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I feel like my life is a journey. Moving at different pace from discovery to revelation to question to puzzlement. It is true, the older we get, the less we know and I don’t think that is from a lack of experience but more awareness about possibilities.

Lately I’ve been on a journey about banking ethics. For most of 2007 I have been troubled by the corporate policies of banks like HSBC, Northern Rock, Bank of Scotland, Halifax, Bank of America, and others. The list is too long to mention so if I have failed to mention you by name, don’t assume you are free and clear here. In fact, just yesterday I heard a new variation of Wachovia, “Walk Over You�. He he he. It is sad, but true.

While it is true that over on The Ethical Banker blog there have been some very good discussions about banking ethics versus societal ethics, I think the clearest explanation of why businesses, of all kinds treat customer poorly is best summarized in this quote.

“Having been worked inside Wachovia and Bank of America, let me share some thoughts. 

First, all banks like to keep their people very busy. Most bank employees have more work than time in the day. Other challenges include shifting budget priorities, changes in business climate, urgent compliance and regulatory issues, merger and acquisition activity, management rotations, new products, new customers, and on and on. All these issues create the tendency for bank employees to become very internally focused. They have bigger problems to solve than whatever you are asking.â€?

If I tuck my intellectual hat away for a minute, the commenter above hit the target dead center. The reason why businesses provide us with crap service is because they place other issues or fires ahead of the exceptional customer service that customers should get. The business of business gets in the way of doing a good job, the right way.

Over the holidays I was impacted by a business failure. I had reservations to fly on MAXjet in February back to the United States from where I am living in England. We’ve been looking forward to this trip and while the customer service had been shaky on MAXjet in the past, I was willing to give them one last try for such a great rate.

When MAXjet first started flying from DC to London the service had been amazing. At that time I was flying back and forth about once a month and got to know the friendly and caring cabin staff and crews. As an all business class airline they made the frequent international trips a pleasure.

I won’t forget getting ready for the plane to back away from the gate at Dulles and I looked out the window and saw the ticket counter staff standing outside on the tarmac, waving to us. Now that’s the kind of service that I remember as a child from the airlines. Top notch.

MAXjet started strong but it wasn’t all that long before cracks began to form and I admit I brushed them under the rug, but I also took the time to bring them to the attention of MAXjet headquarters as well. The best response I ever got was a form letter. Not a good sign.

It wasn’t but about a year latter that MAXjet started canceling flight at the last minute. One long journey I was flying into Stanstead, the MAXjet airport near London and catching a MAXjet flight back to the U.S. I explained to the MAXjet customer service person that they had left me stranded since the next flight was not until the next day. She volunteered that since MAXjet had elected to cancel the flight that they would put me up at the terminal attached hotel and apologized profusely.

When I arrived to check in at the hotel, not only had MAXjet not called them, they had no rooms and I was going to be responsible for the bill. Thankfully for me that night, a quick polite conversation with the manager got things corrected.

I found out from a member of the MAXjet crew staying at the hotel that the reason the flight was cancelled was because the plane was needed for a charter trip to Paris. Really, we are going to bump paying passengers for a charter. That made me start to wonder if the airline really cared about its customers as people or only numbers to push around.

Others I knew where now telling stories of flights getting cancelled. My wife and her friend were on a flight from London to Washington and their flight was cancelled as they sat in the gate lounge. Only a handful of those passengers were put on a New York bound flight and the rest were told there was nothing that MAXjet could do.

When they arrived in New York, after their connecting flight to Washington had departed, they were told there was not much that MAXjet could do even though MAXjet had made the connecting flight arrangements for their D.C. bound passengers on the N.Y. flight. The passengers were put up for the night at a scary hotel outside of the airport while waiting for the next JetBlue flight to D.C.

Soon the flights from London to D.C. were stopped for months while MAXjet expanded its service with new cities like Las Vegas and Los Angeles. There was hope yet that they might get their act together.

So after looking around at fares for the long awaited trip home in February to the U.S. I, now foolishly, booked my flight on MAXjet. At the beginning of December I got a little concerned as a newspaper story mentioned that MAXjet was suspending some of its flight training. Obviously that raised some red flags but almost immediately the email below was sent to former MAXjet passengers.

December 11, 2007
 
Bill Stockbridge
CEO and President
MAXjet Airways, Inc.
45025 Aviation Drive , 4th Floor
Dulles, VA 20166
 
Dear Friend of MAXjet:
 
Recently, you may have heard —incorrectly—that MAXjet is canceling flights due to financial issues.  Please be assured that we have not cancelled and are not canceling any MAXjet flights.  MAXjet is stronger than ever, with 34 non-stop flights per week between London and the US (New York, Las Vegas and Los Angeles).
 
We have completed 100% of our scheduled flights and have an on-time performance record of 82% for November and December to date.  This is a fantastic record for an international airline.  I am confident we will continue to improve on this as we head into 2008. 
 
We take great pride in knowing that we have created a great Business Class product at an incredible value.  Customers have responded to our product and the new category we invented.  And we continue to receive many awards for our all-business-class product from such prestigious publications as Travel + Leisure and Zagat’s.
 
In addition, we are continuing to expand our service.  We have much in store for you, our customers, in 2008 and I am excited to share the news with you shortly.
 
If you have any questions or concerns, please do not hesitate to contact us.  My team is most happy to answer your questions.  Contact us at 1-888-I-FLY-MAX or email us at info@MAXjet.com.  For more information, please click here for the full press release http://www.MAXjet.com/docs/12_10_07_Business_As_Usual.pdf
 
The MAXjet team and I thank you for your business and look forward to welcoming you onboard.  My colleagues join me in wishing you the happiest of holidays and a prosperous New Year.  With every good wish I remain
 
Sincerely yours,

Bill Stockbridge
CEO and President

After getting that email I felt reassured that everything was on track for my February flights that I had already reserved and paid for.

Now flash forward to Christmas Eve when this little Twitter message crosses my computer screen. “Maxjet Stops Flying, Files Bankruptcy�

Now I’m a fairly tolerant guy but MAXjet, “Fuck You!� I can deal with the hassle of having to dispute my credit card charge and get my money back for my tickets and I can look for another flight but really, going out of business on Christmas Eve?

When MAXjet announced its bankruptcy filing, everything stopped. Planes stopped flying, employees stopped working and passengers in the middle of holiday trips were stranded.

Honestly, that performance by MAXjet is almost criminal. It is a good example of corporate arrogance and stupidity at the very worst.

I think we can all understand how market factors would limit the viability of an airlines during times of tough competition and escalating fuel prices. It is especially easy to see that there are problems when some of the planes are flying at less than half capacity.

But the most unbelievable and grossly negligent action by MAXjet was the press release and email from their CEO which apparently was nothing more than straight out fiction. That reassurance was sent less than two weeks before filing bankruptcy and I sure that the passengers left stranded by the MAXjet bankruptcy had received the email as well and continued on with their trips based on the corporate assurance offered by MAXjet.

Ironically it looks like the MAXjet failure is not only a corporate story of forgetting who your customers are and working hard to provide exceptional service but also a collision of aviation world and the subprime banking stupidity that is floating around lately.

USA Today reported that MAXjet’s failure was due, in part, to the airline’s inability to raise cash. The company attributed that failure to a “substantial deterioration in financial market confidence” driven by concerns about rising fuel and operating costs, “competitive pressure and (a) decline in consumer spending.”

Lenders are a lot more risk adverse today and I’m sure that impacted MAXjet’s ability to raise cash in a risk adverse market.

So when you read stories about subprime mortgage loans and you hear analysts and people like me shouting off about how this is just the tip of the iceberg and how the worst is yet to come for the economy and consumers, this is why.

The scary part of what may happen is the trickle down effect as tighter lending closes doors. Consumer in the U.K. and U.S. have been living on borrowed time for a long time now. Basically consumers have been fueling lifestyles they could not afford on borrowed money from home equity or credit.

Now that those markets are tightening, especially in light of news out of the U.S. about double digit credit card delinquency rates, it is definitely not looking like a smooth ride for consumers on either side of the Atlantic in 2008.

And the bankruptcy of MAXjet only turns the financial pressure tap on for others. Employees are out of jobs on Christmas Eve, suppliers will not get paid, and investors probably won’t see a single penny back of their £50 million ($104 million) raised on the London Stock Exchange in June of this year.

What started as a good idea soon started sliding downhill as the company failed to properly care for its most prized asset, its customers, and then finally sank into the bankruptcy swamp with a disgraceful Christmas Eve flame out ending in a crash and burn. But only a small burn time was seen, especially with the high cost of aviation fuel.

Yet another lesson in how not to run an airline.

From a consumer finance point of view I’m sure glad I paid for my tickets with a credit card instead of a debit card. A quick call to my credit card company got me a form to fill out and immediate provisional credit back into my account.

If I’d used a debit card to pay for those tickets, who knows how long is would take to get that money back into my bank account. Score another immediate victory for the credit card.

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Steve

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