If you travel enough, chances are you’ve heard a desperate gate agent attempted to lure paid passengers off their plane with a travel voucher. Usually, the price for that voucher starts at $200 (hardly worth the time and trouble of rebooking, especially if you have to stay the night). Its not uncommon to hear them make an offer of $400 or $600.
The airlines are not in the business of running a sweepstakes at the gate, they are giving travel vouchers because they overbooked their flight.
Overbooking aircraft is a popular practice in the air travel industry. However, after the recent United Airlines debacle, some airlines have vowed to stop the practice of overbooking (kudos to Southwest for ending their practice of overbooking).
The airline industry operates on small margins, so they came they need to overbook to squeeze the most they can out of their programs. Here is a quick breakdown of why the airline overbook flights.
The two most popular passengers are Business and Leisure travelers.
Imagine you are on a business trip, attempting to finalize a lucrative deal that hinged on successful meetings and pitches. Business travelers account for a big chunk of the pie of an airline’s business. 12 percent of the plane’s passengers are business travelers. Since you are a successful business passenger, you are 60 percent of the planes revenue.
As you are negotiating for your company; a meeting that was supposed to be just a few hours quickly turned into 2 a two day event. You become frantic because you missed your flight home! However, the airlines predicted this to happened and created something called flexible tickets.
While flexible tickets are more expensive, airlines are aware of the business world and understand if you miss a flight. Some airlines offer free of charge tickets for late arrival and missing connection flights.
The truth is 5 percent of passengers miss their flight. This puts the airlines in a tricky situation. Ultimately, it’s expensive to fly a plane from point A to point B; especially a plane that is half empty. If airlines sell a large amount of flexible flights it only makes sense to overbook flights.
As a leisure traveler imagine that you scored tickets to the Super Bowl and booked a flight. You have been looking forward to this trip all year and plan to get to the airport as early as possible to fly away to your destination!
Since airlines have created different classifications of tickets; it becomes the traveler’s responsibility to select the level of risk they would like to pick. This means that you and your significant other can purchase less expensive tickets that will charge a fee if you miss the flight.
When airlines observe that people are buying these cheaper tickets with the large fee attached, they can predict the future. Ultimately, they will be careful with overbooking that flight. Airlines also tend to under-book for large holidays and big events happening throughout the U.S.
Now when you travel for business or leisure you can help the airlines predict the future with the variety of flight options that airlines provide!