Old Apr 20, 17, 8:50 am
  #6356  
MSPeconomist
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Originally Posted by flyerbaby19 View Post
I assume the reason UA doesn't allow agents to use "common sense" to increase voucher amounts is because someone ran a calculation. You say increase it from $800 to $1200 is just common sense. Well, I don't know the numbers, but there are probably thousands of VDB's throughout the year. Someone calculated it's cheaper to pay IDB compensation than raise to $1200. The cost of each one going up by $400 is probably huge. Is it as huge as the settlement? Who knows...but nobody expected that scenario to happen. Even so, say it's a million dollars...their analysts may still deem keeping it $800 was the right financial decision. There's no way to know which .000001% will escalate to what happened to the doctor. So you keep all at a $800 cap and in the long run save money.

I also don't agree that it's obviously not IDB. I've read the COC sections multiple times and I think there are folks on this board, myself included, who could see the argument that this was IDB. So just because it's clear to you, doesn't mean everyone universally agrees. Unfortunately, this will probably not make it to trial, so we won't have a legal answer.
If UA really just wants to minimize costs of overbooked situations on a flight by flight basis, they should look at what it would cost to IDB the needed number of passengers for whom the mandatory IDB compensation would be minimum and compare this to offering UA$ vouchers using their 75% breakage rate estimate. If one seat is needed for an overnight rebooking and the customer with the lowest fare for the segment paid just $20 (including only the taxes and fees that are supposed to be used in the calculation), the IDB will cost UA $80, so only UA$320 in vouchers should be offered.

The problem with this thinking is that there's a significant good will value in getting the needed seats through VDBs that make customers happy rather than forcing an IDB on your cheapest victim. Moreover, the voucher tends to encourage someone to buy another UA ticket, perhaps for travel that they wouldn't otherwise have done.

Last edited by MSPeconomist; Apr 20, 17 at 9:37 am Reason: Correcting autocorrect
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