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What is United Getting With New CEO Scott Kirby?

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It’s no coincidence that since 2016, when Scott Kirby was more or less forced out at American Airlines and became president of United Airlines, the two carriers have taken divergent routes.

Since Sept. 1, 2016, United shares have gained 73%. Delta shares have gained 51%. American shares have lost 24%, according to Forbes.

Working under United CEO Oscar Munoz – whom many have described as the carrier’s best CEO in a generation – Kirby helped turn United around (save for those pesky customer service incidents).

Now Kirby gets his turn to run the whole thing.

Munoz and United announced the CEO was retiring. He will become Executive Chairman while Kirby assumes the CEO role. So what is United getting with its new man?

Or maybe the better question is, what is the customer getting?

Kirby’s reputation in the industry is impeccable but he will have big shoes to fill. Munoz was highly regarded for bringing United out of the depths of a murky bribery scandal several years ago that resulted in the ouster of then-CEO Jeff Smisek and the indictment of David Samson, then the head of the Port Authority of New York.

Munoz also handled the incident involving Dr. David Dao – who was physically removed from a flight after being involuntarily bumped – fairly well following some early public relations missteps.

Heck, Munoz even survived a heart attack in the midst of his tenure only to come back and make United even stronger.

Kirby, who will take over in May of 2020, is a similar Wall Street darling and should have no issues assuming the mantle of the Chicago-based carrier. The only knock on Kirby, if you could call it that, is his penchant for leaning more toward the revenue side of the company than the customer experience side.

Kirby is more of a strategist. For instance, while he was one of the early adopters of instituting Basic Economy as a new seat category, Kirby and United still don’t allow passengers to carry both a personal item and a carry-on onboard while holding a Basic Economy ticket.

Adding to the company’s bottom line is important, of course, but there is no bottom line without customers and no customers without exceptional customer service. Perhaps with United more financially stable now he can work on some of those things.

But for immediacy’s sake, United did what it wanted to do. It thrived and survived under Munoz, and now expects Kirby to take it to another level.

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Expect Airlines to Supply Fewer Options and Higher Fares After COVID-19

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While many in the air travel industry are, of course, hoping for a swift and complete rebound in passenger traffic once the COVID-19 crisis finally comes under control, others aren’t as optimistic.

In fact, aviation analysts are saying that the diminished demand for air travel brought on by the coronavirus pandemic will likely persist for quite some time, even once the threat of contagion has passed.

CNN Business’ coverage looked back at the commercial aviation industry’s path to recovery after the 9/11 attacks in 2001, pointing out that passenger traffic didn’t fully bounce back until 2004. And, in the wake of the 2008 Global Financial Crisis, it wasn’t until 2013 that passenger traffic again reached the levels seen in 2007, just prior to the recession. The slumps seen in air traffic during those two crises were just a fraction of what the world has witnessed over the past four weeks.

It’s likely to take a long time for passenger air traffic to rebound from this unprecedented downturn, even once people are able to start flying again. As airlines resume operations, they’ll be selective about the routes they maintain and reduce frequency in order to fill more seats per plane, which will lead to higher fares than were seen before the crisis.

Chief credit analyst for airlines for S&P Global, Philip Baggaley, explained that, as airlines return fewer planes to service and fill those in operation to maximum capacity, many of the low-costs seats that fliers once enjoyed booking will vanish. “Fewer seats flying means fewer cheap seats at the margin,” he said.

“There’s going to be fewer airplanes. That means less flying,” industry consultant, Mike Boyd, told CNN Business. “So, there’s going to be less choice, and you’ll be paying more. There’s no way around that.”

Historically, major economic blows to the industry have resulted in bankruptcies and mergers for the airlines. Prior to the 9/11 attacks, there had been nine major U.S. carriers, which afterward merged into today’s four major carriers, which last year accounted for 80 percent of passengers flown aboard U.S. airlines: American Airlines, United Airlines, Delta Air Lines and Southwest Airlines.

It’s possible, then, that a new wave of airline failures and mergers is on the horizon, especially given that the $50-billion federal bailout promised to the industry won’t even cover the near-$65 billion in revenue that U.S. airlines would have otherwise collected, even if they only matched last year’s numbers.

“In the near term, we’re going to see a shakeout,” said Joe Schwieterman, a transportation expert and professor at DePaul University in Chicago. “The weaker players may not survive this. Most industry leaders are expecting a long, painful recovery.”

This post was published by our news partner: TravelPulse.com | Article Source

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