Why is AC allowed to get away with overselling flights?

[Expat]

This isn't just a phenomenon associated with the aviation industry. It is common practice in the hotel industry to overbook rooms. The hotel would rather walk guests to another hotel than have empty rooms. Like C-HRIS said, they want to maximize their revenue.

It is a common practice in industries with a public measurement of performance. Airlines, trains, and hotels use this method, named passenger load factor(PLF) A higher PLF will boast the shares of a publicly traded company, and that is why the CEO is paid. Bumped passengers are a non event in the financial world, but PLF is very important. The only way to improve the PLF, is to overbook flights to the point where you achieve close to 100%.

http://en.wikipedia.org/wiki/Passenger_load_factor

http://en.wikipedia.org/wiki/Yield_management

Business 101.

[Mad Catz]

To everyone complaining about the overselling of seats, you need to wake up. It's 2013, not 1965. Deregulation of the industry has caused fares to drop significantly over the last 30 years, and as a result so has the level of service. You don't like it? Your welcome to take the bus, train, or boat. I'm pretty sure they do not oversell.

Jeez, I remember just a few years ago when you could check in 2 bags, and carry on 2 more for free! I don't even know what you pay for that "luxury" today.

[oldtimer]

When we say flights are being overbooked, do we mean passengers and/or travel agents book passengers on flights and those passengers do not show up to purchase the tickets or are they passengers with confirmed reservations and purchased tickets showing up at the airport only to be told there are no seats available.
I remember a few years ago a business person I knew who would book 3 or 4 different flights to accomodate his uncertain schedule and then purchase the ticket for the flight he wanted. Selfish, but who cares, it is me first. If there were any monetary penalties, he used a company credit card so it was no skin off his ass.
The last time I flew WJ out of YVR, I was amazed at the number of people who checked in, got a boarding pass, checked luggage, cleared through security and then did not show up when the flight was called. One group were quite upset when the CSR threatened to have their luggage removed and finally, one group of 4 actually showed up after the flight was closed.

[bmc]

An oversold flight is one where, for example, the aircraft has 100 seats and it regularly departs with 80 seats filled. The airline receives bookings for 100 passengers, but flight departs with 80 filled seats. So, the airline opens up the available capacity to 120 seats in hopes that it will depart with all 100 chairs filled. Each sector and each flight has its own profile adjusted, reflecting demand and no-shows.

This is not an AC only activity. I have stood by for flights on LH that were oversold by 60 in economy on a long haul flight, and got on the flight. Most times it works just fine. Some times it doesn't. When it doesn't, the airline makes arrangements to either put you on a later flight or FIM you over to another airline.

[bobcaygeon]

xsbank -----I've travelled once a month from Winnipeg to Ft. St John, BC. WJ charges approximately $167(with all the add-ons) on a Tuesday, Wednesday, Thurday into Edmonton. In Edmonton, I book with CMA which costs $270-$315 into Ft St John. I can take AC direct Winnipeg-FSJ for slightly over $900. Guess which airline I've been using to make those once-a-month trips with for the last two years? If you can find a better deal with AC for 12 months a year, then I please ask you to contact me. I'll also take the seating room on a 737-700 over the "sardine-like" seating of an AC CRJ making the same trip.

When I make that trip, I'll also get into destination many hours before the same AC flight arrives.

Ummmmm, they wouldn't charge that fare if the market didn't support it. Would you sell a stock at below market value?? It's a new system call free market. The growth on segment is unlikely to increase substantially due to lower pricing.

Reasons to go direct or same airline? If mechanical then there are options supplied. If you miss your CMA/WJ connection your hooped due mechanical, wx, etc. With AC you can fly from anywhere in the AC route structure and be supported ie SYD, ZRH, YYT, Wabush, etc.

If you think WJ is low cost maybe you should quickly review how much airfares on BOTH AC/WJ have gone up since 2010. In 2010 the average fares for both companies were up almost 50% with WJ being higher % increase. Jets go was long dead by then. From a consumer point of view you can almost start to argue that price fixing/collusion is in play. Airlines worldwide have recently been tagged for this, particluarily the freight market.

PS Winnipegers are notoriusly cheap so do as you please. Several major retail chains do price testing in YWG including Walmart.

[altiplano]

Article I remember from earlier this year...

http://www.theglobeandmail.com/globe-in ... d/follows/

Airlines have it all down to a science from data they collect and process. The focus of the article is capacity/yield/pricing but obviously overbooking works into that...

“The airlines have got very, very sophisticated yield management tools. They’re good at this,” Mr. Erickson said. “And they have a very, very good indication of what the last-minute demand is going to be.

“There is nothing more perishable than an airline seat. Once the plane goes up, and there’s no bum on that seat, [the airline gets] absolutely no revenue [for that seat],” he said.

As a result, analysts have become fixated on capacity management – that is, how well the airlines are adjusting the number of flights they offer to match demand. Air Canada’s president and chief executive officer Calin Rovenescu regularly talks of capacity management in his public statements to emphasize that it is a focus for the airline.

WestJet’s president and chief executive officer Gregg Saretsky noted the strength of future bookings and said that “our positive momentum culminated in 2012 with a new single-day record of flying more than 57,000 guests on December 21st.”

In managing capacity, airlines look at the regular demand for last-minute, full-priced bookings for specific flights and then work backward from that – offering seats at various prices while leaving enough room for the costlier last-minute fliers.

This formula is also affected by factors such as the extra price travellers are willing to pay for comfort (important for frequent business travellers), flexibility in terms of whether the booking can be changed, and for convenience in getting the flight on a day or time customers want. These all add to the mix of how seats are priced in advance of takeoff. “They’re really, really good at that. Air Canada has 70 years of data. WestJet has 16 going on 17 years of data. So they have their pencils sharpened,” Mr. Erickson said.

[Cessna driver]

Alaska/horizon over books by 25% as well. The CSR told us one day when we were coming back from hawaii, there was 4 of us and 5 seats left. There was about 30 people from our flight in line behind us. All going back home (same dest)