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Bad publicity gives airlines a turbulent flight

(Image Courtesy: Wikimedia Commons)

Stock prices often resonate with consumer sentiments towards a company. Firms that bring out products or services that greatly satisfy consumers often tend to display decent stock performance. This is probably one of the driving reasons for the slow growth being witnessed in the airline industry, which has recently been notorious for poor services.

If you consider the stock performance for the past one year, only Delta Airlines (DAL) managed to take off with a passable 18.8% growth. While Southwest Airlines (LUV) barely managed double-digit growth, United Airlines (UAL) saw a bare 3.8% increase in a year marred by bad publicity. Alaska Air (ALK) was the worst performer losing as much as 30% of its value.

While numerous factors contributed to this sluggish display, bad publicity also played a major role. United Airlines was at the forefront, with the latest example to its poor service coming a day ago when a Kansas-bound dog was reportedly sent to Japan.

Only hours earlier, another pet dog died after it was stored in an overhead bin. United’s stock fell as much as 2.6% at end of market hours on that day. The incident also prompted actress Olivia Munn to publicly urge passengers to boycott the airlines. Had it been Kylie Jenner, stocks might have tumbled further!

Earlier in April last year, the incident of a doctor being dragged out of a United aircraft to accommodate airline staff had invited widespread criticism, besides the stock losing another 2.6% over the week. The company went into swift damage control with policy changes, which to an extent, managed to retain passengers as well as profits; but stock growth remained stagnant.

Other airline companies were no less harsh on its passengers either. A New York woman sued Delta after her exotic Savannah kitten suffered a broken hip while being transported via the airline’s cargo service. A New York court however held Delta liable for only $50. Delta faced another lawsuit from a woman who claimed she was sexually harassed by a co-passenger while the flight attendants took no action.

The topic of sexual misconduct brings us to the latest controversy at Alaska Airlines. The airline company is being sued by a female pilot who alleges that her co-pilot drugged and raped her. She has held the airline responsible for his misconduct.  Southwest Airlines was, meanwhile, managed to stay low-profile in regards to passenger incidents and lawsuits last year.

The allegations and lawsuits are not deterring passengers from using the “services” of these companies. Traffic continues to grow and leading aviation firms have raised their outlook for this fiscal year. However, if stocks need to grow more rapidly, the companies need a lot more than good balance sheets. Customer sentiments, at the end of the day, matters!

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