United says it’ll pay bumped passengers up to $10,000 and reveals nine other policy changes

United Airlines will offer up to $10,000 when a traveler voluntarily gives up a seat on an oversold flight, part of a policy overhaul following the passenger-yanking video seen around the world.

The Chicago-based carrier is adopting 10 policy changes in response to the outcry over the April 9 incident, recorded by other passengers, during which aviation police pulled David Dao from his seat after he refused to exit the plane. Dao was one of four fliers selected to give up their seats to make room for airline employees.

“Actions speak louder than words,” said United Airlines Chief Executive Oscar Munoz, who has apologized repeatedly for the incident after initially describing Dao as being “disruptive and belligerent.”

“Today, we are taking concrete, meaningful action to make things right,” Munoz said in a statement Wednesday.

United Continental, the parent company of United Airlines, already has said it plans to incorporate customer satisfaction levels in its criteria for handing out bonuses to executives instead of basing compensation solely on profits and operational achievements.

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A passenger was dragged out of a United Airlines plane due to the airline overbooking the flight, creating yet another PR nightmare for United Airlines.

United also said it would:

• Limit the use of law enforcement on a plane, except for safety and security reasons.
• Stop forcing passengers already seated to give up their seats, except for safety or security reasons.
• Come up with creative solutions for finding alternative transportation for passengers who have been denied boarding, such as flying them from nearby airports, putting them on flights of rival airlines or using ground transportation.
• Ensure airline crews book a seat at least an hour before departure.
• Provide employees with additional annual training.
• Create an automated system for soliciting volunteers to change travel plans before they take their seat.
• Reduce the amount of overbooking.
• Empower employees to resolve customer service issues on the spot.
• Cut the red tape that passengers face when reporting lost luggage.

None of the policy changes are particularly groundbreaking or even surprising — some had already been promised in recent days. Shortly after the Dao incident, rival Delta Air Lines told its employees that the carrier would pay up to $10,000 to get a passenger to give up a seat voluntarily.

In an interview Wednesday, Delta Chief Executive Edward Bastain said his carrier has adopted several policies to avoid such incidents, including giving supervisors the authority to offer a passenger a free iPad to give up a seat on an overbooked flight.

“It could never happen at Delta,” he said of the Dao incident.

Delta several years ago began asking customers during the check-in process how much compensation they would take to give up their seats. The airline then bumps the passengers willing to take the least amount.

A report on the passenger-removal fiasco released by United on Wednesday named several “failures” that contributed to the problem, including that United had no clear policy on when to call law enforcement and no policy on how late airline crews can book seats on a flight.

The report also revealed that four seats were needed on the flight because an earlier flight carrying four crew members was “experiencing a maintenance issue” and it was unclear if the problem would be fixed.

United’s biggest challenge, experts have said, will be changing company culture so that employees feel they can do whatever is needed to solve customer service problems as they are happening.

The viral videos

Videos shot by fellow passengers on the flight show officers from the Chicago Department of Aviation asking Dao to give up his seat.

But Dao refuses, saying he needs to get to his home in Elizabethtown, Ky., where he is a physician and was scheduled to see patients the next day. Three officers then pull Dao from his seat and drag him down the aisle.

Dao, who was hospitalized after the clash, suffered a concussion and other injuries, according to his attorney Thomas Demetrio. The prominent personal-injury lawyer has made it clear that he is prepared to sue United over the incident.

In incident reports obtained by the Los Angeles Times, two of the officers said Dao was responsible for his own injuries by flailing his arms and fighting with the officers, causing him to fall out of their grasp and hit his face on a seat armrest. Demetrio blames the airline and the officers for using “unnecessary force and violence.”

Four officers involved in the incident have been put on administrative leave pending an investigation by the Chicago Department of Aviation.

United shares have recovered

Shares for United Continental Holdings, the parent company of the airline, took a hit following the incident, dropping from $71.52 on the day after the incident to $67.55 on April 18. The stock closed Wednesday at $71.33 a share.

However, United’s reputation has clearly taken a hit.

In a survey of nearly 1,300 travelers by the website AirfareWatchdog.com, United ranked as the sixth-most-popular carrier in the country, dropping from fifth in the same poll last year. Only 3% picked United as their favorite in this year’s survey, conducted after the Dao incident.

George Hobica, founder of the fare comparison site, said some of the proposed changes will help eliminate the need to boot passengers from a flight, particularly the $10,000 compensation limit.

But he added that video of the incident has been so widely seen that United’s reputation won’t rebound soon.

“There are some people who will never fly them again,” Hobica said.

Compensating fliers for not flying

Under federal rules, airlines can oversell a flight and have no limit on how much they can offer a passenger to voluntarily give up a seat. Each airline creates its own formula for gauging how many seats to oversell. Only JetBlue Airways says it does not oversell seats.

If an airline can’t get enough passengers to voluntarily give up their seats, an airline can deny passengers a seat but must offer compensation, based on how much the passengers will be delayed getting to their destinations.

If an airline gets a booted passenger on a flight that arrives between one and four hours later than the arrival time of the overbooked flight, federal law says the carrier must pay 200% of the original fare, with a cap of $675.

If the airline gets the booted passenger to the final destination later than four hours after the original arrival time, the carrier must pay 400% of the original fare, with a maximum of $1,350.

On Dao’s flight from Chicago to Louisville, Ky., United’s best offer was $800, overnight accommodations and a flight nearly 24 hours later. When no flier agreed to take the offer, United employees picked four seated passengers using a criteria that first targets fliers who pay the lowest fare.

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