Transcript: The Path Forward: Air Travel with United Airlines CEO Scott Kirby
April 29, 2021
By David Ignatius, Washington Post
MR. IGNATIUS: Welcome to Washington Post Live. I am David Ignatius, a columnist for the post.
Today on our series, "The Path Forward," we're going to be talking about air travel with the CEO of United Airlines, Scott Kirby. Scott has been chief executive for about a year, took over in May after serving four years as president of United.
Scott, welcome to Washington Post Live. Glad to have you.
MR. KIRBY: Thanks for having me, David.
MR. IGNATIUS: Let's start talking about your business. You have begun offering additional flights. The numbers that I've seen say you're adding 480 flights a day and are now offering an average of more than 3,100 domestic flights every day. I'm curious about how you've made the decision to increase the number of flights and how you're deciding where to go, which destinations to add and which not to.
MR. KIRBY: Yeah. Well, we're encouraged to see the beginnings of the rebound, particularly for leisure demand, and if you look at where we've added flights, they tend to be a lot more focused in leisure markets of going to Florida, going to Myrtle Beach, going out to the mountain destinations because that's where customers are going.
What still hasn't really bounced back yet is business demand, and so those shuttles between Washington National and Chicago or to LaGuardia still have a lot fewer flights than they did a year ago. Our best guess is that that business traffic is going to start coming back more in earnest in September, once kids are back in school, parents have the school relationship and ability to go back worked out and ability to go back in the office, but for now, we're on the way back. We're not 100 percent of the way there yet. We should have something like 4,500 flights a day, but we're definitely on the way back, and it's biased towards the leisure markets.
MR. IGNATIUS: I want to come back to business travel in a minute, but let me ask you about bringing back staff. You have said that you're going to begin resuming hiring pilots. Tell us about that and what your plans are to ramp back up in terms of staffing.
MR. KIRBY: Yeah. So, you know, we had some people take early outs as we went through the pandemic. The good news for us and for other airlines is the support from the government allowed us to keep essentially all of our staff employed and here, and that's important because what it means is we don't have to go through all the training and recertification that would have happened if those people had been furloughed during the pandemic.
And so now, as we start to see the light at the end of the tunnel, we can get back actually to hiring and growing. Our guess is that we'll be--about the end of the year is where we'll be back to 100 percent of where we were pre-pandemic, and we expect to be back on a growth path in the years to come.
And because of that, we've restarted hiring pilots. We're hiring for ground jobs at a number of locations around the country, and it's just wonderful instead of talking about losses and cash burn and furloughs to be talking about hiring and talking about the brighter outlook for the future.
MR. IGNATIUS: Do you have any sense of when you're going to be profitable again, given current trends?
MR. KIRBY: Well, what we've been saying is that we're not sure on the timing. There's two big variables that we need. One, we need business travel to come back; and two, we need the international borders to reopen.
The news last week from the EU president talking about wanting to reopen the EU borders with the United States is really encouraging. It's not done yet.
What we really need to do is we need to get back to about 65 percent of normal levels for business demand and international long-haul demand to get to a break-even. Whenever those two things are going to get to 65 percent is when we'll approximately break even. It's anybody's guess.
My guess is that business demand is going to get there sometime toward the end of the year. My guess is that Europe will get there by the end of this summer, I hope, but Asia is going to probably take a little longer before all those borders begin to open. It's an open question, but towards the end of this year or sometime early next year, that would be my best guess.
MR. IGNATIUS: On international travel, Scott, where United is such a huge player, I noted the EU announcement that they're going to let Americans travel again. I'm assuming that that's going to be leisure travel, but I'm curious. With the State Department announcing so many travel advisories--there are stories that eight out of ten countries in the world have travel advisories now--that must be a problem in terms of getting people even to think about taking that holiday overseas.
MR. KIRBY: Well, after all we've been through as a society in the last 14 months, you can clearly see huge pent-up demand and desire for people to get back out and experience the world and particularly as vaccination rates are going up and as individuals get vaccinated.
I can speak personally. Me and my wife took our first trip together a couple of weeks ago. We're planning to take the kids to Europe this summer, and you just see that pent-up demand from people and I think an increasing confidence. Look, all of us, including the CDC and others, are getting more and more confidence as we get more and more data about how effective vaccines are at reducing particularly severe infections and mortality rates.
What we see in the business is some cautions from people and doing things like testing or requiring vaccines, but there's just such pent-up demand that the demand is really strong for any of the borders that are open.
MR. IGNATIUS: Let me just ask, for the countries where there are travel advisories but Americans are not banned from traveling there, does United still fly to some of those countries, and do you get any pushback from employees about that?
MR. KIRBY: We do fly, well, especially now where there's so many countries that are on the Travel 4 advisory. Normally, Travel 4 advisories are countries like Iran, North Korea, Afghanistan. It's a pretty small list, and so, normally, we wouldn't be flying there. But in today's environment where you just put a whole bunch of countries on, some of those countries are on.
But, look, I'll just take one example. Israel is on the Travel 4 advisory list, and the vaccinations are--they're really good here in the United States, but the number of people vaccinated in Israel's percentage of the population is about double. And by the way, the case rate in Israel is one-tenth of what it is here in the United States.
I'm hopeful that those kind of Level 4 advisories are a little rearview mirror looking compared to the forward looking, but at the moment, we're flying to places like Israel.
MR. IGNATIUS: We began talking earlier about business travel, and I'd like to drill down on that a little bit. We've had a number of CEOs, including from your industry, on Washington Post Live who've said that it's possible that our economy or our ways of operating, our ways of having business interactions, meetings, just it's going to be changed forever by the experience of the pandemic and that business travel just won't look the same in the future as it has in the past. What's your feeling? You've got to make long-term projections and forecasts. What do you your economists and what does your own gut tell you about whether we'll come back to something like what we had before?
MR. KIRBY: So, I'm going to give you an opinion that is certainly the minority today, but it was a lot bigger minority a year ago when we started making decisions, and really a year ago, at about this time, we kind of went through a bunch of conversations. This is more of a gut decision than it is something from an economist because every survey that you could look at, business travelers said, "Oh, it's never going to come back to where it was."
But we reached--made a different bet, and our bet is that business travel is going to come back, and that is because business travel is about human relationships and human interactions. And as tough as this pandemic has been, it has not changed human desire to be together, need to connect, and if you watch the survey data, it's moving closer and closer and closer to a full return to travel as people start to realize what they've missed as they've gone through the pandemic.
I talked to one of our top five travel providers, a CEO, at this time last year who told me his advice like business demand is going to--we're going to permanently have 50 percent less business demand and you're going to have to adjust your business for that.
I then talked to the same CEO in the fall of last year who said, well, we've realized we've got to go see our customers and our clients, but we're going to not do the internal business demand for meetings and celebrations that we used to do, so we'll be down 25 percent.
I talked to that same CEO in January who said, well, we realize our culture, it's really hard to keep our culture together if we're not together, and at least for the first year or two, once we're allowed to travel, we're going to have to travel more than we did in 2019.
And I can almost guarantee you that that individual doesn't remember they said down 50, down 25, now up 20, but that's what's happening, and it's really a function of it is human nature. And business travel is not about transactions. It's about relationships, building and maintaining relationships, and you just can't do that through video, and so I continue--we've made the bet that business travel is coming back. I feel more confident about it today than when we made the bet a year ago, but we do believe that business travel is going to come back.
MR. IGNATIUS: That's really fascinating and the most upbeat account really of how we're going to come back to something closer to the old normal than we might think.
I want to ask you about a small point for your business but one that a lot of flyers think about, and that's change fees. We're in a pandemic. I assume United, but I know many airlines waived change fees. Are you going to reimpose them, or are you thinking about altering that part of your business?
MR. KIRBY: So, one of the big decisions that we made--and I think we did it in June--was to announce that we were permanently eliminating change fees, and this is a decision that I've wanted to make for 20 years in my career in aviation. I've joked, sort of joked at least, that because it's a billion-dollar decision, you kind of have to be the CEO to make the decision. But we have permanently eliminated change fees at United, and then most of the others in the industry have followed and copied us.
But the point on this one is actually a bigger point, which is we've really tried to change how customers feel about United Airlines, and this is as much a cultural point as something that customers requested, because our employees, we put them in this position of charging change fees. And somebody has a really good reason they need to change their flight, a relative passed away or ill, and they were forced to tell that customer, "Okay. You can change your flight by a week, but we're going to charge you $200 to do it," and our employees knew that wasn't right. And we forced them to defend the indefensible. And when we did that, it's hard for them to believe when we tell them, "We want you to do the right thing for customers." They look at you like, "Well, you don't mean it because you make me do these things that are bad for customers."
It's bigger than just eliminating change fees, which is great for our customers, permanently, but it's also about changing the customers--and really convincing our employees that we want them to be empowered to do the right thing for the customer. And we've got to knock down these obstacles--there's others I could talk about--these obstacles and these barriers that prevent them from doing the right thing for the customer and make it hard for them to do the little things because they don't trust us when we tell them that, and they were right to not trust the leadership team when we asked them to do those kinds of things.
MR. IGNATIUS: Every frequent flyer is going to be happy to hear what you've just said, but I'm curious what else is on your list of things that just bug your customers that you're thinking we ought to fix that and maybe you will change them. Are there any others that you'd be willing to mention?
MR. KIRBY: Yeah. Here's one big one. We've implemented something that we call "ConnectionSaver," which for anybody that flies a lot and takes connecting flights, you've probably had the experience of running through an airport to meet your connecting flight because your inbound flight was a little late. You're completely stressed out about it, and perhaps an airline--it could have been United, could have been one of our competitors--slammed the door in your face and the airplane went, and you're stuck on the ground trying to figure out how in the world am I going to get where I'm supposed to go.
We have this program called ConnectionSaver where we're now willing to delay flights to wait on those connecting customers.
Yesterday we had 1,619 customers whose connections we saved that would have missed a connection at some point in the past, and we're the only airline that I'm aware of in the world that has an automated system that does this. But it's another one of these examples of it's not just about those 1,600 customers whose connections we saved yesterday. It's about convincing our employees that it's okay to do the right thing for customers, because if you're a gate agent and you've spent your career with management telling you please take care of customers, care about customers, do the right thing, but you've been forced to slam the door in people's faces every day, you don't believe it. And because we've started making those kinds of changes, the number of emails I'm getting about all kinds of little things that are happening in the operation, our employees, our people feel empowered to do the little things and to take care of customers.
There are a number of other examples. That's one of the big ones that we're doing, but there are a number of those kinds of examples of just eliminating the kinds of policies that put employees in the position of having to defend the indefensible and feeling like they're doing the wrong thing for the customer. When they feel like the company supports them to do the right thing for the customer, they're the ones that can make the airline great.
In the last year, we've had a 30-point improvement in our net promoter scores from doing stuff like this. I just recorded a video for our employees this morning and said, "I hope this is the most enduring change. We've got a lot of change from COVID, but that this will be the most enduring change of really changing the way we behave, interact with customers, and changing how customers feel when they fly United Airlines."
MR. IGNATIUS: Again, that's news that every frequent flyer is going to really enjoy. Having pounded on gate doors a number of times while the plane was sitting there and I was missing my connection, I'm happy to hear that.
Let me ask you about another thing that you've been trying to do to reassure customers and to reassure your own employees, and that's cleanliness, travel safety that goes along with making sure that your planes are as COVID-free as they can be. Tell us about how you've gone about that. You formed an alliance with Clorox and the Cleveland Clinic to figure out the best cleaning, disinfectant protocols. Just tell us a little bit about them.
MR. KIRBY: Well, in aviation in general and certainly at United, when we say safety is number one, I mean, it is--I don't know of any other industry that is anywhere close to what aviation does in terms of safety, and it really is.
So, when the pandemic first started, we did a number of firsts and a number of things. We were the first to form this partnership, as you talked about it--we call it "CleanPlus"--with Clorox and Cleveland Clinic. Look, I was blessed to be able to get on the phone with the CEOs of both of those organizations whenever I wanted to and just talk through things, because if we remember back a year or 13 months ago, there was so much uncertainty, and just being able to talk through things--and no one knew the right or wrong answers a lot of times, but being able to talk through it helped and led us to take a lot of steps. We were the first airline to require masks. Once it became clear this was aerosolized, we required masks, and for what it's worth got some blowback from that for a few weeks. But a few weeks after we had done it, at least most of the country and mostly across the board was requiring masks and it was normal. But we led on that.
We partnered with the Department of Defense and DARPA to do kind of the biggest study that's ever been done about transmission of viruses on board aircraft and essentially concluded because of--particularly because of the robust airflow on the systems and the other safety protocols that it was almost impossible to catch COVID on airplanes. We started cleaning protocols, the spraying that was in the video, between every flight in aircraft and really have just taken a leadership position on understanding first what the risks are and then when there are risks taking whatever steps are required to mitigate and eliminate those risks.
MR. IGNATIUS: Let me ask about the obvious next step in this, and that's vaccination. I've read that back in January, you expressed support for the idea of requiring your own employees to be vaccinated. I'm curious whether you've made a final decision on that, what kind of pushback you're getting from your employees, if any, just where that stands.
MR. KIRBY: I was public--well, I was talking to our employees, but those events all become public--telling them that my own view was that it is a safety issue, it is a health issue. We're all better off if we get vaccinated and particularly for employees that interface with other employees, interface with customers who travel overseas. We have five flights to India right now that are flying there, that my desire would be to get to the point where we were all vaccinated, also realistic enough to acknowledge that if there was no government mandate for that and there were not other corporations willing to do it, it probably would be hard for United to do it on our own.
I've been really encouraged once vaccines have come out--we were one of the first. We set up pods in many of our hubs. In fact, Newark actually just opened today. The governor was there with us opening that pod, but we had a lot of them earlier where our employees were higher in the list from the CDC and the guidance and so could start getting vaccinated. As people started to see their coworkers get vaccinated and see that it's okay, the vaccine hesitancy was less than I thought it would be or that we were worried it would be or what surveys were telling us at the time it would be. So, to date, we haven't required it.
It's still something we think about, particularly for our crews. I mean, I will admit that watching what's happening in India, Brazil, Peru has us back again having some intensive discussions about whether it's the right thing to do at least for those work groups, and we're talking to the unions about it as well right now.
But I continue to wish that we could get to the point where we were all vaccinated, but we haven't mandated it quite yet.
MR. IGNATIUS: Do you have any rough estimate as to what percentage of your workforce or aircrews, if we want to narrow it, have been vaccinated?
MR. KIRBY: We aren't sure because a lot of people have gotten vaccinated on their own. They went to their local Walgreens or wherever and gotten vaccinated. My guess is that we're probably at the 50 to 60 percent range, but it is a guess because we have some data, people that have gone to our clinics. We have data on that, and so we kind of know about a third of the employees, but the rest, we aren't certain of. My guess would be in the 50 to 60 percent range right now.
MR. IGNATIUS: And I take it, you're assuming there will be a demonstration effect and that those numbers will increase as employees see other employees being comfortable expanding what they can do.
MR. KIRBY: We did. We saw that already, particularly in places where there was a pod at the airport, and so when people were getting their shots--Denver was a good example--getting their shots at Denver, we'd get an allocation of vaccines. We'd have a signup sheet. We'd go through the entire allocation each day, and as people had friends and coworkers that they saw get the vaccine and everything was okay, their confidence level starts to gradually increase, and so I hope that we'll continue to see that, not just at United Airlines. It's important, obviously, for our whole society that we get to a high level of vaccination. But I'm cautiously optimistic that we're headed in that direction.
MR. IGNATIUS: And, Scott, one more question on this subject. Even where people have decided that mandatory requirements to be vaccinated are just not possible, thinking a lot about incentives to get people to be vaccinated--and you can imagine on airlines, special seating for people who have been vaccinated and can display verification of that--other ways that they feel safe and, in a sense, are rewarded for having made an effort to be safe, have you thought about things like that? It's not economy plus; it's vaccinated plus.
MR. KIRBY: Yeah. It sounds like a great idea, and we have thought about it. But I think almost any of those ideas run afoul of the regulatory requirements that we have, and absent a government mandating vaccines to fly or a government rule, it's probably not something we can do unilaterally from a customer perspective.
That said, my guess is that most long-haul international borders are going to require you to be vaccinated to go. For anybody that wants to travel long haul and go to Europe this summer to go to New Zealand or Australia our North American winter, I suspect you're going to have to have a vaccine.
Right now, there's three countries in Europe that are open: Iceland, Greece, and Croatia. But you have to have been vaccinated to go, and by the way, demand is through the roof for those flights because it's a place that people can go. When the EU president talked about it, talked about it as requiring a vaccine--we have discussions between the U.S. and U.K. ongoing. My guess is that there's going to be some government fiat that requires vaccines internationally but unlikely that anything, at least in the foreseeable future domestically, will be requiring a vaccine, and I think it would require some government support/action in order to make that legally possible.
MR. IGNATIUS: In the remaining eight or so minutes we have, Scott, let me ask you about some climate-related issues where United has done some interesting things.
In February, you announced an agreement with a company called Archer Aviation to develop electric aircraft, sort of air taxi, I gather, vertical takeoff planes. I'm curious when those might actually be flying passengers, and also, I'm curious about whether your future planners imagine there could ever be long-haul electric engines that would get us safely across these long distances.
MR. KIRBY: Well, thanks, David, for bringing up sustainability. It's a personal passion of mine. It has been for at least 30 years, and it's a good thing we only have eight minutes left or I would take the whole 30 minutes and talk about it, if you'd let me, because we've got a bunch of things that we're doing in addition to electric aircraft.
The first answer, though, is electric aircraft are not going to replace big long-haul airplanes flying to India, really flying a lot of customers long distances, and the problem is the energy density is simply not high enough in the batteries for airplanes. There's too much weight as a result for airplanes to take off and fly very far, and it's simply physically not possible. Even hydrogen, which has much higher energy density than a battery, is only one-third as much as the energy density as jet fuel, which means you have to have three times the weight of hydrogen on the airplane to cover--to create the same power and cover the same distance, and that's not going to work.
But electric aircraft, eVTOL aircraft, and perhaps some others flying short distances, smaller markets with fewer people on board is a real possibility, and that's why we partnered with Archer. We may have some other partnerships coming, but that was the first partnership. Really, part of that is about--that's kind of--that's almost a helicopter replacement, and I could talk about kind of the service that we envision, you know, get you from downtown Manhattan out to Newark, kind of a premium service. It's quieter than a helicopter. It's safer than a helicopter because it has 12 rotors. It's environmentally friendly, but it's really not replacing our aircraft at that point.
But we're also wanting to be invested in leading-edge technology companies because when you think about climate change and the 50 billion tons of carbon that mankind emits every year, we're going to need a lot of technology to solve this problem, and it is the biggest problem that our generation faces and the one we must solve or our children or grandchildren will never forgive us. We have to solve it.
Part of this is about just being in the mix with technology, and I don't even know everything that might come out of it, but trying to be leading edge so that you can think, have forward thinking about real solutions that can solve the problem--because it's a solvable problem, but it's not as easy as a lot of people think it's going to be. It's a really difficult problem, but it is a solvable problem. And we want to be part of the solution, and the reality is United is the leading global airline in terms of our carbon and sustainability and climate change efforts.
But it's also something that we want everyone to join us. We don't want to be a leader in this. It's like safety. We should all be trying to do the same thing together.
MR. IGNATIUS: Let me just ask you to pursue this a little further. You have something you call the Eco-Skies Alliance, and I think, Scott, that you've made a public commitment to reduce your greenhouse gas emissions 100 percent by 2050. That's an amazing goal.
MR. KIRBY: Yeah.
MR. IGNATIUS: Tell us how you're thinking about getting there, such an extraordinary change.
MR. KIRBY: We've made a commitment that is different than I think that anyone else, certainly airlines, have made, but even other companies. We've made a commitment to 100 percent green, and when we say 100 percent green, we mean we will get there without traditional carbon offsets.
The way we're going to get there is sustainable aviation fuels is number one. We're a large investor in a number of companies that are kind of leading edge on technology again. One of them, for example, takes municipal solid waste, and instead of just dumping it in the dump, it goes through a facility, and you can make a few gallons of jet fuel out of each ton of waste, which is--and by the way, then that's carbon that doesn't go into the landfill and turn into methane and methane leaks coming out of landfills. Sustainable aviation fuel is one.
Number two is the electric aircraft and R&D in that space that we talked about.
But number three and the one that I think is most important for not just airlines but for everyone to think about is carbon sequestration, and I talked about the 50 billion tons of carbon that are emitted every year. And today one of my huge frustrations with corporate America is they're relying on carbon offsets. You see announcement after announcement. If we're going to be net zero and you go ask what they're doing, they're paying some fund some amount of money to check the box and say we bought a carbon offset, and the reality is most of these carbon offset programs are planting trees. The vast majority of them are things that were going to happen anyway, you know, don't cut down trees that have never been cut down, so they really aren't helping climate change because they're not changing anything.
But even if they are a good project, even if you're planning some incremental trees, mankind emits 4,000 times as much carbon today as we did in the pre-industrial era. There is not room on the planet to plant 4,000 times as many trees, and as long as every corporation gets there in the convenient, easy way and checks the box on carbon offsets, the planet is never going to solve this problem. We have to stop doing that, and carbon sequestration is about taking carbon out of the atmosphere, permanently storing it underground for tens of millions of years.
We partnered with Occidental in 1PointFive in what will be the world's largest carbon sequestration project. Each plant will permanently sequester the equivalent of planting 40 million trees per year, but importantly, it's incremental, and it's permanent, and it's scalable. And that is going to have to be part of our solution. Any way you do the math, it's hard to get through the math without having sequestration be a part, and so we're proud to be a launch on the first large-scale commercial project there.
MR. IGNATIUS: Scott Kirby, thank you for a fascinating look at your industry and at United. Thanks for joining us on Washington Post Live.
MR. KIRBY: Thank you, David. I enjoyed it.