Will These Four Wishes of United Airlines Come True? That Depends…
“I t’s hard to say whether new management will see that United has some warts. Record profits can have a way of distracting from hard work. And, United has made some strides on being a leaner, more profitable airline. The tough part about that is most of those changes have come at the expense of the customer.”
Ed Pizzarello of Pizza in Motion is a businessman and entrepreneur; so when I saw the title My Wish List For The New United Airlines CEO for this article, I knew that it was not going to be another one of those “Give me back the elite benefits you took away from me” or “I want more free upgrades” articles.
There are four wishes he expresses which — in my opinion — are critical to the success of a commercial airline business:
- Treat your employees well
- Hold your employees accountable
- Treat your customers well
- Find a way to be profitable that doesn’t involve cheap gas
However, the last sentence in the statement quoted at the beginning of this article resonated with me because those who are in business generally tend to be black and white, right and wrong. Despite the harsh realities which are inherent with economics, finance and other aspects of operating a company, the customer should ideally never feel like changes were implemented at their expense. Weighted average cost of capital; revenue per available seat mile; positive cash flow; earnings before interest, taxes, depreciation and amortization — these terms are only a minuscule part of the amalgam of concepts needed to operate a successful business, with revenue per available seat mile especially applicable towards airlines…
…but what about how a customer feels about a company and its policies? What about the actual transactions and interactions between employees of the company and its customers? What about ensuring a positive experience for the customer? Predictions in the attempt to answer those questions and more have basically been a mystery and an exercise in futility since business was conducted for the first time in the history of mankind — whenever that happened, as I was not around then — and some customers can indeed be fickle. Perhaps all the customer cares about is the lowest prices possible. Others value service and the way they are treated as a top priority. Still others want a product which functions properly and reliably and will last for years…
…and there are those who want varying combinations thereof of those and other priorities.
The reason why frequent flier loyalty programs have been so successful over the past 34 years is because they are amongst the most successful marketing tools implemented which allow airlines to better predict the behavior of their customers. Give them a chance to earn elite level status, and they will patronize the airline more. Throw some miles their way towards the payment of flights, and they will patronize the airline more. There are many cases of customers who have become fiercely loyal to an airline — beyond to a fault in extreme cases.
The only problem with that concept was that the airlines arguably went too far, showering perks and benefits to their top customers which they could not afford to give — especially when they were in debt to the tune of billions of dollars. Something had to give; so airlines started charging for products and services which were once included in the price of the airfare while cutting back on those perks and benefits — while in the process arguably ridding themselves of the chaff in terms of customers who paid as little as possible to enjoy said perks and benefits while keeping the wheat in terms of customers who paid premium prices for airline tickets.
As with politics in general, have the airlines overcorrected themselves to the point where they have trimmed perks and benefits too much while charging inflated prices in the form of ancillary fees on too many products and services? That depends on your point of view, as there is no real definitive answer to that question due to a plethora of factors; but I would not be the least bit surprised if the majority of people thought the answer is yes.
Because of the difficulty of gauging what customers will do in the future, it is therefore difficult to quantify exactly what damage can be caused by something which does not employ a hard business principle such as profits and losses; and even though there are generally accepted accounting principles, there is room for accountants to be creative with the numbers of a corporation in order to give a more euphemistic appearance to the financial condition of a company.
Rather than being creative with numbers — to a point of deception, at times — to satiate the hunger of stakeholders to profit in the short term, how about implementing policies and procedures to ensure that customers are indeed happy with patronizing a company such as an airline, without “giving away the store”? Despite not being able to definitively rationalize doing so with hard numbers, I would surmise that the company would benefit handsomely in the long term — and not solely with profits.
An exemplary leader knows how to ensure that customers, employees and stakeholders are happy and remain satisfied — the basic tenets of accomplishing this goal are not nearly as complicated as rocket science — and that is arguably more important than any other aspect of operating a successful business in general. Only time will tell if Oscar Munoz — the new chief executive officer of United Airlines — is that exemplary leader…
Photograph ©2013 by Brian Cohen.