Scott Kirby
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Cheeky Pint · The airline CEO putting Starlink on every plane
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Why Do Low-cost Airlines Keep Failing?
Scott Kirby says low-cost airlines in the United States keep failing because they left the cheap airports that made the model work and then could not charge enough to cover their costs. New York airports now cost $52 per passenger. Spirit's average fare, before it liquidated, was $58. Paying $52 of a $58 fare, before fuel, airplanes, employees, or maintenance, does not work. He says big-airport costs are up something like 70% since before COVID, and that priced low-cost carriers out.
United did not set those airport fees. It added a basic economy fare and larger airplanes so it could match a low fare most of the time. A passenger may make the mistake of flying Spirit once, and will not do i
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Why Is Air Traffic Control the Bottleneck for Airlines?
Scott Kirby says air traffic control, not airport capacity, is what limits the airline. He puts air traffic control at 90% of the problem. Modernizing it can be done. The block is paying for a project that takes five to ten years with a budget that lasts one year.
A shutdown often means the money arrives two months into the fiscal year. The agency then spends about three months ramping up, about four months working, and the last three months shutting the project down, because the authorization does not run past twelve months. Kirby calls that cycle absurd.
The airlines would pay for the work if they were allowed to. He thinks a private effort could finish the job in two to three years. Pri
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Why Did United Buy Planes During COVID?
Scott Kirby says United bought planes during COVID because the experts were wrong and every other long-haul airline was shrinking. Those experts said travel demand would stay down by 50% forever. Kirby thought the drop would be deep and long, and that demand would come back. Every other global long-haul airline permanently retired part of its widebody fleet. United placed what he calls the biggest aircraft order in history.
The order was 200 widebodies, then several hundred narrowbodies. Those airplanes list for about $400 million, and United gets a big discount off that list price. Kirby told the board that, with everyone else shrinking, United did not have to be right. It only had to be n
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Why Do Credit Card Miles Look Like Pure Airline Profit?
Scott Kirby says credit card miles look like pure airline profit because people see only the revenue. People say almost all of the net profit is coming from credit cards. The perception is big because the revenue is visible, and all United discloses is the revenue. Credit cards going away is not nearly as big a tail risk as people think.
United carries over 50,000 people a day. 50,000 people today fly free on United Airlines by using their credit card miles, and 50,000 people a day are flying for free. Nobody counts the cost of carrying 50,000 people. An accurate contribution calculation has to include the cost.
The Twitter meme that airlines are a credit card business with airplanes attac
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Why Should an Airline Cancel Routes That Lose Money?
Scott Kirby says an airline should cancel any route that loses money, including a route people defend as strategic. The route network is the foundation. If that is broken, the rest of the operation cannot save the airline. When someone calls the losses strategic flying, that word is the whole answer. There is no need to learn the hub or the route.
New chief executives call him for advice, and he does not think anyone is taking it yet. He tells them to start with the route network, because a broken network sinks everything else. A look through the route P&L shows a bunch of negative flying. Ask about the losses and the reply is that the flying is strategic. The excuses sound convincing, and
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Why Does United Limit Where It Flies?
Scott Kirby keeps United Airlines disciplined by limiting where it flies. United only flies to its hubs. The foundation of the product is the route network: fly routes that make money, and fly places that make money. United does not fly point to point in the domestic market.
Employees ask all the time to add new routes and point-to-point routes. He hears it in LA and when he is in San Francisco. Point-to-point routes will not work for United. United is an airline that flies to its hubs. Flying to the hubs is the strength, and a whole bunch of reasons make the hub setup work. United is not going to try to fly point-to-point routes.
In the airline business, if you are not first you are last.
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Why Won't Boeing and Airbus Build New Planes?
Scott Kirby says Boeing and Airbus will not replace the 757 because the two manufacturers hold a global duopoly and have quietly agreed, though not in any official deal, that neither company will invest in new airframes. He has been begging both of them for 20-something years, and they still will not build it.
The 737 comparison in that exchange is the picture of the stall. It first flew in 1967 at Mach 0.78, and the 737 MAX still flies at about Mach 0.78. The latest version burns 50% less fuel and is 30 to 40 times safer. Fuel burn and safety moved. Speed did not. Kirby calls the missing new airframe maddening. Investors do not want either manufacturer to spend on a new airplane, so both k
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Why Does Wall Street Hate United Aircraft Bets?
Scott Kirby says Wall Street almost always hates the big things United does, and aircraft investment is one of them. Investors do not say to skip technology, but they want a lower cost per available seat mile. Airport fees are going up and union contracts are what they are, so the only way to cut the budget is to stop investing for the future. United invests for the future anyway, and in the long run it works out.
Other airline bosses complain that Wall Street is short term. Yes, it is, so stop complaining. Invest for the long term and do the right thing. Make the big bet. If it works, shareholders will like it. If it does not work, the boss deserves to get fired and ought to be comfortable
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Why Does United Say Fast Wi-Fi Beats Free Wi-Fi?
Scott Kirby says fast internet is the real value of Starlink on United Airlines, and free is not the value proposition. United was going to make Starlink free anyway. Customers will try United for Starlink and stay because the other technology is better, then switch their loyalty and get the United credit card.
He has flown all three big competitors that already give internet away free on the legacy systems, each two or three times in the last year. The service is terrible. There is not enough bandwidth to make a free connection usable. It is physics. He was sad when they started making it free, because it makes the experience worse and leaves it unusable for almost everyone. There is only
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When Will United Show Weather Delay Odds?
Scott Kirby wants United to show a weather-impact percentage on the passenger screen by Christmas, in time for the weather trouble that comes with Christmas travel.
Normally, when a weather delay is coming, every airline, including United, sends a text that there may be weather in Denver tomorrow. The passenger already knows December in Denver means weather, has nothing useful to do with the warning, and mostly gets a shot of anxiety before the trip. United has already started adding other flights to the message: stand by for one flight, or take an open seat on another. On the screen, the flight to Denver will show an estimated 41% chance of weather impact, the earlier flight 12%, and the l
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Why Does United Own Its Reservation System?
Scott Kirby says United owns its reservation system because the airline locked into a legacy mainframe it already owned, and the later owners did not want to keep supporting it. United is the only airline in the world that owns its own reservation system. Everyone else outsources reservations to Sabre and Apollo.
United has more of its technology in-house, Kirby thinks, than any airline in the world. Copa Airlines in Panama uses the same reservation system because Copa is a partner, so only two airlines in the world run it. EDS owned the system and then someone else took it. They did not want to keep supporting it, so United had to support the mainframe on its own. United lucked into the sy