Are Airlines Intentionally Overbooking Their Flights? (popularmechanics.com)

"if you sell one seat to two different people, and only one of them shows up, you get extra money," explains an article in Popular Mechanics shared by schwit1. Citing a recent TED-Ed video, they argue that the airlines' strategy for booking flights "makes perfect sense, just not for you." The most frustrating part? This math could be tuned to ensure the maximum number of tickets sold with a near zero percent chance too many people show up. Instead, the most profitable solutions often involve a decent chance a few passengers getting screwed, because the extra ticket sales outweigh having to put someone up in a hotel now and then.

Comments

YES

[Anonymous Coward]

Next question?

Re: YES

[thinkwaitfast]

I had a friend in college who was doing this 30 years ago. He would buy the most expensive ticket from Phoenix to San Diego for Friday afternoon. Every Friday he would go to the airport and give up his ticket in exchange for a refund and a free ticket to anywhere in the country. Since they were all but guaranteed to be at least five people wanting to get on the flight, it was a no brain scam. I remember at one time over Christmas vacation he showed me a stack of 35 tickets that he had gotten. He used a few, but mostly resold them. Life was a lot easier then. It paid for his college.

Re: YES

[jdgoulden]

My thesis adviser and his wife did much the same thing; book all of their travel at peak times, then take the bump and the free ticket / bonus miles / whatever and the free hotel room and fly out the next day. They flew mostly for free for the entire time I knew him.

Re: YES

[Xest]

Um, what? The story makes no sense? I saw this article and thought why is this even a story, this isn't a magical revelation, this has been simple fact for many years. I don't even know why this would be news to anyone, let alone people denying it.

The airline industry has long been doing this, they can't simply raise prices or add extra flights because that means they become less competitive against others flying the route, and they can't just add extra flights because it can sometimes be impossible to get hold of extra capacity on a route. Try getting a slot from Heathrow because you want to increase capacity, have fun waiting years until it's your turn in the queue as an airline requesting an extra slot on the airfield and flight plan.

It doesn't matter if they have to pay a few people compensation, paying double the flight cost charged every flight for one or two people isn't exactly a big deal when they've doubled up say 10 seats.

Consider they have 200 seats, they sell 210 tickets, 8 people don't show because they missed their connecting flight, or someone fell ill, or it was just a cancelled business trip and the tickets are non-refundable then sure they have to pay 2 people double the cost of the ticket as compensation, but that means they're still 206 tickets profit up on a flight that only holds 200 people.

It's really just an insurance type setup for the airlines, as long as they optimise their calculations based on data so as they maximise the number of tickets sold vs. the number of tickets actually used then they're going to increase their profits. This is exactly what they do and exactly what they have done since at least the 90s at busy airports. Yes there are people who know how to play the system, but that already gets factored into the calculations airlines make in terms of how many tickets to sell - it's a complex statistical operation and has to factor in things like local events; i.e. if there's been a damaging hurricane at the destination a lot more people might choose not to fly, so they oversubscribe seats by a higher number knowing they'll get more no-shows.

The news for me here is that people weren't aware of this, I always figured it was pretty common knowledge. I'd have thought pretty much anyone whose flown from a major airport would've known about this having seen it first hand and having asked any of the staff the question. This is even more the case as I figured people were more aware than ever nowadays of the sorts of profit maximisation analytics that occur at companies of which this is just another example.

The fact is flying a plane costs a lot of money, so they want to maximise the number of people on that flight. There's a heavy baseline cost of lifting that massive flying tube into the air, and the more tickets sold against that baseline the more profit for the airline. Simplistic mindset type free market economics of "they should just raise the prices!" don't work when you have constraints like airport capacity. Some countries/airports even enforce penalty costs on flights that aren't carrying sufficient numbers of passengers when the airport capacity is near maximum - they can't justify having a carrier taking up a slot that isn't carrying many people so issues like that too incentivise airlines to do everything they can to fill up their planes regardless of the impact on customers. It's a pretty shitty cutthroat industry in general in this regard.

This story is absolutely spot on, it's also at least 30 years too late to be called news too though unfortunately.

Yes

[Dutch Gun]

Yes, of course they do. I thought this was common knowledge. From what I've seen, airlines typically deal with over-booking by offering passengers free first-class upgrades on a later flight, or other perks to induce people to voluntarily give up their seats.

I wouldn't be surprised if they *don't* overbook flights at the busiest time of the year, since that's almost a guaranteed money-loser for them, but I have no evidence either way. Has anyone ever experienced overbooked flights at busy holidays, etc? I suppose it's also airline-specific.

Re:How !!

[Solandri]

Careful what you wish for. If it were illegal to sell one seat to two different people, yes your flight would never be overbooked. But if you missed your flight, you wouldn't be able to get a refund or rebook. The airline would say tough - by law that was your seat and only your seat. Once you bought it, by law they weren't allowed to sell it to anyone else. So once you bought it it was yours period. If you missed the plane, that's not their problem. If you want to get to your destination, you'll have to buy another ticket.

I like the current system. The airlines usually have enough people overbooked or on standby that they don't lose money when you miss your flight, and they extend the favor to you by rebooking you on a later flight at no extra charge. No need to buy a new ticket. And usually there are enough volunteers willing to be bumped that a forced bump is very rare.

The quote in TFS has it backwards - you arrive at the conclusion that overbooking is bad if you only consider what makes perfect sense for the customer, and completely ignore what makes sense for the airline. If you forcibly implement a system that costs the airlines more money, well they have to make that money up somewhere. In this case it would be from the wallets of passengers who miss their flight. The current system represents a good compromise where the desires of both the airlines (to have full flights) and passengers (to be allowed to rebook without penalty or with minimal penalty if they miss a flight) are taken into account.