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Why do airlines deliberately overbook flights

videos | Aug 8, 2019 7:00 PM IST

Why do airlines deliberately overbook flights


There’s also a high chance that this type of traveler books flexible tickets on multiple flights to cover their options, leaving at least one seat empty.

Have you ever experienced being bumped?

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We mean buying a plane ticket, packing your bags, getting to the airport and then finding out that the airline has deliberately overbooked your flight and you no longer have a seat.
Most of us hate when this happens, so why do airlines continue to do it?
Airlines have been deliberately overbooking flights for decades.
Following the deregulation of the airline industry in 1978, airlines became incentivised to increase the number of passengers on their flights.
And they identified one big missed opportunity for more revenue - all those sold but empty seats.
In fact, most flights take off without their seats completely filled.
Now for many, this may sound greedy but airlines argue that overbooking is a way for them to provide a long-term, sustainable service in a very competitive industry.
It helps them to weather a number of variables that can affect their profit  margins, such as rising labor costs and changing fuel prices.
Recently the International Air Transport Association downgraded its 2019 outlook for the global air industry by more than $7 billion in large part due to the rising price of jet fuel.
So overselling plane tickets helps airlines maximise profits, but according to industry experts it also benefits passengers.
It gives them more choice and access when booking flights and lets the airlines charge less for a ticket too.
Overbooking, as well as unplanned operational issues, meant that in the US last year more than 3.80 lakh passengers were denied boarding.
Most were voluntary, but nearly 12,000 passengers didn’t have a choice.
When overbooking flights, most airlines use sophisticated revenue management systems to choose which seats to oversell.
These systems are powered by AI software that analyses historical flight data  and other variables like date, time and even special events, enabling airlines to profile the type of fare sold and estimate the number of empty seats there will be.
For instance, it may spot an increased risk of no show passengers on connecting flights, who might miss their connection if their first flight is delayed.
There’s also a chance that tickets booked speculatively may result in empty seats.
For example, large optional group bookings may later end up requiring less seats than expected, which is why airlines will oversell these flights until seats are named and paid for.
But the opposite also applies.
Once confirmed, group bookings are highly likely to show up, which means the airline’s need to overbook will actually reduce.
Airlines are also alert to flights with passengers on flexible tickets.
These tickets cost more, but allow travelers to change their flights without a fee.
Usually used by business travelers, flexible tickets are a big reason for airlines overselling flights.
There’s also a high chance that this type of traveler books flexible tickets on multiple flights to cover their options, leaving at least one seat empty.
This was especially true with the Concorde.
The supersonic jet could only seat 100 passengers, yet British Airways and Air France reportedly sold up to 130 tickets for each flight knowing that the
majority of passengers were business travelers, booked on flexible tickets and could change their mind on what flight to catch at the last minute.
If BA and Air France hadn’t oversold those flights, the empty seats would have been a huge hit to their profitability.
Conversely, if the ticket is non-refundable or non-flexible, it’s more likely the passenger will turn up.
This is often the case for budget carriers.
Many of these airlines tend to not overbook as much, due to the low rates of no-shows, around roughly 5%.
Even with sophisticated airline revenue management systems, empty seats are still an issue for airlines.
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