This article is part of a series that examines airline regulation, culture, and business in the United States and around the world. Check back for more articles each week on new topics, and reach out to our team at firstname.lastname@example.org with ideas, tips, or updates.
On Sunday, April 9, United Express flight 3411 was scheduled to depart from Chicago O’Hare International Airport at 5:40 pm. However, the flight was delayed for two hours when Dr. David Dao, a doctor from Louisville, Kentucky, where the flight was bound, was dragged off the flight after refusing to give up his seat for a crew member. Dao knocked his head against an armrest and was bleeding heavily when he tried to re-board the flight.
Two thing came in the aftermath that followed. First, rage was sparked against United due to the way they handled the situation. However, the incident also left people wondering: who do airlines overbook their flights, and is it a necessary process?
Before we get started, you should know that, as a passenger, you never buy a ticket for a specific seat. Though you might select a seat when your purchase your ticket or check in for the flight, you’re not buying a ticket for that seat; instead, you’re buying a ticket from point A to point B. That means that, if you’re flying from New York to Los Angeles but you miss your flight, your airline will rebook you onto a new flight, instead of selling you a new ticket. This is because you didn’t purchase sitting rights for a seat on your first flight. Instead, you bought flying rights for that route.
Now, why do airlines sell too many “flying rights” for flights? In other words, why will an airline sell 150 tickets on a flight with 140 seats? A basic answer is that not everyone turns up for their flights.
“On average, the number of people not turning up to flights is around 5 percent, but, in certain circumstances, that number can be up to 15 percent,” writes Haje Jan Kamps in an article titled “Why do airlines overbook their flights?”.
So, for simplicity, let’s assume that United Airlines has 220 seats on a 787 flight between Los Angeles International Airport (LAX) and Narita International Airport (NRT) in Tokyo. If United sells 220 tickets on a flight, it is guaranteed that some people won’t show up. That means that, when the plane takes off, between five and fifteen percent of the seats on the plane will be empty. And, to airlines, that won’t fly.
See, in an industry with profit margins as low as 1%, every effort must be made to ensure that planes are making the most money possible. And, to an airline, a plane flying at less than capacity is a plane that isn’t making the most money it can possibly make. So, in order to compensate for this, airlines will sell more seats than they have for as many flights as possible.
So, how do airlines know many seats they can oversell?
“There’s no good public number on how many passengers miss their flights, but data is used by airlines to build models to predict how many seats they can oversell,” says a man known only as Sam who runs the Wendover Productions YouTube channel. This quote is from a video entitled “Why Airlines Sell More Seats Than They Have”. “With better data and smarter programs, these models are constantly improving to let airlines sell these nonexistent seats more safely.”
The algorithms that airlines use to predict this kind of statistic are very complicated, and have many variables.
“The no-show rate [on flights] varies hugely by route and date. In United’s network, Chicago, where flight 3411 left from, likely has a high no-show rate, since it’s their hub. A large percentage of passengers taking a flight from Chicago connect from another flight, and since one quarter of U.S. domestic flights arrive late, many people miss their connections,” says Sam. “In addition, there are a ton of competing airlines and modes of transport from Chicago, so it’s not a huge deal for passengers to change their plans to leave a few hours or days later.”
This idea is reflected in statements made by an airline worker (let’s call him Alex) who requested to remain anonymous when speaking with sources. “If you have a Super Bowl ticket, you’re not going to want to miss the game, so you’ll use your flight ticket. When that happens, we are aware of it, and we adjust our models to ensure there’s a lower percentage of overbooking.”
Evidence shows that airlines are getting really good at using these algorithms to play the guessing game. In 2016, the twelve largest U.S.-based airlines denied boarding to 475,000 passengers. Simplified, that number equates to about 6 passengers out of every 100,000. That number is down from 7 out of 100,000 in 2015.
As passengers, we all know that these models aren’t perfect. Most everyone who has flown more than once has heard an announcement offering money or airline vouchers for passengers willing to give up their seats due to overbooking.
“The money we offer passengers to give up seats makes perfect sense to us,” says Alex. “It is far cheaper to give someone a $500 travel voucher every now and again than letting planes fly at less than full capacity.”
But, despite the fact that airlines offer money to passengers involuntarily bumped from flights, many passengers who are forced to re-plan their trips, like Dr. Dao, feel cheated because they were denied access to their flight because of overbooking. But, according to industry executives, overbooking is a practice that can be beneficial for both airlines and their passengers.
“By overbooking it actually does help keep the fares down because the airlines are able to maximize the amount of revenue they are able to collect and generate as much profit as they can,” said Henry Harteveldt, President and Travel Industry Analyst for Atmosphere Research Group. “But if they didn’t overbook it’s possible they may have to charge more.
In addition, Vinay Bhaskara, an Airways senior business analyst, says that overbooking allows for more flexibility in travel plans. “Frequently, the people who benefit the most from overbooking are the last people to buy, the ones who are not able to make plans in advance. Often times those seats are available at the last minute only because that flight can be overbooked. The airline knows some people are going to be missing the flight.”
In the end, airline overbooking is a very complicated and messy process, as airlines consider many factors when they overbook. Though being bumped from a flight due to overbooking is often inconvenient for everyone, the practice is essential for making sure that airlines can fill all their seats and make as much money as possible while keeping prices as low as possible for consumers.