Why Do Airlines Sometimes Oversell Flights and Cause Passengers to Be Bumped?
The best situation for airlines is to fill every seat on every flight, but it is impossible to know how many passengers will not show up for their flights. Therefore, airlines adopt the practice of overbooking, selling more seats than there are available, to ensure their flights fly as full as possible. This method often ensures profitability, as a flight where passengers have been bumped is still considered a profitable one.
Airlines’ Overbooking Strategy
Airlines overbook their flights by anticipating that a certain percentage of passengers will not show up, known as no-shows. This strategy is primarily based on historical data and past cancellations or no-show patterns for specific flights. By doing so, they aim to maximize occupancy and minimize potential empty seats.
For instance, a flight might be sold out, but due to the high rate of no-shows in the past, the airline still overbooks the flight. A common game in the airline industry, yield management, is the system behind this practice. The objective is to ensure the flight departs with all seats full and no one left at the gate.
Who Gets Bumped?
Typically, the last to book and those without reservation status are more likely to be bumped from their flights. These passengers are not prioritized because they are often treated as potential no-shows. To mitigate the inconvenience, airlines often offer incentives such as compensation, upgrades, or vouchers for later flights.
Do Airlines Have Alternatives?
Some might argue that airlines could avoid overbooking and simply duct-tape passengers to the wings, but this is not a practical solution. Instead, airlines try to manage overbooking by having a range of strategies. If all else fails, they may offer compensation for the inconvenience of being bumped, rather than kicking passengers off.
Examples of Overbooking in Other Industries
The practice of overbooking is not exclusive to the airline industry. Luxury hotels, for example, often overbook their rooms by 300 percent. This means that they expect a much higher occupancy rate than the actual number of rooms available. Despite this, rooms are often only partially filled due to cancellations and no-shows. If there are overflow guests, the hotel will usually accommodate them at other nearby hotels.
Reflecting on the number of empty airline seats and hotel rooms that would exist without overbooking, it becomes clear that this practice is essential to efficiently manage demand and supply. Without overbooking, many flights and hotels would have empty spaces, which would be a significant waste of resources.
However, it is important for airlines to be transparent and fair with their passengers. Effective communication and proactive measures can significantly reduce the inconvenience and frustration caused by overbooking for many travelers. Airlines should strive to balance their profitability with the satisfaction of their customers.