Is It Time for Airlines to Stop Overselling Flights?

In April of 1972 consumer crusader Ralph Nader showed up for a flight at Washington’s National Airport and was told the airline had oversold the plane so he wouldn't be flying. Back then there was no such thing as involuntary bumping compensation and Nader quickly set about changing all that. Also back then, when online booking wasn’t possible, passengers could pick up a phone and reserve seats without advance payment much like they can today with hotels and rental cars, with no penalty for changing or canceling (non-refundable airfares, with their $200-$300 change/cancel fees, weren't a thing). Flights in the sixties and seventies were only about 50% full and airlines were heavily regulated by the government. So if someone didn't show up it wasn't a big deal because they weren't depriving someone else of a place on the plane. Full flights were a rarity and oversold ones even more so.



Much has changed since then. Maybe it's time for airlines to change as well.

Or at least change the practice radically. Name one other industry besides airlines and hotels that are allowed to sell the same thing to two people at the same time. Theaters and sport venues don’t sell the same seat to two people. Real estate agents don’t sell the same house to two parties.

But airlines do this every day (except for jetBlue, which has long had a no-oversell policy and seems to be doing quite nicely, and, as of last week, Southwest, which announced they will no longer overbook). For the record, last year, 40,629 passengers were involuntarily bumped by U.S. airlines, according to the U.S. Transportation Department. That's less than 1 (0.62) of every 10,000 passengers, and while it seems like a rare occurrence statistically it can be a disaster if it happens to you. Another 434,425 passengers volunteered to be bumped.

Perhaps overselling was reasonable decades ago when most airfares came with no restrictions for cancelations and changes. You could pick up the phone and reserve a seat without paying for it in advance. Business travelers would reserve seats on multiple flights in case their meetings ended early or went later and just show up for the one that suited them best. (Some, who buy fully refundable tickets, do still cancel at the last minute or fail to show up).

Perhaps overselling was even reasonable a few years ago when airlines were losing billions. But today, airlines are making billions, and the vast majority of tickets are non refundable. The airlines keep at least $200 of your domestic fare if you cancel or don't show up, and $300 or more on international tickets; some airlines on some fares (especially these new "basic economy" fares) keep all of your ticket price and then they resell your seat to someone else, usually at a much higher last-minute fare. So now even if they don't resell your seat by overbooking they still collect revenue. It's greedy to expect to get paid twice for the same seat.

Furthermore some passengers who get involuntarily bumped suffer real hardship.  I'm not referring just to those missed vacation days or the cruise they weren't able to catch. What about the missed funerals and weddings or job interviews? Airlines bump people not based on how desperately they need to get to their destination but on frequent flyer status or whether they're in first class or coach. It's often Inhumane.

Overselling makes air travel look bad

Airlines argue that overselling keeps fares low. Perhaps. I argue that it harms airlines rather than helps them. It tarnishes reputations and adds just one more reason for anyone on the fence about staying home or driving rather than flying somewhere to think twice about buying an airfare. And if that consumer decides to fly, then the fear of being bumped—that his ticket doesn’t guarantee him transportation or a seat-- also adds just one more misery to air travel and as we saw with the now infamous United incident. Even though United now claims flight 3141 wasn't oversold, bumping passengers can lead to very unintended consequences.

It's time for the airlines to stop this or for the DOT or Congress to do it for them.

Here’s what I would like to see: One, the DOT should resurrect Rule 240. That regulation required airlines under some circumstances to pay another airline to fly you to your destination in the event it wasn’t able to get you to your destination in a timely manner (as recently as 2014, even United had Rule 240 in its contract of carriage; today, no airline does). Two, the DOT should look at how Europe protects airline consumers. Anyone flying on a European-based aircraft is entitled up to 600 euros if a flight is canceled or severely delayed (tip: even if you buy a fare on Delta, if the flight is flown by its Virgin Atlantic partner, you're covered). Three, the DOT should at the very least require airlines to publish how they choose who gets bumped (although I’d like to see the DOT establish guidelines in consultation with the airlines). This would give passengers some idea of how to protect themselves. Airlines should consider need to get there rather than just how important you are or how much you paid. Four, airlines should make it perfectly clear that the vouchers they hand out for voluntary bumping require that all travel be completed within a year of issuance (most people fly just once a year, and the vouchers end up being worthless). Five, the DOT and Congress should ask whether overselling should even be a thing now. I think its time has passed. What do you think?