Thursday, December 22, 2005

The 9th Day of the Flight Attendant Christmas

Ninth Day:  No overbooking problems.  Overbooking is a fact of life in the airline industry.  It’s done because of the high no-show factor for flights, leaving the airplane empty and the airline unable to recoup their monetary losses.  

The formula used to figure out how much to overbook a flight is usually based on the past no-show rate for a flight, and does take into high travel days.  It works more times than it does not.  Occasionally, though, the system fails, and we don’t want it to fail during the holidays.

Eighth Day:  Proper staffing.  

Seventh Day:  Delay free flights.  

Sixth Day:  Plenty of space for carry-on bags.  

Fifth Day:  Happy co-workers.  
Fourth DayShort security screening lines. 
Third DayThat we'll be home for those extra special events. 
Second DayNo weather problems.
First DayHealthy passengers.


Anonymous said...

This is something I have never understood, though: If there's a no-show, isn't the seat already paid for? How does the airline lose money on it? I promise I'm not trying to be rude, but I've never known who to ask about this - until now!

Flygirl said...

This list just keeps getting better and's too bad that we rarely actually see these things! :)

Fly Girl said...

It's a good question, and here's my attempt at a simplistic answer.

Think of the seat as an item of inventory. At the time the reservation is accepted and the ticket paid for a seat is taken out of inventory. It's not available to sell to anyone else.

The airlines track the no-show statistics of flights, and use this to come up with an allowable percentage of inventory to be sold over and above what is in stock.

When it comes time for the flight to depart, there are people who don't show up to pick up their inventory even though it's there waiting for them.

Frequently they show up later and still want the inventory item. The airlines give it to them, taking the inventory off of another shelf (flight).

Tickets that are non-refundable (these are getting fewer and fewer) still allow for changes. Usually the passenger can travel at a later date and flight, although sometimes an additional fee is charged. So, it's a trickle down effect. The airlines saved it for your once, you no-showed, now they have to save it for you again.

From an accounting standpoint, this unused ticket remains on the books as a company liability as well.

I'm just re-reading the explanantion and realize that is sounds convoluted. So, if any on my fellow industry workers can simplify this even more, send me an email and I'll try again (giving you appropriate credit, of course).

Fly Girl said...

flygirl: One can hope, though, can't we?

Astroprof said...

I knew a fellow in college who bought one ticket and used that to fly back and forth home the next three years. He would always pick a flight that he was sure was overbooked, and he'd be the first to volunteer to take a later flight, and the airline gave him a complementary ticket for a free flight later. Eventually, he got on a flight that had enough seats for everyone.

I had wonderred myself how airlines could lose money by flying with an empty seat already paid for, but your explanation helps. They are losing money by allowing a refund or by allowing the person to fly on a later flight for only a small fee.

jon said...

In Australia (where I live) the airlines do not have an overbooking policy like this. The simple reason is that most tickets (all but the most expensive) are simply forfeited if you are a no-show without giving 24 hours notice. Use it or lose it.

I watch shows like Airline USA and see all the problems overbooking seems to cause and wonder why this simple solution hasn't been thought of over there...

Fly Girl said...

Astroprof: If I'm traveling on a ticket, and have a chance to take denied boarding, I always jump at the chance. Many times, I can get an upgrade on the next flight, or some other amenity. And a free ticket always comes in handy.

Jon: What a wonderful idea! It would solve the entire problem. Now, how do we get the U.S. airlines to go along with it?

jiffy said...

perhaps the australian method is less customer friendly for good reason? i suspect it's because our domestic market is much smaller than in the states, so seat exchanging is not financially viable for airlines operating here. due to fewer people flying (though proportionatley its higher than the states?), overhead costs are higher for airlines. so with this in mind the ACCC allows airlines concessions in the faith that it will eventually stop once the market expands?

that's my take, but its just another of my armchair theories (which is why this site is just perfect for laymen such as myself). the bit about overhead costs may be a pile of tosh, but i can't for the life of me think of a better reason why we aussies are given the raw end.

#ps. thanks for replying to my query about pricing. very useful. as you say the cost of airline tickets have come down, but it appears the user-pay additions to the "low-price ticket" is a means of clawing back the profit margin (a margin the airlines lost due to various price wars in the past). once one airline introduces extra fees, its inevitable the whole pack will follow suit. collusion among the various airlines puts us back to square one: overpriced tickets (or as i suggested, proportionately overpriced tickets).

end of the day the only guarantee of low cost travel is technology and increasing living standards (ie. more bums on airline seats). and like you, i totally favour the creation of a pricing structure based on user pay. its the way of the future.

jiffy said...

just an afterthought: overhead costs decline with economies of scale. in aus, our domestic carriers (inter-state) are much smaller than yours. they fly to fewer destinations, and operate smaller fleets (smaller market, smaller airlines), though due to increasing demand this is slowly changing.

jon said...

I don't know about you jiffy, but I'd much rather make the effort to get to the airport on time and know I'm not going to risk losing my seat due to overbooking. The system the airlines have here works well - people are actively encouraged to make an effort to get to their flights on time.