Just before Jeff Smisek, president of Continental Airlines, walked in to the Airline Distribution conference, the audience was asked: please turn off your tape recorders or other recording devices. Uh oh. What was this guy afraid of? To the journalist, this is usually a warning sign that the speaker is a little (or, actually, a lot), uncertain about what he'll say or sometimes that he's just a dud, a highly-scripted, dull-tongued figurehead. Not this guy, not Jeff. The number two at the world's number five airline presents a blend of extraordinary candour and optimism that you really want to be there to catch, and is someone to be heard in person rather than second hand. So we'll just offer a few of his more pointed points:
On low-cost long-haul, a topic much in the news with reports that Ryanair may offer obscenely low transatlantic fares, Jeff says, "there already is low-cost across the North Atlantic. It's called coach. It's not our market and will never be our market, though it's possible, I suppose".
Low-cost domestic competition: "over time, airlines grow up, their planes get older and so do their employees. Real airlines have real costs." Continental, he says performed an analysis in which it took JetBlue's wage scales and applied Continental's average seniority, and then took JetBlue's maintenance costs and applied them to Continental's aircraft age, and found that it would have been $750 million to the better. "There will always be new entrants. But low-cost carriers, like children, all grew up."