This week Charlie looks at how United Airlines handled their recent scandal and whether PR disasters have a long-term effect on the organisations involved.
You cannot have missed the recent coverage of the incident involving a United Airlines passenger. The flight was overbooked, because four United Airlines crew members required last-minute seats. Three passengers went voluntarily, but one passenger, Dr David Dao, refused to vacate his seat and was hauled off the plane by the airport’s security guards. The event was filmed and went viral, causing worldwide outrage. The scandal was made worse by United Airlines taking eighteen hours to acknowledge the incident, as well as three attempts to apologise.
Every crisis management pundit is either on the internet or in the papers commenting on the event, indicating how United Airlines could have managed their PR response better. There are a lot of good points made, so I thought I would comment on some different aspects of this incident.
One of the interesting questions from this incident is: why did the video go viral? According to Melissa Agnes, who also did a video blog on the incident, there are three elements required to make a story go viral.
The three elements are:
1. Is there a human story?
2. Is the story relatable?
3. Does it come with a video or picture?
I think this criteria is very useful. United’s PR team could have got ‘ahead of the game’ by realising their incident would likely go viral. They could have minimised the impact and anger caused, by profusely apologising and making clear that they were disgusted at the incident, as soon as it happened.
One of the aspects of this story which interested me, was the real impact of the incident on the company involved. Yes, the share price dropped ‘costing’ the company one billion dollars, but in actual fact the shares later rallied. Pepsi, who had a similar PR gaffe in the same week, saw no movement in their shares. Perhaps each company will follow the model outlined in the paper 'The Impact of Catastrophes on Shareholder Value’ by Rory F. Knight & Deborah J. Pretty, where companies which seem to have managed their response to an incident well (e.g. Pepsi) in the long-term can see their shares rise, while those who are seen to manage their incident badly see a long-term drop in their share price.
The impact for United Airlines will be in lost reputation and cash. The cash costs will include a loss of money from people not booking onto their flights, compensation to the passengers on the plane and a payout to Dr Dao. In terms of reputation, the public has a very short memory. Many of those outraged on social media are people from all over the world, who never have or never will fly with United Airlines. Potential aeroplane passengers when faced with a convenient flight or a cheap flight will usually ditch their principles. The boycotters and those saying “I will never fly with United Airlines again”, won't last long. Very quickly the outrage circus moves on to a new target. Think of the global outrage at the death of Cecil the lion by American dentist Walter Palmer: RIP Cecil, dead and now forgotten!
I was looking through the internet for details of large household names, which have folded after a badly managed incident. United Airlines will survive, because it will continue to offer cheap and convenient flights, but what about the organisations that have their whole business model destroyed by an incident? Seeking an example, I looked at Ashley Madison – an online dating website, aimed at people in committed relationships. Surely after the incident in July 2015, when they were hacked and the details of their members were published on the internet, this would have been enough to close their site. The reason their users are on the site is to be discrete, so if that is compromised it must have destroyed their reputation and lost the majority of its customers. However, looking on the website, the company looks in rude health and it is quite happily trading its wares! I think the lesson is, if you have a strong brand and a product that people want, even a major incident or global outrage may not destroy the company. In my research, I failed to discover one household company which failed due to an incident. Most failed because they were corrupt or dishonest, especially about their finances.
So, it seems that if you are a large organisation and you have a PR disaster, the most likely impact is that it is going to cost you, and the worse you handle the situation, the more it will cost you.
P.S. In every scandal there must be some sex. With this story, I think whatever deity (or not) you believe in, it has a sense of humour and an added twist to the tale. Although the twist has absolutely no bearing on the actual events, there are a number of reports (you can look them up for yourself) on the rather “colourful” background of Dr Dao!
We are delighted to announce that the first of our monthly 'Ask The Expert' webinars will be on Business Impact Analysis (BIA) with industry expert, and weekly BC bulletin author, Charlie Maclean-Bristol.
The first monthly webinar will take place on Friday 28th April at 11 AM (BST).
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The recording will be posted to all bulletin subscribers following the webinar.
We look forward to meeting you on Friday 28th April.