Hard flights make bad law
UNITED AND OTHER CAPITALISTS ARE TO BE DRAGGED THROUGH THE AISLES AND PUNISHED.
The shares of United Continental Holdings rose in Monday trading, in anticipation of the airline operator’s earnings report after the close and CEO Oscar Munoz’s pending conference call Tuesday when he will be interrogated over United Airlines’ manhandling of Dr. David Dao.
Get ready for another wild outbreak of over- the- top reaction. While shareholders do not seem too concerned — profits were up and United stock traded after hours near US$ 72 late Monday, not far from the company’s recent 10- year high — others are still at war. In the media, among politicians, in the Twitter universe and within the consumer-activist community, United is a big corporation that needs to be dragged through the aisles and punished along with the entire airline industry, if not the entire capitalist system.
The real question is exactly how much bad policy can be initiated in the wake of what amounts to a lot of fake news surrounding the United Airlines fiasco.
In Canada, Transport Minister Marc Garneau, egged on by fake consumer advocates, has a new air travellers bill of rights in the works that he says will make sure a United situation never happens in Canada. In the United States, there are calls for the re-regulation of the airline industry, with Senator Richard Blumenthal proposing 22 consumer- protection regulations. At the extreme, the Dr. Dao video clips are being repurposed to condemn a swath of industries — telecom, big pharma, banking — as evil corporate wrongdoers that routinely plunder and beat up consumers.
Maybe, as the facts emerge more clearly in the days and weeks ahead, everybody will settle down. It is clear that blunders were made at the gate before and after the boarding of the United flight from which Dao was removed. But the blunders, as revealed so far, have little or no relation to many of the issues that everybody keeps talking about.
For most of last week the Dao story was said to be a function of airline overbooking. The story persisted for days, even though no overbooking had occurred. It also emerged that the aircraft was not operated by United, but by Republic Airlines on behalf of United. Why did United CEO Oscar Munoz not immediately denounce the unconscionable removal of Dao and put the blame clearly on the CEO of Republic? News that Republic was the operator, not United, appears to have come from United’s airline pilots’ union.
According to news reports over the last few days, here’s what happened. The Wall Street Journal says that Republic officials called an hour before Dao’s flight was scheduled to depart and asked for four of Republic’s airline crewmembers to replace passengers. But for some reason, gate agents went ahead and loaded the passengers onto the fully booked flight.
Then the Republic crew arrived minutes before departure. A procedure to remove the passengers was followed, including offering compensation. That failed, so unlucky passengers were randomly selected and asked to leave the plane. When Dao refused, airport police were called in.
It seems clear from the videos that the airport cops — seen speaking into lapel mics — were taking orders from outside the plane when they confronted and removed Dao. The removal process was carried out in a brutal manner that is horrific to watch. Somebody should be held to account, but not United and not the airline industry.
Everybody loves to hate the airline industry, but the wave of exaggerated claims and overstatements is out of proportion to the blanket condemnation falling upon United’s CEO and airlines everywhere, including those in Canada.
The consumer groups riding the United blowup are dubious representatives of all passengers. Calls for forcing the airlines to stop the practice of overbooking are easy to make, but fail to acknowledge that the corporate motivation for the practice is to fill seats and maintain the low prices many passengers insist is their right.
A new batch of regulations on the industry will not help passengers. The existing regulatory requirements are already too onerous and may in fact have been partly responsible for the United mess. News accounts say the Republic Airlines and Chicago airport authorities were following the rules.
Exactly what Garneau has in mind for Canada is unknown. His new passengers bill of rights would presumably replace an existing protection system brought in back in 2008. Known as “Flight Rights Canada,” that one includes a “code of conduct” for Canada’s airlines that appears to prevent forced ejection from a flight under normal circumstances. Nobody has ever been dragged off a Canadian flight to make room for somebody else.
The airline industry, if anything, is over- regulated and overprotected against different forms of competition. More rules won’t help. As United’s story plays out, as facts get separated from falsehoods, and as CEO Oscar Munoz gives his big shareholder performance on Tuesday, the world of air travel should be able to settle down into a review of what really happened to Dr. David Dao, rather than what a lot of people want to believe happened.