I don’t fly often, and I’ve never been “bumped” from a flight, but it’s been years since I’ve been on a plane trip without at least one overbooked segment. The airlines do it because they can, and I suppose, statistically enough people miss their flights that it works in the airlines economic favor. But why is it allowed? I cannot think of any other business where it is routine and legal to take a customer’s money and then fail to deliver the product or service, offer a “raincheck”, and refuse a refund. It’s not the same thing as advertising a product and then running out, because no money would change hands in that case. The situation is further complicated by the fact that a seat on a later flight is not equivalent to the overbooked seat, due to the lost time. Furthermore, the substitute seat could have had a much lower ticket price at the time the customer originally booked. Could I sell 1000 tickets for a single showing at a movie theater that only seats 10 people, then only have one show per week, thereby forcing my customers to wait as long as 2 years for the service they already purchased?
You’ve never been bumped because airlines know how much they can overbook and because volunteers often take the compensation coupled with the odds of it being you chosen in any of the few circumstances someone had to be involuntarily bumped. And it works in our favor. The alternative is that airlines charge more for tickets to make up for the loss of transporting less passengers.
Most likely because it works in everyone’s favor the majority of the time. I believe hotels and rental car agencies are also allowed to overbook. I’m sure there’s a few more examoles out there.
In addition to what x-ray vision said, even though the practice is not illegal, there are laws ABOUT it. If you are bumped involuntarily, the airline is required to give you a certain amount of compensation, the amount depending on various factors.
As x-ray vision said, involuntary bumping is pretty rare because even when overbooking actually occurs, there are usually enough volunteers.
Ed
I’ve seen this argument before and I still don’t get it. If the airplane is booked and someone doesn’t show they don’t get a refund do they? The airlane then has a less expensive flight because they are carrying less weight.
Could you explain how the airline is losing money here?
Thanks,
Rob
I have an airliner with 100 seats. On average, 10% of my passengers will no-show.
I can operate the airliner on a given route for $9,000, and to repay my capital expenses and make a profit, I need to make $10,000 revenue on every flight. I can either- a: charge $100 a seat, fly the plane with 90 people on it, and waste 10 seats, or b: overbook at $95.00 a seat, fly the plane with 1 open seat, and make an extra $450 in profit and offer a more competitive fare.
We could outlaw overbooking, but that would increase fares. Usually there are enough volunteers to make the system work when it needs to.
In some cases total or partial refunds are given, but this is irrelevant. Airlines expect that a certain percentage of passengers won’t show. By being able to sell more tickets per flight by overbooking, more money is made per flight helping to keep ticket prices down.
Sure, a certain number of the seats are full fare business passengers. They’re not going to leave Chicago at 3:30 if they’re 20 minutes away from making a million dollar business deal at 3:00. They just rebook the next flight at no charge.
And back when the rules were written it was standard procedure to rebook a person with a missed flight with no penalty. Flying between NY and Boston, for instance (not on the Shuttle) there were enough flights so that it was pretty standard to switch to an earlier one if you got done early, or move to a later one if you ran late.
It was also fairly standard practice to book a couple of flights so people would be guaranteed a seat on the one that was best, and then get refunds for the rest. So in the old days overbooking was far more required to fill planes. I don’t know if the level of overbooking had decreased with the addition of penalties for changed flights. I’ve been on a few that were totally full for which no volunteers were sought, so they must be getting it a lot righter than they used to.
That’s the justification. Since there are rules about compensation for overbooking, the answer to the literal question of the OP is that it is allowed by airline regulations.
It should also be noted that if only 90% of people show up for their plane and overbooking by 11% is allowed, then the total number of planes that needs to be bought is 10% less and so there’s 10% fewer airplanes having to fight one another over runway space, and the total amount of transportation achieved per vehicle, per gallon of gas, etc. is all increased by 11%. It’s in everyone, including the government’s, best interest to keep things as efficient as possible.
The European low-cost airline model, which started off by copying Southwest but then diverged, doesn’t overbook. The vast majority of passengers use the ticket as originally booked, and and rebooking has to be done in advance of the original flight departing. So far, it’s worked well for them, for example Ryanair consistently fills over 80% of seats.
FWIW, I’ve shown up at rental car agencies and hotels with a “guaranteed reservation” and been told they were sold out. I show up at a restaurant with a 7:00 p.m. reservation and have to wait an hour for a table. I arrive at my doctor’s for my 10:30 appointment, get into an exam room at 11:20 and finally get my 15 minutes with the doctor at 11:45.
Overbooking isn’t unique to the airlines.
It may have something to do with the history of how commercial flight developed. Originally (and still today to a smaller extent) weather, mechanical problems and other complications meant that it was by no means certain you would actually get to your destination. Thus the business model the airlines developed was that selling you a ticket was not a promise they would actually fly you to your destination; only that they would make a good-faith effort.
I’ve paid for entire vacations by taking a bump or three. It’s in everybody’s best interests that they overbook by a bit.
And the reason people use the ticket they originally booked is because it normally costs a lot to change it, effectively meaning you haven’t got a cheap ticket any more. However, most travellers know in advance exactly when they want to fly and are not likely to change, so the model works both for the business and the passenger.
Increased efficiency, cool I can get behind that. It’s good to hear the airlines are doing something right.
Along the same lines.
Say I buy a non-refundable ticket, have an assigned seat and can’t make the flight.
I’ve still paid for that seat, even if I’m not actually in the seat.
Why, if the airlines overbooks and gives the seat I’ve already paid for to another person, shouldn’t I be reimbursed for at least part of my ticket cost.
The airlines really are selling some of those seats twice.
You aren’t buying a seat. You’re buying the right to be transported to the destination. If you aren’t there, that’s not their problem.
There is an opportunity cost to flying a plane with empty seats even if they are paid for.
It’s like this. I sell 100 seats for $100 on a plane and 90 people show up. I still have the $10,000 they paid. I also have ten empty seats that I could have sold for an additional $1,000. So would you rather have $10,000 or $11,000?
That’s right. So what? Really they are selling the trip, not the seats. People change to different flights, etc all the time. You aren’t buying Seat 22C on flight 111 to Tampa.
Also, aren’t a fair percentage of no-shows people who had a delayed connection on the same carrier? Maybe they can penalize you in that case, but they’ve never penalized me and it’s happened a few times. They just book me on the next available flight. If they didn’t overbook and put someone in the seat I missed, they would have to make up for the expense of putting me on that later flight.
Almost forgot. And that’s part of the reason they have such complicated pricing models. Somehow they figure out how elastic your demand is based on when you buy your tickets and when your flights are. For example, Monday morning flight returning Thursday or Friday night? Business traveler. Expensive. Thursday or Friday night to Florida coming back Sunday evening? Vacation. Maybe not so expensive unless it’s a holiday weekend or you bought the tickets the day before.
Actually, one trick our consulting firm had us do was buy one one-way ticket to the client on Monday. Then buy round trip Thurs/Mon trips for the following weeks. Kind of like we lived in the client’s town and were visiting “home”. I don’t know how much money it really saved though.