The Supreme Court weighed in on airline overbooking in the 1970s, and yet we’re still talking about it today.
Airlines are going to new great lengths to avoid involuntarily denying boarding to passengers — selling more tickets than there are seats and then not having enough volunteers to take a later flight for compensation when more passengers than expected show up. Some airlines are overbooking less. Others are paying out more compensation to get more passengers to volunteer to give up their seats.
We’ve seen stories about Delta giving a passenger $4000 in travel vouchers for agreeing to take a later flight and United giving out $10,000. American’s Day of Departure Desk will also authorize substantially more compensation than before.
This is how badly United didn’t want to give me cash: pic.twitter.com/sI7vmbeB2Q
— Allison Preiss (@allisonmpreiss) March 22, 2018
This is a real cost to airlines, although travel vouchers cost less than cash (they aren’t all used, and they do not all displace cash that would have been spent on tickets). Naturally airlines want to limit the cost.
In my youth I’d go looking for oversold flights and do my best to get compensation. Shortly after college I was traveling regularly from Rochester to Washington Dulles on United Express Jetstream 32 turboprops with 18 seats. These were regularly sold out — and weight restricted in winter. I’d take a bump Sunday evening, fly straight to work Monday morning, and pay for my next trip in the process. Now I’d almost always rather get where I’m going, it would take one of these outsized offers for me to volunteer.
American has implemented a new process to let customers list themselves as a volunteer to give up their seat and specify how much compensation it would take in advance, through the mobile app. The airline is somewhat behind the times here, Delta has had this functionality for several years.
Effective Wednesday, May 1 “When flights are oversold, customers using the mobile app will be offered an opportunity to volunteer to take an alternate flight a full 24 hours prior to departure and during check-in.”
The goal is to get a volunteer list in advance, and for customers to pre-agree to voucher amounts that are lower than what American Airlines offers today.
During the solicitation process, customers are presented with four voucher amounts to choose from. These amounts are less than what the dynamic voucher amount would be, resulting in a reduction of denied boarding compensation. Once a customer selects their preferred voucher amount they will be placed on a volunteer list.
Here’s a sample screen:
There are several interesting things of note here.
- Even though a passenger has pre-agreed, they will still be called up at the gate (volunteers called up ‘in the order they appear on the list’). They’ll be told their alternate flights, and asked if they are still willing to volunteer.
- Agents may still need to solicit additional volunteers at the gate.
- Customers who volunteer and are bumped from a flight will all receive the same compensation amount.
So the strategy seems to be to get customers to input the lowest amount they’d be willing to accept, knowing that they will receive the highest amount necessary to cover all volunteers. It’s sort of like a Vickrey auction.
One of the reasons I love denied boarding compensation by the way is that it isn’t taxable as income. Although for business travelers I do wonder if the compensation should go to your employer instead of you.