It is a formidable -- indeed, well nigh impossible -- task to try to get anybody to feel sympathy for Richard J. Ferris, the 55-year-old executive who got the ax last summer as chairman of United Air Lines following a series of megabucks business blunders. But in fact, I feel some sympathy for Richard J. Ferris.
Whatever else you might say about Ferris and his tenure at the airline company he renamed "Allegis Corp." -- arguably the ugliest name anybody ever spent millions of dollars to come up with -- you have to admit that he had one extremely powerful idea: the notion of building a "fully integrated travel company," providing a business traveler with one-stop shopping for air travel, car rental and lodging.
This concept would have been -- or could still be -- a terrific boon to the traveling public if somebody could make it work. The saddest thing about the Ferris fiasco is that he was never really able to put this great idea into practice. For that failure, he lost his job. Doesn't that evoke your sympathy?
All right, it's true that Ferris will probably manage to escape the poorhouse even after his plunge into unemployment. He walked away from the disaster he presided over at United with a platinum parachute: United will reportedly pay him something like $575,000 annually until 1992 in return for not working at United. United's board of directors voted Ferris this sweetheart arrangement in April of this year to induce him to stay with the company. Two months later, the same board fired him.
And now the one thing that's clear from Ferris' tenure is that he had a wonderful idea when he got the notion of building a large corporate conglomerate composed of subsidiaries in various facets of the business of travel. As it happened, the travel conglomerate Ferris put into operation turned out to be a dud, leading to his demise. But done properly, one-stop travel shopping could be the best thing for travelers since carry-on luggage.
When Ferris joined United Air Lines Inc. in the early 1970s, the company was a holding company with one significant holding -- United Air Lines. There were a few other pieces of the corporate pie scattered here and there, including, almost as an afterthought, a relatively unimportant hotel chain called Western International.
As Ferris moved up in the corporate structure, he began to realize an interesting pattern: The business people who constituted his most important customers tended to get off his planes and head en masse to the car rental counter. After driving their rented cars all day, these same folks tended to head to hotels for the night before boarding a United plane home the next day.
It dawned on Ferris that a single company could offer all those business travel services. With little trouble, he sold the idea to his investors and directors. Suddenly, visions of grandeur danced in corporate heads: Economies of scale! Synergy! Cross-marketing! All the hot business buzzwords could be combined in a single corporate structure.
And so Ferris went out and bought himself a car-rental outfit -- Hertz, the biggest car rental company in the world. The corporate name consultants changed Western International to Westin, and Ferris built it into a chain of 61 first-class hotels. For good measure, he bought a foreign hotel chain, Hilton International, with 91 hotels in 43 countries.
Last year, this travel conglomerate flew more than 50 million passengers, rented more than 12 million cars and served tens of millions of room-service breakfasts. In the board room and business schools, this all looked peachy. In fact, the travel conglomerate simply didn't work.
There seem to be two reasons why this grand theory wouldn't fly. One, which is not Ferris' fault, is that it would have taken a while to get the whole thing working right. That is, Ferris' vision was a long-term plan. But in American business today, investors are not willing to wait for long-term benefits. If this quarter's bottom line is weak, heads will roll -- and the devil with the long term. Wall Street was too impatient to wait for Allegis to start clicking.
The other flaw, though, probably is attributable to the managers at Allegis. In all their brilliant building, planning and name-changing, they forgot one fairly crucial element of business success: the customer.
For the traveler who flew United, rented Hertz and slept Westin, the grand design to build a one-stop-shopping travel complex was something you could read about on the business page, but not something, at least in my experience, that you could take advantage of on the road. For example, when I once asked a United flight attendant to change my reservation at Hertz, the response was a long, blank stare. And another time, I called the desk at a Westin and asked if my United flight was leaving on time. The clerk answered, in essence, "How the heck would I know?"
But if it were done properly -- with appropriate computer linkups -- one-stop travel shopping should, it would seem, work amazingly well. For example, while you're on final approach into O'Hare, the flight attendants could pass out the Hertz rental applications and the Westin check-in forms; then, when you step off the plane, somebody would hand you a car key and a room key. At the end of the trip, instead of waiting in long lines to check out of the hotel or turn in your rental car, you could take care of all the paperwork through the Allegis computer on the plane taking you home.
When you check your luggage at a United ticket counter, a real one-stop-shopping travel company would send it on, not just to the next airport, but to your room in the Westin Hotel where you're staying that night. (This is standard practice at Tokyo's Narita Airport, where you pay about $10 to have a company pick up your bags, take them through customs and deliver them to your room.) When you drop off your rental car at a real one-stop-shopping travel company, a single clerk would take the car keys, check your suitcase through to your next stop and assign you a window in no-smoking.
But for all the corporate smoke and mirrors, Allegis never got close to this kind of synergy. There were United check-in desks outside the Hertz office at a few airports, but that seemingly token tribute to team play was the sum total of one-stop shopping. The few other signs of corporate interaction a traveler -- at least this traveler -- could find were not reassuring.
For example, United dropped its in-flight magazine and replaced it with a new publication designed for all elements of the company. The magazine may have been charming for Westin Hotel guests, but it lacked the one thing every airplane passenger turns to in every in-flight magazine: the route map. A harried United flight attendant told me she got even more complaints about the missing map than she got about that awful name, Allegis.
United issued a new ID card to its frequent flyers this spring. If you call the 800 number for "reservations" that is printed on the card, it turns out to be for reservations at Westin Hotels; the folks who answer at that number know nothing about airline schedules. So much for one-stop shopping.
At this juncture, then, it looks as if Richard J. Ferris' dream of a single travel conglomerate will go down in history as a beautiful idea that died aborning. Wall Street has decided that the various pieces of Allegis are worth more as discrete car rental and hotel companies than as parts of a united whole. Ferris' corporate pallbearers are currently engaged in selling off various arms of the complex.
Still, the woeful traveler might properly plead that somebody else give this concept a try. Can anyone doubt that there would be market demand for genuinely integrated travel service? If somebody did it right, the idea would take off like a 727 at full throttle. And then Richard J. Ferris, floating silkily along on his platinum parachute, would be recognized as a corporate visionary -- and would no longer need our sympathy.