Back in October 2015, United centralized their New York operations, pulling out of JFK and moving all flights from LAX and San Francisco to Newark. At the time the airline promised enhanced benefits and a better experience for all passengers. Former CEO Smisek also said that United had lost money on their JFK routes for the prior seven years and that it was the perfect time to leave the airport as their JFK T7 lease was expiring.
Well, current president Scott Kirby said in a town hall that the decision was shortsighted and absolutely wrong. He told employees that leaving JFK opened up many of the airline’s exclusive West Coast customers to other airlines as executives wanted to fly into JFK instead of Newark. Many companies went from having one preferred carrier (United) to two. Even worse, those contracts allowed employees at those companies to fly the other airline to all locations, not just to New York and most of the time these were first class tickets! He used an example of an employee at a Los Angeles based company who could now choose American for their flight to London rather than United.
“I wish I could roll back the clock and change the decision. It was the wrong decision. You can probably personally blame me, at least to some degree, for the fact that United pulled out. When I was at American Airlines, we were consciously trying to push United out of JFK. That was our goal.”
“The real reason it was a mistake was it let American Airlines in particular go win a bunch of big corporate accounts. 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 but flew United from L.A. to Heathrow and all across the country.”
Kirby said there’s no going back though and the airline will focus on making Newark the best possible experience out of the New York area.
Another interesting takeaway from the meeting, airline margins in the NY area. According to Kirby, United is far and away the most successful.
“We have about 15 percent margins here in Newark. We estimate Delta in New York has a 4 percent profit margin, even when times are good. And American is somewhere in between”