The Air Show is a relatively new podcast hosted by three industry titans — Jon Ostrower (The Air Current), Brian Sumers (The Airline Observer), and Brett Snyder (Cranky Flier) — and is absolutely worth listening to.
This week, they had their first episode with a guest, and they started off with a bang, as United Airlines CEO Scott Kirby joined them. They had a 45-minute interview with Kirby, and it was absolutely fascinating. While I highly recommend listening to the podcast, I wanted to share some of the things that I took away from this. Some are random observations, while others are more important points.
Let me say upfront that I want to be as balanced as possible, and I’ll point out both some positives and negatives, as I see it. While I have a lot of respect for the direction United has taken under Kirby’s leadership, I’m not here to brown-nose airline executives…
With that out of the way, below are some of the points I found most interesting, in the order in which they appeared in the podcast. Jon and Brian did a great job with the questions they asked, as so many different topics were covered. I’ll keep my commentary on each point brief, and then feel free to chime in with your thoughts in the comments section.
In this post:
Kirby reads for three hours per day
Kirby says he has a really unusual schedule compared to most people, and that he reads for around three hours per day. It’s not entirely clear to me what that means — is he actually reading books for three hours per day, or “reading” spreadsheets and reports? Because that’s quite some time management, especially when you also have seven kids…
Kirby loves the “top two” US airline reference
This is nothing new for Kirby, but I think it’s pretty noteworthy that basically whatever topic Kirby talks about, he references the “top two” airlines in the United States, referring to Delta and United. Historically Delta has been thought of as the best US carrier (definitely in terms of profitability, but perhaps also in terms of service), and Kirby sees United as being in the same league, and no other airlines really being competition.
He talks about how the gap between the most profitable and least profitable airlines in the United States has increased considerably in recent years, and how United has “leaped to the front” and is “head and shoulders” above competitors.
Kirby thinks United has amazing service
There’s no denying that historically Delta has been known for having by far the friendliest frontline employees, who are most invested in the company’s success (probably also due to profit sharing). What’s so odd about listening to Kirby speak is that he seems to suggest that United is now in Delta’s league when it comes to service, and that just doesn’t match my experience.
United has some great employees, but the airline also has some not great employees… service is consistently inconsistent. Kirby talks about how his one job is to “create an airline that our employees are proud of,” because they’ll then take care of customers, and “the financials take care of themselves.”
He talks about how United flight attendants are the single most important part of United’s product, and how they greet passengers with smiles. The airline has even kept around sanitizing wipes upon boarding at the cost of millions of dollars per year, because it creates an interaction between passengers and flight attendants.
It’s interesting how Kirby is willing to invest billions in things like new planes and technology, yet the single most important part of United’s product is still waiting for an “investment” (a new contract).
Kirby explains why he now cares about service & product
Kirby first worked at America West, then US Airways, and then American Airlines, before becoming CEO of United Airlines. He has historically been known for being a spreadsheet guy who is all about costs, rather than a product guy. So, what has changed?
According to Kirby, the network has changed. United’s network is so big that the airline can actually compete for everyone’s business. Meanwhile when he worked for the smaller airlines, that wasn’t an option. He explains that throughout the mergers, the goal all along was to get bigger, so that you could then start competing on product and service.
He also says that when he was at American, that’s something he was working toward. Hmmm…
Kirby thinks the ultra low cost carrier business model is over
Kirby states that he thinks the ultra low cost carrier business model no longer works in the United States, and that these kinds of airlines will go out of business. In fairness, this is a narrative he has had for quite some time.
His argument is that their business model has been based around taking advantage of unhappy passengers, and the airlines have grown to the size where they’re running out of people to screw over. Now with the airlines transitioning business models to not have fees, he seems to think that’s equally silly, so I’m not sure what to make of that.
Kirby thinks United basically can’t fail
Remember when former American CEO Doug Parker said that the airline would never lose money again? Or when he said that American’s stock is so low that “it defies logic?” Or when he made a bet that American’s stock would be at $60 as of a certain date, when it ended up being at $34?
Well, I don’t want to say Kirby went quite that far, but Kirby seems to have a similarly positive outlook for United’s future. He talks about how some investors might say that United is doing well right now financially, but that it’s not sustainable. Kirby claims that changes at United and in the industry are “structural, permanent, and irreversible,” that United will “stay in the lead.”
He says that United has long had “a moat around the business,” and the two things that have changed to secure United’s long term success are no change fees and a more competitive basic economy product, to compete with ultra low cost carriers.
Of course airline CEOs are always going to express a lot of confidence, but the delusion of executives pretending that the only way is up has been debunked over and over. And while airlines are doing a much better job at monetizing products and generating revenue, their costs are also way up (particularly labor costs, and those are very hard to negotiate down).
Yes, I understand Kirby thinks there’s upside for United because business travel hasn’t fully recovered. But there’s also a ton of downside. If there’s any sort of a significant recession, United will be in a tough spot, given the carrier’s massive wide body fleet which is heavily premium focused. If you ask me, we’re basically at the best of times on that front. But I guess we’ll see…
He does eventually acknowledge that “when I say it’s irreversible, it’s irreversible unless we screw up.” Which… is quite an asterisk.
Kirby has the right idea with technology
United does an amazing job with technology, and also invests a lot more in this than other airlines. It was refreshing to hear Kirby talk about this, and share how important he thinks technology is for the customer experience.
Between United’s Connection Saver tool (which holds flights in some cases for connecting passengers), to United’s amazing delay updates, United beats American and Delta in that regard by a long shot. Kirby acknowledges that he’s amazed other airlines haven’t followed United’s lead.
Bottom line
United Airlines CEO Scott Kirby had a great interview with The Air Show, which I enjoyed listening to. Given how savvy the hosts are, the questions were excellent. I always like hearing smart, in-the-know airline executives speak, and this was no exception. All too often, airline executives are scared to do unscripted interviews, or give non-answers, but that’s not what Kirby did.
I didn’t agree with everything Kirby said, but I wasn’t expecting to. After all, CEOs of major companies trying to express overconfidence for the future is nothing new…
What do you make of Scott Kirby’s perspective on things?
Although he’s done great things. He’s completely forgotten about the PEOPLE that work so hard to keep this going. The people are truly the core and when you continually make them feel unvalued it breaks down into a toxic work environment. And you can’t have a successful business with out good people. When you show them loyalty and love they in turn will show it back.
It's a dangerous statement to say that United will not fall from the top, many great business have failed, and just because today is good doesn't mean tomorrow will be. Even Jeff bezos said early on it's not a matter of if.. it's a matter of when Amazon will be surpassed by someone else.
https://www.wsj.com/business/media/the-ads-on-your-united-airlines-in-flight-screen-are-getting-a-lot-more-specific-339147cb?
https://www.wsj.com/business/airlines/united-airlines-weighs-using-passenger-data-to-sell-targeted-ads-21ddb447?
Some more of United's push on tech
I don’t think Kirby cares about his customers because UA continues to serve terrible meal on board in all classes in order to save cost. The meal service in
Polaris is improving in recent weeks, but still far behind the old days. I don’t know how FA can be proud of their jobs without supplies of good food. Ground agents’ job was mainly there to harass passengers and could not even properly implement crowd...
I don’t think Kirby cares about his customers because UA continues to serve terrible meal on board in all classes in order to save cost. The meal service in
Polaris is improving in recent weeks, but still far behind the old days. I don’t know how FA can be proud of their jobs without supplies of good food. Ground agents’ job was mainly there to harass passengers and could not even properly implement crowd control.
The only thing UA did right was to keep its wide body fleet during pandemic when DL and AA removed a large numbers of their old fleet. The market is strong and there are not enough seats available in almost any route. Without UA’s aging 777-200er, there are 80+ of them, I think passengers will suffer even more due to higher fare. DL and AA cannot compete against UA without airplanes. These wide body also feed traffic to UA’s domestic network really well and that is another loss for DL and AA. The airfare is high in general, UA is profitable. DL may have planned their routes with better efficiency, but they do not have the market, particularly in transpacific and latin America routes. While Boeing and Airbus are constrained in production, this situation will not improve for DL and AA for quite sometime.
UA will dominate the air travel market and continues to abuse for a long time.
You can dress a pig up all you want but Kirby will always be that pig. UA had a product worth writing about but it’s now gone. Causing mass chaos when a flight is delayed or cancelled is your idea of to big to fail? UA has only proven one thing true true talent can’t be bought!
No questions on mileage plus and the rapid devaluation of awards ?
They’ve already matched Delta and perhaps eclipsed Delta on that front. (By that I mean “shareholder value” not “customer value.”)
This is an excellent synopsis of te Kirby interview! Thank you! from a 1K traveler!
United's biggest liability is its front line employee. The real test of any organization is how it handles itself when things don't go right. Unfortunately UA doesn't invest in people who are capable of solving problems or give them the authority to so. I'd contrast this with Alaska where when something goes wrong you're talking to someone who has the smarts to get it and is empowered to find a fix. For anyone who travels...
United's biggest liability is its front line employee. The real test of any organization is how it handles itself when things don't go right. Unfortunately UA doesn't invest in people who are capable of solving problems or give them the authority to so. I'd contrast this with Alaska where when something goes wrong you're talking to someone who has the smarts to get it and is empowered to find a fix. For anyone who travels frequently that's an immense source of comfort and big part of why AS customers are so loyal to the airline.
First you have to define what is "fail." Could United one day be forced back into Chapter 11. Yes. Would the US Government let United liquidate, likely never. As far as the ULCC business model I don't think it's viable long term. It's too reliant upon lower income consumers which live paycheck to paycheck. These are people that when the grocery bill goes up by an extra $50-$100 a month are hurting. Might not be...
First you have to define what is "fail." Could United one day be forced back into Chapter 11. Yes. Would the US Government let United liquidate, likely never. As far as the ULCC business model I don't think it's viable long term. It's too reliant upon lower income consumers which live paycheck to paycheck. These are people that when the grocery bill goes up by an extra $50-$100 a month are hurting. Might not be the pc thing to say, but it's the blunt truth. They are first to get hurt with inflation or falling employment. All the COVID "stymies" and rising wages are gone while living costs are rising.
Moreover, as time goes on people figure out the game. They do not get stuck with fees because it becomes common knowledge of how to avoid the fees.
All this being said I don't see United (or any other airline) making huge investments or enhancements to the coach experience. For now unless one springs for (or gets complimentary) an MCE seat not much different from Spirit other than a screen and a free soda.
In an article about Scott Kirby (or any other person) it might be good to include his/her photo...unless he is one of the four guys on the picket line. Just speaking for me and maybe some of us uninitiated readers. Thanks
How can he say he cares about service and product yet they continue to serve inedible food in Polaris? Most of the article made it seem like he was completely delusional about the reality.
Does he discuss catering? I remember some other exec did a promo blitz last year around the investment in improvements they're making into that, but the rollout has been s....l.....o.....w.....
From a passenger / business customer perspective, UA has the best network as their hubs tend to be located in large business and / or tourist centers. The tradeoff is sometimes these locations can face more fierce competition. Double edged sword.
First, the Air Show is hitting it out of the park in the content they produce. The partnership between the 3 well-respected aviation journalists is bearing great fruit.
Ben, your assessment of the interview is very balanced . Well done.
Scott Kirby has long had a need to compare himself and his organizations to others and it has only grown more intense since he was passed over for the CEO position at AA. Let's...
First, the Air Show is hitting it out of the park in the content they produce. The partnership between the 3 well-respected aviation journalists is bearing great fruit.
Ben, your assessment of the interview is very balanced . Well done.
Scott Kirby has long had a need to compare himself and his organizations to others and it has only grown more intense since he was passed over for the CEO position at AA. Let's not forget that he made many of the decisions at AA that are handicapping them and he is only to happy to note AA's struggles - some of which he has had nothing to do with - while he undoubtedly thanks his lucky stars that he had the opportunity to jump ship. Now on his fourth airline, he has learned alot and that is a good thing. He notes how much he has learned from Delta. United was mismanaged for so long that he was certain to have been able to fix many of UA's problems; looking at what DL has accomplished certainly has helped shape UA's strategies.
But let's also be clear that Kirby loves to think that he is on the right side of a dividing line in the industry, position UA higher than where it actually is, and draw the line below UA so that every one else is inferior.
In reality, UA made just 55% of the net profits that DL did in 2023. While currrent investor guidance is that gap will close some more in 2024, UA's costs are likely to go up faster than DL's precisely because of the unsettled FA contract.
Cranky does a great job of data analysis and highlighted how the 60% increase in transpacific capacity during the winter resulted in horrible loads and a TPAC loss in the 4th quarter of 2023, the most recent quarter for which the DOT has released profits by global region. Given that UA made half of the transatlantic profits that DL made in 2023 despite flying much more capacity, UA's strategy of a very large international network is not delivering the fruits that it should. and those people in social media that argue that profits don't matter might want to take that up with airline employees that get a portion of their compensation from profit sharing. I am certain that a whole lot of UA employees would be more interested in a "less sexy" network and more profits and profit sharing comparable to DL employees.
ULCCs can fix themselves just as much as UA fixed itself. Let's not forget that UA still holds the record for the longest and most costly bankruptcy restructuring among US airlines.
DL and UA are doing as well as they are in part because US airlines came out of bankruptcy so much stronger than their international competitors but other airlines including foreign competitors will add capacity in markets if UA can make money in those markets.
UA is in a great spot right now and Kirby is making many positive moves but life and the airline industry is much more of a marathon than a sprint.
If he's an exec he probably spends 3 hours a day reading emails
Imagine if he spent 3 hours eating Polaris inflight food. It's not really that difficult of a task to fix catering. Seemingly a lot of other airlines have it figured out
All you gotta do is remove one olive and boom you're good
I tend to disagree. First, there is such a thing as taste, and a menu targeted at my partner is unlikely to please me. It is extremely rare to come across a really good meal in the air, and being based in Asia, I have travelled with some great airlines.
As an amateur cook, there is also the gap between the wow factor of a pretty dish with fancy sounding name/ingredients, and what tastes...
I tend to disagree. First, there is such a thing as taste, and a menu targeted at my partner is unlikely to please me. It is extremely rare to come across a really good meal in the air, and being based in Asia, I have travelled with some great airlines.
As an amateur cook, there is also the gap between the wow factor of a pretty dish with fancy sounding name/ingredients, and what tastes best on a plane. Usually it is the messy, curry-like, dishes that are most forgiving. The Nasi Lemak served by AirAsia (sold for about $5, so I assume it costs less than half that) tastes better than any dish I had on Cathay Pacific or Qantas in the last decade.
Ben - here's a great topic for an article...
Now that the full retrofit is complete, I do see Polaris having a halo effect amongst my friends, who often book 1-3 cash Polaris tickets per year on $200k annual salaries or so (to the tune of $10-15k a year), for leisure trips. The NYC’ers are even willing to schlep to/from EWR, so there’s that as well.
I’m surprised Kirby didn’t mention the global network rather than lack of change fees or basic economy in...
Now that the full retrofit is complete, I do see Polaris having a halo effect amongst my friends, who often book 1-3 cash Polaris tickets per year on $200k annual salaries or so (to the tune of $10-15k a year), for leisure trips. The NYC’ers are even willing to schlep to/from EWR, so there’s that as well.
I’m surprised Kirby didn’t mention the global network rather than lack of change fees or basic economy in terms of being appealing. To me that will be their biggest differentiator in a global world, where United can take you basically anywhere on Earth while AA has huge holes in Africa & non-Tokyo Pacific, and Delta preferring to channel most pax thru partner hubs ICN/CDG/AMS than flying point-to-point
*A is also a bit of a bigger alliance, UA can sell tickets to basically any large city and there's a decent amount of *A traffic through.
UNITED rising
Yes the 763s aren't doing Delta any favors with the discretionary leisure crowd in NYC - they tend to pop up more often on those kinds of leisure heavy routes and even if you get a 764 they sometimes get swapped for the 763
you conveniently ignore the fact that UA's 757s have no Polaris and UA is the only US airline that flies 757s to the UK or continental Europe.
DL uses about 1/3 of its 767-300ERs on domestic flights where the competition at JFK is using narrowbodies.
DL also uses some of its 763s to Latin America on flights that aren't even 8 hours long.
The 763 is flex capacity for DL's transatlantic network...
you conveniently ignore the fact that UA's 757s have no Polaris and UA is the only US airline that flies 757s to the UK or continental Europe.
DL uses about 1/3 of its 767-300ERs on domestic flights where the competition at JFK is using narrowbodies.
DL also uses some of its 763s to Latin America on flights that aren't even 8 hours long.
The 763 is flex capacity for DL's transatlantic network just as the 757 and some of UA's 767s are.
The notion that DL is at a competitive disadvantage to UA because of the 767 is debunked by the fact that DL made twice as much money flying the Atlantic in 2023 than UA even though UA flew much more capacity.
+1. The guaranteed Polaris seat (and dedicated lounge for international flights) is a huge selling point vs D1 out of JFK, where you're very likely to end up on an embarrassingly outdated 763 after waiting to enter one of the overcrowded Skyclubs (the new dedicated lounge cannot open soon enough). Yes, United service is a little more inconsistent than Delta's (although for the most part I have found Polaris FA's to be wonderful), and Delta...
+1. The guaranteed Polaris seat (and dedicated lounge for international flights) is a huge selling point vs D1 out of JFK, where you're very likely to end up on an embarrassingly outdated 763 after waiting to enter one of the overcrowded Skyclubs (the new dedicated lounge cannot open soon enough). Yes, United service is a little more inconsistent than Delta's (although for the most part I have found Polaris FA's to be wonderful), and Delta has better food, but for those quick trans-Atlantic hops it's really not as important when you're primarily trying to have a nice dinner at the airport and get to sleep once onboard.
first, if you have been to DL's terminal at JFK there are massive signs all over the airside part of the headhouse announcing the opening of the Delta One lounge which will happen in a matter of weeks.
It is a guarantee that the opening of the D1 lounge at JFK and the subsequent D1 lounges at LAX and BOS to follow will dramatically improve Sky Club crowding.
and, if the D1 lounges...
first, if you have been to DL's terminal at JFK there are massive signs all over the airside part of the headhouse announcing the opening of the Delta One lounge which will happen in a matter of weeks.
It is a guarantee that the opening of the D1 lounge at JFK and the subsequent D1 lounges at LAX and BOS to follow will dramatically improve Sky Club crowding.
and, if the D1 lounges are like the Sky Clubs, they are likely to be better than AA or UA's premium cabin international lounges.
I get that customers don't care if an airline makes or loses money but UA destroyed the economics of the 767 by putting Polaris in it. The 767 is simply too narrow for modern business class seats and the only way UA could put Polaris on its 767s is to reduce the number of total seats which left UA's 763s the highest cost widebodies per seat among US carriers followed by the 777-200ERs.
The notion that an airline can get premium revenue w/ more premium seats is unsupported by data which shows there is an abundance of business class seats on many airlines and there is no premium because of a very low density configuration.
The sooner people come to grips that UA made significantly less on its international system including TATL than DL which flew alot less capacity, the sooner people can accept that bigger is not better - regardless if the topic is the size of a carrier's network or the size of its business class seats.
Kirby himself said in the interview that loss-making strategies are not sustainable. Problem is that UA has a number of those strategies eve though he loves to talk about the money that other airlines lose.
The readers here probably do care more about business class but the Delta 763 is actually very nice for economy pax.
@Yoloswag not just regular economy, but Premium Select 2-2-2 with direct aisle access on 2/3rds of seats are also quite nice
once you get over the fact that it's in NJ (ew!), EWR is way more convenient hub - particularly for transit accessibility - than JFK for getting into the city.
Whether I agree or disagree with Kirby's points, it's refreshing to have an airline CEO who seems comfortable talking in a mostly unscripted way. Of course this is still a produced setting — and I'm sure there's someone from United comms in the room — but it still feels casual enough.
In contrast, Isom appears uncomfortable speaking even in highly sanitized environments and Bastian seems friendly but somewhat aloof. Neither seems to have the gift...
Whether I agree or disagree with Kirby's points, it's refreshing to have an airline CEO who seems comfortable talking in a mostly unscripted way. Of course this is still a produced setting — and I'm sure there's someone from United comms in the room — but it still feels casual enough.
In contrast, Isom appears uncomfortable speaking even in highly sanitized environments and Bastian seems friendly but somewhat aloof. Neither seems to have the gift of gab like Kirby does.
I really like United's sanitizing wipes. They work great, they smell good, and the FAs always say, take as many as you want. Kirby is right that they create a positive interaction with passengers.
I always seem to have a stock of them in my bag.... I get a lot of conversation out of them... when I used them to wipe down my tray on my next American flight and other passengers ask where it came from (as do the crew... "Oh United has those? I wish we did!")
United is at its high right now but it doesn't mean it'll always be. Plenty of companies peaked and then eventually failed, recent example - Peloton, WeWork. United has a big widebody order backlog to replace its aging 772s, but that also means they have a huge expense and liability in the next decade, and the winter months will de difficult to place all those expensive new wide-bodies profitably, seeing how that turned out in...
United is at its high right now but it doesn't mean it'll always be. Plenty of companies peaked and then eventually failed, recent example - Peloton, WeWork. United has a big widebody order backlog to replace its aging 772s, but that also means they have a huge expense and liability in the next decade, and the winter months will de difficult to place all those expensive new wide-bodies profitably, seeing how that turned out in its Pacific expansion. Is it just me or Kirby just seems like an arrogant person who hold grudges and likes to throw petty shades?
I don't find that interview fascinating, because nothing he said was unexpected.
I wouldn't expect it to be. It's kind of like a friend of mine who goes crazy with "oh we have new news that isn't public!" from some memo to employees... No, any memo to the front line employees is basically a public statement. When you are an exec and have all sorts of SEC and similar concerns, you don't typically throw out something earth shattering that isn't planned.
Man who leads an eternally cyclical business thinks he’s engineered the cycles out.
That’ll age well.