Producers’ Pick | Nick Calio: What Airlines Are Doing to Stay in the Air

Demand cash.

That's the advice we get from Secretary of Transportation instead of solving the problem. Nick Calio, he's Airlines for American President and CEO, joins us now. Nick, I think your industry, is everyone befuddled and angry? What happened? Well, a lot of things happened, Brian.

First of all, thank you for having me on. We've had a confluence of bad weather in the wrong places over two holidays, a surge in demand that came back faster than we expected. And we have been in the process of trying to hire people, pilots, flight attendants, customer service agents, gate agents, machinists, for some time now. And, you know, I guess I would say, too, that not everybody is angry. There's been a lot of press on it, and certainly there have been difficulties and problems. We've all seen it.

It's on the news every night. We're a very high-profile industry. But there are 40,000 flights every day, as many as 5,000 flights in the air at any given time, the vast majority of which go off seamlessly. And that is our goal every single day, to give a customer service that allows people to get to where they want to go, whether it be for business or for pleasure.

Right. I mean, the numbers are astounding. So far in 2022, an average of one of every five flights a day arrived behind schedule. A total of more than 20,000 delayed flights, according to FlightAware, and 116,000 flights have been canceled. Me personally, I've never had that.

I travel a lot. I never had it happen before where they just go, your flight's canceled. And you think there's no reason. There's not, hey, sorry, we're down a crew member.

No, that's just canceled. Why did you make it in the first place? But a lot of people, I've never seen more people more disillusioned by any one industry. And the question is, if all the money came to the airlines to keep 700,000 people employed, why aren't they running as smooth as they were before the pandemic hit? There's no simple answer for that, but I will give you an answer that is true and factually based. The reason, first of all, the money that was provided the airlines, we acted as a non-employment agency for the federal government. We passed it right through to our employees. The money that was given to us covered only about 65% of the cost of keeping those employees on.

And you need a little context. If you go back two years, we were bleeding billions and billions of dollars of cash every month. So we were able to keep some people on, but then we had to take self-help measures because we didn't know when flying would come back. We were flying 96% less people than we were prior to the pandemic when it hit.

That happened within a month. So either the companies were going to go bankrupt like they did after 9-11, or we had to take drastic measures to give people early retirement, voluntary leaves, and all that. You know, if the PSP hadn't happened, you wouldn't be flying this summer, plain and simple. That's what people need to keep their eye on. So were the airlines losing money before the pandemic?

Is that what you said, or I misunderstand you? No, we had 10 years in a row of profitability, and we were making record profits, and things were going great. At the time, the week before the pandemic really hit, there was an investment conference up in New York with a lot of our airlines, and there was a recognition that we had so-called fortress balance sheets designed to withstand an event like 9-11, three and a half times as bad as 9-11. That all went out the window in three weeks.

So a couple of things. Just fact and fiction. That the airlines mandated, all the pilots get vaccinated, and flight attendants get vaccinated, a lot just bailed out. Is that true? That's fiction.

I don't think there's any material number of people who did that. But I know United mandated vaccinations for pilots, correct? Correct. Did you guys have incentive?

Okay, go ahead. No, I was going to say, Brian, United did do that. Some others did it as well. And the expectation, there were predictions that people would quit their job because they had to get vaccinated. Frankly, they're really good jobs, and the numbers were very small, if any, as it turned out. So what about whatever happened to the flight attendants? I heard you were running out of flight attendants. The flight attendant numbers are in pretty good shape, I think. But we are hiring more.

We're bringing people back as quickly as we can. You know, the problem with the airline industry, we're having the same kind of problems that every other industry in this country is having. The bigger problem for an airline is because we are so focused on safety and security, all of our employees have to be trained and certified. And what we've been finding in some cases over the last few months, Brian, is we're bringing people back, we're getting them trained, close to certified, and then they decide they don't want the job. And again, that's like every other industry in the country.

The pandemic has, you know, brought some very big changes in our employment market. And they decide they don't want the job. So because it was just brutal, because people are the people's behavior, is that what flight attendants are feeling for the most part, if you talk to their unions, that they don't like the behavior or the treatment? What is the reason? Because this used to be a coveted position.

No one ever seemed to relinquish it once they got it. Well, it still is a coveted position, and we haven't seen any mass migration of flight attendants leaving their jobs. There was a time when, because of the masks and other reasons, where there was a lot of bad behavior on airplanes, and they are the first responders.

They're right in the line, and they do it admirably, part of the backbone of the industry, just like our pilots are and all our other employees. So pilots retiring, is that correct? You're sure of pilots?

Our mainline carriers, A4A members, are not having a pilot supply problem. We have enough pilots. We're hiring furiously.

We're training. Many of our members have started their own flight academies. It takes a long time to become a pilot. It's very expensive. That's why we think that pilots in training ought to be like doctors in training or accountants in training, be able to get federal student loans.

It costs $200,000. Where there is a problem, quite candidly, is for the regional carriers, the smaller carriers, because that's our main source of hiring. And they, in some cases, have had to pull down flights and stop service to communities because they do not have enough pilots. So was it Delta that was on strike last week? They weren't striking.

They were protesting. Okay. Are they underpaid? I don't think so. Being a pilot is a well-paid job. Does everybody always want more money? Yes. And that's what the protests were about. And the negotiation is going on at a number of airlines. I'm talking now with Nick Calio, the president and CEO of Airlines for America. So, Nick, so the flight attendants, the ranks are pretty much okay. You believe, so far, the pilots, the numbers are okay, except for some regional airlines. You believe that the airline workers were having trouble staffing there.

Is that correct? We're hiring as fast as we can. And we want to go faster.

Right. So when these delays start mounting up to the unprecedented, the worst ever, what do you, what is the quick answer or the longer answer on why this is happening? And when do you think things will go back to normal?

That's a good question. We've learned one thing throughout the pandemic. You can plan, but you can't forecast.

And so we've planned. And, you know, there's a lot of reasons for cancellations. There's shared responsibilities across. There are staffing shortages in the federal government, just as there are in our industry.

And we're working our way through those as quickly as we can. But there's no easy answer because, again, it gets back to the training and certification issue. It takes time to get people trained and on board.

You can't snap your fingers and do it. In terms of air traffic controllers, because of COVID, they had to shut down the training academy for two years. That really dried up the pipeline. And they're doing everything they can. The FAA is doing everything it can to get people on board.

We're all working collaboratively together to try to figure out ways to hire faster, train faster and more efficiently, because that's what we need to do. And it's going to take some time. And do you think by the end of the summer?

I would hope by the end of the summer, but I can't predict that. You know, we've taken down our members have pulled down a number of flights, about 15 percent of the flights. They had originally planned to fly to make sure that there would be fewer, you know, fewer cancellations and disruptions because of unavailability. The other thing would I think a lot of people would like to know with all these flight delays and with the flight cancellations on top of that, you're paying more for jet fuel. So which means the prices have to go up because you can't lose money with every flight.

So how does that factor into this? The price increase in oil is a big factor. And, you know, we were going to moderate the prices to the degree that we can. Although the rise in prices is still, put it this way, demand is still high, which tells you something about the price. And we will have to factor in all of our costs. Our two greatest costs are fuel and labor. And both of those costs are going up.

All right. And any tips for people listening right now from the passenger perspective? How do we know if the flight we're booking has a shot at getting off on time since it seems so random with the cancellations? My greatest recommendation would be airlines have made vast improvements in the technology available to customers.

It's one of our greatest ways of communicating. So if you have, name any airline, if you have their app on your phone, you will get messages saying your flight is at gate so and so, it's scheduled to go off on time. You'll get another notice if it's delayed. If it's canceled, it'll allow you to rebook online rather than trying to call a customer service agent.

That's the number one thing you can do. Get to the airport early, get your airline's app and keep checking because the information is all there for you. And even because other than notifications from the airline itself, all you have to do is click on the app, look at the different buttons and check your choices and find out what your flight status is, where your bags are, all those kinds of good things. It's, you know, for a technologically challenged person like me, it's not initially easy.

But if I can do it, almost anybody can do it. So do you think they know more than the gate agents? The app, believe your app over the gate agent? Believe your app over somebody at the airport?

That's a very good question, but I would check. I think it's easier than stand queuing in line to ask the gate agent what the delay is for. I think my hope would be that there's a lot of communication from the gate agents or the pilots or the flight attendants to the customers so that they don't have to ask. And finally, Nick, when it comes to all this, on the ultimate passenger advice, is it true that you guys are told the people who pay more for ticket, the first class, business class are treated better, given first option? So if there is money in the cookie jar to get that upper, that first class or business class ticket, and you're worried about cancellations and rescheduling, is it true first and business are prioritized?

I can't really answer that. I do know that if you're a frequent flyer and a loyal customer for a particular airline, you usually do get priority. So that would help getting rescheduled. Nick Calio, and by the way, is the Secretary of Transportation not doing something you want him to do? Is Washington not doing something you've been asking them to do? No, we work very closely with them. It's all about collaboration, coordination. We do it with the FAA, we do it with DOT, we do it with the Transportation Security Administration. It's a daily thing to try to figure out where the demand is going to be and where the numbers are going to be, and therefore moving staffing around if need be to cover the demand at any particular time. Air traffic controllers? I heard that there was no training going on during the break, during the two-year pandemic, and therefore you're short. I think they are hiring as fast as they can, and we need more air traffic controllers. I know you know this, Brian, that training is very extensive.

You do your training, then you have to get on-the-job training, and to get to one of the busier centers, it can take years to do so. How short are you, do you know? I don't have a number on that. We can certainly use more.

That way if people get sick or something, you have the staff to cover. Got it. Nick Calio, thank you. Appreciate it. Thank you, Brian.