Overbooking flights

March 14th, 2007 at 8:27 am by David Farrar

I think the airline practice of overbooking flights is deplorable, and hope one day someone sues over it. If there are 300 seats on a flight then they should sell 300 tickets for it. You can have a standby list on top of that, but selling 320 tickets for a 300 seat flight should not be allowed.

Yes some passengers do not turn up for flights. But the airline has already been paid for those tickets. They are not left out of pocket. And even if some passengers transfer flights at the last minute, they either have to pay huge penalties for doing so, or have paid up to three times the normal price for a flexi ticket.

I’ve never personally been affected by an over-sold flight (I guess air points status is used to decide who to not let on) but I would kick up almighty hell if I was.

If Air NZ does continue with such a policy, they should be giving a lot more than a $6 cafe voucher as compensation. I would expect to get the cost of the ticket reduced by at least 50%, a complimentary Koru Club pass for while you wait, and if you have to wait overnight, free accommodation.

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26 Responses to “Overbooking flights”

  1. Sam Dixon () says:

    Come on David, it happens so rarely that when four jokers are stuck for a few extra hours in christchurch it makes national news… you say you’ve never been bumped and neither have I in all my flights, but I’ve been delayed by mechanical faults and I’m betting you have too, and I don’t see anyone calling of sueing over that (I bet if we look at the terms and conditions one agrees that the airline is not liable if one cannot fly at the ticketed time due to either event).

    Over-booking of flights, which only occurs rarely because most flights do not fill up anyway, is the classic use of the poisson distribution.. airlines can be confident (i dont’ know if they use 95% or 99% or whatever) that a small percentage of passengers will not show up for their flights.. the airline can then guarantee flights to more people than it can actually carry, confident that not more than it can carry will actually show up.. this allows flights to be more full, more often, reducing ticket prices and getting more people to destinations when they want to get there than would otherwise be the case… the downside is that, very occassionally, everyone does in fact show up and someone needs to stay behind for a bit (when you think about it, its not so different from Sony selling people TVs knowing full-well that every so often they will not perform as expected and a replacement will have to be arranged- compensating for broken guarantees is a normal, expected business expense)… most airlines offer some kind of compensation for the delay suffered by those unlucky enough to be bumped, and AirNZ seems to have mismanaged this case.

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  2. DavidW () says:

    In the US they often come on board and offer a later flght plus $200 cash to get people to give up their seat when overbooked. If you aren’t in a hurry it can be lucrative to book early at a busy time for business travellers.

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  3. Andrew Bannister () says:

    Many many moons ago I was upgraded to first class on a leg from Europe to Hong Kong because of overbooking.

    Of course, on domestic flights there is no longer a business class to soak up the extras.

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  4. Simon () says:

    Nothing wrong with overbooking as it should allow the airlines to cull out fat people from getting onto flights.

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  5. Ben Wilson () says:

    Doesn’t really seem that unfair to me. Usually the decision as to who stays behind is settled with an auction – first one to crumble to the alternate offer. If no one crumbles they up the offer. Someone always crumbles, there are plenty of people who are time rich and cash poor on every flight, to whom a day’s delay is easily worth a small amount of cash.

    The airlines certainly would be out of pocket if they didn’t run this policy. Their overbooking percentage is money they would certainly lose from changing the policy. It’s a competitive business with slim margins so losses like that could be catastrophic for some operators.

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  6. Joely Doe () says:

    Travelling from the US to London, we were bumped due to overbooking. BA gave us US$500 each and a free nights accommodation at a 4-star airport hotel. We were guaranteed seats on the next available flight. One guy behind us was very keen to take the offer – his family got a free nights accommodation, the next flight, and US$3000 (2 adults and 4 kids). He couldn’t believe his luck!

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  7. David Farrar () says:

    Sam your analogy is wrong. It is almost fraud – selling seats which do not exist. It’s like selling ten TVs when you only have eight to sell.

    I understand the extra profits it makes. I could make extra money also be selling things I can’t supply.

    As I said in the main post, if an airline does decide to do it, then when they get it wrong and someone with a paid ticket can not board, they should treat that passenger like royalty. Not give them a $6 meal voucher.

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  8. GPT () says:

    It happens reasonably regularly and it seems to be regular users (who are used to turning up on the dot) most affected.

    At the very least they should refund the ticket prices (less an admin fee) of those who do not turn up if they are still able to fill the seat.

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  9. Ben Wilson () says:

    “I could make extra money also be selling things I can’t supply.”

    And no one would have a problem with it if you compensated them fairly. Obviously a $6 meal voucher is not fair, and I would sue if I was forced to take that deal. Our uncompetitive domestic service sucks, sure. But that’s not really a blanket argument against the general policy of overbooking, just the details of one implementation of it.

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  10. Craig Ranapia () says:

    Ben Wilson wrote:
    The airlines certainly would be out of pocket if they didn’t run this policy. Their overbooking percentage is money they would certainly lose from changing the policy. It’s a competitive business with slim margins so losses like that could be catastrophic for some operators.

    So, a scam is OK as long as it’s profitable, you keep getting away with it and everyone does it? I’d like to see what would have happened if a concert promoter over-sold all the venues on the next U2 tour, and the last five hundred people at each venue had to put their names in a hat or stand around until enough people said “screw this, I’m going home.” I suspect the Commerce Commission wouldn’t be too impressed by a promoter complaining about what a highly competitive, slim margin industry he was working in.

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  11. Traveller () says:

    I’m all for over-booking, so long as no one is compulsorily bumped off the flight. It’s up to the airline how they manage the overbooking, an auction being the best way. It’s a win-win-win as ensuring planes fly full keeps fares down, and there are always no-shows on any flight, so it’s commercially sensible for airlines to deliverately over-book flights – and it’s also in consumers’ interests for this to happen.

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  12. Ben Wilson () says:

    “So, a scam is OK as long as it’s profitable, you keep getting away with it and everyone does it?”

    Yup. Sounds reasonable to me. Any other approach is just being a martyr.

    Naturally the concert promoters wouldn’t ‘get away with it’ because concerts are very different from airline flights, which is why it doesn’t happen in that business.

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  13. Juha () says:

    Only time I’ve been bumped is on Qantas in NZ… two consecutive flights from ChCh.

    “We need the plane elsewhere”
    “Excuse me? But I need to get back to Auckland.”
    “Can’t do anything sir, you have to wait for the next flight.”

    So I wait… and get bumped off the next flight as well. This time around the hard-nosed woman at the counter takes pity on me and gives me a $30 cafe voucher.

    Being petty and vindictive, I moved a longhaul business class flight booking to another airline a month later, citing what had happened in ChCh. Qantas couldn’t care less of course.

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  14. Cactus Kate () says:

    On the bright side a Union member David Small missed his meeting.

    Air NZ can’t be all bad.

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  15. Rich () says:

    I was off to Monaco GP. All the Nice (nearest airport) flights fill up and are expensive, so we were flying to Marseille and getting a train. The flight was full, so Air France put us on a flight one hour later. Going to Nice. In club.

    Needless to say we weren’t unhappy with that outcome!

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  16. Craig Ranapia () says:

    Ben Wilson wrote:
    Yup. Sounds reasonable to me. Any other approach is just being a martyr.

    Wow, I really hope you’re not in airline management. I’m sure life would be so much more profitable if you didn’t have to bother with all those tiresome – and costly – rules around industrial relations, aircraft maintenance, the health and safety of passengers and so on. Why be a martyr?

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  17. Ben Wilson () says:

    I was booked to fly to Barcelona and back from Amsterdam just because of an airline rule saying I couldn’t pick up my Barcelona-Auckland flight at one of the stopping points along the way, which happened to be Amsterdam.

    So I was mighty pleased to find the flight to Barcelona overbooked and gave up my seat with only one simple proviso – that I would be allowed to break their other silly rule that was only inconveniencing both of us. So instead of a shitty day in planes and airports, I got a free day in Amsterdam, and it didn’t cost the airline a cent.

    Would never have happened without overbooking.

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  18. Ben Wilson () says:

    Craig, airline management of every airline in the world accepts the overbooking policy. It’s a completely different scenario to those other rules. You’d be a martyr if you went way beyond compliance in all those areas though, which is why no one does.

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  19. stef () says:

    I got an offer from B.A to be bumped. They were offering 250quid in flight vouchers plus accommodation and dinner. I agreed to wait to see what happened. In the end I got on the flight but they gave me a 10 quid duty free voucher + dinner for my trouble while I waited. Free dinner and enough duty free to buy a bottle of mr smirnoff. I was stoked.

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  20. Craig Ranapia () says:

    *aigh* So, we’re right back to a scam is acceptable because everyone does it. Well, Air New Zealand and Quantas have both been hit with substantial fines by the Commerce Commission over the last year for misleading advertising in breech of the Fair Trading Act. And I recall the ‘standard industry practice’ argument didn’t cut much ice. Why should Air New Zealand behave as if they’re above the Consumer Guarantees Act as well?

    I’m glad for all the folks above who got fed, liquored up and put in a nice hotel. But when I pay for an airline ticket I’d like to get the service I paid for, and get my fix of airport fiction from the nearest bookshop not my travel agent.

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  21. Craig Ranapia () says:

    BTW, Ben, a big picture question: Are companies operating in New Zealand subject to New Zealand law or their definition of ‘standard international industry practice’? And if your answer is the latter, who exactly defines what that is?

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  22. Fred () says:

    Prove deliberate overbooking on pre paid tickets and you have a premeditated breach of contract. $6 cafe voucher wont cover it.

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  23. John Macilree () says:

    The lawyers (bush and otherwise) among you may wish to have a look at Part 9B of the Civil Aviation Act 1990 relating to the delay of passengers. The aviation industry was rather keen to have these little-known statutory provisions deleted rather than carried over from the domestic Carriage by Air Act 1967. This Act used to be referred to in the fine print of Air New Zealand tickets and is still referred to on the Air New Zealand web site (see Conditions of Contract) even though the 1967 Act was abolished around three years ago!

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  24. a3catlady () says:

    Overbooking is a common practice in many business where people are involved, come on you capitalists its where some of us make our profit.

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  25. Ben Wilson () says:

    Craig, it’s not something desperately in need of definition. Overbooking just happens to be an idea that works for airline flights due to bunch of things peculiar to that business.

    You haven’t come up with a knock down argument against ‘it’s ok because everyone does it’ yet. To me that seems like a pretty good principle, so long as it doesn’t violate the harm principle.

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  26. Nigel () says:

    Personally I don’t like the idea of regulation to solve something like this, it goes against the grain of a free market, it’s not fraud it’s more like insurance for travellers tardiness.

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