# State of the Aviation Industry (part 1) feat. Thomas Jaeger & Addison Schonland

An episode of [The Indian #AvGeek](https://invisiblenetwork.ai/podcast/1759764345), 5 Apr 2026, 1 h 00 min.

Audio: https://anchor.fm/s/f945ecd8/podcast/play/117961662/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2026-3-4%2Fc851270d-857b-57bf-7eda-0e93fe5269e0.mp3

Episode 65 In our landmark 65th episode, we bring together two of the world’s most formidable aviation analysts for a rare joint appearance. Thomas Jaeger (Founder & CEO, ch-aviation) and Addison Schonland (Founder & Partner, AirInsight Group) join the show to dissect the state of the industry. We dive deep into the strategic earthquake of Willie Walsh joining IndiGo: Is he there to protect the low-cost core or to build an IAG-style multi-tier empire? We explore the "Death of the Pure LCC" as IndiGo and Air India Express embrace dual cabins and widebodies, and ask the hard questions about India's growing duopoly, is a 90% market concentration a systemic risk to the national economy? From the A321XLR’s potential to bleed major hubs to the brutal market share war between Boeing’s thoroughness and Airbus’s volume, this is a great listen for the economics and mechanics of flight in 2026. This episode is part 1. Episode 66, where the conversation turns to the global fleet crisis, engine backlogs, supersonic aviation, hydrogen, and blended-wing bodies, drops in three days. The Indian AvGeek streams on all podcast apps. ch-aviation - @chaviation Air Insight Group - @airinsight Vishal Mehra - @vishal1mehra

## Transcript

[0:05] Welcome to a very special two-part milestone of the Indian
[0:10] App Geek. My name is Vishal Mehra.
[0:14] Today marks our 65th episode and to celebrate, we are not just
[0:20] bringing you an interview, we are hosting 2 Icons of Global
[0:25] Aviation Strategy. If you follow the hard data of
[0:29] this industry, our first guest needs no introduction.
[0:33] Thomas Yeager, the founder and CEO of Chapter Aviation, sits
[0:37] atop what is arguably the world's most comprehensive and
[0:42] accurate intelligence platform for fleet data and operator
[0:46] news. When an aircraft moves anywhere
[0:49] in the world, Thomas knows about it before the ink is dry on the
[0:53] lease. Joining him is a man who has
[0:56] spent decades decoding the why behind the what.
[1:00] Addison Schonland, founder and partner of Air Inside Group, is
[1:04] one of the industry's most respected strategic analysts.
[1:08] From the complexities of engine economics to the shifting sands
[1:12] of OEM market share, Addison's foresight has guided some of the
[1:16] biggest players in the aerospace world.
[1:19] What makes today truly special is the rare convergence of these
[1:24] two minds. It has been nearly five years
[1:27] since Thomas and Addison last shared a microphone to dissect
[1:30] the state of the skies. In that time, the world has
[1:34] moved on from a post pandemic recovery into a high stakes era
[1:39] of Indian crisis, record-breaking orders and a
[1:43] total reconfiguration of the Indian market.
[1:46] Gentlemen, it's an absolute honour to have you both on the
[1:49] show. Welcome to the Indian app Geek.
[1:52] Thank you for having us. Let's start with you, Thomas.
[1:56] I want to talk to you about probably the biggest news in
[2:00] global aviation right now of Willy Walsh joining Indigo.
[2:05] Tell me, what do you think? Yeah.
[2:08] Obviously came as a surprise. And I think it's remarkable how
[2:13] fast they, they kind of pulled that very prominent rabbit out
[2:17] of the hat because it's only been three weeks since since it
[2:21] was announced that Peter was stepping down.
[2:22] And then they, they announced the, the, the most prominent CEO
[2:28] pick that you could possibly announce in such a, in such a
[2:32] short period of time. And I mean it's, it's, it's
[2:35] interesting in both directions. 1 is that this is probably the
[2:39] most interesting airline CEO top that that would be available
[2:44] worldwide because it's it's very fast growing dynamic carrier
[2:50] here. There is definitely going to be
[2:52] a top 20 airline for for decades to come.
[2:57] And at the same time, obviously Billy Walls is, is the the best
[3:03] known, most well connected CEO they could have probably picked
[3:09] having been the director general of IATA for, for, for quite some
[3:12] time. It's interesting on many levels.
[3:16] I mean, it's, it's also interesting from the perspective
[3:18] that so far the general wisdom was that you become IATA
[3:26] director general at the end of your career and you're going to,
[3:30] you have a great career at one of the big airline groups.
[3:33] And then the pinnacle kind of is that you become my other
[3:37] director general and lead the entire industry as a group
[3:41] thereafter. And so that, that, that was
[3:45] surprising from that perspective as well.
[3:47] That's obviously really jumped at this and decided to have it
[3:53] another goal. So definitely a very, very
[3:57] interesting toys, but I mean, it's it's it's probably a pretty
[4:03] good toys for Indigo. Yeah, Willy Walsh is, of course,
[4:07] widely known as the architect of the IAG model.
[4:10] You know, you have British Airways at the top, you have
[4:14] viewing right at the bottom. In terms of being in LCC, in in
[4:17] the value spectrum, you look at Indigo, They've been, they've
[4:22] had a very singular focus for the past 19 years.
[4:26] Of course, in the last couple of years they've started the
[4:29] loyalty program. They now have a stretch product.
[4:33] The 350 wide bodies are coming up.
[4:36] The 321 XLRS are already flying. All of these under Peter's
[4:40] leadership. Now Peter is gone.
[4:43] Willie Walsh is coming in. What do you think his mandate
[4:46] will be? Then Peter came in.
[4:48] It was very clear and it was very publicly discussed that the
[4:53] mandate was going to be to internationalize Indigo.
[4:57] And I mean, Indigo had international operations before
[5:00] flying to the Gulf, flying to ASEAN and so on, but not really
[5:05] on that massive scale that they want to grow now.
[5:10] And nothing has been that publicly said about Billy's
[5:15] mandate. I mean, there was an
[5:16] announcement some weeks ago after Peter left that Alec
[5:21] Singh, who used to be the CEO of Erica Express would come in to
[5:25] head strategy for Indigo. And Billy is going to come now
[5:33] in in August. And then that there is actually
[5:38] I guess 2 potential outcomes, 1 is that the strategy is going to
[5:41] stay as is and it's just going to get executed on the new
[5:45] leadership. And I mean, if the strategic
[5:48] decision would have been something outlandishly different
[5:52] than it would have been go back to LCC roots, then probably
[5:55] Billy Wilson would not have been the most logical pick for this
[5:58] anyway. So it's either going to be an
[6:03] execution of the current strategy or the two of them are
[6:07] going to be mandated to work out what the new strategy is going
[6:12] to be. Now you've mentioned I AG and
[6:15] obviously I AG is something that Billy Walsh was instrumental in,
[6:22] in building up. And yes, that included a low
[6:25] cost carrier. And I mean since then British
[6:31] Airways also kind of developed a known low cost carrier operation
[6:35] within itself by having be a Euro flyer in in Long Gatwick.
[6:42] And there is a lot there being done through brand
[6:45] differentiation. But Willy Walsh comes from Aer
[6:48] Lingus and that's where where he was before he became the CEO of
[6:54] British Airways. And Aer Lingus in a sense went
[6:59] the other way. So it started from being a
[7:01] traditional state owned carrier that operated like every other
[7:06] state owned carrier did it back in the old days.
[7:09] And then both market pressure and a lot of that market
[7:14] pressure obviously being Ryanair in front of its doorstep in
[7:18] Dublin kind of made it pivot more towards a low cost carrier
[7:23] short haul and, and and and staying more traditional in its
[7:30] traditional long haul market towards North America.
[7:33] So in a sense where Aer Lingus ended up is probably probably a
[7:38] bit where Indigo would like to be.
[7:42] So you could obviously say them picking Billy is, is that they
[7:49] that they want to continue that existing strategy that they have
[7:53] internationalized and let everything run as a single
[7:58] operation where domestically Indigo operates very differently
[8:01] than they operate internationally.
[8:03] Say one of one of his expertise is going to be to have a multi
[8:09] brand multi carrier operation and maybe they want to develop
[8:12] the group into something like that.
[8:14] That's still something that is going to be very difficult to
[8:17] pull off no matter if you do it as a as a single operator or if
[8:22] you're trying to build up a group of multiple carriers
[8:25] serving different roles. But in whatever it's going to be
[8:30] would be called Indigo Aviation Group or whatever IHE.
[8:36] That's, that's, that's a good one, Thomas.
[8:40] We saw the chaos at the end of last year when Indigo faced
[8:45] operational disruptions due to staffing and scheduling
[8:49] failures. In a market where two players
[8:53] still own about 90% of the slots, does a hiccup at one
[8:59] airline become a national infra crisis?
[9:03] Is India's aviation ecosystem now too big to fail but too
[9:09] concentrated to be resilient also at the same time?
[9:13] And yes, it becomes a problem because because you rely on air
[9:18] transportation in a lot of markets.
[9:20] And as we saw when that happened, there was a, there was
[9:24] a spillover effect then into ground transportation, which
[9:26] couldn't take the additional demand and volume either.
[9:29] So essentially there was no option left.
[9:32] But it's not, it's not like India is very particular in that
[9:38] sense. I mean there's a lot of other
[9:39] big markets that have very similar duopoly situations or
[9:43] maybe sometimes there is 3 players.
[9:45] I mean if you, if you just look to start somewhere out of the
[9:50] equator, I mean in Australia, it's it's situation is not much
[9:53] different. It's a duopoly and has been for
[9:55] a long time. In Brazil.
[9:58] You have three players essentially that are, that are
[10:01] relevant. So I mean, there's a lot of
[10:03] other big markets that have a very high dependency on very few
[10:06] carriers. And if you look at, if you look
[10:08] at if you go to 4 carriers or so, then then you have a lot
[10:13] more markets where there is really only four vendors.
[10:17] So there's always a, you know, when, when, when Southwest had
[10:20] their big operational meltdown that also had a massive impact
[10:24] on the US transportation system and it was over a holiday period
[10:29] as well. So there is not much, you know,
[10:32] if you're running the high load factors that we're running as an
[10:35] industry, one single carrier having an operational meltdown
[10:38] is always going to create a problem no matter if it's a
[10:41] duopoly. Or if it's if there's multiple
[10:43] carriers involved, Addison. In the last couple of years,
[10:48] predatory pricing has become an actual concern in the Indian
[10:52] market, especially with the exit, the shutting down and and
[10:56] consolidation of airlines. The Indian regulator, DGCA and
[11:03] the Competition Council of India as well, you know, makes one
[11:08] wonder if they are equipped to handle a duopoly or will we see
[11:12] a repeat of the US market where fortress hubs literally allow
[11:19] legacy carriers to keep fares artificially high for decades?
[11:25] Are we entering that phase even? You know, just a couple of days
[11:31] back there was a circular out by the DGCA on free allocation of
[11:36] seats, which has now been rolled back, yeah.
[11:39] But just before I get to that subject, I want to add to some
[11:44] of the thoughts Thomas has shared, which were exactly on
[11:46] target. One of the things that's
[11:49] interesting about the Southwest case and in the US when you have
[11:54] industry load factors, now you obviously we don't have a
[11:57] duopoly. We have basically 4 big
[11:59] carriers. But still, given the size and
[12:01] the maturity of the market, they act as a club if you like and
[12:05] which I'll get you predatory pricing.
[12:08] The interesting thing is with the Southwest situation, when
[12:11] you've got 7580% load factors and you have this meltdown,
[12:16] there's nowhere for the traffic to go.
[12:18] It takes three days is the estimate for the airlines to
[12:21] clear that traffic and move it. It took, it took Southwest
[12:26] probably 10 days to get their program and their systems, their
[12:29] network back to some kind of a rhythm.
[12:33] So when you have such consolidation, it becomes a huge
[12:36] problem. So let's let's talk about your
[12:38] predatory pricing thing. So obviously when you have a
[12:40] duopoly, the first thing that you'd learn in game theory about
[12:44] a duopoly is you don't compete on price.
[12:48] Now give an example. Southwest Airlines bought
[12:51] AirTran, which was based out of Atlanta and and AirTran competed
[12:56] with Delta. You don't compete with Delta.
[12:59] You try and exist. Delta's just too powerful.
[13:02] Atlanta is the most busy airport in the world.
[13:04] You don't you don't mess with Delta, they will destroy you.
[13:08] So what you're trying to do is stay under the radar.
[13:10] So Southwest comes along by far the biggest US domestic airline.
[13:15] And what did they do? They came into this fortress hub
[13:19] and the first thing everybody thought was Southwest is going
[13:22] to come in with their their way of doing business and they're
[13:25] going to cut prices out of Atlanta and this is going to
[13:27] hurt Delta. No, no, no.
[13:29] That's not rational. What did Southwest do?
[13:32] We will take Delta's pricing as the way the to do business out
[13:36] of Atlanta. The traffic didn't go away,
[13:40] demand didn't change, but everybody's now making money.
[13:45] Delta doesn't get irritated, continues to do what they want
[13:48] to do. Southwest does what they were
[13:49] doing with just more obviously bigger planes, more capacity,
[13:55] more everything, but not fighting with Delta and
[13:58] predatory pricing only hurts one person, the person whose credit
[14:03] card is bouncing off the off the the the payment.
[14:05] So it's a it is a big issue. Now you said you you mentioned
[14:10] the exit of the exit of go first.
[14:12] Well, firstly, pardon the the play of the word first there.
[14:15] Go first, I don't think was a particularly viable business.
[14:21] You know, they had that big fighter Pratt and Whitney with
[14:23] their blame, pratting Whitney for everything.
[14:25] Turns out they only made one payment.
[14:27] They didn't pay Praton Worthy for parts.
[14:29] That's why Praton Worthy stopped supporting them.
[14:31] You don't hear much about that. And when they came to the US
[14:34] court, the case quickly and quietly disappeared.
[14:37] So consolidation is a big thing. The the Vistara Air India
[14:42] situation. The fascinating.
[14:43] What Air India should have done was try and move towards a
[14:48] successful Vistara product offering.
[14:53] They didn't they they eviscerated and went, they went
[14:57] down market but down to Air India's levels and we'll see
[15:00] that that's not taking them in a particularly good place.
[15:04] The DGCA has covered itself in all kinds of misfortune.
[15:10] Firstly with the Air India crash and the investigation and the
[15:14] really poor way it's handled that and the way it's handled
[15:19] the Indigo situation. The fine is a bit of a joke if
[15:22] you consider how how much of A spank was that for Indigo's
[15:26] meltdown. So predatory pricing is not
[15:31] something that just lives by itself.
[15:32] It lives within a system. And predatory pricing is really
[15:37] not driven by the government or the it's driven by the market.
[15:42] And I think most people would say that Indian airline air
[15:45] prices, airfare prices are probably too low anyway.
[15:48] So it's that's a long winding response to your short question,
[15:52] that's all. Right, though I must say that
[15:54] the Air India brand name was retained due to its global
[15:58] prominence as a flat carrier and Vistara was quite limited in its
[16:03] awareness comparatively. On the product front, Air India
[16:07] did take the premium economy product from Vistara.
[16:12] It never had that before. Thomas, coming back to you.
[16:17] In spite of all the geopolitical disturbances, airports are
[16:22] packed. Of course, what's going on in US
[16:25] is something completely different.
[16:26] But airline revenues are crossing the $1 trillion mark
[16:31] this year for the very first time.
[16:33] Yet the financial foundation feels like it's made of glass.
[16:40] Why? Does it feel like the industry
[16:42] is holding its breath rather than, you know, celebrating?
[16:47] Of course we are well aware of what's going on in Middle East
[16:50] and how that has affected airlines across the world.
[16:55] Well, I mean. The executives everywhere around
[16:57] the world are less confident now than they were a year ago about
[17:02] what's in it for the industry going forward.
[17:05] And I think a lot of that comes from the fact that they have
[17:08] been spoiled post COVID. So COVID was a was a traumatic
[17:14] event for the industry, but then it was followed by a period of,
[17:17] of really high demand, significant increase in premium
[17:23] demand, an artificial constraint on the supply side, creating
[17:30] less supply than would have been required to, to, to satisfy that
[17:34] demand in the market. And that was pretty much the
[17:36] case everywhere across the world.
[17:38] So whoever hasn't made record profits the last couple of years
[17:42] probably shouldn't be in the business of running an airline
[17:45] because it was the easiest time ever to to operate.
[17:51] I mean, obviously not easy because there were a lot of
[17:54] challenges, all of the supply chain issue with aircraft being
[17:57] delivered late, engines not being as reliable as it should
[18:01] have been. But it was a great environment
[18:04] if you looked at the demand versus supply in that period.
[18:10] And what's changing now is that the demand isn't as great
[18:14] anymore as it used to be. So you hear everyone across the
[18:19] world speaking about softness of demand yields starting to go
[18:27] down and so on. So I don't think there's a
[18:31] single event that has caused that.
[18:35] And I don't think that that everything is, is is down to
[18:38] geopolitical issues caused by the Trump government or anything
[18:44] like that. I think it's just, it's just a
[18:46] combination of the economic development in various
[18:53] countries, the fact that there is less of a supply issue than
[18:58] there was before. And so, so we are now in a
[19:01] situation where that that extraordinary period after COVID
[19:08] where there was a massive amount of demand and all this much
[19:12] supply has come to an end. And generally speaking, the
[19:16] airline industry has never been very disciplined with capacity.
[19:19] There's always been capacity in discipline in most markets.
[19:23] As a result of that, there are always irrational players that
[19:27] drag the markets down and then that created this this this
[19:31] volatility. And I mean it's always been very
[19:34] small margin businesses for the most part different in countries
[19:38] where there is a lot of consolidation.
[19:41] So in the US you obviously have much higher margins, but.
[19:47] You also. Have to understand that if US
[19:49] airlines wouldn't have all of their ancillary revenue coming
[19:52] from credit cards and this and that and whatever, it will still
[19:55] be a razor thin margin business. So yeah.
[19:58] And that revenue from credit cards is suddenly under threat
[20:03] because of what Mr. Donald Trump has been talking about.
[20:07] Let's see. Let's see what comes out of
[20:09] that, Addison. Do you think that duopoly
[20:15] creates a systemic risk where which actually discourages
[20:20] foreign investment in the sector?
[20:22] You know, if if you go back some years, a decade or so, a decade
[20:25] and a half, Etihad had invested in Jet, I'm sure you'd remember.
[20:31] And after that there, there has been, you know, multiple times
[20:34] there has been conversation around Qatar trying to invest in
[20:38] Indigo. Of course, Indigo way more
[20:40] successful. They don't need, you know,
[20:43] Middle East money like Jet Airways did.
[20:46] There was conversation around Qatar investing in Spicejet
[20:49] also. That hasn't happened.
[20:51] Duopoly. Does that risk foreign
[20:53] investment in the sector? No.
[20:55] I. Don't think a duopoly and
[20:57] foreign investment are two things that you could should
[20:59] conflate at all. A duopoly is what it is inside
[21:04] a, inside of a market. And the, the the issue of
[21:08] opening that market to foreign investors is a, is a state
[21:13] choice. Most states will not allow
[21:16] foreign investment of more than 25%.
[21:20] For example, Qatar recently invested in Airlink in South
[21:23] Africa. They took a stake.
[21:26] Airlink wanted the money because a, the founder was going to
[21:29] retire. His daughter is a pilot at the
[21:31] airline and she did not, she's not interested in doing anything
[21:35] more than that. So it's a great way to exit, but
[21:38] it also good, good way to, if you're a small company like
[21:40] Airlink competing with a national carrier, it's a great
[21:44] way to build a financial cushion on which to do things like in
[21:50] this case, build on it an E2 fleet.
[21:54] So I don't think a duopoly and, and in foreign investment is, is
[21:58] 2 things that I would kind of put in the same category.
[22:01] The, the thing that the big thing here is what we, what we,
[22:06] what we, my view that we, we, we, we see too many countries
[22:10] who feel that a flag carrier is something that's important.
[22:14] I think increasingly, particularly you see this in
[22:16] Africa and, and the truth is you could say the same thing about
[22:20] the, the, the ME3, the Middle East, three Qatar, U Emirates
[22:26] and and what is the other one, the other one?
[22:30] Yeah. You know, if you go back 1520
[22:34] years, no one ever heard of those countries, never suddenly
[22:37] that their flag was on the tail of an airplane and the airlines
[22:40] grew all over the world. Now everybody knows where they
[22:42] are. So there's a case of a national
[22:45] carrier doing something. But again, duopoly and and
[22:51] foreign investment is something that I don't know that I would
[22:54] sort of put that that cocktail together.
[22:57] Countries don't need to own airlines.
[22:59] It's ridiculous and I should and and I think that if you're going
[23:03] to be, this is the American and me, I suppose, open the market,
[23:08] let let the winners win and let the losers lose and don't
[23:12] irritate the taxpayer. Why should the taxpayer living
[23:16] in India? Vishal, you, you would know what
[23:18] the taxpayer put into Air India. Billions for what?
[23:22] For. Years for years, non-stop.
[23:25] All that money could have gone to education, to healthcare,
[23:27] whatnot. And so now it's in thin air.
[23:30] Right. So the question you need to ask
[23:32] yourself there, where did the duopoly fit in there didn't fit
[23:35] in all and it wasn't an issue. The fact is, whenever you get
[23:39] states getting involved, all they happen to do is their their
[23:43] eternal investment and their investment decisions are not
[23:46] based on economics. They're based on something else,
[23:50] public policy, particularly politicians getting upgrades.
[23:53] I mean, bottom line. So yeah, that's my again, my
[23:59] long winded answer. Sorry.
[24:01] Yeah. But I think, but I think it's.
[24:03] Also driven, you know, I mean, in a sense the Indian
[24:07] government's policies have led to this duopoly situation
[24:12] because duopoly was created by an Indian government's decision
[24:16] to divest of Air India by choosing the partner they were
[24:21] going to go with, which happened to be a competitor of Air India.
[24:26] By having rules and regulations for many years that restricted
[24:31] new carriers from being allowed to fly abroad by having very
[24:35] strict traffic right allocations and, and giving them to the
[24:42] established players and so on. So, I mean, the Indian
[24:44] government creates the duopoly themselves with the policies and
[24:48] procedures that they had for, for how to, to create a, a, a, a
[24:54] playing field for Indian carriers.
[24:56] So in in a sense, had the Indian government not wanted a duopoly,
[25:02] they could have prevented that from happening.
[25:05] Good point, yeah. I mean that that's, you know, we
[25:08] can have a whole podcast on the Indian government and, and the,
[25:13] and the policies and the steps they have taken in the past
[25:17] different administrations. But yeah, Fairpoint Thomas,
[25:21] guys, I want to talk about the death of the pure LCC model in
[25:27] some ways in especially in the Indian market.
[25:31] You see Air India's LCC brand, which is Air India Express going
[25:36] slightly upmarket. They they have hot, they have
[25:39] ovens and, and slightly better seating.
[25:41] And you know what not to sell now.
[25:44] Same for in for for Indigo. They have a premium product now.
[25:48] It's called Indigo Stretch, similar to the US first class.
[25:52] You know, it's a, it's a recliner seat.
[25:55] I can see Addison stretching there with his dumbbells.
[25:59] Absolutely. Thomas, do you think an airline
[26:02] can, can truly be an LCC if it's fleet configuration is no longer
[26:08] uniform? I mean, Southwest also has.
[26:14] What? An extra leg room seat, but
[26:17] still the fleet configuration is very similar.
[26:19] But in India, you know, we see a different model emerging with
[26:23] Air India Express in Indigo like I mentioned.
[26:26] What's your take you? Mentioned many different
[26:29] carriers I mean, I think Southwest even before they now
[26:34] started to differentiate different seats and so on
[26:38] wasn't, wasn't a true to ultra low cost carrier by the book,
[26:42] even though they probably invented the low cost carrier
[26:45] business model because the, I mean they, they never really had
[26:50] the maximum number of seats on aircraft that you could have put
[26:53] on aircraft even before the configuration changes that they
[26:56] started making now to to, to be able to differentiate for
[27:00] premium seating and so on. I, I, I think in general the,
[27:06] the question always is how, how much can you scale that ULCC
[27:14] model and stay true to it. And I think if you can scale it
[27:18] and if you stay true to it, it works very well.
[27:21] I mean, you see many carriers around the world that are very
[27:24] successful in the ULCC model. Obviously being a European
[27:28] myself, there is a Ryanair there, there is Biz Air.
[27:34] You have many carriers around the world that are very
[27:37] successful with that business model.
[27:38] Look at Volaris in in, in in Mexico for example, or even as a
[27:45] subsidiary of a major airline. Look at Jetstar in in Australia.
[27:50] But I think what what we have seen time and time again and
[27:56] that's what's happening in in India as well now is that as
[28:01] these carriers grow, they start to have ambitions that go beyond
[28:06] the original business model and then they start to evolve from a
[28:10] ULCC business model into some sort of a hybrid business model.
[28:15] What we will have to see is if Indigo is going to be the first
[28:18] carrier that is actually able to pull that off because everyone
[28:21] else that tried that before, in my opinion didn't really manage
[28:25] to be better off than if they would have been sticking to what
[28:30] they originally did. I mean you have WestJet in
[28:32] Canada that went through that transformation.
[28:35] You have Virgin Australia that went through that
[28:37] transformation. Funnily enough, both of them at
[28:40] some point later figured out, oh, we should set up a low cost
[28:43] carrier again or ULCC again and set one up and then that failed
[28:47] because it was then a ULCC subsidiary of a hybrid carrier
[28:50] with Tiger Air Australia and Smoop.
[28:55] So Indigo will be the first ULCC that manages to successfully
[29:00] transform itself into a hybrid carrier.
[29:02] And you know, I'm not sure if I'm not sure if the challenge of
[29:08] turning Air India from what we discussed before very loss, very
[29:14] heavily loss making national carrier into now.
[29:20] That is. But it's supposed to be the
[29:22] exact opposite or if it's more challenging to turn Indigo from
[29:27] a ULCC into a global mega carrier, which is what they
[29:32] would like to be once they have all of these A3 50s delivered.
[29:35] Both of these are are are are pretty extreme changes of
[29:39] directions and they're happening at the same time.
[29:42] And I don't think you've ever seen a situation where as you
[29:45] said before, 90% of the capacity was provided by carriers going
[29:50] through massive transformations at the same time.
[29:52] So it's it's a very unique situation that we see in the
[29:55] Indian market there. Addison in the US, legacy
[29:59] carriers used basic economy to successfully to successfully
[30:05] suffocate ULCCS like Spirit, which is in a heap of trouble
[30:09] right now in India with Air India's massive wide body
[30:13] expansion and Indigo's, if you can call it the new business
[30:18] class or the new premium seating class with stretch.
[30:22] Are we entering an era where the product no longer defines the
[30:26] airline but the network does? I'm also reminded of what Vasu
[30:31] Raja, the ex C double O of American one said.
[30:34] He said the network is the product, essentially saying the
[30:38] schedule and network are the primary product, not the onboard
[30:41] experience. Admittedly, Vasu Raja's words
[30:46] were not have not aged well, but what do you think?
[30:51] On the one hand, you've got an industry that is constantly
[30:55] trying how to how to think about this.
[30:59] This isn't a, it's a brutal business like like Thomas
[31:04] rightly pointed out at the beginning of the call, margins
[31:07] are razor thin, if they exist at all.
[31:10] And then you have this crazy stuff like credit cards on the
[31:12] side to like, you know, get a border reliable stream of, of,
[31:16] of, of, of income. So because it's such a high
[31:20] capital business and you've got skilled people working in the
[31:23] industry, you cannot have any kind of mechanic, you cannot
[31:26] have any kind of truck driver. You everything, everybody is in
[31:31] a has to be top of the game. And you're, you're also in the
[31:34] industry that has a safety margin of nothing less than
[31:38] 100%, right? So it's, it's the five nines.
[31:42] Everything has to be the top of the game.
[31:43] So it's high capital, high demand, high skilled, everything
[31:48] is at the top and you've got this tight margin.
[31:51] So you if you, if you're running an airline and you don't have to
[31:54] be the CEO, you have to be anywhere in the top 5% of the
[31:58] management. You don't sleep at night because
[32:01] everything is so edgy. Give an example.
[32:06] Right now, we have this huge storm in the US 10s of thousands
[32:09] of flights are, are getting cancelled today.
[32:12] How do you plan for this? Well, you knew the weather was
[32:14] coming, but you, you still don't know.
[32:18] So it's, it's a, it's a brutal business.
[32:21] So now as you, as you put the question, if you're in this
[32:26] industry, you're constantly trying to find a way to de risk.
[32:30] Everything is de risk. Now, what's weird is they don't
[32:33] de risk where they should, which is like using technology because
[32:38] they always the the standard. Give an example for this.
[32:42] If you look at the on time performance in the US, the
[32:45] industry average is like $110 a minute.
[32:48] That's the cost. Every flight that arrives late,
[32:50] it's $110 a minute. Now what happens if you arrive
[32:54] 10 minutes late, which is not a bad, I mean that's happened,
[32:57] right? The FAA says 15 minutes is the
[33:00] margin that within 15 minutes you're on time, which is
[33:03] ridiculous. What other industry in the world
[33:05] says that you can perform that way and be on be OK, whatever.
[33:10] So let's put that aside. You're right.
[33:12] If you arrive 10 minutes late times 110, a $100 a minute,
[33:17] that's 1000 bucks. That's equal to probably 3
[33:20] passengers that you've just carried for free.
[33:22] Now if you look at the big, the big three, American, Delta,
[33:25] United, and you look at their, their, their, their, their cost
[33:28] structures, they could each be buying a new Max.
[33:32] I think it's 3 Max's every six months, cash.
[33:35] That's it. Every six months they could be
[33:37] buying a new 737 Max 8 cash, but not financing.
[33:42] You got the money just from tightening up your operation.
[33:46] They, they said they can't make it any better because, you know,
[33:49] the dog ate my homework. I, I, I make it, I make it.
[33:53] Any, any, any airline person listening to this will probably
[33:55] be very insulted. I mean, no personal insults, but
[33:58] the bottom line is it's a messy business and it's high risk.
[34:02] It's awful. So they're always looking for an
[34:05] angle so that I, so where am I going with this?
[34:08] So when you try and see, well, I'm a full service carrier, I'm
[34:11] a ULCC, but I've got a thing here and I've got an angle there
[34:14] and I'm going to try something else.
[34:15] They all do this all the time. And most of the time it fails
[34:20] because you've got a culture that says I'm Air India.
[34:23] And this is how I think, OK, I'm going to start this thing called
[34:26] India Express on the side. Maybe it'll work.
[34:29] Maybe it worked. Delta, they had a thing called
[34:31] Song. United had a thing called Ted.
[34:34] They don't work because you've been trained to think inside the
[34:38] silo. Now you can say I'm going to
[34:40] open a valve on the side of the silo and I'm going to have this
[34:42] little side hustle over here. You've got cultural problems,
[34:46] you've got network problems. You've got make.
[34:48] Everything is just crazy. It it, stop it.
[34:51] There's so much inside the silo that needs to be fixed.
[34:55] Don't think you can go out the silo and make it work problem
[34:59] that Indigo's going to have. They are an LCC, right?
[35:03] They're not known for service. They're known for I'm going to
[35:06] get you from here to there, cost effective, end of story.
[35:10] Now I did a story about this comparing them flying to Athens
[35:13] with the XLR. You look at the seating on that
[35:17] airplane and you look at the GN seating on the same plane on the
[35:19] same the same route. If you are a passenger that can
[35:24] choose where you're going to spend your money, you're not
[35:27] going to fly on Indigo you, but you must be crazy.
[35:29] The low, the person who's chasing the lowest cost ticket
[35:32] will fly in Indigo and they'll just suck it up and deal with
[35:34] it. But if you are a person that can
[35:37] say, wait a second, I'll prepare to pay a little bit more.
[35:39] I'm going to get more seat space.
[35:41] I'm going to get more of everything.
[35:43] I don't think that people don't want to talk about too much on
[35:45] the XLR. When I say other people, the
[35:47] people that are flying the XLR and of course Airbus at the back
[35:51] of the plane, you've got a conflict with the toilets and
[35:53] the kitchen and you have a single aisle.
[35:57] There's a traffic problem. If you're going to the toilet,
[35:59] you're in the way of the kitchen.
[36:00] If you're coming out of the kitchen to serve people, you're
[36:02] going to get stuck with people standing in line for the toilet.
[36:05] Why is that a problem? What do you think happens on an
[36:08] 8 hour flight? People have to get fed, people
[36:10] need to go to the bathroom. You don't want to have conflict
[36:13] with space. There is no space at the back of
[36:16] the XLR. Oh, you're going to tell me?
[36:18] Well, the people at the back of the plane don't really matter
[36:20] that much because they're on the cheap seats.
[36:22] Well, maybe that's one approach, but it's not really a polite
[36:26] approach. It's certainly not service
[36:28] oriented. Indigo's going to run into a
[36:30] problem because now you can say they've been flying long hauls,
[36:35] you know, wide bodies. OK, we'll see how that works.
[36:39] I'm not so sure that it's going to be so easy.
[36:41] I think they're going to have to also figure out a way to have a
[36:43] different side hustle. There's a long haul product
[36:46] which is going to be a little, it's going to be upgraded
[36:49] compared to our local domestic product which is whatever it is
[36:53] so. I can, I can tell you with, with
[36:57] with the great degree of certainty that the product on
[37:01] the A-350 would, would certainly be will not be the product that
[37:05] is on XLR and that has been hinted by the Indigo management
[37:09] as well. In fact, I was on the XLR, the
[37:13] Indigo's XLR about 3-4 days back.
[37:17] I can tell you that the seating is slightly more cushioned than
[37:22] the usual Indigo seat. There is certainly much more leg
[37:25] room. It's a slightly more comfortable
[37:28] experience than the usual Indigo domestic product.
[37:31] But yeah, I mean, there are, there are, you know, certain
[37:34] valid points that you have raised.
[37:36] But I want to ask you on that, if let's say if you were
[37:39] starting an airline today, Addison, would you even bother
[37:42] with the low cost labour or, or or is that term now a liability
[37:46] in in your opinion? I once watched.
[37:48] Richard Branson make a speech. So Richard Branson from Virgin
[37:52] Atlantic and he said, you know, I am a millionaire in the
[37:57] airline business. Ask me how I became a
[38:00] millionaire in the airline business.
[38:02] I started off with being a billionaire.
[38:05] Smart money doesn't go into the airline business.
[38:08] If you're asking me to start an airline, I'll tell you quite
[38:11] simply, heck no. It's much easier to sit on the
[38:14] sidelines and watch this. It's like watching a price
[38:18] fight. Two big price fighters fighting
[38:20] with each other. Thank you very much.
[38:22] They should fight. I can sit in the audience and
[38:24] watch. It's crazy.
[38:26] It's it's high risk, it's high, high stakes.
[38:32] I wouldn't start an airline if I had the money.
[38:35] Forget about it, I had an. Interesting conversation on that
[38:37] topic with with. With.
[38:40] I'm not going to name names, but with, with a former chief
[38:43] commercial officer of an ultra low cost carrier.
[38:46] And we say, I say, I don't know exactly how it went, but it went
[38:48] similar to if someone would put a gun to your head and you had
[38:52] to start an airline, where would you start and what would it be?
[38:56] And you know, I think that if you, if you go back 10 years
[39:02] ago, there would have been very obvious answers because there
[39:05] were still dots on the map where you could say in this part of
[39:09] the world, no one came up with the ULCC model yet and there is
[39:13] deregulation. So now you set something up and
[39:15] there is an obvious niche, but but if you ask today, I mean in
[39:22] every country where there's a big enough market that the UCC
[39:25] model wouldn't make sense, there is an incumbent already that is
[39:28] relatively strong. So why I mean if you come in as
[39:32] player number two or three, it's too late.
[39:36] So, so, so as Edison said, it's super difficult to to set up a
[39:43] new airline and make it work. And there is not that if you
[39:47] look back the last couple of years after Indigo, which
[39:51] obviously has been the the biggest success story of the
[39:54] last 20 years, there really hasn't been, haven't been a
[39:58] whole lot of low cost carriers or anything else that has grown
[40:01] from nowhere to that scale in a reasonable time frame.
[40:06] So that that's what maybe. Wiz, Thomas.
[40:12] Yeah, but Wizard has been around longer than Indigo and but it's
[40:18] the same story there. This brought the ultra low cost
[40:21] carrier model to Eastern Europe. Anyone else that started low
[40:26] cost carrier in Eastern Europe after that has either gone out
[40:29] of business or has scaled to 12 airplanes and that was about it.
[40:33] So it it's not like there is there is a wide dot on the map
[40:37] that you would say, OK, here is the obvious gap where you can
[40:42] set up something fresh and it can scale to one of the
[40:45] airplanes fast. I think that that Thomas, it's.
[40:50] Interesting what you're saying, because as further evidence to
[40:53] support what you're saying, in Iceland we had wow and that
[40:58] didn't go anywhere. Then we had play and then
[41:00] suddenly it wasn't play anymore. And now in the US we've got a
[41:03] Velo that it's fascinating. Michelle, this industry is has
[41:12] an ability to attract visionaries and the visionaries
[41:15] can find money. It's amazing.
[41:18] It's absolutely amazing. That's why it's the best to sit
[41:20] and watch. Don't put your money in, just
[41:23] sit and watch. I mean.
[41:24] You, you have bright people like David, David Neilman and he just
[41:29] started Breeze what, three years back.
[41:31] So let's move on to the next topic.
[41:35] I want to talk about the A321 XLR that Addison was just
[41:40] referring to. From a Lesos perspective, is the
[41:43] XLR a safe asset compared to A-787-8 or a 313 new if a long
[41:52] haul P2P route fails? I'm just wondering how easy it
[41:57] is for an airline to re roll the XLR back into the domestic
[42:02] regional high cycle operations without destroying its
[42:06] economics. If you look at Qantas, all those
[42:10] XLRS are scheduled for domestic operations.
[42:14] Well, I don't think that is the, I mean we have seen some
[42:18] carriers doing that. I mean, this air for example
[42:21] started flying some of their XLRS on different routes and
[42:24] they wanted to or or park them and take the engines off because
[42:28] they changed their business model a little bit.
[42:30] But I mean they now applied for rights to fly to the US, which
[42:34] is something that they have been thinking about all along when
[42:36] they got these XLR's to fly to the US from from the UK.
[42:40] So they might go back to their original purpose with these
[42:42] airplanes, but the way the way lessors look at an aircraft
[42:48] variant and decide whether or not it is it is risky or not.
[42:53] Essentially it comes down to what's the is there going to be
[42:58] a market to remarket the airplanes in case they come off
[43:02] the first lease, in case the the lease goes wrong?
[43:05] And I think the answer is it's not.
[43:07] It doesn't seem terribly risky because you have a vast number
[43:14] of different airlines that ordered the aircraft and that
[43:16] believe in it. So that's why I don't think it's
[43:19] risky. OK, Addison.
[43:22] You have described the 321 XLR as a niche finding its limits.
[43:28] If the aircraft is relegated to niche status, does that mean the
[43:35] death of the hub and spoke was an over exaggerated prophecy?
[43:40] Or is the niche simply the strike that bleeds the
[43:44] profitability of major hubs? I love, I love being able to
[43:49] follow the the smart comment from from Thomas.
[43:54] The the one of the things that was Air is interested in doing
[43:58] here is connecting to the US. It's because was air has the
[44:02] same owner as Frontier Indigo partners.
[44:06] So it it's natural for them to want to connect and the same
[44:09] reason they want to connect with their, their, their their fellow
[44:13] airline in South America so that you know, they'll they'll find a
[44:16] way and they're all buying AI. Don't know if you saw one of the
[44:19] Wiz airplanes end up going to jet smart in Chile, which is
[44:22] part of the family, so to speak. In fact, the plane left Europe
[44:26] with with wizard colours, but saying jet jet smart on the
[44:29] side. So on the one hand, there's a,
[44:33] there's a, there's a, there's a thread over there.
[44:35] The second thing is we're living in a time now where you cannot
[44:39] get an airplane fast enough. All these big orders are now
[44:42] people like getting, getting into the line.
[44:45] It's, it's FOMO, fear of missing out.
[44:48] Everybody's, you know, you know, Boeing's not going to do
[44:51] anything new. Or that the rumor that the rumor
[44:53] mill last week again was that the NMA is back on, that that
[44:57] team has been back, is being reassembled because Boeing is
[45:00] getting their mojo back or has got their mojo back.
[45:06] The thing about this industry that's fascinating, Vishal, is
[45:09] we can ask the same question once a month and the answer is
[45:12] going to change every time. Because when we look at this
[45:16] industry, we have a conversation, it's a snapshot
[45:19] and then things change. So because there is a constant
[45:22] demand for airplanes that is seems to be inexhaustible and at
[45:26] the very tip of the spear of that demand is the 321.
[45:31] Everybody wants a 321. So even if the 321 XLR doesn't
[45:37] quite fit for everybody, they'll find a home.
[45:40] Give an example, the Virgin America 320 ones, Alaska got rid
[45:45] of them. The which ones did they get rid
[45:47] of? The 321 was the first one
[45:49] American bought them all. Why?
[45:52] Doesn't matter that they were second hand, they couldn't get
[45:54] them fast enough from new anyway.
[45:57] You need that capacity. The mom, the middle of the
[46:00] market airplane, which is one of my favorite subjects in the
[46:02] whole world, is just hot, hot, hot.
[46:06] You see United going from 7879 to Dash 10s.
[46:10] Why? There's a limit of pilots.
[46:12] There's a limit of slots. The traffic keeps growing.
[46:14] It's physics. You have to get a bigger plane
[46:17] in the US. We've got pilot issues because
[46:20] they just don't make as many as they need.
[46:22] The industry doesn't generate enough pilots.
[46:24] It's physics. New York airports are not
[46:27] getting bigger. LA cannot get bigger.
[46:29] San Francisco, all these big airports are locked in.
[46:31] There's communities around them. So you need to move more people
[46:35] in one smack. How you do that?
[46:38] Well, you go from 180 CS to 210 and you know, that's just
[46:43] physics. So on the XLR is an interesting
[46:46] thing in as much as being a 321, It's great.
[46:50] Does it help to have that extra tank on it if you don't need it?
[46:53] Well, give an example. In the US, the average flight is
[46:56] 1011 hundred miles long, but the 737 and the 320 NIO all can have
[47:02] they can fight 3000 miles, but you're only using a third of
[47:06] that range. Well, it doesn't matter because
[47:08] you know what, in the end you need to have that size 9 shoe
[47:12] that will fit extra roots if you need.
[47:16] So that if you need, if you go from Miami to Seattle or San
[47:19] Diego to Boston, which is corner to corner, you have that
[47:22] capability. So on the one hand, yes, the 321
[47:25] LXLR is a niche, but it's a niche inside the most in demand
[47:30] model in the in the industry right now.
[47:31] So if they have to make it work, they'll make it work.
[47:36] So I on the one hand, I, I think it's a niche and it's origin,
[47:41] but in a in in the net effect, after after all is said and
[47:44] done, it'll probably work either way because of where we are
[47:48] before I. Move on to the next question.
[47:51] Here's a little reminder to all of you listening to the podcast,
[47:55] but you haven't subscribed to it yet.
[47:57] Please do so now. Just press the follow or
[48:00] subscribe button, whichever podcast tab you're using, and
[48:04] that should work. Thank you Thomas.
[48:09] Let's continue talking about the A321 XLR for now.
[48:13] Indigo of course has started the Athens route with the aircraft
[48:18] flying from both Mumbai and Delhi.
[48:20] This is a massive shift from their short haul LCC routes.
[48:26] From your fleet. Data Does Indigo's order for
[48:30] those 60A-350-900 suggest that they are preparing for a direct
[48:35] bloody war with Air India on the US and Europe routes?
[48:41] Or is this more about dominating the eastbound traffic to
[48:45] Australia and Japan and maybe Korea?
[48:49] Though admittedly all those 3 routes are also served by Air
[48:56] India. It will have, it will have to be
[49:00] a bit of both because it's it's a significant number of aircraft
[49:04] that obviously is not going to come overnight.
[49:06] It's going to come in phases, but if you look at how India
[49:10] currently deploys their white body aircraft that are wet least
[49:14] in from Turkish Airlines and N, then they are not flying
[49:20] eastbound that much with the aircraft.
[49:22] I mean, they're flying Delhi to Bangkok, for example, but the
[49:26] vast majority is is westbound into Europe and into the Turkish
[49:32] Airlines hub in Istanbul, so. Likely.
[49:40] What you will see is that when these A3 50s come in, they will
[49:43] first start replacing these badly aircraft that are here,
[49:48] unless Indigo looks at it from the perspective that that
[49:51] they're just going to use them for growth and will keep the
[49:54] badly aircraft a bit longer where they can.
[49:56] I mean, there's always this, this question mark on how much
[49:59] longer they're allowed to do the Turkish Airlines badly's into
[50:03] Istanbul, but. If you look.
[50:08] At all of the moves that Indigo has made from a network growth
[50:14] perspective internationally, so far it has been a lot more
[50:16] westbound than eastbound. So the highly likely scenario is
[50:21] that these A to D 50s are going to be flying more westbound than
[50:26] eastbound as well. I mean, you can see that as well
[50:28] if you look at all of the strategic alliances that have
[50:31] been announced with Indigo teaming up with Air France, KLM,
[50:35] Virgin Atlantic Delta. And so the, the, the, the more
[50:41] likely scenario is that there's going to be more capacity these,
[50:44] these deployed West Point westbound rather than eastbound.
[50:49] But obviously with, with a 350's and with the ambition of Indigo
[50:53] to build the HAP and spoke system internationally via the
[50:59] via the big Indian airports, you will have to deploy some of
[51:03] these aircraft eastbound as well.
[51:06] And to fly from, from from Delhi to Tokyo or to Australia and New
[51:13] Zealand and so on, the obviously need wide body aircraft.
[51:16] With the XLR you can get as far as as Manila or Jakarta and Bali
[51:26] and so on just fine. But you will need the A3 50s to
[51:30] to to fly further east. But the number of aircraft that
[51:33] you can deploy eastbound is just significantly smaller because
[51:37] the number of viable markets that need so much capacity than
[51:40] you would have on the westbound Mark.
[51:42] And. And US would be would be a very
[51:44] long shot for now right on on 359 hundreds or do you think
[51:49] they would eye the the East Coast market?
[51:52] I'm sure that. Is that is eventually one of the
[51:56] plans, but obviously if you fly such long haul markets?
[52:02] You. Need to have significant feed
[52:04] for these markets and Indigo is a very significant feed
[52:07] domestically in India, but it would be better if they would
[52:09] have more international feed to top that up as well.
[52:13] So as they build up the the network, as I said, the most
[52:17] likely scenario is that they're probably going to replace the
[52:22] the vet least aircraft that they have in the fleet right now to
[52:25] build up that feed. I'm sorry to build up the
[52:29] network in Europe that they fly right now with their own
[52:33] aircraft. And obviously that is going to
[52:36] be a shift because right right now a lot of traffic is being
[52:41] routed with these very, very high density triple sevens
[52:44] flying into Istanbul. There will be a shift to more
[52:48] non-stop flying into the European market.
[52:52] But I, I'm pretty sure that this Istanbul and Turkish Airlines
[52:59] partnership is always going to be something that would be quite
[53:02] valuable to Indigo because the number of points that you can
[53:06] connect to via the Istanbul hub in Europe is just massive from
[53:12] an Asian perspective. I mean, there is a joint venture
[53:15] between Thai Airways and Turkish Airlines as well that
[53:18] essentially has just been built for exactly that reason to make
[53:22] sure that all of these secondary markets that are not viable to
[53:26] fly directly from Bangkok in their case are being served one
[53:31] stop in a joint venture set up. Because it's a lot better for,
[53:37] for, for Thai. It's a lot better for Indigo.
[53:40] If if markets like Hamburg, Vienna, Leo, you know, there's a
[53:48] lot of secondary cities or smaller European capitals that
[53:53] are highly unlikely going to be able to take an 8059 hundred
[53:59] from Delhi, but you can reach all of them by Istanbul.
[54:03] So I assume that that strategy is going to to to remain in
[54:08] place even when the A3 50s come. Boeing CEO Kelly Otberg has
[54:14] stressed thoroughness over speed in a market like India, where
[54:19] growth is the only metric that matters.
[54:21] And I would argue that you can say that for some of the markets
[54:26] as well. Can Boeing afford to be slow and
[54:29] thorough while Airbus ramps up to what, 75 aircraft a month by
[54:35] 2020? 7 Kelly Ortberg at Boeing has
[54:38] been absolutely right with that statement.
[54:41] If you think about the disruption to Boeing that the
[54:46] hiccups with a Max and the 787 caused, you can see that the
[54:51] decision at Boeing to slow down last year and then come out
[54:56] slowly and then build with a solid base instead of chasing
[55:00] the number, chasing the quality, was absolutely the right
[55:05] decision. If you can imagine, God forbid,
[55:09] that Boeing has another Max problem or A787 problem, what do
[55:12] you think will the outcome will be?
[55:13] It'll be catastrophic. They cannot afford that.
[55:18] The fact is the backlog for Boeing is now close to 13 years.
[55:22] That backlog's not going to go anywhere.
[55:24] Commack is not a player. Embra is not in that business.
[55:28] Christian Shearer told me a few years ago at then the the
[55:32] backlog was 10 years. Let's be very clear about this.
[55:35] Boeing is doing the right thing focusing on quality.
[55:37] It's more important to get an airplane that will work
[55:41] consistently. Rick Durlu at Pratt and Whitney
[55:43] told me an interesting thing just before the air show last
[55:46] year. He said you were showing, you
[55:48] were showing a bunch of U.S. media people at an at their
[55:52] factory in Asheville, NC, how they were making GTF parts and
[55:56] how they were taking these, these parts for the engine.
[55:59] And instead of using lasers to drill the holes in in these
[56:02] parts because they'll have to have holes to allow cool air to
[56:05] go through the engine inside, otherwise the parts will melt.
[56:08] It's so hot, the pressure is so high.
[56:11] Pardon me. So they switched from laser
[56:15] cutting to water cutting and they've added more holes.
[56:18] I said, well, doesn't that impact your fuel burn?
[56:20] He said, yes, it does. But instead of giving 20% better
[56:23] fuel burn, we'll go down a little bit.
[56:25] We're way over the 16% we promised.
[56:28] What is he saying? Customers will take a knock on
[56:32] fuel burn if they can get durability.
[56:33] Now, if you're the Pratt and with the GTF, that's clearly a
[56:36] big thing. Bottom line is if you're living
[56:39] in the in the airline world right now, what do you want more
[56:41] than anything else? Reliable, reliable, reliable.
[56:47] You don't want your Max arriving with a problem with quality
[56:50] control. You don't want anything to
[56:53] impact what you've sold. Remember, airlines can sell
[56:55] seats 360 days in advance and they need to deliver on that, on
[57:00] that, on that promise. I mean, they've got their their
[57:03] schedule. So again, I'm sorry to give you
[57:06] a long answer to a short question.
[57:09] Boeing is absolutely focusing on the right thing.
[57:11] And I bet you you'll see that even though Airbus is going to
[57:13] try and shoot for 75, they'll do it very deliberately, very
[57:18] carefully. If you can imagine, I've used
[57:20] this example before when people talk about this.
[57:22] Imagine you are at Airbus and you are the conductor of an
[57:27] orchestra, the wind instruments on Asia, The, the, the, the,
[57:31] the, the drums and the, the, that, that those, those musical
[57:36] instruments on Africa and the violence on South America.
[57:40] And you can do it. You're doing conducting music.
[57:43] If these different instruments are not keeping time, you don't
[57:47] have music, you have noise. That's the worst nightmare for
[57:51] any of these OEMs is noise. Everything has to work just in
[57:55] time rhythm. They have to keep the rhythm.
[57:58] So rate is a critical metric to watch, and if that metric is
[58:04] going to be impacted by quality, slow the music down, make sure
[58:09] that what you're delivering is going to be what your customer
[58:11] can put in the field right away and it's going to just keep on
[58:15] going. That's what they need.
[58:17] Great, Addison and Thomas, why don't we take a pause here and
[58:21] and resume in the next episode a couple of days.
[58:25] That brings us to the end of Part 1 of this landmarks 65th
[58:30] episode. We've covered some incredible
[58:32] ground today from the LCCS to the A321 XLR role as a surgical
[58:38] hub Buster to the fascinating premium evolution of carriers
[58:43] like Indigo. Hearing Thomas and Addison
[58:46] breakdown why the pure LCC model is under such immense pressure
[58:51] really reframes how we should look at the Indian sky over the
[58:55] next few years. And in fact, not just Indian
[58:58] sky, the global sky. But we are only halfway through
[59:02] this amazing discussion. We move from the business model
[59:05] to diving deep into the Indian crisis that is grounding fleets
[59:10] worldwide, the brutal market share war between Boeing and
[59:14] Airbus, and what lies ahead. Thomas and Addison, thank you
[59:18] for such brilliance Again. To our listeners, you won't have
[59:23] to wait a full fortnight for the conclusion.
[59:25] Episode 66, the second part of this special conversation, will
[59:30] be released in just three days. Make sure you're subscribed so
[59:34] you don't miss the finale of this heavyweight reunion.
[59:38] I'm Vishal Mehra and this has been the Indian AB Geek.
[59:42] We'll see you in three days.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.