United Airlines CEO: Domestic Seat Reduction a Durable Trend

United Airlines CEO Scott Kirby has expressed confidence in the durability of the reduced domestic seat growth trend, which has been the slowest in at least a decade. This trend, driven by high operating costs at major airports and a shortage of aircraft, is expected to continue, leading to higher airfare prices and improved airline profitability.



Kirby noted that high operating costs at airports in New York, Chicago, Los Angeles, and San Francisco have priced out low-cost airlines, making it difficult for them to compete in these markets. This has led to a reduction in seat growth and a focus on markets where low-cost carriers have a competitive advantage. As a result, network carriers like United are better positioned to operate in the major markets, potentially increasing their market share.



The combination of tight supply and strong travel demand has led to a faster pace of airfare increases, with the fastest pace in 21 months in December 2024. United Airlines has reported robust demand trends in the first quarter of 2025, indicating that consumers are still willing to pay higher prices for air travel. The airline's expansion into new international destinations, such as Nuuk in Greenland and Dakar, Senegal, may also help stimulate demand by offering unique travel experiences.



Kirby believes that the international market for narrowbodies will be stronger for longer due to structural supply constraints for widebodies. This means that network carriers, which typically have a stronger presence in international markets, may see an increase in market share as they can take advantage of the higher demand and limited supply of widebody aircraft.



The slow growth in domestic seats, coupled with strong demand and higher ticket prices, has led to improved profitability for airlines like United and Delta. United Airlines reported a 23% increase in annual pre-tax profits in 2024, breaking records for the most flights and passenger carryings in its history. The airline's strategy of replacing less-efficient and smaller jets with more fuel-efficient and larger aircraft has also contributed to improved profitability by reducing per-unit operating costs.

In conclusion, the slowest annual domestic seat growth in at least a decade is likely to lead to higher airfare prices, potentially reduced consumer demand for price-sensitive travelers, and improved airline profitability in the long term. However, airlines must continue to manage their capacity and costs effectively to maintain these positive trends. United Airlines, under the leadership of Scott Kirby, is well-positioned to take advantage of this durable trend, with its extensive regional flight network and strategic expansion into international markets.