elCheapoDeluxe

Well, SFO doesn't seem to be hurting any in the big picture. They likely would have lost market share at JFK regardless with the increased competition from Virgin America.

spin88

Actually the "owners," and the Hunter Keays of the world, wanted United to not compete and increase its profitability in what they saw as an oligopoly by cutting service and product quality so as to reduce costs while adding extra fees and upsell revenue.

The problem with this plan was that Delta and American saw United's effort to milk their network as an opportunity to seize valuable fliers, which they both did very successfully. The result is that while in 2011 United was by far the best positioned of the major carriers to dominate and have outsized profits, now it is clearly weaker than both AA and DL and has a badly damaged brand.

It is in Kirby's interest - as the guy who needs to make the long term investments to try to turn around the listing ship know as the SS United before the next big wave comes - to highlight the utter failure of prior management. But I certainly see that is a little uncomfortable for some.

worldwidedreamer

So SFO-JFK was an OD route with PS 757s. SFO-EWR was more about connecting, and usually had less premium aircraft like the domestic 777s. As someone who connects in EWR more than leaves the airport, UA will get more of my business than if it had remained at JFK.

jamesinclair

The decision was made when United was bribing PANY for the PATH extension and that project was being fast-tracked.

being caught slowed things down.

spin88

My guess is that United is concerned about the trends at SFO. In 2013 UA had a 46% market share ex-SFO, in 2016, having added a lot of new international routes, it has a 44% share, while AS+VX grew (to now about a 12-13% share), AA moved to a 9% share, Delta is at 8% share. My guess is that Kirby would say that United was getting much less than its "natural share" ex-SFO.

It is not LAX (where UA has been demolished from the largest share to a distant 3rd place) but UA is facing more and more completion ex-SFO.

fly18725

Um, I think the owner(s) of any company, not just airlines, have an objective to reduce costs and increase revenue. Failing to do so will result in insolvency.

There are circumstances where selling a product as a loss leader makes sense. In hindsight, it appears Kirby believes retaining JFK operations would have been margin accretive in the long-run.

You've certainly revised history.

What's uncomfortable is a black-and-white perspective where people are divided into two groups where their always right or always wrong.

The real world is dynamic, complex and messy. The airline business takes this to the extreme and the oversimplification in an effort to "win" the argument sucks any value out of a discussion.

SF1K

I think that UA will continue to loose share at SFO. If there are any other 1Ks like me who for years thought it would get better, and now with AS/VX I'll ALWAYS book them first if they fly the same route as UA.

spin88

The truth, as Kirby appears he realizes is that sometimes actions you take to reduce costs reduce (in the short and long term) revenues more than the savings in Costs. @:-)@:-)@:-) United did a lot of third rate planning in 2012-2016 by just looking at the direct "savings" or extra "revenue" without considering the immediate or long term costs of their actions in the loss of passenger revenue.

There is no evidence that United was net losing $$$$ through running the JFK flights, and there is no "hindsight" involved. Many here predicted exactly what Kirby has confirmed happened. We were just smart enough to look at the big picture.


Suggesting that plans must "run united like a business" and a theory that any decisions that cut benefits and service quality was a good one, that would ipso facto increase profits as people just bought on network and price, is IMHO black and white thinking. This was Jeff's teams approach.

Many of UA's long term customers have argued that to be successful United needed to refocus on service and product quality, and work hard to no longer by the worst major domestic airline. Kirby appears to get some of this, whether he gets enough of it, and is willing to look again at some very bad decission that United made, and perhaps most importantly whether the markets who pushed and chearleeded Jeff's very destructive plans give him the time and resources needed to try to fix UA, is still IMHO an open question.

fly18725

I think everyone realizes that if you cut costs too far, you can impact revenue. We will probably never know if JFK falls into this category.

It's pretty clear that United was not doing well at JFK, especially when you look at the staffing and station infrastructure for a small number of flights. Combined with the fare war started by Mint, there were many facts working against the viability of a ps-only station. Since the decision was made, C/J fares ex-JFK have stabilized, AS/VX announced a reversion to a more standard premium product, and slots have been eliminated at EWR. This changes the current dynamic and certainly makes it easier to say that hanging in at JFK would have made sense.

Portraying Kirby's comments as a revolutionary change in strategy is amusing. I get the cult of personality - it's always been a factor in the industry.

DA201

My companies main office is in NYC and I used to live in Manhattan. From experience, LGA is better than EWR/JFK, and EWR is equal to JFK for people in Manhattan. JFK is better for people on Long Island while EWR is better for people in NJ/PA. The biggest problem with EWR is that people who don't live in NYC think it is farther away because it is marketed as Newark while JFK is marketed as New York. I have always preferred EWR because I don't like taking the train (hassle to take a train to Penn Station to take another train to Jamaica to take another train, all in all over an hour on the train assuming they are on time) and although traffic near EWR can get pretty bad, the Van Wyck is a parking lot. I will always fly into EWR/LGA unless there is only a nonstop from JFK.

adambrau

UA went through a slow and painful death at JFK. First the dropping of all Int'l flights (dropping LHR and NRT on the same day many years ago) left 3 destinations out of JFK (IAD, SFO and LAX). I'm sure many customers left UA when the JFK station was shut down and remaining flights shifted to Newark. I don't doubt that Scott Kirby is mistaken. As a NYC-based customer, I prefer the increased lay-flat frequency consolidation out of EWR to the West Coast. But I can understand many premium customers were lost - because as the endless debate of EWR v JFK so easily ignites here there are several people who flew transcons who feel abandoned. Personally, I drive myself to EWR and it's about the only time I drive my car, but if you live on the West Coast you probably don't have that option. Agree would rather take NJT than a NJ cab anytime.

spin88

I am not so sure that many folks on Jeff's team had any idea that cost cuts could impact revenue.

I guess when we have people on an internet discussion board on one side saying the JFK cuts were brilliant and on the other we have the current president of United Airlines who just happens to be the former President of American Airlines saying is was a bad decision with major impacts on system wide revenue, we never will know.

It may be pretty clear to you and its pretty clear that Scott Kirby feels otherwise. I guess we will never be able to answer who is right.

Well Kirby is portraying his plans as a 180 from what Jeff "Chairman's flight" Smisik did. Not sure about a cult of personality, I did not like things done at either US Airworst or AA by Parker/Kirby, and it is hard to tell if he has turned over a new leaf, is finally free of Parker, or what he is really doing is just adding capacity and has no real plans to try to improve the product and service. Time will tell.

fly18725

I think you're reading too much into reports of Kirby's comments to employees. Clearly, any public information that gives the remotest appearance of attacking Smisek will be jumped on with unbridled glee.

jimmc66

The "lobbying" at Newark cost the last CEO his job. Maybe not. . . .

entropy

the Hunter Keays of the world make their bones by trying to look important and like they have sway... and $misek loved it.

The people who actually own rather than trade, prefer long-term value, and you get that by building a better brand with a better reputation and better structure, not screwing your customers over every penny.