Do the Federal regulations prevent airlines from excessively overbooking their flights? If not, why do the sell out a flight rather than just continuing to raise the price?

With the bump/compensation policies that they have, wouldn't it make economic sense to sell a passenger a ticket for $1,000 if you can bump someone else and give them a $300 voucher - you're still $700 to the good. You would think that the programmers would be able to pretty easily monitor load factors and average revenue per seat to properly price tickets once every seat is full so that you're always getting more money - net of bump vouchers - when a new ticket is sold.

It seems this would be a win-win-win situation. The desperate passenger would win because he could still get a seat on an otherwise full flight as long as he was willing to pay the market price. The airline would win because they would generate more revenue. The bumped passenger would win because of the "free" money from the bumpt voucher. In my experience, it seems there are always plenty of volunteers available for a bump, so I wouldn't see a lot of involuntary bumps. Worst case scenario would be selling seats at the last minute for $2,000 and then needing 30+ volunteers that you could give $1,500 vouchers to. You're going to get a ton of volunteers for $1,500 in vouchers.

They kind of do that already; a ticket bought the day before is usually far more expensive than one bought 60 days before.

Airlines presell inventory on a non-refundable basis for a low fixed price. I don't see how they'd adopt your model without effectively filling the plane with the 180 (+/-) highest bidders... effectively dislodging some of those early buyers. If they knew they could be outbid and tossed off a given flight close to go time, they would be less likely to buy, especially on a non-refundable basis. So the airline would book less guaranteed advance revenue for a given flight, everyone would game the bidding system eBay style, and chaos would result.

Remember that eBay is a classically irrational market -- people pay the highest possible price, not the lowest possible one. They bid up, not down. It's possibly the only pricing market more irrational than the airline ticket market.

I think the problem is that the airline will have to reaccomodate the bump-ees somewhere. If their own flights for the rest of the day (or the next day, or the forseeable future) are all full, then they will eventually have to put them on another airline, quite probably paying something like full fare to do so. Consequently, they try to avoid bumping excessive numbers of passengers.

On a more limited basis, though, a number of airlines do allow their top-tier elite passengers to book full-fare tickets on otherwise sold-out flights.

The airlines already do this to a point, it's called yield management.

As the flight gets closer, prices go up. They oversell the flight and offer voluntary bumps to people (and sometimes involuntary, if necessary).

What Doppy said. The airlines are very good at determining how many seats they can sell and how much they can get for them. Which is why they have such a plethora of fare bases. For people who need refundability or flexability, they usually offer a fare 3-4x what the cheapest is. But that fare is only good until about 1-3 days before the departure date, and have a fare 2-3x that fare which, while available from 330 days out, is usually only sold 1-3 days before the flight departs when it is the only fare available.

Below that are fares that run the whole gammut, usually broken up by requirements such as must stay over Saturday night, or are only good for departure or return on a certain day (or days) of the week, or require a longer or shorter stay, etc.

This way, they can offer the "lowest" fare to the leisure traveller going on vacation for a week. Then charge more for the traveller going on vacation for a weekend. Then for the business traveller who needs to depart on Thursday, but can come home Monday. Then for the business traveller who needs to depart on Thursday, but must come home Sunday.

And so on, and so on, and so on.

It's actually a pretty effective system, except that the LCCs can offer their maximum fare at a price much closer to the minimum the legacy carriers can, which is where they lose their shirts. On routes without LCC competition, they make a bundle (until such time as the LCC comes in, because there is so much pent-up demand for lower fares).

I guess I was looking more at it from the desperate passenger point of view. I wouldn't recommend a "psuedo-bidding" system where the price moved by a few dollars each time a ticket was purchased.

Rather, I'm thinking of the guy who's wife goes into labor 2 weeks early and he rushes to the airport to get on the next flight.... Only to find out that everything to BZN and anything within 250 miles is sold out until noon tomorrow. In this case, the poor guy is faced with essentially no options.

I guess he could do a big ATM withdrawl and go to the gate area and try to pay people to "accidentally" miss the flight so he could get a standby seat. But if the airline at least offered him the option of buying a seat from DEN to BZN for $4,500.... Everybody could come out of it happy.

Airlines already oversell by a certain percentage or by number of seats. They can't just keep overbooking.

Not necessarily. First off, can the person afford the ticket? If they can't, it doesn't matter what they charge for it.

Second, they might be able to buy a First or Business Class ticket. Even if the airline shows no availability, don't think for a moment they won't sell the ticket (fares can be anywhere from four to five figures) and then cancel an upgrade, offering the person they cancelled anywhere from nothing (they just return the upgrade cert) to some minor form of compensation (an additional upgrade cert of a voucher for future travel).

And finally, if they're willing to pay the maximum rate, the airline will sell them the ticket, I am sure, even if they have to involuntarily deny someone boarding, as the compensation will be less then the revenue derived from the ticket, I am sure.

Continental Elites can confirm full-fare Y seats on even "full" flights, if they book at least 48 hours before flight time.

Are you certain of this, or speculating? I've never been in the situation, so I've never really tried pressing the issue. But, I've certainly been told that "no seat are available on that flight, can I check another flight for you?" That was always with a phone agent though - never at the airport where they may have some more flexibility.

Of course, I never really want to have this conversation either:

DevilBucsFlyer: Dang! Completely sold out? Is there any way you can get me on that flight?
Gate Agent: Hmmmm... How bad you want it? I'll give you a seat for $38,500. No? How much you willing to pay?

But........ now that I think about it, your statement brings up an interesting observation. On the reality show "The Amazing Race" there have certainly been situations where the teams would have paid almost anything to get on a "sold out" flight. I'm sure the game has certain rules about bribing gate agents and the like, but I've never seen them try to negotiate their way on to a plane by paying over market price for a ticket.

Several months ago, I was supposed to fly from AEX (Alexandria, Louisiana) to SFO on CO, via IAH.

A colleague and I were on paid first class tickets (fully refundable).

Due to weather in AEX, the flight from AEX to IAH was delayed badly. It was clear that we'd never make the connection in IAH. So, we wanted to get on a later IAH-SFO flight.

I spoke with the ticket agent in AEX, and he said that the next five or so flights from IAH to SFO were totally full, meaning that we'd be stuck in IAH for about 24 hours. I called Reservations and Customer Relations. Both said the same thing. Even if we were willing to downgrade, we couldn't get on a flight.

Since we were still in the terminal at AEX, I made it clear that we were prepared to refund our tickets and fly another airline. They still said that they couldn't put us on a flight.

We refunded our tickets and flew DL instead. The amount of revenue CO lost was considerably more than the cost of denying boarding to two other passengers.

So, at least on CO, a very expensive ticket doesn't necessarily guarantee you a seat.

That's mind-blowing, knowing how CO is doing everything and anything to get paid F and Y passengers, alvn. Maybe everyone else was on a paid BF ticket.

actually, it's within 24 hours and offered to all Skyteam Elite Plus members across the alliance. ^