American Airlines and United Airlines both have hubs at Chicago O’Hare Airport (ORD), and they sure are battling it out at the moment. United has a significant advantage (in terms of presence and profitability), but American isn’t ready to give up there, and wants to regain market share.
This is becoming fiercely competitive. On the one hand, it seems unlikely that American will be able to make Chicago profitable any time in the near future, or that it’ll be able to overtake United. On the other hand, American can’t cede yet another major market to a competitor.
United CEO Scott Kirby is known for his smack talk, and he’s back on the record talking about Chicago. Not only is he claiming that American will eventually give up on Chicago, but he’s even making the argument that it’ll be good for consumers.
In this post:
Scott Kirby says Chicago should want American to fail
Crain’s Chicago Business has a story about how Kirby is stepping up his rhetoric around the American and United battle in Chicago. He’s claiming that American lost $1.1 billion in Chicago over the course of a year, and that things will only get worse. He argues that “economic gravity is going to eventually win.”
Kirby is predicting that American will just give up eventually on having Chicago as a hub, and when that happens, he wants United to grow to 1,000 daily departures at the airport, with the network growing big enough to sustain 15 additional long haul routes. He argues that kind of growth is only possible if American gives up on the hub, since it requires a lot more gate space.
With Kirby’s vision of American giving up on Chicago, he sees the airport having a future like Atlanta (ATL) or Dallas Fort Worth (DFW), in terms of it being a mega hub with global service.
Of course it’s worth emphasizing that American vehemently denies any claims that it’s even considering retreating in Chicago, arguing it will be investing and competing in Chicago for years to come. The airline also points out that United’s vision is to see an airport with less competition.
My take on Kirby’s Chicago competition narrative
Kirby has done a great job leading United in the right direction, and improving the carrier’s performance. But his narratives just keep getting more extreme, and I can’t help but feel like he’s kind of gaslighting the public.
In terms of total number of nonstop destinations served, would O’Hare probably see more service if American pulled out? Yes, we’d probably see less duplicative service, and as a result, more nonstop destinations, since that’s how fortress hubs usually work.
But this of course completely ignores the other side of the equation, which is that a lack of competition leads to higher fares. Airlines charge as much as they can get away with charging, and that’s typically a function of the competitive environment. Consumers value nonstop flights, so the less competition in nonstop markets, the higher the fares.
Kirby assumes that most passengers want lots of nonstop flights, and don’t at all care about fares. That’s actually consistent with the argument he has made otherwise, about how we’d be better off with one “flag carrier” basically flying everything.
Let’s actually use Kirby’s example of Atlanta and Dallas for a moment. Picking random mid-week dates for next spring for the cheapest roundtrip economy flights from hubs to Tokyo, you’ll find that flights from Chicago to Tokyo cost under $1,500, while flights from Atlanta or Dallas to Tokyo cost around $2,300, so they’re more than 50% higher. The reason for that is simple — lack of competition in fortress hubs drives up fares.
Now, when it comes to Kirby’s math in explaining American’s failure in Chicago, I sort of agree with him, and sort of don’t. Do I believe American is losing a lot of money in Chicago? Probably. Do I think Kirby’s numbers are massively inflated, and he’s basically taking the direct operating loss, without factoring in the positive impact of loyalty revenue, etc., which absolutely factors into profitability for airlines? Yes.
All that being said, I also don’t really see how this will end well for American. United definitely isn’t going to give up its number one position in Chicago. But what choice does American really have, other than to compete? In terms of its overall network, the airline needs a hub in the Midwest, and simply giving up there won’t end well either.
As long as both airlines are competing, consumers will win. But I guess Kirby is hoping that trash talking keeps moving things in a certain direction.
Bottom line
United CEO Scott Kirby has long predicted American’s failure in Chicago, or at least that’s what he’s hoping. United is the bigger of the two airlines, is losing less money in Chicago, and definitely isn’t willing to let American make any gains. So while this narrative isn’t new overall, what is new is Kirby’s claim that “when” American pulls out of Chicago, United will be able to increase service there, and it’ll be good for consumers.
Make no mistake — if Chicago turns into a fortress hub, it absolutely may see more nonstop destinations. However, that will massively drive up fares. So Kirby believes that consumers don’t care about the cost of tickets, but instead, just the number of nonstop destinations.
What do you make of Kirby’s latest comments about Chicago?
We live in SF. United has like 75% market share here. They can price the flights how much ever they want due to lack of competition. Competition is good.
As an Expat living in a foreign country, the only other big mid west city alongside Chicago that most people in Britain seem to know of is Detroit. In rural Denmark both Minneapolis and St. Louis are much better known than in the UK, not sure why.
Hockey
Minnesota, the Dakotas and Montana have loads of people with Nordic heritage, people who came towards the end of the 19th century. I know because my wife is one although her family moved further west in the 40s to work for Boeing.
"What choice does American really have? [It] needs a hub in the Midwest." Welp, speaking as a St. Louis resident, the schadenfreude here is delicious.
I still remember connecting at STL with TWA and not enjoying the airport layout, specifically when they’d have a gate-change, and it’d be like, go from D40 to C34, so you’d have to run a mile to catch your flight in-time (for a modern comparison, think Delta at JFK T4, going from B55 to A17, no bus.)
We need American Airlines out of the way so Delta and United can lead.
We need Delta out of the way because it's evil and because the rest of US airports can be like O'Hare.
Considering what a disaster Newark is, a United O'Hare quasi-monopoly would be even worse. Kirby and United need their wings klipped. I am through flying them.
Newark would be a disaster no matter which airline is there. The airport is a dump, the city is a dump, the state is a dump...
Tell us what you really think.
Kirby's arrogance will be his downfall.
And the future looks a heck of a lot brighter for the DFW area than it looks for the Chicagoland area.
I hope AA is starting to gets it act together, and if so the easy wins for Kirby are over.
Well, AA is far from getting its act together. So there are many more easy wins in store for Kirby.
Yes AA is far off but the are starting down a better path. It won't change quickly. DL was in the crapper about 20 years ago and they turned their sh¡ t around. It's not fair to criticize a player for bad choices and then when they make better choices to continue degrading them. UA will win some but not all.
AA deserves all the criticism they’re getting, and then some…
Also, in terms of the consumer benefit, I watched clips of his interview with Crains and he's not really talking about prices as directly per se.
The way he framed it was that today, American and United have a lot of replicated catchment area flights for ORD (e.g., Milwaukee, Madison, Green Bay, Bloomington, etc.). Because they are both competing in this market, they have to duplicate capacity in those places (and often with smaller...
Also, in terms of the consumer benefit, I watched clips of his interview with Crains and he's not really talking about prices as directly per se.
The way he framed it was that today, American and United have a lot of replicated catchment area flights for ORD (e.g., Milwaukee, Madison, Green Bay, Bloomington, etc.). Because they are both competing in this market, they have to duplicate capacity in those places (and often with smaller planes to maintain economics, which takes up flight slots).
Whereas if AA wasn't a major competitor, United could up-guage those flights, reduce frequencies, and then fly other new routes, and more new international routes, with the newly available flight slots / capacity. Also those regional routes would be on nicer / bigger planes.
Now, I'm not saying I agree with this argument! But I think he's more so saying consumers would benefit from more routes, bigger planes, not that they would benefit from lower prices or schedule flexibility or anything like that...
Yep, exactly. United would save money, and then squeeze out even more in fares. It is quite the opposite of what any thinking consumer would support.
What is wrong with smaller planes and greater frequency? I'd rather spend an hour with fewer people on a regional jet with 1-2 or 2-2 configuration, than 2-2 or 3-3. Of course, I would rather take the train, but that alternative has left the station. Taxiing to the gate now takes as much time as the flight, But fewer short-hop flights would just open slots for more long-haul and the maneuvering would be just as bad.
This is getting exhausting. Kirby is a brilliant leader and has done a great job at United but the obsession with talking about American’s failures is repetitive and frankly annoying.
Agreed. Clearly he has a personal grudge because he was exited from American, but he needs to grow up. That is his personal grudge - not anyone else's. We don't care how much he hates AA or wants to beat them. Keep it to yourself and focus more on where you're investing and growing the airline and passenger experience, not how much AA sucks.
I agree he has a bone to pick with AA....but agree the focus is now comical....move on and focus on your airline....
LOL, “economic gravity is going to eventually win.” That's how I feel about a lot of companies (how is Tesla still alive?). But the market can stay irrational longer than you can stay solvent, to paraphrase another economist.
That said, I think AA strengthens ORD. If they were to be snapped out of existence, it would take UA a long time to fill 50% of the gap, and they would never get to 100%.
I am glad I live in a non-fortress hub (LAX) with actual competition and many foreign carriers to pick and choose from.
I can't imagine being locked with a carrier at DFW, CLT, ATL, MSP, DTW, PHL, etc.
Is TD banned? lol
Banned or not, it’s proven that the comment section is much better without him. It’s a pain to have to scroll past the 20+ paragraphs of nonsense plus the 50+ replies of users that still think that is possible to have a rational argument with him. I hope that you use uour away time to seek the medical help that you desperately need Little Timmy !
Fellas. Give him a chance to respond (if he wants to). Ben posted just 3 hours ago. It's late August. Maybe he's enjoying a few extra Biscoff on a morning flight (or he's on a 717 with no WiFi).
maybe hes on vacation? (likely ICN or CDG only)
Alright, folks, I've been officially deputized to inform you all: "I hereby empower you, 1990, to feel free to let them know over there (OMAAT) that I am getting my point across on other sites including Gary’s (VFTW). I don’t need to participate in multiple forums that discuss the same things." --TD.
translation: "i get called out on my BS way more on OMAAT so I'm scared to keep posting there"
Tim, you can't even show up here to say that yourself?
No matter how batsh*t crazy he is. At least I thought he has his dignity. And I respected his perseverance.
Now I have to go all the way over there to tell him. Even in the same forum, he doesn't need to discuss the same things multiple times, multiple paragraphs. So don't fluff about not wanting to participate in multiple sites.
Busted your fluff again Tim.
(Eskimo, if you wish, I can also be your inter-blog communiqué service...)
Good riddance to bad rubbish! He is posting the same nonsense ad nauseum over at LALF. Much more rational discourse here now, with 90% fewer insults (myself included ha)
If Kirby really wanted to benefit consumers in Chicago, he would fund replacement of T1 and T5 at O'Hare. Ghastly airport.
CEOs just say what shareholders want to hear. Whatever
I don't think I'd really benefit that much. Now, I fly on somebody else's dime, so I'm agnostic about fares. However, a lot of my flying is O&D to small destinations in the Midwest. Between AA and UA, I'm pretty much covered. I fully do not expect a dominant UA to backfill all of those regionals, which leaves me with long drives at my destination. I like the convenience I have now.
As a non-Chicago resident, I guess I don’t have a dog in this fight. That said, it would be an interesting experiment to see the impact on fares that would result from an AA withdrawal. I can definitely see fares going up, but I also am not sure that Atlanta or Dallas (to use the examples Lucky cited) are comparable to Chicago from either a business or tourism perspective. To go off of the Tokyo...
As a non-Chicago resident, I guess I don’t have a dog in this fight. That said, it would be an interesting experiment to see the impact on fares that would result from an AA withdrawal. I can definitely see fares going up, but I also am not sure that Atlanta or Dallas (to use the examples Lucky cited) are comparable to Chicago from either a business or tourism perspective. To go off of the Tokyo example, even if AA were to withdraw from O’Hare, I can’t imagine JAL is going to stop flying there — whereas they don’t fly to Atlanta at all (and presumably only fly to DFW because of AA’s feed there). I think that same logic can probably be applied on a lot of different routes; Chicago is a destination in and of itself — Dallas and Atlanta definitely aren’t.
By now Dallas is a heavy business travel destination and should be considered a pretty massive metropolis. A depressing, ugly, too-big-for-its-own-good metropolis, but still. Dallas has significant populations from all corners of the world, especially the Eastern Hemisphere.
I think though that AA is a poor choice in connecting traffic due to its location compared to ORD
Might want to let AC, BA, EY, LH, QR and TK know that Atlanta is not a destination in and of itself…no DL partnership, and yet they stupidly keep going there.
Exactly.
LOL. Qatar Airways’ CEO literally said they expanded into ATL to “rub salt into the wound of Delta” — not because there was a rational business case.
Using Air Canada to disprove the point is hilarious. Air Canada also flies to — checks notes — Charleston, West Palm Beach and Fort Myers. Those are hardly global business centers.
Using BA is equally preposterous. They serve more than 25 US destinations.
So, yeah, thanks for proving my point.
There is just no way the facts agree with this. I am sympathetic to your preferences, as I also enjoy Chicago more than Dallas or Atlanta, but they are absolutely massive destinations- and while not necessarily global-tier cities like Chicago, their business influence is absolutely competing on the same tier. Especially when DFW and ATL are the busiest airports in the country, acting like they are not proper destinations does not add up.
Atlanta and Dallas are not “competing in the same tier” as Chicago when it comes to business influence. Chicago’s GDP is roughly 50% larger than Atlanta’s. (Dallas is a bit closer, but still a wide gap.).
And Atlanta and Dallas are the busiest airports in the country because they primarily connect people to *other* destinations. Chicago’s O&D traffic is above 60% — among the 5 highest in the country. Atlanta and Dallas are typically...
Atlanta and Dallas are not “competing in the same tier” as Chicago when it comes to business influence. Chicago’s GDP is roughly 50% larger than Atlanta’s. (Dallas is a bit closer, but still a wide gap.).
And Atlanta and Dallas are the busiest airports in the country because they primarily connect people to *other* destinations. Chicago’s O&D traffic is above 60% — among the 5 highest in the country. Atlanta and Dallas are typically in the low 40s percentage-wise — meaning upwards of 60% of people don’t begin or end their travels in those cities.
Very true....all DL flights are to or from ATL.....the same is with AS now....all through SEA (and SAN too now).
ORD is a connecting hub for sure.....but less so than ATL or DFW....
Parker did one thing right, fire Kirby. While not an Isom fan, they are starting to dig out of the financial mess that he was left to deal with and improving passenger experience. I live in an AA hub city and fromerly live in a NWA/DL Hub, and hoestly my AA experiences have been good to great and no complaints (especially during Covid when I'd have to fly to visit my elderly and dying parents...
Parker did one thing right, fire Kirby. While not an Isom fan, they are starting to dig out of the financial mess that he was left to deal with and improving passenger experience. I live in an AA hub city and fromerly live in a NWA/DL Hub, and hoestly my AA experiences have been good to great and no complaints (especially during Covid when I'd have to fly to visit my elderly and dying parents every few weeks. . .THANK YOU to the amazin AA crews!). Kirby will have UA in bankrupcy in 5 years given the redicoulious expansion internationally (not enough passengers for 6 of those 10 new routes to make money) and his foulish airplane orders (since both AA and DL have priority over UA at both Boeing and Airbus for slots and pricing). ORD will be lucky to have AA when UA retrenches in 5 years and faster if they buy B6.
Is UA better sure, but they couldn't have gotten worse and those changes were set into motion under previous management, not with higher labor cost and fuel, Kriby kissing trumps @%% won't help him much longer and the bankers will start calling for their money soon.
"Kirby will have UA in bankruptcy in 5 years given the ridiculous expansion internationally"
How exactly do 6 unprofitable routes drive United to bankruptcy?
I don't doubt some of United's international routes lose money - however, the airline overall is still quite profitable, especially compared to American. They have been doing creative international route expansion for multiple years now - and continue to be profitable so what exactly is suddenly different that will drive...
"Kirby will have UA in bankruptcy in 5 years given the ridiculous expansion internationally"
How exactly do 6 unprofitable routes drive United to bankruptcy?
I don't doubt some of United's international routes lose money - however, the airline overall is still quite profitable, especially compared to American. They have been doing creative international route expansion for multiple years now - and continue to be profitable so what exactly is suddenly different that will drive this sharp drop off in performance?
Also, United very easily could have stayed bad or gotten worse - none of their current trajectory and investment in passenger experience was guaranteed. On the other hand, AA could be a much better airline than it currently is - and if Isom had done some of these things earlier they could be well into a transformation. Instead, they're looking
Now, I don't personally like Kirby, but you can't act like the airline United is today was guaranteed and is completely detached from his stewardship.
This guy should stop smelling his own farts. AA is not going to abandon ORD. It's Chicago, not Kansas City or St Louis.
Or, on the United/ex-Continental side, Cleveland.
If American or United want to compete with global carriers, they can start with appearance standards for in-flight crew and training them to provide basic service, starting with getting eye level with their seated customer when taking orders.
ORD construction works to UA's advantage. Concourse D with 19 new gates and customs (CBP) opening in 2028 will make UA connections, especially int’l ones far easier. Then, when Concourse E with 14 new gates opens in 2030, UA customers won’t even need to bother with the E or F Concourses which will then be demolished. Then, there are the new incoming aircraft and continued upgauging by UA.
UA: 1,132 aircraft, (240 WB), Orders: 175...
ORD construction works to UA's advantage. Concourse D with 19 new gates and customs (CBP) opening in 2028 will make UA connections, especially int’l ones far easier. Then, when Concourse E with 14 new gates opens in 2030, UA customers won’t even need to bother with the E or F Concourses which will then be demolished. Then, there are the new incoming aircraft and continued upgauging by UA.
UA: 1,132 aircraft, (240 WB), Orders: 175 WB/421 NB (15.0 average fleet age)
AA: 1,030 aircraft, (137 WB), Orders: 19 WB/267 NB (14.7 average fleet age)
DL: 987 aircraft, (180 WB), Orders: 84 WB/248 NB (15.0 average fleet age)
From 2026 through April 2028, United will take delivery of approximately 260 new aircraft, including 47 787s, while retiring more than 100 older, less-efficient aircraft. It is also adding 22 gates at IAH and 14 at IAD in 2026, while rapidly upgrading connectivity, with approximately 1,000 aircraft expected to have Starlink by year-end 2026 and the entire wide body fleet connected before next summer. United Next should also be complete by the end of next year.
As for the debt, UA’s orders during Covid were on such favorable terms, approximately 65% discounts from list prices (normally 40%-60% for majors), that amazingly, they are accretive. UA execs are forecasting double digit margins in 2027 even with all the aircraft deliveries.
The proof is in the pudding when you look at the last ten years’ growth, deliveries and debt retirement. UA & DL’s net debt are both around 2.0.
Fleet size 2016/2026:
UA: 737/1,132 +385/54%
AA: 930/1,030 +100/11%
DL: 832/1,004 +172/21%
CBP won't open until Global Terminal opens in 2033. They'll get the benefit of gate usage in the battle for annual lease gate allocation math, but it doesn't solve international problems until 2033, when both AA and UA get the benefit of the CBP in Terminal 2.
It looks like you’re probably right. Concourse D will be able to handle int’l passengers, but they’ll clear customs in T2 under the current plan.
Kirby drinking his own cool aid again
Kirby has gotten to the point where he has no credibility with these ridiculous statements. United is a piece of trash airline. Would never willing set foot on one of their trash heap planes.
Kirby is just trolling. He knows American fills all of Terminal 3 and runs those flights full or nearly full.
Ironically they don't - United uses some T3 gates on a seasonal basis. I literally landed on United from LAX the other day and came into a T3 gate.
Now, I never realized this and this was my first time in this scenario but American is not all of T3 and it's kind of wild that United is all of T1, plus most of T2 now and is spilling into T3.
But I also...
Ironically they don't - United uses some T3 gates on a seasonal basis. I literally landed on United from LAX the other day and came into a T3 gate.
Now, I never realized this and this was my first time in this scenario but American is not all of T3 and it's kind of wild that United is all of T1, plus most of T2 now and is spilling into T3.
But I also agree he is just trolling. I find the behavior obnoxious but, whatever, I don't work at United so I don't really care.
American has enough of a presence to stay there and I think if they improve their product over the next 5 years, they can still maintain a loyal base in the region. I actually think the ORD renovation will benefit both United but also American in the long-run in terms of providing a more seamless international connecting experience that makes folks consider domestic (AA / UA) to international carrier (OW / *A) connections that they may avoid today because of the T3/T1 to T5 connecting situation.
If i was an investor in UA i would be worried with the CEO's statements. He wants mergers with competitors or wants them out of his hubs. Makes me wonder is there is some financial tsunami about to strike UA earnings results. Is it the high oil prices or the high price of acquiring those brand new jets. Or is it just a simple case of AA living rent free in the CEO's head.
So, according to Mr. Kirby, consumers benefit... when there's *less* competition? (This freakin' guy...) When an airline drives its competitor out of a hub, fares go up. Period. Not 'more choice' or whatever lies they try to spin. (Fares, generally, have gone up since Spirit has been gone, too.)
It is interesting to look at the recent 2027 route announcements and see how both carriers are investing in their more profitable northeastern hubs (EWR and PHL) which of course also have shorter distances to Europe, and neither of them is doing much at all with Chicago
Chicago is just in an awkward point.
Too much backtracking for the East Coast populations for Europe. Too far from the West Coast to be the ideal connecting hub to Europe. Does ok for Asia, but can't beat the West Coast hubs for that either.
O&D is getting watered down with how their metro population is stagnating.
"...their metro population is stagnating."
Chicago's population has actually seen net growth for the past three years (sclerotic as it may be), and this can also be seen in the increase in costs for housing (while a ~1.5% increase YOY in some areas doesn't spell economic buoyancy, it does show demand is beginning to bounce back, however slowly.
But 100% agree that it's too far from the east and west coasts, thus making some...
"...their metro population is stagnating."
Chicago's population has actually seen net growth for the past three years (sclerotic as it may be), and this can also be seen in the increase in costs for housing (while a ~1.5% increase YOY in some areas doesn't spell economic buoyancy, it does show demand is beginning to bounce back, however slowly.
But 100% agree that it's too far from the east and west coasts, thus making some of the connecting flight options less than desirable - and that's difficult for me to say, as a huge Chicago booster (born in the city and raised in the 'burbs). But your point is one I hadn't thought of - great food for thought, thank you for that.
Born and raised in the (north) 'burbs as well and live in the West Coast. Personally, I've had no problems with using Chicago as a connecting point to many European cities over the past 2 decades since I moved out west. In fact, prior to the current Gulf conflict, I've flown West Coast-Chicago-DOH-reverse a number of times as well.
I agree with East Coast-ORD-Europe -that's not a favorable backtrack.
Regardless, Chicago is a...
Born and raised in the (north) 'burbs as well and live in the West Coast. Personally, I've had no problems with using Chicago as a connecting point to many European cities over the past 2 decades since I moved out west. In fact, prior to the current Gulf conflict, I've flown West Coast-Chicago-DOH-reverse a number of times as well.
I agree with East Coast-ORD-Europe -that's not a favorable backtrack.
Regardless, Chicago is a world-class city/destination. Hate the cold and Crook County property taxes though..LOL!
Interesting points here. Some of Chicago's strength comes from the fact that it's the king of Midwest connections, not huge swathes of America, but nevertheless people still getting out. Places like Colorado Springs, much of the Plains, etc, all sees ORD as a dominating feeder market for connectivity.
agreed on awkward positioning but for me i actually prefer Chicago for TATL flights over NYC/BOS/etc since I can usually get an extra hour of sleep (assuming same award price)
I have to position anyway so I frequently start with Chicago
Kirby addressed this in his talk, saying that it was due to the FAA flight restrictions that are in place through the next year because of the construction and ATC issues and that they plan to grow the network again once this is lifted.
It’s crazy that the FAA basically forced ~200 daily flights to be cut from the 2027 schedule and O’Hare is *still* the busiest airport in the world by aircraft movement.
United is much better than it was 5 years ago but Kirby is a bit annoying with his grudge against American.
This is the same kind of drivel and arrogance that you see at Delta these days.
Scott Kirby has done some good with his leadership, but pride cometh before the fall as they say. If he keeps going down this path with spouting nonsense, United just becomes another Delta.
DL reliability and in flight product is worse then AA, UA and AS these days.....i really think its an attitude that customers still want to believe.....
Kirby has no idea what he's talking about most of the time and should almost never be taken seriously. He's on the top list of inflated egos.