United Airlines - Costly mistake

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Bootstrap
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Re: United Airlines - Costly mistake

Post by Bootstrap »

Josh wrote:The passengers and the airline didn't agree to an auction in the event all the passengers who booked on that flight showed up.
When I book tickets, everything in the user interface leads me to believe that I've bought a seat on a plane that will take me from one airport to another at a given time. That is the only explicit agreement most users ever see when they buy a ticket.

Most are surprised to learn that the real contract is not the one they saw in the process of buying a ticket. That's a kind of bait and switch. They never saw the contract that says that the airline didn't actually say they will give you that seat if they want to give it to someone else.
Josh wrote:If they did, I'd agree with you, but the price for tickets would be a lot higher. And there still have to be limits. Could the passengers all collude not to accept the airline's offer until it hit $1 million?
Doesn't that depend on the rate at which passengers are bumped? Let's see what that rate is.
In 2016, the 12 biggest U.S.-based airlines denied boarding to 475,000 passengers, including about 41,000 who were removed from flights involuntarily last year.

That’s a rate of about 6 passengers who are involuntarily bumped from flights for every 100,000 fliers, according to the U.S. Transportation Department. That rate dropped from about 7 fliers for every 100,000 passengers in 2015.
How much do you think the airline would have to offer these 6 passengers to delay a flight? How much would that add to the cost of the tickets for the other 100,000 fliers? Let's do a thought experiment. Suppose the upper limit an airline is willing to raise the tickets is 1%, and they want passengers to pay for the full additional cost through ticket prices. Suppose a ticket costs $500 on average after raising the tickets by $5 to guarantee seats.

We now have 500,000 available to try to coax these passengers to give up their seats, which means we can offer each passenger up to 83,333.33 to delay their flight. If a passenger were willing to give up a seat for less money than that, we would need to raise prices by much less than 1%. I'm guessing that if I told people I would give them a cash check for $1,000 or $2,000, I could get a handful of people to give up their seat on most flights.
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temporal1
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Re: United Airlines - Costly mistake

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NY TIMES
Lawn-Chair Pilot Faces $4,000 in Fines
Published: December 19, 1982
LOS ANGELES, Dec. 18— Larry Walters, the lawn-chair pilot who catapulted to fame when balloons lifted his contraption 16,000 feet into the sky, faces $4,000 in fines for violations cited by the Federal Aviation Adminstration.

''If the F.A.A. was around when the Wright Brothers were testing their aircraft, they would never have been able to make their first flight at Kitty Hawk,'' said Mr. Walters, who plans to challenge the fines.

Mr. Walters, a 33-year-old truck driver from North Hollywood, surprised himself and several airline pilots July 2 with his aluminum lawn chair tied to 42 weather balloons. He had to pop some with a pellet gun to land.

The F.A.A. has cited him for four violations of the Federal Aviation Act, including operating a ''civil aircraft for which there is not currently in effect an airworthiness certificate'' and operating an aircraft within an airport traffic area ''without establishing and maintaining two-way communications with the control tower.''
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ken_sylvania
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Re: United Airlines - Costly mistake

Post by ken_sylvania »

Josh wrote: The passengers and the airline didn't agree to an auction in the event all the passengers who booked on that flight showed up.

If they did, I'd agree with you, but the price for tickets would be a lot higher. And there still have to be limits. Could the passengers all collude not to accept the airline's offer until it hit $1 million?
Josh, would you be willing to provide the data on which you are basing your statement that ticket pricing would be a lot higher if the law didn't set a legal cap? I'm inclined to think that ticket pricing would actually be virtually unaffected.

Also, I'd be inclined to say that Mr. Dao did not make an agreement with the airline that he would get back off the plane if they wanted his seat for another crew member.
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Re: United Airlines - Costly mistake

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So am I understanding this math right? These airlines have a policy must have worked most of the time.
A policy that garnered no public outcry in 40,999 times in just the last year, 99.997%. They had a policy that worked on all but .002% of the time and that is apparently completely unacceptable?

I'm posting to much on this issue. It's just interesting to my how quickly people will loose the hounds over stuff like this. Its sobering, really.
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temporal1
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Re: United Airlines - Costly mistake

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RZehr wrote:So am I understanding this math right?
These airlines have a policy must have worked most of the time.

A policy that garnered no public outcry in 40,999 times in just the last year, 99.997%.
They had a policy that worked on all but .002% of the time and that is apparently completely unacceptable?

I'm posting to much on this issue.
It's just interesting to my how quickly people will loose the hounds over stuff like this.
Its sobering, really.
understatement.
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Re: United Airlines - Costly mistake

Post by Josh »

Personally, I really question what kind of person isn't happy about getting $1,350 in exchange for the inconvenience of being a day late to their destination.

Do any of us really do anything so important it's not worth $1,350? What if the weather delayed us a day?
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Re: United Airlines - Costly mistake

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RZehr wrote:So am I understanding this math right? These airlines have a policy must have worked most of the time.
A policy that garnered no public outcry in 40,999 times in just the last year, 99.997%. They had a policy that worked on all but .002% of the time and that is apparently completely unacceptable?
What they did to Mr. Dao is unacceptable enough that Chicago is reconsidering their approach to airport police, some jobs are on the line, United had to change their policy and make a public apology, and their stock price is down.

Suppose I asked you to explain to Mr. Dao why what happened to him is acceptable. What would you tell him?

What would you tell other passengers sitting near him who were horrified and filmed this because they thought the world should know, even though nobody was taking their seats?

These algorithms work very well in general. But a few flagrant exceptions is a big deal. After all, suppose 99% of women are not raped, but your wife is. Is that acceptable?

Why on earth wouldn't United rather give someone a check to free up the seat they paid for than let something like this happen? As of today, they have pretty much decided that's what they would rather do. Does anyone really think United is silly to change their policy?
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Re: United Airlines - Costly mistake

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Josh wrote:Personally, I really question what kind of person isn't happy about getting $1,350 in exchange for the inconvenience of being a day late to their destination.
In free market economics, you get to decide your own price, but you don't get to decide the price that someone else would accept.
Josh wrote:Do any of us really do anything so important it's not worth $1,350? What if the weather delayed us a day?
Hmmm, there are days that I've been scheduled to speak at a conference or teach a workshop where each participant was paying at least that much. In some cases, if I couldn't be there, I would have to have their money refunded. (I usually travel a day early when it's that important, I don't trust the airlines, I have travelled quite a bit.) There are things like funerals and weddings. Suppose I'm the groom heading to my wedding ... at what price would I miss that wedding?

People often travel for reasons that are very important to them.
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Re: United Airlines - Costly mistake

Post by ken_sylvania »

RZehr wrote:So am I understanding this math right? These airlines have a policy must have worked most of the time.
A policy that garnered no public outcry in 40,999 times in just the last year, 99.997%. They had a policy that worked on all but .002% of the time and that is apparently completely unacceptable?

I'm posting to much on this issue. It's just interesting to my how quickly people will loose the hounds over stuff like this. Its sobering, really.
You do have a sobering point. However, I think part of what strikes a nerve is that people do feel despised when they fly, and this became a flash point that people could rally around. People perhaps see Mr. Dao as standing up for what they feel should be their rights when they fly.

Yes, United does likely have the freedom to make a policy like this. The public also has the right to complain about it.

It's good for us to keep in mind that if we are in a service business, we rely on the goodwill of our customers, so let's act like it.
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Re: United Airlines - Costly mistake

Post by ken_sylvania »

Josh wrote:Personally, I really question what kind of person isn't happy about getting $1,350 in exchange for the inconvenience of being a day late to their destination.
I'm white, male, under 50, have dark hair and blue eyes. That's the kind of person that wouldn't be happy to get to a 2-day trade convention a day late in exchange for $1,350, considering I've spent well more than that sending my display materials there and have meetings set up with vendors and possibly customers as well.
Josh wrote: Do any of us really do anything so important it's not worth $1,350? What if the weather delayed us a day?
United apparently felt that getting their crew members to Louisville was worth $1,350 plus the loss of the goodwill of at least one passenger.
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