United Will Roll Out Its New Overbooking Auctions By October 3

Earlier this month Delta paid one woman $4000 to give up her seat on an overbooked flight. She still made it to South Bend, Indiana that night to see a game the next day.

In the aftermath of the David Dao United Express dragging incident in April, several airlines revamped their policies around paying denied boarding compensation. Delta authorized gate agents to go up to $2000 in compensation, and allowed supervisors to offer up to $9950.

United naturally outlined the most extensive set of reforms in response to the firestorm.

  • Limit use of law enforcement to safety and security issues only.
  • Not require customers seated on the plane to give up their seat involuntarily unless safety or security is at risk.
  • Increase customer compensation incentives for voluntary denied boarding up to $10,000.
  • Establish a customer solutions team to provide agents with creative solutions such as using nearby airports, other airlines or ground transportations to get customers to their final destination.
  • Ensure crews are booked onto a flight at least 60 minutes prior to departure.
  • Provide employees with additional annual training.
  • Create an automated system for soliciting volunteers to change travel plans.
  • Reduce the amount of overbooking.
  • Empower employees to resolve customer service issues in the moment.
  • Eliminate the red tape on permanently lost bags by adopting a “no questions asked” policy on lost luggage.

Involuntary denied boardings are rare. They’re continuing to become even more rare. And when they happen there are usually volunteers at much lower amounts. Still the airline wants to process them better and cheaper, while they adopted a policy of going up to $10,000 getting to that amount would be a failure.

They also want to be able to sell more seats to people who want them the most. So a 5 p.m. business route on a Thursday might sell out, why not reach out an see if some customers are willing to be moved to an earlier or later flight for a few hundred dollars if that seat could be sold for thousands? Instead of ‘overbooking’ it’s an arbitrage opportunity to let a customer resell their seat that’s more valuable to someone else with the airline as market maker.

United will roll out its system of bidding so that passengers declare in advance the price at which they’ll volunteer their seat and take another flight. This will help the airline manage the process earlier, limit costs, and boost revenue.

If the system works as-described it will be fair to passengers and better business for the airline.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] United Will Roll Out Its New Overbooking Auctions By October 3 by View From The Wing. I think Gary’s article glosses over the issues of overbooking and somewhat understates the problem, but it’s still nice to see that United is implementing this new auction system sooner rather than later. I still say that the mandatory minimums are exceedingly low and need to be increased until we see proper reform by airlines. […]

Comments

  1. Yeah one question I have had is I have often been able to take an earlier flight but thats not an option to take a VDB credit. Only once did United call me up and proactively offered $200 credit to go on an earlier flight, they had had an equipment change and were heavily oversold.

  2. A lot of times they want just one seat.

    And yes, if traveling with my spouse I’d send her on BUT at what price?

    And it’s not the airline compensation I’m referring to.

  3. So how long before they just sell your cheap $200 fare you booked 6 months ago so they can sell it to a walk-up for $1,000. Seriously though why should they even be able to legally overbook. What if you bought a movie ticket and showed up to the theater and found that it was overbooked. Who would put up with that.

  4. It’s stupid. You name a price before you know the damage. Nothing else on the planet works this way, and it’s failed at Delta. Name a high price, and then they have a quick reaccomm, a lower bid would have been fine. Name a low price, and you’re locked into that bid, yet they can’t get you out until tomorrow.

    Would you name a price for the car before you knew what car you’re going go get? Would you tell a prospective employer how much salary you wanted before you knew what the job entailed or how many days/hours you’d have to work?

  5. My only issue with this is how reaccommodating you can actually get. One of the great things about VDBs are getting creative reroutes, rebooked on other carriers, upgrades to FC, etc, which I suspect would almost disappear under this method (unless of course there was people needed at the gate).

  6. AA IT would need another 5 years to figure something like this out. UA routinely makes AA IT look elementary. Kudos to UA on this.

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