Wild summer travel tales from Boeing to CrowdStrike

Note: Transcripts are automatically generated from episode audio, and are not fully corrected for spelling, grammar, and formatting.

BRIAN KELLY: Boeing’s actions are extremely concerning from a corporate governance perspective — from do they really have the safety protocols in place? That being said, I have so many friends who will ride to the Uber without a seatbelt. And then they get scared to board the plane. You’re on a plane with trained professionals. Tell me another mode of transportation that’s perfect. There is none. 

BOB SAFIAN: That’s Brian Kelly, founder of travel media platform The Points Guy. I wanted to talk to Brian to better understand one of the wildest nonpandemic travel summers ever. More people are flying than ever, airports are packed, planes are packed. And yet airline businesses are struggling. Southwest is doing away with its distinctive seat-yourself system, Spirit is moving away from discounting, and of course we had the massive CrowdStrike outage that hit all airlines, but particularly Delta. Plus there’s Boeing safety concerns, a whistleblower suicide, a new CEO coming in. So what is going on? Brian sheds light on how airlines and travelers are adjusting to this chaotic market — and along the way, he shares some of the travel industry’s best kept secrets and insider perks. It’s a journey worth taking, so let’s get to it! I’m Bob Safian, and this is Rapid Response. 

SAFIAN: I’m Bob Safian, and I’m here with Brian Kelly, founder of travel resource, The Points Guy. Brian, thanks for joining us.

KELLY: Thanks for having me. Good to be here and not in an airport.

SAFIAN: Yeah, I was wondering whether you’d be dialing in from a plane. 

KELLY: I try to minimize it.

Copy LinkFlying anxiety despite air travel surging

SAFIAN: Well, this summer travel season has been quite dramatic, and the first thing I wanted to ask you about was Boeing, you know, the safety-drama concerns you hear from friends and family and certainly media about people wary to get on planes, some avoiding Boeing aircraft and yet at the same time, air travel volume is like at record levels. Are people really nervous? Are there things to be nervous about? Like what’s that disconnect?

KELLY: It’s really interesting because I’ve researched the fear of flying and it’s so fascinating. 2023 was the safest year on record: 29 million flights and not a single commercial jetliner crash. So flying is so astronomically safe. It’s mind-boggling that it appears anxiety around flying has increased. And I think there’s a number of factors. 

One key trend is, you know, social media and where every incident gets blown out of proportion, whereas there have probably been a lot worse incidents over time that have happened that didn’t really get picked up because it wasn’t filmed on camera. So I do think there’s this sense like flying’s more dangerous now. Certainly, Boeing’s actions are extremely concerning from like a corporate governance perspective — from do they really have the safety protocols in place, and I did recommend people to avoid the 737-9 MAX, not for safety reasons necessarily.

Although if we do remember, you know, the Boeing 737 MAX crashes, there were several of them. I was doing it more out of concern, ‘cause the airlines are going to ground this for who knows how many months. So if you book this aircraft, it’s probably going to get canceled. And some people were like, “you’re being over the top.” But lo and behold, United, Alaska, people who were booked on MAX 9 flights, they got, you know, rebooked on alternate flights that were far less appealing. So that was my take on it, overall travel is safe, but certainly Boeing needs to get its act together.

Copy LinkExamining the history of Being issues

SAFIAN: Statistically then, even though it might seem like, ‘oh, there’s this Boeing problem, and there’s that Boeing problem,’ they still have a ton of planes up in the air and those planes are not having any trouble.

KELLY: I mean, that’s the nature of transportation. Tell me another mode of transportation that’s perfect. There is none. And that’s why, you know, I have so many friends who will ride to the Uber without a seatbelt. And then they get scared to board the plane. Which I think is just so fascinating, that in our heads, we’ve built a narrative when in fact, like, you know, you’re on a plane with trained professionals. They check each other. They make sure they’re sober. I mean, you go on the LIE in New York and, or 95 in Miami, Jesus, take the wheel. I mean, there are people on the road that probably haven’t slept in days. So, I’m clearly an advocate for flying and I don’t think people should be nervous, necessarily. 

And, you know, it does appear that Boeing is in the process of a good overhauling of its leadership and hopefully they put more engineers and positions of power. Cause I think that’s really where they lost course. They were trying to cut corners, sort of the corporate side of, ‘let’s just get things to market. We’re so behind, stock prices going down. I’m getting pressure from all angles’ and hopefully they put and listen to more engineers and certainly, protect the whistleblowers who seem to be dropping like flies. But I guess that’s a story for another podcast.

SAFIAN: Well, I mean, if you’re prone to conspiracy theories, there is a Boeing whistleblower who committed suicide. 

KELLY: One had a random MRSA infection that took him out in 24 hours. That was an interesting one. And you know this isn’t just the 737 MAX-9. Boeing has had these, you know, a couple of years ago, there was a New York Times exposé on their Charleston factory with the 787 production wires that were not done correctly. So, yeah, it definitely seems like there are more issues with Boeing than Airbus.

That being said, as consumers, like if you’re only going to fly Airbus in the US, you’re going to dramatically have to change your patterns. And who really, at the end of the day, most consumers care about money first. Money and time, right? Like you’re not going to double connect to get to your location to fly Embraer or, you know, Airbus aircraft. That would be silly. I don’t know a single person who would add hours of their life and more flights for an infinitesimal safety increase.

Copy LinkWhy air travel is at record levels

SAFIAN: Air travel is at really high levels. Do you have an understanding or an explanation about why we are at these record levels? 

KELLY: Yeah, I mean, the first thing is fares have dropped. You know, in 2022 we saw this insane spike, month over month 20 percent increases in airfare. 

I remember looking, trying to go on a last minute trip to Europe and it was like 7,500 in business class to every major capital. You know, there were no deals to be had. And so over the next two years, airlines have added tons of European capacity, which has resulted actually in fares coming down quite a bit when you peg to 2019 dollars, fares are cheaper today, even with record numbers of people traveling. 

I’m going to Europe. I got an award ticket for 50,000 Air France miles, one way business class. Going to Spain later this summer, first class on British airways, 4,000, first. You know, those were triple two summers ago. So it’s a great time for consumers. 

And I will say, even though airports are more packed today than they’ve ever been, the airports are running pretty smoothly, barring one-off meltdowns. But you know, the TSA in general, like two summers ago, even last summer, there were meltdowns at Amsterdam. I remember 20,000 bags lost at Heathrow. Huge lines. Things are actually running pretty smoothly. It’s a great time to be flying, in my opinion. 

Copy LinkWhy are airline businesses struggling?

SAFIAN: The volume of travelers is at record high numbers. So why are the airline businesses struggling as businesses? 

KELLY: They were actually making more money when they were gouging customers at double the rates. 

SAFIAN: Even though the planes weren’t as crowded then?

KELLY: The planes are more full today. 3 million passengers screened on TSA, but they’re filled at cheaper fares. The airlines are still making money, but not bank. 

And also I would say too, we don’t have the full numbers about business travel, but fare pricing has completely changed versus pre-pandemic. First class, business class used to have this premium that barring, you know, JetBlue coming onto a route and kind of stabilizing fares that the major airlines were just charging 7,000 business class pretty much across the board. So they were gouging last minute and business travelers. Now it’s more leisure travelers. So more people are buying business class, which is where airlines make money in general, but not at the rates that they used to have. And once you get consumers used to buying 4,000 dollars round trip business class pretty easily all summer long, it’s a lot harder to all of a sudden move that up to 7,000 where you were because consumers get locked in and then they’ll say, “well, I’m not going to go.” 

SAFIAN: So individuals are paying for business class. It’s not mostly businesses or even points? 

KELLY: That is the biggest trend that came out, as the pandemic was hitting it, most airlines were also launching premium economy. So consumers got used to easing into premium economy versus just the cheapest fare. Cause during the pandemic, you did not want to be jammed-in like a sardine. And during the pandemic, flights in the beginning were really cheap. So consumers started to get a real good taste of the life in the front of the plane and realized — wait a minute, as economy has stagnated, economy hasn’t changed really in 40 years. It’s still a tiny seat. You might get free wifi if you’re lucky, but economy sucks. But where the real innovation has happened is in the front of the plane. So, and most people know the feeling of once you start flying first class, it’s really hard to go back. A decade ago, Delta was upgrading 80 percent of its first class domestic cabins to elite travelers and 20 percent were paid. Now it’s flipped. 80 percent are paying and only 20 percent are given to those upgrading.

Copy Link“Airlines are flying banks these days”

SAFIAN: It does seem like business class keeps getting better, and coach keeps getting worse. And it’s like, it’s confusing cause there’s economy light and economy classic and economy. It’s like, they’re all these categories.

KELLY: Yeah. And it can be confusing to know what you’re exactly buying. And I think consumers are realizing cheap is expensive. Like buying that cheapest fare, it doesn’t make sense, especially for those travelers who own frequent flyer miles, you know. 

The evolution of all the major frequent flyer programs. Now they’re not frequent flyer programs or rather frequent buyer programs. You’ve got to spend baby. You know, the airlines don’t care how many flights you take. Who cares, you know? How much money are you spending? 

But yeah, there’s definitely been these tectonic shifts in behavior and travel. Loyalty is still as important as ever. And the credit card industry is really still fueling the growth in revenue and profits with airlines. If the airlines didn’t have their co-branded credit cards, they would be in a really bad spot.

SAFIAN: They make more money on their cards than they make on their flights.

KELLY: Yeah. I mean people joke that airlines are really flying banks these days. One percent of total US GDP is put on a Delta Amex card which is pretty incredible to think about.  And think about it — it’s brilliant business because every time you spend a dollar at a grocery store, Delta is getting a cut of that.

Copy LinkInside the CrowdStrike meltdown

SAFIAN: Let’s talk about CrowdStrike. The CrowdStrike network outages really hammered the airlines — Delta worse than others. My recollection is that in previous kinds of crises, Delta systems generally held up better than some of the other airlines. 

KELLY: Delta is sort of at the forefront of technology. United is also very good as well. It’s sort of United and Delta have invested a lot. So it was very concerning to see this complete and utter meltdown. Delta had poor systems in place, and did not have backups for their crew scheduling.

So essentially for several days, their system that tracks, and think about it, I think they have 900 planes, at all times pretty much flying globally, and multiple crew members who have different timeouts, right? I mean, it’s an insane mathematical problem. Anyway, they lost the computing power to decide all that, I think they were doing it manually. And that’s just a math problem even the smartest mathematicians can’t do in real time. You certainly scratch your head and think, like, ‘how were there not plans in place for this?’

SAFIAN: The other airlines had backup systems?

KELLY: Apparently. Well, and not every airline uses CrowdStrike. Certainly it was a mega failure and one that you cannot place on CrowdStrike. It was Delta’s response to a vendor issue or lack thereof that caused their mistake.

SAFIAN: It’s interesting. Delta was so, I felt like during the pandemic in some ways, ahead of other airlines, better at communication, and they just kind of slipped here.

KELLY: Consumers are so willing and love when companies can just own their mistakes. I mean, when people had weddings canceled, people couldn’t see sick family members stranded for days. When you’re putting consumers through hell, you know, that’s when you really need to have some humble leadership that first and foremost focuses on the suffering of your customers 

It took Delta four days to even come out with their consumer policy. And I think that’s so wrong because think about it — especially consumers who don’t have a lot of money. You’re with your family. You’re supposed to go to Orlando, the big Disney trip of the year. You scrounged your money to get to do it. You’re at the airport… Delay, delay, cancel, cancel, cancel. The Department of Transportation says I’ll get a refund. Great. But now I’m losing 2000 in hotels, park tickets, et cetera. Do we fly on United at last minute, at 500 a ticket for five people? In the end, Delta covered that but not until I’m sure tons of people had to say, you know we’re calling it quits when they could have just rebooked themselves. And I think that’s really lousy. 

So this is where I hope we can educate the flyers like — Hey, look, these meltdowns are going to continue happening. They happen every six months or so. Sometimes it’s an airline. Sometimes the FAA systems, someone uploaded a bug and they shut down the whole, you know, U.S. aviation system for a day — that was last year. So. I just think we need clearer consumer guidelines when the airline goes wrong, that you’re not having to wait in a hundred person line at a crowded airport with stressed out frontline employees who are essentially God in that situation and they get to decide what happens to you.

SAFIAN: It’s a paradox that busier airports don’t necessarily translate to flush times for airlines. But Brian’s explanations about habits and pricing help connect the dots. As for his point about clearer consumer guidelines, it’s a good practice for any industry. 

After the break, Brian digs in about Southwest, JetBlue… Plus shares his insider tips on how best to use rewards points. Stay with us.

Before the break, travel expert Brian Kelly explained why this summer’s travel boom hasn’t necessarily helped airlines. Now he talks about Southwest’s open-seating pullback, why he loves JetBlue, and why he calls today ‘the platinum age of travel.’ Let’s dive back in.

Copy LinkWhy South West moved to assigned seating

SAFIAN: Southwest is giving up this sort of ‘seat yourself’ model. It feels like the end of an era or the end of what defines Southwest. I don’t know, it’s such a key part of their business model. What changed?

KELLY: I mean the lagging of their competitors is the straw that broke the open seating back. You know, they’re not doing this because they did market research and all of a sudden they realized that everyone wants assigned seating. This is strictly a revenue play. Their model is a relic of a time that no longer exists, losing billions a year in seating fees, they also still give two free check bags, losing billions a year. 

Southwest for many years was the leader. They had brand loyalty when airfares were higher, planes were fuller, less meltdowns. You know, they got stuck with an 800 million fine for their fiasco in 2022. They also got dinged with the Boeing issues and delays of new aircraft. So they’re struggling in a lot of different ways. So I think the culmination is — we have to deliver to stockholders and let’s do it by monetizing what every other airline does. What remains to be seen is will they still give away two free check bags?

Copy LinkWhy low-cost airlines rarely do well

SAFIAN: You would think that with the airline’s emphasis on higher margin tickets and higher margin products overall, that it would kind of open the way for new budget airlines, but that doesn’t seem to be happening.

KELLY: No. And I mean that low cost carrier model is really, really tough. The ones that are doing well: Avelo, Breeze, they’re serving these new markets at the big airlines. They’re small potatoes. There’s a lot of movement happening into the rust belt. You know, there’s people retiring into parts of the country that are not just Naples, Miami, Jacksonville, and some of these low cost carriers are doing well serving those communities. Allegiant is a great example where they serve random airports on random flights and the people who love it, it works. 

So I think the fact that our infrastructure in America, our airports are overcrowded, air traffic issues, there’s also pilot delay, you know, shortages and aircraft shortages. And also the major airlines try to push you out. So they’ll drop their prices to bleed you dry ‘cause they can do that a lot longer and we see that happening. You know, American Airlines is really trying to push out JSX, which is the semi-private airline that’s starting to take market share in LA and Dallas. And you’ll see the airline start to really sue them in court and do whatever it takes to make sure that these low cost competitors don’t come in.

Copy LinkUnderstanding the JetBlue-Spirit merger halt

SAFIAN: Earlier this year, we had the JetBlue/Spirit merger blocked. What does that mean for the industry moving forward? What does it mean for JetBlue and Spirit?

KELLY: It’s not great for them because all the other airlines merged during more friendly times. I see their point of view saying it is really hard for us each individually to operate at scale at the size we are when this country has already allowed the top four airlines to, I think it’s over 80 percent market share. You know, you really gain efficiencies of scale when you merge and that’s really how you become profitable in airlines. So basically they tried to do it at the wrong time, wrong president.

Now, do I think mergers are good for consumers? In general, no, I mean, I actually like JetBlue. I fly JetBlue Mint. I’ll even fly JetBlue Economy at six foot seven ‘cause they have really spacious seats. free snacks, free wifi, free Dunkin Donuts. It’s a great airline. So what would have happened in that merger is all Spirit planes would have become more premium JetBlue planes, which when you think about the market for cheap bare bones flights, it would have dried-up. So, you know, I see both sides of it. But in general, the more consolidation, the less cheap fares in general, I don’t think is great for consumers. 

Copy LinkThe consequences of the Credit Card Competition Act

SAFIAN: Are there topics and issues beyond airlines, travel-related, that you most have your eye on right now?

KELLY: Well, yeah, I mean, so clearly, I’m The Points Guy, and I call the current age of travel, we’re in now ‘the platinum age of travel.’ I mean, credit card points and loyalty, when you know how to play it, is incredibly lucrative. And we’ve had this boom in credit card and loyalty, and now more and more people are traveling, saving thousands of dollars using points. 

There’s a piece of legislation called The Credit Card Competition Act, which was introduced last year. Which people don’t realize could fundamentally change travel, and increase airfare, and take away the ability to earn points, which now, I mean, is like an American rite of passage. Everyone has their points, credit card, their airlines. 

Essentially what the government’s trying to do is — so say you have a Chase Sapphire Visa, you pay 550 a year, you get triple points, you get your lounge access. You’re happy. The government, if this bill passes, is going to force you to have essentially a debit card network. The government is going to give the right to retailers to choose which network to run. The retailers are salivating at this bill because it would take billions of dollars in value and reduce processing fees. Consumers wouldn’t get points or nearly as many, and it would put that into the bottom line.

So basically, Bob, every time you want to use a credit card, you would need to negotiate, haggle and argue. So if you’re at a restaurant, you would say ‘you better put it on the visa.’ Because the restaurant has the power, the retailer has the power to choose. And of course they’re going to choose what’s in their best interest, unless you negotiate. So every single time you use your credit card, you would have to negotiate to get the points that you want. So it’s this law and this is the one big thing that could, I think, cataclysmically impact travel. And the airlines, which make billions from their credit card co-brands, as we discussed, are going to lose billions of dollars. What do you think they’re going to do? Oh, it’s a shame, you know, let’s just start losing money and keep flying planes at a loss. No. Fares will rise. So consumers are going to get hit from multiple angles. 

SAFIAN: I never really thought about that airline travel is basically being subsidized by credit cards.

KELLY: A million percent. People go on trips solely because they have enough points. Great, my flights to Hawaii are paid for. We’re going to Hawaii. If you dramatically reduce the amount of points and earning, it will reduce commerce. It will reduce employment and, you know, leisure centers.

SAFIAN: Well, it reduces incentives for the airlines too, right? Like their business becomes different.

KELLY: Correct. They’re going to make the money elsewhere. Trust it. You know, the government, dear government, they’re like, ‘we got the banks this time.’ I’m like, ‘you don’t understand how business works. They’re going to make it up.’ They’re going to figure out and guess who’s going to pay for it? Consumers. 

SAFIAN: You’re highly passionate about this. I can feel it.

KELLY: Yes.

Copy LinkThe Point Guy’s top point hacks in 2024

SAFIAN: Before I let you go, best point tips for travelers right now?

KELLY: I would say here are my top points hacks: So since the pandemic, almost every loyalty program has waived the cancellation fees on award tickets. So I use my points like an insurance policy. So when I was flying Delta during the meltdown, I had a backup reservation on United using points. So if my Delta flight didn’t go out, get this, you can cancel your award tickets up until one second before departure. So if you’ve got a lot of points, I view my points as insurance policies. I don’t buy travel insurance. That’s the other tip. You want to have credit card transferable points. You don’t want to just all have all Delta or American. You want to have Amex points, Chase. Built, Capital One, those points allow you to transfer, allow you to transfer to a number of different partners. 

So when I’m sitting there at the airport and I see there’s one flight on United on the other LA flight, I think mine’s going to get canceled. Bam. I just make a points reservation. If my original flight goes out, I cancel and I get all my miles in cash back, zero fees. That’s what people don’t realize, like, you can use your points as insurance policies to make sure you’re getting to where you go.

And my other tip would be, say the US programs have increased the amount of miles you need for tickets. You know, you look at Delta going to Europe — 375,000 miles each way, 750,000 miles for a business class ticket. That same flight, if you transferred Amex or chase points to Air France, their partner, as low as 50,000 each way. So the deals are with foreign frequent flyer programs. Cause once again, in France, they don’t have a hundred thousand point offers-bonanzas like we do here. So we’re seeing inflation in the amount of award tickets for US programs, but not nearly the amount for the foreign programs. Cause if they did that in France, where their French members can’t earn points like we do, there would be a riot.

SAFIAN: Well, I gotta get off cause I gotta go jump on and make some reservations. 

KELLY: I’m here to help.

SAFIAN: Well, Brian, this has been great. Thanks for doing it.

KELLY: Thanks so much for having me. Safe travels.

SAFIAN: ‘The platinum age of travel’ sounds pretty good for business travelers, but less so for those in economy. The upside: maybe economy will be upgraded, to grab a competitive advantage. Or maybe airlines are too obsessed with higher profits for that. And I guess if I had to choose, I’d rather put the incremental investment toward safety, aging infrastructure and vulnerable tech systems. Then again, a few more inches of legroom? I don’t know, it sounds pretty good! I’m Bob Safian, thanks for listening.