News United Airlines is a terrible business

[Dr.D]

They didn't need to do that. They could have simply increased their offer. There was an AA flight; they could have put one of the crew on that. There was a second UX flight, also full, but they could have offered VDB compensation there. But all of these cost money (much less than chartering a plane, of course). It's better for the airlines bottom line to simply use Chicago Aviation Security.

In arriving at your bottom line figure, I think you may have neglected to include the cost of all the adverse publicity they have gotten.

 

[Nugatory]

I am not saying that the situation couldn't have been handled better by United. However, this would have never happened to myself since I would have acted like an adult and complied with the https://www.united.com/web/en-US/content/contract.aspx that are written on the ticket.

Without taking a position on who could have handled it better... it is not clear that Dr. Dao was violating the rules of carriage.

The contract allows United to cancel a reservation and not let you on the plane because they need the seat for someone else. But is the general language about cancelling reservations in section 5, and especially section 5G, intended to allow removing a passenger who has already been boarded and seated in their properly assigned seat? Probably not, because if it were we wouldn't have Section 21 which enumerates the specific reasons for which a boarded and seated passenger may be involuntarily removed, none of which apply in this case. (And to the extent that the contract language is ambiguous, the ambiguity must be resolved against the party who drafted it).
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[Greg Bernhardt]

They didn't need to do that. They could have simply increased their offer.

Agreed. I think it's fairly clear they may have had a right to do what they did according to policy, but that doesn't make it a good business decision. Proper compensation from the beginning and even a much better/quicker apology from the CEO would have nipped this PR disaster in the bud. Sometimes I don't understand how these big shot business minds don't learn these lessons about customer treatment and public relations. Don't they spend millions hiring PR specialists. What the heck was the advice from them? Suddenly video capture, social media and mob mentality is a new thing to them?

 

[FallenApple]

I've heard that they lost around 250 million dollars due to this fiasco. Seriously, what did they think was going to happen?

Dr. Dao is obviously going to emerge rich out of all this. But I feel sorry for the shareholders, some of whom may have their retirement/family funds tied into the company.

 

[FallenApple]

I think that the overbooking is being used incorrectly in this case. My understanding is that the four employees were being transited to the other city in order to serve on a flight departing from there. Transits like that are pretty routine but I haven't heard of that many passengers being removed from a flight before.

As for Dr. Dao, I consider his actions to be extremely childish. Four people were removed from that flight - I wonder why the other three weren't injured? People get bumped from flights all of the time but he chose to fight with four officers while trying to hang on to his seat like a child that doesn't want to give up a toy. His face was injured when the officers had to pull so hard that when he lost his grip on the seat, he got slammed into a seat on the other side of the aisle. His injuries are a result of his own behavior from resisting when it was clear that they weren't going to take no for an answer.

His actions may have been childish, but when there are thousands of flights, eventually someone like this would show up. United should have known this and should have taken extreme caution to not arouse the anger of social media with actions that are generally highly disapproved of by the public.

And also, the CEO's initial tweet was ridiculous. Yes the security's actions were within the company's set procedures but he didn't have to mention that; it just made them look worse. People now believe that its wasn't just the actions of a lone buffoon, but the entire company as a whole.

 

[Borg]

His actions may have been childish, but when there are thousands of flights, eventually someone like this would show up. United should have known this and should have taken extreme caution to not arouse the anger of social media with actions that are generally highly disapproved of by the public.

I find it interesting what social media gets angry about. People can mouth off, forcibly resist and even take a swing at police but if a cop uses any force in return, social media gets upset at the police. It really makes me wonder what it would take for social media to fault the person who won't cooperate and purposely escalates the situation. All this makes me of the situation in Arizona in January when a bystander shot and killed a man who was beating a state trooper on the side of the road. I wonder what the reaction would have been if another cop had shot the assailant instead?

 

[Vanadium 50]

Borg, in this case they weren't police. Yes, two of them are wearing jackets that say "police". They are not allowed to do that. Indeed, according to the Chicago Tribune, Jeff Redding (deputy commissioner of safety and security for the city's Department of Aviation) has said that they are not even supposed to board a plane for a customer service issue. He said "If it is a customer-service related incident, then you don't need to board the plane at all. If there's no threat, there's no imminent threat or no charges being drawn, then you don't need to board the plane."

So we don't have cops. We have people dressed like cops enforcing an airlines unwillingness to pay out an additional $400, even though they are told not to. Real cops are trained to de-escalate the situation. These escalated it almost immediately. Real cops are aghast at their behavior (here's one link).

There was an earlier post on the economics of this. United does around 65,000 VDB's a year. If everyone gets an extra $200, that's $13 million. United has a great deal of incentive to call airport security rather than raise their offer. However, as I mentioned earlier, there is a big difference between a boarding area and a tiny metal tube.

 

[vela]

I think it's fairly clear they may have had a right to do what they did according to policy, but that doesn't make it a good business decision.

I don't think it was clear that they had the right according to their policy to remove the passenger from the plane. In any case, it was certainly a bad decision to remove already seated passengers to make room for employees. I don't like how many in the media keep making the claim that the problem arose because of overbooking. It wasn't overbooking; it was UAL deciding to remove passengers that had already boarded and were in their seats because UAL decided to put its needs before the customers'. I expect that instead of improving its service, UAL will amend its policy to explicitly allow for removal of already seated passengers in cases like this.

 

[gmax137]

All I know is, United has gone onto my "do not patronise unless no other choice" list. I got PO'd at Exxon about 40 years ago and have bought their gasoline three times since then. I know it doesn't matter to them but it does to me.

 

[Astronuc]

Oscar Munoz, CEO of UnitedContinental, announced a new policy regarding crew movements. NPR reported that a new policy '"to make sure crews traveling on our aircraft are booked at least 60 minutes prior to departure." I don't know how that would have worked in Chicago for flight 3411.

http://www.npr.org/sections/thetwo-...es-changes-its-policy-on-displacing-customers

There are three airports within two hours drive (Lexington, Cincinnati and Indianapolis) and one airport within 3 hours (Nashville).

Update:
Forbes - The United Flight Was Not Overbooked, Airline Admits
https://www.forbes.com/sites/christ.../united-flight-not-overbooked-airline-admits/

Washington Post - Here’s what United will do differently after the infamous dragging incident
https://www.washingtonpost.com/news...-infamous-fiasco-involving-dragged-passenger/

No crew member “can displace a customer who has boarded an aircraft,” according to the email, which was sent Friday. Schmerin confirmed the authenticity of the published email.

 

[StatGuy2000]

I think that United (and other airlines) could have saved themselves considerable trouble by allocating a small number of seats (say, 4 seats, the number who were to be "bumped" off the now-infamous flight) for potential crew on each plane, and not have those available for sale. Having these redundancy in seats available would have allowed the required flight crew to be transported to the next airport on a future shift without anyone else being forced off a paid flight, as well as allow for vacancies in case of passengers who need to make last-minute changes.

 

[SW VandeCarr]

I think that United (and other airlines) could have saved themselves considerable trouble by allocating a small number of seats (say, 4 seats, the number who were to be "bumped" off the now-infamous flight) for potential crew on each plane, and not have those available for sale. Having these redundancy in seats available would have allowed the required flight crew to be transported to the next airport on a future shift without anyone else being forced off a paid flight, as well as allow for vacancies in case of passengers who need to make last-minute changes.

Not likely. Commericial airlines generally operate on tight profit margins and high occupancy routes that often run fully booked are their bread and butter. The government subsidizes airlines to serve unprofitable routes, but airlines probably just break even on these. Their incentive is that they feed traffic into hubs.

https://www.transportation.gov/poli...unity-rural-air-service/essential-air-service

 

[StatGuy2000]

Not likely. Commericial airlines generally operate on tight profit margins and high occupancy routes that often run fully booked are their bread and butter. By regulation, they are required to serve unprofitable lower occupancy routes usually using subsidiary or contract airlines.

But I don't see how setting aside a small number of reserve seats for airline staff on planes will change high occupancy routes that are fully booked. After all, these seats are simply taken off of whatever seats that are available. For example, if a plane has a total of 70 seats, and if say, a maximum of 4 seats are taken out, that still leaves 66 seats which can be fully booked. And somehow, I don't see how 2-4 seats that are not made available will really hit the profit margins by that much.

At any rate, if the profit margins are so tight, then the negative PR that United Airlines is facing will hardly help them in seeking ways to boost those margins if there is a flood of passengers seeking other flight alternatives.

 

[SW VandeCarr]

At any rate, if the profit margins are so tight, then the negative PR that United Airlines is facing will hardly help them in seeking ways to boost those margins if there is a flood of passengers seeking other flight alternatives.

Of course bad PR can be disastrous for the bottom line, but this is not something businesses usually plan for. Maybe they should, but I don't know how one does that. In the normal planning, most routes may barely yield a profit 24/7 so the small percentage of the best routes at the best times must yield substantial profits to make profit goals. CEOs are under constant pressure to increase the bottom line year to year.

BTW I edited my previous post re unprofitable routes.

 

[Choppy]

But I don't see how setting aside a small number of reserve seats for airline staff on planes will change high occupancy routes that are fully booked. After all, these seats are simply taken off of whatever seats that are available. For example, if a plane has a total of 70 seats, and if say, a maximum of 4 seats are taken out, that still leaves 66 seats which can be fully booked. And somehow, I don't see how 2-4 seats that are not made available will really hit the profit margins by that much.

Just a guess, but if United were to do this, they would likely need to increase their prices to compensate. If one of their competitors oversold those same seats, then they would be able to offer lower priced seats. Customers sorting their flight options by price would likely show a strong preference for the cheaper seats. Perhaps it could be communicated that there is a lower probability of being bumped with the higher price, but I suspect most people would still go for the cheaper seats. It's not so much the loss of those individual seats, but that would lead to a loss in market share.

And that wouldn't solve the problem completely. It would only make an overbooking or flight bumping scenario less likely.

It seems that it would make a lot more sense to simply increase the compensation when such situations occur.

 

[rootone]

Heh, could implement an auction like system for the always fully booked routes,
Staff seats are always guaranteed, customers pay a price to turn up for the auction but get a refund if they don't end up with a seat.
(and maybe hotel room + free entry to the next auction.)

 

[Vanadium 50]

could have saved themselves considerable trouble by allocating a small number of seats (say, 4 seats

Too expensive. The average seat on that flight is $180, so you're talking $720. United was willing to send in the brute squad so they wouldn't have to shell out compensation that would cost them $200, so they sure won't see $720 as an advantage. At 1.6M flights per year, for a similar cost, this would cost them over a billion dollars, or 25% of their total profit.

 

[SW VandeCarr]

IMO, the best solution is not to overbook at all and not reimburse customers who fail to cancel in time. A reasonable appeals mechanism for reimbursement can be worked out. This will work best if adopted by the entire industry. If seats are needed for employees, voluntary bumping only would be allowed.

 

[StatGuy2000]

IMO, the best solution is not to overbook at all and not reimburse customers who fail to cancel in time. A reasonable appeals mechanism for reimbursement can be worked out. This will work best if adopted by the entire industry. If seats are needed for employees, voluntary bumping only would be allowed.

My understanding is that is what hotels do -- set various conditions on which customers can be reimbursed if they cancel a reservation. For example, in many hotel booking sites (e.g. Priceline, Expedia) there are hotel rooms for a reduced cost under the strict condition of no refunds. Similar rooms would be available with various options for cancelling/reimbursement (typically, cancelling within 24 hours or within an hour's time) but at a higher cost.

I don't see why similar methods can't be adopted throughout the entire industry. After all, my understanding is that airlines don't so much care about full occupancy as much as all available seats that are paid for (after all, an empty seat that is paid for is the same as a filled seat).

 

[StatGuy2000]

Too expensive. The average seat on that flight is $180, so you're talking $720. United was willing to send in the brute squad so they wouldn't have to shell out compensation that would cost them $200, so they sure won't see $720 as an advantage. At 1.6M flights per year, for a similar cost, this would cost them over a billion dollars, or 25% of their total profit.

The irony is that sending in the brute squad will end up costing United far more than the $200 that they would have lost with the compensation.

BTW, I dispute the logic you use to determine the cost to United to following my proposal. You are essentially assuming that those 4 additional seats will have been sold otherwise, but if they are simply not available for sale, there is no additional cost. In essence, revenues will be based on having, say, 66 seats on the plane, which could be thought of as the equivalent of flying a smaller plane (which airlines already do to cut costs). If this is applied throughout the entire industry (not just at United), perhaps mandated by the TSA (assuming that the TSA has the ability to mandate this), then all airlines will forego the same additional revenue, so United will not be in any worse shape than other airlines.

Of course, there could be unintended consequences through this mandate (e.g. overall higher ticket prices). But this would at any rate reduce the probability of overbooking. (I am also in favour of @SW VandeCarr's proposal, which is essentially what the hotel industry does to avoid the situation of overbooking).

 

[vela]

IMO, the best solution is not to overbook at all and not reimburse customers who fail to cancel in time.

But the problem wasn't overbooking. It was United deciding to force people off a flight after they had already boarded. The situation could have easily been avoided if United hadn't decided at the last minute that its employees had to be on that particular flight, or if the airline had simply increased compensation until it found four passengers willing to give up their seats.

The irony is that sending in the brute squad will end up costing United far more than the $200 that they would have lost with the compensation.

Yup, someone at United made a really bad and ultimately costly decision. It was a situation that could have easily been avoided, so your proposal strikes me as an overreaction by imposing an industry-wide requirement because someone at United made a really stupid choice.

 

[SW VandeCarr]

But the problem wasn't overbooking.

I was the first in this thread to point out that the UA case wasn't overbooking (post 3) but the result is the same. Overbooking is selling something you don't have. Should a merchant take money for an item he knows he cannot provide unless others don't claim what they purchased? BTW you didn't quote my post fully (post 48). I addressed the issue of employee seating.

 

[russ_watters]

That's not what happens. Here's how it's supposed to work...

...they have N seats, M passengers with seat assignments, K passengers confirmed but without seat assignments, and L passengers on the standby list. For the flight in question N = 70, M was probably about 60, which would make K around 10, and I don't know what L was. In this case things are straightforward - print up K boarding passes and go.

What's a "supposed to"?

I know there are differences between how a perfect world works and how the real world works -- this thread would not exist if "supopsed to" always matched reality. I also recognize that it is a very complex situation/dance (that overall you understand better than I). My point may not have been explicit enough, but I was trying to point out one critical aspect, which it appears you overlooked as well: you're missing group "S" -- the no-Shows. My point was that the airline doesn't know if a potential "S" is actually an "S" or an "M" until they close the door to the plane.

Or to put it another way: this problem (typically) doesn't happen because they overbook the flight, it happens because they overbook the flight and then not enough people no-Show. In the era of online check-in, when people don't need to get their seet asignments at the ticket counter, the airline doesn't know if a late-running passenger is in the airport or still at home in bed.

My suspicion is that the easy/typical solution is that they bump the guy who is running late involuntarily and give away his ticket even before he's actually missed the plane, but in the past I have seen two people get on a plane with the same seat asignment.

Because this was not an oversold situation, and the pax was actually boarded, this does not fall under Rule 25 (Denial of Boarding), but rather Rule 21 (Refusal of Transport) in the CoC. However, none of the conditions in 21 seem to apply here. It appears that United breached its own CoC.

My interpetation of several clauses of rule 21 is that they are broad and apply here, but at this point the courts will have to sort it out. Either way, it is strange to me that this situation or one like it wouldn't be covered more explicitly by the rules.

 

[vela]

I was the first in this thread to point out that the UA case wasn't overbooking (post 3) but the result is the same. Overbooking is selling something you don't have. Should a merchant take money for an item he knows he cannot provide unless others don't claim what they purchased? BTW you didn't quote my post fully (post 48). I addressed the issue of employee seating.

I don't see why the supposed problem with overbooking needs to be fixed when it wasn't and isn't the problem in the first place. The end result might have been the same, but the difference was the way United violated the reasonable expectation of most travelers. Travelers might not be happy to lose their seat, but they can understand an airline giving away their seat if it thought they were no-shows. They won't have much sympathy for an airline that solves its problems by arbitrarily deciding to kick them off a plane they're already on.

 

[SW VandeCarr]

I don't see why the supposed problem with overbooking needs to be fixed when it wasn't and isn't the problem in the first place. The end result might have been the same, but the difference was the way United violated the reasonable expectation of most travelers. Travelers might not be happy to lose their seat, but they can understand an airline giving away their seat if it thought they were no-shows. They won't have much sympathy for an airline that solves its problems by arbitrarily deciding to kick them off a plane they're already on.

No shows should not be a problem the way I described it. To reserve a seat you pay in advance. If you fail to cancel in time you don't get your money back. Waivers may be granted for certain conditions beyond the customer's control, but they must be reported ASAP. The airlines set what "in time" means , the nature of the waiver and who gets waivers (loyal frequent flyers, etc). There is no need for overbooking. What happened to Dr Dao could have happened whether it was for overbooking, unbooked employee transport or some other reason. I already said if bumping is necessary, it must always be voluntary. Bumping is a major source of irritation or worse for many passengers. Most of it is due to overbooking and can be eliminated IMO. Why did nobody else volunteer for $800 and save Dr Dao from the thugs?

 

[gmax137]

The airlines have reduced ticket prices to the point where they must fill every seat on every flight (or so they would have us believe). That is the real "problem" -- there is no surge capacity on any flight. Back in the day the flights were typically 2/3 full so there was always plenty of seats for the "expected no shows" that actually showed, or the passengers who missed their connection due to delay on their previous leg. All of that wiggle room is gone now (pun intended).

When the majority of passengers were business flyers the higher ticket process were ok (easier to spend the customer's money than your own). In those days few could afford to take their kids to Disney or to visit grandma. But flying was a lot more pleasant.

On Edit -- I wonder about the subject flight, what was the reaction of the passengers to the United employee who took the seat "vacated" by Dr Dao?

 

[Vanadium 50]

I wonder about the subject flight, what was the reaction of the passengers to the United employee who took the seat "vacated" by Dr Dao?

I'm sure they were polite. Very, very polite.

(And technically, it wasn't a United employee. It was Trans-States)

 

[XZ923]

Not to digress, but my opinion on this matter is very simple: confiscate and destroy every camera in every smartphone. I am beyond tired of seeing the daily cause du jour that everyone always gets so spun up about. Dr. Dao should have complied with security, the airline should not have allowed the situation to occur at all. Plenty of blame to go around. I honestly don't care enough one way or the other to form an opinion or pick a side.

Pay the guy's medical bills and an extra few K for his trouble and let that be the end of it.

Here's a truly stunning thought for today's youth: it's possible for a minor event in your life to occur without the need to film it and broadcast it to the world. Turn the damn thing off once in a while!

 

[BillTre]

Personally, I don't like the idea of shutting down a major route of communicating unjust events because they are "tiring" to particular individuals.

Seems to me a more appropriate recommendation would be that those easily "tired" individuals just back off of the web browsers and TV news and luxuriate in their ignorance.

 

[XZ923]

Personally, I don't like the idea of shutting down a major route of communicating unjust events because they are "tiring" to particular individuals.

Seems to me a more appropriate recommendation would be that those easily "tired" individuals just back off of the web browsers and TV news and luxuriate in their ignorance.

Obviously I was being facetious when I said "confiscate and destroy every camera". My overall point stands. If you're so obsessed with "unjust events" maybe you should pay attention to ones that actually have significant impact. How many people were murdered in America the same day this event happened? The same week? How many people died of drug overdoses? How many homeless veterans who fought for this country are sleeping on a park bench because of the incompetent federal government?

In the long run this incident should be meaningless. Dr. Dao will be perfectly fine, the airline will pay restitution, and no one's life will be significantly altered. The only reason you care about it so much is because someone shot a video and the media told you that you need to be upset about it.

Perhaps I should rephrase my previous premise. I'm tired of people getting spun up over minor things just because someone pointed a camera at it and CNN told you how awful it was when there are REAL injustices of much greater magnitude around us all the time. If you want to do something about injustice, unplug from the media long enough to donate time or money to charity.

And for the record, you don't need to film yourself doing it.