United Airlines' stock fell as much as 4 percent Tuesday as the airline continued to deal with outrage over a video that went viral on social media of a passenger being dragged off his oversold flight, his face bleeding.
The U.S. Department of Transportation confirmed it was reviewing the incident involving a man forcibly removed from his seat by Chicago Department of Aviation police, as United Flight 3411 was preparing to depart Chicago O’Hare airport for Louisville, Ky., on Sunday evening. Media reports have identified the passenger as David Dao, 69, a sometime professional poker player and physician who lost his medical license in 2004 and had it reinstated in 2015.
“While it is legal for airlines to involuntary bump passengers from an oversold flight when there are not enough volunteers, it is the airline’s responsibility to determine its own fair boarding priorities,” the DOT said.
BuzzFeed News reported overnight that millions of people in China have called for a boycott of United. The passenger dragged off the plane was reportedly born in Vietnam.
United reportedly offered travel vouchers worth $400, and then $800 and a hotel stay, to entice volunteers to give up a seat on the United flight operated by Republic Airways on Sunday evening.
United CEO Oscar Munoz emailed employees that the airline had offered a $1,000 voucher.
“If $1,000 is not enough, then increase it,” said George Hobica, founder of airfarewatchdog.com, an airfare-tracking website. “I’ve seen offers of $2,000. The point is, it was a stupid move on United’s part because it’s going to cost them a lot more than the few extra hundred dollars to solve this situation before it became an international scandal.”
“And it has become international," he said. "Because this passenger was Asian, China is in an uproar. Chinese United customers are calling for a boycott.”
Airlines routinely oversell flights, counting on some passengers not to show up. When more travelers arrive than the number of seats on the plane, airlines ask for volunteers who are willing to reschedule their trips and offer them travel vouchers, cash, upgrades to first class, or hotel rooms.
Between January and September 2016, U.S. airlines persuaded 327,701 passengers to voluntarily leave oversold flights, the Transportation Department said, in exchange for compensation and a seat on a later flight.
Denying boarding to passengers is more unusual. Some 31,674 passengers were involuntarily denied boarding, or bumped, on flights in the first nine months last year.
Last year, United forced 3,765 people off oversold flights and 62,895 additional United passengers volunteered to give up their seats, probably in exchange for travel vouchers. That’s out of more than 86 million people who boarded a United flight in 2016, according to government figures. United ranks in the middle of U.S. carriers when it comes to bumping passengers.
ExpressJet, which operates flights under the United Express, American Eagle, and Delta Connection names, had the highest rate of bumping passengers last year. Among the largest carriers, Southwest Airlines had the highest rate, followed by JetBlue Airways.
“Denied boarding is different from pulling you off the plane,” Hobica said. “The airline had allowed people to board.”
Philadelphia aviation lawyer Arthur Wolk said that United and all airlines hide behind their “contract of carriage,” which is 45 pages of terms incorporated by reference into passengers’ tickets. The terms for “denied boarding” and “removal of a passenger” do not allow removal of a passenger “because they want to fly a crew member instead of a passenger,” Wolk said.
Airlines can remove passengers who commit criminal acts, interfere with operation of the aircraft, are loud and boisterous, or drunk. “This poor guy is sitting there, boarded on the plane, and they decide to take him off," Wolk said. "That’s not one of United’s rights. They committed an assault and battery on this guy.”
The United flight was oversold when four airline employees -- two pilots and two flight attendants -- showed up at the gate saying they needed to get to Louisville for a flight the next day.
After United could not get volunteers, four passengers were asked to leave. Three agreed. Dao refused, and police were called in to remove him. Airlines have different criteria for determining which passengers will get bumped from oversold flights, such as a passenger’s time of check-in, whether the traveler had a seat assignment before reaching the departure gate, the fare paid, and a passenger’s frequent-flier status, DOT said.
“I originally thought this would hurt the airline for maybe a day," Brett Snyder, author of crankyflier.com, wrote in a blog post. “But this one may have some staying power, some of it thanks to United’s response.”
United's CEO issued a new apology Tuesday over the passenger's removal: "No one should ever be mistreated this way," Munoz said. "I want you to know that we take full responsibility and we will work to make it right.”
The Chicago Department of Aviation said the incident “was not in accordance with our standard operating procedure, and the actions of the aviation security officer are obviously not condoned by the department." It placed the officer on leave effective today pending a thorough review.
The Crankyflier’s Snyder noted the "vast majority" of people who are denied boarding are “really, really happy about it.” The airline offers them a later flight, and they walk away with vouchers for future travel.
A small percent are involuntarily bumped, and federal rules provide that an “involuntary bumpee” gets up to four times the value of the ticket capped at $1,350, plus a seat on the next available flight, Snyder said.
“The airlines make more money overselling flights than they lose paying out compensation,” Snyder said. “And this actually does help keep fares lower. If airlines couldn’t oversell flights, they would generate less revenue overall and have to find a way to recoup those costs.”
United shares closed down 82 cents, or 1.15 percent, to 70.70 on Tuesday.