United Airlines' Issue & Crisis Management: A Case Study Essay.

Background of United Airlines

Discuss about the Issue and Crisis Management of United Airlines.

The development of new and innovative technologies has been influential for the development of newer techniques that eases the standard of living of human beings. The use of these techniques has mainly been observed in the transportation sector thereby lowering the time of travelling. The fastest mode of transportation has been with the help of the aviation industry. The aviation industry has been growing in leaps and bounds and there has been an increase in the number of flights that are operating with time (Domonoske 2017). There has been a rise in competition in the aviation industry and it has been observed that increase in competition has been influential for the airline companies to implement new and innovative strategies in order to preserve the existing customers and bringing in new and potential customers.   

However, it has been observed that there has been various issues and crisis in relation to the management of the aviation industry, which has had an impact on the business activities. This paper with respect to these issues concentrates on the crisis faced by United Airlines with respect to an incident that took place with their passengers and a video was released in media that had an impact on the operations of the company. The paper will discuss about the impact that the company faced as an after effect of this incident.

United Airline is the 6th largest airline in the world which was established in the year 1964. The company has it’s headquarter in Chicago and United Airlines, Inc. is a subsidiary of United Continental Holdings, Inc. and the organization functioned with 1231 aircraft in the year 2016. It gives out various services to the 3^rd parties that are inclusive of ground handling, fuel, catering and maintenance services. Company passenger transport hub of United Airlines handles 16.6 million departing passengers per year. United Airline concentrates on their customer and the services provided by the company to them. The employees of United Airline are concentrating on enhancing the customer services and by looking at the services and the amenities and the facilities that airline is giving out to the passengers and the stakeholder who undertake investment (United, 2017).

The paper has been constructed in order to understand the main issue that had an impact on the operations of United Airlines. The issue took place due to overbooking of the flight that led to a confusion among the administration of the firm. The company therefore in order to rectify this problem asked four passengers to leave the flight and board another latter flight. It is in this scenario that United Airline forced the passengers to leave the flight. The flight was over booked hence, aircraft employees declared that they needed 4 passengers who can leave the flight. The airline was ready to reimburse the volunteers and therefore primarily the airline offered $400 to the passengers who were ready to leave their seats. When the passengers were not interested to leave the flight, United Airline increased the compensation amount to $800 by the United Airline. However, no passengers were ready to give up their seat. It is seen that according to the federal law, the airline can offer up to four times the cost of the fare (Reiboldt, & Mallers, 2015). When the passengers were not ready to leave the flight, the airline officers randomly selected 4 customers with help of the computer and asked them to leave the flight. Out of the four customers, three of them agreed to the proposition of $800 and left the flight. However, only one passenger denied to leave the flight as he was a doctor by profession and had to attend his patients in the morning. He was travelling with his wife and did not want to leave the flight as he had to leave the flight whereas his wife could board the flight.  On denial, 3 security officers (who were wearing uniform of Chicago aviation police) came and dragged the passenger out of the flight as he rejected to leave the flight. This incident was recorded by various passengers who in the flight and later on was released in press media, which had an impact globally and lowered the esteem of United Airlines.

Overview of the Issue

The passenger faced serious injury as his faced got hit by the armrest when he was dragged out of the flight by the airline officers. Later on it was discovered that the passenger was admitted in Chicago Hospital with a broken nose and two missing front teeth. This incident went viral in the social media and created a chaos with respect to the safety and security of the customers (Nagesh 2017). The CEO of United Airlines accepted this mishap and said the company would review their passenger removal policy. The airline industry has even been accused of such incidents that took place earlier with respect to wearing leggings in the flight.

The key stakeholders included in this incident were: - Passengers, other passengers, CEO Oscar Munoz, security officers and crew members, and general public.

• Passengers: - Passenger in the United Airline faced problems, as airline said that they need 4 passengers who can give up their seats. There were two more passengers who were selected to leave their seats and they easily agreed on it. This passenger did not agree to give his seat and denied for same, led to the emergence of the episode.
• Other passengers: - There was one of the passengers who made video for the incident. And other passengers who were there in the flight agreed that this kind of ruthless behavior by the United Airline members shows conflict management (Hampel, 2011). This occurrence shows that airline is not providing any kind of services to their passenger, however on the other hand they claim that they work for customer delight. The flight might include the passengers who travel on the daily basis but after seeing this kind of behavior they will not prefer travelling in the united airline.
• Security officers: - There were security officers who announced in the flight that they wanted 4 volunteers who are ready to leave their seats. The officers were very arrogant and were not negotiating with the passengers. This demotivated the passengers to undertake future flights with the organizations.
• CEO Oscar Munoz: - United Oscar Munoz CEO tweeted that it was an upsetting event and he apologies for the same and not only this he said United Airline will re-accommodate to these customers. Said that the team will personally talk to the passengers directly and will resolve the issue as soon as possible. Definitely CEO understands that this will create a negative impact for the public and for the passengers.
• General Public: The general public was astounded with the behavior that was given out by the employees of the airline industry and lost their trust over the company and decided to reduce their travel with the airline.

The effect of this incident with the passengers went viral globally and thereby demotivated the customers to undertake any future relations with United Airlines. It has been observed that after this incident, the overall sales of the organization fell down. The shares of United Airlines went incredibly down in the early period after the incident took place and the stock of the company went down by 6% after performing poorly in the international markets. The opening of New York Stock Exchange revealed the shares of the firm rebounded to around -2%.

When the trading started in the morning, the stock of the firm continued their downward journey to about 4% and with the sustainability of the trend would make United Airlines to lose millions of dollars during the capitalization of the market (Selk, 2017). A decline of about 3% would mean a loss of $600-700 million from the market value of the company and any other fall of the stock of the market would mean the company losing their market capitalization of approximately $1.4 billion. Therefore, this incident would have a serious impact on United Airlines.   

The methodology used in the research is secondary research which is taken from the newspapers or journal related to the issue. The issue is the current issue which is easily available on the newspaper or on internet (Victor & Stevens 2017). This is one of the big issues of the United Airline.  The secondary research includes data collected from the sources that are basically used for the research purpose that involves summary, collation or synthesis of existing research.

Conclusion

The evaluation of the situation indicates that United Airlines compelled the passenger to leave the flight that was unethical in nature. This created a big impact on the United Airlines because the passengers reduced their travel with the airline. This created a spot light on the reputation of the airline. The airline should tackle such situations very carefully and do take care of the conflict management in the organization.

References

Domonoske, C. (2017 April 10). Passenger Forcibly Removed From United Flight, Prompting Outcry. The two- way. Retrieved from https://www.npr.org/sections/thetwo-way/2017/04/10/523275494/passenger-forcibly-removed-from-united-flight-prompting-outcry

Hampel, C. (2011). It's Not Personal: Lessons I've Learned from Dealing with Difficult Behavior. Orange sun press.

Nagesh, A. (2017 April 27). United Airlines to give passengers $10,000 if they have to be bumped from a flight. Metro News. Retrieved from https://metro.co.uk/2017/04/27/united-airlines-to-give-passengers-10000-if-they-have-to-be-bumped-from-a-flight-6600515/

Reiboldt, W. & Mallers, H. M. (n.d). Consumer Survival: An encyclopedia of consumer rights, safety and protection. First edition. United States of America.

Selk, A. (2017 April 10). A man wouldn’t leave an overbooked united flight. So he was dragged off, battered and limp. The Washington post. Retrieved from https://www.washingtonpost.com/news/dr-gridlock/wp/2017/04/10/a-man-wouldnt-leave-an-overbooked-united-flight-so-he-was-dragged-off-battered-and-limp/?utm_term=.a16a2bbb0779.

United. (2017). About United. Viewed on 2^nd June 2017. https://newsroom.united.com/corporate-fact-sheet

Victor, D. & Stevens, M. (2017 April 10). United Airlines Passenger Is Dragged From an Overbooked Flight. The New York Times, Retrieved from https://www.nytimes.com/2017/04/10/business/united-flight-passenger-dragged.html?_r=0

Williams, C., & Waltrip, S. (2017). Aircrew Security: A Practical Guide. Routledge.