When Elon Musk fired two-thirds of the staff at twitter and the website still stayed running, it was a wakeup call for big tech companies who were paying a lot of people not to do very much of anything. Those companies saw it as permission to downsize their staff.
The same thing… doesn’t really work as well at airlines. But don’t tell United’s CEO Scott Kirby that.
Kirby claims the entire U.S. airline industry is overstaffed by 10%. Yet airlines haven’t been getting more efficient, and they’ve lacked the staff to manage their operations, especially as air traffic control melts down, bad weather rolls in, and carriers like United lose control of their schedule.
.@united and airline industry is "10% overstaffed" CEO Scott Kirby says
— David Shepardson (@davidshepardson) September 12, 2023
Let’s be clear. There’s a shortage of pilots in the United States (though the major pilot union argues otherwise to fend off measures that would make it easier to become a pilot).
The minimum number of flight attendants on each flight is mandated by law. Airlines have more flight attendants on staff than required because they need some to be on reserve for when crewmembers call in sick, or when flights cancel or delay and they need people to work onward flights.
Airlines shed non-union headquarters staff during the pandemic, as soon as they were legally permitted to do so (and sometimes even before that). They can use fewer support staff and fewer people in non-operations roles, but not fewer people flying planes or dealing with customers.
That’s not really Kirby’s view. Last summer Scott Kirby said United was overstaffed with pilots by 10% relative to the hours they were flying. Yet United had just acquired a flight school to address the pilot shortage.
Then last fall he claimed that United was overstaffing by 10%, which is to say they had 10% more employees than pre-pandemic on a per block hour basis.
Does it seem like United has too many reservations agents or staff at airports? Here’s the scene from United Airlines in Houston over the weekend, as the airline cancelled more flights than any other carrier.
@united WTH is happening at the Newark Airport? Hundreds of people stranded all being told by @united employees that they can’t be helped. People waiting for help for hours to be told they’re SOL. get your shit together pic.twitter.com/mU9IRt7upW
— Richie (@Richiejricardo) September 9, 2023
Here’s United at Chicago O’Hare.
The @united customer service line at O’Hare (and this is prob only half of it) pic.twitter.com/ZXuBGq7cWA
— Amanda Finnegan (@amandajfinnegan) September 9, 2023
And here’s United telling customers that even though they weren’t going to fly on Saturday, they can’t have their checked luggage bag, even when it’s mere feet away. They aren’t staffed to handle returning luggage.
@united embarrassing that my flight was canceled and you won’t retrieve my bag. Apple air tag says it’s 15 ft from Me! pic.twitter.com/WsidSHqw2i
— Julie Cohn (@jbcohn) September 9, 2023
Kirby can look at a spreadsheet and say that the airline should be able to operate at staffing levels from 2019, and do comparisons of how much they’re flying and assume that the number of employees ought to scale linearly in either direction. But that’s not entirely how this works. A preponderance of leisure travelers need more handholding by staff. More flight cancellation the need for more crew and more employees to interface with customers. And Kirby and other CEOs are agreeing to work rules in union contracts that are less efficient and drive up employee numbers.
The airline industry is one of the least dynamic in the country. Roughly speaking flying in the U.S. works very similarly to how it did 10, 20 and 30 years ago. It’s one of the most heavily regulated industries in the country, and much of the process of moving passengers from one place to another is actually done by governments – which own the airports, perform security screening, sign off on cabin configurations, and tell planes where to go both on the ground and in the air.
Wage growth is going to be driven not by productivity but by cost disease – higher wages in other sectors force airlines to compete for employees with more pay, even though those employees by definition in most cases aren’t more productive (same number of employees on each flight). Sometimes that means hiring more people at extant (low) wages instead, as well.
- Airlines were given massive subsidies during the pandemic to keep employees on board, so that airlines would be ready to fly
- Instead they used some of the money to pay employees to retire early
- Then they didn’t have staff to run their operations when travel returned
- So they had to hire the people that they could. That may be more people!
I don’t think Kirby’s extrapolations of data do a great job at predicting or managing airlines. He argued at the start of the summer that airfares would rise as the year went on beyond they were below their historical percentage of GDP. Airfares have continued to moderate.
Despite staggeringly obvious appearances, Kirby is actually not an idiot. He’s simply way, way, way out of his depth at running a large international airline. That pretty common for not only him but the rest of the AmericaWest crew, who were crammed full of the ULCC mantra and simply can’t shake it off. Kirby would make a phenomenal CEO for Frontier; He’s simply out to lunch at United.
Shocking this could happen @ New Ark one on the finest luxury airports in the world and a Untied Hub.
Does Kirby – like his peer at Southwest – also have a degree in accounting from UT Austin? Seems to be a prerequisite for being an incompetent airline CEO.
United has had far more operational meltdowns than any other airline in 2023, yet he insists it’s overstaffed.
You simply can’t make this stuff up…
Paging Jack Welch…
He is right.
They have too many useless managers, VPs and the like.
Kirby is a clown.
Seeing that Kirby rarely leaves the upper-management environment you can fairly assume he is referring to that level as being overstaffed. Get rid of useless and clueless VPs of This, That & Another, and their support staff, for starters!
Maybe the Board could do with a trim too.
@nsx at flyertalk,
Jack Welch created Bob Nardelli. One of the worst CEO’s on record.
Let’s see. Imagine United with 10% fewer staff cleaning aircraft. How about 10% fewer mechanics and other aircraft maintenance personnel. Finally 10% fewer folks in their call centers.
Sure glad that I don’t often fly United.
this article aged well with the audience.
United has always done better w/ staffing than American but not as well as Delta and nowhere near as good as Southwest which was built from the ground up on the concept of efficiency.
Delta has done a far better job of connecting employee compensation w/ company success via profit sharing so it isn’t a surprise that they are more efficient and have less staffing – and generate the most revenue per employee in the US and probably global industry.
And it was a given that United would start pushing on other labor groups as soon as they had to sign the DL-driven massive pilot pay raises. UA FAs are still looking for a pay raise and he is now talking about being overstaffed. Add in that fuel is going up and demand is starting to normalize AFTER UA signed up for massive amounts of fleet spending and reality was bound to set in.
good article, Gary. And not because it is about United.
Kirby may feel that his airline is over staffed, but it may be due to the increased number of people needed to do the jobs that were done by fewer experienced people before the pandemic.
In the meantime, his passengers believe they are under serviced by United’s inexperienced agents.
If there is any consolation for Kirby, it is that all of the airlines are dealing with the same problems they caused themselves by their unbridled greed during the pandemic.
Uh… what?
Have they not been on the industry podcasts for the past two years whining about how they can’t get people back to work?
Certain CEOs expect workers to be like a faucet they turn on and off at will. And then wonder why there’s so much resentment.
Scott Kirby sucks. United should restore the FA position in longhaul business cabin. That should be part of Polaris 2.0.
UAis overstaffed at airports? At ORD land-side, I would say it’s too understaffed in the evenings when I miss a connection from international flights coming into T5 and am to depart on UA from the B/C/F gates at the T1/2/3 complex. UA shuts down the Star Gold premium check-in counters too soon for my liking, and their “additional services” counter is a slow joke and ramps up too slowly in the evenings to be fast enough to be considered customer-friendly.
The airlines think they can keep cutting customer-facing staff on the ground and outsource to the customers the work and burden of time lost by customers trying to get service. And unfortunately they can and do get away with it.
nsx,
Arguably, Jack Welch set up GE for massive problems by front-ending the benefits of his endeavors and masking the damage being done by those endeavors — only for that damage to be more publicly realized after he could walk off the stage as “CEO of the century” and having had this time and then some as the celebrated celebrity CEO with a “great record”.
GU is right on Jack Welch.
It is notable that the original GE is now just the high margin jet engine builder w/ many of its other functions spun off or sold since he left.
and regarding Kirby’s comments,
Spirit just reduced its investor guidance for the 3rd quarter based on higher fuel and a weakening revenue environment.
Since American already guided to a weaker 3rd quarter based on the ending of the Northeast Alliance while Southwest, Alaska and United did the same based on fuel and general revenue trends, it is clear that a weakening industry environment is coming and United is particularly exposed due to its massive financial commitments from Kirby’s grandiose fleet spending and growth plans which were never likely to come to fruition.
It all comes down to who has the financial strength to withstand a weakening of industry financials.
All eyes will be on Delta’s presentation at the Morgan Stanley conference to see what Delta has to say but it is possible that they could further distinguish themselves from the rest of the industry from a financial performance perspective. Pratt and Whitney will be paying Delta Tech Ops hundreds of millions of dollars just to inspect other airlines’ GTF engines while the refinery will benefit DAL’s fuel costs once again. add in whatever Delta does from Skymiles and Amex and other airlines including United could quickly find themselves as financial underdogs competing against a much stronger competitor that is capable of withstanding a financial downturn.
Regarding the inability to return bags that were checked, I could see that happening on a normal day with staffing.
I accidentally left my ipad aboard at ORD on an overnighting aircraft, realized it shortly thereafter, and attempted to retrieve it. Bag services told me (as a fellow employee mind you), they couldn’t get it since it was in a locked room that only one employee had access to. If it wasn’t retrieved in 3 days they’d send it to central bag services, even though the ipad had my name and phone number on it. That employee was only there 7-5 monday-friday. It was 7pm on a midweek. I eventually retrieved it the following morning, after getting a station manager involved. I can’t imagine the process a normal passenger would have to go through, especially if they were going on a long trip.
It is difficult trying to defend my own companies practices and policies as an employee when I see those policies fail miserably on a daily basis. We are definitely overstaffed, and while employees are forced to work overtime, we haven’t kept up with hiring to mitigate it. Just at BOS the last few days there was one gate agent working a full flight while delays and cancellations were happening. It’s unacceptable to see that.
Sorry meant to say we are UNDERSTAFFED, not overstaffed. Still waking up.
That’s what I love about Scott Kirby…every time you begin to forget, he reminds of what a complete idiot he is!
Airlines need to pay more and hire less people. CLT airport for an example is full of slackers that stand around doing nothing while it takes an hour to get bags off a flight. Baggage customer service is full of grumpy trolls that couldn’t get a job at Gringotts Bank. Customer service is terrible. It’s not the number of people. It’s the laziness, the attitudes and the lack of pride in personal performance.
It’s not like DL is that much better. It’s that UA seems to have smaller seats and low-class passengers, and is not very timely. I’ve had great service from UA ground staff and UA lounge staff. Next month, I’m planning on flying to a UA hub city. I could go free on MileagePlus points, or I could pay for a DL flight. I’m thinking of just paying for the DL flight to reduce the risk of a weird flight hassle.
Those who are commenting have been the CEO of how many airlines? Just as many as I have most likely.
To that point, Theodore Roosevelt once observed, “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
Scott Kirby is not an idiot; in fact he is a genius – who always finds ways to screw customers up, devalues mileage program, cuts back on anything and everything so he can look good with investors and the board. I agreed with many readers here that if he thought United was overstaffed, reduce the numbers of VPs, Executives. He is destroying CO/UA to bring it to Spirit’s level. When United announced he came over, that would be the end for United flyers. Trust me, he is not stopping. He will find more ways to “change” and introduce “more benefits”.
Scott Kirby cooked up a grand scheme to grow far more than the rest of the industry and now finds itself in the midst of a downturn in the economy – long expected due to high inflation, the end of covid stimulus money, and higher energy and labor costs.
UAL already was in a far riskier position as much as they tried to convince many otherwise.
Kirby is simply saying what every CEO knows – cutting labor costs is the only way to protect falling margins. Problem is that UA already committed to massive raises for its pilots even while now expecitng UA flight attendants to wait for the economy to improve to get their raises.
Add in that UA has long paid the highest amount per gallon of the big 4 for jet fuel and UA’s finances are set to deteriorate rapidly.
It doesn’t take running an airline to know those realities. Some of us can actually read financial statements, Ghost.
and DL’s quality of service in your mind might not be different from UA’s but DL clearly gets a much higher amount of total revenue per seat mile at lower costs and that is why the core transportation component of what airlines do will be less important going forward than all of the ancillary sources of revenue and means to lower costs. DAL is simply head and shoulders financially above the industry in that regard.
Please correct your inaccurate statement about ALPA and pilot shortages, @ Gary.
What you meant to say is that there is a shortage of QUALIFIED pilots. What there is NOT a shortage of are just pilots.
Look to the regionals and ask them how their staffing issues are. Because of the complexities in training pilots, some regionals don’t have class dates till into 2024. What good does that do you in 2023? none.
Secondly, regionals are shot on captains, and even legacies for various reasons.
But you wouldn’t know that because you don’t have any real experience in aviation.
I suspect he is intending this for an audience of FAs in the course of salary discussions. On the other hand, it is undoubtedly true at the management level.
@Arthur — Yes! It’s not on the “front line” where AA (and other large corporations, it’s at the managerial and C-suite level….
It didn’t work very well at Xitter (use the Mandarin pronunciation of X), either. It’s turned into a hate-filled mess without the redundancy needed when something goes wrong and it’s in violation of various laws and being sued by a bunch of suppliers that they have stiffed.
@steve – I go into much greater depth in the linked post, if you actually bothered to read more deeply instead of reacting personally you’d see that there’s a shortage of qualified pilots available to commercial airlines. And it’s not just regionals, legacy airlines like Southwest don’t have enough to operate their full fleet. It’s wrong to suggest this will be over in 2024, and that the issue is limited to left seat or right seat.
Gary,
no need to apologize that you don’t preface every comment about the pilot shortage to make some people happy that it doesn’t really impact them or their “preferred” airline.
And Scott Kirby’s labor nightmare just deepened as AA pushes a contract proposal across the table that essentially matches DL pay rates including boarding pay and profit sharing.
Given that UA has long had higher profit margins than AA even though that flipped in the 2nd quarter, UA will pay more out of profit sharing offset by the lower percentage of domestic mainline flights – although Kirby’s growth plan seeks to change that. His mainline domestic growth is about to get more costly as FAs take a bigger piece of the pie.
@DesertGhost – So the only people who can judge are current or previous airline CEO’s? Using your logic the only people who should judge the U.S. president are the current or prior holders of the same office. The same argument could even be pressed much further. Why not have potential rapists only be judged by convicted rapists? Sure that’s absurd but that’s the argument you’re making.
Scott Kirby as tone deaf as ever. Somewhere Oscar Munoz is rolling his eyes. It’s comments like these that will help ensure that UA employees never fully trust him.
I agree…. they can make United WAY more efficient by making those cuts from the top down.
He can start to shed the awful management in Chicago and start to have more respect with frontline employees.Morale is all time low at United.
Unbelievable. We are so short staffed in Denver. We can’t keep bew employees because of the pay and lack of support. New employees are getting mandoed on a daily basis expected to work 4 hours extra on top of their hours. Customer service does not exist because of him. He can charter his own plane when things get bad. Oh ya, let’s give him millions when it comes to profit sharing while some new employees are sleeping in their car and airport to make it. Horrible
Sounds good, Kirby and the other big 3, start cutting the fat off these overpaid executive positions and start paying those on the front lines a livable wage! Oh wait, when it comes to your wage, that’s exempt! Hypocrite!