Did Boeing, Southwest, American, and United Make a Brand Blunder?

Boeing and three major U.S. airlines declined to ground the Boeing 737 Max fleets for three full days after the second 737 Max 8 crashed on Sunday in Africa. The plane first released for service in May of 2017 had its first crash in Indonesia in October of 2018, the cause of which is still uncertain. After the latest crash, it took three days for the FAA to ground 737 Max 8 air service taking the decision out of the hands of Boeing and the airlines.

This inaction may cause lasting damage to Boeing, in particular, who should have providing safe travel as task number one. It made an assertion as late as Tuesday that it had “full confidence” in the 737 Max 8 and “based on the information currently available, we do not have any basis to issue new guidance to operators.” It offered no explanation why the plane failed twice, leading one to believe that Boeing values its business and its pride in its engineering over passenger safety. Any airline buying Boeing will discount similar assertions in the future, and some passengers may avoid Boeing flights, especially if there is another crash involving Boeing in the near future (which would be an ultimate disaster). Their bank of trust and goodwill, which can serve them well in difficult times, may have been diminished.

The three airline brands, Southwest, American and United, aspire to be world leaders in air travel but resisted calls to ground their 737 Max fleet when others around the world were doing just that. Southwest noted that their “focus on the safety of our operation is constant and unwavering. Our fleet of Boeing 737 Max 8 aircraft are operating as planned today and we plan to operate those aircraft going forward.” For these three brands to make assertions that their 737 Max fleet is safe without acknowledging the elephant in the room, two planes that have crashed soon after takeoff within five months, sounds patronizing from an airline that does not want the inconvenience and expense that grounding the fleet would entail. Their response is even more inexplicable given that they collectively have only 73 aircraft that are affected in a fleet of around 2,500 planes. Grounding these planes would not be an action catastrophic to their business by any means.

What does that say to a traveler that thought the safe choice was to fly a major U.S. carrier (compared to one that is lesser known), perhaps with a low-price strategy, or one that is from Europe, Asia or Africa? Are Southwest, American or United really the safest choices? Are they the ones to trust because they buy the more reliable planes and spend the money on regular maintenance and the best pilots? You don’t want to have these types of questions coming from consumers if you are one of the leading airlines.

The gold standard for handling a crisis is represented by Tylenol when faced with contaminated packages. First, take responsibility even if it is not your fault (Tylenol pulled all their product off the shelves). Second, find the problem (contaminated packaging) and provide a visible solution (a sealed package). When the product went back on the shelves the loyalty to Tylenol and its maker, Johnson & Johnson, not only was still there, it had sharply increased.

Departing from that model is risky. The Audi 5000 in 1986 was alleged in a “60 Minutes” feature episode to have “sudden acceleration” that caused over 100 accidents and a half dozen deaths. Audi vigorously denied the charge claiming that driver error was the cause of the accidents—drivers pushed the accelerator instead of the brake. The evidence either way was not clear and definitive, so the public was left with a suspicion that Audi might have a problem and thus would just buy something else. Audi provided a fix that prevented the problem (without admitting there was one in the first place). Notably, annual sales of Audi plummeted from 75,000 to 21,000 and for the next decade languished even though Audi, by some objective opinions, was making the best car on the road. Also, the whole Audi line was affected not just the Audi 5000. United should take note: they might believe they are less vulnerable because they only fly the 737 Max 9, but this is hardly the case.

The 737 Max 8 crashes are not like Walmart mistreating employees or Nike exploiting foreign labor. These crashes and how they were handled go to the heart of what these four companies do. It is like Perrier contaminating water. Or Schlitz beer going flat after being on the shelf for six months. It is core to the functional benefits of the brand’s value proposition. It is therefore hard to change the conversation.

Another brand that was affected was that of the FAA who did not act like a regulatory body whose ability to promote safety can be relied on. They noted on Tuesday night that they are taking no action because, “Thus far, our review shows no systemic performance issues and provides no basis to order grounding the aircraft.” Not very reassuring. Basically, they said because we cannot identify the problem, we will let the planes fly.

Still another brand affected was that of the United States. The reputation of a country is largely created by that of its visible firms and institutions. Korea is largely represented by Hyundai, Samsung and other firms often far more than the Korean government and its programs. In this case the unwillingness of these four companies to act aggressively in the face of a safety concern and the slowness of the FAA to respond, does not support or enhance the image of the “leader of the free world.”