In a blunt statement at the Wall Street Journal’s Future of Everything conference, United Airlines CEO Scott Kirby declared that low-cost airline model is ‘dead’, describing it as a ‘crappy’ business strategy designed to ‘screw the customer’.
The incendiary remarks came shortly after United announced a new partnership with JetBlue Airways; a company largely considered a low-cost carrier itself.
Kirby was quick to clarify, saying that “JetBlue was founded in trying to be a better airline for customers. Budget airlines were founded in trying to have the absolute bare bones lowest cost. They may both be startups, but two polar opposite business models.”
According to him, low-cost airlines trick people into buying cheap tickets only to charge them later for a wide range of unexpected costs.
“It was like trick people, get them to buy, and get them to come, and then charge them a whole bunch of fees that they aren’t expecting… disclosures buried in legalese,” he explained.
He further argued that while the model might have worked as a tactic in the early stages of the budget airline boom, it ultimately failed as a long-term strategy.
“Their problem is they got big enough that they needed repeat customers. They don’t get them.”
He also specified that JetBlue’s model is entirely different and that his remarks do not apply to it.
While JetBlue is sometimes grouped with budget airlines, many analysts actually classify it as Hybrid or ‘premium low-cost’, due to its emphasis on offering greater passenger comfort with features such as free Wi-Fi, in-flight entertainment and more legroom, uncommon in other ultra-low-costs such as Spirit or Frontier.
The partnership – not merger, as ‘Mergers are hard’ said a laughing Kirby to Business Insider – known as Blue Sky, will allow passengers to earn and redeem frequent flyers air miles across the airlines, while elite members will enjoy reciprocal benefits.
The deal will also give United access to seven daily round-trip flights out of JetBlue’s new Terminal 6 at JFK starting in 2027. This is a significant improvement as United currently has minimal presence at JFK. The partnership strengthens its foothold in one of New York’s most strategic airports.
Reacting to Kirby’s criticisms, Frontier airline’s CEO Barry Biffle defended the ultra-low-cost model. “He must be referring to other carriers,” he said, adding that Frontier ’offers free carry-on bag, free changes, and free seat assignments in our economy product’.
Other low-cost among which Ryanair have not commented.
Kirby’s criticism comes at a time when the line between low-cost and traditional airlines has blurred. Extra charges for seat selection checked baggage and onboard refreshments have become common across most of the industry.
