This week’s episode of The Air Show podcast came out early this week. Why, you ask? My partners-in-crime Jon Ostrower and Brian Sumers went allllll the way out to Dubai for the IATA annual general meeting. And of course, they lined up some interviews while they were there, none bigger than United CEO Scott Kirby.
In case it’s not clear from what you’ve heard in our first dozen episodes, we are not taking this podcast lightly. We secured a room, and brought in a local producer from Dubai to make sure the sound was good. Ostrower even put a tie on. I think I still own one or two of those somewhere…
The interview happened Monday in Dubai, and by Monday night here in California our producer Sara Fay was able to get it live. What’s the hurry? Scott, as you may know, is a great interview who doesn’t hesitate to say what’s on his mind.
In this interview, he railed against the ultra low cost carriers and their survival chances. Scott also had plenty to convey about aircraft and engine manufacturers. He also said he’s buying American. Ok, that last part isn’t true at all, but you could imagine him saying it, right?
By now, you undoubtedly subscribe to The Air Show, so you can listen every week. If somehow you don’t, there are links below. If you’d like to get in touch with us, well, come on down to theairshowpodcast.com.
A big thank you to Scott for making the time for the interview this week and to this episode’s sponsor, Anuvu.
20 comments on “The Air Show Podcast Interviews United CEO Scott Kirby”
Great episode. Shame that you weren’t there to ask some questions about distribution.
I haven’t listened yet but based on Jon and Brian’s body language depicted in the photo, it seems like it’s gonna be a doozy!
That’s all jet lag on my part
This was a great interview and actually made me excited about my upcoming United flight (my first in almost a decade since I gave up on them back when they were assaulting passengers and leading the race to the bottom on Basic Economy).
American has been so awful lately though (punishing customers for… being customers?) that they’ve driven me back to reconsidering United – this interview gave me more confidence in moving that direction.
I thought the interview was good too. However, SK is known to be a bit of a S#$T talker. He (United) has much to gain by discussing AA’s plights and the ULCC’s ultimate demise.
10 to 12 destinations in Europe and North Africa not served by any US carrier on the A321XLR?
This has very quickly overtaken the On-Air podcast by Dan and Alex as my new favourite aviation related podcast.
I guess to conversation didn’t mention Mr Kirby, after having too many drinks on a USAirways flight, being cut off when he asked for more and was refused. He hit the flight attendant that cut him off…. probably didn’t come up in that interview….
I don’t know much about Scott Kirby (and rarely fly United), but this was a great interview that well worth listening to. It sounds like Mr. Kirby is saying the “right” things, at least.
I agree with A220, this podcast is very good. I’m not really a podcast person (Cranky’s several podcasts are the only ones I listen to), but I’m starting to get excited when I see a new episode of this podcast released.
Finally, I’m glad that the team is spending the money (and I assume it isn’t cheap) to get this podcast professionally produced. Recent podcasts especially have clear audio & great sound quality (as good as any other profesionally produced audio segment, such as NPR), and the production quality not only makes the podcast easier to listen to but also adds some extra credibility.
Great interview. I don’t agree with Scott Kirby saying the ULCCs are doomed. I think they’ve made serious missteps, but there is a place for them and I believe they will improve their operations. I am more concerned with Spirit’s future than Frontier’s, given their debt obligations and cash burn. I have actually never flown Frontier, because the way they charged for carry on bags was confusing and infuriating. I think they are going to capture far more business with the bundled model. Being able to see Frontier’s bundled price for the same flight on the same day as a United flight and knowing ill spend $100-200 less than United with a carry on…. I’ll take Frontier. Sorry but a smile and a wet wipe isn’t going to make up the difference… With that said, I find Scott Kirby to be wildly unlikeable and this interview (although very well done) made me like him even less. So maybe I am just biased against United at this point for that reason.
I feel like you in a way backed up his point about ULCCs. You said you wouldn’t fly Frontier in the past because their baggage policy was confusing and maddening, but now that they are changing their business model to be more aligned with legacy carriers, you will fly them. It took them abandoning some of the vague ancillary fees and spelling out what you get for you to consider them. Frontier also seems to be making an effort to improve customer service, an area they have been awful with in the past. That was also a point Kirby made about why the model doesn’t work. You were honest that you can’t stand Kirby. I think it severely colored your perception of the conversation.
Also, just assuming Frontier will fix their operations when that’s been an issue as long as they have been a ULCC seems generous. For me, I’ll believe it when I see it.
Valid points, for sure. Especially with the ULCC operational reliability. I think my issue is that Scott points to the business model of Frontier and Spirit as if they’re certain to fail. Meanwhile Ryanair has done very well with the ULCC model. Of course their market is very different. But in my mind, the major differences (between Ryanair and US ULCCs) from the consumer standpoint are operational reliability and transparent pricing. I feel Frontier made a major step in the right direction by addressing the latter. Obviously the reliability is a far more difficult problem to solve, but the move to out and back would hopefully improve that over time.
Scott Kirby’s certainty of UA’s current position remaining and his belief that the ULCCs are doomed and that neither of that will change seems woefully arrogant in light of the fact that legacy carriers financially underperformed low cost or ultra low cost carriers for many years since the domestic industry was deregulated in 1978. UAL still holds the record for the longest and most costly airline bankruptcy so it is certainly plausible that ULCCs could take advantage of the same provisions as they revamp their business models just as all 3 of the global carriers did. There is no certainty that the factors that are driving strong demand for international travel will remain as they exist now.
The sudden cry for a 3rd airframe manufacturer seems rather self-serving now that Boeing’s delays for both the MAX and 787 will push United NEXT back by years if it can even happen to the degree UA once planned given the fleet replacement needs that UA will have with the industry’s oldest fleet. WN has seen how costly it is to keep older aircraft in service while waiting for new aircraft.
Given that the MAX 7 and 10 weren’t certified at the time UA added even more orders and the 787 has faced delays and production problems for most of its life, obtaining hundreds of 787s this decade seems like more than a stretch goal even while reduced growth across the industry is not likely to be corrected for most of the decade.
It was interesting to hear him say that he has learned from his mistakes and from Delta.
I will go out on a limb and guess that other airline execs also faithfully read their competitors’ earnings and investor call transcripts.
A call for a third aircraft manufacturer might be self-serving, but it’s true. Boeing should have come up with a clean sheet replacement of the 737 instead of the 737-MAX. I have believed that from the moment when they announced that awful creation. There isn’t too much pressure to create anything new these days since both Airbus and Boeing are really busy producing their airplanes that they sell today.
I think there is a market for a 757/767 replacement that neither Boeing nor Airbus is producing right now. Unfortunately, there is no manufacturer that is able to do that outside of Boeing and Airbus.
It is fashionable to say that Boeing made a mistake by trying to further modify the 737 to create the MAX but the reality is that Boeing failed at the execution of the MAX just as it did with the 787. The MAX 8 and 9 are flying so there are solutions that made the old airframe be competitive with the A320 family.
Boeing is right that there were not sufficient technical advances in narrowbody airframes to justify an all-new design at the time that the MAX was designed and that is still true today and will be probably for another decade. Engine makers are struggling because engines are running hotter and harder in order to squeeze out everything that current materials can deliver.
It is absolutely true that competition is good for consumers and that is true w/ having more airframe and engine manufacturers for airlines. The irony of a cry for a third airframer is that UA was one of the last US Airbus operators to choose the A321 and has been pushing its A350 order even further down the road.
And Kirby’s comments at the beginning of the interview make his motives clear – he wants UA to have all of the aircraft UA wants with none going to UA’s competitors. There are and always will be many more airlines than aircraft and engine makers and none of those manufacturers are going to put too many of their eggs in any one airline’s basket or exclude customers.
The same competition among airframe and engine suppliers that is good for airlines is why the US needs a healthy low cost and ultra low cost airline sector. As noted, some LCCs and ULCCs in the US have done poorly because they offer an inferior product in terms of reliability and onboard services. But Ryanair is one of the most on-time European airlines while their onboard service isn’t much different from the legacy carriers; on LH Group airlines, all you get in intra-Europe economy is a bottle of water.
Every US airline has had periods of poor reliability and some have fixed it; there is no reason to think that LCCs can’t fix their reliability and improve their product. One need only look at on-time performance over the past couple weeks including today in NYC to see that B6 is FINALLY fixing its reliability problems. Their on-time is far better today than other airlines even though the NE has had brutal ATC delays.
The bottom line is that UA won’t grow as aggressively as it thought it would because supplier constraints affect everyone while other carriers will improve their product and add capacity where UA can make money.
From a pax-ex experience the only plane that the big US airlines fly that is worse that the 737 is the CRJ. The A320 is a much better plane to fly that the 737. If they can stretch the A220, that would be better too. The 737 is an outdated design and was not originally designed to fly the long routes that it does today. The 737 has needed a replacement for a long time.
It’s the one plane I do everything possible to avoid.
There is no doubt that the A320 family benefits from a larger fuselage and its newer design made it more capable to expand it than the B737 family. But Boeing has managed to come up w/ solutions to push the 737’s capabilities so there are solutions. Boeing just screwed up rolling out those enhancements – but they did the same thing w/ the much more modern 787. Airbus was built around the concept of major components being built all over Europe and assembled in one location, something Boeing stumbled badly in doing.
And the point is still that calls for a 3rd OEM ring hollow given that UA was last to order the A320NEO family and keeps pushing its A350 order forward.
Wanting a 3rd manufacturer just to bail out Boeing’s inability to deliver the planes it committed to build for Boeing won’t yield fruit because Boeing will fix its problems and no manufacturer is going to invest in new production capacity or products just to bail out Boeing customers.
Long-term, there might be room for a 3rd manufacturer and I am certain that Jon Ostrower will follow everything Embraer and Mitsubishi and others do that might push Airbus and Boeing to develop a new generation narrowbody but that new airplane will likely be the most expensive aircraft ever developed so no one is going to rush anything.
and Airbus just released its May deliveries and they are weak. By some sources, they have 17 A350s sitting outside their factories waiting for engines along w/ A320NEO and A220 delays so the chances are high that there is not much ability to expand aircraft capacity by anyone right now.
Airlines should make it a priority to use tight capacity to make money and fix what doesn’t work – such as for the US ULCCs.
The tone here about a call for another OEM being ‘self serving’ is weird. Of course it’s self serving! That’s literally his job!
I’ve never heard Scott Kirby before, but I’m impressed by how blunt his answers are. He also doesn’t seem to lack for confidence either.
I think he’s right about the ULCCs being in trouble. If something goes wrong, it’s much easier to be re-accommodated on one of the legacy network carriers via a different hub or having your ticket endorsed to fly another airline than it is to wait for the ULCC to have space for you to fly again. Plus, it’s difficult to keep your costs super low when your labor force matures.
I find it interesting that Southwest wasn’t mentioned at all.
Scott Kirby: I think we need more competition in the aerospace business
Also Scott Kirby: If there’s 2 airlines I think it’s good for customers