A few days ago, the Washington Post published an article in response to the most recent United Airlines Scandal. The beating and forceful removal of David Dao, a 69 year old doctor, has caused a media frenzy and customer backlash. United’s stock price plummeted, and the CEO, Oscar Munoz, refused to apologize.
Recently, however, Mr. Munoz apologized stating, “I deeply apologize to the customer forcibly removed and to all the customers aboard. No one should ever be mistreated this way. We are going to fix what’s broken so this never happens again.” Within minutes of issuing his apology, United’s stock price rebounded, ending only 1.1% below the the price before the incident. Is the public really this willing to forgive and forget?
According to history- yes. The recent Pepsi scandal, in which Pepsi released an ad parodying the Black Lives Matter Movement with Kylie Jenner, caused the stock price to sink. But just six days after pulling the ad, PepsiCo’s stock was back to its original price. Toyota and Volkswagen, both of which were involved in recent scandals, have recorded record sales. If these corporations are any indication, it could mean that United Airlines will too be forgiven by the public. And with the recent rally of the stock price, it is almost guaranteed.
Another explanation for United’s rebound could also be attributed to the fact that it is part of the ‘Big 4’, or one of the four largest airlines in the country. United, along with Southwest, Delta, and American airlines make up 85% of all flying customers. The lack of competition, which correlates to reduced prices and increased convenience. Convenience and low prices are important factors to determining where customers chose to bring their business.
These factors, apologizing, convenience, and low prices, all determine customer’s reactions to this scandal. Loyal customers will not abandon the brand, and many customers do not have the option to fly other airlines depending on their location. Together, these factors will ensure that United will survive this incident.