Archer Open House | Indicative Economics with Mike Leskinen, President of United Airlines Ventures

It takes decades to innovate. I covered the airline sector as well, and it's an amazing sector that really since deregulation has just commoditized. You hear about ULCCs, Southwest really being the first and most successful, growing the business by making a basic product. It's a good product, they run a great airline, but a basic product: shrinking the seat pitch, charging... when you think about the latest innovation in ULCCs, it's really charging bag fees and really making it a bus service in the sky. Number one, number two, an industry that is highly, highly competitive, has had low margins, super capital intensive, really important to our economy, but not something that has been great for investors.

I thought the airline industry was an exciting place to do that, so I joined United about five years ago. About three years ago we started a venture capital operation, a team. We launched publicly the venture capital fund a year and a half ago, and that team is in place to do a couple of things. Number one is to drive innovation into the industry and lead with United, and we've done that in a big way, and it really started with Archer. Number two, this industry, we have to cut emissions across the entire economy, but cutting emissions in transportation, particularly in aerospace, is really, really difficult. So we're doing that. That's what we're all about. We've got a great team, we've been empowered by Scott Kirby, our CEO, in a very big way, and you're going to see more and more from us. In fact, we're going to be announcing some investments that really feed the eVTOL industry. We're so passionate about this because this is going to change the way we all work and live. So let me talk a little bit more about that. We're going to talk about a journey in a little bit.

We recently announced our first route. I lived in Manhattan for 15 years, I lived in Tribeca. Sometimes early in the morning it might be a 20-minute trip out to Newark Airport. I was a proud United customer when I was at JP Morgan, but sometimes it'd be 20, 25 minutes to get out to the airport, sometimes it could be an hour and a half. From Tribeca to Menlo Park, through the booking seam, through the entire channel, we have seamless integration with TSA, and we make that trip special, de-commoditized, and predictable for our customers. So we announced Manhattan first. United Airlines, we have some of the most congested cities in the United States. If you live in Atlanta, I love some of our competitors there, there's some good ones and some not so good ones, but if you live in Atlanta or if you live in Detroit, the traffic is not the same. Houston maybe not the same. But if you live in San Francisco, if you live in New York, if you live in Chicago, we are the first major airline to bring this to our customers. And Archer's taking this pragmatic approach, you've heard it all today from the great team, a pragmatic approach to get through FAA certification, that being the big long pole in the tent to make this all work. So we're launching Newark. We're going to talk about the next route we're launching in coming weeks. Adam, kill me if I shared that with you today, but we've only got so many hubs. Congested cities, that's where we want to operate first, and Newark's going to be a great first operation. We've got the downtown heliport in New York City. In fullness of time, we need to have 10, 20, 50 vertiports within the city. The key here is that our customers are going to be able to walk to the heliport, walk to the vertiport, they can get in an Uber and go to the vertiport, then have their journey. We're going to rely on all of those pieces being connected together, and we're working on that now, and you're going to hear more from us over time.

Let's talk about a little bit of a journey. So you wake up for a day trip if you're in Manhattan. Scott, he lives in SoHo, he has a short walk out to the vertiport. Maybe initially we've got to take an Uber, that's a short Uber trip to the vertiport. But once you get to the vertiport, we've got to decide whether TSA is at the vertiport or at the airport, maybe a specialized TSA at the airport. But you get there quickly, speed through the TSA, it's going to be expedited, it has to be. We have ideas where we're going to locate the vertiport at Newark Airport, we're not sure of that yet, but it'll be a short walk then to your airplane. So instead of thinking, 'Okay, geez, I've got a flight leaving at 7:30, so I've got to build in an hour to the airport and I want to be at the airport for an hour,' so you're leaving two hours before your 7:30 flight, like 5:30 in the morning. You can leave 45 minutes before your flight. And then in reverse on the way home. So really going to change the value proposition to our customers. It'll be really special when United brings that first.

There's lots of questions, and I'll be happy to talk to many of you after. We've got plenty of customers in our congested major cities in the U.S. that are going to be very thrilled to pay Uber Black to get to the airport and back. So I think it starts there. But as we build on the economies of scale of this industry and we start increasing the frequency of the routes, increasing the vertiports, we will be able to bring that cost down. I think it's going to look a lot more like an UberX, a lot more like a ride share. We've talked to many of our customers, this is an exciting value proposition. We had customers that have used helicopters that worked a little bit, but it doesn't have the same emission profile, you can't get the same frequency, etc. And again, you're not... How do we get CSA in place? How are we going to get pilot training? How do we integrate this? We have a pilot academy, first in the industry, called Aviate. How do we get this eVTOL integrated with that? Adam mentioned that not only did we make the first announcement, but we made a deposit here recently. We are also making investments in other eVTOL manufacturers and other eVTOL components of the infrastructure. Some of those we've announced, some we have not. Who's going to operate these aircraft for us? We announced this with Mesa, which is one of our great regional operators. We have several regional operators at United. In addition to that, I think probably for the first aircraft, we're going to want to work with them. And we couldn't have found a better partner than with Adam. Now I am sorry that my CEO Scott Kirby has not made it today, but I do want to leave you with a little message from him to let you all know how important this mission is to United Airlines all the way to the top.