United Airlines ( UAL)

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April 13, 2017

Good morning.

I mentioned in passing yesterday that responding to social media outrage is not something they teach in business school. Silly me. Turns out there is a Harvard Business School case study on just that topic. (Thanks to BJ for pointing it out.) And the company featured is – wait for it – United Airlines.

The incident happened in 2009, and involved a professional musician named Dave Carroll who watched from an airplane window as United bag handlers badly bashed his $3,500 guitar. In his effort to seek compensation, Dave got the runaround for months. Then he decided to write a song about the event, film it on video, and post it on YouTube. The song was called “United Breaks Guitars.”

The video went up at 10 p.m. on Monday July 6, and within the next couple of days started to pick up steam. A number of mainstream news organizations began calling Carroll for interviews. By Friday, nearly 1.6 million people had watched the video, and United was taking a beating.

The episode turned out well for Carroll – he was compensated by the airline, and his musical career got a boost. The effect on United’s business was serious, but doesn’t seem to have lasted long. Whether this time will be different remains to be seen. Worth noting that a couple of things have changed since 2009. First, David Dao didn’t have to make his own video; these days, there are cameras everywhere, ready to record any outrageous move at any time. Second, it took hours, not days, for this video to go viral, and spread across the globe.

Meanwhile, Dr. Dao has taken his case to court, filing a “bill of discovery” in Illinois demanding evidence of his “re-accommodation” be “preserved and protected.”

By the way, Southwest Airlines says it is not responsible for the slogan making rounds on social media attached to its logo: “We beat the competition. Not you.” But maybe it should hire the person who is.

News below.


Alan Murray

@alansmurray

alan.murray@fortune.com
 
peilthetraveler said:
I thinking you're either crazy or looking for attention now.
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Did you slap yourself 10 times across the face before posting this and the previous reply? If not, that's TWO counts of breaking the rules, violation of our "Terms and Conditions". The Police is on their way now...
 
dealmaker said:
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April 13, 2017

Good morning.

I mentioned in passing yesterday that responding to social media outrage is not something they teach in business school. Silly me. Turns out there is a Harvard Business School case study on just that topic. (Thanks to BJ for pointing it out.) And the company featured is – wait for it – United Airlines.

The incident happened in 2009, and involved a professional musician named Dave Carroll who watched from an airplane window as United bag handlers badly bashed his $3,500 guitar. In his effort to seek compensation, Dave got the runaround for months. Then he decided to write a song about the event, film it on video, and post it on YouTube. The song was called “United Breaks Guitars.”

The video went up at 10 p.m. on Monday July 6, and within the next couple of days started to pick up steam. A number of mainstream news organizations began calling Carroll for interviews. By Friday, nearly 1.6 million people had watched the video, and United was taking a beating.

The episode turned out well for Carroll – he was compensated by the airline, and his musical career got a boost. The effect on United’s business was serious, but doesn’t seem to have lasted long. Whether this time will be different remains to be seen. Worth noting that a couple of things have changed since 2009. First, David Dao didn’t have to make his own video; these days, there are cameras everywhere, ready to record any outrageous move at any time. Second, it took hours, not days, for this video to go viral, and spread across the globe.
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First of all, there is a bit of difference in terms of damage that UA has dealt to Mr. Carroll and Dr. Dao. Both are devastating but in Mr. Carroll, after all it was damage only to his property of an inanimate object which is his guitar whereas in Dr. Dao, we all saw that it was deliberate physical assault resulting in painful injury to his physical body as well as the extreme psychological distress from being publicly humiliated in front of such large amount of people in so close proximity. So of course the damages suffered by Dr. Dao were no doubt exponentially higher. So How high would the damages be awarded to Dr. Dao? Of course it would be decided by either the Judge and/or the Jury depending on how Dr. Dao chooses to decide on his case in court and how much do they want to stick it to United Airlines. Punitive damages would DEFINITELY be in order even if the Jury doesn't award it, the Judge DEFINITELY will. All the anger and frustration from all those delays, booted due to overbooking or else, rude flight attendants, the tiny narrow seats, EVERYTHING that people have suffered throughout the YEARS from taking United Airlines all going to come out in those damages, I am sure even from the Judge. LOL If the lawyer can prove that this passenger selection and/or all their other behaviour towards passengers is racially based, United will be DONE because this trial will be monitored if not watched around the world especially in Asian nations not just in China and Vietnam but in ALL Asian nations.

dealmaker said:
Meanwhile, Dr. Dao has taken his case to court, filing a “bill of discovery” in Illinois demanding evidence of his “re-accommodation” be “preserved and protected.”
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Good for him! I was afraid he wouldn't. And I hope he gets compensated justly for what he's been through.

Mr. Carrol should've REALLY sued too instead of settling just for compensations.
 
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dealmaker said:
By the way, Southwest Airlines says it is not responsible for the slogan making rounds on social media attached to its logo: “We beat the competition. Not you.” But maybe it should hire the person who is.

News below.


Alan Murray

@alansmurray

alan.murray@fortune.com
More...

Nah Southwestern Airline would NOT hire the person who came up with that mock tagline although I agree they should. At the end of the day, you can see that all the domestic american airlines all stick together. If you look at all the responses from all the other airlines, AA and Southwestern basically stayed mum the whole time. Delta defended the overbooking practice in response to many politician's call for banning this practice. And the former CEO of JetBlue even sympathized with the CEO of United for being in such a difficult spot. The former CEO of Continental Airline, the airline that United took over even called the passenger "immature". The only airlines that did jibe UA a little bit is Emirates and Royal Jordanian but those are foreign airlines who are actively competing for market shares in America (which would be a good thing for us consumers but is obviously not welcomed by all the oligarchs of american domestic airlines).

It's because everything that happens to UA will also affect them so they would not want to kicking their business partner that's already down even further even though it's their competition. After all, they partner with each other on flights and have all kind of business dealings together; their board of directors all sit on each other's board; they go to the same country clubs playing the same golf and in some extreme cases, they even marry off each other's children. Would they seize this opportunity to claw some market share for themselves? Sure but in public, they would not want to rub it in too much. That's how Corporate works for you. In EVERY SINGLE industry, it's ALWAYS Us (consumers) against Them (corporations), NEVER them for us no matter how heartwarming their commercials maybe.
 
We all thought Economy Class passengers were treated like shit by United Airlines. This First Class passenger who paid FULL fare for his First Class seat was already checked in and SEATED and was asked to get out of his seat for another VIP who is on higher priority list than him.


If this is how they treat First Class passengers, well no wonder Economy Class is the cattle class. LOL Imagine if Dr. Dao had never stood his ground and relented like this guy did, shit like this would've NEVER come out.
 
JSOP said:
Really the next time the police whacked you unconscious for something that you did not do, let's see how "man" you will be when you want to protect what you are entitled to. LOL

You are the reason why United Airlines can do what they did on Sunday and get away with it. Very sad.
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If he followed police orders, he would not have been harmed. He could have walked off the plane then taken United to court the next day. But because he acted how he did he'll now be able to get a better settlement than a free trip and some peanuts from UAL. I predict UAL will lose some business in the short-term, but most passengers only care about price. Those that leave permanently will be replaced by others seeking a lower fare. That's why stock not changed much.
 
JSOP said:
How to handle oversold situations: There should NEVER be any overbooking on any flights. There should only ONE ticket sold for EACH seat!! There are airline companies that do not overbook and they are doing LOT better than United Airlines in terms of revenue generation so it just proves that overbooking is absolutely not needed as does not contribute to generating any additional revenue.
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What airlines don't overbook? Not disputing your claim, just curious. If airlines did not book more than the airplane occupancy, there would be many empty seats. Empty seats means higher prices. The airline market is highly competitive and efficient. The market has indicated that it prioritizes price over other things. Your priorities might be different. UAL handled the situation wrong, should have just offered cash. Would be much cheaper than chartering a plane or taxi. Start with vouchers then go to cash if necessary. $2k cash would have done it easily. That's probably more than many of the passengers make in a week. Another way to handle it is sell some lower class of tickets that are much cheaper, but where passenger agrees to be placed on another flight within some window of time if necessary.
 
ET180 said:
If he followed police orders, he would not have been harmed. He could have walked off the plane then taken United to court the next day. But because he acted how he did he'll now be able to get a better settlement than a free trip and some peanuts from UAL. I predict UAL will lose some business in the short-term, but most passengers only care about price. Those that leave permanently will be replaced by others seeking a lower fare. That's why stock not changed much.
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UAL wont feel any hurt of lost business. When you've got packed planes that you have to kick people off, a few boycotters aren't going to kill you.
 
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