Originally Posted by
themixwizard
Are they overselling a flight in anticipating someone won't show and they ensure they leave full?
Yes, that's exactly it. The black art of determining exactly how many seats a given flight can be oversold by is called "Yield Management" or "Revenue Management." It is a given that almost all flights will have cancelled reservations at the last minute, and it's in the airline's interest to have as many seats go out full as possible. If you have a cancellation at the last minute and haven't oversold the flight, then you end up flying an empty seat around.
jetBlue is the only American airline which does not oversell, to my knowledge.
Originally Posted by
themixwizard
Also, if one class is oversold, let's say economy, but business or first has several seats, does the oversold passenger get a free bump up?
No, the "free bump up" (also called an operational upgrade) is given out to economy passengers with elite status first, in virtually all cases. The economy seat thus freed up is then assigned to an oversold passenger.