QantasA333
Topic Author
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Joined: Mon Jan 29, 2007 5:21 pm

How Do Airlines Overbook A Flight?

Tue Jul 14, 2009 7:59 am

The question says it all, how do airlines overbook a flight, which they know has a certain amount of flights available for sale. Airline fault? Last minute seat blockages?

QantasA333
 
wilco737
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RE: How Do Airlines Overbook A Flight?

Tue Jul 14, 2009 8:36 am



Quoting QantasA333 (Thread starter):

There is an average no show rate for the flights and you can book as long as this isn't reached. The more bookings made, the higher the fare and booking class. And at some point it is not bookable anymore.
Sometimes more passengers show up than seats. Then the gate agents ask for passengers who wants to fly the next day or on another flight. They get cash or a voucher for another flight.
Charter Airlines usually do no overbook their planes. I used to fly for Hapag Lloyd and when all 189 seats were sold on the plane, you are not able to book it anymore. But on these flights the no show rate is rather low as these passengers usually travel for vacation and you won't miss that flight then Big grin

wilco737
 
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RE: How Do Airlines Overbook A Flight?

Tue Jul 14, 2009 2:47 pm



Quoting WILCO737 (Reply 1):
There is an average no show rate for the flights and you can book as long as this isn't reached.

There's actually a big seasonality in this no show rate. It all depends on the day of week/flight number/time of the year/special events etc. No show rates are even forecasted by booking class.

If you would just take a monthly/yearly average, you'd heavily underestimate no show rates during certain points of the year while you could heavily overestimate it for other flights, leading to denied boardings.

Overbooking is forecasted like your demand for a flight in general is forecasted (and also where this demand is located, f.i. in the higher yielding or lower yielding booking classes).

Airlines have specific departments which deal with this kind of revenue management issues!
 
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airbuseric
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RE: How Do Airlines Overbook A Flight?

Tue Jul 14, 2009 9:40 pm

For example, a flight is normal 100% booked. No overbooking situation.
But on the day of travel, some traveller(s) with full flexible tickets come up and request a seat on the full flight. That might mean that the revenue of the full-flex passenger is more important then some restricted low revenue Y-class passenger. The airline can ask voluntary passengers with lowfare tickets to accept a rebooking/rerouting, with a voucher for compensation in return.
This is a overbooking situation, which is finally solved well. The full-flex passenger gets the demanded seat, the low-fare Y-class passenger get another flight (later, or rerouted), but is compensated for it.
In the end, everybody is more or less happy  Smile The airline keeps all people satisfied.
"The whole world steps aside for the man who knows where he is going"
 
Viscount724
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RE: How Do Airlines Overbook A Flight?

Wed Jul 15, 2009 1:59 am

Quoting Airbuseric (Reply 3):
The full-flex passenger gets the demanded seat, the low-fare Y-class passenger get another flight (later, or rerouted), but is compensated for it.
In the end, everybody is more or less happy The airline keeps all people satisfied.

I recall seeing overbooking data a couple of years ago for U.S. carriers which the U.S. government maintains and publishes. It mentioned that during the year in question, only 1 in 10,000 passengers was involuntarily denied boarding. So the systems in place work very well and permit many thousands of passengers to travel and generate millions of $$ in additional revenue than if the airlines didn't overbook. Revenue management systems based on historical no-show data usually work well.

In Europe, carriers are now generally more cautious in their overbooking profiles than a few years ago since penalty payments to passengers denied boarding were significantly increased under new EU policies several years ago. Some low-cost carriers (for example, Ryanair) don't overbook since all their fares are non-refundable, and if they did overbook and guessed wrong and had to pay the EU-mandated denied boarding compensation payments it would be very expensive considering their very low fares..

[Edited 2009-07-14 19:00:56]

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