Why do airlines overbook? and bumped passenger compensation
Update Apr 11, 2017: Coincidentally this post was published the same day as the United Airlines fiasco and figured I’d offer my two cents briefly.
Obviously this is tragic and should not have occurred. Blame while on United, also falls on Chicago PD who ultimately injured this man and probably didn’t need to rip him out of his seat. I’m sure two healthy policemen could’ve lifted him instead of dragging him on the floor though an airplane.
United Airlines should’ve kept offering higher amounts of vouchers/cash to entice flyers to give up their seats. They stopped at $800 which I find a bit low. If they even spent $10,000, it would’ve been better than the PR fiasco they are in now. Certainly they will lose hundreds of thousands, if not millions of dollars in booking from potential customers. Also, don’t let bumped passengers board. Lessons learned, I hope.
Ever been bumped from a full flight? This is a common practice amongst almost all airlines globally, although there are some exceptions. Southwest Airlines, Jetblue, and Scotairways do not overbook.
Here is a short Ted Talk video explaining overbooking and explains the answer to the questions “Why do airlines sell too many tickets?”
To me it makes complete business sense to overbook. I don’t have any problem with the practice, and was never bumped myself, luckily.
Compensation for bumped passengers
Compensation varies by airline and country. Asia tends to be the least regulated, you’re usually forced to accept whatever the airline gives you, since there’s little government policy on this topic. Keep in mind, they will always look for volunteers first.
Cathay Pacific for example, might offer $1,000 HK, a hotel stay (if overnight required,) and business class upgrade on the next flight. Hong Kong Airlines, and especially Hong Kong Express will likely offer less.
A mainland China airline may offer you a mere $200-300 RMB.
The EU has set rules for compensation based on flight distance.
At overbooking, the airline must first ask for passengers who are voluntarily willing to give up their reservations for a compensation, the carrier and the passenger may agree upon. Are there not enough volunteers the airline is obliged to financially compensate those who are denied boarding against their will. The amount of compensation depends on the distance.
- EUR 250 for all flights of 1500 kilometres or less:
- EUR 400 for all intra-Community flights of more than 1500 kilometres, and for all other flights between 1500 and 3500 kilometres
- EUR 600 for all other flights.
The compensation shall be paid in cash, at the passenger’s bank account, by bank transfer or by check. If the passenger accepts it, compensation may consist of travel vouchers or other services.
In the United States, usually airlines will start a bidding war amongst the passengers, so they’ll ask for volunteers and offering a flight credit for $XXX and keep raising it until they get a willing passenger. Keep in mind, you usually don’t need to accept their first offer and can negotiate. In theory, if all passengers hold out, you can get over $1000 US, though someone is certain to crack at a lower offer. Negotiating for cash instead of a flight voucher is certainly more appealing, amateurs will take the flight vouchers.
Minimize / Maximize bumped chances
If you want to minimize your chance of getting bumped, make sure you have a seat assignment. Usually those without seat assignments are left to get bumped. Also, check in early. Usually those who’ve checked latest will be bumped as well.
On the flip side, there are those who purposely book full flights looking to get bumped. They can rack up all of these vouchers and cash, and use them for future free travel! Certainly a game plan if you know what you’re doing and have plenty of time on your hands.