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United Airlines CEO Scott Kirby said ULCCs are “going out of business.”
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Kirby criticized no-frills carriers like Spirit for prioritizing cheap costs over customer service.
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He poked fun at one ULCC for charging $99 for a carry-on and then giving the agent a commission.
Ultra-low-cost airlines are taking one out of left field.
In a candid interview with The Air Show podcast published on Monday, United Airlines CEO Scott Kirby said the carriers are “going out of business” due to bad business strategy and poor customer service.
“It’s a fundamentally flawed business model,” he said. “The customers hate it.”
Kirby’s comments point to no-frills carriers like Frontier Airlines and Spirit Airlines, which offer cheap tickets thanks to their unbundled fares and barebones planes. Usually, these lower fares are at the expense of passenger comfort.
In a bid to attract more customers, the ultra-low-cost carriers, or ULCCs, have improved their operations with more free and premium perks, like Spirit dropping change fees and Frontier adding an “UpFront Plus” seat that resembles European business class.
Kirby, however, argued this shift in focus from leisure to premium offerings suggests an “internal acknowledgment that the [ultra-low-cost] business model doesn’t work.”
But above all else, Kirby said one “fundamental issue” has cost ULCCs a lot of business: “They haven’t treated customers right.”
He gave an example of an unnamed competitor that he said “started charging $99 for your carry-on bag,” noting a commission was then paid out for collecting the steep fee from the customer.
Kirby is likely referring to the viral interactions between Frontier customers and ticket agents that surfaced on TikTok last year. Customers were reportedly forced to pay $99 per piece of luggage that fit into the airline’s bag checker, and Frontier later admitted it offered a bonus to those who caught oversize carry-ons.
“You can do it once, but you don’t get to do it to them twice,” Kirby said. “And those airlines grew big enough that they actually need repeat customers.”
Kirby’s stance is further expressed in his response to Frontier CEO Barry Biffle’s reported comment that the “lowest cost always wins.”
“He’s dead wrong…Best service always wins,” Kirby said.
Recent airline rankings by customer satisfaction scores back up Kirby’s claims.
Regarding the economy experience, Frontier and Spirit ranked last and second to last, respectively, in JD Power’s 2024 survey that examined 11 North American airlines.
According to the Department of Transportation, the pair also had the highest rate of customer complaints among US airlines in 2023.
Over the past 12 months, shares of Spirit and Frontier have declined roughly 73% and 39%, respectively, as the carriers struggle to remain profitable.
Still, Kirby did give credit where it’s due, saying the well-built “mousetrap” low-cost carriers use to lure in infrequent flyers who care about price over loyalty have forced United to adapt and create its own version of a cheap ticket.
“They want the lowest price, and they’re willing to have a disaggregated price,” he said. “So, we needed to build a basic economy cup.”
United’s stripped-down coach fare mirrors the basic ticket most US ULCCs offer, including no free carry-on, changes, or cancellations allowed, but still has the regular mainline coach perks.
To their credit, Spirit has recently dropped all change and cancellation fees, and Frontier has dropped the fees for all non-basic economy fares.
Spirit and Frontier did not respond to requests for comment.
Read the original article on Business Insider
Source Agencies
