By now, you have probably seen—or at least heard about—the troubling situation that occurred at Chicago’s O’Hare Airport this past weekend. Law enforcement officers were summoned onto an airplane sitting at the gate to forcibly remove a passenger—a doctor from Elizabethtown, Kentucky—from an express flight headed to Louisville. The confrontation became heated and ended with the bloodied passenger being dragged down the aisle of the aircraft. Videos of the incident were quickly posted to social media, creating an enormous media firestorm. Perhaps the most concerning thing about the situation is the reason that happened. The passenger was not initially breaking any rules or making threats; instead, the flight was simply overbooked.
Overbooking flights is an extremely common and legal practice in the airline industry, and it is usually done as a cost-saving measure. As business law attorney, I certainly appreciate the need for a company to maximize efficiency and save money whenever it is reasonably possible, but situations like the one this past weekend are enough to make anyone stop and take notice.
Why Overbooking Occurs
It is reasonable to wonder why airlines would sell more tickets than there are seats available on a given flight. The answer is fairly simple: on average, 5 percent of ticketed passengers do no show up for their flight—a number that can sometimes go as high as 15 percent. Depending on how you purchased the ticket, missing your flight means that you will usually be put on another flight—sometimes with a transfer fee, sometimes without one. This means that without overbooking, there would be empty seats on your original flight. It still costs the airline the same in fuel, labor, and other expenses, and with fewer passengers, the airline could be losing money on the flight.
But I Paid for My Seat!
While you may have chosen your airline, departure time, and even a window seat, your purchase really only includes the trip from your point of origin to your destination. Thus, just as you can transfer your ticket to another flight, the airline can transfer you if necessary as well. In most cases of overbooked flights, the airline will ask for volunteers and may offer incentives—including hotel accommodations, travel vouchers, and more—for passengers who agree to switch flights. If not enough people volunteer, the airline may be forced to involuntarily bump more. Last year, some 46,000 travelers were involuntarily transferred from their original flights.
Overbooking Is Not Going Anywhere
The airline industry, as a whole, operates on razor-thin profit margins—sometimes as low as 1 percent. Thus, business practices have emerged to avoid any further losses. According to industry insiders, it would be possible to revamp the current business model so that each passenger who buys a ticket is guaranteed a seat on the flight they chose, but prices would rise by an estimated 20 percent. While some travelers would be willing to pay the difference, not everyone would be, and the difference would be enough to effectively kill commercial airlines.
Best Business Practices
If you are a business owner, you have likely adopted practices which are standard in your chosen industry. They may be related to cost-effectiveness, customer retention, and a variety of other considerations. From time to time, however, such practices should be reviewed to ensure that they are still offering benefits to both your company and your customers. Contact an experienced Naperville business attorney for guidance today. Call The Gierach Law Firm at 630-756-1160 for a confidential consultation.