Posted on 04/15/2017 8:29:54 PM PDT by SeekAndFind
The fallout for United Airlines from their attempt at “involuntary rescheduling and attitude adjustment” for a doctor on one of their flights continues in the public relations department and other airlines seem to be responding. In terms of the endless What Went Wrong discussion taking place on every cable news network, the biggest question which kept being asked was, why didn’t they offer the passengers more money to leave voluntarily? That turns out to be a somewhat complicated question (more on that below) but the folks at Delta were clearly watching. Less than a week after the incident they’ve announced that if you wind up on one of their overbooked flights you might be getting an offer for significantly more cash to wait for the next plane. (Honolulu Star Advertiser)
Delta is letting employees offer customers almost $10,000 in compensation to give up seats on overbooked flights, hoping to avoid an uproar like the one that erupted at United after a passenger was dragged off a jet.
In an internal memo obtained today by The Associated Press, Delta Air Lines said gate agents can offer up to $2,000, up from a previous maximum of $800, and supervisors can offer up to $9,950, up from $1,350.
United is reviewing its own policies, including incentives for customers, and will announce any actions by April 30, a spokeswoman said. The airline would not disclose its current compensation limit.
That’s a significant step up in compensation and if United had been doing that last week we probably wouldn’t be in the current situation. It’s probably an overstatement to claim that the beaten down passenger will wind up being a majority owner of United, but it’s obviously going to cost them a lot more than jacking up the offer on the table to get someone to voluntarily get off the plane. A three digit number like $800 is nothing to sneeze at, but it’s obviously not enough to get most travelers to budge. By comparison, for the vast majority of workers in the country who make less than $100K per year, a sudden cash infusion of ten grand is a serious incentive.
But can they actually do this? Let’s remember that one of the arguments being put forth this week was that the federal government barred the airline from offering much more money. That was explained in this article from the Harvard Business Review.
But the DOT has adopted a rule that encourages involuntary bumping — which is undoubtedly less popular with flyers than voluntary bumping. The regulation specifies that if a passenger is involuntarily bumped, airlines have to pay a penalty amounting to 200%–400% (depending on the delay length) of the one-way fare that they paid with a maximum cap of $1,350. This provides an incentive for airlines to bump passengers who paid the least amount for their ticket, often the poorest travelers on the plane.
So it’s not so much of a “law” as a “rule” from the Department of Transportation. (Which winds up having the same effect as a law, which is a topic for another day.) But let’s assume they can actually offer these levels of cash to get you off the plane. Will you benefit? Possibly, but let’s not start spending that money just yet. Keep in mind that the airlines would be insane to just announce right off the bat that they were offering ten thousand dollars for four people to take the next flight. They would be flooded with offers and find themselves dealing with even more angry passengers who didn’t get a shot at the sudden windfall. Also, they’d wind up paying much more than they would likely have to. (A poor business model in anyone’s book.) Odds are that they will continue to start the “bidding” at four or five hundred dollars and then bump it up incrementally until someone takes the bait. That will probably come at a level well below $10K and the passengers will effectively be put in a game show environment where they keep waiting for the bid to reach their level of comfort while hoping nobody else takes it first. So you might get something better if it happens to you, but the odds are lower and the payout probably will be as well.
The larger question is if this horribly handled debacle is going to actually make the airlines rethink many of their policies and make things better for passengers. Will they stop overbooking? How about bringing back more leg room and amenities? Don’t get your hopes up. Chris Sagers at the Washington Post repeats the same gloom and doom message I’ve been preaching about this subject for a while now. None of this matters and not much is likely to change in terms of airline service beyond some possibly higher compensation for buying seats back.
The reason is the same for why any of our country’s other oligopolistic powerhouses can treat their fellow Americans with such crass indifference: Shareholders don’t really care about consumer opinion or even a company’s larger public image. They care about profits. If there is no competitor to whom consumers can turn, who really cares what they think?
The 2013 merger of American Airlines and U.S. Airways — the biggest and last in a series of dramatic consolidations that federal regulators did little to stop — left the United States with only four major airlines. The overwhelming weight of empirical evidence shows that wherever fewer carriers compete in individual airline routes, fares go up. No factor can fully explain it except market power.
Chris is right. You have no leverage with Delta, United and the few other remaining domestic air carriers. They’ve been allowed to merge into such a small pool of “competition” that they can pretty much do what they want and they know you’ll still have to come to them the next time you have to get anywhere. I have no doubt that United would have preferred not to go through this humiliating exercise and all of the bad jokes being made about them, but they are still in business to make a profit. Doing things differently in a way which might make air travel less unpleasant for you or prevent you from getting bumped off a flight would detract from their bottom line. Your protests about the horrible service aren’t going to change their profit margins measurably so they have zero incentive to improve.
We now return you to your regularly scheduled packing for your next flight. And there’s probably a fifty-fifty chance it will be on United.
I haven’t flown United for years because I’ve never had a good experience with them and their flight crew is always weirdly hostile. I fly Delta because they treat me better.
As for being bumped, I think this is an industry wide problem and they’ve got to rethink how overbooking (which, to some extent, they have to do to make the flight profitable) is handled.
Capitalism works.
The airlines LOVE selling tickets to us at prices they control. They LOVE SETTING the prices we pay
But, they just are not so keen on Capitalism when it comes to buying tickets from us when they oversell tickets on a flight. If they have to bid $1,000 - $10,000 for volunteers, they will get them.
I know I will take an inconvenience flight for $10,000
It won’t help you much unless you’re the one asked to get off a flight.
I still wonder what would have happened if someone towards the front had stood up while Dr. Dao was being dragged and said he or she would get off instead.
Delta sucks compared to NWA and both are worse than airlines in the 60s/70s.
Agreed. And I want cash, not a voucher.
Delta owns Northwest.
Sunday afternoon you probably have people going home - not leaving home. They have already checked out of their hotel, returned any rental car, wasted hours with TSA, check-in, etc. It would take a larger incentive for these people (who probably have obligations at the other end the next morning) than for one leaving their Chicago area home and can just go home for the night.
Not sure if I have stating this correctly, but it would be a big PITA for one returning home after a weekend in Chicago. The computer should have restricted itself to local zip codes perhaps, for involuntary bumping.
The funny thing is, I wonder how United handled the actual offer to seated passengers. I had heard they asked for volunteers, then offered $400 and a night in a hotel, then $800 and the hotel. If they jumped to their maximum right away, no wonder no one bit right away. They played all their cards before anyone could process it.
If they knew $800 was the upper limit, they might have started at $400 and stretched out the bidding. Maybe going up $10 every minute. I would think four people would jump at $500 just to put an end to the stupid game after ten minutes of it!
It was a merger of “equals”. My acct # comes from Republic...
Nonsense.
United set up a system where this was going to occur at some point. Anyone who ever worked in customer service could have told you that if you keep pushing people at some point they will snap. It does not matter if it is a guy who just wants to go home or a worried wife asking for a blanket for her husband.
And this was not making United a profit. Even if it is a night in a flea bag motel and "company credit" when you times it by four it would have been far cheaper to have rented a limo for the employees to be driven to St Louis.
When you add in the time that the airplane sat at the gate, which cost mega bucks, this was not a profitable move for the airline.
It was that they were too stupid, too hide bound or did not give their people leeway to be creative in situations.
This might shake United up enough that they might stop making "screw the customer" their default option.
Or perhaps not.
If so I would expect there to be one less airline shortly. Because the other airlines are not as dumb as United. Almost, but not quite.
What does SWA do?
United? Delta? two sides on the same die.
Alaska and Southwest are the only decent airlines in operation. All the FReepers defending United make me ill.
All their talk about margin and regulation and yet there are airlines who manage to run their operations without using the business model of livestock haulers.
Maybe they are just waiting to see what the final cost will be. If it's the hospital bill and a bottle of aspirin then we may get by without a significant price increase. Otherwise expect a 10, 15, even 25% increase. Someone has to pay for that settlement if that's what happens and you know it won't be the airline. It will be those who fly and use that airline and anyone thinking the other airlines won't see that as an opportunity to raise their rates is dreaming.
In the not-too-distant future the name "Dao" will be spat out; not spoken. It may even become a slang term for faker or fraud. WTF are you? A DAO!! Or maybe "You've been Dao'd!" Or "watch out for the Dao men out there". Or maybe "this sounds like a lotta Dao to me".
Think about it. Words come into play in all kinds of ways.
Delta has had my business for some time.
Clean planes and excellent service.
Airlines should be making great strides to beat the competition - not their customers.
The other airlines will likely not raise their prices over this in order to take all the business away from United. Remember, there are low fare carriers exerting downward price pressure that full service airlines are having to compete with. Airlines are really resistant to price increases these days.
And, no, the only person spitting out Dao as an insult besides you will be United employees.
SWA is usually smart enough to figure out when there are more people than seats before allowing passengers to board. They also are usually smart enough to have more than one flight per day between major cities...
You don’t know that. You speculate it. You hope the other airlines won’t take that opportunity to raise their rates and defy conventional precedent but you don’t know what they will do any more than I do.
As for his name being used as an insult or cuss word; I was being sarcastic but stranger things have happened to make new words in our language. You can bet some people are already thinking that way. The CEO of UA and those security people are probably thinking “that f%3king Dao Ba$tard”! Why couldn’t he just comply like the other 40,000 people from last year alone so we can keep our planes flying and get the majority of the people to their destinations.
Maybe this will be a healthy thing for passengers going forward but I wouldn’t count on much changing. It’s a shuttle service; not some 5 star hotel for people to relax and rejuvenate and if the settlement is too high; look for ticket prices to rise. There’s simply no way they will absorb that cost. It will come from the pockets of people like you and me who need to get from point A to point B without all the drama.
Thing is, this isn’t just a random prediction. It’s based on the past conduct of the airlines. It’s not the first time a big nasty PR mine detonated on them.
One recent example would be during the recent Obaminated fuel price era. Southwest had huge fuel hedge contracts and they used them to keep their fuel costs down. If they were as you suggest they would be, they would have jacked their prices up to the same degree as other airlines. They emphatically didn’t, and stole lots of customers away from the other airlines.
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