What's the purpose of overselling flights?
 

I've seen the term overselling, overbooked, etc. in regards to flights. Can anyone explain what the purpose of overselling a flight? I've seen it quite a few times.

Are they overselling a flight in anticipating someone won't show and they ensure they leave full? Also, if one class is oversold, let's say economy, but business or first has several seats, does the oversold passenger get a free bump up?

Maximize revenue.
There are always missing passengers and the airlines try to guess as accurately as possible how many "missing" passengers there will be.

Yes, that's exactly it. The black art of determining exactly how many seats a given flight can be oversold by is called "Yield Management" or "Revenue Management." It is a given that almost all flights will have cancelled reservations at the last minute, and it's in the airline's interest to have as many seats go out full as possible. If you have a cancellation at the last minute and haven't oversold the flight, then you end up flying an empty seat around.

jetBlue is the only American airline which does not oversell, to my knowledge.

No, the "free bump up" (also called an operational upgrade) is given out to economy passengers with elite status first, in virtually all cases. The economy seat thus freed up is then assigned to an oversold passenger.

The airlines all know from historical data roughly how many passengers are likely to be no-shows for a given flight. Based on this, they try to sell enough tickets that they're likely to fill up all the seats exactly. Of course, this is all based on statistics, so they'll always be off by a little, so they figure in the cost of having empty seats and the costs of compensating passengers who don't have seats and try to strike the best balance for maximum profit. (One could argue they should factor in customer goodwill, too, for the cases where they can't find enough volunteers to take a later flight and have to bump unwilling passengers, but I don't know whether that ever factors in.)

There is no such thing as "an oversold passenger"; if the flight is oversold, then there are more confirmed reservations than there are seats, but no passenger has any more of "valid" ticket than anyone else. In that case, it's usually the most frequent fliers who are given "operational upgrades" to make room in the other cabin.

True, although that is when it pays to have a seat assignment (although in approaching oversell situations, I believe .bomb doesn't allow GMs / non-MP members to even choose seats, claiming they must be assigned at the airport). Pax with a seat assignment are in much better shape than those without!

It also pays to be checked in on time (via the Web, IMHO) so that one's seat doesn't become released and given to someone else, leaving that person in an "oversold" position and waiting for a seat via a no-show / VDB / an op-up to free up a seat.

I made the mistake years ago, as a 2P, of missing the check-in window for my flight and got a dreaded DM card for the last IAD-ROA flight of the day. I managed to get onboard, but barely. I couldn't believe all the college kids who were refusing a VDB (which I should have taken; the GA offered it to me and a seat on the next morning's flight, plus hotel, etc.; I was afraid of calling in late to work due to that at the time, though).

[QUOTE=exerda;8481914]True, although that is when it pays to have a seat assignment (although in approaching oversell situations, I believe .bomb doesn't allow GMs / non-MP members to even choose seats, claiming they must be assigned at the airport). Pax with a seat assignment are in much better shape than those without![/exerda]IME, being without a seat assignment only really matters for non-elites (in terms of making it on the flight). If they can't get enough VDB's, the IDB pecking order virtually guarantees that any elites won't be the ones who get booted, except maybe on some of those Monday AM / Thursday PM flights where all but 2 pax board in group 1. ;)
Very good point, although I believe if you miss the checkin cutoff, you're not considered "oversold"; you're actually off the flight. In that case, you're not eligible for any compensation is you're not able to board the flight. As exerda pointed out, at that point you have to beg for mercy from the airline gods and hope that you can get back on the flight as a standby.

Non elites are able to select seats online. They just can't select seats in E+ and seats in a few other rows.

You check-ed in late for a flight and the agent offered you VDB compensation, a hotel, and a confirmed seat the next day? Wow...I guess that agent didn't know what s/he was doing, because all you really get when you check-in late is the opportunity to standby for the next available flight or pay to get confirmed.

Not to split hairs, but I think the art of determining how many seats to oversell would be considered "Inventory Management" (i.e. trying to utilize all of your 'inventory' at departure). "Revenue Management" is about maximizing the total revenue generated for a flight and "Yield Management" would be about generating the most profit per seat and/or flight (which may vary from revenue management").

Confused yet? :cool:

Sending this to TravelBuzz!

iluv2fly
Moderator, UA

Since you want to be pedantic about things, "Yield Management" has nothing to do with profitability.

"Yield Management" can be defined as the science of maximizing the "yield" over a given period where "yield" is defined as the revenue earned per revenue seat mile.

Besides trying to predict the number of no shows to still have the flight full, consider that in some cases, overselling even beyond that may be profitable.

Example:
A hypothetical domestic flight might have an advance fare of $300 RT ($150 OW) when purchased well in advance. That same flight might have a last-minute walk-up price of $700 one way. If the flight is full and the airline anticipates no no-shows, they can still sell that last minute traveller a ticket for $700, then offer a $250 VDB voucher to get someone to volunteer for a later flight. Net profit from the oversell = $450.

Or just offer the VDB pax a round trip flight voucher that is standby-only, costing the airline next to nothing.

Do any airlines have the gall to do this? I can't imagine any FTers accepting a standby voucher as VDB compensation.

You both say "in virtually all cases" resp. "usually". I've seen this changing on some companies to upgrades not to the FF, but to the full-fare tickets on some airlines. So a full-fare-paying customer with no status can be upgraded before FF with high status; KLM is one of them.

An airline overselling a flight is the same as a hotel overbooking. It almost always works out in the favor of the airline/hotel, but every now and then it doesn't and they have to compensate the traveller; I'd guess it's about an 85/15 split after having worked in hotels a very long time ago. In the end, the revenue from the 85 more than makes up for the cost of the 15.