United Airlines CEO Scott Kirby does not think there is room in the USA for a third “premium” airline, dismissing the aspirations of American Airlines to join Delta Air Lines and United Airlines in putting more emphasis on the premium product experience. But how much of Kirby’s remarks are driven by personal animus against AA and are his recollection of events a form of revisionist history?
Scott Kirby Does Not Believe American Airlines Can Be A Premium Carrier
Kirby is a straight-talker. He may not always be correct, but he generally doesn’t sugarcoat matters, especially compared to his counterparts at American Airlines and Delta Air Lines, and I appreciate that. I’ve had fun highlighting several aspects of his remarks at the JP Morgan Conference last week (including on Southwest Airlines, sticky customers, a possible JetBlue merger, and the retirement of 21 aircraft) and want to unbundle one more portion that exposes a certain unsettled score that may drive Kirby’s push to makeover United into a premium carrier.
Kirby believes that there is room for only two premium carriers in the USA…and claims he has held that opinion since late 2013:
Well, the first time I actually remember saying that was 12/09/2013, which was the day the American Airlines US Airways merger closed. And at the end of a successful day, I got everyone in the room and said there’s only room in the country for two successful premium airlines. We’re going to be it.
Here’s what we’re going to do. We’re going to seat back entertainment. We’re going to sort of the same playbook. We’re going to do all this stuff. We’re going to push United out of the transcon market, then we’re going to push them out of Los Angeles, then we’re going to push them out of Chicago.
I said that on 12/09/2013. So I’ve thought that for a long time. The airlines decided to flip the playbooks, but I still think there’s only room for two. It’s just the size of the market. You just look at the big metro areas like New York is big enough to have two.
It’s really hard to be three in there. It’s hard to have a competitive advantage. Here in New York, Delta is bigger on one side of the river, we’re bigger on the other. We can each kind of be number one, but it’s hard to be the real point is it’s hard to be number two. And you just run out of big cities where you can be number two.
You can be really big in a place that’s not New York or Chicago or Los Angeles, but it’s hard to be kind of global and comprehensive if you can’t be number one in those big cities. And there was always I thought there was always only room for two as you just look at the map. And I still think there’s only room for two.
Kirby was pushed out of American Airlines when former CEO Doug Parker essentially told him there was no path to CEO for him. United poached him, created a new “President” position for him, and it soon became clear that he would succeed Oscar Munoz as CEO, which took place months before the 2020 global pandemic.
But is Kirby correct that he tried to steer AA in a very different direction? I’m not so certain.
Scott Kirby’s Revisionist History About American Airlines
Kirby was known as a “bean counter” for years because of his strong focus on financial metrics, cost-cutting, and operational efficiency. The term “bean counter” is often used to describe someone who emphasizes numbers, budgets, and financial performance over other factors like customer experience or employee morale.
Kirby gained this reputation during his earlier roles at America West, US Airways, and American Airlines, where he was known for implementing aggressive cost-cutting measures aimed at driving profitability through financial discipline. For instance, during his tenure at US Airways, Kirby introduced plans to charge for in-flight beverages and removed seat power from aircraft. For years, he resisted adding Wi-Fi internet onboard. He was seen as someone who carefully analyzed data and financial reports to maximize efficiency and reduce expenses, even if it meant making decisions that adversely affected employees and passengers.
The idea that he tried to add seatback screens at AA is curious because the Airbus A321 and Boeing 737 aircraft with seatback screens were ordered before the merger with US Airways. When the legacy US Airways Airbus A319s were retrofitted during his time at AA, seatback screens were NOT added. Furthermore, “Project Oasis” (in which AA removed seatback screens) did not begin until after he left American Airlines, but was planned during his tenure.
Kirby Is On The Right Track Now
I met Kirby at the United Club in LAX days after he joined United Airlines. In early 2018, I penned a note to Kriby on this blog titled, Dear Scott Kirby, Remember the Ghost of Jeff Smisek.
There, I said, “In order to create and sustain a world-class airline, you must be willing to make the investment in it. And why not now instead of later? Is cutting meals and liquor really necessary? Wouldn’t the more prudent course of action be to accelerate Polaris seat installation and lounge completion so that more passengers will actually pay for business class fares? Even if that reflects poorly on your quarterly report, can’t you forcefully justify it?”
During his first full year at United in 2017, Kirby implemented continuous cuts to the Polaris business class product, including:
- reducing flight attendant staffing
- shifting to pre-plated meals
- eliminating “wine flights” plus the bloody mary + mimosa carts
- stopped proactively offering midflight snacks
Thankfully, Kirby read my post (or something like that…) and did almost a 180º U-turn. United has heavily invested in technology and is taking genuine steps to improve the onboard product. That, coupled with its unparalleled global route network, places it in a competitive race with Delta Air Lines to the best US airline.
American Airlines CEO Disagrees With Kirby
Unsurprisingly, American Airlines CEO Robert Isom disagreed with Kirby’s take. Here are his thoughts at the same conference, given hours after Kirby’s remarks above:
So, I’ll just start with this. I worked for Scott and with Scott for a long time. So, you know, I’ve seen him be right on a lot of stuff. He’s a brilliant man. I’ve seen him wrong in a lot of stuff.
And in this case, he’s dead wrong. And, you know, the reason for that is American has been around for a long time. American probably had, you know, a weaker hand going into into the pandemic. Certainly, we were hamstrung on the way out. We didn’t again, I mentioned that we had 200 aircraft over 200 aircraft that, we couldn’t fly because of regional pilot shortfall.
You know, I love our regional network. It flies incredibly well. We’ve got a great fleet. But by the same token, you have to have pilots to fly. You know what?
We’re back at. You know? Scott says that kind of stuff. I’m sure because he would like nothing better than to not have American as a competitor. He would guarantee he doesn’t like us being a competitor in his backyard in some places.
But to that end, we’re a premium product carrier. We’ve got a great fleet. We’re not dependent on a lot of the issues that Boeing or Airbus has to deal with. Our growth is fairly metered. We’ve grown in DFW in Charlotte.
We have an incredible position with, you know, Sunbelt position, hub position, enviable relationships. I see Luis Gallego here from IAG. Anyone would love, you know, to have a partner with, you know, Iberia and and and BA in their network of carriers. The same thing holds true across, you know, the Pacific with JAL, and our other partners. American is not going anywhere.
American is recovering. And I can guarantee you that anything that you hear to the contrary is just concerned that we’re actually making a lot of progress.
Nice to point out the partners and that it has pursued a moderate growth policy, but what does Isom say here that argues for AA being (or becoming) a premium carrier? Nothing, as far as I can tell…
CONCLUSION
Many have speculated that the only reason Donald Trump ran for the US presidency was because Barack Obama ridiculed him so strongly at the 2011 White House Correspondents’ Dinner.
I’m not a psychologist, but I suspect Parker’s de facto firing of Kirby in 2016 and his pivot to United has inserted an unavoidable personal element into the battle against American Airlines and pushed Kirby even more to push UA to surpass AA.
image: @ScottKirby / Instagram
Here’s the real issue with Isom’s philosophy. He is right that AA has real assets going for it, and they can be incredibly valuable. AA does have a good domestic network, and AAdvantage is the best of the big three loyalty programs (imo), just to name a few. The issue is that he seems to think he can just sit back and let these assets do the work for him, while Kirby sees UA’s assets as a foundation that can be leveraged and built upon. When Isom talks about what makes AA great, it’s about the things they *have,* but when Kirby talks about what makes United great, it’s about the things they *are doing.* One is fixed and stagnant, the other is dynamic and evolutionary.
I think there is a path to premium for AA, but it’s not going to happen overnight, and Isom needs to bring people onboard, either in the C-suite or on the board, from outside the circle he’s grown up with in his career.
Is there a premium US carrier? I suppose Delta almost make it but there is no other contender.
LOL. Okay Scott. UA isn’t a premium airline either – by any subjective or objective measure, unless you include Sprit and Frontier in that lot. That ANY of the US3 to be throwing stones in their very fragile glass houses is laughable – especially when they start tossing around the nebulous term “premium”. The delusions of grandeur of the US3 is beyond the pale. What a fucking tool.
This Kirby sort is a pain in the neck . He claims superiority over others , but he lacks both humility and realism . As @DCAWABN properly explains , UA is not a “premium” airline itself ; especially when it’s most famous “premium treatment” was that administered to Dr. Dao . The only flight Kirby can do is to Go Fly a Kite .
The last Classy CEO of an Airline , who said what he meant , and was truly interested in customer service , was Frank Borman at Eastern .,
I don’t know Borman’s attitude towards customers, but sadly his relations with Eastern’s labor groups helped to bankrupt a classic American airline…. Maybe a ‘Frank Lorenzo Lite” … lol
Reading between the lines,Kirby seems to advise AA the only path to reach premium status is for crew to act like lambs during meal service and cougars the rest of the flight.
What is a premium carrier? If you’re based in GRU/GIG/EZE and you fly to Miami regularly (as many do), American is THE premium carrier on that route. The same thing could be said across the Caribbean.
I get the point Kirby is making, and he’s right that AA, domestically at least, will likely always trail UA and DL. But what is he trying to prove exactly? QR is a premium airline. SQ is a premium airline. CX is a premium airline, and so are all three Taiwanese carriers.
US carriers serve slop and provide surly service. There are frequent delays, brand standards are frequently overlooked, and you don’t even get lounge access on paid premium cabin tickets. There’s nothing premium about that, and trying to pretend otherwise is silly. If cabotage was allowed in the US we’d certainly see some premium carriers operate, and it wouldn’t be United and Delta.
Why do all of the legacy airlines have to be exact clones of all the other ones? Isn’t there room for some differences?
I agree with Kirby. AA does not know what kind of carrier it wants to be. It wants to be premium but acts like spirit.
For example, no food for sale on even the longest domestic flights? One pass through for beverages on even the longest domestic flights. Second meal on transatlantic flights cold bagel while United offers hot options in similar flights?
These are just a few examples in economy. Not to mention entertainment options.
I will say domestic AA first is comparable to UA and DL. I feel their international business is not.
Delta and United are definitely more premium. It’s the little things that make a difference and AA continually tries to see how much they can takeaway. Then wonder why their profits are much less than DL or UA.
The term “premium’ is relative when compared to the ‘low bar’ level of the ULCC’s … And we all know that’s not saying much at all when compared to some Asian & ME3 carriers …. I don’t think any of the Americans carriers have the cultural mentality to compete on a par with them in their descent to the bottom….
The food United serves in first/business wouldn’t be considered “premium” if it was served in federal prison.
United has the most potential to be a premium carrier. American has the second most potential. However, American is so far behind that I can count American out as being a premium carrier for at least another 10-15 years.
Delta has made the most of a weak hand.
Delta’s name is the worse of the three.
Delta’s name is a regional description to the U.S. (Mississippi Delta) and slow to catch on internationally.
Delta’s partners in Skyteam are weaker than Star or One World.
Delta has dying cities as hubs, like Detroit. SLC is very regional. Seattle is a weak hub. Its armor is mainly Atlanta and maybe JFK. It has retreated from CVG, MEM, NRT, MKE.
Delta should have kept the Northwest name or tried to buy the Pan Am name.