With most fares nowadays being non-refundable, why should the airlines care whether the seat is empty or not? It's paid for. If it's empty, that's a bonus because they save a little bit of fuel, time at the gate, and the passengers adjacent to the empty seat have a better experience. Empty seats that are paid for should be a win-win.
Airlines say that this means all the seats on a flight can be a bit cheaper as the cost of operating the flight is shared amongst more people but I'm skeptical of that. Businesses like free money and only pass that on as lower prices due to competition when they really have to.
Well, yeah, but that badly misses the point. Selling any product twice is more profitable than selling it only once, all else being equal. But in most industries, selling the same product twice is considered unacceptable. In fact, it would be considered fraud. The story that the airlines tell to make people think it should be acceptable in their industry is clearly bogus.
As for the rest, I dunno, maybe give them a break. Margins run at about 1%, give or take, so two empty seats matters. Heavy financial losses and bankruptcies are common for airlines.
On the practical side, people like to get to their destinations at their preferred time, so it’s good that airlines try and serve people by getting as many people as possible onto their preferred flight. And for environmental reasons people like to know that capacity/fuel isn’t being wasted.
Having worked with airlines for a long time, I’m no great lover of their business practices, but on this topic we can do a bit better than just presuming them to be greedy, exploitative monsters.
Airlines are under no obligation to offer fully flexible fares. If they screw up the business model so badly, maybe the answer is to simply stop offering them.
The problem is that there is lots of competition backed by heavy state funding that can weather out bad events (e.g. a 9/11 scenario with a general downturn, or something as simple as a volcano eruption, or mundane such as strikes of any kind of personnel).
The other smaller airlines have to keep up with the offering of the big giants even if they're unsustainable or risky or they risk directly going out of business.
They don't screw up the business model, the business model relies on it. Without these fares, everyone would be paying more and flexible passengers would be inconvenienced.
But the presence or absence of flexible fares doesn't change the fact that the precise number of passengers trying to board is uncertain, and that will always create a complex optimization problem if you care about both efficiency and customer satisfaction.
The problem is that right now every ticket is effectively a standby ticket, and this is buried in the fine print.
A lot of people have thought a lot about these problems for a long time now.
Many of them are both clever and well-intentioned.
I understand that last sentence is where we differ.
So I guess we're done here.
You've chosen to invoke an Argument By Authority, so I guess you're right.
Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices.
> In fact, it would be considered fraud.
Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell.
The downside is that a free market isn't very good at adjusting to unlikely individual events.
I favour the legislative model in which airlines are permitted to oversell but there is statutory compensation due to anyone who is bumped. This provides the counterbalance to airlines taking it too far in risk to passengers.
No. You have to calculate for compensations for the people who have to be left behind because the flight was oversold. As you can read in the comments, those compensations can come in quite expensive. And rebooking passengers to other flights means that you can't sell that specific seat at the right price.
> Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices.
Again: No. You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up. If this type of calculation does not cover your costs as the airline, you have a bigger problem in general.
> Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell.
I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up. To be honest, selling the same good twice and only delivering once could very well be a definition of fraud. Try that on some kind of marketplace and you will find yourself in quite some trouble in no time.
Sure, but factor those in and you still end up being able to offer cheaper ticket prices by overselling. It is clear that this is true from existing market behaviour.
> You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up.
That is one way of running an airline. However, given that some proportion of passengers change their plans in practice, overselling will cause a reduction of ticket prices in a competitive environment. This is just textbook economics and I'm not sure how I can explain this concept better to you.
> If this type of calculation does not cover your costs as the airline, you have a bigger problem in general.
The airline industry disagrees with you.
> I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up.
You can find it to be whatever you want, but it is legal and not fraud. Wishing it to be fraud doesn't make it so. You could seek to make overselling illegal. If this were to happen then it would be illegal, but still not fraud.
It's fraud and it's legal. Which is why the EU cracks down on it pretty hard with large settlements, fines, and the passing of passenger bill of rights. In this thread alone you see passengers offered $100s - $1000s in compensation. Do you think those airlines wanted to pay out compensation? Those fines are statute according to the terms of passenger rights, which you will find printed on the back of every ticket.
Just like speeding, most don't get caught. But just because they don't does not make it any less illegal.
As something between data and anecdata to support that statement, I've seen measured conversion rates indicate that customers cancel an online shopping deal after they have already agreed to it, after being redirected to PayPal. Those numbers were way too high to indicate just users who couldn't remember their passwords, so we assumed (here's the non-data part) that they jumped off when they realized that they have to log into PayPal and pay real money now. And those things are widely known, certainly so to a customer who has paid with PayPal in the past.
Do remember you can't pass security without a confirmed seat. They can't load your luggage without you being confirmed and through security. If every flight on every airline tried this as SOP it would turn out really badly.
If you think I'm kidding check the news around a major holiday with inclement weather. Hoardes of people with standby tickets waiting in terminals, camping out in whatever floorspace they can find. Sounds pretty damn dystopian.
No more than they do now. The only difference between what I'm proposing and what is currently done is that the people who get bumped if too many people show up "volunteer" ahead of time.
That's the practice in the article, passing ticket holders along and telling them the seat will be assigned at the gate, well after baggage is checked and security lines have been waited.
Selling standby seats at the same/similar overbook ratio as they currently do wouldn't lead to any more of a dystopia then we currently have.
However, the consumer has voted, again and again, for cheaper airline tickets over anything else. If that's what they want, then banning overselling would be contrary to that as it would cause ticket prices to rise.
I live in the EU and am quite happy with the current statutory compensation arrangements here.
Since banning overselling would increase ticket prices, there will inevitably be some passengers who would suffer as a result. Statistically we'd find that some passengers can no longer afford to go on holiday, etc. These passengers surely want a cheaper ticket so they have _some_ opportunity still.
Instead, I think the most reasonable solution is to allow oversell but enforce adequate compensation by statute, which is what we have today in many places.
The difficulty is in deciding what constitutes adequate compensation. Too much and we'll be back to the "no oversell but inefficient and therefore high ticket price" situation. Too little and traveling would be a mandatory gamble that passengers might be wiped out (eg. a weekend away ruined with no compensation to go again another time, etc). A balance is needed. Banning overselling completely however is I think too far in the wrong direction.
Not necessarily.
There are a lot of businesses which sell you a service assuming some "average" load. Web hostings, insurance companies for example.
That's even before I start whinging about my monthly train ticket.
But in pretty much any profession there's a chance of a promise not been met. If that happened I would expect an apology, and some kind of a remediation. For extra credit a small token of appreciation would also be nice.
No passenger, no profit.