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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