Where specifically did you read that they attempted to circumvent the obligation to compensate this guy? I haven’t heard that anywhere else.
And it’s only $1350 if the airfare is greater than $337.50. Below that, they only have to give him four times the fare.
I’m gonna go out on a limb, and try to explain why this will never happen, and it is the case for several reasons.
Let’s start with the hypothetical, that last week there was a big news story about how passengers held out, and got a $1 million payout for their seat. And now, we are in the same situation. I know that all the other passengers are going to hold out for the million payout, so I am going to undercut them, and take $900,000. I win, they all lose. Of course, someone else will realize that that is my strategy, and they will undercut me at 800k, and the person next to them is going to undercut at 700k, and so on. With at least 70 passengers, this will go on for every passenger, and we are going to end up at the lowest price that someone is willing to take.
Looking at it another way, you are on a plane, with a 1 in 70 chance of winning $1 million. When they first offer 5k, you scoff, as your odds are 1 in 70 of a million dollar payout, so you are getting good pot odds on your money, so you go ahead and “buy” the 5k ticket for a million dollar payout. So the offer is now 10k. You still have pot odds. Now the offer is 20k. You are now buying a lottery ticket with a 1 in 70 payout for 20k, this is not good pot odds, over an indefinite number of runs, you will lose money with this strategy. Your pot odds only get worse at this point. you are going to turn down 100k for a 1 in 70 chance at a million? how about 500k for for that 1 in 70 chance? when it is at 900k, are you really going to take the 1 in 70 chance you get 10% (11.111…% for the pendants) more, or are you going to go ahead and take it?
The last way to look at it form the passenger’s perspective is opportunity cost. When they announce that they are auctioning off the seat, I am going to come up with a number in my head that is the opportunity cost of losing my seat. Once the offer has exceeded that number, I win if I take it. I leave the plane with a higher marginal wealth than I anticipated I would have when I got on. Everyone else on the plane is left with the exact same marginal wealth as when they got on. I am the only one in the “game” that wins and comes out ahead. Once the offer exceed my threshold, I could hold out for more, but if someone else takes the offer, then I lose, so holding out is not in my best interest.
Finally, the reason you will not get an enormous payout is because the airline will not pay that much. Sure, they may not be able to kick you out of your seat without compensation, but not moving that crew doesn’t cost the airline an infinite amount of money. The worst case scenario is that no crew can get to the destination, and the flight is cancelled, this is expensive for the airline, but not infinite. There would be no reason for the airline to pay you for your seat more than they are going to lose by not getting it. And this is worst case scenario, I am sure they have other options than just cancelling the flight, they may delay it, they may bring in crew from further away, they may just go head and violate duty hour regs and pay the fine. Point is, your seat is not worth an infinite amount of money, and is likely not worth nearly what you think you are going to hold out for, so if you and the other passengers try, then the airline goes on to its next contingency plan, and all the passengers get nothing.
Agreed, nobody is likely to settle for a $200 voucher. However, if the choice is between a guaranteed $2K (if you accept immedately) or a possible $5K (if you and everyone else holds out for more money), many people will jump at the $2K offer.
Exactly, iiandyiiii. The comparison with wages is a good one. When you negotiate a job offer, there is also no defined upper limit. Smapti, you have surely heard of people in the U.S. who are paid tens to hundreds of millions of dollars in pay (and stock options). So since these people surely exist, why did you accept a far lower rate of pay in your current job? Why did you not hold out for millions of dollars?
(Here’s a hint: it’s because there are other job seekers who will take a far lower rate of pay to do your job. This is how the free market works.)
The free market also applies to competitive bidding, auctions, etc. The only thing that throws a wrench into the works is collusion, so whoever is running the auction needs to take steps to ensure that there is no collusion. In the present case, collusion would be difficult to engineer for a planeload of random people.
Not every order a cop gives is lawful.
Cops tell people to stop filming them even if they have a legal right to do so and then seize (and lose) their phones.
Cop orders a woman to show ID in California and arrests her for not doing so - even though you do not have to show ID in California.
Cops arrest people for posting speed trap signs although it is their First Amendment right to do so.
And yes it is bullshit that a cop can arrest you on made up laws and if you do anything other than meekfully comply you are arrested for resisting arrest - a charge that sticks even if the cop had no legal right to arrest you.
This is an international board so perhaps you don’t live in the United States, but here we do have rights and cops are not supposed to make up whatever law they want (see above). I recognize that is not true in every country.
A more apt situation another poster mentioned. You pay for a hotel room and have unpacked. The hotel wants to give your room to the company President. The promise to maybe find you a room that night or sometime in the near future. PLUS they give you 3 free nights (not redeemable for cash) that MUST be used within a year or they expire. You refuse.
Can the hotel call the cops and have you removed forcibly?
Link to the story and video of the appearance by the CEO of United on Good Morning America earlier today.
And if they don’t legislators may. There are already rumblings in Congress about changing the law.
In all of this discussion we forgot the most important question:
Did he get his $800 voucher?
Yay, another bright line law that will lead to the cancellation of more flights.
Really amazing, with all due respect.
The very simple ‘game theory’ principal to think of is the prisoner’s dilemma a version of which applies here. In your model the several accomplices to a murder separately interviewed by the police and offered 5 yrs to roll on their accomplices, v 25yrs if their accomplices roll on them, and release if nobody rolls on anyone, will never roll. Why roll on my accomplice and get 5yrs when I can hold out, hope they also do, and walk? But basic game theory says they’ll all roll if they are rational, and that’s assuming they know each other and have supposed commitment not to rat each other out.
In this case they are strangers, and it’s only a possibility of getting a very high prize (walking after committing a murder), since only one (or a handful among dozens) passenger can win, whereas in PD all can win the big prize.
And let’s examine your end game just a little more. Who finally wins the big prize with no limit? Exactly how does it end without collusion and sharing? If you think through that end game, make a fresh start and really think hard, you’ll realize why you’re hilariously wrong and in fact somebody will jump on the offer once it’s worth their while at all, no way it ever gets even to $5k with economy passengers on a domestic flight. Flight is democratized. Plenty of people in economy are wondering how they’ll pay next month’s rent, if not quite as high as the % walking down the street. But they are going to pass up $5k hoping strangers somehow allow them to get $1mil while the strangers get nothing (which is how your scenario must end)?
Other auctions that work pretty much exactly like this: myriad. For example lots of debt securities are auctioned by a method where the borrower starts out with a low offer of what rate they will pay, and raises it until enough lenders (purchasers) have stepped forward to buy the total amount offered. No limits: it’s not consumer debt so usury laws don’t apply. Under your theory the lenders would spontaneously hold out for 100% a year interest, at least. Why accept 1% (let’s say it’s short term debt of well rated entity, that’s the ballpark) when ‘you can get 100%’. Because you can’t get 100%. If one lender doesn’t buy the whole thing when the rate slightly exceeds the going rate in the market otherwise, another will, so it won’t even ‘slightly’ exceed the going rate. Without collusion the incentive is overwhelmingly to take the first slightly attractive offer.
But the basic principal is in every market, all the time.
The only use of your point is that it illustrates how some retail consumers are completely naive about markets, some even insistently hold completely wrong views of how markets work. You might actually think you had a ghost’s chance of getting a lot of money in such an auction by holding out for some very large sum. Whereas in a professional market everyone realizes how completely mistaken that is. But even among retail consumers, enough will realize intuitively, or from having a little more commercial experience, that their self interest is in taking the first attractive offer, before someone else beats them to it. Thus the auction prices will always be reasonable with at least dozens of participants, and the effect of naive people thinking as you do is just that those particular people will never, ever win.
Yep. It’s trivial compared to the stuff I usually call my Congresscritters about, but I called them up about this yesterday afternoon, urging them to ban involuntary bumpings, and instead force the airlines to offer whatever incentives were needed to get enough volunteers.
The airline is not going to offer $1 million unless it’s worth $1 million to them. They’ll just give up trying to buy people off the plane and come up with a different way to transport crew members.
Indeed. The only way it would work is if you’re actively colluding with the passengers or in an auction with yourself. It’s stunning to even have to explain this.
Seconding all this.
Because Lord almighty, I just can’t believe the way this keeps on coming up in this thread, the notion that people could ‘hold up’ the airlines for huge sums if the airlines couldn’t bump people against their will.
As you’ve explained at length (and as others have tried to explain earlier in this thread), there’s just no freakin’ way that’s going to happen.
So thanks for having the patience to explain it one more time.
If such a law is passed, and the airline has trouble finding enough volunteers, I think they will end up cancelling flights entirely. I’m not sure that’s better for the public. In general, reactive legislating is a bad idea.
So true..but you forget three little details that really fucking matter here(how convenient):
I’ll tell you right now that the answers aren’t “On the plane, during boarding, and Dr. McScreamy”.
If I was sitting next to the United employee that got the ejected passenger’s seat, I wouldn’t let him have any of the armrest!
The cost of finding alternative means to deliver crew is not going to outweigh the losses from cancelling flights. Just not going to happen.
The option of bumping people from a flight to transport crew is merely a convenience to an airline. It is not a matter that’s going to make it reasonable just to stop flights.
There’s no way that this is such a huge cost issue to an airline that they will rather just cancel flights.
The notion of an entire planeload of people holding out for $1M bump compensation is bizarre.
The comparison to a classic open, ascending-price auction is not a useful one. The more apt comparison is the Dutch auction, in which the asking price starts out ridiculously high and is slowly lowered until the first person in the buyer’s pool says “I’ll take it.” Unlike an open, ascending-price auction (in which bidders can counter the current bid with higher and higher bids until they reach the point where the bidding exceeds their own perceived value for the item), a Dutch auction means everyone in the bidding pool is locked out the instant one of them accepts the asking price. If an interested bidder waits too long, he risks losing the opportunity to buy the item because someone else may snap it up, and no one knows exactly when that’s going to happen.
Under Smapti’s notions of game theory, Dutch auctions wouldn’t work because all the bidders would wait until the price hits zero. But the fact is that Dutch auctions never reach zero, and for the same reason, overbook comp auctions (whether at the counter or in the cabin) in which the airline offers higher and higher payouts until the first person accepts would never reach $1M.
Apparently not
It doesn’t have to be a bidding war to get stupid-it just takes idiots being told about “That guy who got $11,000!!” without knowing(or giving a fuck enough to find out) that this amount went to a family of three adults that were bumped twice and then delayed.