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This Company Is Promising to Prevent Involuntary Denied Boardings

May 11, 2018
14 min read
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Volantio's office, in the tip of the spear that is Atlanta's Flatiron Building, overlooks a pedestrian plaza where, in late April, buttoned-up millennials shared Asian fusion takeout next to Hare Krishnas promising enlightenment. Across the plaza, a drifter warned of damnation.

In some ways, the site was an odd choice for the company; most tech companies flocking to the New Atlanta prefer to roost among the gleaming cubes of upscale Buckhead or the silicon hive of Alpharetta.

"When we were looking around for a place to move into, they showed us all these glass boxes," CEO Azim Barodawala said as he strolled back from the weekly team lunch at a neighborhood food hall. "We didn't want glass boxes. Here, we could be part of the community."

For him, the parallel to Volantio's position as a newcomer in the hoary airline industry is clear.

"There's a reason airline culture is the way it is: It's safety-oriented, from the engineering on the engines they buy to the office buildings they rent," he said. "It even applies to things like working with small, plucky startups like ourselves. That's a challenge for us."

But it's a risk Barodawala is betting more and more airlines will take, because what his company offers is nothing less than a service that could fundamentally rewrite the relationship between airlines and passengers.

(Photo by Chris Burden for The Points Guy)
Barodawala (right) works on his laptop at the Volantio offices. (Photo by Chris Burden for The Points Guy)

The Rise of Overbooking

Volantio would prefer to think of it as a reset, back to a time when air travel still enjoyed a veneer of glamour for Americans. More than 40 years ago, the industry was highly regulated by the federal government, with tight control over routes and prices. As a result, it cost a lot to fly, and commercial flights were rarely full.

In 1978, Congress passed the Airline Deregulation Act, which caused an industry upheaval that saw fares plummet and airplane cabins become increasingly crowded with passengers who could suddenly afford to fly. Overbooking — selling more tickets than a plane had seats for a particular flight — became standard practice, and carriers resorted to buying back tickets at the gate when necessary.

But the airlines began to find that, in some cases, enough passengers still wouldn't sell back their seats. That's when involuntary denied boardings, or IDBs (the industry term for kicking a paying customer off a plane for whatever reason), became a fact of life in commercial aviation. Without deregulation, there would never have been a Bumpgate.

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And there may never be a Bumpgate again, if Volantio lives up to its promises. By using an artificial intelligence-fed platform it calls Yana, the company says airlines will eventually be able to all but read their customers' minds.

With Yana, United would have foreseen that Dr. David Dao wouldn't budge, and could have instead offered personalized compensation to, say, the couple from Kentucky eager to extend their vacation — and the company could have done it three days before they even went to the airport.

"I was just at JFK catching a flight to Tampa when they were offering $800 to give up a seat," Barodawala said. "And the guy next to me was like, 'If they'd just offered that to me yesterday, I would've taken it.' And I was thinking, why are we still doing this? It doesn't have to be that way."

Alan Bender, a professor of airline economics at Embry-Riddle Aeronautical University, said in a phone interview that if it works, it's poised change the way at least some of us fly.

"It's a whole new world if you can do that several days out," he said.

(Photo by Chris Burden for The Points Guy)
Barodawala in front of the leading tip of Atlanta's Flatiron Building. (Photo by Chris Burden for The Points Guy)

Predicting the Future

Barodawala's the perfect evangelist for Volantio's Yana, from his encyclopedic knowledge of points and miles programs to his plane cufflinks. (He stresses out over the inaccurate wing placement on the cufflinks.)

"I was born in 1978, the year that airlines deregulated," he said. "So my lifetime tracks with the industry timeline from then to now. I've always believed that everything in my life led to today and what we're doing to create something that's beneficial to passengers and makes the customer experience better."

When he joined Volantio, it was focused on a run-of-the-mill travel booking platform called Adioso, lost in a world of competitors like Kayak and Orbitz. But a chance meeting with an Alaska Airlines executive in 2016 near San Francisco International Airport (SFO) changed that. The executive urged Barodawala to take the tech they used to predict when fares would drop and surge, and apply it instead to overbooking and denied boardings.

"It's been a hole in the whole revenue-management process," that executive, Kevin Ger — Alaska's vice president of revenue management — said in a phone interview. "There's a very sophisticated science based on using our massive data from our history to project forward, but the reality is there's always going to be a minor amount of variability at play. We didn't consider what happens to the percentage of pieces where you can't predict the future."

(Photo by Chris Burden for The Points Guy)
Note the cufflinks. (Photo by Chris Burden for The Points Guy)

From flyers' perspective, that "minor amount of variability" where airlines fail to prognosticate is when they end up bumped from seats. For the airlines, it's an additional cost. For the passenger, it's a potentially major hassle and yet another reason not to fly a particular carrier.

The way Volantio's Yana engine addresses that rare variability is not by eliminating it (which would be impossible), but by offering passengers a solution tailored to them before they even realize there's an issue. Once the client airline determines that a flight is in danger of being overbooked, which could be several days before the actual departure, Yana kicks in, using an ever-growing trove of data about passengers' flying habits and trip details (number of people in the party, departure and destination airports, the time of day of the flight, business versus leisure travelers, etc.) to pinpoint which of the current passengers is most likely to be amenable to changing flights.

To sweeten the pot, Yana uses the same data to offer the most compelling compensation for each specific target. One passenger might be swayed by hotel or restaurant vouchers, for example, while another may prefer miles and yet another will only fold for cash.

(Photo by Chris Burden for The Points Guy)
An e-mail from Volantio offering a passenger compensation and and an alternate flight. (Photo by Chris Burden for The Points Guy)

"It's not a blunt-stone approach like airlines use now and everybody gets the same offer at the gate," Barodawala said. "What about the guy who travels once a year? They don't want a $600 voucher from the airline. Imagine the responses when you can know that you could fly one day later than you originally planned, with an upgrade to business class — and you get to make that decision three months earlier. We help the airlines run the process in a more civilized manner."

Yana texts or e-mails the targeted passengers with the offers, then helps the ones who accept rebook on different flights. Volantio uses the same basic model for involuntary denied boardings from overbookings to those arising from what's termed "irregular operations," such as when an airline is forced to switch to a smaller plane and has to come up with a way to cope with the sudden decrease in available seats.

"Think about how stressed out the gate agent looks in a situation like this," he said. "They don't want to be the [jerk] who bumps people off flights. We have a way to remove the gate agent from the process so they don't have to worry about doing this and can focus their attention on what they're supposed to be doing, which is getting flights out on time and safely."

The passenger gets his or her preferred compensation, the gate agent does their job without distraction, and the airline gets to sell an unexpectedly valuable seat at a higher rate. Everyone wins, at least on paper. But perhaps most importantly, the airline reclaims its old role as a service catering to clients, rather than another penny-pinching corporation that customers regard with suspicion and go to for lack of other options.

In hindsight, of course, it seems like an obvious way to leverage modern AI. But it took a number of things to happen before the airline industry was ready for the idea. Mobile phones had to become truly ubiquitous; the past decade's waves of mergers had to slow down; carriers had to run out of aspects of the service to turn into ancillary revenue (baggage fees, paid meals, etc.); and finally, commercial aviation, with its culture geared toward sticking to what's proven to work safely, had to overcome its instinctive distrust of anything new and different.

(Photo by Chris Burden for The Points Guy)
CEO Azim Barodawala and CTO Fenn Bailey moved with Volantio from its original headquarters in Australia. (Photo by Chris Burden for The Points Guy)

"It's operationally complex to set up the infrastructure, so it's a bit of a daunting undertaking, and for a lot of carriers, it doesn't fall to the top of their priority lists," Alaska's Ger said. (Ger has no personal stake in Volantio.) "The industry is in a tech backlog."

Nevertheless, several airlines quickly got behind Volantio's idea. In February, the company secured $2.6 million in Series B funding from IAG, the parent company of British Airways and Iberia; JetBlue Technology Ventures; and Qantas Ventures. It has signed up clients including, at least publicly, Alaska, Iberia, Qantas, Volaris and IndiGo. The company expects to have between eight and 11 clients by the end of the year.

"We used to be toward the bottom in IDBs but are now near the average as the overall industry numbers have dropped," Ger said. "We want to make sure we get our IDBs to be the lowest in the industry."

And remember the post-Bumpgate PR hit United took? In an effort to staunch the bleeding, the airline swiftly revealed that even before Dao stepped foot on Flight 3411, it had begun working with an up-and-coming tech startup with an out-of-the-box idea about eliminating overbookings. That startup was, of course, Volantio.

(Photo by Chris Burden for The Points Guy)
The Volantio team tackle a challenge. (Photo by Chris Burden for The Points Guy)

Staying Private

Despite saying it would be a leap forward for airlines to offer compensation for overbooked seats days in advance, Embry-Riddle professor Bender said Volantio isn't going to change many flyers' minds about air travel for one simple reason: They already have it pretty good.

"Overbooking leads to an absolutely miniscule number of involunatry denied boardings because, overall, the system works pretty well and 99% of the time, the denied boardings are voluntary," he said. "Once in a while you get horror stories like Dr. Dao and all that negative publicity, but there [are] almost always more volunteers than they need."

And in a post-Cambridge Analytica world, the concept of micro-targeting has brought up a host of deeply concerning privacy issues. Barodawala said Volantio adheres to a strict set of privacy rules — he said he doesn't even know whether, say, men or women are more likely to prefer travel vouchers over cabin upgrades. All identifying information is stripped away once it leaves an airline's system, and Volantio only contacts people who've opted in through the airline.

"We see this as similar to the way fraud detection works: You don't need to know it's John Smith who was acting in a particular way to know it's probably fraudulent activity," he said. "As opposed to Cambridge Analytica, there's not a shred of manipulation in anything we're doing."

(Photo by Chris Burden for The Points Guy)
In the background is a whiteboard with the team's flight schedules. (Photo by Chris Burden for The Points Guy)

What about United, which once implied that its Flex-Schedule program, powered by Volantio, would be a panacea for overbooking and Bumpgate-type incidents from then on?

The publicity from after the Dr. Dao incident gave Volantio a healthy head start against competitors both existing and yet to come. But United now carefully phrases its time with Volantio like you do when you break up with someone you dated for only three months but know you'll keep running into at parties.

"We successfully concluded a small test with them last fall and we continually evaluate innovative products and services from various vendors to help us improve our customers' travel experiences," United spokesman Jonathan Guerin said in an e-mail.

At Alaska, Ger said Yana's currently being used to e-mail passengers on overbooked flights to see if they'd be willing to volunteer their seats, but that it hasn't yet reached its potential.

"It will still be another six months or so until we really see a significant benefit," he said.

Barodawala emphasized that, as with all machine learning, Yana will become more powerful as it consumes more data.

"This is still the super early days, nascent-type work that's being done," he said.

Flying the Friendly Skies Again

Just inside the entrance to the Volantio office, there's a long row of model planes on a bookcase filled with aviation history texts. (There were more model planes there than in the TPG offices, in fact.) After lunch, the team was scattered around the office, some lounging with laptops, shoeless in bay windows, others peering into screens surrounded by the requisite bric-a-brac of coder paraphernalia (obscure Simpsons figurines, stress balls, bottles of hand sanitizer).

It was a small team of around a dozen then, and a whiteboard chart kept track of employee travels to clients, potential clients and conferences around the world. Barodawala alone accounted for 291,000 of the miles the group flew last year.

(Photo by Chris Burden for The Points Guy)
The office sports model planes from existing clients, potential clients and airlines the employees admire. (Photo by Chris Burden for The Points Guy)

"We traveled something like 750,000 miles last year as a company," Barodawala said. "We're on planes a lot, and that's one of the reasons we're really keen on the things that we're doing."

Things are about to change, though. The company's hiring more people to keep up with the work new clients bring in, and Volantio will soon be moving into a larger space in the same building. The company is confident that Yana will be the way of the future, not only for Volantio but also for commercial airlines and the people who fly them.

"There was a point in time when customers really admired airlines, and looked up and thought of air travel as being this special experience," Barodawala said. "But things changed, and it's not really the airlines' fault. It's just the reality of the business, which is brutal. But this is super personal to me. So, as travelers, this is our perspective: How can we make travelers' lives better?"

Featured image by (Photo by Chris Burden for The Points Guy)

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