Wootrader.com is moving to https://financeboards.com - sign up for a free account.

United


The recent overbooking incident in which a passenger was removed from a United Continental Holdings Inc.’s (NYSE:UALC) United Express flight by force, created a social media storm that points to the importance of positive public relations on airlines today.

United CEO Oscar Munoz didn’t appear to make things better when he referred to the involuntary removal of the passenger as “re-accomodation.” United shares were down more than 3% early Tuesday but recovered to -2.7% by midday.

Related: SWIFT-KNIGHT TRANSPORTATION COS. TO MERGE

The Overbooking Issue

The cause of the United incident was something airlines commonly do – overbooking or selling tickets to more passengers than the airplane can accommodate. While that may sound on the face of it like a bad idea, the truth is most airlines experience “no shows” – people who buy a ticket and for one reason or another don’t get on the plane.

To allow for “no shows” airlines are allowed to overbook flights. Depending on the number of passengers, rules require the airline to reimburse removed passengers up to several times the price of their ticket and guarantee them a seat on a later flight. Most passengers removed from a flight volunteer in order to get the reimbursement.

Better Solutions To Be Had

Travel experts suggest the United CEO should have offered a simple apology. Instead he used the “re-accommodate” line which quickly became a Twitter hashtag. According to Rupert Younger, a PR expert and director of the Oxford University Centre for Corporate Reputation, "The apology by the CEO was, at best, lukewarm or, at worst, trying to dismiss the incident."

Another PR expert, Ed Zitron, said the airline may not be offering a full apology due to fear of a lawsuit. Zitron added, "Had United shown compassion and intent to make things right, they could have come out of this at the very least looking like an airline that cares."

United Not Alone

MileCards.com released a study recently indicating that in 2016, Delta Airline Inc. (NYSE:DALC) offered compensation for being removed from a flight due to overbooking to more passengers than any other airline.

United was actually second, followed by Southwest Airlines Co. (NYSE:LUVC), Spirit Airlines Inc. (NASDAQ:SAVEC), American Airlines Group Inc. (TSX:AALC), Virgin America, Alaska Air Group Inc. (NYSE:ALKC), Frontier, and JetBlue Airways Corp. (NASDAQ:JBLUB). These figures, of course, refer to voluntary bumps. When it comes to involuntary removal from a flight, the leader was Southwest.

Related: THE CURRENT STATE OF AUTONOMOUS VEHICLES

Numbers Going Down

One bit of good news is that fewer passengers are being denied boarding against their will. Involuntary bumps, such as what happened on the United flight, are about 40% less likely to happen than they were in 2010.

Unfortunately, overbooking is still common practice. Last year 475,000 passengers were denied boarding (both voluntarily and involuntarily). The fact airlines are legally permitted to decide who gets kicked off the plane and to forcibly remove them if necessary, makes overbooking a PR nightmare and one airlines will have to deal with for some time to come.



Get Started For Free