So an airline passenger dared to believe his ticket actually gave him the right to a seat? No wonder United Airlines was so enraged.
Its clumsy response to the now-famous incident in Chicago can be read in many ways – as a commentary on United's tone-deaf management (which has since apologized) or on the sad state of air travel, for starters.
Really, though, the case is one that echoes way beyond any single company or industry.
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It's a fine example of what happens when there is a clash of two supposedly sacred imperatives. One: Treat customers well. Two: Maximize shareholder value.
No need to linger here in suspense. When the two principles have clashed in recent years, the second one has reliably won.
It did so in United Airlines' case, when the company stood by as a paying customer was bloodied for having the nerve to demand the service he purchased. It also did so at Wells Fargo, where employees under pressure to meet sales targets resorted to opening fake accounts for customers. And the overwhelming imperative to create shareholder value completed the trifecta by overruling common sense at Volkswagen, which cheated on emissions tests to win approval for some of its diesel vehicles.
This was not how things were supposed to work out. In theory, deregulation and fierce competition were supposed to create a golden age of customer service as companies battled to win the public's trust and affections.
Some times that has happened. But in other cases companies have veered in the opposite direction.They have adopted a grudging, or even belligerent, attitude toward their own customers while directing the benefits to shareholders.
United Airlines offers a case in point. Investors in its parent company, United Continental Holdings Inc., tripled their money over the past five years. In contrast, United's ranking in the Airline Quality Rating improved only moderately, to eighth place (out of 12 contenders) in 2016, from 14th place and dead last in 2012 .
The results suggest the link between happy customers and happy shareholders is nowhere near as tight as many of us would like to assume.
Perhaps that's because consumers have come to believe all the available suppliers are more or less equally dismal. It's a pattern that holds true in many industries. Canadians, for instance, love to complain about banks and wireless providers but don't exactly rush to embrace alternatives.
How to improve things? We can start by creating more complete markets.
In the case of airlines, this would entail removing limits on how much companies can pay passengers to give up their seats. Airlines should be forced to hold open auctions if they find themselves in situations such as the one in Chicago.
United says it offered passengers up to $1,000 (U.S.) to get off the flight but couldn't get enough takers. The obvious solution would have been to offer even more money. At some point, a few more passengers would have stepped forward.
Beyond such auctions, it may be time to take a look at the growing tendency toward common ownership of major industries.
A new paper by economists José Azar of the University of Navarra, Martin Schmalz of the University of Michigan and Isabel Tecu of Charles River Associates points out that mutual fund families and other big institutional investors now own more than 70 per cent of publicly traded firms.
When the same handful of big investors own all the major companies in a sector, there is – in theory anyway – less incentive to compete, since the same group of shareholders wind up reaping the benefits no matter which individual company wins the battle for customers.
The researchers do some heroic number crunching and conclude that "ticket prices are 3-7 per cent higher on the average U.S. airline route than would be the case under separate ownership."
As you might imagine, this is controversial stuff. But the growing tendency to common ownership offers one explanation for why an airline might be willing to see a passenger pummelled in pursuit of higher efficiency.
Ian McGugan