Why Are Airlines Allowed to Overbook?

Airlines · 5 min read · Dec 03, 2021
Why are airlines allowed to overbook

The act of booking the number of seats more than that available on an aircraft is called overbooking. You might think that such a practice is quite rare, but in fact it in the airline industry it happens for almost all scheduled flights.

Overbooking of Airlines

Air travel emerged as the safest mode of transportation due to increasing competition, and the advent of low-cost carriers pushed them in the struggle to generate revenue. Overbooking flights is a method used to boost revenue. Overbooking is profitable to airlines, but it can also be helpful to inconvenienced passengers in terms of compensation. That’s why it is allowed to overbook seats.

When did airlines start to overbook flights?

Due to the 1978 deregulation act, carriers began to overbook flights. Following the deregulation of the air transport business in the United States, competition intensified with cheap pricing, and carriers began to look for strategies to enhance revenues. Since then, the method of overbooking seats has been initiated.

Airlines overbooking banner

Why do airlines overbook?

Airlines are customer-centric businesses; from basic safety to luxury in-flight services, plenty of options are available to travelers to maximize customer satisfaction. However, many historic American airlines in the United States have come to an abrupt end due to airline deregulation, the most notable examples being Pan American and TWA.

It is necessary to boost revenue on each flight to keep the air transport business from going into bankruptcy. Not all tickets are non-refundable. Overbooking is the practice of ensuring that the least number of seats are left unoccupied prior to flights departing an airport.

Almost always, a fraction of the total booked customers fails to arrive by check-in time for a flight even with a confirmed reservation. Overbooking benefits carriers as well; those who wish to arrive on an early flight can purchase tickets at the last minute.

However, not all seats on the flight are the same; mostly charter flights and leisure first-class travelers are usually excluded from last-minute changes because these seats produce the most profits. Other passengers from economy and business class seats are determined to be overbooked.

The difference between an oversold flight and an overbooked flight?

Overbooking is the process of booking more seats than there are available on a flight. The act of selling more seats than the actual number of seats available on an airplane is known as overselling. The main distinction is that travelers pay for their next flight tickets in advance rather than simply booking them.

When a flight is oversold, certain customers cannot acquire a seat assignment at the time of check-in and sometimes they are denied boarding. To clear security, they will be given what is known as a priority verification card in airline lingo.

An empty wide-body aircraft cabin with crew in the back preparing for a flight.

The DOT considers overselling and overbooking a flight legal under involuntary compensation rules to protect carriers from revenue loss and optimize passenger load factors per kilometer flown. When an airplane flies empty seats, carriers suffer revenue losses and increased pollution with an increase in the number of flights.

The carriers have determined that it is in their economic interest to take a chance to provide adequate compensation payment of a few hundred bucks in exchange for improving the load factors on their flights.

Only a certain number of seats are overbooked or oversold by airline flight planning departments; if any customers are bumped, they will receive compensation. Notably, individuals who have paid reservations but not seats have a greater priority on the list than those who have made voluntary modifications.

How do airlines calculate overbooking?

Many airlines oversell flights based on prior flights on that airline’s regular schedule on the same route and timings, carriers determine the appropriate number of seats to be overbooked. The Binomial Function is one method for determining overbooked flights.

This tool assists the airline flight processes department in calculating the likelihood of no-show customers, which is influenced by a variety of factors, for example, a three-hour delay in the original connecting flight at the transfer point, traffic bottlenecks, or any other personal reasons. Carriers use Python’s NumPy cumulative distribution to compute the number of empty seats, the likelihood of showing up travelers, and the cost of overbooking coupons.

why are airlines allowed to overbook

What are the negative impacts of overbooking?

Overbooking can negatively influence an airline’s reputation and airline brand value. Modern air travel is frantic, and it has only gotten worse since new laws were imposed as a result of the global pandemic, including large lines for TSA screening and rapid COVID-19 tests. Surviving these stressful periods, when passengers learn that the carrier has bumped them, all that is left is fury and hatred for the airline corporation.

How do airlines compensate bumped passengers?

Airline business models are customer-centric, emphasizing customers’ well-being throughout the voyage. The airline will seek volunteers to give up their seats on a scheduled flight and are compensated with rebates and discounts on the later flight. If no more ticketed passengers are prepared to give up their seats, they get bumped from a flight.

Gate agents process names from the standby list. This is practically unfavorable to so many passengers and may result in a negative image of the airline. Travelers may be awarded a standby seat on an earlier flight several times or may have been bumped from a few flights with a periodic compensation payment. Thus things are generally in favor of customers.

How to avoid getting involuntarily bumped from a booked flight?

It is the airline’s right to bump customers from flights. If any passenger is spared, it is simply an act of generosity on the part of the airline. All the involuntary people can prevent being bumped from the airplane next time by taking a few steps.

It includes traveling with carriers that bump fewer travelers, checking in for flights online, eschewing basic economy tickets in favor of first or business class, and connecting reservations with groups. When the flight is overbooked, it may not have enough seats available at check-in, and those who do not have seat assignments may be bumped.

Many passengers boarding an Air China aircraft on a cloudy day.

FAQs

Can airlines overbook legally?

Although airlines are permitted to practice overbooking and overselling, fundamental consumer rights must not be abused. Overbooking is advantageous for both airlines and passengers. If the Department of Transportation deems overbooking illegal, airlines will lose income, and the cost of flying will skyrocket.

Is overbooking acceptable?

Although being bumped from a planned aircraft is inconvenient for travelers, this action benefits both airlines and customers. Airlines overbook to maximize seat filling on each flight, while travelers can benefit from perks such as cashback and discounts.

How do airlines decide who gets bumped?

Bumping passengers from an aircraft is not common, but airlines must sometimes use force to conduct this on an overbooked flight. Initially, airline management asks individuals if they are willing to give up a seat voluntarily. If nobody is willing, airline management will select customers randomly to give up their seats.

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admin
Jet pilot @NASA

5 comments

  1. Letizia says:

    They say that overbooking helps the airline to not lose revenue. I am sorry but that sounds wrong on all levels. If someone has booked a flight and hasn’t shown up, I am betting they will not get the ticket reimbursed. Therefore, that seat is already paid in full. No loss of revenue. And standby should be just that. You come to the airport gambling you “may” get a seat, only if someone does not show up. Not bumping someone already on the plane off!

  2. G Jones says:

    Surely if a passenger doesn’t turn up for their flight don’t they lose their money so the airline doesn’t lose out

  3. David Webster says:

    “It is the airline’s right to bump customers from flights. ”

    Right, but if you or5 I do it, it’s called “Fraud”.

    You know who else makes greater profits by engaging in fraud?

    Everyone.

    That’s why it’s outlawed for most, and only those paid up on their bribed can do it.

    If you can’t make a profit without engaging in fraud, then you shouldn’t make a profit. Somebody who CAN make a legitimate profit will eventually make bank.

  4. Greg James says:

    Bumping should not be random! If I book 3 months in advance, the first one to book, I should be the LAST one bumped. The second person, second to last, etc.

  5. David McGee says:

    “It is the airline’s right to bump customers from flights. If any passenger is spared, it is simply an act of generosity on the part of the airline.” Wow, that’s the most ridiculous phrased nonsense I’ve ever heard.
    Also, airlines are not losing money if someone doesn’t turn up to a flight, no other industry in the world has legal comeback on overselling.
    You state that airlines need this to stay profitable, this is demonstrably untrue. It’s a particularly unpleasant policy, unique to the airline industry.

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