United Airlines’ Operational “Improvements”
This one is going to be quick, because it’s more a matter of something that tickled my funny bone than anything else.
United Airlines has its quarterly analyst conference call this morning and, of course, it started off with some unintentional humor. Management started off by bragging about its employees’ “new spirit and culture” at the airline. I get it, you’re speaking to your employees as much as your investors, but let’s not kid ourselves that flying has all of a sudden become a “friendly” experience.
“We’re better, really!”
One of the biggest concerns that passengers have, after price, is getting to their destination on-time. So when United started to brag about their operations, I assumed that it was related to better completion percentage (no cancellations) or getting to the destination when they say they will. What I did not expect was boasting about their Involuntary Denied Boardings being down 92% and having 28 days during the quarter when there were none at all.*
Hang on, let me understand this: You’re excited about the fact that you kicked ticketed passengers off flights (or prevented them from boarding) on 70% of the days during the quarter? Wow, we’re really looking for silver linings here. They’re certainly no Delta, who led the industry in almost every major operational category in 2016.
On the plus side, Not a single passenger was “re-accommodated (their words, not mine)” by being beaten and dragged off a United flight in the quarter, and every single giant rabbit that flew on the airline survived (to the best of my knowledge).
At Least They Boarded Quickly
But United’s operations were good as well, right (assuming that you weren’t involuntarily denied boarding)? Management told us that they had their best ever D0 (airline short-hand for a flight that left on time) in the second calendar quarter and second-best in the third quarter (which does deserve credit because United has a hub in Houston). But look at it this way: Do you care about whether you depart on time or whether you arrive on time? That’s what I thought. On-time departures don’t necessarily lead to on-time arrivals, and an airline only brags about its departure rate when the arrival rate isn’t so hot.
As of 11:17 am this morning, the stock is down 5.5%, wiping out about $1 billion of value. PR Spin: So easy, a caveman could do it. But not an airline.
*Beginner’s Hint: Airlines overbook flights in the hope that somebody won’t show up and the airline can keep their money. When the airlines guess wrong, you have the opportunity to pick up some serious cash for taking a later flight.
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