Why Flying is Miserable and How to Fix It with Ganesh Sitaraman
TOPICS DISCUSSED
It’s one of the biggest travel weeks of the year in the United States, so we’re sharing a conversation with Ganesh Sitaraman, Professor of Law and Director of the Vanderbilt Policy Accelerator and author of the new book, Why Flying is Miserable: And How to Fix It. He shares how flying got to be such a slog and some ideas about how we can change it.
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TRANSCRIPT
Sarah [00:00:09] This is Sarah Stewart Holland.
Beth [00:00:10] And this is Beth Silvers. Thank you for joining us for Pantsuit Politics.
[00:00:14] Music Interlude
Alise Napp [00:00:34] Welcome to Pantsuit Politics. This is Alise, the managing director of the show. I would imagine that a lot of you, like me, are enduring airline travel this week so that you could spend the Thanksgiving holiday with your people. I realize I'm the outlier here, but I love airports. Before I worked for the show full time, I had a job that was about 70% travel and I loved it, even though it was exhausting. I've loved traveling, especially flying since I was little. And every single time I'm on an airplane, I take a moment to look out the window and marvel at the wonder of flight. It really is incredible when you think about it. I love the hustle and bustle of the airport, imagining where all the people are going and why. I love the challenge of being the best security. Just give me an A-plus TSA. I love the possibility all of it presents. Now, whether you share my adoration of the whole idea or not-- and I know a lot of you do not-- we probably all agree on this: the experience of flying has gotten worse, like a lot worse. And I swear it's not just because now I often have a squirmy toddler on my lap, although that doesn't help. But the structural experience of flying is becoming an increasingly negative one for most Americans. A smooth flying experience can feel rare, much less one that's actually enjoyable, even for someone like me who is coming in with rose colored optimism for the whole ordeal.
[00:01:55] Why? What's going on? Why does something so miraculous feel like such a drag? Our guest today is here to answer those questions. Ganesh Sitaraman is a professor at Vanderbilt Law School, the director of the Vanderbilt Policy Accelerator and the author of the new book Why Flying is Miserable and How to Fix It. What a great title. He and Sarah sat down to chat just before his book released last week about how we ended up here, where the process of flying feels like such a burden and the solutions seem so daunting. You will be quite surprised by the unexpected characters who played a role in deregulating the airline industry, which, spoiler, this is partially due to deregulation. But those who fought for and against regulation, it's going to shock you. Sarah and Ganesh also talked about how change for the better could happen. They ended on a hopeful note. I promise. This conversation is fun and interesting, as is Ganesh. We know you're going to learn something. And if you, like me, are flying this week, we hope it offers a little perspective into why things are the way they are and a little hope for a future Thanksgiving someday when flying doesn't seem like such a devil's bargain.
[00:02:57] Music Interlude
Sarah [00:03:16] Welcome to Pantsuit Politics. It's been a while.
Ganesh Sitaraman [00:03:19] Thanks so much for having me. I'm excited to talk with you again.
Sarah [00:03:22] Well, this is an apt time of year to talk about the horror that is air travel. What a good timing you had with your book. Did you plan it to come out during the holidays?
Ganesh Sitaraman [00:03:30] We actually did plan it to come out during the holidays.
Sarah [00:03:34] That's appropriate.
Ganesh Sitaraman [00:03:34] The thought was everyone's going to be flying and there's always some disaster around the holidays and people want to know why, and they want to know why is it like this and why do they have to suffer like this every year?
Sarah [00:03:45] Yep. Now we're going to get into the air specific aspects of the suffering, but you have a broader framework around this, which is a bigger point about regulation and deregulation generally. So let's do a little bit of the framework and then we'll get into the air travel part.
Ganesh Sitaraman [00:04:02] Let me tell you a little bit about how we decided to write this book, because I think it ties into bigger questions about public policy. A few years ago, some colleagues of mine and I, we were working on a textbook that we called The Law of Networks Platforms and Utilities. And this was things like transportation, energy, telecommunications, banking. And what's special about these industries is that throughout history-- and that's really going back to the 13th century in some cases, so hundreds of years-- people thought that these businesses were different than other businesses and they were important infrastructure. They were critical public services. They were kind of foundations for commerce or communications or civic life, and that they had to be regulated specially because of that, because we wanted everyone to have access to them, because we wanted them to be available for all kinds of businesses. And that work really was exciting because we learned a lot about all these sectors: railroads and maritime shipping and oil and gas pipelines, the telegraph, the telecom.
Sarah [00:05:03] I hope your next book is how daycare is a public utility. But I will not derail our conversation with that.
Ganesh Sitaraman [00:05:08] One thing people talk a lot about childcare is a social infrastructure. It's kind of a utility service that we all need.
Sarah [00:05:14] Exactly.
Ganesh Sitaraman [00:05:14] But for this book, as I dug into the history for this textbook and was writing the chapter the textbook on airlines, it just became clear that the shift away from this kind of special system of regulation for these infrastructure sectors to a totally deregulated market competition model as opposed to a regulated competition model, is what shapes everything about flying and what makes it miserable and what makes the industry problematic too in a bunch of ways that we've seen over the last few decades. And so really the spoiler here, why is flying miserable, the answer is really two words: public policy. We had made a bunch of choices and that made it more miserable by unleashing a set of dynamics that explain a lot about how our system works and doesn't work.
Sarah [00:06:02] Well, I thought this history is so illuminating because you show the public policy's role and how we got here. But tell us what the public policy was before the Chicago School, which I want you to talk about, got involved because it's got so much broader application outside of the airline industry. So tell us what did it look like to fly? I vaguely remember I flew by myself as a child in the 80s to see my dad in California on TWA. And so I think some of us have memories that it wasn't always like this. It wasn't always so miserable. So what did it look like under that more regulated framework?
Ganesh Sitaraman [00:06:35] So let me give a quick historical overview, and I'm going to skip the period from the Wright brothers inventing the airplane--
Sarah [00:06:43] When we were flying mail. I thought that was so interesting. Our biggest thing was like how are we going to fly the-- There are lots of characters in this book I did not expect to appear, and the U.S. Post Office was one of them.
Ganesh Sitaraman [00:06:51] The post offices is a key part of the early stage of the origins of American aviation. But we'll skip that little period. To my mind, there's really three eras that we could think about in flying. So the first one I think we could think of as a stable system. And this period existed from the 1930s to the 1970s, and policymakers in the '30s said, what we really want is for airlines to be a stable, reliable service. And so they created a regulatory body in the federal government called the Civil Aeronautics Board, and the regulators allocated routes to different airlines to fly from one city to another. They set prices for the flights, and they made sure that the airlines didn't go bankrupt or need bailouts. And they weaned them off of subsidies because this was still a pretty young industry in the 1930s. In short, they treated airlines like a public utility. And so this was a period of regulated competition. It lasted for about 40 years. And then in the 1970s, advocates for deregulation said this system is basically a cartel and that we should have market competition because cartels are bad.
Sarah [00:08:02] Listen, don't skip who that was. Who is the key player in this call for deregulation? I about fell out of my chair.
Ganesh Sitaraman [00:08:09] So I'll say this: there's two key players, and what's surprising about it is on one side it's who you might expect. Conservatives and economists in the more libertarian kind of frame were opposed to government regulation. So you mentioned the Chicago School. The Chicago school style economists and their allies in government and elsewhere in academia.
Sarah [00:08:27] So influential that when I read that part, I thought, yeah, I forgot this was a point of view because now it's just the water we swim in.
Ganesh Sitaraman [00:08:36] It's just what people think.
Sarah [00:08:38] Yes.
Ganesh Sitaraman [00:08:38] But the really interesting thing was the other side of who supported this.
Sarah [00:08:43] Guys, you're not ready.
Ganesh Sitaraman [00:08:44] The leading advocates for deregulation at the time, Senator Ted Kennedy and now former Supreme Court justice, then chief counsel to Ted Kennedy, Stephen Breyer.
Sarah [00:08:53] Stephen Breyer was not who I was expecting to show up in the pages of this book.
Ganesh Sitaraman [00:08:58] Yeah. And so you have liberals like Kennedy and Breyer, and deregulation was passed by Jimmy Carter who was the president when it was signed. So you had Democrats and Republicans who were on board with this move. And for Democrats, they thought it was kind of a pro-consumer move and something that would show that they weren't just big government liberals. But their pitch was a pretty good pitch from a sales perspective. They said, imagine you could have 200 stable airlines with cheaper prices and no real downsides. All we need to do is let the airlines fly wherever they want, whenever they want, and charge whatever they want. And the problem, though, was when we did deregulation in '78, we didn't end up in the dreamworld that the deregulators asked for. What we really got was phase two, which was Hunger Games. And it was this period of cutthroat competition in the 1980s where airlines were trying to break the unions and they were engaged in all kinds of anti-competitive behaviors. And we saw dozens of bankruptcies and mergers, all kinds of chaos. And over the few decades after that, I think we really settled now into phase three, which is a kind of monopoly in capitalism, where you don't really have that much choice. You get often bad service at bad prices. And if you sit in couch in the back of the plane, you might end up with a bad back too at the end of your...
Sarah [00:10:19] Or sewage running down the airplane aisle-- has happened like a few weeks ago. It's just [inaudible] out there guys.
Ganesh Sitaraman [00:10:27] It can be tough. And when you think about where we are now, we're actually in a place now where there is less competition today than there was under regulation in the 70s. So the top four airlines, the biggest four airlines, have a larger market share now than they did in 1977. So we actually have more concentration at airports. And so this shift was one where there were a lot of unintended or unanticipated consequences by the promoters of deregulation. But the opponents, they predicted a lot of what was going to happen.
Sarah [00:10:57] Well, that part was really convicting for me because, as basically a lifelong Democrat, the story I have in my head is whatever you're doing, whatever type of change you're making in a corporate environment, you cannot trust the narrative coming from the corporations because they just want to make money. They're never looking out for the public good. Their public policy recommendations are always going to be one sided. You just can't trust them. And so it was truly a little mind bending to read this to hear Stephen Breyer going, "No, let's just try it. Let's just try something fun and different." It felt like that was the vibe. Like we needed something fun and different to try, so let's try this. And to have the CEOs of the airlines literally screaming at them be like, "You're going to ruin everything." Because, again, my default is we don't trust them because they're just looking to make money. But they were right. They were like, this is going to be a disaster.
Ganesh Sitaraman [00:11:56] This is one of these places where there's a lot of strange things in the book of who's on what side.
Sarah [00:12:02] Exactly. That's what makes it such a good learning experience.
Ganesh Sitaraman [00:12:05] And so you see Robert Crandall, who was later the legendary head of American Airlines, he was opposed to deregulation, said that Breyer and their team was going to wreck the industry by deregulating the airlines. And then when he becomes head of American in the '80s and is running the airline in this new cutthroat environment, he's good with a knife like anybody else, and he's out there doing as much aggressive stuff as he can do to keep American getting bigger, more powerful and more successful. And then fast forward a couple of decades later, once he's done being CEO and it's the 2000s and he gives a speech saying actually this system isn't the right system. We should regulate it like a public utility. That's what it takes to have a leading system in the world that's better for the country. And one thing I thought was just surprising was the sense that for Crandall, I think he really understood both before and after he was running America that, that was the right way to do it. But if you set the rules up where that's not going to be, if you don't set it up as a public utility, you set it up as competition, he was going to be a competitor and he was going to win the game.
Sarah [00:13:15] Don't hate the player, hate the game.
Ganesh Sitaraman [00:13:16] Exactly. And so I think that's how he was. So it is a really striking thing that you will maybe have your political views challenged a little bit when you find yourself agreeing with Barry Goldwater in some cases or others who had different views about deregulation than you might expect.
Sarah [00:13:36] Well, and I think there are so many interesting and important components of this that it's so interesting because it's almost like the uniqueness of the airline industry illustrate the sort of universal tenets of this public utilities regulatory argument. So when you say it sounds so good, it's like when people say, my least favorite phrase in American politics, "I'm a fiscal conservative." Well, who isn't? Okay, cool. That doesn't illuminate anything. And so when people say, "Well, we should have competition," again, because I think the Chicago School has been so influential, it's just become this default, well, yeah, we want people to thrive. Well, of course, we all do. But there's so many aspects that you need to have a really competitive environment like economies of scale, like access to hubs that they didn't understand when they were-- well, I don't know if they didn't understand it or they just sort of ignored it. All these different components, not to mention just this idea that it was the stability was baked in and that they weren't affected by things like prices in the Middle East or September 11th or Covid 19, that there weren't this rise and fall, these waves in the industry that we're bailing them out every time. We're sending billions of dollars to bale the airline industry out because we need it, because we can't just say competition sucks sometimes and you lose a lot of money and go bankrupt. And there were lots of bankruptcies, but to a certain extent. If the market says there are no airlines now because there's not enough money during the Covid 19 pandemic to sustain airlines, it's not like we can all go, "Well, that's what the market requires, so I guess that's what we'll do."
Ganesh Sitaraman [00:15:16] Yeah, exactly. And, in fact, this was part of what people in the 30s understood, was that you wanted a reliable, stable system and you might not get it in a regular market without regulation. And so they put in regulations to make sure you had that stability and reliability in a way that allowed for some competition, allowed for airlines to make a profit, but wasn't going to be this thing where we're seesawing back and forth between boom years and bust years. And that's what's happened. We're sort of in a boom-bust cycle now. And you mentioned some of the examples. The Gulf War happens in '91 as a big crisis, 1991 is a big crisis for the airlines. September 11th, big crisis for the airlines. Covid 19, big crisis for the airlines.
Sarah [00:16:03] And it's not because they, like, mismanaged the competition or the market. They couldn't have done anything.
Ganesh Sitaraman [00:16:09] These are external events that are happening that create big shocks on demand. But as a society, we still want the service to be reliable. And so that's the key part. When you have something that's a critical public service like that, you want to have availability for commerce, for national security, for Verizon, for all kinds of things. And that means you have to treat it a little bit differently. We can talk about airlines as being too important to fail, hearkening back to our too big to fail debates over the banks. But it's a kind of similar thing. We need banks. And if they're going to fail, then it's going to have cascading crisis effects across the economy. And so we have the bailouts now more than a decade ago, after the 2008 financial crash in the financial sector. And it's not so dissimilar here. These are essential services. And, unfortunately, the system we have now is one where in the good years, the profits all go to the companies and their shareholders and the CEOs and everyone. And in the bad years you need a bunch of public money to come in, in order to provide support. And in Covid, I think what's really critical here is it was essential to do it. This was important because it was livelihoods of all the flight attendants and the pilots and the workers at the airports. They were all going to get potentially fired and or laid off or furloughed or something. And that would have been really devastating for a lot of people. And it would have been devastating for the service because it would have been even worse than it was trying to get the industry to bounce back once demand picked up again. And so while I think it was important, it really raises to me a bigger question, which is why should we have a system like this?
Sarah [00:17:50] Yeah. Well, and we got the worst because we tell them, listen, use those knives. They took the money to keep people on. And then they said, "But you can retire if you want to. Go ahead and retire." And then we got back and we don't have enough staff to do bags or fly planes or run the airlines. And I think we also got the worst of both worlds with the competitive aspect because we got these ones that are too big to fail, which would be great if they were so big that they were running routes all over the country, but they're not. They're shutting down routes left, right and center in not even small cities. So, again, we're getting the worst of both sides of the spectrum.
Ganesh Sitaraman [00:18:29] For everyone listening, how many of the four big airlines fly to Toledo, Ohio? Think about your answer. I'll give you a hint. I'll give you multiple choice question. It's either one, two, or three
Sarah [00:18:42] Zero.
Ganesh Sitaraman [00:18:43] Zero. The answer is Zero.
Sarah [00:18:45] I read the book. That's cheating.
Ganesh Sitaraman [00:18:46] You cheated. But as a spoiler to everyone, the answer is zero. And you don't have big airlines flying to Toledo. Now, in fact, since Covid, 74 cities have lost service from one of the big carriers. And you've got some places losing all service altogether. And this is a real problem in part because access to air service for a city is important for its economic fortunes. You're not going to start a new Fortune 500 company in a city that doesn't have any air service. You might not even want to have your company in a city that has minimal air service.
Sarah [00:19:22] Even your company's conference, much less your company yourself.
Ganesh Sitaraman [00:19:25] Yeah. A conference, a convention, tourism to your location, all kinds of things that's really valuable for. So as a country, if one of our values is that we want to have regional and geographic access to opportunity and economic growth and economic energy, air service is a critical component of that. And you think about it, where we electrified as a country rural places so everyone could have electricity, we've struggled with that on broadband, I'd say that goes back to kind of forgetting our tradition of regulated capitalism.
Sarah [00:19:56] Or things we should think of as a utility.
Ganesh Sitaraman [00:20:00] But there's efforts now to try to do more of that. Air travel is part of that story, too.
Sarah [00:20:05] Here's the thing. I think there's aspects of this that are like intuitive to people. I think the aspect of like, we told them to use the knives and they made the service crappy and they cut routes while getting bigger and squeezing as price rise so that we're paying more and all of that. There's like a certain-- you're like, okay, yeah, that makes sense. I really struggled with the capitalization of the airline industry and I'm going to need you to walk me through that a little bit because I think that part is very important but harder to understand intuitively as far as the frequent flier miles and the credit cards and all that. I think that is harder to understand, but vitally important.
Ganesh Sitaraman [00:20:43] Yeah. So it's one of the areas that I found pretty interesting in working on the book. I think for a lot of people who fly, you see the kind of gradations of points systems and benefits. And even on some of the airlines, they walk through and say, "Do you want to sign up for our credit card?"
Sarah [00:21:00] They pressure; they don't ask. They kind of pressure you.
Ganesh Sitaraman [00:21:03] And how does all that work? And one of the things I talk about a little bit in the book, is in a way, airlines are kind of like banks almost now. So a little bit of analogy. They create these point systems really out of thin air. It's not like there's gold or something backing it. In the same way that governments create money and money has value because the federal government says it does, this is what happens basically in the point system. And so they create these point systems and they have this partnership with credit cards. They sell the points. They issue the points. And what's really striking, I think about it, is they've built this whole apparatus to make money. And it works for them. It works for everyone, but it doesn't really work that well anymore for people in the systems. So while they started as a buy four sandwiches get your fifth one free kind of deal, over time they've moved from frequent flier points to really high spender credit card systems. The idea is you get benefits if you spend a lot more. Those benefits are in the form of points. But even recently, what we've seen is that it's actually harder to get the status. You get less for it.
Sarah [00:22:17] Yeah.
Ganesh Sitaraman [00:22:17] You get less for it because they can inflate away the price of items by saying, oh, it now costs more to use your points, or maybe there's just fewer flights on which you can use points to buy your ticket. And we've seen some airlines pulling back on access to lounges and other things. So it's not obvious that for a lot of places, for a lot of people, this is still going to be a good deal going forward. And I think it raises bigger questions: why are airlines in the credit card business anyway? Shouldn't they really be in the air travel business?
Sarah [00:22:48] Yeah.
Ganesh Sitaraman [00:22:49] This was also a thing about deregulation. Just to bring it back to the book, which is before deregulation, you wouldn't have had a system of these loyalty points because it's explicitly anti-competitive. The purpose of it is for you to keep flying on that same airline and not fly a competitor. So it's trying to dissuade you from using competitors and going to wherever the best price is. And so anyone has ever said, well, I'm not going to fly this other one which is $10 cheaper because I want to get the points. That's the point. That's stopping competition. The regulators wouldn't have allowed that before. And people in the '80s recognized this was anti-competitive. And the other thing that's going on is during regulation, they were really confined to being just airline businesses. The idea was we didn't want them involved in a lot of other stuff.
Sarah [00:23:36] Yeah. No owning rental cars and hotels and all that.
Ganesh Sitaraman [00:23:39] Couldn't own all these other things because we were worried about abuses of power in that space because you have all the scale and with scale comes power. And I think that's a real shift that's happened over the last few decades too. And I think we need to think very critically. Do we really want the kind of financialization of the airline sector like we've seen in so many other sectors?
[00:23:59] Music Interlude
Sarah [00:24:16] Okay. So short of time travel, which is not available to us, what are the public policies moving forward that could get us out of this travel hell?
Ganesh Sitaraman [00:24:27] Well, in the book I give three big principles and then give them some ideas about how we might flesh those out. But the three principles, I think, our first, no more flyover country. We should decide as a country we don't want to have a system where big chunks of the country don't really have access, including small places, including mid-sized places which are losing service. We need to have service to a lot of places. Second principle, no bailouts, no bankruptcies. And this is a pro-business position. I'm actually in favor of an airline industry that is successful, that is profitable, that is making money because I want this to be a service that exists and I want it to exist in a reliable, stable way. But that means moving it from the kind of booms and busts to something that's a little bit more boring. And that's the second principle, is we should have a system where we don't have the kind of big swings that we've had and where we don't need to bail them out if there's a big demand shock. And then the third is fair and transparent pricing. It should be a lot simpler than it is now for people.
Sarah [00:25:34] You mean I shouldn't have to open up an incognito tab in order to be treated fairly in a pricing structure?
Ganesh Sitaraman [00:25:40] Yeah. It's amazing that airlines can do dynamic pricing whether it's different if you buy it on Tuesday versus Wednesday or the morning.
Sarah [00:25:49] Or they just know you want it.
Ganesh Sitaraman [00:25:52] Yeah, they know you want it. And when you think about personalized pricing, that could be a thing where it can be really tailored to individuals. We don't have this in other transportation industries. You're going to go on the subway in Washington, D.C., it's the same price if you buy it five minutes before or if you buy it a week in advance. You're not paying different prices when you buy your ticket. You're not paying different prices if you're sitting facing forward or facing backward or standing up. We have rules to say, actually, this is a service that we want kind of consistency for everybody. And some people like to say, well, market prices are important, but it's not just business people buying last minute tickets. It's people who've had a death in the family or an illness or a crisis and need to get somewhere, and they're at the mercy of this as opposed to really just having a consistent system-- which we could have, we just have to ask our policy makers to give it to us.
Sarah [00:26:46] I think the hard part is you point out that because of the way our service works now, we're not a consistent constituency, right? I mean, we are in that everybody uses the service, but because of the way it's been sort of nationalized and decentralized, how do we begin to advocate for this? It feels like we need sort of a champion on the national stage that we can all support.
Ganesh Sitaraman [00:27:08] Yeah. I think the first place to start is if everyone channels all their inner rage-- which you should not channel toward the people on the airplane. Don't channel it toward the flight attendants, it's not their fault. But channel it towards your members of Congress and get on the phone, talk to them at events, write letters to them, and tell them you want them to do something about this. And I think that's the real starting point here, is moving in that direction because a lot of people are affected. And I think for people in Congress, they fly too, they see all these problems.
Sarah [00:27:44] Yes, seriously.
Ganesh Sitaraman [00:27:44] And so it's just pushing them to understand we can do something bigger. We can think differently about this. We can push harder on it. And if you, member of Congress, do something, it's actually going to be really popular. And we the people are going to vote for you again in part because you did something about this.
Sarah [00:28:12] Well, your book is a great place to start. I think we should all send it to our members of Congress. Thank you so much for writing it. I felt so much smarter after I finished it and less mad. I mean, I'm still mad, but I feel more educated in my rage.
Ganesh Sitaraman [00:28:24] Hopefully, mad in a direction that points towards doing something.
Sarah [00:28:28] Yes. Well, thank you so much for having me. It's great to be here.
Alise Napp [00:28:32] A huge thanks to Ganesh for joining us, and to all of you for the same. We hope you've had the best Thanksgiving available to you. And that if you are traveling, you have the best travel experience available to you. And if you don't, maybe share this episode with the grumbling person in line behind you at the airline counter-- just a thought. Sarah and Beth will be back in your ears on Tuesday to catch up on the news. Happy Thanksgiving!
[00:28:53] Music Interlude
Sarah: Pantsuit Politics is produced by Studio D Podcast Production.
Beth: Alise Napp is our managing director. Maggie Penton is our director of Community Engagement. Sarah: Xander Singh is the composer of our theme music with inspiration from original work by Dante Lima.
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