The high cost of inadequate crisis management
A quick and adequate response was needed when the temperature of the damaged nuclear reactors inside the stricken Fukushima Daiichi nuclear power plant reached over 1,000°C following the tsunami in Japan on 11 March 2011. Water was needed to cool down the reactors and as a last resort, one option remained open: shipping in equipment and pumping in seawater. But Tokyo Electric Power Company (Tepco), which operates Daiichi, refused to take this option. A nuclear power plant is worth approximately US$10 billion and the use of seawater would have totally destroyed it. Blinded by concerns about potential financial losses, Tepco hesitated, resulting in the overheating of the reactor and uncontrollable consequences. The cost of handling the accident and the accident-induced follow-up actions has amounted to billions of US dollars. By the time Tepco officials realized the true cost of their decisions, it was too late.
In recent years, the airline industry has devised ideas to maximize profits, for example, by charging passengers for extra legroom, reserving seats in advance, charging for inflight food, checking luggage on domestic flights as well as other services once included in a basic ticket price. These new ideas have led to some unpleasant experiences for passengers, but they pale in comparison to United Airlines' "violent removal" incident on 9 April 2017. That night, four UA crew memebers arrived at the boarding gate after all the passengers had been seated for a flight leaving from Chicago. Four seated passengers were asked to leave the flight to make room for the UA employees. When one passenger, Vietnamese by birth, refused to comply with the request, the crew summoned airport security to drag the passenger off the plane. The ethic Vietnamese passgenger lost two front teeth in the struggle and was blooded from his injuries.
Airline overbooking is becoming the norm. The usual practice is for airlines to offer a reward to passengers who have to forfeit their seats, starting from US$200 and going up. The hope is that passengers will agree to relinquish their seats with the lure of cash or a voucher. In the recent United Airlines case, it was reported that United went as high as US$800 but no further. In order to get the seat, officials chose to haul the passenger off the plane rather than offer further incentives. The poor service and miserliness have damaged United's corporate image. In the end, the airline had to pay a hefty price to appease the passenger, which was a far worse and regrettable consequence.
Both Tepco and United have suffered at their own hands for inadequately handling crisis situations, in both cases by failing to take a careful look at the overall financial picture.
22 May, 2017