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Comment by rlpb | Hacker News Reader

Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else.

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.

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I think the Right Answer is for the airlines to sell two different ticket classes: guaranteed seats, which may not be oversold, and standby seats, which can be. That way everyone knows what they're getting.

Standby seats will just jam up the airport and security. Most shoppers will search for the cheapest flight, the airline will sell it as a bargain with the requisite disclaimers that no one reads, and when 100 standby ticket holders show up to the airport all hell will break lose.

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.

> Standby seats will just jam up the airport and security.

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.

You absolutely can and many do pass security without a confirmed seat.

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.

I wonder what the effects would be if the airlines had to put a clear statement directly above the "buy now" button, like "You might not be allowed to take this flight if too many people turn up for it, see our compensation policy if this happens here". It shouldn't make a difference at all if it's actually "widely known" to all participants, but I suspect it actually isn't.

While I seriously doubt that overselling is really widely known, it is also quite an assumption that repeating a widely known fact has no effect on customer behavior.

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.

> Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else.

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.

> You have to calculate for compensations for the people who have to be left behind because the flight was oversold.

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.

> You can find it to be whatever you want, but it is legal and 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.

it's flagrant scamming , I don't know who's paying you to lobby for them but your goals aren't aligned with your fellow man

I don't know who you work for . But you care too much about corporate profits and not enough about humans

I'm not employed in any related industry. I do travel for work, so if anything I'm more impacted on the consumer side as a frequent traveller.

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.

I'm ambivalent about overselling, but I think your argument is flawed. Consumers can only "vote" for what's on offer, and you cannot individually escape a prisoner's dilemma/race to the bottom scenario without making yourself worse off.

I agree and this is what I meant by "The downside is that a free market isn't very good at adjusting to unlikely individual events" above.

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.

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