737MAX

"I've made the decision, the company has made the decision, that we will cease to overbook going forward," Kelly said. "We've been taking steps over the last few years to prepare for this anyway."
Kelly didn't say when exactly the new policy will be put in place, but said "it's something that we will be discontinuing here very shortly." Southwest joins JetBlue in the commitment to end overbooking.
https://finance.yahoo.com/news/southwest-airlines-ceo-just-said-143757790.html

ucfjoe

Sweet. Maybe I'll get that empty middle seat more often.

palmetto86

So I guess that means AT and BS fares are either going up in price or going away as we know them? I don't know how you sell fully-refundable fares profitably without overbooking. Seems like a complete overreaction to me...

ADDITION: Maybe these plans were already in place, hence the auto-cancellations we've been seeing. Either way, seems like a drastic measure to something that Southwest actually handled very well compared to other airlines, IMO.

toomanybooks

Yeah, with fully-refundable fares up to 10 minutes before departure, my devious mind sees some ways to really cause havoc if desired.

If some group gets mad and wants to boycott/damage WN, they sure could.

pinniped

Feels like an overreaction to me. UA3411 had nothing to do with overbooking.

Unintended consequence #1 : I'm a business traveler, and I want to buy BS/AT three days before my flight, but in the future more flights will show "sold out" where today I would have been able to buy a date/time I wanted, albeit at a very hefty price.

Unintended (or maybe intended?) consequence #2 : I'm a leisure traveler, just looking for a $59 fare far in advance, willing to travel anytime. That fare is now gone, because the revenue model has to change to get more out of the medium to high fares since they can't oversell at the AT/BS level anymore.

I hope I'm wrong on this, but I don't see how the math works any other way. I know the CEO isn't going to take a pay cut to fund it.

LegalTender

They notably make a distinction between "overbooked" and "over-capacity" flights.

VDB's remain an active option.

pinniped

What is the distinction in WN's nomenclature? If a plane holds 137 and they sell 138 confirmed tickets, is that overbooked or overcapacity? Is "overcapacity" a term intended to cover for last-minute crew movements? e.g., they sell 137 but are willing to VDB a few to make room for crew?

In WN's operations, don't crew stay with their aircraft as it flies along a point-to-point route? It would seem like they'd have fewer issues with crew movement than a hub-spoke airline.

flyingcat

I take this as a mixed blessing, overbooking is a key financial contributor. Southwest could just start charging for bags and still claim they are unique because they overbook. I feel like this is a carrot and there is a stick with our names on it.

LegalTender

All excellent points.

Still, they made the distinction.

DMN

Kevin AA

I wonder if "over capacity" means is if a passenger mis-connects and is placed on standby, and that flight is full anyway, WN could ask for a volunteer so the misconnecting passenger can make that flight. Or an equipment swap to a smaller size 737, or deadheading crew.

omghaxcode

I can't be the only one that thinks this is bad news. For the flexible flier, this is a negative change. For the inflexible flyer, this likely means higher average fares. I have personally taken vouchers on Southwest many, many times.

rsteinmetz70112

Overbooked is obviously whne they sell more tickets than there are seats.

Could Overcapacity be when more people show up than there are seats?

Most Overbooked flights would not be Overcapacity, since there are cancellation and no-shows..

ursine1

This is pretty brilliant.

Other carriers are dealing with the current "overbooking" PR problem (not actually even caused by overbooking, but that's beside the point) by issuing stricter guidelines and upping VDB compensation to as much as $10,000. Southwest, of course, isn't going to do that.

Instead, they use customer perception of the issue as a way to announce that they are "ending overbooking," appearing to be pro-customer, while actually just accelerating internal policy changes they were already implementing, as a result of ongoing technology changes. Most likely aimed at increasing profits, because everything always is.

PR win.

If the new technology is actually able to keep load factors at current levels, there should be minimal negative end result to customers -- the most obvious exception being less availability of last-minute seats. Southwest never really fully committed to meeting the need of business travelers anyway.

Since Southwest's never been particularly adept with technology implementation (yield management perhaps a notable exception) it's worth considering alternate scenarios.

If load factors fall, expect an increase in fares, and/or a change to the 10 minute cancellation policy.

If load factors are held consistent, but profits fall, expect an increase in fares.

One assumes projections included realized profits from reduction in IDB and VDB. But how that is calculated, and how that is accounted for with respect to the bottom line, are important considerations. One bright spot is that there's a chance that this number could be enough to offset potential fare increases.

Time will tell.

pinniped

The explanation above helps. "No overbooking" means they'll only sell 137 tickets on a 137 seat plane. Overcapacity can still happen, mainly for operational reasons. Weight limits, inop seat, deadhead crew, downsize to a smaller 737 variant, etc.

Traditional overbooking relies on the statistically-expected cancels and no-shows. That's the piece that WN is removing from the equation.

LegalTender

Good will converts customers - pretty much a law.

We'll never know if they actually stop overbooking. The moment was pregnant.