Are airlines losing the battle for customer loyalty?

Are airlines losing the battle for customer loyalty? Another day, another PR nightmare: just as we were all tiring of enjoying the twitterstorm over Pepsi Cola’s ill-conceived Kendall Jenner ad, along comes United Airlines to one-up them with a customer-service horror story, captured on mobile video, that has the entire internet raging with righteous indignation. Given the recent hubbub over the news that airlines now make as much or more money selling miles as they do flying planes, the United snafu has us wondering: are airlines chasing short-term profit over long-term customer value?   By Rick Ferguson   Your news feed no doubt exploded this week with the details: on a Sunday evening Chicago O’Hare-to-Louisville flight, United randomly chose four passengers to be involuntarily bumped after their various offers of enticement failed to find four volunteers to give up their seats for a flight crew flying on standby. When one of the passengers – apparently a physician who had patients to see the next morning – refused to give up his seat, the airline had uniformed police drag him bodily from the plan, to the point that the man left the plane bloodied from the encounter. Several passengers recorded the incident – and suddenly United’s CEO was forced to apologize for the way the passenger was treated.   Let’s recount all the ways in which this incident was an epic operational and customer service fail. First, the airline intentionally overbooked the flight. Next, it allowed all passengers to board the plane before informing them that four of them would have to give up their seats. Why not inform them before they got on the plane, when the potential for conflict was so much less? Next, the airline made only two offers to potential volunteers: first $400, then $800 and a hotel room, to passengers who would then need to wait until 3pm Monday to get home. Then they bumped four passengers who were already in their seats on the plane. Those passengers were then forced to make the walk of shame out of the airplane with their carry-ons in tow.   Let’s conceed that once the passenger refused to get out of his seat, the airline had no choice but to call for security – the law requires passengers who are asked to leave a flight to do so. Once the passenger failed to comply, he was subject to law enforcement. Let us also conceed that, if the videos are any indication, one of the officers exaccerbated the situation by resorting to physical force to remove the passenger rather than, say, taking a little extra time to reason with him. The officer’s reaction prompted this statement from Chicago’s Department of Aviation:  

“The incident…was not in accordance with our standard operating procedure and the actions of the aviation security officer are obviously not condoned by our Department. The officer has been placed on leave effective today and pending a thorough review of the situation.”

None of these mitigating circumstances, however, make up for United’s failures, which fall under two categories. First, the operational failure allowed the passengers to board before bumping them. Second, United’s tone-deaf response to the social media storm found a United spokesmen defending the airline’s actions with a terse explanation: “We explained the scenario to the customer. That customer chose not to get out of his seat.”   Um, okay – I’m sure that explaination will placate the Twitter horde. Meanwhile, here’s what United reaped from the incident: four bumped passengers who will most certainly never fly United again; one forcibly-removed passenger who is even now most certainly preparing a lawsuit against the airline; a planeful of alarmed and appalled passengers, many of whom will also most likely never fly United again; and many millions of consumers who, having watched the videos, will now think long and hard before ever flying United.    It’s hard to imagine how the airline could have damaged its reputation more severely. And let’s not forget that this is the second PR nightmare for United this year – the airline also caught flack for denying boarding to a pair of young women who apparently violated the airline’s dress code for employee relatives by wearing leggings. The passenger-removal incident prompted this apology from United CEO Oscar Munoz:  

“This is an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers. Our team is moving with a sense of urgency to work with the authorities and conduct our own detailed review of what happened. We are also reaching out to this passenger to talk directly to him and further address and resolve this situation.”

There’s no apparent problem with this statement. And yet the Boarding Area’s Seth Miller is unmoved:  

“Munoz falls short on taking responsibility for the mess. The statement uses industry terms (“re-accommodate” is the worst offender here) rather than plain language and is a spectacular display of the passive voice. There is no ownership of the incident or even really mention of the specific incident itself. I have no doubt that much of the message is limited based on potential legal issues associated with the incident, but failing to own the problem means it will continue to spiral out of control.”

The real story here, however, isn’t limited to United. The real story is the airlines’ insistence on overbooking flights. Slate’s Daniel Gross has the data on the rise in airline overbooking:  

“In 2000, the data shows, 1.12 million people (or .2 percent of all travelers) were denied boarding, almost all of them voluntarily. By 2010, the figure had dropped to about 746,000. However, in 2015, after having fallen for four straight years, the number of bumps rose 15 percent to 552,000, of which 46,000 were involuntary. We don’t have the numbers for 2016 and early 2017, but my guess would be that the incidence of bumping has risen – and that it is becoming harder and harder for airlines to convince people to get bumped.”

Therein, fellow flyers, lies the rub. At a time of unprecedented industry stability driven by consolidation and record profits, why must the airlines continue to place their need to have every seat on every plane full ahead of the needs of their passengers to actually fly on the flight that they booked? Is the practice of overbooking essential to efficient airline operations? Or is overbooking a classic case of putting short-term profits ahead of long-term loyalty?   We’re not here to judge. No doubt, there will always be situations in which passengers must be bumped. Perhaps, however, the airlines could use this incident as an opportunity for a little soul-searching. Perhaps it may be time to think about increasing capacity after a decade of downsizing. Or perhaps there’s an opportunity to think differently about those unsold seats: instead of overbooking flights to fill them, maybe consider offering more reward seats. Instead of overselling those flights and turning loyal flyers into irate and angry ones, fill them full of loyal customers enjoying a redemption experience. Maybe even reduce the mileage cost of some of those short-haul flights. Is such a move unthinkable?   The price paid in short-term profits might more than rebound to the airline in the form of lifetime customer value. Instead of dragging passengers off your plane, invite your most loyal customers to take a flight on you. Is the practice of overbooking worth the financial impact of the hit on United’s reputation? Only United knows for sure. The question, however, is certainly worth asking.   Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.  

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