United pulled out of New York JFK entirely in fall 2015. A year ago the airline’s President Scott Kirby said that was a mistake. Now he wants to return to New York JFK and doesn’t know how to do it.
Scott Kirby, president of the Chicago-based carrier, said United would like to return to JFK but “doesn’t see a feasible organic solution to getting back in there”, a summary of his presentation at the Wolfe Research Global Transportation Conference on 22 May shows. The presentation was not webcast.
Here’s what happened:
- United left because they were losing money on the only flights they offered at JFK
- But the airline’s bean counters looked only at revenue and expense for the those particular flights and missed the bigger revenue picture — lucrative corporate contracts which made other routes profitable, and which they lost without the JFK flights.
Kirby said last year,
“The real reason it was a mistake was it let American Airlines in particular go win a bunch of big corporate accounts,” he said. “People like Disney and Time Warner — two big examples — are corporate accounts that had been United exclusive corporate accounts and not only flew United on the transcon [routes] but flew United from L.A. to Heathrow and all across the country.”
…Many of the corporate contracts were unusual because the companies cared less about pricing than typical businesses, Kirby said. Actors, for example, usually must fly in premium cabins — regardless of whether the fare is $1,000 or $10,000.
United Dominates New Jersey
Newark isn’t New York — New York Mayor Fiorella LaGuardia once refused to get off a plane at Newark Airport, because his ticket promised he’d travel to New York. He was at the time pushing for construction of what became LaGuardia airport (the very first airport lounge was opened at LaGuardia converting the mayor’s private office there). It’s more convenient to parts of the city, however.
Their market share in New York has fallen from 30% down to 23% since Continental and United first merged. Still Kirby said last year that their New York margins are higher than their competitors because they’re still the largest carrier in the metropolitan area. He claimed United had a 15% margin in New York compared to 4% for Delta, with American somewhere in between — something it accomplished while barely competing at JFK.
Two years ago the FAA dropped the ‘temporary’ level 3 slot controls at Newark that went into effect in 2008. Now other airlines can fly in and out of the airport as long as they can get access to gates.
Ironically the problem United now faces is that they can’t get back their old slots and gates at New York JFK. They sold their slots to Delta. And Alaska has moved into some of the space they were operating out of in the airport.
New York is the most important air travel market in the country, and the premium New York West Coast routes the most important as well. There was a time of course that an airline could be number one coast-to-coast out of Newark…
Kirby has effectively admitted that Newark may be convenient enough to New York but it isn’t all that’s needed.