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Even if you bought a ticket and showed up at the airport on time, and the plane is not late, you may not board. That’s because there are more passengers than seats. How is this possible? Overbooking.
History and causes of overbooking
Overbooking is otherwise known as overselling. It is a situation in which an airline has sold more tickets than there are seats available on a given flight. Why do carriers do this? Because one of the most important business indicators for them is the load factor, i.e. the filling of seats on a given flight.
Meanwhile, it almost always happens that someone cancels a trip, arrives late at the airport or has a scheduled connecting flight, but an earlier segment is canceled. Overbooking allows airlines to reduce the risk of empty seats on a given flight. This is because it has been known for a long time that the more passengers on board, the lower the cost per passenger. And that means higher margins.
Overbooking is not a new practice. One of the online editions of the Chicago Tribune recalls that back in the 1950s it turned out to be an accidentally discovered solution to one of the carriers’ more serious problems. Just a decade earlier, the passenger transport market had begun to grow.
“With the development of services in the late 1940s, airlines struggled with the problem of ‘no-shows’ – people who booked a seat but did not board. It was a serious problem: a half-empty plane – even one with several empty seats – could make a loss or significantly reduce profits,” – The Chicago Tribune wrote.
The article goes on to say that at the time there was no question of the technological sophistication of the ticketing process. The filling of seats on airplanes was manually monitored and it was easy to make a mistake. It was realized that the “no-show” problem occurred on virtually every flight.
Why do airlines risk overbooking?
“It didn’t take long for executives to realize that overbooking was a fantastic money-making strategy.However, no airline ever took responsibility for this innovation. For years, executives vehemently denied that they deliberately overbooked flights. By 1950, the practice had become commonplace.” – One could read in the Chicago Tribune.
As a rule, overbooking is an airline strategy that works. Until all passengers with purchased tickets appear in front of the gate. Then some of them go on a waiting list (stand-by), and the carrier starts looking for volunteers. That is, people who don’t care so much about the departure date, and in exchange for additional benefits (cash or later travel in a higher class) agree to give up their seat. However, when volunteers are not found, the airline will deny some of those waiting to board the plane
What rights does the passenger have?
In the European Union, the issue of passengers’ rights in an overbooking situation is regulated by Regulation 261/2004. In the case of denied boarding, compensation ranges from 250 to 600 euros, depending on the length of the route. In addition, the carrier must offer an alternative way to reach the destination, drinks and meals during the long wait, and, if necessary (the next flight only the next day), also hotel accommodation including transfers.
If, due to overbooking, the trip has lost its meaning (we will arrive the next day after a concert or a business meeting), the carrier must refund the cost of the ticket.
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