Flying sucks these days. Aviation week outlined the problems a few weeks back, saying…
In an era of packed airplanes, no meals, a la carte snacks, rationed blankets, gate delays, runway delays, enroute delays, landing delays and more gate delays, there still is nothing so aggravating as the “involuntary denied boarding,” a polite term for being bumped from a flight. It is the ultimate insult to a would-be airline passenger and the No. 1 cause of consumer dissatisfaction...
According to Transportation Dept. data, the bumping rate has been less than one per 10,000 passengers in seven of the past 10 years. But last year’s 1.01 rate represented 55,828 passengers, each with a sad story to tell. And for whatever the reason, the rate in the first quarter of 2007 spiked to 1.45 per 10,000. - Aviation Week, September 17, 2007
The reason is economic, duh. If WalkUpPrice > BumpCharge then Bump.
The penalties for involuntarily denied boarding were set up in 1978 at $100, $200, and $400, depending upon the severity of the delay. However, they were never indexed to inflation. As the chart shows, in today’s dollars these correspond to $300, $600, and $1200.
These dollars are further discounted, because the payout typically occurs in airline credit, which has an expiration date, blackouts, etc. which means that in aggregate, not all the credit they give out will be used. Moreover, it will never track with inflation in the future, so it continually loses value in time. What a crock!
When a business traveler comes up to buy a last minute ticket, they are totally price insensitive. We’re happy to pay $500 for that last minute Detroit to New York flight on an overbooked plane since the company is paying for it. The airline joyfully books our revenue, bumps off an existing passenger, pays them their piddling amount, and generally ruins their day.
The right solution to this problem is really very simple. Adjust the compensation rates upwards match what they were when the rules were instituted. Then, index them to inflation going forward. Airlines will quickly and rationally decrease the number of involuntary denied boarding events because they will make much less economic sense.
Sourcing:
Editorial Stop Finding Excuses, Ban Passenger Bumping Aviation Week & Space Technology 09/17/2007, page 98 In an era of packed airplanes, no meals, a la carte snacks, rationed blankets, gate delays, runway delays, enroute delays, landing delays and more gate delays, there still is nothing so aggravating as the “involuntary denied boarding,” a polite term for being bumped from a flight. It is the ultimate insult to a would-be airline passenger and the No. 1 cause of consumer dissatisfaction.
Now, the U.S. Transportation Dept. is considering whether and how to update the rules that govern bumping and the limits on what compensation is required from airlines that inflict it. The department asked for public comment on refinements to the current system, and most input from airlines and the public follows this line. This is the wrong approach. The department should ban bumping as an obnoxious anachronism that causes a great deal of suffering to a limited but meaningful number of powerless passengers.
In its invitation for comment, the Transportation Dept. restated the justification for bumping that the old Civil Aeronautics Board used in deciding to permit it, and how to regulate it. Remember the CAB? The rules are that old, dating originally from 1962.
In a nutshell, the department says “controlled overbooking” gives passengers a degree of flexibility in making and canceling reservations, and in buying and obtaining refunds on tickets. The argument is that overbooking enables airlines to fill more seats and make up for no-shows, and thus it reduces the pressure to increase fares and “makes it easier for people to obtain reservations on the flights of their choice.” Confirmed reservations “can almost always be honored.”
Problems arise, however, when a confirmed reservation can’t be honored—when the airline can’t find volunteers to give up their seats on an overbooked flight, and someone must be bumped. All too often that someone is a passenger who bought a ticket well in advance at a discounted price. This enables the airline to fly a late-booking passenger who paid the full “walk-up” fare. The rules limit compensation for bumping a passenger to $200 or $400 depending on the length of delay and type of flight; this is often less than the difference between discount and walk-up fares. Bumping thus becomes a profit-making proposition, especially when the compensation turns out to be a voucher that is even harder to redeem than frequent-flier miles.
The potential loss to the bumped passenger, financial and otherwise, is potentially much greater than the compensation. A substantial delay can result in forfeiture of a hotel deposit at the passenger’s destination; a missed connection for an overseas flight, a cruise or a tour; a lost day at the start of a vacation. Less tangible but more serious is the missed wedding or other family celebration, or the business meeting that might have sealed a deal.
Furthermore, delays are more likely to be long enough to cause these kinds of problems, because the time-honored remedy for denied boarding—a seat on the “next flight out”—is less likely to be available. When domestic load-factor percentages were in the 60s, as they were years ago, a bumped passenger had a reasonable chance to get on that next flight. Now, with load factors in the 80s, the next flight is as likely to have bumped some of its own passengers as it is to take on stranded travelers.
The Air Transport Assn. (ATA), which represents the biggest U.S. airlines, says overbooking occurs on 20% or more of all flights, but airlines actually sell too many tickets on only a “tiny fraction” of the overbooked flights. And in 2006, there were more than 11 passengers who volunteered to give up their seats for every passenger who was bumped, the association adds.
In so big a business as commercial aviation, however, tiny fractions produce big numbers. According to Transportation Dept. data, the bumping rate has been less than one per 10,000 passengers in seven of the past 10 years. But last year’s 1.01 rate represented 55,828 passengers, each with a sad story to tell. And for whatever the reason, the rate in the first quarter of 2007 spiked to 1.45 per 10,000.
The ATA also cites the “razor-thin” profit margin of airlines—net profits in 2006 were 1.9% of sales—as an additional reason to preserve bumping. But airline profits are notoriously erratic. Just last week, Delta Air Lines estimated a 6-8% operating margin for the current quarter.
Most important, there is a way to eliminate bumping without depriving airlines of an opportunity to fill all of their seats. Carriers should issue reservations and sell tickets up to the seating capacity of the aircraft on a given flight, and then issue standby commitments. Seats should be held for confirmed passengers until a short time before departure, at which point unclaimed seats would be released to the standbys, first-come, first-served. When a smaller aircraft is substituted at the last minute, the same rule should apply—first-booked, first-flown. If airline computer systems and software are sophisticated enough for just the right amount of overbooking, surely they can figure out when a flight is full and who ordered their tickets first.
The Transportation Dept. is asking another important question: Should denied-boarding rules apply to aircraft with 30-60 seats? The ATA and Regional Airline Assn. say they should not, because small aircraft are more susceptible to weight restrictions in hot weather, especially at high altitudes, and bumping may be necessary to reduce weight. The Transportation Dept. notes, however, that regional aviation has grown enormously since the CAB excluded 30-60-seaters from the bumping rules, that about 20% of domestic trips are flown on regional carriers, and that 99% of regional-airline passengers traveled on flights operated in a code-share agreement with a major airline. From the passenger’s standpoint, being bumped from a regional jet is at least as serious as being bumped from a mainline aircraft. We support the extension.
This magazine is no fan of a “passenger bill of rights” to regulate every facet of airline customer service, which ought for the most part to be left to the marketplace. But the mechanism of bumping—selling more seats than an airplane holds and then blocking access by ticketed passengers–—smacks of illegality. If bumping isn’t considered a unilateral breach of an airline’s contract of carriage, it should be. It’s an abuse whose time has come and gone.
http://www.usairways.com/awa/content/aboutus/customersfirst/customerserviceplan2.aspx
- If the passenger's arrival at his or her final destination is greater than one hour but less than two hours past their original scheduled arrival, involuntary compensation is 100 percent of the sum of the values of the remaining flight coupons of the ticket to the next stopover, but not to exceed $200
- If the passenger's arrival at their final destination is two hours or more past their original scheduled arrival, involuntary compensation is 200 percent of the sum of the values of the remaining flight coupons of the ticket to the next stopover, but not to exceed $400
- If the passenger's arrival at his or her final destination is greater than one hour but less than four hours past their original scheduled arrival, involuntary compensation is 100 percent of the sum of the values of the remaining flight coupons of the ticket to the next stopover, but not to exceed $200
- If the passenger's arrival at their final destination is four hours or more past their original scheduled arrival, involuntary compensation is 200 percent of the sum of the values of the remaining flight coupons of the ticket to the next stopover, but not to exceed $400
