Human Risk also comes in customer form

A strike by British Airways (BA) pilots highlights an often-ignored driver of Human Risk: customers. 

This weekend BA was supposed to be celebrating its 100th birthday. Instead, it hit the headlines for all the wrong reasons.

Like thousands of other BA passengers, I received an unwanted birthday greeting from them, in the form of emails sent late on Friday evening. The emails inform me that flights I am booked on have been cancelled due to a pilots strike taking place in September. Clicking the links provided, told me that my options are to rebook to another flight or get a refund.

Only I couldn’t. Call centre lines were, and remain, jammed and, true to form the BA website crashed. Neither of these things is surprising. After all, if you’re sending out 1000s of emails telling people their plans have been disrupted, then they’re going to want to resolve things as quickly as possible. Particularly flights, which tend not to be booked as stand-alone items; there are usually other logistics involved, most of which require a form of pre-commitment.

Humans don’t like uncertainty. Understandably anxiety turned into frustration as people sought to rescue their travel plans and had to make alternative arrangements on their own. Usually involving expensive last-minute bookings with other airlines.

To make things worse, over the weekend it then transpired that many of the cancellation emails had been sent out in error. 

As I write this, the chaos continues. I still haven’t managed to switch my flights. I’m still not entirely sure whether I really need to, though I think I probably do. Fortunately, I have some flexibility around my trip and the financial firepower to make alternative arrangements should I really need to. But even knowing that, I’m annoyed and frustrated and I’m spending far too much time thinking about it. At least I’m getting inspiration for a Human Risk blog.

But for many other people who aren’t in the same position, and who don’t blog, this will be causing unnecessary anxiety. If you’ve saved up for the trip of a lifetime, you might not be able to afford or fund additional costs; even if a refund is eventually forthcoming.

Putting aside whether the strike is justifiable because I know too little about the way in which pilots are remunerated, this has been a masterclass in Human Risk mismanagement.  

Customers probably aren’t the first people we think of when we consider Human Risk, though they represent a critical aspect of it. Sometimes customers induce it through no fault of the company. But very often it comes from customers reacting to what the company does (or doesn’t) do. What some people call a customer relations disaster is, for me, a crystallisation of Human Risk.

This isn’t just semantics: customer relations disasters, particularly those that come from the actions or inactions of the company, are what happens when risk isn’t properly managed.

Let’s examine this from a Human Risk perspective. What has BA got wrong?

Firstly they’ve adopted a very legalistic approach in dealing with customers. Cancellation emails were sent out late at night at the start of a long weekend in the UK.  Not the best time to deliver bad news to swathes of your customer base.

BA will probably argue that they wanted to let people know as soon as possible. But I suspect the timing has more to do with the fact that under EU rules, airlines have to pay passengers compensation for cancelled flights if they inform them less than 14 days before departure. The first strike is due to take place 16 days after the emails were sent out. So it’s a fair bet they had that on their minds when they hit the send button.

What’s wrong with that, you might say? They’re perfectly entitled to do that.  It makes a lot of commercial sense to avoid paying out compensation if you don’t need to. True. But it’s worth remembering that these EU rules exist for a reason. When flights get cancelled, people are inconvenienced and that usually costs them money. Presumably, the 14-day limit was created to allow the airlines some latitude for unpredictable circumstances and to put a limit on the protection offered. But it’s an arbitrary choice. It’s not as if costs that arise for a cancellation 14 days before a flight, are noticeably higher than for a cancellation 16 days before a flight.

Seeking to avoid paying compensation to passengers complies with the letter of the law and totally ignores the spirit of it. It is basically taking money from customers or their travel insurers (who will recoup it through future increases in policy prices).

However, in their haste to beat the regulatory deadline, BA sent emails in error to people who weren’t impacted. Even accepting the logic that mitigating the “risk” of having to pay compensation, they’ve unleashed another one in disrupting far more customers than was actually necessary to do so.  Perhaps more Haste and less Speed(bird).

We all want to arbitrage rules to our own advantage. But when those rules are there to protect people, then seeking that arbitrage comes with risk attached. By saving the money they’d have to spend on compensation, they’re risking the much less tangible cost of customer dissatisfaction. Compensation is a one-off; an irritated customer can be for life.  Often the act of arbitrage can bring regulatory scrutiny of its own; the UK’s Civil Aviation Authority is now investigating BA.

I’ve recently published the 5 Rules of Human Risk: the final one of which is “just because you can, doesn’t mean you should”.  I’d argue that BA could have played this much better, by being willing to accept the true nature of the inconvenience they’ve caused.  Which brings me to the second aspect I think they’ve got wrong; the tone they’ve adopted.

It is equally legalistic. Read the cancellation information and you’re left with the impression that BA cares more about protecting its legal position than ensuring its customers get to their destinations. I’m told I can change flights, but I might have to pay additional charges. That may technically be true, but pointing that out to me doesn’t change the legality of my contract with them.  All it serves to do is to irritate me,  meaning that when I do finally get to speak to a customer services operative, I’m more likely to do so on the presumption that I’m going to need to fight to get what I want. 

The manner in which BA is presenting the cause for the cancellations also seeks to be missing a trick. They’re firmly blaming BALPA, the Pilot Union. Although this is technically correct, it smacks of abdication of any ownership on the part of the airline. I don’t book my tickets with BALPA, I book them with BA who ultimately are accountable to me for the service they either are or are not delivering. If I order a piece of furniture and it breaks because a supplier has failed to deliver the right screws to the manufacturer or a courier has failed to get it to me on time, then I blame the manufacturer, not the supplier or the courier. 

The rights and wrongs of the strike are of little interest to passengers; all we care about is the fact we can’t fly when we thought we were going to.

It isn’t just the “don’t blame us, blame the union” narrative that misfires here. BA’s reaction also conveniently ignores the fact that most people don’t fly somewhere just for the pleasure of being on a plane. Even those that fly at the front, have a reason for visiting their destination. BA knows this. Take a look at this advertisement from earlier this year.  

Flights are sold as adventures. Yet when it all goes wrong, BA reverts to ignoring the emotional reason for flying that they’ve sold tickets on and focuses on the utility. Offering passengers flights on a different day is economically comparable. But it’s not the same thing from a human perspective.

If I’m flying on a Friday to get to a wedding on a Saturday, then offering me a flight the following Monday is not what I need. Airlines know this because they themselves distinguish between flights in their pricing models which charge more for peak flights than off-peak ones. If I turn up late for a flight, then switching to another flight is down to the discretion of the airline. At this point, they make a clear distinction between the flight I’m booked on and any other flights. No fungibility there. Yet this distinction disappears the moment it suits them when magically, flights three days after I paid to fly, are suddenly treated as being of the same value as the one I’d originally booked.

I understand the business rationale for the approach they’ve adopted.  Playing hardball with pilots is logical. As is trying to save money and taking a narrow view of what your legal obligations are when you run on relatively thin margins.

But there’s a hidden Human Risk cost in taking that approach; the huge disruption and emotional distress this causes to customers.  It’s not just about the money, though that matters.  If you want to sell flights as trips to dream destinations, then you can’t revert to behaving like the provider of a utility.

What BA should be doing is looking at this from a human perspective. If you can’t fly someone to their destination when they’ve paid you to do so, then do everything you can to put them in the position they would have been in, had you been able to. That might involve paying for them to fly with other airlines or recompensing them for reasonable expenses incurred in changing their plans. I’m not saying write blank cheques and yes some people will try to take advantage of the situation. But many more will just want to go on their holiday when they’ve planned to and have negotiated with their employers to do.

The sad thing is that it’ll probably end up costing BA much more in lost revenues as customers who have been stung by this, take their business elsewhere. Because the pilots aren’t just going to go quietly. They will continue to press their case for more money, knowing that this turn of events will be costing BA. Until industrial relations improve, passengers considering flying BA will know that it comes with a serious risk of flights being cancelled. And if that happens, they’ll be up against a bureaucratic response. That’s a risk that many won’t want or be able to afford to take.  

I’m well aware that things aren’t always as simple as they might seem from the outside.  Perhaps the email wasn’t sent to avoid the EU deadline and perhaps there are good reasons for what they’ve done that I’m not aware of.  As BeSci guru Daniel Kahneman once wrote “What You See Is All There Is”; human perception is based around what we see. That’s not necessarily the whole story. But that’s all that matters. Customer reaction won’t be induced by the facts or a fair assessment, it’ll be induced by peoples feelings towards the situation.  Perception is everything.

The UK’s Financial Conduct Authority, one of the financial services regulators, upholds a principle known as “Treating Customers Fairly” (TCF) which it requires regulated Firms to comply with. As the name implies, this is about doing the right thing for your customers. If BA were regulated under this principle, there is no doubt in my mind that the regulator would conclude they had breached TCF.

The irony here is that when I normally cite the airline industry in blogs about Human Risk, then I’m praising them for having very advanced approaches to risk management in the air.  Yet that seems to fall apart when it comes to managing Human Risk around customers on the ground.

BA’s slogan is “To Fly. To Serve”.  Right now they’re doing neither of those things and in not doing them, they’re inducing masses of Human Risk.

If you liked this, then do subscribe to my Human Risk newsletter. Latest edition (with links to subscribe) here.

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