In defense of the indefensible: 10 lessons from the United "bumpgate"

What, or who, are we mad at? And what does this mean for corporate leaders?

Like me and like hundreds of millions of people, you have seen the viral video of a passenger, Dr. Dao, being brutally removed from United Airlines flight 3411. Like me, and like hundreds of millions people, you were outraged. When we see these images, we are angry. #boycottUnited!

And yet, it is worth asking: who, or what, exactly, are we angry at? Attempting to answer this question yields a few interesting management lessons. It may even – hold your breath – make United seem a (tiny, little) bit less guilty. Let’s try.

Lesson 1: As a corporation, whatever you set in motion is your problem

No one disputes the fact that United employees asked Dr. Dao to leave the plane before they had him removed. Some sources even claim, implausibly, that they asked “politely”. Now, we may hate airline crews (and perhaps we hate them for this very reason), but if safety and security are to be ensured, we must obey their direct orders. Not doing so, in the U.S., is a federal crime. The unfairness or stupidity of the policies behind these orders is an entirely separate issue, to be addressed at a different time.

At this point, the crew faces a passenger who refuses to comply with their orders, and who seems fairly stubborn about it. Later on, as a recently released video shows, he will also resist the police, and tell them “you’ll have to drag me” and “I’d rather go to jail than get off the plane”.

So the crew calls the police, who, in a civilized state, has a monopoly on the legitimate use of physical force. (The alternative, I suppose, would be for UA to have its own posse of armed henchmen, but that does not strike me as an appealing prospect.) The person we see dragging Dr. Dao out of the plane with inexcusable brutality is not a United employee or contractor: it is a policeman (who was later suspended, as were two of his colleagues). This is, sadly, a case of police brutality – and even more sadly, it is far from being the worst one in recent times.

The odd thing is that we all seem to agree with Dr. Dao’s lawyer in blaming United. It seems clear that we cannot expect United (or anyone, it seems) to control the police’s behavior. The police is not a catering operator or a luggage handling agent whose standards can be specified by a service level agreement. And if the police used excessive force on a burglar trying to enter your house, no one would blame you – an individual – for having called 911. But evidently, public opinion doesn’t hold corporations to the same standards. As a company, whatever happens on your watch is your problem – even if it is outside your control.                                                     

Lesson 2: Let market forces work

Before it got to the point where it had to call the cops, UA offered cash to passengers to get them off the plane. Usually, this works: in 2016, United had to bump 3,765 passengers off overbooked flights, but 62,895 passengers gave up their seats voluntarily (i.e., in exchange for compensation). In other words, cash does the trick in 94% of cases.

Here, the offer went up to $1,000, but it was not enough. Why stop at $1,000, though? Whatever estimate you put on the cost of this crisis to UA (see chart below for a clue), it is certain that there is a price higher than $1,000, but lower than that number, at which a passenger would have been happy to give up his seat.

Clearly, if there is one easy-to-fix management mistake in this case, this is it. If compensating the more flexible travelers to re-schedule their flight works in 94% of cases, it stands to reason that even a modest increase in the maximum amounts airlines offer would clinch the deal in close to 100% of cases. And since compensation is given to volunteers on an auction basis, airlines need not fear that passengers will collude to take advantage of a more generous policy. I bet UA, and other airlines, will discreetly but quickly choose this route.

Lesson 3: Don’t play God

Once it was clear that money (in the small amounts offered) would not get passengers off the plane, UA “randomly” selected the four passengers it would bump. The method of selection here is important. Not all airlines have the same policy – some, for instance, favor their frequent fliers. If you were one of the bumped passengers, unless you got to see a glass urn in which all names were placed, it would be easy to think that no randomness was in fact used and that you were singled out based on some hidden, possibly discriminatory, criterion. Dr. Dao told his fellow passengers that he believed he was singled out because he was Asian. To my knowledge, there is no reason to believe that – I am quite willing to believe that United is an equal-opportunity bully. But what I think does not matter. Dr. Dao’s perception does, as does the perception of thousands of Asian consumers, who are incensed at the airline.    

The underlying problem here is simple: to invoke randomness, you need to be trusted. That is why lotteries are regulated (and often state-owned). Attributing (or taking away) goods and services on a random basis is akin to “playing God”. We are less and less willing to accept the randomness of life, because it is inherently unfair. We are certainly not willing to accept “random” unfairness from United Airlines.

In the highly unlikely scenario in which offering sufficient incentives does not work, an airline will still have to make choices. Having a clear written policy to that effect strikes me as much more acceptable than drawing lots. Some airlines, for instance, have a “last in first out” principle – the last passenger who checked in is bumped first. At least, a good incentive to check in on time…

Lesson 4: Educate the consumer

Overbooking is widely seen as a practice that maximizes the airlines’ profit at the expense of passengers. It is clear however that the general interest is better served when more passengers travel than when a flight leaves with empty seats. Since 7 to 8 percent of people with reservations do not show up, overbooking is a sensible way to optimize capacity utilization. Yes, the airlines profit from it, but so do the passengers who fly instead of being stranded. Overbooking is a win-win: on the whole, we are all better off with some overbooking than without it. (There may, of course, be too much overbooking, and it may be poorly managed.)  

So why do we resent overbooking? It is a simple case of availability bias. We readily identify with the passenger being told that she can’t get on the flight because of overbooking – perhaps it happened to you, as it did to me, and it is clearly an unpleasant experience. But, including the people who agree to be bumped in exchange for compensation, this only happens in 0.09% of trips – less than one in a thousand. “Involuntary” bumpings such as Dr. Dao’s are only about 5-8% of that (depending on years and sources), or roughly one in twenty thousand.  

On the other hand, we are never aware of the many times we could only get a reservation thanks to overbooking. Assume that one-quarter of no-show seats are reassigned: this would mean that about 2% of passengers are traveling thanks to overbooking. This may not seem like much, but it means we are about 400 times more likely to benefit from overbooking than to be its involuntary victims. Yet, we never find out.

Here is a practical suggestion. Suppose that, every time a flight is full, the airline calculates the percentage of the passengers who would not have been on board without overbooking. It could then inform them (by email, leaflet, boarding announcement, whatever) of the exact number of people on the flight who benefitted from overbooking. Perhaps this would make it a bit more palatable when the policy turns against them.

Lesson 5: What is rationally optimal may still be morally unacceptable

All that being said, you may still disagree about the merits of overbooking. The argument goes roughly as follows: “People who paid their ticket are entitled to a seat, and if this means that other people cannot buy a seat, so be it. Sure, prices may go up as a result (assuming airlines aim at the same level of profitability), but at least everyone who shows up at the airport will get on board.”    

The trouble is that, even if this is your position, there is still a problem with this particular case. As it turns out, the extra seats that Dr. Dao and three fellow passengers were asked to free up were needed for a crew who was scheduled to fly another aircraft from Louisville in the morning. (It is hard for me to see why this could not be anticipated, but I do not claim to understand all the complexities of airline operations.) So if your overarching goal is to make sure that people who paid their ticket get to fly, the alternative to bumping four passengers off flight 3144 is an even less appealing one: cancelling the morning plane out of Louisville, which inconveniences a much larger number of passengers.

Despite this logic, most of us still view United’s actions as just plain wrong. Why? Because, when an issue is framed as a moral choice, we do not generally do the sort of calculations that this reasoning implies. Often, and particularly when we are under the spell of emotion (as we are when we watch a clip of someone being brutally mistreated), we think in terms of “right” and “wrong”, regardless of the consequences. Our ethics are not utilitarian – optimizing for results – but deontological – following principles. We are intutitive Kantians! 

The implication of this for companies is that policies that aim for “the greater good” may nonetheless be emotionally unacceptable. And that a company that defends these policies on utilitarian grounds (with the sort of logic I use here) will seem insensitive, callous and greedy (as United’s initial reaction sounded).

Lesson 6: What you have given is not yours to take away anymore

An unusual (if not unique) feature of this incident is the passengers were physically taken out of the plane, rather than denied access before boarding. Telling people at the gate that they won’t get a seat is one thing. Telling people on the plane that they have to get off is quite another: by then, it is their seat.

This seems to be a case of the endowment effect: once something is ours, it has a lot more value to us than it did before we owned it. In a classic experiment, subjects demand more money to give up a mug than they are willing to pay to buy it. Here, it is likely that some people would have been willing to give up their seats before boarding, but were not willing to do so once on board.

The practical implication is not new to airlines: overbooking problems should be solved before boarding starts, not once passengers are seated. This is an operational challenge that should be manageable. At any rate, let’s hope United (and the other airlines) have learned this lesson about its importance…

Lesson 7: Look the part

A little-noticed contributing factor to this mess is the fact that at least one of the policemen, the one dragging Dr. Dao off the plane, is a plainclothes cop. Dr. Dao certainly seems like an opinionated person, but I am prepared to bet that he does not routinely resist uniformed policemen. I have not found research on this (let me know if you do), but I strongly suspect that the orders of uniformed law enforcement agents are less likely to be ignored than those of men in plain clothes who just say they are police.

Hence an age-old piece of advice: dress the part. Airlines, by the way, know this – even budget airlines don’t skimp on their crew’s uniforms.

Lesson 8: Support your people

This may be the only thing in this crisis that United did right, but it is interesting: CEO Oscar Munoz’s first reaction was to support his crew. In a letter to United employees on Monday afternoon (the day after the incident), Munoz emphasizes that employees “followed established procedures for dealing with situations like this”, and adds: “While I deeply regret this situation arose, I also emphatically stand behind all of you, and I want to commend you for continuing to go above and beyond to ensure we fly right”.

If we put ourselves in the crew’s shoes for a minute, it is clear that an incident like this one is highly stressful to them, too. It is crucial for Munoz to reassure his 85,000 employees that if this happens to them, he has their back. This is exactly what he is doing.

This obviously does not excuse Munoz’s complete lack of empathy for his customers – including his unbelievable euphemism in apologizing only for “having to re-accommodate customers”. For that, he was universally, and rightfully, skewered. But precisely because he assumes (as far as we know, correctly) that employees are not at fault, this does not have to be an either-or choice. Munoz could support his employees AND apologize to his customers. This is what he did, eventually – but as one PR professional puts it, “the back-against-the-wall, through-gritted-teeth apology isn’t generally a winning strategy.”

Lesson 9: Beware of PR people bearing gifts

Speaking of PR professionals, here is the part of this story that I find truly surreal: just one month ago, Oscar Munoz was named “2017 Communicator of the Year” by PRWeek, a trade publication. That’s right: the same PR experts whose witty soundbites about Munoz’s appalling incompetence pepper newspaper reports were celebrating him as the best of the best.

“The charismatic CEO of United Airlines”, PRWeek wrote on March 9, “has shown himself to be a smart, dedicated, and excellent leader who understands the value of communications. His ability to connect and share with employees his vision for the airline, and get them to rally behind it, is a key reason PRWeek named him 2017 Communicator of the Year”. Less than five weeks later, PRWeek declared: “It’s fair to say that if PR Week was choosing its Communicator of the Year now, we would not be awarding it to Oscar Munoz.”

“Beware of Greeks bearing gifts”, says the Aeneid. Clearly, if Virgil had been able to meet the distinguished editors of PR Week, he would have saved special praise for them…

Lesson 10: it is not possible any longer to manage an enterprise “rationally”

So, what else can be said in defense of United? Perhaps Sean Spicer would say that at least they didn’t use chemical weapons. But, seriously, although United clearly mishandled the PR crisis, it did not make as many big, obvious mistakes as one would think it takes to create a storm of such biblical proportions. Instead, it seems that United made the cold, calculated, and efficient choices we naturally expect from any large corporation. In one word, United acted rationally – in setting its policies, in enforcing them, in supporting its crew, etc.

This may well be the most frightening lesson of this story: in the age of social media, rationality is no longer a sufficient guide to action. Not only must leaders avoid marketing mistakes, such as the provocative and tone-deaf commercial Pepsi finally pulled. They must also anticipate reactions to apparently sensible policies – ethical, emotional, instinctive reactions – that are not the predictable responses of rational economic agents. In a world where such irrational responses can spiral out of control in a few hours, turbulence is to be expected. Fasten your seat belts!