Oscar Munoz, CEO of United Airlines.

How Building Reputational Capital Can Help United Airlines

Article originally published in the American City Business Journals on July 8, 2017

“All companies need to build reputational capital by banking goodwill, just as we all build
political capital and bank goodwill within our companies by building trust and by
exceeding expectations.”

Earlier this month, I wrote an article about United Airlines passenger Shirley Yamauchi, who flew for three-plus hours from Houston to Boston on June 29 with her 27-month-old son on her lap. Her son’s boarding pass was not properly scanned, and therefore his seat was assigned to a late-boarding standby passenger.

In an interview on ABC’s “Good Morning America,” Yamauchi said that when she told the flight attendant that the adjacent seat was hers, “She told me that the flight was full and she shrugged and that was the end of it.”

In my article, I wrote, “Recalling the [April 9] incident in which Dr. David Dao … was dragged off a United flight [by airport security officials] to accommodate a United flight crew member, Yamauchi said, ‘I didn’t want [my son] hurt. Of course, I feared [for] my personal safety with everything I have seen with United Airlines. I didn’t want to see anyone get hurt.’”

The flight Dao was on was a United Express flight using a UA flight number, but it was operated by Republic Airline with a Republic Airline crew. United was the brand that the passengers were buying, so United had responsibility and was blamed for Dao’s removal and injuries.

I titled my July 11 article “To improve its image, United Airlines needs to get better at hospitality.” I received feedback from readers that I failed to acknowledge the thousands of dedicated United employees that provide hospitality, treat their passengers with respect and who work each day to give them a pleasant flight. I do so now.

One of my readers wrote to me stating, “The mother and her 27-month-old child is just one isolated case out of thousands of non-event flights that customers experience on United on a daily basis.” This is true.

The same thing can be said about the Dao event: It’s an isolated case. Regardless of how good the culture within any company is, adverse events will occur — though hopefully not as serious as the Dao and Yamauchi events.

In an article I wrote shortly after the Dao incident, I criticized the culture within United, based on the initial statement by United CEO Oscar Munoz. I wrote, “In a ‘tone deaf,’ insensitive email to the airline’s employees, blind to the firestorm and the growing damage to United’s reputation, [Munoz] called [Dao] ‘belligerent and disruptive.’”

After experiencing a negative reaction to his email critical of Dao, two days later Munoz said he “felt shame when he saw the video [of the incident].” He added, “This will never happen again.”

Munoz also said, “[This] was a system failure. We have not provided our front-line supervisors, managers and individuals with the proper tools, policies and procedures that allow them to use their common sense. …This issue could have been solved by that. That’s on me, I have to fix that.”

I have no doubt that the board of United is holding Munoz accountable for changing the culture within the airline and that Munoz and his team are in the process of doing so.

Airline Quality Ratings (AQR) published annually by Embry-Riddle Aeronautical University and Wichita State University indicate that United has improved its performance each year from 2014 through 2016. AQR measures on-time performance, denied boardings, mishandled baggage and customer complaints.

However, in 2016, United was ranked eighth out of 12 U.S. airlines, the same as in 2015, which is a slight improvement compared with a ranking of ninth in 2014. The AQR data indicates that the entire airline industry is improving its performance. For United, however, the challenge is to improve at a faster rate.

Every airline experiences serious adverse events that get videoed on passengers’ cell phones and quickly find their way onto social media. How does the reputation of any company withstand serious adverse events?

All companies need to build reputational capital by banking goodwill, just as we all build political capital and bank goodwill within our companies by building trust and by exceeding expectations.

The greater the political capital of an individual, the greater the chance of minimizing the career impact of a major mistake. The greater the reputational capital of a company, the greater the chance of minimizing the social media impact of a serious reputational incident.

So, how does United build reputational capital? Through continued communication of Munoz’s tone at the top and a hospitality-focused culture. I am sure United is benchmarking the best airlines in the world as viewed by their passengers.

United also needs to ensure that its contract carriers, such as Republic Airline, adopt the same cultural norms regarding hospitality and passenger experience as United. Passengers purchase United tickets and reserve seats on a flight with a United flight number. It should not be their concern that they are flying, for example, on a Republic flight with a Republic crew.

All airlines need to go beyond what is expected to help passengers in need of an extra level of service. Airlines also need to reconsider their practice of reducing the distance between seats to provide a more comfortable flight for their passengers to “lower the temperature” and reduce stress in the cabin.

Gate agents and flight attendants, whose jobs can be stressful, need to defuse situations by being empowered to do the right thing for their passengers. They also need to have common sense and exercise good critical judgement.

All airlines need to make every effort they can to avoid events like the recent Dao and Yamauchi situations. It’s worth remembering that in addition to posting negative experiences, passengers post positive experiences on social media, too — and those are the experiences that can help to build reputational capital.

United Airlines is a unit of United Continental Holdings (NYSE: UAL).

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.

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