Say you're an airline, and you notice that all your planes get fully booked, but on every flight, 2 to 5 passengers do not turn up or miss their flight.
That means that you can easily sell 2 extra tickets for each flight. That's free money (as good as; fuel consumption will go up a tiny bit)
Now, there's the rare case where too many passengers turn up. So, you pick out a college student or backpacker who is happy to take a flight an hour later in exchange for money, a free ticket for another flight, or whatever. That costs you a bit, but as long as it is rare enough, the net result still is extra money, and, ideally, everybody is happy.
Airlines have departments that compute the ideal amount of overbooking.
So, how can it be legal? That's easy; if you book a flight, you accept terms and conditions, and no government has seen reason to make it illegal.
First, at this point it's reasonable to expect passengers in the US to know that their booking is subject to availability in some limited number of edge cases. It's not particularly common but it's also very public knowledge that it sometime does happen.
Second, both parties have a cost to rebook - passengers pay a rebooking fee, airlines pay a bump fee (in a voucher if the passenger is foolish enough to accept that). Additionally, the rebooking fee for a passenger is significantly lower as a % of ticket cost than it is for the airline.
I question that. My guess is that the vast majority of the people who get a seat assignment when they book, never consider the possibility it might be taken from them. Most of the time, people are conditioned to not want to cause a scene, but I can bet no one is too happy about it when a breach of contract happens.
Airlines are unique in that lots of people go along with this. If you sign a lease to rent your house to someone and on the day they arrive with their moving truck you tell them you decided to lease it to your brother, there is a good chance you will end up in court.
It's very odd that you consider this a breach of contract, because these contracts are pretty heavily policed by regulators and the courts. Check every ticket you've bought, the contract of carriage includes terms specifically about overbooking.
For instance, here's United's Rule 4G:
All of UA’s flights are subject to overbooking which could result in UA’s inability to provide previously confirmed reserved space for a given flight or for the class of service reserved. In that event, UA’s obligation to the Passenger is governed by Rule 25.
You are partially right in the sense of the one-sided document that they impose on their customers, they reserve the right to not let you board. In the case of the United passenger (and many others that came to light after this assault) the person had already boarded. At that point, the reasons for not transporting (Rule 21) are spelled out and they don't include reasons like ("we decided to use the seat for our employee" or "a gold member wants the seat"), etc.
>...because these contracts are pretty heavily policed by regulators and the courts.
The idea of involuntary bumping should probably be viewed as regulatory capture. We don't allow that in other industries.
[1] https://www.transportation.gov/airconsumer/fly-rights#Overbo...
I guess the only way to force them out of this habit would be to make the compensation mandatory at 10x the ticket price, in cash, on the spot. And a seat on the next plane, plus free accomodation for the bumped person if the next plane is more than 8 hours away.
Also a bonus if overbooking helps keep the route to the rinky-dink airport in my hometown operating so that I don't have to drive in for the last leg of my holiday trips.
That's not an argument.
Else we can ask what about those who can't afford an airplane ticket at all? Perhaps nobody should ever fly since we can't assume that these people don't have important plans either?
>Their plans less important because they can't afford the no-bump class?
No, but their purchase power is clearly less -- which is what determines what one buys (and if one can afford to fly in the first place), not the importance of their plans.
(The only place where the argument holds is in things like organ transplant waiting lists, which we don't want to turn into a market -- and we'd be less hypocritical if we extended it into general free/same-price healthcare for all).
The obvious answer is "chartered jet" has a 100% seat guarantee, but that's an order of magnitude more expensive.
Anyways, the bumping situation only would come up rarely, most oversold flights don't have to bump anyone and usually oversold flights have volunteers before they have to involuntary bump someone.
Airlines don't have an interest to bump passengers. At least in Europe this can be relatively costly as in up to 600EUR compensation per passenger. Add hotel rooms, multiple restaurant visits, taxis and communication costs to that. Add the image loss if this happens too frequently.
Airlines employ extremely complex math and statistical models to avoid bumping passengers, while filling the plane to capacity and mostly it works out. If it doesn't they usually find volounteers, who are willing to be bumped, provided that they are fairly compensated and provided with a reasonable alternative.
Job interviews are readily rescheduled if you're bumped against your will.
Airlines already have bereavement flights that give the bereaved priority and extra flexibility.
We already have regulations that compensate people who are bumped against their will so it's not in the airlines best interest to do so, it's expensive.
BTW, my mom missed her dad's funeral due to the 1981 air traffic controller strike.
When I buy something, I should not need an hour to read a contract.
Airlines are able to get away with this cause they haven't been challenged in courts. But once challenged, it will be deemed illegal.
I suggest you Google "is airline overbooking legal?" Literally, the very first link returned is titled "here's why it's legal for airlines to kick you off your flight" http://www.nbcnews.com/business/travel/here-s-why-it-s-legal...
Not only is it specifically legal, the regulations actually state that airlines have to give passengers a pamphlet spelling out their legal rights if bumped, and how much a passenger must be compensated if they are bumped. If it were illegal, don't you think the pamphlet would say "hey, the airline can't do this to you?"
What kind of legal scrutiny are you looking for? And do you not think that, among the tens of thousands of passengers who are involuntarily bumped in a year, not one of them would have challenged this in court by now?
Where it becomes a problem is when the airline decides they don't want to pay "too much" and start bumping people involuntarily. That should be illegal. If a flight is oversold and nobody will accept being bumped for less than $10,000, then the airline should have to pay $10,000 to resolve the situation.
As it stands right now, the whole thing is skewed in the airlines' favor because they have a nice, low cap on payouts.
One person is willing to take $10,000? Great. Every other passenger is willing to refuse $9999 for the low price of $9999. Now, each passenger needs a 1/Nth of the payout, and that fraction needs to be >$10,000.
Now the negotiation's starting offer becomes: "You overbooked by one seat. How much will it cost you to ground the plane, or fly it empty and bump us all to other flights? Give us that much money."
Honestly, this outcome would be fine by me, since it would correct poor airline behavior pretty rapidly. They already let you buy standby tickets; overbooking is double dipping.
1) "Come on, you can't get 100 people to collude." vs
2) "There is a law that ensures our per-passenger liability saturates at $1350 plus re-booking costs."
For similar reasons, they insure against a hundred different possibilities and require low-personal-judgment protocols to comply with the policy terms.
That only leaves a) a law saturating the liability, or b) a contractual provision (and law validating such provisions) that saturates the liability. It still would explicitly prevent the possibility of colluders extracting an unbounded amount to be bumped.
Obviously it is more efficient for everyone if this bidding is done before you get to the airport, the system described in the article is one example.
aka collective bargaining, which in principle should be encouraged, to counter power imbalances.
https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action
By overbooking, the airline can ensure that all seats are occupied, which means more people get to their destinations when they want to, and the cost-per-passenger is lower (as fares don't have to include the overhead cost of empty seats).
Most of the time their forecasts are accurate and the system works well for everyone. But occasionally their combination of forecasting, incentives to transfer and customer service practices go wrong, resulting in the horrible incidents we've heard so much about.
Just confirming the above: The no-show rate is actually relatively stable in _most_ cases, which is why airlines try and optimize for this by selling past physical aircraft capacity.
In some markets it's illegal, in which case the average airfares are often notably higher.
This can have a more extreme effect than is immediately obvious: Because "last minute" fares (the ones that often fill up the aircraft) are usually the highest price and are critical in how airlines are able to make flights profitable.
Additionally, the most common no-shows are those who have booked early (the cheap tickets), meaning oversell allows the airlines to make space for urgent last minute travellers when the earlier ones don't turn up.
Without catering for no-show, it's feasible that air fares could end up a LOT more expensive (potentially 20%+) to remain profitable, depending on the distribution of prices in the demand curve leading up to departure.
You can certainly not do it, but on average, customers end up worse off (and the market is relatively good at optimizing this).
The biggest problem (in our mind) is that airlines don't have a good "safety valve" in cases where things go wrong. That's what we (attempt to) fix.
Oversell is sometimes known with high confidence at checkin-close (1 hour prior to departure) or even before, due to the fact that oversell thresholds can change throughout the booking curve.
Airlines don't have a current solution to rebalance/correct loads prior to the gate auction.
You can talk about overbooking as "profit motive" for the airline, but airlines traditionally make very low margins. Air travel is a classic oligopoly, where a large number of competitors offer goods that are practically indistinguishable (Coke vs. Pepsi, Shell vs. Exxon, United vs. Delta) -- these industries are characterized by fierce price competition. Ultimately, any decrease in revenue from one source will be reflected in higher average ticket prices.
An airline industry that didn't overbook would be one where either everyone pays significantly more for their tickets, or where most tickets become truly non-changeable, as in you have to buy a totally new ticket if you change your travel date or time.
Honestly, a system like this, where the airline can do yield management transparently, days or weeks before departure, when people have time to weigh their options and make alternate plans, makes tremendous sense and does a lot to allocate costs to those who are willing to pay, keeping things less expensive for those who aren't.
And of course there's a middle ground: being upfront about which seats are really reserved, and what you can expect for not-really-reserved seats on overbooking. None of this "oh you should have done research to realize what your rights and minimumn payment are and that this voucher is worthless".
Eliminating overbooking is overkill and some people are in fact confused on that matter. But please don't pretend the only alternative is some apocalypse.
My work travel system even has a built-in tracking and reminder system for ticket vouchers that will nudge me to fly on a particular airline if I have a credit with them.
And, I will say this -- in nearly all situations, if an airline thinks they may need to involuntarily bump you, they won't assign you a seat. Once you have picked a seat on their reservation system, you have a very low chance of being bumped involuntarily. Once you have a boarding pass with a seat number on it, I'd guess that the odds are 100,000:1 that you're not going to get on board (unless you volunteer to take a voucher). All the more reason that the infamous United dragging incident was some kind of anti-unicorn (which wasn't about over-sold seats, after all -- it was about needing to accommodate a non-revenue flight crew).
Do I get special treatment on the airline I fly most? Yes, I do. I've been able to change tickets on that airline without a change fee as a courtesy on multiple occasions, in contradiction to their printed policies.
I can't/won't book these for leisure travel, because they don't even allow you to sit with your family members.
Honestly, the recent penetration of basic economy into the US market is something I'm much more concerned about than involuntary bumping. If the airlines are successful, then they're just going to re-set the baseline for standard economy up by $100 or so a ticket. Planes were already full, it's not like they are going to increase revenue by offering cheaper tickets, they're just going to get away by giving you less for your money.
Not being able to cancel / refund your ticket is NOT a new trend.
Other than Southwest most airlines would not let you change your tickets without paying a fee, and this has been the case since quite a few years.
The new bit is you can't even pay a fee with the new basic fares--it's use it or lose it.
The last I checked most of them charge change fee to the tune of 150-200 dollars. Moreover, if you get it in the form of airline credits it's further restricted in the sense that the credit is available only to the person under whose name the ticket was booked. So if I book tickets for my daughter and pay for them and have to cancel them, I can't use that money other than to buy a ticket for my daughter on the same airline in the next 12 months.
Even on fully changeable tickets, with no fee, you can't assign them to another passenger. You'd have to have a refundable ticket, get the refund, and then buy another ticket.
But I don't think I ever implied differently?
The vast majority of tickets sold in the USA have restrictions on changes.
> An airline industry that didn't overbook would be one where either everyone pays significantly more for their tickets, or where most tickets become truly non-changeable, as in you have to buy a totally new ticket if you change your travel date or time.
This is a legacy from time long past and it wasn't the best decision back then. If you put a little thought into most airline policies you can come up with something that is both more effective and provides a better customer experience while reducing costs or increasing profits.
There is simply not enough competition in the industry to force change.
I agree the system in the article sounds like a good start - making more efficient use of planes is better for everyone.
Scammy? Ehhh. People get way more than their money back for switching flights, which I consider enough to make it un-scammy. Others might reasonably disagree.
People buying full-fare tickets don't incur a penalty if they just don't show up for the flight. Most tickets, nowadays are anyway non-cancellable (except, sometimes for a hefty fee) and non-refundable.
At times the flight from Tel Aviv to Zurich could be overbooked by as muchas 60 seats. I know this because my sister worked at (now defunct) Swissair.
Personally I don't feel this to be a scammy concept, provided that the airline
- Rebooks you onto the next available flight. If necessary with a competitor and
- Compensates fairly and in cash and coughs up for hotel acommodation, transportation and food if necessary
If they didn't do overbooking, then missing your flight is a huge opportunity cost of them. They wouldn't be so quick to let you just move it last minute or fly standby.
The real problem with that united PR debacle was that the passenger was roughed up by security. But overbooking is probably a positive for flyers.
IMO the correct thing to do is do everything they can do to find alternative arrangements for crew member transportation in that case. I think paying customers should be the priority.
Another mistake made was allowing the passenger to board and then removing him. Bumped passengers should not be allowed to board in the first place.
They booted paying passengers for crew members.
Another mistake made was allowing the passenger to board and then removing him
Oh, and offering the amount in cash and not in some vouchers, which probably come with so much fine print and restrictions to be virtually useless would probably help too.
Thing is, I'm not sure those arrangements were actually considered by United though, they seem very short sided in general.
I didn't really consider resting times might be an issue though.
The important part is don't board a passenger THEN kick them off. If they are bumped, they shouldn't ever board.
In reality, there is no problem to manage here. You simply wind the incentives up until people move.
The "problem" is an airline too cheap to wind the incentives up far enough to get people to give up their seat voluntarily.
So what I'm hearing is that they'd rather be lied to at the airport, than at the time they're buying the ticket.
If you buy a ticket, then there should be no reason for the airline to deny you boarding (excepting safety issues). This is how every other service works.
If I turn up and it turns out so did everyone else who bought a ticket, then the airline should not be bullshitting about overbooking.
http://www.tvlon.com/news/how-many-people-get-involuntarily-...
http://www.huffingtonpost.com/entry/united-bump-overbooking-...
They are absolutely not forbidden from offering more if they choose to - this is actually even explicitly mentioned in the regulations. The legalese is not super easy to parse, but this link makes a decent attempt at explaining it: https://www.dailykos.com/stories/2017/4/11/1652290/-The-Wide...
Edit: The Department of Transportation's own official website also explains it quite clearly here: (https://cms.dot.gov/airconsumer/faq)
Q: Is the amount an airline must offer involuntarily bumped passengers arriving on a substitute flight over 2 hours after their original flight still 400% of the one-way fare, for a maximum of $1,350?
A: Yes, an airline must offer 400% of the one-way fare up to $1350 to involuntarily bumped passengers arriving on a substitute flight over two hours after the planned arrival time of their original domestic flight. Airlines are free to offer involuntarily bumped passengers more money than required.
The 400% minimum compensation only applies if the airline chooses not to offer enough for anyone to volunteer.
The airlines are trying to make it sounds like they are just trying to reach 100% capacity but in reality they are trying to arbitrage the fact that a few people buy non-refundable tickets and don't show up.
Even allowing for the complex financials and T&Cs of the airline industry I really struggle to see how this is acceptable. If it in any other industry people would be arrested.
Hotels and cruise ships (at the least) do exactly the same thing. They're all essentially gambling, and they win most of the time, so people don't really get angry enough to make an issue of it.
That contract gives both you and the airline a number of very specific performance requirements, and also a bunch of outs in situations like weather delays.
To get into the longer answer -- seats on a plane are a special kind of commodity, because they become completely worthless the minute the door closes. If you really want to treat them as widgets, 99.999% of the time the result will be worse for the airline (they fly a plane with empty seats, which they do not get paid for), and worse for the consumer (people don't get where they want to go, because planes are taking off with empty seats).
I will argue that a world where airlines overbook, we all get lower fares and better flight availability, passengers can change their tickets with nominal penalties, significantly less than 1% of passengers are compensated to change their flight plans, and 0.007% of passengers (that's 7 people out of 100,000) are involuntarily bumped with compensation (source: https://www.dallasnews.com/business/airlines/2017/03/20/hold...) is better than the alternative.
But that is itself a problem: that they're banking on you not knowing your rights because the exact terms are so complicated.
It would be a different matter if each purchase made it explicit:
"This is really just a standby ticket with an X% chance of having to bump you, in which case you are paid $Y and booked on the next flight. To convert to a true reservation you may pay $Z."
Overbooking is not the only reason that airlines have to deny boarding. Sometimes, they end up making an aircraft change. Sometimes, headwinds dictate that they have to lower their weight. Sometimes (as in the now-infamous United case), they decide that they need those seats to carry crew. Sometimes, a seat is broken, and they can't use it.
JetBlue is an airline that does not oversell seats (Southwest apparently also decided to join them in that practice this year -- my guess is that their unique no-assigned-seats boarding method gives them a lot more flexibility). Despite that, in 2016, they had one of the highest rates in the industry of forcibly denied boarding, significantly above the industry average. (source: https://www.fool.com/investing/2017/04/16/1-us-airline-never...). Each and every one of those had one of those "true reservation, it's not a standby ticket" tickets that you're talking about.
Practically, when picking who to deny boarding to, airlines have some pretty clear rules. If you want to be sure you're going to get a seat, pick one for yourself when you make your reservation, check in as early as possible, and buy a refundable ticket.
People do this all of the time...
It's called accepting orders prior to manufacture. Most of the time it works out. When it doesn't, you deal with the consequences.
And even if you lied to the customer, you just tell them you had manufacturing delays. And either refund them, or up-sell them to another product.
The only reason we don't see this behavior in the news is that companies typically don't physically assault customers who have bought widgets that can't be delivered.
But flights are different. There is a hard limit on availability, plus most bookings are time sensitive. There are only a a certain number of seats available on each flight. You might be fine with being moved on to a later flight, but then again you might not. If you book and pay for a specific flight you should have every right to assume that the seat is yours.
I can't imagine working someplace where, as a matter of course, people with reservations are turned away due to overbooking. It's likely that such a place would not last very long either, because as soon as people read TripAdvisor reviews about how your property doesn't honor its reservations they will stay elsewhere.
http://www.huffingtonpost.com/daniel-j-jones/how-to-avoid-be...
If you are removed involuntarily (not asked to switch for a certificate) you're entitled to up to 400% of your one way fare up to $1350 cash in hand on top rebooking you, depending how long you got held up. [1] Theyre also required to show you your rights on paper in that situation. It almost never happens because there's a huge incentive for them not to do this to you.
And if you think that's rough check out EC 261/2004 [2] and that applies even in the case or a mechanical issue.
[1] https://www.law.cornell.edu/cfr/text/14/250.5
[2] http://www.thisismoney.co.uk/money/holidays/article-2271213/...
> They should also be required to make their best effort to find the available seats for the passenger.
In other words, it should be their responsibility to get you re-booked immediately on all available flights. This should be something that should be verifiable afterwards (i.e. if you as a customer find out they didn't send you on a certain flight by another airline that was better, that should mean additional fines). This should be strongly enforced by regulators to the point where it actually occurs.
Unless I'm missing something (didn't see it in [1]), those rules/enforcement are not currently place. Under these circumstances, I could _maybe_ accept overbooking as an acceptable practice, but without them I don't see why it should be acceptable.
I have no moral argument against overbooking, its wasteful for them not to do so if their projections show that without it, the seat would go out empty. Sometimes they mess it up, sure, and in those cases they owe you cold hard cash, hotel accommodation IIRC and a flight to your destination anyways. Between the monetary outlay and the social media feedback, as a very frequent traveler (top tier with AA and Alaska this year, that's 190,000 qualifying miles), I feel quite satisfied with the status quo.
Per [1] in 2015, only 0.09% of passengers were denied boarding voluntarily or involuntarily. Involuntarily denied boarding accounts for only 0.0075% (43 out of 613,141) of boarded passengers -- that's four nines -- and my understanding is 2016 performance was even better. You were almost as likely to be hit by lightning each year (1 in 700,000). With those kind of performance metrics, it feels like things are working, or else we need to really get our act together re: lightning strikes :)
[1] https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/pu...
In years of business travel, where I frequently arrive at the hotel at midnight, I've only been walked three times. Once at a trade show, where the hotel was renovating and didn't get the rooms done on schedule. Second, where a guest got ill and was unable to depart on schedule. Third, on a trip to New York, where they walked me to a sister property located literally across the street (I got the feeling that these two hotels frequently traded guests).
>the cancellation period is actually one day prior to arrival
Unfortunately, a lot of chains are increasing their cancellation window. In addition, there seems to be a fairly significant trend toward hotels (especially the chains) offering substantial discounts for non-cancelable reservations.
All hotels routinely is not accurate.
From the cited article:
>Now that I've sufficiently scared you out of ever booking another hotel, here is the reality: Your odds of being walked are incredibly slim.
Even most sold out hotels have maintenance rooms. Sometimes the only reason it is in "maintenance" is something simple. And could be rented last minute (as i did in similar job)
I think you'll find hotels targeting backpackers overbook, too (if they allow reservations, at all)
But is not at all common, and when it happens it is more likely that the reason is not overbooking, but rather some incident (like a mistake in the bookings, a bathroom found leaking just before the customer arrival, a couple that booked a twin and then arrived with a 17 year old "kid", etc.)
In our industry, ISPs used to, many still do. Shared hosters definitely. VPS, way too often. That dedicated host with a gigabit port? Well, you have a gigabit inside the datacentre... beyond ... it's a big question and not all are honest about it.
Because no one has done anything about it. There are any number of scummy beahviors which are still legal.
In this case, if (say) 1% of people never show up for flights, that's incentive for airlines to over-sell by 1%. Because the case where everyone does show up is the 1% of the 1%.
i.e. it's more cost effective to fudge things and deal with problems later.
The issue is that they have shitty procedures for dealing with that 1% of 1% situation. They still want to screw the customer out of every penny, where they could be telling themselves "We made our money on the other 99%, If we give this guy his money back and some more for inconvenience, we'll still come out ahead".
The insistence on screwing the customer no matter what is deeply ingrained in corporate culture. Money and bad marketing be damned...
Is it cheaper for them to hold the connecting flight, or does it make more sense, financially, to rebook them? Including paying for hotel rooms and compensation. Sometimes they have an agent at the gate of the incoming flight whisking the connecting passengers to their flight.
Here's another dirty secret to ponder: An airline may bump you even if there are free seats available. The reason being weight limits. It can be far more profitable to fly an additional container to Hong Kong then those three passengers with cheap economy class tickets. Even with the additional cost, which this incurs.
Which country do you live in? I didn't know there were countries that forbid the airlines from overselling seats and forced them to fly airplanes with empty seats when there are no shows.
As customers choose tickets based on comparison sites that order on ticket price only, ultimately the only thing that matters is the price. That's why there is overbooking, all kinds of cheesy attempts at hidden but obligatory fees and attempts at lowering standards to ridiculous levels such as flying without seats.
Let's say United has 8 flight a day from SEA to DEN. Each are fully booked and hold 100 passengers. 1 of the 8 flights gets cancelled today due a major mechanical problem.
If everyone from the cancelled flight rebooks a on a later flight, now each plane is overbooked by ~14 people.
This happens everyday with every major airline.
Your assertion requires that you actually provide evidence to counter these facts. As you have given none, I have to assume you are incorrect.
source: https://www.fool.com/investing/2017/04/16/1-us-airline-never...
"You know how to take the reservation, but not how to hold the reservation."
Clearly there is some sort of profit motive for the airlines, but how can this be legal. It seems wrong to oversell a limited resource like this. Even if not legal it feels scammy on the lines of "upto" speeds for ISP's.