Flight seats as fractional reserve banking

davomcdave

https://ftalphaville.ft.com/2017/04/10/2187210/flight-seats-as-fractional-reserve-banking/

A brilliant commentary piece on the similarities between Fractional Reserve Banking and overbooking the seats on flights: both represent promising customers they have claims that cannot be met, both are fundamentally necessary for the business model.

An article on this same point in The Economist reckoned that what the airline should have done was to offer to buy back seats in an auction until passengers agreed to voluntarily give up their seats. However if the police are prepared to beat up your passengers and take them off the plane for free then setting up an auction seems like an unnecessary expense to me.

westernpromise

The problem with the airlines' attitude to this is that the passengers see through the incentives they ordinarily offer to passengers to get them to give up their seats, and they aren't persuaded.

Typically the airline offers a later flight and discount vouchers. But the vouchers can only be redeemed with the airline directly and against the full price. As this results in a seat that is no cheaper than a discounted you'd get through a bucket shop, and perhaps even then is more expensive, then in effect you are not compensated at all. You're just delayed. So nobody bites.

And then, as you say, the next cheapest way for the airline to balance the seats is to summon the police.

Ballard

From what I'd read the airline initially offered $400 high no one accepted. They then hoped the offer to $800 which was accepted by a couple. They could have offered up to $1,350 but didn't. The article didn't stipulate whether this was cash or voucher but I have been offered cash to be bumped in the past (although not a United flight).

AnotherJoe

Ballard wrote: »

From what I'd read the airline initially offered $400 high no one accepted. They then hoped the offer to $800 which was accepted by a couple. They could have offered up to $1,350 but didn't. The article didn't stipulate whether this was cash or voucher but I have been offered cash to be bumped in the past (although not a United flight).

They could have offered whatever they wanted. $1,350 is the legal maximum they are obliged to pay as comp, but they can pay more if they wish.

Note also that this flight was not overbooked. It was fully loaded ready to go and then someone decided to remove passengers to make way for 4 employees heading to another airport.

I'm loving some of the new slogans.

Putting the hospital in hospitality
New cabin Class: Fight Club
Come for the seating, stay for the beating
First removal free, additional $25
Did you want a window seat or a beating?

davomcdave

AnotherJoe wrote: »

They could have offered whatever they wanted. $1,350 is the legal maximum they are obliged to pay as comp, but they can pay more if they wish.

Note also that this flight was not overbooked. It was fully loaded ready to go and then someone decided to remove passengers to make way for 4 employees heading to another airport.

I'm loving some of the new slogans.

Putting the hospital in hospitality
New cabin Class: Fight Club
Come for the seating, stay for the beating
First removal free, additional $25
Did you want a window seat or a beating?

:rotfl:

Ryan Air would have charged them EUR20 for the beating.

westernpromise

If the bucketshop seat price was $400 and the full fare $1,300, then offering people $800 in vouchers redeemable only against the full fare is offering them nothing. It means they can have a seat for $500, which is $100 more than it's available elsewhere. I suspect that's the problem.

If I were offered a decent standard of overnight accommodation and an upgraded cabin on the changed flight, I'd take the offer, but quite often these deals are airport hotel, $20 for food and a worthless voucher.

Thrugelmir

There was an occasion some years ago. When I was returning to the UK from Sacramento via San Francisco. The US Carrier wanted to bump people off the SF- London leg. The bait on offer was a business class flight to London via Paris (with a 4 hour stop over). As was travelling solo was very tempted.After 3 weeks of working and living in a City Centre hotel room. Decided to pass on the offer. Sometimes ones time is more important.

PasturesNew

How do they get your suitcase off?

vivatifosi

What happened was a systematic failure at all levels.

The planners failed when they didn't realise that they needed four seats for repositioning crew.
The ground crew failed when they boarded the plane without addressing the situation.
The cabin and flight crew failed when, put in a difficult situation, they chose the nuclear option and involved the police.
The police failed when they roughed up a fare paying passenger.
The CEO failed when he listened to lawyers rather than accepting responsibility.
Quite a chain of failure.

But from an economic standpoint, what has also happened is that there is now transparency of pricing for the public who are asked to be bumped off a flight. They now know the min and max offer of being bumped. What impact do you think that will have on customers? Surely now everyone knows, they will hang on for the higher offer, costing the airline much more in the longer term.

AnotherJoe

westernpromise wrote: »

If the bucketshop seat price was $400 and the full fare $1,300, then offering people $800 in vouchers redeemable only against the full fare is offering them nothing. It means they can have a seat for $500, which is $100 more than it's available elsewhere. I suspect that's the problem.

If I were offered a decent standard of overnight accommodation and an upgraded cabin on the changed flight, I'd take the offer, but quite often these deals are airport hotel, $20 for food and a worthless voucher.

Its not, or at least the vouchers I've been offered on US flights are just like money, same as hotel offers etc. For example last one I recall was first class next day, decent hotel, meal paid for, $250 - I accepted and then to my annoyance they squeezed me on in economy last minute :mad:.

Usually they will offer something like (say) $X+ in vouchers (redeemable against any flight bought via the airline so not full fare perhaps not lowest of the lowest though) but might be time limited to a year) or $X in cash. Even if they were as you stated you'd just need the offer upping until it did make sense.

I did once get the sort of vouchers you mention, from BA. I was too naive at the time to know that.

wotsthat

davomcdave wrote: »

An article on this same point in The Economist reckoned that what the airline should have done was to offer to buy back seats in an auction until passengers agreed to voluntarily give up their seats.

That might not have been in the best interests of the passengers in this case as everyone of them has been refunded.

i.e. maybe it's best to hope it's one of your fellow travellers who is dragged off by their feet. It does require nerves of steel and a mobile phone with a camera.

However, I would've caved as soon as I heard that woman saying 'oh my god' repeatedly in the world's whiniest accent.