Yea, I agree the problem is not auctioning seats high enough. But the proximate issue is that United didn't offer cash, but $800 in United Fun Bux that are worthless for most people. The vouchers they were offering were only valid at dates United decided. The vouchers expired after a year. And they are offered in coupons for which you can only use one coupon per flight, and the excess value is lost.

Practically all news outlets are reporting that "United offered $800 in compensation", but the reality is that it's closer to $0 in compensation. It's disingenuous to call it "compensation".

A better move on the airline's part would be to offer some amount of airline credit, and then half that in cold, hard cash, at least up to $2,700 credit / $1,350 cash, which is what they have to give you for an involuntary bump.

In the European Union, airlines are forbidden from offering vouchers as compensation for overbooking. They must pay cash.

Simple solution that fixed a consumer-hostile approach adopted by a cartel of companies. Sadly, the EU rarely gets credit for the great number of consumer protections it has established; instead people like to rant about egregious regulations that either don't exist or have been grossly misrepresented.

Where "people" == right wing press

Yes, the voucher thing is nonsense. I've been on overbooked flights before where I could have easily taken the next flight instead. I never volunteer, because the vouchers are worthless to me. Offer me cash and I'll often be first in line.

The only time I've volunteered to be bumped was when BA offered $700 in cash (technically I got a prepaid VISA card) and a free hotel+meals. That may be due to the EU though (there are passenger rights regulations about compensation for delays caused by the airline)

Back in the days when I traveled a lot, I would ask for some sort of on-the-spot compensation - usually, put me in first/business class on the rebooked flight. Sometimes it worked, sometimes not.

You can ask them to pay you in cash as long as you don't accept the offer before hand. They're legally required to compensate you with cash if you ask.

Surely they would just say "thanks, but no" and keep looking for suckers who will take a voucher?

Where "suckers" are people that don't like what you like?

I like to travel so I would rather take the $1000 voucher than wait for a cash offer that someone like you would jump on before I could get a chance.

I've taken in over $5,000 of free air travel over the years and always used it to visit family and see places I wouldn't have otherwise. In the meantime people thinking like you got nothing because it was a "sucker's" deal.

I suggest you look into the study of economics and pricing to understand how people can get different levels of value from things. The you might understand why auction systems like that aren't magically lining your pockets with gold.

>$800 in United Fun Bux

Yeah, exactly. They damn well know there is a 90+% chance you aren't going to be able to redeem it. Literally.

http://www.seattletimes.com/life/travel/travel-wise-donrsquo...

>Redemption rates on vouchers hover somewhere between 5 percent and 8 percent

Vouchers like that are egregious.

Now that it's too late, United is now offering up to $10k if they can't get someone to volunteer for less.

I don't understand why there even is a limit. What happens if nobody takes the 10k? Someone gets beaten up again? If they are certain someone will leave for 10k why have the limit at all?

For $10k, you could probably charter a private plane. So unless every single passenger on the plane is a doctor flying out for an emergency brain transplant, there'd be no rational reason to decline it. For $100k, you could probably buy a small plane.

If they leave the plane docked until somebody agrees, then you could end up in a situation where you get to your destination slower if you stubbornly refuse. Then, you could argue that it's in their best interest to (beat them up if they don't move).

My objection wasn't even over booking. My objection was eviction after the passenger already sat down. To me, that was the unredeemable act. I'm also ashamed that the police department apparently did not accept responsibility. We often talk about how it is a systemic problem when we accidentally run rm -rf in production and find out none of our backups work but we turn around and say "Oh surely the police department is full of good hard working people if it weren't for a couple of bad apples" and completely throw some people under the bus. No, the organization has life of its own and things won't change if heads don't roll at the top.

Up to 10k in vouchers. I don't even know how someone with a non-travel job would use that many coupons in a year.

You could trivially spend it on a single international holiday if you felt like flying in business or first class...

Actually no, you can't, because they limit how much you can apply to a single flight. To use up $10k in vouchers, it's likely you'd need to make 20-100 flights, before they expired in a year.

Where is this information coming from?

I've received large (not $10k) vouchers from major airlines before, and the only restriction is the expiration date.

They are effectively the same as cash for that airline, and I have yet to see a VDB voucher that is significantly restricted.

Airlines do give away a lot of "good will" certificates during irrops (e.g. weather events) to upset customers, which function more like coupons than traditional vouchers.

I'm happy to be proven wrong, but checking with a few friends who between us fly all the major US carriers - VDB vouchers are effectively airline cash with an expiration date.

Like the other reply you got, I've received a multi-thousand (but not $10k) voucher from United before and the only restriction was use within a year. I also didn't have to use on a single flight, but could use the full value on one flight if I wished (which I did, flew paid business, but was upgraded to first to APAC).

Ugh, please don't make unfounded claims like that.

A lot more easily when you realize what a Y-class economy fare costs (Boston to Hawaii next week? $2700+)...

Vouchers are typically only valid for full fare unrestricted economy fares or better, not V-class discount fares (display details when you browse your next flight).

This is simply not true...I've gotten these vouchers and used them and sure as hell wasn't buying y-class tickets.

You can actually ask for cash. Most people don't realize it's an option but they will give you a cashier's check on the spot.

That's if you're getting involuntarily bumped. Far as I know, if you volunteer, you can only get vouchers.

There's nothing prohibiting you from asking for cash and there's no law that prohibits airline from giving it to you.

Calling airline vouchers 'worthless to most people' is pretty stupid. The vast majority of the population would love to travel more and is constrained mainly by their budget. The proof of this is how Delta never seems to have problems and they constantly offer Delta dollars.

And then you have guys like me, who fly very rarely and only if no other options are available. Any voucher tied to flying is inherently worthless, because not only I've lost a lot of time but also the whole point of flying - being able to move quickly from one place to another - is defeated by the fact that I'm now stuck in the airport.

To top that off, if this happened during a holiday it means I'm getting a bad deal anyway - if I'd want money I wouldn't take vacation days in the first place.

Then you wouldn't accept the bid. That's the entire point of an auction system.

Vast majority of the population wants to travel more but, of all things, the cost of a plane ticket is holding them back? No, this is not true.

I travel for pleasure about once a year. I can travel more if I wanted to, finances don't hold me back, but once a year is enough for me. Traveling for vacation is usually pretty fun but at the same time just stressful enough that I wouldn't want to do it more than once a year. Airplane travel is really inconvenient.

Plane tickets are just a small part of the cost of a vacation so a free ticket isn't magically going to make them afford extra travel. United isn't paying them for their hotel, rental car, and activities they are going to do when they go on this extra vacation.

Even if you do make use of the vouchers, you better hope that United flies to that place you want to go and you have enough time off saved up at work and your schedule works out to use that voucher before it expires. I know you get a year but people have schedules and usually only have windows where it works out to take vacation.

If you are a business traveler you better hope you actually like traveling for pleasure.

You are very disconnected from a huge chunk of the US population. Traveling with a family of 4 to visit extended family on a popular period like Christmas or Thanksgiving (i.e. when typical middle class people get time off) will cost upwards of $2000 for a round trip flight a thousand miles away or so.

Most of the US population doesn't get very much vacation time from their employer. The problem isn't the cost of airfare (which is a tiny portion of the cost of any vacation compared to hotel, meals, rental car, etc.), the problem is a lack of time.

That's wrong. Most people get 2 days off every week. If you have a good priced airline voucher that means you can make a weekend trip to NYC, have dinner, see a Broadway show, spend the night and then fly back.

Flying out a Friday night and returning Sunday is the most expensive component of a weekend trip like that.

Oh please. Traveling is tiring for most people, especially with TSA and the hectic mess that is airports, and the severe discomfort of modern airplace seating; I don't know many people who really want to fly somewhere on a Friday evening right after work (meaning you get to your hotel somewhere around midnight if you're lucky, and you have to skip dinner) and return on a Sunday (meaning you get home late, leaving you exhausted for work on Monday).

Oh please, cramped seats? Use the voucher for economy comfort or first class. Have dinner in the airport if it's that inconveniently timed.

We went on weekend trips when I was little that involved driving for 4 hours each way. Most people aren't as pathetic as you are portraying.

> The problem isn't overbooking. The problem is not auctioning the seats higher when overbooked.

This. Oh so very much this. United could have avoided this whole debacle simply by not imposing price controls on the market for seats when it became a buyer rather than a seller.

Could they have averted disaster with money? It's astounding that there were no volunteers when they offered USD 800 for a seat, 800 dollars is a nice sum. Every single passenger on that airplane thought there was a catch involved, they were getting again 800 dollars in airline vouchers, which everyone knows have big gotchas attached. The airline has a trust problem, which won't improve anytime soon.

My understanding is that the next flight was something like the following afternoon. Business travelers are basically not going to voluntarily take a later flight at all. With respect to vouchers, most people don't travel all that much so a 1 yr. voucher isn't worth much. But offer cash (or a voucher at 2x) and you'll get people at some point.

> Business travelers are basically not going to voluntarily take a later flight at all.

This. As a business traveler, I don't know how I would justify this to my finance department and/or management. It would take too much effort to justify the change in travel plans for a shitty voucher that I'd probably never be able to redeem.

I once received the $500 voucher, and as an infrequent traveller, it was completely useless. The voucher went unused and expired. I wish they had offered me cash.

Now, I am a frequent traveller and mostly travel on business. Now again, the vouchers are useless to me.

I think the airlines should offer real cash instead of vouchers. More people would be ready to take those instead of vouchers.

You're lucky you got a single $500 voucher, they like to multiple smaller ones that you'll likely never use up.

Regardless of how heinous it might be to someone that a whole flight turned down $800, I can guarantee there was a number for every single person on that flight that would have averted the disaster. Now some of those numbers were probably much, much higher than others but I guarantee everyone had a number they would have agreed to (barring extenuating family circumstances or the like).

I think there would be takers even for $800 if it was cash but other commenters have pointed out that united never offered money but rather travel vouchers in small denominations that you cannot use more that one of in a single transaction.

I can offer $100k in thanksgiving fun bucks as well every time I screw up majorly. It will be in denominations of $50 and you can use them towards future consulting with me. My consulting starts at $100 per hour with minimum of one hour. You cannot use more that one voucher per transaction.

It was $800 in vouchers for other flights, not cold hard cash I believe. And even if it was actually $800, that is not worth missing a day of work unplanned for many people- the Doctor they dragged off the plane who had patients to see thought so.

Well in this case the market is distorted by the fact that regulations allow the airline to not let people board for a much smaller cost. If the airline didn't have that legal out, they would be forced to negotiate terms with each passenger whose contract they wanted to break.

Without regulations the airlines will just put a "we reserve the right to uniterally terminate this contract with a full refund" clause in their contracts.

Status quo: offer increasingly higher flight vouchers until you hit the federally mandated rate of 400% ticket price cash rebate, capped to $1350.

Without regulations: offer increasingly higher flight vouchers until you hit 100% ticket price refund cap.

They didn't even hit that limit before they sent in the goons in this case, though.

The actual limit is 4x the price of the ticket, capped at $1350, so it could very well have been down in the $400 range.

There is no limit. It is a minimum, and it does not work like you seem to think it does (if you blame regulations, which is how I read that comment). See https://www.usatoday.com/story/travel/flights/todayinthesky/...:

> For example, an involuntarily bumped traveler who arrives to his final destination more than two hours late (fours internationally) is entitled to an amount worth 400% of his one-way fare (capped at a maximum of $1,350).

There are no regulations forbidding United to offer more when a passenger is already seated, and that passenger thus can't be legally bumped (apart from because of safety reasons maybe).

I am well aware of how it works. What I said is that the incentives to offer more than what they are legally required to offer by the IDB regulations (which does have an upper limit) are significantly lessened since the IDB rules give them a "get out of contract free" card for that amount.

And they could have offered the passenger free United flights for life and it still would have cost less than this embarrassing and protracted PR catastrophe ever will.

As someone on pprune.org said: Announcer on local TV said it would be less damaging if United actually crashed the plane !

Black Mirror episode:

PR disaster happens at 40,000 feet and gets recorded by smartphones. Since they're still in the air the footage hasn't been uploaded to the internet yet.

The on-board AI supercomputer makes the determination that the negativity of a plane crash would be less than if the footage leaks out so it decides to crash itself in order to maximize profits.

It isn't a simple auction. Not all passengers are equal. There are issues that make an airline not want to bump some passengers. For instance, on some international flights there are rules against unaccompanied baggage. So the passenger without checked luggage will be bumped in order to save time. Passengers travelling in groups are also preferable as they will more likely share a hotel room. That's why families get bumped so easily. And then there are connections. The passenger who will miss subsequent connections is an expensive person to bump. This seems to have been the case in the United fiasco. The man was travelling in a group (his wife was with him) and didn't have any checked luggage, else we would have heard about it being offloaded or returned to him in hospital, and had no connections to make. Such complications go beyond the simple cash payout, making a strait auction difficult.

Want never to be bumped? Travel alone but with a pet in the hold. They won't touch you. Or travel with someone in a wheelchair. They are also an expensive awkward person to bump. As I said to one gate person: "We cannot be bumped. My grandmother only has pills for the next 12 hours." That lit a fire under them. Grandma knew to play ball and suddenly looked very much older than she was.

Another solution is even more simpler. After all seats gets booked, they should clearly mark overbooked tickets as "probable" tickets and heavily discount it + refund it if not eventually available. Keep in mind that airlines don't make huge profits per flight. Giving away $10K to 4 passengers is like giving away 80 seats or about 10 to 20% of revenue which could be almost all of their profits for that flight.

Those airlines take a risk by overbooking, and that risk can be penalized by a net negative profit if need be. If you're allowed to gamble, you need to be able to lose.

Yup, and moreover like any good casino it's pretty clear that they did the math already. That's why you're getting $800 fake bucks: they crunch figures on how much of that $800 they'd be on the hook for. If they gave you cash, I bet the inflection point where this entire overbooking scheme is actually fiscally worth it, becomes a losing proposal.

This is how they do in Indian railways. We book tickets. If it's full, we get waiting list number which will be confirmed a day before or on traveling day. If not confirmed, it will be cancelled automatically and refund sent to your account.

The problem is overbooking, though. Corporations are getting preferential treatment by being allowed to sell services which they're not going to fulfill.

The boner people on HN have for objectivism really does get quite old.

> Corporations are getting preferential treatment by being allowed to sell services which they're not going to fulfill.

Does the contract of carriage say the service they're selling is a guaranteed flight? Spoiler: No.

I hate the air travel experience as much as the next guy, but for the life of me I can't understand the derangement that seems to take hold of people when they start talking about. All else held equal, reducing airline costs (for example, by increasing utilization as with overbooked flights) brings prices down. It reminds me of when everyone I knew started complaining about airlines charging for luggage. When I'd ask them "I never fly with luggage, why should I bear the cost (fuel, opportunity cost, etc) of you packing too much", the most I got was some sputtering about how they didn't see why prices would be affected, even from people who I know knew much better.

> The boner people on HN have for objectivism really does get quite old.

Don't confuse your economic illiteracy with other people's support of objectivism. The perspective you're describing isn't even particularly libertarian, let alone Objectivist (and no, I'm not personally a fan of either of those philosophies).

Contracts are irrelevant here because there is no competition in that market, you have to accept the contract or walk to your destination. For contracts to be meaningful the parties have to be of comparable power and both parties must have the opportunity to choose a competing good or service. This is plainly not the case here.

Sure? Except that has nothing to do with what I was talking about. The irrelevant statement here is yours.

I was specifically rebutting the claim that airlines are getting "special treatment" [by the government] by being allowed to sell services they don't fulfill. The service they're selling is not "a guaranteed flight".

Words have meaning and facts matter, beyond "Airlines bad, pick a side". It's possible to think that they're anti-competitive and shitty without making entirely false claims about them (as the gp comment did).

Overbooking makes air travel more effective than, with less empty seats and less pollution per passenger.

The way it eas handled can definitely be improved, but you can't argue that it is inherently bad.

I'm not a frequent flye but I would really appreciate some clarification on this topic. How does an airline selling more than the number of physical seats it has increase efficiency/effectiveness more than if it sold the same number of tickets as the number of seats available? Do they have that big of a problem with people canceling flights? What are the return policies usually for flight tickets?

> Overbooking makes air travel more effective than, with less empty seats and less pollution per passenger

> but you can't argue that it is inherently bad.

You're simplifying things a bit too much.

You can't go from:

- We want to make air travel more cost effective, and less damaging to the environment.

And arrive at:

- The only way to achieve this, is to sell more tickets than we have physical seats for, to ensure the plane is jam packed when it takes off.

There are always alternatives, Americans just seem to be fucking brilliant at ignoring any possible alternative than their first shitty attempt.

What does this have to do with Americans? Overbooking is used by nearly every airline in the world.

I've never heard of any airline overbooking here in Europe. Yet they seem to manage just fine. In fact Ryanair (a budget airline) has a bunch of flights advertised for around €15 ($16~ USD)...

it uses less fuel per passenger to ensure that every flight is jam packed. It's more efficient and everybody wins. There are almost no examples of situations that overbooking + auctions doesn't solve.

I think you don't understand the law as it currently exists, because what happened on that united flight was in clear violation of that law.

They didn't deny the man boarding, they deplaned him. This isn't something the airline is allowed to do for economic reasons, ever.

Can you explain what you mean by the overbooking + auction system? I don't fly often and though the news has left a bitter taste in my mouth about United, I do want to understand how their system works and their flaws in a less biased way.

One possibility is that the regional flights are only marginally profitable for United, and very slim margin for the regional carrier (Republic Airline/United Express) so they limit voucher amounts for bumped passengers.

For an Embraer 170 aircraft (70 seats) the operating cost of the flight is about $2500-$3000 for the Chicago to Louisville flight. A supplementary flight with the 4 crew and any re-booked passengers would have cost the airline about $5,000 if they flew out-and-back as a non-scheduled flight.

SWA 737s cost around $4,000/Hr to fly, but a non-scheduled (Out and back) flight on a shorter route would still cost less than $12,000 in operating expenses.

The $1000+ flight credits for bumped passengers add up fast, but supplementary flights are relatively rare for airlines, other than for cancellations due to maintenance issues. CEOs like Oscar Munoz need to make supplementary flights easier to authorize, and the negative PR would be significantly reduced.

They could have just used a rental car or a taxi. Airline crews don't have to travel by air. The amount of inflexibility displayed by United is breathtaking.

Needs to be a fast mode of transport to keep crew duty hours down, so ground vehicles are out. I was once on a plane at Dublin airport that had to wait for a few minutes behind a small jet that turned out to be the RyanAir (UK and Ireland low cost carrier) company LearJet which they use for positioning flight crews in an emergency or time sensitive situation. Surely United should have chartered a small jet to get crew there, should be doable pretty quickly?

Ryanair is an entirely Irish company, and is one of the largest airlines in Europe.

They are also fanatical about not being late or cancelling flights. I used to work for them, and there are posters everywhere about the 18 minute turnaround times (they recently expanded this to 28 mins, when they introduced pre-booked seats as standard).

As far as I know, the Ryanair Learjet is mostly used for spare parts. It's cheaper bringing a spare part via private jet than cancelling a flight with 180 passengers. For crew transportation, the 80 stations that Ryanair has in Europe should ensure that there's a spare crew only a few driving hours away

All depends on the money. Based on what they offered the passengers, they weren't going to rent a private jet.

That's what I'm wondering about. Putting the 4 crew in an Uber or rental car would've probably cost $1k-1.5k. It's standard in Europe that crew gets long distance taxi rides throughout the country, why isn't that the case in the US?

Do you understand how expensive it is to take a taxi that far? Or the fact that taxi/rental car companies usually don't like you going over state lines?

Right, that's the ballpark of the 'natural ceiling' for how much they should be willing to pay (at maximum) for a solution involving deferring passengers; also in /real money/.

Rental car companies don't like you going over state lines? What? That's ridiculously untrue. I've never ever ever heard of anything like that and I never didn't take a rental car over state lines. I always read the fine print and I've used several companies.

I'm sure it would cost several thousand dollars. Do you think it wouldn't be worth the cost?

It may not have been practical for the flight crew because of hour on duty restrictions. But they could have transported 4 passengers for $1-2 k on a limo.

With Uber or a private cab company probably around $1,500. That's $375 per crew member, less than offered for IDB (if it had been offered in cash).

Care to elaborate? I've never had any trouble going over country lines, let alone state lines, in a rental car.

I've occasionally had rental companies limit me to nearby states, but they usually don't care. When they do care, I'm certain they can be made to stop caring if you apply enough money to it.

Rental cars (booked in Germany or Switzerland) often included restrictions for me. Most of the time they excluded a number of eastern/balkan states, quoting (if they offered reasons at all) insurance prices would be higher. The more expensive the car, the more likely were these limitations: Booking a Golf was 'go anywhere', booking a BMW 5-something .. not so much.

Completely irrelevant. We aren't talking about Germany or driving to other countries, that's totally different. We are talking about travel within one's own country. I would expect rental car companies to limit travel to foreign countries.

Nice use of 'we' there. I implore you to read the post I specifically replied to once more. That post explicitly talks about crossing country lines.

We = this article and the commenters on this article. We are commenting on travel between two US states, nothing to do with crossing country lines. The grandparent topic was, specifically, about ground transportion for four Americans from one part of the US to another part of the US.

Well, this whole subthread is about an American airline operating in the US. (And yes, you can potentially drive a car across an international border from the US!)

Five hour limo rides are nothing out of the ordinary. Maybe a thousand dollars or two.

Apparently this is part of negotiated contracts for the crew.

I've seen this happen many a time with British Airways in the UK too - they just keep offering more money until someone volunteers to move to a later flight. Seems like a good way to manage overbooking, and I've never seen it not work.

The difference is that in the UK, you'll either have multiple flights a day or can take train/car without much delay instead. That's very different in more sparsely populated countries as the US.

But cash is likely to be the main issue here. If united had offered $800 cash, they would've probably found someone to rent a car and drive down there instead of flying.

Often this is true, yes. But I've also seen this happen with flights within Europe on occasion too - the bidding usually starts with £100-£200 cash plus a night in a good hotel with transfers dinner paid for, and a flight the next day. I don't think I've ever heard the auction go very much past that. I guess there is always someone not in a hurry willing to extend their trip by 1 day. Actually, I think I considered it myself one time, but someone else took the deal while I was still thinking on it!

Compensation is definitely the main issue. If United had offered a decent sum of cash (I mean cash, absolutely not United vouchers) they would certainly find someone willing.

Should I be able to sell you a car, have you pay for a car, have you come to collect the car and then tell you there's no car?

In this case, you're in the car, ready to go.

Wait!

I need that car so my brother can drop his kids off at their grandparents house a state over. You don't want to give it back? Tough, the police are on my side. Thanks for your understanding. Here's an $800 voucher for the next time you buy a car off me.

"This case" was an unusual incident. The majority of overbooking is handled before anyone enters the plane.

So while your analogy works for the doctor who was dragged off the plane, it doesn't work for the overbooking system in the air travel industry as a whole.

Hail Corporate!

There was a Seinfeld episode about this.

https://www.youtube.com/watch?v=4T2GmGSNvaM

Do people really miss their flights so often that overbooking isn't often an issue or do a lot of flights have people that need to wait for the next one?

As someone that's never flown it's surprising to me that overbooking is even a thing airlines do, who's out there missing their flights? I can't even imagine cancelling a pre-booked taxi never mind a flight!

Um... yes. I missed a flight due to major flooding on the route to the airport requiring me to take the loooooooooog way around. The flooding didn't effect the airport itself (or my flight) because I don't live in a town with an airport.

It's also very, very easy to miss a connector flight if the plane coming in is delayed, or even if the airline decides to route you through an entirely different city. I've missed a couple that way. You can get held up at customs or security when landing in a new country and that country requires everyone to go through customs and security again.

Then there is illness, accidents, and emergencies that come up all the time.

Yes. Mostly because of delays that cause them to miss a flight that they're connecting with.

You also have people oversleeping, getting caught in traffic, getting confused about their flight time. It happens. I've missed a few flights in my life for these reasons. (But just a few.)

Finally, business travelers do make last minute cancelations and changes on a pretty regular basis--for example, to get on an earlier flight out.

> Do people really miss their flights so often that overbooking isn't often an issue

Yes. Wendover Productions on YouTube posted an excellent video a while back explaining why airlines overbook their flights: https://www.youtube.com/watch?v=EqWksuyry5w Most of the time it's not an issue.

There can be a number of reasons for missing a flight. Two examples: a) You're going from an airport which you need 2h+ to get to, and your train is delayed. b) You're on a week long holiday going through multiple towns, you miscalculate travel time / miss a transport, and don't arrive on time.

The problem is overbooking. When it will be definitely banned by law, flying experience will get better. Want to pay less? No refund on no-show. Prefer flexibility? Pay something more. But, once you get top the airport, you know you'll be on the plane.

So... my first reaction to your comment was "why don't they just turn this into an actual auction, with no price limits? This seems like such a good solution that I feel like I must be missing something."

However, thinking about it more, I think there's a problem with that that's hidden by the nature of the United debacle.

In that situation, the passengers had tickets, and they company was trying to seat their own staff. That is, the potential buyer was the airline, and the sellers were the passengers. So in that scenario, auctioning makes sense, because you can literally flip the buyer and seller roles.

However, in a typical overbooking situation, there are more passengers than seats, so it's unclear who the buyer and sellers are, because none of the "sellers" actually "own" anything definitive. If the tickets are all infinitely valuable to each passenger, no one can get on the plane, and there's a sort of stalemate. Then I suppose there would be a cost to each passenger, and an incentive to accept a price, and it wouldn't be infinite anymore. But in general, the cost dynamics seem weird to me. But then again, I'm not an expert in this.

At some level, overbooking seems indistinguishable from fraud--which can also be profitable for its practitioners.

> However, in a typical overbooking situation, there are more passengers than seats, so it's unclear who the buyer and sellers are, because none of the "sellers" actually "own" anything definitive.

I'm not quite sure I'm following. When the airline overbooks then tries to pay off passengers to accept a different flight the buyer is always the airline.

They're buying your seat back from you to satisfy their contract with someone else. I can't fathom a situation where every seat is infinitely valuable - out of several hundred people surely at least one person will accept a million dollars for example.

Overbooking can look like fraud, but if the airline offers an uncapped ever-increasing payout for a seat then the risk profile increases significantly for them and they'll do it to a lesser degree.

I'd be utterly shocked if it ever required more than, say, $2,000 to buy enough seats.

The trick, of course, is that it has to be actual United States Dollars, not this worthless fun money voucher stuff they usually offer.

It is a lot like they are short selling their own airline seats.

That's kind of funny. If the auction for seats goes too high, it's a short squeeze.

I like your analysis.

In the U.S., plane tickets are a contract where all passengers agree to the standard overbooking process: passengers who don't have a seat are placed in a standby status. If they are bumped from the flight, they can get up to a certain amount of money and are placed on the next available flight.

It's shitty because no airline offers an alternative to this contract, so all passengers have to accept it... until Southwest decided to stop overbooking.

> However, in a typical overbooking situation, there are more passengers than seats, so it's unclear who the buyer and sellers are

The passengers with tickets are still sellers in your second scenario; to the airline as a buyer. The airline needs to buy back the number of seats that they oversold for which passengers checked in.