United CEO says ultra-low-cost airlines like Frontier are 'going out of business' thanks to poor customer service and a 'flawed' business model

• United Airlines CEO Scott Kirby said ULCCs are "going out of business."

• Kirby criticized no-frills carriers like Spirit for prioritizing cheap costs over customer service.

• He poked fun at one ULCC for charging $99 for a carry-on and then giving the agent a commission.

The CEO of United Airlines dinged ultra-low-cost airlines in a candid interview earlier this week.

Scott Kirby told "The Air Show" podcast on Monday that carriers are "going out of business" because of bad business strategy and poor customer service.

"It's a fundamentally flawed business model," he said. "The customers hate it."

Kirby's comments were aimed at no-frills carriers like Frontier Airlines and Spirit Airlines, which offer cheap tickets thanks to their unbundled fares and barebones planes. These lower fares often come at the expense of passenger comfort.

In a bid to attract more customers, the ultra-low-cost carriers, or ULCCs, have improved their operations with more free and premium perks, such as Spirit dropping change fees and Frontier adding an "UpFront Plus" seat that resembles European business class.

Kirby argued this shift in focus from leisure to premium offerings suggests an "internal acknowledgment that the business model doesn't work."

But above all, Kirby said one "fundamental issue" has cost ULCCs a lot of business: "They haven't treated customers right."

He gave an example of an unnamed competitor that "started charging $99 for your carry-on bag," noting that employees received a commission for collecting the steep fees from customers.

Kirby is likely referring to the viral interactions between Frontier customers and ticket agents that surfaced on TikTok last year. Customers were charged $99 for each piece of luggage that didn't fit in the plane's overhead bin, and Frontier later admitted it offered a bonus to employees who caught oversize carry-ons.

"You can do it once, but you don't get to do it to them twice," Kirby said. "And those airlines grew big enough that they actually need repeat customers."

Frontier's CEO Barry Biffle has said that the "lowest cost always wins."

"He's dead wrong," Kirby said on the podcast. "Best service always wins."

Recent airline rankings based on customer-satisfaction scores back up Kirby's claims.

Frontier and Spirit scored last and second to last in the economy-basic class category in JD Power's 2024 survey ranking 11 North American airlines.

According to the Department of Transportation, the pair also had the highest rate of customer complaints among US airlines in 2023.

Over the past 12 months, shares of Spirit and Frontier have declined roughly 73% and 39%, respectively, as the carriers struggle to remain profitable.

Still, Kirby did give credit where it's due, saying the well-built "mousetrap" low-cost carriers use to lure in infrequent flyers who care about price over loyalty have forced United to adapt and create its own version of a cheap ticket.

"They want the lowest price, and they're willing to have a disaggregated price," he said. "So, we needed to build a basic economy cup."

United's stripped-down coach fare mirrors the basic ticket most US ULCCs offer, including no free carry-on, changes, or cancellations allowed, but it still has the regular mainline coach perks.

Spirit recently dropped all change and cancellation fees, and Frontier has dropped fees for all non-basic economy fares.

Spirit and Frontier did not respond to requests for comment.

Read the original article on Business Insider