It just seems like it happens so often, and airlines will sometimes offer you three times the price of the ticket just to stay a few extra hours. Seems like it’d be easy to just…stop selling tickets once the plane is full??
In: Economics
If your way costed them less overall then that’s what they would do. They’re very price sensitive, so it obviously wouldn’t.
There are always some people who don’t show up so airlines use algorithms to predict how much to overbook so the plane will be exactly full. Of course algorithms like that cannot be perfect so overbooks at the gate still happen here and there. Apparently the bottom line works out better for the airlines even if they have to pay a few people not to fly.
The amount they spend in compensation is less than the amount they get for selling the same seat twice and having one person not show up before take off.
They’ve worked out what % of passengers on average never board the plane after buying tickets for whatever reason, so they sell the seats twice.
They do overbook every flight because it happens very often that people don’t take their booked flights. So often that otherwise they would fly with empty seats. So paying for hotels or for people simply waiting still is cheaper for the airlines.
I’ll use an example to help illustrate this.
You, a traveler for pure pleasure has spent a few weeks tripping around europe. You booked your return ticket well in advance and got a great deal (say $500 because it makes the math easier).
Me, a traveler for work, found out this morning that I need to go to New York for an important client meeting tomorrow. Crap, should have planned better but you know gotta keep the lights on. So I look up flights and lo and behold it’ll be $2000 for the ticket. Boss says go we need you there so I buy it.
We both get to the gate and look at that it’s oversold. So they make the announcement for someone to fly to NA tomorrow instead (the plane is not full so this is easy). You as a pleasure traveler don’t really care so you go up and take the $500 they give you and go to a pub to enjoy your extra day.
Now at the end of the day the airline comes out ahead. I overpaid for the same seat on the plane by $1500, you got $500 and the airline gets $1000 for free.
I used to work for an airline. We didn’t overbook every flight, just ones on routes where we had more then one flight every day (so that if someone did ever have to be left behind we could accommodate them on another flight as quickly as possible)
The ‘no show’ rate for flights was between 4% and 7% and that was pretty reliable. It was very rare for everyone booked on a flight to actually turn up.
If 99% of the time a handful of passengers aren’t going to turn up, and you can fill some of those extra seats, it just makes commercial sense to do it.
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They overbook to ensure full capacity… they know that on average, X% of people who book a flight will cancel or change their flight. So they’re better off overselling the flight and compensating people if they have to bump people than flying with unnecessary empty seats
They make more money that way.
A certain number of people are going to miss every flight…their plans changed, they caught an earlier flight, or they just didn’t get to the airport in time. Airlines anticipate this and sell a few extra tickets rather than fly with empty seats. Most the time, they do a good job and no one has to get bumped. Occasionally it doesn’t work out, and they have to bribe someone off of the plane. If they stopped selling tickets when the plane is full, they’d have to charge everyone more.
It might seem like they are spending a lot of money, but it is not every flight and that last-minute traveler might have paid $800 for the ticket you bought for $200 three months before.
Because it’s worth it. It’s really that simple.
The airlines have done their homework, they did the math. The amount that they pay to passengers that get bumped is less than the potential revenue lost by having empty seats.
And it’s not like you have much of a choice, either. There are half-a-dozen airlines left, and they don’t all service every city. So you’ll probably have a choice of 2 or 3 airlines at most, who all do the same thing.
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