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Topic: If you like business theory, operations...

Topic: If you like business theory, operations...

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Monroe Slavin
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If you like business theory, operations...

Posted: 4/13/2017 1:10:18 AM

An interesting take on how United could have better handled the over-booked flight...instead of beating the guy up:

https://finance.yahoo.com/news/uniteds-way-bumping-ineffi...

It's OHIO related because it's interesting from an academic viewpoint.

Last Edited: 4/13/2017 1:28:10 AM by Monroe Slavin

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Alan Swank
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RE: If you like business theory, operations...

Posted: 4/13/2017 11:39:53 AM

According to that chart, you have less than a 1 in 10,000 chance of getting involuntarily bumped. Not condoning how this thing played out but this guy was of very questionable character to start with.

BillyTheCat
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RE: If you like business theory, operations...

Posted: 4/13/2017 11:43:43 AM

Alan Swank wrote:

Where do you get that this guy was of questionable character?

Monroe: interesting read, thanks for sharing

Ted Thompson
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RE: If you like business theory, operations...

Posted: 4/13/2017 11:58:33 AM

Not that airport securty would have known but: Doctor dragged off flight was convicted of trading drugs for sex

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Deciduous Forest Cat
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RE: If you like business theory, operations...

Posted: 4/13/2017 12:01:59 PM

I think it's wrong that the guy's past indiscretions are being brought into this, or even being brought to light because of it. It's not relevant here. Unless he offered the flight attendant drugs for sex, it's bull**** that it's even coming up.

Ted Thompson
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RE: If you like business theory, operations...

Posted: 4/13/2017 12:36:51 PM

It should not have been relevant to the actions taken. But it will likely lessen his leverage when it comes time to sue. He'll still get a nice settlement.

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BillyTheCat
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RE: If you like business theory, operations...

Posted: 4/13/2017 12:58:42 PM

Deciduous Forest Cat wrote:

Has absolutely NO bearing on any this.

Ohio69
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RE: If you like business theory, operations...

Posted: 4/13/2017 1:15:53 PM

BillyTheCat wrote:

Alan Swank wrote:

Where do you get that this guy was of questionable character?

Monroe: interesting read, thanks for sharing

I knew he was a questionable character the second he didn't get up and walk off the plane when asked.

Can somebody hit a pull up jumper for me?.....

rpbobcat
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RE: If you like business theory, operations...

Posted: 4/13/2017 1:35:57 PM

Alan Swank wrote:

I don't disagree with the overall number,but that doesn't tell the whole story.

A lot depends on the airport and flight.

Newark is notorious for "bumping".
I know that there always seems to be an issue with the smaller "commuter" flights.

I usually fly to Columbus, to visit Athens,once a year.
I can't remember a flight out of Newark where they didn't ask for volunteers to be "bumped".
Fortunately in my case they've always found enough volunteers.

The terminal area in Newark where we fly out of is pretty much limited to
"commuter" flights.
Again,you hear announcements all the time asking about "overbooked" flights and asking people about being "bumped".

Alan Swank
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RE: If you like business theory, operations...

Posted: 4/13/2017 1:51:31 PM

rpbobcat wrote:

Alan Swank wrote:

The key word is "involuntarily." In 30+ years of regular flying (American Platinum), I've only seen it happen twice.

Alan Swank
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RE: If you like business theory, operations...

Posted: 4/13/2017 1:51:53 PM

BillyTheCat wrote:

Alan Swank wrote:

Where do you get that this guy was of questionable character?

Monroe: interesting read, thanks for sharing

Just one of many articles:

http://nypost.com/2017/04/11/doctor-dragged-off-flight-co... /

And as 69 said, in this day and age when they tell you to get off a plane, you get off. Period.

Last Edited: 4/13/2017 1:53:00 PM by Alan Swank

The Optimist
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RE: If you like business theory, operations...

Posted: 4/13/2017 2:26:31 PM

My roommates and I overbooked every party we ever had at Ohio University.

Some policies we followed:
-We ALWAYS denied entry at the gate rather than trying to kick people out once they had already boarded.
-We NEVER called the police if people got unruly, although the police did sometimes show up at the gate unannounced.
-Free in-flight beverages.

Despite record-high customer satisfaction levels, local regulators were constantly enacting legislation aimed at slowing our growth. Knowing our customers did not like local regulators, we countered with a number of organic marketing campaigns on social media. Sensing government overreach, our customers rallied behind our message and our popularity grew tenfold.

I've seen crazier things happen.

OhioCatFan
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RE: If you like business theory, operations...

Posted: 4/13/2017 4:11:41 PM

BillyTheCat wrote:

Deciduous Forest Cat wrote:

Has absolutely NO bearing on any this.

+1 I agree 100 percent. He sounds like a sleaze bag, but this has no bearing on the present case. Once you have boarded a plane, it is completely ridiculous to randomly select folks and ask them to leave their seats based on that fact that you (the airline) overbooked. This "overbooking business" needs to stop and I would support legislation to make that happen. When you buy a ticket for a flight, I view that as a contract between you and the airlines. They should not be allowed to unilaterally abridge it.

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Robert Fox
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RE: If you like business theory, operations...

Posted: 4/13/2017 4:35:41 PM

Two things I don't understand: 1. Overbooking. The airlines claim that the practices is done to provide insurance against the likelihood that some travelers will simply not show up, which I know happens. However, if I don't show up for a flight, it still costs me the full fare. I pay for my fare when I make reservations, as I assume, most people do. The airline will ding my credit card whether or not I "show up." If that's the case, then a no-show would still be revenue generating. If so, why would the airline need to overbook? 2. I don't think I have ever seen passengers asked to leave the plane for overbooking. In my experience, this is always done at the gate. No one gets on until all seat assignments are final. What caused the flight to be boarded and only then require the removal of four passengers? That's the real crux of the problem, as I see it.

Alan Swank
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RE: If you like business theory, operations...

Posted: 4/13/2017 5:18:00 PM

Robert Fox wrote:

Not necessarily. Some fares are fully refundable and some are booked with points. If those folks cancel at the last minute those seats do indeed go unsold.

People get on all the time before all seat assignments are final. It's called standby and if connecting flights don't show up on time or ticketed passengers cancel at the last minute or just don't show up, these standby passengers are boarded long after others have boarded. It happens all the time.

Last Edited: 4/13/2017 5:31:03 PM by Alan Swank

OhioCatFan
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RE: If you like business theory, operations...

Posted: 4/13/2017 7:38:13 PM

I think standby is a totally difference situation. I used to fly military standby when I was on active duty in the Navy. You understood that you would only get a seat (at a greatly reduced price) if there was an available seat after all regular paying customers had boarded. Regular standby is similar, without the discount I would assume.

In my experience there are very few times that ticket costs are refundable, unless it is many days prior to the flight. The bottom line, IMHO, is that the airlines have no problem getting revenue from a no-show and then placing a new paying customer in the same seat. It's kind of "double booking."

Insurance companies have done this kind of double-billing thing for years. They adjust rates so that they are almost assured of making a profit on each individual insured, instead of making a smaller, but still substantial, profit on the entire population of those insured.

The remedy for both airlines and the insurance industry is the development of some good laws to prevent gouging of this sort, sort like usury laws in the banking industry.

Last Edited: 4/14/2017 12:37:41 AM by OhioCatFan

Monroe Slavin
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RE: If you like business theory, operations...

Posted: 4/14/2017 2:27:46 AM

OCF--what evidence do you have to support your claim that insurance companies generally price to make a profit on every customer? I'm not saying that is not so. I've just never heard of that.

I think overbooking is okay as a way of ensuring maximum revenue. But the remedy is not to physically force beat the hell out of an involuntarily chosen person. The remedy is to raise the price for voluntary 'get-offs' until a sufficient number of people to solve the problem get off the aircraft (or, better, agree not to get on it).

Last Edited: 4/14/2017 2:30:03 AM by Monroe Slavin

Robert Fox
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RE: If you like business theory, operations...

Posted: 4/14/2017 7:48:24 AM

Alan Swank wrote:

Not necessarily. Some fares are fully refundable and some are booked with points. If those folks cancel at the last minute those seats do indeed go unsold.

I don't get how they could be refundable for simply not showing up. Yes, if you're a frequent flyer, you get special perks like refundable flights. However, if the airlines implemented common-sense rules whereby within say, 24 hours before the flight, your opportunity to cancel is over. It would be very similar to a hotel stay. 24 hours from takeoff? You pay the full fare.

Alan Swank wrote:

People get on all the time before all seat assignments are final. It's called standby and if connecting flights don't show up on time or ticketed passengers cancel at the last minute or just don't show up, these standby passengers are boarded long after others have boarded. It happens all the time.

Not in my experience. Agree with OCF that "standby" is a different animal because the gate agent will not know who has "shown up" until the boarding process happens. But in an oversold situation, it's the reverse. The gate agent knows there aren't enough seats. When that happens, again in my experience, the sorting out happens at the gate, not on the airplane. That also seems like common sense.

Alan Swank
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RE: If you like business theory, operations...

Posted: 4/14/2017 10:22:35 AM

Robert Fox wrote:

Alan Swank wrote:

Not necessarily. Some fares are fully refundable and some are booked with points. If those folks cancel at the last minute those seats do indeed go unsold.

Alan Swank wrote:

If I buy a refundable fare, I simply need to cancel before the flight and I get my money back. I don't fly Southwest very often but their top two fares are that way.

As for oversold, the only way they know if the flight is oversold is if more people check in either online or in person. When that happens, that's when you hear the announcements in the boarding area asking for volunteers.

And finally, there are people who book flights to a destination through a connecting city with the intent of getting off in the connecting city. Technically those people have checked in for the second leg of the flight. That's one of the reasons standby is unpredictable. Also, with standby at least on American, your status has everything to do with whether you get on or not. Believe me I've been on that list many times when business has ended earlier than I thought and I've tried to get on an earlier flight home.

Deciduous Forest Cat
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RE: If you like business theory, operations...

Posted: 4/14/2017 11:03:25 AM

Monroe Slavin wrote:

I think overbooking is okay as a way of ensuring maximum revenue.

Ding ding ding. Pretty much the reason airlines do anything...

It's all about filling empty seats... on other flights. By overbooking a high demand flight, usually with more expensive tickets, they're essentially selling higher priced tickets to a low-demand flight because volunteers will end up on those previously half full flights. They like overflow because they can channel it to empty seats elsewhere. How well this works after all the comps are accounted for I'm not sure.

OhioCatFan
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RE: If you like business theory, operations...

Posted: 4/14/2017 11:21:51 AM

Monroe, years ago I had a friend, now deceased, who had a Ph.D. in economics. He constantly harped on this theme -- of insurance companies adjusting risk pool data to insure (pardon the pun) that they made a profit on 95+ percent of clients rather than making a profit on the entire pool. Over the years, I've watched as various insurance companies make pleas before government regulatory bodies about their fee structures and I've seen evidence that this slight of hand was indeed continuing. My friend testified numerous times in front of the various Ohio General Assembly committees on this issue. In fact, I think they considered him a real nuisance, because as he would say, the legislature was in the "hip pocket" of the insurance lobby at that time. Maybe still is.

Monroe Slavin
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RE: If you like business theory, operations...

Posted: 4/15/2017 2:42:51 AM

I'm not sure about that OCF. If a policy is specifically underwritten, surely it's priced at what the insurance company thinks will be a profitable price.

Now under Obamacare, I gather that there's not specific case underwriting. This must be true because the applications are simple--to apply, one doesn't answer any health status questions, right? Isn't that the point of it? So, insurers underwrite a class of business or a policy type instead of individual cases. Again, this is why everyone must ...as in requirements to pay taxes, wear seatbelts, etc...be made to be covered, must pay for coverage--so coverage is affordable for all. (It's truly impressive that Repubs won't accede to this and, yet, think that they can put in a viable national healthcare plan.)

Also, from an economic standpoint, there's got to be little diff between making a profit on an entire book of business vs. making a profit on 95% of the components of that book.

cc-cat
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RE: If you like business theory, operations...

Posted: 4/15/2017 10:41:41 AM

His past means nothing to this case. Only leverage he needs are the tapes of the assault. Plus this won't sniff a court. Had a client whose father was the lead attorney for TWA back in their day. She used to honestly joke he had no idea what the inside of a courtroom looked like because he had never seen one.

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