U.S. lawmakers grill airline executives after customer disasters

WASHINGTON (Reuters) - U.S. lawmakers threatened United Airlines UAL.N and other carriers on Tuesday with legislation aimed at improving customer service after a passenger was hauled down the aisle of a flight last month.

Top airline executives testified to the House of Representatives transportation committee and promised to address customer service failures at the hearing held to consider ways to address passenger frustrations with problems such as overbooking.

The industry breathed a sigh of relief after the four-hour hearing, in which lawmakers did not outline any immediate plans for increased oversight on the largely deregulated sector.

In April, video went viral on social media of 69-year-old passenger David Dao being dragged from a United flight at Chicago’s O’Hare International Airport after he refused to give up his seat to make room for crew members.

United Chief Executive Oscar Munoz repeatedly apologized at the hearing for the removal of Dao, with whom the airline reached a settlement last week for an undisclosed sum. "In that moment for our customers and our company we failed, and so as CEO, at the end of the day, that is on me," Munoz said. He called the removal the result of a series of system failures and "a mistake of epic proportions."Munoz was joined at the hearing by United President Scott Kirby and executives from American Airlines AAL.O, Southwest Airlines LUV.N and Alaska Airlines ALK.N. American Airlines experienced its own public relations fiasco last month when a passenger video went viral, showing a woman on a plane in tears holding a child in her arms and another at her side after an encounter with a flight attendant over a baby stroller. "Clearly what happened was wrong," said Kerry Philipovitch, the airline's senior vice president of customer experience, at the hearing.

Airline stocks rose after the hearing and Delta Air Lines Inc DAL.N reported a gain in April traffic.

On Tuesday, United’s stock closed up 5.2 percent, Delta gained 5.4 percent, American added 4.3 percent, and Southwest was up 3.6 percent.

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Analyst Jim Corridore of CFRA Research said investors were focusing on news of Delta’s improved unit revenue and were also relieved that lawmakers did not outline plans for immediate moves to tighten regulations.

Many lawmakers fly weekly to and from Washington and during the hearing took the opportunity to recount the frustrations customers routinely face, including complicated booking systems, confusing fees, long waits and unexplained flight delays.

“We all know it’s a terrible experience,” said Representative Michael Capuano, a Democrat from Massachusetts, throwing his arms in the air in frustration. “Some charge fees for baggage, some charge fees for oxygen, who knows?”

Bill Shuster, chairman of the House of Representatives’ transportation committee, said: “If airlines don’t get their act together, we are going to act; it is going to be one size fits all. Seize this opportunity because if you don’t, we’re going to come, and you’re not going to like it.”

After the hearing, Munoz said the message that change was needed was loud and clear.

“I think the sense in the room was one of an admonition to get your collective stuff together,” Munoz told reporters at the Capitol. The alternative is to face additional legislation, “which I think is fair,” he added.

In response to the dragging incident, United has changed its policies by reducing overbooked flights and offering passengers who give up their seats up to $10,000.

Airlines have said they routinely overbook flights because a small percentage of passengers do not show up.

Delta Air Lines DAL.N declined to testify. In a statement, the airline said it was working with individual members of Congress on customer service issues.

Additional reporting by Steve Holland and Amanda Becker in Washington; Writing by Roberta Rampton and Amanda Becker; Editing by Richard Chang and Lisa Shumaker