There has been a shortage of good news over the last 12 months and for some, the last year has changed their circumstances and outlook forever. Against this rather bleak backdrop, it was good to hear from Scott Kirby, CEO of United Airlines, being rather bullish about the future at the recent CAPA Live virtual aviation summit.
Kirby, 49, took the opportunity to share his thoughts on several important issues, including environmental change, which Kirby says is a “personal passion” for him.
Looking beyond the current pandemic, Kirby said that United Airlines “is going to be the leading airline in global aviation”, adding that “we have really used the opportunity to reset the business and have had a huge focus on changing the customer culture.” As an example of this, Kirby cited United’s removal of change fees, which will be permanent going forward. This is something Kirby has wanted to do for “20 years” but it has revenue implications. “It’s a billion-dollar decision and I had to wait until I was CEO to take this decision, as only CEOs can take billion-dollar decisions,” he noted.
Business travel will return
Kirby continued to be positive on the future of both international and business travel. “Once borders come down, international travel is going to come back even stronger than domestic travel,” he noted.
Expanding upon this theme and looking specifically at business travel, Kirby has a “non-consensual” view, stating that business travel will return, but that “it’s not transactional, it’s about relationships and human nature.” Kirby is a firm believer that to get business won and done, companies will need to get their workforce back on the road meeting existing and potential customers. Also, to help get business travel back, Kirby explained United is looking to make the travel experience better. “We want our customers to like us,” he noted.
New London-Boston route
Internationally, Kirby believes that the European market will be one of the strongest post Covid. To back up this point, United has recently announced a new non-stop service between Boston and London Heathrow, starting this summer. This of course could be a reaction to JetBlue’s recent announcement that it will start services to London from both Boston and New York. When asked about JetBlue’s European ambitions, Kirby was quite dismissive. “Flying once a day on a narrow body into Gatwick doesn’t compare to our frequencies into Heathrow.”
Most commentators have expressed the view that when traffic comes back, it will be led by domestic services, predominantly carrying leisure and VFR traffic. Currently within the US, this is the case with airlines, including United focusing on sun and domestic destinations. However, Kirby believes that the growth in US domestic leisure traffic is a “short-term phenomenon”, saying that come 2023, international traffic will have grown again and will be bigger than the domestic market.
Kirby was also asked on his view about possible consolidation in the airline market. This is something he had expected to be an outcome due to the pandemic. However, he pointed out that because US airlines have raised so much cash, they don’t face liquidity issues.
Moving onto environmental issues sees the passion rising within Kirby. “United is focused on really making a difference to reducing their carbon impact. Climate change is a personal passion for me,” he noted. Kirby sees climate change as a “real opportunity for us to lead.” United has set a 2050 target to reduce its current greenhouse emissions by 100%. In the short to medium term, sustainable aviation fuels have a big role to play on this, but United has also been investing in a process that strips CO2 from the air and deposits it underground.
Scott Kirby remains confident that United will be a stronger airline going forward and will become the leading airline in world aviation. To some degree, this assertion was backed up when United advised that they expect core cash flow for March 2021 to be positive if future bookings continue at the current level.
Perhaps United, with Scott Kirby at the helm, is starting to turn the corner and this must be good news for the industry if United can be seen as a bellwether for the industry as a whole.
CAPA’s next live event takes place on 14 April. Click here for more details and for free access to the event.