Why do airlines over-book flights?

Discussion in 'Community Discussion' started by maflynn, Sep 28, 2014.

  1. maflynn Moderator

    maflynn

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    #1
    I'm sitting here in the airport waiting for my flight and I've gotten word that my flight is over-booked.

    Why do airlines do that?

    I mean tickets are nonrefundable (by and large). People spend a lot of money to go to a location, so there is a need and intent. Yet the airlines sell more tickets then seats? They then have to give a voucher for a future flight and get you on a new flight - seems like a lose/lose proposition from the airline's perspective and it will only anger those people (I pray its not me) who get bumped.
     
  2. Scepticalscribe Contributor

    Scepticalscribe

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    #2
    Airlines prefer to fly with as full a load as possible - that is what is most profitable. Thus, they seem to engage in a balancing act which is a cross between a cost benefit analysis and educated guesswork.

    I think they overbook on the (presumably calculated) odds that not everyone will show up - some will cancel for a variety of reasons, (often at the last minute) whereas others will actually miss flights. The upshot of this is that there will be empty seats on the flight - even though the tickets have already been paid for.

    So, with this in mind, it seems that airlines calculate that a small excess of passengers should be booked on each flight (mathematically, the sort of calculations that maybe an actuary might be called upon to make.)

    If they get caught out, they have to rebook or refund the inconvenienced passengers and pay for that. However, I assume that this still works out at a profit for them, as the (financial) price of the inconvenience is far less than the profit made form an over full flight - just think, you have sold more seats than the plane actually has.

    I recall travelling to Poland almost two decades ago and it turned out that the flight from London to Warsaw was completely overbooked. The airline offered overnight accommodation, plus £500 compensation (per inconvenienced person) plus a flight the following day to Poland to anyone prepared to surrender their seat. To be honest, I won't say I wasn't tempted, (I was on a pretty miserable teaching salary at the time) but, as I was heading to a series of seminars and conferences where I was supposed to give a number of presentations, arriving a day late wasn't really an option…….
     
  3. maflynn thread starter Moderator

    maflynn

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    #3


    True, and I'll not disagree but when the cost of a ticket per person is in excess of 300 dollars (for my flight to San Francisco), I'd hazard a guess that 99.99% of the people who buy tickets will be at the airport. I understand life circumstances can impact a person's plans to travel but generally I think that's the rare exception more then a rule.
     
  4. Scepticalscribe Contributor

    Scepticalscribe

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    #4
    Well, I'll confess I was surprised when I first learned of this practice, that day in Heathrow in the mid 1990s as I had never heard of it prod to that. My boss explained what he said was the thinking behind it.

    It seems to be a balancing act, or gamble, and it must come off sufficiently often (and be of financial benefit) for the practice to be so widespread in the airline industry.
     
  5. DollaTwentyFive macrumors 6502a

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    #5
    I agree that with non refundable tickets making up the vast majority of sales, most people will be there.

    Where the gamble comes in is there will be a certain percentage of people willing to be bumped. Some people feel that getting a voucher plus potentially food and accommodation is worth taking the bump. That is also factored into the airline's calculation.

    My father used to travel back and forth from Boston to West Palm Beach multiple times per year for pleasure. He was never in a hurry to be in either place, so he liked getting bumped.
     
  6. rdowns macrumors Penryn

    rdowns

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    #6

    Your guess would be way off. They overbook so as to not fly planes with empty seats. They have proprietary software that tells them how many won't show for a flight. Obviously, overbooking and having to issue vouchers/hotels/meals is more cost effective for them than flying empty.
     
  7. adk macrumors 68000

    adk

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    #7
    That may be true on a Saturday afternoon when the flight is full of leisure travelers (and by the way, $300 RT from Boston to SF is a steal), but not on a weekday full of business travelers. I've been waiting on a morning flight to Chicago where five people walked up and cancelled their reservations because the flight posted a 40 minute delay. Why? they were going to miss their connections and would miss their meetings (they were only going for a day trip). On a flight from a hub, there's also a good possibility that somebody's flight into the hub will be delayed and they'll misconnect.

    Also, the redemption rate on those travel vouchers for people who volunteer is very, very low, so that $300 voucher doesn't actually cost the airline $300. Additionally, while they might have to hand out a $300 voucher, they may be overbooked because somebody booked a last minute fare for $1,300, meaning they're still winning. It gets interesting when they don't get any volunteers in an overbooking. In many cases an involuntary denial of boarding involves writing that passenger a check right there at the gate.
     
  8. ElectronGuru macrumors 65816

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    #8
    Years ago when flights were point to point, that may have been true. But with the advent of hubs and legs, it's near impossible to get across the country any more in a single flight. And with increased complexity comes the opportunity for delays. And to compensate for delays...

    Just remember, deregulation is good for you. How else would we be benefiting from lower prices and higher service?
     
  9. MacDawg macrumors P6

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    #9
    This

    They have whole departments devoted to researching and calculating the cost benefit analysis with specific computer algorithms based on day of week, time of year, holidays, markets, aircraft size, etc.

    You can be assured if it was a losing proposition, they wouldn't be doing it
    Instead, as counterintuitive as it seems, they make more than they lose

    It isn't just a matter of non-refundable tickets showing up for flights
    There are missed connections due to weather, delays, etc
    And a host of complicated interconnected pieces

    In addition, there are customers who research and look for flights likely to be overbooked, so they can claim the benefits on a flexible travel schedule :)
     
  10. Huntn macrumors G5

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    #10
    It could be proprietary and/or it could simply be good record keeping and compiling of past no-show data.
     
  11. senseless macrumors 68000

    senseless

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    #11
    If you don't show up for or cancel a flight last minute, do you get a refund if that seat is sold to someone else?
     
  12. Macky-Mac, Sep 28, 2014
    Last edited: Sep 28, 2014

    Macky-Mac macrumors 68030

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    #12
    And they over-book in different quantities on different routes depending on what their analysis shows

    different fares have different rules about refunds, but typically don't expect a refund just because somebody else took the seat when you failed to show
     
  13. snberk103 macrumors 603

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    #13
    My Good News Over Booking Story. My flight was overbooked, and they asked for volunteers for a travel voucher good for a roundtrip anywhere the airline flew in the lower 48 states, and of course a seat on the next flight. I was having a good time chatting with another traveller waiting for a different flight so I volunteered.

    The plane I would have otherwise been on had subsequently developed mechanical difficulties, and was delayed. I ended up at my destination at least hour earlier than I would have otherwise, and I made a new friend. Plus I had that travel voucher. Overbooking is not always bad!
     
  14. bradl macrumors 68040

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    #14
    Personal experience here.

    Roughly 13 years ago, I was on a flight that this every exact thing happened on. I had 2 slightly different issues, though. First, the airline was SWA (I'll happily admit it, because they were great in what they did), and I was flying from KLAS-KLAX. Short 30 minute roller coaster up and down.

    My flight was free. At that time, their Rapid Rewards program was really simple: fly 16 one-way legs (or 8 round-trip flights), and earn a free roundtrip flight. So I get to my flight, and it is overbooked. But the thing about that route, is that there is a flight leaving every hour from 6am to midnight. So what the hell, my flight is free, and I know some people paid for it (even though each leg was $39 at the time), so I volunteered to be bumped. $100 travel voucher, and forgone on the hotel stay (it was for Vegas, and I lived there).

    The problem came up, that the original flight I was going to be on was delayed (mechanical problems), and it ended up that my new flight left before theirs....

    .. or so it was supposed to. Weather delayed my flight for a good hour, and we couldn't return to the gate. So because of that long of a delay, they gave everyone on that flight a free flight anywhere they wanted to go.

    So I came out ahead: bumped from one flight got me a $100 travel voucher, and delays getting to LAX got me a free roundtrip flight. And add the fact that my flight was a free one any way (from having those 16 points), I earned a free trip and $100.

    My point: like mentioned before, overbooking does have its advantages, especially if you can get +100 and a free flight from it.

    BL.
     
  15. malman89 macrumors 68000

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    #15
    Heck, last fall when I flew into Ronald Reagan/DC my flight was feeding into a bunch of other connections. They were offering people $300 vouchers to leave on an hour or two later flight that still wouldn't affect their second leg of the trip. Sign me up! Except I was staying in DC, so I couldn't take advantage of that offer.
     
  16. Roller macrumors 68020

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    #16
    I've flown on many over-booked flights over the years. As others have written, the airlines go to great lengths to avoid empty seats. In fact, the tendency now, I believe, is to cancel rather than fly with too few passengers. I once flew on a 747 with no more than about 20 passengers in economy - I don't think that would happen these days.

    However, airlines are fairly good about compensating bumped passengers and finding other arrangements. It's also worth remembering that gate agents have a lot of latitude in doing things like moving passengers to business class when there's no seat in coach. As in all situations, it pays to be firm, but polite.
     
  17. balamw Moderator

    balamw

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    #17
    Recently flew on two flights that were only 1/3 full. Was shocked. Am sure they were not cancelled because the return leg was full.

    B
     
  18. mobilehaathi macrumors G3

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    #18
    I haven't seen an empty business class seat in years (on a domestic flight). Any empty seats are always populated by frequent flyers.

    Then again, I'm flying cross country routes on a popular route into and out of a major hub, and on about half my trips they're begging people to volunteer.
     
  19. rdowns macrumors Penryn

    rdowns

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    #19

    This is correct. It's not only about flying with empty seats but where they needs the planes to be.
     
  20. sviato macrumors 68020

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    #20
    I'm sure some actuaries banged out the numbers to figure out how many people to book per seat - airlines wouldn't do it if there wasn't a benefit. And it seems that the benefits outweigh the costs: two of my friends were travelling and one of their flights was overbooked. The airline moved them to a scheduled flight for the next day, paid for hotel accomodations to stay the night, and gave them an $800 flight voucher each for the inconvenience. They were travelling for leisure and didn't mind at all staying an extra day in the city they were in.
     
  21. Macky-Mac macrumors 68030

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    #21
    yep....any unsold business class seats are likely to be snapped up by mileage program members looking for an upgrade and the airlines are happy to move them up to an empty business class seat so they can get the revenue for another economy fare
     
  22. FrankieTDouglas macrumors 65816

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    #22
    I've been on that flight before. They randomly picked five people while boarding, and denied them entry because they overbooked. I was one of those five, and the only person not put on the next flight out.

    I was beyond irritated by the whole thing.

    Ended up spending the whole day at the airport and rather than getting home at 2 PM, it was instead around 3 AM. Yes, they did give me a coupon on my account to use for a future flight as well. Would have rather just went home when planned.
     
  23. yg17 macrumors G5

    yg17

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    #23
    They wouldn't cancel even if it was just 1 person because the plane (and probably the crew) needs to be at the destination for the next flight. An airplane doesn't make money sitting on the ground so they generally don't have spares to use in the event an inbound is canceled due to to few passengers.

    People are likely seeing that a lot with the mess going on in Chicago right now - flight cancellations even they're not going from, to or through Chicago. Inbound from Chicago getting canceled means there's no plane for the next flight.

    I had that concern the other day flying United to IAD. Luckily my inbound came from Houston and not Chicago.
     
  24. bradl macrumors 68040

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    #24
    Think about it this way. You have 3 airlines who have hubs at ORD or MDW. And given the fact that they won't be back to full functionality until the end of October, it's going to be a bear getting anywhere near there. MKE included.

    BL.
     
  25. NckLpz macrumors newbie

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    Sep 29, 2014
    #25
    I used to work for an airline. Almost every flight has NO SHOWS, typically they will open up seats as it gets closer to the flight date and the fares are more expensive. It's the perfect balance for revenue vs having to possibly bump someone. Also there is typically enough people that will volunteer for a small amount of compensation.

    Of course this was 7 years ago and a lot of things have changed since then.
     

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