[yeukhon]

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/

[nsnick]

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.

[yeukhon]

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.

[daemin]

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.

[yeukhon]

The incentive for a refund.

[falcolas]

> But is it really true?

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).