September 26, 2019 • 42 mins
Starting in 2020, Southwest Airlines at long last will provide content and full booking capabilities in the global distribution system. What does this mean for the travel industry?
In this episode, we discuss:
»The GDS and the role it plays in air travel
»Southwest’s decision to enable GDS bookings
»The impact this is likely to have on the travel industry as a whole
»How travelers and travel program managers can prepare for what lies ahead
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
[inaudible].
Speaker 2 (00:09):
Welcome to Roger that the business travel podcast
hosted by Roger Hale, CEO of addtrave travel management.
Join us as Roger interviews,business leaders from around the
travel industry to unravel thetrue drivers impacting this
complex industry.
And now here's your host, RogerHale.
(00:30):
Welcome and thank you for tuninginto Roger that where we discuss
today's compelling corporatetravel issues,
Speaker 3 (00:35):
market initiatives with top executives from around
the industry.
We've got a great show lined uptoday as we welcome Southwest
newly appointed vice presidentof Southwest business, Dave
Harvey, welcome to the show,Dave.
Speaker 4 (00:48):
Thank you.
Appreciate the invite.
And we look forward to tellingour story here today.
Speaker 3 (00:52):
Excellent.
Well, you know, Southwest hasbeen making headlines for the
last few months with their newinitiatives regarding corporate
travel, from the branding ofyour corporate sales efforts as
Southwest business to the bigannouncement of distributing
your products through the GDSand joining the arc settlement
system for ticketing andpayment.
You know, all of this with theintention of expanding your
(01:15):
share of the lucrative businesstravel market or, so it would
seem so now before we dive intothis, you know, I'd like to
start by giving our listeners alittle bit of background on you
Dave.
So you've just celebrated your20 year anniversary with
Southwest.
Congratulations by the way.
Thank you.
And uh, you know, like manyairline people, you know, you've
had a variety of jobs over thelast 20 years from technology to
(01:38):
network planning strategy tocorporate sales and now the,
the, the big one vice presidentof Southwest business.
So kind of looking back over thelast 20 years, how do you think
your experience is going to helpyou in this new position?
Speaker 4 (01:53):
Yeah, absolutely.
I don't know where the time hasgone, starting in 1999 to today.
And uh, you know, veryfortunate.
Southwest is very much a growthcarrier, had healthy growth for
all those years.
I started before we had 300aircraft and now as we're doing
all of our 2020 planning, we'regoing to be closing in on about
(02:14):
800 Boeing seven 37.
So it's just, it's been excitingto see the company grow and
mature.
And I've, I've had theopportunity to see that sitting
in a lot of different seats.
So a came in and spent my firsteight plus years in technology
doing development solutions.
Kind of interesting time withSouthwest being a point to point
(02:34):
carrier.
And there was, there's not a lotof commercial off the shelf
products.
Everything was more kind of huband spoke focus.
And as we were scaling andadding different levels of
complexity to the model, weended up having to build a lot
of those, those businesssolutions ourselves.
So really having to dig in andunderstand the requirements and
the business need and thentranslate that into tools and
(02:56):
software, you know, then kind ofprogressed.
We, uh, help stand up and builda longterm kind of corporate
strategy shop as Southwest hadkind of gone through nine 11,
multiple recessions, a lot ofdifferent competitive things
going on in the marketplace ascompetitors were going through
bankruptcy startup.
If you LCCs you know, Southwestreally had to take a five to 10
(03:19):
year view of what we wanted tobe when we grew up, if you will.
And laying out kind of clearstrategies and plans to go
achieve that.
As you mentioned, had a neatopportunity as we were in the
midst of AirTran integration andkind of consuming and
integrating that across ournetwork.
I had the, had the chance tojump into network planning, did
(03:41):
work around the right amendmentas is that was repealed and we
could do the long haul flyingout of there.
A lot of DCA and LaGuardia slotsled a lot of our new cities that
we, we brought online to thenetwork.
A lot of the internationalgrowth as we took a small
international portfolio from airtrain and really expanded that
rapidly and then continued inthe commercial space to a, you
(04:06):
know, we, we continue to look atwhat longterm airline
partnerships a codeshare,Interline, some of the
international capabilities thatwe need had a chance to kind of
shepherd a lot of thoseactivities.
And one of the other things thatkind of came into the portfolio
was at the time what we calledcorporate sales, really selling
predominantly to large, medium,small buyers.
(04:30):
And that kind of continued toevolve as we got more focused on
both federal government, state,higher ed, not just a SMI
managed business but Smeeunmanaged or self serve as well.
And really looking at what ourfair share opportunities should
be, what that full potential andwhat were some of the things
historically that had beenroadblocks or stood in our way
(04:54):
to really servicing and callingon these customers and, and, and
winning more of their business.
So kind of laying out a multiyear strategy and plan to how do
we reduce that friction or not,not just reduce it but remove it
and make the investments inmanpower and technology to serve
all these buyers well, andthat's really what kind of
(05:16):
culminated in this new, I'd callit B2B distribution strategy,
the new brand Southwestbusiness.
We're thrilled to go to marketwith that.
That's really resonating withour buyers and clearly
demonstrating.
We've been listening for thelast 10 years and we're now
making strategic partnershipswith folks like Amadeus and
(05:38):
Travelport and Ark and othersthat that are gonna really allow
stop West and in our our greatnetwork, our great product, we
know our customer friendlypolicies like no change fees
really play well to thisaudience.
Our national network areincredible program on and on and
(05:59):
on.
We've got so many tools, bigdifferentiators and if we can
just reduce this friction andmake it easier to do business
with Southwest, we feel likeit's a huge opportunity as we
look over the next five to 10year horizon.
Speaker 3 (06:12):
Excellent.
Excellent.
That's a great background andkind of leading into some of the
questions that I've, you know,that I think the industry is
asking that I've heard out thereand you know, you talk about and
you know, there has been, youknow, Southwest has grown and
gone through a lot of changes.
Of course our industry is justfraught with changes.
It seems like it's changing allthe time.
(06:32):
And when we look back over thesechanges, it's kind of one thing
that's been a consistent themefor the, for the vast majority
of the corporate travel managersis that Hey, the TMC is their
channel of choice when formanaging their corporate travel
programs.
(06:52):
So, you know, as I take ahistorical view and, and had to
describe the Southwest TMCrelationship, I'd probably put
it in a bucket of, you know,mutual respect tolerance, but
not really, I wouldn't describeit as strong or actively
engaged.
So as you look forward togetting into this, you know,
more in penetrating thisbusiness travel market, how do
(07:17):
you plan on strengthening yourrelationship with the corporate
TMC community?
Speaker 4 (07:22):
Absolutely.
And, and you may be a, you maybe kind to us on how you
describe that relationship.
I might even be more blunt tosay there just hasn't been much
of a relationship at all.
If you ever wind the tapes allthe way back to the late
nineties early two thousands weactually Southwest maybe a
misnomer or people just weren'taware.
We actually did pay some of thecommissions more kind of
(07:44):
standard in that period.
Clearly we had a lot of successwith southwest.com being first
to market and kind of poweringour direct distribution
strategy, which still serves usvery, very well going forward.
And I think it is an importantdistinguish distinguishing
factor that when our charge isvery much the B2B business B to
(08:05):
C, clearly the channel that wehave great success driving our
customers to is to southwest.comand that's not changing at all
with with some of thisinvestment we're making around
Southwest business for our B2Bcustomers.
But what we're excited, and thiswas, this was part of our recent
announcements is it's kind of anew day.
(08:25):
We, when we go to our customers,we're going to ask them how do
you prefer to do business withSouthwest?
And if that answer is, Hey, TMCis our channel of choice or this
GDS is our GDS of choice, thenwe're going to be able to come
to the table and say, we have anindustry standard solution for
(08:48):
booking for change, modify forsettlement, all your mid office
back office needs.
That is exactly what we're goingto be coming to market with here
in 2020 and to help supportthat, we have actually just
recently finished building outwhat we call our TMC strategy
and relations team, where wehave dedicated resources that
(09:12):
are industry experts and we're,we're gonna focus kind of out of
the gate on the top 50 agencieswhere a lot of the volume is
being driven and not only it,we've got great relationships
with the buyers themselves, butwe want a better, have better
relationships with these top 50agencies, kind of understand
(09:35):
what their needs look like,their roadmap, and make sure we
can kind of integrate and meettheir needs as well.
Uh, we feel like that was a bigmissing leg in the stool.
So now we are actively going toengage and promote that
relationship directly with theagency community.
Speaker 3 (09:55):
Yeah, and I think that's a great move and
certainly getting into the GDSis going to to to be, to really
power that because it's allabout getting into the TMC
workflow and that's always beenthe challenge for, for our
company and and others is, Hey,how do we cost effectively
manage Southwest reservationsand bookings.
(10:16):
And you know, you mentionedTravelport and Amadeus and they
were both, you know, directlymentioned in all the
announcements concerning yourGDS participation.
You know, however, you know,cyber is by far the leading GDS
in the United States and they'reconspicuously missing from these
announcements.
Now I know you currently have,you know, what the industry
(10:37):
calls a basic booking level withSabre.
And my understanding is thatyour current agreement with them
does call for parody across allthe offerings with the other
GDSs.
So, I guess, could you just talka minute about, Hey, where is
Sabre in this solution and thatyou're developing and what can
we expect in the near future onany announcements or any
(11:00):
initiatives with cyber?
Speaker 4 (11:02):
Roger, I'm surprised you actually caught that and I'm
just,
Speaker 3 (11:05):
yeah,
Speaker 4 (11:07):
we're, we are coming out of the gate with the other
two major GDS players.
You know, we, we have astrategic relationship with
Amadeus as we, uh, they're ourPSS provider.
We went live in may of 17, soit's been a little, little more
than two years.
And uh, that's working reallywell for us.
I would say at the end of theday, we want to be multi GDS.
(11:30):
We have a great relationshipwith saber as well, long time
partner of theirs.
They power a lot of our othersolutions and tools.
So we, we continue to do greatbusiness with them and, and
we'll just kinda continueworking through what kind of a
mutual relationship would be fora higher level of connectivity
and content from a GDSstandpoint.
(11:53):
So that is ongoing.
You know the intent is easy tosay but and then we're going to
fulfill this is we're going tobe industry standards.
So back to if our buyer says,Hey we want to work with this
agency of choice and that agencyis powered by is tech Travelport
in this instance.
Then the level of connectivitythat they experienced today with
(12:18):
all of a in in level ofparticipation with all of their
other airlines that they'repartnering with.
We are going to be making allthe investments to be industry
standard in that space and thenwe're also going to be putting a
lot more content into the GDSchannel.
So, uh, we actually have verylimited, we have a an existing
(12:40):
relationship and are sellingthrough Sabre as you mentioned,
the basic booking requests andalso through Travelport today we
have very limited contentthrough that channel and we are,
we're excited to deliver a muchmore expanded amount of our
fairs.
All the, what I wouldcharacterize is our, our
everyday low fares including ourwant to get away fares in that
(13:02):
channel.
Really the expectation is allthat B2B relevant content is
going to be in that channel.
So we needed to deliver uponthat.
So we're excited about going tomarket with that next year as
well.
Speaker 3 (13:14):
Okay.
So sounds like you know, the, wecould classify your cyber
relationship as in progress, butit is something you're actively
engaged with.
And the fact that they weren'tin the announcement doesn't mean
that you're shunning them.
It's just Hey, we're not thereyet.
Is that a, was that a goodcharacterization of it?
Speaker 4 (13:29):
Absolutely.
That's spot on.
It is ongoing and a, I thinkboth sides are, are eager to
figure out something that worksfor both companies.
Speaker 3 (13:39):
Okay, excellent.
You know, and when you talkabout now distribution, you
know, the vast majority ofcorporate travel programs
incorporate, you know, some typeof online booking tool into the
reservation process.
And you know, currently allthose tools be, they concur get
there or whoever pass along atechnology fee that's charged by
(14:02):
Southwest to access the content.
So just if you could talk alittle bit about how, okay.
We hear about your relationshipwith Amadeus and Travelport and
the ongoing one with cyber.
Talk a little bit about yourrelationship with the online
booking tools, any changes thereand then also this, the fee is
that truly going away, thisextra fee that was being charged
(14:23):
by Southwest big
Speaker 4 (14:24):
online booking tools, corporate booking tools.
We've had a longstandingrelationship.
You know, as I mentionedearlier, we uh, we first to
market with our direct bookingback in in 2010.
And uh, those partners steppedup immediately and we've had a
lot of success with them.
You've got to go down the line,concur deem get their Agencia.
(14:45):
There's a lot of activity in themarketplace with what I knew, a
upstart tools or almost digitalagencies in a way.
So you know, the GDS investmentthat we were talking about
earlier is a major investment,major opportunity for us to meet
our customer's needs.
There are still a lot ofcustomers that are very
(15:06):
comfortable connecting with usthrough our direct connect to
their online booking tool ofchoice or also a, we're making
the major investment in swab iswe had let that get a little
long in the tooth, but if haverolled out major new capability
sets and just really improve thelook and feel the navigability
making investments in 18 thisyear and 19 and continuing into
(15:29):
2020 and make that product bestin class for those companies
that do a significant amount oftheir travel on Southwest and
kinda like that one stopshopping for all of their
reporting, tooling, duty ofcare, unused funds, everything
they need, they have right thereat their fingertips.
Specifically with the corporatebooking tools, you know, we
(15:49):
look, we have strongrelationships with them as well
to understand their tech roadmapand their investment roadmap and
we see that business continuingto grow through them.
Then it kind of comes back tothe buyer and the, the
arrangement with the buyer andif there's an agency involved.
And would they rather go moretraditional agency, GDS or are
(16:11):
they comfortable just thecorporate booking tool directly
to Southwest?
You know, clearly there'sdifferent economics at play and
that gets into kind of thenonstandard booking fee that you
know, some of the agencies havedecided to charge.
It's been in the marketplace fora few years.
So at the end of the day we aremaking the investments so that
(16:33):
the extra steps, the extra timethat we know that it takes
agents to kind of know if it'snot only the book but the change
modify which can be a little bitmore tedious and it's just
because we haven't made theinvestments, we aim to not have
any other reasons in themarketplace, reduce all that
friction.
So those know non Steiner feeswould no longer apply.
(16:55):
Um, starting starting next year.
So, and then that also goes backto the TMC strategy and
relations team that I hinted ator talked about earlier.
So that we have thoserelationships.
We can talk through what thatmeans for the agencies, what
other servicing needs, theagencies, waivers and favors.
(17:16):
Other ways that we can make iteasier for the agencies to do
business with us.
We fully intend to put those inplace as well.
Speaker 3 (17:23):
Okay, excellent.
You know, and one of the otherthings that you had talked about
in your previous answer wasabout content.
And I picked up on where yousaid that Hey, we're going to
have all the fairs in there andI think I heard you say that not
only the low business classfares but the wanna get away
fares would actually be in the,in the GDS.
(17:44):
Did I hear that correctly?
Speaker 4 (17:46):
Absolutely.
We, um, you know, there's theone to get away product.
There's a lot of companies wouldprefer our refundable products,
so the business select in anytime.
And you know, we, we spend a lotof time and energy kind of
focusing from a B2B perspectiveon incentivizing those, those
(18:08):
products.
But they're there.
There's, there's a lot of othercompanies, especially when you
go kind of downmarket small tomedium enterprises where the
want to get away product worksgreat and is expected and given
that we need to be able toprovide that content and those
fares through GDS as well sothat that is absolutely in scope
(18:30):
of what we want to come to themarketplace with next year.
Speaker 3 (18:32):
Okay.
Excellent.
Excellent.
Cause I do feel that's a veryimportant part because to your
point, I think, you know if youlook at where the corporate
traveler is spending the money,it's mostly in the higher fares
with the refundability and allthe availability those offer.
But there is a need for acertain percentage to use those
(18:52):
wanting to get away fair.
So that's good to hear that thatwill be in the distribution
through the GDS.
Speaker 4 (18:58):
The thing is if a customer tells us that their
channel of choice is GDS, someof the friction that's out there
is they have to kind of channelshop and kind of bounce back and
forth and we want to eliminatethat.
That takes time and createsfrustration.
So we want them to haveconfidence that the content
(19:18):
they're looking for is in theirchannel of choice.
Speaker 3 (19:21):
Excellent, excellent.
Now you talked about some of theworkflow and the services that
the TMCs offer to theircorporate travelers and wanting
to remove that friction.
And one other area, and I don'twant to dive too deep on this,
but one that always comes up isthe identification and the reuse
of these non-refundable fares.
(19:42):
The want to get away fares.
And if you, you know, we alreadyknow that Southwest doesn't
charge a fee for those, but oneof the things out there is being
able to automate theidentification of unused
tickets.
So Southwest planning on puttingthat flight coupon status,
making that available throughthe GDS so that these automated
(20:04):
systems can go out and identifyand pull in these tickets
without the traveler having tonotify the TMC that they didn't
use the ticket.
Speaker 4 (20:14):
Yes, we've got kind of a multipronged approach there
and we are still in the thick ofkind of our technical
implementation know we hope totoward the end of the year or
early next year to be very, veryspecific on our launch dates or
our go to market dates with boththe travel port and almond
[inaudible].
Roger to your question, knowthat that's the strategic
(20:37):
partnership with arc and as theindustry standard for ticketing
and settlement as well.
That'll help alleviate a lot ofthat friction that's there on
the unused unused funds today tocompliment that.
One of the things we're doingwith swab is actually went live
with this new report in Decemberof last year and want to
(20:58):
continue to expand upon that.
So today if you have any unusedfunds that were booked through
either our direct connect orthrough swab is the agency or
the travel manager can run thatreport and see all that in real
time right now and it's, we'vegotten rave reviews, a lot of
good feedback on that.
Clearly we would want to expandthat reporting capability.
(21:21):
One stop shopping.
Someone could go in there andsee their GDS funds as well.
And then taking that a stepfurther, we want to actually
make the usage of those fundsmuch easier to then kind of
reapply to that corporation.
So just kind of make it in thebooking flow.
If you've got the unused funds,I can just grab them and apply
(21:41):
them and, and you go.
So you'll have, I think we'rereally excited about the
industry standard capabilitiesthrough the GDS and managing
that.
But then you'll have a, anotherway as you kind of look at your
entire book of business throughour swab is portal.
That'll make it easier for ourbuyers to get their hands around
(22:02):
that.
Speaker 3 (22:02):
Okay.
Excellent.
So now let's, let's shift gearsa little bit to the traveler and
the traveler experience.
You know, if you look at yourmain three domestic competitors,
they've really done an effectivejob of creating this
differentiated experience forthe business traveler.
You know, be it the cabinconfiguration, the boarding
process, you know, even, youknow, the recognition aspect of
(22:24):
it.
And even in some cases for thehigher levels to actually
sponsor the clear memberships tohelp them get through the TSA,
you know, check in process asquickly as possible.
So, you know, in light of yourcurrent operational processes,
your technological capabilities,your cabin configurations, you
know, are there plans to offer adifferentiated experience for
(22:46):
the business traveler or is itthat, Hey, we're going gonna
have the lowest prices and havejust one experience across both
business and consumer travelers?
Speaker 4 (22:56):
Yeah, great question.
And uh, you know, Roger, ofcourse, every seat on Southwest
as a first class seat.
Speaker 3 (23:02):
There you go.
There you go.
Speaker 4 (23:05):
I would say a lot of that is as you look at our
overall plan to not only servicethe art, the travel managers and
their agencies better, we alsocontinue to look at ways to then
take good care of those.
B to B travelers are a hugepiece of the equation.
And clearly we do a lot ofbenchmarking and keep close tabs
(23:28):
on the big three.
And then even some of the otherkind of niche players that we're
out there competing with and youknow, they, they've got, they've
got great products.
When you think about cabin classand you know, business class,
first class, extended leg room,lounges, there's a lot of things
with kind of a hard product.
The soft product, those are forthe most part Southwest, you
(23:49):
know, we feel like we know whowe are.
We're not trying to be allthings to all people.
You know, if you even just goout and look at all of the, uh,
the corporate or governmentpurchases that are being made,
the lion share clear majority isa coach or economy ticket, you
know, and we know a lot of thosetravelers are playing kind of
(24:09):
the upgrade game and hoping theycan kind of get bumped up to the
front.
But you know, we're, we're nottrying, if the travel policy
allows for first class businessclass, some of those other
amenities, that's just notnecessarily the traveler or the,
to an extent the company, ifthey've got a high propensity
for that type of traffic, that'sjust a, they're not prioritized
(24:30):
all the way to the top.
Now that that said, we docontinue to look at things for
the traveler aroundpersonalization, customization.
We talk a lot under kind of ourhospitality umbrella about
surprise and delight.
The moments that matter and howwe can start differentiating and
doing things uniquely for these,uh, these, these customers,
(24:53):
these high valued customerscoming through some sort of
corporate agreement orgovernment agreement.
So I, I'd say we're in discoveryand exploratory mode and we
continue to work with ourcustomer experience teams to
understand, you know, what thoseopportunities look like at our
DNA.
At our core we are more of anegalitarian airline that w we're
(25:17):
, we want to deliver.
Once you get on the tube, onceyou go on the plane, you know,
we want to have that amazingcustomer service that our
frontline employees are flightattendants, pilots, agents at
the airport, delivered day inand day out.
We think that is very importantto our core and to our brand.
But uh, you know, we know, youknow, pre-boarding post boarding
(25:39):
reporting.
Our loyalty program clearly hastiers with a list, a list
preferred, our companion pass,which hands down is the best
loyalty amenity.
I think in the business.
And by nature a lot of ourtravelers are traveling enough
where they, they find themselvesin those tiers.
So they have our, our bestexperience when it comes to
(26:03):
boarding, picking their seat,getting an a or early B.
So they have the selection, theyhave the choice to grab the
aisle or the exit row or thewindow, you know, whatever
their, their seat of of choiceis.
So inherently we have a lot ofbenefits in our product and we
continue to look for ways toexpand that for this traveler.
Speaker 3 (26:24):
Yeah.
And I agree with you 100% that,you know, what you say that a
lot of companies do is theystart to try and change who they
are to chase a different market.
And that ultimately never worksout well.
And so, you know, glad to hearthat y'all have got a, you know,
you're going to be true to yourDNA as you say, know this is we
know who we are and there'sthings we can do to increase the
(26:48):
experience or improve or enhancethe experience of the, the
business traveler.
But we're going to stay in ourlane and because we know what
our lane is and, and again,you've been very, very
successful in your lane for thelast 40 plus years.
Speaker 4 (27:02):
And I wait, well, one other thing to tag on there, you
know, we do a lot of customerfocus groups, a lot of surveying
and specifically in this, thissegment, this traveler segment
and the travelers loveSouthwest.
These B2B travelers, they loveour people.
They love the experience.
It's just, it's easier.
(27:23):
It's simple.
They know what they're going toget.
It's very predictable.
So not to say that we canimprove and we're absolutely
gonna continue to look for thoseopportunities.
But if you did that same surveyto the travel, you know, I think
it would, the results would be alot better if you took that here
today.
But even just going back a year,plus it was really the travel
(27:43):
managers, Hey, my travelers loveSouthwest, but you guys can be
in these certain areas.
You guys can be a pain in theneck to work with.
Or Hey, I'm not seeing myaccount manager as frequently as
I would like to what's going on?
And you know, we just hadn'tinvested in the manpower and the
technology that we needed to, to, uh, to make it easier to do
(28:04):
business with us.
So it's, it's a, it's a wholenew day and that really kind of
played into this new brand, kindof the bold brand, Southwest
business.
We are, we're here to meet yourneeds.
Speaker 3 (28:13):
Yeah.
You know, when you talk aboutSouthwest business, and part of
that obviously is you know, therelationship with the corporate
travel managers and ofdeveloping preferred
relationships or preferredagreements, discount programs,
you know, whatever you want tocall it.
So as part of the Southwestbusiness initiative, do you see
any changes or enhancements toyour current, you know,
(28:36):
corporate agreements, quoteunquote?
Speaker 4 (28:38):
Well, you know, if you, if you think about the
agreements we have in place andthe agreements that we're trying
to win, one of the big obstacleshas been sending, you know, some
of this friction point and for alot of the larger buyers it was
the GDS and agency and andmaking that seamless.
So clearly this, this presents abig opportunity if you put
(28:59):
yourself in the shoes of one ofour account managers, you know,
being able to go in and Hey, welistened and now let's talk
about market share.
Let's talk about potentialexpansion in the program.
I would say just even a coupleof years ago, a lot of our
agreements were fairly cookiecutter, part of more resources
(29:22):
and more time with thecustomers.
We've actually been verythoughtful and, and done many,
many kind of customized andspecialized deals that it, you
know, we want to walk in and wewant to hear what their travel
needs are, how Southwest canserve those needs, and then come
up with a program, a travelagreement that meets those needs
and it's mutually beneficial.
(29:43):
And in that we've done somedifferent things beyond just
kind of discounts, uh, you know,really go into market with more
of a B2B kind of loyaltycomponent has been wildly
successful.
Continuing to kind of testdifferent waivers and favors.
So not only just hard dollars,but looking at some soft dollar
things.
Also some experiential items fortheir travelers and for their
(30:07):
executive teams.
So there's just, um, we'restarting to really kind of build
out that toolkit to just giveour account managers more, more
assets to go win business and toserve better.
Speaker 3 (30:20):
Gotcha.
Excellent.
You know, switching gears alittle bit, one more time, you
know Southwest has probably beenhit the hardest by the max eight
and groundings because yourwhole fleet is a seven 30 sevens
and a number of them are in themax eight category.
And you know, in listening toyour second quarter earnings
call, I know that you all haveadjusted your schedules through
(30:43):
the 5th of January, I believe2020 and when you take into
account the max eights you hadto take out of the fleet and all
of the planes that you had onorder that are now just sitting
at at Boeing, you're going to beabout a hundred planes down in
December.
And it was real interesting tonote that you have, even despite
(31:05):
all of this, your team has cometogether and you've been able to
sustain your revenue growthprojections and your
profitability throughout all ofthis.
But obviously when you're ahundred planes down from your
plan, it impacts your plan.
And so what do you see from aSouthwest business perspective,
the impact of being down thesehundred planes?
(31:26):
How's a business traveler goingto be impacted by that?
And I don't know if you have any, um, thoughts or any new
information about, you know, hisJanuary 5th, you know, do we
feel confident about that or isthat still a date that's gonna
be in flux as the FAA and Boeingand everybody and Southwest, you
know, really examined thisairplane and make and get it
(31:48):
back in the air?
Speaker 4 (31:50):
Well, man, that's a a , there's a lot there in that
question, Roger.
Uh, and I think it's veryrelevant.
I one quick correction right outof the gate.
So it's not quite a hundredaircraft as we kind of go into
2020 to its 70 ish is what we'relooking at when the grounding
occurred in March, we 34 inscheduled service that we
(32:10):
grounded immediately.
But if you just kind of play outthe Boeing order book with a lot
of the max AIDS coming onlinethroughout the year, it gets to
about 70.
And it's roughly nine to 10% ofour entire fleet.
So it clearly as time goes on,it's just, it's less lift, less
seats supply that you can put inthe marketplace.
(32:32):
I, uh, I also, it has been justamazing to see the Southwest
team, the warrior spirit kind ofcome together this year.
Clearly what's gone on was notin the plan kind of rolling into
2019.
But just seeing so many heroesstep up across our network and
(32:53):
scheduling teams, our marketingteams, our communication teams
that the operation, especiallyin the early days where there
was a lot of disruption and awhere we are having to be just
out of necessity more reactiveand continuing to lean into the
customer and try to become moreproactive and make our schedule
(33:13):
even with these max air linesbeing pulled out, try to make
the uh, the schedule aspredictable and, and just give
the customers confidence thatuh, you know, when they book
that that flight was, you know,there's going to be there, it's
going to be there on time.
That was one of the reasons thatdrove us.
We were kind of the first onesto remove them from our schedule
(33:36):
out through January and throughthe holidays.
And that was really just leaninginto the customers.
The last thing we wanted to dowas be in a guessing game over
Thanksgiving and Christmas.
We wanted to create as muchstability with our operation as
we possibly can.
And with all this going on, ouroperational performance, our on
time performance, our NPS scoresare hospitality and satisfaction
(33:58):
scores have been incredible.
So the, just a quick shout outto the this team at Southwest
and all the groups that cametogether to navigate this.
As far as next steps, clearlythere's a lot going on right now
as we speak.
We are getting close to Boeingdelivering the software and FAA
doing the test flights andreally getting it recertified
(34:23):
and return to service.
And it's not just simply ofcourse putting the aircraft back
in the skies there.
There's a lot as far as customerconfidence that we're going to
partner.
All the airlines are going to beheavily partnering with Boeing.
You have that reentry, so moreto come, you know?
No, no, no specifics.
(34:44):
You know, right now our, fromwhat you know, all of our
relationships and talkingthrough kind of timelines we
feel good about, you know, the,the January timeframe, you know,
once you that add that airlinedirective comes out, it's going
to take us a period of time toreintroduce the aircraft.
It's not big bang.
They have to kind of sequence inand there's a lot of activities
(35:04):
our tech ops teams have to do tomake sure everything's ready to
go.
But we have a very, verydetailed and methodical plan.
And clearly safety is first andforemost, always has been,
always will.
And we're excited about thefuture going into 2020 we think
it's an absolute great aircraftare pilots who kind of lead from
(35:25):
up front and they're, you know,we, we flew the aircraft, we
were the launch customer inOctober of 2017 so call it 18
months.
We had actually flown theaircraft 44,000 times and our
pilots love the aircraft.
They've seen a lot of the workbehind the scenes since March
with software and performanceand a are ready to kind of get
(35:49):
back in the cockpit, which givesour full Southwest team.
And ultimately I think that'llgo a long way in building that
customer confidence as well andgetting them back out there and,
and flying.
Speaker 3 (36:01):
Yeah.
And thanks for that updated.
I, it is something that's outthere on everybody's mind.
And to your point, it is amazingthe way that, and I think this
is kind of, you know theSouthwest culture and many of
the organizations out there, butit's in times like this where
you people just really cometogether and really, you know,
put their heads down and getthings done.
(36:23):
And again with being down thatmany aircraft to have the
stability that you've had inyour schedules and the
profitability is a definitely aTestament to the efforts of all
of the Southwest team.
And hopefully we'll have thisbehind us very quickly.
You know, one final questionDave, cause it looks like we're
just about out of time here.
You've talked a lot aboutSouthwest business and this, I
(36:45):
think you've been in theposition just for a few months
now or less.
And if you were to look ahead tothree years from now, what do
you hope to have accomplishedwith Southwest business?
Speaker 4 (36:57):
Great question Roger.
At the end of the day, we are sohyper focused on our customer
and trying to be customercentric.
So the biggest satisfaction inall of this is we could go all
of our buyers, all segments, andwith a straight phase, those
(37:18):
customers could just say, Hey,thank you.
You know, Southwest, you listen,you cared, and you put your
money where your mouth is.
With all the investment we'vebeen talking about and you make
it easier for company X to dobusiness with Southwest.
I think that is something thatwe would feel as is wildly
(37:40):
successful.
And then clearly if we're ableto do that time and time again
across all of these greatcustomers, then that's gonna
propel Southwest business.
And then Southwest airlinesforward at, at the end of the
day, our leisure customers thatis going to continue to be, you
(38:01):
know, the majority of ourbusiness, we do really, really
well.
There are brand our valueproposition, they keep coming
back time and time again, nobaggies, no change fees,
loyalty, all, all the, all thosethings.
But this is going to be a hugeincremental growth opportunity.
Uh, and if, if we're successful,I think Southwest is gonna
(38:22):
actually have the opportunityto, to do things we've never
done in our 50 year history andmaybe have to look at kind of
our growth plans cause we wantto cater to both of these, these
customer segments.
It really is amazing that a, weturn 50 years old as an airline
in June of 2021 and there'sstill these pockets of potential
(38:44):
like the BW space that we'vereally never fully focused on or
invested in.
So it, it just, it, it's anexciting place to be.
It's an exciting time forSouthwest and we will absolutely
want to do another podcast, youknow, down the line and report
in on on how are we, how are wedoing on that promise for our
(39:05):
customers?
Speaker 3 (39:06):
Yeah, absolutely.
And we'd love to have you backon and you know, we are kind of
bumping up against the, the endof the, of the show here.
And I think that was a greatrecap of kind of, Hey, you know,
Southwest is getting into thebusiness side with a new renewed
focus on it.
And we've heard kind of, Hey,here's how we plan to, you know,
(39:27):
here's our playbook, so tospeak, of of how we're going to
expand our presence and ourimpact in this segment of the
industry.
And like you say, we'd love totouch base with you again, a
few, you know, on down the roadhere, six months, 12 months kind
of see, okay, how are, how arethings progressing?
Cause a lot of changes thatSouthwest is going through right
now on the business side of thehouse.
(39:50):
So, um, you know, we'lldefinitely be in touch and we'd
love to have ya back on the showand we'll be able to hopefully
look back on a lot of this stuffand we can go through and check
the box and all the thingsyou've accomplished out there,
Dave.
Speaker 4 (40:04):
Yeah, that, that would be wonderful.
Roger.
We really appreciate theopportunity to just date our
customers on where we're at anduh, we'll look forward to
following up six or 12 monthsdown the line and giving a
status.
Speaker 3 (40:18):
Well, thank you Dave.
It's been an absolute pleasurespeaking with you today.
We appreciate the inside.
Look into this new divisionSouthwest business.
This is really is a newdirection for Southwest,
especially from a distributionperspective.
So I know the industry will bewatching and of course a big
thank you to our listeners.
We appreciate you tuning intoRodger, that where we address
(40:38):
the latest happenings inbusiness travel with top
industry executives.
So until next time, we wish yousafe travels.
Speaker 2 (40:46):
Thanks for listening to this episode of Rodger that
the business travel podcast,like what you hear, check out
more episodes highlightingcurrent industry trends and
events@adtrap.com forward slashpodcast have some feedback about
this episode.
We'd love to hear it.
Simply drop an email to podcastat[inaudible] dot com with the
(41:07):
subject line, Roger that, andshare your thoughts.
Speaker 1 (41:24):
[inaudible].
[inaudible].
Speaker 2 (00:09):
Welcome to Roger that the business travel podcast
hosted by Roger Hale, CEO of addtrave travel management.
Join us as Roger interviews,business leaders from around the
travel industry to unravel thetrue drivers impacting this
complex industry.
And now here's your host, RogerHale.
(00:30):
Welcome and thank you for tuninginto Roger that where we discuss
today's compelling corporatetravel issues,
Speaker 3 (00:35):
market initiatives with top executives from around
the industry.
We've got a great show lined uptoday as we welcome Southwest
newly appointed vice presidentof Southwest business, Dave
Harvey, welcome to the show,Dave.
Speaker 4 (00:48):
Thank you.
Appreciate the invite.
And we look forward to tellingour story here today.
Speaker 3 (00:52):
Excellent.
Well, you know, Southwest hasbeen making headlines for the
last few months with their newinitiatives regarding corporate
travel, from the branding ofyour corporate sales efforts as
Southwest business to the bigannouncement of distributing
your products through the GDSand joining the arc settlement
system for ticketing andpayment.
You know, all of this with theintention of expanding your
(01:15):
share of the lucrative businesstravel market or, so it would
seem so now before we dive intothis, you know, I'd like to
start by giving our listeners alittle bit of background on you
Dave.
So you've just celebrated your20 year anniversary with
Southwest.
Congratulations by the way.
Thank you.
And uh, you know, like manyairline people, you know, you've
had a variety of jobs over thelast 20 years from technology to
(01:38):
network planning strategy tocorporate sales and now the,
the, the big one vice presidentof Southwest business.
So kind of looking back over thelast 20 years, how do you think
your experience is going to helpyou in this new position?
Speaker 4 (01:53):
Yeah, absolutely.
I don't know where the time hasgone, starting in 1999 to today.
And uh, you know, veryfortunate.
Southwest is very much a growthcarrier, had healthy growth for
all those years.
I started before we had 300aircraft and now as we're doing
all of our 2020 planning, we'regoing to be closing in on about
(02:14):
800 Boeing seven 37.
So it's just, it's been excitingto see the company grow and
mature.
And I've, I've had theopportunity to see that sitting
in a lot of different seats.
So a came in and spent my firsteight plus years in technology
doing development solutions.
Kind of interesting time withSouthwest being a point to point
(02:34):
carrier.
And there was, there's not a lotof commercial off the shelf
products.
Everything was more kind of huband spoke focus.
And as we were scaling andadding different levels of
complexity to the model, weended up having to build a lot
of those, those businesssolutions ourselves.
So really having to dig in andunderstand the requirements and
the business need and thentranslate that into tools and
(02:56):
software, you know, then kind ofprogressed.
We, uh, help stand up and builda longterm kind of corporate
strategy shop as Southwest hadkind of gone through nine 11,
multiple recessions, a lot ofdifferent competitive things
going on in the marketplace ascompetitors were going through
bankruptcy startup.
If you LCCs you know, Southwestreally had to take a five to 10
(03:19):
year view of what we wanted tobe when we grew up, if you will.
And laying out kind of clearstrategies and plans to go
achieve that.
As you mentioned, had a neatopportunity as we were in the
midst of AirTran integration andkind of consuming and
integrating that across ournetwork.
I had the, had the chance tojump into network planning, did
(03:41):
work around the right amendmentas is that was repealed and we
could do the long haul flyingout of there.
A lot of DCA and LaGuardia slotsled a lot of our new cities that
we, we brought online to thenetwork.
A lot of the internationalgrowth as we took a small
international portfolio from airtrain and really expanded that
rapidly and then continued inthe commercial space to a, you
(04:06):
know, we, we continue to look atwhat longterm airline
partnerships a codeshare,Interline, some of the
international capabilities thatwe need had a chance to kind of
shepherd a lot of thoseactivities.
And one of the other things thatkind of came into the portfolio
was at the time what we calledcorporate sales, really selling
predominantly to large, medium,small buyers.
(04:30):
And that kind of continued toevolve as we got more focused on
both federal government, state,higher ed, not just a SMI
managed business but Smeeunmanaged or self serve as well.
And really looking at what ourfair share opportunities should
be, what that full potential andwhat were some of the things
historically that had beenroadblocks or stood in our way
(04:54):
to really servicing and callingon these customers and, and, and
winning more of their business.
So kind of laying out a multiyear strategy and plan to how do
we reduce that friction or not,not just reduce it but remove it
and make the investments inmanpower and technology to serve
all these buyers well, andthat's really what kind of
(05:16):
culminated in this new, I'd callit B2B distribution strategy,
the new brand Southwestbusiness.
We're thrilled to go to marketwith that.
That's really resonating withour buyers and clearly
demonstrating.
We've been listening for thelast 10 years and we're now
making strategic partnershipswith folks like Amadeus and
(05:38):
Travelport and Ark and othersthat that are gonna really allow
stop West and in our our greatnetwork, our great product, we
know our customer friendlypolicies like no change fees
really play well to thisaudience.
Our national network areincredible program on and on and
(05:59):
on.
We've got so many tools, bigdifferentiators and if we can
just reduce this friction andmake it easier to do business
with Southwest, we feel likeit's a huge opportunity as we
look over the next five to 10year horizon.
Speaker 3 (06:12):
Excellent.
Excellent.
That's a great background andkind of leading into some of the
questions that I've, you know,that I think the industry is
asking that I've heard out thereand you know, you talk about and
you know, there has been, youknow, Southwest has grown and
gone through a lot of changes.
Of course our industry is justfraught with changes.
It seems like it's changing allthe time.
(06:32):
And when we look back over thesechanges, it's kind of one thing
that's been a consistent themefor the, for the vast majority
of the corporate travel managersis that Hey, the TMC is their
channel of choice when formanaging their corporate travel
programs.
(06:52):
So, you know, as I take ahistorical view and, and had to
describe the Southwest TMCrelationship, I'd probably put
it in a bucket of, you know,mutual respect tolerance, but
not really, I wouldn't describeit as strong or actively
engaged.
So as you look forward togetting into this, you know,
more in penetrating thisbusiness travel market, how do
(07:17):
you plan on strengthening yourrelationship with the corporate
TMC community?
Speaker 4 (07:22):
Absolutely.
And, and you may be a, you maybe kind to us on how you
describe that relationship.
I might even be more blunt tosay there just hasn't been much
of a relationship at all.
If you ever wind the tapes allthe way back to the late
nineties early two thousands weactually Southwest maybe a
misnomer or people just weren'taware.
We actually did pay some of thecommissions more kind of
(07:44):
standard in that period.
Clearly we had a lot of successwith southwest.com being first
to market and kind of poweringour direct distribution
strategy, which still serves usvery, very well going forward.
And I think it is an importantdistinguish distinguishing
factor that when our charge isvery much the B2B business B to
(08:05):
C, clearly the channel that wehave great success driving our
customers to is to southwest.comand that's not changing at all
with with some of thisinvestment we're making around
Southwest business for our B2Bcustomers.
But what we're excited, and thiswas, this was part of our recent
announcements is it's kind of anew day.
(08:25):
We, when we go to our customers,we're going to ask them how do
you prefer to do business withSouthwest?
And if that answer is, Hey, TMCis our channel of choice or this
GDS is our GDS of choice, thenwe're going to be able to come
to the table and say, we have anindustry standard solution for
(08:48):
booking for change, modify forsettlement, all your mid office
back office needs.
That is exactly what we're goingto be coming to market with here
in 2020 and to help supportthat, we have actually just
recently finished building outwhat we call our TMC strategy
and relations team, where wehave dedicated resources that
(09:12):
are industry experts and we're,we're gonna focus kind of out of
the gate on the top 50 agencieswhere a lot of the volume is
being driven and not only it,we've got great relationships
with the buyers themselves, butwe want a better, have better
relationships with these top 50agencies, kind of understand
(09:35):
what their needs look like,their roadmap, and make sure we
can kind of integrate and meettheir needs as well.
Uh, we feel like that was a bigmissing leg in the stool.
So now we are actively going toengage and promote that
relationship directly with theagency community.
Speaker 3 (09:55):
Yeah, and I think that's a great move and
certainly getting into the GDSis going to to to be, to really
power that because it's allabout getting into the TMC
workflow and that's always beenthe challenge for, for our
company and and others is, Hey,how do we cost effectively
manage Southwest reservationsand bookings.
(10:16):
And you know, you mentionedTravelport and Amadeus and they
were both, you know, directlymentioned in all the
announcements concerning yourGDS participation.
You know, however, you know,cyber is by far the leading GDS
in the United States and they'reconspicuously missing from these
announcements.
Now I know you currently have,you know, what the industry
(10:37):
calls a basic booking level withSabre.
And my understanding is thatyour current agreement with them
does call for parody across allthe offerings with the other
GDSs.
So, I guess, could you just talka minute about, Hey, where is
Sabre in this solution and thatyou're developing and what can
we expect in the near future onany announcements or any
(11:00):
initiatives with cyber?
Speaker 4 (11:02):
Roger, I'm surprised you actually caught that and I'm
just,
Speaker 3 (11:05):
yeah,
Speaker 4 (11:07):
we're, we are coming out of the gate with the other
two major GDS players.
You know, we, we have astrategic relationship with
Amadeus as we, uh, they're ourPSS provider.
We went live in may of 17, soit's been a little, little more
than two years.
And uh, that's working reallywell for us.
I would say at the end of theday, we want to be multi GDS.
(11:30):
We have a great relationshipwith saber as well, long time
partner of theirs.
They power a lot of our othersolutions and tools.
So we, we continue to do greatbusiness with them and, and
we'll just kinda continueworking through what kind of a
mutual relationship would be fora higher level of connectivity
and content from a GDSstandpoint.
(11:53):
So that is ongoing.
You know the intent is easy tosay but and then we're going to
fulfill this is we're going tobe industry standards.
So back to if our buyer says,Hey we want to work with this
agency of choice and that agencyis powered by is tech Travelport
in this instance.
Then the level of connectivitythat they experienced today with
(12:18):
all of a in in level ofparticipation with all of their
other airlines that they'repartnering with.
We are going to be making allthe investments to be industry
standard in that space and thenwe're also going to be putting a
lot more content into the GDSchannel.
So, uh, we actually have verylimited, we have a an existing
(12:40):
relationship and are sellingthrough Sabre as you mentioned,
the basic booking requests andalso through Travelport today we
have very limited contentthrough that channel and we are,
we're excited to deliver a muchmore expanded amount of our
fairs.
All the, what I wouldcharacterize is our, our
everyday low fares including ourwant to get away fares in that
(13:02):
channel.
Really the expectation is allthat B2B relevant content is
going to be in that channel.
So we needed to deliver uponthat.
So we're excited about going tomarket with that next year as
well.
Speaker 3 (13:14):
Okay.
So sounds like you know, the, wecould classify your cyber
relationship as in progress, butit is something you're actively
engaged with.
And the fact that they weren'tin the announcement doesn't mean
that you're shunning them.
It's just Hey, we're not thereyet.
Is that a, was that a goodcharacterization of it?
Speaker 4 (13:29):
Absolutely.
That's spot on.
It is ongoing and a, I thinkboth sides are, are eager to
figure out something that worksfor both companies.
Speaker 3 (13:39):
Okay, excellent.
You know, and when you talkabout now distribution, you
know, the vast majority ofcorporate travel programs
incorporate, you know, some typeof online booking tool into the
reservation process.
And you know, currently allthose tools be, they concur get
there or whoever pass along atechnology fee that's charged by
(14:02):
Southwest to access the content.
So just if you could talk alittle bit about how, okay.
We hear about your relationshipwith Amadeus and Travelport and
the ongoing one with cyber.
Talk a little bit about yourrelationship with the online
booking tools, any changes thereand then also this, the fee is
that truly going away, thisextra fee that was being charged
(14:23):
by Southwest big
Speaker 4 (14:24):
online booking tools, corporate booking tools.
We've had a longstandingrelationship.
You know, as I mentionedearlier, we uh, we first to
market with our direct bookingback in in 2010.
And uh, those partners steppedup immediately and we've had a
lot of success with them.
You've got to go down the line,concur deem get their Agencia.
(14:45):
There's a lot of activity in themarketplace with what I knew, a
upstart tools or almost digitalagencies in a way.
So you know, the GDS investmentthat we were talking about
earlier is a major investment,major opportunity for us to meet
our customer's needs.
There are still a lot ofcustomers that are very
(15:06):
comfortable connecting with usthrough our direct connect to
their online booking tool ofchoice or also a, we're making
the major investment in swab iswe had let that get a little
long in the tooth, but if haverolled out major new capability
sets and just really improve thelook and feel the navigability
making investments in 18 thisyear and 19 and continuing into
(15:29):
2020 and make that product bestin class for those companies
that do a significant amount oftheir travel on Southwest and
kinda like that one stopshopping for all of their
reporting, tooling, duty ofcare, unused funds, everything
they need, they have right thereat their fingertips.
Specifically with the corporatebooking tools, you know, we
(15:49):
look, we have strongrelationships with them as well
to understand their tech roadmapand their investment roadmap and
we see that business continuingto grow through them.
Then it kind of comes back tothe buyer and the, the
arrangement with the buyer andif there's an agency involved.
And would they rather go moretraditional agency, GDS or are
(16:11):
they comfortable just thecorporate booking tool directly
to Southwest?
You know, clearly there'sdifferent economics at play and
that gets into kind of thenonstandard booking fee that you
know, some of the agencies havedecided to charge.
It's been in the marketplace fora few years.
So at the end of the day we aremaking the investments so that
(16:33):
the extra steps, the extra timethat we know that it takes
agents to kind of know if it'snot only the book but the change
modify which can be a little bitmore tedious and it's just
because we haven't made theinvestments, we aim to not have
any other reasons in themarketplace, reduce all that
friction.
So those know non Steiner feeswould no longer apply.
(16:55):
Um, starting starting next year.
So, and then that also goes backto the TMC strategy and
relations team that I hinted ator talked about earlier.
So that we have thoserelationships.
We can talk through what thatmeans for the agencies, what
other servicing needs, theagencies, waivers and favors.
(17:16):
Other ways that we can make iteasier for the agencies to do
business with us.
We fully intend to put those inplace as well.
Speaker 3 (17:23):
Okay, excellent.
You know, and one of the otherthings that you had talked about
in your previous answer wasabout content.
And I picked up on where yousaid that Hey, we're going to
have all the fairs in there andI think I heard you say that not
only the low business classfares but the wanna get away
fares would actually be in the,in the GDS.
(17:44):
Did I hear that correctly?
Speaker 4 (17:46):
Absolutely.
We, um, you know, there's theone to get away product.
There's a lot of companies wouldprefer our refundable products,
so the business select in anytime.
And you know, we, we spend a lotof time and energy kind of
focusing from a B2B perspectiveon incentivizing those, those
(18:08):
products.
But they're there.
There's, there's a lot of othercompanies, especially when you
go kind of downmarket small tomedium enterprises where the
want to get away product worksgreat and is expected and given
that we need to be able toprovide that content and those
fares through GDS as well sothat that is absolutely in scope
(18:30):
of what we want to come to themarketplace with next year.
Speaker 3 (18:32):
Okay.
Excellent.
Excellent.
Cause I do feel that's a veryimportant part because to your
point, I think, you know if youlook at where the corporate
traveler is spending the money,it's mostly in the higher fares
with the refundability and allthe availability those offer.
But there is a need for acertain percentage to use those
(18:52):
wanting to get away fair.
So that's good to hear that thatwill be in the distribution
through the GDS.
Speaker 4 (18:58):
The thing is if a customer tells us that their
channel of choice is GDS, someof the friction that's out there
is they have to kind of channelshop and kind of bounce back and
forth and we want to eliminatethat.
That takes time and createsfrustration.
So we want them to haveconfidence that the content
(19:18):
they're looking for is in theirchannel of choice.
Speaker 3 (19:21):
Excellent, excellent.
Now you talked about some of theworkflow and the services that
the TMCs offer to theircorporate travelers and wanting
to remove that friction.
And one other area, and I don'twant to dive too deep on this,
but one that always comes up isthe identification and the reuse
of these non-refundable fares.
(19:42):
The want to get away fares.
And if you, you know, we alreadyknow that Southwest doesn't
charge a fee for those, but oneof the things out there is being
able to automate theidentification of unused
tickets.
So Southwest planning on puttingthat flight coupon status,
making that available throughthe GDS so that these automated
(20:04):
systems can go out and identifyand pull in these tickets
without the traveler having tonotify the TMC that they didn't
use the ticket.
Speaker 4 (20:14):
Yes, we've got kind of a multipronged approach there
and we are still in the thick ofkind of our technical
implementation know we hope totoward the end of the year or
early next year to be very, veryspecific on our launch dates or
our go to market dates with boththe travel port and almond
[inaudible].
Roger to your question, knowthat that's the strategic
(20:37):
partnership with arc and as theindustry standard for ticketing
and settlement as well.
That'll help alleviate a lot ofthat friction that's there on
the unused unused funds today tocompliment that.
One of the things we're doingwith swab is actually went live
with this new report in Decemberof last year and want to
(20:58):
continue to expand upon that.
So today if you have any unusedfunds that were booked through
either our direct connect orthrough swab is the agency or
the travel manager can run thatreport and see all that in real
time right now and it's, we'vegotten rave reviews, a lot of
good feedback on that.
Clearly we would want to expandthat reporting capability.
(21:21):
One stop shopping.
Someone could go in there andsee their GDS funds as well.
And then taking that a stepfurther, we want to actually
make the usage of those fundsmuch easier to then kind of
reapply to that corporation.
So just kind of make it in thebooking flow.
If you've got the unused funds,I can just grab them and apply
(21:41):
them and, and you go.
So you'll have, I think we'rereally excited about the
industry standard capabilitiesthrough the GDS and managing
that.
But then you'll have a, anotherway as you kind of look at your
entire book of business throughour swab is portal.
That'll make it easier for ourbuyers to get their hands around
(22:02):
that.
Speaker 3 (22:02):
Okay.
Excellent.
So now let's, let's shift gearsa little bit to the traveler and
the traveler experience.
You know, if you look at yourmain three domestic competitors,
they've really done an effectivejob of creating this
differentiated experience forthe business traveler.
You know, be it the cabinconfiguration, the boarding
process, you know, even, youknow, the recognition aspect of
(22:24):
it.
And even in some cases for thehigher levels to actually
sponsor the clear memberships tohelp them get through the TSA,
you know, check in process asquickly as possible.
So, you know, in light of yourcurrent operational processes,
your technological capabilities,your cabin configurations, you
know, are there plans to offer adifferentiated experience for
(22:46):
the business traveler or is itthat, Hey, we're going gonna
have the lowest prices and havejust one experience across both
business and consumer travelers?
Speaker 4 (22:56):
Yeah, great question.
And uh, you know, Roger, ofcourse, every seat on Southwest
as a first class seat.
Speaker 3 (23:02):
There you go.
There you go.
Speaker 4 (23:05):
I would say a lot of that is as you look at our
overall plan to not only servicethe art, the travel managers and
their agencies better, we alsocontinue to look at ways to then
take good care of those.
B to B travelers are a hugepiece of the equation.
And clearly we do a lot ofbenchmarking and keep close tabs
(23:28):
on the big three.
And then even some of the otherkind of niche players that we're
out there competing with and youknow, they, they've got, they've
got great products.
When you think about cabin classand you know, business class,
first class, extended leg room,lounges, there's a lot of things
with kind of a hard product.
The soft product, those are forthe most part Southwest, you
(23:49):
know, we feel like we know whowe are.
We're not trying to be allthings to all people.
You know, if you even just goout and look at all of the, uh,
the corporate or governmentpurchases that are being made,
the lion share clear majority isa coach or economy ticket, you
know, and we know a lot of thosetravelers are playing kind of
(24:09):
the upgrade game and hoping theycan kind of get bumped up to the
front.
But you know, we're, we're nottrying, if the travel policy
allows for first class businessclass, some of those other
amenities, that's just notnecessarily the traveler or the,
to an extent the company, ifthey've got a high propensity
for that type of traffic, that'sjust a, they're not prioritized
(24:30):
all the way to the top.
Now that that said, we docontinue to look at things for
the traveler aroundpersonalization, customization.
We talk a lot under kind of ourhospitality umbrella about
surprise and delight.
The moments that matter and howwe can start differentiating and
doing things uniquely for these,uh, these, these customers,
(24:53):
these high valued customerscoming through some sort of
corporate agreement orgovernment agreement.
So I, I'd say we're in discoveryand exploratory mode and we
continue to work with ourcustomer experience teams to
understand, you know, what thoseopportunities look like at our
DNA.
At our core we are more of anegalitarian airline that w we're
(25:17):
, we want to deliver.
Once you get on the tube, onceyou go on the plane, you know,
we want to have that amazingcustomer service that our
frontline employees are flightattendants, pilots, agents at
the airport, delivered day inand day out.
We think that is very importantto our core and to our brand.
But uh, you know, we know, youknow, pre-boarding post boarding
(25:39):
reporting.
Our loyalty program clearly hastiers with a list, a list
preferred, our companion pass,which hands down is the best
loyalty amenity.
I think in the business.
And by nature a lot of ourtravelers are traveling enough
where they, they find themselvesin those tiers.
So they have our, our bestexperience when it comes to
(26:03):
boarding, picking their seat,getting an a or early B.
So they have the selection, theyhave the choice to grab the
aisle or the exit row or thewindow, you know, whatever
their, their seat of of choiceis.
So inherently we have a lot ofbenefits in our product and we
continue to look for ways toexpand that for this traveler.
Speaker 3 (26:24):
Yeah.
And I agree with you 100% that,you know, what you say that a
lot of companies do is theystart to try and change who they
are to chase a different market.
And that ultimately never worksout well.
And so, you know, glad to hearthat y'all have got a, you know,
you're going to be true to yourDNA as you say, know this is we
know who we are and there'sthings we can do to increase the
(26:48):
experience or improve or enhancethe experience of the, the
business traveler.
But we're going to stay in ourlane and because we know what
our lane is and, and again,you've been very, very
successful in your lane for thelast 40 plus years.
Speaker 4 (27:02):
And I wait, well, one other thing to tag on there, you
know, we do a lot of customerfocus groups, a lot of surveying
and specifically in this, thissegment, this traveler segment
and the travelers loveSouthwest.
These B2B travelers, they loveour people.
They love the experience.
It's just, it's easier.
(27:23):
It's simple.
They know what they're going toget.
It's very predictable.
So not to say that we canimprove and we're absolutely
gonna continue to look for thoseopportunities.
But if you did that same surveyto the travel, you know, I think
it would, the results would be alot better if you took that here
today.
But even just going back a year,plus it was really the travel
(27:43):
managers, Hey, my travelers loveSouthwest, but you guys can be
in these certain areas.
You guys can be a pain in theneck to work with.
Or Hey, I'm not seeing myaccount manager as frequently as
I would like to what's going on?
And you know, we just hadn'tinvested in the manpower and the
technology that we needed to, to, uh, to make it easier to do
(28:04):
business with us.
So it's, it's a, it's a wholenew day and that really kind of
played into this new brand, kindof the bold brand, Southwest
business.
We are, we're here to meet yourneeds.
Speaker 3 (28:13):
Yeah.
You know, when you talk aboutSouthwest business, and part of
that obviously is you know, therelationship with the corporate
travel managers and ofdeveloping preferred
relationships or preferredagreements, discount programs,
you know, whatever you want tocall it.
So as part of the Southwestbusiness initiative, do you see
any changes or enhancements toyour current, you know,
(28:36):
corporate agreements, quoteunquote?
Speaker 4 (28:38):
Well, you know, if you, if you think about the
agreements we have in place andthe agreements that we're trying
to win, one of the big obstacleshas been sending, you know, some
of this friction point and for alot of the larger buyers it was
the GDS and agency and andmaking that seamless.
So clearly this, this presents abig opportunity if you put
(28:59):
yourself in the shoes of one ofour account managers, you know,
being able to go in and Hey, welistened and now let's talk
about market share.
Let's talk about potentialexpansion in the program.
I would say just even a coupleof years ago, a lot of our
agreements were fairly cookiecutter, part of more resources
(29:22):
and more time with thecustomers.
We've actually been verythoughtful and, and done many,
many kind of customized andspecialized deals that it, you
know, we want to walk in and wewant to hear what their travel
needs are, how Southwest canserve those needs, and then come
up with a program, a travelagreement that meets those needs
and it's mutually beneficial.
(29:43):
And in that we've done somedifferent things beyond just
kind of discounts, uh, you know,really go into market with more
of a B2B kind of loyaltycomponent has been wildly
successful.
Continuing to kind of testdifferent waivers and favors.
So not only just hard dollars,but looking at some soft dollar
things.
Also some experiential items fortheir travelers and for their
(30:07):
executive teams.
So there's just, um, we'restarting to really kind of build
out that toolkit to just giveour account managers more, more
assets to go win business and toserve better.
Speaker 3 (30:20):
Gotcha.
Excellent.
You know, switching gears alittle bit, one more time, you
know Southwest has probably beenhit the hardest by the max eight
and groundings because yourwhole fleet is a seven 30 sevens
and a number of them are in themax eight category.
And you know, in listening toyour second quarter earnings
call, I know that you all haveadjusted your schedules through
(30:43):
the 5th of January, I believe2020 and when you take into
account the max eights you hadto take out of the fleet and all
of the planes that you had onorder that are now just sitting
at at Boeing, you're going to beabout a hundred planes down in
December.
And it was real interesting tonote that you have, even despite
(31:05):
all of this, your team has cometogether and you've been able to
sustain your revenue growthprojections and your
profitability throughout all ofthis.
But obviously when you're ahundred planes down from your
plan, it impacts your plan.
And so what do you see from aSouthwest business perspective,
the impact of being down thesehundred planes?
(31:26):
How's a business traveler goingto be impacted by that?
And I don't know if you have any, um, thoughts or any new
information about, you know, hisJanuary 5th, you know, do we
feel confident about that or isthat still a date that's gonna
be in flux as the FAA and Boeingand everybody and Southwest, you
know, really examined thisairplane and make and get it
(31:48):
back in the air?
Speaker 4 (31:50):
Well, man, that's a a , there's a lot there in that
question, Roger.
Uh, and I think it's veryrelevant.
I one quick correction right outof the gate.
So it's not quite a hundredaircraft as we kind of go into
2020 to its 70 ish is what we'relooking at when the grounding
occurred in March, we 34 inscheduled service that we
(32:10):
grounded immediately.
But if you just kind of play outthe Boeing order book with a lot
of the max AIDS coming onlinethroughout the year, it gets to
about 70.
And it's roughly nine to 10% ofour entire fleet.
So it clearly as time goes on,it's just, it's less lift, less
seats supply that you can put inthe marketplace.
(32:32):
I, uh, I also, it has been justamazing to see the Southwest
team, the warrior spirit kind ofcome together this year.
Clearly what's gone on was notin the plan kind of rolling into
2019.
But just seeing so many heroesstep up across our network and
(32:53):
scheduling teams, our marketingteams, our communication teams
that the operation, especiallyin the early days where there
was a lot of disruption and awhere we are having to be just
out of necessity more reactiveand continuing to lean into the
customer and try to become moreproactive and make our schedule
(33:13):
even with these max air linesbeing pulled out, try to make
the uh, the schedule aspredictable and, and just give
the customers confidence thatuh, you know, when they book
that that flight was, you know,there's going to be there, it's
going to be there on time.
That was one of the reasons thatdrove us.
We were kind of the first onesto remove them from our schedule
(33:36):
out through January and throughthe holidays.
And that was really just leaninginto the customers.
The last thing we wanted to dowas be in a guessing game over
Thanksgiving and Christmas.
We wanted to create as muchstability with our operation as
we possibly can.
And with all this going on, ouroperational performance, our on
time performance, our NPS scoresare hospitality and satisfaction
(33:58):
scores have been incredible.
So the, just a quick shout outto the this team at Southwest
and all the groups that cametogether to navigate this.
As far as next steps, clearlythere's a lot going on right now
as we speak.
We are getting close to Boeingdelivering the software and FAA
doing the test flights andreally getting it recertified
(34:23):
and return to service.
And it's not just simply ofcourse putting the aircraft back
in the skies there.
There's a lot as far as customerconfidence that we're going to
partner.
All the airlines are going to beheavily partnering with Boeing.
You have that reentry, so moreto come, you know?
No, no, no specifics.
(34:44):
You know, right now our, fromwhat you know, all of our
relationships and talkingthrough kind of timelines we
feel good about, you know, the,the January timeframe, you know,
once you that add that airlinedirective comes out, it's going
to take us a period of time toreintroduce the aircraft.
It's not big bang.
They have to kind of sequence inand there's a lot of activities
(35:04):
our tech ops teams have to do tomake sure everything's ready to
go.
But we have a very, verydetailed and methodical plan.
And clearly safety is first andforemost, always has been,
always will.
And we're excited about thefuture going into 2020 we think
it's an absolute great aircraftare pilots who kind of lead from
(35:25):
up front and they're, you know,we, we flew the aircraft, we
were the launch customer inOctober of 2017 so call it 18
months.
We had actually flown theaircraft 44,000 times and our
pilots love the aircraft.
They've seen a lot of the workbehind the scenes since March
with software and performanceand a are ready to kind of get
(35:49):
back in the cockpit, which givesour full Southwest team.
And ultimately I think that'llgo a long way in building that
customer confidence as well andgetting them back out there and,
and flying.
Speaker 3 (36:01):
Yeah.
And thanks for that updated.
I, it is something that's outthere on everybody's mind.
And to your point, it is amazingthe way that, and I think this
is kind of, you know theSouthwest culture and many of
the organizations out there, butit's in times like this where
you people just really cometogether and really, you know,
put their heads down and getthings done.
(36:23):
And again with being down thatmany aircraft to have the
stability that you've had inyour schedules and the
profitability is a definitely aTestament to the efforts of all
of the Southwest team.
And hopefully we'll have thisbehind us very quickly.
You know, one final questionDave, cause it looks like we're
just about out of time here.
You've talked a lot aboutSouthwest business and this, I
(36:45):
think you've been in theposition just for a few months
now or less.
And if you were to look ahead tothree years from now, what do
you hope to have accomplishedwith Southwest business?
Speaker 4 (36:57):
Great question Roger.
At the end of the day, we are sohyper focused on our customer
and trying to be customercentric.
So the biggest satisfaction inall of this is we could go all
of our buyers, all segments, andwith a straight phase, those
(37:18):
customers could just say, Hey,thank you.
You know, Southwest, you listen,you cared, and you put your
money where your mouth is.
With all the investment we'vebeen talking about and you make
it easier for company X to dobusiness with Southwest.
I think that is something thatwe would feel as is wildly
(37:40):
successful.
And then clearly if we're ableto do that time and time again
across all of these greatcustomers, then that's gonna
propel Southwest business.
And then Southwest airlinesforward at, at the end of the
day, our leisure customers thatis going to continue to be, you
(38:01):
know, the majority of ourbusiness, we do really, really
well.
There are brand our valueproposition, they keep coming
back time and time again, nobaggies, no change fees,
loyalty, all, all the, all thosethings.
But this is going to be a hugeincremental growth opportunity.
Uh, and if, if we're successful,I think Southwest is gonna
(38:22):
actually have the opportunityto, to do things we've never
done in our 50 year history andmaybe have to look at kind of
our growth plans cause we wantto cater to both of these, these
customer segments.
It really is amazing that a, weturn 50 years old as an airline
in June of 2021 and there'sstill these pockets of potential
(38:44):
like the BW space that we'vereally never fully focused on or
invested in.
So it, it just, it, it's anexciting place to be.
It's an exciting time forSouthwest and we will absolutely
want to do another podcast, youknow, down the line and report
in on on how are we, how are wedoing on that promise for our
(39:05):
customers?
Speaker 3 (39:06):
Yeah, absolutely.
And we'd love to have you backon and you know, we are kind of
bumping up against the, the endof the, of the show here.
And I think that was a greatrecap of kind of, Hey, you know,
Southwest is getting into thebusiness side with a new renewed
focus on it.
And we've heard kind of, Hey,here's how we plan to, you know,
(39:27):
here's our playbook, so tospeak, of of how we're going to
expand our presence and ourimpact in this segment of the
industry.
And like you say, we'd love totouch base with you again, a
few, you know, on down the roadhere, six months, 12 months kind
of see, okay, how are, how arethings progressing?
Cause a lot of changes thatSouthwest is going through right
now on the business side of thehouse.
(39:50):
So, um, you know, we'lldefinitely be in touch and we'd
love to have ya back on the showand we'll be able to hopefully
look back on a lot of this stuffand we can go through and check
the box and all the thingsyou've accomplished out there,
Dave.
Speaker 4 (40:04):
Yeah, that, that would be wonderful.
Roger.
We really appreciate theopportunity to just date our
customers on where we're at anduh, we'll look forward to
following up six or 12 monthsdown the line and giving a
status.
Speaker 3 (40:18):
Well, thank you Dave.
It's been an absolute pleasurespeaking with you today.
We appreciate the inside.
Look into this new divisionSouthwest business.
This is really is a newdirection for Southwest,
especially from a distributionperspective.
So I know the industry will bewatching and of course a big
thank you to our listeners.
We appreciate you tuning intoRodger, that where we address
(40:38):
the latest happenings inbusiness travel with top
industry executives.
So until next time, we wish yousafe travels.
Speaker 2 (40:46):
Thanks for listening to this episode of Rodger that
the business travel podcast,like what you hear, check out
more episodes highlightingcurrent industry trends and
events@adtrap.com forward slashpodcast have some feedback about
this episode.
We'd love to hear it.
Simply drop an email to podcastat[inaudible] dot com with the
(41:07):
subject line, Roger that, andshare your thoughts.
Speaker 1 (41:24):
[inaudible].
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.