The United Airlines Incident

Here’s the most thoughtful piece I’ve read on this debacle:

Here’s how it usually works: the airline starts offering monetary incentives (could be flight vouchers or cash or other considerations) to get enough customers to voluntarily give up their seat, increasing the offered price until the market for seats has cleared, that is, you’ve found enough people to give up the seat they paid for.

That way everyone is happy, either with their seat or with payment that the person considers sufficient to make up for losing the seat.

My criticisms of United and the police in this incident are not based on general hostility to overbooking, which both makes great economic sense for the airlines, almost certainly makes ticket prices less than they otherwise would be for customers, and creates win-win scenarios for airlines and passengers when the airline is smart enough to actually carry through the Simon policy to a market-clearing result.

In the case of this United flight from which Dao was violently ejected, by all accounts United tried two rounds of offers, and after $800 decided to start busting heads.

There is zero reason to believe that quick increases in the price offered to voluntarily abandon your seat would not have resolved this situation far more quickly and justly than calling the cops on Dao. (And, almost certainly after all the dings in the market and possibly the courts ahead for United, it all would have been far less costly for United as well.)

More here.

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