Jeff Smisek promised frequent flyers “changes we’re going to like.”
And I don’t think Continental, now doing business under the name United Airlines, gets enough credit for two of the things that are actually good since the merger between the two airlines —
- The elimination of “Starnet blocking” or “throttling” (United used to tell customers that award seats on partner airlines weren’t available even when the partners were offering the seats but when United didn’t want to pay for them)
- Much more generous “award routing rules” or the ability to fly just about any way you want between two cities based on what seats are available with miles instead of being highly limited in what flights can be used.
The reason they can’t really get the credit they deserve for these two items is because they’ve taken so many steps backwards — a “passenger service system” that simply doesn’t work, that can’t even always issue tickets correctly; a disaster combining the airlines onto a single system (and some of the longest phone wait times in history that resulted); major changes to its upgrade procedures that prioritize single trip revenue over loyalty; changes to how elite status is earned; elimination of benefits to million mile frequent flyers that they promised they would not eliminate; actual insults of loyal frequent flyers. And the list goes on.
This isn’t just “over-entitled” frequent flyer griping. Smisek now acknowledges it.
Mr. Smisek, in an interview, called 2012 “awful” for United. The company lost money, was hit by a wave of canceled and delayed flights, and infuriated many customers by mishandling changes to its passenger reservation system and dramatically modifying its frequent-flier rules. Two reservations outages, last August and November, inconvenienced fliers and fueled questions about United’s ability to manage itself.
But… wait for it… it’s the employees’ fault!
Among other things, he said he is working to fundamentally change employees’ thinking about the company. “For far too long, we’ve operated this company as an airline: Airlines don’t make money,” Mr. Smisek said. He wants employees to view United as a business. “That means constantly looking at ways to do things smarter and less expensively.”
If only his employees would see things as clearly as he does, United would be great! And it’s the employees standing in the way of more cuts, so they can do things less expensively.
How are they shaving costs now?
“Our costs clearly are too high,” said the CEO, a lawyer who started at Continental Airlines as general counsel in 1995. United is seeking reductions large and small. It revamped its employee shuttle-bus system at Chicago’sO’Hare International Airport, an effort expected to save $2 million over five years. New luggage handling procedures at Houston’sBush Intercontinental Airport are shaving $400,000 a month. The catering team rebid the contract for the heated nut cocktail served in first class by switching to split cashews from whole ones, a savings of $200,000 a year. “Customers don’t care if it’s a whole nut or split in half,” Mr. Smisek said.
He doesn’t even value United’s hot nuts.
Which is apparently ok because customer complaints aren’t as bad as the month following the integration of United’s and Continental’s computer reservation systems.
Customer complaints about United filed with the department in April were down by more than a third from the year-ago month. Still, there were more than for any competitor.
And yet he acknowledges that they are still very bad.
The airline’s score on the annual J.D. Power & Associates poll of passenger satisfaction published in May improved slightly, to 641 out of 1,000 possible points, from 625 the year before, but United rated second to last among traditional airlines in North America in both years. United says its own customer-satisfaction scores are up fivefold from the nadir reached last July.
“It’s measuring off a low base to say it’s materially improved,” Mr. Smisek conceded. “Last summer was bad.”
The biggest mistake, and the way forward?
Mr. Smisek said that, in retrospect, the company “changed too much too quickly.” …
Mr. Smisek said he takes inspiration from Delta, “which is doing quite well, which I’m delighted with because they’re two years ahead of us’ in absorbing its 2008 acquisition of Northwest Airlines.
Be afraid. Be very afraid.
(HT: Joe Brancatelli)
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