The Post-David Dao Era – and the $10,000 Bump Voucher – Is Ending

Airlines are tightening their belts, trying to cut what it costs them to give out denied boarding compensation to passengers when they overbook a flight. Both United and American have copied Delta in soliciting ‘bids’ from customers for what compensation they’d accept, hoping to avoid bidding wars at the gate.

In the wake of United’s April 2017 passenger dragging incident – where David Dao was told to give up his seat for two crewmembers and refused, winding up bloodied by airport – there was a huge public backlash against bumping passengers off of overbooked flights. And airlines started paying out far more compensation to avoid involuntarily denying boarding to passengers.

The Public Was Outraged At Involuntary Bumps

Public reaction to the David Dao incident focused less on (1) airlines outsourcing their customer service problems to law enforcement in the post-9/11 environment and (2) excessive force by law enforcement and more on (3) airline denied boarding policies. There was a sense that if you buy a seat on a flight you’re entitled to that seat and if the airline has a problem and needs you seat, it’s up to them to pay whatever it costs to get passengers to volunteer to be taken off.

Airlines overbook because they know not everyone will show up for a flight, and it’s a huge wasted resource to have a plane take off with an empty seat that a passenger would have preferred to pay for and travel in. Airlines do a great job of anticipating no shows and not selling more seats than there are passengers, but very rarely they screw this up and have more passengers than seats.

That’s not the only way airlines wind up having to bump passengers. When a mechanical problem, weather or other issues causes them to substitute an aircraft that doesn’t have as many seats on a route they can wind up with more passengers than seats .

Airlines – recognizing the public reaction to David Dao – started paying out more than the legal minimums required by the Department of Transportation.

Bump Compensation Skyrocketed After David Dao

It became news when Delta paid a woman $4000 to take a later flight the same day (which was perfectly convenient for her). Even more so when United paid out $10,000 to a passenger.

When American Airlines swapped out a Boeing 787-9 for a smaller Boeing 787-8 they may have given out $250,000 in compensation to passengers who had to take a later flight, even though Department of Transportation rules wouldn’t have required compensation at all.

American Has Started Trying to Rein In These Costs

Compensation costs were about what passengers now thought was fair, but more than airlines wanted to spend. American launched a new bidding system to hold down costs and has recently started holding people to their bid amounts (rather than paying everyone the highest amount necessary to get enough volunteers). They’re calling it “Pay What You Bid.” The intention is to no longer announce dollar amounts soliciting volunteers, with different passengers getting different amounts for volunteering.

Customers place their bids without knowing how long it will be until the next flight they’re able to get on, so it’s not really possible for a customer to know in advance what amount they’d accept for inconvenience. Gate agents may still need to solicit volunteers at the gate, they just aren’t supposed to announce amounts. Once the flight takes off everyone getting a voucher will be standing there learning what everyone else got, turning a rewarding experience into a resentful customer interaction.

The Post-David Dao Era is Over

Before David Dao airlines offered modest compensation and if nobody took it, they didn’t much care, they would pay out DOT-mandated cash. It was bad policy and bad economics but highly regulated industries, especially with barriers to entry as significant as U.S. aviation, often act in complacent fashion.

Dao changed the dynamic, and airlines adapted, willing to spend more than before to avoid involuntary bumps. Now the pendulum is swinging back, as they work to control costs.

Almost no one who said they were going to boycott United after David Dao still does so. There are plenty of people who haven’t flown United, but is David Dao the real reason why? United has certainly outperformed American.

And involuntary denied boardings are so rare – indeed they were extremely rare 45 years ago – that consumers don’t make decisions on the basis of avoiding the chance it could happen to them. Airline promises not to overbook don’t even factor here if consumers were trying to avoid the result, since no airline operates every flight, every day without disruption or change of aircraft. (Delta does earn a revenue premium in part because they’re more reliable than United and American.)

David Dao wasn’t enough to change the mindset where every customer is a security threat, though United’s policy is still that they won’t call police on customers unless there’s a security threat (which is whenever they say it is). And it wasn’t enough to keep the era of $10,000 bump vouchers either.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Gary,

    You say it’s over, but was it really here? Given the limited reports of high payouts, one can reasonably assume those that got paid what they did were done so for PR reasons.

    Second, you don’t actually indicate any clear policy changes that limits VDB payouts. It seems to me that if nobody bids at the kiosk and the airline has to solicit volunteers at the gate, it is what it is, no?

    Finally, for the few times I’ve bid for VDB compensation at the kiosk, the amounts have been super low… sometimes so low I didn’t think the max permitted compensation was actually fair, let alone $10,000.

    I hate to say this, but given what you’ve written, you don’t provide *any* evidence to support your headlines. The only policy that you cite is a post of yours that is two months old quoting a Tweet from JonNYC. Jon’s tweet says nothing about a $10k limit.

    I’m just not getting your writing on this one.

  2. I’ve never gotten the AA prompt to volunteer in the app, but I get it all the time at UA. Most of the time when UA prompts they don’t end up needing volunteers, i.e. they might ask for volunteers even if a flight is oversold by 1. It doesn’t make sense how this would work, at AA if they don’t announce amounts at the gate. I will be curious to see this play out. Also corporate may have these ideas or policies but it seems like gate agents and supervisors do whatever they want, so I could see them say still asking for volunteers for $500 to take a later flight rather than doing it the way corporate is asking them to do it. I’m sure its as you describe if corporate prompt you to vounteer through the app.

  3. It depends on the situation, on the airline, on the airport,on the destination, etc. Since you obviously have not experienced this, you cannot comment first hand. The whole post is conjecture, mostly based on American. When you experience this yourself, come back and write about the experience!

  4. I just read on a board about a woman who got $1800 each for herself and two children for VDB on United plus rooms, food vouchers, taxis so she was thrilled. I wish there was a website for ways to find the VBD deals, best flights to book to get them, etc….any young tech folks looking for a new venture? LOL you could probably make a killing,

  5. Involuntarily denied boardings are so rare it’s very hard to care one iota about the issue. I haven’t seen such a denied boarding in my last 1000 flights.

  6. If AA wants to play it that way, my stance if presented with that scenario would be to estimate what expenses I would incur, add 20% for unknowns, then double it. Seems fair to me!

  7. Airlines are very lightly regulated. We get more protections when buying milk at a supermarket than when buying an airline ticket.

    It is a self-serving lie of the airlines that they are highly regulated. If they were, they would not have been allowed to buy each other out and collude against the public.

  8. @Jake

    Fares for economy are cheaper than they ever have been in real dollars. Even in nominal dollars airfare to Europe regularly cost $1000 in the early 2000s and now it can be half that. If airlines are colluding they are doing it wrong and the argument that airline mergers is bad for consumers is flat out false evidenced by the low fares. More regulations means higher passenger fares which you would probably complain about too. It’s true that economics of these cheap fares necessitate smaller seats so if you aren’t happy with that pay up for economy plus, PE or business which is also cheaper than it was 15 years ago.

  9. It is long past time for the United States to adopt the EU procedure for compensating passengers that do not receive their contracted benefits of paying for a ticket. LONG PAST.

  10. Back in Nov 2018, on a flight from Honolulu to Newark, plane was swapped from a 767-400 to a 767-300

    9 less seats in first.

    Gate agent s asked for 9 volunteer s, in exchange for your 1st class seat, you got economy plus seat on same plane and 1500 dollar voucher.

    After a little negotiating, I got to 5000 dollar travel voucher for each of us.

    10000 bucks of travel is getting used.

    Low and behold, our flight from Newark to Honolulu in Nov 2019 had the same thing happen, only I didn’t make it to the gate early enough to take advantage of it.

    Watching flight status on the UA app, it seems the 767-300 is in regular service on that route.

    Giving out $45,000 in travel voucher s for 1 flight has to hurt the bottom line even if only half is used.

  11. The Dao case never infuriated me. I was on United’s side. Dao was in the wrong to refuse a request to deplane. If I ask someone to leave my property and they don’t, I’d call the cops too. The cops roughed him up, not United.

  12. I flew UA the day after Xmas to OGG and because of aircraft issues we went from a high density Hawaii 777 to an international config and they needed 15 people to volunteer to take a flight 12/27. They started offering $4,000 each and then went to $10,000. I still get hesitant with that though because I feel like there are always stipulations.

  13. one thing is for sure – I will never blindly bid on a VDB opportunity without knowing what my itinerary is. AA can kiss my ass with their bidding system. If they need my seat, we can wheel and deal. I was never a big fan of bumps to begin with – I’m usually traveling somewhere for a relatively time-specific reason – but the few times I’ve accepted them it has always been a win-win, and to me it’s almost textbook not a win if the airline has “controlled its cost.”

  14. 2 years ago I got $9k travel voucher to sit in economy (with an open seat next to me) instead of business (paid not upgraded) on a Delta flight from ATL-LHR. It was well worth it.

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