My friend Ben at One Mile at a Time wrote a thoughtful but critical piece on the tenure of United Airlines’ CEO Oscar Munoz. While normally spot-on in his analysis, I view the matter differently.
I’m not going to dismiss the many unforced errors that turned into PR nightmares. Nor will I downplay unkept promises and the painfully slow rollout of Polaris Business Class.
But let’s take a step back and look at the bigger picture.
Improved Operational Performance
The biggest issue that plagued post-merger United was operational performance. It was terrible. Remember the “summers from hell” in 2012, 2014, and 2015? In June 2015, for example, only 42.5% of United flights left on time. Forget everything else: United could not even get passengers from Point A to Point B on-time with any reasonable certainty.
Since taking the helms of United in September 2015, United has dramatically changed course. Not only have I personally avoided a substantial delay for more than two years, but the stats are impressive: United’s operational performance is now (arguably) best in the U.S. industry. That’s a testament to the leadership of Oscar Munoz and the oft-maligned Scott Kirby.
This is the most important issue upon which I judge an airline. And on this issue, Munoz can point to unequivocal success.
Surging Stock Price
Since taking over, United’s stock price has risen and analysts predict it will continue to rise. Ultimately, Munoz’s most important contribution is adding to shareholder value. Without that, the airline ceases to exist. For better or for worse, that is the way business works in the United States.
True, most stocks have risen over the last couple years. But don’t assume that United’s leadership had nothing to do with United’s stock rise. Alaska’s stock has fallen by 5% in the same period and is way off its high of nearly $100/share last February.
This metric matters greatly and Munoz will be judged positively for UA’s share price growth under his tenure.
In the post-merger Smisek years, employees lost much of their ability to exercise discretion. Instead, they were kept on a very short leash. The result: paltry, often insulting compensation or lack thereof for service mishaps and other customer service failures.
This was a common occurrence:
That has changed in a big way. Each FA now has an iPhone and can compensate consumers on the spot for service mishaps. Gate agents and reservation agents have been given more discretion in handling irregular operations. For example, voluntary denied boarding credit may now reach as high as $10,000.
This translates into happier employees and happier customers. Munoz should be credited for recognizing that trusting employees is smart business. This was a promise he kept.
United is also trying to reform the customer mindset of its workers through its core4 training. Some employees are no doubt incorrigible, but this is a worthy effort.
The lottery scandal aside, employee morale is incredibly better under Munoz than Smisek.
More Competitive Product + Fares
On the product side, I find myself in the same boat as many: I’m buying more premium fares. That’s not because I’m suddenly flush with cash, but because United has wisely lowered the price of domestic first class tickets. Often dramatically. This has uprooted the traditional upgrade paradigm, but helped me to sit in the premium cabin on flights that matter most without breaking the bank.
And all things considered, the product is getting better. I’ve recently flown transcons between Newark and Seattle, Los Angeles and Newark, and Washington and Los Angeles. All featured lie-flat beds in business class. And prices were cheap enough that I just paid for the seat outright. The seat is the most important part of the experience and United is delivering.
Internationally, the Polaris rollout has been slow, but United still offers lie-flat beds across the fleet and the best bedding in business class in the world (as far as I am concerned). And as much as I hate cutbacks, I guess I cannot blame United: it doesn’t change the purchasing decision of most travelers, including me. United can get away with it. It’s just the reality of a profit-driven business.
Meanwhile, United’s international route map has expanded and Munoz + Kirby are aggressively fighting for domestic dominance…something Smisek all but abandoned.
I often post Munoz’s letters to employees. Actions do speak louder than words, but a well-developed moral character is a foundational to strong and effective leadership.
Munoz’s notes often touch me. For example, this letter on sexual harassment is powerful and inspires a common goal for the betterment of all.
A year after the Dao incident, he told a group in Chicago last week,
We had a truly horrific event last year that everyone in the world frankly heard about. It was flight 3411, with the doctor that was dragged off the plane. And people say, ‘Aren’t you glad that’s over? Can’t you wait for that thing to go away?’
That is the furthest thing from my mind and our mind. We want it front and center. We constantly want to be reminded of how things can go wrong so quickly.”
That’s encouraging to hear. Munoz is not sugar-coating United’s sins.
And he overcame a heart transplant and came back to work instead of retiring. This wasn’t for money: it was to make a difference at an airline desperate for effective leadership. I salute him for that.
> Read More: My Conversation with United CEO Oscar Munoz
Has Munoz exaggerated some of his promises? Of course. And he should be held accountable for that. But despite dead dogs and dragged doctors, the situation at United is not bad. I’d argue it is quite good. As a frequent United flyer, I recognize that the status quo represents a marked improvement from the Smisek era. I get to my destination on time and still find MileagePlus fare more valuable than AAdvantage or SkyMiles.
United still has great potential and has missed many opportunities, but it simply would be dishonest to tell you I’m not a happy camper flying United. I maintain that overall, Munoz’s tenure has been encouraging.
What do you think?