My Wish List For The New United Airlines CEO
I was going to start blogging about our trip to Greece this summer, and then United happened. At least I have SMI/J and the good folks at United to blame for pushing that back at least another day.
In case you missed it last night, United fired their CEO for his involvement in a bribery scandal. If even a portion of the information we’ve learned so far is true, this was an act of monumental stupidity with a good enough audit trail to cost people their jobs.
But, this post isn’t about rehashing the, ahem, salient details. And, it’s not to point out all the horrific things United has done over the past few years, though some of them will undoubtedly come up here. I had given up lamenting most of the deficiencies United exhibited because they became the new status quo. At some point, if there’s no change, customers and employees augment their behavior to fit the “new normal”.
It can’t really be a clean slate just because the CEO is out. I’m a firm believer that if it took you 6 months to break something (like a company) it’ll take 6 months (or much longer) to fix it. A great example of that is some of the history behind the demise of TWA. I don’t expect change immediately, but I do expect change, if only because it would be hard to run the airline more poorly given the prosperous times the airlines find themselves in. Here’s what I’m hoping for:
1. Treat your employees well. It might sound like a simple thing but it’s where good customer service starts. I don’t think United and Continental employees got enough support/training during the merger, leading to lots of frustration. And, I run into so many employees on planes who just aren’t happy with management. That’s not exactly news for airlines and union employees, but it seems to be more profound on UA.
2. Hold your employees accountable. This goes hand-in-hand with #1. When employees are treated well, they don’t mind being held accountable. Good employees want to be held accountable, because they also want bad employees held accountable as well. The sheer volume of stories about inconsistent operations I’ve heard are staggering. Holding employees accountable for both the good and bad experiences will lead to….
3. Treat your customers well. Yes, I know I’m playing the role of Captain Obvious. But, this hasn’t been United’s forte for quite some time. At least pre-merger when something went wrong, they would apologize and offer compensation. Now, the answer more often sounds an awful lot like crickets. And, this isn’t just the preacher/choir aspect of United haters. An independent survey by JD Power ranked United last amongst the major carriers in customer satisfaction recently. Delta has made a habit of treating their customers well (maybe not from a loyalty standpoint) and running a good operation. American has, IMO, done a good job of keeping contentious labor issues and a bankruptcy from developing into a toxic mess. Both their employees and management get credit there.
4. Find a way to be profitable that doesn’t involve cheap gas. Despite record profits, United’s revenue is actually down. They’re not alone in this regard, American has had a drop in revenue as well. But, American just got through with bankruptcy and is mostly complete with union contracts. Additionally, they’re updating their fleet at a rapid pace while United is still trying to figure out how to master the basics of in-flight connectivity. Delta is even further ahead of American in terms of the hard and soft product. Things might look rosy right now with record profits, but I’m reminded of the hotel industry. Back when I used to be charged with renovations at various hotels, we always worked hard to renovate properties when the economy was good so we’d have a solid product during the lean years to attract customers. Airlines have a different renovation trajectory than hotels, but some of the same logic applies. If United wants to sustain their financial results when the industry takes another turn for the worst (and it will), they need to be focused now.
It’s hard to say whether new management will see that United has some warts. Record profits can have a way of distracting from hard work. And, United has made some strides on being a leaner, more profitable airline. The tough part about that is most of those changes have come at the expense of the customer.
Given today’s United Airlines, it would take a sea change from their competitors for me to shift a sizable chunk of business back to them. American treats me great and is more rewarding in a number of areas, even though they offer me many less nonstop options out of my home market of Washington, DC. United lost my trust a couple of years ago and continues to reinforce the reasons I book away from them when the opportunity presents itself.
I fully expect that the loyalty equation at American won’t stay as customer friendly as it is right now. However, if they treat me fairly and give me reasonable notice about changes, I’m unlikely to change my habits. United ingrained in me that I am a transaction, as valuable as the fare I buy on any given day and nothing more (and some days much less). I’m sure I’m not the only one.
You can only whip the horse for so long before it doesn’t respond.
Nicely said Ed. I completely agree, though in my case substitute Alaska for AA.
I guess United noticed I wasn’t flying with them and sent me a survey that included questions on the order of what would they have to do to get me to come back.
-David
David, do you still have that tulip rug you bid on during the 787 SMD? 🙂
Thanks for weighing in!
Great write up, Ed. I cannot get over how uncomfortable the coach seats were on my United flights in February (the last time I flew them). Between Dulles and Kona (flights arranged by someone else, alas), I flew UA three flights and Alaska one flight. The Alaska flight was much more comfortable. United seat bottoms and backs were extremely thin, pitch is torturous, and staff were not happy to be there. When I have a choice, I choose different brands.
Charles, I *really* don’t like those seats either, and I’ve only flown them on shorter flights. I can’t imagine what it would be like on a long haul flight. Both the bottom and the back were uncomfortable for me.
Are there any “names” in the airline business who could take over the top spot at UA? I’m among those who believe this is an interim appointment of a capable corporate exec, long time board member, who can keep the airline on an even keel until a true CEO can be found. None of the former AA execs really stands out and could a CEO from JetBlue or VirginAmerica really move to a first tier carrier? My money is on former AC CEO Robert Milton who’s still young enough to helm a major airline and did turn things around at AC…though his reputation with staff was almost a poisonous as Smisek’s was among UA originals. Can’t see much changing at UA otherwise until the real CEO gets installed. UA’s attempted to patch up its faux pas — new domestic F meals — but it has lost customers like me to an aggressive and delivering AA.
As for the “scandal”, it suggests to me that the feds are about to bring down some pretty heavy indictments and prosecutions over “Bridgegate” any day now. Doesn’t look good for Gov. Chris Christie, not that it will much impact his Presidential aspirations, which have pretty much been sunk by The Donald as he scrambles for recognition among the dozen other pygmies of the Republican party.
DavidB, I would have agreed with you on it being a temp appointment, but the guy just rose to the top at CSX. I can’t imagine he walked away from that for an interim position. I think it’s entirely possible they *say* it was interim if they have to can him soon. I’m actually of the opinion that a non-airline CEO might be just what the doctor ordered. They need a competent CEO, period. Not sure if Munoz is that, but someone needs to come in and rebuild.
We’re in agreement on Bridgegate and Christie. I keep waiting for Trump to lose steam. And waiting. And waiting.
2.5 Empower your employees to Do The Right Thing. Travel can be stressful and things often go wrong. Providing the employees with the ability to make things better can go a long way towards improving everyone’s flying experience. That’s the key to #3, in my view.
4.5 Bring more predictability to airfares. These yield management systems might result in squeezing additional profit in the short run, but they encourage everyone to game the system. More predictable prices, coupled with the other improvements above, will start to provide a means for airlines to differentiate themselves by more than just lowest price. Frankly, you can’t compete with the budget carriers who fly a few profitable routes when you compete on price; you’re playing their game by their rules.
David, sorry for not replying sooner. We agree completely on 2.5. I do think that if you improve culture you’ll organically get employees making better decisions. Not sure we agree on predictability to airfare. If airlines can sell seats for me, I hope they do, such that I can utilize strategies to get cheaper seats in pockets of low demand.
Ed,
Whole article was a nice summation for not just yourself but oh, so many of us ex-UAL customers. I left United for AA & Alaska and I am quite happy with both & it would take more than a sea change to get me back to United. Massive overhaul of every aspect of their current business practices might induce a trial trip or two, but honestly, after being a United flyer most of my life, have to say, don’t actually miss them at all.
Frankly, these days I’m using UAL to connect to LH or other Star Alliance partners. Not clear it’s worth spending my FF miles for domestic flights, and the perqs for Gold/Million Miler status for domestic flights aren’t all that valuable either.
David, I’ve been forced to use more of my miles on UA metal more frequently as of late because I don’t want to pay the huge premium for LH and other Star Alliance carriers in business class.
Maureen, it’s sad to see folks like you that I know were passionate supporters of UA. Loyalty engendered irrational behavior in all of us frequent travelers (and still does for me with AA from time to time). I do think UA is trying to turn an aircraft carrier as opposed to a jet. Any change will be slow coming.