How Can United Airlines Enhance Customer Care in the Future When “bumping” Passengers on Overbooked Flights?

Statement of the Problem

How can United Airlines enhance customer care in the future when “bumping” passengers on overbooked flights?

Point of View

United Airlines Management

Objectives

Reduce the number of customer complaints to (1) have a continuous process improvement and strict compliance of company policies with regard to their  services; (2) conducting customer care training to familiarize employees of the do’s and don'ts when attending customer needs; (3) provide survey form to customers to measure their perception of satisfaction and experience; (4) incorporate customer’s suggestions and (5) conduct a periodic reviews and updates of company policies and procedure.

Manage overbooking flights  

United Airlines needs to manage overbooked flights and decide whether to accept more bookings from other passengers or to deal with the overbooked passengers through compensation and making alternative travel arrangements for them.

This can be done by having real time review of flight bookings, collating crew and passenger information thru computers and communication over mobile phones. Additionally, check-in information for flights should also be distributed by the airline as early as possible and understood by all passengers.

Offer packaged deals along with regulated monetary compensation for inconvenienced passengers

To further entice passengers to voluntarily vacate their seats, UA should increase the maximum bid. However, the United States Transportation Department set the compensation rate for overbooked passengers with two options; 1) 1-2 hours of delay for a domestic flight and 1-4 hours of delay on an international flight, the airline will pay double the one-way fare until a maximum of $675 USD and 2)  2+ hours of delay for a domestic flight and 4+ hours of delay on an international flight, the airline will pay double the one-way fare until a maximum of $1,350 USD. Therefore, United Airlines could instead create certain packaged deals aside from monetary compensation.

Assumptions

UA has the revenue to provide additional compensation for “bumped” passengers

Based on the case provided UA is a big company and operating in 6 continents. The company has the capability to offer lucrative rewards (free meals, accommodation, cash and plane fare air vouchers). The payoff will generally increase as the flight nears take-off time and the airline grows more desperate to empty seats.

Overbooking flights is a common practice for United Airlines

 Overbooking flights results bumping off passengers – which means the denial of seat when you confirmed and paid flight of a passenger. This is an airline practice  designed to fill the empty seats that a no-show passenger leave behind (cancelled their flights due to emergencies). The more popular the route, the more likely the flight is oversold. Overbooking increases profits and optimize company resources . They know that not everyone will show up for their flights. They are able to maximize their profits and resources that are wasted are minimized.

Strengths, Weaknesses, Opportunities, and Threats

  Strengths

UA is a leader in the airline industry in the US. Among its strengths is its top performing operational network completing 500+ flights per day to over 360+ destinations within 6 continents with environmentally friendly, fuel-efficient planes. This also allows for heightened brand recognition due to the abundance of United Airlines advertisements all over the world. UA also implements an industry leading and globally known loyalty program known as MileagePlus and employs around 85,000+ people worldwide.

Weaknesses

However, UA does face a well-sized challenge. They currently have a high dependence on third-party service providers that tends to slow down their business. These third-party providers are mainly found through their customer service lines, maintenance teams, and refueling services.

Opportunities

Along with strengths and weaknesses, many opportunities arise for United Airlines as the growth of the global tourism and travel industry continues to exceed expectations due to the “wanderlust” and instant gratification tendencies of the millennial and Gen Z generation. Additionally, the US economy has strengthened and overcome the recession that started back in 2007 and people now have the revenue to spend on travel, unlike before.  In relation to this, since United Airlines’ main target market are business people and luxury travelers, or high income earners, the medium to low level income earners can possibly help to expand the market for United Airlines if they were to tap into that audience. United Airlines also makes use of direct sales websites allowing the company to target and even retain their customers efficiently and effectively.