I had the chance to meet the charismatic United Airlines CEO Scott Kirby on the sidelines of the IATA AGM in Boston, to talk about United’s global network during the pandemic.
“Our operations to Latin America are 100% recovered, also to Europe by next year we are 100% recovered. Besides that, United has grown Africa and India and we are already larger then before. Europe should recover to pre-crisis levels in 2022. Current bookings to and from Europe are already higher compared to 2019, there is a lot of pent-up demand,” Kirby said.
“My guess is that next summer will be the busiest over the Atlantic ever. There is a huge desire to travel.”
United Airlines CEO Scott Kirby
Kirby said that he expects that the international markets in Asia will recover to pre-pandemic levels of activity by 2023, slower than other regions but still ahead of some industry forecasts.
United’s Asia-Pacific network will take longer to recover, but Kirby predicted it will be completely back online sometime in 2023. “I hope it’s earlier but that’s what we’re planning for.” Asia is the one region which is just a fraction of what it was and United operations will be mostly cargo revenue-driven operations, as passenger revenue is down about 85% from 2019 levels.
Moving TransPacific Fleet to Transatlantic
Kirby told me that the dedicated 50-60 wide-body aircraft, which United operates on Transpacific routes, will be redeployed. “We are by far the largest US airline to Asia. Now we re-deploy many of these Pacific fleet aircraft to Europe as well domestically, as well as on newly added flights to Africa, India and the Middle East.“
“I believe Asia will be slower to reach as vaccination rates are different. Most importantly there is a zero-tolerance policy.”
“The case rates are similar to Europe and the US, but the zero-tolerance policies in place everywhere in Asia make it much harder to get open. It is so different.”
United Airlines CEO Scott Kirby
“A good sign for United’s Asian business is how quickly demand has rebounded in other international markets, once government restrictions have been lifted. This is my guess, excluding Asia“ Kirby explained why some business travel to Asia may take longer.
Views on Return of Corporate Travel
He added that there will probably be “an inflection point” sometime in January, before corporate travel springs back in earnest in North America.
Kirby pushed back against suggestions that business travel may be structurally weaker in the future, being replaced by video-conference technology adopted during the pandemic.
“Business travel is about relationships, it’s not about transactions. I think Zoom is going to replace some telephone calls and conference calls, but it’s not going to replace the human interactions where we actually get to know each other. You can’t do that over Zoom.”
The PW 777-200 Engine Issue
I was asking Kirby regarding their fleet of 52 Pratt & Whitney-powered Boeing 777-200s, when these aircraft may return to service after the FAA grounded them in February. “This is a really big deal. I have insight on that, but not a go ahead from the FAA,“ he told me.
He added that the good thing is that United is working with Boeing and Pratt to develop new methods for inspecting the type’s hollow fan blades.
“The FAA has developed new technology for inspecting these blades, that is an order of magnitude better than anything that ever existed before. It’s just a phenomenal improvement in safety and the ability to test the blade for any cracks internally. When these planes ultimately do return, they’re going to be really safe.”
United Airlines CEO Scott Kirby
Changing United’s Culture
Kirby said the current crisis in global aviation is a phenomenal opportunity for United to change their culture.
“I told the board two weeks ago, my job is really very simple. My job is to make employees and our customers proud. Because if our customers are proud, they like to fly on United. And if our employees are proud, then they want our customers to be proud and they do the right thing for the customer. It is really all about changing the customer experience at United,“ he added.
“We talk about customers all the time. Historically, I think we didn’t do this nearly enough; but it feels different now, employees want to do the right thing. It is about changing the culture,“ Kirby added.
I agree with Kirby on Business travel. The travel “experts” said the same thing post 9-11, claiming business travel would never return to pre 9-11 levels. All it takes is a company to realize humans are social animals and we love interacting face to face to make things happen. Those companies that reach out to their customers with a personal visit will win market share and their competitors will soon realize the importance of face-to-face meetings and rebuilding relationships. It’s not in the board rooms where deals are made, it’s usually at the pub or the restaurant where things get done. It’s been the same for hundreds of years.
The B777-200 P&W powered ones are old! They must be near,well a good 50% and maybe more to retirement age as in 1994/95 the first B777s that rolled off the Boeing production line were powered by P&W ,then GE 90 then RR! P&W was selected to be first operational engine and launch engine?
The RR was the smallest by a a few cm of the 3 and GE 90 the biggest! BA for the first time and was a real shock to the Aviation watching community at the time, opted for GE 90 rather than RR! Its only like 5 years later when another big order went on for B777-200ERs they opted for the RR engine! No doubt encouraged by the then Labour Government in taxation or VAT help to get a better deal for the the purchase of buying British! Ba has always done this trick,likes deals …..Always been Pro boeing till lately and amazed everyone when opted for Airbus A380s and A350s over B747-8s as always been B747 and B767 fans in the Landor livery times under Sir Colin Marshal and Lord King! Under IAG and Willie Walsh more Airbus prone!. BA with United were the 2 airlines that pushed for the B777 aircraft!
If so as the United CEO see it,then its a great time for United to buy 2nd hand A380s to capitalize on what they believe is going to be a bumper year! A few could be bought on the cheap for just certain routes over the Atlantic as they believe this was be a boom time on routes ,so cash in by doubling up lol……..
Use 2nd hand A380;s on Atlantic routes like a ‘cash cow’ run!
By the way when they merged with Continental they had B777-200s and they were powered by GE 90s! Not sure how many of them they still have of their old machines flying!
I do however feel only United will be the sole American Airline to buy B777-X.sometime down the road. AA and Delta will be more B787s and A350s.
I think he’s dreaming. I don’t see business travel getting back to where it was for many years and we all know that pent up demand for leisure travel won’t make up for lost biz travel revenue and bookings. People have got used to not have to travel for work, lots of people are happy to have time back to spend with families and not have to make short trips across the Atlantic only to be fighting jet lag when they get there and then come home. Travel for work really is not so lavish or luxurious regardless of the class you are travelling in. And regarding leisure people have had to become more adventurous closer to home and many have found that you don’t need to cross the Atlantic to find great holiday spots: there are plenty to be discovered closer to home.
History has again and again proved this thinking wrong. The first time a business deal is lost to a competitor who bothered to travel and show up in person verses phoning it in or trying to close via Zoom, will be the last time. Important business deals are transacted face-to-face, and the successful companies realize this, it’s a competitive advantage and shows your customers, partners, etc. that you care more than the other guy to actually make the effort to show up in person.
As far as leisure travel, domestic travel and exploring is great for a while until you exhaust your options and want to get more adventurous and branch out to more distant and exotic locations. Humans crave novelty, and domestic travel only gets you so far. Again history has borne this out time and time again, and we will continue to progress to a more mobile and interconnected word.