More Flights Are Overbooked, but Payoffs Are Rising

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http://www.nytimes.com/2008/08/23/business/23bump.html?_r=3D1&hp&oref=3Dslo=
gin

The New York Times
August 23, 2008
More Flights Are Overbooked, but Payoffs Are Rising
By MICHELINE MAYNARD and MICHELLE HIGGINS

The bad news: the likelihood that travelers will be bumped from an overbook=
ed flight may grow worse this fall when airlines shrink their fleets to cut=
 unprofitable flights and inefficient planes, meaning even fewer empty seat=
s than there are now.

The good news: airlines are required to offer richer rewards =E2=80=94 twic=
e the amount of money they used to pay out =E2=80=94 for passengers bumped =
from a flight. The payoff can be even greater for people who know how to ba=
rgain.

In the first six months of the year, about 343,000 passengers were denied s=
eats on planes, according to the Department of Transportation, out of 282 m=
illion passengers. Most of those people volunteered to give up their seats =
in return for some form of compensation, like a voucher for a free flight.

But D.O.T. statistics also show about 1.16 of every 10,000 passengers had t=
heir seats taken away outright because of overbooking =E2=80=94 which may s=
ound like a low rate, until your name is called.

=E2=80=9CI hear all kinds of nightmares,=E2=80=9D said Clay Escobedo, a sup=
ervisor at the Reno/Tahoe International Airport in Nevada. He was told earl=
ier this week that there were not enough seats for his family on a Horizon =
Air flight to Los Angeles, where they were to connect for a trip to a resor=
t in Mexico. =E2=80=9CI didn=E2=80=99t think it could happen to me.=E2=80=
=9D

Back when most tickets were refundable or easy to change, and the airlines =
offered multiple daily flights to many cities, carriers used to routinely o=
verbook about 15 percent of their seats. Passengers who missed their plane =
could simply catch a later flight.

Rules are tighter now, and passengers with nonrefundable tickets can only e=
xpect a credit for an unused ticket, often minus a hefty fee, if they chang=
e their flight. That means they have more incentive to show up.

But airlines still overbook, regarding bumping as a necessary part of doing=
 business, especially in the face of record fuel prices. Overbooking, after=
 all, helps ensure flights are as full as possible, a priority for the fina=
ncially troubled carriers.

That strategy can also backfire on the airlines, said Tim Winship, an edito=
r with SmarterTravel.com, a Web site that offers travel advice. The practic=
e is =E2=80=9Cbad for them, it=E2=80=99s bad for morale, and you end up wit=
h a potential riot on your hands among people who have to be compensated,=
=E2=80=9D he added.

Even with the higher compensation for being bumped, many passengers are ang=
ered by the practice.

=E2=80=9CIt feels like I=E2=80=99m paying them for goods and services, and =
what I=E2=80=99m getting back is some useless voucher and a =E2=80=98good l=
uck with getting home,=E2=80=99 =E2=80=9D said Andrew Cox, a manager at a J=
immy John=E2=80=99s sandwich shop in Lansing, Mich.

He agreed to give up his seat at Kennedy International Airport in New York =
last week in exchange for a $400 voucher good toward a future Delta flight =
and a seat on a later flight, only to find out that his later flight was ca=
nceled.

=E2=80=9CThere=E2=80=99s just so much passing the buck,=E2=80=9D Mr. Cox sa=
id. =E2=80=9COf course there are things that can=E2=80=99t be controlled, b=
ut a flight has a certain amount of seats. It=E2=80=99s pretty simple. If f=
lights are being overbooked, then what does that say about how the airline =
runs their business?=E2=80=9D

For Delta Air Lines, bumping became a big concern last summer, when 3.3 pas=
sengers out of every 10,000 travelers were bumped, more than double the ind=
ustry average.

So Delta started using new technology to better track differences in no-sho=
w patterns based on time, day and season.

=E2=80=9CWe now have a much better view of how many passengers we expect to=
 show up=E2=80=9D for the same flight on a Tuesday versus a Friday, said Be=
tsy E. Talton, a Delta spokeswoman. The methods have helped Delta cut its i=
nvoluntary bumpings in half, putting it more in line with the industry aver=
age. In fact, the rate of forced bumping for all the airlines declined in t=
he first six months of 2008, compared with the same period last year. But t=
he rate remains higher this year than in all of 2007, and has been on a ste=
ady climb since 2002.

Meanwhile, Continental Airlines said it was introducing a new feature on it=
s Web site and at airport kiosks that lets travelers automatically check in=
 within 24 hours of their return flight. The step is meant to save traveler=
s the trouble of going online to check in the day before their return fligh=
t. It can also help protect them against getting bumped, since Continental =
will know that they plan to make the flight.

The higher cost of payouts, which the Transportation Department doubled thi=
s spring after last summer=E2=80=99s travel chaos, gives the airlines extra=
 incentive to refine their overbooking models.

Travelers can now receive up to $400 if they are involuntarily bumped and r=
ebooked on another flight within two hours after their original domestic fl=
ight time and within four hours for international. They are eligible for up=
 to $800 in cash if they are not rerouted by then. The final amount depends=
 on the length of the flight and the price paid for the ticket.

Even stricter rules apply in Europe, where compensation ranges from 125 eur=
os (about $185) to 600 euros (about $888), depending on the length of the f=
light and the amount of time the passenger will be delayed.

Compensation must be paid immediately in cash, or with a voucher if the pas=
senger accepts it, and the airline must offer a choice of a refund, a retur=
n flight to their departure city or an alternative flight. Volunteers also =
receive compensation, which they negotiate with the airline.

Passengers are learning, however, that if an airline does not get enough vo=
lunteers at a lower figure, they might be able to bid up the offer, and als=
o obtain sweeteners that include vouchers for meals, hotels, transportation=
 and even plane tickets.

Mr. Escobedo, traveling with his wife, daughter and two grandsons, was told=
 there were only three seats for them for their Horizon Air flight to Los A=
ngeles to connect for their vacation in Mazatlan, Mexico.

=E2=80=9CI stood my ground,=E2=80=9D he said. =E2=80=9CI kept telling the a=
gent, =E2=80=98That plane better not pull away from the gate. You need to m=
ake another announcement.=E2=80=99 =E2=80=9D

The agent complied, and, once everyone was on board, asked for two voluntee=
rs so the Escobedos could travel together. The airline offered a free round=
-trip ticket, good for a year, to anywhere that Alaska or its partner Horiz=
on Air fly, and promised that volunteers could still reach Los Angeles via =
San Francisco that day.

Stephen Schwartz, a graphic artist, immediately put up his hand, as did Mar=
garet Cockrell, a professional development educator. Her reason for volunte=
ering? =E2=80=9CThis family deserves to go on their vacation,=E2=80=9D she =
said.

Mr. Schwartz added: =E2=80=9CA round-trip ticket. Who could pass that up? N=
ow, I can go anywhere I want.=E2=80=9D

When Mr. Schwartz arrived in San Francisco after giving up his seat from Re=
no, he learned his connecting flight to Los Angeles was also overbooked. Th=
ere, the airline was offering $250 vouchers to passengers who would agree t=
o take a later flight.

Mr. Schwartz said he was tempted, but ultimately declined because he had ar=
ranged to be picked up in Los Angeles so he could reach his job at a summer=
 camp.

But Mr. Schwartz had already received an unexpected reward. As he gave up t=
he seat in Reno, Mr. Escobedo, head of the vacationing family, handed him a=
nd Ms. Cockrell each $20, so they could buy themselves lunch.

=E2=80=9CThey saved the day for me,=E2=80=9D Mr. Escobedo said.

Kathryn Carlson contributed reporting.

Copyright 2008 The New York Times Company
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