American may soon offer gift cards and miles for overbooked flights

Back when oversold flights were a "thing," flexible flyers knew to ask about the possibility of getting bumped.

When a flight approaches capacity, airlines have two choices: solicit volunteers to take a different flight or pay involuntary denied boarding compensation, which can get as high as $1,350 under Federal Aviation Administration regulations.

Carriers have long offered compensation to get passengers to consider voluntarily switching flights. After all, it pays to offer someone $500 to take a later flight — as opposed to involuntarily bumping the last passenger for $1,350.

In recent years leading up to the pandemic, American Airlines has gotten even savvier about oversold flights. In May 2019, the Fort Worth-based carrier started soliciting volunteers in the mobile app. And then six months later, AA began paying volunteers different amounts based on in-app bids, all in an effort to reduce the total compensation distributed.

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Either way, if you were bumped from an American flight, you were given either a travel voucher for use on a future AA ticket or – in some cases – cash for being denied boarding involuntarily.

But now, the carrier is paving the way to offer additional compensation options for voluntary denied boardings. Per an update to the Conditions of Carriage, American will now offer "compensation… in the form to be determined by American." Previously, this legally binding document referenced only "travel credit."

When asked about the change in wording, a spokesperson offered:

This change provides American the opportunity to offer different forms of compensation to our passengers who volunteer to take a different flight when their scheduled flight is full.

The spokesperson said both gift cards and AAdvantange award miles are under consideration as forms of compensation.

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Should AA decide to move forward with these new options, perhaps it can convince more flyers to volunteer. Depending on the mileage amount, it could definitely make sense to choose AAdvantage miles in lieu of travel credit. After all, there are still some incredible sweet spots on the AA award chart.

Unfortunately, AA didn't have a timeline or further details to share about the potential new compensation methods. It's possible that AA will also roll out a more automated volunteer process as well. Right now, processing volunteers requires manual intervention by a gate agent.

Of the Big 3, American's compensation options are the weakest. Both Delta and United offer a more comprehensive selection of choices. Delta volunteers receive a gift card that can be redeemed at one of 10 retailers: Delta, American Express, Amazon, Best Buy, Bloomingdales, Macy's, Marriott, Nordstrom's, Royal Caribbean and Target. These gift cards are fully transferrable and combinable.

Related: Tips and tricks for how to handle oversold flights

United, on the other hand, offers travel vouchers or MileagePlus miles when soliciting volunteers.

In the meantime, American likely doesn't have much trouble getting people to switch off of full flights. With the pandemic raging on and people looking to maximize their personal space, American will notify travelers should flights approach capacity. If your flight is eligible, you can make a fee-free change to an emptier flight.

That way, the traveler gets a shot at some extra space — and American likely doesn't need to offer any compensation.