The United Airlines Incident Does Not Require New Laws, Despite What Chris Christie Says. It Could Have Been Resolved by Intelligent Use of Markets.
The beaten-up Dao does not seem to have violated any contractual term that would give United the right to have him violently removed.
Predictably, America's least popular governor, Chris Christie of New Jersey, approaches the national conversation generated by Chicago aviation police beating up and dragging Dr. David Dao off a United Airlines flight on Sunday by demanding more legal action.
Christie, a Republican, is calling for quick federal action to ban the process of "overbooking," that is, selling more seats on an airplane than there are physically available.
As a post here explained the other day, a libertarian-leaning economist, the late Julian Simon, invented and policy-entrepreneured into existence a wonderful price-system, free-market model for solving the problem of overbooking.
Here's how it usually works: the airline starts offering monetary incentives (could be flight vouchers or cash or other considerations) to get enough customers to voluntarily give up their seat, increasing the offered price until the market for seats has cleared, that is, you've found enough people to give up the seat they paid for.
That way everyone is happy, either with their seat or with payment that the person considers sufficient to make up for losing the seat.
My criticisms of United and the police in this incident are not based on general hostility to overbooking, which both makes great economic sense for the airlines, almost certainly makes ticket prices less than they otherwise would be for customers, and creates win-win scenarios for airlines and passengers when the airline is smart enough to actually carry through the Simon policy to a market-clearing result.
In the case of this United flight from which Dao was violently ejected, by all accounts United tried two rounds of offers, and after $800 decided to start busting heads.
There is zero reason to believe that quick increases in the price offered to voluntarily abandon your seat would not have resolved this situation far more quickly and justly than calling the cops on Dao. (And, almost certainly after all the dings in the market and possibly the courts ahead for United, it all would have been far less costly for United as well.)
Free market types are understandably attracted to explanations for seemingly idiotic or perverse behavior on the part of companies that blame government. In the conversation surrounding this United debacle, I've seen many people excited about a Department of Transportation regulation that sets a cap on the airlines legal obligation to pay off those bumped from an overbooked flight:
Compensation shall be 400% of the fare to the passenger's destination or first stopover, with a maximum of $1,350, if the carrier does not offer alternate transportation that, at the time the arrangement is made, is planned to arrive at the airport of the passenger's first stopover, or if none, the airport of the passenger's final destination less than two hours after the planned arrival time of the passenger's original flight.
But that has no application to United's bad decisions in the case of Dao's abuse. (Remember, the police's equally bad decisions were triggered by United's bad decision; while the cops should have been more curious about why they were asked to commit violence against Dao, they did so because the airline decided to treat him as an intruder on their property for no good reason, when what he was was a paying customer.)
First, by all reports United didn't even reach their regulatory obligation to offer as much as $1,350 as an incentive. (I am discounting as extremely unlikely any possibility that no one on that plane paid more than $200 for a seat, though if that were so they would have met the obligation by offering 400 percent of that.)
Second, despite how some want to interpret it, nothing in that regulation says it is illegal to offer more as compensation. It is not written as a price ceiling. It merely says the airlines' legally ordered obligation to the bumped will thus be met. Nor have I seen anyone point to any case law that seems to complicate my read of what the regulation actually says.
So, contra Christie, United had available to it a very sensible and almost certain to work free-market option to solve this problem of the truculent Dr. Dao. No overreaching federal action to ban overbooking is needed, and it would not be to the benefit of the flying public if it were enacted.
Since first excoriating both United's application of policy and the police's blithely going along with United's demands, I've heard both directly and indirectly many arguments insisting that mine was a dead wrong position for a libertarian to take, for various reasons, which I'd like to try to address here.
I'm not a contract lawyer with long experience litigating cases related to United's contract of carriage, but I have read it, and have not encountered any argument against my positions here that seem to be informed by such long experience litigating this contract.
But I can read English. Underlying the following arguments is the belief that the contract doesn't make sense on its face without a background understanding that in general, having paid for a service gives you the right to receive that service, unless contradicted by either the contract specifically or some larger or more important principle. And I don't see how that's the case here.
First, United's contract of carriage certainly does give them many rights to boot passengers when it comes to an overbooking situation. (While I am not at all confident this point is dispositive, there is some question as to whether the flight even truly qualified as "overbooked" by contract definition because the extras were crew.)
But the key recourse United has by its contract regarding bumping passengers uses the language "denied boarding."
Dr. Dao was not denied boarding. He was permitted to board. They ejected him after he had boarded. So that doesn't apply.
If you argue this is being unfairly niggling to the letter of the law as opposed to its spirit, I'd argue that any attempt to welsh on the background obligation to deliver the service you sold by nature relies on niggling letter of the law as opposed to its spirit.
If United or its apologists want to hew to letter of contract rather than commonsense background understanding of commercial transactions (whereby purchasing the service means you get the service), then hew to the letter of contract. By which, nothing about United's right to deny boarding has anything to do with what happened to Dao.
I've also seen United apologists scramble to say, well, "boarding" means something different than just "getting on board," but rather is some ongoing process until the plane is in the air.
This contract takes lots of times to give special legal term of art definitions for 68 distinct terms, and does not bother to do so for "boarding." As a jurist I'd be inclined to treat the word in its standard English definition, by which Dao was not "denied boarding" but rather violently ejected from his paid-for seat. It may be that "boarding" as an overall process is continuous until flight. But Dao was not "denied" his part in that process, but had indeed already boarded.
United has other contractual recourse to boot people as well beyond overbooking, under its Rule 21. But do they apply to this situation? Not to my read.
First, I think it would be grossly unfair to rely on Point B, "government or airport security directive of any sort," since in Dao's case the directive came at United's order. That would be an absurd escape clause, to say "well if we ask security to boot you for any reason, that is by definition contractual."
The only other possibly applicable line is the catchall under Point H, which reads: "Whenever refusal or removal of a Passenger may be necessary for the safety of such Passenger or other Passengers or members of the crew including, but not limited to…"
That does say "not limited to." But every reason listed is supposed to be connected to "safety." There was nothing safety-related in the order to Dao. It was about the airline's convenience in moving its crew. (Yes, failure to get the crew to its next flight in a legally required manner would inconvenience more people than Dao. But if your argument is based on a rough and ready "quick assessment of greatest good for greatest number" consideration, then your attitude should be not that Dao should have been beaten up but again, that United should have offered more incentive to find willing volunteers.)
So I see no reason any reasonable jurist would consider that catchall related to "safety" as justifying United's ordering of Dao's physical removal.
United does makes an extracontractual claim on its website outside the actual text of the contract which is basically a nullifying clause, that "United Carrier reserves the right to…change or modify any of its conditions of contract with or without notice to ticketed passengers."
I'd be interested in seeing if the claim "well, we said outside the contract that the contract is utterly meaningless and we can do whatever we want" might hold up in a court of law. It does not arise to any standard of justice I think applicable to a case of a violent beating and physical removal.
Within the contract itself, the reference to United unilaterally changing terms of the deal says "UA's conditions of carriage, rules and tariffs are subject to change without notice, provided that no such change shall apply to Tickets issued prior to the effective date of such change." That does not apply to this situation, in which Dao's ticket was issued prior to their decision to physically remove him.
To my read of the contract, any attempt to rely on some sort of strict contractarianism beyond commonsense commercial obligations and human decency to defend United or the police in the case of Dao's beating fails.
And even if you were 100 percent certain that Dao in fact was the one acting outside his obligations under this contract, which again seems untenable for all the reasons above, I see no reason why the more standard contractual solution of "sue for damages" should not be the fallback, as opposed to "one party is so sure they are right about the contract they are going to have the other party, rightly, beaten up."
And thankfully, United seems to agree that the use of police to remove paying customers is bad policy.
