What's behind United's unfriendly skies?

United Airlines' big toxic public relations dumpster fire just seems to get worse the longer it burns.  What an incredible take of corporate boneheadedness.

To make room for a deadheading flight crew, a passenger was dragged off a flight kicking and screaming as rent-a-cops bloodied his face.  First, the airline's executives dug in their heels and said the problem was the passenger, not their policies.  Then, as their stock tanked, they finally apologized to the passenger.  Then they apologized again.

By that point, the damage was done.  The passenger said he was in the hospital recovering from his wounds and lawyering up.  The company's market cap had skidded by $1.5 billion.  The coveted Asian flight routes market was in for trouble as Chinese, Vietnamese, and other social media sites lit up with charges of racism and vows never to fly that airline.  Congress was vowing to investigate.  And the speed with which social media was able to transmit the hysterical incident on tape rocketed and rocketed around the world millions of times over as the company stumbled around with different responses.

To what does one attribute such pig-stupid corporate behavior in a consumer industry such as an airline?  The inflexibility of the airline was mind-boggling.  You'd never see Starbucks or Michaels Arts & Crafts or Amazon treat a customer like that.  Except of course, airport contract workers at Starbucks – a different breed.

Airlines are full of such indignities – massive overcharges for baggage, capricious gate closings, paid carby snacks of paltry selection, insufficient overhead bin space with weak enforcement for violators, inadequate accommodation for bumped passengers (once when I was a college student, I was bumped overnight into a hotel and given no voucher for food), lost and delayed luggage (come pick it up yourself if we find it), lousy compensation for lost luggage, no accommodation for bawling babies or spillover customers from adjacent seats – and that's before you run into the tender hands of the TSA or high airport parking costs.

What is behind this?  The airlines themselves, for sure, but it looks as though the worker inflexibility may be the work of outdated unions at odds with the modern world – working to letter, not my job, mac, put the customer last may be part of it.  The other part is its flip-side – an out-of-touch corporate elite that finds that situation just fine, given the inability to press for better conditions.  Working together, they really couldn't empathize as a company with a doctor passenger who said he needed to be at a hospital to see patients and couldn't be bumped?  He was just a computer-generated random number to them, and they were determined to throw him off anyway.  And it doesn't appear that they are even bothering with the technical details anymore.  Whether of honoring their three-year-old pledge of assigned seats or giving passengers their bills of rights as the law requires, they are just sending in the goons.

The corporate culture is bad enough, but regulation adds more layers of horribleness, just as it does to much detested Obamacare.  One instance is how overbooking is handled.  Overbooking, by regulation, can be compensated only with $1,350 max if a passenger is bumped.  This is chicken feed to many passengers, and not worth the cost of a missed flight.  If airlines really do run into overbooking issues, offering up $100,000 for a lost seat would have plenty of takers and solve the airline's overbooking problem much better than forcible computer-generated bumping with nightsticks.  And it would be far cheaper than the lost market cap value or the lawyer and payout costs that are sure to come of this incident and plenty of others.  Investor's Business Daily has an excellent editorial on how this would work and how United's real problem is that it doesn't understand these basic economics of incentives.

Why is this incident so resonant?  Because it seems the awfulness of air travel has reached a critical mass.  The public is responding because so many passengers have had such lousy experiences and can't make it much better by patronizing another airline.  Maybe something good can come of this, as the revolt of passengers might just create a more innovative airline culture and get Congress moving to create more competitive conditions.

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