United's Oscar Munoz Refuses to Acknowledge This Massive Problem

We all know about the United Airlines dragging incident.

Passenger buys a ticket and boards a plane. The passenger is later told to leave the plane, refuses, and gets dragged off by security. The world can't stop watching the horrifying video for at least a week.

Oscar Munoz, United's CEO, has been making the media rounds to tell everyone he's really sorry and the airline will do better. He's been interviewed by the Associated Press and appeared on ABC News and NBC News. 

On Friday, a statement from United Airlines announced "changes to improve customer experience." The statement also contained this quote from Munoz about the incident:

our policies got in the way of our values

That quote is a massive problem.

What Munoz doesn't understand, or won't acknowledge, is that United's values created those policies. And until those values change, things won't fundamentally get better.

Image source: United Airlines

What Are Corporate Values?

Corporate values are an aspect of corporate culture.

They provide guidance on how employees should act in the workplace. We often say "employees" in reference to frontline employees or perhaps line supervisors, but the term really refers to anyone in the company's employ, including executives.

People sometimes mistake written values for actual values.

A company might have a set of written values as United does (more on that in a moment). Those values have zero meaning unless they are actually guiding employee behavior.

In my research for The Service Culture Handbook, I discovered company after company where the written values weren't authentic. The real values in these companies weren't written, but you could see evidence of them in employees' daily actions.

This includes policy-making.

United's Corporate Values

In February of this year, United announced its first-ever customer service vision (a.k.a. "shared purpose") along with four corporate values:

We Fly Right On the ground and in the air, we hold ourselves to the highest standards in safety and reliability. We earn trust by doing things the right way and delivering on our commitments every day.

We Fly Friendly Warm and welcoming is who we are.

We Fly Together As a united United, we respect every voice, communicate openly and honestly, make decisions with facts and empathy, and celebrate our journey together.

We Fly Above & Beyond With an ambition to win, a commitment to excellence, and a passion for staying a step ahead, we are unmatched in our drive to be the best.

Now, compare those written values to the myriad of policies and operational decisions that led to a paid passenger getting dragged of a United plane.

The situation was caused because United needed four seats on a plane to get a flight crew to Louisville. If the crew didn't get there in time, the flight might be cancelled, which created severe cost pressure for operators.

Gate agents weren't notified about the crew until after boarding had begun. This is either a failure to anticipate a problem or a failure to communicate it.

Unconfirmed reports suggest that gate agents were empowered to offer a maximum of $800 to solicit volunteers to give up their seat. This was a Sunday evening flight, and the airline was offering to rebook passengers on a Monday flight, so you can see why this wasn't a compelling offer.

United's policy allowed gate agents to have passengers removed from a plane to accommodate crew members, so gate agents followed this policy. They called security for assistance when one passenger refused to leave the plane. 

All of those policies and operational decisions show that United's true values are cost-cutting and tight corporate control.

Crew scheduling in particular has dogged United for years. My most-read blog post way back in 2012 tracked a series of texts from my wife, Sally, as she endured United's comically lame operations while trying to fly home. 

Now, it's fair to assume that United hadn't fully disseminated and indoctrinated its new corporate values since they were created in February 2017 and this incident happened in April 2017.

But the CEO should be the new values champion. Instead, Munoz reflected United's old values in his initial letter to employees the day after the incident, where he blamed the passenger and commended employees for doing things right.

How to Avoid United's Values Problem

Having written values isn't enough.

Employees need to be aware of the values. They must understand what they mean. And they need to be able to describe how the values guide their actions.

JetBlue was one of the customer-focused companies profiled in The Service Culture Handbook. This airline leads the American Customer Satisfaction Index in customer satisfaction (ahead of Southwest Airlines!) while United is ranked near the bottom.

Unlike United, JetBlue ensures its policies are aligned with corporate values.

The airline has six values committees that review workplace polices and ensure each one is aligned with JetBlue's corporate culture. Each committee represents different groups of employees (gate agents, flight attendants, etc.) and committee members are elected by their peers.

New hires at JetBlue receive extensive training on the airline's customer service vision, Inspire Humanity. Supervisors regularly discuss the corporate culture with employees and executives visit each JetBlue location at least once per quarter to share updates and reinforce the culture.

A service failure reveals surprising customer service trends

On the Friday before Christmas my wife, Sally, headed to Newark Liberty airport for what she thought would be an uneventful flight home to San Diego. What followed instead was a string of bizarre delays lasting nearly nine hours that could only be caused by a company as inept as United Airlines.

Throughout the day, Sally texted me frequent updates on her flight status. I captured her messages in a blog post that turned out to be my most read post of the year.

Sally finally made it home safely. As she recounted her ordeal over a late dinner that night I realized that her experience reflected a few surprising customer service trends. Perhaps most surprising of all is that Sally intends to remain a loyal United Airlines customer (more on that later).

Trend 1: Communication is more important than the problem
Research posted by Rob Markey on the Net Promoter System blog just one day prior to Sally’s trip suggested that the way airlines handled a flight delay had a larger impact on customer perception than the delay itself. More specifically, passengers were much more understanding when the pilot provided frequent, clear, and empathetic updates.

This is exactly what happened on Sally’s flight. The pilot and the rest of the flight crew were absolutely terrific and the passengers generally remained calm as a result.

Trend 2: Anticipatory Customer Service
In his book, High Tech, High-Touch Customer Service, Micah Solomon describes the concept of anticipatory customer service where companies predict customer needs and proactively address them. Anticipating a customer’s needs gives companies an opportunity to provide unexpectedly good service or fix a problem before it gets even worse.

By the time Sally’s flight landed, the passengers on her plane had received an email from United Airlines apologizing for the delay and offering their choice of travel credit or frequent flyer miles as compensation. Sally has experienced her share of challenges in the past trying to get a response from the United Airlines customer service department, so it was a pleasant surprise to receive a proactive resolution.

Trend 3: Not all customers are equal
A day prior to Sally’s trip, Adam Toporek wrote a post on his CustomersThatStick blog explaining how all customers should expect excellent treatment, but they can’t all be VIPs. In the real world, Toporek explains, some customers will receive better treatment and service than others and deservedly so.

Sally certainly had some advantages over other passengers on her flight from Newark. She was relatively comfortable in her first class seat with plenty of legroom, a power outlet to keep her computer and phone charged, and attentive service from the flight attendants. Sally also knew from comparing notes with other passengers that she received a higher compensation offer in her email from United than the people sitting next to her.

Sally received better treatment than her fellow passengers because she is Premier 1k frequent flyer member. To earn this status, she had to fly more than 100,000 miles on United Airlines in 2012. This frequent flyer level comes with perks like complimentary first class upgrades, but Sally had to spend many hours and many flights sitting in coach to get there.

Final Trend: Why Sally is still loyal to United Airlines
Last November, Bruce Temkin shared new research that reveals some companies’ customers are more loyal than their customer experience ratings suggest they deserve. United Airlines was 19th on Temkin’s top 20 list. One of the explanations offered by Temkin was that people may be more loyal to a company than reasonable when there aren’t a lot of acceptable alternatives.

This is exactly why Sally will continue flying United almost exclusively. United Airlines offers a flight schedule that best meets her overall business travel needs in terms of cost and convenience. Her frequent flyer status also ensures she spends less time waiting in airport check-in and security lines and receives frequent seat upgrades. Looking at the big picture, Sally would have to spend more money and travel with less convenience to avoid flying United Airlines.

One Final Note
United Airlines might pat themselves on the back for earning Sally’s continued loyalty. What they may not realize is they still lost a customer that day – me.

I flew enough miles on United Airlines last year to earn their Premier Silver status. I plan on traveling a lot more this year and that status would have come in handy. However, unlike Sally, I have several good alternatives that make it easy to say I won’t be buying a ticket on United Airlines anytime soon.

All I want for Christmas is United to fly my wife home

Yesterday, Rob Markey published an excellent blog post analyzing the root cause of passenger anger over flight delays and cancellations.

Little did I realize that I would see these same circumstances unfold today as my wife, Sally, tried to fly home on United Airlines. She experienced delay after inexplicable delay that ultimately caused her flight to take off nearly nine hours late. 

Below is a transcript of the text messages she sent me. I think they give a pretty clear picture of what was going on from a passenger's perspective.

9:27 am

- Flt currently 1.2 hours delayed. Weather bad and heavy rain and winds. Here's hoping no more delays, and a safe flight.

10:02 am

- I was wrong. Delay not due to weather (as most flts are), crew rest requirement and captain. And, he's late. Still hasn't arrived, and we were to depart 15 min ago.

- And when he does arrive, he still has to do paperwork. Ah, United.

10:15 am

- Captain finally on his way to plane. He better be sprinting.

10:31 am

- Apparently he wasn't quite as close as they indicated. Still no pilot.

10:49 am

- This is RIDICULOUS. Still.NO.Captain!!

- Saga continues. They are now allowing passengers off plane, and no captain. They are trying to find one for our flight. Will text when I actually leave.

(Me: What?! They actually boarded the plane with no Captain?!)

11:00 am

- Yes, because they were told at 9:20 he was on property and heading to gate.

- Turns out, not our captain.

- Got off plane to grab lunch. Board showing 1145 departure. Lovely.

11:45 am

- Still no pilot.

12:05 pm

- My flt# is UA xxxx. Online now showing 1pm depature

- Sure am glad I woke up @ 5am.

1:02 pm

- Guess what we still don't have. And they have no status update. Lovely day...

1:15 pm

- Oh Captain, my captain!! Progress... I may just land by 5pm!

1:41 pm

- Door closed!! On way home :)

- Door back open. Addressing a 'minor' service issue with fuel.

2:00 pm

- This is INSANE. Turns out fuel pump issue is a recurring problem. Mechanic trying to avoid aircraft change. They have brought a new food truck, switching out breakfast. CRAZINESS.

- No plane change. Finishing up approvals.

- Door closed (again)

- If you don't hear from me again, then we actually took off.

2:24 pm

- I'm back.

- Misunderstanding on the maintenance repair - they are 'crunching #s to see if we can go to CA'.

- So over this.

- !! Door being disarmed.

- Ops Mgrs now involved

- Changing aircraft.

3:02 pm

- Insane. Crew has at least been great - and captain cool. New plane landing at 3pm, we are scheduled to leave @ 4.

- Will keep you posted. Lady just ate it hard in bathroom. Another woman traveling solo w/2 kids, and dog down below. My day could be worse.

- Captain uber cool - he went to check on pup.

- That's replacement captain, not jackass no show captain.

3:38 pm

- Plane here. Crew, captain, co-pilot all on board. Captain asked lots of questions before boarding. Making most of it.

- On plane. Fingers crossed.

4:14 pm

- Passengers on. Luggage on. Door still open - no catering.

(Me: Seriously, remind someone to check TP supply.)

- Laughing with crew - told them story, she ran and checked. Came back to report, 'unless everyone gets sick, we are all good'!

- Their one positive - they recovered my iPad I left charging on first plane (doh!)

- (Continental) crew has been awesome

4:33 pm

- Crew upfront talking about their time limits. They have been at airport since 9am

- One just said, 'oh crap. That will go over well'

- Yup. We were to leave @ 4pm...and then just checked online and it said 435pm

- Still no catering

- Old plane they cycled breakfast and lunch. wonder if we will now get dinner

- I was wondering why they hadn't offered us any beverages. She only has 'dirty dishes'

(Me: Did you ever get a meal voucher?)

- Yes. $5. I didn't stand in line for it - just went and got lunch... 5 hours ago.

4:45 pm

- One of the crew members just said, 'The Mayans are laughing'

- Still no catering. They were to take it from our old plane (at gate 85) to our new plane (at gate 83). Stupid crazy

- Seems they moved old plane before doing so.

- Yet another new departure time: 510. Let's see if we blow that one too.

(Me: New crew required?)

- Not yet. Heard them say they had 1.5 hours max before they got pulled.

5:02 pm

- 5pm - captain came on board explaining we are still waiting on catering. Stated front door open, and passengers are well within their right to leave and request a refund. At this point all we are waiting on is catering. Thanked people for patience.

- Seriously restless natives.

- Lady with dog down below is going NUTs

- 8 hour delay, 6 hour flight.

- YES! Catering truck just arrived.

5:17 pm

- Lady next to me just said, 'I don't think I've ever been on a plane where they announced 2 meals they would be serving, and never served it'. Hysterical. We are taking bets on which meal we will receive.

- catering finishing. They are doing a passenger head count. Everyone better be on this plane.

- Door closed...

5:30 pm

- Agent funny. Just said, 'FA, prepare doors for departure... again'.

- not shutting down until the wheels move.

- You seriously can't make this shit up. Arm stuck on jetway. They are trying to move it back so we can get out of here.

- Moving!

Why companies need to cure their fee addiction

I recently dined at a restaurant with a few colleagues. Two of us ordered a glass of Red Breast Irish Whiskey after our meal. My friend asked for hers neat while I ordered mine on the rocks. Imagine my shock when I saw the bill:

That’s right, my drink was $1 more after the "rocks upcharge" was added. Charging $1 for ice has to be the dumbest fee I’ve ever seen. (If you’ve seen dumber, PLEASE let me know!)

Customers Hate Fees
The sheer outrageousness of that little fee completely ruined what was an otherwise acceptable dining experience. Just to make sure I’m not being overly sensitive, I did a little homework and discovered other customers hate fees too. Here are a few examples:

• A 2006 study by Bain & Company found that fees were one of the leading causes of customer dissatisfaction (read more in their whitepaper).
• A 2011 study by J.D. Power & Associates found that checked baggage fees decreased customer satisfaction by an average of 8.5 percentage points (here's the story).
• High-profile attempts to raise fees by companies like Bank of America have led to widespread public backlash and customer defections.

Bottom line: Fees can negatively influence customers’ perception of service, especially when the fees are for products or services that used to be free.

Companies Are Addicted
For many companies, the fee addiction is easy to explain. The company faces pressure to increase profitability from investors, the board of directors, or competitors. Charging fees seems like a good way to boost revenue, pass costs along to the customer, or both. The financial motivation associated with a new fee is generally easy to measure. Here are a few examples:

• Checked baggage fees added an estimated $3.36 billion in revenue to U.S. airlines’ bottom line in 2011 (source: MSNBC's Overhead Bin).
• Bank of America hatched their plan to charge customers using debit cards a $5 monthly fee after legislation cost them an estimated $2 billion in revenue (source: LA Times).
• Companies in a wide range of industries, from hotels to ticket brokers, use fees to make the cost of their product or service appear lower than it actually is.

Curing the Addiction
Companies will only reduce or eliminate unfriendly fees when they are convinced doing so will increase profitability. Making that case takes both data and guts.

Gathering the data isn’t always easy. It requires companies to look beyond individual transactions and examine their customers relationships. For example, when an airline charges a passenger $25 to check a bag on a flight, the airline knows it made an extra $25. What it might not know is whether the fee encouraged that passenger to book her next flight on another airline. Companies need to get closer to their customers through surveys, mining their CRM programs, and even face-to-face interactions to analyze whether fees are really a net gain or loss.

One way to add guts to the mix and make executives a bit braver is through a compelling success story. Here are a few examples from companies that resisted the urge to raise fees:

• In the mid-2000s, Charles Schwab reduced or eliminated many fees as part of its well-publicized turnaround that led the brokerage firm to increase profits from $109 million in 2002 to $1.2 billion in 2006 (read more).
• An estimated 650,000 people moved their accounts from Bank of America to a credit union in the fall of 2011 in response to an announced fee increase (source: Credit Union National Association).
• Netflix built a successful company with a business model that eliminated late fees for movie rentals. Of course, they also made two enormous blunders in 2011, but that’s a different story. 

Is there such thing as the "United Airlines Effect"?

Just over a year ago, United Airlines and Continental Airlines announced they were merging. At the time, I predicted that the combined company would get bigger, ruder, and less efficient. 

The American Customer Satisfaction Index has just released their latest airline passenger satisfaction index and it appears my ruder prediction is coming true. The index is still tracking United and Continental as individual airlines, so you can see an interesting trend. I call it the "United Airlines Effect" where you take something bad (United Airlines customer service) and merge it with something mediocre (Continental Airlines customer service) and end up with something bad.

I've thrown in industry service leader Southwest Airlines for the sake of comparison.

Source: The American Customer Satisfaction Index

You can see that United Airlines hit rock bottom in 2009. Service at both United and Continental went up in the 2010 index, which was released just after the merger was announced. Since the merger, service at United Airlines has risen slightly while the service rating for Continental Airlines has tanked. The "United Airlines Effect" appears to be real.

Some of my friends and colleagues regularly fly both United and Continental. Some have even reported a few instances of unusually good service when flying United. Is there a newly discovered service spirit within United? Are they motivated by a desire to prove themselves during the merger? Or, is service at both airlines simply heading towards a mid-point that reflects their newly combined operations?

Whatever it is, I'll stick with Southwest Airlines whenever I can.

Another last to first customer service merger

My relaxing Sunday was disrupted by news that AT&T it is purchasing T-Mobile USA from Deutsch Telecom. Ugh.

I've been a loyal T-Mobile USA customer for a number of years after fleeing AT&T's terrible customer service. The worst part is AT&T has continued to stalk me like a psycho ex-girlfriend (see that post).

This is another example of a company whose service I despise purchasing a company I enjoy doing business with. T-Mobile currently holds the #1 spot for customer service ratings with both J.D. Power and The American Customer Satisfaction Index. AT&T, on the other hand, is tied for last in J.D. Power's rankings and holds last place by itself in the American Customer Satisfaction Index.

The last example of one of a service nemisis taking over a decent company was United Airlines buying Continental Airlines last year. (See: United Airlines will get bigger, ruder, and less efficient.) When that was announced, I walked outside and looked up at the sky while shaking my fist and screaming, "Noooooooooo!" (To be fair, commercial airliners regularly fly over my house.)

So now what? Will T-Mobile's outstanding customer service somehow rub off on their new owner? Not likely. Something tells me my future involves a switch to Verizon.

United Airlines will get bigger, ruder, and less efficient

United Airlines has just announced that they are buying Continental Airlines for just over $3 billion in stock. A company that lost $651 million last year is buying a company that lost $282 million so they can form the world's largest airline. Who will this benefit? Certainly not us.

Last year, United Airlines ranked last in the American Customer Satisfaction Index for major airlines with a score of 56. Their poor service became even more legendary last year with Dave Carroll's video, United Breaks Guitars, that has generated more than 8 million views on YouTube.

It's hard to imagine a company run as poorly as United Airlines can handle a massive merger with grace and style. In the short run, customers should expect even worse service as employees face the fear of uncertain job security, potentially contentious union negotiations, and the general confusion that is sure to come from this deal.

The one bright spot may be that Continental's CEO, Jeffery Smisek, will be at the helm of this new company. Contintental scored a 68 in last year's American Customer Satisfaction Index for major airlines, second only to Southwest which scored an 81.

Do you fly United or Continental now? If so, it may be time to cash in those frequent flyer miles and start looking for another carrier.

United Breaks Guitars song #3 released

In one of the ultimate cases of consumer revenge, Dave Carroll has just released his third in a series of three videos called United Breaks Guitars. The videos have collectively been viewed over 9 million times and United has looked very bad in the process. Best of all, Carroll comes across as a fair and kind person who only wants what is right.

The backstory

On March 31, 2008, musician Dave Carroll was traveling on United Airlines from Halifax to Omaha when baggage handlers were observed throwing his guitar on the tarmac. His guitar was damaged in this incident, but United Airlines gave Carroll the run-around for months. In response, Carroll vowed to write and record three songs about his experience and post videos of the songs on You Tube. What followed is a great lesson about the sometimes hidden cost of goodwill and why it may be a good idea to go against a strict corporate policy when that's the right thing to do.

You can read Carroll's complete story on his blog here.

Video 3

More info

Carroll provides a lot of information on his website. You can also view all three videos plus his video statement on his YouTube channel: sonsofmaxwell