Why the United story may be over-blown with regard to the impact to the airline's business:

posted by Brian Mudd - 

Why the United story may be over-blown with regard to the impact to the airline's business:

Bottom Line: The United bumping disaster has doubtless hurt the United brand. That being said comparisons to some of the other recent corporate disasters that have cropped up and substantially hurt business over a long period of time. The most notable, recent disaster is the Wells Fargo "fake account" cover up.  The total estimated impact of their scandal is $8 billion. Other notable recent examples are the Chipotle listeria issue which impaired business by an estimated 20% in 2016 and Target's bathroom policy which led to an estimated 6% loss of business over the past twelve months. 

Here's the thing though. It's easy to go to a different bank, a different restaurant or a different retail store. It's not nearly as easy to find another airline with the flight destination and times you're looking for... Without a doubt there will be some type of negative business outcome from United's handing of the doctor who was bumped but it's likely to be far less than all of the aforementioned companies. According to research firm Mintel here are the percentage of people who consider the following when booking an airline:

  • 65%: Price
  • 57%: Flight schedule
  • 48%: Baggage fees/policy
  • 36%: loyalty

So let me ask you... If United had the best price on the most convenient flight schedule for you are you really going to pay more for as less ideal flight time? That's our get real moment. Barely more than a third of flights are even booked with any type of loyalty consideration - let alone it being the driving force for booking flights. The airline industry is vastly different than other industries in this respect. If you opt for a different bank over Well Fargo, that's likely to have a negative impact on Wells Fargo's business for the decade plus. If you go to a different Tex-Mex restaurant due to concerns about listeria you might like it and potentially might patronize Chipotle less. Ditto Target if you went to Wal-Mart instead. But none of that applies to flying and very few people have both money and time to burn so provided there isn't another shoe to drop United's likely to quickly recover from this current PR nightmare.

Brian Mudd

Brian Mudd

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