This week United Airlines found themselves at the center of a PR disaster that will undoubtedly make its way into business textbooks as an example of what not to do.
After overbooking flight, the airline offered passengers volunteering to give up their seats vouchers for future travel. No one was interested, so the airline instead began selecting passengers at random to remove. Three of the four they needed to remove complied, but one passenger, Dr. David Dao, refused to comply. It’s hard to blame the guy — he’s a doctor who had patients he needed to see at home.
After refusing to leave, United promptly called the police, who dragged Dao off the plane, bloodying him in the process.
As if that wasn’t enough, many were further outraged at what the CEO of United thought qualified as an apology when he publicly addressed having to “re-accomodate” his customers.
United CEO response to United Express Flight 3411. pic.twitter.com/rF5gNIvVd0
— United (@united) April 10, 2017
This is the same Oscar Munoz who somehow was named “Communicator of the Year” by PRWeek. The designation now carries about as much weight as the Nobel Peace Prize after Barack Obama won it.
But back to United, it’s been fascinating to watch the differences in how conservatives and liberals are expressing their righteous indignation. Some liberals are calling for the government to step in and pass new regulations making it illegal for airlines to overbook their flights. Meanwhile, many conservatives have been pointing out that an airline that voluntarily stops overbooking (and makes it known that they’re the sole airline that doesn’t) would draw in a heck of a lot of business for themselves.
And speaking of the market resolving problems on its own, the backlash to United has been so fierce that they could’ve paid Dr. Dao $1 million to give up his seat and they’d still be ahead.
According to Yahoo! Finance, Shares of United Airlines (UAL) were down as much as 4% in early trading on Tuesday after video surfaced Monday of a passenger being forcibly removed from an overbooked flight over the weekend.
On Tuesday, as the controversy surrounding the video failed to die down, shares dropped as much as 4.3%, or $3.10 per share, taking upwards of $950 million in market cap value away from the company based on 314 million shares outstanding.
United had offered a $1000 voucher to anyone willing to give up their seat on the overbooked flight, according to a letter sent by Munoz to United employees on Monday obtained by the Associated Press.
But as Bloomberg’s Joe Weisenthal quipped on Tuesday, given the drop in United’s market cap it seems the actual offer price for that voucher could’ve been in the hundreds of millions of dollars and the company would still be making out fine.
BuzzFeed News reported overnight that millions of people in China, the world’s fastest-growing air travel market, called for a boycott of the airline. The man dragged off the United flight was Asian-American.
Meanwhile, their competitors have a lot of outrage to capitalize on….
— voksul (@voksul) April 10, 2017
[Note: This post was written by Matt Palumbo. Follow him on Twitter @MattPalumbo12]