The federal government is promising that new rules it will introduce for air travel mean that no one will ever be kicked off a flight again due to overbooking.
But that doesn’t mean that airlines will suddenly stop overbooking flights, airline industry experts say.
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“We know on every flight a certain percentage of people won’t show up, and that’s why they overbook to make sure that these planes fly with as high capacity as possible,” said Todd Crawford, principal economist at the Conference Board of Canada.
Barry Prentice, a professor at the Asper School of Business at the University of Manitoba, agrees, saying overbooking makes good business sense. “You don’t want empty seats on an airplane, because you’ll pay for them anyway.”
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Airlines make most of their money from business travel, he said, and business travellers value the flexibility that allows them to change their flight times as necessary to accommodate meetings and appointments that run long. So sometimes someone else has to go — which is still a good deal for airlines even if they compensate the person who’s bumped, he said.
And if airlines can’t remove people involuntarily, they have to keep sweetening the deal until someone decides to go, said Crawford.
“If the airlines plan for this and they want to avoid a marketing or advertising disaster, they will voluntarily just keep offering more and more to get consumers to voluntarily get off of a flight.”
“At some price, there will always be somebody,” Prentice said. “Everybody has a price.”
Although this system will undoubtedly be more expensive for airlines than the status quo, Crawford doesn’t think it will significantly affect an airline’s bottom line. “In terms of the overall cash value to airlines, it’s very minor in sort of the overall scope of things,” he said. “The main risk to them is if they have one bad incident, it shows up all over YouTube, all over the media, and that’s where the real risk to the industry is.”
For a few hundred dollars extra, for example, United Airlines might have been able to avoid the embarrassing incident where a passenger was dragged off a flight and the footage went viral, he said. That incident affected their stock prices — a much bigger impact than just offering a passenger more to give up their seat.
And if that sounds like a great deal — airlines offering lots of compensation to inconvenienced travellers — don’t be too excited, Prentice warns. “There’s no free lunch. If the airlines have higher costs, we’re all going to pay a little bit higher fare,” he said, noting it could potentially be relatively small but there’s no way of knowing yet.
All in all, Prentice doesn’t think the new rules will automatically make air travel more pleasant for the average passenger.
“But at least they will have more peace of mind that if something screws up they have a bit more protection,” he said. “You can’t legislate service.”
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