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JetBlue Almost Never Bumps Passengers—and That's Bad for Business

JetBlue Almost Never Bumps Passengers—and That's Bad for Business

Old Feb 5, 14, 11:59 am
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JetBlue Almost Never Bumps Passengers—and That's Bad for Business

The airline has shunned the idea of bumping passengers for the last 14 years yet very few passengers are aware of this. Should the airline monetize on it?

While other airlines make more money than they offer up to bump volunteers in future travel vouchers, JetBlue has the lowest rate of involuntary denied bookings...
only 18 people out of 21.3 million passengers through the first three quarters of 2013
http://www.businessweek.com/articles...d-for-business
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Old Feb 5, 14, 1:13 pm
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Originally Posted by TravelingPeanut View Post
While other airlines make more money than they offer up to bump volunteers in future travel vouchers, JetBlue has the lowest rate of involuntary denied bookings...
I don't understand - how do airlines make money by bumping volunteers? Alternatively, if you're saying they're making more money by overbooking, how do you quantify that?
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Old Feb 5, 14, 1:14 pm
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Bad for business

Originally Posted by TravelingPeanut View Post
The airline has shunned the idea of bumping passengers for the last 14 years yet very few passengers are aware of this. Should the airline monetize on it?

While other airlines make more money than they offer up to bump volunteers in future travel vouchers, JetBlue has the lowest rate of involuntary denied bookings...

http://www.businessweek.com/articles...d-for-business
Its also good for most customers who like not having to be bumped from a flight. (although some passengers like to get bumped).
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Old Feb 5, 14, 1:22 pm
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Originally Posted by TravellingSalesman View Post
I don't understand - how do airlines make money by bumping volunteers? Alternatively, if you're saying they're making more money by overbooking, how do you quantify that?
That's what the article is saying. You can quantify it by adding up the revenue from all the seats sold on a flight (or more likely, a route) and taking away the compensation paid for bumping.

The question I have is, if they don't overbook, do their planes fly slightly less full than other carriers or do they have fewer cancelations / no-shows etc.?
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Old Feb 5, 14, 1:34 pm
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Originally Posted by TravellingSalesman View Post
I don't understand - how do airlines make money by bumping volunteers? Alternatively, if you're saying they're making more money by overbooking, how do you quantify that?
Because the last 20-30 percent of tickets they sell are the most profitable. So they oversell them by a few and hope there are some cancellations.

If there are not and they need to bump 2 passengers, even the cost of a couple 200 dollar vouchers puts them well ahead of where they would have been had they not sold the extra tickets.
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Old Feb 5, 14, 1:53 pm
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I think the legacy carriers with significantly more business travelers will have a lot more same day flight changes and no shows. JetBlue on the other hand is geared toward leisure travelers that are a lot more predictable that they will actually take the flight they booked.
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Old Feb 5, 14, 4:31 pm
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Very interesting. They would need to expand their flight routes to really implement the logic. More routes, more fish in the net.
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Old Feb 5, 14, 5:11 pm
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Originally Posted by zerolife View Post
I think the legacy carriers with significantly more business travelers will have a lot more same day flight changes and no shows. JetBlue on the other hand is geared toward leisure travelers that are a lot more predictable that they will actually take the flight they booked.
This. And of course, the "humanizing" concept. JetBlue at least tries to maintain some principled leadership as a business, rather than "anything to make money" that the author seems to think is the best thing for all businesses.
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Old Feb 5, 14, 5:46 pm
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Originally Posted by acardio View Post
Because the last 20-30 percent of tickets they sell are the most profitable. So they oversell them by a few and hope there are some cancellations.

If there are not and they need to bump 2 passengers, even the cost of a couple 200 dollar vouchers puts them well ahead of where they would have been had they not sold the extra tickets.
Well stated!!!
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Old Feb 5, 14, 9:01 pm
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Originally Posted by TravellingSalesman View Post
I don't understand - how do airlines make money by bumping volunteers? Alternatively, if you're saying they're making more money by overbooking, how do you quantify that?
I thought the entire point of the oversale is to fill the plane completely with revenue passengers. What we probably don't know is all the mathematics and predictive modeling that goes into estimation of how many seats over capacity the airlines can sell... aka predicting:

1) How many passengers mis-connect to that particular flight on average for that day of the week
2) How many passengers typically don't show for that particular flight on average for that day of the week (likely depends on whether it is holiday, business travel day, etc. etc.)

Even if the plane does over-sale on a given day, those last few tickets that were booked would have been in extremely lucrative fare classes (Y's, B's, M's), which may end up being twice or more the amount of the voucher that will be given out to a VDB.

I don't know the exact statistic, but I heard that more than half of vouchers for VDB's / IDB's go unused. If that truly is the case, the airlines win big by overselling.

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Old Feb 6, 14, 1:07 am
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Originally Posted by TravelingPeanut View Post
The airline has shunned the idea of bumping passengers for the last 14 years yet very few passengers are aware of this. Should the airline monetize on it?

While other airlines make more money than they offer up to bump volunteers in future travel vouchers, JetBlue has the lowest rate of involuntary denied bookings...

http://www.businessweek.com/articles...d-for-business
This is crazy to say! I worked for Jetblue and the policy is to NEVER oversell a flight, think about it for compensation rule you have to give a pax on average 300 dollars and still get them to their destination. When one way tickets are barely going for 150 on average how would losing for example 300 make since..... More importantly do you want to be the pax that they bump? I wouldn't! Think about it.
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Old Feb 6, 14, 3:35 am
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Originally Posted by travelRN777 View Post
This is crazy to say! I worked for Jetblue and the policy is to NEVER oversell a flight, think about it for compensation rule you have to give a pax on average 300 dollars and still get them to their destination. When one way tickets are barely going for 150 on average how would losing for example 300 make since..... More importantly do you want to be the pax that they bump? I wouldn't! Think about it.
You don't really know what you're talking about. Since they have switched over to Sabre, RM analysts have the ability to set levels above capacity. It's true that the "official" policy is you don't overbook. In many cases that's true they don't. But it's common knowledge now some are overbooking to improve revenue numbers. You leave a lot of revenue on the table if you don't over book.
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Old Feb 6, 14, 8:08 am
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Originally Posted by grahampros View Post
You don't really know what you're talking about. Since they have switched over to Sabre, RM analysts have the ability to set levels above capacity. It's true that the "official" policy is you don't overbook. In many cases that's true they don't. But it's common knowledge now some are overbooking to improve revenue numbers. You leave a lot of revenue on the table if you don't over book.
You leave a lot of goodwill and long-term money on the table if you DO overbook (see the race to the bottom for most airlines), but because it doesn't translate well to an Excel spreadsheet, it's somehow not "smart."
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Old Feb 6, 14, 8:09 am
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Originally Posted by grahampros View Post
You don't really know what you're talking about. Since they have switched over to Sabre, RM analysts have the ability to set levels above capacity. It's true that the "official" policy is you don't overbook. In many cases that's true they don't. But it's common knowledge now some are overbooking to improve revenue numbers. You leave a lot of revenue on the table if you don't over book.
What are you saying "some" are you talking about JB analysts? Airlines in general? Unless it's changed recently I was understanding that JB doesn't oversell flights at all....lining up with the article and the statement by the former JB employee above.
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Old Feb 6, 14, 8:26 am
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I think B6 should promote this better, honestly as a flier the fact that I am guaranteed a seat goes a long way in my book. I think this alone makes people feel a little better than the possibility of being bumped. I would think with the technology that rev mgmt has at their disposal they are pricing each seat accordingly.
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