Kevin May:
Good morning. Good evening, wherever you are. Welcome to another episode of how I got here. These are mosey on focus wise, weekly conversations where we get the backstory from entrepreneurs and innovators in travel, and transportation. We’re absolutely delighted this week to be joined by Ben Bell danza. Many of you will know him. But a quick biography for those who perhaps don’t, is a veteran airline executive, who is perhaps best known as the CEO of Spirit Airlines from 2005 to 2016. He began his long and checkered career in aviation, with American Airlines belief and works for Northwest

continental and Taka.

He’s credited with, I guess, say, turning spirits into what many call or is a so called ultra low cost airline. He now serves on the board of JetBlue and has many, many other interests in these more recent years. So it’s a very warm welcome Ben, thank you very much for joining us on how I got here for this episode.

Ben Baldanza:
Well, thank you, Kevin. It’s great to be with you.

Kevin May:
Okay, as always, regular listeners will know, we always like to start our podcast off with a very simple question. And that’s if you could tell us, Ben, how did you get here?

Ben Baldanza:
Well, great. Well, I grew up in a small town in upstate New York. And when I was very young, just 12 years old, so I got a paper route. And that’s when people read newspapers. Right and, and I delivered papers. It was no, it was a morning paper, the town I lived in, published an afternoon newspaper, but the town 15 miles away, published a morning paper and so everyone in the town got the evening paper, not everyone got the morning paper. So my route was geographically fairly large. And in many cases, I served, you know, just one or two houses on a block. And it was a morning baby. So it was a morning routine, so I’d be this before school. But in that job, that’s where I learned everything that I needed to learn about business, at least at that point in my life, because I think Essentially was a wholesaler who bought the debt, never thought about it those terms at the time, but I bought the papers wholesale from the newspaper company. And I sold them to my customers, I had a collect from them, and I sold them at retail. And I remember still the very first week I have this job is after I collected all the money, and I paid my bill, I had about $14 left. And it was just the greatest feeling in the world that that was my money that I had earned from something I had done. And it was that’s what turned me I guess into a capitalist that game in a sense. And also also in that job. I learned some ideas that help later on to the ideas of sort of average and marginal costs and things like that. I know that sounds crazy, but like I might deliver to two houses on a block, but I was riding my bike and I went by all these other houses. So after I got a little confident I would buy like five extra papers every week, and I would deliver the houses that didn’t subscribe, and I’d say I’m giving you this paper for a week. I hope you enjoy it. Let me know if you want to subscribe. And in that process over a couple of years, I’m more than quadrupled the subscriptions of the newspaper, but didn’t have to like ride my bike any further. Because I was now I just stopped at my house. So that’s all you want to know about paper ads, but fast forward, go to college, I get a degree in economics. I go to Princeton University, and got a degree in their public policy school, but really wanted to focus on transportation because I thought transportation just provided a really great complex set of things that included government and labor and big capital and networks and all kinds of things and got a job out of college at American Airlines. Like you said, that’s where I started. And that was back in 1986. The US airline industry was deregulated for pricing scheduling in 1978. And in the 1980s, American was a very innovative company to work with. They were led by a guy named Bob Crandall, who’s well known in the airline industry. And Bob Crandall was acquired. finance guy. So he had a big finance department. And that’s where I went to go work in and American didn’t make big decisions about anything about fleet about labor, about marketing about routes without having the finance department sort of doing analysis on that. So working in American Airlines was almost like postgraduate work in a sense, I got to work on a lot of great project that a company that was very was growing very fast moving ahead, very forward and was very innovative in that time in the 1980s. American developed things that are really commented like frequent flyer programs and hub and spoke networks and using computer systems for reservations and things like that. I then went on to work at a couple of different airlines and in each case, sort of followed someone I had worked with who moved and they hired me and in each case, whether Northwest or continental or Taka, in all cases, sort of expanding my my experience base, started in finance then moved into marketing, but really the more technical side of marketing like pricing and scheduling areas planes and things like that. And then at Taco was my first experience actually managing a p&l. Up to that point, I had been, you know, gotten to sort of a C suite kind of role at Continental Airlines and was the VP of Marketing, but still just was running the revenue side of the business. And at talk, I had to think about all the business I think about all the employees, I had to think about the cost side as well as the revenue. And even though it was a smaller company, it really sort of opened my eyes as to how fun that could be. I then spent six years at US Airways. And US Airways initially, was a company that was growing and was trying to establish how it would compete as the sixth largest airline in the US. But then after 911 and the effects of that the airline went into a bankruptcy process. And you learn a lot in bankruptcy for sure. And I went through the first process with US Airways, not proud to have worked for the company that necessarily to say proud that we went in bankruptcy. But you learn a lot in that process and you learn about what has to be done with that. And then, and then after emergence from the airlines first bankruptcy and went through bankruptcy twice, I got recruited to go to spirit and Spirit had been bought by a private equity group in 2003, called oak tree capital. And oak tree bought spirit on a relatively simple and with perfect hindsight, somewhat naive basis, which is if we bring new airplanes to this airline, and we bring some people who know how to manage an airline, maybe we can spin this relatively quickly JetBlue had gone public in 2002, when they were looking at that as a potential valuation and so on. So I went to spirit in 2005. And over the next 11 years, we we transformed the airline me and some of the team that I brought there and recruited there, transform the airline into what we we called an ultra low cost carrier. We we came up with that term because we didn’t want people to compare us with Southwest Fast everybody thought of as an LCC, or a low cost carrier and our first inspiration, you like this, Kevin was really Ryanair. And you’re, and we said, well, let’s look what Ryan’s doing, and how can we be more like them in terms and so to. To make all this happen, we came up with a, we had an epiphany one day where we said, we’re going to compete for customers on a different basis than all of our competitors. Most airlines compete for customers by saying, we’re going to, we’re going to make you more comfortable on board, or we’re going to get you to any place on the planet you want to fly, or we’re going to reward you with all kinds of points. You could take your family to a great place after you pay us a lot of money for your business travel, right or anything like that. And we said it’s spirit, you know, we’re too small to compete on that kind of basis. We’re never gonna have as many planes as American or a Delta or British Airways or something like that. We’re not going to have big planes to fly across the either ocean, or either the big oceans anyway.

Ben Baldanza:
And so we got to be different So we said, we’re just gonna be the lowest price. And we’re going to cater to customers who care about price as the reason they pick one airline or the other. And to do that, we said, we got to do a couple things. First of all, we got to forget about business travelers, because business travelers are going to care about the time of the schedule and sitting in a really nice seat, maybe waiting in a lounge or something like that. So he said, we won’t carry any business travelers. And we’ll, we’ll do everything we can to make our product really simple and get all the costs out to make our cost of production really low. And then we’ll also unbundle the tickets. And so we noticed at the time, for example, it only 70% of our customers check bags, and we said well, what about the 30% that don’t, why should they have to pay for the bag belts, and the and all the people that have to carry the bags in and out of the airplane and things like that? Why don’t we lower our ticket price and then only charge the people who want to check bags for the back. And starting that process. We started a whole series of things that created a whole new new series of revenues for the airlines that airlines how call ancillary revenue. At the time I joined spirit, our team, our average ticket price was about $105 on an average two hour flight to give you an example of what that price was. And we collected about $5 after the ticket from customers, usually for any maybe alcohol they bought on board. Or, or if in some cases, if they bought, you know, really heavy bags or check three or four bags, so there wasn’t much to charge for that. By the time I left spirit, our average ticket price was around $60. So it had dropped from 105 down to $60. But our collections after the ticket were at $55. So we were collecting a little more money in total, but but customers could pay a lot less if they would not carry bags and such and that whole process is spirit created a lot of consternation in the media. My favorite of those was in two 2010 when we announced we were going to charge for carry on bags, we were the first airline in the world to do that, that that resulted in a resounding media thud. There’s 100% of the media after that was negative, like this can’t be good for the world. And this is just terrible. And so we decided, well, we still think it’s a good idea. And we were thought knew it would improve our operations. We were gate checking a lot of bags, we kind of created our own problem in a way because we had charged for check bags, but didn’t charge for carry ons. So people brought a lot more on board. But we had a lot of seats on the plains and couldn’t fit all the bags in the overhead bin. So we said we’ll make an economic solution to that problem and charge for the carry on to by the time the process started a few months after we announced it, it actually ended up working really well and now customers understand that inside, but it took a lot in the media to sort of get people to understand why it might make sense. So um, so that if I haven’t worked at Taco a smaller company, if I hadn’t spent time in finance and marketing at bigger airlines before that I probably never would have been successful at spirit. also learning to work with great people and knowing who who can do jobs well and who can’t, that was really important in spirit. So there are a lot of things that came together in the spirit experience. And I’m really happy with where that company has, you know, what that company did and how that company has continued to grow even after I’ve left. Now I serve on the boards of a couple different companies, some airlines some non airline and trying to help them think how can they disrupt their industries? And how can they lower their costs and improve their revenues and some and that’s what my life is like today, and I really enjoy that.

Kevin May:
And we’re about 15,000 questions that we could probably ask you a lot along and maybe glittering but also very kind of varied career, all the different things that you’ve done it it’s difficult to know where to start. And, boy, I really will ask you because you will One of Bob krandalls, so called Brat Pack, right with Tom Horton and David Kirsch and Doug Parker, all who all went on to have distinguished careers as well. I mean, what’s the one thing that you learned from Bob Crandall that you’ve kind of taken on, perhaps in all the jobs that you’ve had since that time at American?

Ben Baldanza:
Well, in my first few months at American Airlines, I went to what was called a president’s conference, usually at the beginning of the year, Bob Crandall, would host conferences around the system and just give an update on the company and answer questions from employees. And I went to one of these in my first few months in the company. And after giving a presentation about the company, he was taking questions, and at one point, he points to someone in the front of the audience and said, everybody, this is Bob and I don’t know if that was his name or not, but he’s the general manager of our Oklahoma City station. Bob. Tell everyone here how much you spent on rats. Last month in Oklahoma City, and Bob like says something and he goes, I’m telling all of you station managers right now, if you want a station and you don’t know how much you spend on rags, you don’t know enough about your station. And as a as a kid, you know, 2022 23 years old out of college, or 24 years old, I guess at that point out of college, and hearing this very powerful speaker, this guy well known in the industry, talking about rags at a station is the level of detail you needed to understand to run an airport station. It really impressed me in terms of both how detail oriented the company was going to be and how much they wanted to really understand the business they were in. So I was working in the finance department, which was a terrific area to work in at that point. And the people you mentioned were there and a lot of others too, that have gone on. Some have stated American and some have gone on to run big airline and other travel kind of companies as well. And it was just a really excited environment where there were Smart people who were willing to work hard, willing to work long hours, and we’re excited about helping the company make good decisions around what fleet should fly, and what route should it fly and how should it structure its contracts and things. And in that process, I just got I got to build good financial models. I got to work with a lot of great people and talk about the way they thought would think about solving problems. And it really helped set my mind I guess, in a good business sense. They really helped me in everything I did after I left America. Now there are

Kevin May:
some airline bosses or bosses have many organizations that pride themselves on knowing everything about everything in the organization. And I wonder if if you are a detail kind of person in that way that you know a little bit about every single department rather than some CEOs or company bosses that hope that they surround themselves with enough people that know everything that they So enough for them, are you? Which which one of those do you fit into? The latter?

Ben Baldanza:
Well, I think the reality is I don’t think Bob Crandall knew what Oklahoma City spent on rags, but I think he expected but he expected that guy to know, right. And so the reality is as you as you get into bigger roles, and as you’re managing more people and bigger and more processes, it becomes impossible to sort of know everything going on. So you do. And you do have to hire people that you trust and such. But, you know, I have a 13 year old son right now, today, and, and one of the things I’ve told him since he was very young is that it’s not good enough just to be busy. You have to be busy doing the right things. So that idea of prioritization, I think is very important. I think it’s important in life, but it’s really important in business. So by the time you’re CEO of a company as I was at spirit, you know, there’s only 24 hours in the day so I had to make sure that I was spending my time on the things most Important to spirit and spirits, customers and employees and shareholders. And it was very easy to stay busy as a CEO. But I could be busy doing things that weren’t that important or doing things that were most value to the company. And that’s, that’s where I would spend a lot of my time is thinking about what’s the most important thing and making sure my people were working on the things that are most important for them to work.

Kevin May:
I’m assuming you’re you’re encouraging your son to start a paper around this around.

Ben Baldanza:
The 2020 version of that is, yeah, Jason.

David Litwak:
So Ben, yeah, first of all, thanks for joining us on our podcast here. I you mentioned that you you know we’re trying to imitate Ryan here and I feel like every American returned from the European backpack trip ask themselves you know, why? Why is there not a similar kind of service, you know, here and I know that obviously spirit has, you know, frontier and then Legion there’s been a, an attempt, but I think, you know, I’m curious, where do you feel like you are We’re able to give an equivalent kind of Ryanair experience, where did you fall short? And what are the what are what are the differences? And why don’t we have exactly the same sort of budget airline infrastructure that Europe has?

Ben Baldanza:
Well, you know, Ryanair, in addition to being the largest airline in Europe, in terms of they carry more people than anyone else. And being a very, you know, profitable company for a long time. They also built the reputation of being of not necessarily being the most customer friendly company in the world. And their CEO, Michael O’Leary is a who’s a very, very successful guy, you know, was has been quoted multiple times with things like saying like, what part of non refundable Did you not understand? And so, when we were in spirit, you know, we we had our own customer issues that we had to deal with. But we also had set up early for part customer proposition. We said, we’re going to be the lowest total price you’ll pay, we’re going to be clean, we’re going to be reliable, and we’re going to be friendly and we said if We can do those four things, we can win a lot of customers. Now, we’re not going to be flying high frequency between groups. So we’re not going to win a lot of business customers. And I can still charge you for anything you’re going to eat or drink on board, but still be clean, friendly and reliable. Right. And so anything that can help me be the lowest price, we said, that’s a good combination. Now, the reality is in my 11 years, it’s fair, we did some of those things better than others, we did the fare really well. We, we we did reliable, not as well as we should have been the company’s got better than that since I’ve left and they’ve focused more on that. But we’ve been pretty clean. And we had we were inconsistent on the friendliness, and we got better and better at that. And so I think it’s important for companies to have not just vision statements, but practical ideas of what are they trying to deliver to customers. And that idea of low price clean, friendly and reliable, sort of drove a lot of what we did, and we built metrics around those things, and we watch those things and again, some were done. Better than others. But I think that was important. And the copying Ryan was around copying the success. And really the unbundled nature of the product. We were really fascinated by the fact that another thing Michael O’Leary was saying regularly at that time was, at some point customers will pay nothing for the ticket, we’ll collect so much after the ticket, that you’ll be able to board for free, because we’ll make enough money from the baggage fees and the seat fees. And I always thought he was just crazy. And when that when I got it spirit, I realized, I understand at least why he’s thinking that because there’s a lot of power in this ancillary revenue. And while that price may not go to zero, it can get quite low. And the lower it is the more people who will fly. And so in a way airlines like Ryan and Speer create their own market because they stimulate travel that might not have flown otherwise.

David Litwak:
So you know, follow up question that you mentioned is reliable plus low cost, right? Do we run a ground transportation aggregator platform and I often have to navigate you No corporate clients going well, we want the you know, the meet and greet limousine with a driver waiting for an hour but at Uber prices and you’re just kind of like, that doesn’t exist. And it’s an incredibly hard thing to have to sell something. So how did you, you clearly some of the things you mentioned like reliability and cost are there at loggerheads. Where did you Where did you figure out where that line was for you where you said, this is a spirit brand? We’re okay doing the Miko Larry thing and saying, did you not understand what a refundable means? You know, and that’s fine. We’re going to piss off at these 10%. But did you think like, well, at 20%, that’s too much. And how did you think about that?

Ben Baldanza:
It’s a great question, David. Well, you know, we, we didn’t want to piss off any customers.

Ben Baldanza:
But we did want people to understand our product and and over time, we built what we call the spirit curriculum and explaining what it means to fly spirit and we wanted people to understand that well, but it was a tough thing. I’ll tell you the general world that we used. We used to rule that we were unwilling or didn’t want to sort of inflict certain costs on the company, meaning that we know we will spend this money for perspective revenue. We’ll spend this money and hope that people pay for it. That’s what we tried to avoid was that idea. So for example, the whole time I was there spirit never had Wi Fi. And let me tell you, I didn’t have Wi Fi because Wi Fi is expensive to, to install on an airplane, it adds weight to an airplane, so the plane burns more fuel forever after you install that on every flight. And not a lot of people pay for it. So we didn’t think we thought that it would, yes, would more customers be interested in flying spirit if we had Wi Fi maybe, but we’d have to raise our ticket prices, because the Wi Fi wouldn’t pay for itself. So we went to every Wi Fi provider of airplanes at the time, and we said look, here’s the deal. You install it on our airplane, you pay for the incremental fuel burn on the airplane for the life of the airplane. And then you charge whatever you want customers to pay. And you tell us how much of that money you’ll give us, will you give us a penny of every dollar, two pennies of every dollar, and no company would work on that basis. And we realized at that time that their success was getting the plane getting Wi Fi install on the plane, our success needed to be making money from having Wi Fi on the plane. So we didn’t put Wi Fi. That’s an example of that idea of how we thought about it. That harkens back to when I worked at continental where I worked for a very innovative and smart leader named Gordon buffoon. And Gordon used to talk about the 15 b rule. And the 15 b rule was he would say if you have an idea, that’s really good. Go ask the customer sitting in 15 B and see if they think it’s a good idea. Meaning Is it is it something that’s going to make the customer experience better, or make that person’s fare cheaper or something or make them more reliable or something like that, and he said that’s really Leave the screen. And so in a way, it was sort of an extension of that idea that I learned from Gordon years before.

David Litwak:
So it was interesting as I feel like you were displaying a character trait that I really admire here, which is like being almost hyper rational, and it almost reminds me of kind of the, like, you know, Uber guy got a lot of shit for surge pricing, but like, you know, he also was like, you know, this makes sense, you know, higher demand, raise the price, right? And, you know, basically it time and time again, I’m like, seeing here, you’re demonstrating they’re like, Okay, well, they’re pissed off about back fees, but it makes economic rational sense. We’re just going to do it and it seems almost to be like a, a very ruthless streak to your management. And I say that as a positive again, to your management. track record, would you would you agree with that?

Ben Baldanza:
I think I would. David You know, there’s there’s a there’s something that I’ve learned in my career, which is companies that Listen to what people say, don’t do nearly as well as companies that actually watch what people do. And if you ask somebody what they want from their airline trip, they will want the experience you described with your car service, right? They’ll want a really comfortable seat and a really nice meal and an on time flight and a really low fare. That’s what they will want. So they may not want bag fees, but they really like low fares, right. And so the idea was, we were going to approach it on that hyper rational basis. You know, in 2012, we were interviewed by the NPR show planet money. They came down and spent a day with us and they talked to customers who got off airplanes, and they talked to us headquarters, and they were like, how is this airline? we’d only been public for about a year. So our numbers were public, and they realized we were making a lot of money as an airline, and how can we make money when everybody hates us? Right? That was sort of their premise. They came down to time About that, and at the end of the day, the two people, a man and a woman were sitting in my office and I was explaining the basis of why we made the decisions. And one of them said, you know, this sounds like an airline that was designed by an economist, which I immediately sort of, you know, pumped up and felt really good about until the other person said, but don’t you know, everyone hates economists.

Ben Baldanza:
So there’s, there’s bad so that hyper rationality,

David Litwak:
I love planet money, but I granted like I, you know, I it seems to have won out of course, so but Kevin.

Kevin May:
Yeah, I mean, it’s interesting that I mean, I’m sitting here chuckling on mutes because of the, you know, the Ryanair kind of comparisons. It’s exactly true that people criticize and you know, that Ryanair and certainly up until very recently in the madness that’s been going on this year. It’s an incredibly well run airline and was very, very profitable and carries hundreds of millions of passengers. I mean, it’s just it is Europe, aviation. Success Story. So that wasn’t my quote that wasn’t it’s just a comment. But I’m interested when you joined Spirit Airlines, they’ve just been taken over by private equity. I think you said when you were, let’s assume you were interviewed for the job do you send that they knew what they were getting? How far you were, how far that you want. You wanted to take it or did you learn a lot about what you needed to do once you were on the job as it were?

Ben Baldanza:
I had some ideas but I learned a lot there as well. The the company that hired me Oaktree capital, which was the private equity firm that had bought spare from private owners. What they really liked about my background was the revenue side of the business. Their view of the business that time was that the company was operationally Okay, and had its cost generally in control, but that they just didn’t get a high enough ticket price and they needed to be smarter and some of the technical ideas of revenue management and pricing and here’s a guy who’s actually run an airline at Taka and been involved with big airlines in a couple different areas. And maybe you can help us with that. And what I told them is what I wanted from them before I went, as I said, I need to have the ability to hire the people that I want to hire, and, and structure the team the way I want to structure and make changes to the business that I think are going to make sense once I really understand what the business is. And they were open to that idea. So on that basis, I went to work there once I started going there and realized, well, let me tell you, let me tell you another story about another guy worked for I worked for when I worked at Northwest, the CEO at the time was a guy named john Gasper and john dyersburg said once, the fastest way to stop losing money is to stop doing things that lose money. And a lot of people laughed at that statement. But john was exactly right. And the first thing I realized that spirit was most of our flying lost money. So what I realized is we got it, we got to stop doing a lot of what we’re doing and do something else. When we started really changing where the airline flew from an airline that flew mostly from the Northeast and Midwest to Florida, we really started flying into the Caribbean where there weren’t a lot of lower fares. And there weren’t a lot of low fare airlines there. And we said we’ll use our position in the Fort Lauderdale airport to exploit Caribbean and northern, later northern Latin America, and that started working for us. A year after I joined spirit, Oaktree partnered with another private equity firm called Indigo partners that is more focused on sort of the ultra low cost carrier kind of world. And what Indigo brought to me and the company was really a better benchmark around the world. Don’t just compare yourself to delta and American Alaska and JetBlue. Compare yourselves to the best run airlines in the world to the Ryanair to the Asia to the airasia and things like that. And that’s what I think really converted me into, okay, we’ve got to go whole hog into this idea of reading Low cost. And that’s when I started going to bed every night. And when asked my wife, how can I make the fare lower tomorrow, tomorrow, tomorrow to make the fare even lower. And that was like 10 years of that.

Kevin May:
That’s a fairly strange pillow talk it must have been mean interesting because of your your History Prior to spirit where the American with Northwest with you so with with continental intact. I mean, by the time you started implementing all these ideas that spirit and turning into into the carrier of you know, your strategy and your backers strategy and everything. What did some of your former colleagues make of what you were doing? I mean, presumably they would have been friends still or good contacts and things like that. I mean, what kind of things were they saying to you about what you were doing? Essentially, because you were turning one model on its head and taking it even more extreme arguably?

Ben Baldanza:
Well, first, I think they all thought I was crazy for going there in the first place. But I had this fairly nice, at least by title, fairly nice job at US Airways, like, why would you go to this carrier that probably shouldn’t even exist? But they thought that, but once it was clear what we were doing, I think people really respected what we were doing. And in many ways, maybe thought we wish we could do that. But we’re not that kind of airline. I remember one event. That was an industry conference where I was, I was actually sitting on a panel with two of the people you mentioned earlier with Doug Parker, who at the time, was the CEO of America, West airlines, and Tom Horton, who is the CEO of American Airlines. Today, Doug’s the CEO and chairman of American Airlines. But at the time it was Tom and Doug with me and we all work together at American Airlines. So I knew each other, and we were on this panel, and somebody asked a question about, about earning about how high could margins go in the industry and what is a realistic cap for margin? And I said, well, it’s fear, we’re not going to ever let a route make too much money. And they said, Well, what do you mean? And I said, Well, if the routes making you know, 18 19%, we’d rather add another airplane and have two airplanes make 15%, then one of them, then one of them make 19 or 20%. And Doug and Tom are on either my size, both looked at me and said, We hate you. And we all laughed about that. That’s a, I think, if you I think if you talk to people around the industry that worked with me earlier, I think they will generally say that it was we took a lot of risk. It’s fair, but we proved out a concept that ultimately proved out pretty well. And I think the proof of that is around the industry. Things like Basic Economy fairs are more common now, which is really a spirit back fair, and use of ancillary revenue as a more productive way than things like fuel surcharges and things like that. Every airline charges for bags today except for southwest and and so I think I think some of the things that seemed crazy that we did have become a little more commonplace in the industry.

Kevin May:
Yeah, I mean, it’s interesting. I regularly moderate the retail stream at the world aviation festival in London every September. And a couple of years in a row I’ve had someone from spirits talking about the latest kind of retailing thing that they’ve come come to talk about. This is in the last two or three years, since you’ve since you’ve left that airline. And ordinarily, there are a lot more people in the room listening to the people from spirit talking about things, because I guess, to your points, you know, it has gained a reputation of knowing how to do this kind of thing. Right. So it’s just it’s just interesting that you say it’s kind of held up as the example of our demo which we could do that kind of thing.

Ben Baldanza:
Yeah, you know, I think that’s right. And at one point, when I was at sphere, we, we did a little we did got some data and estimated that even though we only carried about 1% of the passengers in the United States, that’s ferrets name was mentioned in like 25 percent of every media story about it. And we realize that’s because we sort of defined one end of the industry. And, you know, in some case, it was at least it’s not as bad as spirit, or at least it’s not like spirit or spirit chose the answer this way. Right? in some way. There was all we were there for all kinds of different reasons. But we realized just how important our little 1% airline was, in terms of moving industry mindset.

Kevin May:
Yeah, I mean, just before David comes on again, I mean, it’s the Ryanair model is is all publicity is good publicity, whether it’s actually bad publicity. I mean, there’s the legendary pay to have a p story, which was completely fabricated by their PR department just to get more people to talk about the airline at the same time as they were launching one euro fares to from London to Antwerp or something like that, you know, it was brilliant, brilliant PR. So David

David Litwak:
well, so Ben, you mentioned deregulation. One point you kind of came in right after and you mentioned Bob Crandall and I don’t wanna say it’s like well known, but it’s, you know, someone understood that airlines like pan-am that, you know, ushered in the jet age actually didn’t age well. And the type of innovation that actually kind of won out in a deregulated world is, you know, what you referred to, which is online booking and hub and spoke economics and stuff like that. And there’s a lot of new airline disruptors, or I could say, probably the urban aviation disruptors these days, and we’ve actually had blade on the podcast as well. And I’m curious what your you know, your opinion is other than the surf fair, and some of them are focusing on new technologies. You know, Evie tolls, electric, vertical takeoff and landing vehicles. Others are working on kind of the network, kind of building up the proper network. How do you look at this new aviation market today?

Ben Baldanza:
Well, among the many reasons I’m proud to be on the board of JetBlue is that JetBlue also has a subsidiary company called JetBlue. Tech ventures, and one of the things that JetBlue tech ventures They invest in

Ben Baldanza:
us and in us,

Ben Baldanza:
okay, well, they invest in some of these companies, right. And in order to sort of not just know what is coming up, but be sort of, you know, more involved in helping to create what the future will be. And I think that that’s really exciting. I think it’s great that people are thinking of all kinds of ways to move. People need to move. I think economies need people to move. It’s great that you can use zoom or Microsoft Teams or, you know, the video platform of your choice to host a meeting once in a while. But the reality is human beings live off interaction with each other. Traveling is probably the easiest way to learn there is on the planet. You know, when I when my wife and I took my son to Vietnam last year and spent two weeks there, it totally changed his worldview. And there’s no book he could have read our story. We could have told him that would have done that, without that without that trip. And so travel is important. It’s important for our economies. And so finding ways so that more people can connect People can connect maybe at lower prices, or maybe more quickly and things like that are great things for entrepreneur printers to be thinking about. So in general, I really support the idea of companies like blade, like, like some of the electric aircraft people not

David Litwak:
because innovation is the one that JetBlue is back, right?

Ben Baldanza:
Yeah, that’s right. Not not because I think that that’s gonna be next year’s great new technology that everybody’s gonna use. But what it does is it starts to change people’s view about what is possible, and what can happen. And I think that that’s great. I mean, the world is better off because of people like an Elan musk like him or hate him. Right who will think big and it will think ways to do things that the world hasn’t thought about yet. And travel needs that kind of thing. Those that kind of thinking,

David Litwak:
Well, you know, quick follow up on that do you do you have like a particular angle about like you so blades, big ideas, I like we’re not going to be the technology you know, we’re going to be we’re going to kind of create the network that then the Evie tools plug into I think there’s two theories of kind of like, you know, to grossly oversimplify two theories of like, you know, innovation is kind of the incremental Bob Crandall, you know, world or the one trip, like, let’s get jets in there kind of, you know, you know, I think philosophy that I’m curious if you look at like, what’s going on? Do you have you fallen one side of the spectrum?

Ben Baldanza:
That’s a great question.

Ben Baldanza:
I think companies that can create value without as much capital that sometimes called capital light, I think is where the most money can be made. And the most innovation can be made. When you have to burden the company with really expensive capital, which is what airlines are all about, right? Even a, even a relatively common 737 or Airbus A 320 is a $40 million asset plus or minus, right. And so when you can grow a company, with, with technology, with code, with ideas with an app and things like that, And create the kind of value that a new verse created, or things like that. I think that, to me, is where the most efficiency and the most excitement can come from. That doesn’t mean that there aren’t companies that are going to be capital intensive, that aren’t going to be great companies to I don’t mean that, but fundamentally, there’s just more risk in that.

David Litwak:
Yeah, no, absolutely. You know, one more kind of maybe controversial question here. So we just my last line, I think it was around deregulation here. And so to go back to that, a lot of people have said that, you know, there hasn’t been enough regulation in the past five to 10 years, we’ve got, I think, four carriers last spot, Virgin, right. And basically consolidation that, like we were saying has prices were rising. You know, if you were president or president of the TSA, whatever TSA had, I don’t know what it is these days. You know, what, you know, what would be your prescription for how like, you know, we potentially or if If it’s we should be doing more of the same. I’m curious, what do you how do you view the airline regulation market?

Ben Baldanza:
Well, I think there’s regulation in the airline business. That is That makes sense. And that is important regulation around airplanes safe to fly. I mean, the the crash of the two 737 part of the investigation of that was all around how did that plane get certified? Right. And I think government and regulators have a role to play in ensuring that planes are properly maintained that pilots flying planes are properly trained and they know what to do. And and that there aren’t, there aren’t too many planes trying to land at the same time and one runway, right. I think regulations around safety and around the process of flying and the mechanics of flying, make perfect sense and keep everyone safe. It’s the reason that the US has, collectively an extremely safe air system and around the world that people look to the United States as the model for Safe commercial airline operations. And I think regulation in that and all of that area, everything the FAA does, for example, I think is really, really good. I’m not saying that they couldn’t do it better, everyone can do anything better. But collectively, that’s really good. What I don’t particularly like is regulation on the commercial side of the business. I believe that companies are much more innovative than government. And I think that customers are willing to test and try all kinds of things. So where you can fly, how you can charge how you can distribute your product, what you should sell, as long as it’s transparent and clear and things like that. I think that should largely be unregulated. Now the Department of Transportation has played a little in both camps a little bit. They, for example, there is a law in the United States called the the 24 hour rule that if you buy an airline ticket for any reason at all, within 24 hours, you can just get a refund on that say, I decided I don’t want to fly or I found a better fare somewhere else and such. And I understand the consumer appeal of that, but that’s very expensive for airlines. They they sell a spoil product, that seat is not available for sale to someone else while you bought that seat. And if you decide 24 hours later to release it, well maybe that seat will never sell again but would have sold while it was there. And so that’s the kind of law that I don’t really understand the value of that regulation. If now maybe we have a perfect example in southwest Southwest markets their airline saying we don’t have a lot of extra fees we don’t charge for bags, we don’t charge for change fee. The rest of the industry charges for baggage charge for change. But if you want to fly an airline that doesn’t charge for bags, you can go fly Southwest, right i think the market, post deregulation the market is provided wonderful solutions delta is not JetBlue JetBlue is not spirit spirit is not self They all fly airplanes, but they all approach the business differently. They all have different sensibilities around the customer and where they go. And that’s a much better world than if every airline were Delta, or every airline were spirit. We get variety in the restaurants we go to, we get variety in the cars we buy, all at different price points, because we realized that that creates a good economy and different people are going to want different things. So I tend to want to push against regulation on the commercial side of the business, where around pricing scheduling, the commercial activities and the cult and the airline’s relationship with a customer, but love the regulation around the safety and the operational efficiency to keep everything safe. That’s my view of it generally did.

Kevin May:
Okay, so we’re coming up to the the end of the podcast and then so one final question then for me, really, I mean, how I got here, our podcast is very much about exploring and people’s lives. Through their careers, and, you know, almost for many of them have had a very seasoned and very curious yourself, you know, kind of getting people to talk about their legacy, which you’ve done very eloquently. I mean, my question is this. I mean, there’s there’s three distinct communities here. So there’s the AV geek community, that one, there’s the financial world, that’s too. And then there is the staff of spirit. Right. So those three communities, what would you say those three communities would say about you and your legacy?

Ben Baldanza:
Okay, well, let’s start with the with the AV community. I think what they would I think what the AV community would say is that reluctantly, spirit is sort of proven that there are people who want what spirit offers, and maybe that doesn’t make them happy in the first place like that they would rather and they can certainly choose not to fly an airline like spirit, but secretly I think many of them do. And, and they think about that, and I think ideas that are different are often perceived as negative at first, and a lot of the changes of spirit were that way. But over time, I think people have recognized the fact that there are different airlines that approach things differently is better for consumers than one than the other. The second is the financial world. I think a lot of people made a lot of money on Spirit Airlines. And I remember during our, during our IPO roadshow, when we were convinced trying to convince companies when we were going to go public, you should buy shares of this company. A lot of the questions came around is like, how are you possibly valuing this company as high as you are like we don’t, we don’t see growth here. We don’t see a lot of valuation. We ultimately IPO to $12. And at one point, the stock was trading in the 80s. I mean, today in a COVID world, obviously, all airline equities are depressed in a big way. But I think the financial community has come to recognize that the the hyper rational approach that we have that we took spirit into, and the way we manage that company was really well received by the financial community. I will tell you one more story if there’s time for it during the roadshow, this was in 2011. So it was a year, a year, almost exactly a year after we announced the carry on that we had been. We’ve been charging for the carry on bags for maybe nine months at that point. But we were talking to this one group of people at some fun. And we were explaining the business and we were talking about the carry on bags, he and one of the guys said, Wait a minute. You mean you charge to carry a bag on board? We said Yes, we do. And he leaned back and he said that makes such perfect sense. And that was the very first time in my role has been since Visio. I ever heard that reaction to the charts. And I realized the financial community got it instantly, of why it makes sense, where the revenue upside is why customers are still going to carry bags on board and pay for that, how it will make the boarding the plane even simpler. So I think the financial community with would say, Spirit has been a really good run and is and is still a good investment in the airline space, if you’re gonna invest in the space to the spirit staff, I think most of them would be really thankful to for the changes that spirit made, we created a lot of jobs that paid well, and that were very stable for people. When I first got the spirit, what a group of pilots told me is that nobody saw a career at spirit. They came to work at spirit to get enough hours and fly a bit until they could then go work at a real airline. Right. Right. By the time I left spirit spirit was creating great careers for pilots. And in fact, we were a great place for pilots to come because they would get upgraded from the right seat to captain’s more quickly at Spirit because we were growing faster than if they worked at a bigger airline. So I think the staff It’s fear, I would say, you know, it was a bumpy ride at times. And we weren’t always the most popular person at parties in our neighborhood. But overall, we’re really happy with what spirit did because it created a real stable, viable employment for me.

Kevin May:
That’s, that’s great. Thank you for being so honest about that. So, and thank you for being a really great guest for us this week. But that was great. Thank you so much. Well, thank you, Kevin. And David, I really enjoyed this and, and I and I look forward to listening to your podcast going forward as well. Sounds like you bring in some great guests, and me not included in that. But some of the people I talked about sounded really good. No, you’re very humble as well. So thank you very much. So you’ve been listening to another episode of how I got here. For those of you that haven’t subscribed, you can do so by ticking that box on Spotify, and all the other different places where you can download and listen to how I got here. leave us a review. It’s always good to hear people’s feedback. But it’s really nice if you give us a very high rating that helps us spread the word even further. So That’s all from us. David denied this week. This was how I got here. This is mosey on focus wise, weekly podcast where we talk to the innovators and entrepreneurs in travel and transportation. Once again, thank you very much to Ben. Thank you very much, Kevin. And thanks so much to everybody for tuning in. We’ll see you next time.

Transcribed by https://otter.ai

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