.S. and more so in a Chicago winter. At the risk of sounding naive, if the airlines and airports spend half the time they have fighting each other on this, couldn't we find a way to get more creative gates at O 'Hare? Good question. I love it. Alex, thank you for the question and Scott for posing it. And it's not naive at all. So firstly, let me just say, yes, the airlines are fighting each other competitively there. But I can assure you, And even in my four years with responsibility at O 'Hare, I spent a lot of time on this issue then.

1:14:04And I know it's only gotten more acute since. So linear feet, I know no other airport does it, but it does make sense to me. And maybe I'll just try to kind of unpack it, you know, a little bit, you know, here for you, Alex. So, I mean, ultimately, you know, you've got the terminal space. You can't expand the size of the terminal, at least, you know, in the short term. You could knock a terminal down or build a new one. And look, when I was running O 'Hare for United, we had 88 gates in total and across however many linear feet. But that was all of Terminal 1, the B and C concourses, as well as most of Terminal 2, the E and F concourses at that point in time.

1:14:43Of those 88 gates, I'll never forget this, six of them could only accommodate a CRJ200. and in fact if we wanted to take those same six gates and also include the ERJ-145, which listeners probably know both of those are 50-seat aircraft and the network team would schedule them the same, we could only fit four aircraft in that space because the E-145 is longer and the CRJ is much shorter and we could cram more CRJs into the same space. And so we wanted the 88 gates, but it put a lot of constraints on us to maximize the gate total. Another challenge that's been coming out, think about the terminal hasn't been expanded.

1:15:24It was built decades ago, but each new generation of aircraft typically has a wider wingspan than the aircraft it has replaced. I'll give you two examples that I've come across in my time. The E-175, the Embraer 175, with roughly 70 seats with the 45-degree angle winglets on the end, takes the same gate footprint as an A319. with about 50 more seats, right? Yeah. And a similar example came about in my time when the 787-8, you know, came about. It has the same wingspan as a 777-200 or 300 in D. Really? And so, again, there could be a 50 or 100 passenger, you know, seat passenger difference for the same envelope.

1:16:08And so we would go in and we even looked at the safe clearance. We had 12 feet of wingspan clearance from the end of the wingtip to the end of the gate area. So you'd have 24 feet between any two wingtips. And we even reviewed with our safety team, could we shrink that down anymore? And we weren't comfortable doing that for safety reasons. And so ultimately, Alex, I mean, you know, the way to get more flight activity and more growth is to actually add more terminal feet, you know, and meaning more terminals. And there's a real tradeoff here between flexibility of gate use and gate count. I would guess that we could take the 88 gates at O 'Hare, could have, and made all gates at O 'Hare for United able to accommodate all aircraft types, meaning from the smallest RJ up to a big wide body.

1:17:03But we would have lost easily 30 gates going from 88 to maybe 58 in that process. And that's just not something that we would be able to take on and do. So and then the final point, you brought up a lot of great points. And I realize my answer has gotten very long winded here. But I do like the hard stand idea. And I think Jeremy Stone is on to something with O 'Hare and the de-icing pads. That does bring up some complexity around the taxiways and how those vehicles would get out to those remote pads, which are quite far from the terminal buildings. But there are a lot of ways to get after this.

1:17:37but gate constraints the gate real estate is so valuable it's so precious it's why the airlines are fighting over it uh you know so so um actively and uh and ultimately that that that is the uh constrained resources jeremy rightly pointed out in his discussion with us scott yeah and one of one of his suggestions about longer jet bridges i think that gets that gets complicated because you can't push airplanes into alleyways or in a taxi. You're exactly right, Scott. And the space is so tight at O 'Hare. I know this and you can actually look at it. You can see what they're called the zipper lines where the gate area, the ramp area then moves into the taxiway.

1:18:18And there just isn't the depth, the space to do that in general, certainly in the United area. And this is an airport that was called ORD, Orchard Field, back from the World War II era. And these terminals were laid out in a different era when the space wasn't as dear. And that's why the current project is underway. And in fact, in the near term, the airlines are losing gates as this construction is going on. So there's definitely some near-term pain to get more terminal space out at O 'Hare. But all great questions. Well thought out. But that's the reason for the feat is that ultimately the airlines can put as many gates, as many or as few, in that space.

1:19:00And I can assure you it's optimally laid out with lots of thought and adjustments made from time to time as schedules and aircraft types change. Yeah. Excellent question. Send us more. Love love getting mailbag questions. We get so many thoughtful, good questions from listeners. Let's work on that. Yes. Get to work, listeners. All right. That's all we have for this week. I will be back next week with our friend Jay Sorensen for a deep dive into ancillary revenue. Love it. And maybe Jay will even teach me how to pronounce the word correctly since I always stumble over ancillary. So we will figure all that out and more.

1:19:42Thank you so much, Charles. This has been fantastic having you here. Thanks for having me into your humble office, Scott, which is not so humble. It's been a lot of fun and I just want to wish all of our listeners a fantastic week. Thanks for listening and we'll catch up soon. This podcast is produced by Mass Media. Info at MassMedia.net.