We share good ideas and conversation here.   Login, Join Us, or Take a Tour!
comment by veen
veen  ·  41 days ago  ·  link  ·    ·  parent  ·  post: #BoycottUnited

While I do agree that this is an awful way to treat your customers, I have seen quite a few people going bananas over United's overbooking strategy. "Didn't he pay for his seat? How can United sell seats they don't have??!" That just isn't how airlines work these days. I dug up my textbook from airline industry expert Peter Belobaba:

    If too many reservations are accepted and more passengers show up at departure time than there are physical seats, the airline must deal with the costs and customer service issues of denied boardings (DB). On the other hand, if not enough reservations are accepted for the flight and the no-show behavior of passengers is greater than expected by the airline, there are costs associated with the lost revenue from empty seats that could otherwise have been occupied, also known as spoilage (SP). The more specific objective of most airline overbooking models is therefore to minimize the total combined costs and risks of denied boardings and spoilage (lost revenue).

    Why is overbooking even necessary? The simple answer is that airlines have historically allowed their passengers to make reservations (which removes seats from the airline’s available inventory) and then to “no-show” with little or no penalty. In very few other service or manufacturing industries can the consumer “promise” to buy a product or service and then change his or her mind at the last minute with little or no penalty. The economic motivation for airline overbooking is substantial. In the USA, domestic airline no-show rates average 10–15% of final pre-departure bookings, and can exceed 20% during peak holiday periods. Although there are substantial regional differences, average no-show rates are almost as high throughout the rest of the world. Given that most airlines struggle to attain a consistent operating profit, the loss of 10–15% of potential revenues on fully booked flights (which would occur without overbooking) represents a major negative impact on profits.

Another thing he points out is that DB costs are almost always lower than SP costs, especially since optimizing for low SP costs means accepting a structural, large loss. DB costs can also be compensated for with upgrades, free tickets and lounge access, all far lower than the profitability of a few seats. Especially since US airlines have been quite good at getting regular passengers to give up their seats voluntarily:

    With the help of voluntary DB programs, the largest US airlines have become extremely successful in managing DB and the associated costs, despite what is perceived to be very aggressive overbooking to reduce the revenue losses associated with spoilage. The involuntary DB rate among US major airlines in 2007 was only 1.12 per 10 000 passengers boarded (US DOT, 2008). Over 90% of all DB in the USA are volunteers, meaning that the total DB rate for US airlines was about 12 per 10 000 passengers boarded. This total is in line with world airline industry standards of 12 to 15 per 10 000. But the important point is that US airlines are able to report lower involuntary DB rates than most world airlines, thanks to effective voluntary DB programs.



kleinbl00  ·  41 days ago  ·  link  ·  

Yeah, gonna have to go ahead and call bullshit on your entire fucking textbook.

PREMISE:

    "Didn't he pay for his seat? How can United sell seats they don't have??!" That just isn't how airlines work these days.

Nope, sorry. If you're hitting me for multiple hundreds of dollars of nonrefundable travel, we have an agreement that in exchange for the money I paid you, you take me where you promised I will go. That you think this isn't our agreement simply because you've got a bunch of boilerplate that says otherwise illustrates that you are operating in bad faith. That all your competitors do the same thing is an illustration of collusion. And if you want to see how that sits with your passengers, just wait for the lawsuits.

PREMISE:

    Why is overbooking even necessary? The simple answer is that airlines have historically allowed their passengers to make reservations (which removes seats from the airline’s available inventory) and then to “no-show” with little or no penalty.

Key word: "Historically." This has not been true for at least two decades. Sure - all the airlines offer "refundable" airfares. They generally cost between two and four times as much as refundable airfares. And, as the low-cost non-refundable carriers have eaten into the profit margins of traditional carriers (like United) the non-refundable fares have gotten more and more expensive. Now? Now you lose 100% of the value of the ticket if you don't check in both ways (been there, done that) because while the airlines assume you recognize that you're paying exorbitant sums for the illusion of guaranteed travel, should you buy two round-trip tickets that are cheaper than one round-trip tickets on the dates you want, the airlines will cancel all four legs because fuck you, that's why.

PREMISE:

    In the USA, domestic airline no-show rates average 10–15% of final pre-departure bookings, and can exceed 20% during peak holiday periods.

Holy shit! It's almost like non-refundable fares are so much cheaper than refundable ones that it pencils out to buy three of them instead of one refundable one, especially with how fucked up the pricing is! I know - let's blame the customer.

Premise:

    Given that most airlines struggle to attain a consistent operating profit, the loss of 10–15% of potential revenues on fully booked flights (which would occur without overbooking) represents a major negative impact on profits.

So... the fact that airlines can't profit without treating customers like cargo is the customer's fault how?

PREMISE:

    DB costs can also be compensated for with upgrades, free tickets and lounge access, all far lower than the profitability of a few seats.

Yeah, they fuck you there, too. $200 airline voucher? You know what that actually is? It's $200 that must be redeemed in person at a ticket counter within the next 365 days for a full-fare ticket. Which means that "discounted" fare of $200 that you want to buy? Yeah, if you use that voucher you owe the airline $600 because it's actually an $800 ticket.

I suspect your shitheel Peter Belobaba is one of the reasons things have gotten as shitty as they have and make no mistake: everything you quote is an airline industry asshole justifying why the airline industry is entitled to be assholes to everyone.

And fuck them all.

veen  ·  41 days ago  ·  link  ·  

Okay, I was under the impression that most regular airline tickets are still mostly refundable and / or easily canceled. I also didn't know that the money they offer is a voucher; European airlines hand out actual money, usually the same day.

What I was mostly defending was the strategy of airlines responding to regular no-shows and how I think it's not surprising to expect a large, profit-hungry airline to overbook just to make sure planes are full. It's the 'ZOMG overbooking is evil' responses that I thought were unfounded and not the issue here. They should've just offered more or rerouted the United crew.

kleinbl00  ·  41 days ago  ·  link  ·  

There are no regular no-shows any longer. And watch this space:

Most airline employees fly standby. They don't pay full-fare and, if they're crew, they don't pay at all. This is a perq of being an airline employee and most of the crew and stewards I know use it a lot. So when American says it needed to get crew to Louisville...

...I wouldn't be surprised to find out that they weren't even essential personnel. Because really? if United really needed to drag a doctor off the plane to make room for crew, that's United saying "we aren't just overbooking, we're cutting into our overbook margin to cover our staffing shortfalls." And if they were doing that regularly they'd have procedures. They'd have policies. And most importantly? They have reciprocity with just about every other carrier. There's an American that takes off an hour later. Shit, linear will put you in a learjet for $1k per person. This is me, looking this up as a consumer, on fucking Kayak.

I think somebody fucked up BIG at United and they're flat-footedly trying to figure out how to differentiate their typical neutral-evil behavior from their current chaotic-evil move.

flagamuffin  ·  41 days ago  ·  link  ·  

    Okay, I was under the impression that most regular airline tickets are still mostly refundable and / or easily canceled.

they are, just not same day. fucking up and missing your flight is different from deciding to change something around a couple days in advance. for the latter you won't get a full refund, but they'll work with you.

this is the major advantage of booking directly with airlines rather than using cheaper third party travel agencies

kleinbl00  ·  41 days ago  ·  link  ·  

I have no idea what magical fantasy flights you're booking, but United charges $200/$400, Delta offers a $200/$450 rescheduling fee, Alaska's at $175 and Virgin is at $100 (which, since they don't do round trip, means it's actually $200).

I had a $159 ticket from Los Angeles to Seattle. I was going to help my uncle haul a trailer. Then the person who needed the trailer hauled backed out. So I called up Alaska to cancel my ticket.

They tried to charge me $16.

To the best of my knowledge, all of the above require you to book directly with them and don't entertain third party tickets.

oyster  ·  41 days ago  ·  link  ·  

No showing with little or no penalty is definitely not something that is a thing anymore if it ever was.

WanderingEng  ·  41 days ago  ·  link  ·  

    While I do agree that this is an awful way to treat your customers, I have seen quite a few people going bananas over United's overbooking strategy. "Didn't he pay for his seat? How can United sell seats they don't have??!" That just isn't how airlines work these days.

Ignoring the textbook stuff, I think the issue is not seeking volunteers. No volunteers? Offer more money. That's the overbooking strategy I have an issue with. Overbook, fine, but don't kick people off planes when there aren't volunteers at the price you want to pay.

kleinbl00  ·  41 days ago  ·  link  ·  

Vox is arguing that the FAA's own guidebook says $1350, not $800, and that it's up to the airline to negotiate more. The problems are

1) Nobody is flying Chicago to Louisville on a Sunday evening for fun

2) People flying Chicago to Louisville on a Sunday evening do it regularly

3) People who fly that leg regularly have a pretty good idea how delayed, shitty and overbooked United tends to be on that leg

4) People with an idea of how shitty and overbooked United tends to be have probably gotten worthless vouchers before

5) People who have gotten worthless vouchers before are not eager to get more worthless vouchers

6) It boggles the mind that a paying customer could be forcefully removed from a flight because United couldn't solve their bullshit crew problems.

This is a flight full of people going "there's no way United could be that shitty" and a country full of people going "wow. United is shitty."