Overbooking of Flights

Today I’ve been talking to Rob as he’s sitting around in Chicago O’Hare Airport on standby for hours on end. It’s his own fault, he missed his flight this morning. As he’s complaining that every flight he’s been bumped to has been overbooked, I was thinking that I should blog about overbooking of flights. Having travelled quite extensively, hopefully I’m qualified to talk about it. This is one of the nastiest little secrets of the airline industry.

Overbooking (of flights) is the practice of selling more seats on each flight than there actually are on the plane. At first blush, the concept is simple. The airlines claim that since passengers typically don’t notify the airline to cancel their reservation when their plans change, there are many no-shows for a given flight. All major airlines overbook flights, with few exceptions1. An un-used seat is wasted revenue.

A given flight might be overbooked by as little as 10% or as much as 100%. When they estimate wrongly, and too many people show up for the flight, they have to “bump” some passengers to the next flight. You’ll notice this all the time at the airport: They’ll be asking for people to voluntarily give up their seat for some sort of compensation. Often they pay cash, sometimes airline vouchers and other incentives.

I understand the airlines’ plight. I myself have many times booked a flight and not shown up for it, without notifying the airline. This isn’t so simple as blaming the passengers for not notifying the airline though. This is a bigger issue. Most no-shows (mine included) can be attributed to one of two causes:

  • One-way penalties— Most airlines (in the US) charge steep penalties for booking one-way flights, versus round trips. They do this in the hopes of penalizing and extracting more money from business travellers, who are likely to book many one-way trips to visit different customers, without returning home.
  • Non-refundable tickets— Most tickets sold by major airlines in the US are the “non-refundable” type, and have steep fees to change—on the order of $150 or more, plus possible fare differences. This means that the passenger has absolutely no incentive to notify the airline in the case that they change their mind or their plans, especially if they can book a new ticket for less than the change fee.

Airlines have caused this mess themselves, but they continue to try to blame it on the customer. Charge reasonable prices, don’t try to extract money from the business travellers, and be honest, and this problem wouldn’t exist. Airlines that allow easy cancellation, with full or even partial refunds don’t have this problem. Airlines that don’t charge one-way penalties don’t have this problem.

1 JetBlue is one notable exception, here.

2 thoughts on “Overbooking of Flights

  1. If you have a bit of spare time (airport bar ;) ) and are travelling alone go ahead and volunteer to give up your seat. If they end up not needing your seat or they have room in first class it’s a great way to get a free upgrade.

  2. Absolutely, if you’re not in a hurry, take the offer, but only if it’s worth your time. In many cases I’ve seen them offering as little as $100 travel vouchers. I won’t give up my seat for less than perhaps $300 cash.

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