By now nearly everyone has seen the viral video of Dr. David Dao being physically dragged off an overbooked United Airlines flight. The videos that have surfaced the past few days are certainly shocking, make most viewers uncomfortable, and have caused what feels like a national outrage against United. Yet, despite millions of “key-board warriors” rallying together against United, I cannot help but think that no meaningful change will come to fruition.
Airline companies (and not just U.S.-based ones, like United) overbook flights as a way to generate more revenue, since customers miss their flights or choose not to go all the time; so, United’s business practice of overselling their planes is by no means unique. Despite all the outraged responses by potential future United customers over a somewhat morally-questionable business practice, the oligopoly that is the U.S. airline industry will continue to flourish, and United Airlines will get through this public relations nightmare. At least that is what history tells us should happen.
Following years of M&A activity in the space, the airline industry in the United States is controlled by the “Big Four”—American Airlines, Delta, Southwest, and United Airlines. Not only do these firms each individually have over four times the fleet of their closest competitor, Air Canada, they offer more flights to more “desirable” cities than their competition. Moreover, the airline industry as a whole does not, and should not, feel any pressure from the bad publicity that is consuming the current news cycle. Consumers will always want to travel to new, exciting places or destinations they’ve traveled to countless times. Ultimately, consumer preferences will not change; airlines offer consumers the most efficient, cost-effective, and time-effective method of transportation. That will not change anytime soon. While oligopoly-driven markets are not always efficient, the commercial airline industry’s contribution to GDP in the U.S. is estimated to be just under $1.5 trillion, and roughly $3 trillion worldwide. In the U.S., the industry provides jobs to over 10 million Americans. The economic functions that the commercial airline industry provides to the U.S. economy are important and quite noticeable.
United is not the first major firm to make mistakes and feel the outrage of their consumers. Think of the relatively recent Volkswagen controversy. The company wrongly installed software that would read out the diesel-pollution numbers that consumers and rating agencies wanted to see. When this became public knowledge, lots of people urged a boycott of the car manufacturer. Yet, now, no one speaks about it anymore. It’s news cycle has run its course, and it is only a matter of time until United gets to the same point.
At the end of the day, the incident involving Dr. David Dao will not be the end of United Airlines. United has a strong footing in the commercial airline industry to begin with, and the emotions that people feel when they see those viral videos are momentary and forgotten by the time the next news cycle rolls around.