When Things Go Wrong With an Airline, It’s the Whole Industry That Suffers

David Dao getting dragged off of a United Express flight was a worldwide moment. It focused attention on involuntary denied boardings. It generated outrage. And United, Delta and American all looked closely at their approach. United’s stock recovered quickly, passenger numbers held, and the airline continued to grow. Two years later United suffers no drag at all from David Dao, but it’s the industry that has shifted.

The Boeing 737 MAX crisis doesn’t just affect American, Southwest, and United that fly the aircraft. Most passengers don’t know who flies the plane. It’s not driving passengers to choose Delta over those carriers, and it won’t once the MAX returns to the skies either.

Southwest’s tragic engine incident last year hasn’t continued to dog the airline either.

Traditionally no airline questions the safety of another airline. The whole industry benefited from public confidence in flying.

New research supports the notion that collective reputation of an industry matters. After the 2015 Volkswagen emissions scandal U.S. sales of BMW and Mercedes dropped.

The decline was principally driven by an adverse reputation spillover, which was reinforced by consumer substitution away from diesel vehicles and was partially offset by substitution away from Volkswagen. …We provide direct evidence on internet search behavior and consumer sentiment displayed on social media to support our interpretation that the estimates reflect a reputation spillover.

There’s an argument here, I think, that airlines should collaborate in ways that they traditionally have done so such as placing customers on other airlines during irregular operations and lending parts to other carries when planes go mechanical.

Getting passengers to their destination, keeping planes flying safely is in everyone’s interest. The flip side is also true: as airlines degrade their product, that hurts everyone. Customers think “they’re all alike” and a miserable experience on one densified carrier doesn’t just damage the reputation of that airline, it hurts everyone.

That’s probably contributed to the race to the bottom and made Delta’s net promoter score achievements and Southwest’s generally strong brand all the more remarkable.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. This was probably more true back 10-15 years ago when there six “legacy” carriers. Back then, it did seem like everybody was all the same, so you may as well go buy the cheapest.

    Today, this idea is more true in some areas than others. Basic economy? I assume they’re all the same, even though one of them doesn’t charge you for a carry on or something like that.

    But AA may be in a league of its own with the densified 737MAX. Most people aren’t going to pick up on the MAX affiliation, but the consolidation of airlines has increased the brand recognition for the remaining players — meaning AA gets stuck with the reputation of having cramped coach AND A BATHROOM YOU CAN’T TURN AROUND IT.

    Most people probably know that Southwest has free checked bags and doesn’t charge for seat assignments, cause, uh, they don’t have any.

  2. United got a lot of unjustified bad publicity over “Dr.” Dao. It was his own fault for refusing to leave his seat when asked to. At that point he became a tresspasser, like someone who refuses to leave your house. You’d call for assistance, and so did United. When police authority tells you to do something it’s best to comply and contest later. They’ll use force.

  3. @Andrew

    Except for the fact that the Chicago Department of Aviation officers aren’t real police. The Chicago Tribune did a quick blurb on the thing, and DOA spokeswoman Karen Pride said the following: “While they [DOA officiers] do have limited authority to make an arrest, Sunday’s incident was not within standard operating procedures nor will we tolerate that kind of action.”

    It also wasn’t clear at the time what authority United had to remove a properly boarded passenger from the aircraft. It’s a civil matter, governed by the airline’s contract of carriage. The contract of carriage talked a lot about “denial of boarding”, and the circumstances under which a boarded passenger can be removed are much narrower. Sure, causing a disruption or affecting the safety of the flight are causes to remove a passenger, but a passenger who shuts up and sits in their seat doesn’t rise to that level.

  4. I suspect sales of BMW’s and Mercedes have dropped mostly because of Tesla’s move into the same market segment with the model 3 not because of VW emissions scandal.

  5. The “market” is an ineffective regulator of corporate conduct. Boeing killed 350 or so but will recover from a short-term reduction in stock price. Data breaches occur over and over. It is cheaper for companies to deal with the fallout than to to institute adequate safeguards. Write offs can work to a company’s advantage. Meanwhile Boeing’s victims are dead and our personal information still is floating around god knows where.

  6. @john, you are correct and that’s why the punishments need to be severe. Normally I’m not a fan of too much government, but those are the only people who can knock a few heads together and let them know that data breeches are not OK. If fines are in the multiple billions, CEOs will get the message that it’s worth it to protect our data; in the case of Boeing, I think there’s criminal negligence too.

  7. SWA definitely concerned about impact of 737Max on whether customers will still want to fly the plane with them. They sent a survey out last week to customers asking them specifically about their views on the 737 Max and whether people would still fly on it and with SWA. They also asked, though didn’t explicitly explain it was the same plane, what people thought about flying other planes such as the 737-8. Likely they and others will definitely be pushing Boeing for a rebrand

  8. Perhaps the distasteful service on the US3 is tolerated simply due to a lack of choice; a lack of significant differentiation.

    Years ago, Ries & Trout wrote numerous books on market positioning and how companies fit into the minds of the consumer. Today, they’re all the same crap, with a slightly favorable Delta distinguishing itself, and a more pronounced negative over American with the hostile environment created by their Oasis seat concept. What doesn’t help AA is how the management team of USAir (“You’re Still Allegheny In Reality”) consumed AA and sucked out any pride left in the organization.

    For those who traveled in the early 1960s, they had a far more pronounced understanding of the fierce competitive appeal created by intensive advertising programs for the airlines–and railroads. For example, American was for the business traveler, TWA for the actors and stars, and United for the families. To the same extent, during the ‘last hurrah’ for passenger trains, the “Twentieth Century Limited and “Broadway Limited” fiercely competed for Pullman travelers on their fast, overnight schedules between NYC-Chicago by offering epicurean meals and top notch onboard services. Yet, the “Super Chief” was considered far above the “City of Los Angeles” for deluxe, first class travel on their schedules between Chicago-Los Angeles.

    In essence, the lack of meaningful competition gives us “one size fit all, and the hell with you,” which explains American’s insulting approach to domestic travelers, and Amtrak’s Soviet standard towards the remaining overnight, long distance trains.

  9. @Mark, Allegheny was a fine airline back in the 70’s IMO.

    Fixed your comment “What doesn’t help AA is how the management team of USAir (“You’re Still America West In Reality”) consumed US Air, then AA and sucked out any pride left in the organization”.

    BA does not allow apparently cut and past strike-thrus in the comment section.

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