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September 23, 2021, Online, New York, NY, USA
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Aviation’s Inflection Point: How the U.S. Moves Forward From Here
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Robert Jordan
Executive Vice President & Incoming CEO at Southwest Airlines

Bob Jordan serves Southwest Airlines as Executive Vice President and Incoming Chief Executive Officer. Bob is responsible for all activities involved in Communication & Outreach, as well as bringing the right People into Southwest Airlines; giving all Employees the opportunity for personal and professional growth; and assuring quality and depth of Leadership throughout the Company. Bob also oversees the Airport Affairs, Diversity & Inclusion, and Corporate Facilities Departments. Bob joined Southwest Airlines in 1988, and has served in roles including Director Revenue Accounting, Corporate Controller, Vice President Procurement, Vice President Technology, Senior Vice President Enterprise Spend Management, Executive Vice President Strategy and Technology, and Executive Vice President and Chief Commercial Officer. During his time at Southwest he has led numerous significant change initiatives, including the acquisition of AirTran Airways, the development of the new southwest.com e-commerce platform, the all new Rapid Rewards loyalty program, and an enhanced boarding process. Prior to Southwest Bob worked for Hewlett-Packard as a programmer and financial analyst. Bob holds an undergraduate degree in Computer Science and a Masters in Business Administration, both from Texas A&M University.

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Please welcome CEO for Southwest Airlines Bob Jordan in discussion with Airline weekly editor. My do uni, Krishna. Easy. Good morning, everyone. Thank you for joining us today. And thank you for all of you who are listening on mine. Thank you. Bob, for joining a. You're welcome. Thanks for having me a few years. It wake me up at the last year-and-a-half feel like about five years right on it that way. But yeah, I think it's been four years since we've been together.

I'm not sure what that man. Exactly. This conversation is Aviation inflection point or Airlines and this is probably the worst time to get started with you yourself. So I understand 33 years ago. You had quite a job interview at Southwest Metro, how many flexion point or not supposed to be up or down? Right? But a Packard and California and we actually have the families in Dallas. Want to go back to Dallas? So I had my mother won't send me the Dallas Morning News. This is back before that

thing called the internet and just Southwest Airlines. And I had no idea where they were when they were so small. So I apply and I fly in on Southwest. This is before the right Amendment so I can fly in for an interview and I have one day and so Real and I have to change planes in El Paso and of all things I get snowed in in El Paso. It snowed in El Paso. So by the time I get to Dallas, I have an hour for my interview. So I run down to what we call, the people Department do a quick interview. If it, it turns out it's the day after the corporate Christmas

party. So, everyone, I talked to his hungover at Southwest not just her and so I get a couple of questions and then I run over and I'm interviewing for a programmer job and I meet with r c, i r c, i o for a few minutes we're talking and then runs a guy and he goes, oh my gosh, we got this issue with the are Hewlett-Packard system. They had no Hewlett-Packard programmers. I was feeling the one job. So I'm like well, I could probably help. So I go in there and I Klickitat, Klickitat! Klickitat. I fix something. I fly home never really interview so I can just call the next day. You want to

come to work for Southwest Airline that has my start and it turned out. All right for you. It's funny. Poop poop poop that ever imagined? I could I could never die. When I still got a college started, Southwest would never have imagined. This would be a possibility. I will admit, I was surprised whenever I eat a week with, this is what we chose to do with the board and with Gary. And it is just a, it's a completely humbling experience to be able to lead such an iconic company, 56,000, terrific. Wonderful people. I tell people that I get a lot of how, how do you feel about

all this question? Then I am I not, I guess. I usually say, I'm 80% completely excited in about 20% terrified. Congratulations. I'm so let's get into it. What do you see is your main? What do you see is your main challenges and opportunities. Oh, you bet. I think the The right that the crisis that were in is unlike anything we've ever seen as a company or an industry. I mean 911 was really difficult but a lot of folks forget that the first quarter after 9:11, we had a record profit. So the recovery was much faster.

This this is nothing like that. We've never seen our business in 3 weeks, go down, 98% flight craft with one passenger in one bag on them. So it just it's we've never seen anything like that. So as I think about what are the priorities, I think number one, we've got to continue to emerge from the pandemic. It's really clear. I wish we didn't have this Delta variant Wave, It's really clear. That 2022 is another year to transition. I wish it was a normal year, but it's clear that we're going to be in a transition. Here. So just continue to recover from from the pandemic. I think is

is is certainly right up there. These are the way I'm thinking about what what is Bob need to do over the next, you know, a couple of months. It's it's really basic thinking about the transition. I've got a couple of things I really want to do. You just got, you've got to communicate like crazy so that I'm trying to say yes to every opportunity to go out and be with media, be with our investor relations, folks, and especially be with our people be in town halls and be in stations. And so that is you just have you do you almost cannot communicate enough? The second thing is I want to be

with our people. I feel it's important for me to affirm is terrific culture that we have at Southwest Airlines. So I'm trying to be in the station every single week and was in Phoenix last week with her people and just truly enjoyed it. We the people of Southwest Airlines are just wonderful. I feel like I need to be out there and then lasta it. It. You just have to have a bias for Action even though this is not effective till February. Change even even for terrific people and it's riffic company. That trivia culture just changed, just generates uncertainty and the faster that

you can move some of that and certainty along and have a bias for Action. The better. There is a lot of navigating out of this crisis, the near to medium-term and has Delta, but do not tell your dad to bring out. How is the Delta Varian scrambled, you know, this whole thing has been unpredictable you have a wave You think maybe where it's over? And you have another way, if you think it's over, the good thing is that every subsequent wave the business has been a little bit less affected. But there's no way

that there's no way to say that the Delta. Has not had an impact on our business. It has our bookings, are off revenues her off, and I'm hopeful that we are at the peak of that impact. It looks like we're on the, on the backside of that, our our, our our bookings, and our, our our corporate business has stabilized. And that's why I'm hopeful, we're sort of living on there. But it but it's had an impact for sure. Absolutely. I love them. It's so pretty. I think that you'd be, if you look out, the bookings are really normal. If you look at the hospital at the Holiday. It is

relatively normal with the real impact of the clothes in cancellations. So people just make decisions a week or two or three. I mean, you know, I'm sure you had that you've had this here where you're trying to figure out what the, you know, what the end. Person in Virtual attendance is going to be in people. Make that decision. Sometimes a week before the conference. What? I love as we've been able to really take advantage during the pandemic. So you, you, you go looking for went. When when business is down 97%, you go looking for Revenue anywhere, you can find it. So, you saw us open

18 cities and they're all doing really, really well. You saw expand Hawaii. And so I think we're able to really take advantage of the panda Nations, one year for a lot of our, let's see, how, how, how, how have you reject the route Network in response to? Nothing that we did was not planned the way. I would say that we basically pulled over things that we were going to do over over a longer period of time because we had the aircraft available with we didn't need as many flights as many frequencies because the traffic just wasn't there, you know through the waves at the

beginning traffic was down 97% in the next wave it was down 80 and then the next wave it was down more like Fifty and so so we just had a lot of aircraft that can do different job. So we thin the network out. We didn't really quitting close cities, but we did reduce routes in some cases and especially reduce depth and frequency. So that's how we were able to find the list of the cities in Hawaii. A lot of folks don't know is the eighteen cities and our Hawaii expansion took 92 aircraft to do that. So I've been asked a lot

so I've had a lot of folks say well, what are you going to next year and We may open a few but the vast majority of the hundred and fourteen aircraft. We're getting next year, which is a record. By the way, they're going to. They're going to go to restoring the network death to what we were pre-pandemic, you know, if if we will use 92 aircraft to go expand and expand Hawaii. And so the vast majority of that 114, net, retirements is really all about restoring the network to the, to the depth that we had in 2019, without the

death, is just harder to recover. Your customers. It's harder to, to move your employees around, it just makes things a lot more difficult. It will spend the vast majority of that Fleet expansion restoring the nail right on. I think you call the surfing ski destinations that, right. So, those are laser wraps, right? I don't surf, warski, by the way, but So are those. Those are mainly the pleasure routes right? As is that where you're saying a lot of the traffic now, especially with the

laser traffic came back. Much faster, you look at the summer and there there was an inflection point in February where you could see the booking. The bookcase just took off. It was obvious that it has had to be the vaccine. The availability of vaccines and some bookings were really strong into the summer. And now the vast majority that was Leisure. Now, we've had, we've had success opening a primarily business airport to you. Look, look at the Intercontinental in Houston and O'Hare in Chicago. And so those are doing really well and all of

the 18 and a Hawaii expansion are really all doing well. And they are, they are either at or ahead of the plans that we had for them, which is just just just terrific. And what about I'm so, you know, I heard Carrie. Say that you thought about 20% of his travels is not coming back. Do you still think that's true. You do it. Boy. It is. It's the week. We can pull the room and get all kinds of answers. I think it that that is a huge question. I do think every time you've had a prediction that it's that it's different. This time that'll never happen.

That'll never come back. Typically it does. I think what you're going to see is a slow recovery. So if you had offices that intended to open earlier in the year and then you had to wave, you had offices than intended to open and bring back their employees Labor Day. You got the wave so they pushed that out either this fall or in the next year. So I think it's more a matter of time, then it then it is a matter of it will never come back. Now. Is it going to come back to 100%. It's it's hard to say, but the first time I had a lot of my Consulting friends, especially,

tell me the first time. I lose a deal, because I wasn't there in person. I'm on the road. So I'm actually very optimistic for the for business travel recovery overtime, but I think it's going to take a long time. So yesterday, the CEO of Hilton was on the stage and he said that the saying a lot of travel from bookings from small medium sized as well. It's a blend but I yes, I would say that generally that's the case for us. If you look at our managed business in total. We were picking up about Five Points of

getting back to normal. Every single month. We are on a really good pace. So then the Delta Burien hits and we stalled and we stalled in July August, September in the in the kind of down, 63 down, 64 range compared to 2019. And that was really across-the-board, Oliver manage travel. Now we're beginning to see that pickup again. If it's hard, it's hard to predict what that pace is going to be though. But again, I'm very optimistic optimistic. It'll come back, but I've been optimistic guy. I'm very optimistic that we're

going to get to the travel back. We are seeing the leisure travel again, over the summer. Before the Waverly hit, Belize travel was really strong. And the interesting thing within that we are seeing new customers that we've never seen before. We're seeing a record number of customers that have never flown and the, especially the fair stimulation low prices are bringing them into the market. So I'm actually really encouraged about that as well. We need to retain them arrive in certain

unruly passengers after the mask mandate. Now, I want a little backstory mint, Ed Christy to see if Spirit Airlines put it this way. Take the totality of whites in the number, right? There's a fly every day and the number of unruly passenger incident since more media narrative, then reality. And I'm would you agree with that? It's, I feel like, I keep saying it. Depends, right? I'll tell you this. I I've been on a lot of our Southwest Airlines flights late late. Again. I'm trying to be somewhere in an airport every week 3, with our our wonderful employees and

just talked to them. Listen to them, encouraged them. And always talk, obviously to our flight Crews. And I would tell you two things, the majority of them have not experienced The Sensational headline that you've seen, you know, something really bad behavior, fighting that kind of thing, but they are all experiencing a very different environment. Folks, just sitting for hours with the mask on and nobody likes that they have to enforce that the passenger or are employed. So I do think the This is tougher at Southwest Airlines are one of our greatest. If not,

the greatest Advantage, are our wonderful employees that just love to deliver customer service to our customers. And it's just hard to do that with the mask on because they're, you know, that they, they love to smile and take care of you and them in the environment there were in, you can't do that. You got a mask and whether they're taking drink orders by looking at a card. And if they just can't provide that touch that they could. But I will tell you this. No one, but we've had a flight attendant that was punch. No one deserves that. And we're not going to tolerate that.

Nobody deserves to come to work and have that happen to them. So we're not going to tolerate that. And to we have, even though it's difficult. We have the best employees and best flight attendants on the planet. And I'm extremely proud of the way they've handled themselves and taking care of our customers. For those who don't know. I'm southwest has never laid off for for a while and it's 47 48 years. I think we are 50 years, but you weren't play 99 by Alex and are voluntary leaves of

absences and buyouts are much smaller, but you are also adding 114 Airlines a lot of growth. So are you ramping up hiring now? And how are you spacing 8 challenges? Eat of this whole last 18 months has been a complete whipsaw. It's incredible that the pivot of going on but no, we had we had 5000 taken early retirement. We had about the 11,000, take temporary leaves up to up to two years. We had folks, taking monthly leaves our employees reacted and Rose to the challenge at it just an admirable. Way week, we need to cut costs and they

and they and they did that, but it was all voluntary. And so I'm very proud of the airline and in our company for been able to do that and not put all of this on the backs of our employees. Do you do all that? And then suddenly the man becomes to come come back and we are in the summer in the mist of recalling, almost everybody that we had on a leave and so you got to retrain. And so that's very difficult. So then you move from that to all my guys. We need to hire. We, we are hiring $5,000 ball across the company. We anticipate. We're going to hire about 8,000 next year. All

were groups against the primarily on the front line, but but across all work groups and it is really difficult worth rivet company. That has never had any issue, attracting applicants. And even we are finding it hard. We're raising wages at Ben, that's both in the contract. And then I can non-contract areas. And it's just difficult where we used to typically receive about 42, 43 application, for opening. I believe a receiving about 14 right now. It's just the number of open jobs, which everybody's experience and you, you

I've never seen a time when you, you go to a restaurant and or a store. And it says, you know, we're close at 3 today because we don't have staff. I think, in a way, I've never been. I've been with the company 33 years 34 here in February. And the constraints of always been, can we get aircraft? Can we get facilities? Can we get Gates? I've never experienced a time when the constraint is can we get employees? And I may have work for the full disclosure. I work for a couple Airlines and there's a very great that you can stay at United. There's a very great benefit to

track people. Who are you competing against? You know, it depends on the type of position. I would say for our more more entry level positions like the ramp or an in an airport you are competing with everybody. That means there's we moved our wages along but we've de facto become as a country of $15 minimum wage, it feels like so we're we're we're hiring all over the place but a good example is Denver. So I was in Denver 2 weeks ago. We we need to hear about 250. Go on the ground and we're offering obviously great wages. A great career. Your

pay goes up very quickly and the union scale travel benefits, terrific health benefits, but To get someone to come interview with Southwest Airlines. If you know, where the Denver Airport is. It's a little ways out of the city. They probably have to drive by 30 places that have job, you know, application for job. Openings posted in the window that are all offering some more wages. And so it's just, it's just difficult. This may not make any sense cuz I want a burger. Oh, I come on. It's the best.

It's the best burger on the planet ever near In and Out Burgers, but I'm in Dallas and I go to the at one point I go to the Whataburger drive-thru, which I, okay. I'm trying to be healthy. I don't do that very much. I go to the Whataburger drive-thru, go get my bag and stapled to the bag is a job application. They are stapling a job application to the sack of food that every single person coming to the drive-thru get. That is that's what it's come to that. We use the money, tell

the story of Southwest Airlines. The first thing they ask me is whether I applied or not, but I did not qualify, but it has become to me the sort of the symbol of the job market that we live in here. There's so much competition. Now, I'm confident, we'll get staph, but I told everybody, I internally exora back to the priorities week. I want to communicate via their employees but but transition that job one. This fall is get staffed and get stable and our operation because stability in our operation. Depends on getting almost that time.

What do you think you got to pay to visit United? No change fees as part of our DNA is not changing. Thank you very much for joining us. Thank you. Thank you so much.

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