June 04--The CEO of United Airlines' parent company on Tuesday vowed better service for passengers this summer compared with the problem-plagued season last year.
"It's been a long runway, no question about it," Jeff Smisek told the group of about 1,000 business people at the Chicagoland Chamber of Commerce annual membership meeting. "Mergers are tough, but we're doing well."
He cited United's first-quarter on-time performance, which was below some competitors but marked United's best in a decade, and customer satisfaction scores "that have gone up by a factor of five from where they were a year ago."
"We're a service business. We need to get you where you want to go, on time, with your underwear," he said.
United passengers suffered through rampant delays and cancellations last summer, after United and Continental moved to a common passenger reservation system, the technology backbone of an airline. Glitches and inadequate training of employees were blamed for delays and poor customer service.
"We're making huge strides," he said. "If you've been flying us lately I think you've experienced improvement in customer service, and I think you're only going to continue to see that going forward."
Smisek also spoke about the industry's trend of "unbundling" or charging for services that had been free but only some customers used.
"We use to serve you a pizza with all the toppings, and that's all you got," he said. Unbundling allows passengers to pay for only the services they want, he said.
Smisek said he's hopeful about the future of the airline industry, which has been plagued in recent decades by massive losses and bankruptcies. That's because carriers are now acting like businesses, concerned with making a profit instead of simply grabbing market share, which he said has been a failed strategy in the past.
"We actually lost money on every seat and tried to make it up on volume; it didn't work," he said. "I've been in the business 18 years. This is the first time I have hope that it's a business...that it's becoming consistently profitable."
For passengers, a profitable airline industry means airlines can invest in upgraded airplanes, airport facilities and customer service, he said.
Rampant industry consolidation, including his own merger of United and Continental airlines, has been good for the industry, Smisek said. "We're finally achieving a rational structure for the U.S. airline industry," he said.
Hitting on industry talking points, Smisek complained about federal airline taxes, which now make up 20 percent of fares, "crushing and burdensome" federal regulation and an outdated air traffic control system. "We're using the very finest World War II ground-based radar technology to guide our airplanes," Smisek jabbed. "You've actually got better technology in your Hondas than our government uses."
Smisek thanked Chicago Mayor Rahm Emanuel, former chief of staff for President Obama, for contacting the Obama administration on behalf of United when federal sequester budget cuts threatened to furlough air traffic control workers, which some say would have created rampant flight delays throughout the United States. "We asked the mayor if he could help us, and he did," Smisek said. "And in record time, that poor decision by the administration was reversed."
Also at the chamber event, the annual James Tyree Emerging Business Leadership Award went to AuctionsByCellular, a company founded in 2011 that helps facilitate fundraising auction events -- often by allowing donors to bid using electronic devices, such as their own smartphones.
During the event, Emanuel thanked chamber President Jerry Roper for his 20 years of service at the group. Roper will retire this year and be replaced by Theresa Mintle, former chief of staff to Emanuel. He also thanked Rita Athas, who resigned as president of World Business Chicago after five years in the job. She will be replaced by Jeff Malehorn, a longtime General Electric executive.
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