Fair market value goes both ways

© 2016 Jim Spence - Baseball season is back. I love baseball. It is a beautiful game. I went to Cincinnati last week to watch my hometown Baltimore Orioles play the Reds. My cousin and I met there on the Ohio River and also got in a couple of rounds of golf, plus a trip to Keeneland Racecourse in Lexington, Kentucky.
I noticed as I prepared to fly out of El Paso to Cincinnati a week ago that my flight was booked on United Airlines. Unfortunately for stockholders, United made the news recently and not in a good way. It seems United CEO Oscar Munoz has at least a couple of rules he really likes to follow. First, he prices all of the services provided by United at whatever he thinks the market will bear. In doing so, Munoz also takes into account the fact that United has sophisticated algorithms in place to predict the number of cancellations for any flight. United overbooks flights routinely, to increase load factors.
Unfortunately, like all programmers who try to predict human actions based on elaborate mathematics, sometimes their models fail. Overbooking is the risk United and other airlines run to try to keep their flights full of passengers. They earn many millions of dollars with this strategy. Good for them! 
Here is the catch. When United sells more seats than they have, and nobody cancels their trip, United has to bump people off the flights.
Fair enough, overbooking is allowed by law. And typically what airlines do when they get caught short, is quickly start offering incentives for people to sell them back their seats. Seems reasonable to me. I love free markets. For the college kid with more time on his hands than money, these situations create mini-financial windfalls. 
The problem with CEO Munoz at United, is he doesn’t embrace the same free market pricing model when United has to re-purchase seats. When United is selling seats, whatever the market will bear is a really cool concept that makes him look good as the guy running the airline. However, when United is buying seats back Munoz has decided the market-based pricing model is to be cast aside for an artificial cap that somehow United feels it can predetermine. Good luck with that Oscar. What a schmuck.
In Chicago a couple of weeks ago, a doctor was literally dragged off the plane against his will, because neither he, nor anybody else on that flight, was willing to accept the artificially capped price that United chose to offer for the gross inconvenience caused by their profit maximizing overbooking strategy. The video was all over the news.
Sorry folks. These are the kinds of incidents that progressive Democrats use, no matter how isolated, to turn citizens against ALL businesses.
United is a pariah that should be shunned by every business person in America until CEO Munoz is canned. United is bad for everyone out there competing in the business world who is trying to take care of their customers.
Oscar Munoz poured gas on the fire he lit, when he acted like this incident was a tough choice that had to be made between his employees, or this particular passenger. It wasn't what this was about at all. Instead, it was about his hypocritical attitude towards ticket pricing. Astonishingly, United actually used some of the seats to fly crew to Louisville to serve a flight leaving from there. Talk about skewed priorities.
The airline industry successfully lobbied Congress to make sure overbooking was legal long ago. The point here is simple. All reasonable people have no problems with overbooking per say, simply because it is a much more efficient way to run an airline. However, what is not OK.....is arbitrarily capping the amount your airline will pay to grossly inconvenience a customer who was counting on his or her seat when they booked the flight.
In this instance, $800 was not enough (in the free market for flights to Louisville at that time) to compensate a single passenger to sell his or her seat back to United. Here is what should have happened. The United officials should have said on the microphone, "Do I hear $900? How about $1,000? $1,200? How about two grand?" The process should have been to offer more and more money until United had a taker. Eventually they would have gotten one who was happy.
Oscar Munoz is not CEO timber. And nobody in their right mind should fly United again until he is fired. This man SOLD United’s reputation for fair play and integrity instead of paying fair market value for one lousy ticket.
I wouldn’t let Munoz clean my toilets, let alone run a multi-billion dollar company like United. Munoz is the kind of businessman that nobody wants or needs. The United board should have fired him immediately for lack of fundamental integrity. United should find themselves a decent CEO who understands that market-based pricing applies at all times……..especially when you get caught over-booking. Overbooking works for everyone when airlines buy their tickets back at fair market value. This is the only way that everyone can win with overbooking and Munoz knows it and so does the United board.
Bringing cops on to your airplane because it is legal to steal a ticket back from a customer below market value is barbaric. Oscar Munoz is a barbarian and the United board has embraced barbarism. Both United and Munoz need to get what they have coming.