Travel

Give United passenger free travel for life to end PR nightmare: U of T expert

ullahnor — Wed, 12 Apr 2017 19:06:42 +0000

Give United passenger free travel for life to end PR nightmare: U of T expert

ullahnor Wed, 04/12/2017 - 15:06

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David Soberman says United Airlines' blunder may be the worst he's seen for a company (photo by Anna Zvereva via Flickr)

Noreen Ahmed-Ullah

Author legacy

Noreen Ahmed-Ullah

Topic

City & Culture

Travel

Marketing

Rotman School of Management

Video of a passenger being dragged off a United Airlines flight sparked a wave of public outrage this week, leaving the airline the subject of mocking Twitter memes and the punchline of late night talk shows.

In fact, two recent incidents – the doctor dragged off a flight in Chicago to make room for a United employee and two teenagers barred from flying for wearing leggings – have made a serious dent in the airline's image and profits, says David Soberman, professor of marketing at U of T's Rotman School of Management.

“Of all the blunders I have seen by companies, this is one of the worst,” he says.

Shares of United Airlines' parent company were down as much as 4.3 per cent in trading on Tuesday amid reports that millions of people in China, the world’s fastest-growing air travel market, have called for a boycott because the man dragged off the flight was Asian-American.

U of T News spoke with Soberman about how United, previously known for breaking guitars, can climb out from under the negative publicity.

Can United Airlines come back from a series of fiascos like this? How?

With any marketing disaster, time is the best healer, but of all the blunders I have seen by companies, this is one of the worst.

United Airlines needs to examine whatever managerial systems they have in place that allowed this to happen and fix them because what was done makes no sense at all. Apologies are important, but they need to be accompanied by changed behaviour.

United needs to communicate the concrete actions with regards to its managerial structure that will prevent this from happening again.

When this occurs, a simple auction for all passengers on the plane would have solved the problem. This is what is done before passengers have boarded an overbooked plane, and United needs to outline the steps that would be taken to implement such an auction.

They will need to compensate the passenger (with free travel for life or something like that) and also provide compensation to the other passengers who witnessed this.

Is the practice of overbooking a bad thing? Should companies like United get rid of it?

No. Overbooking is a completely normal practice in a world of uncertain demand.

Whether it makes sense is an economic question that the firm needs to answer, i.e. the cost of empty seats versus the cost of getting people with booked seats to fly later. Independent though of whether a firm should do it, they should always do it right, which means putting the customer first. If a firm wants a passenger who had paid for a seat to fly later, the firm needs to offer enough money such that the customer voluntarily chooses to fly later.

Are there lessons here on how companies must respond to situations like this in the days of social media and cellphones?

Companies need to work out ahead of time, how things will look to the public at large…especially in a world of digital communications and cellphone videos.

Sometimes being right isn’t enough. Here, being right (that is having a legal right to do something) can be the same as being 100 per cent wrong from the customer's point of view.

If a company puts its customers first, it should not be dragging them off a plane unless they have physically threatened or assaulted someone in the context of the service being provided. Obviously with terrorism or violent passengers, police may at times have to enter planes, but this is not one of those cases.

Twitter complaints influence business behaviour, U of T study says

ullahnor — Wed, 01 Mar 2017 18:03:42 +0000

Twitter complaints influence business behaviour, U of T study says

ullahnor Wed, 03/01/2017 - 13:03

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U of T study suggests using social media to complain can be worthwhile so long as a company values the customer enough to respond and offer some incentive for them to stay (photo by Brian via Flickr)

Topic

Rotman School of Management

Nothing inspires consumer frustration quite like an airline flight delay. Researchers from the ��Ƶ's Rotman School of Management have used those viral meltdown moments – and the complaints they produce via the social media platform Twitter – to study how consumer "voice" may influence business behaviour.

"We thought complaints were an important part of the economy but until now, we haven’t had a systematic way to measure them," says study co-author Mara Lederman, an associate professor of strategic management at Rotman.

Researchers found that passenger complaints via Twitter increase when an airline's “on-time” performance gets worse. This was based on an analysis of approximately four million Tweets made to or about the top seven U.S. airline companies over a two-year period.

Their results suggest using social media to complain can be worthwhile so long as a company values the customer enough to respond and offer some incentive for them to stay. Meanwhile, companies may want to consider setting up dedicated complaint channels as a way of retaining valuable customers who might be at risk of leaving, says Lederman.

The accepted idea among economists is that markets act to discipline companies for poor performance as consumers will withdraw their business if they are not happy. Complaining – as opposed to switching – has been suggested as an alternate mechanism but, to date, has received much less attention.

The public nature of social media now makes it possible to track consumer complaints, the market circumstances under which they're made and how companies respond. This opens the door for studies that examine the purpose and impact of customer voice.

Researchers also found that the deterioration in on-time performance generated about 50 percent more complaints when the airline was the dominant carrier in the passenger’s local market. Airlines also responded more often when competition was limited and when the passenger mentioned the airline's loyalty program in their tweet.

These finding suggest that companies in low competition markets may have the most to lose from ticked-off customers because these customers generate high margins yet have the ability to go elsewhere if they are not happy, says Lederman. The same goes for customers who are invested in a company’s loyalty program – these are the very customers that are costly for the company to lose.

"In markets where you don't have a lot of competition, but you have some – voice might be effective because this is precisely when companies will care to retain customers who have been made unhappy," she says.

Lederman carried out the study with fellow Rotman researchers Joshua Gans, a professor of strategic management, and Avi Goldfarb, a professor of marketing.

Anger in the sky: U of T research shows air rage a product of class difference

lavende4 — Wed, 04 May 2016 13:56:53 +0000

Anger in the sky: U of T research shows air rage a product of class difference

lavende4 Wed, 05/04/2016 - 09:56

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Does this image make you feel cranky? Forcing economy passengers to walk through first-class compartments increases air rage, says Katy DeCelles (Miguel Medina/Getty Images)

Ken McGuffin

Author legacy

Ken McGuffin

Topic

Global Lens

Rotman School of Management

Travel

Research & Innovation

Criminology

Collaboration

Subheadline

“I expected there to be more support for a lack of leg room as a contributor to air rage”

A Korean airline executive is jailed after she throws a handful of macadamia nuts at a flight attendant.

A flight from Rome to Chicago has to dump thousands of litres of fuel and land in Belfast after a passenger starts to act belligerently.

A passenger on a flight from Dubai to Birmingham, England, is arrested after he threatens a flight attendant, makes racist remarks and punches an inflight entertainment system.

These are just some of the thousands of incidents of air rage that occur every year. Now, a ��Ƶ researcher and her Harvard colleague say they have discovered one of the major causes – and it’s not what you might think.

We blame air rage on long flight delays, shrinking seats and a general decline in civility. But the first empirical research study into the phenomenon pegs another culprit – class inequality – for the reason passengers lose it when taking to the so-called friendly skies.

Katy DeCelles, an associate professor in organizational behaviour and human resource management at U of T’s Rotman School of Management, says that visible inequality between first class and economy class passengers is one of the leading causes of air rage – among both groups of travellers.

Air rage incidents are more likely when the plane has a first class cabin, says the study, co-written by Michael Norton of the Harvard Business School. The odds increase when economy passengers have to pass through first class to get to their seats, reinforcing the inequality.

Simply having a first-class compartment made an air rage incident nearly four times more likely, equivalent to the effect of a nine-hour flight delay, the study found. The bad behaviour was higher not only for economy passengers, but those in first class too.

Other factors such as crowdedness, alcohol consumption and long flights can contribute to disruptive incidents, says DeCelles, but her research found their impact was smaller than you might expect.

“I expected there to be more support for a lack of leg room as a contributor to air rage, given the attention that leg room has had – but there wasn't,” says DeCelles, who is also cross-appointed at U of T's Centre for Criminological Research.

Although the study did not delve into the reasons behind its findings, past research has identified that people tend to have poorer health, well-being and behavioural outcomes when they experience comparative deprivation or feel treated unequally or unfairly. This study contributes to the research by showing that even temporary experiences of inequality can have negative effects.

The study has made headlines here at home and around the world, in major news outlets and on social media.

See the CNN coverage

Read the Los Angeles Times article

See the Global News coverage

DeCelles used a database of thousands of documented disruptive flight incidents over several years for a large international airline. The incidents were serious enough to be considered a threat to onboard safety, such as passengers refusing to sit down, yelling obscenities at a flight attendant or interfering with smoke sensors so they could sneak a cigarette. The majority of incidents involved belligerent behaviour or intoxication.

The results have implications for any physical environment where differences in class or status are apparent – such as a tiered stadium or a workplace where lower-level employees have to pass by executive offices to get to their cubicles. Meanwhile, airlines that want to consider how to reduce negative behaviour may want to think about ways to de-emphasize differences between passenger groups, such as using a dual gating system.

“The more you can use those dual gates to board airplanes, separating the first-class cabin from the economy cabin, you're going to have less air rage in both cabins,” DeCelles says.

The study was published earlier this month in the Proceedings of the National Academy of Sciences of the United States of America.