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A Tale of Two Airlines 

Peter Leppik | Apr 14, 2017 263 views 7 Comments

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This has been a bad week for United Airlines. After making news for having a paying customer dragged off a plane, bloody and unconscious, for refusing to accept $800 to take a later flight, another slightly-less-horrible story emerged of a United first-class customer who was threatened with handcuffs if he didn’t give up his seat to a “higher priority” first class passenger.

It’s no surprise these stories went viral. They’ve got everything: giant faceless corporation beating up its customers (literally!), tales of woe about how unpleasant air travel has become, astonishingly tone-deaf non-apology. At least United didn’t also kick puppies and kittens out of spite.

But there’s another side to this story, one with some important lessons for Customer Experience. Because at the exact same time United was digging itself furiously into a PR hole, Delta managed to score some positive press when a customer wrote about getting paid $11,000 not to fly in the middle of Delta’s own system-wide scheduling fiasco.

On paper this should have been a terrible week for Delta, too, since the airline cancelled thousands of flights after severe weather rolled through Atlanta. And there were certainly stories out there about customers struggling to get home and chaos in airports. So why is it United that lost a billion dollars in market value and not Delta?

The answer lies in an interesting pair of statistics: among the four largest airlines, Delta overbooks the most. But Delta, in contrast to its competitors, almost never bumps passengers involuntarily. Instead, Delta tries harder to get passengers to give up their seats willingly in exchange for compensation.

That’s how a family was able to score $11,000 by negotiating with Delta for not flying. Delta empowers its staff to offer more compensation in exchange for customers willingly freeing up seats.

Meanwhile United apparently decided to draw the line at $800. When nobody was willing to accept that to give up their seat, they had left themselves no option but to remove already-seated passengers from the plane, by force if necessary. In hindsight, United probably wishes they had been a little more flexible and offered more money.

There’s two CX lessons Delta has figured out that United hasn’t. First, sometimes it’s better to spend a little more money upfront to keep customers happy and avoid bad publicity. That’s obvious.

Second, and more important, Delta understands that there is a segment of their customer base who likes making deals, customers who think about overbooked flights with anticipation, not dread, since they see an opportunity to score cash and free travel. Customers who get so excited about getting paid $11,000 to cancel a family vacation that they write articles about how they did it.

The accountants will probably do the math and say that Delta paid way too much to free up six seats total (from a family of three who cancelled a round-trip). That’s almost $2,000 per seat, way more than the amount Delta would have been legally required to pay for involuntarily bumping those passengers. But what the purely financial analysis doesn’t take into account is the fact that people hate being bumped involuntarily. There’s a cost associated with forcing a customer to give up his seat against his will.

Usually that cost is hard to quantify, but this week it because large and obvious. Don’t fall into the trap of ignoring the hidden cost of bad customer experience.

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Republished with author's permission from original post.


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7 Responses to A Tale of Two Airlines

  1. Brittney Sly April 14, 2017 at 3:15 pm (26 comments) #

    Hi Peter! Great read on the analysis of the poor customer service that United Airlines provided this past week. I think what they did provides an excellent example of what not to do in this type of situation. As you mentioned Delta gave a family $11,000 to voluntarily leave the flight, which saves them money and reputation in the long run. Since United put the cap at $800, then forcibly removed the passenger, they will most likely be faced with a lawsuit and the potential to lose much more money than the $800 they offered. Putting the customer first will save a company in the long run.

  2. Shaun Belding April 15, 2017 at 5:35 am (60 comments) #

    Well said Peter. Your point about “the accountants doing the math” is ultimately at the root of the issue, and this whole thing simply would never have happened had United kept upping the ante until someone was happy. The $2,000 that Delta paid that family is just a drop in the bucket compared to what this incident will end up costing United.

    It’s a mindset, however, that few people seem willing to embrace, despite the evidence. I always think of Sears, with it’s unconditional return policies. Those ended in the late eighties, along with Sears’ fortunes.

    One of our clients is a GM of a large hotel. He implemented a $500 rule. Every employee, full-time and part-time, had a virtual $500 in their pocket. When a customer was having a challenge, they could make a decision up to that amount to make things right. No approvals, no repercussions. The Regional VP thought he had gone insane, and warned of willy-nilly abuse, poor decisions and sinking profits.

    It didn’t happen. In fact, staff were so stingy that the GM had to actually incentivise them to dip into their $500. The ultimate result was fantastic.

    Imagine, though, trying to sell THAT to a board of directors…

  3. Michael Lowenstein April 15, 2017 at 5:39 am (1260 comments) #

    Where customer behavior is concerned, there are “hard” costs as well as “soft” costs for all vendors.. In contrast to United’s strictly accounting-focused processes, with simultaneously give employees precious little empowerment and action latitude, Delta’s approach, though looking more costly, is actually the preferred method of dealing with overbooked situations. Of course, Delta also has its own issues, like software systems issues that can overwhelm the airline at times, resulting in massive flight cancellations and passenger strandings.

  4. Chip R. Bell April 15, 2017 at 6:18 am (176 comments) #

    There is another backstory to this saga. We all remember the fun that songwriter Dave Carroll had with his “United Breaks Guitars” YouTube video now seen by over 16 million people. And, last year Bloomberg Businessweek ran a cover story entitled “United Tries to Be Less Awful.” Part of the backlash from this sad story told by the media over the last week is an airline that has failed to build a reservoir of trust that leads to quicker forgiveness and a wider berth to make mistakes.

    JetBlue was ranked in the Top 25 Customer Elite companies by Businessweek the year before their unfortunate February, 2007 debacle when a plane load of passengers sat on the tarmac in Denver for many hours due to heavy snow. JetBlue was obviously dropped from the Top 25 list. But, the CEO went on a media tour sincerely apologizing, the company created a Customer Bill of Rights (now used by all airlines), the CEO took out a full page apology in USA Today, and on and on. It was a textbook case of great service recovery.

    The next year JetBlue was back on the Top 25 list. Why? People viewed their major hiccup as atypical of an airline they viewed as customer-centric. United’s long-term negative reputation created a backdrop that caused observers to think, “United’s done it again.” We can analyze the tactics they failed to use or mistakes they made. Bottom line, a reservoir of trust is a critical component when the marketplace views a company behaving badly.

  5. Mohamed Latib April 15, 2017 at 1:23 pm (3 comments) #

    Why is it that what should be done is not done? Why the gap in common sense application of CX practices? The United example shows that we have relics in our systems- those outdated policies that get us into trouble. Peter has reminded us of the urgency to give our employees the autonomy to make choices that serve the brand’s agenda.

    Nice job Peter.

  6. Gautam Mahajan April 15, 2017 at 9:27 pm (169 comments) #

    Greta analysis.
    My question is that airlines charge for changing reservations or on no show, the point being your seat is guaranteed and your no show means we are losing a potential paying passenger.
    Isn’t this inconsistent with overbooking?

  7. Paul DeSousa April 17, 2017 at 7:09 am (1 comment) #

    I appreciate all of the commentary and agree with all points….however as global leaders of every marketed product and or service, we must come to grips with our 180 degree change in the business value system. Product design/engineering is a dime a dozen offering, no longer commanded by the few and JUST ONE ALIBABA CLICK away. The Kia is now just as perfectly engineered as the Lexus….Price, Credits for Errors and Loyalty points offer fleeting loyalty.

    The manner by which WE serve our customer is the ONLY sustainable Builder of Brand and Guarantor of Customer/Consumer Stickiness. Service is a Practiced Science of – *Communication/Information Exchange Technology, *Access in the Method, Speed and Language Valued by the Brand Purchase Influencer, * Systematic Controls and Data that offers ROI analysis and allows Yes, Yes If, Yes And or Yes But Responses……and of the most importance, gathers insight into what the market values and WILL PAY MORE FOR, with every touch point along the order life-cycle and customer journey.

    Wake Up Airlines…..Each Passenger is more valuable that your staff, than your convenience and isn’t justly subject to your technical, measurement, logistical, cultural or planning failures!

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