Prohibiting overbooking will drive up costs for everyone.
This is something everyone on the internet today seems to not understand. Those who do seem to be under the impression that their favourite airline doesn't overbook.
Quote:
Originally Posted by kobasew19
United should have just offered more credits... Like the story below with Delta.
Delta has paid an insane amount of money in the last 6 days for people to abandon trips. But an $11k payout requires the flyer to be savvy enough to work the system. Anyone one board this plane could have done so, but instead our doctor chose to fight for his seat like it was his dog - which is understandable, not saying he shouldn't have. What this comes down to, really, is GGG's post: sweetening the pot until someone bites is the only way forward. Asking people to leave their seat and compensating them according to the applicable laws is not a horrible plan, but falls apart for an airline as gigantic as United that can't keep tabs on how well all their contracted above-wing staff are trained.
Or you know they can just sell the exact amount of seats that are available.
Don't give me the garbage about how complicated it is, they made it complicated to make more money.
It's very simple. 100 seats on the plane, 100 get sold. Some cancel? Boo-hoo, suck it up and pass on the costs like airlines do with everything else.
I mean... I haven't given an opinion either way. I'm not opposed to federal law banning overbooking and that's what it will take, because it's not like a single airline is going to voluntarily stop and leave money on the table if others are allowed to continue.
At the same time, this incident was not caused by overbooking so it's somewhat moot.
Why would it cost the airline? you buys your ticket its your problem if you cant go, I thought that's what flight insurance was for.
It does not help United if you retrieve the value of your fare from insurance; it merely encourages them to continue overbooking as you pay no penalty. As it is now, you fully forfeit the ticket on most fares by no-showing so on a 100 seat airplane with 5 no-shows that the airline overbooked by 5 seats, they are making 105 tickets worth of revenue. A prohibition of overbooking would therefore cost the airline the revenue of 5 additional tickets that could have been sold to fill the seats left by the no-shows.
Let's say United flies 5,000 flights per day (it's a bit more) and overbooks only seat per flight (averaged out, it's more) and the average fare across their system is $150 (it's more). The gross revenue of overbooking for United and United Express would be around $275 million per year from which you would then subtract the costs of getting it wrong and paying people for hotels and vouchers, etc. This is an airline with over $30 billion in annual revenue, but that loss of many millions of dollars would be recouped by raising fares.
I suppose of note is that depending on the exact contract United has with Republic, they can't even be named in the impending lawsuits. It's just their name on the airplane, but everyone hates them already.
The key being the compensation has to be accepted and not forced onto the passenger
Then they wouldn't do it cause everyone would seek $11k payouts like the Delta guy, overbooking would go away, and we'd have those higher fares anyway.
40,000 people are involuntarily bumped a year because it's legal, and this guy fought for his life so it's news. Republic also flies for Delta out of O'Hare, and I bet these same same security guys work those flights too... this just as easily could have happened on a flight operated for Delta. I'm not saying put the United pitchforks down, but really most people's beef is with the DOT and not United, they just don't know that.
Then they wouldn't do it cause everyone would seek $11k payouts like the Delta guy, overbooking would go away, and we'd have those higher fares anyway.
40,000 people are involuntarily bumped a year because it's legal, and this guy fought for his life so it's news. Republic also flies for Delta out of O'Hare, and I bet these same same security guys work those flights too... this just as easily could have happened on a flight operated for Delta. I'm not saying put the United pitchforks down, but really most people's beef is with the DOT and not United, they just don't know that.
It's legal because the laws were basically written by airline lobbyists. Most people are frustrated that the framework of doing business with the airlines is so one-sided on the side of airlines. Airlines treat your side of the contract as binding no matter what the situation, even if they can't get you where you paid to go. On the other hand, they seem free to not live up to their end of the contract at their own whim.
If the consumer doesn't like it, then their only option is to not fly, since all the airlines have the same policy.
It will be interesting to see how United (and other airlines) handle similar incidents in the next little while with the social media microscope on them.
That was yesterday. This morning (pre-market) they're down a little over 2%. Surely people will come to their senses and recognize that one guy being treated terribly isn't going to crater a $22bn operation, but at least for now they're getting hit.
It will be interesting to see how United (and other airlines) handle similar incidents in the next little while with the social media microscope on them.
For a while they'll just make sure they don't have to bump after boarding, and increase comp offers. If this particular situation happens again, they'll simply call the police which is what should have happened the instant he refused, and people will be far less likely to fight unless they want to go to jail. The law is still on the airline's side, because even if you paid for the seat you still have to leave.
Because if it's Chicago police dragging the guy out and making him bloody, then it's a lot easier to shift the blame on to them, not to mention the guy is then resisting arrest/interfering with a flight crew and possibly getting felony charges.
That was yesterday. This morning (pre-market) they're down a little over 2%. Surely people will come to their senses and recognize that one guy being treated terribly isn't going to crater a $22bn operation, but at least for now they're getting hit.
This story has a little more legs than most it seems, as an awful lot of people emphasize with him. Hopefully it leads to some changes on how airlines treat their passengers.
This story has a little more legs than most it seems, as an awful lot of people emphasize with him. Hopefully it leads to some changes on how airlines treat their passengers.
Yeah and I am not saying everything is great and we should ignore it in those terms. But really, it sure looks like overreaction from where I am seeing in the market alone. I mean its over $450mn loss of market cap based on this incident alone.
