
Southwest to Stop Overbooking as United Uproar Echoes - rayuela
https://www.bloomberg.com/news/articles/2017-04-27/southwest-to-end-overbooking-as-united-uproar-echoes-in-industry
======
johngalt
The problem isn't overbooking. The problem is not auctioning the seats higher
when overbooked.

I've seen a number of overbooked southwest flights and people can't line up
fast enough for a $300 flight credit + next available flight. I can't imagine
it ever going over $1k.

IMHO if any airline should continue overbooking it's SWA. No first class, no
assigned seats. Most of the flights are short range with multiple flights
options every day. You're much more likely to agree to switch to the next
flight if it means only waiting 2hrs.

~~~
zeroer
Yea, I agree the problem is not auctioning seats high enough. But the
proximate issue is that United didn't offer cash, but $800 in United Fun Bux
that are worthless for most people. The vouchers they were offering were only
valid at dates United decided. The vouchers expired after a year. And they are
offered in coupons for which you can only use one coupon per flight, and the
excess value is lost.

Practically all news outlets are reporting that "United offered $800 in
compensation", but the reality is that it's closer to $0 in compensation. It's
disingenuous to call it "compensation".

A better move on the airline's part would be to offer some amount of airline
credit, and then half that in cold, hard cash, at least up to $2,700 credit /
$1,350 cash, which is what they have to give you for an involuntary bump.

~~~
mikeash
Yes, the voucher thing is nonsense. I've been on overbooked flights before
where I could have easily taken the next flight instead. I never volunteer,
because the vouchers are worthless to me. Offer me cash and I'll often be
first in line.

~~~
iLoch
You can ask them to pay you in cash as long as you don't accept the offer
before hand. They're legally required to compensate you with cash if you ask.

~~~
mikeash
Surely they would just say "thanks, but no" and keep looking for suckers who
will take a voucher?

~~~
hueving
Where "suckers" are people that don't like what you like?

I like to travel so I would rather take the $1000 voucher than wait for a cash
offer that someone like you would jump on before I could get a chance.

I've taken in over $5,000 of free air travel over the years and always used it
to visit family and see places I wouldn't have otherwise. In the meantime
people thinking like you got nothing because it was a "sucker's" deal.

I suggest you look into the study of economics and pricing to understand how
people can get different levels of value from things. The you might understand
why auction systems like that aren't magically lining your pockets with gold.

------
chmaynard
Southwest Airlines has the best website, best checked luggage policy, best
change policy, and now no overbooking. The big four domestic airlines all
treat coach passengers like cattle, but Southwest is the least predatory.

Edit: Also, consider that Southwest is very profitable despite the fact that
they don't have first class or business class sections on their aircraft. Yes,
passengers pay different fares. But as far as I know, they all sit in the same
crappy seats.

~~~
Veratyr
To offer a counterpoint, Southwest also offers the worst boarding procedure,
unless travelling alone or with kids. My wife and I were going on vacation and
it was impossible to get seats together as we were pretty far back in the
assigned line positions and by the time we got on the plane, there were no two
vacant seats next to each other.

After landing we discovered that checking in at the right time might get us
further ahead in the line but we tried that, checking in within minutes of
checkin opening and were still pretty far back in the lines.

We ended up buying an "upgrade" to get us ahead in the line and next to each
other. For us to do that for both flights, we'd have been paying ~50% extra
for a feature that comes by default with all other airlines.

Also, while interacting with Southwest's famously "better", more "caring"
staff, we were met with total disinterest and absolutely no sympathy.

~~~
WillPostForFood
Counter-counter point: Southwest boards faster, by far, than airlines using
the standard pre-assigned method. That means less time sitting on the plane,
or waiting to board the place. Also means less abuse of selling seat upgrades.

~~~
brandonmenc
Anecdotally, boarding speed is not my major complaint - failing to secure an
aisle seat, however, is.

~~~
lucasmullens
Fast boarding speeds lowers their cost. That's one of the reasons Southwest
can often be much cheaper than other airlines.

~~~
codydh
Is Southwest often that much cheaper? I usually only fly them because they're
direct where others are not, but it usually doesn't save me money.

~~~
dionidium
I guess our mileage literally does vary, but I almost always find Southwest to
be among the cheapest options for short domestic flights.

------
munificent
I didn't follow the doctor-getting-dragged-off debacle closely but I have a
question about the basic mechanics of what went down:

When I've been boarding on flights, they do the overbooking announcement at
the gate and get volunteers to take later flights there, before people board.
That makes a lot more sense because, in the event that no one volunteers, the
airline can simply refuse to let certain people on.

They don't have to take the seat _away_ from the passenger, they can just not
to give it to them. Certainly, psychologically, people are a hell of a lot
more attached to something once it's been given to them. I've toyed with the
idea of taking a later flight before, but I'd be much less likely to do that
once I was all settled into my seat.

How is it that the doctor was already seated when they "volunteered" him to
not fly? That seems like the main fuck-up to me.

~~~
CamperBob2
The important detail that everyone likes to ignore is that the flight was
_not_ overbooked. It was filled to capacity. Everybody who wanted to be on the
flight was on the airplane. Then United decided to reaccommodate four seated
passengers to make room for four employees who were needed elsewhere.

Their contract of carriage allows them to kick you off under certain
conditions, but that's not one of them. "Overbooking" didn't come into play at
all in this case.

~~~
munificent
Ah, that's interesting. That _is_ a big fuck-up then.

------
aresant
This response feels knee jerk.

It's been demonstrated in countless other threads (1) and articles (2) how
economically important it is to overbook.

Overbooking is central to airline profitability and their ability to provide
flexibility - like partial refunds, or SW's "open tickets" policy on business
select.

As a consumer I appreciate these things and find them incredibly useful.

United's response of "We'll push the allowance up to $10,000" is completely
acceptable to me, that seems like the simplest solution.

(1) [http://www.businessinsider.com/overbooking-flights-is-
good-f...](http://www.businessinsider.com/overbooking-flights-is-good-for-
consumers-2017-4)

(2)
[https://techcrunch.com/2017/04/11/overbooking/](https://techcrunch.com/2017/04/11/overbooking/)

~~~
diogenescynic
>how economically important it is to overbook.

I still don't believe this claim. A 727 seats 129, a 787 seats 290, and a 747
seats 366. That means it only makes flights slightly less expensive. I only
travel a few times a year and I'd rather pay 2% more than get bumped off my
flight.

Why do we allow airlines to overbook but not movie theaters or other
industries? This seems like an artificial advantage we've given them and it
doesn't seem beneficial at all to the average consumer.

~~~
lucasmullens
Paying 2% more and getting bumped off your flight is a false dichotomy.
United's approach of offering $10k avoids both.

I don't see a reason to waste seats if it can be avoided without hurting
consumers. Wasting seats is inefficient economically and bad for the
environment.

------
gregschlom
I have a question for the HN crowd: what would happen if airlines sold their
seats at a fixed price and let customers resell them?

For the sake of the discussion let's assume that all seats are in the same
class (ie: economy) - there are no business / first class seats.

So the idea would be:

1\. All seats are sold at the same price, no matter how early or how late you
buy. The price covers all the costs associated with running this flight, given
an expected "occupancy rate" (sorry not the right term).

2\. All tickets are non-refundable. If a customer changes their mind, they use
the airline app to put their ticket up for sale. They can try to sell the
ticket at the same price, or at a discount (or maybe even at a higher price?)

3\. Airline charges a small fee (something like $10) every time the ticket is
transferred to another person.

Since this has never been done - to my knowledge - there must be something
wrong with it. But I wonder what it is?

~~~
jowiar
The challenge is whether you are fundamentally buying a seat on a particular
plane, or transit from point A to point B. Almost all simple solutions re: air
travel break down once connections get involved.

~~~
sjm-lbm
Also breaks down for equipment swaps. If we view seats on a given flight as
assets that can be resold, there's a lot of ways that normal (even
understandable) airline operations can "devalue" those assets, and sorting
that out legally would be an amazing mess.

~~~
jowiar
Pretty much any American airline that provides "better" service generally does
something along the lines of having a very limited coverage map and a more-or-
less a uniform fleet.

Most problems with air travel are "last mile" problems, with "last mile" is
defined as flying to a location that does not have a critical mass of service
to really be a "full service" city.

------
rdl
I think my favorite solution to this is to sell "guaranteed" and "standby"
tickets. Sell full plane capacity of "guaranteed", and then any ticket after
that is bumpable/standby. You could potentially switch to sell "bumpable"
tickets earlier, too, at a discount.

If the airline is flying ~8 flights a day from SFO-SEA, I'd be fine in many
cases paying x% less for y% risk of being bumped one or two flights later.

~~~
ramses0
People are price-sensitive (will always buy the cheapest option) and then
complain when they don't get the expensive service. It is _incredibly_
difficult to explain to someone: "You are not getting to your daughter's
wedding because reasons." ...and nobody wins that argument when it happens.

Apart from removing over-booking completely, the Delta "pre-blind-auction" is
the best choice. All tickets are sold at their regular prices (no random
discounts), and day-of people are able to decide if they are willing to be
bumped (ideally: by how long) as well as the price it would take.

There's a huge difference in "I'll take $1000 to be bumped to a later flight
today" and "I'll take $1000 to be bumped to a flight that's two days later"
(depending on the route, that is something that can happen).

It's a delicate balance between customer service, incentives, and profit, and
"guaranteed v. standby" pretty clearly fails.

------
ww520
The pricing nature of an airline seat is such that the closer to the flight
time the more expensive the ticket is. Consumers have been forced to pay more
under this model for the longest time. Buying back seats due to overbooking
should follow the same rule. Buying back seats at the time of flight departure
should cost the most. If airlines follow their own pricing model, they won't
have a problem. It's only when they try to bend the rules and use forces to
get back those seats that people got upset.

------
greeneggs
Between San Francisco and Los Angeles, Southwest has a lot of flights on their
schedule, but if one isn't full they'll just cancel it. Often all the midday
flights will be cancelled. Technically, this isn't overbooking, but it feels
like it.

------
heavymark
Seems odd that the airlines keep talking about overbooking but while yes
overbooking is an issue, it's not this issue. This issue is that UA wasn't
overbooked but rather allowed someone to get kicked off who was already
boarded because late staff wanted to catch a free ride.

JetBlue doesn't overbook, but they have removed passengers already boarded who
have not violated any rules, other than they wanted to accommodate other
passenger(s).

Overbooking is an issue, and they should either stop overbooking (though that
means potentially higher ticket costs for everyone), or when they do overbook
make sure they don't start boarding everyone until someone has agreed to not
fly and offer the appropriate amount to get someone not to fly, such as the
max amount or cash rather than a voucher. But once again, that's a different
discussion, and SW and others should focus on the bigger issue at hand that UA
violated.

~~~
maxerickson
The employees were flying at the direction of the airline, in order to staff a
flight elsewhere.

So it wasn't really about what the employees themselves wanted or not.

------
martinald
Considering Ryanair doesn't overbook yet is stupidly profitable, I think it's
possible to make this work.

~~~
davidf18
But they usually don't use major, convenient airports.

~~~
dx034
They started to use them, that's not the difference. The main difference is
that Ryanair doesn't allow connecting flights. So it's always your fault if
you miss the flight, never Ryanair's.

------
hueving
This is stupid. As a passenger I benefit from overbooking because it means
lower cost per ticket _and_ the option to get free flights out of an
overbooking scenario when I have a flexible schedule.

------
gregorymichael
For anyone looking to switch airlines amidst all the news lately, I can't
recommend Southwest more highly. Flew them out of Chicago for business the
last two years -- their rewards, no-fee rebooking, etc. literally changed our
lives. Wrote a bit about it here:

[http://baugues.com/southwest](http://baugues.com/southwest)

------
jemfinch
Does that mean ticket prices will increase?

~~~
sandworm101
I don't see how it could. Only a handful of people on any one flight are ever
bumped, on average. The bumped are normally put on other flights. The only
'win' is where someone doesn't show and also doesn't fly or get a refund. I
cannot see how it is more than 1 or 2% of revenue.

That said, perhaps I am dead wrong and overbooking is being used for darker
purposes. Perhaps they are deliberately overselling flights at peak times
knowing that they will push bumped customers to later less-full flights. If
that is being done knowingly, that's a bait-and-switch operation that might be
worth more than a couple percent.

~~~
mwfunk
Well, if it's a 1-2% decrease in revenue there might be a 1-2% price increase.
I thought the margins for US airlines were incredibly small (could be wrong,
I'm no expert).

~~~
jonknee
They also won't have to pay the people who get bumped which will somewhat
offset the lost revenue from overbooking.

~~~
nommm-nommm
I was under the impression they didn't actually pay people bumped, only gave
them a voucher for their next flight that they probably won't even use.

Do they actually give cash?

~~~
jonknee
They give flight vouchers, but they often have other direct expenses like
hotel accommodations and food.

The last time I was bumped it was ~$600 airline voucher, transportation
to/from a ski resort (a perk of being bumped in the mountains!), a room for
the night and a good meal voucher to cover dinner and breakfast the next day.
Plus they still flew me out the next day and took care of rebooking the
connection on another airline. I don't know exactly how much it cost them, but
I made out like a bandit.

~~~
sandworm101
I can better that. In the early 90s I (12) and a schoolmate (17) were flying
vancouver-toronto-london with BA. I as an unaccompanied minor, him no so. The
toronto-london flight was delayed overnight due to mechanical issues. They
probably wouldn't have helped my friend so much but when I mentioned there was
an older student on the flight from the same school they tracked him down. We
got two hotel rooms and, this sounds strange but true, a stewardess. She took
us to visit the University of Toronto, to which my friend was applying, and
then the CN tower before our flight the following night.

------
thinkloop
There is no "win" for the consumer here, same as when airlines decide to re-
provide free food or free checked bags - these things get baked into the price
of tickets, nothing is free. They are marketing. Rather than spend a million
on ads, they spend a million on less efficient flights (by not overbooking),
but hopefully getting more customers than ads would have gotten given this is
a hot-button topic.

------
spullara
They just need to charge people for no shows and QED.

~~~
loeg
They already do. Refundable tickets cost about twice as much as non-
refundable.

~~~
spullara
Usually when you miss your flight you get credit. So non-refundable just means
you can't get cash. Most times you still can use the price of the ticket on
another flight in my experience.

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dandare
Is it possible to calculate a price tag for United's fiasco?

------
randyrand
Lets hope Southwest doesn't become uncompetitive.

~~~
CamperBob2
They know what they're doing.

------
ddingus
I love Southwest.

