United Airlines piloting technology to manage the problem of oversold flights
bloomberg.com
bloomberg.com
If you ever wondered what happened to Adioso, well, here's part of the answer. The company took the insights and technology assets it had developed for the consumer market and turned them into enterprise services to offer to airlines, and that has been the focus for the past 3-4 years.
As evidenced by this breakthrough, it has turned out to be a very good move.
The original Adioso product still exists but in a different entity, and its current status is best described as side-project. I'm still optimistic that the original vision we had for Adioso as a consumer product will be realised, but it will end up looking very different to what it's been to date.
In the meantime, it's extremely pleasing to see Volantio making such an impact.
For example, you live in country A and your special someone lives in country B, and you want to list countries C and airports in order of smallest sum of two return tickets.
Is there an api that flight search websites use, which you can get access to? Or are there already websites offering such a feature?
There are some exceptions. GDS cost money so budget airlines usually don't bother with them. In that case, they may publish an API which agents may consume, or the agent may screen scrape them.
"You know how to take the reservation, but not how to hold the reservation."
Clearly there is some sort of profit motive for the airlines, but how can this be legal. It seems wrong to oversell a limited resource like this. Even if not legal it feels scammy on the lines of "upto" speeds for ISP's.
I can't imagine working someplace where, as a matter of course, people with reservations are turned away due to overbooking. It's likely that such a place would not last very long either, because as soon as people read TripAdvisor reviews about how your property doesn't honor its reservations they will stay elsewhere.
I think you'll find hotels targeting backpackers overbook, too (if they allow reservations, at all)
But is not at all common, and when it happens it is more likely that the reason is not overbooking, but rather some incident (like a mistake in the bookings, a bathroom found leaking just before the customer arrival, a couple that booked a twin and then arrived with a 17 year old "kid", etc.)
http://www.huffingtonpost.com/daniel-j-jones/how-to-avoid-be...
If you are removed involuntarily (not asked to switch for a certificate) you're entitled to up to 400% of your one way fare up to $1350 cash in hand on top rebooking you, depending how long you got held up. [1] Theyre also required to show you your rights on paper in that situation. It almost never happens because there's a huge incentive for them not to do this to you.
And if you think that's rough check out EC 261/2004 [2] and that applies even in the case or a mechanical issue.
[1] https://www.law.cornell.edu/cfr/text/14/250.5
[2] http://www.thisismoney.co.uk/money/holidays/article-2271213/...
> They should also be required to make their best effort to find the available seats for the passenger.
In other words, it should be their responsibility to get you re-booked immediately on all available flights. This should be something that should be verifiable afterwards (i.e. if you as a customer find out they didn't send you on a certain flight by another airline that was better, that should mean additional fines). This should be strongly enforced by regulators to the point where it actually occurs.
Unless I'm missing something (didn't see it in [1]), those rules/enforcement are not currently place. Under these circumstances, I could _maybe_ accept overbooking as an acceptable practice, but without them I don't see why it should be acceptable.
I have no moral argument against overbooking, its wasteful for them not to do so if their projections show that without it, the seat would go out empty. Sometimes they mess it up, sure, and in those cases they owe you cold hard cash, hotel accommodation IIRC and a flight to your destination anyways. Between the monetary outlay and the social media feedback, as a very frequent traveler (top tier with AA and Alaska this year, that's 190,000 qualifying miles), I feel quite satisfied with the status quo.
Per [1] in 2015, only 0.09% of passengers were denied boarding voluntarily or involuntarily. Involuntarily denied boarding accounts for only 0.0075% (43 out of 613,141) of boarded passengers -- that's four nines -- and my understanding is 2016 performance was even better. You were almost as likely to be hit by lightning each year (1 in 700,000). With those kind of performance metrics, it feels like things are working, or else we need to really get our act together re: lightning strikes :)
[1] https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/pu...
All hotels routinely is not accurate.
From the cited article:
>Now that I've sufficiently scared you out of ever booking another hotel, here is the reality: Your odds of being walked are incredibly slim.
In years of business travel, where I frequently arrive at the hotel at midnight, I've only been walked three times. Once at a trade show, where the hotel was renovating and didn't get the rooms done on schedule. Second, where a guest got ill and was unable to depart on schedule. Third, on a trip to New York, where they walked me to a sister property located literally across the street (I got the feeling that these two hotels frequently traded guests).
>the cancellation period is actually one day prior to arrival
Unfortunately, a lot of chains are increasing their cancellation window. In addition, there seems to be a fairly significant trend toward hotels (especially the chains) offering substantial discounts for non-cancelable reservations.
Even most sold out hotels have maintenance rooms. Sometimes the only reason it is in "maintenance" is something simple. And could be rented last minute (as i did in similar job)
In our industry, ISPs used to, many still do. Shared hosters definitely. VPS, way too often. That dedicated host with a gigabit port? Well, you have a gigabit inside the datacentre... beyond ... it's a big question and not all are honest about it.
Scammy? Ehhh. People get way more than their money back for switching flights, which I consider enough to make it un-scammy. Others might reasonably disagree.
In reality, there is no problem to manage here. You simply wind the incentives up until people move.
The "problem" is an airline too cheap to wind the incentives up far enough to get people to give up their seat voluntarily.
http://www.tvlon.com/news/how-many-people-get-involuntarily-...
http://www.huffingtonpost.com/entry/united-bump-overbooking-...
The 400% minimum compensation only applies if the airline chooses not to offer enough for anyone to volunteer.
They are absolutely not forbidden from offering more if they choose to - this is actually even explicitly mentioned in the regulations. The legalese is not super easy to parse, but this link makes a decent attempt at explaining it: https://www.dailykos.com/stories/2017/4/11/1652290/-The-Wide...
Edit: The Department of Transportation's own official website also explains it quite clearly here: (https://cms.dot.gov/airconsumer/faq)
Q: Is the amount an airline must offer involuntarily bumped passengers arriving on a substitute flight over 2 hours after their original flight still 400% of the one-way fare, for a maximum of $1,350?
A: Yes, an airline must offer 400% of the one-way fare up to $1350 to involuntarily bumped passengers arriving on a substitute flight over two hours after the planned arrival time of their original domestic flight. Airlines are free to offer involuntarily bumped passengers more money than required.
So what I'm hearing is that they'd rather be lied to at the airport, than at the time they're buying the ticket.
If you buy a ticket, then there should be no reason for the airline to deny you boarding (excepting safety issues). This is how every other service works.
If I turn up and it turns out so did everyone else who bought a ticket, then the airline should not be bullshitting about overbooking.
The airlines are trying to make it sounds like they are just trying to reach 100% capacity but in reality they are trying to arbitrage the fact that a few people buy non-refundable tickets and don't show up.
People buying full-fare tickets don't incur a penalty if they just don't show up for the flight. Most tickets, nowadays are anyway non-cancellable (except, sometimes for a hefty fee) and non-refundable.
At times the flight from Tel Aviv to Zurich could be overbooked by as muchas 60 seats. I know this because my sister worked at (now defunct) Swissair.
Personally I don't feel this to be a scammy concept, provided that the airline
- Rebooks you onto the next available flight. If necessary with a competitor and
- Compensates fairly and in cash and coughs up for hotel acommodation, transportation and food if necessary
If they didn't do overbooking, then missing your flight is a huge opportunity cost of them. They wouldn't be so quick to let you just move it last minute or fly standby.
The real problem with that united PR debacle was that the passenger was roughed up by security. But overbooking is probably a positive for flyers.
IMO the correct thing to do is do everything they can do to find alternative arrangements for crew member transportation in that case. I think paying customers should be the priority.
Another mistake made was allowing the passenger to board and then removing him. Bumped passengers should not be allowed to board in the first place.
They booted paying passengers for crew members.
Another mistake made was allowing the passenger to board and then removing him
Oh, and offering the amount in cash and not in some vouchers, which probably come with so much fine print and restrictions to be virtually useless would probably help too.
Thing is, I'm not sure those arrangements were actually considered by United though, they seem very short sided in general.
I didn't really consider resting times might be an issue though.
The important part is don't board a passenger THEN kick them off. If they are bumped, they shouldn't ever board.
By overbooking, the airline can ensure that all seats are occupied, which means more people get to their destinations when they want to, and the cost-per-passenger is lower (as fares don't have to include the overhead cost of empty seats).
Most of the time their forecasts are accurate and the system works well for everyone. But occasionally their combination of forecasting, incentives to transfer and customer service practices go wrong, resulting in the horrible incidents we've heard so much about.
Just confirming the above: The no-show rate is actually relatively stable in _most_ cases, which is why airlines try and optimize for this by selling past physical aircraft capacity.
In some markets it's illegal, in which case the average airfares are often notably higher.
This can have a more extreme effect than is immediately obvious: Because "last minute" fares (the ones that often fill up the aircraft) are usually the highest price and are critical in how airlines are able to make flights profitable.
Additionally, the most common no-shows are those who have booked early (the cheap tickets), meaning oversell allows the airlines to make space for urgent last minute travellers when the earlier ones don't turn up.
Without catering for no-show, it's feasible that air fares could end up a LOT more expensive (potentially 20%+) to remain profitable, depending on the distribution of prices in the demand curve leading up to departure.
You can certainly not do it, but on average, customers end up worse off (and the market is relatively good at optimizing this).
The biggest problem (in our mind) is that airlines don't have a good "safety valve" in cases where things go wrong. That's what we (attempt to) fix.
Oversell is sometimes known with high confidence at checkin-close (1 hour prior to departure) or even before, due to the fact that oversell thresholds can change throughout the booking curve.
Airlines don't have a current solution to rebalance/correct loads prior to the gate auction.
Is it cheaper for them to hold the connecting flight, or does it make more sense, financially, to rebook them? Including paying for hotel rooms and compensation. Sometimes they have an agent at the gate of the incoming flight whisking the connecting passengers to their flight.
Here's another dirty secret to ponder: An airline may bump you even if there are free seats available. The reason being weight limits. It can be far more profitable to fly an additional container to Hong Kong then those three passengers with cheap economy class tickets. Even with the additional cost, which this incurs.
Say you're an airline, and you notice that all your planes get fully booked, but on every flight, 2 to 5 passengers do not turn up or miss their flight.
That means that you can easily sell 2 extra tickets for each flight. That's free money (as good as; fuel consumption will go up a tiny bit)
Now, there's the rare case where too many passengers turn up. So, you pick out a college student or backpacker who is happy to take a flight an hour later in exchange for money, a free ticket for another flight, or whatever. That costs you a bit, but as long as it is rare enough, the net result still is extra money, and, ideally, everybody is happy.
Airlines have departments that compute the ideal amount of overbooking.
So, how can it be legal? That's easy; if you book a flight, you accept terms and conditions, and no government has seen reason to make it illegal.
The obvious answer is "chartered jet" has a 100% seat guarantee, but that's an order of magnitude more expensive.
Anyways, the bumping situation only would come up rarely, most oversold flights don't have to bump anyone and usually oversold flights have volunteers before they have to involuntary bump someone.
Airlines don't have an interest to bump passengers. At least in Europe this can be relatively costly as in up to 600EUR compensation per passenger. Add hotel rooms, multiple restaurant visits, taxis and communication costs to that. Add the image loss if this happens too frequently.
Airlines employ extremely complex math and statistical models to avoid bumping passengers, while filling the plane to capacity and mostly it works out. If it doesn't they usually find volounteers, who are willing to be bumped, provided that they are fairly compensated and provided with a reasonable alternative.
Job interviews are readily rescheduled if you're bumped against your will.
Airlines already have bereavement flights that give the bereaved priority and extra flexibility.
We already have regulations that compensate people who are bumped against their will so it's not in the airlines best interest to do so, it's expensive.
BTW, my mom missed her dad's funeral due to the 1981 air traffic controller strike.
That's not an argument.
Else we can ask what about those who can't afford an airplane ticket at all? Perhaps nobody should ever fly since we can't assume that these people don't have important plans either?
>Their plans less important because they can't afford the no-bump class?
No, but their purchase power is clearly less -- which is what determines what one buys (and if one can afford to fly in the first place), not the importance of their plans.
(The only place where the argument holds is in things like organ transplant waiting lists, which we don't want to turn into a market -- and we'd be less hypocritical if we extended it into general free/same-price healthcare for all).
I guess the only way to force them out of this habit would be to make the compensation mandatory at 10x the ticket price, in cash, on the spot. And a seat on the next plane, plus free accomodation for the bumped person if the next plane is more than 8 hours away.
Also a bonus if overbooking helps keep the route to the rinky-dink airport in my hometown operating so that I don't have to drive in for the last leg of my holiday trips.
[1] https://www.transportation.gov/airconsumer/fly-rights#Overbo...
First, at this point it's reasonable to expect passengers in the US to know that their booking is subject to availability in some limited number of edge cases. It's not particularly common but it's also very public knowledge that it sometime does happen.
Second, both parties have a cost to rebook - passengers pay a rebooking fee, airlines pay a bump fee (in a voucher if the passenger is foolish enough to accept that). Additionally, the rebooking fee for a passenger is significantly lower as a % of ticket cost than it is for the airline.
I question that. My guess is that the vast majority of the people who get a seat assignment when they book, never consider the possibility it might be taken from them. Most of the time, people are conditioned to not want to cause a scene, but I can bet no one is too happy about it when a breach of contract happens.
Airlines are unique in that lots of people go along with this. If you sign a lease to rent your house to someone and on the day they arrive with their moving truck you tell them you decided to lease it to your brother, there is a good chance you will end up in court.
It's very odd that you consider this a breach of contract, because these contracts are pretty heavily policed by regulators and the courts. Check every ticket you've bought, the contract of carriage includes terms specifically about overbooking.
For instance, here's United's Rule 4G:
All of UA’s flights are subject to overbooking which could result in UA’s inability to provide previously confirmed reserved space for a given flight or for the class of service reserved. In that event, UA’s obligation to the Passenger is governed by Rule 25.
You are partially right in the sense of the one-sided document that they impose on their customers, they reserve the right to not let you board. In the case of the United passenger (and many others that came to light after this assault) the person had already boarded. At that point, the reasons for not transporting (Rule 21) are spelled out and they don't include reasons like ("we decided to use the seat for our employee" or "a gold member wants the seat"), etc.
>...because these contracts are pretty heavily policed by regulators and the courts.
The idea of involuntary bumping should probably be viewed as regulatory capture. We don't allow that in other industries.
When I buy something, I should not need an hour to read a contract.
Airlines are able to get away with this cause they haven't been challenged in courts. But once challenged, it will be deemed illegal.
I suggest you Google "is airline overbooking legal?" Literally, the very first link returned is titled "here's why it's legal for airlines to kick you off your flight" http://www.nbcnews.com/business/travel/here-s-why-it-s-legal...
Not only is it specifically legal, the regulations actually state that airlines have to give passengers a pamphlet spelling out their legal rights if bumped, and how much a passenger must be compensated if they are bumped. If it were illegal, don't you think the pamphlet would say "hey, the airline can't do this to you?"
What kind of legal scrutiny are you looking for? And do you not think that, among the tens of thousands of passengers who are involuntarily bumped in a year, not one of them would have challenged this in court by now?
As customers choose tickets based on comparison sites that order on ticket price only, ultimately the only thing that matters is the price. That's why there is overbooking, all kinds of cheesy attempts at hidden but obligatory fees and attempts at lowering standards to ridiculous levels such as flying without seats.
Let's say United has 8 flight a day from SEA to DEN. Each are fully booked and hold 100 passengers. 1 of the 8 flights gets cancelled today due a major mechanical problem.
If everyone from the cancelled flight rebooks a on a later flight, now each plane is overbooked by ~14 people.
This happens everyday with every major airline.
Your assertion requires that you actually provide evidence to counter these facts. As you have given none, I have to assume you are incorrect.
source: https://www.fool.com/investing/2017/04/16/1-us-airline-never...
Which country do you live in? I didn't know there were countries that forbid the airlines from overselling seats and forced them to fly airplanes with empty seats when there are no shows.
Where it becomes a problem is when the airline decides they don't want to pay "too much" and start bumping people involuntarily. That should be illegal. If a flight is oversold and nobody will accept being bumped for less than $10,000, then the airline should have to pay $10,000 to resolve the situation.
As it stands right now, the whole thing is skewed in the airlines' favor because they have a nice, low cap on payouts.
One person is willing to take $10,000? Great. Every other passenger is willing to refuse $9999 for the low price of $9999. Now, each passenger needs a 1/Nth of the payout, and that fraction needs to be >$10,000.
Now the negotiation's starting offer becomes: "You overbooked by one seat. How much will it cost you to ground the plane, or fly it empty and bump us all to other flights? Give us that much money."
Honestly, this outcome would be fine by me, since it would correct poor airline behavior pretty rapidly. They already let you buy standby tickets; overbooking is double dipping.
1) "Come on, you can't get 100 people to collude." vs
2) "There is a law that ensures our per-passenger liability saturates at $1350 plus re-booking costs."
For similar reasons, they insure against a hundred different possibilities and require low-personal-judgment protocols to comply with the policy terms.
That only leaves a) a law saturating the liability, or b) a contractual provision (and law validating such provisions) that saturates the liability. It still would explicitly prevent the possibility of colluders extracting an unbounded amount to be bumped.
Obviously it is more efficient for everyone if this bidding is done before you get to the airport, the system described in the article is one example.
aka collective bargaining, which in principle should be encouraged, to counter power imbalances.
https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action
Even allowing for the complex financials and T&Cs of the airline industry I really struggle to see how this is acceptable. If it in any other industry people would be arrested.
Hotels and cruise ships (at the least) do exactly the same thing. They're all essentially gambling, and they win most of the time, so people don't really get angry enough to make an issue of it.
But flights are different. There is a hard limit on availability, plus most bookings are time sensitive. There are only a a certain number of seats available on each flight. You might be fine with being moved on to a later flight, but then again you might not. If you book and pay for a specific flight you should have every right to assume that the seat is yours.
People do this all of the time...
It's called accepting orders prior to manufacture. Most of the time it works out. When it doesn't, you deal with the consequences.
And even if you lied to the customer, you just tell them you had manufacturing delays. And either refund them, or up-sell them to another product.
The only reason we don't see this behavior in the news is that companies typically don't physically assault customers who have bought widgets that can't be delivered.
That contract gives both you and the airline a number of very specific performance requirements, and also a bunch of outs in situations like weather delays.
To get into the longer answer -- seats on a plane are a special kind of commodity, because they become completely worthless the minute the door closes. If you really want to treat them as widgets, 99.999% of the time the result will be worse for the airline (they fly a plane with empty seats, which they do not get paid for), and worse for the consumer (people don't get where they want to go, because planes are taking off with empty seats).
I will argue that a world where airlines overbook, we all get lower fares and better flight availability, passengers can change their tickets with nominal penalties, significantly less than 1% of passengers are compensated to change their flight plans, and 0.007% of passengers (that's 7 people out of 100,000) are involuntarily bumped with compensation (source: https://www.dallasnews.com/business/airlines/2017/03/20/hold...) is better than the alternative.
But that is itself a problem: that they're banking on you not knowing your rights because the exact terms are so complicated.
It would be a different matter if each purchase made it explicit:
"This is really just a standby ticket with an X% chance of having to bump you, in which case you are paid $Y and booked on the next flight. To convert to a true reservation you may pay $Z."
Overbooking is not the only reason that airlines have to deny boarding. Sometimes, they end up making an aircraft change. Sometimes, headwinds dictate that they have to lower their weight. Sometimes (as in the now-infamous United case), they decide that they need those seats to carry crew. Sometimes, a seat is broken, and they can't use it.
JetBlue is an airline that does not oversell seats (Southwest apparently also decided to join them in that practice this year -- my guess is that their unique no-assigned-seats boarding method gives them a lot more flexibility). Despite that, in 2016, they had one of the highest rates in the industry of forcibly denied boarding, significantly above the industry average. (source: https://www.fool.com/investing/2017/04/16/1-us-airline-never...). Each and every one of those had one of those "true reservation, it's not a standby ticket" tickets that you're talking about.
Practically, when picking who to deny boarding to, airlines have some pretty clear rules. If you want to be sure you're going to get a seat, pick one for yourself when you make your reservation, check in as early as possible, and buy a refundable ticket.
You can talk about overbooking as "profit motive" for the airline, but airlines traditionally make very low margins. Air travel is a classic oligopoly, where a large number of competitors offer goods that are practically indistinguishable (Coke vs. Pepsi, Shell vs. Exxon, United vs. Delta) -- these industries are characterized by fierce price competition. Ultimately, any decrease in revenue from one source will be reflected in higher average ticket prices.
An airline industry that didn't overbook would be one where either everyone pays significantly more for their tickets, or where most tickets become truly non-changeable, as in you have to buy a totally new ticket if you change your travel date or time.
Honestly, a system like this, where the airline can do yield management transparently, days or weeks before departure, when people have time to weigh their options and make alternate plans, makes tremendous sense and does a lot to allocate costs to those who are willing to pay, keeping things less expensive for those who aren't.
And of course there's a middle ground: being upfront about which seats are really reserved, and what you can expect for not-really-reserved seats on overbooking. None of this "oh you should have done research to realize what your rights and minimumn payment are and that this voucher is worthless".
Eliminating overbooking is overkill and some people are in fact confused on that matter. But please don't pretend the only alternative is some apocalypse.
My work travel system even has a built-in tracking and reminder system for ticket vouchers that will nudge me to fly on a particular airline if I have a credit with them.
And, I will say this -- in nearly all situations, if an airline thinks they may need to involuntarily bump you, they won't assign you a seat. Once you have picked a seat on their reservation system, you have a very low chance of being bumped involuntarily. Once you have a boarding pass with a seat number on it, I'd guess that the odds are 100,000:1 that you're not going to get on board (unless you volunteer to take a voucher). All the more reason that the infamous United dragging incident was some kind of anti-unicorn (which wasn't about over-sold seats, after all -- it was about needing to accommodate a non-revenue flight crew).
Do I get special treatment on the airline I fly most? Yes, I do. I've been able to change tickets on that airline without a change fee as a courtesy on multiple occasions, in contradiction to their printed policies.
I can't/won't book these for leisure travel, because they don't even allow you to sit with your family members.
Honestly, the recent penetration of basic economy into the US market is something I'm much more concerned about than involuntary bumping. If the airlines are successful, then they're just going to re-set the baseline for standard economy up by $100 or so a ticket. Planes were already full, it's not like they are going to increase revenue by offering cheaper tickets, they're just going to get away by giving you less for your money.
Not being able to cancel / refund your ticket is NOT a new trend.
Other than Southwest most airlines would not let you change your tickets without paying a fee, and this has been the case since quite a few years.
The new bit is you can't even pay a fee with the new basic fares--it's use it or lose it.
The last I checked most of them charge change fee to the tune of 150-200 dollars. Moreover, if you get it in the form of airline credits it's further restricted in the sense that the credit is available only to the person under whose name the ticket was booked. So if I book tickets for my daughter and pay for them and have to cancel them, I can't use that money other than to buy a ticket for my daughter on the same airline in the next 12 months.
Even on fully changeable tickets, with no fee, you can't assign them to another passenger. You'd have to have a refundable ticket, get the refund, and then buy another ticket.
But I don't think I ever implied differently?
I agree the system in the article sounds like a good start - making more efficient use of planes is better for everyone.
The vast majority of tickets sold in the USA have restrictions on changes.
> An airline industry that didn't overbook would be one where either everyone pays significantly more for their tickets, or where most tickets become truly non-changeable, as in you have to buy a totally new ticket if you change your travel date or time.
This is a legacy from time long past and it wasn't the best decision back then. If you put a little thought into most airline policies you can come up with something that is both more effective and provides a better customer experience while reducing costs or increasing profits.
There is simply not enough competition in the industry to force change.
Because no one has done anything about it. There are any number of scummy beahviors which are still legal.
In this case, if (say) 1% of people never show up for flights, that's incentive for airlines to over-sell by 1%. Because the case where everyone does show up is the 1% of the 1%.
i.e. it's more cost effective to fudge things and deal with problems later.
The issue is that they have shitty procedures for dealing with that 1% of 1% situation. They still want to screw the customer out of every penny, where they could be telling themselves "We made our money on the other 99%, If we give this guy his money back and some more for inconvenience, we'll still come out ahead".
The insistence on screwing the customer no matter what is deeply ingrained in corporate culture. Money and bad marketing be damned...
def buy_ticket():
if soldout:
return FalseOf course, the real issue is a monetary one for the airlines because standby tickets have to be discounted. But as a customer, I still advocate against overbooking.
If you're open to using financial incentives like cheaper pre-arranged "standby" flights, why is that better than auctioning cash/vouchers to willing passengers volunteering to be bumped?
The problem with your proposal is that all the passengers are forever sorted into "guaranteed" and "standby" according to first-come-first-served:
|timeline of bookings -->-->
|-- guaranteed --|--- standby --|
In terms of game theory and fairness, calculated overbooking based on stable historical trends seems to be the most optimal strategy that benefits the most people. The real issue is that the airlines implement the compensation incorrectly. Instead of blaming the overbooking, blame the airlines' compensation rules:
1) offer cash instead of vouchers
2) eliminate silly rules about caps
3) start the auction process as early as possible in the lounge area instead of waiting until the last minute by standing in the aisle of the plane with a bunch of impatient passengers. (With American Airlines, their check-in kiosks will sometimes alert passengers and give them the option of being voluntarily bumped.)
Since jet fuel airplanes are probably the most expensive form of travel that's 2nd only to space tourism flights on liquid oxygen rockets, it would be an irresponsible waste of energy.
To be clear about the specific problem we're trying to solve, it's the involuntary bumping instead of the voluntary ones.
Why is using "empty seats" the superior solution instead of raising the financial incentives to attract volunteers to be bumped?
I travel 90% of the year and there is no reasonable financial incentive (especially if they are just flight vouchers) they could offer that would make me volunteer my seat. If I'm travelling, it's for business and I have no desire to be late. If it's travelling back home, I want to see my family and I'm not going to miss that flight if I don't have to. On busy commuter flights, I would imagine most passengers share my sentiment. This would ultimately lead us into a situation where someone is randomly removed from the aircraft against their will.
Furthermore, being offered flight vouchers to give up your seat is really stupid on commuter flights. Pretty much every person on those flights has more miles than they know what to do with. Offer cash instead.
The moment an airline attendant announces an oversold situation, that announcement kicks off a frantic battle between dopey consumer game theory calculus on the one hand, and rigid airline offer-escalation procedure on the other. This slow, maddeningly predictable war of attrition often results in delays of 45 minutes or more. Those delays cascade into further delays when the flight misses its departure window.
We have a "not enough dopes" problem. There need to be more people willing to take buyouts, and since that's not happening, we can consider pretty much any alternative solutions that make sense.
I guarantee there will be enough takers. The issue is, even though the cost of overbooking is already factored into the cost of the flight, the airline is still trying to eek out extra dollars by offering less than the cost (vouchers, starting with lowball offers, etc).
Don't get me wrong; I'd love if they simply cut to the chase. But airlines are not in the business of customer service, as is often painfully obvious. They seem to take their business practices from the Ferengi Rules of Acquisition. (In particular, the dictum, "Once you've got their money, never give it back.")
I'm a 2-million-miles frequent flyer on American Airlines and I've never seen voucher auctions require 45 minutes. Usually it takes less than 5 minutes. Often, the gate agents run the auction in the lounge which doesn't add any delay to the plane pushing away from the gate.
>We have a "not enough dopes" problem. There need to be more people willing to take buyouts, and since that's not happening,
Is the goal to have zero involuntary bumps? Because 40,000 involuntary bumps out of 660,000,000[1] seems like there are "enough dopes" on virtually every plane.
[1] https://www.dallasnews.com/business/airlines/2017/03/20/hold...
But the point is that it's a market. Pretty much always there will be a price at which someone is willing to give up their seats for whatever incentive. The overall system with overbooking, voluntary bumps, and the occasional involuntary bump is overall much more efficient.
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bumpprobability=0.05f*(1-premiumeconomy*0.5);
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}Also I would say a GS upgrade probability is closer to 0.9f. 1K can be anywhere from 0.1f to 0.8f depending on the routes flown (a consultant flying hub-to-hub around beginning / end of week will be 0.1f; me flying leisure routes mid-week will be 0.8f).
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}You want to solve this problem? Offer cash. I'd volunteer to be bumped 99% of the time if they offered cash. As it is, my percentage is 0.
You can go to the faa website and read how much cash, it's some multiple of the ticket price.
I don't think that law should exist. They should be required to pay whatever it takes to get enough people to go willingly.
Note that this behavior is extremely, unbelievably rare. N=1 over hundreds of millions of flights rare.
There is a lot of other discontent regarding bumping on oversold flights, but the existence of a cash minimum doesn't by necessity lead to assaulting passengers.
Yes, assault is super-rare in these cases, but unhappy passengers are fairly common. People hate the airlines for overbooking. If they always offered enough compensation for people to be willingly bumped, this wouldn't be the case.
If no such law exists, and everyone refuses up to like a million dollars, than what, the plane just sits there and nobody leaves? There should be some cap. Maybe it should be higher, but not unlimited. (I'd be more in favor of no overbooking at all honesty)
The other part of the problem is lack of awareness. Most people in the US don't know you are legally entitled to cash if bumped involuntarily. If they knew, more would hold out for cash instead of vouchers.
Your hypothetical is silly. What if Jesus Christ descends from the heavens and declares air travel to be a mortal sin? That's about as likely. It's not going to be impossible to find a few people among 100+ who are willing to take the next flight for an amount of money that's at least vaguely reasonable.
And if airlines don't want to risk it, they always have the option of not overbooking. This way it's their choice how to handle it.
We can argue that the cash offer should be higher, but when was the last time you even saw the voucher bids go up past a thousand dollars and then get replaced by cash? I'm guessing never since you didn't even know it was the law. I've never seen it, only increasingly high voucher offers.
* Also it's not 10%, it's like 1 in 100000 passengers.
Assumes facts not in evidence. I'm well aware of the law. I'm also well aware that the law specifies a pretty low cap on what airlines are required to give.
Offering people worthless vouchers and then bumping people involuntarily for a mere 4x their fare for that segment is very much not what I was referring to in my original comment.
But then I'm confused, is the complaint that for the 0.001% of passengers, they should get higher cash compensation? Because the other 99.999% of passengers either board without issue or take vouchers.
This article paints involuntary bumping as some terrible thing the airlines are saddled with, and this new approach offers a way to finally get past it. Which just isn't the case at all.
No, the United "thing" (aka the assault) happens when they decide that a someone who made travel plans, paid for a seat, travelled to the airport, went through security and waited for the plane just to have the airline decide that they would breach their contract and use the seat for their employee. The fact that the individual had already boarded the plane meant the poorly trained security people had to use an extreme amount of violence against him, but even if they had stopped him before boarding the plane, it doesn't explain or excuse the companies willful breach of contract.
Or maybe, the plane leaves because it's full, and everyone has boarded?
It's beyond me why anything thinks it's a good idea to hold up a full plane because someone else wants to board.
Let's say this suggestion was implemented in law. In civil law, they could always breach their contract with you, and refuse you boarding anyway.
You'd then sue them and be awarded damages because they breached their contract with you. But it'd cost you a ton of money to do that, and so nobody will do this.
The law that sets the compensation amount shortcuts this and gives you the money more directly.
"Be required to pay whatever it takes" is the default position of a contract. If you want to return to that, you'll be stuck with the situation above.
You could instead increase the statutory compensation amount. Then they'd be in an reverse auction situation. They'd rarely need to force anyone off because some passenger will cave sooner for the money.
In other words, you'll get what you want if you increase the statutory compensation amount, but you won't if you eliminate it as you suggest.
The limit on small claims court is usually 5 thousand and small claims court doesn't cost a "ton of money" and is very accessible. Since anyone could be bumped, there are cases where I am sure the damages would be greater than 5 thousand, but then you would have the incentive and means to hire a lawyer.
The law to set up compensation limits in the US was done to lower the costs to the airlines, not as some way to help the consumer. There is no reason that anyone should ever be involuntarily bumped - this law just made people think this was somehow acceptable.
You risk being awarded just a refund of the ticket, which I'm sure that United would offer anyway. And then you'd be down court fees and perhaps loss of earnings for a day to attend court. It's not worth it for ordinary people.
> The law to set up compensation limits in the US was done to lower the costs to the airlines, not as some way to help the consumer.
Overbooking lowers ticket prices. Lowering costs to airlines lowers ticket prices.
Court fees for small claims court are minimal. Your original claim was that it cost "tons of money" - I think you will agree that is not true. Your claim that "It's not worth it for ordinary people is just a guess. My guess is that the vast majority of the people who get a seat assignment when they book never consider the possibility it might be taken from them. Most of the time, people are conditioned to not want to cause a scene, but I can bet no one is too happy about it when the other side doesn't fulfill their end of the deal. Having even a small number of people filing cases against the airlines would cost the airlines far more than than they currently pay out (they have to show up at court etc) - it would also likely lead to class action lawsuits, etc. Those low statutory limits on payouts are there to make sure the cost to the airline is minimal.
>...Overbooking lowers ticket prices. Lowering costs to airlines lowers ticket prices.
I didn't say anything was wrong with overbooking. Whether it results in lower ticket prices or leads to more profit for the airline will actually vary, but it is ultimately immaterial - making more productive use of airplanes is good for everybody. The issue is involuntary bumping and treating this as somehow acceptable. If the airlines screw up and have too many passengers for too few seats, it is up to them to solve the problem through voluntary means - the system described in this article is one way to help do that.
In the end, the whole idea of involuntary bumping should probably be viewed as regulatory capture. We don't allow that in other industries.
Agreed. That would be the "free market". They always would find people if they offered enough money.
The United fuckup was almost entirely due to the operating airline being too stingy with payout money, and that policy is now changed.
The technology in question is making that process more efficient, only, rather than fundamentally changing it, because the PROCESS WORKS.
I'm not gonna hold my breath these people will actually offer cash.
http://www.seattletimes.com/life/travel/travel-wise-donrsquo...
> >Redemption rates on vouchers hover somewhere between 5 percent and 8 percent
Not fix the problem but "manage" it. Imagine telling your boss you've decided to manage a problem instead of fixing the root cause.
>"With the help of its new Flex-Schedule Program, the airline is piloting a way to buck the trend of involuntary bumping—the term for kicking passengers off oversold flights—without necessarily offering four-figure payouts to passengers at the gate, or curbing their practice of overselling inventory."
Rather than fix a problem that they themselves are responsible for they are instead going to treat it as a "revenue stream"? Why is this even legal? If you experienced this at a car dealer, a restaurant or a hotel you would never do business with them again.
Is there any other industry that knowingly engages in selling the exact same item to two different people only to cause stress to one of those two people?
They are still bumping you, they just aren't doing it at the last minute. Vote with your wallet and avoid this airline altogether.
But certainly Delta has been paying more, it was a 3000+ ppl computer conference ending and some sports event at the same time so the airport was a total gong show and Delta paid a friend of mine $1200 to not fly to New York.
If it is vouchers, do you still need to pay fees on top of that?
That $300 flight you buy on Orbitz is considered a hugely discounted fare. The same seat at "full fare" would be $900-1000.
So in this example, if you got a $400 voucher for being bumped from another equivalent trip, the expected value of the voucher is -$200 because you would have to pay the airline ($900 - 400 = $500) to book that $300 seat. You would need to combine multiple vouchers before it made financial sense.
The reality is that the lowest fares are often found on the airline website and the airline website only and the voucher is good there. There are sometimes but rarely real good offers on these OTAs but it's literally getting rarer and rarer day by day.
People want to pay the _absolute_ minimum possible to travel, no exceptions. If you tell people "For $5 more we won't have you kicked in the head by an angry toddler" people loudly tell each other "Yeah, yeah, I really want that, $5 is a steal". And then, they click "No thanks" and say to themselves "Saved myself $5"
Every safety feature on an aeroplane is there because it's mandated by law. If you let people go without for a dollar, people who'd use a dollar to wrap used gum will forego the safety to save a dollar, because people think of every dollar spent on air travel as somehow "wasted" even as they simultaneously complain about how awful air travel is.
Over the years Airlines have _tried_ telling customers they're interested in offering a better service for a higher price, and customers almost all say that's what they want, and almost all choose a different, cheaper airline. This is the customers' fault, as clear as day.
Airlines are, in general, incredibly bad at advertising the small ways in which their coach seats are better. You have to go to weird niche websites to find this information. And you're blaming the customers here?