74.2 F
Washington D.C.
Wednesday, October 13, 2021
Advertisement

United CEO Kirby: Corporate, International Travel Will Rebound Strongly

Must Read


Although domestic leisure travel will be dominant in the early stages of the recovery, United CEO Scott Kirby is betting long-term on a strong recovery in business and international travel.

Speaking on Wednesday at a CAPA Live virtual event, Kirby acknowledged that his outlook for business travel was “not the consensus.” An International Air Transport Association poll of about 4,700 travelers released this week, for example, showed that 62 percent of respondents said they expect to travel less for business even after Covid-19 is contained—a solid majority, albeit a smaller percentage than the last time IATA took such a poll, in September. Kirby, however, said he disagrees with the idea that a sizeable chunk of business travel will not return as companies have grown more accustomed to virtual platforms during the pandemic.

“Business travel is not transactional; it’s about relationships,” Kirby said. “Going to an event and socializing and having drinks, that’s where you get to know people whom you can pick up the phone and call them if you need them. We’re not going to get that [from virtual events.] It’s a question about human nature, and human nature has not changed.”

International travel, meanwhile, “will come back even stronger than domestic will” once borders begin to reopen and restrictions lift, Kirby said. While that recovery will take time, Kirby projected that long-haul international routes would be outperforming domestic routes by 2023.

United has taken a contrary position to many global airlines in terms of fleet during the pandemic, he said. Even as several carriers have been trimming their widebody fleets, United’s grew by 5 percent year over year in 2020.

Kirby is particularly bullish on transatlantic routes, saying the European market would be “one of the strongest in the world” coming out of the pandemic. Even though the market is getting some new entrants, JetBlue in particular, Kirby said the industry will benefit from a shift in the transatlantic competitive structure.

“There were players in the Atlantic who never made money and had a business model that had no chance of ever making money,” Kirby said in an apparent reference to Norwegian Airlines, which earlier this year announced it was permanently out of the long-haul business. “They’ve gone away.”

In a research note published Wednesday following a separate conversation with Kirby, Cowen’s Helane Becker said it’s too early to know whether United’s gamble will pay off.

“We buy in to the idea that the international passenger air travel industry’s competitive structure has shifted, given many participants reduced operations or gone bankrupt,” she wrote. “However, we believe the international recovery is ultimately too far off to make a call on if United’s move to grow the wide-body fleet instead of rightsizing, as peers did, will pay off.”

At the CAPA event, Kirby said he does not expect to see much airline consolidation in the United States as a result of the pandemic. U.S. airlines in general have been able to raise enough liquidity to get through the crisis, he said.

One effect that will endure, however, is the elimination of change fees, which United kicked off last summer, Kirby said. Asked whether they would ultimately return once the industry gets back to normal operations, Kirby said he had wanted to eliminate them even before the pandemic.

“That’s something I wanted to do for 20 years, but because it’s a billion-dollar decision, you kind of have to be the CEO to make that decision,” Kirby said. “That one is permanent.”

- Advertisement -spot_img

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -spot_img

Latest News

Suit of the Week: The Fold

For busy working women, the suit is often the easiest outfit to throw on in the morning. In...
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img
Translate »