Scott Kirby’s Dismissal Of A New “Premium” American Airlines Is Very Personal
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