Tuesday, 11 April 2017

Rise the price, don't beat people up

From Stuff: Man dragged off overbooked United flight by police as fellow passengers look on in horror
Passenger Audra D. Bridges posted the video on Facebook. Her husband, Tyler Bridges, said United offered US$400 (NZ$574) and then US$800 vouchers and a hotel stay for volunteers to give up their seats. When no one volunteered, a United manager came on the plane and announced that passengers would be chosen at random.
I can't help but think the airline has missed the obvious here. The price offered was too low. If you want people to get off the flight then keep raising the price till its worth while for people to get off. Don't beat them up and drag them off the flight. There will be a price at which people will get off.

People will value a seat on a given flight in the same way they value any other good or service, what the airline has to do is workout what that value is. The easiest way is to keep raising the compensation offered until someone takes the offer. That way the passenger is happy, they voluntarily took the offer, and the airline is happy, the required number of people have left the flight. The price mechanism works better than violence. This removes the need to beat passengers up.

Could this get expensive for the airline, yes. But you want it to be expensive. If airlines are to be given the incentive not to remove people from flights then you want removal to be expensive, that way the airline will think twice before getting themselves into a position where they have to do it.

Ninja Economics twittered the new United Airlines setting plan.

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