Last November, Qantas was thrust into the spotlight for an emergency landing seemingly caused by one of its Rolls-Royce engines. Recently, the airline has faced a few more incidents involving Rolls-Royce engines.
J.D.: What is the media/public sentiment in Australia right now — any scrutiny pointed at the airline or the engine manufacturer? Any notable public anger or fear of flying?
Jaques: Every time there is another problem for Qantas, the list of previous problems gets revisited and the same TV clips get rerun over and again. However it doesn’t seem to have any substantial impact on public confidence in Australia, and the preliminary safety report makes it clear that the incident off Singapore last November was entirely the fault of Rolls-Royce. However, all these events play into the industrial situation, where Qantas engineers are campaigning against offshore maintenance, and this keeps the maintenance/safety issue in the headlines. A threatened engineers strike was called off only last week and there is now a fresh dispute involving pilots. However, the public seem to be much more worried about whether their flight will be cancelled than with union allegations about the standard of offshore maintenance (or for that matter, how much pilots get paid).
J.D.: In the aftermath of last November’s situation, Rolls-Royce remained mostly silent and the Qantas CEO seemed to be frustrated by the engine-maker’s handling of the situation. Any similarities to these current incidents?
Jaques: Qantas under its present CEO is extremely proactive in its media positioning, and the CEO himself take a very high profile position and does not shy away from the camera. It is true that the CEO was critical of Rolls-Royce, but it has to be recognized that there is a massive pending law suit against Rolls-Royce and the Qantas CEO is hardly a disinterested party.
Jaques: I counsel many B-to-B clients and often tell them that their reputation is important – that they can lose relationships, sales and contracts if they don’t protect reputations. However, it’s really difficult to find clear-cut examples of this. My hunch is that Rolls-Royce may lose reputation for a while…but really may not lose too much business or valuation. Their shares took a hit for a while. But it raises the very interesting question of the impact of reputation for a product which is extremely high value and purchased only by massive corporations such as airlines, often as proxies for governments. There is no doubt that major aircraft orders (and possibly aircraft engine orders too) are politically sensitive decisions which can become matters of foreign policy and national controversy. The general public probably never knows what influences these decisions, but my guess is that reputation may in fact be less important than money and politics. I suspect that Rolls-Royce is far more worried about its reputation with a relatively small group of select stakeholders rather than with the media, and that their efforts right now are concentrated on those critical stakeholders rather than trying to respond to some fairly transient headlines. Assuming that is what they are doing behind the scenes, it is probably the right decision for them – even if it doesn’t suit reporters who think corporations are obligated to answer whenever the media have a question.
I agree with Tony’s assertion that there aren’t enough high-profile b-to-b crisis management cases that point to clear solutions on “to comment or not to comment.” That said, it just makes simple business sense for good companies to communicate and put context on how they are addressing bad events. Whether that communication is done privately or publicly depends on too many factors to list here.
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