Airline Overbooking, as Explained by a New TED Talks Video

Dec 27, 2016

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Of the many seemingly unfair practices that seem to haunt the airline industry — from high fuel surcharges to United’s new policy of making passengers pay to use the overhead bin space above their seats — the most perplexing one of all may just be the rampant practice of overbooking.

According to the Daily Mail, approximately 50,000 ticketed passengers are bumped off their flights in a given year due to the airline industry’s nasty habit of selling more seats than the plane has. While to travelers, this may seem like a pretty dumb thing to do, for the airlines, it all comes down to probability, statistics and perhaps, unsurprisingly, maintaining a healthy bottom line.

To help us make sense of it all, a new TED Talk video offers a fascinating mathematical overview of the practice of overbooking which, according to the video below, happens “because it increases profits while also letting businesses optimize their resources.” To put it more simply: airlines know from years of experience that not all of a flight’s ticketed passengers will arrive at the airport on time — if they even arrive at all. Rather than risk the chance of having an empty seat (the horror!), airlines will instead sell more tickets than can possibly be accommodated for, and hope that history and probability are on their side.

But there’s more to the process than simply booking an arbitrary number of extra passengers. In order to calculate the exact number of tickets to sell or, well, oversell, airline employees analyze years of flight data to try and predict who will and will not show up at the airport. 90 percent of individual travelers are expected to show up on time for any given flight, but from there, the math gets a bit more complicated, and is best explained by the video, below.

There are, of course, proponents on both sides of the overbooking argument. While many claim that the practice of selling the same seat to two people is unfair, others believe that without 100 percent certainty that one of those people will show up, overbooking is just smart business. What we do know is if you’re not in a hurry to get to your next destination, feel like volunteering to be bumped or are in the mood to negotiate, waiting to catch the next flight can sometimes be worth your while.

H/T: Daily Mail

Featured image courtesy of Andy Cross/The Denver Post via Getty Images.

 

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.