United Airlines CEO Oscar Muñoz offered that full-throated apology that I stated he needed to give. In his third statment on the incident, Mr. Muñoz offered a much different tone. He stated that United takes full resposibilty for what transpired. Furthermore, he said that a full review has been ordered to be completed by April 30th in order to “to fix what’s broken so this never happens again.”
I imagine that this incident will make a great study for business schools.
If you’ve paid attention to news in the U.S., one of the biggest story, on- and offline, is what happened on a Chicago-to-Louisville United Airlines flight Sunday night, prior to take-off. If not, let me briefly recap: United Airlines overbooked a flight and asked that 4 passengers give up their seats to accommodate a flight crew could make the trip to Louisville, Ky. Unable to convince passengers with promises of travel vouchers and a hotel for the night, four were randomly selected to give up their seats. David Dao, however, did not want to go and, apparently, informed staff that he was a doctor and was needing to get back to Louisville to see patients the following morning. Nonetheless, he was forcibly taken from his seat by police and was bloodied in the incident. Of course, in the wake of this, a number of videos surfaced online.
Stepping away from the ethical or legal questions for a moment, let’s look at why a company would be served well to understand the power of social media.
First, they should have considered just how bad the video looked for them. From a consumer’s perspective, you see a passenger who’s paid for his seat, being asked to give it up to an employee of the company he’s paying. At the behest of the company, his protest results in his being manhandled while people around him are capturing it on cellphone video. So, no doubt this was going to be online.
This leads into the second consideration — the initial response. This was the response from CEO Oscar Muñoz posted to United’s Facebook page:
On its surface, it reads as a safe response but, remember the whole video thing? By the time people are reading this, they have likely seen the video. Referring to what happened as having to “re-accomodate” this passenger reads a tad Orwellian.If you look a little further down, you will see that, as of this afternoon, this response has been share over 11,600 times and received over 97,000 comments. Obviously, I haven’t read the overwhelming majority of these comments but, scanning through them, it appears that there are a lot of people upset by this incident.
It got no better on Twitter. A snarky hashtag #NewUnitedAirlinesMottos has the company trending for all the wrong reasons. It’s at 218,000 tweets and still going.
This takes us to my third consideration — the follow-up. Mr. Muñoz, rather than striking an apologetic or, at least, conciliatory tone, instead referred to the passenger as “disruptive and belligerent” in a letter to United Airlines employees.
This bad P.R. is already affecting United Airlines in a very real way. United has a huge presence in China, where it accounts for 20% of the market share of flights U.S.-bound flights. According to The Daily Beast, video of this incident has been viewed more than 200 million times in China. Seeing an Asian man bloodied and dragged down the aisle of a plan is not sitting well with consumers there. So, this incident could pose a very real threat to the company’s global business.
Furthermore, before the trading bell, the United’s stock valued dipped by $1.4 billion (yes, billion), thanks to this episode and the company’s response. By this afternoon, it had recovered some but, at present, still shows that it’s still about $600 million down from what it was prior to Sunday night’s mess.
At this point, a full-throated apology and sizeable cash settlement may be United’s only hope to stem the tide. Otherwise, what started on one plane on a runway in Chicago could create a ripple effect that severely damages a major U.S. company.