United Airlines could have avoided PR nightmare by following economics 101

According to reports, airlines routinely overbook their flights leading inconvenience to passengers

On April 9, a passenger was forcibly removed from a United Airlines flight from Chicago O’Hare to Louisville after the carrier was unable to find volunteers to accommodate four of its employees on standby.

Dramatic videos of the incident have gone viral on YouTube and social networks, and I reckon the resulting cost of this PR disaster will likely make United’s CEO wish he had sent in a private jet to ferry those employees to Louisville (which the airline could easily have afforded, given its net income of US$2.3 billion in 2016).

ALSO READ: United shares fall after worldwide backlash over dragged passenger

Many articles have reported that airlines routinely overbook their flights, and sometimes passengers have to accept (voluntarily or not) the inconvenience of getting to their destination later than planned.

As an airline economist, I do not recall, however, such a situation ever escalating to the level it did on that United flight. The incident raises many questions, including why airlines overbook and what the carrier could have done differently.

Airline economics 101: Why they overbook

Overbooking is indeed something that the airlines routinely do, and it represents a rational behavior for a carrier that sells some of its tickets as fully refundable contracts (mostly to business customers who pay the highest rates).

While the last few years have generally been good for airline profitability, the brutal truth is that profit margins have been rather low historically. Airlines rank below most other industries in terms of return on invested capital, according to the International Air Transport Association. readmore

Plane evacuated at Louisville airport after replaced Samsung phone starts smoking

Plane evacuated at Louisville airport after replaced Samsung phone starts smoking

An overheating, smoking Samsung smartphone forced the evacuation of a Southwest Airlines jet that was preparing to take off from the Louisville airport.

The incident raised fresh trouble for Samsung, which saw its new Galaxy Note 7 device recalled last month because of overheating batteries.

Samsung, Southwest and federal aviation-safety officials declined to say what model of Samsung phone was involved, saying they were still investigating.

But an Indiana woman, Sarah Green, told The Courier-Journal of Louisville that it was her husband’s Samsung Galaxy Note 7 that made popping noises and started to smoke after he powered it down while the plane sat at the gate.

Green told the newspaper that her husband, Brian, received the Galaxy Note 7 about two weeks ago as a replacement for his recalled phone. He called her from someone else’s phone to tell her what happened.

Last month Samsung agreed to recall the Galaxy Note 7 after receiving 92 reports of batteries overheating in the US, including 26 reports of burns and 55 cases of property damage.

The Federal Aviation Administration took the unusual step of warning passengers not to use or charge the devices while on board and not to stow them in checked luggage.Read More

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