Changes are coming to air travel within the United States in the near future — potentially at the expense of the nation’s budget airlines. That’s one of the big takeaways from comments made by United Airlines CEO Scot Kirby in the company’s latest earnings call.
“[W]e also expected and now believe it’ll happen even faster, that the domestic market is going to see a shakeout that leads to an improvement in margins over the medium to long-term,” Kirby said during the call. “It’s impossible to call the timing exactly, but I guess that we see meaningful industry changes by 2H ‘24.”
As The Points Guy’s Meghna Maharishi observed, Kirby seems to see this “shakeout” as something that will largely affect lower-cost airlines. Maharishi points to a short message Kirby posted to LinkedIn earlier this week as one example of Kirby’s bearish take on budget airlines circa 2023.
“For my entire 30-year career, the airline industry has gone through cycles, and we are in one now…but all of those cycles have ended with the lowest margin airlines forced to make adjustments — which will lead to better results for United,” Kirby wrote.
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Kirby’s predictions about the industry are especially interesting in light of federal regulators blocking the mergers of some low-cost airlines earlier this year and in 2022 over concerns that this would reduce consumer options. We’ll have a better sense of where some of the airlines Kirby alluded to in his comments are headed next week, when the likes of Southwest and Frontier have their third-quarter earnings calls.
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