United's Social Media Response Ignores Reputational Risk

Reputation claims can have a lasting impact that may cause damage to a company's profits well beyond any regulatory settlement.

United Airlines Airbus A320. (Photo via Wikipedia.)

We have all been there. The airline overbooks your flight and offers a $200 voucher to miss your flight and leave the next day. No one volunteers. Eventually, the voucher price creeps up enough (maybe a free night at the airport hotel is thrown in) and a passenger or two agrees to miss their flight. And, when no one volunteers, apparently, the airport police may drag a random passenger off the plane.

In a video circulating the internet, this scenario played out on a United Airlines flight outbound from Chicago (the airline's base of operations). In the video, the passenger, who claimed he was a doctor and was worried about missing his flight because he had patients to see, was left bloodied and disoriented after Chicago Department of Aviation security officers dragged him off the plane.

After the video aired on social media and went viral, United tweeted that the passenger refused to leave, and United CEO Oscar Munoz later apologized for having to re-accommodate the customers. On a flight two weeks ago, United had a similar response when airline employees told two girls they could not board a flight because they were wearing leggings.

Airlines have a tough job. Flights are often delayed and passengers are upset because of factors beyond the airline's control. Overbooking seems to be part of their business model to ensure that they operate routes profitably and have enough passengers to fill planes. Unwritten rules exist for airline passengers—such as don't eat something that will bother those sitting around you, do not take your shoes and socks off and put your feet in between the seats in front of you, and share the armrest (leggings to our knowledge have never been part of these rules).

Sort of a "passenger's code" that separates us from animals. Most passengers try to be civil to one another for the hour or more that we are stuck on the flight. Airlines are supposed to set a good example for passengers. Having flown on United flights around the globe in various cabin classes, most of the time, United does a good job with this. The company, however, has some serious work to do in responding to issues on social media that impact the airline's reputation.

A key part of a company's risk assessment program is assessing the reputational impact of compliance failures, not just the financial impact. Because reputational harm can have a financial impact. In 2013, Target had a data breach that impacted roughly 40 million customers. Social media users widely covered the breach on platforms such as Twitter. Did that change the shopping habits of any potential shoppers? When social media users posted extensively about Chipotle's food safety issues, how many burrito lovers decided that they'd never eat at the restaurant again?

After GM's ignition crisis, how many consumers won't drive a GM car or truck? Reputation claims can have a lasting impact that may cause damage to a company's profits well beyond any regulatory settlement. A well-designed risk assessment process looks at both the financial and reputational impact of the risk of compliance failures and addresses both scenarios.

For United, presumably the company looks at the reputational impact of various subject matters risks, such as potential safety issues, regulatory and customer-facing issues, etc. What would be the financial and reputational impact of a food safety incident where passengers get sick because of the food served on a plane? What's the likelihood of that impact? How does social media fit in to compliance issues and potential reputational damage?

After assessing the potential financial and reputational impact, the next step is figuring out how to respond. How does a company respond to a regulatory subpoena? What are the internal processes? Who should the company notify? A critical part of any response plan addresses the media, including social media.

We live in a world where everyone walks around with a camera. If something exciting happens when people are sitting on an airplane with nothing to do, waiting for it to take off with their phones on "airplane" mode, you can bet that half of the plane will record the video, and someone will post it online by the time the plane lands. If your company operates an airline in this environment, how you address social media must be part of your compliance playbook. At the end of the day, compliance is about building trust with stakeholders, including your customers. What is the message you want to send to your customers?

Airline passengers put up with a lot of bureaucracy to get from point A to point B. Some of the rules make sense and some don't (like why can you use a phone when you land but not immediately after the airplane door closes?). We trust that these rules have something to do with our safety, and we choose airlines not only because of price, but because we trust they care about our well-being.

An effective social media response should align to this view. Because in a customer's mind, perception becomes reality. When companies get this wrong, the reputational impact may have a lasting impact on the company's brand. After the video was posted, United shares (UAL) dropped 4 percent (over $900 million in market cap).

We will still fly United. The company has a lot of great employees who work hard every day to make sure passengers have a world-class experience. But the company has to do better in responding to social media issues.

Originally published on Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Contributing Author

Ryan McConnell

Ryan McConnell is a lawyer at R. McConnell Group — a compliance boutique law firm in Houston, Texas with Fortune 500 clients across the globe....

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Contributing Author

Meagan Baker

Meagan Baker is a lawyer at R. McConnell Group — a compliance boutique law firm in Houston, Texas with Fortune 500 clients across the globe....

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