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United Airlines and Reputation Risk

As United Airlines hits a completely avoidable yet violent bout of reputation turbulence over its aggressive customer disservice, we must ask how one of the world’s largest airlines could suffer such a terrible self-inflicted wound. The now infamous case, involving the hapless Dr. David Dao, who was violently dragged in an unconscious state from a United flight at Chicago’s O’Hare airport, has captivated the media cycle, which oscillates from very serious calls for boycotts, to comical parodies of the airline’s alleged customer hostility. What is not funny, however, is how quickly this tragic case revealed a tone deafness from Oscar Muñoz, the CEO captaining United through this turbulence, whose initial response quite literally added insult to injury and did little to assuage the problem for United’s customers, employees and shareholders – let alone for Dr. Dao.

Further compounding United’s woes, the company’s market value entered rapid descent, wiping away $250 million since the scandal emerged, highlighting the growing economic cost of reputation risk. When a simple apology – combined with some “blood money” to prevent inevitable lawsuits – would suffice, United’s response has angered many of its stakeholders, elevating crisis response efforts to a board-level priority. This is particularly challenging, because the global airline industry is a fiercely competitive market and regaining lost customers will be a difficult task for the airline. Unlike Volkswagen’s emission-rigging scandal, which was carried out under the cover of darkness and from which Volkswagen has reemerged as the world’s largest automaker (although battered and largely due to sales in China), United’s recovery will likely be a more protracted affair. This is in part due to the violent, visceral and videoed nature of the scandal, which will be hard to forget.

As many cases of excessive force have taught us, when people carry smartphones, they represent a new breed of citizen journalists and an important source of forced accountability.

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