United left New York JFK in 2015, a decision it now regrets.
I covered United’s departure from JFK extensively–
- United Airlines Leaves JFK, Moves p.s. to Newark
- United JFK Employees Say Goodbye to Home, Hello to Uncertainty
- Onboard Video from the Final United p.s. Flight from JFK
- A Review of My First and Last United p.s. Flights from JFK
- Saying Goodbye to United Airlines at JFK
- United Airlines First Class San Francisco to New York JFK
The JFK station was very special to me, particularly in cultivating loyalty to United over the years, and I viewed its abandonment as one of the prime blunders under the crooked reign of ex-CEO Jeff Smisek.
But United Airlines President Scott Kirby now admits the decision to move premium traffic across the Hudson has backfired. In speaking to employees at a closed-door event in Newark, he stated–
I wish I could roll back the clock and change the decision. It was the wrong decision.
As refreshing as it is to hear Kirby admit that, the damage has been done.
Why It Was Foolish for United to Leave JFK
Let’s not forget that competition is fierce in the LAX/SFO-JFK market. United competed with American, Delta, JetBlue, and Virgin for premium traffic. Let’s also not forget that United allegedly lost money for seven consecutive years on the route. Kirby points out that focusing only on the JFK-LAX/SFO routes was penny wise, pound foolish.
The real reason it was a mistake was it let American Airlines in particular go win a bunch of big corporate accounts. People like Disney and Time Warner — two big examples — are corporate accounts that had been United exclusive corporate accounts and not only flew United on the transcon [routes] but flew United from L.A. to Heathrow and all across the country.
He also adds that the JFK was unique in not being price sensitive.
Those are the kind of corporate accounts [where] on-air talent has contracts that say they fly first class. They pay first class fares — it’s completely irrelevant what the price is. … We opened the door and let American in on contracts like that.
To be fair, United did that already when p.s. went from a three-cabin to two-cabin product a couple years earlier.
Kirby to Blame for Smisek Decision
Not sure whether to file in the “don’t flatter yourself” file, but Kirby takes personal credit for United’s departure from JFK, stating–
You can probably personally blame me, at least to some degree, for the fact that United pulled out. When I was at American Airlines, we were consciously trying to push United out of JFK. That was our goal.
AA did aggressively compete at JFK, introducing A321T service featuring a premium-heavy cabin including first class seats in 1-1 configuration.
No Plans to Return to JFK
United will likely not return to JFK. The slots have been given up and have gone up in price. Furthermore, Newark is profitable. But United does hope to claim market share back. When the merger occurred, United’s New York market share (factoring in the huge Newark hub) was 30%. It has now dropped to 26%, something Kirby calls a “big, big drop”.
Newark’s profit is 15%, says Kirby. He claims Delta’s New York margin is only 4% and AA’s somewhere in between. Thus, the goal will be to win back market share by making Newark “the best airport, the best schedule, the best everything for New York.” Good luck…
Not a lot of surprises in this latest revelation. A larger profit margin in a captive hub like Newark is not surprising. But it matters much less when market share drops. Noting that the JFK-LAX/SFO market was about much more than those two routes is also not a surprise. Somehow, I feel much more comfortable that with Kirby at the helm United will be making less strategic blunders.
(H/T Brian Sumers)