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Imbalance of Power (Gwen Moritz Editor’s Note)

4 min read

I fly about three times a year, always because I need to get somewhere and back on a fairly tight schedule, so I was blissfully ignorant of the finer points of airline compensation for passengers bumped from overbooked flights.

I knew airlines overbooked because I have heard gate agents seeking volunteers in exchange for varying offers of compensation. But until the United Airlines incident that shocked the world, I hadn’t given any thought to the fact that a passenger could be bumped involuntarily.

It would never have occurred to me that any airline would, or could, remove passengers who had already boarded for any reason other than bad behavior. I didn’t understand that an airline could count on not having to spend more than $1,350 for each passenger bumped, the maximum compensation required by the Federal Aviation Administration.

But now I know that what happened to Dr. David Dao, the 69-year-old Kentucky doctor whose bloody nose and exposed torso have been on every screen in America, could have happened to anyone who, like me, didn’t understand that resistance to the all-powerful airline was worse than futile. In fact, there’s no reason to believe that Dr. Dao’s experience was unique; he’ll end up a wealthy man because the day has arrived when every passenger has a handy video recorder. If this had happened 10 years ago, we might never have heard of Dr. Dao, even if he had sued United for his injuries.

I’m old enough to remember when flying was fun — or maybe I was just really young then. I’m certainly old enough to remember when flying was tolerable, but now it’s just one of those miserable tasks that must be done. Frayed nerves are the tie that binds everyone in an airport into a sympathetic community.

As is typical when something routine goes so spectacularly wrong, several factors combined to create the Dao Incident. Certainly no one from United or the Chicago Department of Aviation intended for a retirement-age doctor to have his face smashed.

But it seems to me that the essential factor was the imbalance of power between the airlines and the passenger. This is in part because consolidation of the industry has left consumers with fewer choices — a limited number of planes are going where you need to go when you need to get there — so it’s increasingly a seller’s market, and the airlines know it.

You have to give the airline the full fare before you receive any services — a lot of businesses are like that, including buying a subscription to Arkansas Business. But the airlines routinely collect money in advance from more people than they can serve. Sweet!

Then if everyone shows up, they can look for cheap volunteers to give up their seats or, in the worst case, can pay the maximum (four times their fare, up to $1,350) and bump someone involuntarily. I suspect airlines love that particular regulation just as it is. Until someone’s nose gets broken or teeth knocked out, the risk from overbooking is small and easily managed.

Removing the cap would change the dynamic entirely. Finding volunteers would become a game of “Deal or No Deal.” Bumping would become more costly — Delta reportedly reacted to United’s misfortune by giving gate agents authority to pay up to $2,000 in flight vouchers and supervisors up to $9,950 — so overbooking would become riskier. Airlines would do less of it.

A game theorist interviewed by NPR suggested doing the negotiations privately by text message and starting the bidding high and working down.

Kevin Zollman, a philosophy professor at Carnegie Mellon University in Pittsburgh, said a text message would remove peer pressure from the negotiation. “Humans are really sensitive to being suckers,” Zollman told NPR, and a passenger might pass up a tempting offer if other passengers aren’t validating the attractiveness of the offer by volunteering.

Zollman also suggested that the airlines start with a generous theoretic offer — if we need a volunteer, would you give up your seat for $2,000? — and then lower the offer to find the cheapest point at which enough volunteers would be willing to give up their seats. He thinks this would result in more volunteers and fewer people being bumped involuntarily; I think it might end up being even cheaper than bidding up. And it would certainly help the airlines avoid those passengers who aren’t willing to be delayed for any price, as was the case with Dr. Dao.


At a minimum, airlines should never, ever bump people after they have already boarded. That’s just cruel.


Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.
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