In this segment from Market Foolery, Chris Hill is joined by Motley Fool analysts Jason Moser and Taylor Muckerman to discuss the viral video that has resulted in major backlash for United (NYSE:UAL) Airlines.
Regardless of how the stock moves short term -- it has declined 2.5% this week -- the Fools believe this incident could hurt the airline going forward. And major competitors are taking the opportunity to step in and poach upset customers.
A full transcript follows the video.
This video was recorded on April 10, 2017.
Chris Hill: The head of public relations for United Airlines, whoever he or she is, is having a tough day, and that is because, as you have probably already seen by the time you're listening to this episode of Market Foolery, video has surfaced of a passenger being forcibly removed from a flight that was going from Chicago to Louisville. This was on Sunday. Everything about this, I think, is bad for United Airlines, because the backstory -- this is not some passenger who was drunk or causing trouble. This was, United overbooked the flight, they asked for volunteers to leave so that they could get four United employees to Louisville to service another flight. And they offered $400, and then they offered $800, and then they said, "You know what? We're just going to have a computer pick people at random." So a passenger who had paid for his flight got removed. And Taylor, as you were saying before we started taping, the aviation police, who were doing their job, seemed relatively unconcerned that so many people on that flight had their phones out and were videotaping this situation. And I know this isn't going to hurt their stock today, but among other things, I think, if I were another airline, I would be trolling United so hard with this for so long. I don't know. I think there could be some potential long-term trouble here for United, but maybe I'm wrong.
Taylor Muckerman: It's unfortunate for them, because like you said, it was the Chicago Aviation Police. It wasn't their employees that apparently knocked this gentleman unconscious while trying to drag him off the airplane. Yeah, the Facebook video I saw I had been viewed 360,000 times, and it wasn't a company's page that was liked 360,000 times, it was a regular citizen who probably only had a few thousand friends on there, but 360,000 views shows the virality of this video and how widespread it become in less than 48 hours. Was it yesterday that this happened?
Hill: This was yesterday.
Muckerman: Less than 24 hours, viewed almost 400,000 times on one person's account. Yeah, they're definitely going to see this on social media for quite some time.
Hill: And, you're right, it wasn't United employees who removed this guy. But I look at the underlying business systems that United put in place, and I think, ultimately, it falls back on them. It highlights how airlines overbook.
Muckerman: Yeah, they're not the only ones that overbook. All of them do it.
Hill: Yeah. But in this case, they're overbooking so that they can get employees from point A to point B. Why are you stopping at $800 if you're trying to get people to leave a flight voluntarily?
Muckerman: This is going to cost them way more than $800.
Jason Moser: And if you think, too, if you go 10 or 20 years back, to when this was something airlines would do, and I think travelers probably assigned more value to that travel voucher back then than they do. I think a lot of that is because the way the internet has changed everything we do, from e-commerce to travel to banking. What I think the internet has ultimately done is helped us realize placing more value on our time. In any scenario, you value your time moreso today than I think we could have 10 or 20 years ago, because there were not as many choices. So when you get stuck on an airplane and they're trying to get people to take off and take a travel voucher and take a later flight, like, "That $400, I guess I could do something, but it's such a nightmare going to the airport and dealing with getting through security and getting on the plane, nobody likes flying on those planes with those little tiny seats." All of the sudden, United becomes ... any airline is going to have to look at that and say, "Maybe $400 isn't going to cut it." Maybe $800 does cut it. Maybe there are a few people on the plane that will go ahead and take that offer. But, again, I think, why in the world do they so consistently overbook flights? You have a fixed number of seats. It's not like it takes a PhD to figure this out. So obviously, they do something where they're relying on some sort of statistical measure, where it says how many people might not show up for a flight, or however many cancellations might exist, and they can overbook by this amount. But, I do think, for someone, I look at myself and I am, generally speaking, about as apathetic to any given airline brand when it comes to flying. I'm just looking for a plane that's not going to go down, and I want a reasonable price, and I want you to get me there quickly. But man, after this, I have to say, I don't think I would want to buy a ticket for a United flight because of this. I don't see anything good that came of this. There was the dress code thing that wasn't too terribly long ago, either, which I found to be pretty absurd, honestly. They're just not doing themselves any favors.
Hill: And I don't know if you saw this, but in response to the whole United flight not letting the two young women on because they had leggings, Delta Air Lines tweeted out something about how, "Flying Delta means flying comfortable, even if you just want to wear leggings."
Moser: Yeah, you should go out in public and you should be dressed in such a way that is not provocative or questionable. But hey, instead of focusing on the dress code, why don't you focus on people that smell bad? Right? Have you ever sat on a plane next to somebody who stinks? Because that's offensive.
Hill: I think that's going to be a tough one to put into a system.
Muckerman: Well, they're both subjective.
Moser: I don't think so. I think fashion is subjective. Objectively, you either smell or you don't. And if you smell, I don't want to sit next to you.
Chris Hill has no position in any stocks mentioned. Jason Moser has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.