United Airlines CEO Scott Kirby made some interesting comments this week about the profitability of the carrier’s hubs, in comparison to those of the competition (thanks to @xJonNYC for flagging this). I don’t think this is terribly surprising, but it’s something most of us probably haven’t put much thought into.
In this post:
United claims all of its hubs are profitable, unlike competitors
United’s financial performance has been improving nicely in recent years, under the leadership of Scott Kirby. Kirby outlined one of the primary strategies he has been employing to improve profitability, particularly as it related to hubs.
This starts with an interesting claim — Kirby insists that he has data supporting that United is the only airline in the country to have all of its hubs be profitable, and at other airlines that isn’t even close to being true. Furthermore, United has pretty equal profitability between hubs, and the difference in profitability between the carrier’s most and least profitable hubs is only six points.
Why is it so important to have all hubs be profitable? Well, you’ll be shocked to hear this, but there’s a credit card angle. 😉
Kirby believes that customers typically choose the best airline in a given market (usually the one with the biggest presence), and then get their credit card. If an airline is second place in a market, it gets dramatically less traction with its loyalty program, so being the number one airline of choice in a particular market is one of Kirby’s biggest priorities.
Kirby believes that this is a large part of the carrier’s success, and that this dominant position makes customers “sticky,” and easier to monetize.
My take on Kirby’s hub profitability claims
It’s fascinating how the airline industry has evolved. Even the most profitable airlines make much of their profits through loyalty programs, so that completely changes the strategy when it comes to what it makes sense to focus on, and how to grow.
When your average cost per air seat mile is roughly comparable to your average revenue per air seat mile, hub profitability isn’t just about the average fare in a market. It’s also about how much loyalty you can build up, and how much revenue you can generate through credit card agreements and other opportunities.
United does indeed have really well rounded hubs. Chicago (ORD), Denver (DEN), Houston (IAH), Newark (EWR), and San Francisco (SFO), are all strong hubs for United, where the airline has a dominant market position. I’d say that Los Angeles (LAX) is the only questionable hub, since it’s an airport where all of the “big three” US carriers have hubs, and no airline has that big of an advantage.
There’s no point in even discussing the profitability of American’s hubs, since, well, American isn’t very profitable. But clearly Kirby’s statements were intended to draw a contrast to Delta, the carrier’s biggest competitor.
Kirby is almost certainly right that not all of Delta’s hubs are profitable. Atlanta (ATL), Detroit (DTW), Minneapolis (MSP), and Salt Lake City (SLC), are presumably wildly profitable hubs. I would imagine that New York (JFK) is probably profitable as well, while I’m not sure about Boston (BOS) and Los Angeles (LAX). Meanwhile I think it’s highly likely that Seattle (SEA) is currently Delta’s least profitable hub.
Delta continues to be more profitable than United, so obviously those profits are coming from somewhere. While United only has a six point difference between its most and least profitable hub, I imagine the spread at Delta is absolutely massive.
Also, presumably part of Delta’s strategy is to continue growing in unprofitable hubs until they are profitable. That’s not guaranteed to work, but it’s a fair strategy to try.
Bottom line
United CEO Scott Kirby insists that his airline is the only one in the United States where all hubs are profitable. Not only that, but there’s a remarkable level of profit consistency between hubs, with a spread of just six points between the most and least profitable hubs.
As Kirby sees it, this profitability comes down to having a dominant position in a market, so that it’s easier to get “sticky” customers who also pick up credit cards.
While Delta is the most profitable US airline, there’s simply no denying that the airline has a much bigger spread in terms of profitability between hubs. That’s not necessarily a bad thing, it’s just a different strategy. I’d be fascinated to know just how big that spread is at Delta.
What do you make of Kirby’s hub profitability claims?
Ben needed some page clicks while he (and I) are flying so here goes... I've got 5 more hours before I land.
For those who think I am fixated w/ United, Kirby has been fixated with other airlines his entire career.... and he desperately needs to be the center of the discussion and make everyone BELIEVE he is the smartest person in the room.
He also said at that same conference that back in...
Ben needed some page clicks while he (and I) are flying so here goes... I've got 5 more hours before I land.
For those who think I am fixated w/ United, Kirby has been fixated with other airlines his entire career.... and he desperately needs to be the center of the discussion and make everyone BELIEVE he is the smartest person in the room.
He also said at that same conference that back in the early 2010s while he was still at AA, the industry was only big for two premium carriers. DL was one of them and he desperately wanted AA to be the other other. 4 years later he was at UA and was convinced that UA could displace AA - which they clearly have done.
Kirby thinks he has more data than other airlines have about themselves - and yet UA continues to trail DL in profitability EVEN WHILE paying tens of thousands of employees less. DL even posted a higher net profit in the 3rd quarter last year after the Crowdstrike mess that DL said cost it $500 million. DO you really want to admit that you know so much but continue to come up short even with a billion dollar/year labor cost advantage?
Nick and Anthony's comments below are spot on.
and system profitability still comes down to putting ALL of the pieces together to come up w/ the biggest pie.
DL has ATL which is a money-printing machine. Nothing like it exists anywhere else in the world. It moves so many more passengers with so many more seats than any hub in the world - and does it from the lowest cost global hub in the world.
Quite frankly, yes, there IS a huge gap between DL's most profitable hub - ATL - and its less profitable hubs - but UA will NEVER have a hub of the size (nearly 1000 flights/day, 90% of which are mainline, scope (scores of flights to five continents), and efficiency (less than $4 per enplaned passenger).
The true hypocrisy of Kirby's comments is his endless drivel about how ULCCs can't afford to compete in high cost coastal hubs but then fails to note that ORD is the highest cost large connecting hub per enplaned passenger - 10X what DL pays in ATL, 5X what DL pays in DTW, MSP and SLC - and the rebuild of ORD terminal 2 into the global terminal will cause even more cost growth.
But UA is going to grow including to displace AA from ORD by capturing basic economy passengers. Is that the most bizarre set of realities that any company could come up with?
And the icing on the cake is that UA gets a couple billion per year less than DL and AA get from their credit card deals and UA's deal won't be up for renewal for several years. They will get a nice bump but then DL renews.
And DL will then be making $5 billion more in revenue per year (their stats, not mine) repairing GTF and LEAP engines.
UA will ALWAYS be looking at DL's backside while trash talking everyone else and still end up short.
and 2025 will be the year that UA's employees - ALL of them - want to be paid like DL employees.
we have the data and can recalculate UA's profitability after they shell out $400 million more in pay and another $500 million in profit sharing per year.
Your analysis of United’s structural disadvantages relative to Delta is largely correct, particularly in terms of labor cost asymmetries and the operational leverage derived from ATL’s uniquely efficient enplanement model. Delta’s hub-and-spoke system optimization at ATL, with its unparalleled mainline-to-regional ratio and cost-per-enplaned-passenger efficiencies, functions as a self-reinforcing profit engine that United structurally cannot replicate. Additionally, your point on Delta’s superior credit card monetization is critical—United’s Chase deal remains comparatively constrained by both renewal timing...
Your analysis of United’s structural disadvantages relative to Delta is largely correct, particularly in terms of labor cost asymmetries and the operational leverage derived from ATL’s uniquely efficient enplanement model. Delta’s hub-and-spoke system optimization at ATL, with its unparalleled mainline-to-regional ratio and cost-per-enplaned-passenger efficiencies, functions as a self-reinforcing profit engine that United structurally cannot replicate. Additionally, your point on Delta’s superior credit card monetization is critical—United’s Chase deal remains comparatively constrained by both renewal timing and aggregate transactional velocity, which exacerbates the airline’s loyalty program revenue gap.
However, there are a few underlying premises that merit a more nuanced examination. First, while you correctly highlight United’s reliance on ORD despite its prohibitive cost structure, it is reductive to frame this as purely a strategic liability. United’s presence at ORD isn’t an accident of legacy network design—it is a calibrated exposure to a premium O&D market that, despite cost disadvantages, generates above-benchmark yield elasticity in high-frequency corporate corridors. While ORD lacks the scale arbitrage of ATL, its premium-cabin RASM multipliers on transatlantic and transpacific routes—particularly in business-heavy corridors like FRA, LHR, and HND—should not be ignored. The redevelopment of Terminal 2 into the Global Terminal does present an escalating cost issue, but it also fortifies United’s competitive positioning in a critical long-haul gateway market.
Your point about Delta’s aircraft maintenance arbitrage via GTF and LEAP engine overhauls is well-taken, but this is a double-edged sword. Yes, Delta extracts revenue from MRO, but this operational dependency also creates a nonlinear exposure to the next-generation fleet transition curve, particularly as Pratt & Whitney’s GTF engine issues present a prolonged operational liability. Delta's revenue recapture via PBTH (power-by-the-hour) contracts partially mitigates this, but United’s CAPEX-intensive fleet refresh strategy—centered on MAX and 787 acquisitions—positions it for superior long-term fleet efficiency once these units scale into service at a lower net ownership cost per ASM.
On labor, you are absolutely right—United’s relative cost advantage is an unsustainable distortion that will be corrected, and the upcoming labor cost normalization will further erode its profit margins. However, dismissing United's strategy purely as "chasing Delta’s backside" oversimplifies the competitive calculus. United isn’t just imitating Delta’s network segmentation—it is executing a counter-positioning play that leans into high-density, lower-CASM configurations on transpacific routes where Delta’s premium-heavy approach lacks volume efficiency.
In sum, Delta’s structural advantages are undeniable, and United’s CEO rhetoric is often more aspirational than operationally grounded. But the reality is more complex: United’s network inefficiencies are partially offset by strategic yield targeting, and its fleet and loyalty program disadvantages have long-term mitigations that could narrow Delta’s lead. Whether these mitigations materialize before labor cost inflation erases the gains remains an open question—but it is not as deterministic as your argument suggests
"Your analysis of United’s structural disadvantages..."
You typed in a 461-word response in five minutes.
Gosh you're smart.
This has to be AI. If not, I’m impressed
You left out IAD - which is increasing becoming profitable for UA. Lot's of new international flights being added.
IAD is going to take a big hit with DOGE and mass layoffs of the federal workers. Leisure spend will go down as DC takes a huge hit to employment. And direct spending by the feds on work travel is also declining a ton.
Seems almost axiomatic tbh
Kirby’s hub profitability claim fails to incorporate second-order effects of premium cabin yield elasticity, disregarding how Delta structurally outperforms in high-margin corporate and luxury leisure segments—a space where United remains a commoditized, economy-heavy operator. United’s six-point spread is a static, rearward-looking metric that ignores yield curve convexity and premium cabin price insensitivity, while Delta’s EBITDAR arbitrage (16-18% vs. United’s 13-15%) and CASM ex-fuel efficiency (7.5-8.2¢ vs. United’s 8.5-9.1¢) reinforce its premium-tier pricing moat and operational...
Kirby’s hub profitability claim fails to incorporate second-order effects of premium cabin yield elasticity, disregarding how Delta structurally outperforms in high-margin corporate and luxury leisure segments—a space where United remains a commoditized, economy-heavy operator. United’s six-point spread is a static, rearward-looking metric that ignores yield curve convexity and premium cabin price insensitivity, while Delta’s EBITDAR arbitrage (16-18% vs. United’s 13-15%) and CASM ex-fuel efficiency (7.5-8.2¢ vs. United’s 8.5-9.1¢) reinforce its premium-tier pricing moat and operational capital efficiency.
Furthermore, Delta’s Seattle hub is a masterclass in stochastic capacity reallocation, functioning as a volatility-hedged trans-Pacific gateway that captures asymmetric high-yield corporate demand, while United remains trapped in a legacy network optimization model designed for bulk transport, not premium segmentation. Delta’s Amex co-branding synergy ($7B+ in 2023) isn’t just about revenue—it’s about creating a financially inclusive, rewards-driven ecosystem that empowers diverse customer demographics.
And let’s talk sustainability—while United makes performative SAF purchases, Delta is actively investing in carbon offset strategies that model long-term fleet transition viability under ESG constraints. Delta doesn’t just move passengers; it solves systemic inequities through targeted hiring initiatives and inclusive leadership pipelines, proving that profitability, sustainability, and social responsibility aren’t mutually exclusive—except, apparently, at United.
I put this through an AI detector and it came back as 85% confident.
Not sure if you're memeing or actually bot.
I’m not sure where you got that DL outperforms UA in premium revenue. UA’s premium cabins have always been larger than DL’s, and many of DL’s premium cabins are in 767s with an outdated product. UA also has hubs in the business centers of the country.
Premium customers in Chicago, Washington DC, and San Francisco all have nonstop options to other business and high-yield cities, when the DL customers have to connect.
DL...
I’m not sure where you got that DL outperforms UA in premium revenue. UA’s premium cabins have always been larger than DL’s, and many of DL’s premium cabins are in 767s with an outdated product. UA also has hubs in the business centers of the country.
Premium customers in Chicago, Washington DC, and San Francisco all have nonstop options to other business and high-yield cities, when the DL customers have to connect.
DL profits are significantly drawn from a higher number of fortress hubs than any other carrier. They not only dominate traffic in four hubs, but those four hubs don’t even have a competing airport across town. UA does not have a single hub without any other competition either at the airport or the other airport in the city.
DL gets fortress hub pricing in those cities, as well as the benefit of CPEs below $3 in ATL, the lowest costs of any large airport in the country.
Additionally, they get billions more than UA each year in credit card revenue, a tailwind UA will receive when their credit card agreement with Chase is renegotiated.
If DL really was chosen as a premium carrier above all others, they wouldn’t underperform in their hubs where they face competition, relative to their fortresses. They would be more dominant in BOS, SEA, and LAX.
masterclass.
And DL does own a nasty refinery because jet engines still burn dead dinosaurs. It helped DL save about 10 cents/gallon on a systemwide basis. and UA tried to copy DL's refinery strategy = but came up short.
all the talk about SEA and how much larger AS is fails to mention that DL outperforms AS in longhaul domestic (east coast) and international longhaul which AS doesn't fly. We heard that AS would launch...
masterclass.
And DL does own a nasty refinery because jet engines still burn dead dinosaurs. It helped DL save about 10 cents/gallon on a systemwide basis. and UA tried to copy DL's refinery strategy = but came up short.
all the talk about SEA and how much larger AS is fails to mention that DL outperforms AS in longhaul domestic (east coast) and international longhaul which AS doesn't fly. We heard that AS would launch NRT vs. DL (and others) HND and become the 5th or 6th carrier to ICN using aircraft that are inferior in cost and amenities to everything in the market.
Some people can't understand that DL doesn't need to operate the same number of flights to LAX or ANC because they do things that AS simply does not do and may never do on par w/ DL even if they actually try.
Let's also not forget that AS connects pax over SEA that DL connects over much more logical hubs; of course, AS has to have more flights to carry so much more domestic connecting traffic.
And AS' answer is to open another hub (or bullk up) PDX 200 miles away - which does nothing to solve the geography problem.
And as much as Kirby and everyone else loves to look down on SEA, it is still the 2nd largest US carrier hub to E. Asia and has a geographic advantage over every other US hub to Asia.
and another fact that gets left out is that NYC and LAX are DL's only two hubs that are in cities where there are multiple airports. By contrast, DEN is the only UA hub that is in a single airport city. IAD is the 3rd preferred airport for domestic travel in the Baltimore/Washington area.
and DLs financial health relative to AA and B6 - its LGA/JFK/BOS competitors - is far stronger than UA relative to WN.
You forgot the IAD hub. I wonder how it will be affected by the government contraction. I assume most international travel for the government used United from IAD.
Nice take. I was told a similar store by an airline exec many years ago. He said that at a dominant hub, brand loyalty to the largest player and the fact a flyer might have the airline's CC allows the airline to raise prices. It's the pricing that's key. People will pay more for the dominant carrier, whereas in many industries the big guy squeezes the competition with low prices. And it's not based on...
Nice take. I was told a similar store by an airline exec many years ago. He said that at a dominant hub, brand loyalty to the largest player and the fact a flyer might have the airline's CC allows the airline to raise prices. It's the pricing that's key. People will pay more for the dominant carrier, whereas in many industries the big guy squeezes the competition with low prices. And it's not based on monopoly power but brand loyalty. The obviously doesn't always work (American).
Interesting point about how much less passenger and revenue traction the number two carrier in a hub gets.
Wonder what sort of implications this has for AA in ORD, WN in DEN, etc.
Most airlines that are number two in a market have much stronger positions in other hubs. Will we see airlines draw down the less dominant operations in order to further build up their positions of strength?
If Kirby is allocating credit card revenue/profit on a hub by hub basis - and it sounds like he is -he may be somewhat right, but it makes his point kind of irrelevant if you ask me. Credit card revenue benefits the entire enterprise. Delta's hubs in BOS, NYC, SEA, LAX all likely generate a huge amount of credit card revenue that help subsidize flying in those hubs. And robust flying in those hubs help...
If Kirby is allocating credit card revenue/profit on a hub by hub basis - and it sounds like he is -he may be somewhat right, but it makes his point kind of irrelevant if you ask me. Credit card revenue benefits the entire enterprise. Delta's hubs in BOS, NYC, SEA, LAX all likely generate a huge amount of credit card revenue that help subsidize flying in those hubs. And robust flying in those hubs help Delta compete against other airlines and likely help them make schedules more attractive for their core hubs.
That makes a lot of sense. People forget that Delta is carried by their Amex partnership.
BOS/SEA/LAX/NYC spending power is much higher than those interior hubs and ATL. This actually seems so obvious that I wonder why people have never realized this.
really good point, Anthony
I wonder if the other shoe will drop somewhere as when DL abandoned DFW, and less significantly, CVG.
I would think loyalty (people that fly regularly-at least once a month) is very hub based in those cities that are a hub for one of the Big 4. Naturally to get additional benefits they will get that airline's co-branded card. When you fly often you know the complications a connection can bring. While sometimes unavoidable, generally those not flying solely on the rock bottom fare want direct flights. A hub can do that. Being...
I would think loyalty (people that fly regularly-at least once a month) is very hub based in those cities that are a hub for one of the Big 4. Naturally to get additional benefits they will get that airline's co-branded card. When you fly often you know the complications a connection can bring. While sometimes unavoidable, generally those not flying solely on the rock bottom fare want direct flights. A hub can do that. Being Miami based I fly AA exclusively not because I think AA is better than UA and DL. But particularly in the summer time I don't want to deal with connections and if I have do a connection I know I need a minimum of 2.5 to 3 hours, wasting my time.
UA has strong hubs for the exception of Guam and maybe arguably IAD can be inferior to DCA for direct flights.
There’s a big difference between “not profitable” and “least profitable.”
Which are you implying applies to SEA? I would say least profitable is likely, but Delta surely isn’t losing money there.
I'll bite. Why are you so sure SEA is profitable? It's quite a dogmatic statement when nothing about Delta's current market position would suggest profitability for any airline. Nor does any domestic fare data suggest profitability in SEA. And if the reply to that is "well, Asia"... yeah. I doubt it.
And that has nothing to do with Delta but everything to do with being the half the size of a loved hometown partner and...
I'll bite. Why are you so sure SEA is profitable? It's quite a dogmatic statement when nothing about Delta's current market position would suggest profitability for any airline. Nor does any domestic fare data suggest profitability in SEA. And if the reply to that is "well, Asia"... yeah. I doubt it.
And that has nothing to do with Delta but everything to do with being the half the size of a loved hometown partner and when that hometown airline has non-JV partners at all the major destinations from SEA (though that pales in comparison to the significant size and frequency disadvantage of DL in SEA)
and Keep in mind Scott Kirby doesn't think all DL hubs are profitable either and he has MUCH better data than all of us. He didn't specify SEA but... it isn't hard to imagine that's one of the ones alluded to.
DL just has a very suboptimal position in SEA. That's not a knock on Delta but they do.
I agree. I just get this deja vu with DL in SEA like they were in DFW. It seems like it's the same story. If DL had 2 flights a day out of DFW to a place, AA had 4. It's the same in SEA. If DL has 2, AS has 4.
And God only knows what's going to happen with AS's purchase of HA and its announcement they plan to build up to a...
I agree. I just get this deja vu with DL in SEA like they were in DFW. It seems like it's the same story. If DL had 2 flights a day out of DFW to a place, AA had 4. It's the same in SEA. If DL has 2, AS has 4.
And God only knows what's going to happen with AS's purchase of HA and its announcement they plan to build up to a dozen international markets. I doubt AS is going to drop a load of 787's into their noon bank and leave it at that. It only makes sense they will further fortress SEA.
I think DL will sustain the losses (or much lower profits) in SEA since they have no choice. It will be their primary west coast hub. Without it they only have LAX, where they have less than 20% of the market.
They have to keep SEA to maintain relevancy in a west coast market with only significant competitor, even if they are a distant number two there.
"Scott Kirby doesn't think all DL hubs are profitable either and he has MUCH better data than all of us."
Yet doesn't have DL's internal data, so while his claim might be less speculative than a man-on-the-street's, it's still very much only speculative.
I wonder how UA's eighth hub that everyone forgets (GUM) is doing. Japan traffic is rough lately because of the exchange rate and they've been moving planes and crews to operate service from NRT to smaller Asian cities. Although I imagine lots of those GUM routes are subsidized by the US government/military. I flew GUM-NGO just over a year ago and was the only one in business, with fewer than 20 seats occupied in coach....
I wonder how UA's eighth hub that everyone forgets (GUM) is doing. Japan traffic is rough lately because of the exchange rate and they've been moving planes and crews to operate service from NRT to smaller Asian cities. Although I imagine lots of those GUM routes are subsidized by the US government/military. I flew GUM-NGO just over a year ago and was the only one in business, with fewer than 20 seats occupied in coach. Obviously GUM doesn't have a analog to any AA/DL hub since it's completely unique to UA, but interesting nonetheless.