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
No, the supersaver ticket did not have a different contract of carriage, it was just bought at a different time when the free market price allowed the passenger to save money. Likely limitations on cancelling the ticket or changing the reservation, but “reservation for space” was not disadvantaged, and once he was boarded United could only remove him for violations of its Rule 21, not even argued by United.
No, the supersaver ticket did not have a different contract of carriage, it was just bought at a different time when the free market price allowed the passenger to save money. Likely limitations on cancelling the ticket or changing the reservation, but “reservation for space” was not disadvantaged, and once he was boarded United could only remove him for violations of its Rule 21, not even argued by United.
he was planning to get bumped off to “accomodate employees” after he had already got the seat and was seated? How, pray, did he know about this in advance to plan?
This most probably has happened before (paying customers removed from a plan to make way for employees), and would have happened again, if not for David Dao making a scene.
United wins? Logically they did not win. Logically they failed to accommodate a paying customer.
Yeah, an anecdote is a statistic. I understand the lawyers are going to find the right judge to rape the business. That’s what the legal business is about, stealing money through legal means.
Nah, I'd just love to see flying become great again. It's a livestock operation. I drive every chance I get.
Knowing the legal profession is ready to pounce, why do businesses take extreme/unnecessary risks? United asked for ***volunteers.*** Two genuine volunteers took the deal. One non-volunteer allowed herself to be browbeaten into the deal. Then another couple volunteered. They would take the offer if United raised the compensation by a few hundred dollars.
A few hundred bucks.
United’s response was to laugh in their faces, and call the goon squad to forcibly remove Dao.
Think about it. The man is 69 yo. Is there a genuine chance that he could suffer injury via forced removal?
You bet there is. Younger people have died just from tasing, and, in the course of their elder abuse, they tased Dao point blank.
They put Dao in the hospital. He had non-fake-able injuries. This is a matter of fact/record.
The Dao-haters say, on the one hand, he got what he deserved. Otoh, they curse lawyers.
United is fully responsible in this situation. To save a few hundred dollars, they put an elderly man’s life and health in jeopardy. Now they’ve got top gun lawyers breathing down their necks.
And it’s nobody’s fault but their own.
I don’t not like what he said, I just understand that it’s a PR move and it doesn’t mean he believes a word of it. The facts are the facts and the facts are BOTH sides handled the situation as poorly as possible, United screwed up the timing and Dao acted like a 3 year old. I never said Munoz doesn’t know what he’s talking about, I said what he said doesn’t matter.
Bull, it goes to court and United will pay out a big amount of money.. you really just are foolish. United may have the “right” to do whatever they want, that doesn’t mean they can bash a guys face in and drag him off.. you think those airport police folks were suspended over this incident because what they did was right???
United is going to pay out big, because this isn’t a criminal case.. any lawsuits will be CIVIL... and I guarantee this guy isn’t going to be suing United for “breach of contract”.
I guarantee, United won’t win in any courtroom if they let this go to court... Do you think United tried to bribe every passenger on that plane by offering them full reimbursement of their airfare, just as long as they agreed not to sue, because they think they have a winning case?
You really really are naive.
If both sides screwed up, why isn’t United counter-suing Dao?
United made their bed, they will pay a very very high price to lie in it. Don’t have to like it but the simple truth is, United is the one to blame for the mess they have found theirselves it, no one else. They chose the course of action they engaged in, no one else.
They consciously decided to show ever single air traveler out there.. this is what United thinks of its customers... and if you think that all the spin in the world will change that, you are naive. United literally burned 10s of Millions if not 100s of Millions of dollars, in revenues and brand value by doing something so idiotic, even the Hillary Campaign wouldn’t have done it. ....
And that’s without the money they will in the end pay to this passenger and others because of this incident. United can argue it may bump a passenger per its terms for an employee it wants to move around... but it doesn’t have the right to bash someones head in in the process of doing it.
If you believe United was in the “right” here, you have a really warped world view. It is one thing to say United has the right to bump a passenger, it is quite another to say United can call in jack booted thugs to beat them up and drag them off the plane to exercise those rights.
You think the Airport police are on suspension because everything was “right” with what happened and was done? IF you believe that, naive doesn’t begin to cover your argument.
The flight was an 80 seat plane, if I am not mistaken... United wanted 4 of those seats for crew after it was fully sold and seated. So United wanted 5% of its passengers to give up their seats.. but offered only $800 in vouchers to attempt to get them... United chose to go vinegar instead of honey, reality is simple, they could have gotten those 4 seats voluntarily if they had offered enough for them... they didn’t.. now instead of paying out a few K to get them, they are paying MILLIONS in lost revenues and brand damage.... Stupidity... nothing but stupidity from the top down... and you think otherwise, go read United’s CEO’s first “apology”... This incident was the result of a systemic disregard for customers by united... It may have been an extreme example, but there is no doubt after the CEO’s first “apology” that disdain for the paying customer is systemic to United as a company...
Having your face bashed in and dragged off a flight is just a “re-accommodation” which in and of itself is comical, because how do you “re-accommodate” someone you never accommodated in the first place? Obviously having your face bashed in and physically dragged off a plane is considered being accommodated by United based on that claim.
United made its bed... and will be lying in it for a long long time.
Exactly, United has attorneys on staff, they aren’t an added cost for them... they pay them an annual salary so any court costs are limited to the actual court related costs, not attorney fees.
United doesn’t have a prayer legally and they know it... that’s why one of the first things they did was offer every passenger on that flight a full reimbursement, as long as they agreed not to sue.
Their own lawyers told them you are effed.... start trying to dig your way out.
Because there’s no margin in that. Dao doesn’t have nearly enough money to be worth their time to sue, and the bad press from that would be EPIC.
Actual video footage of you doing something is evidence. You talking about it not under any form of legal accountability is hearsay.
Just because United will pay doesn’t mean both sides didn’t screw up. United will pay without it ever going to trials, trials generate too much bad press. None of which means Dao is without fault.
People who can’t complete a post without insults are sad.
Here’s the problem. After video of United’s elder abuse bonanza hit social media, a tsunami of support rolled Dao’s way. Concomitantly, wave after wave of condemnation and mockery broadsided United. If both sides screwed up, as you claim, the reaction shouldn’t have been so lopsided.
A bare smattering of support has gone toward United. [It appears all their supporters are either on this site or are connected with United (see: pilot’s wife responds, on Facebook)]. The tidal wave of support is in Dao’s favor. No matter how you slice it, that cuts against your, ‘They’re both at fault,’ narrative.
The tidal wave of support is in Dao’s favor. No matter how you slice it, that cuts against your, ‘They’re both at fault,’ narrative.
We are truly lost when we have fallen into the trap of law by public opinion and surveys.
We don’t deserve a republic.
So true. Munoz wouldn’t be going on TV groveling like a submissive dog if United hadn’t created a nightmare for themselves. United made the decision to use for on a legally boarded, well-behaved elderly man. They seriously injured him. If, in addition to the monetary award, Dao wants Munoz to dress in a giant chicken costume and parade around in front of the Chicago terminal clucking, ‘I’m sorry,’...Munoz will do it.
You missed the point.
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