Summary
- Airlines overbook flights to maximize revenue and ensure flights are full, as routine no-shows and flexible ticket holders contribute to empty seats.
- Volunteers are asked to switch flights when there are more passengers than available seats, as it is more cost-effective than flying with empty seats.
- Airlines carefully plan their overbooking strategies by analyzing events and passenger behavior, using data and technology to make informed decisions.
You've probably seen stories in the news involving passengers getting bumped from their flights. This happens as airlines oversell fares for their flights - it's perfectly legal, and often a necessary way for carriers to maximize revenue and ensure flights are as full as possible.
Passengers who find themselves on overbooked flights are entitled to compensation for catching a different flight, often amounting to thousands of dollars per person. So why exactly do carriers allow their flights to be oversold?
Routine no-shows
Carriers have been overbooking their flights for decades as a way to maximize income. According to Tech Crunch, on average, 5% of travelers miss their flight, and there are some situations where up to 15% of passengers do not show up. Rather than accepting that there will be empty seats regularly on their flights, airlines want to monetize them further.
It isn't just no-shows accounting for empty seats on flights either. Many passengers buy flexible tickets that allow them to switch flights at the last minute. If airlines don't practice overbooking, they would lose out on valuable revenue each time a flexible ticket holder switches from a fully-booked flight.
If an aircraft has the capacity to fly 400 passengers and 5% do not show, 380 are onboard. Therefore, 20 seats are available, which is 20 further ticket sales an airline can make. Some of these ticket sales can be worth thousands of dollars, depending on the seat. It is more effective for carriers to account for these extra 20 seats beforehand rather than scrambling to make a sale on the day.
Every little bit helps
When a flight ends up having more passengers checking in than seats available, airlines ask for volunteers to switch their flights. These volunteers are compensated with money and other perks, like hotel reservations or lounge access. From the airline's perspective, it is more cost-effective to compensate a few customers than to take off with empty seats. Along with this, there is slightly less environmental impact per person, as each plane is as full as it can be.
If a traveler is denied boarding, or in some cases taken off the plane, due to overbooking, there are certain rights that they are entitled to. These rights differ per region, but generally, rerouting and monetary compensation is a standard.
Under EU Regulation 261/2004, passengers that are involuntarily denied boarding on an overbooked flight departing from an EU airport are eligible for compensation. Also, those who are overbooked on flights inbound to the EU operated by an EU airline are also eligible under the legislation.
Switching aircraft
Airlines with different aircraft types at their disposal may choose to deploy a smaller aircraft if they don't get enough bookings for a particular flight. For example, a flight scheduled to be operated by a 190-seat Airbus A321 may only attract 170 bookings - in that case, the airline could instead use a 165-seat Airbus A320, leaving five overbooked passengers.
The economics of operating a smaller plane will more often than not offset the compensation for bumping the extra passengers.
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Careful planning
It's a fine line between strategic overbooking and a public relations nightmare, so airlines are smart about the process by analyzing events and passenger behavior. Whenever there is a huge event in a certain area such as a festival in New York on a certain weekend, the airline knows not to oversell their tickets. This is because they know that the majority of these customers are intently traveling that weekend. Therefore, passengers have less incentive to miss their flights.
Additionally, carriers are increasingly using data and technology to determine how to best plan their ticket sales. For example, Air France launched a program called SWING to help them manage situations such as this - the software sends an email to select passengers on Air France flights, offering alternative flights plus credit. Earlier this year, Delta Air Lines revealed it would overlook flights more often, increasing from 3% to 5% extra bookings allowed per flight.
With reports of controversial incidents occurring due to overbooking, airlines now have more incentive to better control their overbooking strategies. Involuntary denied boardings are quite rare, but voluntary denied boardings happen with more frequency - some passengers have received large sums of up to $10,000 each to give up their seats.
Have you been in an incident related to overbooking? Share your experience with us in the comments.
Source: Tech Crunch