General Industry

Lessons From the United Airlines Debacle: Mohamed A. El-Erian

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Lessons From the United Airlines Debacle: Mohamed A. El-Erian

United Airlines is in the midst of a major reputational crisis after it decided to forcefully “re-accommodate” a passenger from an overbooked flight on Sunday.

Yet judging from a series of informal conversations I had with passengers at United’s Los Angeles terminal and on one of their cross-country flights this week, the airline’s frequent fliers don’t seem to share the sense of outrage that’s ubiquitous on social media.

Some of the reasons for this discrepancy speak to important lessons about crisis management and prevention that United, and other companies, should take away from this now-notorious event.

Frequent travelers do not appear as shocked as others. They know that airlines overbook their planes almost routinely, betting that some passengers will change their travel plans at the last minute. They know that airlines offer passengers incentives to give up their seats when flights end up oversold, that sometimes passengers are involuntarily bumped off a flight, and that the airline has a legal right to do so.

Some of us have even been on flights, seated and ready to leave the gate, when suddenly there is a need to make space and someone has to deplane. I saw it happen when an acquaintance was asked by airline officials to wait for a later flight on a United Express commuter plane that was determined to have a weight issue, given updated information on prevailing winds. And most frequent travelers have witnessed irate passengers in one situation or the other, whether at the gate or on the plane.

As such, and judging from my admittedly limited and far-from-representative survey, frequent fliers seem to be a lot less outraged and surprised about what happened on that flight from Chicago to Louisville than the rest of the world is. Yes, United and law enforcement personnel exercised very poor judgment, and, critically, the use of force was totally and absolutely inappropriate. But planes get overbooked, and passengers get irate. It happens, as regrettable and disappointing as that is.

Contrast this with the general sense of outrage and dismay. And it’s global: An event on a small U.S. domestic route ended up being the No. 1 trending topic on Chinese social media, raising possible challenges for a company with greater aspirations for its Asian lines of business and beyond.

One of the major reasons for this discrepancy is that customers with different levels of information have different expectations about what "normal" looks like. And that is something that companies like United should reflect much better in their contingency planning.

In the critical minutes of crisis management following the highly unfortunate incident, United failed miserably in explaining the context for its decisions. Its first set of communications was not just poor and badly structured. It was also overly ambitious in trying to differentiate between different stakeholders operating on an information playing field that was far from level. With its dismal failure to get the facts out quickly, United actually fueled rather than diffused the spread of outrage.

Rather than stumble through the difficult exercise of reconciling multiple constituencies using different messages, United should have initially focused on their most important ones - their customers. The company could (and should have) expressed upfront genuine remorse for a customer who - remember - sadly ended up in hospital, rather than calling him “disruptive and belligerent.” Moreover, in this day of rapid video dissemination, it took the airline way too long to counter the awful images of the incident with its own video of genuine apology and proper explanation.

Then there was the biggest failure of all: United should have dealt with the oversold situation before starting the boarding process. Did they not know about their personnel requirements at that time?

Denying someone a seat on a plane is bad enough; doing so when the person is already sitting in it is a disaster to be avoided at all cost. If anything, it doesn’t provide the airline with much of an opportunity to explain to passengers why they were selected. Indeed, the most important takeaway from any crisis-management discussion is the need to strengthen crisis prevention!

Finally, and in what may be the most relevant lesson for the business community as a whole, it seems that United’s management had not done spent enough time and energy on effective scenario planning. Apparently, there was insufficient focus on the “what ifs,” both internally generated (as was the case here) and in response to fake news.

Lacking a clearly anchored tone and a well-established approach, their crisis-management effort came across as unprofessional, disjointed, and -- especially --lacking in strategic underpinnings. This is a particularly large slippage at a time when companies have to live with a lot more “unusual uncertainty,” seeing any mishap easily amplified by social media. And it happened in a world in which companies already have to deal with a much longer list of improbables becoming reality.

While this awful incident is unlikely to change United’s business outlook in a material way over the long-term, it carries important lessons. The faster they are absorbed by the business community as a whole, the better it is for customers, too.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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