Airline Overbooking and the Appeasing of Customer Frustration

As the means for traveling have gotten progressively more and more sophisticated over the years, people find it easier to book flights for various rates either through the airline itself or through a price search website (Priceline, Travelocity, Kayak). But as the act of traveling itself has become easier, why has the organization and customer service stayed the same or gotten worse? In a recent article in Tampa Bay Online titled "Making the Best of Getting Bumped", this problem is questioned. In an industry that is so unprofitable relative to the amount of business they actually do, airlines have become more and more likely to bump (dropped from your current flight schedule to a later one) passengers from their flights in an effort to maximize profits. There is a problem though: as we have moved forward, it appears as though the airlines have taken a step back. The rates at which customers are getting bumped have increased from 49,000 in 2008 to 54,000 through the first nine months of 2009. This is happening largely in part to overbooking.

Aside from the danger of losing good will with the customers by bumping them back a flight, airlines are apparently more worried about overbooking in an effort to sell out every flight and reduce the risk of flying at a loss. Therefore, the airlines sell over capacity for particular flights, knowing that approximately 50% of reservations get cancelled at some point in time, and if a problem arises then it is a small loss for them assuming they can get the bumped passenger to their desired destination in a timely manner. But where does it end? One would think that as technology has gotten better and airlines have become more experienced, they would have better solutions for these problems than bumping someone for anywhere from a $400 to $800 voucher. The airlines must re-evaluate their situation when it comes to overbooking if they are concerned with flying at a loss. Perhaps the cancellation fees need to be more stringent or the estimation of how many passengers they allow themselves to book should be adjusted. One thing is for sure though, another 9% annual increase in bumped flights may dissolve consumer confidence faster than they can bump someone onto another flight.

- Randy Abbott, Jeanette Elliot, Dan Furey