Scott Kirby has a very specific view about how the three U.S. hub-and-spoke airlines work best, having managed two of them. In his current job as president of United Continental Holdings Inc., Kirby"™s role is to oversee a major overhaul of how the carrier operates, beginning with a broad restructuring of its three domestic-focused hubs in Chicago, Denver and Houston.
By United"™s math, this trio has profit margins that are 10 percent below the inland domestic hubs operated by American Airlines Group Inc. and Delta Air Lines Inc. That gap is one big reason for United"™s third-place finish among the three in recent years.
The troubles, Kirby explained, began shortly after United swallowed up Continental back in 2010. United"™s post-merger decision to shrink, forced by investor demands that the carrier curb capacity to bolster fares and profits, was a weak choice, he said. United cut seat growth domestically by 8 percent over the next six years, while Delta and American grew 8 percent and 3 percent, respectively, according to United. That growth by its rivals put United on the defensive as they made inroads into its Middle America hubs.
Almost halfway through his second year as president of United, Kirby, 50, wants to reverse this trend.
"Our growth and strengthening our hubs is absolutely the critical, essential element to driving higher "¦ margins at United," Kirby recently said in response to a dubious analyst. "I"™m absolutely certain about it»…
