Although domestic vacation travel will dominate in the early stages of the recovery, United CEO Scott Kirby is looking to see a strong rebound in business and international travel over the long term.
At a CAPA live virtual event on Wednesday, Kirby admitted that his outlook for business travel was “not the consensus”. For example, a survey by the International Air Transport Association of around 4,700 travelers published this week found that 62 percent of respondents said they would travel less for business even after the Covid-19 containment – a solid majority, albeit a smaller percentage as the last when IATA took part in such a survey in September. However, Kirby said he disagreed with the idea that a sizable chunk of business travel will not be returning as companies have become more accustomed to virtual platforms during the pandemic.
“Business travel isn’t a transaction, it’s a relationship,” said Kirby. “If you go to an event, socialize and have a drink, you meet people there who can answer you and call you when you need them. We won’t get that [from virtual events.] It’s a question of human nature, and human nature hasn’t changed. “
International travel will “return even stronger than domestic” once the borders reopen and restrictions are lifted, Kirby said. While this recovery will take some time, Kirby predicted that long-haul international routes would outperform domestic routes by 2023.
United took an opposite position on the fleet with many global airlines during the pandemic, he said. Although several airlines have scaled back their wide-body fleets, United grew 5 percent year over year in 2020.
Kirby is particularly optimistic on transatlantic routes, saying the European market is “one of the strongest in the world” emerging from the pandemic. Although the market is getting some new entrants, In particular, JetBlueKirby 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 obvious reference to Norwegian Airlines Announced earlier this year it was permanently out of long haul business. “You went away.”
In a research report released Wednesday after speaking with Kirby separately, Cowen’s Helane Becker said it was too early to know if United’s gambling is paying off.
“We agree with the idea that the competitive structure of the international passenger air travel industry has changed as many attendees have reduced their businesses or gone bankrupt,” she wrote. “However, we believe that the international recovery is ultimately too far away to make a call if United’s move to expand its large fleet rather than grant rights like its peers pays off.”
Speaking at the CAPA event, Kirby said he did not expect any major airline consolidation in the US due to the pandemic. US airlines have generally been able to raise enough liquidity to weather the crisis, he said.
However, one effect that will continue is the elimination of change fees that United started last summer, said Kirby. When asked if they would ultimately return once the industry has returned to normal, Kirby said he wanted to get them out before the pandemic.
“I’ve wanted to do that for 20 years, but because it’s a billion dollar decision, you have to be the CEO to make that decision,” said Kirby. “This one is permanent.”
