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What Are The Benefits Of Oversold Flights?  
User currently offlinerwfa From United States of America, joined Apr 2010, 25 posts, RR: 0
Posted (4 years 3 months 1 week 3 days 9 hours ago) and read 13164 times:

With the peak of the summer season upon us, many flights are over-sold. I know that this has been a practice of the airlines for many years as my father was in the industry for 27 years, and now my brother's and I have been in it for almost 20 years. I was wondering though, is there any "benefit" for the company to do this, even at the cost of possibly losing customers?

RWFA

67 replies: All unread, showing first 25:
 
User currently offlineRobertS975 From United States of America, joined Aug 2005, 945 posts, RR: 0
Reply 1, posted (4 years 3 months 1 week 3 days 9 hours ago) and read 13137 times:
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The financial benefit would seem obvious... continue to sell last minute high price fares even when oversold, then offer a modest financial reward to volunteers to take another flight. The people who are likely to volunteer may have paid $200 for their ticket, but they were likely replaced by someone who paid $800 or more for a last minute ticket.

If I was an airline, I would never sell out of full priced Y fares.


User currently offlinerwfa From United States of America, joined Apr 2010, 25 posts, RR: 0
Reply 2, posted (4 years 3 months 1 week 3 days 9 hours ago) and read 13107 times:

Quoting RobertS975 (Reply 1):

Very well stated, and it makes sense. Thanks Robert.


User currently offline9252fly From Canada, joined Sep 2005, 1396 posts, RR: 0
Reply 3, posted (4 years 3 months 1 week 3 days 9 hours ago) and read 13085 times:

Airlines that oversell flights use a lot of statistical information to determine what the historical no-show figure to be for any given flight and day. It's obviously not a perfect science,otherwise you would not have raised the question. The risk is to the airline is the potential loss of revenue from an aircraft departing with an empty seat or a customer denied boarding with it's associated costs. At the end of the day,it's a risk/benefit decision and airlines wouldn't do it if they were not correct most of the time.

User currently offlineNASBWI From Bahamas, joined Feb 2005, 1316 posts, RR: 0
Reply 4, posted (4 years 3 months 1 week 3 days 8 hours ago) and read 12970 times:

Quoting RobertS975 (Reply 1):
The people who are likely to volunteer may have paid $200 for their ticket, but they were likely replaced by someone who paid $800 or more for a last minute ticket.

In theory, yes. But if no one volunteers, then they have to involuntarily remove pax from the flight in order of reverse check-in. Therefore, that last-minute guy that purchased an $800 ticket is getting the boot (yes, with compensation, but still) if he/she was the last person to check in for the flight.

Quoting RobertS975 (Reply 1):
If I was an airline, I would never sell out of full priced Y fares.

I concur...or, just don't oversell and you can accomodate everyone - full-fare and otherwise.  

Now, I do have a question about over-selling: do airlines oversell their premium cabins as well? We all heard the horror stories of customers being inconvenienced in Y due to oversales. However, I don't think I've heard of an incident of someone being booted from J or F due to an oversold situation.

[Edited 2010-07-12 20:40:50]


Fierce, Fabulous, and Flawless ;)
User currently offlineAlias1024 From United States of America, joined Oct 2004, 2777 posts, RR: 2
Reply 5, posted (4 years 3 months 1 week 3 days 8 hours ago) and read 12950 times:

Quoting 9252fly (Reply 3):
he risk is to the airline is the potential loss of revenue from an aircraft departing with an empty seat or a customer denied boarding with it's associated costs.

Exactly. Once the aircraft departs, the opportunity to sell that seat is gone forever. Overselling helps maximize revenue, while using historical data minimizes the compensation paid out.

This risk of an empty seat is also the economic justification for higher prices as the departure date nears. The airline could sell the seats at a cheaper fare but they know that some people will need to make travel plans at the last minute. To accommodate those passengers the airline has to hold back some seats they could have sold, which means the airline is risking flying an empty seat that they could have earned revenue on. The higher fare they charge is to compensate them for the risk they take in not selling the seat earlier.

Quoting RobertS975 (Reply 1):
If I was an airline, I would never sell out of full priced Y fares.

That depends on what you can get people to volunteer for. When you are looking giving someone at $500+, a hotel room and meal vouchers, it can start to add up.



It is a mistake to think you can solve any major problems with just potatoes.
User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 6, posted (4 years 3 months 1 week 3 days 8 hours ago) and read 12952 times:

Quoting NASBWI (Reply 4):
Therefore, that last-minute guy that purchased an $800 ticket is getting the boot (yes, with compensation, but still) if he/she was the last person to check in for the flight.

No, that is not how all airlines do it, at least not my carrier. There is a WHOLE list of criteria that has to be followed; you may end up knocking the 20th person from last booked, it all depends on many many factors!

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently offlineAlias1024 From United States of America, joined Oct 2004, 2777 posts, RR: 2
Reply 7, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12925 times:

Quoting NASBWI (Reply 4):
herefore, that last-minute guy that purchased an $800 ticket is getting the boot (yes, with compensation, but still) if he/she was the last person to check in for the flight.

Many airlines use other factors. They won't bump their frequent fliers or anyone that paid a decent fare. They will also try to avoid bumping someone that is connecting to another flight and their only way to get to their destination is that flight.



It is a mistake to think you can solve any major problems with just potatoes.
User currently offline9252fly From Canada, joined Sep 2005, 1396 posts, RR: 0
Reply 8, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12877 times:

You generally don't get bumped if you have a preassigned seat.

User currently offlinePWMRamper From United States of America, joined Jul 2009, 636 posts, RR: 3
Reply 9, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12876 times:

Quoting NASBWI (Reply 4):
In theory, yes. But if no one volunteers, then they have to involuntarily remove pax from the flight in order of reverse check-in. Therefore, that last-minute guy that purchased an $800 ticket is getting the boot (yes, with compensation, but still) if he/she was the last person to check in for the flight.

Full fare tickets have the highest boarding priority, so they'll always get a seat.


User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 10, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12839 times:

Quoting 9252fly (Reply 8):
You generally don't get bumped if you have a preassigned seat.

Another thing that isn't quite true. Often seats are taken away to accommodate others.

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently offline9252fly From Canada, joined Sep 2005, 1396 posts, RR: 0
Reply 11, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12824 times:

Quoting Crosscheck007 (Reply 10):
Often seats are taken away to accommodate others.

That's some nasty airline you work for!


User currently offlineeta unknown From Comoros, joined Jun 2001, 2083 posts, RR: 0
Reply 12, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12721 times:

Not nasty, but sadly true!
Here's one better for you: don't know if they still do this, but MH would routinely bump a SYD-KUL-LHR pax off the KUL-LHR flight at SYD check-in, upgrade them KUL-AMS/FRA in J for compensation, then Y AMS/FRA-LHR on BA/KL/LH.

As for overselling F/J class.. I've seen this happen, but never more than 2 seats. If J was oversold, seats in F would be blocked just in case.

[Edited 2010-07-12 21:27:37]

User currently offlinecyxuk From Canada, joined Mar 2009, 111 posts, RR: 0
Reply 13, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12667 times:

any information avalible about what % of people actually are no shows for airlines? what % they overbook by?

User currently offlinecrosswinds21 From Netherlands, joined Jun 2009, 698 posts, RR: 0
Reply 14, posted (4 years 3 months 1 week 3 days 7 hours ago) and read 12651 times:

Quoting rwfa (Thread starter):
even at the cost of possibly losing customers

The airlines don't lose customers over this. In fact, it's extremely unlikely that anyone would ever have to get involuntarily bumped. When flights are oversold, regardless of by how much (the limits on overselling are determined using various algorithms and historical data), the huge majority of the time, enough people will cancel, no show, or miss their connection such that there will be enough seats for everyone. When this doesn't happen, then the huge majority of the time, there will be enough volunteers to accept vouchers and later flights to, again, make it such that there will be enough seats for everyone. The overall rates on involuntarily bumped passengers are EXTREMELY low.

Furthermore, not only does overselling NOT cost airlines customers, but it can also be said that this gains them customers. When someone voluntarily accepts a voucher to take a later flight, one of two things will usually happen. Either that person will book another flight with the same airline using the voucher when he may have otherwise booked with someone else or he will forget to use the voucher within the 1 year time period, which thereby winds up costing the airline nothing (and this happens a lot more than you might think...the "return on investment" on vouchers is actually quite high).

I have flown hundreds of flights on many different airlines and I have never been on a flight where someone had to get involuntarily bumped. I was probably on a total of 2 or 3 flights where volunteers were solicited, but in each case, enough people volunteered to give up their seats.


User currently offlineeta unknown From Comoros, joined Jun 2001, 2083 posts, RR: 0
Reply 15, posted (4 years 3 months 1 week 3 days 6 hours ago) and read 12633 times:

That question is hard to answer- you could argue it can't be answered as it varies month-to-month, route-by-route. What can be answered is teh percentage now is much lower than a few years ago owing to the fact a large percentage of seats are sold on-line and must be paid for- there's been a vast reduction of seats still held, but unticketed by travel agents.

User currently offlinedl767captain From United States of America, joined Mar 2007, 2539 posts, RR: 0
Reply 16, posted (4 years 3 months 1 week 3 days 6 hours ago) and read 12633 times:

The overselling usually benefits me, a lot of times on my SAN-ATL flights they are oversold, i'm usually offered a $400 travel voucher and a seat on the next flight. This usually pays for my next trip and I just sit in the sky club for 2 hours. Worth it to me.

User currently offline9252fly From Canada, joined Sep 2005, 1396 posts, RR: 0
Reply 17, posted (4 years 3 months 1 week 3 days 6 hours ago) and read 12576 times:

Quoting cyxuk (Reply 13):
any information avalible about what % of people actually are no shows for airlines? what % they overbook by?

I don't think that kind of information is in the public domain. Years ago,an airline that operated on the YVR-HKG route would overbook economy by over 70 seats and still leave with empty seats. Every route is different and varies by flight,day of the week,seasons,holidays,etc. There are many more variables that are unique to specific routes. It's a dream job setting the figures if you're the analytical type. Biggest challenge is the high yield business traveller whose tickets are fully flexible and may cancel at the last minute,or for that matter want to get on a flight.


User currently offlineSurfandSnow From United States of America, joined Jan 2009, 2887 posts, RR: 31
Reply 18, posted (4 years 3 months 1 week 3 days 6 hours ago) and read 12523 times:

Quoting cyxuk (Reply 13):
any information avalible about what % of people actually are no shows for airlines?

Giving a general number would be rather meaningless because such figures vary by airline, airport, and even time of day. Plenty of no shows for those bright and early 6 and 7 AM flights, whereas the no show rates for flights on the same exact route(s) later in the day would generally be much lower. Airlines with robust schedules (like UA, AA, and DL) probably see significantly higher no show rates than smaller carriers like NK or FL because you can expect to catch the next flight an hour or two later on the former, whereas you could have to wait for a day or even longer if you miss the flight on the latter. Finally, it depends on the route. On business routes, plenty of business guys are "no shows" due to meetings that run late or other changes in plans that they are not financially accountable for. On leisure routes, you would tend to have far fewer no shows because folks are not going to miss that highly anticipated flight to Maui or Aruba unless its a damn good reason  .

Quoting cyxuk (Reply 13):
what % they overbook by?

Again a general number would be meaningless because this varies widely by airline, airport, route, and time of day. I believe Hawaiian Airlines never (or very rarely) overbooks at all, while it is said that other airline can overbook flights up to 50% (meaning they sell at 150% of the plane's capacity). Though, to be fair, if HA overbooks its A330 on LAX-HNL, it can't pull a bigger plane out of the woodwork to get everyone there. If UA overbooks its 763 on LAX-HNL, it can just throw a 777 or 747 on the route to get everybody there if the situation is dire. Again, business routes are going to see higher rates of overbooking than leisure routes because businessmen can be reasonably expected to not show, whereas leisure/VFR travelers are far less likely to do so.



Flying in the middle seat of coach is much better than not flying at all!
User currently offlinejimbobjoe From United States of America, joined Oct 2001, 658 posts, RR: 0
Reply 19, posted (4 years 3 months 1 week 3 days 4 hours ago) and read 12252 times:

Quoting cyxuk (Reply 13):
any information avalible about what % of people actually are no shows for airlines?

Though I agree numbers aren't very helpful...

this paper says that, from March 02 to March 03, Lufthansa had 10.5% average no show rate, and Ryanair had a no show rate of 5.7%. (At least at the time of the paper, Ryanair did not overbook flights.)


User currently offlineCrosscheck007 From Poland, joined Jan 2010, 278 posts, RR: 2
Reply 20, posted (4 years 3 months 1 week 2 days 21 hours ago) and read 11653 times:

Quoting 9252fly (Reply 11):
That's some nasty airline you work for!

When you are having to pay cash compensation of 200% the face value of a ticket ($800 max), who are you going to bump? The $100 fare with a seat or the $400 fare without a seat? (also taking into consideration the other criteria) I know of at least 3 major U.S. carriers that do this.

Cheers,

007



Je l'attends pas un homme. J'apporte le parti, j'apporte le feu d'artifice.
User currently offlineBoiler905 From United States of America, joined Apr 2010, 47 posts, RR: 0
Reply 21, posted (4 years 3 months 1 week 2 days 21 hours ago) and read 11612 times:

Here are the results from 1Q 2010 for Involuntarily Denied Boardings. (Source: BTS Form 251)

FL: 283
AS: 538
AA: 2,284
MQ: 1,629
CO: 2,320
DL: 1,372
XE: 870
F9: 476
HA: 28
B6: 7
YV: 503
9E: 184
OO: 688
WN: 6,167
UA: 2,142
US: 3,593

Quoting crosswinds21 (Reply 14):
In fact, it's extremely unlikely that anyone would ever have to get involuntarily bumped.

Tell that to the folks who were in the numbers above...  
You're right though about the adavanced math behind determining how much a flight is oversold. I think it is necessary in certain cases to oversell those flights with decreased show rates.



Boiler Up
User currently offlinesw733 From United States of America, joined Feb 2004, 6341 posts, RR: 9
Reply 22, posted (4 years 3 months 1 week 2 days 21 hours ago) and read 11589 times:

Quoting dl767captain (Reply 16):
The overselling usually benefits me

I took advantage of a trick in college, when I was studying in Kansas but lots of my family was in Chicago, and I would go back fairly often for a weekend. I knew the second-to-last WN flight from MDW-MCI on Sunday nights would be oversold a good chunk of the time, but the last WN flight from MDW-MCI on the same day was not. So, I would book myself on the second-to-last flight, and wait very close to the counter at the gate...3 or 4 times out of 5, the call would come up for volunteers to bump to the next flight, confirmed, which was only about an hour later. I would jump on the offer and get my money for the flight back, in essence flying free.

It was a great system I had going there for a year or so!


User currently offlineRobertS975 From United States of America, joined Aug 2005, 945 posts, RR: 0
Reply 23, posted (4 years 3 months 1 week 2 days 21 hours ago) and read 11368 times:
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Quoting dl767captain (Reply 16):
The overselling usually benefits me, a lot of times on my SAN-ATL flights they are oversold, i'm usually offered a $400 travel voucher and a seat on the next flight. This usually pays for my next trip and I just sit in the sky club for 2 hours. Worth it to me.

But DL probably used for seat for someone who paid for a late purchased last minute ticket that may have paid $900 or more.

Quoting cyxuk (Reply 13):
any information avalible about what % of people actually are no shows for airlines? what % they overbook by?

Involuntary bumps are reported as has been pointed out.

As I said in post #2, if I were an airline, I would never stop selling full Y fares (within reason) because the costs of seeking volunteers or even involuntary bumps is far less than the incremental increase in revenue.

Some airlines have a policy that for the elite plus super platinum flyers, they will always offer a full Y fare to them even on a sold-out flight. Again, this would seem a no-brainer!


User currently offlineMingToo From Zimbabwe, joined Jun 2009, 464 posts, RR: 1
Reply 24, posted (4 years 3 months 1 week 2 days 21 hours ago) and read 11221 times:

Last year I was offered voluntary bumping off a Virgin BOS-LHR to a flight the next day.

Hotel, meals and a free ticket from LHR to any destination except SYD (including all taxes). Seemed like a good deal although unfortunately couldn't take it.


25 crosswinds21 : The numbers that you're referring to prove my point spot on. Take one of thsoe numbers and divide it by the amount of passengers that that airline ca
26 RDUDDJI : I worked in Rev Mgt a few years ago. My instructions from my boss were: 1) Fill every seat possible on every flight 2) Make as much money as possible
27 MingToo : Happened to a friend of mine travelling JFK-LHR on Virgin. He was bumped down from Upper to Premium Economy involuntarily. They placated him with qui
28 330lover : I do remeber from my time at SN (when SN was still Sabena), that flights to Africa, and especially Kinshasa were sometimes overbooked by 40 to 60 %.
29 NQYGuy : What does the passenger get in they're involuntarily bumped off a flight? Presumably, buy the time of involuntary bump off, they would have already re
30 ssides : When you notice that Southwest, one of (if not the) most successful airlines in the history of aviation, has the highest "bump" rate, you can see why
31 dl767captain : Good for Delta making more money, but I got a free flight so it's alright with me! haha
32 MingToo : Can they really bump someone who has already checked-in ? How would that work ? That person could be wandering around the duty-free oblivious and onl
33 Viscount724 : I recall statistics in the US a couple of years ago that said roughly 1 in 10,000 passengers were involuntarly bumped. That's a very low number consi
34 Post contains images Boiler905 : Thank you for the percentage lesson, but I'm going to assume that people prefer to be treated as a person, not a low statistical probability. The pos
35 330lover : Compensations depend mainly on distance and total delay in arrival at destination. Normally, at most of the overbooked flights, check-in staff will f
36 airplanenut : A relative is a multi-million mile flier on AA. He reported once being bumped from First to Business after someone bought a very last minute ticket.
37 Post contains images isitsafenow : Benefits of oversold flights................Hmmmmm. We know what they SHOULD BE. What they ARE is usually not the same. One thing you get is going fro
38 antoniemey : No, generally the gate agents are making announcements at the gate during/right before the boarding process. If someone hasn't checked in they can't
39 Crosscheck007 : Usually those who upgrade (especially if it cleared the night before!!) hold elite status at that airline and would not be bumped. My carrier, my las
40 crosswinds21 : I don't disagree with you on the fact that people prefer to be treated as a person. However, the IDB issue constantly gets over hyped all the time, e
41 Crosscheck007 : If they are checked-in, never show up for the flight, and it is time to close, then they are "offed" and the seat is given away. Also if there is a p
42 canyonblue17 : I bet if you worked a small station during a busy season you might think differently. Volunteers are easy to get based on availability. Small station
43 crosswinds21 : Yes that's true. And that's generally reflected in the statistics since they show that regional carriers have higher IDB rates. But it still doesn't
44 antoniemey : Thought it might be something like that... It's been a long time since I've been in a position to see what happens behind the podium and I've yet to
45 eugdog : The high paying passengers make it cheaper for the rest of us to travel. So it is perfectly fair that an economy passenger is bumped to accomodate the
46 bjorn14 : I was on a NW flight once where they were still asking for volunteers when the plane was ready to push back and they finally pulled two guys off the
47 Post contains images isitsafenow : Your comment Number one....you need to rely that to NW..oops now, Delta....We shall see in the future if there are changes . I can tell you on Northw
48 GA330 : How much are the mandatroy compensation now for involuntary denied boarding as set by the government?
49 ckfred : According to a friend of mine who is a pilot with AA, AA does oversell first and business, at least on domestic service, out of LAX to JFK, ORD, MIA,
50 ikramerica : And this is true even if the flight isn't oversold. You will lose your seat assignment, and it can be given to someone else who is trying to sit next
51 GA330 : My theory with WN having a hard time getting volunteers with their flts is because 1. They got no first class to offer bumped passengers 2. The compen
52 canyonblue17 : My thoughts on why WN oversells more. WN does not punish pax for not showing up.....i.e. if you miss your flight or don't show up at all you don't los
53 canyonblue17 : I am biased as I work for the airline that does the most oversells (not a regional) and I work in a small station.
54 Post contains images FlyDeltaJets87 : I quite like them. Our family is heading up to New York City next weekend using vouchers my dad got from taking a bump a couple months ago. We're goin
55 Crosscheck007 : You have obviously never flown with my airline then, because every oversale whether involuntary or voluntary (fortunately I haven't had an IDB in mon
56 xtoler : It's funny, because we did that in MAC/AMC. Even though the flights are anywhere from free to $20 tops per space-a passenger. Of course we didn't do t
57 seabosdca : I have experienced this, and seen it happen to others, but always during IROPS. I would be very curious to know what percentage of IDBs happen during
58 Lufthansa411 : I have worked for several European airlines on the US east coast. Pretty much every one had a policy of NEVER overselling F class on any route on a 3
59 Post contains images StarAC17 : While I agree that WN is a more leisure based airline and that is why they have more trouble finding volunteers to get bumped. Airline always finds t
60 skyguyB727 : Let's correct some terminology. "Overbooked": A flight that is being booked beyond the capacity of the aircraft. For example, an airline might accept
61 RobertS975 : And it also varies by the date! Delta will not oversell a flight nearly as much 2 days before Christmas as it will when there is no special day invol
62 Post contains images FlyASAGuy2005 : And it does suck for those people. And I can guarantee you that they were highly compensated; the airline paying out of their a$$ but they don't mind
63 Mir : They're not ignored. They are compensated for their inconvenience. But to claim that overbooking is a serious problem is just plain misleading, becau
64 PWMRamper : In the case of UA, and I believe US, Full Fare Tickets are BP1. Passengers such as UM's, Military on Orders, or Handicapped passengers are usually BP
65 crosswinds21 : Is this really true? I would think that leisure travelers would be the ones that are more likely to volunteer to get bumped. They are more price sens
66 antoniemey : It all depends on how time-sensitive their vacation schedule is. If you're on a morning flight and your cruise leaves at noon (no, not smart, but peo
67 ckfred : I won't argue with you that TV shows without drama are boring. But between myself, my wife, and friends who fly a lot for business, we all agree that
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