I don't understand the hate for overbooking flights. Most of the time, I don't care at all about the system where flights are overbooked, because most of the time I don't get bumped. When they do overbook a flight and I've blocked out more time than I need for travel, I can make a few hundred dollars (not bad even in vouchers since I usually tend to fly the same route with the same airlines frequently enough) for the inconvenience and it's voluntary and cleared through a bidding process, meaning that usually the person who gets bumped is the person who is least inconvenienced by it.
It's a pretty low cost to customers (I've never met anyone who was unhappy that they got bumped, because the kind of people who don't want to get bumped don't opt-in) and it actually delivers returns in the form of lower ticket prices, since if they were underutilizing the space in the planes, it would be more costly to operate.
It seems to me that the problem with this situation was not overbooking, it was that for whatever reason they did not use the generally well-received bidding system to allow the people who were going to be bumped to select themselves. On a full plane, what are the chances that you can't find 4 people willing to give up their seats for $1000 (or even less)?
This is the way to handle it. Offer a monetary reward, and obviously the problem can be solved in a way where everyone wins. Even the airline. They shouldn't want to piss people off, and can consider it as spending on their brand if nothing else.
And great point about how it is more efficient this way. Reminds me of surge pricing, or congestion pricing. Economics ftw.
Overbooking guarantees near 100% utilization. As you observed, it also leads to regular situations where a gate agent has to prioritize customers into limited slots. If overbooking and gate agents predictably end up destroying customer goodwill, then the practice has to be reconsidered.
Which means increased costs, especially since every other airline is also overbooking flights. Free-market is an asshole in this case: gotta overbook to compete.
I fly about once a month or so over the past 2-3 years, a number of different airlines. United is the only one that consistently asks for volunteers to get bumped on every flight.
We're talking about ~0.1% to 1% probabilities here of overbooked flights. (EDIT: Apparently we're talking even smaller: 0.01% to 0.1% probabilities... actually)
That's not every flight. Small enough that its too small for anecdotal evidence to be useful, big enough that it causes media stories. Every airline has some degree of overbooking necessary because flights get delayed, connecting flights lose passengers, and sometimes people just simply don't show up.
Especially in large airports (ie: Chicago's) where the airport is basically a hub for other airports to go to.
That's only the involuntary bumps. If you divide out the numbers for the voluntary denied boardings, United is #3 behind Skywest and Expressjet - far worse than other major carriers for overbooking flights.
This is naturally going to create a systemic problem when there's too many overbooked flights. If you have to bump some passengers from flight 1, then they try to get on flight 2, but flight 2 is ALSO overbooked, so now you have to bump or pay off even more passengers from flight 2 and put them on flight 3, which is ALSO overbooked and so on. You end up with a cascading snowball of bumped passengers.
Inevitably you run into a situation where nobody wants to volunteer, then you get a situation like the one in the news. It's not a coincidence that happened on United.
Voluntary is a bit harder to compare though. For one, because its not necessarily wrong for people to give up their seat for money. If I were going on a vacation and someone offered me $400 to take a flight 2-hours later, I probably would take the $400.
In any case, United is not the worst offender in either voluntary nor involuntary "bumps".
I'm just saying in order to estimate how many flights they overbook, you'd have to look at the total of voluntary and involuntary bumps. People wouldn't be volunteering to take a later flight and United wouldn't be handing out vouchers if the flights weren't oversold.
I don't think it's wrong per se, in a moral sense. I just think it creates problems. The more overbooked flights you have, the less able you are to respond to delays or to re-seat passengers who got bumped, or to find new flights for people whose plane suddenly got smaller or who missed a connection or whatever, and there are ALWAYS going to be things like that happening.
The passengers who get bumped don't usually just give up altogether. They have to get on some flight. The more overbooked flights there are, the fewer chances there are for them to get on a different flight, and the more people there are looking for different flights in the first place. The problem compounds and you get the cascading spiral like I described above.
A constrained system like the airline is going to respond nonlinearly to perturbations. When you double the number of overbooked flights, the problems they cause aren't just going to get twice as bad, they'll get four times or six times as bad or more. (made up numbers, I'm just saying it's not one-to-one).
Flying is already a stressful experience thanks to the TSA and just the general stress of making sure you get there on time with all the uncertainty in what can go wrong (traffic, long security line, long wait to check a bag, whatever). If I book a flight at a certain time, it's because I want to leave and arrive at the times I chose, not a couple hours later or the next day or two days later, or never. This is why I pretty much refuse to fly United anymore. I don't like the stress of having to wonder if I'm going to be allowed on the flight I've paid for.
JetBlue usually sells inflexible tickets with fewer connections, so passengers are much more likely to show up for their flight. In 2013, they only had to deny 18/21,000,000 passengers where the average rate is at 9/10,000.
No. JetBlue doesn't overbook. Starting in Q3-4 of 2016 JetBlue starting having fleet issues with the A321s and many times had to swap in a A320 (with ~50 fewer seats) due to mechanical issues with the newer A321s, which resulted in a massive spike in involuntary denied boardings. You can definitely argue that if you get bumped from your flight the cause doesn't matter much, but JetBlue apparently does NOT overbook at all... Which I respect.
Due to airlines' razor thin margins, this is simply impossible. That simple. Every single traditional airline will go bankrupt if it stopped overbooking.
Unfortunately it is the greed and stupidity of us consumers that drove this market into the ground. We shouldn't blame airlines. Think about this next time when you pick 'order by price' in skyscanner...
This is a scary statement that no one is willing to test it. But is it really true? I offer an alternate theory.
It won't lead to an airline bankruptcy.How about we create a cancellation fee. UA can add an incentive (not sure if one already exist) to their mileage club membership giving club member free cancellation up to 5 hours before the onboard time.
* Free cancellation up to 24 hours, and thereafter no refund plus a $30 cancellation fee.
* 50% refund for up to 24 hours
* no refund if no show
* club members get up to free cancellation and 50% refund up to 5 hours, except
* ultra gold club members free cancellation and 80% refund without cancellation fee
IDK. Someone on their business team make up a profitable number.
The truth is though, airline does this because they have a proven statistics the percentage of customers are no-show. According to [1]:
> On average, the number of people not turning up to flights is around 5 percent, but, in certain circumstances, that number can be up to 15 percent. Obviously, that puts airlines in an interesting position.
In the long run as airlines struggle to keep up with profit if overbooking is illegal, airlines will be forced to implement the above.
[1]: https://techcrunch.com/2017/04/11/overbooking/
Airlines already take your money when you cancel. They overbook because so many people cancel that they have vacant seats, meaning they can sell X% of seats twice.
Yes, I am aware they take my money. But my point is to add cancellation fee to cover up the losses after making overbooking illegal. Profit will go down, but they avoid delays and other unnecessary disputes/situations.
How can they charge you that fee? All it would mean is that you won't board the plane and instead take another flight.
I have done this before because buying a new ticket cost me less than moving the existing ticket. So I just didn't check in, and didn't turn up for the flight.
Well, aircraft are really, really expensive. On the order of hundreds of millions of dollars apiece just to buy. Then there's the yearly maintenance which involves tearing them apart and putting them back together. And the jet fuel, airport landing fees, highly trained personnel, regulations...
This means their operation costs eat up somewhere around 80-90% of the revenue for any single full flight. I can't imagine personally trying to manage such a system and eeking profit out of it.
One of the big reasons airlines even survive while serving so many otherwise unprofitable locations is because of the federal grants, and the regulations that ensure they do serve more than just the biggest metropolitan areas.
In other words, if unregulated and not provided with grants, airlines would only ever serve the major cities (with higher ticket prices as they do so), because it would never be profitable to serve anywhere else. They would also completely fold after the first downturn in air travel (9/11 would have effectively killed all the airlines).
Airlines made $25 billion in profit in 2015, on about $169 billion in total revenue. Doesn't seem razor-thin to me.
(A few years before, airlines generally were barely eking it out, but that was in a time of high oil prices. The recent collapse in the price of fuel has been very, very good to them.)
In a highly competitive industry a regulation that prevented overbooking would have near zero impact. Ticket prices would rise to compensate, but a 5% change in price would have minimal impact on overall utilization.
That said, it's very hard for one airline to avoid the race to the bottom unless they spread that across the company's processes. AKA, we don't double book, we don't have ridiculous fees etc, your ticket costs X% more, but and they capture a different market segment.
The problem is they have a monopoly now that there's only 1 or 2 airlines to choose from at each airport. If we had more than 3 or 4 choices, then we could pick alternative airlines and United would cease to exist.
Too late for that now. Get ready for more harsh treatment in the future and lots of increases in fare prices, higher than inflation.
I think "greed and stupidity" is taking it a bit far, but most people are not willing to spend an extra $200 to patronize an airline that doesn't act like this. United's stock went down but most people are not going to fly out of a different airport in order to patronize a different airline.
And before we call air travel expensive let's look at what it actually is. We've only been flying at all for about a century (much less of that time commercially) and it's already safer than driving to the airport. You can get from San Francisco to LA for less than $100 in an hour. Across the country (NYC to LA) for less than $400 in the amount of time it takes you to watch two movies and eat a meal. This is with something approaching $300-350k worth of annual payroll in the cockpit, flying a machine where the engines have to be literally broken down into their component pieces and rebuilt on a regular schedule. The overhead is obscene, the skills required to do the job are expensive, and they'll move you and a friend from one end of the country to the other for less than most people here would spend on a laptop.
The fact that a $20 difference in fare will make you choose one airline over the other is what drives all airlines to this point.
strange we don't have these issues in Europe in really competitive market, so I don't think customer is to blame here... once again why is there so little competition in US airlines market? do current airlines have such good lobbyists blocking entrance of other companies?
It's a pretty low cost to customers (I've never met anyone who was unhappy that they got bumped, because the kind of people who don't want to get bumped don't opt-in) and it actually delivers returns in the form of lower ticket prices, since if they were underutilizing the space in the planes, it would be more costly to operate.
It seems to me that the problem with this situation was not overbooking, it was that for whatever reason they did not use the generally well-received bidding system to allow the people who were going to be bumped to select themselves. On a full plane, what are the chances that you can't find 4 people willing to give up their seats for $1000 (or even less)?