Okay….so Smisek is out at United Airlines. Many, both travelers and financial analysts, see this as a time to celebrate. Me? I’m a bit more hesitant on the topic.
I happened to be passing through the United hub at San Francisco a couple hours after the news came out. That gave me plenty of opportunity to casually chat with front-line employees about the news. There were a lot of smiles on display. There was also plenty of hesitancy. Many offered up a “the new guy cannot be any worse” sort of view, but there is also apprehension in that incoming CEO Oscar Munoz is relatively an unknown. His letter to employees talks about common goals and “an ongoing conversation among ourselves” to reach those goals. Given the relatively toxic labor environment at the company today it is easy to see the optimism. One flight attendant I spoke with was quite clear in her hopes, “Maybe we’ll finally get a damn contract.”
Us too. https://t.co/Jc6OrbWvoc
— Dispatchers United (@PAFCAUAL) September 8, 2015
There are also many references to conveying passengers happily and safely, nods to the little things which make customer satisfaction higher. Anyone reading this who believes that it is likely to translate into significant on-board product changes is likely to be disappointed. Munoz mentions “new forms of loyalty programs and affinity groups” which suggests that the current track of the MileagePlus program is likely to hold; revenue-based and co-branding are the new world order in the industry (and not even really that new).
"One thing that won’t change is our focus on improving long-term shareholder value," says @united acting CFO Laderman on Munoz appointment
— Edward Russell (@ByERussell) September 9, 2015
As for what it will take to bring United back, the “must do” actions early in Munoz’s tenure, there are only two I see as mattering. I alluded to the toxic labor environment above. That’s one of the things which must be fixed and it is not something which fixes easily nor quickly. The second is operational reliability.
United is trailing market peers when it comes to getting people and planes where they are supposed to be and when they are supposed to be there. It has been trailing for far too long with no evidence of concrete actions in place to fix that problem. And it is the most critical thing for an airline. Passengers will accept a less comfortable seat or a worse meal if they actually get where they’re going. But if the company doesn’t meet that basic need then all the other stuff is just lipstick on a pig.
Some of the operational reliability will be especially hard to address given the company’s reliability on regional partners. Republic Airways operates 600ish daily flights for United and has a spectacularly bad cancellation rate running right now as it fights to hire and retain pilots.
There are other reliability challenges as well. The long-haul fleet is performing well below where it should be. The company is focused on fixing dispatch reliability on the 767-300 fleet with a major maintenance program kicking off later this year. That work may solve some of the issues but the 763 subfleet is not the only troubled spot. In fact, those aircraft are dispatching better than some of the other subfleets. The road ahead on this front is a long one.
I’ve read plenty of other listicles about this news, talking about things like boarding order and frequent flyer “perks” for travelers. New seats and even a new livery have been mentioned as well. That’s all cute, but it does not affect the true issues affecting the company. Those are not the things Mr. Munoz needs to be focused on as he takes over the role.
There will be some changes in the next few months. It remains to be seen who will like them.
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THANK YOU! The problem with UA isn’t the branding, or the livery, or whether or not someone likes the new meals on board, or the frequent flyer program. Sure, I get some folks have left because they don’t like how MileagePlus has changed. Those passengers probably weren’t the most valuable to begin with. Fix the labor issues, which cost money and lead to poor customer service, and fix the operational reliability, and you’ve fixed the major reasons why UA is not performing well. Then they can focus on the feel good, fluffy stuff, like the branding. Otherwise, a new livery and some better food on board is just lipstick on an unreliable pig that can’t get you where you need to go on time. That’s what drove me away, and what has driven away several of my coworkers who used to fly UA and nobody else.
And, honestly, if you look at the Continental Go Forward plan from 20 years ago, two of the four pillars in it refer to labor relations and operational reliability. And nothing in it refers to the frequent flyer program or livery. Sure, those were things they dealt with too, but they weren’t the focus.
I agree. While United MileagePlus program isn’t great, what ultimately drove me away was the poor operational reliability (eg long delays when DL flights to the same destination were still on time) followed by a declining product and in-flight experience. If they spend money and effort on improving reliability and employee morale, customers will follow.
Good post. It’s almost cringe-worthy reading some of the posts on FT and some other blogs, with what people think should/could happen. I don’t see any “frequent flyer friendly” changes to (or changes back to old ways in) MileagePlus simply because of this. Let’s hope their performance and reliability start heading in the right direction for now.
Thanks Seth, this is logic. We ALL would like UA to become the next 5* airline, but first it has to become a reliable airline. THEN it can work on adding the bells and whistles.
I wonder if United will eventually be given some some sort of penalty for it’s CEO’s actions. Perhaps they will be forced to give up a bunch of slots at EWR or just pay a large fine.