United Airlines has a reached a settlement with the passenger dragged from a Chicago flight earlier this month in an incident that sparked international outrage.

A lawyer for Dr David Dao, a 69-year-old Vietnamese-American doctor, said Friday morning (AEST) his client had settled his claim against the airline for an undisclosed sum.

Dr Dao was hospitalised after Chicago aviation police dragged him from a United plane to make space for four crew members on the flight from the city’s O’Hare International Airport to Louisville, Kentucky.

United has taken “full responsibility for what happened on Flight 3411, without attempting to blame others, including the City of Chicago,” Thomas Demetrio, an attorney for Mr Dao, said in a statement.

“We are pleased to report that United and Dr Dao have reached an amicable resolution of the unfortunate incident that occurred aboard flight 3411,” United said in a separate statement.

“We look forward to implementing the improvements we have announced, which will put our customers at the centre of everything we do.”

Dr Dao’s lawyers previously said their client lost two front teeth in the incident.

Policy change

The settlement comes as United announced a new incentive for passengers to voluntarily give up seats on overbooked flights.

The airlines has raised the incentive for passengers who give up their seats from $US1,350 to ($1800) to $US10,000 ($13,375).

The change in policy is part of the company’s efforts to repair its public image after a string of incidents have generated negative publicity.

United also said it will take actions to reduce overbooking flights and improve customer satisfaction.

“Our goal is to reduce incidents of involuntary denial of boarding to as close to zero as possible and become a more customer-focused airline,” the carrier said in the statement.

The airline typically oversells flights by less than 0 to 3 per cent of the plane’s seat capacity to account for no-shows.

United has said it will no longer call law enforcement to deny passengers boarding, nor would passengers who are already seated be required to give up their seats on overbooked flights.

Damning report

The report from United also provided new details about the April 9 incident.

It said Dr Dao’s flight was oversold by one ticket, but a volunteer gave up his seat.

Dr Bao was forcibly removed from the United Airlines flight.

After passengers boarded, four crew members of Republic Airline — which operates many United Express flights — arrived late after their plane to Louisville was delayed by a mechanical problem.

United said it was a mistake to let the Republic crew board late, which required removing four paying passengers, calling officers when there was no safety or security issue and not offering enough money to entice volunteers to give up their seats.

“We could have spent a lot of $10,000s and made that thing right,” United Airlines CEO Oscar Munoz said.

– With agencies