Economy

Why United Airlines fiasco resonated with so many

How others see it

Some people saw implicit racism. Some were outraged at the lack of humanity and fairness. But the video of a passenger being forcibly removed also speaks to the boiling frustration many Americans have toward the corporate class.

People with Asian community organizations from Chicago hold signs to protest after Sunday's confrontation where David Dao, 69, of Elizabethtown, Ky., was removed from a United Airlines airplane by Chicago airport police at O'Hare International Airport Tuesday.
Chris Sweda/Chicago Tribune via AP
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[Update: This story was updated at 11:30 a.m.]

When video circulated early this week of a man being dragged from a United Airlines flight after refusing to give up his seat to make room for four airline employees, the footage left many wondering: Has air travel really gotten this bad?

The fallout from the footage, in which a man, whom witnesses overheard saying he was a doctor who had to see patients in the morning, is forcibly removed from his seat by Chicago airport police, was swift and disastrous. It didn’t help that United CEO Oscar Munoz initially responded by characterizing the passenger as “belligerent” and praising the actions of United employees. David Dao suffered a concussion, a broken nose, and lost teeth, his lawyers said Thursday.

The company’s stock plunged Tuesday. Members of the US Senate called for an investigation. United customers posted videos and pictures of themselves cutting up their frequent flier cards, and in China the incident went viral amid allegations of racism toward a passenger of Asian ethnicity.

But if the outcry reflected the shocking details of this one incident, the incident also hints at a deeper public frustration with the airline industry and the service economy more broadly.

Jacob Turcotte/Staff SOURCE: Department of Transportation

Many customers feel they are being treated worse and worse, with few financial consequence for corporations. (United, the world’s fourth-largest air carrier, made $2.3 billion in profits last year). Increased stratification of services, where a select group of elite travelers get all the perks while seats get smaller and fees pile up for the rest, may be increasing that sense of dissatisfaction.

And it’s not limited to aviation or even the hospitality industry. Cable and internet service companies came in high in one 2015 survey of customer dissatisfaction, conducted by Ipsos. Health care, insurance, and utilities were also high on the list. But airlines are the venue for some big disappointments.

“United’s policy is make the most money you can, but at some point that interferes with your actual job moving people from A to B,” says Jeff Wagg, a licensed travel agent and partner in Absolutely Cruises!, a cruise-focused travel agency based in Cambridge, Mass. “There’s no other industry where you pay for a service way ahead and then you might not get it if it isn’t convenient to them.”

“This is an oligopolistic industry that has become increasingly callous toward customers as it rakes in billions in profits thanks to strong demand and low oil prices,” The New York Times editorial board wrote Tuesday. “Disgruntled travelers may howl on Twitter or send furious emails, but airline executives know their bottom lines are for the moment secure.”

One twist, though: This week’s social-media furor was a very high-profile reminder that consumers aren’t actually such helpless victims. In at least some cases their concerns can drive stock prices and corporate behavior. (Mr. Munoz has said United will never again have a passenger dragged from a flight.)

And to some degree, consumer dissatisfaction is a mirror of rising consumer expectations or aspirations in an era of ever-advancing technology.

When it comes to airlines, the dissatisfaction may also stem in part from travel becoming cheaper and more accessible than ever before, giving more people a chance to experience it but also come face to face with those receiving better, more expensive treatment.

The (certain type of) customer is always right

United initially said that the passenger who was removed from the plane was randomly selected after no one else would give up their seats on the full flight to make room for employees who needed to travel in order to be the crew on another flight. But according to Mr. Wagg and others, that “random selection” is anything but.

“If you’re in first class you’re not getting picked. In economy plus you’re not getting picked. If you’re a frequent flyer you’re not getting picked,” he says. “It’s people who don’t fly all the time who don’t know the game.”

But even if that’s the rule, there are exceptions. In the wake of the incident, the Los Angeles Times ran an account of a first-class United passenger on a trip to Hawaii being threatened with handcuffs after initially refusing to give up his seat to an even higher-priority traveler.

The dragged-passenger incident has raised questions of whether airline tactics to fill all available seats and maximize profits have gone too far.

“No one deserved the treatment he received,” says Robert Stuart, a sometime customer of United from Tallahassee, Fla., who says he will never fly the airline again. “When employees trump the rights of paying customers, the problem is taken to a new level. And when employees resort to violence against customers, a clear line has been crossed.  I hope this doctor pursues some type of legal action. This is assault.”

At the same time as most air passengers are facing more fees for luggage, seat assignments, and even bathroom use, amenities for business class travelers, from flat beds to private bathrooms, are getting more luxurious.

That aggressive sorting of travelers according to what they are willing to pay is a relatively recent phenomenon, says Herman “Dutch” Leonard, a professor of business administration at Harvard Business School. “There is much more work on price discrimination, trying to figure out who would be willing to pay a little bit more and how can we get them to pay a little bit more,” he says. People have come to resent all the extra airline charges – bags, carry-on, there’s this sense of, 'if we can take more money from you we will.' ”

“The entire travel industry is going in this direction,” agrees Mr. Wagg of Absolutely Cruises! “Hotels overbook all the time, too [to avoid the sunk cost of empty rooms when people don’t show], and you are more likely to get bumped based on how much you paid.”

On cruise ships, he says, first- and second-class passenger tiering is now common, with exclusive areas blocked off for VIP customers. “We weren’t seeing that in the '80s and '90s.”

The travel industry makes the bulk of its profits off big-ticket customers, “so they make the steerage people as uncomfortable as they can so they will pay more,” he continues. “We get complaints all the time that people feel they are being nickel-and-dimed to death.”

More accessible, less loved

Part of the reason more customers have complaints, however, is that more customers are actually traveling in the first place. Since the airline industry was deregulated in 1978, inflation-adjusted ticket prices have fallen by about 50 percent, according to Airlines for America, an industry trade group.

But in recent years, increased industry consolidation has reduced competition between air carriers, which have ridden added fees and low oil prices to record profit margins.

Overall, North American airlines have cleared $20 billion in profits in each of the past two years, and in 2014 Delta and United each made an estimated $1 billion in extra fees for things like checked bags, seat preference, and other formerly taken-for-granted amenities. That, combined with the practice of cramming more seats into smaller spaces, feeds the perception that air carriers aren’t exactly a customer-first enterprise (“Push the sardines in the can and shut the door,” is how Mr. Stuart described his handful of United experiences).

If the short-term fallout for United is any indication, however, the case of the dragged-off passenger could be a tipping point – especially as incidents are increasingly documented on video and spread online.

“Everyone is on notice that all actions of employees should be thought of as available for public display. I don't think companies realize how vulnerable they are to this,” says Professor Leonard at Harvard. “I think this means that if you’re United, you push the discretion to front line staff and emphasize the importance of maintaining relationships with your customers.”

Staff writer Lonnie Shekhtman contributed to this article.