This is The Next Trip Podcast with Aviation Insiders Doug and Drew. Together, with more than 40 years of industry experience, they are creating a network for other app geeks and travel enthusiasts to obsess about all things aviation. All thoughts and opinions are their own. Good day and welcome to Boarding Pass 283, operating on April 28th.
This is Drew, an airport ops manager and private pilot trainee, and I'm here with my buddy Doug, an airline pilot. We're here to discuss aviation topics from an industry insider's perspective. We're taping on Saturday afternoon. I know where I am. I'm in DC and it's the afternoon. I don't know where you are or exactly what time it is. How much can you share? I don't know where I am.
either the listeners might be able to tell my voice it sounds like I've been hit by a baseball bat we're going to talk about where I am why I sound this way it is the morning And I am not where I was supposed to be or where I thought I was going to be when we recorded this episode. That's life as an Air Force pilot. We'll talk about it in a little bit. It's funny that the airlines are more predictable.
So any of you that have complaints, just know that if you're at the Air Force, you could be at a different airport, different island, whatever. Well, ironically, I'm sitting in a place where I just was a couple of weeks ago. The listeners might be able to start figuring that out. And it's also a place that I have broken more times than not on Air Force. So when you say broken to a civilian or to an airline employee, it's like what does that mean so we go on mechanical
But in the military, I guess you're broken. But when you say that, it sounds like you're broken as a human being. I was broken in San Francisco. You know, it sounds like someone broke your heart or something. Well, let me explain this real quick. We diverted. I'll talk about the trip. I can talk about most of what we did on this trip. It was actually a really cool trip.
Long story short, we had a mechanical issue on the flight to where we were going yesterday and we diverted to Honolulu instead. Now the difference between the airlines and the Air Force... is the Air Force we fly with, we call them flying crew chiefs, maintainers flying. They're not specialists in the airplane, but they're general practitioners. I would say maybe 75% of things that might go wrong on the airplane.
Are they physician's assistants? Yeah, that last 25% that maybe they would need a specialist for, then they would have to fly those people in from their respective bases. stateside who know what they're doing on that particular system. So when we have an issue and we land somewhere in the airplane, there's something wrong with the airplane or like what happened last night, we diverted here and there was something wrong with the airplane.
When we left the airplane and our maintainers were still at the airplane, we had no idea if they were going to be able to get it fixed last night, if we were going to have to call in support from the mainland. And then that comes with...
getting those people commercial flights because it's easier than waiting for a military flight to fly them here. Then they have to figure out getting the parts. Maybe they don't have the part at their base. So then the part has to come via FedEx or UPS from somewhere else. And we're on an island in the Pacific. Luckily, this didn't happen at a couple of our other stops because we were a lot farther away.
a couple of them a lot more remote. So you can see how the airlines, they need to keep the airplanes churning. I mean, the Air Force does too, but we just don't have, we go places. we don't have maintenance airlines when they go somewhere it's contracted out by someone else or the company does it. Well, and airlines have more resources.
because you don't have a hub airport for the military. Actually, you kind of do, but not as much as the airline. We do, but also we're operating for the taxpayers. I know that when I talk about this trip, it's going to sound like Elon Musk should have gotten his hands on this trip. Where I'm going with this is we can't just pay to have. the maintenance on the ready for something that may or may not happen and that's why we fly with flying kerchiefs so if something happens
What happened last night, I guess I can get into it. We were halfway across the Pacific and we had an issue with the glare shield. The mode control panel went out. Couldn't select altitude. Couldn't select speed. Couldn't select heading.
Couldn't select any of that. The whole panel just went dark. Because of that, the flight directors had no guidance. They didn't know what altitudes or speeds we were trying to select. So they went off because the flight directors went off. Our autopilot and autothrottles went off. at night crossing the equator, middle of the Pacific. So now all of a sudden we're three hours from anywhere.
Without autopilot without any ability to be able to select altitude. So we had to request a block altitude because we're now hand flying this airplane we had a request from air traffic control left and right deviation because we didn't have we had our navigation line but we didn't have center line control
So it was a lot of work doing this hand flying. So you don't even have anything that can keep the wings level. No. Everything's by hand. It's like I have more stuff in a Cessna 172. We were flying as if you were flying your Cessna 172 on a cross. Wow, which the Cessna also has autopilot, so I could have more instrumentation than you. I'll back it up. I can talk about a lot of the trip. We left from my base in California.
And then we flew to a place called Wake Island. Drew, before I told you I was going there, had you ever heard of Wake Island? I've heard of Wake Island. Okay. But mostly in history books where, you know, in terms of World War II. Yeah, it was huge during World War II. It got invaded. by the Japanese the same day that Pearl Harbor did. And the Japanese actually took it over. So the Japanese owned it the entire time during World War II.
This is an island that's like one square mile or one mile by two miles. So maybe a mile and a half square, but there's this giant lagoon in the middle of it. It's basically, it's an atoll. It's just a spit of land in the middle of the Pacific. the only people who can go to this island you see all these in travel influencers they go to north korea they go to venezuela they go all these
cool places that not a lot of people go to, even these influencers can't go to Wake Island. You have to be associated with what we are doing. to be able to go. Oh, got it. So there's no people that live there that are not part of what you do? Correct. Are there people that live there 24 that live there year-round? Yeah, they are their contractors.
who choose to live there and support what it is that we're doing when we go through. So how do they have water and power? Just real quick. They ship it in or they bring it in on airplanes. that's crazy along those lines we actually camped on wake island which was awesome we camped on the beach in 10 We brought our own food in. We brought our own drinks in. And we did survival training while we were on wake. It was awesome. I know I sent you a couple pictures. It was such a cool.
Well, you know, that picture of your action figure that you sent That wasn't too far from the pictures you sent. The only thing that was missing was the full uniform. Exactly. That was why I made those action figures, because I knew what we were going to be doing when we were there. We went from there then down to Brisbane, Australia, refueled.
some fighters from a country as we were down there. This was the coolest part. We were down there during what's called Anzac Day, which is their version of Veterans Day. New Zealand, Australia, and Tonga. all celebrated together. It's based on something that happened in World War I. That's what brought those countries really close together. Their entire military.
takes to the streets in these giant parades. The whole country comes out and supports them. And then the squadrons rent out pubs and bars for the entire afternoon the entire day and i'm surprised you didn't this is something it sounds like something it sounds like something you would plan It was. The Brisbane stop was planned. It just worked out that the timing was on Anzac Day. And my buddy who was in charge of the itinerary planning this whole trip.
actually used to fly down in australia so he has all these connections he knows a lot of these people and we were able to meet up with his old buddies it was awesome seeing the the reunion the homecoming And then we just, we celebrated this Anzac day with them. It was so cool.
I have never heard of Anzac Day. When you said Anzac, I'm like, is this a medication you had to recover from being on a deserted island? Yeah. I've never heard that. It sounds like some pharmaceutical commercial that you see. Then we flew from there to Pongo Pongo. It's spelled Pogo Pogo, but apparently it's pronounced Pongo Pongo. Yes. In American Samoa. Again, another place that most people... A lot of people probably have never even heard it. It's in American territory.
in the far far far eastern part of the eastern hemisphere technically okay actually technically it's in the western hemisphere but it is on the left side of the dateline So it's like 22, 23 hours ahead of the United States. But it's still in the Western Hemisphere. We just did a quick fuel stop there. And then we were supposed to go to Kona. That's when we had that issue and we elected to divert to Honolulu just because bigger airport.
We were an emergency aircraft. As fun as much as we were looking forward to the Kona stop, it just made sense. to do Honolulu instead. Now, you sent me a picture of something that's very interesting, which is, or you told me that your plane, the 767, the KC-46, was parked at a regular gate in Brisbane. It was. At the International Airport. Are there civilians walking by the gate like they're on their way to their flight to Singapore and they pass this thing that looks like...
someone's really boring special livery on a 767. As we were sitting there waiting for pushback yesterday, I looked out the one little window that we have. I wasn't up in the flight deck for the departure. I looked out the one little window. There's this Jetstar 787 just pulling into the gate next to us. We push back. We taxi out. There's a United triple. There's a Qantas A330. When we landed the other day, there was an Emirates A380.
And you're just in the mix. International terminal. Yeah. Walking through the terminal in our uniforms. We're a flight crew. We're walking through. with our giant bags that isn't compliant with carry-on restrictions. They weren't entirely sure what to do with us. This whole trip is for training. We brought, as I said, we did survival training. We have flight medics along. They've been doing training on using us as their practice subjects.
This whole thing has been for training. So it's a giant crew of people that are walking through this terminal. And I made a joke yesterday as we were going through security in Brisbane because I'm in my flight suit. You stand in front of this little body scan. And then if it flags something, you know, you're supposed to take things out of your pockets. But in the flight suit, it's impossible to get everything. There are zippers everywhere. It flags.
The guy showed me the screen and he's like, is it okay if I touch you in these places? My whole body was just flagged. So once I finally got through. I made the joke. I was like, we're here for a training trip. We just gave Brisbane security some of the best training of their lives. Right. A full body. No idea. Yeah. And you're military. So you're good sports about it. You're not going to sue them for, you know.
unwanted touching. That's all I've got. I'm just imagining these tourists going through Brisbane Airport. It's like, oh, okay, I didn't know ANA flew their 767s here. I guess that's a whale theme or something that they're doing with some kind of theme park. All right, so you said you were broken, so will you have a ride home? We are fixed. Our maintainers, I know you hate when I say maintainers, but they call themselves that. That's the name of the career field.
They, bless them, they stayed at the airplane until I don't even know what time this morning. supposedly fixed. So we'll be heading home tomorrow. As soon as we're done with this episode, we're staying on Pearl Harbor. So we're actually not down by Waikiki. As soon as the ep is done, we're going to take a cab, go spend the afternoon down on the beach.
I know it's work, but it sounds like a fabulous trip. It's been an amazing trip, but it has been so exhausting and so much work involved, which is part of the reason why we get these. this day off. We have that day off in Brisbane. We have this day off. Because we're going to these places that we've never been to. I know I've been talking forever. Last thing I want to say, leaving Pongo Pongo yesterday was incredible.
they don't have a tower that's part of the reason why we went there because it's a non-towered field we had to get special permissions to go in there it's a civilian airport but we still had to get special permissions they don't have a tower they don't have air traffic control So the only way for us to get our clearance, which we're about to go oceanic, is to call the air traffic control tower at Samoa, not American Samoa.
which is another country 80 miles to the west of American Samoa, where we were parked on the ramp, we couldn't get our clearance because we couldn't talk to them. They couldn't hear us. There was a mountain in between where we were sitting and where their air traffic control tower was. Do they have other flights out of here? Hawaiian flies in there. I was walking through the airport terminal. And there's no control tower, and there's no one...
Oh, my God. So who checks? So is there any airport operations? Yeah, there's airport operations. Yeah, they met us. They do your job. They came out and they helped us fuel. We actually, part of our training was to learn how to fuel the airplane. So we were out there pushing buttons and things. Long story short, to get out of there, I had to take off VFR, fly a circular pattern.
spiraling higher and higher until I got high enough to be able to call this air traffic control tower in another country 80 miles away asking for my instrument clearance my IFR clearance to then go Oceania The training was awesome, the flying was awesome, exhausting at the same time. Tomorrow. Okay, so you get some free time. All right, enjoy. Yeah, we'll do Waikiki this afternoon and then leave tomorrow.
Yeah, and you can't see this, but Doug has a really nice shirt on, which looks like a regular Hawaiian shirt, but I think there's airplanes on it. Oh, can I get one of those? Yeah, next time we order, I'll get you one. All right, cool. This was my third week at airport operations, and it was the most exciting, Doug. I finally got to drive. They're really careful about driving on the AOA, which is the airport operations area.
They've loosened the reins a little bit so I can drive on the vehicle service roads by myself, unattended, no babysitter. But they had a little surprise for me, which they didn't tell me. And they were talking behind my back. It's like, what is he going to think? They're like, all right, you ready for the runway inspection? I'm like, yeah, let's go. I'm expecting to be the passenger. Like, nope, you're driving. So I was driving with a CFI though.
Was that your checkride? No, I mean, the checkride. No, not yet. Oh, you haven't had it yet? No, the checkride would be with the radios and the whole thing as if I'm on my own. So he did the radios and I was able to check the runway. And I had, it was Ops 2, cleared full length runway 19. And I'm like, oh my goodness, there's two planes waiting. So the tower is holding these two departures.
so that we can quickly check the runway. So 80 miles per hour, some of them go faster than that. 80 miles per hour down runway 19. And I'm looking for anything, you know, any irregularities, any rubber, any holes very quickly to make sure it's safe. And they do that on each shift. Get off the runway and those two planes take off. And then we check the other two runways. It was amazing.
Telling the guy, this is awesome. I was like, we knew you'd enjoy it. We knew you'd be excited about it. Well, you also sent me a message saying that you got stuck in rush hour. And rush hour meant that you were behind an Airbus A3. Yes. Which is a rush hour I like. Which is a great rush hour to be in. No, it is a great airport. The people work so well together. It's smaller, so it's a nice community. During the day, I'm walking around meeting the airline managers, the supervisors.
Not the FAA yet. That'll be soon, but I'm meeting with everyone else. But then I come back, we come back in after the runway inspection and the boss is there and she's like, oh, and she has a big smile on her face. She goes, congratulations. I'm like, oh no, what does that mean? Because I've heard that that means you're getting an assignment. I've got something for you and you're going to be wonderful. So it turned out to be I'm going to assist with bring your kids to work day.
Oh, perfect. Pick the guy without kids to manage. Right, exactly. But it was more like bring your new airport manager to his own job day because I took them to the, I'm able to drive on the AOA. So I was able to escort a bus right behind me with the kids. And it was more, I think I was more excited. So we went to the firehouse.
I think I was more excited. I was more asking more questions than the kids. The kids were probably like, who is this old guy asking all these questions? We saw what we wanted to do. We just want to go play with something else. But no, they were able to sit in this fire truck, and Francis is going to kill me. I don't know the name of it. I think it's like the, what is it? It's like the Predator or something. These trucks look like something from outer space.
And they have these, you know, the water things that turn everywhere like it's a robot, you know, like something from Alien. But then the kids go in, this cockpit on this thing is so big, it's bigger than a 737. I mean, the driver, the firehouse guy. That's not hard to do. That's not hard to do. There are like eight kids inside the cockpit of this fire truck. That was amazing. That's it. I mean, we got a lot to cover. So anything else? Drew, I'm glad you kept the episode relatively unpacked.
Because I figured we would talk quite a bit about all of this. We're already 10 minutes over where we should be. Luckily, we're not going to be talking about too much more going down the road. First thing we're going to talk about is Shepard One. Then we're going to move into airline uncertainty as a navigate. what's going on in the global climate right now. And then we're going to end with airport business models. I'm actually really excited about that one because I have no idea.
I was thinking about that, and we're just going to touch on the airport business models because we're not a business podcast. I even looked at Fitch bond ratings for airports, which you would just have a field day with. Yes. Listeners, don't worry. We're not going into bond ratings for each airport. But if you ask for that, I'm sure Doug would be more than happy to go through each bond rating for each airport.
in the next episode. Alright, our first story, however, is a sad one, everyone. As we remember, Pope Francis who passed away this Monday at the age of 88 after leading the Catholic Church for 12 years. He was known for his humility, which involved his preference to ride in a Fiat.
versus in the Popemobile, which is a modified Mercedes, which I would have chosen the Fiat. I mean, I don't want to be on display. It just looks like he's a circus act, you know, on the Popemobile. He also broke with tradition and chose to live in a Vatican guest house. instead of a luxurious apartment in the Apostolic Palace, which shocked the Vatican establishment. When Francis became Pope, he even tried to book his own flight with Alitalia to the island of Lampa.
Lampedusa in economy to visit immigrants. He wasn't successful with the booking, and he was flown there on a chartered Alitalia flight. He accepted, not that he had a choice due to security requirements and the large press following, he accepted that he would now travel the world on the Pope's Plane, or Shepard One, as it's known. It's the call sign for the aircraft that is transporting the Pope, and it's not an individual aircraft.
This is similar to the U.S. president's Air Force One, which could be a 747. That's what we know Air Force One is, a 747-200. But sometimes Air Force One is a 757 if the president has to go to a smaller airport. It could be a KC-46, Drew. Really? Has it been? It's whatever airplane the president is on.
I don't think it's been a 46, but it's not just the VIP. It could be. It's not just the VIP airplanes. Okay, so anything could be. A Cessna 172 could be Air Force One, if that's all that's available at the time, right? Correct. All right, so what is different is that Shepard One does not belong to the Vatican where Air Force One belongs to the U.S. Air Force. The Vatican doesn't have an air force or even an airport.
The Vatican City is actually way smaller than Rome-Fumicino Airport. Usually Shepard 1 is an ITA, previously Alitalia, aircraft which is chartered by the Vatican and flies from nearby Fumicino Airport. Unlike Air Force One, the aircraft is a regular airliner configured with first or business class and economy seats.
Departing FCO, it's usually an ITA A330 that's been pulled off at civilian flying to fly the Pontiff. The Vatican pays for the flights, which are subsidized by the press, who pay for their seats in economy. Although they're in the rear cabins, the flights will normally be catered with business class style meals. During the flight, the Pope will visit the press in the back, Francis, who is known to sometimes speak or pontificate until 20 minutes prior to landing.
I'm sure the flight attendants are like, okay, sir, it's time for you to sit down. Yeah, Father, the landing gear is down. Would you please, for the love of God, sit down? What's cool is the Shepard 1 call sign isn't always assigned to an Italian aircraft. When Francis visited the U.S., for example, in 2015, an American Airlines 777-200 was allowed by the FAA to use the Shepard One call sign as it flew from D.C. to New York and Philadelphia and then back to Rome.
the same year and this is how it is usually he'll get to whatever country he's visiting on ita or all italia in the past and then that country's airline they find it an honor. They see it as an honor to fly the Pope back. Usually. Sometimes this is back on ITA. That same year, in 2015, the Pope flew to Sri Lanka, where Shepard I started off as an Alitalia A330 to Colombo.
And then leaving Colombo, he was on a Sri Lankan Airlines A340-300 to Manila, which also had the call sign Shepard 1. And then that was followed by a Philippine Airlines A320 to Tacloban in the Philippines, which became... Shepard 1, and finally Shepard 1 continued as a Philippine Airlines A340-300 back to Rome. How cool is that? I mean, reading these stories, doing the research... If you could just see the crews on these planes, they were just like, it was history, you know, to fly the Pope.
Yeah, Drew, I think this is incredible. It's so cool. You see these pictures. I'm picturing one famous image of Pope Francis. I think it was right after he became Pope. standing in the aisle with the press corps around him. He's in his full garb. And there's just Alitalia seats.
and airline markings on the inside of this airplane. It's just a regular civilian airliner carrying the Pope. There are probably some listeners, I'm not Catholic, but there are probably some listeners who... really don't even know anything about this. Yes, he is or was. Francis was the head of the Catholic Church worldwide with one point. I think it's one point three billion followers.
1.5 billion Catholics. Not just that, he's also the head of state for the Vatican. The Vatican is a country, and he is the head of state. He is essentially the president of the Vatican. That's part of the reason why he gets treated like this, too, because he is a dignitary beyond just the leader of the church. Yeah. And if you want to learn more about this, so our buddy Ryan Ewing, who is on the podcast a couple of times, he's.
On his website, AirlineGeeks.com, he did a really nice segment called Remembering Shepard One. So go on AirlineGeeks.com. He has more details on the American 777. 777, I forget the tail number. It's been retired. So after 2020, it went to, looks like Mobile, Alabama, I think. and it's retired, but it has a plaque. saying that it carried the Pope. I also, the other thing is, I always assumed...
that the airline, American, Sri Lankan, or the country, just bore the cost of transporting the Pope because it was such an honor? No, the Vatican pays. The Vatican charters these flights. So American or Sri Lankan, they got paid to fly this flight. And they were saying they charged the press for their tickets. So if you're pressed on that flight, you pay to be on that flight with the Pope. And that covers a lot of the costs. So it's not like U.S. taxpayers are paying.
True. And by the press paying, it's their employer. It's not like if I was a reporter for the Washington Post, I go shepherder. or shepherd1.com and then choose which flight I want to book. It's paid for by my employer. Yeah, exactly. That's definitely awesome, and the Pope got around. Let's hope that the new Pontiff is also a frequent flyer and helps support aviation and international travel. We can maybe do a follow-up story once the... new pope is selected on his first trip.
Okay, where is he going? What is he flying on? And we can do another deep dive on that first trip. Yeah, and did he try and book Ryanair to save money? All right, so speaking of international travel and supporting aviation, That's what all our news is about this week. Let's do a rapid-fire overview of what's going on. Doug, let's alternate. And go. The IMF said the global economic growth is slowing and cited Donald Trump's tariffs as causing the uncertainty leading to the downturn.
They maintain they don't expect a U.S. recession, but raise the probability to 40%. American joined Delta and Southwest in pulling their guidance for the year, saying the economic outlook is, again, too uncertain to forecast financial performance. United hedged its bet with two outlooks, saying it's maintaining its full-year forecast but tacked on a second guidance in case the country and or world go into a recession.
They said they would make a profit either way, which is interesting, which is great. United Airlines said international and premium cabin revenue actually rose during the first quarter. However, domestic coach sales dropped. Common theme, it seems like leisure traffic is dropping. American CEO Robert Isom said that after a strong fourth quarter, leisure sales dropped considerably in February. And then Ed Bastian of Delta said, with broad economic uncertainty around global trade...
Growth has largely stalled. In this slower growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year. That's where the rubber hits the road, or in our case, the rubber doesn't hit the runway due to capacity reductions and route suspension.
United is expected to reduce some off-peak flights and is retiring 21 aircraft this year. The airline forecasts a 4% reduction in domestic flying. Southwest has cut their Atlanta schedule by a third, and Denver will see 5% fewer flights this year. Denver will have eight less overnights, which were doing early morning kickoff or star flights, as Drew used to call them in his past life. The company has reduced its pilot base there by 155 employees.
although some stations, such as Nashville, have grown. We also have several individual route cuts in markets that can't support the capacity, and these are markets where the airlines tried to... forays into markets into new markets but this economy just can't support that so delta will cut boston to honolulu and atlanta to oakland later this year alaska is suspending washington dulles to los angeles
and Dulles to SFO as well as Chicago to SFO and Los Angeles to NASA Bahamas. So they're saying they only have, I think they have a couple a day, Dulles to LA and SFO, but Chicago to SFO is just one flight. You can't really... run a business market with just one offering. The airline will still serve Washington DCA to SFO and LAX. I see their planes all the time. It just seems so out of place.
To see an Alaska 737. Yes, I think the same thing. Sometimes they have three planes there. American has a bunch of international flights that they're ending earlier. So this summer, it just seemed like... Pre-possible recession or maybe for United and Delta still, that summer schedule kept getting longer and longer. It would go through October sometimes. But American is going to be discontinuing some of these summer schedule flights.
to Barcelona and Rome at the beginning of September versus going into later in the year. On a positive note, there are some significant international flight additions that were announced recently. United got approval for its fifth freedom flights from Hong Kong to Saigon and Bangkok. Cathay and Eva are starting flights to Dallas-Fort Worth.
Cathay also mentioned that they're looking at other North American cities, such as Dulles and Seattle, where they flew pre-COVID. ViaJet also announced new service from Ho Chi Minh to Fukuoka and Nagoya after recently announcing service to India, China, and Singapore. South African Airlines announced plans to return to Dulles after being gone since 2020. The flights from Johannesburg to D.C. will stop in Akra, Ghana.
Drew, you talked about it's weird to see an Alaska 737 at DCA. Every time I see or saw pre-COVID the South African A340 at Dulles, That was another one of those weird things. Yeah, that's a long way from home. It just kind of stood out very long. Yeah, so we're talking about the domestic U.S. market softening.
That is not necessarily the case around the world. Now, this thing between the U.S. and China may lead to a global slowdown, but not so far. Like in Asia, like I told you, you go there, I've been there. It seems very vibrant right now as far as air travel. And you have Vietjet, which is their second biggest airline, starting all these international flights.
so you have two international vietnam vietnamese airlines and the fact that cathay pacific and eva are starting additional flights to north america I can't even, I don't even know there's a huge market for EVA Airways from Taipei to Dallas. But apparently there is. So it's not just the U.S. market. There's a very strong Asian market that has not been traveling as much in the past few years.
Well, can I jump in with the U.S. market? When we first got here last night, we were told that they didn't have room for us on base and we were going to be sent off base to an off base hotel. It's hit or miss. Sometimes when we come here, we're off base. Sometimes we're on base. but when we were told we're not going to have rooms for you, we started calling hotels. We started looking online. Nothing drew the entire city of Honolulu, the entire island of Oahu.
There's no room at the inn. To go back to a Catholic term, I'm going to pontificate on that. There is no room in the inn. We would be sleeping in our tents that we brought to Wake Island if we weren't able to get these rooms. that we ended up in last night, but it took a couple hours for them to procure the rooms for us. The entire island of Oahu, booked solid. Tonight, tomorrow night, I don't know beyond.
We're in the U.S. This is not spring break anymore. We're past spring break season, but yet everyone is here. There are no rooms available. Yeah. Before we leave this topic... have you guys watched this series white lotus it's on my list i've heard that you're gonna have to watch it just for like the hotel content for this well yeah and the travel
Yeah, and also because airline executives are specifically mentioning that show. Patrick Quayle of United mentioned White Lotus People are seeing more interest to fly to Bangkok and Thailand because Americans are watching that show and wanting to go to Asia. It's ridiculous, but if it's coming from a corporate office, it might actually be true.
And then Cathay Pacific said the same thing. Yes. Well, I read an article. It was filmed at the Four Seasons in, is it Phuket? I don't know where. I haven't seen it. There's some four seasons luxury resort somewhere in Thailand where the first season or maybe the first couple seasons were filmed. This article I was reading, it was talking about the business side. saying that Four Seasons, that particular location, took a huge gamble to let this show film there because it's...
My understanding is it's kind of a horror show or like a murder mystery. Oh, yeah. There's a darkness to this show. It's not an upbeat show. Usually about someone dying. It's almost like a murder mystery. Robbie and I have just seen the first one, which was in Hawaii. and it starts off with a coffin being loaded onto a plane, and it's fast-forwarded to the end of this guy's trip, and now you're wondering, all right, who died on this trip? Exactly. The article then was saying that...
This hotel took a huge gamble by filming here, but now it's working out beyond their wildest dreams. Because not only are people wanting to go to Thailand, they're wanting to stay at the four seasons where White Lotus was filmed. Well, that's where Singapore Airlines chose not to be in...
Crazy Rich Asians, because they weren't sure how they would be represented in that. But it was a loss. It was some fake airline that they used instead. As long as it gets butts in seats, I don't care what bad miniseries they're watching. Right. As long as they're traveling. All right, Drew, enough about part 121, which is scheduled airlines, your old job. Let's move to part 139, airport operations, your new career, for the next segment and talk about airport business models.
in the airlines we have network carriers point to point low fare and ultra low fare what are the airports models yeah surprisingly doug as i'm learning about this stuff it's less complicated and more complicated and let me explain on the face of it it's less complicated because there's not that many models but it's incredibly complicated as you delve into the finances of an airport
Some of them are funded by themselves. Some of them are funded by the local city government where the airport operates. So it's crazy. For this episode, we'll stick to the easy part. Doug, there are only three main business models for commercial airports. There's the residual cost model, which is where airlines assume financial risk.
but they also maintain more control we'll talk about an example in just a moment the second one is the compensatory model where the airport assumes all the financial The airport assumes the financial risk and tries to collect that from the concessions and the parking and the airlines, of course. And then there's a hybrid model where the airlines and the airport share the risk. First, let's talk about what are the major costs of running an airport. This is from the Airports Council International.
This is the infrastructure needs of airports in the country, and it's $115 billion total. What is that made up of? $20.3 billion, just under 20%. Well, actually, $40.1 billion, the biggest single cost. So that makes sense, right? Because that's a huge structure. Lots of capital investment that we're seeing around the country. $40.1 billion. Of that $115 billion is building the buildings themselves. After that, it's airfield reconstruction.
which includes the runways and the taxiways. It's a constant struggle to keep these maintained. And that's part of my job, to look for damage and get it fixed. And then if it's beyond repair, then it's a big capital expenditure to... close the runway and repave it, for example. And then the other things are safety, environmental, terminal access.
I love how new airports is only $2.1 billion of this $115 billion. We're not building new airports. We're just recycling. We talked about this last week. Yeah, it's not a bad thing. We're just, you know, improving the ones we have. There are definitely huge costs to running an airport. So why would airlines agree to the residual approach? We're there on the hook for any short.
For this, we have to go back to 1954 when United and O'Hare Airport in Chicago settled on a precedent-setting agreement. United would pay the difference between the airport's revenue and expenses. This was known as the O'Hare Agreement or United contract and had a 50-year term. Under this agreement, United was the signatory carrier and had control over the budget along with the airport authorities.
non-signatory carriers would pay fees to the airport to operate there in return for taking on the risk. United would have more control over their main hub and would benefit if the airport was profitable. And we'll talk more about this at the end, but it's like you're taking on this huge risk, but you probably see that you're going to make a lot of money. So you're willing to take on that risk to have more control over your flights and your gates.
who your competitors are, I guess. The next approach is the compensatory model where the airport takes all the risks. and charges the airline's fees, landing fees, gate usage fees, whatever. This gives the airports more control, and a well-run, profitable airport is free to do whatever they want with all the profit. The last approach is the hybrid model, which is the elements of both the residual and compensatory approaches. This approach has airlines signing shorter leases to limit their risk.
Interestingly, airports around the country use all three approaches, residual, compensatory, and hybrid, so there's no one-size-fits-all for airports. Drew, do we still see airports using the United O'Hare residual approach? Yeah, I didn't think that we would because who wants to take on that much risk? But Doug, yes, there are several airports that still have that residual approach where the airlines are willing to take on the burden.
which could be huge, of an airport, right? Environmental concerns, runways, huge building costs. Currently, in this country, they are Detroit, Midway, Miami, Philadelphia, SFO, San Francisco, and yes, Still O'Hare. So United had a 50-year agreement. This started in 1954, so that would have taken them to 2004. There is still a residual agreement. However, Chicago also has American Airlines as a signatory. So those two airlines will cover the cost.
If Chicago, O'Hare Airport can't pay their bills. But along with that... They have a lot of control. They control their terminals. They have some say on construction projects because they're going to be paying for it. Or reaping the benefits of profits made at the airport. Doug, who's using the other one, the compensatory model? These are the airports that are taking on the risk in return for more control over their operation and budget.
Atlanta, LAX, Houston, JFK, LaGuardia, Newark, Charlotte, Minnie, Seattle, BWI, and Boston. These are all airports. They're taking on the full risk where the airlines are not. I can see where we just talked about the airlines rolling the dice. This is the airports rolling the dice. Just a couple that I'm looking at here. For instance, Minneapolis. When Northwest and Delta merged. We had seen a lot of hubs close at this point. So Minneapolis is taking a huge risk.
hoping that because Northwest was based there, so of course they're going to continue operations when it's Northwest, but when they merge with Delta... There was talk maybe many will be de-hubbed. Now all of a sudden it turns out like Memphis where they spent on this infrastructure and all of a sudden no longer it's a hub. Pittsburgh is another example that I can think of that. was de-hubbed and they just spent all this money in the 90s on this huge hub for USA. Yeah.
I mean, if we just rewind a little bit, the residual airports, right, where airlines are the signatories. I'm just looking at the list. Detroit, it's got to be Delta, who's the signatory. Midway would be Southwest. Miami would be American. Philadelphia would be American. SFO is interesting. I'm sure United would be at least one of the signatories. Maybe there's another one.
Looking into it, it is American and United who are the main signatories. Finally, the airports that use a combination of these models are hybrid approaches, and they include Dulles. Actually, no, scratch that. Let me go back a little bit to the compensatory model. All three New York airports are in that. And what that tells me is that these New York airports know there's going to be a lot of traffic.
They know that they're going to make a lot of money. So they really don't need an airline signatory because they know they're going to bring in a lot of money. And with the compensatory approach, they're calling all the shots. They're making the revenues. And if something goes wrong, they're on the hook. They're on the hook to pay the bills. But I think these New York airports are all compensatory because they know a lot of people will fly and they want to reap those benefits.
and charge the airlines. Or they'll make so much money with passengers flying through in the volumes and the concessions that they can charge the airlines less in fees. That would have to compensate that. That's why pizza in Newark costs $50. There's been a lot of articles about why everything. Because they have to pay for it. Yeah, so that pizza, that $25 slice of pizza that you're getting in Newark, don't feel bad. It's helping to pave the runway.
I'm not even joking. They should put signs. You being hungry is keeping the airport lights on. But then what I was shocked is Atlanta is in that compensatory. You would think that Delta would be a signatory to have more control, but I guess... Atlanta thinks they can do fine without Delta, or they know Delta's not leaving, so they have that assurance. Alright, the last one is a hybrid approach, which is a combination of both.
So both the, well, two of the three D.C. airports are here, Washington Dulles and Washington National. And then Denver, Honolulu, Orlando, and Salt Lake City are in that hybrid approach where they have shorter leases. So they are signatories, but they're not on the hook for 50 years. United was at O'Hare. Now, if you want to look at the Fitch Bond ratings, both Chicago and... Faux, both residual models, they're both A-plus ratings.
So that is working. We might need to do a deep dive on bond ratings. A lot of the listeners probably have no idea what that is. Essentially, that's it is you're issuing. It's not really a stock, but it appreciates you are issuing. Drew, let's say Drew is like, you know, I want a 10 year thing that's going to grow at 8%. I'm gonna get this bond for Chicago O'Hare. I can't see it. I can't touch it. It's just gonna grow at 8%. I'll get my money in 10 years.
Drew buying his $100 bond for an A-plus rating at Chicago O'Hare. is giving Chicago O'Hare $100 to then do whatever they want with it. But then the city of Chicago or the airport, they then have to pay Drew the interest at the end. So they are hoping that they are going to reap the benefits of making up that money that they are going to pay Drew in 10 years by having a good operation. The A-plus bonds, it's A-plus because Drew knows.
These guys pay their bills. I'm going to get all of my money at the end. Pick an airport. What's a... I was going to say pick a terrible airport that might be a B rating. Well, what we should do on the next episode is take SFO, which has an A-plus rating. It's a residual. And then let's find another one, which is a hybrid model or a compensatory that doesn't get a good rating. And these Fitch ratings, like when you look at it, it has so much information. It has.
It has stuff that everyone can understand. It has an executive summary of the airport and what the customers are and what the demographics. It's really good. You would love the reading. I know you would. Let's take that and let's... Let's put that into bite-sized pieces.
For me and our listeners. Yeah, SFO and Chicago have A-plus ratings. Just looking at it, it seems like the airports are generally moneymakers. But here's the thing. If the city of Chicago or the city of San Francisco go bankrupt, Then you might not get your bond. You might not get your money back. But what are the chances of that? So there's always some risks and bonds are considered pretty low risk.
Yeah, even if it's less than an A or an A-plus rating. Hopefully we kept that basic enough that we didn't lose too many listeners. It's edutainment. So if we're diving too deep into it. If we're diving too deep in the tank, please let us know. Doug, nice job making a transistor radio with a coconut shell, with the coconut shell radars and a hamster wheel work so that we could do this podcast, which I think looks like you're in a three-star hotel, which would be similar.
It's definitely not a three star. Is it nice? Okay. No. It's less than that? It's less than that. Okay. I just heard my neighbor flush and it sounded like the building might collapse. So you really are just one step above coconut radars and a hamster and a wheel. Correct. Yes. It's not camping on the beach. but it's also not the Ritz. All right. Well, thank the hamster because the internet.
The internet did keep up. When you leave the islands, what's on approach for your week? I do have a trip with the company this week. And to be honest, it's only two days. It's domestic. I don't even remember where I go. I've been so focused on this trip and getting this trip done with all the work that's gone into it.
When I get home, hopefully knock on wood. Actually, this is faux wood. I need to find real wood somewhere. When I get home tomorrow night, then I'll start transitioning mentally back into... the company job and figure out what's on the schedule coming up. What about you? Next week, my goal is to be completely signed off to drive anywhere on the airport. So I'm really excited about that. I'm going to the PM shift. So it was three weeks on AM. It'll be two weeks on PM.
Which will be so refreshing because I've been AM shift forever. And it'll be nice to wake up naturally, go to the gym, get my lunch, and go to work like I used to in the old days. So that'll be nice. Two weeks on PM and then two weeks on midnight.
I'm probably going to hate it, but I'll probably love it because they say it's very peaceful and you can do the runway inspections without being bothered. It's mostly about the lights, making sure that the taxiway lights and the runway lights are good. And you're just there in case something happens. overnight at the airport, which could. It's a huge facility. You've got your Hawaiian shirt on. You're probably ready to go and enjoy Waikiki, so let's let you do that.
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Make sure to use the country code 001 or plus one when calling from abroad. Or if you're calling from a hamster coconut shell, figure out what the digits and Morse code. you need to press call in from the islands we'll use ai to translate it don't worry we'll figure it out thanks to all of our friends and contributors for your support and for joining the conversation we'll see you next week and in the meantime Stay aviation tough. This has been the Next Trip Podcast.
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Yeah, hold on. My neighbor is flushing and it's loud. It sounds like the building's going to fall down. That woke me up a couple times during the night.