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Comment by valuearb | Hacker News Reader

Airlines overbook because people don't show up for flights.

Overbooking means airlines can offer passengers refundable tickets.

Occasionally they get it wrong and have too many people show up. So they offer compensation to get people to voluntarily give up seats. If they can't get people to voluntarily give up seats they have the right to pick who to deny service to (but by law have to pay specific compensation to).

It's a system that works well. It keeps planes as full as possible. It keeps fares as low as possible.

I'm not sure it should change based on one guy who decided he was too important to accept being bumped.

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One person who "decided he was too important to accept being bumped"? How about one person who expected the contract that he paid for in good faith to being fulfilled? Someone who made commitments to others based on that contract.

Why is it now that the consumer always has no rights? Don't want your private information sold when using the internet? Don't use the internet.

Don't want to be forcibly removed from a plane in which you followed all the rules for purchasing a ticket that was most likely non-refundable if you didn't show up, lost your rights for privacy by being searched to board the plane, stood in line to board the plane, was on time, boarded the plane to sit in an uncomfortable seat, maybe had to pay extra to store your luggage, then get beat up when you were told they weren't going to honor the contract?

What is this country becoming?

The whole point is that the ticket doesn't actually guarantee a seat on a given flight. Bumping is in the contract.

The whole point is that the contract is shit.

The post I replied to is written as if it is something different than it is (they write as if the contract guarantees a seat on a flight at a particular time; of course it doesn't).

I think it's a bad situation, but I also think people giving very high priority to price is a big part of the reason that the contract is shit.

Bumping happens before boarding.The contract doesn't allow for bumping after being seated. They're also required to offer up to $1300 cash if you refuse the $800 voucher.

Let me correct that for you: 200+ people who decided that United hadn't offered enough incentives/financial compensation to be bumped.

If United ran an escalating auction system - like Delta does on overbooked flights - they would eventually have found someone to volunteer to take the incentive and that person would have voluntarily disembarked. Because they were apparently too cheap to do this, their share price is getting pounded into the ground today.

Whether that gets United's sociopathic CEO to change policy or not remains to be seen. If it doesn't, I'm inclined to agree with the OP: the consumer protection laws, at least for commercial flights, need to be updated so this doesn't happen again.

>Airlines overbook because people don't show up for flights.

That's false. They overbook because it makes them more money and for some reason people just accept it. Pretty much no other industry could get away with doing that to its customers.

Imagine the shit storm that would have unveiled if some random movie theatre sold 110% of its seats for the midnight premier of Star Wars VII and subsequently physically removed people from their seats because their employees also wanted to see the movie and they sold too many tickets.

That's false. A ton of airline business is refundable business travelers. Your meeting goes late? Take the next flight.

Airlines are catering to their customers, if one didn't offer refundable their competitors would.

If one offered refundable but didn't overbook, 10% of their passengers wouldn't show up for every flight. They'd get killed by competitors who did overbook and could offer cheaper fares because that 10% is nearly pure profit.

And though they've actually made big profits the last couple years, historically airlines are one of the least profitable businesses, possibly even posting net negative profits over the entire industry lifetime. They require massive capital costs to buy expensive airplanes, and alternate profitable and unprofitable years. Warren Buffett said if he had been at Kittyhawk he would have done capitalism a favor and shot the Wright Brothers down.

Hotels do this all the time. They book over 100% occupancy and usually someone cancels at the last minute and there's no problem. If everyone shows up they bump one of the people on the lowest rate. They give them a room at a comparable hotel nearby and some sort of other compensation. Most price-sensitive guests are okay with this trade because they're getting something for free.

They don't have fiascos like this because they aren't foolish enough to let them into the room before removing them. Unsurprisingly, kicking a guest out of a room/plane has a much higher risk of escalation than not letting them in.

He was a doctor trying to get to the hospital he works at. In this case he actually is "too important to accept being bumped".

Not that that would justify doing this to anyone else but he had a very good reason to not want to get off the plane.

This is why offering more and more money is a good strategy. There almost certainly were people on the flight willing to get bumped for $1500. But the doctor likely would have turned down nearly any sum of money if it meant putting his patients in danger.

They should have offered more.

But he's a doctor, not royalty. Hospitals have more than one doctor in case someone can't make their shifts. He was no more important than any other passenger.

Perhaps he or his employer valued his timely flight at $5,000 or more while some other passenger would have gladly taken $501 in cash. Now it looks like United will end paying millions directly in court or settlement costs, plus many more millions in lost revenue due to negative publicity. Hopefully United, by paying his laywers will have bought themselves a clue and start offering real values to Volunteers. And other airlines will learn by proxy if they know what's good for them.

Ask 10 people on the street how the compensation works today, maybe 2-3 will know. If you asked them 2 days ago, maybe 1.

Point is the compensation is obfuscated. If people demanded their $1350 or whatever when this happened, things may be better.

Another way of looking at this would be to point out that internet service and air travel are the only two industries where it is legally allowed to sell people something you know in advance you can't provide.

In a sane world, overbooking would be at best illegal, the airline would realize the savings from the flight they were paid for but didn't actually have to carry the 200 pounds of passenger + luggage.

(That's about $90 worth of fuel on top of the average $350 price for a plane ticket)

At worst, overbooked tickets would be required to be disclosed as such at the time of purchase.

There's also fractional-reserve banking, hotels, old-style phones, online / mail-order shopping ("sorry, your stuff is in back order"), etc.

Statistical arbitrage is a thing.

Hotels tell you when they're full and stop accepting bookings, nobody is selling anything at FR banking, everywhere I shop online tells me when their stuff is known out of stock, and so on.

Air travel does none of these things. They know they've sold more than they can provide, and do nothing to tell people until the last possible minute just to make a buck.

The airline has to provide you passage. They don't have to provide you passage on the flight you reserved. By doing this the system works more efficiently and your ticket cost is lower.

> They don't have to provide you passage on the flight you reserved.

You must be joking.

This is silly. If every plane had every ticket sold and no one showed up, the airlines would make out even better. Less cost of food and drinks, fuel, labor costs in moving baggage. Airlines should HOPE people don't show up and take seats on the plane. This idea that they overbook because people don't show up is a money-grab and when it bites them in the ass I, for one, am glad.

To be honest in that situation overselling would net airlines even more money. That's why airlines oversell.

IMO a better system would be a more market-based solution.

Disallow involuntary bumping except under exceptional circumstances, and require airlines to up theirs compensation until enough people voluntarily bump themselves. Airlines would still oversell but at lower % because the cost is now higher. And people who get bumped are at least given satisfactory compensations.

The rules regarding overbooking are irrelevant as they can only be used to deny boarding. He was already boarded.

Indeed: http://marginalrevolution.com/marginalrevolution/2017/04/tod...

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