United Airlines' Latest PR Gaffe Is a Doozy

In an attempt to regain its status as a preferred airline for travelers, United Continental (NYSE: UAL  ) recently began a major ad campaign promoting itself as "flyer friendly." If United wants to rebuild its historical revenue premium, it will need to convince fliers that it has upped its game from a customer service perspective. However, last week United Airlines walked into yet another embarrassing PR blunder.

United Airlines just made another foolish PR mistake. Photo: United Airlines.

Ninety-year-old WWII veteran Ewalt Shatz, who fought during the Pearl Harbor attack, was headed to Honolulu on United Airlines for a Pearl Harbor memorial ceremony. United bumped Shatz from his flight due to weight restrictions for the plane. Instead, they put him on an American Airlines (NASDAQ: AAL  ) flight that left eight hours later for Maui, where he had to connect to an inter-island flight on Hawaiian Holdings  (NASDAQ: HA  ) .

The story has led to a public outcry against United, with many customers vowing to take their business elsewhere. United Airlines' inability to find a more humane solution than rerouting an elderly veteran in poor health makes a farce of its "flyer-friendly" ad campaign. The perpetuation of its reputation for poor customer service will in turn frustrate United's efforts to rebuild its revenue premium.

A history of blunders
United Airlines has had an unfortunate tendency to make headlines with bad PR blunders in recent years. Most famously, in 2008, United customer (and musician) Dave Carroll watched a careless baggage handler break his guitar. After United refused to reimburse him for the damage, Carroll eventually wrote a song called "United Breaks Guitars," which went viral on YouTube.

A more mundane -- but much more serious -- problem arose last March, when United Airlines and Continental Airlines finally moved to combine their reservation systems to complete their merger. While the company had supposedly prepared thoroughly for the switchover, the change did not go smoothly.

This caused a surge in customer complaints. A variety of glitches remained through the summer, leading to frequent flight delays and cancellations, landing United Airlines at the bottom of the annual Airline Quality Rating survey for 2012.

A terrible decision
United seemed to be making some progress in boosting customer satisfaction earlier this year. United Continental executives have repeatedly noted that the company is giving all of its customer-facing employees new customer service training this year.

In the case of Ewalt Shatz, this training did not pay off. United had no choice but to remove passengers from his flight to Honolulu, but it did have a choice about whom to rebook. It should have been obvious to employees that Shatz would have a harder time coping with a new itinerary than most fliers -- not to mention the fact that he deserved better treatment.

United couldn't even manage to get him to his destination quickly. Shatz had paid for a nonstop ticket, but was instead rebooked with connecting flights. 

United's poor customer service performance stands in stark contrast to the exceptional service provided to Shatz by Hawaiian Airlines. Hawaiian sent an agent to the gate where Shatz's American Airlines flight arrived in Maui in order to personally escort him to his connecting flight. Hawaiian Airlines also upgraded him to first class for the short hop from Maui to Honolulu.

Time to perform
I have been arguing all year that United Continental's management team talks a good game, but can't put up results to match. The same could be said for United's customer service performance. United may be providing customer service training to its employees, but it appears that old habits of indifference die hard. (Either that or common sense needs to be added to United's curriculum!)

I don't expect this particular incident to have a material impact on United's earnings. A few vocal customers may boycott United Airlines, but most people will continue to fly United if it offers the best price or schedule for their travel.

However, investors should abandon any illusions that United Continental has returned to the service-oriented culture of Continental Airlines. United's tone-deaf customer service will make it difficult or impossible for the carrier to grow its revenue premium over time, which will keep its margins razor-thin.

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  • Report this Comment On December 10, 2013, at 2:27 PM, CLINTJ5 wrote:

    Wow, you are still trying to find any thing out there to beat UAL up and bringing up past errors that have since been rectified. Desperate aren't we. I tried to help you with some advice before, keep ignoring and losing your money. I agree it was a bad thing to do, was it express or mainline UAL? Either way things happen, He should have said what his purpose was, most cases UAL does there best to accomodate these issues. Do you know all the facts? I doubt it. !0 years is not enough time to follow the airlines, Look further back to gain a better investment understanding.

    Take Care,

    Clint

  • Report this Comment On December 10, 2013, at 5:09 PM, KAURICK wrote:

    Trying to be as respectful as possible, the crew, customer service reps, and plane were all Continental. The plane was a 737, something legacy United never flew to Hawaii. The new United management team, all Continental, has incentivized all employees to depart on time regardless of disservice to passengers. The new United management team, Continental, has also begun a process of outsourcing it's customer service people to American Eagle (sub of American Airlines). The new United has ditched legacy United standards in the cockpit, the maintenance line and the passenger cabin for the more minimalist FAA standards. United'a state of the art reservation system was dumped for Continental's1970's DOS based system. These policies and many others were done all in the name of saving money. The only thing that is United is the name on the plane.

  • Report this Comment On December 10, 2013, at 5:39 PM, allpointspr100 wrote:

    Well United has had luck in the past of good PR. They use a good <a href="http://allpointspr.com/contact-us"> franchise PR </a> firm. They Just need a good marketing team to show the how to do good customer service. Thanks for posting this, Adam.

  • Report this Comment On December 10, 2013, at 8:50 PM, caffeinefree51 wrote:

    As a long term employee in the airline biz, it is an embarrassing treatment of a World War VET.. This is the first I have heard about this incident. I agree something else should have been done about it, and yes it was a mistake.

    All airlines have snafus, and it's not an easy business to run, as nobody is ever happy. the flying public today screams about how the airlines are nickel and diming passengers' but the American public wants cheap seats. Airline management wants cheap labor, and is willing to sacrifice service to appease stockholders.

    In an industry such as customer service, this will only lead to more problems in the future. I had to go through this supposedly customer training at UAL, and it was a joke. I have been flying for almost 3 decades, and have seen our service deteriorate. It's ok for top management to make the big bucks, but not ok for the actual workers to make a good living. When this happens, you get disgruntled employees, that give up caring for their company, or taking care of their customers. It's a downward spiral effect.

    This merger was not wanted on the Continental side I guarantee you that. Continental service climbed back to it's glory, only to be trashed in this merger. The new CEO Smisek wanted this merger big time, and the employees of both airlines are suffering for it now. Two different cultures working as one now, with different ideas on how to get things done has lead to clashes. On top of that, airlines just keep taking away everything, and the passengers keep losing as well. The only happy ones in all this mess, are the top tier in the airlines. Just today, it was announced what outgoing Tom Horton will now receive on his departure. Close to $17 million severance package, after he took AA into BK. He shafted the employees, and walks away with millions. What a scam!

    UAL needs to invest in it's people, and in turn you have happy employees. Happy employees make a good airline, and with that comes profitability. These current CEO's in most of the airlines today are making out like bandits, whether the airlines make money or not. That is a shame. Also, price tickets to make money, and bring back the little things, or air travel will only continue down the current path. It's all about money, money, money, and that will be the curse haunting airlines for years to come.

  • Report this Comment On December 10, 2013, at 11:39 PM, mcdo6869 wrote:

    Adam,

    Do you ever fly? i suggest you go out and get some experience in the subject you write about.

    Just because you have shorted the stock doesn't mean you have to promote misinformation.

    Jeff

  • Report this Comment On December 11, 2013, at 1:00 AM, spin8382 wrote:

    Adam: Thanks for posting this story, but there are two interesting parts to it that have not been widely covered.

    First, while UAL's public statements all say this was "weather" related (strong winds) the aircraft in question actually had a broken bleed air valve on the APU. As such, the APU could not pressurize the airplane if a problem occurred. With no back up system, and no airport to divert to, the plane (a CO 737-800) which was flying at the edge of its range already, would have had to drop to 10,000 feet, where the air is much heavier, and fuel burn greater, in an emergency.

    As a result they needed more fuel to be able to fly at 10,000 feet in an emergency (as the APU was not working for bleed air) and that required off loading weight.

    So the basic story told by UAL is simply not true, this was a deferred maintenance issue, not weather.

    The real issue though is that when shatz was told at the ticket counter that UAL would not fly him (and send over to AA for a 6 hour later flight to Maui with a connection to HNL) he was what is termed "IDB" and was entitled to compensation for the bump under 14 CFR 250.2. This was likely $1300, and it was legally owed at the time of the bump. He was told to pound sand by two agents and a supervisor, all of which it is reported knew he was going to the Dec 7 ceremony, hell he was wearing his pearl harbor hat. Obviously, had UAL sent him to the gate, and offered compensation ($300? $400?) probably half the plane would have given up their seat so he could fly. Alas, United never gave them the chance...

    Instead of asking for volunteers at the gate, UAL - it appears - chose not pay this compensation, they probably just figured he was a little old man, who would know? So far UAL has not said they paid the legally required $1300, and had they done so, no doubt their spokespersons would be saying "we feel bad for Mr. Shatz, but we gave him $1300 for his trouble"

    If you want a better example of a badly run company - and why UAL is losing large numbers of High Value Fliers, and is trailing in yield and PRASM growth badly - its hard to think of a worse one than one that would lie to the media and chisel a 90 yo war veteran out of the compensation for the bump he was legally entitled to.

  • Report this Comment On December 11, 2013, at 1:34 AM, sliderw wrote:

    Without a good product, a company is doomed to failure. United, you are one such company (so are several other airlines). Your customers are buying your product but they don't enjoy it; they are simply putting up with it.

  • Report this Comment On December 11, 2013, at 4:12 AM, VikingBear wrote:

    spin8382 is right on.

    That particular aircraft belonged in a hangar, not on the ramp.

    Attempting to depart with a known critical system broken, and pretending to work around it by randomly picking on a number of passengers to lower weight, sounds like a clerical decision rather than something a pilot in command would do.

    Anybody get to talk to the crew on deep background?

    Or were they too embarrassed/afraid?

  • Report this Comment On December 11, 2013, at 8:32 AM, wildncraz8 wrote:

    I think the easiest way to say this is....United SUCKS. Remember in the 70's the "Friendly Skies"? And how can I ever forget the UAL flight I took from LAX to Allentown, PA which wouldn't land because of fog even though we were flying directly above the airport and looking at the clear view of the runway? So where did we land? Newark of course and were bussed back. Yeah good old United....the last time I ever flew United by the way. United+Continental=crap joins crap.

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