SAPMAN

I have rarely seen WN ask for volunteers over the past 18 months. True, reduced on other airlines, but I still see them ask for volunteers more than at WN.

Is it a good strategy to overbook a bit more and have a few volunteer bumps but more seats full? I would think this is a good strategy, especially for earlier flights that have multiple flights later on. Especially if you have extra seats on the earlier flights. Versus going out with 4-5 empty seats.

I know some think this upsets the public, but on 95% of the times I see airlines asking for volunteers (for a $100 - $300 flight credit compensation), there are plenty of takers. And if they can get to destination within 2-3 hrs., it really is easy to get volunteers.

It seems to me WN could increase % of seats filled by doing this and improve revenue/profit.

MikeMpls

Wife & I netted $1K in bump vouchers from WN in March & April, 75% due to overbooking & 25% due to a broken row of seats (wife got that one, I had already been bumped 'cause it was overbooked by 1 ).

Best approach is to visit the podium as early as possible & offer to volunteer before they make any announcements.

medic-again

loads are down, so the company has been cutting flights to try to fly with full planes. the problem is that if you cut too much on some routes, people will just take their travel elsewhere with a better schedule and you lose any revenue you'd have had. plus, you've got to get the planes to the rest of the network.

Actually, the best strategy is to match loads with capacity, overbooking and having everyone show up actually costs the company money. In the CNBC special on AA, they followed a flight from Boston to SFO I think and said the difference between profit and loss was 1-2 passengers. Obviously, WN has a different fare and cost structure, but when you have to bump, you've lost that revenue and it's even more costly if you end up bumping the BS or Anytime fare instead of the $39 anytime fare.

Frankly, I've been flying WN more at certain times because I'm pretty sure I can get an empty seat next to me on my trips to the Bay area. If I didn't have that flight, I'd reconsider my travel options. This experience has resulted in my selecting WN for other flights and also recommending the airline to others who still remember the cattle calls and hoped never to fly WN again.

wnflyer

It probably also depends on the average fare paid on a flight as well. In my opinion, if the majority are ding/want to get away/sale fares, the revenue opportunity vs. denied boarding compensation matrix would lean to having fewer seats available that lead to an oversale.

Just because the load factor is high doesn't mean a flight is profitable.

lewisc

You're assuming SW could sell those seats at a profitable fare. Having a fare sale doesn't make much sense if the result is TTF being issued to already ticketed passengers but few, if any, new reservations.

mritty

Not understanding the mathematics here.

For simplicity sakes, Let's say the fare is $100, and it has 100 seats. Ideal situation is every seat filled => $10,000 revenue. If the plane flies with two seats empty, it's $9,800 revenue. If they over book by two, and need two volunteers, it's $10,200 - $400 (2 pax * ($100 original fare + $100 compensation)) = $9,800.

How does overbooking help matters? Did my simplification remove important details that compensate for the fact that when someone has to volunteer, SWA both loses the original fare plus gives up revenue on a later flight? If so, how?

formeraa

My mother has netted a total of $560 in the past three weeks from VDB opportunities on two flights. One flight was out of SEA and another out of PHX.

MikeMpls

If you sell all 100 seats, maybe only 98 people will show up. If you sell 102 tickets, the plane is full.

Overbooking helps the airlines mainly when they sell a bunch of high last-minute & walkup fares, where compensation in the form of vouchers is more than offset by the income.

luv2cattlecall

It helps in a few ways. First, SWA doesn't actually lose the original fare when someone gets bumped - they're still moving you from A to B, and they still keep whatever you paid.

Mostly, however, overbooking helps in situations where pax cancel their tickets. Since Southwest is VERY lenient in letting you change your plans (i.e. no fees), they have to overbook, or they risk really empty birds. I don't mind the occasional risk of being bumped if the trade off is no change fees.

Also, consider that a $250 voucher is very different from $250 cash. In reality, the seat you buy with the voucher is costing maybe, at most, $10 in marginal costs, since the aircraft your flight is on would have been in the air anyways. Since that voucher would almost certainly make you choose Southwest over another airline, it could even work out in their favor. Let's say, for example, that because of the voucher, you use WN for a family vacation. In that case, they actually gain hundreds in revenue that they might not have had, from your family members.

This works out even better because there's virtually no chance of losing revenue from businesses, since most travelers would pocket the voucher, not surrender it to their company.

Here's a link to one of the best studies I've seen re: overbooking (pdf warning): http://www.aerlines.nl/issue_32/32_K...verbooking.pdf

Hope that helps!

SAPMAN

Good points, but if they overbook by 5 vs 2 normally on 20 flights and only need to give comps on 3 of the flights (but fill a few more seats on all 20), WN comes out ahead. Most flights are overbooked to some degree. If airlines did not overbook, you would rarely see a full flight.

Also I am not sure the fairness -- but why not have WN ask people to volunteer and take people in order of the cost to them (lowest to highest). Those on Award travel get less since the ticket cost is zero. I have seen someone (in fact a strategy mentioned a year or so ago) with a connection and much higher priced ticket get bumped and comped when others with cheap tickets also volunteered -- but maybe not first at the podium.

One issue I have is probably getting a C boarding pass on the backup plane. WN should let gate agents give a "manual" A boarding pass to volunteers. I know they used to do it -- but not sure now.

lewisc

Let's assume the plane has 100 seats and 95 seats are sold for $100. Assume SW uses a DING promotion, $75, for 7 seats (sell out the flight and overbook by 2). Assume 7 existing passengers re-ticket at the DING fare. The flight still has 95 passengers but SW just lost $175.

EIPremier

I took a WN flight san-sjc last Saturday, which was notable to me for one reason: it was the first WN flight I've taken in close to a year where I did not have an empty seat next to mine (flight was maybe 90% full). Definitely haven't seen an oversold flight on the Bay Area routes in some time. I usually find that by sitting toward the back I have a pretty good shot at the middle staying empty.

The absence of high yield last-minute bookings has resulted in lower oversale rates. Put another way, the airlines overbook less because the expected marginal revenue of selling those last few seats on the plane has decreased, but the marginal cost of compensating/reaccommodating bumped passengers has stayed about the same. Sometimes I even still see bargain seats being offered a day or two prior to departure, so it's not like you are bumping a passenger who payed $39 to accommodate someone who paid $390. The fare spectrum is much less polarized than it was 10 years ago, the airlines can't price discriminate to the same extent, and it's less common for business travelers to buy full-fare tickets at the last minute.

Another factor, I think, is that Southwest probably has a higher no-show rate compared to other airlines, due to the lack of change fees and the fact that you don't lose the value of your ticket if you no show (and you can even hold multiple reservations on the same day). But, this also likely means there is also going to be more variability in terms of the no show rate on any given flight, and so the inability to project a consistent no show percentage, coupled with the overall low fares, probably results in this conservative yield management strategy.