United Airlines was forced to cut service to 11 secondary cities across the midwestern USA beginning in January due to the pilot shortage, the company’s chief executive officer says.
The Chicago-based carrier in the past weeks announced it would end flights to smaller cities including College Station (Texas), Colombia (Missouri), Lansing (Michigan) and and Evansville (Illinois), Twin Falls (Idaho) from its hubs Denver, Chicago and Houston.
“It’s down to pilots,” Scott Kirby tells viewers of the Skift Aviation conference on 17 November. “The pilot shortage is now real, we don’t have enough pilots to fly all the airplanes. It’s very simple.”
“The market is in a position where it has never been before,” said Christopher Marich, co-founder of MySky, an online management platform for jet owners.
“For every aircraft out there, there’s two or three buyers for popular models.”
The hunger for pricey jets is just the latest example of the booming billionaires economy, where demand for mansions, boats and many collectibles has surpassed pre-Covid levels.
The number of superyachts sold this year through mid-October increased by about 60% to 523 from the same period last year, according to research from SuperYacht Times. More than a quarter of those purchases were for new vessels.
Meanwhile, prices for some of the world’s costliest homes are soaring. Venture investor Marc Andreessen just spent $177 million on an estate in Malibu. Private equity titan Leon Black paid a more modest $28 million for a mansion in one of London’s most exclusive neighborhoods.
“The world’s truly wealthy seem to be traveling again and wanting to do things,” said Paul Welch, founder of MillionPlus.com, an online marketplace for luxury property, yachts and jets. “I’ve got people buying real estate in London from Indonesia, Canada and Hong Kong.”
In the U.S., the private jet industry’s biggest market, tax incentives have also driven demand. The nation’s 2017 tax bill allowed buyers to write off the full amount of their new plane’s cost on their federal tax returns, making a private jet affordable for more wealthy Americans.
The number of private flights departing this year through mid-October from Teterboro Airport in New Jersey, the country’s busiest private-jet hub, was up 61% from a year earlier, according to aviation data company, WingX.
Any longtime United Airlines flyer will know quality has not always been the airline’s strong suit. Things went decidedly downhill, both onboard and operationally, after the carrier merged with Continental Airlines in 2010 and really only began to recover after former CEO Oscar Munoz took the helm in 2015.
Scott Kirby, Munoz’s right-hand man until he took over as CEO in 2020, is changing that narrative. While costs remain of high importance to the famously penny-pinching manager, those cuts will not come at the expense of improving the passenger experience. In fact, United has embarked on a major investment program to improve the onboard experience for travelers and, Kirby hopes, get the airline to higher margins than long-time U.S. leader Delta Air Lines.
“We will win customers on quality,” Kirby said at the Skift Aviation Forum on Wednesday. And he had plenty of examples quality improvements to cite: The addition of premium-heavy “high-J” Boeing 767-300ERs that fly to Europe, the Bombardier CRJ-550 that met pilot contract rules while bringing a dual-class product to smaller cities, and a return of in-seat entertainment screens to its domestic mainline narrow-body fleet to name a few. And, while further out, United is investing in new spaces in Denver and Newark, and possibly in Washington, D.C.
In October, Delta Chief Financial Officer Dan Janki said the airline is focused on “prioritizing driving margins, profitability and restoring our balance sheet” in 2022. It will do this through the continuation of many of the programs it began before the Covid-19 pandemic: Replacing smaller regional jets with new larger, more efficient aircraft; Updating aircraft cabins with additional premium seats; and accelerating investments in its hub airports. Delta plans to release more details of its 2022 plans at an investor event in December.
“There’s room for both of us to do really well,” said Kirby on United’s competition with Delta. “[But] I think we will win. We’ve just got a better hand of cards.” By “cards,” Kirby referred to what he sees as United’s better located hubs.