Too Many Balls (and Too Few Planes) in the Air

So the woes are official.  United’s recent announcement of its 2Q 2012 quarterly results confirmed what virtually every customer already knew: the merger of United and Continental is still causing problems.  It’s not quite Jeffrey Smisek with his Head on Fire but it’s not good either.

Even the most carefully orchestrated integrations can hit clear air turbulence, particularly when merging entities as complicated as airlines.  Let’s look at some of the issues in hopes of finding a little preventive medicine.  (Ahem … American, are you out there?)

The UAL announcement noted the following problems:

  • Cut-over to a single reservation system has been more complex than anticipated.
  • Changes to the frequent flier policies have wrought confusion and pissed off customers, particularly at the most-active flier levels.
  • On-time arrival metrics have slumped.
  • Flight cancellations have increased.
  • Baggage handling mishaps have increased.
  • Spare plane inventory was cut back only to have to be rebuilt.
  • Reservation transaction times have increased, making them more expensive and more frustrating to customers.
  • Changes to the company’s revenue accounting system have led to revenue adjustments.

If we set aside the accounting change, we find one thread that ties together all of those problems: the customer.

Everybody knows that acquisitions bring change and that change can bring turmoil.  The hope is that the turmoil will be replaced – sooner rather than later – by the promised potential of the deal.

But customers have limited patience and limited appetites for turmoil.  In a post-acquisition setting – particularly one as complex as an airline – there should be one universal mantra: under-promise and over-deliver.

It would appear that United took on too much change at one time.  Was it absolutely necessary to have the cut-over to a single reservation system happen when and how it did?  Scheduling a Big Bang event might have a lot of marketing appeal from one angle but it clearly has big risks from another.

The promises that United made to its customers in its cut-over plans had both timing and quality implications to them.  At some point it must have become clear that they would not be able to deliver on both.  Rather than sticking to an announced but arbitrary schedule, they would have been better off failing to deliver on the timing to ensure that they could deliver on the quality.  They are paying the price for not doing so now.

Take-away:

  • Customers would rather have smooth and easy later than screwed-up and annoying now.  If the schedule you “cast in stone” four months ago looks like it’s going to impair customer service, suck it up and change the schedule.
  • In almost all customer service scenarios, quality trumps timing.  Exceptions do happen but you should accept them as exceptions.
  • An integration manager’s job is to make sure that he or she understands and controls both the promise and the delivery as two companies unite into one.  So I repeat that tired old saw: under-promise and over-deliver.

Tommy, can you hear me?

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