On May 20, 2020 United President Scott Kirby will officially become the new Chief Executive Officer. How will consumers, employees, and shareholders react?
Kirby: Hope Is Not A Strategy
In several pieces over the last two months I have highlighted Kirby’s contrarian approach to COVID-19. While every major airline has acknowledged that it will emerge smaller and that demand will be slow to recover, Kirby has been an outlier in predicting doom and gloom. He has repeatedly said that he hopes for the best but plans for the worst.
That planning has included warnings of mass layoffs, mandatory hour reductions for non-union employees, and cutbacks onboard.
The perspicacious Brian Sumers of Skift defends this strategy:
“But Kirby’s not cutting hours or warning of layoffs or furloughs because he hates workers or wants to crush unions or screw the taxpayer. Instead, he claims to see what competitors do not — there are no quick fixes. To survive, he said, United needs to take action, even it means annoying workers, lawmakers or customers…
“I have been shocked at how many airline executives don’t mimic Kirby’s approach. I can’t understand if they don’t agree with him, or if they understand as well as he does, but would rather not scare the shit out of their customers or employees. Maybe they don’t want to hurt anyone’s feelings, or think the faux happy talk is good business…
His candidness is refreshing.”
I would agree, in part. Kirby is a no-nonsense guy. He’s shrewd, smart, and yet doesn’t come across as the clueless and out-of-touch imbecile the way Glenn Tilton and Jeff Smisek did. Practically, I also see mass layoffs as inevitable this autumn and think that preparing employees for it now is much wiser and fairer than hoping for a summer miracle and then dropping the news in late summer.
Where Kirby Might Rethink
I’ve long stopped worrying about “Kirby Kutbacks” like cutting appetizers in Polaris class or suspending lounge construction projects. Indeed, United is in a fight for its survival and it does not appear demand will return anytime soon. Furthermore, demand for United’s strong international network will return even more slowly. That’s not necessarily a zero sum game, since widebody aircraft can also be used on more domestic flights, but let’s all appreciate the uniquely difficult situation United is in.
MileagePlus
While customers have short memories and the value of loyalty programs is not just an absolute valuation, but a relative one, I do think Kirby should be more nimble in slashing value from MileagePlus.
Two recent changes–capping partner earning rates and increasing partner award redemption pricing–antagonize the very customers United need mosts, especially now. Surely, Kirby must realize that.
With so many U.S. businesses continuing to ban company travel, United’s bread and butter consultant class premium travelers will not be flying anytime soon. But discretionary passengers on the margins will likely fly much sooner. These are the travelers who have a choice in airlines and will patronize airlines in which they feel valued as customers. That means offering a loyalty program that does not suddenly change policies without notice, always in a negative direction. Kirby loves to emphasize how honest he is about keeping it real. Why not be honest with members about the need to cut back amenities, but also provide some advance notice?
I’ve long questioned the wisdom of rewarding those who would fly United anyways (by corporate contract or due to being hub captive) while punishing those who may indeed extract more value from MileagePlus than others, but nevertheless fill seats and provide long-term, often decades-long loyalty. Many are not lucrative tech worker in the Bay Area who spend thousands of dollars per ticket on United. But, they spend thousands of dollars on United each year…United should think twice before alienating these passengers.
Refunds
Secondly, the whole refund debacle has been a huge embarrassment to United. While American and Delta have mostly played nice with consumers, United has made a fool of itself by flip-flopping repeatedly on refunds and re-defining what a flight cancellation or major schedule change is. Most customers won’t remember that, but those who matter most will…
> Read More: United Airlines Sued For Refusing Refunds: Class Action Coming?
CONCLUSION
Kirby enters United’s top role at a unique and difficult time. He is shewed and has greatly helped United to re-capture market share and improve operations during his tenure as President. But he must continue to grow beyond his “bean counter” mentality and recognize that unannounced, negative changes to the ticketing polices, the onboard product, or MileagePlus become counterproductive when they drive away discretionary revenue and destroy decades of loyalty.
image: United
Kirby will be the one to destroy United Airlines. He isn’t the genuine of aviation many think he is. He should keep his mouth shut and focus on being ready to capture demand. He is going to lose mass market share to his competition and UA will be in the worst condition of all.
You can’t provide good service to the owners when you don’t care about the Employees or the Customers.
From the consumer stand point, could someone please explain how Glenn Tilton and Jeff Smisek were worse than Kirby? Again, if all the changes UA has made since November last year work for some flyers in this forum, that’s great. It just doesn’t work for me and this is personal opinion.
I had no problem with Tilton myself…those were great years for the MileagePlus other than StarNet blocking. But employees hated Tilton. Do you remember the “Glen’s Gotta Go” bracelets and how bad morale got under his leadership? Smisek was a clueless doofus who abandoned JFK, cut the domestic route network, ceded to competitors, and thought the key to growth was a smaller airline. These missteps alienated him from employees.
Smisek was also a lawyer – so now Scott Kirby has Brett Hart, also a lawyer, as his new CEO, right hand man. Since when do lawyers make good airline executives?
Ah… Herb Kelleher was an attorney.
Also, Brett Hart will move into the position of President. (He has been interim CEO for United in the past. I know him. I think he was the right choice.)
I was in consulting and flew UA every week. However, I finally left them after all the cutbacks.
Its the end of the world as we know it….and I (don’t) feel fine.
This 1K’r & 3MM’r is now choosing happier trails, where the customer is appreciated
Me too! I hit 3MM several years ago and since then have almost exclusively flown DL. And, yes, I do live in a UA hub. DL works great for me and my weekly (well not right now) travel. If I had stayed with UA, I would be very close to 4MM right now … but I have no regrets.
Yes, I feel that Kirby will be the one to drive UA into the ground.
I don’t understand your point about “I do think Kirby should be more nimble in slashing value from MP”…maybe “smarter” or “more judicious”
That’s probably a better word choice. My point was that I can even understand if cutbacks to MileagePlus need to be made. But, they should be done carefully, weighing that there will be an adverse affect in turning away customers at the margins. At the very least, advance notice should be given, not sudden and unannounced policy changes that negatively impact customers.
“Two recent changes–capping partner earning rates and increasing partner award redemption pricing–antagonize the very customers United need most, especially now. Surely, Kirby must realize that.” If Kirby realized that, he’d change the policies since it’s been painfully obvious that the cornucopia of negative changes have been coming from him. Kirby just views extreme antagonism toward loyal employees and loyal customers as being the normal state of affairs. Maybe he thinks that United customers all have Stockholm Syndrome or something where they’ll keep coming back for more abuse. I know you love United, but with Kirby not even having a nominal boss outside the board itself, things will only get worse. When American looks good by comparison, you’re doing something wrong.
I think Kirby may be a good bean counter when it comes to downsizing but he’s a an absolute disaster when it comes to building goodwill and loyalty for the United brand.
From frequent UA Mileage Plus program benefits slashing to UAs refusal to give people their money back if a flight has cancelled (how he thinks this doesn’t absolutely decimate trust is beyond me) my bet as a 1KMM is that United will be most likely to fail.
No way am I buying a ticket with them. My money ticket money is safer with Delta or AA as proven by Ed Bastian’s most recent letter to staff, and my own experience getting a refund with AA, and I’m not obviously not alone in this thinking.
I was well on my way to being a free agent when it came to flying so UA’s constant program devaluations don’t phase me anymore. Am a 1K but not for trying and not because I care. Not being a 1K won’t bother me if I’m flying business with another airline where I know that if they cancel the ticket I’ll have my money back in the account instead of a IOU.
Kirby takes everyone for granted. Fortunately other airlines are interested in providing a service.
I live in a Delta hub but have flown 150,000 miles per year on United or partners – 90% ultra long haul (crediting to UA) for the past 5 years. I am switching to either AA or DL next year after using up my PlusPoints. Kirby’s anti-customer moves – 10 across seating in coach on the 777, removing the award chart, gutting the award prices, making it more difficult to earn status when flying longhaul etc., removing showers at EWR – makes it very difficult for me to continue with UA. They will lose a lot of passengers like me who spend $10k per year on UA by flying ultra longhaul in coach/premium economy.
#Kirby’d