United Airlines: Did They Just Crash and Burn?

In case you missed it, an Asian man was drug off a United Airlines flight after being randomly selected to get booted.  If you’re looking to chuckle at another man’s plight, I encourage you to check out United Airline memes.  In true internet style, they’ve created a stunning recollection of the event.  United gets lambasted.

Really quickly though, I’d like to get one thing straight.  United Airlines HAS.  NOT. Lost $300-500 million.  They’ve lost $1.81 in their stock price.  That’s not ‘real’ money; it’s not revenue.  It’s stock that United Airlines lost possession of years ago when they sold it for financing.  And frankly, PR incidents like this have made companies lose far more than $1.81.  For all the hoopla, they’ve lost 1.23% in their stock price.  Companies lose more than that for bad quarterly earnings!  Heck, I’ve lost more than that on Fitbit!

This article though will be my own take on the do’s and don’ts, and then finally, what could United Airlines do differently?

United Airlines – Dirty Deeds Done Dirt Cheap

April 9th, 2017 United Airlines flight 3411 boards its passengers.  All seems well in the land of Make Believe.  Just before take-off, a flight steward requests four passengers to voluntarily disembark so crew members can board.  The steward didn’t get enough volunteers, so they picked out some Voluntolds to be removed.  Mr. Dao was one of the selected and refused to disembark.  After pleading with and bargaining, United Airlines called in Joey Knuckles.

Joey Knuckles did what Joey Knuckles does.  Mr. Dao now, allegedly, has a broken nose, concussion, and two broken teeth.  He was also robbed of his dignity.

The Celtic Ruling

There has been a lot of back and forth on this topic.  So, let me add one more.  This, as a whole (although very unfortunate for Mr. Dao’s constitution) was a great thing to happen legally speaking.  However, only if this makes it through the court system and doesn’t settle out of court.  I sound callous, so let me explain.  This is a gray area.  The DOT says that passengers can be involuntarily bumped for oversold flights.  United Airlines also notes in the Contract of Carriage that passengers can be removed for any plethora of reasons, specifically “passengers who fail to comply with or interfere with the duties of the members of the flight crew, federal regulation, or security directives”.

The problem with that idea though is that it’s vague and doesn’t really provide passengers with a true idea of what is expected of them.  Dao didn’t interfere with the duties of the flight crew assigned to the flight; federal law might provide a catch-all that disobeying any command by a flight crew is a violation, but it detracts from the spirit of the law; and we know Dao wasn’t in any violation of a security directive BEFORE being put in the situation of being disembarked.  Furthermore, most of United Airline’s Contract of Carriage deals with the non-boarding of a passenger.  Dao was already boarded and thus could potentially fall under the “transport” clauses of the contract which are far more stringent.  Let’s also remember, this flight wasn’t oversold and so those bits of the law aren’t really applicable.

Basically, but for United Airlines negligence in the scheduling of their own crew, Mr. Dao would have never been placed in an extreme circumstance.  But for, United taking proactive, reasonable measures to not allow passengers to board so they can deal with their own logistical errors, Mr. Dao would still be in possession of his two front teeth.  The policies and rights of passengers were, at best, vaguely written by United.  Ambiguity gets read in favor of the person who didn’t write the contract.

What Should United Airlines Have Done?

United Airlines favored central, corporate policy over local creativity.  Stories conflict on this, but somewhere along the lines United Airlines offered $400, $800, or even $1000 to get a volunteer (most stories don’t corroborate the $1,000 though, that was offered by the CEO it appears).  Just so everyone is on the same page, that’s money for just the one-way ticket.  However, everyone has a price.

Once no one takes the communal bait, negotiations say to pick out the weakest link.  Approach them directly and offer them a best offer; people respond better when being talked to rather than at.  “Hey Tommy!  Thanks for flying United Airlines.  Unfortunately, we really, really need some seats.  We hate to inconvenience you, but what if I give you $1,000, a free hotel stay at the Marriott, and we promise to get you to Louisville tomorrow morning?  Again, so sorry to even ask, but what do you say?”  So what if United pays a little overboard for the seats on this flight.  It was their fault they were in the predicament.

United Airlines CEO Shark head!

How people see United’s CEO now

If nobody still takes the bait, that’s when you bring in the muscle.  But once the muscle is there, you RE-OPEN NEGOTIATIONS!  Make another general offer: this time with the conditional “someone is leaving this plane.  Our rules and regulations allow us to remove a passenger for any reason.  Would anyone now like to take our offer?”  But say that with more tact.  As a bystander after the fact, I disagree with that statement, but in the moment, I would have no idea.  Add an extra $150 cash to the prize with an extra $100 in airline vouchers they’ll never use.

Conclusion

United Airlines should probably collect some money bags.  Their policy was poorly written.  Furthermore, I don’t believe their own regulations actually allowed them to remove a boarded passenger.  There was also plenty of time to call the actual police, rather than airport security.  Sworn officers have liability protection; airport security does not.  Finally, to seal the deal, United’s CEO guaranteed a huge payout.  His public statements were callous and were unnecessarily inflammatory.  His statement should have been short.  An incident happened – we’re reviewing it.  I trust my employees to act professionally.  There is no indication, at this point, that -UNITED- employees were out of line.  That said, look for a final comment in the coming days after we’ve processed all of the information.

It’s worth mentioning that Dao also helped escalate the situation. Once the men in black show up, it’s time to pack your things and storm out in Salt Bae fashion – that is to say, eccentric.  Throw in a “you’ll be hearing from my lawyer” for good measure.  I can see Dao’s state of mind though.  His medical license was on probation.  He may have genuinely believed that if he was a no-show for his patients they may revoke his license permanently.  In that case, it’s time to look for mercy from fellow passengers.  Everybody loves doctors.  Somebody would have fallen on the sword.  Instead, he chose to instigate with the flight crew and caused a scene.  That’s no bueno.

To my chagrin, I believe this settles out of court for around $30 million, a gag order, and United Airlines coming out smelling like a rose.  If I were on the Board of Trustees though, this settlement would be coming out of the CEO’s bonus compensation for his actions.  Say stupid things, win stupid prizes.

Celts, how do you feel about this incident?  Who was at fault, United Airlines or the airport security?  Let me know in the comments below!  Be sure to check me out on Facebook by clicking here!  If you’re looking to purchase real estate or speak to me about business consulting, check me out here.

Cash Flow Celt

I'm just a local business and finance nerd looking to help people get educated about small business, marketing, and personal finance! I write about anything and everything that I can tie into those themes. I'm also Central Florida's only Kilted Realtor, so I write about Real Estate too! Check out my About Me page to see the origins of Cash Flow Celt.

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4 Responses

  1. Jack Catchem says:

    Good analysis. Situations like this make me think of my favorite Miles Cameron statement, “Battles only happen when both sides think they can win” (paraphrased).

    Having been through the court wringer multiple times, I love a negotiated agreement on the Street MUCH better. As I’ve advised multiple people in various disagreements: take the deal…then crucify the company on Angie’s List/Blog/Yelp. Look at what happened to Uber. Public commentary hurts the company AND you get to keep your teeth!

    • Cash Flow Celt says:

      Retreat is the better part of valor. You can always regroup and plan a better tactical approach – this was no different.

      Interestingly enough though, Dao is now better off. He had a civil disagreement with United, but nothing would have EVER come of it. Now, it gets resolved, he gets a pay day, and customers as a whole potentially benefit through better, and more clear, terms of service.

      So perhaps our judicial system is flawed.

  2. While it’s unfortunate what happened to Dr. Dao, if he followed instructions by the airport police this probably could have been averted. He’ll get a huge settlement I’m sure and live on some island afterwards. I wonder how long before United loses this image.

    • Cash Flow Celt says:

      The stock price has already mostly recovered. I would say this will be a bad quarter, and then all we be forgiven come the third quarter.

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