The David Neeleman Interview

Hello and welcome to the airline Weekly Lounge, I'm Gordon Smith.

While J&I are away for the holidays, we're bringing you two special episodes, with extended

interviews from our recent Skift Aviation Forum held in Fort Worth, Texas.

In this second program, I'm in conversation with Aviation Legend, David Neelman.

In this fast-paced on-stage interview, Neelman and I cover everything from the health of

the U.S. airline industry to his controversial views on sustainable aviation fuels.

Enjoy.

David, welcome to the Skift Aviation Forum.

How are you?

That was apropos.

I'm leaving here to go to Atlanta to catch an Etihad flight to Abu Dhabi.

So I get a lot to look forward to.

A little palette cleanse of that.

Yes.

It feels like ancient history now, but the government shutdown was pretty nasty, and it's not over yet.

January 30th looks like a new deadline.

You've seen a few shutdowns in your time.

How did 2025 compare and watch your message to those in DC?

Well, this was the worst one of all time.

It went on longer than it should have gone.

I hope there was some lessons learned.

The sad thing for us is that we had a street going of almost 50,000 flights with one single

cancellation.

And we walked into our chief operating officer and said, you're going to have to cancel

32 flights over the next summer days.

He goes, nope.

I'm not going to do it because that's not what we do.

And as it turned out, some people did, and now they're doing investigations and talking about

a $70,000 $5,000 fine for every violation.

But, you know, it's just a shame, really.

It's not necessary.

Hopefully, these guys will get together, learn some lessons.

You speak about lessons.

What are the lessons?

Well, the lessons are that people don't like shutdowns, and it affects people's lives and

it affects the economy.

It affects people's ability to earn a living.

Air traffic controllers are not being paid going to work.

T.S. agents.

Ironically, we had less problem with the T.S. agents, and they make a heck of a lot less money

than the air traffic controllers.

They came to work, and they didn't get paid.

And, you know, hopefully, cooler heads will prevail, and we'll be able to get something

worked out so that we don't have to go through this again in January.

You spoke about your network there.

One cancellation out of $50,000, or at least it was up in two.

Yeah, March 30th until the shutdown.

We had one cancelation, maybe we shouldn't have canceled that one.

What was it?

You must have been so frustrated.

It's Mike Orders, who's our chief operating officer.

You know, we embarked on this program last December, a year ago.

You know, I just got out of the options together.

I say, guys, this ridiculous.

We have smaller planes.

We can turn them quicker.

We don't fly in congested airspace.

We have plenty of overhead bin space.

We don't have to gauge up bags.

We need to be in a one on time in the country.

There's nothing else is acceptable.

So the next three months, we were 12, 12, 12, 12, and then we start climbing.

And then for the last three months, September, October, November, we're number one.

So we intend to stay there because, you know, we don't have connections.

The complexity of our operation is much, much less.

So there's no excuse for us not to be the number one on time airline.

If we can get, not cancel your flight, get you there.

90% on time.

We can not lose your bag and give you a great experience.

Especially when you're brand new competitive brands.

Yes.

That helps.

Well, you know, fit.

I keep telling our people that 50% of our customers on every single flight, on average, are brand new to breeze.

So, you know, you never.

Are you today?

2025?

Because we have some, we're growing.

We have 42% growth.

So it's just, people come fly us and then they come back and fly us again.

But the best way to mature, the way you make money in this industry is to mature a market.

Especially markets like we fly where 83, 85%.

Well, I think we've got a slide we can show to, to represent that.

You've texted just five cities out of around 80 that you've launched.

Yeah.

83% of Q3 routes were exclusive to breeze.

What is the secret sauce between establishing, whether a city of destination is underserved,

or that's been left in the bargain bin because it's frankly not very good?

It's true cost.

You know, what we, you know, you have a legend there has been around for a long, long time.

They've done, you know, really a really good job.

But, you know, they decided to go bigger.

They went to 200 C maxes and then back to 190 and work actually just keep going smaller.

We started out with 130, we will, we start out with more.

But 137 seats, 12 first class.

We're going to go to 136, 16 first class.

And then we're now looking at going to 21st class seats because.

Angels here somewhere.

So I will say a cent as well are a feature of marketing, a cent and branding.

Yeah, it's a cent first class.

So, you know, it's, it's all about trip costs.

If you can do, if I've got a 20% lower trip cost than those other guys,

then what happens is I can fly more on Tuesday and Wednesday.

I can, you know, operating costs are really low because of fuel burn.

But it just allows me to go to cities that other people can't go to.

And what we find is that about 80% of our traffic is stimulated.

You know, if you're living in, you know, Westchester County area of New York.

And you have two non stops today that go to Viro Beach.

People are just going down there and buying places.

They're like, I, I used to be able to go to Orlando and drive two hours

or I'd go to West Palm Beach and drive two hours now and go to Viro.

And hey, real estate and values in Florida are falling.

Let me just go buy.

And so a large percentage of people on our flights are on second homes

in the places where they fly.

No different than Ryanair.

You know, when they start flying them to, to Europe.

Until they don't though, because you know, as well as Aldi Reiner and many other ULCCs,

they can come into a market when they get the incentives and pull out just as quickly as they came in.

Well, you use your example.

If you're buying that Florida beach house based on a breeze root.

Yeah.

How much confidence have you got?

Well, I would put our pull-out rate up against the innovates.

You know, I, there's a slide on that.

But we pull out less than anybody else because we have a lower troopers.

And you know, it takes less people on the airplane for us to make money than anybody else.

Like you said, we pulled out of five cities out of 80.

Probably three or four will go back into.

But the timing wasn't right.

And we've learned a lot.

We've gotten so much better.

You know, I looked at our growth this summer over last summer on the newly launched schedule.

And we grew in every single one of our cities.

So it's not like, oh, no, this was not working terribly.

We don't grow unless we're doing well.

And it's people love flying breeze.

Let's continue the growth discussion.

You're going international as of next month.

We had the devastating hurricane come through Jamaica.

No, Montego Bay was one of your initial launch routes.

It was a progress update on the thinking that.

Well, it's, you know, I think we should ask the hotels.

But the word we're getting is that they're making good progress and getting open.

Obviously, we can't fly there if the hotels aren't open.

So as long as they can get the hotels open, we'll be there.

Your numbers, man.

How many international destinations do you think breeze could reach in two course?

A lot.

I mean, there's so many long thin routes.

We can fly from our cities.

You know, some of obviously not all the cities that we have have customs.

And that's like a problem with Provo, for example.

But, you know, international is really important for us.

And, you know, it's interesting that a legion has never flown international.

Because we do really well.

Everybody does on Thursdays, Friday, Sundays, and Mondays.

Saturdays a little weaker, but we have a lower trip past airplanes

so we fly more on Saturdays.

And then you have Tuesdays and Wednesdays.

So being able to kind of go to international destinations like Cancun,

or to Montego Bay, or to Puntacana on a Saturday where I have all these inclusive resorts,

turns Saturday that's kind of a not the greatest day into one of our greatest days.

That's where international works so great.

So we focus more on areas where there's all inclusive resorts where we dump them off.

They're coming from Providence, for islands, freezing cold, drunk them off of Cancun.

We'll be back next Saturday, pick you up.

And then we have a Wednesday rotation we can use as well so you can stay three or four days.

So, yeah, international is important and it's going to add a lot to us.

Speaking of our freezing cold, you're speaking to a Scotsman.

Can we ever see breeze going transatlantic?

You know, it seems like everything takes longer, you know, with certifications and all that.

And obviously we'd have to have e-tops to do that.

And, you know, the plane has got good range, but it's more kind of Ireland,

Scotland, British Isles kind of range from the Northeast.

And I think there's probably some demand there,

it's not really high on our priority list today.

Got it.

This might be a conversation between David and I, but we want to hear from you as well.

Get on the skip to have the Q&A function there towards the end of the session.

We'll try and take a couple of questions.

David, you previously described breeze as quote,

a technology company that happens to fly aeroplanes.

So the uninitiated, that sounds a bit like Silicon Valley talk.

What does it mean in practice?

When I started JetBlue, we were a customer service company that happens to fly aeroplanes.

Yeah.

And that was the hallmark of JetBlue.

When I started it, and it's got Kirby lately said,

JetBlue started with the customer in mind, and that's the difference.

And what you're seeing from the other ULCCs are really struggling.

But people don't want to smile in a boarding pass.

They just want to do everything on their app, and they want to be able to do it.

So, you know, we don't have the most advanced app today.

We're getting there.

We have a great technology team, and obviously all this AI program is helping tremendously.

But we just want something that's really easy to use.

And if you can just book yourself, drop your bag, scan yourself on the airplane.

Really the only person you ever see is our flight attendants and they're amazing.

So, they do a great job.

Do you have additional call sensor if I want to just pick up the phone and speak to someone?

No, we don't.

No.

And we will...

You text us, we'll get right back to you.

Under 10 minutes, we'll resolve everything.

Everybody works at home.

It's just not these big, huge call centers with full of people that are miserable.

Everybody works at home.

And then, you know, the little bit of a twist I've told everyone,

look, if somebody really gets frustrated, ask for their cell phone and pick up the phone and call them.

Okay.

So, yeah, there is...

Empowering the...

I'm an amp for people who are frustrated.

But, hey, if you can never cancel flight and you can get everybody on time,

they just don't...

You don't have that much to deal with.

So, that helps a lot when we're in these areas where we don't have congested airports.

Prevention better than cure.

You're listening to a special episode of the airline Weekly Lounge.

Don't go anywhere.

We'll continue our discussion with David Nealman right after the break.

Hello and welcome back to the airline Weekly Lounge.

Let's continue now with part two of our onstage interview with David Nealman,

recorded on December 3rd at the Skift Aviation Forum in Fort Worth, Texas.

Breeze took flight in 2021, the same year as a Velo.

We haven't had any meaningful attempts at breaking the U.S. airline industry since then.

Do you think the start-up window has closed?

Or is the still room for brand new entrance?

You know, I don't think there's a lot.

The big three in Southwest, Alaska, they've become so much better at what they do.

When I started JetBlue, you get on our plane, there was a light TV, a leather seat,

a brand new airplane, the new plane smell.

People were just kind of dazzled and blown away by it.

You get on today, you get on Delta and free Wi-Fi, light TV.

First class, which JetBlue is getting, but doesn't have yet, new planes.

So, you got to do something completely different than everybody else.

I mean, go into the teeth of those guys with their credit card, revenue that they have,

their international networks, their free qualified programs.

You know, I would never run an airline that's overlapping those guys

because they're basic economy where they can match the fairs.

You go over to Europe and Ryanair is still booming.

And they say, what's wrong with you with the low fair business in the United States?

And it's like, Ryanair just stuck to what they were doing.

They were going to Terceria and secondary airports.

They didn't try and go B what they were.

You know, they build a tremendous business and, you know, and, you know,

spirit obviously has really struggled in, you know, same with Frontier.

I know a lot of people in the room are excited to hear from Johnny Gerrity shortly.

Yeah.

She is...

I was with Joanna last night.

Joe Peterson, who's the longtime chairman of JetBlue, who replaced me at JetBlue, passed away this week.

So we were at his weight together last night.

I got the five AM flight and she got the seven AM flight.

But American, I had to spend 20 bucks for the Wi-Fi and I would have been free on Delta,

so interesting there.

You know, see more left yet?

Hopefully he's back running what's going on in there.

She's spoken about, Joanna, that is about the pursuit of a level playing field in the US.

Do you think the chips are loaded against new entrants and to the smaller players?

Yeah, I mean, to a great degree.

But what do you do about it?

You know, I mean, you can't...

You know, I guess if you...

You know, there was legislation to do something with the credit card.

Those things are so dang powerful.

I've got a Delta SkyMiles in my wallet because I live in Salt Lake and I've got kids in Dayton, Ohio.

And I use my Delta miles to bring them home.

So, you know, it's...

I think obviously I have a great affection for Joe Blue and I want him to do well.

But I just don't know what you can do to stop the power of these airlines.

They've really got to figure it out.

You mentioned Rhino there.

Last week, they scrapped the subscription program.

Rhino Prime after just eight months.

We surprised that a company as successful as Rhino in the local space was able to make a strategic misstep like that.

You know, you got to give them credit for throwing things against the walls if they stick.

So, obviously it wasn't living up to their expectations.

And all the details of it.

But, you know, we were always trying new things.

You know, the cool thing about Breeze, the thing that I've...

That is most amazing for me is that...

The way that Lucas Johnson, our chief commercial officer, bundled everything.

It's just not obnoxious.

It's not ridiculous for customers.

They don't feel like they're being nickel and dined.

They can buy a nice, nicer and nicest.

And our NPS score...

When we run over 90% on time, our NPS score is 80.

It's just like clockwork.

So, people really love flying Breeze.

And I know that airlines are like, oh, now what are we going to do to hurt those guys?

80% of our people are generate.

I mean, if you can fly someone non-stop and they can go buy a house and go 10 times or 12 times a year or...

Then go visit people.

You know, there's this great migration from the Carolinas to the Northeast.

Then, you know, people...

People are just going to go more often.

And it's all generated.

It's generative.

Almost every bit of it is.

Lots of focus on Breeze and JetBlue.

Azul is another one of your babies.

The restructuring process has been extensive.

Look at the split.

Yeah, give it an update on the restructuring.

So, you know, Azul was going into COVID.

It was one of the most profitable airlines in the world.

Had TripAdvisor was the number one airline.

We were paying about $60 million in interest a year.

That ballooned it to over $300 million a year because of exchange rate.

The COVID debt we took on.

And so, it's been a lickety split.

I mean, everything's approved.

Our exit hearings next week will be out in...

It's stockpastructuring again in Missouri's February.

And so, yeah, it's been tough.

But we've lowered that $300 million of interest payments down to about $70, $80.

And so, the company generates an enormous amount of cash.

But it was all going to banks.

You know, we had to restructural that.

Now, we've got some shareholders going to do really well.

You're straight talking on a number of issues.

Sustainable aviation fuel.

I know it's one of your favorites.

What it's going to be about aviation fuel is that...

AI is going to pass us out.

Let me give you the key.

AI is passing out the airlines.

It's like...

Let me give you the quote first.

You said, Sustainable Aviation Fuel was a complete waste of money.

Total.

Why do you believe that it's such a lousy solution?

Because it makes no sense.

I mean, you basically generate so much carbon generating that stuff.

And I was on stage with Willie Walsh and he was saying,

oh, it's going to...

You know, we make $20 billion as an industry.

And it's going to raise our cost by $200 billion.

And I just said,

all of you in the audience are going to be out of it.

You're not going to have jobs.

No one's going to have a job at this little audience.

And you don't really solve anything.

It was just...

You know, we have such a small percentage of it.

It was all folly.

It was all window dressing.

It was all just fake for the longest time.

And now with AI passing up the airlines,

we're falling behind on CO2 emissions.

So let's be really clear that what is AI going to do with CF?

Because you have so much power generation.

To generate all the AI stuff that they're going to create so much CO2.

So they're going to be...

Unless we all go nuclear.

AI is going to be the new bad guy.

Yeah.

Yeah, AI is the new bad guy.

So go after AI.

Don't go after airlines.

I promised a few questions from the audience.

Here's one.

What is your outlook for further industry consolidation in 2026?

You know, I think spirit and frontier need each other.

They need each other.

I think they do.

Yeah.

Barry Bethel may not say that.

But I think they do.

And I think the spirits restructuring now is meaningful.

They've been able to cut their pilot salaries.

They've been able to get rid of a bunch of airplanes.

They got some cash from America and from...

You know, I seem proud as well.

You said they need each other.

Are they going to get each other?

Well, they need the synergies.

And they need to not stop competing.

There's room for a ULCC in the U.S.

But probably not too.

And so if they get together,

you cost synergies, revenue synergies.

I think they'll probably be okay.

A few more quick files.

Will 2026 be the year that buries IPOs?

I don't know.

Probably not.

Probably 2027.

Okay.

We've made tremendous progress.

And you know, our budget next year is profitable.

We've been...

We're profitable too.

The four quarters of this year.

You know, it's got to solve January and September.

But yeah, it's...

We're doing well.

I mean, year over year.

We're really pleased.

And it all comes from running a great operation.

So all eyes on 2027.

Look down to Group IAG, Air France KLM.

Who is going to win the battle for TEP?

Yeah, you know, I had it kind of sold to...

To look down at one point in time.

I kind of think they would make more strategic sense for them.

I don't think being that close to Madrid

is a really good idea for the...

For the strategic of the company long term.

I think it would drain Lisbon.

So, you know, either probably Lisbon or Air France, I would guess.

Got it.

So just to clarify, not IAG.

Well, I just think the hubs are too close.

And I think Lisbon really needs a Southern European...

Anchor Point.

Yeah, Anchor Point.

Yeah.

Would you buy the A22500 if it was offered to?

I'm not really sure.

Because, you know, I think it all depends on the price of the airplane.

If Airbus is saying, look...

And we're going to put this little plug in here in Niagara

and charge you a heck of a lot more.

But they're not playing a new engine.

I don't think so.

Because the engine guys are so worried about what they're doing today.

So if you have a bigger, more expensive airplane

that doesn't give that trip-cross advantage that we love,

then we're not really...

We'll look at it, but we're not...

We're not thinking it's essential for us.

Lisbon from the audience does breeze of any plans

to launch a co-branded credit card.

We have one.

It's in my wallet.

There we go.

Alongside of my Delta SkyMiles card.

Which one do you use more?

Oh, I can't answer that question.

But we have a great card.

And, you know, the thing about our card is...

It's really incredible.

Because we play on these unique destinations,

I was in Tampa the other day,

and I was standing in line talking to our guests

as they were getting on there,

as they were checking in.

And this guest was like,

our daughter is in Charleston,

and she's in medical school.

And today, we're going to Myrtle Beach,

and I said, you have the credit card,

and he said,

no, we're going to get it.

Because if you have...

If you're just flying where everybody else flies,

why do you need a credit card?

But if you're flying where nobody else flies,

then you...

There's the value card.

Because we've just launched our new

freaking flower program that will be in effect in January.

We're really excited.

Yeah.

We've rewards.

And it's really going to be great.

And we'll make the credit card

even that more important.

And it's becoming meaningful.

We keep exceeding our goals every year

that we have with Barclays.

We just passed the goal for this year,

before, you know, with a month and a half to go in the year.

So, yeah, people love the card.

And as far as revenue per passenger,

we're already approaching,

like, spirit frontier,

that they've had over 15 years.

I know you appreciate it.

And on time arrival,

we're clean out of time.

One final one.

2026 is looking...

Don't, don't, don't.

Finish this sentence.

That's pretty good.

Yeah.

If we can avoid another shutdown.

But it's, yeah, we're...

You know, it's...

When you keep lapping all these markets

that you've been into over 12 months and over 24 months,

you know, they just continue to mature.

Because, you know, when you start a route,

you have no repeat business.

And then they start coming back and flying you again.

And then it matures and does so much better.

So, you know, we're...

As a...

We're still adding 15 new airplanes next year,

but as a percentage,

it's going to be lower of routes

that were in the zero to six months,

is where you kind of lose your money.

So, no, we're...

We're very encouraged and very optimistic.

Look forward to you joining us next year

for a progress check.

David, thank you so much.

Thank you.

Appreciate it.

And that brings us to the end of this special episode

of the airline Weekly Lounge.

If you're a Skift or airline weekly subscriber,

check out our archive for more full length insights

from the Skift Aviation Forum.

And if you'd like to learn more about our upcoming events,

check out live.skift.com.

Thanks as always to our producers Monica and Will,

and wherever you are on the world.

Thanks for listening, happy holidays,

and we'll catch you next time.

Bye for now.

Whether you're listening to us on Spotify, Apple,

or wherever you get your podcasts,

please make sure to subscribe,

rate us five stars,

or leave us a positive review.

This really helps us get the word out about the airline Weekly Lounge.

So, we can continue to bring you this podcast

every week, absolutely free of charge.

And if you're watching us on YouTube,

make sure to subscribe to the Skift channel,

and hit the notification bell to find out

whenever a new video drops.