United Air Lines – The Bad News Continues to Dribble Out

By Hank Boerner
April 12, 2017

United Air Lines, need we say, is in the midst of a serious brand and reputational crisis. Social media chatter is replete with those awful loops of passengers’ cell phone videos of “brutality” on a UAL aircraft — and are spreading the bad news worldwide, in a flash!

Broadcast and cable channels had a good run of the story with passenger videos as the highlights of the report on the goings-on in Chicago on Sunday night. Love those ubiquitous cell phone cameras.

How both alarming, and mesmerizing: Who could turn away from the video clips of ham-handed airport security staff dragging a 69 year old paying customer out of his window seat, slamming his head against the seat post, knocking off his glasses, bloodying his face, dragging him down the aisle in front of other passengers. No wonder it went viral – worldwide!

While he (Dr. David Dao) apparently tried to explain at the start of the incident that he was a doctor and needed to get to his patients in Kentucky, airline staff and airport security officers ignored him — and got on with the job.  And so we saw them in action.

Oh, those resulting headlines:

Facebook: (“Man Violently Dragged Off Plane After United Airlines Overbooks Flights!”)

Also reported with the passenger videos on The Huffington Post. “Dragged like a rag doll,” a witness posted on a Twitter account.

Facebook: (“United Airlines CEO Says Cops Will Never Remove a Booked Passenger Again…Will Use Common Sense.”)

A passenger watching the incident told the media: “He said, more of less, I’m being selected because I’m Chinese…”)

All of this is certainly not good news for the airline on the China mainland, where there is wide public outrage being expressed. The doctor clearly being brutally yanked from his window seat – which he paid for and thought he was entitled to — and was apparently of Chinese or Asian origin.

(The devil is in the details; have you ever read the fine print of the Airline Contract of Carriage, which sets out the rights, rules and procedures governing your relationship with an air carrier? Here’s United’s, in case you are considering a flight: https://www.united.com/web/en-US/content/contract.aspx )

United and its China Market

United has scheduled flights between the USA and China cities — Chicago/Beijing; Chicago/Shanghai; Denver/Zian; Houston/Hangzhou..,and more city-pairs. United has flights to five mainland China cities from various U.S. cities. In all, UAL has cities to 14 different Asia/Pacific destinations. Not a market to have branding issues in, especially this, with discrimination overtones.

What are the Asian customers of the airline thinking about today? There were almost 300 million immediate “hits’ on Chinese social media — and the story is still “new” and in the current news cycle. A boycott was part of the chatter.

And those passenger-provided cell phone videos continue to play in endless loops on television news media around the world.

As Fox Business reported, “Horrifying Video Threatens United Airlines’ Big Investment in China.”

Speaking from Experience

I’ve worked a good number of years during my career as an airline corporate citizenship manager, spokesman, issues and crisis manager, and marketing strategist. I can’t fathom what would move airline personnel to conduct themselves in such a manner when it comes to dealing with their customers. ( “The flying public,” as one would say,)

Yes,working with passengers, things can get tense. Perhaps the cabin crew was exasperated due to a series of incidents (the “now what”!); maybe the ground crew just wanted to get customers off/employees quickly to avoid criticism (what? you didn’t get the flight crews to Louisville on time?).

Of course, all manner of operational issues come up with an airline company having so many moving parts. Fleets of giant airliners moving through the skies, leaded with passengers; landing and taking off at various airports, large and small; the task of people-scheduling to make sure employees (including flight crew) are at their assigned post for “go on time”; fuel loading; baggage loading/unloading; dealing with changes in weather…and more.

Airlines train and train again to make certain their employees are prepared for “anything.”

And then in an instant it hits the fan and we find out if all that training paid off, are we really ready. Or not! United clearly was in the “not” column this weekend.

The Crisis Details Dribble Out

The details continue to dribble out (the worst scenario in a critical issues situation, of course). The Sunday evening Chicago-Louisville flight (3411) was ready to go and then came the announcement: the plane is over-booked and four passengers need to get off.

The airline’s explanation was that the flight being overbooked (again, not uncommon) meant that four people had to yield their seats. Money was offered (again, not uncommon — it’s the way carriers coax passengers out of their seats).

What happened next? The Washington Post played the story big in the nation’s capital. Where lawmakers, employees of regulatory agencies and other key players could take it all in.

This is an example of where the right or wrong language used is Important — especially in critical incidents.

The Post reported that the airline told the local newspaper in Louisville that the situation was “an involuntary denial of board process.” (Is that clear to you now?).

Apparently no one on the Sunday night flight home to Louisville quickly volunteered to leave their seats. (If you were headed home, would you have gotten up? Maybe – people do that when the price is right.) That’s when the airline “chose” passengers to leave the flight to accommodate four UAL personnel who “had to fly” to get to other aircraft to meet flight schedules.

So, the airline staff selected by some means four people to leave the aircraft.  Three people agreed to leave. When a fourth passenger would not leave his seat, the crew summoned Chicago Department of Aviation security and the man was violently dragged out of his seat and down the aisle and off the plane.

Somehow he got back on the plane, blood on his face, glasses back on, howling it was said, and then was dragged off again. He eventually left the terminal on a stretcher. (The flight will not leave until everyone is off, the cabin crew evidently barked to the passengers.)

When the four crew members came on to fill the vacated seats they were reported to have been booed. Aren’t you ashamed to work for this company, people shouted to them.

The airline began to communicate, sending conflicting messages to the employees and media. (The flight was overbooked; or, the passengers had to make way for United employees. The passenger was belligerent end unruly. The removal was established procedure. The man ran back onto the aircraft in defiance of both our crew and security officials. )

EVERYONE was taken off the plane and after a while re-boarded as the man left on a stretcher. Some did not re-board (they were high school students and their chaperone, the Post said).  The CEO issued an apology to the passengers who were re-accommodated!

Fall Out – Death by a Thousand Cuts

As The Washington Post put it: “It’s a story that has shaken a global air carrier worth billions of dollars – and one that people around the world can find nothing right in at all.”

Investors reacted on Monday, sending the UAL stock downward at once. (CNN: “How to make a PR crisis a total disaster.”)

At the daily news briefing the White House press secretary was asked if a federal investigation was warranted. The U.S. Department of Transportation was looking into the situation, we learned. The late night comedians had new content to add to their stand up routines.

Finally the CEO apologized to the passenger who was “forcibly removed” and to all customers on board the fight. “No one should ever be mistreated this way.”

Another oops moment the media had fun with: Oscar Munoz, the CEO, was named “Communicator of the Year” by PR Week for “transforming the fortunes of the beleaguered airline, galvanized the staff, and set the airline on a smoother course…” (This after a year-and-a-half on the job.)

Systemic Failure?

Over my four decades of crisis management, one of the things learned early on is that it usually is not a single “thing” that goes wrong. Whatever issues bubbling just beneath the surface can suddenly erupt to complicate the response to the (initial) single incident.

The information from the local scene (usually distant from the where the leaders who have  to respond is ) can be scant; the news reports can be conflicting; the standard comments prepared in advance can sound hollow and uncaring as the details of the incident become more widely known. (“This is standard operating procedure?”   Really?)

Unhappy employees can react to situation irrationally and even violently; local managers can make very “wrong” decisions and then try to correct, making things worse at times.

This was a Sunday evening; management was not likely to be at the office and equipped to move quickly to address the situation and begin communications (not in either the HQs or the airport).

Lessons Learned?

What are the lessons learned? We hope for the Chicago Department of Aviation, it’s don’t go dragging and injuring passengers off a plane because a long-time hometown airline asked you to. The aviation authority had moved quickly to put the security officers involved on administrative leave.

For the airline leadership: Best to always think up and down the value chain about actions taken and communications needed with key constituencies.

Employees (we hope they are viewed as team members and not just numbers in an organization as it grows larger).
Customers (especially those in physical proximity, at the curb, at the counter, boarding the plane, in their seats, during the fight, as they leave the cabin, getting their luggage).
Potential customers (what are they thinking today about their intention to fly United).
The public-at-large (who as they continue to fly in greater numbers and frequency have come to think of airlines as un-caring, faceless bureaucracies that take advantage of the public with planes that are cattle cars in the skies).

Regulators (yes, airlines are still regulated entities).

As for not flying United, we must remember that they have 50% or more market share at some key cities (Newark, New Jersey) and considerable share of market at Orlando, Boston, Washington DC, Los Angeles, Denver, Houston. (In 2010 United and Continental merged, creating one of America’s largest airlines.)

Perhaps then we should re-examine the structure of the American airline industry: have the dominant carriers become too big to manage?

Should we explore public policies that would begin to return us to the days of robust competition within the U.S.A. industry to try to ensure greater competition and more “customer-friendly” service?

More accountability by large carriers? Should we devise consumer protection measures that would help to reduce the perception that airlines don’t give a damn about their customers?

These and other questions will likely be raised by public policy experts in the days ahead, as the United situation calms down…and another airline crisis erupts. United meantime is the poster child for everything Americans hate about the airline industry.

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Author Post Script:  July 6, 2017 – ABC News Report

Well, it happens again — United Air Lines accused of abusing a customer today.  A mother traveling with a 27-month old son, en route to Boston from Hawaii, had to hold the boy on her lap for hours of the final leg of the flight.  She bought a ticket for the son — two tickets for the flight, money in the United till.  So what!  Hey, we are overbooked – so hold the kind on your lap. (As unsafe as that is – note, please, federal safety regulators.)  A standby passenger took the boy’s seat.

Later United evidently learned that the boy’s ticket was not properly  scanned.

The woman did explain the situation to the crew.  We wonder what is missing in common sense, good judgment, customer-first (should be) thinking at the carrier.  Oh, and the woman appears to be of Asian background.  United is counting on the Asia market – on China flights — to assure its future.   A small note to think about as you Stay Tuned top United’s passenger treatment.


Too Big to Fail/or Jail – Federal Judge Jed Rakoff Weighs In With His Views on the Financial Crisis Aftermath

by Hank Boerner

American bankers have had their share of nasty media headlines and uncomfortable conversations at congressional and regulatory oversight hearings.  And experienced the condemnation of the many for the nasty escapades that almost brought down the national economy. The excesses of the big money center banks (Citi, Bank of America, Goldman Sachs, Wells Fargo, other familiar names) have been well documented in newspapers, on cable and broadcast television, in some movies, and in a spate of best-sellers since 2008, The prosecutors in America (state attorneys general, US attorneys) have pursued some bankers in the courtroom.

But as The New York Times’ Gretchen Morgenson pointed out in her story of April 14, 2011, “…several years after the financial crisis, caused in part by reckless lending and excessive risk taking by major financial institutions, no senior executives have been charged or imprisoned…”

So what do these actions say about the cultures or the large financial institutions – the ones bailed out by the Federal government and were deemed “to big to fail.”  (And their leaders, too big to jail.)  As I characterized in my commentary during the 2008-2009 crisis, the leaders of the big financial institutions (which are “banks++) loaded everyone in the big yellow bus and proceeded at top speed toward the edge of the cliff.  Faster, faster — bonuses are at stake!  The public treasury kept the busses from hurtling all the way into the abyss. And taking the rest of us with them.

And so now we are tuning in to the aftermath of the great party of the first decade of the 21st Century, as bankers and yes, the rest of society, pretty much gorged on easy credit, loose regulatory oversight, lax controls in the companies, boards and C-suite that ignored risk, and were drawn like moths-to-the-flame to the sources of e-a-s-y money.  The party is over — but the clean up is still underway.  And will be for years to come.

The Federal and state prosecutors have been working against statutes of limitation to put criminal cases together and bring charges against high-level financial industry players.  Right now a trial is underway for another top manager at Steven Cohen’s SAC Advisors (the firm paid a hefty fine as well).

The large bank that was considered to have weathered the storms best — JP Morgan Chase — in the sunny days of the crisis aftermath is now busily writing checks to state and Federal governments — US$40 billion to date. The Huffington Post this week had a nasty story about the accumulated fines paid by JPMC in recent months.  The question hangs in the air – what kind of culture exists at this large institution that resulted in huge financial losses and fines for various kinds of errant behavior?  No doubt in books to come we will find out more.

in a remarkable piece in The New York Review of Books, United States District Judge Jed S. Rakof wrote, “…I do not claim that that the financial crisis that is still causing so many of us so much pain and despondency was the product, n whole or in part, of fraudulent misconduct.  But if it was, as various governmental authorities have asserted, then the failure of the government to bring to justice those responsible for such colossal fraud bepeaks weaknesses in our prosecutorial system that needs to be addressed…”

He points out that companies do not commit crimes, only their agents do that.  And yet companies are being prosecuted, not the top “agents.” The judge’s article — “The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?” — asks,”… if the Great Recession was due, at worst, to lack of caution, then criminal law has no role to play.  But if it was the product of intentionally fraudulent practices by high-level executives, then failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years.”

He points out that in the 1970s, the junk bond bubble era, those who committed fraud were successfully prosecuted, “right up to Michael Milken” (at Drexel Burnham Lambert, who was considered “King of the Junk Bond”) After the Enron collapse, senior executive Jeffrey Skilling went off to jail; after the WorldCom collapse, CEO Bernie Ebbers was successfully prosecuted.

In contrast, not a single high-level executive has been successfully prosecuted in connection with the recent financial crisis…and with the a five year statute of limitations, it appears likely that none will be.  It may be too soon to ask why…perhaps no fraud was committed. Even though the Financial Crisis Inquiry Commission found signs of fraud everywhere it looked (and documented same in a lengthy public document that mentioned fraud 157 times).

The respected Federal jurist mentions the doctrine of “willful blindness,” where defendants cannot escape prosecution by shielding themselves from clear evidence of critical facts strongly suggested by the circumstances surrounding the crime.  But perhaps now, with so much at stake for large financial “supermarkets” that such blindness to certain behaviors is being baked into the culture…becoming part of the DNA of large financial institutions.  The Federal government itself does not escape criticism from the judge. He cites government involvement in creating the conditions that could lead to such fraud.

Judge Rakoff is well respected among other judges and among the prominent bar.  His criticism of the Department of Justice (for inaction) are stinging.  The SEC is no doubt watching closely (Chairwoman Mary Jo White is a former Federal prosecutor in NY).

I would Stay Tuned to the judge and his now very public proclamations on the subject of the ebbing financial crisis and possible wrongdoing.  Which may not be pursued at high levels in 2014…but do not rule out sweeping changes at some point in how the justice system looks at future allegations of corporate or executive level fraud calling for  thorough criminal investigation and aggressive prosecutorial action. Major changes many be in store for the U.S. Justice Department and the SEC with regard to public expectations when the next bubble occurs.

Judge Rakof’s article is worth reading – he is a judge on senior status for the Southern District of New York, and former Federal prosecutor who really know the territory of the financial industry – you can find it at: www.nybooks.com