DALLAS — Running an airline, or any business for that matter, beyond financial prowess demands a high degree of interpersonal skills coupled with a strategic vision.
In an exclusive interview with Airways, former United Airlines (UA) Chairman and CEO Oscar Munoz shared his perspectives on airline personnel management, operational integration amid airline mergers, fleet renewal, expansion, and the future of the commercial aviation industry.
Munoz took the helm at United Airlines in May 2015, guiding the company out of a rocky post-merger integration between United Airlines and Continental Airlines and into a future which, despite the challenges brought forth by the COVID-19 pandemic, appears set for sustained growth.
Having retired from United Airlines in June 2021, Munoz sees future growth in the airline industry as reliant upon the elevation of air travel as an experience rather than a process, one that empowers consumers to fulfill their desires for cultural and geographical exploration.
BF: United Airlines was marred by controversy and low customer satisfaction levels when you took over as CEO, how did you look beyond the fog to envision a better future for the airline?
OM: I think for me, it harkens back to kind of knowing myself, I was at a different company but I was on the board of Continental/United and the envisioning part really became more about my abilities. My ability to bridge opposite sides, to build strong cultures, and to really listen and understand the views of people that do the work every single day.
With my railroad work, when I was COO at CSX, you know there was a big union and a fragmented organization throughout a large geographical area. As I thought of staying in my former role at CSX and becoming CEO, which was the plan, and when I thought of the opportunity at United, I just felt my skillsets were more equipped to bridge these warring factors of two companies and all these unions along with turbulence with everything that we had financially, with customers, operations, etc.
So, I may not have seen the true amount of fog there but I really felt my skillset would help more than where I currently was. Over time, as I began to get into the details of the company, I think my style of leadership was really the driving force behind me being able to see through that fog and stay focused on the outcome we eventually reached.
The pre-merger Continental Airlines and United Airlines employees still held a degree of division upon your arrival as CEO in 2015, what lessons or insights did you gain from successfully integrating the two employee groups?
Well, I think the insight I would have for all of your readers is this concept of a merger of equals quote on quote, the concept of co-CEOs, all of that is so difficult. You have to work at it hard and you have to really go from soft to hard. You just can’t assume that time will mold itself into a positive outcome.
You’ve got to take action and it’s different actions for different organizations but more importantly this concept of, “Oh no, we’ve already integrated this, we’ve already integrated that, or we’ve already solved that.” Well yeah, somebody already made a system, chose a leader, chose an organization, chose a philosophical path towards pricing or something but it was a path that was chosen by an individual, not an organization, and not all of its employees.
You could see the tension, you could feel the tension everywhere you went but the documents said, “No, no, here’s the checklist of we’ve integrated our pricing system, our revenue model, our operating philosophy, and all of that.” Well, the merger of equals was mostly Continental leaders taking the senior, most important jobs. The really critical jobs in the integration had all been filled by ex-Continental folks so they had made decisions based upon what they knew and what they knew worked.
The problem was the combined company was infinitely larger and more complex than any one of them separately. So, there had to be conscious efforts to really understand the environment and bring not just one versus the other or maybe even a third but that wasn’t being done because we had a timeline. There’s always synergy costs, so there’s a mission to get to the street so we’re going to save all this money.
There’s just a really big drive and I think people forget, going back to your question on insight, we forget that humans and human dynamics and culture and environment and willingness to follow along and do the right thing just doesn’t happen because you tell people to. They have to be involved in the process.
Early in your tenure as CEO, you conducted a “Listening Tour” to understand where employees thought United Airlines needed to improve. How did the resulting employee insights inform your turnaround plans for the airline?
I constantly use the phrase, “Listen, learn, lead, and only then can you lead.” It was really critical in terms of importance. I think the act of being willing to go out and listen before making decisions is probably the more critical point I would make. I will talk about the things I learned but you have to get people to talk.
Again, we had had several CEOs in the past sort of decade beforehand. Think about your human interaction, when you trust someone and genuinely think they’re going to help you, you’re willing to open up. I mean, somebody once told me that trust travels at the speed of vulnerability, meaning I have to put myself out there. I know no other way than getting out in front of humans in the workplace and asking kind of silly, simple questions like, “Hey, tell me what’s going on or what’s wrong?”
Once I started doing that, the listening tour became pretty intense because there were a ton of things to listen to. I heard lots of things. Unactionable things like, “You need to fire people.” People getting their anger and emotion out with me trying to mollify the situation to a degree where it’s like, “Okay, help me understand how I can actually act upon this.”
We forget that humans and human dynamics and culture and environment and willingness to follow along and do the right thing just doesn’t happen because you tell people to. They have to be involved in the process.Oscar Munoz
Listening is hard for a couple of different reasons. Sometimes we already have our ideas that we want to implement and listening just takes too much time. The other thing concern people have with listening is, “Wow, if you get all this input people are going to assume everything they tell you is going to be fixed.”
Again, I don’t subscribe to that. I think listening to other humans is important. You can also say, “Listen, not everything you say is going to be put into action, I am listening to gather information and eventually figure out the next best thing.”
What I always like to say in a turnaround situation, which we certainly had at United, is that there were a thousand things broken, which one you pick first as the baseline, the infrastructure, the cornerstone of what you’re going to build from there, I think is a really critical point.
To what extent did customer feedback determine operational improvements across the United Airlines operation from the ground level to the inflight experience and even fleet modernization efforts?
Well, it starts with the listening tour. The big takeaway from that was a flight attendant breaking down in front of me when I asked her a simple question about how things were going. She said, “You know Oscar, I’m just tired of always having to say I’m sorry.”
Think about that human context when you work for an organization where all you do is get grief every day for things that you do not control whatsoever. Our first thing was to regain the trust of our own employees so they knew that indeed we were listening to them and we were going to build the tools and things that they needed to make the customer’s life easier.
So we started kind of in reverse. Rather than asking you the customer, we asked our people what could we do to make things better.
We told our employees all the time, “Be the brand,” “Be this,” “Be friendly,” etc. It is hard to do that when you are apologizing for a ton of things. So, the customer level of engagement came a little bit later as we first addressed our employees.
The best customer service you can have is a human being in front of you that says, “‘Hey Brent, how are you?’ All of a sudden, your life just got better as opposed to that brittle, harsh, ‘Dude, yeah that’s not my problem, call this line.”
We, over time, got a lot of input as we built up the Polaris Class. We used a lot of customer focus groups, we literally flew people across the world in some of our aircraft in those seats to get their input.
So, customers are really important but the fundamental thing I learned from the listening tour was that our very own employees, the ones that provide you the service, weren’t buying this whole concept. We had to get them back on first and that made the biggest difference as all of a sudden everything became a little better.
Amid fleet modernization efforts, how did you balance the revitalization of long-standing United Airlines aircraft like the Boeing 767s with the operational integration of newer aircraft like the Boeing 787 Dreamliners?
If you and I were starting an airline today, we wouldn’t have this problem. We would go with the latest, greatest aircraft. The Dreamliner is a beautiful aircraft, it just is. We had the 747 at the time too which held a lot of wonderful history and emotion but it was old, there were no parts, and it broke down all the time. So the 767s, the 757s, all the different aircraft that were already sort of in the stable.
Aircraft are expensive and we weren’t making the kind of money, we didn’t have the cash to go buy new airplanes. So, integration becomes a question of how you modernize, how you streamline, how you clean them up, basically, and how we make them more consistent.
We had Continental aircraft, we had United aircraft, so we went about a lot of internal things but we couldn’t switch out the aircraft. All the different types of aircraft and their derivatives are meant for size and travel distance. There are aircraft built for certain things. If you’re going from Newark to Europe, it’s one thing, if you’re going from San Francisco to Europe it’s quite another thing.
So, we wanted to fill all of that out but in the process of doing that, how do we fix that customer experience? We talked about Polaris, so how do you retrofit a lot of these seats from two different companies with two different views? There was a lot of maintenance work that had to be done with the planned and phased obsolescence of certain aircraft like the 747. It couldn’t be done immediately.
That is a long ball game, it just takes a lot of strategic thinking. If you talk to people about the concept of United Next, where they’re going to bring in a ton of brand new aircraft that are just going to slowly begin to replace everything that’s getting a little dated. Of course, by the time you get done with that, there will be a whole new array of aircraft.
During your tenure as CEO, how did increasing low-cost and ultra-low-cost competition inspire United Airlines to leverage the hub-and-spoke model for further growth?
A combination of things. I think the primary motivator for our network strategy was mostly not so much the low-cost carriers, although they were a big part of it. It was just that our profitability, our margin, our throughput through some of our continental hubs (think Chicago, think Denver, think Houston), we just weren’t having quite the flow through there as we did in our hubs on the coast with more international service.
So, our strategy around flying became twofold. We were flying small aircraft between big business cities and business customers, who when given the option between a narrowbody 737 and an ExpressJet are going to pick the narrowbody ten times out of ten.
So we started kind of in reverse. Rather than asking you the customer, we asked our people what could we do to make things better.Oscar Munoz
So, most of our initial strategy wasn’t so much about low-cost carriers. Inevitably, those low-cost folks did have an impact on us because of the fare wars. The concept of basic economy evolved where the low-cost carriers would offer very cheap tickets between different cities and in order for us to compete we’d have to offer the same price. Of course, that would completely drive down the revenue generation of our aircraft and we have higher costs. We travel to a lot more different places.
So, we invented a lot of different things like the basic economy, where only a few seats would be sold at the price that a Spirit or Frontier was selling at. Importantly, we needed to expand the amount of coverage and flying we did between feeder cities and smaller cities on the outskirts of our hubs.
How do we get people from there to let’s say Chicago to fly internationally?
We implemented a new aircraft, it is a small aircraft, a small 50-seater that we truncated to have a really great experience. A very complex thing but the trick was to not lower ourselves to the service levels and the pricing levels of the low-cost folks but to build our brand, build our service, and make people want to make a complete journey on United because they enjoy the service, they enjoy the quality, and they enjoy the freedom along with the flexibility that we have.
The smaller 50-seater aircraft you referred to is the Bombardier CRJ-550.
Yes, the 550.
How did United Airlines navigate risks and Wall Street pressure as it phased out small regional aircraft and replaced them with mainline or modified regional aircraft on select routes to smaller business markets?
I think one of the things you learn in business is that there are always going to be a lot of folks that have viewpoints and opinions, some learned and some not so much. There is clearly conventional wisdom out there that has been historically correct in the industry. Probably the biggest one was capacity kills price.
You’ve always had that adage and so, therefore, we were struggling by maintaining our capacity at a fairly low rate so it would not upset the pricing angle. We were conforming to this broader industry model, which was not the right thing for us.
For United and its global footprint and its network in the United States, the key thing that we figured out over time, and everybody knew it was just a difficult puzzle to solve, but in order to be the company that we can be and be the airline that we can be, we needed to fly. We needed to fly a lot more and we needed to not lose customers.
So, the decision to move away from the small, low-cost aircraft to the bigger aircraft was to generate that business travel. What we had to do is over time prove that. We announced our growth plan in January of 2018 and our stock dropped when we were talking about doing more flying.
Even though we talked about our growth from a flying perspective with bookends of profitability targets, people of course in the street will believe and say, ‘Oh, we know they’re going to grow because that’s easy to do and they can promise all they want on the profitability but we just don’t know how they’re going to make it.’
I was on TV and I think I said something to the effect of, when they said, “You’re stock’s going down,” I responded ‘Isn’t that a great buying opportunity?’ By November, our stock had risen dramatically and we were beginning to show that indeed the extra flying with the extra business customers with all the added aspects on the revenue side was proving out.
We were proving against conventional wisdom that growth for United did make sense. There is no way of avoiding the initial concerns people have, I have a concept of that says proof not promise. So, you have to prove it and you have to endure and have conviction that the work you have done to make the decision beforehand is going to represent what you do and accomplish.
What steps did you take to lay a framework for the continued incorporation of sustainable operating practices at United Airlines?
Well, it was evident to some and not to all, and it still continues to be the case today that the concept of our planet and sustainability is still questioned as to whether it is an issue or not. I have actually grown weary of trying to battle, if someone feels strongly one way, especially if nothing is going on, I kind of let that be just because I don’t have the resources to convince people otherwise necessarily.
I do know that asking yourself the question of whether you think there is something going on with the climate or not. If you think there is something going on, you do something about it. We can all do something about it. The next big question is will you do something about it?
I think back to the ongoing culture and togetherness and family orientation and being able to get everybody’s viewpoints inside of United. As we pose that question, I think people begin to fundamentally say we should do something different and more because we do burn a lot of fossil fuel. There is going to be a time and place where something is going to happen and should we not be moving ahead?
So, I sold this concept early on, we were the first airline to say we were going to reduce our emissions by 50% at the time. Of course, that’s grown now to much better numbers. By asking those questions of will you do something about it, we did.
So, sustainable fuel, we had the first flights with waste to energy or algae to energy sort of examples. We were the first, through a little bit of communication with fellow CEOs from the industry, to say forget the green/tree-hugging concerns that people sometimes have but imagine your most volatile profit and loss (P&L) item, fuel, through something like sustainable aviation become a more constant price point.
Our equities and our value trade closely with fuel. Fuel goes up, our stock goes down, and vice versa.
So, I sold it less as a sustainable thing and more from a P&L business aspect where people could say it makes a little more sense. I think those are the practices we set in place. Now, United is by far one of the world’s leaders regardless of industry about how to actually, the concept of will you do something about it, I think it has been proven that they are doing lots about it.
In the age of social media, what key communication insights do airline industry leaders need to keep in mind as they navigate a fast-paced public relations environment?
Gosh, you know it is changing so rapidly and unfortunately, your readers will remember the dragging incident of one of United’s customers and the absolute social media debacle that it became, and rightly so, because of the way I handled it at the time.
I think everyone has learned that social media is real, it has an impact, it causes brand reputation issues, and all that. Everybody has learned to deal with it.
Now, the difficult question is what do you act upon? What do you speak about? What do you take a stand on?
That’s become a little sport because we’ve seen plenty of history of people that say something and then realize it’s not what they meant to say or didn’t have depth behind it or their customers reacted in a different way. So, I think, when people seek advice, I always say, ‘Listen, first of all, silence can be deafening.’
Staying quiet on social issues and matters is not an option.
Choosing which ones make sense, which ones apply to you, and which ones you have viewpoints on as a company, I think is more important. So, being wise in how you work, always being prepared, with CEOs in particular as you’re always in the press and there’s always somebody in a studio who’s going to ask you a question about something that you really don’t have a lot of depth or background in or doesn’t apply to your business but nevertheless, you’ll be asked, and how you answer that is critical.
You always need to be prepared, understand the impact of social media and how widely it travels. We learned that lesson the hard way.
More importantly, use social media as an engagement tool for your customers. There are a lot of fun things from Instagram to TikTok to many more things that are going to be coming out. It is how this new generation is engaging and it’s important to keep your brand and your values in front of those.
A powerful tool, very useful, very damaging if you don’t do it wisely, and always be prepared because it’s also a place where you can get caught very quickly and go down into a tailspin.
In your opinion, what takeaways can industry leaders gather from your experience at United Airlines to keep employees and customers at the forefront of airline operations?
I think the advice that I gave up on my exit from the United family was, “These folks have been through a lot, they have been through ups and downs, and we’re now back in the forefront in a good way. We can never let them get back into that disenchanted, disengaged, disenfranchised mold because we may not be able to bring them back a third or fourth time, whatever the case may be.”
Staying close to who they are, knowing that they do the work, as you seek to grow, as you seek to do all those things, they can really make that happen if they’re with you so include them for sure. It is probably the biggest thing I would tell. Probably, because of the events we went through at United, I think the whole commercial aviation industry has really embraced and adopted the whole customer-centricity.
So, you’re seeing the bigs serving America, Delta, American, and of course, United really make efforts to provide a better product for everyone. It’s become a differentiator. It’s not just getting people there on time. I hope that continues and then really broader long-term, the industry has not gone through a much broader technological transformation.
We can never let them get back into that disenchanted, disengaged, disenfranchised mold because we may not be able to bring them back a third or fourth time.Oscar Munoz
We have more fuel-efficient engines, more streamlined aircraft like the Dreamliner but it’s still kind of the same-same. What you see on the horizon increasingly, you have things like supersonic with Boom and the Overture brand that they’re building where we’re going to have that back in a sustainable way. You’re going to bring it back safely with FAA approval, it’s going to be a better product than the Concorde was and of course a safer one.
Then you have this really crazy flying car concept or eVTOL, vertical take-off and landing aircraft. I’m a big part of Archer, they’re building what is the essence of an air taxi. Let’s say a shuttle from Chicago to O’Hare, which is only 19 miles, can take you 30 minutes or two hours depending on traffic. What if you had a shuttle-like taxi service that could get you there, very consistently, in ten minutes or less? It is also sustainable.
So there’s a bright new world of things being developed and implemented out there that are going to be really exciting and keep people really engaged. Again, we want to travel, to see different places. All of these new developments are really exciting and will hopefully be on the market very soon.
Ultimately, where do you see the greatest challenges and opportunities for growth in the 21st-century airline industry?
The challenges include the fact that we are so human and we still want to feel like we care about each other, and the technology is bringing in so many great things. Our app, the United app is amazing and I never really interact with anyone if I don’t have to.
The challenge some of the time is how to make sure we keep the human aspect involved because I think inherently the concept of flying is a human endeavor.
One big social question that comes up is the fact that we have the ability to fly aircraft autonomously. The question is from a social acceptance, would you get on a flight that didn’t have a pair of human pilots? Some people say, “Yeah, absolutely I would do that!”
I don’t know what the answer is across the board but I don’t think we’re quite ready for that.
So, that continues to be a challenge because technology is becoming increasingly available, and how we accept that. The opportunities are endless, we talked about Boom and supersonic, we talked about Archer and flying cars, and we talked about the ability to just continue to make this world even smaller.
People, especially after COVID, I think have a general sense that they want to take time to think and reflect and make progress and all of these human values that come into the system as opposed to just getting people from left to right and just going to work.
So, the opportunity is centered around how we create and curate experiences for the flying public that makes them want to fly more and more to fulfill personal desires that, for personal fulfillment, I think, is an important and wonderful thing for all of us in all business, not just aviation.
Excellent, thank you, Mr. Munoz, for sharing your time and insights with Airways.
Featured image: Former United Airlines CEO Oscar Munoz. Photo: Fortier Public Relations