GOVERNMENT REGULATION AND THE UNITED AIRLINES FIASCO

[4/18/17]  It is not new for government action to cause a problem, then offer more government regulation to solve the problem. We see this with government price controls, which invariably result in shortages, with government-imposed rationing then offered as the solution to shortages. Government price controls on wages during World War II led to businesses offering employer-provided health insurance, which predictably drove up the price of healthcare in the United States. Today, more government involvement in healthcare is suggested as the solution to the problem mostly caused by government action.

What does this have to do with the public relations fiasco suffered by United Airlines? Most of us have seen the videos and heard the jokes resulting from the incident in which government officials, acting on behalf of the airline, violently removed a paying customer from a flight bound for Louisville, Kentucky.

When four United employees needed to get to Kentucky to work another flight, United asked four passengers to voluntarily take a later flight, attempting to entice them with an $800 travel voucher. It is not unusual to get passengers to give up their seats — it usually is resolved without such infamous incidents as what happened at the Chicago airport. In this case, of course, the passengers were already seated.

One paid customer, a medical doctor, was finally ordered off the flight, and when he refused (he argued that he had patients he needed to see back home), officers of the Chicago Department of Aviation physically removed the man, bloodying him in the process.

It has been a public relations nightmare for the airline. Their stock has fallen almost three percent, losing $600 million in market value.

Still, many Americans are not content to let the marketplace (and perhaps even the civil courts) mete out its own form of punishment. They want the government to do something to ensure nothing like this happens again.

The problem is the government already has done “something,” and the United Airlines episode is the logical result. It was the federal government itself that allows the notorious “over-booking” of flights. According to the law, “Airline flights may be over-booked, and there is a slight chance that a seat will not be available on a flight for which a person has a confirmed reservation.” At this point, airline personnel will ask for volunteers to surrender their seats in exchange for compensation “of the airline’s choosing.”

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