Breeze Airways CEO: We’re a tech company that ‘happens to fly airplanes’

David Neeleman, Breeze Airways CEO, joins Yahoo Finance to discuss the company’s latest airline launch in the U.S. and outlook on the overall airlines industry.

Video Transcript

ALEXIS CHRISTOFOROUS: The founder of JetBlue just got another airline off the ground. It's called Breeze. And it touts itself as a low fare, high-flex airline that is, quote, "seriously nice." Joining us now is the founder of Breeze, David Neeleman. David, always good to see you. Congratulations on the new airline. I know it debuted with service from 16 cities. But there are lots of adjectives here that we're using for this. What makes Breeze, quote, "seriously nice"? And what do you mean by a high-flex airline?

DAVID NEELEMAN: Well, I think, you know, when I started JetBlue, that was 22 years ago. And times have changed since then. And I always called JetBlue a customer service company that just happens to fly airplanes. And with the changes in technology, we call Breeze a technology company that just happens to fly airplanes. And what does that mean? It just means that we're going to try and use technology all we can in our apps and in all of our processes to lower our cost and so that we can pass those savings along to our customers.

And the goal is to get you there twice as fast for half the price. 95% of all of our flights are in markets where there is no nonstop competition. So our customers are loving the fact that they can get somewhere in an hour and a half instead of 3 and 1/2 hours and can pay $89 instead of a lot more than that.

KRISTIN MYERS: All right, so David, we're showing everyone on the screen some of those introductory fares, $39. And as you were just mentioning, tech obviously enabling you guys to really slash some of those prices. Curious to know how long those $39 fares are going to last. When do you envision them jumping? And what do you think they're going to jump to?

DAVID NEELEMAN: Well, I think what's key is that in our markets where we're flying, we need to make the market 10 times bigger. There may be only five or 10 people a day traveling maybe between Huntsville and New Orleans or between Charleston and New Orleans. So we need low fares to stimulate that traffic. So we're always going to have low fares, something 79, 89, 69, 59, you know, 99. You know, they're always going to be low. But then also, you'd be able to find a $39 fare, not just in introductory, but in the future as well.

So it's all about stimulating traffic. Like I said, about 90% of all of our traffic comes from generation, as opposed to taking from someone else. And that's-- we like to generate new traffic and get people going places and especially kind of postpandemic and people are looking to get out and travel and see new places and experience new things, taste new foods, and see new historical sites like Charleston. And so it's pretty cool to watch.

ALEXIS CHRISTOFOROUS: You mentioned the pandemic. Interesting timing to start a venture like this when travel has sort of been under attack because of the virus. Why did you choose now to do this? And what has demand been like here in the early going for Breeze?

DAVID NEELEMAN: Well, we chose to do it before the pandemic. And so we put things on hold and just kind of waited it out. And, you know, we had our first flights last month in May. And I think the timing is good. I mean, obviously, there's concern about Delta variant and other things. But thank goodness we have a vir-- we have a vaccine. And, you know, people who are vaccinated and feeling comfortable might have an 87-year-old mom and dad that got vaccinated. And they've been able to see their grandkids and travel and do some things that they wanted to do for a year and a half.

So, you know, I think getting the vaccines out there and having people take them and, you know, I think there's a lot of concern about people who aren't vaccinated. And, you know, my opinion is, you know, people are vaccinated shouldn't-- should just travel, and worry-- and the fact that the data shows even what the Delta variant-- that you're safe. You're not going to be in a hospital, or you're not at risk of dying with the vaccine. And so the timing is really good.

KRISTIN MYERS: So we've been seeing the TSA screening more and more patients-- excuse me, not patients-- more and more passengers every single week. When do you think that we're going to start seeing the demands, but also those traveler numbers, air traveler numbers, essentially get back to some of those pre-pandemic levels? And sustain that.

DAVID NEELEMAN: Well, I think on the leisure side, they've probably exceeded it. They've already gone beyond pre-pandemic. Because people saved money over this time. There was, you know, maybe a trillion six that was saved on travel that now is being spent. The bigger question I think is when is business traffic coming back. And I'm seeing office buildings now starting to fill up again. People are going back to work. They don't have to do it with a mask on.

And so I think once people go back to work, and I've heard one of the airline CEOs say once you lose a customer because somebody else visited him in person and you didn't, then you're going to get back on the airplane again. So thankfully, we're not in the business traffic market, especially international business traffic, where you get those $5,000 and $8,000 tickets that really sustain those airplanes. We don't have to deal with that. But I think that's the big question. The leisure traffic's back.

ALEXIS CHRISTOFOROUS: And you're also busy buying up some airplanes. Tell us a little bit about those purchases, David.

DAVID NEELEMAN: Well, we've got the Embraer 190, 195, 108-seat aircraft that we're flying now. We've got 13 of them flying. We'll probably get a few more by the end of the year. But then in October, excitingly, we're going to start getting the new Airbus A220s right off the factory floor from Mobile, Alabama.

And those planes are unique because they have a really long range. We're going to have some first class seats in them. And we're going to be able to go up to seven, eight hours of flight time eventually. And there's just a lot of different markets that we can serve, long, thin markets that have never had non-stop service before on a long haul basis. So we're excited about both products. And our customers are going to love it.

ALEXIS CHRISTOFOROUS: Hey, David, I know I'm really jumping ahead here, but long, long term, do you see Breeze making a debut on the public markets? Would that be the end game for you and your investors?

DAVID NEELEMAN: Well, airlines have always been a high capital intensive market. And so that's why most of them are public. And I would think that would be an eventual outcome. But, you know, we've got plenty of capital. And we can go for a long, long time. And we expect to be profitable next year. So it's not something that we have to do. But I'd assume that that could be a possibility someday.

ALEXIS CHRISTOFOROUS: It's a nice position to be in. David Neeleman, founder of Breeze Airways, thanks. Good to see you.