Why Do Some Airlines Overbook Seats on Flights?

Passengers face a number of stresses from the time they are at the airport as well as during the flight. Baggage limitations, airport security intrusions, long queues, as well as the difficulty in finding seats in the waiting area can all add stress to the trip.

To make matters worse, since the onset of the Covid-19 pandemic, there have been more requirements depending on the rules of the destination countries. In addition, the Ukraine invasion added more uncertainty to flights.

If all of this is not enough, it appears that passengers have one more area to be concerned about: overbooking.

What Is Overbooking?

Overbooked seats are not a new phenomenon. Airlines have been doing this for a long time. According to Google in 2019, Spirit Airlines was the worst performer with 78 IDBs. IDB stands for Involuntary Denied Boarding.

Spirit Airbus c Aibus overbook
Spirit Airlines had more IBDs in 2019. © Airbus

Essentially, what happens is that when seats are overbooked, is that passengers are told that they cannot board their flight because too many people have booked seats. This can even happen when passengers reach the departure gate. A compensation agreement then has to be agreed upon between the passenger and the airline.

According to the International Air Transport Association (IATA), however, if such agreement is not there, then all the airline needs to do is compensate people in what is deemed to be an appropriate way and ensure that the passengers that were denied boarding are offered an alternative flight (re-routing) and are well looked after.

What this means is that any passenger can be denied the right to board a flight and the compensation given does not fully have to meet the expectations of travellers.

Why Do Airlines Overbook?

So why is it that airlines overbook? Surely the disadvantage associated with the reputational loss would prevent airlines from wanting to upset passengers in this way. According to Forbes, in 2017 a passenger was videotaped being dragged off a United Express plane by Chicago security police when they refused to give up a seat after they had been denied the right to board. The video provoked outrage towards its owner United Airlines.

According to the IATA which vehemently defends the right of airlines to overbook, airlines need to have the facility to book more tickets than the number of seats that are available. The reason for this is that airline tickets count as perishable goods. What this means is that they cannot be used again. For example, a T-Shirt that is sold can be returned to the shop and re-sold if need be. However, airline tickets, once the flight has been taken cannot be resold.

Some tickets on a flight may be sold as non-refundable and therefore may be cheaper. Other tickets are sold which are more expensive but give flexibility to the passenger to change their plans. It is this combination of having a perishable good such as a plane ticket whilst at the same time offering flexible options that means that if airlines did not overbook they would end up losing money. This is because planes would be running with empty seats. It is therefore important for airlines to have the opportunity to manage their bookings in this way, as it allows them to manage their inventory (which in this case means their flights) more efficiently.

However, as shown by the incident with United Airlines, flight operators can lose their respect unless they treat their passengers fairly. In addition, if people are not sure about whether they will get to their destination on time, it can affect tourism and it can also affect other areas of the economy. For example, if someone is travelling on business.

Some airlines however have historically been trying to reduce their IBDs. Delta Airlines, according to Forbes, boasted that in the second half of 2019 it had no IBDs. Their strategy involved improving the management of bookings as well as effectively targeting passengers on the basis of their reason for travel and giving a higher incentive to those who volunteered to give up their seats.

Delta Airlines overbook
Delta Airlines boasted no IBDs in the second half of 2019. | © Andrea Ongaro / Travel Radar

As one can see, there are financial reasons why airlines overbook flights. However, it is clear that the reputational damage caused by passengers losing their seats means that airlines such as Delta are aspiring to have no passengers being told that they can’t fly.

Have you ever been denied boarding due to overbooking? Let us know in the comments below! 

 

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Amuthan Chandrarajan
Amuthan Chandrarajan
Aviation Reporter - Amuthan has a background in residential and commercial real estate. He also has a keen interest in aviation and travel and has visited many countries. Amuthan has a sound knowledge of business and finance.  He has gained a Master of Business Administration and has become a Chartered Management Accountant. 

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