The Trick to Flying Cheap ft. David Neeleman | What's Your Problem? | Jacob Goldstein

Summary

In this episode of 'What's Your Problem', host Jacob Goldstein interviews David Neeleman, founder of JetBlue and Breeze, discussing the challenges of reducing airfare costs using technology. Neeleman shares his journey from ticketless travel to leveraging apps for self-service to minimize call center needs. He emphasizes the importance of direct customer communication, efficient operations, and strategic route planning to offer cheaper flights. The conversation also touches on the broader industry issues like the pilot shortage and the potential for airlines to integrate more comprehensive travel packages.

Takeaways

• 📈 Airfares have increased significantly, driven by factors such as the price of oil, staff costs, leasing or purchasing planes, and customer acquisition.
• 💡 David Neeleman, founder of JetBlue and Azul, is focused on using technology to reduce the cost of air travel through his new airline, Breeze.
• 🎟️ Neeleman revolutionized the industry by introducing ticketless travel with Morris Air, eliminating the inconvenience of paper tickets.
• ✈️ Breeze aims to utilize technology for self-service through an app, reducing the need for call centers and associated costs.
• 📲 The Breeze app is designed to handle customer service inquiries in writing within 10 minutes, improving efficiency and reducing costs.
• 🛫 Breeze offers competitive first-class fares, sometimes for just $50 more than coach, making luxury travel more accessible.
• 🌐 Neeleman emphasizes the importance of direct communication with customers through their contact information, which is mandatory for booking with Breeze.
• 🔄 The airline industry has seen a pendulum swing from consolidation to a new opportunity for airlines like Breeze to fill gaps in service.
• 📉 The COVID-19 pandemic has impacted pilot training and caused a shortage, affecting the industry's ability to scale operations quickly.
• 🛂 The DOT provides valuable data on air travel patterns, which Breeze uses to identify underserved routes with potential for growth.
• 🏆 Neeleman's vision for Breeze includes integrating air travel with other trip components like hotels and car rentals for a seamless customer experience.

Q & A

What is the main challenge that David Neeleman is trying to address in the airline industry?

David Neeleman is trying to address the challenge of using technology to drive down the price of air travel, making it more affordable for consumers.

How did David Neeleman revolutionize the ticketing process in the early days of Morris Air?

David Neeleman revolutionized the ticketing process by introducing ticketless travel. Instead of paper tickets, which were like negotiable documents, he proposed giving passengers a confirmation number and using machines to quickly process these numbers, significantly improving efficiency and convenience.

What technological innovation is David Neeleman implementing in his new airline, Breeze, to reduce costs?

David Neeleman is implementing an app-based system for Breeze that allows passengers to self-manage most of their travel needs, such as flight changes and refunds. This reduces the need for a call center, which is more cost-effective due to its asynchronous nature and the ability to handle multiple queries simultaneously.

How does Breeze's approach to customer service differ from traditional call centers?

Breeze's approach to customer service involves an app that facilitates self-service for passengers, reducing the need for live calls. Passengers can text their issues, and the goal is to resolve any issue in less than 10 minutes, which is more efficient and less costly than maintaining a traditional call center.

What is the significance of Breeze requiring customers to provide their cell phone number or email for bookings?

Requiring customers to provide their cell phone number or email allows Breeze to communicate directly with customers about flight updates, disruptions, and personalized offers. This direct communication channel is a strategic move to enhance customer experience and provide targeted marketing.

How did David Neeleman's experience with JetBlue influence his approach to starting new airlines?

David Neeleman's experience with JetBlue, particularly the decision to offer live TV instead of meals, taught him the value of offering unique and unexpected services that can significantly enhance the passenger experience and brand perception, even for a discount airline.

What was the strategic reasoning behind JetBlue's first route from JFK to Fort Lauderdale?

The strategic reasoning was that JFK was an underutilized airport with less congestion and delays, and it served a large population from Queens, Brooklyn, and Long Island. The decision countered the Manhattan-centric bias and capitalized on the availability of slots and less competition.

How does Breeze's route strategy differ from traditional airline route strategies?

Breeze's route strategy focuses on flying non-stop between secondary markets and cities that do not have direct flights, aiming to significantly reduce ticket prices and increase convenience, thus stimulating demand and market size.

What is the potential impact of the current pilot shortage on the airline industry this summer?

The pilot shortage could lead to increased flight delays, cancellations, and overall disruptions in air travel. It may also force airlines to be more strategic with their route offerings and aircraft utilization.

What is David Neeleman's perspective on the future of airline business models?

David Neeleman believes that airlines should focus on integrating their services with other aspects of travel, such as hotels and car rentals, through automation and a la carte options. This approach could potentially increase profitability beyond just the airfare.

How does David Neeleman view the opportunity in the current airline industry?

David Neeleman sees an opportunity in the current industry due to the focus on hub connectivity and the pilot shortage affecting regional flights. This situation has created a gap in service for secondary markets, which Breeze aims to fill with non-stop flights at reduced prices.