What’s Really Wrong With United Airlines?

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Over the last 15 months or so United Airlines has received a lot of well deserved negative publicity. Here is a partial list:

  • In January of 2017 they were blamed for killing a passenger’s Golden Retriever dog because it didn’t fit on a flight the passenger was told it would fit on, and then had to stay in containment for 20 hours.
  • In April of 2017 United famously, physically removed a passenger from a flight after the passenger refused to give up his seat for the benefit of a crew member.
  • Also, in April, Simon the rabbit died on a United flight and the post-mortem handling was a circus (which is an insult to circuses).
  • And again, in April (clearly not a good month) A French-speaking passenger was put on a flight to San Francisco while actually holding a ticket to fly to Paris, which was her intention. (Seems a security issue that allows an un-ticketed passenger on a flight)
  • In June, a 2-year old’s seat was given to a stand-by passenger and her mom was afraid to complain based on United’s history, so the child flew in her lap instead.
  • And then this week we find out that United killed a passenger’s dog by forcing it to fly in the overhead bin. (Seriously, who is that stupid?)
  • United had the most animal deaths in 2017, 18 in total.

While each of these events has created a firestorm for United, my question is: What is the root cause of this and other behaviors that seem to defy logic or common sense?

I submit it is the CEO, Oscar Munoz, who has allowed or created a culture of passengers being an inconvenience to the efficient movement of airplanes. Mr. Munoz has been a Board member of United and Continental (before its merger with United) for many years.

He was named Communicator of the Year (why is unclear) in March of 2017 by what is either an inept publication, or one that gives awards based on money. Note that in April (one month later) their PR nightmares, including dragging a passenger off the plane, began and United’s responses were bad, to put it politely.

Why is Mr. Munoz still CEO of United? (To be fair the Board stopped their plan to make him Chairman as well.) Who has been fired for these fiascos? What is wrong with the culture of an airline that can create and allow this pattern of behavior? When Jan Carlzon became CEO of the world’s worst airline (at that time), SAS, in 1981, he turned it around by creating a “moments of truth” culture and enforcing it. Has Mr. Munoz either exacerbated a dysfunctional culture or created one that is not customer-centric or even remotely interested in the customer?

Mr. Munoz has either fostered, encouraged or allowed a culture where “using your good judgement at all times” (the primary policy of Nordstrom’s which drove it to greatness) is clearly not the plan. Or hiring people based on their bad judgement tendencies is the plan.

In reality, I blame the Board of Directors for not having replaced Mr. Munoz already. And maybe the shareholders for not replacing the Board. Fortunately (for United), the airline industry is strong and the number of airlines is limited so United can probably get away with this behavior without going bankrupt … again. But then who would really want to work at such a place?

This won’t stop until Munoz is gone, and he won’t be gone until the Board acts. And the Board, like many, doesn’t seem to be focused on the longer-term issues that face their company. That’s what’s really wrong with United Airlines, in my opinion.

Mitch

5 COMMENTS

  1. I always say the powers that be do not care. They view their job on creating profits as distinct from creating value for customers and employees. They believe they can succeed without customers.
    Are their competitors so much better? I think not and that is why United survives.
    We customers really do not have a choice. especially if on this sector at this time United is the cheapest (and so i accept short comings because of the lower price…that is what value means to many of us)

  2. You’ve stated – “Mr. Munoz has either fostered, encouraged or allowed a culture where “using your good judgement at all times” (the primary policy of Nordstrom’s which drove it to greatness) is clearly not the plan. Or hiring people based on their bad judgement tendencies is the plan.” – which explains much of United’s issues. This is a classic case of talking it and not walking it, culture-wise and process-wise; and the rot starts at the top. Passengers are often treated like animals, and passengers’ animals are given even less consideration. Unlike Southwest Airlines, for example, United is clearly not even close to being stakeholder-centric; and their frequent appearance on nightly news programs suggests they have little real intention of becoming so.

  3. It’s unfair that sales reps who under-perform their revenue goal by a miniscule 20 points are routinely fired, while CEO’s who commit massive, heinous, financially destructive transgressions are allowed to carry on in their jobs.

    But the case you’ve built against Mr. Munoz wouldn’t convince a board to remove him. Send me the name of an airline, and I’ll return a list of serious complaints from passengers. What matters is the number of occurrences against the overall volume, and United flew over 140 million passengers last year. It’s no surprise that some of them had a bad experience.

    United’s problems are that a) at 18 deaths, United apparently kills more animals than any other airline (in 2017, American killed 2), and b) Dr. Dao has become an icon for bad corporate behavior, and as a byproduct of its arrogant self-satisfaction, United’s name is inextricably linked with Dr. Dao.

    For an airline, these are among the worst things to be known for, and United is saddled with being known for both. Still, if I’m a board member of United, that won’t convince me to fire Munoz. Wells Fargo’s board fired John Stumpf, but he was patently dishonest – not the case with Munoz. Other CEO’s have been fired for financial under-performance. That doesn’t seem to be United’s problem either.

    According to ThePointsGuy, which tabulates airline ratings, even with Dr. Dao, United only dropped two positions (from 2 to 4) in the overall rankings between 2017 and 2018, and the company is still two places ahead of American. Meanwhile JetBlue plummeted from fourth to eighth. “United also recorded a 17% drop in number of passenger complaints against it filed with the U.S. Department of Transportation,” according to ThePointsGuy. I share your dislike for United, but that’s impressive. The incidents you’ve described, while unfortunate, don’t seem grounds for firing Munoz, which possibly explains why it hasn’t happened.

  4. Mitchell, I completely agree with your brief analysis, and, as has been seen so many times in the history of business, Oscar Munoz will have left/retired with a hearty financial package by the time the true price of his hubris emerges. Yes, Andrew, for now the stats produced by ThePointsGuy all seem to be okay, but they measure short term lagging indicators, rather than long term future prospects. The consequences of the destruction of customer loyalty do take some time to show themselves, but I’m willing to bet that 10 years from now, (unless something truly dramatic changes the complete culture and architecture of the company,) United will become a case study in how to lose everything. The sheer size of the company with all of its routes, together with the poor service from most of its rivals, makes it as close as you will get to a monopoly in a free market, but at some stage all stakeholders – customers, employees, shareholders, regulatory bodies, and more – will abandon this sinking airline. How many of the Fortune 500 companies from 20 years ago are still around today? The rest have either shut down, merged with others, or gobbled up by competitors.

    If Munoz is not to blame, and the combined collective leadership of the board and senior executives don’t take responsibility for this mess, who will? The already-demoralised front-line staff? Gautam had it right when he said that it all starts right at the top. Jan Carlzon and Richard Branson are personally involved in the day-to-day experiences of passengers. I saw Branson at Heathrow very early one morning when passengers on a Virgin flight had experienced a traumatic flight. He was there to shake hands, offer an apology, and dispense tea. Percy Barnevik, formerly CEO of ABB Asea Brown Boveri, said his job was to go around the world and put up slides.

    Never has that old Mediterranean saying that “the fish rots/stinks from the head first” been more true. At some stage, dreadful companies that give dreadful service to their customers will pay the price. Sadly, the CEOs responsible for this will have been long gone.

  5. Or, Aki, maybe we all have it wrong. The Board must be happy with him and who cares if the customers are happy with him
    Stop looking for a solution, all of you inconsequential customers.

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