Jens Flottau The United CEO talks with Aviation Week about the airline's fleet orders, customer service and international expansion.
Jens Flottau
When Scott Kirby, 54, took over the CEO position at United Airlines in May 2020 after four years as its president, the airline industry was in the worst crisis it has ever faced. Kirby has not only managed United through the COVID-19 pandemic but made crucial decisions defining its future: The airline has ordered hundreds of new aircraft and signed preliminary commitments for regional electric aircraft and air taxis. United also wants to fly Boom supersonic aircraft across the Atlantic. At the same time, Kirby has committed the company to net-zero emissions with no offsets. Kirby met with Executive Editor for Commercial Aviation Jens Flottau in Munich during a trip to Europe.
AW&ST: Electric aircraft, air taxis, supersonic flights across the Atlantic, the internal transformation—you have launched a lot of initiatives in a very short period in the middle of the industry’s worst crisis. Are you now making the decisions that you have always wanted to make but never could? In a lot of ways, the answer is “yes.” I feel liberated to make the kind of changes that I have always wanted to make. Some of them are high-profile, but some others are at least as, if not more, significant: permanently eliminating change fees, the connection saver and eliminating delay codes. If a flight was even 1 min. delayed, it got blamed. Is it maintenance, pilots, flight attendants or the gate? It created such a culture of conflict [about] who is to blame. It also created a culture where if you got a connecting customer running to the gate and [allowing him or her to board] would have made the flight 1 min. late, everyone was incentivized to slam the door and leave the connecting customer behind even though he or she may have had to spend another day in Munich. It was impossible to have a real customer-service culture. Even pre-COVID, I really wanted to take a shot at changing the customer-service culture at airlines. Far too many U.S. airline executives see air travel as a commodity [for which] people only shop based on price. If anything, the biggest bet we have made is that customers care about quality.
Have you tried some of these ideas at American Airlines or US Airways in your previous positions? At American, we were putting seat-back entertainment in on every seat. The week after I left, they reversed the decision. When I was at America West, the biggest thing JetBlue did when they created their brand was [adding] LiveTV. They were just a tiny little airline. At America West, we had about 100 aircraft, so we were a lot bigger but still a small airline. I convinced our board that we were going to put LiveTV on all our aircraft and be the second airline in the world to do that. I called the CEO of LiveTV after the board meeting, knowing it was a big deal for them because we were eight times bigger than his only customer. But he didn’t call me back for two days, and when he finally did, he said he was “really, really sorry, but JetBlue found out that you were going to put LiveTV on all of your airplanes, and they bought the entire company.”
So I have had this view about customer service. I wanted to get rid of change fees 20 years ago, but that is a decision that only one person in a company can make because you are giving up a billion dollars of revenue. You are betting that the improvement in customer service will make it pay for itself in the long term. That’s a huge bet to make. You kind of have to be the CEO to make decisions like that.
United has made a big deal about sustainability. What is sustainable about air taxis and supersonic flight? Air taxis are straightforward because they are going to be electric.
Since Scott Kirby has taken over as CEO, United has ordered a large new fleet of new narrowbodies. Credit: United Airlines
But you could use the same amount of energy for a lot of electric cars that would be a competing mode of transport. That’s true for today. The bet, though, is that we are going to get to a world of green energy where electricity is green. I agree we are not there, but we are also not flying air taxis yet. By the time we do, electrification will be increasingly green around the world. It is already happening. I think here in Germany, you are at 50% renewable.
And Boom Supersonic? It’s the first aircraft ever that has been designed [to operate on 100% sustainable aviation fuel (SAF)]. But I don’t think that [fighting] climate change can be so absolutist that we are never going to do anything that creates emissions. Otherwise you sit at home and don’t eat food, because eating food creates emissions. We have to acknowledge that people need electricity, are going to drive and are going to travel. Travel is important, and doing that efficiently is what we are focused on. Air taxis and Boom are going to be transformative for customers, and by using SAF we are doing it in a responsible manner.
How real are these projects anyway? They don’t need huge engineering breakthroughs. It is highly likely that there will be electric aircraft and [electric vertical-takeoff-and-landing (eVTOL) vehicles] flying. It may not happen as fast as some of [those companies] would like, because they underestimated perhaps the rigor in aviation for the testing and approval process, but they will get there. So will supersonic aircraft. The difference is, I suspect, that the addressable market is not as big because of sonic booms.
What is the impact on your business model? If anything, it will attract more premium passengers to United. Take a market like New York to London Heathrow, which will be our first market to fly [supersonic]. If you look at the time channels for Boom, there will be only a couple of flights a day for supersonic aircraft. Overnights don’t work because it goes too fast. Leaving in the morning from Newark and arriving for dinner in London works great, and the times coming back from London work great. Within a few months, we will be back at seven flights a day and 50 premium seats per airplane. By putting Boom into that market, we are giving customers the option to go to London for a business dinner and come back the next day. You can do the same for Paris or Frankfurt.
If Heart Aerospace and Boom don’t deliver, there is no risk for you, because the contracts are conditional. That’s correct.
Moving to more current fleet and network issues: As you go from 50-seaters to larger regional jets, you can’t serve a lot of these smaller markets anymore, right? Yes, that’s a policy challenge. Many of these smaller communities are simply not big enough to fly larger jets. The economics and the pilot constraints and the airspace restrictions at bigger airports all mean that cities like Erie, [Pennsylvania,] are beginning to lose service. It gets much harder to attract high-quality businesses and jobs to these places. When we can fly only 450 flights a day at Newark [Liberty International] Airport, are you going to fly to a small city, or are you going to fly a jet to London Heathrow? That trade-off is tough.
Are you going to stick with the Bombardier CRJ550s? We will continue with the -550s, particularly in business markets. But we have 300-plus single-class 50-seaters today. It will probably be less than 100 eventually.
In terms of regional aircraft size, you are still limited to 76 seats by scope clauses. Are you trying to negotiate those away? Not at the moment. Scope clauses came about because pilots could see their jobs migrating downward. At United, we are taking delivery of 500 airplanes in the next 5-6 years—there are tons of career opportunities. People are going to upgrade faster than at any time in history. Already people with 3-4 years of seniority can upgrade to captain. That all creates an environment where we will be on the same side of the table as our pilots.
Has former CEO Oscar Munoz taught you how to deal with unions? I would not say it that way. Oscar was wonderful mentoring me on listening and inspiring people, which is distinct from dealing with unions. Sometimes I think companies make the mistake of viewing their employee relations as their union relations. They are not the same. Oscar was wonderful at walking into a break room and listening to frontline employees and reacting to the issues that are on their minds. That’s different from walking into a negotiating room.
Before the pandemic, you started rebuilding domestic connectivity and strengthening the hubs. Where are you in this process? We are fully on track. The aircraft orders we made during the pandemic are 99% domestic and will be used at our seven hubs. What the pandemic changed is an emphasis on the global network. Our international network next year will be 10% bigger than in 2019, which is really unique. Most airlines in the U.S. and Europe shrank [as they] retired [Boeing] 747s, 767s, 777s or [Airbus] A380s, and because of that they are going to be smaller and we will be larger. Our international network did well before, but the supply-demand environment is going to be better, and we also opened up new geographies. We are the only U.S. airline that flies to India with four flights a day. That was important during the pandemic, too, when the [COVID-19] delta wave kicked in, and we flew 100 tons of medical equipment. The Accra, [Ghana,] and Johannesburg [flight in South Africa] is doing great. For the first time in my career, when my team sent me route announcements, I had to Google these airport codes. But particularly from Newark and [Washington] Dulles [International Airport], we can fly to places in Europe successfully where others can’t.
United is investing heavily in new aircraft interiors. Credit: United Airlines
During the pandemic, you gave up the specialization of the hubs to an extent—you just flew what was possible. Are you going back to that specialization? Newark is called a hub, but its connectivity is lower because it is such a big local market. It is always going to be our largest gateway to Europe. Washington Dulles is our primary connecting hub up and down the East Coast and a great international gateway. There is government business that goes back and forth and also large ethnic populations. We have underutilized Dulles as an east-west connecting hub. Newark does not work for that. It is too big, too crowded and operationally challenging. It is the most delayed airport every year. Chicago, Denver and Houston are all very similar, serving unique geographies north, middle and south. San Francisco is a phenomenal gateway to Asia. We’d love to grow in Los Angeles, but we are out of gates. It is also more of a local market. We believe we are the only large airline that made money in Los Angeles.
What will be the role of the Airbus A321XLRs? They are principally and maybe exclusively going to be Newark and Dulles airplanes flying to Europe and North Africa, [and they will] replace Boeing 757s and fly to new markets that we will open up. We bought them for international service like Dulles to Toulouse or Nice, [France], or Marrakech, [Morocco]. The A321XLR is a better airplane than the 757, and we have designed a cabin and premium seats specifically for the airplane. It will be a much better customer experience.
How do you rebuild the North Atlantic network? It feels like the only thing that works for other U.S. airlines is to fly into their partner hubs and Heathrow. But they are pulling out of secondary cities. When I landed in Munich yesterday, I saw four United aircraft. Delta [Air Lines] and American [Airlines] have one flight a day. It is because we just have better hubs in Newark and Dulles. We have growth opportunities in Europe in places like Croatia that do great for us, also in Africa, the Middle East and India. Historically, we have been the third-largest airline across the Atlantic, and from next summer, we will be No. 1 with a comfortable margin—and forever after.
You still have 52 Pratt & Whitney-powered Boeing 777s on the ground. When do you expect them back in service?Early next year. We have a great collaborative process with Pratt, Boeing and the FAA oversight. We have developed technology that can identify micro-cracks more easily than before, and it is easier to administer. But this has been painful: We have had the biggest headwinds from COVID because we are the biggest international airline, and we had this 777 issue with 52 widebodies grounded. But if you look at our financial or customer results, you would not know it. These massive headwinds are all about to disappear. International is going to be strong, and 777s are going to come back.
You have a large order for 45 Airbus A350s in place that has changed a number of times. What’s the status of that?We do have the order in place. It is a great airplane. I was the launch customer for the A350 back at U.S. Airways. But the [Boeing] 787 is also a great airplane, and we have a large installed base. We have a lot of time to decide—these airplanes come later this decade. The big questions are: What is the right airplane to replace the 777s, and what is the right large long-haul airplane? The 787 does not fit that niche, so maybe you don’t have to have it.
What’s your position in the debate about a new Boeing aircraft? Should they do a straight 737 MAX replacement first or a middle-of-the-market jet? From Day 1, I have encouraged Boeing to build a large narrowbody, kind of a 757 replacement. Don’t do a widebody, but a large long-haul narrowbody.
You have made investments in Avianca, a troubled story, and Azul. Do you see opportunities elsewhere? I am reluctant to make noncontrol investments in other airlines because the track record of doing that is abysmal. Almost everyone who has done it has lost all the money they put into it. We made the mistake at Avianca. I much prefer our partnership with Lufthansa, for example. We realize we are each stronger by helping each other. It is not based on who paid the biggest premium to buy equity.
U.S. airlines have benefited from massive state aid during the coronavirus crisis. Is that unfair? There was significant state support almost everywhere in the world. Without government support, we would have just shut the airline down and hoped we could return when COVID was over. Government support really gave us a bridge to raise a bunch of private financing. We come out of COVID with $27 billion of incremental debt. We got far more money from the private than from the public sector, but we could not have done it without that government bridge.
American recently had to cancel nearly 3,000 flights in three days, and other airlines have faced similar issues as they rebuilt. This has not happened at United to the same extent. Why not? We recognized that rebuilding would be difficult, so we were going to be gradual. That might mean we left some short-term opportunities on the table and sacrificed some short-term profits, but we were just not prepared to put customers and employees at risk. We knew that staffing, particularly pilots, would be difficult unless we did something different. We did not furlough or downgrade anyone. We kept them all current. Other airlines have gotten overwhelmed with retraining requirements. If you are just a little bit behind and have no margin for error, it can quickly cascade into a meltdown.
What about the escalating attacks on flight attendants in the U.S.?
This has not been on United. Our incidents are lower than pre-COVID. We were the first airline to require masks, before any government mandate. Because of that, we knew that was a potential point of conflict. We worked with the flight attendants on deescalation procedures and told them: “We are not expecting you to be the policeman or -woman in the sky.” We have these cards, and if someone is refusing to wear a mask, they give him this card that says: “Last warning, if you are not putting a mask on, you are going to be banned from flying United.” We have banned 700 people. But it’s not the flight attendant’s job to fight. They give them the card, walk away, we get the airplane on the ground and we ban them. That creates a more civil, congenial environment on the airplane.
