US federal law is responsible for the United Airlines incident

You can hate the greedy practice of airlines overbooking flights all you want, but it wasn't greedy overbooking that sparked the great United Airlines fiasco, which ended in a passenger being brutally dragged off a flight from Chicago to Kentucky.

It was actually a federal regulation stipulated by the US Government's Department of Transportation, according to news.com.au.

On Tuesday, United Airlines spokesman Jonathan Guerin said that all 70 seats on the United Express Flight 3411 were filled, but the plane was not overbooked as the airline previously reported. At least not by overselling tickets.

Instead, United and regional affiliate Republic Airlines, which operated the flight, selected four passengers to be removed to accommodate crew members needed in Louisville the next day.

The public was quick to condemn anyway, asking how the airline could ostensibly bump paying customers off a flight to make room for its employees. But here's the thing, it can and should, according to US federal regulation.

The Department of Transportation's Fly Rights not only makes overbooking completely legal, but it makes it legal for airlines to kick someone off against their will if they are deemed not to be in a hurry.

All they have to do is give all passengers who are "bumped involuntarily" a written statement describing their rights and explaining how the carrier decides who gets on an oversold flight and who doesn't.

And according to aviation lawyer Thomas Janson, airline crew needing to get to a destination to work are classified as "must-fly" and are given priority under this regulation.

"Such a practise is called 'deadheading' and it means that flight and cabin crew are given first priority over passengers in the event that they are required to crew a flight," Janson, National Manager of Transport Law at Shine Lawyers told news.com.au.

The thought is that if United Airlines didn't send those four crew members to work a flight the next day, a whole plane load of passengers was going to be bumped when that flight was cancelled.

However, even though Janson said the airline acted in accordance with the law - putting aside the violent way in which the situation was handled, which does spark legal questions - he said it shouldn't have been United's first option.

"Given that the flight that the cabin crew were meant to work was not going to depart until the next day, United Airlines should have paid for alternative transport. For example, by land as it is only about a 4.5 hour drive between Chicago and Louisville, or they should have paid for the crew to fly on another airline," he said.

But US airline industry expert and commentator Gary Leff, disagrees. He said United Airlines couldn't have just put the crew in a Taxi.

"United doesn't get to transport its crew any way it wishes whenever it wishes. They're bound by union contracts, and in any case, they were following standard established procedures," he wrote in an opinion piece for his travel blog, View From the Wing.

"We can debate those procedures, that's productive, but United didn't do anything out of the ordinary."

What are the laws around overbooking?

When overbooking occurs, the Department of Transportation requires airlines to ask people who aren't in a hurry to give up their seats voluntarily, in exchange for compensation.

If passengers don't voluntarily give up their seats, the airline can then bump passengers against their will.

Those passengers bumped involuntarily are, with a few exceptions, entitled to compensation.

The Department has not mandated the amount of compensation that airlines offer to volunteers, however, it does require airlines to advise any volunteer whether he or she might be involuntarily bumped, and the amount of compensation that would be due if that were to occur.

Airlines usually bargain with passengers who agree to give up their seat voluntarily.

If a passenger is bumped involuntarily, the airline must provide a certain amount of compensation. The amount depends on the price of their ticket and the length of the delay.

If you are bumped involuntarily and the airline arranges substitute transportation that is scheduled to get you to your final destination within one hour of your original scheduled arrival time, there is no compensation.

If the airline arranges substitute transportation that is scheduled to arrive at your destination between one and two hours after your original arrival time - or between one and four hours on international flights - the airline must pay you an amount equal to 200 per cent of your one-way fare to your final destination that day, with a $675 maximum.

If the substitute transportation is scheduled to get you to your destination more than two hours later - or four hours internationally - or if the airline does not make any substitute travel arrangements for you, the compensation doubles to 400 per cent of your one-way fare, with a $1350 maximum.

Overbooking can also occur on Australian Airlines, although it is rare compared to the US.

If it does happen, there are no formal regulations set by the government or the ACCC (Australian Competition and Consumer Commission) to govern how passengers are compensated. Instead, Australian Airlines compensate passengers at their own discretion.