United Airlines: Charging a premium for decreased service

Today I contacted United Airlines to change a return flight on trip. The total came to $230 ($150 change fee and $80 difference between the price of my old and new ticket).

Fortunately, I checked on-line before making the call and saw that the one way trip on my new date was only $194. The agent and I both agreed that it made more sense (for me at least) to keep my old reservation and book the one way flight. I wondered why, at that point, United would choose to go with the process that was less cutomer friendly (me booking the one-way on line versus them changing the flight for the same price). The outcome would have turned out the same. Either way they would have $194. But, for some reason, they chose the business-centric rather than customer-centric response.

This was a clear lose/lose in my book. As a customer, United made it hard for me to do business with them. If I can book a one way flight for $194, why charge me $230 to do it? At that point, they already paid the sunk cost of the agent’s time. It wasn’t lke they were getting any process savings for me booking on-line.

But did they gain anything? I now have a reservation on two return flights and I am only going to use one. So their supply and demand planning is off. They have one less seat that they can sell for full price (and make a lot more than the incremental $40 they would have made by charging me $230). So, I think they lost too.

At some point, trying to squeeze every penny out of your customer backfires, especially when customers are in control and have other choices. It’s one thing if there wasn’t an on-line flight that cost less. But given the circumstances, it seems like they consciously chose to provide poor service.

United had the choice to be customer-centric. The outcome in this case didn’t change. The only thing that changed was the process. And they chose a process that placed the burden on the customer without getting any actual benefit for themselves. Now why would anyone do that?

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2 Comments

  1. You are right, this situation is absurd. However, the larger problem here is that United is not delegating enough authority down to the lowest level: the customer service rep.

    When I think about a company that has stellar customer service, that company generally allows its customer service reps alot of authority in what they can and cannot do with their customers.

    For whatever reason, United has not delegated down the ability for customer service reps to eliminate the $150 change fee for situations when it would make sense to do so.

    But, if you were to talk to a United executive and ask why that is, they would probably say that the customer service reps lack business sense to know when it would be a good idea to do so, etc.

    What they should do is invest more time in their people and strive to develop an organizational culture that values initiative and serving the customer. And, if they still feel customer service reps lack the “know how” to make good business decisions, then they should invest time in training them to do so.

    When you think about it, the reason for this nonsense is actually quite complicated and it shows something about United’s leadership.

    -Kyle

  2. Hey Kyle,

    Thanks for your post. What a great observation. We often blame the messenger in these cases, when in fact, the problem often lies with leadership and the culture they create.

    Interestingly, I’ve been thinking about what I should do with the existing ticket (it was actually part of a block of tickets I bought from my family). I’m thinking that since we bought it (and since United made us buy a different ticket for the alternate flight home) that we should get to use the seat whether I am there to occupy it or not. So, if the flight is overbooked, perhaps I’ll suggest to my wife that she sell the seat back to United for $150. Otherwise, we’ll let my daughter use it for her teddy bear.

    Thanks for your comments – very insightful.