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
They make more money this way—they sell more tickets by overbooking a flight. That’s why they do it.
They make more money this way because some number of people will cancel or modify their flights. Usually this means everyone can be accommodated.
Sometimes their predictions are wrong, and then they have to offer people something to take a later flight. Usually this is dollars toward a future flight, which costs them less than the face value.
Basically they have done the math and even factoring that in, they come out ahead.
Plenty of people miss their flight by simply being late. Also, there are people who fly for business, and it would be a huge problem for them to take a later flight due to scheduling an important business meeting. The problem is when a businessman gets bumped off of a full flight, even if he arrives on time. So…many business people book two separate tickets, and cancel one as they are boarding.
FWIW not every flight is overbooked. It *seems* like it because people flying observe more full flights, because there are more people to observe it. If there are 20 flights that have 1 person on them, and one flight that’s overbooked with 100 people, most people will have an overbooked flight even if that’s not the majority of flights. A lot of flights are, in reality, far from full, it’s just that people aren’t necessarily there to observe them.
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.
If your way costed them less overall then that’s what they would do. They’re very price sensitive, so it obviously wouldn’t.
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.
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.
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.
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.
If it bothers you, JETBLUE doesn’t overbook.
Of course, if you don’t show up for your flight, they won’t just put you on the next one, like every other airline will.
That’s the tradeoff.
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