The other day I was reading a post and I realized something that I had never before thought of. If your flight is cancelled due to mechanical problems, that doesn't mean your flight had the probem, it might just mean that your aircraft is being used to replace the flight that had the problem.

So now I understand why flights with few passengers are more likely to be cancelled for mechanical reasons. I have read many posts about upset passengers because they feel that the airline is cancelling flights because there are few passengers and they are only using "mechanical cancellation" as an excuse. It seems that the truth is somewhere in the middle; the airline should say "your flight is cancelled due to another flight's mechanical problem and your flight's aircraft is being used to substitute". I think this would clear up the misunderstanding that airlines cancel flights simpley because there are few passengers, not to say whether or not airlines do cancel flights only because they are low yield.

Is my understanding correct?

Should the airlines be doing anything differently when they cancel a flight so that the aircraft can be used to substitute another?

When an aircraft is taken to be used as a substitute, should the passengers of the cancelled flight be compensated just as bumped passengers are?

In a situation like that, if they told the truth, there would probably be a riot at the gate.

Accommodating passengers due to a flight cancellation, unless it's a force majeure event (in other words out of the airline's control) is treated the same regardless of whether it's for aircraft substitution purposes or an actual mechanical. Rule 240 applies.

A summary of what you are/are not entitled to can be found at http://www.onetravel.com/rules/rules.cfm

I find something of a Catch-22 (rest in peace, Joseph Heller) in Sheryl's statement: "In a situation like that, if they told the truth, there would probably be a riot at the gate." Yet, we expect the airlines to tell the truth. If I'm a gate agent and can avoid a riot, guess what I'm going to do? Honestly though, whatever the reason given, there are going to be angry passengers. So why lie about it?
I believe in most cases, it's not lying; it's a lack of communication and information between the maintenance, dispatch and customer service departments.
In any case, the information Sheryl provides regarding cancellations is right on the mark.

I've heard some agents claim that airlines wouldn't cancel a flight simply because it was too empty because it leaves the airline with equipment in the wrong city, and the airline's equipment is too carefully scheduled to make ad hoc changes like that. Well, that may be true for some parts of the network, but it isn't true for the cases where the airline runs hourly shuttles between two points. Cancelling a midday CityA-CityB flight leaves the airline with an extra plane at CityA, and short one plane at CityB, but cancelling a corresponding CityB-CityA flight takes care of the imbalance. And in that situation, the airline itself is capable of getting the passengers on the cancelled flight to their destination without using any interline agreements, and without making the passengers >2 hours late to their destination.

That still doesn't mean that the airline would cancel a flight (or a pair of flights) just because the load factor isn't there, but this particular excuse isn't really airtight.