Posted on 04/18/2017 11:54:41 AM PDT by SeekAndFind
That the forceful ejection of a United Airlines passenger the Sunday before last proved so newsworthy indicated something that’s largely been ignored by the airline’s myriad critics and “advisers.” What happened was news precisely because it’s so rare.
But for a commentariat prone to turning anecdote into statistic, United’s resort to force when it came to properly removing David Dao (more on this in a bit) from one of its airplanes was naturally (to the chattering class, at least) a sign of a tone-deaf airline; one clueless about customer service thanks to a culture within the airline that doesn’t prioritize it. United’s actions were apparently also a sign that its executives don’t understand the auction process that economists – who’ve almost to a man and woman never run a business – can apparently design in their sleep. Oh please.
Back to reality, we all know why airlines frequently sell more seats than are physically available. They do so because they have a good sense based on years of statistical analysis of roughly how many no-shows there will be for each flight. The major airlines are plainly good at divining the no-show count as evidenced by travel journalist Gary Leff’s stats in USA Today revealing that, “Out of over 600 million passengers boarding major U.S. airlines in 2015, half a million didn’t have seats. Most of those voluntarily gave up their seats.” Leff adds that the latter explains why a mere 46,000 passengers were actually involuntarily denied boarding in 2015, a rate of 0.09%, according to Leff’s calculations. Again, Dao’s ejection was news precisely because what happened almost never does.
Despite this, economists have as mentioned used United’s alleged error to showcase their presumed worth. You see, economists claim to solve problems. Crunching numbers in their cubicles free of the pressures that concern those who actually run businesses, they come up with “solutions” for those businesses.
Case in point is Robert Samuelson, resident economist at the Washington Post. Though he acknowledges that there are lots of public policy problems that “cannot be easily solved,” he contends that “Fixing airline overbooking is not one of them.” Samuelson’s solution is for airlines to consult another economist who has largely spent his adult years contemplating the many great problems businesses face from Harvard’s leafy campus. According to Samuelson, Greg Mankiw has a plan for the airlines. Here it is:
“Make the airlines pay when they overbook. When they do, ‘they should fully bear the consequences. They should be required (by government regulation) to keep raising the offered compensation until they get volunteers to give up their seats," writes Mankiw. "If $800 does not work, then try $1,600 or $8,000.’"
Samuelson adds that the professor in Mankiw is "sure volunteers will appear as the price rises." Samuelson agrees with the professor, but would “tweak” his proposed imposition of force on businesses “by requiring that all the bumped passengers receive the highest payment.”
Of course the problem for Samuelson and Mankiw, along with countless other economists awoken by United’s alleged error, is that airlines have long been doing what they propose. We know this because airlines regularly oversell flights, only for them to offer rising rates of compensation to reserved passengers assuming they don’t have enough seats. Sorry economists, airlines have long employed the auction process that has oddly given your profession its day in the sun.
As for the proposed regulations offered up by economists mostly untouched by the real world, they’re passing strange simply because economists generally pay lip service to the truism that there’s no such thing as a “free good.” But in demanding federal compensation rules as Samuelson, Mankiw et al are, they act as though the compensation will be paid by 'someone else.' Back to reality, assuming the federal imposition of highly generous compensation for bumped passengers, this will reveal itself either through reduced seat availability for consumers, much higher prices for the consumers in search of low-priced fares, or both. Well-heeled economists presumably don’t consider this truth simply because their air travel is likely not of the supersaver variety.
Regarding Dao, it’s well known at this point that the flight he’d booked a ticket for wasn’t oversold as much as United wanted to transport four crew members to Kentucky in order to staff a flight the next day. So that the airline could serve many more passengers, it bumped Dao, along with three other willing customers. And while PR mavens can fight among themselves about the brand implications of United’s actions vis-à-vis Dao, it’s worth pointing out that the airline did the right thing in removing the obnoxious passenger from the plane.
Lest we forget, a purchase of an airline ticket, particularly a supersaver ticket, is not a guaranteed reservation in the traditional, contract sense. A supersaver ticket is low-priced precisely because such a fare might be bumped – albeit rarely – based on a lack of seats. In Dao’s case he didn’t have a reservation as much as he’d booked the strong possibility of flying when he wanted to. United was correct in removing him much as any business would be correct in removing from its premises any individual engaged in the act of taking. The seat was United’s to allocate, not something owned by Dao.
About this, readers can rest assured that United’s most frequent passengers, as in the ones that generate the most revenue for the airline, are the least likely to be bumped. For members of the commentariat to defend Dao’s right to a seat is for those same members to reject the property rights of businesses. Federal regulations imposed on businesses regularly ignore property rights, and because they do costs for their customers rise to reflect government disdain for property.
The economist in Samuelson concludes that “Making airlines pay more for overbooking would, almost certainly, make them more careful in their scheduling, while also more adequately compensating inconvenienced passengers.” It’s a nice thought from the offices of the Washington Post, but if it’s so simple as Samuelson suggests, why the need for governmental force? Samuelson never considered the latter, and realistically didn’t consider business and economic realities much at all in penning his piece in which he explained to the airlines how they should operate, sans irony.
But for-profit businesses don’t need the help of economists largely unfamiliar with business or profits. As evidenced by how airlines regularly and seamlessly handle the good, pro-consumer strategy of overbooking, they’re already well aware of how to handle passenger overflow. The problem isn’t the airlines, but an economics commentariat ever eager to turn what’s singular into a statistic.
-- John Tamny is editor of RealClearMarkets, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading
I would like to hear that argument.
I don't think there are "laws" requiring a flight to occur. It was a business decision to eject one saver passenger to protect the potential lost revenue of an entire future flight. And there is no guarantee that future weather conditions wouldn't have delayed or canceled THAT flight when the time came.
The only "laws" that I can think of are the union rules regarding the method of transporting the crew and the duration of time they can log as "working" versus "resting." From what I've seen, transporting the crew via limousine to Louisville would not have counted as union "rest," and would have still made the crew ineligible to fly the next day.
-PJ
The plaintiff's lawyer will counter that, while this may be true, there's nothing in the law, nor United's Contract of Carriage, which states they needed to use that particular flight to move the crew when there are many other choices of transportation available.
Again, the plaintiff's lawyer will counter that it was United, themselves, who set the chain of events into motion by calling the security in the first place.
“I would not have gave up my seat other wise but for fear of arrest.”
Statistically it should never happen to you again, but with all the news this has generated and education about the contract now available, if you are in the situation again you can just sit back and say no - unless they actually threaten arrest and then you must comply. Of course a law enforcement officer would be an absolute fool to arrest someone after this debacle.
You had your seat bought and paid for. You are sitting in it. What right does an airline have to forcibly remove you from your seat and give it to someone else? What would happen if I sold 1200 condo apartments but only had 1000?
Man, if he takes from seven digits, I’ll probably be laying down in the aisles in United next!
According to Part 21 - Refusal To Transport of the CoC’s, there are 19 specific reason you can ‘re-accommodate’ a passenger after he has been seated, i.e., drunk, rowdy, barefoot, smelly, blind, etc.
Needing his seat for a company employee isn’t one of the 19.
Thanks for clearing that up. It's amazing how many lies have been run up the pro-United flagpole.
Fed regs give airlines no flexibilty on a deal.
They have a federal regulation on the max payout. 800 dollars?
Remember that common people who resented the oligarchy in power had a quiet resentment that manifested itself last year in the defeat of the establishment candidates, Jeb Bush and Hillary Clinton, by the self-proclaimed outsider, Donald Trump. United Airlines is a recipient of the same sort of popular revolt that doomed Jeb and Hillary. Whether this incident will be forgotten in a month or will lead the airline into bankruptcy or merger remains to be seen.
So sad that the author of the article has no access to a search engine:
UNITED CEO: ‘This can never, will never happen again on a United Airlines flight’
Bob Bryan Apr. 12, 2017, 8:02 AM 42,036
United Airlines CEO Oscar Munoz.AP
UAL United Contl
In an interview with GMA, Munoz said he apologized to the passenger —identified Tuesday as Dr. David Dao — and promised that nothing similar would happen on a United Airlines flight again.
“The first thing that I think is important to say is to apologize to Dr. Dao, his family, the passengers on that flight, our customers, our employees — that is not who our family at United is,” Munoz said. “You saw us at a bad moment, and this can never, will never happen again on a United Airlines flight. That’s my premise, and that’s my promise.”
snip
“No, he can’t be,” Munoz said when asked whether Dao was at fault in any way. “He was a paying passenger sitting on our seat, in our aircraft, and no one should be treated that way.”
I agree.
Law enforcement could have said, you are now down to two options.
option 1, you leave on your own power and can then seek what ever redress you desire
-OR-
Option 2, you leave under arrest and face criminal charges.
This is the default option and if you do not leave on your own power, by the time you are asked to leave for the third time, you will be automatically processed under option 2.
How would you like to proceed?
Stupid read. United lost in the court of public opinion. And it will also lose in the courtroom, should Dao’s case make it that far (it probably won’t. United will be much better off just settling). Delta was smart enough to drastically raise the amount of compensation that will be offered in the future. I seriously doubt that bidding will ever reach the top amount of approximately $10,000. And if it does, it will be so infrequently as to have virtually no impact on the bottom line. And it will certainly be cheaper than a four or five percent stock devaluation, the PR nightmare, the loss of customers and the inevitable lawsuits.
Hey, let's ask Jim Bakker!
-PJ
Somebody has a conflicting point of view...a guy by the name of Oscar Munoz...ceo of an airline I believe.
Of course United didn't do the right thing. The 'right thing' for United is to perpetuate their business and maximize profits. I guarantee that this entire incident will do the exact opposite.
United has ticked off customers for decades. They are a horrible service company. It does not matter if the Doctor was not in the right. The fire storm is not about him. Its about the rest of us. We have been mistreated by United or we have watched United mistreat people. That is why the fire storm happened.
They could have rented a Cessna or booked seats on a rival airline.
There are literally too many errors in your post to correct. Who has that kind of time?
Porbably some airlines use the cap on compensation for involuntary denial of boarding as an excuse to cap their voluntary offers, but there is no cap on the voluntary offers.
Delta says it will pay passengers up to nearly $10,000 to leave seats on overbooked flights
Out of curiosity, exactly what criminal charges would he be facing?
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