When leadership fails

It is the little things that matter. As organizations focus on the big picture, many lose sight of the essence of being in business

As organizations focus on the big picture, many lose sight of the essence of being in business, which is to maintain and grow a loyal clientele who help to support the franchise. That often means being mindful of the little details, which can make a huge difference.

CX 845 was due to depart Terminal 8 at New York’s John F Kennedy Airport as usual on the 3rd of August at 1.35am. At the Admirals Club on Level 4, a lounge that Cathay Pacific (CX) shares with American Airlines, the tannoy blared at 12.15am informing CX passengers to start making their way to Gate 47 for the 15.15 hours flight to Hong Kong.

Bleary-eyed, passengers that sauntered to the gate 10 minutes away were soon jolted out of their stupor by scenes straight out of the start of a Black Friday sale. As passengers crowd around the CX counter, hushed murmurs turned into loud voices. “I am travelling with my family; I have eight checked-in luggage including my golf bag. You expect me to take them all out?” shouted one. “I have a connecting flight to Beijing for business meetings,” another uttered. Meanwhile, a mother with his young son sleeping on her lap gesticulated: “I am going to Cebu and I am going to miss my connecting flight.”

The source of the angst was the decision by the airport authority to shut down arrivals and departures following a tornado warning issued by the National Weather Service (NWS) at around 10.20pm for Queens, the Bronx and Nassau County. The arriving CX 845 plane from Hong Kong, passengers were told, had to be diverted to Newark airport 36 miles away in New Jersey.

If Cathay Pacific ever needed to simulate and test the resilience of its crisis management, this was it. Except, of course, this was no trial run. And on several counts, the airline and its staff were ill-prepared and unable to pacify passengers who were rightly concerned and upset by this unexpected disruption to their travel.

In a crisis situation, leadership matters the most. Oscar Yiu, the manager on duty at the time for CX and who has been with the airline for 3.5 years, could have fired up his team to go all out to help the stranded passengers who were tired and looking to a good night’s rest on the flight to Hong Kong. After all, it was one in the early morning of Friday.

Instead, CX staff announced to the assembled that not only were there no rooms at the area hotels near the airport, the airline was not going to do anything to help. Passengers, some of whom visited New York for the first time, will have to make their own way to find accommodation and transport back to the city. Each passenger can claim up to US$200 for hotel and transport upon presentation of an official receipt. Imagine the scene in the next hours. “It turned quite ugly,” said one passenger. “The manager was nowhere to be found,” exclaimed another.

The chaos at JFK adds to the woes of the airline as it battles to right size its operation. Cathay Pacific reported back-to-back losses of HK$1.25 billion (US$160 million) last year and HK$575 million in 2016 as a result of intense competition from Chinese and budget carriers and a wrong-way fuel hedge costing the airline US$800 million in 2017.

A report published earlier in the week in the South China Morning Post disclosed that the airline has sent out an internal memo to employees based outside Hong Kong a week ago. According to the source, the company plans to slash overseas jobs as part of an ongoing restructuring to return to profitability.

It is not just turning the company around, however, that the airline has to worry about. It may have to dig deeper to uncover and fix underlying problems in procedure that could damage its reputation especially with its Marco Polo passengers. The CX845 debacle is a glaring example.

Lapses included not only failing to inform passengers early about the tornado warning issued as they were being checked in, staff also scrambled at the gate at first confirming a new departure time of 4pm only to have it corrected a few moments later to 11.30pm Friday night. “It was a mess,” exclaimed one passenger from South Africa. “Some people were sleeping at the airport because they assumed the flight was leaving at 4am.”

An irate Marco Polo Diamond member who was flying first class on CX845 complained that the airline was required to provide stranded passengers hotel, food and transportation. “They gave us nothing. It is 2am and they tell us to pick up our bags and go home. There are international rules that when you are more than five hours delayed, the airline has to arrange accommodation, pay for food and transport.”

Another passenger shared a similar previous experience he had with Qantas, a rival airline. “The flight was cancelled due to something technical. They kept us on the plane. By the time we got off the plane, buses were ready to take the first, business and economy passengers to hotels in the city.”

Asking passengers to fend for themselves in the early hours of that morning with a promise to reimburse US$200 also did not make sense, another passenger related. Either the airline finds hotel and transport at a cost of US$200 on behalf of passengers or accepts the cost of passengers having to find their own way, he argued. In the wee hours of that Friday morning, when hotels around JFK airport were fully booked, this was the better and perhaps the only option.

What also ticked off some was that CX staff were seen huddled earlier in the evening, presumably right after the NWS announcement came out, with check-in staff vacating their counters to meet with the manager. One staff admitted the following day that the gathering was unusual, and it was to brief them about NWS’ tornado warning. But not a word was mentioned to passengers who were being checked in subsequently.

As passengers on the Aug 3 flight CX845 eventually made their way to Hong Kong and elsewhere, some forced to stay at the airport to take a chance to catch the earliest flight out of New York, many were surprised at how inadequately prepared staff were in dealing with a tough situation. One passenger who asked to see the manager on duty the previous night was told repeatedly that he was “too busy” to come out.

For airlines such as CX, customer loyalty is paramount. In competitive industries such as in aviation where customers are spoilt for choice, it can mean a world of difference not just to sustaining the organization’s bottom line but also in being seen as a leader of best practice in governance. “It is a people problem,” believed the CX diamond member. “At 2am, everyone (at CX) just wanted to go home saying, ‘here is your suitcase, go home’.” It also may have to do with the airline’s ongoing restructuring as cost-cutting and job security weigh wearily on the management and staff.

But it is these moments, despite the background corporate noise, that the attention to the small details matter the most in the company’s quest to turn things around. The right approach to assuage customers’ concerns and a genuine desire to help mitigate a rather unfortunate situation including facing the passengers’ ire would have been greatly appreciated in the end. If handled well, such a crisis could have been an opportunity to showcase the values that a company believes in thereby protecting its brand, strengthening its long-term success and keeping customers loyal.

How are companies working to improve their engagement with customers? The Asset ESG Forum is keen to hear your views. Send your thoughts to editors@theasset.com. The Asset conducts an annual survey of the Best in ESG in The Asset Corporate Awards, if you are interested to find out more, please click here.

Date

6 Aug 2018

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