United, Airlines, Airports, Viral

Volunteering at United

The newest corporate public relations blunder now belongs to United Continental Airlines (United). I am sure that Pepsi is very happy to pass the hat onto another corporate citizen.

What Happened

It is ‘commonly known’, in some circles, that airlines will oversell their flights to ensure that they are full at time of departure. United follows the same practice. This practice came to a head for a flight from Chicago to Louisville on April 10th. United staff asked for 4 people to voluntarily give up their seats to accommodate the airline. 3 people volunteered while the 4th person was violently removed from their seat. From a memo off the desk of the CEO of United, Oscar Munoz, the person was ‘re-accommodated’.

Airlines commonly overbook their flights, for multiple reasons. According to the US Department of Transportation, in 2016, less than 1 in 10,000 were involuntarily bumped from the major US airlines. In 2016, this happened to United passengers at a rate of 0.43 per 10,000. It happened on American Airlines at a rate of 0.64 and at Southwest Airlines to 0.99 persons per 10,000.

Why Did It Happen

Overbooking happens for a number of reasons. None, however, can explain the events that occurred.

Resource Allocation: A flight leaving from Louisville had 4 members of its flight crew in Chicago. This is a reason why 4 seats were required. Did United not have any flight crews in Louisville that they could have used? Are their flight crews centrally located in certain locations or based off flight schedule and needs? Overall, did the schedule of the flight crews have then in the correct place?

Leadership: The CEO of United, Oscar Munoz, sent out a memo to staff after the event blaming the passenger for actions which is not seen in any of the footage that was captured. The CEO mention in the memo that the passenger was violent and belligerent. A properly written memo could have helped the situation but instead, gas was poured on the fire. If an employee of mine treats a customer that way, I would take ownership of the situation right away. It can be assumed that staff were not properly trained. That is a responsibility of the CEO. I understand that it was Chicago Airport Police that removed the person but United staff should have been trained on various methods to help get passengers to volunterily give up their seat. I have seen it happen effectively.

KPIs: United is a publicly traded company. Shareholders are constantly looking at the numbers to see how their investment is performing. Revenue per Available Seat and Passenger Miles Flown are key indicators on the health of an airline. Why does this create overbooking? If there is no passenger in the seat, the miles flown per passenger are negatively affected. When travelling, I have waited more than once for a fellow passenger to board the place. By overbooking, airlines are ensuring that there is a person in every seat.

Sensitivity: Consumers are rarely loyal to a certain airline. They will change airlines to save $5. If you don’t have any loyalty to an airline or are constantly purchasing the cheapest flight possible, you are increasing your chance of getting bumped out of your seat.

Legality: Airlines are allowed to overbook their flights and they are also ALLOWED to remove someone from a plane. In the purchasing contracts of Canadian airlines, however, it does not state how a person could be removed from the plane. Based on this assumption, the acts which happened on United are allowed and legal.

Internet Reaction

As you can imagine, the reaction from the Internet, specifically Twitter, was very fast. Videos of the event were online hours after the event occurred. It is possible that videos were posted even before the plane departed Chicago.

Social Media, Reaction, United, Overbooked

Some reaction from Twitter in regards to the United flight.

Stock Market Reaction

Shareholders of United firstly saw the event in a positive light by bidding up the price of the stock. When reading the headlines, the focus was most probably on the fact that United was overbooking their flights. A great problem for business is to have too many customers. As I am writing this the day after the event, United’s stock price has already decreased by 4%.

Overbooking, United

United’s Stock increase after word of event spread

Operating in the airline industry is not an easy task. There is a high capital investment along with the fact that one of your largest costs, jet fuel and airport fees, are largely controlled by third parties. Overbooking of flights is not something that will stop in the near future. Airlines have lost their sensitivity to consumer demands and views…mostly because consumers have trained them to be that way.  Even after dragging a bleeding and paying customer off one of their planes, United is still flying today and will for some time.

Did you know that airlines commonly overbook their flights? If you were a CEO of airlines, would you look at stopping the overbooking of flights? How would you do it so your financials are not compromised?

Kevin

Kevin MacDonald is a Business Consultant at L6S Business Consulting (www.l6sbc.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for the South Edmonton Business Assocation, the Fringe Festival, Goodwill Industries of Alberta and donates blood at the Canadian Blood Services.

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This Is How We Do It!

This is how we do it

Social media, like Twitter, Facebook, or LinkedIn, are great tools to connect with other people, learn new perspectives, and develop a sense a community. Granted, social media does not create a sense of community like a neighborhood BBQ with friends and family.

As with anything else, there is a dark side to social media which needs to be monitored and managed. Social media is a very common means to give ‘feedback’ to organizations on their lack of performance, based on the perspective of the consumer.

Venting in person to someone in regards to the person’s or their company’s performance still occurs in our society. These pieces of feedback are possible gems which can help anyone in improving their offering.

Recently, I had the opportunity to attend a concert at the Winspear Centre where the Edmonton Symphony Orchestra played various hits by Pink Floyd with help from a tribute band.

I will admit, the first half of the concert was very disappointing. You were not able to understand the words that were sung. The band and the orchestra seemed to be competing against each other with the drum set constantly winning over all over instruments. During intermission, a friend and I noted that it seemed that the show was off and not impressive.

As a lover of social media, I sent out the below tweet to the Edmonton Symphony Orchestra:
Tweet pic 1

After the intermission was completed, we returned to our seats wondering what the rest of the concert was going to be like. To our pleasure, we could crisply here the voices of the singers to the point we could identify each single person. No instrument was prevalent to the others and it turned into one of the better concerts I have seen.

The next morning, I received a tweet back from the Edmonton Symphony Orchestra:

tweet pic 2

To use a saying that has been repeated many times: that is the power of social media. If social media was not around, it is possible that the sound issues would not of been resolved which would have created a bad listening experience for myself and my friends.

With the Edmonton Symphony Orchestra responding to an online inquiry, not only did they make a spectator’s experience more enjoyable, they made a fan of their organization even more engaged.

What social media successes have you been a part of? What about failures? I would love to hear.

Have a great week!

Kevin

Kevin MacDonald is a Business Consultant at L6S Business Consulting Inc (www.L6SBC.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for different groups and donates platelets at the Canadian Blood Services clinic on a bi-weekly basis.

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Receiving Feedback

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When reading different publication in regards to human resources, management, or feedback, it is about giving it out. You can sandwich the feedback with saying something good, something negative, and then something good. You can also tell someone the negative action, tell them how it makes you feel and then give them a possible solution.

Those are all great pieces of advice, depending on the situation and the person that you are dealing with…but what do you if you are on the other end? How do you take the feedback? Do you try to explain yourself?

I enjoy gaining feedback from others. Being a CMA, I believe in constant self-improvement and preparing myself for bigger, more complex situations. When I receive feedback, I like to:

Not Argue: I don’t argue the feedback. I may feel that the feedback is incorrect, from my perspective, but the prospective of the other person, it is warranted.

Listen: I listen to what is being said to me. I also ask open-ended questions to make sure I fully understand the feedback. If I still don’t fully understand the feedback, I try to use the feedback in a scenario with the person giving me feedback.

Thank you: I always try to say ‘Thank you’. The person giving the feedback took the time to formulate and deliver the feedback to me, at the very least, I can say thank you for their effort in trying to make me better.

Apply It: Even if I don’t agree with the feedback, I still try to apply it. It may not work out for me but it doesn’t hurt to try something.

What was your reaction the last time you got feedback? How did you receive it?

Next week, I will be hopefully taking tour of a Boeing plant in Washington. I will let you know how that adventure turns out.

Photo Credit to Armando Sotoca https://www.flickr.com/photos/criterion/