Let's just note that giving the guy a 1st class ticket or even a private jet to his destination would have been less expensive. And could even have enhanced UA's image and business.
I have even seen it suggested that the employees could even have gone by taxi, though I don't know if that was really practical.
Anyway, seems to me the best solution would have been to simply keep raising their offer for compensation until they got enough volunteers. Whatever they had to pay would have been far less than the $1.6B hit they took to their stock price.
(I actually like Delta's solution the best: they ask you when you check in how much you would accept to get bumped. It's fair and efficient.)
I waited for a bit and then talked to the Delta rep at the counter, explaining that I really needed to get to my destination soon as my friend was waiting to pick me up, and if they had a flight available in the coming hour or two, I'd volunteer to be bumped.
Received a $400 voucher, and got placed in 1st class on a flight which departed 30 minutes after my delayed flight.
It was a win-win. I pounded 3 heinekens and had a jolly time.
I have a feeling the contract with the Pilot and FA unions squashes that idea rather quickly.
Correct, the pilot and FA unions would both have forbidden using a taxi to deadhead in this scenario.
Source: friends who are flight attendants, and I've actually also gotten bitten myself by this rule personally (though obviously with far less serious consequences than this doctor).
[1] http://www.space.com/20897-nasa-russia-astronaut-launches-20...
I think we all understood that already. It's merely comparing, and accentuating, the market cap loss vs. options that would have been less costly, even if those losses aren't "real".
To that endeavor, putting these employees on a rocket ship, launching them into space, docking with the ISS, then finally returning sometime later... just for fun... all would have "hurt" less than trying to evict customers from their seats in this case.
That's just the point. A short term stock move doesn't hurt (or help) a company much at all.
However I find it difficult to believe that the Airline (or the flight attendants manager) would have allowed a $5,000 compensation for the seat. Because they had no way of knowing how this was gonna unravel.
/
> Why the hell did you give this customer $5,000 for his seat, are you CRAZY?
>> M'am, I just prevented the biggest PR shitstorm in our company's history
> You're fired, and we'll make you pay those 5 grand
/ :)
http://www.chicagomag.com/city-life/April-2017/3-Things-to-K...
tldr: They're rent-a-cops hired by the airport, not United.
However, this is Chicago. Locals know to never assume anything about city government because you'll tend to discover the opposite later on.
Having lived in Chicago before, you fear the Chicago Police and your local alderman is the fixer.
If you're the mayor and you want to close an airport, do you follow FAA procedure and give notice to the government and all the aircraft owners (especially the ones with planes parked on the tarmac)?
Nope! You shut it down in the middle of the night and bulldoze the runway. Problem solved!
https://www.aopa.org/news-and-media/all-news/2003/march/31/m...
http://www.airspacemag.com/flight-today/day-shut-down-meigs-...
[1] http://www.chicagotribune.com/news/local/politics/ct-united-...
The the officers screwed up the extraction, but the guy was ridiculous.
Did he actually believe wailing like a 2 year old and doing his damnedest to hold on to his chair would result in his remaining on the flight?
His face injuries were caused when he finally lost his grip on his seat. The effort of the guy extracting him suddenly had no resistance and the guy sprang out across the aisle and whacked his face hard on the aisle arm rest opposite him.
The whole thing was a shitstorm where mistakes kept compounding, made by both parties.
Of course the whole thing was instigated by united and I firmly believe they were in the wrong, but the passenger was obnoxious and not free of blame.
They have both the training, tools and experience to deal with this.
I'm not sure what happened here - apparently the officers were "Chicago Aviation Police" - which is different to the "Chicago Police Department" (i.e. what you and I would know as real police officers). Surely there was somebody they could have escalated to (or simply called in the actual Police Department) if they thought it had to come to this?
Those police officers deserve praise for defusing the situation without escalating it. And at the same time, it also shows that yes, police can find ways to control situations without resorting to extreme violence. Even in this case on the airplane, I could easily imagine a competent officer saying to United, "is there any way you could convince someone else to give up their seat? Maybe offer more money?"
http://www.chicagotribune.com/news/ct-united-chicago-aviatio...
IIUC, regulation stipulates $1350 or 4 x the fare, whichever is lower. For Chicago to Louisville, the fare may well have been $200. If so, stopping at $800 was within the regulation.
[1] http://www.dailykos.com/story/2017/4/11/1652290/-The-Widely-...
I suppose an excellent reason for an airline to offer more than $1350 would be to avoid losing $1.6 billion off its stock price.
http://www.cbsnews.com/news/delta-offer-10000-to-flyers-give...
$400x4 = $1600, so without that $1350 cap they would have to offer $1600 using the 4x rule, but because that cap exists they can offer just $1350. Basically any fare above $337.5 can be treated as the same amount by the airlines, which is kind of silly since that's a really low fare relative to any kind of average flight cost.
The way people seem to be getting confused is assuming that cap is the maximum they can legally pay.. it isn't, it is the capped minimum they have to pay when following the 4x rule.
https://www.law.cornell.edu/cfr/text/14/250.2b
Carriers to request volunteers for denied boarding.
In the event of an oversold flight, every carrier shall request volunteers for denied boarding before using any other boarding priority. A “volunteer” is a person who responds to the carrier's request for volunteers and who willingly accepts the carriers' offer of compensation, in any amount, in exchange for relinquishing the confirmed reserved space. Any other passenger denied boarding is considered for purposes of this part to have been denied boarding involuntarily, even if that passenger accepts the denied boarding compensation
https://www.law.cornell.edu/cfr/text/14/250.5
Amount of denied boarding compensation for passengers denied boarding involuntarily.
Compensation shall be 400% of the fare to the passenger's destination or first stopover, with a maximum of $1,350, if the carrier does not offer alternate transportation that, at the time the arrangement is made, is planned to arrive at the airport of the passenger's first stopover, or if none, the airport of the passenger's final destination less than two hours after the planned arrival time of the passenger's original flight.
(c) Carriers may offer free or reduced rate air transportation in lieu of the cash or check due under paragraphs (a) and (b) of this section, if - (1) The value of the transportation benefit offered, excluding any fees or other mandatory charges applicable for using the free or reduced rate air transportation, is equal to or greater than the cash/check payment otherwise required;
---
There's a section about volunteers, which may be compensated in any amount (literally the phrase "in any amount" appears), and a completely separate section for how much you have to pay people involuntary denied boarding, which specifies something that looks like a fixed amount. And even if you're involuntarily denied boarding, you may accept non-cash compensation that equals or exceeds the statutory minimum.
There is simply no basis for the claim that an airline can't offer more than $1,350 in vouchers during a search for a volunteer. It's plainly refuted by the text of the law.
They also said they'd put us on first-class for our flight the next day, but didn't.
So when they say "$400" they really mean 4 $100-off coupons that expire in 1 year.
> A “volunteer” is a person who responds to the carrier's request for volunteers and who willingly accepts the carriers' offer of compensation, in any amount, in exchange for relinquishing the confirmed reserved space.
They're free to offer $2000, $3000 if they think it's in their best interests (or in this case, cheaper than the inevitable suit). $1350 is just a cap on their legal obligation, not their moral.
I don't have a real opinion on what compensation levels should be. (Although there are enough IDB's that the answer is probably "not enough.") However, in addition to the compensation, the airline still has to get you to your destination.
Note that the monetary compensation is in addition to rebooking the bumped passenger on a later flight, so even if an economy passenger had paid more than $1350 for the ticket initially, they are still getting $1350 in addition to a seat on another flight.
That is not true. There are cases of business and first class being bumped (http://www.latimes.com/business/lazarus/la-fi-lazarus-united...).
Either way, my other point makes this not really matter; the compensation isn't a "refund" for the seat. It's compensation for the inconvenience, and the airline is still required to get you to your destination in addition.
The airlines really hate giving up the cold hard cash since it hits their bottom line immediately, whereas the voucher is essentially "free" money.
Delta has just announced they will offer up to 10k for giving up a seat.
This is kind of like a recruiter asking you what your current and expected salary is. I wouldn't call it fair and it is only efficient for the airline which can then use that information to bump customers with the lowest thresholds, maximizing producer (the airline) surplus.
Better to reverse auction until only 4 hands are left. It should end up cheaper (and fairer, incidentally, as it will closer to true preferences)
A reverse action is offering $2K. More people than we need. OK, how about $1500? Still too many. $1000? OK, right number.
"Wait! You offered us $2K and now you're only going to give us $1K. Lying POSs."
At least that's what I think people are referring to as a reverse auction in this context. I'm not sure if that's a totally accurate description or not.
But in the case we're discussing here, United's offer wasn't sufficient to get them as many volunteers as they needed. So they would have had to pay someone more than usual. Seems like the right outcome to me.
I do see the recruiter analogy, but I think there's one key difference you need to consider: Delta still has to get you on a plane at some point.
In practice though, auction theory only works well with high stakes auctions with sophisticated participants (ie, Treasury debt auctions or FCC spectrum auctions). With small stakes and unsophisticated participants, people do crazy stuff, and you need more of a behavioral economics model. (As opposed to a game theoretic model, which is how the standard auction theory stuff works.)
Unless people blow off the dollar-amount question or later have second thoughts, then people should feel like they've been compensated fairly because they literally told the airline what they believe would be fair compensation. If they provided a bad figure, then really, that's their fault.
If we want to "stick it to the airlines" a bit more and make it equal compensation, then sure, require them to pay all bumped passengers the max bid of anyone who they actually end up bumping. That's not a terrible burden on the airline and is an easy tweak.
So going for an optimal auction can be a good idea if you're trying to make the most money possible (many if not most private sector auctions), or to distribute items in an equitable way (lots of government auctions fit this category).
In this particular case, airlines have multiple goals. They want to solve the overbooking for a small amount of money, they want to minimize the time their staff spends dealing with it, and they want to keep their customers happy.
An auction's a good fit for discovering how to keep their customers happy for the least amount of money in an automated way. As to which auction... I don't think theory helps very much here. As I said, theory doesn't work well except in high stakes auctions with sophisticated participants. So you need a behavioral model of your consumers (ie, an understanding of the ways in which they behave irrationally) to figure out a good choice in this case.
If a flight is oversold, it's oversold. They're going to bump the same customers with the same low thresholds whether they declare those thresholds when they check in or if they wait until they're at the gate.
Sure, there's a psychological difference between making an abstract dollar amount decision at check-in time (when most of the time no bumping will even have to occur anyway) vs. participating in a live auction at the gate (when it's actually a reality), the latter of which might result in higher payouts by airlines, but I don't think that's necessary, and makes the process much more inefficient.
I don't like the sound of that much - how many people actually know or are prepared to think straight about how much money they would accept to get bumped when they're checking in?
I'd rather the system be that, if they need to bump someone, they start with a public offer of a modest amount, then keep increasing it until either somebody accepts or it gets so high that it's cheaper to do something else.
However, if people were being bumped at check-in, or between check-in and boarding,
It would have taken five hours. By itself, that's fine. But according to FAA rules, what is their status during those five hours? If they're on duty, they either need eight hours off duty once they get to Louisville, or they have a limited amount of time they can be on duty once they get there. (If that time doesn't count as on duty, of course, no problem.)
Incidentally they were actually from another airline, Trans States Airlines of Missouri, which also flies for United and American. So they were using their status as to-become-United Express crew to make must-ride space on a Republic Airways aircraft.
Chicago -> Louisville is a little further than Baltimore -> Philly, but it still seems manageable. The only question is, would the crew have been "on the clock" (counting against their hourly limits).
* 1000hour flight time clock which they couldn't exceed (cosmic radiation or something).
* They had the flight clock which is how they were compensated ie. 14 hour LHR-HKG.
* They had the break clock in flight. So crew could sleep 1-2 hours during a 12-18 hour flight.
* Rapid response standby (15 minute) was a 12 hour standby shift in the terminal.
Because the work times are so extreme cabin crew is given certain latitude in off time. Like, they may work 3 12-hour shifts and then take 3-4 days off.
Everything I've read so far has not been clear about why the crew needed to be there on a flight that was already closed (when the last seat is filled the gate is closed). There were many better options, including driving, that were available. Unloading a passenger is a logistical nightmare and most ground crew are reluctant to do it. It messes up their performance metrics but in an airline like United maybe they just don't care.
Wasn't aware of that feature of Delta's check-in; that's actually really smart.
I'd be in favor of a system where involuntary bumps are banned, and the airline just takes (cash) bids for people who might volunteer, and is required to take the N lowest bids. I'd be ok with something like allowing the compensation to be vouchers if the airline is willing to make the voucher amount 2x (or something) of the cash amount.
That's backwards from a psychological point of view, that will entice people to hold out for a larger offer later.
How they should handle it is very simple. Pick a very large number, lets say 10k, tell everyone on the plane to raise their hand if they're willing to get off the plane for 10k.
Obviously a lot (probably way more than half) will raise their hands. Now, tell everyone "keep your hand up if you're willing to get off for 7500," rinse, repeat until you get to only four people with their hands up.
I bet united could have gotten four passengers off that plane for LESS than the $800/each that they offered at the beginning, probably a LOT less and the four passengers would have been happy about it, too.
There a crew resting hour regulations that might have prevented the crew from operating the next flight had they driven, and union contracts that stipulate how deadheading crew can be transported.
Again, all of those might be renegotiated at some point, but that doesn't mean there is an easy obvious alternative at hand now every time a pax refuses to deplane.
So UA's policy is possibly based upon a "stay below some non-market-related amount" internal goal versus recognizing that they were throwing away perfectly useful pricing signals every time they enacted these kinds of policies. If they reached $2712.50 per seat for those four deadheading crew members in the auction with no takers (highly unlikely), then that is not just signaling it is cheaper to charter a private jet, but also signals pricing information to inform their route planning and marketing teams.
I see this all the time in business when helping clients implement their policies into software. There are often policies set for what amounts to someone with policy making power within the organization trying to game the metrics they are compensated by, and it ends up blinding the company to valuable market information that they then turn around to spend a minor fortune upon obtaining a very low-fidelity equivalent in lengthy, futile sales and marketing efforts.
As for your scenario, ask for a volunteer to get bumped instead, and incentivize them as necessary.
(And yes, the idea that others have the right to compel my labor, on pain of prison, scares me. It also would make me very hesitant to be a pilot and express any concerns about the airworthiness of the plane I'm flying.)
I'm astonished at the facility with which this keeps being said.
Why are weather and maintenance (e.g. broken seatbelt) a reasonable excuse to bump someone? Well, because they're unpredictable, unavoidable, and if you didn't bump, the flight could not be safely executed, affecting a planeload of pax (and probably more, due to knock-on effects.)
Now, mechanics flying to AOG (aircraft on ground) have the highest priority on many airlines, and dead-heading crew the second highest. Why? Because if they don't go, you will have to cancel flights affecting plane loads of people (and probably more, due to knock on effects). Now, why do you suddenly and unexpectedly have to position mechanics or deadheading crew? Why, good question - frequently for weather, maintenance, sickness, and any number of similar unpredictable and unavoidable reasons.
The justification to bump pax due to seats required for mechanics or deadheading crew is exactly the same (avoid flight cancellation and inconveniencing planeloads of pax that arose for unforeseen, unpredictable, unavoidable reasons).
But there can be unexpected need for crew to position due to weather, maintenance, sickness.
I sincerely doubt that. Most people will not voluntarily get mixed up in police violence that isn't directly related to them.