Business and leisure travel are showing signs of a pick-up after a weak start to the year.
Scott Kirby, chief executive of United Airlines, told the Los Angeles Times that, with some easing of uncertainty surrounding tariffs, the economy and global politics, more people and businesses are gaining the confidence to hit the road again.
The airline industry is perhaps the best real-time indicator of the U.S. economy, as travel is one of the first things that businesses and consumers cut back on when they sense difficult times ahead.
Since June, however, United’s orders suggests there is more certainty as consumers know what to expect and booking demand since Labor Day has surged, Kirby said.
In an interview, Kirby took a swipe at ultra low-cost carrier Spirit Airlines, discussed artificial intelligence and explained why he thinks the 2028 Olympics might not be such great news for the airline industry.
The conversation has been edited for length and clarity
How are United Airlines operations changing in L.A.?
In Los Angeles, we have 21 gates. We have about 140 flights per day here. I think it’s our highest gate utilization airport. We’d love to have more flights, but there aren’t enough gates in Los Angeles. So the constraint in Los Angeles is gates.
Our constraint on growth in Los Angeles is the gates. Essentially, if we want to add a new route, we have to cancel our current route. We just don’t have enough gates yet.
In California, Spirit has slashed the number of airports it serves. What is the issue with the low-cost airline model?
Ultra low-cost carriers, I don’t think they work. Primarily because their business model was based on bait and switch with customers. It is based on a low headline fare and it’s really hard to figure out what all the other fees are going to be. Then you show up at the airport and get charged $99.
When your business model is based on screwing the customer, that business model is not going to work in any industry. It didn’t work here, and I never thought it would work and now that’s what happened.
Don’t people want cheaper flights?
People want good value. They get good value at United. They don’t want a cheap flight that gets delayed, that gets canceled, or where they can’t trust the airline.
It has been a tough summer for tourist traffic from some countries. What have you seen?
At the end of June, it was like a light switch got flipped back on. It had been very slow to start the year, but demand has come back. It’s been even stronger post Labor Day.
I think the economy is in better shape than most people think. A lot of the economic statistics are trailing. We’re a good real-time indicator. The economy was weak to start the year — for the first five, six months — but it is much stronger coming into the third quarter.
There was a big drop-off in Canadian travel. There was a drop in European travel. Those bottomed out in about May, and they’re still down, but they’re not down as much. It is coming back.
How have the immigration raids impacted travel?
Those are so tactical that they’re not big enough for us to see in our macro statistics. I just look at the overall demand, and the overall demand is strong. Maybe it would be a little bit stronger without that.
What is United doing to help with travel to L.A. for the Olympics?
The Olympics, interestingly for airlines, lead to less demand. When the Olympics come to town, business travel shuts down.
We’re going to add flights and we’re going to be a participant. It’s not a big deal, but it actually is a net negative for airlines when the Olympics come to town.
How is United using AI?
There are a lot of tactical places, like call centers or reading contracts, where it works. But AI is not good at everything. I am in the camp that believes AI in many industries is more evolutionary than revolutionary.
Our digital technology team thinks that they’re 30% more efficient on a lot of the coding work. We’re testing getting AI to use all the data we have to tell customers what’s going on with flights. To be able to take uncertainty out for customers, that’s an exciting example.
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