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Why Do Airlines Overbook Flights?

AuthorThe AirHelper

I have a confession to make: there are few things in the world that stress me out more than flying. When I plan trips, I tend to book them solid – so missing a flight could be the difference between the trip I had planned and, well, sleeping at the airport. Not exactly most people’s idea of fun, unless you’re into creating music videos, that is. So, why do airlines overbook flights?

Since I’ve become a more frequent traveler, I’ve come to view the seemingly convoluted air travel business as a relationship, an art form even. As long as everyone plays by the rules, everything goes smoothly. But one little thing goes wrong and it’s like a giant Jenga puzzle falling into pieces all over the floor.

It turns out one of those puzzle pieces that I used to view as things that can go wrong are actually things that airlines purposefully do: overbook flights.

The Art (or Science) of Flight Overbooking

From the outside looking in, I can’t even begin to imagine how airlines pull off the flight overbooking game they play. Then again, I’m not working with the same software they are. The fact is, airlines are constantly losing money and overbooking flights is one of their best ways to prevent this from happening. But why? How can it work for them?

No-shows. Whether it be a last minute change in plans, weather and other such delays, or simply not following through with a purchase – people no-show on flights. Airlines have become privy not only to how often this happens, but they’ve managed to get it down to a science. In fact, at this point, airlines have gotten so good at predicting no-shows that they can tell you how many passengers are likely to no-show based on the specific details for each flight.

The New York Times highlighted this practice in an article two years ago:

“Thanks to a better understanding of its booking patterns, Mr. Casey [VP of Revenue Management at American Airlines] said American now overbooked about 5 percent of its seats, down from about 12 percent a decade ago.

In 1999, the company said it had on average about 72 percent of its seats filled and 35.2 out of every 10,000 seats were oversold. Last year, the company filled 82 percent of its seats while the number of oversold seats had dropped to 8.3 for each 10,000 passengers.

Bill S. Swelbar, a research engineer with M.I.T.’s International Center for Air Transportation, called this ‘the dark art of revenue management.’”

Great news right? A reduction in overbooking means airlines have learned how to prevent lost compensation while still maintaining balance in their flights. But…what about the percentage still being overbooked?

Software, formulas, and science are all great when they work out. But, as highlighted in the example above, there’s not always a 100% success rate. So what happens when your airline’s formula doesn’t quite get it right?

When An Overbooked Flight Impacts Your Travel Plans

If you’re on a flight that’s overbooked, suddenly the airlines’ formula to save themselves money could throw a massive wrench into your trip. Not exactly fair, right?

That’s why airlines offer vouchers to volunteers willing to be bumped to the next flight. Airlines know that some percentage of people will likely take these vouchers. And those who don’t – those whose plans are much less flexible – will likely be able to get on their flight. But there’s not always enough volunteers and that leads to involuntary bumping.

Interestingly, there’s a sort of a class system built into ticketing that makes it pretty easy to see who’ll get bumped from their flight. Here’s a breakdown:

Least Likely to Get Bumped
Business class travelers and frequent fliers
Travelers who checked in first

Most Likely to Get Bumped
Discounted fliers
Travelers who checked in last

Luckily, not all airlines are created equal. The New York Times points out that some have perfected the art of avoiding bumping passengers by removing the hierarchy entirely:

“Not all airlines practice the art of overbooking. JetBlue Airways offers only one class of service and most of its tickets are not refundable, meaning passengers are more likely to show up. As a result, last year, it had only one oversold seat for 5.1 million passengers.

‘It’s like a theater overselling tickets for a show,’ said Dave Barger, the president and chief executive of JetBlue. ‘It’s wrong.’”

How to Make Airlines Pay You for Overbooking Your Flight

Not all airlines are going to jump on Jet Blue’s bandwagon, so it’s best to be prepared for the possibility of being involuntarily bumped, otherwise known as being denied boarding. The first thing you can do is check in early. The second thing is to understand your rights.

If an airline asks for volunteers to change their flights and you still end up being involuntarily bumped, understand that you don’t have to take the voucher they’re offering. Airlines owe you 200%-400% of your one-way fare. This may far exceed the value of the voucher, so do the math before you agree to anything!

Keeping Your Relationship with Airline Travel Strong

As a passenger paying good money for plane tickets – and planning your entire trip around the flight schedule – getting bumped due to overbooking can be undeniably infuriating. However, the more you understand about how the system works, the better you can ensure that this doesn’t happen to you. (Or at the very least, how to minimize its effects on your trip.)

So don’t give up on your relationship with airline travel just yet! Keep an eye on these trends and stick to the airlines that treat you the best.

Flight delays happen, but that doesn’t mean you have to accept them. You may be entitled to as much as $680 in compensation if your flight was delayed, canceled or overbooked within the last three years.

Image Credit: Tony Hisgett

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