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?
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...