Chicago Is Becoming the Center of the Growing Conflict Between United and American

As president of American Airlines, Scott Kirby liked quoting his favorite Will Ferrell movie — Talladega Nights: The Ballad of Ricky Bobby — to describe airline hub economics.

“If you’re not first,” he would say, quoting the title character, “you’re last.”

At American, that mantra was germane in Chicago, one of the only airports with two full-scale airline hubs. Despite having significantly fewer gates than United Airlines, which is headquartered in Chicago, American operates nearly as many daily flights. And in many cases, it provides more convenient schedules for Chicago-based business travelers, while offering more options for connecting passengers. Plus, American flies to some smaller Midwestern cities United does not.

Until August, Kirby was the architect of American’s strategy that had it trying to match United’s Chicago footprint. But late last summer, Kirby joined United as its president, and now he has a different goal — to make United the clear leader in Chicago, and perhaps someday drive American out.

“In Chicago, we have massive advantages,” Kirby told employees recently at a town hall meeting. “If people want to talk about our long-term plan for Chicago, it’s to grow it incredibly, and I hope to someday take over those gates that currently have the AA on them. We have the winning hand here. We should win in Chicago.”

Today, United and United Express operate an average of 530 daily flights, only about 30 more than American and American Eagle, according to figures provided by both airlines. But United has more room to grow, because it has nearly 20 more gates than American, though that gap will soon shrink, with American planning to build five gates.

By rescheduling when some flights leave and depart and adding more flights, Kirby is betting he can strengthen United in Chicago while making American less profitable.

He notes Chicago O’Hare is probably the only airport in the world to support two major ailrine hubs — and for good reason.

“The reason there is only one city in the world is because whoever is biggest wins,” Kirby said.

Fixing past mistakes

In early 2015, under previous management, United made a big deal of doing something that’s common in the airline industry. Instead of scheduling Chicago flights without considering how they would facilitate connections, the airline tweaked its schedule to create banks —or groups of flights that arrive and depart in waves.

In United’s case, all flights from the West Coast might arrive in Chicago at 4 p.m., and then take off for East Coast airports at 5 p.m. That approach makes some connections easier, but according to Kirby, United erred with how scheduled its banks, because it assumed connecting passengers would always travel West to East, or East to West.

But that’s not always the case. A United passenger in Indianapolis or Green Bay, Wisconsin might want to connect in Chicago to go to Los Angeles or New York. For Indianapolis customers, connecting in Chicago to reach New York is back-tracking, but not by so much that it’s not a viable option.

Later this year — perhaps as soon as this summer — United will introduce what are called “omni-directional” banks in Chicago. They will allow a customer from Indianapolis to fly East or West from Chicago, and have efficient connections either way.

“We have this huge catchment area in Chicago where customers are going both ways, and we can connect them in both directions,” Kirby said.

Kirby said the new approach will have another benefit. It will allow United to schedule more flights from Chicago to the West Coast at about 7:30 a.m., a key departure time for business customers. Currently, Kirby said, United does not fly to many West Coast cities until at least 9 a.m., because it does not have enough connecting passengers to fill planes.

Adding more routes

Though United is bigger in Chicago, American flies to many smaller cities that United does not, including Dubuque, Iowa, LaCrosse, Wisconsin and Columbia, Missouri.

Now, United plans to try to thwart American in those types of markets.

“We will also be filling out service from small cities that will feed the hub, places that don’t have service in but in certain cases, like at O’Hare, we have our principal competitor, American Airlines, that does,” Andrew Levy, United’s CFO, said Tuesday at an investor conference. “We are not going to allow that to happen being that we have a bigger footprint there.”

In addition, Kirby said United will bulk up its schedule to other airline hubs, such as Dallas/Fort Worth, where American is based.

“We are just going to keep doing that here in Chicago,” he said. “That will make us stronger and stronger when we grow a big hub like this. And it will do exactly the opposite to our competitor. And we’re just going to lean on them. And we are going to win here in Chicago.”

Told of Kirby’s comments on the Chicago hub, an American spokeswoman declined to comment.

Less change for international routes

As for international routes, Kirby suggested few changes for United’s Chicago network. But he did say the airline’s new flagship plane — the 366-seat Boeing 777-300ER — probably won’t be used from Chicago It’s too big, he said, with the airline preferring smaller planes, such as the Boeing 767 and Boeing 777-200, for long-haul routes.

“The -300 is really only going to be an airplane that we fly only in a handful of markets that need that size and that range,” Kirby said. “It’s unlikely there will be any in Chicago in the long term. There might be one or two just because of aircraft rotations. Those will most likely be West Coast airplanes over the long term.”