Why do airlines get away with overbooking?

Why Airlines Overbook Flights and How Passengers are Impacted

Airlines engage in the practice of overbooking flights to maximize their revenue by filling otherwise empty seats. This strategy allows them to balance the risk of empty seats against the potential for denied boarding and compensations to passengers.

The Economics of Overbooking

Airlines calculate the average demand for specific flights based on historical data and booking trends. They then intentionally sell more tickets than the number of available seats to increase their chances of filling all seats. This strategy works well when there are no-shows or last-minute cancellations, allowing airlines to generate additional revenue without losing profit.

Impact on Passengers

While overbooking can benefit airlines, it can also create disruptions and inconvenience for passengers. When a flight is overbooked, passengers may be denied boarding, delayed, or forced to take alternative flights. This can lead to missed connections, lost baggage, or stress for the affected individuals.

Indemnification to Passengers

To mitigate the impact of overbooking, airlines have established compensation policies for passengers who are denied boarding. These policies vary depending on the airline and the specific circumstances, but they typically include vouchers for future flights, cash refunds, or reimbursement for expenses incurred due to the disruption.

Solutions to Overbooking

To reduce the likelihood of overbooking, airlines have implemented various measures, such as:

• Monitoring booking patterns: Airlines analyze historical data and use algorithms to predict passenger demand accurately.
• Offering incentives for voluntary cancellations: Some airlines offer vouchers or other incentives to passengers who voluntarily give up their seats on overbooked flights.
• Limiting overbooking on key routes: Airlines may limit the amount of overbooking they allow on flights that are typically in high demand or have limited alternative flights available.

Conclusion

Overbooking is a controversial practice in the airline industry that balances the interests of airlines and passengers. While it allows airlines to maximize revenue and minimize empty seats, it can also lead to disruptions and inconvenience for passengers. To mitigate these risks, airlines have established compensation policies and implemented measures to reduce the likelihood of overbooking. However, passengers should be aware of the potential for overbooking and consider their risk tolerance when making travel arrangements.