Tuesday, April 11, 2017

The friendly skies

In which I explain the legality, ethics, and optics of overselling flights, and use the term "salty" as a teenager would.

By now you've heard of the incident in Chicago on Sunday on a United Airlines flight to Louisville.

United Airlines oversold the flight (i.e., sold more tickets than they had available seats).  United also needed to get a crew of four to Louisville to fly the next day.  This is not an entirely unusual situation, so United offered volunteers $400 to give up their seats.  Finding no takers, they upped the offer to $800, which is apparently the limit for such compensation per a corporate policy.  They still had no takers, so their next step was to "deny boarding" to a passenger, supposedly randomly selected.

The problem, however, was that they had already boarded the plane, so this meant removing someone from the plane.

The randomly selected passenger was a doctor who said he needed to see patients in the morning, and he refused to deplane.  After he reiterated his refusal, United notified the airport police in Chicago, who bodily removed the passenger, banging his head on an armrest and cutting his head open in the process.

Since cameras are ubiquitous these days, most of this was caught on video.

As a frequent traveler, I thought I might weigh in on this a little bit.

First, you'll find no words of comfort for United coming from me.  In my experience, United is the worst American airline--worse even than the super-discounters Allegiant and Spirit.  I have had a no-United policy for my own travel for around 10 years now.  As a result, the incident on Sunday came as no surprise to me.

But I do feel some obligation to separate what was legally correct--which is what United did--from what is correct from the standpoint of customer service, business ethics, and financial reason

It's true:  Airlines oversell their flights.  They do so because an empty seat is one that the airline will never be paid for.  Airlines feel safe overselling their flights because they know that the chances are excellent that there will be no-shows.  Business travelers like me have changing schedules, and we frequently buy and cancel tickets at the last minute.  For example, tomorrow, I'll be headed to Washington, DC, on a last-minute trip.  I bought my ticket last night, but there was a good chance I would have to delay the trip until Friday.

Occasionally, more people will show up for the flight than there are seats.  For safety reasons, the airline can't put more people on the plane than there are seats (and believe me, they would if they could).  The airlines have various ways of dealing with this.  First, they ask for volunteers to take a later flight.  Sometimes there's another flight in a couple of hours, so the airline will give you a meal voucher and a voucher for future travel (usually worth $400 or so, enough for a round-trip if you plan in advance) and a guaranteed seat on the next available flight--sometimes even on another airline.  If they don't get any volunteers with comps, they will sometimes offer cash.  Volunteering to be bumped can, under those circumstances, be a great way to get some freebies if your schedule is flexible.

But what do they do if they don't get any volunteers?  That's a matter found in the airline's "contract of carriage," the agreement you "signed" when you bought a ticket--although the contents of that contract are heavily regulated by law.  And it turns out there is a federal regulation that governs what happens, found in Title 14 of the Code of Federal Regulations, in section 250.5.

First, the airline is entitled to deny boarding to any passenger it wishes to on an oversold flight.

If they "bump" you, but they can make alternate arrangements that get you to your next stop within an hour of the original time, they don't have to pay you anything.

If they can get you there between one and two hours of the original time, they owe you 200% of the fare to your next stop, with a maximum of $675.

If they can't get you there within two hours of the original time, they owe you 400% of the fare to your next stop, with a maximum of $1350.

There are some exceptions to this:  If the airline has to substitute a smaller plane for a larger one and bump people, there is no compensation.  If the scheduled flight is on a plane that holds no more than 60 passengers, and they have to bump people for weight or balance issues, there is no compensation.  And if the scheduled flight is on a plane that holds no more than 30 passengers, there is no compensation under any circumstances.

Finally, to get involuntary denied boarding compensation, you have to ask for it.  You have the right to insist on a check rather than a voucher for use on their airline.  But they can offer that to you if they want, and if you take it, that's the end of the question.  By the way, you can decline the standard DBC and sue the airline instead--but don't count on getting more than the standard DBC unless you can show extraordinary circumstances.

So, to review, United was completely within its rights to deny boarding to the passenger in question--even though its purpose was to free up seats for its own personnel.  And the passenger was legally wrong to refuse to get off the plane.  Regardless of his reasons for needing to get to Louisville, the contract of carriage does not give him the right to stay on the plane.

And that's the end of the "legal" part of this story.

United's behavior, though legal, is nevertheless wrong for several reasons.  First, it had to know that the optics of denying boarding to a paying customer in order to fly its own personnel to position them for a flight the next day would be bad.  United could have easily and cheaply arranged for a car service to take its personnel on the five-hour drive from Chicago to Louisville.  I was traveling once to a very important meeting in San Antonio, and I missed my connection in Houston because of a weather delay out of Charlotte.  We didn't reach Houston until 11:30 pm and had to be in San Antonio by 8 am, so my business partner and I hired a car service to drive us from Houston to San Antonio, about 4 hours, while we slept.  It was around $400, and this was about 10 years ago.  So, let's say that a thousand dollars would have gotten the crew to Louisville.

Or, if driving weren't an option, United could have chartered a private plane to ferry the crew to the destination.  That would've cost them something like $15,000--a lot of money, yes, but...well, just you wait.

But I suspect that this kind of thing would have gone entirely unnoticed but for what happened next.  After all, every year, there are about 60,000 passengers who get bumped involuntarily and receive DBC, almost all of them without incident.

The passenger refused to deplane.  And, as illegal as that was, it was completely understandable.  When you have a confirmed seat on a flight, and you're sitting in that seat, and you have acted in reliance on having that seat in getting to your destination, and you have very good reasons for needing to be at your destination, it's reasonable to be upset at being told to deplane.  And, depending on how tired you are, you might be a bit salty* about it.

* - I am reliably informed by my teenage friends that this is a correct slang usage of the term "salty." Historically, "salty" has referred to the use of coarse or vulgar language, derived probably from the association of bad language with sailors and the salty sea.  But I am told that the current vernacular defines "salty" as an emotional state that's something like angry, agitated, or upset, particularly in response to being embarrassed or otherwise mistreated.

When the passenger refused to deplane, however, rather than seeking another solution, United chose to call the police.  Again, this was legal on their part.  It's unclear whether the police officers could bodily remove the passenger as they did--and slamming his head against an armrest is yet another issue--but United could legally force the passenger off the plane.  I predict litigation against United and the police because of the manner in which it was carried out.

United had to know that the process would be filmed.  And even if it didn't, this removal occurred in front of around 150 other passengers, many of whom were traumatized to see a fellow passenger picked up and bashed into an armrest.

And the initial public reaction of Oscar Muñoz, the now-embattled CEO of the airline, to this?  To blame the passenger.  It's hard to imagine a more tone-deaf response to this crisis.  (He has since issued a different statement promising to get to the bottom of this and to do better.)

So United is about to understand what it is to be punished for poor customer service--and that's what this boils down to.  The hallmark of a customer-focused company is one that seeks to do right by its customers.  That doesn't mean that the customer is always right--frequently customers are wrong--but it does mean that treating your customers well is your first impulse.  We've all experienced poor customer service.  Rarely are we given the opportunity to teach the perpetrator a lesson in the way that United is about to learn one.

United could've solved this problem by driving its crew to the destination.  Cost: $1000.

Or it could've driven the passenger to his destination, hiring a swanky limousine.  Cost:  $1000, plus some freebies to make the passenger feel better about what happened.

Or it could've chartered a plane, if it were that important to get the crew to Louisville quickly.  Cost:  Around $15,000.

Or it could've raised the voluntary denied boarding compensation to $1500 or $2000 (and somebody would've taken that).

Instead, United is going to lose a lot of passengers.  That's true domestically, although not as significantly as you might expect because of the way the domestic market is segmented.  But it's about to be exceptionally brutal in China, for reasons that United probably couldn't have anticipated.  United has about 20% of the routes between China and the U.S., and it has made a major effort to serve the burgeoning Chinese travel market.  It turns out that the passenger who was denied boarding, then manhandled off the plane, is of Asian descent.  And that's gotten Chinese consumers talking about a boycott of United.

Over the course of around 48 hours, the video has been viewed more than 200 million times in China alone.

At one point, United's market capitalization--the value of its outstanding stock--was down by a billion dollars, about 6% of the company. It has since recovered to "only" a $255 million loss.

And it really couldn't have happened to a nicer airline.  (I mean that literally. It wouldn't have happened to a nicer airline.)

All airlines have their problems.  All airlines oversell flights, and as long as they handle it correctly, it's really OK.  But some airlines are better at handling it correctly.  That's why I heartily endorse Southwest.  They don't get it right every time, but they do put customer satisfaction as their first priority.  They do everything they reasonably can to make the travel process better, and it shows.  Simply put, I love flying with them.

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