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United Airlines tries to end PR disaster with $10,000 compensation offer that could end up costing it millions - in vouchers

United airlines flight - PA
United airlines flight - PA

Troubled United Airlines has announced it will pay up to $10,000 to persuade passengers to get off overbooked planes - a move that could cost it more than $100m a year. 

In an attempt to end the public relations nightmare that began last month when security staff dragged doctor David Dao off a United flight last month, the airline said it will increase the incentives on offer to fliers so they take later flights when plans are overbooked.

Previously, the maximum staff would offer to voluntarily bump people off flights was $1,000, but this was raised as part of 10-point plan publicly issued on Thursday by United as it tried to end its image troubles.

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Asked by The Telegraph, United said that the $10,000 would not be in cash.

"For now, it will be Travel Certificates," the company told The Telegraph in an email.

"We are working toward introducing other forms of compensation into the volunteer process. This is just first step."

David Dao
David Dao was left bloodied after being dragged off a United Airlines flight

Image issues for the airline started when footage of a bloodied Mr Dao surfaced online, triggering a firestorm of criticism for the carrier, which was compounded by a series of missteps.

Among them was chief executive Oscar Munoz seemingly failing to acknowledge that there was a problem and not apologise to Mr Dao, and the revelation his seat was being taken to transport United’s own employees.

Further concerns then arose including the death of a giant rabbit called Simon which was being transported on a United flight.

Simon the rabbit - Credit: Caters
Giant rabbit Simon dies in mysterious circumstances on a United flight Credit: Caters

However, the new $10,000 offer has the potential to put a big dent in United’s profits, with passengers knowing the airline is desperate to avoid further controversy and so holding out for the maximum award.

According to its own data United and its United Express offshoot flew 143m passengers last year, and official US figures show the national average for those being “denied boarding” is 0.09pc. This means 128,700 people are likely to be kicked off flights a year, potentially racking up almost $130m in compensation costs for United.

“It’s madness to announce they will pay out $10,000,” said aviation analyst Alex Macheras. “The airline’s argument is that it’s up to that amount and someone will give out before then.

“But United can’t risk another PR disaster so they will be well aware that it’s willing to pay the top amount.”

Mr Macheras said United’s public commitment to “limit the use of law enforcement” and “reduce the amount of overbooking” was a further stumble.

“It makes them sound like a sinister airline which is constantly overbooking,” he said. “It’s naive, because the basic airline model is to overbook because you want planes as full as possible.”

Savvy customers can also game the system to ensure they are denied boarding and win payouts.

“There are publicly available websites where you can easily see which flights are likely to be overbooked but tickets are still being sold for,” Mr Macheras said. “Weirdly, United is one of the easiest to see it on - in a few minutes anyone can find first three letters of the surname and initial names of passengers who are on standby.”

Although United had total revenues of $36.6bn last year and profits of $2.2bn, margins in the industry are notoriously tight and passengers abandoning the carrier because of its recent troubles could see it dive into the red.

United Airlines boss Oscar Munoz - Credit: AP 
United Airlines boss Oscar Munoz Credit: AP

Announcing the 10-point plan, Mr Munoz said: “Every customer deserves to be treated with the highest levels of service and the deepest sense of dignity and respect. However, actions speak louder than words and, we are taking concrete, meaningful action to make things right and ensure nothing like this ever happens again."

In a statement released later on Thursday, United said it had reached an “amicable settlement” with Mr Dao, but gave no details of the compensation offered.

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