i think it's a question of core competency and which are able to do inside the company enters the extended value stream to do. gary mentioned strategic. you have to have a mindset where your key suppliers are an extension of your company and you have to behave in a way that you have a partnership approach the thirst transparency and when there's a problem, leahy mentioned requirements were

okay. there's an research issues, whatever the issue is we've got to deal with. so it's a mindset. one of the problems were faced with this obviously the cost pressures. so when we go in outsource, there's a strategic issue, you also have to push up costs, so you want to compete. when you have one or two suppliers and you worry about keeping up with the competition, are you getting a good enough deal, so you have that pushing you to look at others that are less qualified and enter more risk versus having key suppliers. saying i'm going to trust he will keep up with the competition, and it is going to keep me help the economically, but they seem to have a better fit the years of experience and

programs together because there's an extension of my enterprise with that. the partnership and transparency between the company seems like a very simple concept, but it isn't. to have that openness you can discuss with the real issues because the commercial issues that we skidded to your fall, my file, all the things that come into play when you have a problem. so i think that the philosophy were trying to adopt more and more. pick a commodity or system one key driver, one key supplier and one or two others to keep them honest, but basically this is the driver, this is a partner for the long haul and trust that the right approach. >> is a true partnership, especially in the core issues says to be related to. i come back to the fact that it's the management of the process as a whole.

it's a true partnership, the give-and-take on both sides will go a long way in helping solve the problems as they. >> you think one of the problems you have in every partnership is trooper transparency. maybe i don't find out about one of them in time. >> i'll give you a very simple example. yesterday i was on the phone with dave. we had issues schedule wise and so on. at that level him and i were talking about this issues. if you have the trusty can say i'm in trouble, you're a month later we have this issue with this customer whatever, that are your tested. if you can work through those issues, it's amazing how fast you get to the problems. >> are used to joke around with the very senior executive at oem who will go unnamed, but i call

them up and say okay, what am i today? a vendor, supplier or partner? because the treatment is very different in this issue of partnership is exactly right. i say first of all come you don't want to boil this down to commercial terms were all in thinking about is getting well for myself. you won't be in a position where he spent all of my tired body making sure i'm making you well because i said before, in our industry, there'll always be problems. there's too much technology and complexity to expect anything to run problem free is the way we deal with those problems and the sense of partnership that is scary and i have talked about. and with a personal relationship with the reach a respect and

transparency, we actually come out of it well. right doesn't, we stumble bumble around. >> when they talk about emissions. there's all kinds of conversation with climate change. we were attacking about how unusually cold it's been in global warming. the fact a serious concern and a lot of discussion and i expect to see some form of taxation on emissions, whether it's a form of carbon tax, whatever. assume that happens for purposes of this conversation. what do you see that can be done given higher costs for failing to bring down emissions? what can be done to further reduce emissions? >> let me give you the days. number one, i'm not sure if anything changes. if you look at our track record since the early 60s, from the

early 60s to today, where about 70% more fuel-efficient than they were then. without caps, without being thin ice because the environmental pressures are perfectly aligned with the financial pressures as you know when an airline, were 35% of your cost is fuel and the only way you can try to maximize profitability despite having more fuel-efficient aircraft. for every% of fuel efficiency improvement you can't come you get a 1% reduction in carbon emissions. said there's a huge incentive to can tenuously improve the environmental performance of our progress because we need that to a financial success in the industry. i don't see that trend changing. if you look at the engine is, there's kind of a history of the

nature of the twin-engine architecture followed by a period of 10 to 15 years of incremental improvement. but over time, and improvement averages about 1.5% a year since the 60s. we went from propellers to chat and chance to turbofans in the next sleep would be a the triple pier we have a technology roadmap laid out they continues to improve it by another 1% and a half over the next decade. i now see the trend changing whether you have schemes are not. there's going to be the pressure on this industry to make aircraft were fuel-efficient and writer in the same thing with the manufacturing footprint. >> emission reduction are essentially the same game. >> yeah. >> if you wrap your mind around the fact that they set this is

the right thing to do from an environmental corporate social responsibility standpoint, but the right thing to do for a business perspective as well. you can orient your efforts in that direction. i may have the numbers wrong here, but we've committed until 2020 a .5% improvement in minute 2020 is carbon neutral growth and by 2050, half reduction versus 2005. of course in our strategic plan, were conscious about it. with the only industry that made this commitment for we consume 2% of the world carbon and in our plan, everything we do from a product standpoint from our facilities is geared towards that because that's where the customers are going to be expect the stb. so the programs that pay for other manufacturers are mindful

of that and were really designed for the environment. not only fuel efficiency. there's more and more airports right now surrounded by cities. you can't land because of noise? you can't land because of regulations involved commercially defended aircraft become that commanded most environments can sure feel like spirit [inaudible] >> now, but our footprint is four times smaller than the previous peers do you have to wrap your mind around the way that this is going to be in the right business thing to do is a corporation. and then you focus your resources that way. >> what is interesting to note about the emissions reductions at the same time that rpms are supposed to grow double roughly in the next 20 years. so we put rpms growing, will be

reducing emissions because of the performance. >> which is a tremendously good record the industry has. >> hard to imagine another industry that's done what we have. >> it's in propulsion aerodynamics and i might say our focus is kind of radical. were looking outside the box design. it's the incorporation of certain other technologies like electric motors on taxi, but also i don't think anybody has mentioned yet the biofuels. as for the real cooperation as an industry has happen. remarkable cooperations between competitors and that's where we have to go together as a group to make something meaningful going forward. those are the focuses we have right now.

>> you talk about an electric motor tax. are you working on that sort of thing for your airplanes? >> we are. the short answer is that it's on our radar. we are examining the technology, but i would say it's premature for us to even think about when we would introduce something like that. certainly we look at -- gee, i don't know. >> we see some applications for it, however when you look at the power consumption also some of the size that may be required to put this technology, there's some trade-offs. so there may be some applications for customers happily use the airports, where there's on taxi and, where the trade-off may make some sense, but it may not be true of all the applications. some are trying to evaluate. we don't think from our standpoint anything will happen before 2016 plus, but it's on the radar screen.

it does bring advantages, but for the trade-offs we mentioned, we have to be careful because like customer pay for that to get the return on investment? is that the right application, et cetera, et cetera. >> those are the big hitters, but i would add one more thing system oriented imacs next jan. righthanders still too many delays using too much kerosene on the ground or in the air. i came in yesterday to dulles and my flight plan was extended 10 minute for spacing. as we moved to next jan and not onboard systems, which we work on right now that are brought to you by in and out and flight management systems, you cannot trajectory management the controllers and airplane can use or require time of arrival to basically paid that time in the year many minutes now, have a

continuous decline so you're a glider at that point. our estimate is you can save a thousand pound is fuel per flight just by getting this for preferential rallies. this is the multifaceted answer to a question that's important to this industry. >> i think you're right if we can get nextgen in place and get consistent funding an application and begin to use technology to her today. >> i shouldn't be a problem to what congress is working right now. we can count on that happening. >> would you see if he's got a fever? [laughter] >> well, congressional efficiency is not something i'm very familiar with. you know, we've talked about fuel efficiency, weight,

manufacturing processes. what haven't we talked about the importance in europe dvds? what are you doing that i have a nasty without? are there new materials we have not heard about? what lies fighters out? >> we didn't touch on that, but we are certainly evaluating carbon profits in her newer aircraft. right now remanufacture them right here in the u.s. in wichita if it's going to be in a composite business. it's growing at a lot of invention going on, but it will basically be an all composite aircraft and its amazing when i go and visit what the possibilities are down the future for able to crack the code i'm doing this right. if you can visualize one part

number. i know how many we have in our affairs, thousands. in this aircraft, one part number, one piece. but that is an amazing feat of engineering and it's hard to repeat. absolutely material -- you talked about biofuels. it's another area that's very important. we are cooperating with competitors and government agencies make sure our aircraft are ready for that with the engine, so anything we decide now is compatible only know the issues there, and the infrastructure costs, but certainly areas that are very important. >> where we going to biofuels? >> from an engine perspective, biofuels are somewhat trivial. we basically demonstrated our engines for quick biofuels today

with certified engines both military and commercial engines. it's really trivial from a technology standpoint from the engine perspective. what needs to be developed is supply-chain and getting prices to where their competitive with jet fuel prices today and that's where the challenges, trying to find a way to bring those things to market that would be economically acceptable for the end-user. from an engine is, it's really trivial. [inaudible] >> i suppose so in the consistency and supplies. anybody out there that's got a question we have a nasty chile to hear us talk about? i don't see anybody. tell me about the interaction of

government and engine procurement. to what extent is the choice of the airplanes are the choice of outsourcing a function of governmental interactions outside the normal commercial interaction of suppliers? you get pushed? do you find yourself pushed because that government, the government of an airline you may be trying to sell some and want to do that. is that an important part of your business or is that not something important? >> maybe i will start. absolutely there are some interactions and relationships. i would say, and these are generalities. not exactly for every specific

case. but if you are dealing with transactions in a developed country, mostly boils down to more of the normal competitive issues, having the best value proposition come in the product technology, performance guarantees and usually the other governmental issues don't come into play so much. but in some parts of the world, there's sometimes unwritten things, where there's trade-offs between a big order, but industrial counterpart trade-off. would like you to industrialize in our country and give us a package from that standpoint. so that is certainly something we are faced with a some parts of the world and campaign for dealing with. another transaction are huge and more and more when you're dealing sometimes it's not just a manufacture with the customer, but the government also imposed because there's bigger trade issues between the countries.

so that's part of a big visit of the president of the country visiting the other president in these announcements made to try to certain decisions. some of those come into play as well. but at the end of the day, even though that exists, you have to compete on the product. burly one airline taken aircraft or product that won't meet their needs long-term. you have to have the right product, the right cost and value for the customer application admission. >> what do you see happening in terms of the trade-offs? how is in-flight entertainment changing with the increasing emphasis on in-flight communication? >> i wouldn't say in-flight entertainment. i was a big technology push to your previous question and conductivity. i often refer to aviation is the final frontier of comic dignity. it's the only place in the world

today cannot be conveniently connected to your home or office. that would include whether you're a passenger or member. there are devices that are very low rate, not a lot of bandwidth and whether it's an air traffic control announcement is still done by voice and not by data. and that of course is what nextgen is going to get you. as aircraft become more electric and demand to stay in touch, they will demand the conductivity and you'll see the newest equipment now come with servers and conductivity built-in. our new proliant fusion that we are building for business aviation and for some regional jets are built into the system to enable built-in server equipment so as they become more ubiquitous, you can connect to that. the second thing i want to talk about is the idea of government involvement.

we see a lot more which he described in military programs and commercial programs. the commercial aviation industry in the developed countries is pretty much best-of-breed and understand they have to be competitive by picking that. in the emerging countries, russia, china specifically we see a much more controlled environment where you are asked to partner up in joint ventures with local entities to allow them to develop the knowledge and expertise to allow the wealth to flow and that's where we are beginning to see a little of that. but that is the exception, not the rule. >> just does not shoot to that, the one thing i've seen over the last 10 years especially in particular the last five or six years when it comes to challenges with the financial crisis is the emerging of the

eca's. i think oecd has done a remarkable job of applying can this conceit, but the short answer here is can we assure that globally, especially with new entries emerging and coming in now. that's another challenge going forward something we need to keep our eye on and be careful of. >> there's been an increasing amount of discussion here in recent weeks particularly with a very broad free trade agreement between europe and the united states. we heard he got recognition certification. what do you perceive might be added to that if i get a very broad essentially absolutely free trade agreement between the e.u. and the u.s.? >> that sounds really good, bob,

but every time you plug an agreement scarcity to death. i'd be worried about that slowing down, not speeding up. i think the government should push to include that. but i don't think that ought to be done in lieu of the harmonization and alignment we are to going between europe and the united states, the two largest certification bodies in the world. for years and years it had mutual certification going well. obviously different views related that is troublesome. those can be worked on a bilateral basis, one specifically with the aviation industry much faster and more comprehensively than the broad transatlantic agreement. i would fear for the delay in subjugation to a minor role that i place a sin i would be a caution. >> there is a much more developed framework's for

deviation cooperation. nonetheless, you wonder what might have been if such a trade agreement comes to pass. in any event, i've about run out of question, guys. anybody want to ask these distinguished gentlemen something? somebody will get a microphone over there. we'll take that question. >> some companies are talking about engine was taxiing, electric engine was taxiing. on paper it seems to make sense from a field consumption emissions and noise pollution. is that anywhere and you guys' screen? >> terrible idea. [laughter] i think they both touched on not a minute ago or perhaps i asked

the question a different way that had to do with the engine was taxi systems and there has been research and conversation about it. i think you guys both said we are thinking about it, but so far we can't find a set of trade-offs that makes any sense. those devices as i understand our electric motors design to run off dep, et cetera. that's the general idea. any other questions out there? yes, right there. alan mccarter, how are you my friend? [inaudible] >> to rip it. yes. [inaudible]

let me just repeat the question for those who couldn't hear it in the back. variants question is are you having any difficulty recruiting talent? either skill deficits, et cetera. what is the state of play? >> i would say we see that. if you look around the room and the panel here, probably a lot of us were inspired to join the industry because of the u.s. space program in the 60s and the speech from president kennedy and so forth really inspired a generation of scientists and engineers to come and work in the industry. i think we are starting to see some of those, some of the intellectual property beat the industry. it's hard to see how you inspire the next wave of excitement. we want people to work in this

industry, not go to work at google or whatever. we need something to inspire the development of new aircraft or a next generation fighter aircraft or whatever. it's getting harder and harder to get them engaged and excited about the prospects for the industry because of the pressures we've been under and challenges. >> or companies about 50% military and 50% commercial. he can imagine the trick for a given what's happened in the market. were not having any trouble recruiting the talent they need because were not recruited not much talent because removing the military to commercial and we have the luxury because the skill set similarities that. where we are running into a problem this retention and seen a much higher than normal attrition rate out of our military business because of a fear and if you look at this

country to bootleg on what dave said, so much of the intellectual capital and cutting-edge technology that comes out of the research and development and to assert extent procurement is derived from the military business and i worry deeply about the country's ability to retain people in this industry, doing a marvelous things we've done for decades if the torture or he continues as it is right now. that's our biggest challenge. fortunately, we've got exciting things going on but allows us to draw people into the company. but there's many companies in the country who don't have the advantage right now and i think we should be concerned. >> we have maybe a little different perspective because were heavily based in canada, although we have significant operations in the u.s. we had over 6000 people in the u.s., the balkan wichita. ironically the recession was a good thing from that standpoint

because we have been to watch a lot of programs before the recession, which a lot of people think is drunk and disorderly or crazy, but happen to be a way of the cycle and because of the recession happening, there is a lot of people available globally. we are higher in 100 industries a month. so we recruited from all over. everywhere in the world because there was a recession going on and we take as many people as he could in the company. the other thing was done because the two were not of people, particularly canada, a smaller company and so on globalize surf of prayer. so now we have a significant footprint in india appeared were developing one with mexico, one in china. we obviously have one in europe and canada, but were also decentralizing wormer technical footprint over time.

you can't just be on montréal. there's two ways to skin the cat. during the town times we went out and pulled a lot of people. we are concerned about losing people, but globalizing also helps. there's a tremendous amount of graduates coming out of china. there's ip issues running through people's minds, that india is another great place and so on. so there is talent out there. >> you're finding it around the world. >> yes, you have to. >> through the efforts, mary ann and carol here at the chamber, we here in the industry know our days are limited here and the next generation needs to come forward. we have a strong publication has been in the industry to ensure the industry's future. so after saying not, one of the

great examples i could use and a great introduction for me is to address this specifically in two ways. we've made the decision to bring the business closer to our customers and we were just talking about this before. we established ourselves on the space coast. we have found an abundance of talent there as you would expect. for example, one third of the workforce we have fair comes from nassau contract are saying they are driving that process there. and a small way, we are preserving the intellectual property bear, which is so precious to our country. a second example is we decided to expand our engineering presence out of brazil. we have 4000 in brazil, but that didn't stop us from thinking globally. we decided to establish an engineering center in the united states. we did a lot of research and found the home would have been alberta is the perfect place to

put in operation specifically for the same reason and success with the phenom facility. one example is that the facility the other day. we just hired our 18th employee going up to 200. we are a temporary facility with a 25-dollar investment. we are going around beating the new employees and one gentleman i met with head of the environmental engineering for the space shuttle discovery is now working on our systems. so this is a win for the community anyone for that gentleman is on preserving our talent and being part of the intellectual presence on the space coast. >> is this the right way to end this? >> peridot effect now. we'd be better off if we have better growth than these guys have a lot more trouble finding the talent needed.

thank you call for attention. we appreciate it. [applause] >> slightly blinded a moment. anyway, it's my great pleasure to introduce jeff smisek, chairman, ceo and president of united airline and also the vice president of airlines for america. air travel has been part of life before he took over the reins at united. he was an air force brat who lived on base in the united states and germany. nonetheless, it was not the love and the smell of chatfield traveled to florida into the airline industry. he started practicing law and does his entrée into airline would then cut now ceo asked jeff to join the been struggling

airline. never one to shy away from a challenge, he joined the team that led to the turnaround of comp nano to wear with the top airline in the "forbes" magazine or "fortune" magazine list of most admired companies. those efforts served him well as he worked and continues to work to integrate two distinct airlines with two systems, route maps and cultures as the united states chairman of the new united. the goal of the integration is simple yet elegant and has been repeated often. he wants to create an enterprise for which is not 85,000 or is want to work. customers want to fly and in which investors want to invest in us working. united is beating its own operational performance goals, which meant bonuses for the

employees and passenger unit revenues increasing. in his 18 years in the industry, just as the numerous changes, probably chief among them to create the world's largest airline. and much remains the same. the industry continues to face a tax burden, which constrains its ability to be profitable on a sustained basis. jeff is a leader in the industry and realizes the industry's challenges are his challenges. as such has been a vocal proponent of the campaign for the airline policy. it's been a champion for airlines for america and a$a in the 10 million jobs it creates. as each august coworkers to do their best, so he challenges us and biases can earn feedback. i think a value that is altering his remarks and q&a. jeff smisek.

[applause] >> 30 set everything i want to say, so i'm done. thank you for having me here today. they appreciate the opportunity to talk to all of you. let's first talk about what mentioned, which is the transformation of the business. many of you would assume have been in business far longer than i am and i've been in 18 years. this is the first time i have hope for this business. when i say hope for the business, i mean transforming this from an airline to a business. i was actually invited to speak at an industrial conference recently. as an airline. when i got there, it was an early morning speech and i went to get some food and a friend of

mine was aired around the chemical company. chemical companies are doing pretty well. he came out to me and said jeff, what are you doing here? and not is how people think about airlines. airlines are not businesses. they're fun, interesting, incredibly important to the economy, important a jobs and growth, but they're not a business and have never been a business. airlines have not returned in excess of their cost of capital since the right brothers. what we are doing is transforming not just at united, but the entire airline into a business. was driven not? consolidation, incredibly important. for far too long, we had way too many business plans chasing way too few passengers. we price or product below its

cost and try to make it up on volume. that doesn't work. we are now in a position to have the second thing that comes from consolidation, fewer business models. we been an issue with low barriers to industry and high barriers to exit, also not very good. the capacity discipline has been incredibly valuable. what we've learned that united, we've learned capacity, discipline is profit maximizing. you put too much capacity against too little demand any drive you yourselves out of business. capacity discipline has an incredible value and efficiency is the consolidation not only in terms of revenue centers, but the cost efficiencies are important in a consolidating business. also, airlines are now run by professional management.

today we are very focused on earning returns in excess of our cost of capital. were very focused i came to the point where we can do love our balance sheet. were actually generating enough cash that ultimately we will return the cash to its owners. the owners are not the airlines. our shareholders have been very, very good about holding our feet to the fire them as a result of the transformation to consolidation through capacity discipline towards management focused on running a business and not airline. we do not have any more of my runway is longer than yours. that is gone and gone forever. now we have shareholders turning over in her business. we used to be on not by shareholders, but option is, people who traded volatility and you could make good money. people have done so.

but we are turning our shareholders from hedge funds and option keys to long-term investors and the genesis of the world because they see what's happening in business. they seek the transformation and the focus on delivering. they see focus for the future on capital returns than returns to investors. they're investing for the long-term. nobody in his right mind ever invested in airlines for the long-term until now and that's an exciting place to be today in the airline business. now, are there still remaining issues in the business? of course, many, many issues. we have huge burdens from our own government. we have seven team different taxes and fees before you get to

income tax. we never had to worry about income tax because the taxes and fees basically made it almost impossible to earn anything for income tax. if you think about it, 20% of the domestic ticket is taxes. some of you are not in the airline business. can you imagine the kind of business you would have if the government took 20% of your top line before you saw a dollar of revenue, do you know what you do not? you'd airline. and we have a tremendous regulatory burden as well. we came out of a regulated environment. we were deregulated in 1978, but the concept remains in our regulators. and we are subject to amazing amounts of regulation for deregulated business. i would like to say where the most heavily regulated to regulated business known to man.

some regulations make sense. science-based safety regulations make sense, but many of them don't and many of them are very burdensome. we are required to produce. we oblations of people producing frames of data fed to our regulators. which is the data is not used or understood, that basically is a remnant of the old civil aeronautics board and the mentality needs to change. they need to think of this is a business and not regulated business. those are very expensive and the cost benefit analysis is simply not there. you take the tax burden and regulatory burden the fact that government uses as a business bank. they are $19 million out of the airlines every year and it's not being spent where it needs to be spent like on a modern air traffic control system. we today have an air traffic

control system that is safe. it uses the very finest world war ii ground-based technology. you have better way of finding and your honda accord and the government uses to track airplanes. that is got to change initiate change over time and i hope that will change. there is some progress being made. but if you think about value to our society, let's take the waste peoples time off the table, an enormous amount. think of the fuel burn allowed. inc. of that impact on our environment alone. a modern air traffic control system could reduce fuel usage by 10%. i united airlines alone, our company, we burn 100 million barrels of oil a year. that's more than one day supply of oil in the world.

more than one day supply of oil in the world. let's pretend half of that is burned in the u.s. 10% is 5 million barrels. oil is $120 a barrel. it's a lot of money. it's also a lot of pollution. so environmentalists should be supporting an air traffic control system good for the environment. so we have a business today that is transforming it sells. we need our government to assist us in our transformation, good for consumers. everyone wants a stable, modern airline system. it is good for us to make profits so they can invest in our product, people, technology and was good for the customer. in our fleet, and our facilities it's good for the united states

of america to have a healthy airline business because it's vital. together with the airlines and all the ancillary support, 10 million jobs. so we need our government to work with us so we have a national airline policy, a policy that furthers the interests of transportation. we're competing on a global scale and their governments far marmite and emily are losing that race. the national airline policy is very important to reduce the level of the burdensome regulation, modernize the air traffic control system. those are things that will have tremendous benefits to our consumers and to our nation. and with that, i will stop and

be happy to take questions. [applause] my guess is this is not a shy crowd. >> since no one has a hand up, i get the first question. the first question is who did not talk about foreign ownership of u.s. airlines, a very important issue, one that has been around for a while. give us your thoughts on that idea. >> i actually don't waste my time on my because it's not going to happen. >> that's a good answer. as a matter of fact, those are the answers we need. not horsing around, but coming up with that isn't going to

happen. i think if we were to ask lee mock and a lot of others in the room, they would say the same thing. so hopefully that is now given, here we are to question right out here. >> i am tom came from atlas air. one of the price overscheduled business models is a city program, wherein the government employees and whatever on our flights. the challenge i think is that the capacity utilization of our current environment, the seas, the premium pricing can be canceled last minute. do you have a feeling about that in your business model and whether we had to compete a little more aggressively and raise the rates on this government employees that have to travel around the country? >> look, you know, we bit into government programs from time to time and review those programs is similar to many other corporate customer.

and as a function of the market we can serve in the price he can get and the dilution that would occur or so of the pricing were too low. so i don't view, you know, people flying on airlines who are government employees terminate different than people who work for chevron. i don't see any difference. >> there must be some more questions there. >> is hard to see. lights are brighter. must say. >> scott maier with the associated press. was just wondering if airfares have gotten to a point where the traveler may not feel it and make as many trips as they would've liked to in the past? >> airfares are an incredible bargain today. on inflation basis or 20% cheaper than they were 20 years

ago. the fact is people got used and the battle days of industry. people got used for fares the reps are below, where airlines suffer losses on every single passenger. they weren't even covering feel, so i would say, you know, i can't talk about future airfares because my lawyer slap me when i do that, but today they are incredible bargain. we can get you from point a to point b. in complete safety at great speed, with reliability unlike any other form of transportation. very efficient transportation. obviously as fares change, people make decisions whether or not they make particular trips, but this is a business that remains brutally competitive. >> here we go right here.

[inaudible] >> almost, but not quiet. >> alliances have brought enormous value to members of the alliances and there's three major alliances. i think alliances change over time. i was actually meeting this morning i was telling me about his personal ax. it's forming. if you think of how starlings change when they were put together initially, it's been a huge transformation and they bring enormous benefits to the airlines an enormous benefit to customers, otherwise they could keep alliances where they are. there will be change in alliance as that happens all the time. that's largely driven by consolidation. if you think of star alliance, what happens?

i suspect there is another apparently some other merger in the work someone was telling me about it. one of our partners is involved in not merger. that obviously will create a change in alliance as well. alliances continue to bring value to airlines and even within alliances, there are different relationships. some alliances have joint ventures of some of the partners. others have frequent flier reciprocity with the mix-and-match, sort of what we do at air travel, giving consumers more choice in the elements of air travel that we've historically done. i think the members of alliances will change as consolidation

moves in europe. >> we have one right out here. >> i've really enjoyed the opening announcements you've been doing on your plants of different stories letting us learn more about united airlines. i'd be interested what kind of reaction you've gotten from customers. that is to break the mold move, said be interested to hear how you guys have come about doing that and the reaction. >> i don't want my competitors to copy us, so i'll tell you it's been terrible. [laughter] the stuff we have on our airplanes, no notice to see much less of me. that's on purpose because i want to showcase my coworkers more than people are interested in the behind-the-scenes stuff and that helps. we have one today that's up on customer service because we have very passionate people at our airline. it's my job to give them the

tools in the training and incentives and make sure the accountability, which goes with all that, that they will deliver. this year at united we are extremely focused because in a merger uses customer service. you bring organizations together. there are distractions. nobody gets in the airline business to do a merger. nobody signed up for that. the merger brings terrific benefit. you can lose customer services in the interim, but the coworkers are proud. they want to give good customer service and showcasing passion is important to understand we have very good people who want to get good service. we are training 100% of our flight attendants and our agents at airports on the phone and customer service. that's a big undertaking, including the people who handle through third parties and flight attendant and united express.

we are investing in our people and were doing things that invest in things like breakroom still never see. but it shows respect to the coworker and makes them understand the care and put our money where our mouth is to prove their lot in life so we can give them the tools they need to do their jobs. i think those videos help and those videos showcased elements until seymour done that customers are interested in, behind the same looks. not many people get to go into back rooms so we'll continue to do them. therefore our competitors, you don't want to do it. >> or question the second window. >> on the first vice president of the airline association. i completely a key that we do need a comprehensive cohesive aviation policy, but we all talk about basic terms and we have

this paralytic that we can figure out how to get from point a to point b. either constructive steps that we can realistically afford to make incremental steps in achieving this goal of the national policy? >> that's an excellent question. in my view and nick may disagree, this is a multiyear process and part of it is education. i mean, these are people very interested in airlines and aviation. very few people really understand the power of airlines to gross domestic products. 5% probably shocks a lot of people. we compete on a global scale that we do things as a nation that are curious. for example, will trade open skies with dubai, so basically timorous can fly wherever one

thing we in return can fly wherever we want. heckuva trade. so we need to educate people about the power of the airlines, the power of airlines for moving people, moving cargo, moving ideas. we are huge exporters. when we sell a ticket overseas, were exporting a service. that's why long lines are damaging to the export of america. you could imagine if your three in four hours coming into the country, word gets back to that country and people don't want to come to the united states of america as a result. the first step is educating the public, educating their own government about the power and importance of u.s. airline and making sure people understand the power of a modern air traffic control system.

most people don't understand don't take off and fly straight to your destination. you are going like this to get to your destination. you are wasting time and fuel, people's time. you are wasting throughput. you could use money they are supposed to pour in more concrete. we don't need more concrete. we need an efficient air traffic control system. it's a multiyear process of education, talking to elected officials and making sure they understand and exposing regulatory burden we have. few people know seven in different taxes and fees. they don't know they're paying 20% off the top. ditto another being taxed more heavily than alcohol and tobacco, by the way, generally people think it's been. air travel was not a sin. it's going to be a long process, but i think will make headway. nick calio is out in front on this and chairman shuster

understands it. he understands were used as a piggy bank. he knows we have an air traffic control system. he knows a burdensome way we are regulated. he knows tax policy is inappropriate for the industry. so there is hope. >> i think there is hope for this country when we have ceos like just some poor. this is exciting because he tells it like it is then you're really making a difference. >> my pr people are holding their gears generally when i talk. [laughter] >> that you're the boss. one or question out here. >> there's been a lot of talk about the potential pilot and technician shortage around the world and i'm curious if you see that it united in what steps are taken to attract and retain these resources? >> that's another long-term issue. the answer is no.

bob lappin is the express carriers will begin to see you. the question is where do they get their pilots? when you have a 1500 our role related to quality, hours, and that has a damaging effect on the pool of potential scope pilots coming into the business. so we are looking on a broad range of programs. i'm not prepared to talk publicly, but we understand on the road we have issues and you could say initially it doesn't affect us because we'll draw from the united express carriers. but we need the feed of our expressed affiliates. why would we have been if we didn't need the feed? it is an issue and we are attempting to address it. there's a broad range of