What’s wrong with United Airlines comes straight from the top. The IT problems and labor relations are just symptoms.
United’s Jeff Smisek sat at dinner with the Chairman of the Port Authority of New York and New Jersey and listened to his request for a special flight to Colombia, South Carolina. And ultimately gave him that flight, because the airline wanted favors from the Port Authority which controls Newark airport. Instead of calling the FBI. And Smisek is a lawyer.
United’s Chairman and CEO would have been replaced by now if not for the drop in fuel prices. Those gave him a new lease on life, because the airline is profitable in spite of itself. It is still very badly run. And it’s easy to see why.
Management resents their customers, and they resent their employees.
- Frequent customers were called “over-entitled”
- And employees are blamed for the airline’s problems
- They straight up lie to customers when hiding information from them.
- United’s twitter team diagnosed one challenge for the carrier as having too many customers.
- And they turned customer care over to their lawyer.
So it shouldn’t be at all shocking when the Chairman and Chief Executive of the airline that stranded a monk in Africa says that customers don’t understand the airline, that wants to be more like AT&T.
Some travelers are “having difficulty recognizing that we’re now a business,” Smisek told attendees… “They criticize us if we charge for more legroom. Let me tell you though: that’s what businesses do.”
…”If you want more data on your data plan so you can watch faster, better cat videos, you call AT&T, and they’re happy to increase your data plan,” said Smisek. “And they charge you for it. That’s what businesses do.”
Smisek is frustrated that customers aren’t living up to his expectations, and customers need to change. They need to realize that United aspires to be like AT&T.
Which isn’t a good thing, but explains a lot.
My own view is that:
- United wasn’t a strong operational carrier when Continental took over
- But Continental had a reputation as the best run airline at the time, and was supposed to fix United
- That reputation was built on the executives that preceded Smisek: Gordon Bethune and Larry Kellner. Had Kellner been allowed to stay on, things might have been different.
- Instead of fixing things, they were made worse.
- This isn’t a new CEO at the helm. If customers, or employees, aren’t executing his vision then he owns that and should be taking responsibility. He should have acknowledged failure, identified the gaps in leadership, and behaved differently.
- That he hasn’t done it suggests it isn’t likely to happen.
There’s only one way to fix the airline. But as long as fuel prices are low, and competitors’ capacity remains restrained, they’ll make money no matter their narrative towards employees and customers. And the board will likely play along.
Where’s Colombia, SC?
Perhaps you means Columbia?
I am UA Lifetime Gold. So is my husband. Now that we don’t aspire for status (we don’t see much benefit to get Platinum and 1K is a bit unrealistic for us since we don’t like to waste time on mileage runs), we’ve been flying on AA and DL and AS and VA and WN as our needs required, whatever the best routing and timing required.
The fact is that we’re still overall more pleased with UA. Domestically, from SoCal where we live, we have most routes covered from SNA or LAX. We get upgraded complimentarily about 30-40% of the time. We can use miles for whatever we want, too–at rates comparable to those on DL and AA for the most part. We always fly domestic Econ+ or F since we’re Gold and can reserve it at booking. When we fly internationally, we’re reasonably pleased with UA GF even when compared to most top airlines (EK, CX, OZ, LH, etc).
When we’ve flown AA and DL domestically and internationally, we don’t see much difference domestically. We pay for better economy seating on both, but it’s about the same. Service isn’t that different to us, either in Econ or Business/First compared with UA.
Internationally, though, UA is the only one of the 3 that still has plenty of F. It may be going away, but UA still has it. We’ve flown UA, AA, and DL in J and there’s not a lot of diference–except on the few AA 777-300ERs that fly to destinations we rarely go. And getting premium seats on AA and DL using miles is far harder than it is on UA.
Everyone says UA sucks…and I’m hoping more people bleed out to DL and AA. Leaving more flights and awards for me. I’m more than pleased with UA these days…and like the improvements they’ve been making.
Ok, this is weird, I always tend to correct those that call Colombia the country in South America, Columbia, but now I also have to correct the city in South Carolina is Columbia, same as DC.
Yeah as a former over-entitled 1K (2006-2014) I now fly Southwest with a companion pass and will probably spend $20k with them in 2015. If I’m going to sit in economy I may as well take someone along when I can 🙂 I hated being on the cusp of getting an upgrade every time I flew and missing out so often to someone who showed them no loyalty. I have burned through most of my United miles so any evaluation won’t hurt me.
Gary,
+1
-David
Sounds like an over-entitled CEO.
… who has lost touch with reality. One day it will bite him in the butt. Just not right now…
It really is a shame because right now is the ideal time to bring in a new CEO. As you pointed out, in the current environment it is not difficult to turn a profit, and this would buy a new CEO ample time to make significant changes without worrying about mounting losses and impatient shareholders.
Good post. Too bad all of the good work at CO was wasted by merging with UA. I was hoping for a CO/NW merger. The result, though, may have been the same ultimately.
Many companies since our economic recovery have changed their attitudes on many topics. The new views from the board room
– Serve the shareholders before anybody else.
– Get as much money from customers and provide less than before
– Employees are the problem even know they worked for us for 20 years and know everything there is in that area tell them they are easy replaced by a new untrained worker.
This just confirms what I suspected–Smisek appears to be suffering from delusions. Perhaps we should feel pity for a man that appears to be suffering from a psychotic break! Perhaps it’s just a severe personality disorder. I hope he gets help soon and finds a place to rest FAR AWAY from any airline.
I have a useless US airways companion certificate. The website, flight route map, and phone numbers redirect me to American Airlines. The certificate cannot be used on AA. The wait times on the phone are horrifically bad! 45 minutes to speak to a live person. They advertise that the certificate is good for flights to Canada. That’s great if they had flights to Canada (a bit of false advertising). I’m trying to fly from the Bay Area in California. If one can’t find a flight from CA to somewhere interesting in the US using a companion certificate – then there is no hope for folks living in less populous states. I GIVE UP.
Spot on Gary
Good post.
If there was something I disliked more than these unregulated airlines, it’s these criminal telecom companies. We know that AT&T and the other big telecom companies run illegitimate businesses. They pour money into Congress to keep their oligopoly legal, while they price gouge the customers and throttle data.
It’s a bit outrageous that Smisek expects customers to simply accept shady business practices that don’t benefit the customers…. Because we all know that the purpose of business is profit, and we should be happy about it no matter how they make that profit (sarcasm).
@pat the certificate can be used on American Airlines flights for travel October 17 onward
@Over-Entitled GS +1. You may be a “business” but you sure as hell don’t have any business sense when you are out there saying your customers need to change.
Gary, agree. UA is ironically already a very similar business to AT&T- part of an oligopoly, recipient of lots of government favors and protections in past and present, and widely hated by its customers. Maybe Smisek should try having UA customers subscribe to 2 year contracts too?
Funny that when you let a lawyer run a business he is vastly more focused on the way things “should” be than the way they are.
UA is probably the world’s worst airline (and that includes Air Koryo). U.S. headquarterd airlines are generally terrible anyway, but most living Americans weren’t born when U.S. airlines had decent service so they don’t know any better.
They are like AT&T in one way. The acquire reasonably well run companies and wreck them.
Happy flying fellow travelers!
It will be very interesting to see how United and the other US based carriers reverse their position when the economy is hurting again. In current market conditions they are fat cats.
That’s a heck of a picture in the NY Times.
Smisek is an embarrassment to Princeton University.
At Atlanta airport. Been here since 8:00 am. Flight was cancelled due to “maintenance issues”. Unbelievably AWFUL customer service (or lack thereof). Shifted to an inferior flight that was much cheaper than the one we booked. My child has to sit with strangers because no available seats are located near each other. Offered to sell me an upgrade (at full price). Have lost a day in Edinburgh, missed hotel and rental car connection. I will never fly this useless “airline again”!
Excellent post.
Bill,
+1
-Paul
Just a terrible company and in need of new management. Why smisek is allowed to stay on is sad. Bring back continental, I do anything to fly other airlines after being a platinum status flyer for many. Change in all levels of management is much needed. If I performed like this, I would not last a week in my job.
If it’s not a “service”they have to offer then all it has is a product to sell. Sadly, the “product” is undependable, inefficient, unreliable, unpleasant, outdated, has poorly maintained equipment, is difficult to work with….and the list goes on. The product won’t sell; so UA must offer something better than the competition… and with the current CEO attitude, that certainly won’t happen.
Now, I don’t have an MBA, but I have a brain, and I can make choices with my buying power. This fuel situation won’t last, so I would say the future is not all sunny. Companies have to offer something better than the competition if they are going to survive.
Shortly after taking over Continental Smisek smugly bragged to the WSJ that he had swapped premium whole cashews in business for cashew pieces. Until he told the WSJ, I did not notice. Afterwards, I was not happy with the cashews. I am sure everyone that read that article, many of whom are frequent high value flyers, had the same reaction. How stupid is that? I understand the cost saving measure, but I do not understand creating negative publicity by bragging about to your customers.
BTW, the steak tastes worse every year on United. Based on the cashew example, I wonder if they have been buying lower quality meat.
Before merger I had an opportunity to talk to mr. Smisek. His friendly demeanor changed quickly after asking a question and not hearing what he wanted to hear!
He definitely sees UA and his position in a totally different way. So if he is still treating employees and customers badly… Why does he do it? Because he believes his lies!!!!! He knows better but that big ego just can’t handle listening and seeing what’s really going on!! He can’t fix it!!!!!
I’m sure he will take full credit for making such a huge profit. Nothing to do with dropping oil prices.
He needs to start with his employees… The core of the company. You can’t hire new people and expect change.
You don’t say condescending smirky remarks to customers and employees and expect loyalty …
Obviously, he doesn’t care and that’s where the problems began.
United, get a CEO with people skills everything else will fall into place.
I worked for continental for 21 years. I was very proud of how far the airline had come under great leadership. The merger has been horrible. Along with bad decisions from our leaders moral is at its worst. Our CEO has out sourced more cities to lower paid companies and have disrupted loyal employees of 20 to 25 year seniority along with less senior. I myself took a retirement deal because I refused to up root my life for this horribly run company with no loyalty or respect for dedication .so sad to see this happen.
One thing I must say is that All the Upper Manangement at United is Continental!! Almost everyone from the former United no longer works at UAL. I am reading so many of these posts and totally agree. United has out source many jobs in customer service- airport personnel -and many passengers feel this change.
Air travel is on a roll and United is making record profits- but the day to day flying for many passengers is horrible. Send a note to Shareholders…and about those nuts too.
“United’s Jeff Smisek sat at dinner with the Chairman of the Port Authority of New York and New Jersey and listened to his request for a special flight to Colombia, South Carolina. And ultimately gave him that flight, because the airline wanted favors from the Port Authority which controls Newark airport. Instead of calling the FBI. And Smisek is a lawyer.”
Dude…..