For the past month and a half United Airlines (Stock Quote: UAUA) has endured an unmitigated, ongoing public relations disaster with a country-western soundtrack.

Here’s the back story.

Last year Canadian musician Dave Carroll was on a United flight en-route to a gig with his band when he spotted baggage handlers tossing guitar cases around during a stop-over in Chicago. He told some United staffers but says they were indifferent. When he arrived at his destination his fears were confirmed: his $3,500 Taylor guitar was broken.

For the following nine months Carroll attempted to navigate what turned out to be an utterly pointless claims process. In his words, “I had been fighting a losing battle all this time and that fighting over this at all was a waste of time. The system is designed to frustrate affected customers into giving up their claims and United is very good at it.” (If you want to read a detailed account of the saga from Carroll’s perspective, it’s on his Web site.)

What’s a Musician to Do?

Carroll decided to do the only thing he really could. He pledged to himself and to United that he would write three songs about his experience, make videos for each, and release them all on YouTube (the second song came out this week).

The first song, called “United Breaks Guitars,” was posted to YouTube on July 6 and practically became an overnight sensation. The video was linked to and embedded far and wide and to date has more than five million views on YouTube alone.

One reporter suggested that the initial video may have cost United tens of millions of dollars. “Within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines’ stock price to suffer a mid-flight stall, and it plunged by 10%, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars,” reported Chris Ayres of The Times of London.

Carroll did eventually get himself a replacement guitar. The president of Taylor Guitars got in touch with the singer/songwriter, gave him a couple of guitars (as bad as the PR was for United, it was excellent for Taylor whose guitars are generally held in very high regard anyway) and even had him out to the factory for a tour.

United Responds

In an effort to put a positive spin on things, United spokeswoman Robin Urbanski said that the situation provided the airline “with a unique learning opportunity that we would like to use for training purposes to ensure all customers receive better service from us." She would not, however, comment on the fates of any of the United employees involved in the guitar incident, saying it’s against company policy.

Soon thereafter the release of the first song Carroll confirmed, in another YouTube video, that United had contacted him and offered to make amends (Carroll spent $1,200 fixing his guitar, but he said it never really sounded the same again). Too little too late. Carroll declined the settlement offer and instead suggested that United donate whatever money they were going to give to him to a charity of their choice. Urbanksi says that she has since spoken to Carroll a number of times, adding, “I now consider him my BFF.”

United agreed to make a donation (they also said they amended their complaint escalation process to prevent things like this from happening again), but some news organizations questioned the airline’s motive’s here as well.

“WalletPop has learned that United gave $3,000 to the Thelonius Monk Institute of Jazz, an educational organization that includes, among its board of trustees, Sonya Jackson -- United's managing director of corporate social investment. (Want to see for yourself? Click here. United's logo also appears on the bottom of the organization's welcome page.)”

The insinuation that United was giving to itself is “ridiculous,” Urbanski says. “A member of the company serves on the board of every major charity we give to.”

On Aug. 17, Mr. Carroll released the second song in the trilogy, “United Breaks Guitars Song 2." Currently there are some 66,000 views.

Is Perception Reality?

Whether or not this song, or the final installment, is a viral sensation along the lines of the first one, the damage done to United’s brand is undeniable. People identified with the message in the music and Carroll was elevated to the status of a kind of a folk hero for calling out a popular boogeyman: an airline. It’s entirely possible, however, that United is shouldering the burden for the entire industry.

According to a recent report by J.D. Power and Associates, “overall customer satisfaction with airlines in 2009 has declined for a third consecutive year to a four-year low. The decline is driven by decreased passenger satisfaction with in-flight services, flight crew and costs and fees, compared with 2008.”

We asked Urbanski why she thought the video was such a sensation. “It was a creative and well-produced video,” she said. But there are plenty of creative, well produced videos out there and most of them don’t get five million views. Why did this one?

“It’s a creative and well-produced video,” she repeated.

Urbanski did say that she thought the video, “struck a chord,” also noting that she thinks, “there’s a misperception out there. Ninety-nine percent of customer bags are delivered without incident.”

We asked her what she thought about the idea that the first video was popular not because viewers had experienced similar problems with bags or musical instruments, but because of a general perception that airlines lack good customer service.

“Perception isn’t always reality,” she said, “but we’re always striving to do better.”

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