United Airlines vs. Doctor David Dao

Overview

United Airlines can date back its history to almost the beginning of aviation and is considered to be the oldest airline still in existence. The company can be traced back to the specific date of April 6, 1926. On that day, Varney Airlines air-mail service, owned by Walter Varney (who is, also, considered to be the founder of Continental Airlines) and based in Boise, Idaho, flew the first contracted air-mail flight from Idaho to Washington in order to retrieve over 200 pounds of mail for delivery. That flight is seen to be the beginning of commercial airline travel.

One year after that historic flight, William Boeing formed Boeing Air Transport and began purchasing air-mail carriers, including Varney Airlines. Four years later, Boeing Air had accumulated airlines, airplane manufacturing companies, and a number of airports. In 1929, Boeing Air Transport changed their name to the United Aircraft and Transport Corporation. The year 1930 saw the evolution of air travel carrying cargo to its carrying passengers which was the same year that had the first airline stewardess who was a registered nurse, Ellen Church, hired by United Aircraft to ensure the utmost safety of their passengers.

Due to an air-mail scandal in 1930 in which smaller companies complained that the major air transport companies had created a monopoly. During this time, President Franklin Roosevelt canceled all air-mail contracts and the mail routes were conducted by the Army Air Corps, throughout which a number of planes were lost along with their pilots mostly due to the worst winter on record until that point and aircraft that was not built to handle the conditions.

Congress passed the Air Mail Act of 1934 that forced the large aircraft holding companies, such as United Aircraft and Transport Corporation, to separate their assets into different companies and required the removal of airline executives that were considered to be behind the creation of the monopoly. As a result, United Aircraft was split into three different parts: a parts supplier/manufacturer that became known as United Technologies, an aircraft manufacturer that took on the name of the Boeing Airplane company, and the United Airlines company.

United Airlines grew to be the fourth largest airline company by 2009. That year they were fined $75,000 for violating price advertising rules as set forth by the United States Department of Transportation. They failed to provide full disclosure of all taxes and fees that would be added to the price of their ticket. Provided that they not have a repeat violation, they were given the option of paying half of the fine, $37,500. Almost inevitably, a few months later in January 2010 a second violation was reported and confirmed. United Airlines failed to include the 7.5 percent federal excise tax in with the ticket price, forcing them to pay the entire amount of the first fine in addition to a second fine.

Later in 2010, United Airlines became the largest airline company by merging with Continental Airlines and changing their name to United-Continental Airlines. In today’s market, they have a yearly revenue of $36556M and operate worldwide with 740 carriers within their fleet.

Their stated mission statement is one of diversity and inclusion. They embrace employees of all cultures and backgrounds in order to form a genuine community. Their main goal is in three parts: first, to have “leaders that embrace diversity and inclusion as a business advantage,” second, to have employees that feel highly valued, feel actively engaged in the company, and feel themselves treated with respect and dignity, and third, to have customers value their approach to providing “flyer-friendly” service.

Situation Analysis

What most people do not realize when flying with United Airlines is that they commonly overbook their flights similarly to many other commercial airliners. The reason behind the airline’s overbooking of their flights is that business travelers, while making up an average of 12% of the airplane’s population make up 60% of the airline’s revenues according to an article from TechCrunch by Jan Kamps. With business travel, there is need for more flexibility because a meeting might run late or plans to fly from one city to another could change last minute. Through many statistics, the airlines have learned that it is more cost effective to overbook the flights and then offer passengers monetary compensation to switch to a different flight rather than have empty seats on the airplane.

A situation occurred on April 09, 2017 where a passenger, David Dao, a physician from Kentucky was randomly selected to be removed from a flight when not enough passengers volunteered to switch flights for $800. It is noteworthy to keep in perspective that Dr. Dao had been charged with 98 felony drug counts for illegally prescribing and trafficking Hydrocodone, Oxycontin and Percocet. Dr. Dao was also convicted of writing prescriptions and checks to a patient in exchange for sex as well as 6 felony counts of obtaining drugs by fraud and deceit. Dr. Dao lost his license to practice and was then reinstated on the condition that he can only practice one day a week at a specific outpatient clinic.

Dr. Dao and his wife initially agreed to take the money and the later flight then changed their mind. After Dr. Dao was randomly selected when they couldn’t get enough people to volunteer, he was empathetic then refused to get off the plane. According to Officer James Long, an officer that was involved in the incident, Dr. Dao, “…started swinging his arms up and down with a closed fist,”. The entire altercation can be viewed from cell phone videos taken by Joya and Forest Cummings who sat behind Dr. Dao.

Witnesses stated that Dr. Dao began screaming and behaving belligerently when the officers began to pry him from his seat after it was clear that he wouldn’t leave the plane willingly. According to statements from witnesses, Dr. Dao made comments that he won’t be leaving the plane and he doesn’t care if he gets arrested. During the period where Dr. Dao was resisting being drug from his seat, one of the officer’s hand slipped which caused the officers to drop Dr. Dao and that is what caused him to get a concussion and the blood on his face when his head bounced off one of the seats.

Once Dr. Dao was removed from the aisle where the initial altercation took place, he was standing on the floor of the jetway talking with the officers. After being offered a water, Dr. Dao said, “I’m going home, just kill me.” Dr. Dao pushed past two officers to try to get back onto the plane after he made that comment. Comments made by Dr. Dao while on the floor of the jetway are confirmed by officers and a flight crew attendant that wasn’t named.

Being that the incident was made public with the cell phone video footage, it opened the door for a large wave of criticism for United Airlines. There has been much conversation of boycotting United Airlines because of the David Dao incident but seeing as that United has such a large share of the market, it is nearly impossible to travel to certain cities without using the airline. Dr. Dao’s lawyer, Thomas Demetrio stated that Dr. Dao will be suing United Airlines.

On April 27, 2017, United Airlines settled out of court with Dr. Dao for an undisclosed amount. It is possible that the settlement amount may come out in the future. United also changed their maximum offer for changing flights from $800 to $10,000. United Airlines has also taken effort to change the way they treat their customers. Now United Airlines, “…signals a culture shift toward becoming a better, more customer-focused airline,” according to chief executive Oscar Munoz in a statement.

Precedence and Implications

The precedence and implication in this case is that United Airlines has been taking a lot of criticism for the violence that was used to remove Dr. Dao from the plane. It was the Chicago Department of Aviation that forcefully removed Dr. Dao. United can be criticized for their policy regarding not guaranteeing seats, but not for the removal process of Dr. Dao. United has apologized. The Chicago Department of Aviation should have found a less violent way to remove Dr. Dao from the plane but then the question can be asked, “what are you supposed to do when someone blatantly refuses orders? It wouldn’t be fair to select another passenger just because Dr. Dao refused to comply.

Timeline of Events

United Continental Flight 3911 was ready for take-off on Sunday, April 9, departing from Chicago and landing in Louisville, Kentucky. The airline decided that four crew members from Republic Airlines needed to board the flight to be on hand for a United Express flight in Louisville. Passengers were asked if anyone would be willing to give up their seat for $400 and a hotel voucher. When no one accepted the offer, the price was raised to $800.

Sources are conflicted on exactly what transpired. One source claims that 69-year-old Doctor David Dao at first agreed to give up his seat and take a later flight until he discovered that the next flight would not leave the airport for almost 24 hours. Another source says that he never agreed to relinquish his seat. All sources do agree, though, that when no one took the offer of compensation, flight crew performed what is basically today’s version of drawing straws and had the computer pick four names at random.

Doctor David Dao’s name was one of those chosen. The flight attendants asked him to leave the plane at which point he explained to them that he was a doctor and had patients in the hospital that he needed to see in the morning of the next day and that the next flight would be too late. When he would not willingly leave, the flight crew contacted Chicago Department of Aviation Security Officers to bodily remove him.

Again, sources are varied on the following circumstances. Officers claim that Doctor David Dao began to fling his arms up and down with clenched fists and that he became violent. A couple sitting on the flight directly behind Doctor Dao and his wife say that he was never belligerent or raised his voice and just kept explaining that he had patients that needed his attention the next morning.

At this point, video began to be taken by other passengers. Doctor Dao can be seen to be forcibly removed from the aircraft by his wrists, with his bloodied, his shirt lifted up, and his glasses askew on his face. One officer stated that when the doctor was lifted up, the flinging of his arms caused them to drop him and his face hit the seat in front of him. He suffered a concussion, broken nose, and lost his two front teeth.

After dragging the passenger off the flight, reports say that Doctor Dao was on the ground saying that he suffered from diabetes. He was offered a small glass of water at which point he got back up and re-entered the flight claiming, “I am not leaving the plane. I need to get home. Just kill me.”

The following day, United Continental made two statements. The first was a simple apology for the flight being overbooked, which was refuted later that day when the CEO, Oscar Munoz, made his statement. Mr. Munoz’s statement called the incident an “upsetting event” and apologized to the other passengers. He, also, issued a letter to United workers confirming that he was on their side, although lessons could be learned from the event. At no time did he address Doctor Dao, other than to basically blame him for the incident.

On Tuesday, April 11, Mr. Munoz changed tactics by accepting full responsibility for what transpired and promised that the matter would be looked into after a backlash of negative publicity and responses from the public. The following day, April 12, he promised all passengers a full refund of their ticket price and expressed shame over the incident.

An “amicable” agreement between United Continental and Doctor David Dao was reached on April 27. The amount and/or exact nature of the settlement will not be disclosed to the public. A Congressional hearing was conducted by the House Transportation Committee on May 2 to fully explore the details of the event and the committee chairman issued a warning to United and all other airlines that customer service must be improved or Congress would intervene and none of them would like the result.

Response to Event

There were many reactions to how United handled the situation involving Dr. Dao. There were different reactions in respect to how United itself handled it, how the public responded, how much social media freaked out, the news, and even how the stakeholders in the company took it. There were both positive and negative reactions from each of these groups.

 

United’s Response

Obviously, since the incident happened with United, United is going to have to describe what happened and explain why they took the necessary actions that they did with Dr. Dao being dragged off the plane. The CEO of United, Oscar Munoz, initially said he was happy with the way his employees dealt with situation and said they acted accordingly. On twitter, United even posted a tweet coming directly from the CEO to inform everyone on the action that is going to be taken following this incident which can be seen in the picture below. Although this was Oscar’s initial response to the incident, he had a second response to the incident after looking deeper into the situation.

 

After looking more closely into the what happened with Dr. Dao, Oscar changed his stance on his initial reaction to what happened. He admitted that he defended the actions his flight attendants took and has been blaming Dr. Dao, but since then he has been apologizing relentlessly and realized he made a mistake. In an interview with The Associated Press, Oscar admits that the airline has been taking criticism for years and that this event has escalated the pace at which they are going to act and change some policies (Associated Press, 2017).

 

The Public’s Reaction

 

The public has had probably the most widespread reaction out of all the groups. After people saw the video of Dr. Dao being dragged off the plane, many people took their reactions and posted them on various social networks, with the most popular of them all being Twitter. The amount of mentions that United had the day of the incident skyrocketed because of everyone using hashtags and mentioning United in their reactions in their tweets. Many twitter users began making memes of the company and poking fun at them including humor in their tweets.

 

Many of the people were talking about boycotting the company and saying they were going to tell all their friends and family to stop flying with United and fly with other airlines. The clear majority of the tweets at United following this incident were negative, with very few positive reactions to it.

 

What the News Outlets Had to Say

 

This story became a countrywide headline very fast. Every news station jumped on the story to gather attention and views. They all tried covering the story as closely as possible and many of them all had very different stories from each other. It was hard to know exactly what happened because when reading one article from one station like Fox and then reading an article from CNN, they had completely different information and two different stories. It was up to the reader to take in all the information and piece together what they think happened and form their own opinion.

 

 How the Stakeholder’s Reacted

 

While the public and everyone see this incident as being detrimental to the company, this incident may have helped the company and stakeholders. The initial reaction was this incident was a disaster and United is going to have problems, but after everything settled down this kind of helped United in lots of ways. Airlines have always had problems with customers for overbooking flights and having PR problems, and this incident has helped expedite fixing problems with customers.

 

Since this happened on April 9th, United has been working harder and quicker to improve ways to deal with customer complaints and compensating customers for hindering their travels. In expediting fixing customer relationships, this can help United gain the trust of customers back and hopefully give investors a reason to invest back into the company.

New Policies Developed

 

After reviewing the incident and in order to maintain good relations with the general public and, especially, their own customers, United Continental will be making a number of changes to their policy. Ten changes in particular are to be started immediately or in the very near future.

These changes are as follows:

  1. The usage of law enforcement will only occur in cases where safety and/or security are affected.
  2. Passengers already seated on the planes will not be required to relinquish their seats unless it is an issue of safety and/or security.
  3. Compensation for a passenger voluntarily not boarding the flight will be raised to $10,000.
  4. A team of customer specialists will be created to assist passengers with reaching their destinations within a comparable amount of time by joining with other airports, airlines, and ground transportation companies.
  5. Any crew members must be booked at least 60 minutes in advance of departure.
  6. Additional training will be given yearly to all employees.
  7. An automated system will be implemented for the asking of volunteers to delay their departure or to find alternative avenues prior to their boarding the flight where passengers will basically place a bid amount at which they would be willing to change their plans.
  8. The frequency of overbooking will be reduced and limited.
  9. Employees will have the ability and power to deal with and resolve problems at the moment they occur.
  10. Hassles, or “red tape,” over lost baggage will be eliminated and a no questions asked policy will be implemented.

 

These changes will be made to ensure that another incident such as the one with Doctor David Dao becomes far less likely to ever happen again. In addition, they are intended to improve relations with all of the customers and public and to prove to the company’s stakeholders that are positively responding to the crisis in order to improve their overall image.

 

 Business Performance

Financial Impact

Since the incident made national news everywhere, the financial impact of United Airlines resulted with over 1 percent of their shares in the stock market dropping. Shortly after the incident happened, United Continental Holdings stock decreased 1 billion dollars off the company’s market value. Eventually, the stock recovered from the most horrible losses, but its market value remains off by 250 million.

Many investors felt that United Airlines decision to eject a passenger from an overbooked flight would have little effect on the company’s profits. United is a 21-billion-dollar company that had losses up to 1.4 billion dollars, leaving shares down by 4 percent.

The CEO of the company, Oscar Munoz, made an attempt to publicly defend the actions of the company but his efforts were deemed insensitive by many on social media. Munoz could also lose up to at least 500,000 dollars in compensation if United customer satisfaction falls. When more videos of the incident surfaced showing David Dao bleeding from his head, and being dragged across the floor, it even resulted in an investigation by the Department of Transportation.

Although much of United’s stock investments has declined, ticket sales have not. Also, it is projected that the decline of sales will not happen in the future, unless something else were to happen.

United Airlines and David Dao have now reached a settlement. Dao’s lawyers announced the deal happened but did not disclose the financial terms of the agreement. Also, Dao’s lawyers stated that Mr. Munoz said he would do the right thing, and has taken full responsibility for what happened.

Reputation Impact

When David Dao was forced off Flight 3411, it caused outrage across the country. Many were furious that Dao was forced to get off the plane regardless of him making it clear that he did not want to get off. Passengers on the flight stated they were scarred from the events they had seen that day. Outrage grew when Munoz sent an email to employees defending the actions taken by staff members and calling the passenger “disruptive and belligerent”. The anger from this incident became global and many began to question the practice taken by airline companies to overbook flights.

Moreover, after the incident, United’s reputation took a nose dive that set the company in a panic mode. People took to all social media platforms and made United one of the most hated companies in the country. Since the plane was still on the ground, many passengers were able to post videos, pictures, and comments during and directly after it happened.

Furthermore, many people believe that if the staff members tried to at least attempt some kind of diplomacy, then the incident could have been prevented. It is an overlooked policy by many airlines to overbook flights and anyone can be kicked off against their will and bumped to different flights. The officer handling the situation received tremendous amounts of backlash after the videos of Dao surfaced and was even suspended for what happened.

Others argued in favor of United and thought Dao should have listened to authority and removed himself from the plane. Dao claimed in a video that he would not get off the plane unless he was dragged off, so that’s what staff members and officers did. Many believe this incident could have been prevented but feel that the removal of Dao the way it occurred was inhumane.

As for United’s reputation, it will remain as the company that physically assaulted a man due to an overbooked flight. There are so many different opinions from people who may or may not agree with the actions taken by United. Different companies such as Delta have even changed their policies of overbooking flights and the amount of money they’ll offer if they need a passenger to voluntarily leave the plane. Today, United has learned a lesson, and many can only hope that this will never happen again.

 

Page Principles

There are seven key principles of communication that every company should follow in order to achieve the best result with their customers and stakeholders.

  1. Tell the truth. At first, United Continental attempted to praise their workers for their performance during the event and ignore the person to which it occurred. The second step was to blame the victim for the incident. The company could not deny or cover-up the event because of video that was taken during it. Two days after Doctor Dao’s removal from the flight, the company took responsibility and promised to review their policy.
  2. Prove it with action. A settlement was reached between United and Doctor Dao with the company accepting culpability for what occurred. A list of immediate and very near future policy changes was released and will be incorporated into the organization. United Continental was made to answer before a congressional hearing.
  3. Listen to stakeholders. Immediately after the event, the company attempted to place blame on Doctor David Dao. The majority of responses on the social media sites, Facebook and Twitter, were in support of the passenger and against the airline. Due to this backlash of public opinion, the company accepting culpability and issued an apology to Doctor Dao and the other passengers and reached an agreement with him and reimbursed all other patrons the full price of their tickets.
  4. Manage for tomorrow. United Continental has begun to change the policies that caused this event to happen. Once a passenger has taken their seat on the flight, they will not be required to relinquish it. Passengers will be compensated up to $10, 000 for being willing to change their travel plans and specialists will be available to assist them to make new plans that will still get them to their destination without undue hardship or overly long waits.
  5. Conduct public relations as if the whole enterprise depends on it. All decisions should be made according to the thought that dealing with any one passenger can affect the company overall. United Airlines learned that how they treated one passenger, Doctor David Dao, spiraled into a situation that threatened to harm the entire company and may even affect the entire industry if the result of the congressional hearings is for the government to step in and make their own changes.
  6. Realize that an enterprise’s true character is expressed by its people. This key principle will be fully displayed once United’s employees have the full power to handle and resolve any customer complaints at the moment they happen. It will then be up to each employee to show the public that the passengers come first and that they are of the utmost value to the company.
  7. Remain calm, patient, and good-humored. CEO Oscar Munoz can be considered to have heeded this principle. He did keep calm and patient and continued to apologize to Dr. Dao and his family after the incident. He continues to remain calm and patient in front of the congressional panel while answering their questions on how this could have been prevented and how to ensure it will never happen again.

Looking Ahead

After the incident with Doctor David Dao, United Continental is attempting to regain their reputation for “friendly flying” with their customers and other stakeholders. One way of doing this is through large changes to their policy that will make certain a similar situation will never again happen.

Once a passenger is on the aircraft, they can now fully be reassured that the seat is theirs and they will not be asked to leave it and if they do voluntarily give up their seat before boarding, representatives will connect with other airlines, airports, and/or ground transportation to make certain that they arrive at their destination within a few hours of the original plan.

Unfortunately, within the last few weeks, United has not been the only company to suffer from customer service issues. It is appearing extremely likely that Congress will need to make good on their threat of intervening and the result will be something that none of the airlines will appreciate or approve.

 

 

 

 

 

 

 

 

 

 

 

References

The Air Mail Scandal | America by Air. (n.d.). Retrieved from https://airandspace.si.edu/exhibitions/america-by-air/online/innovation/innovation05.cfm

Associated Press, (2017, April 27). United CEO: I “messed up” with initial response to incident. Retrieved May 02, 2017, from http://www.foxbusiness.com/markets/2017/04/27/united-ceo-dragging-incident-may-sway-fliers-airline-pick.html

Banks, S. (2017, May 03). United Airlines CEO admits removing passenger David Dao was a ‘mistake of epic proportions’ Retrieved May 04, 2017, from https://www.yahoo.com/news/united-airlines-ceo-admits-removing-001722383.html

“Breaking: United Airlines Reveals Major Policy Changes – Live And Let’s Fly”. (n.d.). Retrieved from http://liveandletsfly.boardingarea.com/2017/04/27/united-airlines-policy-changes/

Commitment to Diversity and Inclusion | United Airlines. (n.d.). Retrieved from https://www.united.com/web/en-US/content/company/globalcitizenship/diversity.aspx

Fury in Vietnam over United passenger dragged from plane. (2017, April 12). Retrieved May 04, 2017, from http://tvtsonline.com.au/en/news/vietnam-news/fury-vietnam-united-passenger-dragged-plane/

Hamreed, K. (2010, July 2). Company analysis: United Airlines. Retrieved from https://kamranhameed.files.wordpress.com/2010/07/united-airlines-company-analysis.pdf

History of United Airlines. (n.d.). Retrieved from http://avstop.com/history/historyofairlines/united_airlines.htm

A Look at U.S. Airline Logos Since the 1920s | TravelInsuranceReview.net. (n.d.). Retrieved from http://www.travelinsurancereview.net/2013/06/03/airline-logos-over-time/

McCann, E. (2017, April 14). United’s Apologies: A Timeline. Retrieved May 04, 2017, from https://www.nytimes.com/2017/04/14/business/united-airlines-passenger-doctor.html?_r=0

McKirdy, E. (2017, April 27). United Airlines incident: David Dao swung fists violently, officers’ reports say. Retrieved May 04, 2017, from http://www.cnn.com/2017/04/25/us/united-airlines-incident-officers-report/index.html

United, (2017, April 10). United CEO response to United Express Flight 3411.      Retrieved May 02, 2017, from           https://twitter.com/united/status/851471781827420160/photo/1?ref_src=twsrc%5Etfw&          ref_url=http%3A%2F%2Fwww.cnn.com%2F2017%2F04%2F10%2Ftravel%2Fpassenger-removed-united-flight-trnd%2Findex.html

United Is Struggling Two Years After Its Merger With Continental – The New York Times. (n.d.). Retrieved from http://www.nytimes.com/2012/11/29/business/united-is-struggling-two-years-after-its-merger-with-continental.html

United settles with passenger who was dragged off flight. (n.d.). Retrieved from https://www.flightglobal.com/news/articles/united-settles-with-passenger-who-was-dragged-off-fl-436667/

(n.d.). Welcome to Twitter. United (@united) on Twitter. Retrieved from http://twitter.com/United

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