United CEO Jeff Smisek was ousted in September 2015 with a $37 million golden parachute after he reportedly agreed to pay off a politician in exchange for favorable action from the Port Authority of New York New Jersey which oversees their Newark airport hub.
He led Continental’s takeover of United, and many frequent flyers believe he destroyed both airlines in the process. So much for ‘changes you’re going to like’.
And yet it turns out he may have done as much as anyone to preserve the Cathay Pacific brand. At a dinner with Cathay’s CEO he advised against Cathay starting its own low cost carrier and apparently the Chief Executive took the advice to heart, crediting it as the reason they didn’t move forward.
Cathay Pacific Airways’ decision to hold off on launching a low-cost carrier was influenced by an executive who was forced out of United Airlines, the Hong Kong carrier’s chairman has revealed.
In a surprising revelation, John Slosar said that part of the reason he has been dead set against launching a budget airline came from a dinner he had “a few years ago” with Jeff Smisek, the former United Airlines chief executive who resigned in 2015 after a major corruption scandal.
“The most important thing he said was, ultimately the idea that you could have a separate [budget] airline … and your main brand doesn’t compete turns out to be a false assumption,” Slosar told students at Polytechnic University in a speech last week.
Cathay Pacific Business Class
United had Ted (and Shuttle by United). Delta had Song. US Airways had MetroJet. Although the same McKinsey consultants shopped the idea as the crucial strategic move to survive the early part of the last decade none of those efforts survived.
Of course United and American are no stranger to destroying their premium brand through efforts like basic economy, and United, Delta and American through charging ancillary fees for what they maintain is a premium product, without the need for a separate airline-within-an-airline in order to do so.
However Cathay took the lesson that you cannibalize your premium business with your own low cost carrier, and they avoided that move.