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Warm Cookies and Changing Skies: The Evolution and Future of Air Travel with Greg Aretakis

• Jeff Borman and Matt Brown

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If Greg Aretakis had a coaching tree, it would literally include every CEO and high-ranking executive in the airline industry. We talk with the Midwest Express Airlines president about the much-needed role of mid-sized airlines, how antitrust investigations get started, the future of private air travel and small airfields, whether completely electric planes will ever fly, and so so so much more!

Matt Brown:

If Greg Aratakis had a coaching tree, it would literally include almost every CEO and high-ranking executive in the airline industry. Greg is president of Midwest Express Airlines Inc, a new airline which is planned to be Milwaukee-based, serving Midwest markets, with frequent flights and warm chocolate chip cookies on board the famous chocolate chip cookies. I'm sure he gets questions about it all the time. He's been in the airline industry since the late 70s, serving at American Airlines, continental Airlines, shuttle, america, vanguard, frontier and Midwest. Passion is an oft-used term in the travel business, but Greg is the genuine article. He is executive advisor, survivor and sage in this business. Greg, welcome to no Show.

Greg Aretakis:

Thank you guys. So much, matt, jeff, very good to meet you both.

Jeff Borman:

Great to have you. Okay, so I didn't know. I don't get Matt's intros before he does this. I'm now not going to be able to think of Midwest Airline Express without thinking of a former brand. I worked for Doubletree. I remember asking the head of the brand when I first began with Hilton so what is Doubletree's brand, what is it?

Greg Aretakis:

And he said a cookie which was started in 1984 and changed the name at the turn of the century to Midwest Airlines, was an airline created by Kimberly-Clark, when it was headquartered here in Appleton, wisconsin. The airline started out as a corporate jet shuttle that morphed into a scheduled airline. In those days we had all business class seats. There were older DC-9s, but they looked just fine inside. The problem with the airplanes was, you know, they had a lavatory and it could smell up the back of the airplane. And one day a very clever employee said why don't we bake chocolate chip cookies on board? Not as a snack, but to perfume the plane? And sure enough, the airplanes became known for the scent of the chocolate chip cookie. And the chocolate chip cookie survived from the first day, or nearly the first day, all the way until the company merged with Frontier Airlines and ceased to be a brand in 2011. And ceased to be a brand in 2011.

Matt Brown:

Greg, I can't think of a signature move by an airline that resonated so much with people, like people still talk about those cookies.

Greg Aretakis:

They do. And I get in trouble when I talk to investors or other people who are interested in what we're doing, because everyone wants to focus on the cookie and I keep on saying the cookie isn't the brand, the cookie isn't a snack, the cookie is a symbol. To this day, I have a relationship with the original maker of the cookie. They're in River Falls, wisconsin, and I buy the cookie in boxes of 240, par-baked and frozen, and then we have cookie ovens and we will give them out at civic events. We will give them out at the Chamber of Commerce annual dinner, do you?

Matt Brown:

think it's in any way because, in an increasingly mechanized environment, going through an airport, boarding a plane, deboarding a plane, that it feels personal?

Greg Aretakis:

Yes, it does. I can say many times that we always overbooked, overbaked the cookies and we would always have a dozen, maybe 18 cookies left over after we'd served the people. And sometimes people turned down the cookie for sugar reasons or for whatever reason, but walking off the airplane we would offer people two cookies in a cute little packet I have one right over here actually, but a very cute little packet and years later people told me we took those cookies home, gave them to our kids and the next time we were traveling the kids would say to me Daddy, when you get back, make sure you bring me a couple of cookies In an industry that's become very similar. I mean, the difference between airline seats and the flights isn't huge. The cookie is a differentiator. We talk about the stickiness of a brand, not much more sticky than having your kids saying can you bring me home one of those?

Jeff Borman:

When Doubletree, like all hotels, were shuttered during COVID, there were these passionate travelers who couldn't go to Double Tree and couldn't stay and get their cookies, and so Double Tree published the recipe. That's how powerful it was. If we understand, you miss your cookies badly, here you are All right and almost as much fun as cookies. I want to ask a question about airline deregulation and regulation At the end of the 70s. Doj, DOT has recently you witnessed deregulation at the end of the 70s. The DOJ and DOT just announced that they're launching an investigation into antitrust behavior in aviation, again here in 2024. My question is what's to investigate?

Greg Aretakis:

Well, I know where it starts. It starts with people who say to people maybe at a cocktail party, maybe after a committee hearing on the Hill, they'll say things like boy, airfares have really gotten high. Or I'm hearing a lot about high airfares. Or I get letters from a friend or a constituent who had a bad flight experience and had a hard time contacting the airline or getting my refund or something like that. And that becomes the beginning of that conversation.

Greg Aretakis:

At the end of the day, deregulation gave people the right to try different techniques associated with flying an airplane around. Of course, table stakes are it's got to be safe and it's got to be reliable, and as soon as you go off that script, then the government is looking over your shoulder. I have said many times and I've said it publicly, so I won't hide from it. I've said when we talk about re-regulating the airline business or doing a case study on competition in the airline business, the first two things that ought to happen is the Department of Transportation and, separately, the Department of Justice each have to look into their respective mirror, because where we are today is no more or less than the product of what government regulation has created. In 1978, you could fly where you wanted to fly for the first time, with as many flights as you wanted. For the first time, you could charge the prices you wanted. For the first time, you could do marketing shtick for the first time.

Greg Aretakis:

And as Dr Kahn Fred Kahn, who was the author of deregulation once said, the dumb should be allowed to fail. And that's what deregulation was all about. Now we've moved to a place and I will steal the line that has been offused too big to fail, and the airlines that are left are, in fact, kind of too big to fail. The government is going to work extra hard to keep them up and, as a byproduct of that, has increased the barriers to entry. Remember, in 1978, we created airlines like well. 1980, we create airlines like New York Air and People Express and Midway Airlines. Those brands are long gone. They in fact failed. Today, the cost of getting in the business, the capital requirement, the regulatory hurdles that you have to go over are gigantic, and the government did that in order to make sure the too big to fail didn't in fact.

Jeff Borman:

So where I, as a consumer and a pretty educated one find issue with the current environment, first of all, it seems to me that it got significantly worse after the financial crisis and big six became big three. The second to that is there are a few things more annoying when I travel than when American Airlines tells me on landing we appreciate you for choosing us. You have a choice when you fly On my way into DFW, where I have no choice in who I fly the regulatory environment to me.

Jeff Borman:

if you're looking at national figures, you're probably not going to find an issue. But if you're looking at anyone based in Atlanta trying to have a choice in Dallas trying to have a choice, right, let's go for probably 20 of the next top 25 cities. That's where it seems to rubber meets road. Regulation is back in question. Am I wrong in that observation or am I just a jaded weekly traveler?

Greg Aretakis:

The bottom line is, if you look at the large cities, what they have going for them Dallas and Atlanta and Detroit and O'Hare and Newark is they have a lot of flights to a lot of places. So if you're in Dallas and you're trying to go to Cincinnati, there are probably six flights a day and they're conveniently timed. They might be more expensive than they used to be and I'll get to the price side of it in a second. But if you're in Cincinnati and you want to go to Pittsburgh, your choice is to drive because there are no flights. If you want to go to St Louis these are five-hour drives, by the way, five-hour drive there are no flights. If you want to go between the two largest cities in the state of Ohio, cleveland and Cincinnati there are no flights. So the fact is that if you want to go to Dallas or O'Hare or Newark, even Nashville, which is a Southwest hub, or Phoenix, an American Airlines hub, or Denver, a Southwest and United hub, plenty of flights Airlines hub. Or Denver, a Southwest and United hub, plenty of flights. If you want to go any place else, it becomes harder and part of the hard becomes.

Greg Aretakis:

You got to take a connection Back in 1980 or 81,. You could fly most places that were within two hours of where you lived for $39,. $49, right, those were Southwest Airlines just a couple of decades ago charging $19, right. As a smart man once said to me, if you charge a low enough price, people will travel in a wheelbarrow, and that's very much the situation Today. That same flight is going to cost you about $600 round trip and, by the way, I might be low and at $600,. The demand of the customer for a more complete delivery. Whether that's the airport process, whether that's the boarding process, whether that's the flying process, whether it's the collection of baggage upon arrival process. They demand excellence because for 600 bucks, they feel like they paid for it At $39,. When People Express didn't fly from Newark to Buffalo for three days during a blizzard, everyone said, well, $39, I'll just sleep in the airport. That's what's changed. What's changed is the combination of the demands by the customer, particularly at a price versus what they had been years ago.

Jeff Borman:

When I was a young revenue manager, I had a former airline executive, who was a mentor, to me explain how airlines would price fix by publishing fares on Saturday mornings when shopping volume was the lowest, making the risk of being priced wrong very low. So if a pricing manager from American wanted to take the fare up from DCA to Tulsa, they'd do it on a Saturday morning, and if the competing airlines for that route were going to match, they would do it on Saturday afternoon, and if they didn't, the airline revenue guy from American could take that rate back to what it was. I imagine that there is a far more sophisticated system out there today, but do airlines still message price intent with each other like they used to?

Greg Aretakis:

It's more instantaneous now than it was. So there are two things I want to talk about, then and now. So then, atp Co, a company headquartered right outside of DC which is the nationwide clearinghouse for airline fares. They used to only allow a fare load three times a day, and twice on Saturdays, and twice on Sundays, by the way, so that the trick was to load on the first load on Saturday morning and there isn't much buying on Saturday afternoon. So your risk of making a catastrophic mistake was small, although I can remember examples where Alitalia published a fare of $59 from New York to Rome for a day and they sold a billion tickets and it was bad. But I mean, it happens right. But on Saturday afternoon mostly, what happens is the fares are quickly scrutinized. You don't fix it Saturday night. Listen, have a great evening. Sunday at noon you're at your computer and you're saying, gee, delta didn't match, or People Express didn't match, or PSA didn't match, and you just change your fare back and there was very, very little harm.

Greg Aretakis:

Now there's an almost instantaneous loading of fares. It's hourly or even quicker than that. So again, the signaling happens more. You know, someone has I've seen several articles the best day to buy a ticket is on a Tuesday. Well, you know, I file a fare on a Tuesday at 11 o'clock in the morning. By 1 o'clock in the afternoon I can fix it, because it can be fixed very quickly, and so the drama associated with Saturday morning and Sunday morning isn't the way it was. Airlines don't want to be that different. Among the club of American United, delta, alaska, the fares are almost always harmonious. Among the airlines like Allegiant which doesn't publish with ATP Co by the way, they do it all internally or Spirit or Frontier, the numbers can be somewhat different, but that's more of a marketing ploy than anything else. Some people offer a cookie, some people offer a fare that's $20 lower.

Matt Brown:

Let's go down that rabbit hole a little bit and talk a little about private aviation, particularly the future of private aviation. Private flyers can dodge airport experiences. They can dodge the two-hour wait times, the flight delays, the bag checks, all the unnecessary anxiety created by the TSA, and they can do it for the cost of a first-class commercial ticket for a couple. Why don't we see more of this?

Greg Aretakis:

I think we are. It's certainly growing. In 2020, we set an all-time record for private jet flying. 2021, we exceeded that. 2022, we exceeded that. 2023, we exceeded that, and only this year is it going down a little bit. That is absolutely collinear to airlines finally growing their schedules enough to making the convenience factor for scheduled flight almost as good as private jet.

Greg Aretakis:

But as I said earlier when we talked about price and the relationship between a consumer's expectation and the price is, once you get to the point where a two-hour flight is going to cost just $600, so that the family of four is going to pay $2,400 or more, I can fly a private jet for about double that and all my whole family's on the airplane.

Greg Aretakis:

And oh, by the way, I park for free at the FBO. I get a nice little snack and a cup of coffee in the 20 minutes and I'll repeat 20 minutes that I have to wait around for my plane and then I walk out and get on the airplane. I don't have to meet 10,000 of my closest friends in the airport concourse, I simply get on the plane and then, when I get to the other end, I walk off and I get on my Uber or, if there's a rental car, I pick it up. The difference of convenience is quite high. The frustration with people at the airport has grown. It's one of the reasons why airlines like Delta are building clubs with private entrances where they have their own dedicated TSA line, so that people going to the highest-end clubs have a more private, jet-like experience.

Matt Brown:

On a similar tack, america has something like 4,000 small airfields and they're all around this. Will those ever be tapped for significant commercial travel? If we see this kind of dispersion out for kind of personal experiences, I wonder if somebody will come along and start to leverage all these airstrips.

Greg Aretakis:

Well, some of those strips are not being served but are in fact viable. There are airports like Republic Airport in Long Island or Lakeland Airport south of Orlando. Those airports were always available to be served. I guess the best really recent example is New Haven, Connecticut. New Haven was a viable commercial airport, had no service. Avelo Airlines went in there and today they serve 18 destinations nonstop out of there and it has many of the small airport benefits, of the small airport benefits and the piece of the airport.

Greg Aretakis:

That's become more worthy of a discussion. So we used to all live more urban. We lived in Connecticut, we lived in Queens, we lived in Northeast New Jersey and we were anywhere 45 minutes an hour away from an airport. One of the things the pandemic did was for a large fracture of people, it sent them out to the hinterland and the access to an airport might be two hours and in fact the end of air service at a lot of small airports, which has been occurring as the small planes have been retired out, those people are now faced with a two-hour or so drive. So there's a certain convenience with those 4,000 airports. The private jet business is already doing that and there's a lot of data out there. If you go to look at someplace like Pontiac Michigan, it's one of the busiest airports in the country. No one knows that Teterboro has been there for years, but these airports they're so highly convenient. No one wants to go to the big airport, they want to go to these private, these small, private airports closer to where I work.

Jeff Borman:

So how does that make its way into everyday life? Most people I mean 99% of commercial air flyers in America don't even consider using these tiny airports. What has to happen for the Addison airport, that is five minutes from me, to be on my radar instead of DFW, at 35 minutes away?

Greg Aretakis:

And DFW is 35 minutes away. If there's no traffic across LBJ and if you can find a parking spot, that's reasonably convenient. But I digress.

Jeff Borman:

I don't park and I fly super early, but part of that is because of all the inconveniences you described.

Greg Aretakis:

So let's say I want to fly privately. How do I connect with Directional Aviation? They're headquartered just outside of Cleveland, ohio, one of the largest private jet providers in the country. Who knows them? How do you buy them? Can you go on Google and buy them? Are they in a GDS where a travel agency is going to see them? The answer is no and no Private jet has the most potential and the most flexibility of the aviation products, because the rules for private jet flying allow a pilot to be older than 65 years old.

Greg Aretakis:

Commercially that's against the rules, but I can be 67 and a certified pilot and fly a Falcon 50. And I'll get hired by a private jet airline. If I'm a retired United captain, I might be able to fly till I'm in my mid-70s and I'm totally qualified. I'm probably my mid-70s and I'm totally qualified. I'm probably overqualified. So they don't have pilot issues the way that scheduled airlines have pilot issues and they don't have forced retirements the way that scheduled airlines do and they don't have as many restrictions on what airports they can fly into. Think about the flexibility on what airports they can fly into. Think about the flexibility?

Jeff Borman:

Do you think that with EVTOL, the electric vertical takeoff and landing or flying taxis, I think, as most people think of them. I don't know if that's particularly an accurate description, but as people use this product and it will evolve and be available at some point rather soon, will that be what changes the use of these small airfields?

Greg Aretakis:

I talk with the eVTOL guys every year at EAA up in Oshkosh, Wisconsin. They all present and every year when I ask them, how far away are you from certification, it's always 18 to 24 months. And, by the way, the next year it's 18 to 24 months. And, by the way, the next year it's 18 to 24 months. And we hear periodically of some of these eVTOL makers suddenly running out of cash and shutting down. That's just happened a couple of weeks ago with one of them. But if you look at a company like AMP or a company like Lilith or some of these guys, they're all coming around Right now.

Greg Aretakis:

The product doesn't have the legs. It can be a four-seater and might be able to go maybe 100 miles. I am not going to poo-poo the future of electric flying. I think it's going to come. But there's a whole lot of stuff that has to happen first. One is the technology isn't there when the product can fly for a couple of hours and the battery can be charged or swapped out at the other end in 25 minutes. That's part of it.

Greg Aretakis:

Remember the original electric cars that we saw in the United States, the Prius. The battery was the size of the car, I mean, it was literally a. The entire chassis was a giant battery. Aviation can't handle that kind of weight. So the battery's got, the technology's got to get better, and even Elon Musk has said we're not there yet, we're not even close. Musk has said we're not there yet, we're not even close. I've said you get 20,000 torque pounds of power out of a battery the size of a shoebox and it can last for two hours. Okay, now you got something.

Greg Aretakis:

The other side of the coin is a plane flying through the sky with fixed wings. If something bad were to happen, an engine were to shut down or something, you can glide to an airport and make a very safe landing. It happens enough times that we know it works. A propellerized airplane, something more akin to a hybrid helicopter. When the battery suddenly goes dead, it's a stone that falls straight down suddenly goes dead, it's a stone that falls straight down. So there's a lot more care and concern around eVTOLs, because there just can't be a mistake. There's got to be a backup system, and so on and so forth. My personal opinion is we're many years away from electrified flying with any consistency.

Matt Brown:

Greg, let's go to lightning round. What's your favorite small airport in America?

Greg Aretakis:

Can I define favorite? Yeah, the most thrilling airport that I have flown into routinely is Telluride, colorado, and I love the airport. It's built on the side of a cliff and when you go off the end of the runway you're suddenly looking down at a canyon and it's just scenic as can be. It's what they used to call a five-ticket ride at Disneyland, and I've loved that airport for that reason.

Matt Brown:

What's the best airline logo in history?

Greg Aretakis:

Boy, I'm a homer and I'm going to say the original Continental Airline Black Meeple.

Matt Brown:

What's your favorite airport lounge?

Greg Aretakis:

The lounge that is the most memorable for me is the President's Club Continental's former lounge at Washington Dulles Airport, and the reason that it's memorable is I was in Europe and I got a call from my boss to go to Dulles and meet at the lounge, and it was in the lounge that I was told we were going to be filing bankruptcy and I better come up with a plan. I only had like a week to do it, but I have. That was an electrification day.

Matt Brown:

If you could give one piece of advice to Southwest Airlines, what would it be? And they'd have to follow it. They'd be required by law to follow this piece of advice.

Greg Aretakis:

Well, that's a good question. Um, I think they have to re-examine their fleet and they really have to make a fleet decision that is different from anything they've ever done before. Their airplanes have gotten bigger and they have more flexibility than they've ever had, but they've also had to walk away from a lot of markets because the MAX 8 is a 170-seater and it wasn't too many years ago they were flying 737-500s around with 125 seats and when they did that, they served many smaller markets where they could be both unique and control the pricing in the marketplace, which is harder to do when you're competing with everyone else flying Max H. If I could have a cup of coffee with Bob Jordan, I'd say you really got to look at the E-195, e-2 made by Embraer. It is a small airplane, it's got coast-to-coast range, it's got new technology engines and it's 30% lower fuel burn and would allow you to fly the kind of niche markets that made Southwest successful the first time around.

Matt Brown:

Then finally, if you could give the Bart Giamatti, pete Rose lifetime ban to anyone in the aviation industry who would you excommunicate?

Greg Aretakis:

I'm not that guy.

Matt Brown:

I know, I know you have a name, that's OK.

Greg Aretakis:

I know, but I'm not that guy. The fact is that there were a lot, there have been a lot of people in the airline business who in their era did a lot of really good things, maybe extended that era longer than it needed to be extended. You know, I will say there was a time many, many years ago and I worked for Frank Lorenzo on and off for 16 years and there's a world of people that really hold animus toward him. I do not. I think he's a very smart guy, probably the best mentor I ever had and taught me so much. And while everyone talks about him being a Wall Street money grabber, the fact of the matter is that the stock that he acquired with Continental Airlines he didn't sell a single share until he retired in 1990. And everyone thinks he was just grabbing money and stuffing it into pillows. That is just not true, frank, and he has a book out now. He just put out his biography called Flying for Peanuts. I recommend it to everybody. It talks about the entire industry post deregulation because he kind of led that era. There was.

Greg Aretakis:

The first bankruptcy of an airline that did not fail totally was Continental in 1983, the first airline to go bankrupt and resurrect itself, first one ever. He also started what has now become the current craze of rolling airlines up. They said, well, how can you buy Eastern Airlines? How can you buy People Express and Frontier Airlines things we did in the 1980s. Well, american Airlines bought AirCal, american Airlines bought Reno Airways. So how can you say that? That was evil? It became the drill. Delta bought Northwest, southwest bought AirTran. We at least did not buy in those areas. We did not buy our competitors and shut them down, which is what American did with TWA. So I conclude that the era of the airline roll-up was one era.

Greg Aretakis:

I think the era of the enriching of senior executives is one that does bother me somewhat. I think the guys who came in and took over Northwest Airlines they were from Marriott, by the way, and those guys made a whole lot of money and left when the leaving was good. I think that the era of when Stephen Wolf went to US Airways and enriched himself but left the employees somewhat behind. I think that was an unfair thing to do.

Greg Aretakis:

But I've known many, many, many of the first generation of airline leaders and I found them all to be incredibly warm, gracious and thoughtful. Mr Six was amazing. Six was amazing and a guy who I really really came to totally respect. I think that Frank Borman was an amazing guy and a high class and, you know, not everyone liked him as he mechanics union thought he was a bum, but I thought he was a fully thoughtful guy and had to think about the whole company, not just one union, and I think that that's part of it. I think Don Burr at People Express was an incredible guy and a really outside-the-box thinker in his era. So these guys were fantastic. I am proud to have met them all, including Herb, who I thought was just a great guy to spend two hours with.

Jeff Borman:

Greg, speaking of a great guy to spend two hours with. If I had one more hour you'd make that list. I'd love to keep this going for a second hour. The thanks that we owe you. We're in your debt.

Greg Aretakis:

Jeff, thank you so much and Matt same to you. Always a pleasure. The one flattering thing you said about me at the beginning this industry is my passion and I love it and I watch it evolve and I'm not going to stop watching it evolve.