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THE REVENGE OF THE 'OVER-ENTITLED'
By Joe Brancatelli
May 24, 2012 --Every airline crisis comes with its own defining quotation. Some idiot airline executive eventually says something so truly inane that it perfectly defines the issue and simultaneously explains his regime's eventual downfall.
We now have the definition for the crisis at United Airlines. The buffoons in Chicago think we're "over-entitled."
While chief executive Jeff Smisek is grabbing with both hands, more than tripling his annual compensation as his airline melts down, his new chief financial officer tells investors that United's frequent flyers have been "over-entitled."
Mark it down, fellow travelers. When Smisek and The Gang That Couldn't Manage Straight are eventually driven from the top ranks of the world's largest airline, we will call it The Revenge of the Over-Entitled.
A year from now, perhaps two, when Smisek is finally exposed, he will go. He will leave United in a mess, but he will be gone. He'll go back to Houston and the legal business from whence he came and he probably won't give a damn. But, at least, he will be gone and there will be a chance to save United Airlines.
The Revenge of the Over-Entitled will have toppled another despicable, self-important Skygod and we'll start again, hoping that the next moron will at least understand that you don't publicly criticize your most frequent, most loyal and most profitable customers.
On the off chance that you missed it, CFO John Rainey went in front of a transportation-investment conference last week and spilled the beans about United management's contempt for its customers. If you skip to the 11:50 mark of the audio, you'll hear him hem and haw and fumble as he tries to frame the issue. But, haltingly, painfully, it comes out.
"We also changed our MileagePlus program, some of the benefits that accrued to the members," Rainey stammers. "We had certain groups in this program that were over-entitled, if you will."
This attitude shouldn't surprise you because I told you about United management's contempt for its best customers two months ago. "These guys think their 1K and GS flyers have no options," I quoted someone very close to the airline's management explaining. "That's why they think they can get away with what's going on."
But Rainey's outburst of public honesty shocked and infuriated the "over-entitled" posters over at FlyerTalk.com. The metaphoric shaking of fists at Smisek, Rainey and the dysfunctional Chicago C-suite had reached 73 pages and nearly 1,100 posts by 9 a.m. this morning. Rainey's truth-telling even motivated the Murdoch-addled Wall Street Journal. After months of excusing United's dreadful financial and operational performance, The Journal this morning felt compelled to report the self-evident truth right on Page One.
After Rainey's defining quote went viral over the weekend, United's wretched publicity machine tried to walk it back, of course. His crack about over-entitled MileagePlus members only referred to silver elites, they hurriedly and defensively claimed.
For flying 25,000 miles a year on the pre-merger United, silvers received the chance to reserve an Economy Plus seat at the time of booking. When the new program launched on March 3, the same day that the ill-fated data conversion began, silvers were downgraded and could only confirm an Economy Plus upgrade at check-in.
United this week claimed that the silvers were swiping E+ seats that should have been going to higher-level elites. That bit of balderdash was immediately dismissed by the FlyerTalkers, of course. Their commonsense response: There was no thread complaining about it on FlyerTalk. And if someone wasn't complaining about silvers stealing their E+ seats on FlyerTalk.com, the problem ipso facto never existed.
In fairness, United did face a crisis of too many silver elites competing for too few E+ seats when the two carriers merged. But it was a crisis of United's own making. Smisek and his C-suite carpetbaggers went for months before deciding to outfit the pre-merger Continental fleet with Economy Plus seating. Even now, more than two years after the merger was first announced, United has not retrofitted the entire pre-merger Continental fleet.
As for John Rainey himself, please understand that he is a second-stringer, a real-life example of the Peter Principle. He only got the job five weeks ago after Zane Rowe, the CFO who came with the pre-merger Continental crew to manage the combined carrier, abruptly resigned only days before the disclosure of the first-quarter loss of nearly half-a-billion dollars. Yet Rainey is certainly familiar with the concept of being "over-entitled." His base salary is $750,000 a year and he's eligible for a 125 percent performance bonus and many other C-suite perks.
Still, Rainey's act of public truth-telling defines what everyone except The Wall Street Journal, the Chicago Tribune and the idiot securities analysts have known for months: Smisek has butchered this merger.
Just in case you've forgotten, in the two months since the data-conversion tanked, United has dropped to the bottom of the rankings for on-time operation, baggage-handling efficiency and denied-boarding rates. In the first quarter, United lost nearly as much money as its legacy competitors combined. And its passenger-unit revenue is growing more slowly than any of the other legacy airlines. The rank-and-file employees are itching to strike. Super-elites are fleeing to Delta and American and average flyers are screaming bloody murder on United's own Facebook page.
Sooner than you might think, Smisek will fall because his idiotic dislike of his best customers is costing United millions of dollars. He doesn't think just the silvers were "over-entitled," he misunderstands and distrusts the entire concept of customer loyalty. He's a transactional sort of guy. To him, your worth is solely and strictly based on your financial contribution to United Airlines on your next flight. He doesn't understand the value of repeat customers or the overall fiscal impact of his 1K and GS flyers.
So let's thank John Rainey for his tongue-tied categorization of us as "over-entitled" because it defines the inevitable fall of Smisek. Just as the idiot Leo Mullin was doomed as Delta chief executive when he claimed the "airline industry cannot be the first casualty of this war" even as actual 9/11 victims were still buried in the rubble. Just as the buccaneer Stephen Wolf was doomed as top dog at US Airways by claiming "there is no Plan B" if US Airways could not merge with an earlier iteration of United. Just as the preening Gordon Bethune was eventually driven from the chief executive job at Continental after uttering the classic: "If you have to be in San Francisco for a presentation tomorrow, you are going. If I say it's $1,200 or it's $800, you are still going."
None of those men ever worked in an airline C-suite again. They took their ill-gotten gains, fled the scene of the corporate carnage they created and disappeared into Skygod Stovokor.
So you think we're "over-entitled," Jeff? That explains everything. When The Revenge of the Over-Entitled sweeps you out of the Chicago C-suite in the next year or two, make sure that your Golden Parachute includes lifetime free passes and GS status on United Airlines.
'Cause if it doesn't, you'll be just another "over-entitled" passenger sitting in coach on the flight back home to Houston. And ORD-IAH in coach, without status or an upgrade to E+, is a miserable place to be.
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ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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This column is Copyright © 2012 by Joe Brancatelli. JoeSentMe.com is Copyright © 2012 by Joe Brancatelli. All rights reserved.