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
Let’s say that a flight has 100 seats, each selling for $100 For this flight historic dropouts of 10 people. So the airline says that theres a 10% no show rate. This means they can sell 10 more tickets, but then one of thos wont sell so they can sell 1 extra extra ticket. This means they sell 111 tickets for a 100 seat flight. Revenue wise this means that they make $11,100 instead of $10,000. So pocket the extra $1,100 you made. Unless that 10% is off. Let’s say that for each person they need to re-book it costs $200. As long as no more than five extra people show up they can still make a profit.
Airlines spend a lot of money to figure out these margins and how much risk they can take. This is money that can be made as a side revenue stream without setting up more flights, so they do it. Better from the airlines perspective to have two unhappy customers on a flight and still make $$$ than leave the $$$ on the spreadsheet and let some lucky customers have extra space to stretch out. Eventually the number of unhappy people will cost them, but airline research shows that customers dont have much loyalty or hold grudges, they just follow the cheapest price that fits their travel window.
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