In future business school classes if case studies on handling public relations are considered, United Airlines’s handling of the “re-accommodating” of Chicago-Louisville passenger David Dao, who was forcibly and, apparently, violently removed from the plane because the airline had overbooked the flight, it needed to deadhead personnel from Chicago to Louisville, and the flight was full, will be studied as an example of what not to do. The editors of the Wall Street Journal seem to agree with me:
As corporate PR fiascoes go, the United Airlines case of the doctor forcibly dragged off an overbooked flight at Chicago’s O’Hare International Airport Sunday is one for the ages. The late-night comics have a new non-Trump target, United’s stock fell more than 4% before rallying to 1.1% off on Tuesday, and CEO Oscar Munoz’s use of the word “re-accommodate†to describe the episode will enter the Euphemism Hall of Fame. To think that a simple lesson in market economics might have spared everyone the trouble.
Passengers loathe overbooking, for understandable reasons, but the practice is legal, makes economic sense for airlines, and doesn’t inconvenience many passengers. Airlines use algorithms to monitor no-show probabilities, and overbooking helps airlines run with fewer empty seats. Passengers can also benefit because not penalizing no-shows means there will likely to some seats available to fly stand-by or at the last minute.
I do have some questions. Why did United offer so little? According to published reports under the laws governing air transport, airlines must offer up to 400% of the fare as compensation. That would have meant $1,350 rather than the $1,000 United CEO Oscar Munoz reported was offered. Is that United policy or an error on the part of United’s Chicago personnel?
Why doesn’t United conduct an auction under these circumstances? I’ve experienced that many times on other airlines.
What do people think should have happened? The digital linchmobs are out, calling for the blood of United and the City of Chicago. Clearly, United should have handled the situation much better and in particular the situation should have been identified and dealt with prior to boarding Dr. Dao. Whether United is liable for damages is up to the courts to decide. If airlines are forced to abandon overbooking, it will result in increased air fares for everybody and possibly even less popular measures.
By what stretch of the imagination are the people of Chicago to blame? Sovereign immunity should hold the city secure from such suits but Illinois law has exposed Chicago and other cities. Even if the Department of Aviation security officer roughed Dr. Dao up, by all accounts he was operating outside of official guidelines. The security officer, the Department of Aviation, the mayor, and other city officials won’t end up paying a cent if damages are awarded. The City Council will borrow the money and the people of Chicago will pay into the indefinite future. How is that just?
I have been assured that companies would never do anything to sully their reputation. There is no need for the FAA because the airlines would never operate unsafe planes. Oh wait, it is regulations that cause bad behavior in businesses.
If United was unregulated, Mr. Dao would have been “Flying the Friendly Skies”. It was regulations that caused United to become unfriendly. Free-market blah, blah, blah.
Personally, I do not care about Mr. Dao. United has a Contract of Carriage, and he agreed to their terms. The United crew could have done something differently, but they did not. Apparently, they decided that it was better to have a passenger dragged off a flight than pay a few more dollars.
The crew did not anticipate that they would receive any negative consequences from their employer, and United’s response confirmed they were right. United has only become concerned because of Youtube. Prior to Youtube, this was not a problem.
Mr. Dao thought he purchased a seat on a specific United flight, but he only purchased the chance to use that seat. It is in the airline’s Contract of Carriage, but to my knowledge, airlines do not advertise it. They should be required to add – “as long as the supply lasts”.
This was not a free-market value-for-value transaction. United engaged in bait-and-switch to sell its product. When an airline overbooks, it is fractional reserve seating.
For this to be an example of the free-market working as advertised, Youtube would have needed to be created for documenting bad behavior of airlines or companies in general, but Youtube was created for cat videos and other other silliness. Without cellphone cameras to record cats, there would be no Youtube, and United would still be free to do what it wanted.
Prior to cat owners recording their cat’s antics, there is no way to know whether United (or any other company) was acting badly. So, United’s future behavior will be due to cat lovers. It is their fault that United cannot continue to operate as it has. I guess that United’s drop on the stock market is their fault as well.
Now, the airlines will need to fork over more money to passengers that they have sold non-existent goods or services, and every other company can expect the same thing.
Thanks cat lovers for ruining the economy.
Reports say attorney Thomas Demetrio has taken the case. What is his rep?
My question is whether the Chicago personnel were following company policy or making it up as they go along.
If they were making it up as they go along, it’s a problem for management. If they were following policy, it’s a problem with management.
Unless the guy suffered some real damage, compensation for him should be in the $50,000 range. The idea that because some employee of some big company embarrasses you, that makes you entitled to millions of dollars is bizarre.
Steve
It may be bizarre but it’s not beyond the realm of possibility as Liebeck v. McDonalds suggests. Ms. Liebeck eventually settled for around a half mil but that’s still more than $50,000.
As a Chicagoan I’m more worried about possible lawsuits against the city. Merits don’t seem to have much relationship to settlements here.
Here is Tom Demetrio in Lawdragon:
http://www.lawdragon.com/2012/01/05/thomas-a-demetrio/
Whether he goes after United or the city or both, he’s not going to settle for any $50,000 for his client, just or not. He is one of the top ranked litigators in the country. He wouldn’t get involved for a measly $25,000 (at 30%).
@Dave Schuler
My question is whether the Chicago personnel were following company policy or making it up as they go along.
I start with the observation that few people want to be fired or disciplined, and even if there are, it is highly unlikely that there would be at the same place and time.
If that is correct, nobody in the United flight crew, gate personnel, or management thought that they would have a problem with the way they handled it, and the CEO stated as much after the incident.
Contrary to the free-market nonsense that overwhelms my simple brain, almost every company has a non-written rule about not getting caught. Without the Youtube video, they would not be ordered to stand in the corner or sent to bed without any supper.
Youtube provides the much needed proof of the legal but totally outrageous conduct of people in authority. Thanks cat lovers for the collapse of Western Civilization.
My experience has been that there is a tremendous amount of policy creation being done by low level staff. Frequently, they don’t even recognize that they are making policy.
“Frequently, they don’t even recognize that they are making policy.”
Even worse, senior leadership often does not know they have put low level staff in that position.
Steve
The problem is accountability, and it is sorely missing in the private and public (non-military) sector. In the Marine Corps Infantry, there was no excuse for anything someone under you did. Either you knew, or you should have known. Issuing orders (policies) is not the last step of action.
The last and most important step is supervision, and if the low level staff are making formal or informal policy decisions, the guy/gal above them is responsible for their actions and decisions.
In the Marine Corps Infantry, anybody under the rank of a Corporal might be able to claim ignorance or stupidity as an excuse, but anybody above was accountable to the next person in the chain of command. Sergeants are responsible for Corporals. Staff Sergeants are responsible for Sergeants. When you f*ck up, your 1st Sergeant has a chat with your Staff Sergeant not you, and it flows downhill from there.
(For a personal problem, you might be called to chat with your 1st Sergeant, but it would not be pleasant.)
It was pretty much that way in the corporate world when I started out but that was a very long time ago. What I’ve seen lately is group decision making and trying to avoid being blamed for anything. Pretty much a bureaucratic model.
I wonder if the shift to non-income reimbursement has been the cause.
I think it’s more the large number of top managers who come up through staff functions rather than line functions.