United Airlines18 April 2017
The United Airlines incident will surely become a business school case study classic for all the wrong reasons (for United that is). By all accounts Oscar Munoz is a talented and popular CEO who has been successful, so far, in sorting out United - but dragging a bloodied passenger off an aircraft and the cack-handed PR management afterwards, is about as bad it gets.
First, the overbooking and the incident itself. Overbooking is part of the airline business model in order to maximise payload. Nothing wrong in that, but the inevitable result - and it is inevitable - will be having to get passengers to give up their seats on occasions. But why were the passengers actually in their seats when they decided to lighten the plane? If this had happened at the check-in desk, the worst thing would be an irate customer. Surely they knew that they had to get four spaces before the passengers embarked? Once the passengers were on board, they offered a reward and hotel room that three people took up. The problem was the fourth. Why didn't they then have an auction? There would be a point, surely, at somewhere south of $1000 that would have tempted a hand into the air. Why wasn't this - or something like it - gamed, anticipated and built into the operational model? Pretty basic for an airline, surely?
Then the handling of the aftermath. Everyone makes mistakes and messes up; again this is inevitable. The process afterwards is called, in business schools, 'service recovery' and we have found at Property Vision that, if handled well, you can turn a pissed-off bad-mouther of your business into an apostle who can become your best salesperson. The first thing is to put your hands in the air and admit that you have messed up - and apologise with no ifs or buts. You then have to make an offer that is way beyond anything that the client is reasonably expecting - in this case maybe a very large sum of money and free flights on United for life. Whatever the cost, it would have been cheap. What happened instead? Lawyers almost certainly - and they are the worst thing possible in any such situations, as weasel words will only inflame both the bloodied passenger and tweeters all around the world who have a festering resentment as to how they perceive they are treated by airlines - whether that is justified, or not.
Again, what is extraordinary is why this - or something like it - wasn't anticipated. Airlines are a service businesses with thousands of human moving parts, where there will be screw-ups ranging from no ice in the drinks to an air crash with 100% fatalities. These can be practiced and gamed by the airline, their lawyers, PR company and maybe a business school so that when the inevitable happens there is a practiced response. This should involve every employee that is facing a customer. There should be no surprises other than the particular circumstances of the incident. Why not here? Probably because United forgot that they are, like it or not, a service business. Getting load factors, fuel prices, finance and the technical paraphernalia of running an airline right are worth little if you really anger your customers.
Ask Gerald Ratner.