Travel Technology for Dummies: What Is Overbooking?

Travel Technology for Dummies: What Is Overbooking?

Complicated topics explained in a simple way: Today let us understand what overbooking means.

Since United’s disastrous ‘removal‘ of a paying passenger with an assigned seat from an airplane in early April 2017, which went viral in social media all over the world, the term ‘overbooking’ is on everybody’s mind. But what are ‘must-ride passengers’ and what does ‘overbooking’ actually mean?

People around the world were shocked when they saw the videos posted online, taken by fellow passengers, when a customer who refused to leave was violently pulled from his seat and physically dragged down the aisle of an aircraft in order to clear a seat for an airline staff who ‘must travel’. In a world where a camera is always at your fingertips, one would think officials such as police, TSA or other security people would have enough common sense to know that they may become ‘social media celebrities’ even if they act within their ‘rights’. A little intuition would go a long way. One would also think United had learned a lesson after they came into the social media spotlight in 2009, when a frustrated musician whose (checked) guitar got broken on a flight, created a song that went viral with millions of views in a few days.

In both cases, not one specific United employee was the actual hitman (rather employees of a subcontracted airport ground services provider), but United itself, whose regulations are not significantly different from any other airline, had to accept responsibility, hence the blame. It would be interesting to learn why other airlines employ more ‘common sense’ and a customer-first mythology. I experienced a poor United customer service myself when I went from Miami to Canada for a ski trip (in other words: from plus 90 degrees to minus 10 degrees Fahrenheit [+32 to -23 degrees Celsius] in  shorts and flip flops), forced by higher security protocols and a small aircraft to check most of my carry-on, realizing that almost no checked bag had made it with me for several days. The guy on the phone, in an Indian call center, was trying to convince me that he ‘understands’ my problem, not shy of telling me there won’t be any room for luggage in the next couple of days on any flights from Houston to Calgary. From a business perspective, I can relate that they did not want to degrade somebody else’s travel experience by making room for my luggage and bumping theirs, but on a personal level I felt pretty annoyed wasting the better portion of my holidays in department stores looking for cold weather stuff I already own and never wear, not knowing if I will ever get reimbursed. Nothing compared to the recent incident that, according to main street media, led to a huge stock drop and cost United a billion in equities value (whether this is actually true is debated, but this is not the focus of this article).

But what is overbooking?

Per definition, overbooking means “to accept more reservations (for a flight or hotel) than there is room for”. In order to ensure that an airline doesn’t fly with empty seats, airlines came up with sophisticated models to estimate the number of ‘no-shows’ or last minute cancellations. A ‘no-show’ is a ticketed PNR where the person just simply doesn’t show up at the gate – he/she can be sick, have missed a connection, be lost at the airport or many other things. If somebody on the waiting list is at the gate, he/she might get the seat of a ‘no-show’ – the passenger who didn’t show up. The challenge is that usually there are no-shows but people without a ticket do not happen to be around the boarding area prior to departure. In order to avoid that the airline departs with empty seats, airlines ‘overbook’ flights – meaning they book and ticket more inventory than there are actual seats on an airplane – assuming that some people will always not show.

Should such equation not add up, and there be more passengers at the gate than seats available, a negotiation starts with a common phrase: “Ladies and Gentlemen, this flight is overbooked, we are offering $X credit to you for future travel if you are willing to take an alternative flight to your destination.” Usually airlines find volunteers who are flexible and appreciate the credit (according to U.S. law up to $1.350, in EU law ranging between €250 for short-haul flights and €600 for long-haul trips). However, airlines are also legally allowed to remove passengers from flights for nearly any reason – including to vacate a seat for someone else, even if nobody is willing to accept an offer from the airline. Overbooking is common practice for the majority of airlines and is perfectly legal. Documents of the European Union show that the probability of all passengers with a valid ticket checking in on time is less than 1 in 10,000 at best. According to the Bureau of Transportation Statistics, in the U.S., the number of passengers having been involuntary denied boarding was only 0.0076% in 2015 – but still close to 50 passengers (0.09% of passengers were denied boarding in total – voluntary and involuntary). When purchasing the ticket, the traveler agreed to an overbooking policy (see below), and consequently can be ‘bumped’ from the flight. Airlines usually announce this in their consumer notices – which basically gives them the right to do what United did in April 2017 – or at least so they think (meanwhile United has changed their policy to no longer allow crew members to displace passengers already on board an airline and has bumped its cap for denied-boarding compensation to $10,000).

In that specific case on April 10th 2017, the airline offered passengers on a United Express flight from Chicago to Louisville, KY, a $400 voucher and a free night in a hotel. When no one volunteered, the offer was doubled to $800 which still did not find any takers. Then the airlines decided to select four passengers to leave the flight – including the man in the video and his wife. Footage shows the man was bleeding from the mouth as they dragged him away. The selection process is usually done based on frequent flyer status and price of the ticket – even though airlines tend to claim it is a random selection. The legal agreement when you purchase a ticket basically says that the airline can ask you to leave your seat at any time for any reason and if you are uncooperative, you are considered disruptive and they can use force. Question remains obviously why did they did not offer more money or put their staff on a separate flight as there is not just one airline flying that connection.

Blog series: Travel Technology for Dummies

  1. What Is Full Content?
  2. What Is a Booking Reference or PNR?
  3. What Is Overbooking?
  4. What Is a Passenger Service System (PSS)?
  5. What Are Booking, Waitlist, Ticket, Codeshare & Interlining?
  6. What Are Active and Passive Segments?
  7. What Are Incentives, Commission & Overrides?

What is a must-ride passenger?

In simple terms, a must-ride passenger is an employee of the airline who is needed in a different location. Examples are a pilot or flight attendant needed to crew an airplane in another city where the planned crew got ill or over hours due to flight disruption, or a maintenance technician needed to repair an airplane that has experienced a mechanical issue. One can understand that such individuals are important as it is very costly and will cause a lot of frustration for paying passengers in the other city when a flight cannot leave as planned because one needed piece of the puzzle (the pilot or flight attendant) is located in another city, unable to catch a connection. But that of course sparks the question: Why did the airline in United’s case not offer more money or even have their must-ride passengers take a competing airline to accommodate?

Overbooking makes sense

I believe United’s case will ultimately lead to no more passengers with assigned seats being asked to give up their seats, however, the airlines will still overbook the flights, as there is just too much money involved. Passengers will continue to ‘give up their seat’, however, it will be done in a smarter way. Airlines will leave themselves more ‘buffer’ and simply not assign seats at check-in until they know they don’t need them for one of their own (you know those tickets with “get your seat assignment at the gate”). It will continue to be a gamble, but most likely the airlines will have to offer more money to individuals who are willing to give up their tickets (a simple question of supply and demand – there is always a price somebody will take). In essence, airlines don’t even offer ‘real money’ but only ‘vouchers’ – which means they are not losing anything, they just have to provide somebody a seat on another flight. And chances are one won’t even use up the complete value of such voucher or one has to pay extra to cover remaining costs – or they just expire. I guess we can all agree that, according to the numbers, overbooking makes sense, since it is a way for airlines to ensure that they are filled to capacity, hence it can even lead to cheaper airfares, but the ‘customer comes first, second and third’ mentality has somehow disappeared.

A typical notice I received from several airlines about the overbooking of flights:

Airline flights may be overbooked, and there is a slight chance that a seat will not be available on a flight for which a person has a confirmed reservation. If the flight is overbooked, no one will be denied a seat until airline personnel first ask for volunteers willing to give up their reservation in exchange for compensation of the airline’s choosing. If there are not enough volunteers, the airline will deny boarding to other persons in accordance with its particular boarding priority. With few exceptions, including failure to comply with the carrier’s check-in deadline, which are available upon request from the air carrier, persons denied boarding involuntarily are entitled to compensation. The complete rules for the payment of compensation and each airline’s boarding priorities are available at all airport ticket counters and boarding locations. Some airlines do not apply these consumer protections to travel from some foreign countries, although other consumer protections may be available.  Check with your airline or your travel agent.

 

Picture credit: Shutterstock 

One thought to “Travel Technology for Dummies: What Is Overbooking?”

  1. Mike Lee

    Such a hot topic right now. I have voluntarily off-loaded myself a few times over the years in exchange for discounts and of course hotel stays and food, and I don’t think it’s such a bad idea.
    What the problem is when Airlines go really strict and are forceful as the case was with United. I totally understand why airlines over-book but on the other hand with so many non-refundable tickets etc. it’s not that they lose out on money. Don’t think there is a right or wrong conclusion to this debate.

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