Overselling flights is a global industry practice. On its face, overselling a flight might appear negligent if not fraudulent, and the traveling public is rightfully skeptical of the practice. In reality, the number of passengers displaced by oversales is minimal (as discussed later). Overselling flights allows airlines to keep prices lower by offering more seats than otherwise would be available. It also allows more passengers to book a flight at the time they prefer rather than be forced into a more inconvenient travel schedule.

Overselling

Route scheduling departments at airlines have distilled incredibly accurate information regarding misconnecting and "no-show" passengers for every departure, to every city, and every time a flight is offered. Based on these historical data points, airlines oversell flights to generate an actual load factor that most closely resembles 100%. As a theoretical example, Lufthansa scheduling might know that selling 107% of the available seats on a Tuesday afternoon departing Frankfurt will result in a 99.5% load factor. Their Airbus A320 has 126 economy seats, so Lufthansa might make 135 economy seats (107% of 126) available. They will make these seats purchasable up to a pre-determined cut-off point before departure.

A rule of thumb for airlines is that they can more affordably (and more efficiently) oversell flights originating at one of their hubs. A perfect weather day across the southern and eastern US might see a few misconnecting passengers flying through Atlanta on Delta Air Lines. Delta might be unable to accommodate all the "revenue oversales" on the original flight that passengers booked. Still, the airline will have more flights departing later in the day that travelers can be accommodated on. Alternatively, Delta might connect the oversale passengers through another hub, adding an extra leg to their journey but ultimately getting the traveler to their destination with a bit of additional compensation for the hassle. This is only possible in a city where an airline has a significant operational presence since there are many options to connect passengers to their final destination.

Airlines generally have smaller margins for overselling the last flights of the day from their hubs. Flights that arrive late at night are usually flown exclusively by "terminating" passengers, or those who will not connect since no late-night flights are left to take. Accordingly, load factors on flights arriving after 10:00 pm local time are significantly lower than their earlier counterparts. This is good for the airlines, particularly on days that saw many passengers misconnect or were involuntarily denied boarding. The airlines use the last flights of the day to catch up on the scheduling issues that arose and ensure as few passengers are stranded at the hub airport overnight. Paying for hotel rooms for misconnecting passengers is an expense that always loses the airline money and hurts its reputation.

The reality of overselling flights

It's difficult to determine the number of passengers involuntarily denied boarding due to oversales. In 2016, the International Air Transport Association (IATA) estimated that 0.09% of passengers in the US were denied boarding. It is unclear if this is strictly due to revenue oversales or if this figure is the overall percentage of passengers denied boarding for any reason (intoxication and argumentativeness being other notable reasons). IATA has set standards for the world's airlines to follow when flights are overbooked. Asking for volunteers is the first measure listed, and offering compensation for voluntarily giving up a seat is a standard industry practice. Likewise, governments have established strict regulations limiting the amount of overselling (both as a figure and a percentage) airlines can do.

As an additional tool in their belt, airlines sell "revenue standby" tickets to passengers. Not only is this an effort to make ticketing more transparent, but it also allows passengers to make a flight that the airlines could not legally (or otherwise) offer as an option. This gives the airline more revenue as well. After reaching the oversale ticketing limit, an airline might sell five additional revenue standby tickets in case more confirmed passengers miss the flight than historical figures indicate—this happens somewhat regularly since historical statistics are an average rather than a rule. It's a useful ticketing option, but it can also be a bit stressful due to the uncertainty of the standby ticket.

How to avoid being denied boarding

There are three simple measures travelers can take to make themselves less susceptible to being denied boarding on an oversold flight. First, be at the gate on time. Passengers who are away from the gate and do not respond to their name the first time it's called will likely have their reservation removed as gate agents hustle to accommodate people on a busy flight. Second, hold some sort of status with the airline. A measure as small as signing up for a rewards account with the airline you're flying will advance your status off the bottom of the traveler list. Make sure that your rewards number is associated with your booking. It costs you nothing and presents you in the airline's system as having status with them, even if it's your first time flying. Lastly, check in 24 hours before your flight if you can. When determining who will not fly, passengers without any status at the airline are often eliminated by how early (or late) they checked in.

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Overselling flights makes sense for the airline so that they can offer more seats at lower prices. Ultimately, seats on planes are a perishable commodity. Unfilled seats are lost revenue for airlines and lost opportunities for passengers as soon as the boarding door closes. Most people come out on top when the maximum number of tickets is offered—prices decrease, airlines enjoy the extra revenue, and the maximum number of travelers make it to their destination. The downside is that the middle seat next to you with its coveted second armrest is now occupied.

Source: IATA