United Airlines Customer Dissatisfaction Festers, 5 Years After Merger By jad mouawad and martha c. White

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United Airlines Customer Dissatisfaction Festers, 5 Years After Merger



Paul Wigdor in Midtown Manhattan. He misses the old Continental Airlines, before its merger with United. CreditJoshua Bright for The New York Times

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The merger of Continental Airlines and United Airlines in 2010 was supposed to combine Continental’s reputation for solid customer service with the broader reach of United’s domestic and international network.

Instead, the five-year-old marriage has turned into an exercise in frustration for United fliers, with frequent delays, canceled flights and lost bags. Like many fans of the former Continental, Paul Wigdor, a managing partner at Ascendant Advisors, an investment advisory firm based in Houston, still bemoans the loss of the airline.

“Continental was probably the best airline in my opinion that you could travel on pre-United,” said Mr. Wigdor, a New Jersey resident who flies about twice a month to Houston from Newark on United. “I would say United is one of the lowest.”

Among his complaints: poor service, choppy Wi-Fi and — after United cut back on perks and upgrades — little appreciation of frequent fliers, like himself, who log tens of thousands of miles a year.

A United counter at Newark Liberty International Airport, where the airline handles about 70 percent of all traffic. CreditEduardo Munoz/Reuters

Flying between two of United’s biggest hubs, Mr. Wigdor does not have much choice in picking an airline. In Newark, United has an overwhelming share — about 70 percent — of all traffic. “If there were other options,” he said, “I’d happily fly other options.”

In large part, the merger is still a work in progress. Labor relations are sour, customer satisfaction is low and the basic measurements of the airline’s operational performance are dismal compared with its main rivals.

Passengers surveyed by Skytrax, an airline quality rating agency, give United a grade of 3 out of 10, the same as the low-cost carrier Spirit Airlines. (American earned a 4, Delta got a 5 and top-rated carriers like Singapore Airlines, All Nippon Airways and Qatar Airways received 7’s.)

Steven Chen, a self-described serial entrepreneur and venture investor, said he had noticed that most of his early-morning flights with United out of Washington, where he runs an online security firm, were delayed. Despite having a half-million miles in his account, Mr. Chen said he still uses other airlines about half the time he travels.

Like some other passengers, he recalled several nightmarish trips involving missed connections, lengthy waits at airports and generally poor customer support.

“I’m just frustrated being with United,” he said.

On-time performance is one of the biggest problems for the carrier. In July, for instance, about 25 percent of all United flights did not land on time, ranking the airline ninth among 13 domestic airlines, according to FlightStats. This compared with 18 percent for Delta Air Lines and an industry average of 22 percent. While Delta can boast of going several weeks without canceling a single flight, United had the second-lowest percentage of completed flights after WestJet in July, the last month for which government statistics were available.

“If you’re not getting the fundamentals right, if you don’t have an airline that travelers can trust to depart and arrive on time, if you don’t stick to your schedule, you don’t have the foundations for an airline,” said Henry Harteveldt, a travel industry analyst and founder of Atmosphere Research Group.

But Mr. Harteveldt said United’s problems ran deeper still. The airline needs a new computer reservation system — the brains of an airline’s operations — after deciding to use Continental’s Shares system following the merger. The decision cost the airline badly, leading to canceled flights and repeated computer failures.

It must also improve its relationship with corporate customers, which complain about United’s lack of flexibility in dealing with big accounts, according to Mr. Harteveldt. Finally, he added, it must improve the internal culture, which has fared badly since the merger.

Regaining the support of employees and customers, particularly business and corporate travelers, will be the first challenge for Oscar Munoz, a rail executive and United board member who was named chief executive last week after the surprise resignation of Jeff Smisek in the face of a federal corruption investigation.

Mr. Smisek had been a key architects of the merger between the airlines. As chief executive of Continental at the time, Mr. Smisek helped orchestrate the shotgun marriage with United after advanced talks between United and US Airways broke down.

United had far bigger ambitions when the merger was announced, declaring that the combination would form the world’s biggest airline. Its lead has been squandered. American Airlines, which merged with US Airways, recently signaled that it measured itself against Delta — not United, its traditional rival.

For all that, United has not been standing still. Last week, it introduced new business-class seats for its single-aisle fleet of Airbus A319s and A320s, as well as Boeing 737s and 757s. It was also the first North American carrier to fly the new Boeing 787 Dreamliner. Since 2010, United has added 200 new airplanes to its fleet and introduced wireless Wi-Fi.

The airline also says that its on-time performance in recent months has improved, and that it has narrowed the gap with its chief rivals. In August, for instance, according to one measure of on-time arrivals, known as A-zero, United was running neck and neck with American and Southwest, though it still trailed Delta.

While Mr. Munoz vowed to talk with employees, he has not been vocal about the direction he wants to take. The airline said that Mr. Smisek left the company because of the investigation, not because of his performance. Mr. Smisek is entitled to a severance package that could reach $29 million, including a cash lump sum of $4.9 million, about 60,000 stock shares and various long-term performance awards for his work from 2013 to 2015, according to a United regulatory filing. (The figure was first reported by Bloomberg News.)

Mr. Smisek’s departure is not what was envisioned when he took over the merged airline. “Everyone thought it would be Continental on steroids,” said Vicki Bryan, an analyst with Gimme Credit. “Instead, management has been the main problem for this airline. It’s not just that they’ve underperformed. They squandered what should have been a wonderful opportunity to build a great airline.”

Ms. Bryan said she was disappointed that the board and Mr. Munoz did not signal a clean break from Mr. Smisek’s past management. The board, she said, should have stepped in much sooner to correct the company’s course.

“It’s not happening for the right reason,” Ms. Bryan said. “It’s not a big enough sonic boom I wanted to hear to shake up this airline. They have only gone from bad to worst. They have to get their employees back to work.”

The nostalgia for Continental’s glory days can obscure the flaws that airline had as well. Its network was small, its product offering not as sophisticated as that of other airlines (for instance, it had no premium economy option), and its food onboard included a reheated turkey hot dog served in a plastic box, according to Mr. Harteveldt.

“Continental wasn’t a great airline,” he said, adding, “It was good only in relative performance.”

Still, it had a charismatic chief executive in Gordon M. Bethune, who led the airline from 1994 to 2004 and turned its fortunes around by focusing on lifting employee morale, which he said led to better operations and happier passengers. Continental was viewed as an example of a successful corporate turnaround.

But even if Mr. Munoz takes a page from Mr. Bethune’s playbook, it might be too late for some customers.

Shubber Ali, co-founder and chief executive of a software company based in the Bay Area, who flies about 150,000 miles a year, said he recently moved his business to American Airlines from United. As a frequent flier, he also noticed that once United got bigger, it took away fliers’ benefits and made it harder to earn privileged status with the airline.

United has not recovered from the difficulties of the merger, in which stressed-out employees took out their frustration on passengers, Mr. Ali said. “It created chaos,” he said, “and the passengers were the ones that suffered.”

A version of this article appears in print on September 15, 2015, on page B1 of the New York edition with the headline: Despite Shake-Up at Top, United Faces Steep Climb . Order ReprintsToday's Paper|Subscribe

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