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May I Drag You from Your Seat?

eye on the news

May I Drag You from Your Seat?

Corporate cluelessness is leading to a decline in institutional confidence. April 11, 2017
Economy, finance, and budgets

Americans trust big companies less and less. When Bill Clinton took office in 1993, only 31 percent of Americans said that they had little or no trust in business, according to Gallup. On the eve of Donald Trump’s presidential victory, 38 percent said that they didn’t trust business. Some public skepticism of any large institution, whether government or corporate, is healthy. But that skepticism has turned rancorous—and big companies have played a significant role in their loss of credibility.

On Sunday, United Airlines became the latest corporation to show that it is unaccountable to its customers. As everyone knows by now, the company had overbooked the last flight of the day from Chicago to Louisville. No one volunteered, so United bumped four paying customers. Three left voluntarily. The fourth, a 69-year-old man, refused to go. Chicago’s aviation police officers dragged him out of his seat and up the aisle, causing bleeding to his face.

Instead of apologizing and promising to change its protocol, United grew defensive and entrenched itself behind legalistic corporate-speak. The company claimed that its employees had “followed established procedures” to remove the man from the plane—to “re-accommodate” him, in their clunky euphemism—using its legal right to deny people boarding when it overbooks a plane.

This approach reminds ordinary people that they are at a legal disadvantage in their day-to-day business transactions with large institutions. United’s contract of carriage— the rules you agree to abide by when flying—is 37,286 words long, the length of a short book. Nobody reads it.

Aside from the legalese, people don’t read contracts of carriage, or warranties, or car rental agreements, or website terms of service for a good reason: we have no input. It’s not as if United has a team of lawyers to propose a draft of the contract, and then each passenger employs his own team of lawyers to pore over it and decide which provisions they think are fair or not, sending it back to United for negotiations. If you don’t electronically sign the contract of carriage as is, you can’t fly. That technically insulates the company from as much liability as its lawyers think they can get away with, while preserving a tattered freedom of choice for the consumer.

The law aside, Americans have an innate sense of fairness. Bumping a passenger before he boards an aircraft may be fair, if inconvenient. Frequent fliers are accustomed to seeing it happen, and they know that they run this risk. Bumping a passenger after he is on the aircraft, by contrast, is unfair. After a prospective flier has arrived at the airport on time, thrown away his water, and gone through security and boarding, his reward is that he gets to relax for a couple of hours with a book or some music. He is done worrying about missing his flight. 

When United decided that it needed some seats, the company could have used simple economics to change behavior. If nobody took up the airline’s reported offer of $1,000 to leave voluntarily, they could have raised it to $2,000, or $5,000, or $10,000—in cash, not vouchers. Airlines charge whatever they can get from the market for their seats, so why should auctions to find “volunteers” to be bumped have an artificial price ceiling? Instead, the airline used its power to summon the government’s brute force to circumvent market forces.

Consider that United bumped its four passengers not because it had booked too many paying customers, but because it needed to fly four of its own employees to Louisville. The airline found it inconvenient to make its employees wait until the next day. But United did not seem to consider that the same truth holds for the flying public. The man that United dragged off the plane claimed to be a doctor with patients to see. Other fliers refused to give up their seats voluntarily because they, too, presumably, had things to do and places to be.

United is not the only corporation alienating Americans by acting outrageously. This week, Wells Fargo moved to claw back $75 million in compensation from its former CEO and retail-banking chief, noting somewhat startlingly that the CEO had been aware of systemic fraud at the bank for 15 years.

It’s time that corporate executives do some self-examination into their own role in losing public trust. The customer isn’t always right. But an airline that assaults a customer is always wrong.

Photo by Scott Olson/Getty Images

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