Earlier today I wrote about United’s aggressive steps to combat an unprecedented drop in demand and revenue. But what might some of these measures mean for customers?
Are Kirby Kutbacks Coming?
Incoming United CEO Scott Kirby has been a shrewd operator throughout his career at America West, US Airways, American Airlines, and now United. He’s known as a bean counter and may be tone deaf when it comes to customer service, but he’s very good at weathering storms…his tenure suggests he is the right man at the right time for United, in terms of ensuring survival.
But there’s a huge gulf between survival and the sort of product and service that will make United a world-class airline.
As Kirby promises a drawdown in investments and looks for ways to preserve revenue, might we soon see a further degradation of the onboard product?
I cannot take credit for the term “Kirby Kutbacks”, which I just love. That comes from Flyertalk, where a thread has already formed speculating about what cutbacks we may seen in the weeks ahead. I won’t broadcast or even add to the list…it’s never good to give United ideas.
But the discussion resonates because we have seen Kirby cut back benefits during the good times. A flight attendant position was eliminated on many wide body jets. Meals became pre-plated on casserole dishes. Bonuses were cut for employees and compensation was reduced for flight delays and other travel mishaps.
It thus seems intuitive that Kirby will be willing to cut back during times like this. Perhaps there is some logic to it: those who will continue to travel are likely to be those who will travel anyway, not discretionary travels. If they will travel anyway, they will be willing to accept a lower standard of service enroute from A to B.
I don’t buy that logic; I reject the notion that United should slide by being “just good enough” and not aim for the sort of premium product Delta is now known for. It would be tragic if United did not complete its Washington Dulles Polaris lounge, which is nearing completion. It would be pathetic if United cut amenity kits, pajamas, and further degraded meal quality onboard. That would serve to alienate, ultimately serving as a penny wise, pound foolish move.
Any further devaluation in MileagePlus will backfire. If United thinks it boost revenue by raising prices or fees, it should think again. If anything, United should loosen elite qualifying requirements and roll back the onerous new close-in processing fee for awards (in the form of miles). Those sorts of moves will win back customers, especially discretionary customers, and set United on the road to recovery once the health scare vanishes.
That said, I suspect we will see more cuts in the near future beyond the schedule and to the product.
CONCLUSION
United, understandably, is in crisis mode. But its response to this crisis cannot be cut, cut, cut the onboard product. We’d be foolish to doubt that everything is on the table. Let’s hope that wiser heads prevail and this health crisis will not be used as a cover to enact a new round of Kirby Kutbacks that will leave United comparatively less competitive in a space that remains highly-competitive, even with depressed demand.
Kirby yesterday said they’re cutting capital investment 50% for the rest of the year.
And capital expenses “won’t come back for 2-4 years.” They won’t “restart deferred capex until they’ve [strengthened the balance sheet].”
Expect that to include lounges.
https://viewfromthewing.com/holy-smokes-united-planning-for-revenue-down-70-domestic-net-bookings-already-down-70/
I wrote about that too. I was just hoping that the remaining $2.5BN in capital expenses on projects already underway will include the Polaris Lounge in IAD.
Product over profit. If he decides to cut, I will personally fly to chicago and square up in a fighting match with him.
I haven’t been on a United plane in the last 15 years and don’t plan to be in one anytime soon.
thanks for posting the most irrelevant comment of the day.
Well, at the rate things are going – very fast – millionaire Monsieur Kirby might not have an airline to cut back. Please read what Southwest’s CEO said in the past 24 hours about the collapse in bookings at his carrier. He used the word ‘breathing’ and said the industry is in a financial crisis. His words, not mine. Be prepared. This is a whole different animal – no pun intended, Frontier. Think the word ‘liquidity’ as we move forward. Today Boeing took all the loans, 13 billion dollars, it got from 10 or so banks. Why? Because the very real risk of banks halting loans, credit. Other companies are panicking and doing the same. So from a disease crisis we enter a financial crisis. Stay tuned.
“… those who will continue to travel are likely to be those who will travel anyway …”
We’ll travel, alright. Whether it is with United, however, is another story.
They are not “Kutbacks”, Kirby calls them “service enhancements”.
Maybe they will Kut Kirby or his pay???
If you read UALs 8k you will see that both Oscar and Kirby have forgone their salaries during the crisis.
“Kirby Kutbacks” – love it.
Hi Gary:
(I intend to repeat this post on other aviation sites).
I am a little tired of the general bashing of the airline industry, and of United Airlines in particular.
Here is a summary of what happened last Friday February 28:
1. Friday afternoon my wife and I flew to EWR from PIT.
2. Because we had been upgraded, we spent the layover in the new Polaris lounge. Amazing. Fantastic product.
3. Boarded the flight to Rome, UA40
4. Technical delay announced. Possible problem with a fuel pump….. The captain spends some of the time chatting with Polaris passengers.
5. We are asked to deplane 30 minutes later. I look at my wife and say “they are giving us a new plane. This will delay us a couple of hours”.
6. As we are walking off the plane I overhear a flight attendant say that the threat level has been raised to 3. She shows me her screen
7. Back in the boarding area I confirm the news. We decide to abort the trip concerned about possible quarantines on the way back. (Indeed, Sunday evening my employer mandated self quarantine, beating the government agencies).
8. “No problem sir, we call this a carry over, carry back”, says the fantastic gate agent at C90, and we are booked on the 7:40 back to Pittsburgh
9. During this very short time, the plane is re-boarded. We hear that about 4 other passengers elected to also stay back
10. We go back to the Polaris lounge where my wife has a light dinner.
11. Landed at PIT at 9:50pm
12. So…. We had a nice Friday evening date at the EWR Polaris lounge
13. Now, my eldest son is certain the technical delay was not real, and thinks that United was being warned of the upcoming news by the CDC. Even if that was not the case, why did they not make a public announcement on board, or in the gate area?
Guess what Gary and friends: United did not give us a credit. United refunded all expenses! There is a reason they are the best airline in the galaxy, and you “experts” only perpetuate the ignorance of the infrequent flyer, a being I define “the tourist”
Loosen elite requirements? Everyone and their mom is already premier. The upgrade lists are getting ridiculously long, especially on hub-to-hub flights with upgrade lists reaching triple digits sometimes.
So glad to see this happening to the airlines. They deserve all of the pain they receive. After years of taking advantage of customers, they deserve everything they have coming. Would be great to see one or more airline fail (but that will never happen).
Why would you ever wish that. That’s so many people loosing third livelyhood just because you have to pay for a check bag.