Last year, United Airlines made the decision to suspend service to New York’s John F. Kennedy Airport. Prior to the decision, United operated daily transcontinental service from JFK to the popular west coast destinations of Los Angeles and San Francisco. When the decision was made, it was expected to have “significant benefits” and an “overall higher-quality experience” for travelers, according to United’s public relations staff. At the time of the decision, United’s CEO Jeff Smisek argued that the airline had no choice. United had claimed that it had been continuously loosing money on the two routes for seven years. The competition also seemed to be an impending issue, with airlines such as American, jetBlue, Virgin America, and Delta offering similar routes with similar business class and economy products. In addition, another push factor for the decision to leave JFK was that the airline’s lease was expiring.

Now, a year and a half later, United’s new president Scott Kirby believes that this decision to leave JFK was in fact a bad one. Kirby claims that many of the customers that flew on this route wanted to fly into New York, and not New Jersey. As a result, United lost these customers when the flights switched over to Newark. “I wish I could roll back the clock and change the decision,” Kirby told employees at a recent town hall meeting in Newark.

United’s BusinessFirst Product, which is featured on its Premium Service 757-200s. Photo Credits: United

Prior to his position with United, Kirby was the president of American Airlines up until August of 2016 when he came to United. When he was with American, he remembers being pleased when United left. “When I was at American Airlines, we were consistently trying to push United out of JFK. That was our goal” Kirby claimed. Now, Kirby realizes that the real reason this was a mistake is because it let American Airlines win over customers from a number of bigger corporate accounts. Many corporate accounts such as Time Warner and Disney were United exclusive and frequently few on these transcon routes. These corporate contracts were extremely favorable by the airline because clients always flew in premier cabins regardless of the ticket price. As a result, American won over many contracts like these once United ceased operations at Kennedy.

Kirby was faced with a tough decision: to either re-establish United presence at JFK, or focus even more on the airline’s hub over in New Jersey. He decided to ultimately build up United’s operations in Newark. Kirby claimed that “[United] would never get all those customers back but one of the things we are going to focus on is making Newark the best airport, the best schedule, the best everything for New York.” he said. Kirby has made it his goal to get the airline back to the 30 percent market that it held in New York prior to the United-Continental merger. Currently, United has about a 26 percent share. United, however, still operates a much larger hub at Newark than airlines such as Delta and American at JFK, and as a result makes United flights out of Newark more profitable.

There is still much debate as to whether or not the 2016 decision to suspend all United flights to JFK was a wise decision or a decision that ultimately hurt the company. Kirby has been cited to be one of the most honest airline executives in the industry, and he has come out and deemed the decision to be a mistake. “You can probably personally blame me, at least to some degree, for the fact that United pulled out” Kirby stated. United and the entire team is hoping that increasing their presence at Newark in the future will help make up for the loss at JFK.

Categories: Industry Talk