During yesterday’s earnings call, Delta President Glen Hauenstein had some interesting comments about how the airline is adjusting its overbooking model, as noted by View from the Wing. This could have some (mostly good) implications for passengers.
In this post:
Why Delta is increasing flight overbooking
Overbooking flights has been a common practice in the airline industry for a long time. The logic is that not all passengers will show up for a particular flight, as some passengers might cancel last minute, while others might make it to the airport too late, while others might misconnect.
You’re missing out on revenue if you let seats go out empty, so the idea is that airlines use historical models to predict the average no show rates for flights. Most of the time airlines get that right, but other times they don’t.
But since the start of the pandemic, something major has changed about predicting no shows. Major US airlines have eliminated change fees on a vast majority of fares, and that increases the odds of people booking flights that they might not actually end up taking. Many people might speculatively book a ticket, and then only end up canceling it day of.
Delta plans to adjust its overbooking model going forward to reflect this. As Hauenstein describes it:
- If the airline previously sold flights to 103% of capacity on average, the airline is now working toward selling flights to closer to 105% of capacity, to reflect an increase in cancelations
- “There’s a little bit of risk in that,” so the airline won’t go to 105% right away, but rather might go to 104%, see how it goes, and then work up to 104.5%, etc.
To be clear, Delta’s goal isn’t to consistently bump more people from flights, but rather the goal is to maximize revenue and have as few seats as possible go out empty.
Why Delta’s overbooking changes may be good news
On the surface, Delta increasing by how much it overbooks flights might seem like bad news, as it means that more people will be bumped from flights. While that’s true, this could actually be a positive:
- When a flight is overbooked, airlines first have to solicit volunteers to take another flight, in exchange for compensation
- Only if the airline can’t get enough volunteers can it involuntarily deny boarding to passengers; airlines have a strong incentive to avoid involuntarily denying boarding to passengers, as this data is tracked by the Department of Transportation
The reality is that Delta is really good about soliciting volunteers, rather than involuntarily denying boarding to passengers. The airline has among the lowest involuntary denied boarding rates in the industry.
Keep in mind that voluntary denied boarding is a negotiation process, and typically Delta will increase compensation until it has enough takers. We’ve even seen stories of the airline offering $10,000 in vouchers for someone to take a different flight, when there weren’t otherwise takers.
The way I view, the more voluntary denied boardings an airline has, the better. It’s only involuntary denied boardings that we should be concerned about, and I doubt we’ll see those increase materially.
Bottom line
Delta plans to increase by how much it overbooks flights, reflecting that more people are changing flights last minute due to flexible booking policies. I figured this would happen when airlines eliminated change fees on most fares, since booking a flight isn’t as much of a commitment as it was in the past.
Ultimately the goal is to get the forecasting right, though there’s always some variability, and at least in the short term this could increase how many passengers Delta has to bump from flights. That doesn’t have to be a bad thing, though, as a vast majority of passengers bumped from Delta flights do so voluntarily.
What do you make of Delta adjusting its overbooking model?
I wish I had read this before booking a Delta flight. Basic Economy does not allow seat selection. Checked in at 8 sharp time, all queued up to press that enter key at 8. Just found out 7th on STANDBY list!
I have to drive 4 hrs to airport, flight is a red eye, and I won't know if my dtr will even be on flight.
I will never book a flight on...
I wish I had read this before booking a Delta flight. Basic Economy does not allow seat selection. Checked in at 8 sharp time, all queued up to press that enter key at 8. Just found out 7th on STANDBY list!
I have to drive 4 hrs to airport, flight is a red eye, and I won't know if my dtr will even be on flight.
I will never book a flight on Delta again.
And, I will tell everyone don't fly Delta. My bottom line is reliabity. Let's see how next earnings report goes.
SHAME shame Delta Airlines, you will lose so much $$$. This over booking was not well thought out
I take issue with the idea that a last minute cancellation is “missed revenue.” Airlines keep that fare for the seat, whether it’s empty or not, if most people aren’t buying the fully refundable fares. It’s an opportunity to get double paid.
If an airline rebooks my seat with another passenger after I cancel because I’m throwing up the morning I am supposed to fly out (this happened), then I should get a refund. But...
I take issue with the idea that a last minute cancellation is “missed revenue.” Airlines keep that fare for the seat, whether it’s empty or not, if most people aren’t buying the fully refundable fares. It’s an opportunity to get double paid.
If an airline rebooks my seat with another passenger after I cancel because I’m throwing up the morning I am supposed to fly out (this happened), then I should get a refund. But that’s not how it works. They keep my money and obligate me to fly with them again in the future or lose my credit, AND collect a double fare from someone else.
Agree this is the point of revenue management systems and the cost of compensating is less than the loss of revenue. Also an increase of 0.02% is not very much. Surprised it is not more.
Utter BS. Those seats are already paid for. Nobody shows up at the airport with an unpaid seat. They are just getting double payment for the same seat. No other industry gets away with taking your money and not giving you a product..
Overbooking is a crock of crap! Last time I flew I had to wait 4 hours before a pilot could be found to fly a routine, daily scheduled flight. No we're sorry, no nothing. Airlines don't care about the very people that keep them in business. Overbooking is just another excuse to fatten their wallets and share prices. They've taken all the enjoyment out of flying. Just a large cattle car experience these days.....Moooo!
Not so good for staff travelers, but we don't bring in revenue, so completely understandable.
Good luck to nonrev’s trying to get on flights
The surest way not to get bumped on Delta is unfortunately the most expensive way. Fly first class. What Delta does is starting from the back of the plane with the basic economy then economy and then premium economy and then first class for choosing which people are to be bumped. It's one of the privileges of the first class passengers because they are paying the most ,as an example first class passenger may be...
The surest way not to get bumped on Delta is unfortunately the most expensive way. Fly first class. What Delta does is starting from the back of the plane with the basic economy then economy and then premium economy and then first class for choosing which people are to be bumped. It's one of the privileges of the first class passengers because they are paying the most ,as an example first class passenger may be paying $700 to $2000 while basic economy for the same flight is paying $75. I wouldn't call it classism. I wouldn't call it privileged. I would call it business. That being said I've never read nor known anybody who ever has been involuntarily bumbed by Delta. They're one of the few airlines that does not have an attitude of Ticketmaster customer service. Gate agents have broad discretion in determining compensation for people who are voluntarily bumped. This article is correct except for the fact that there have been cases when people receive_$ 15,ooo to $20,000. First class passengers are also the least likely to be bumped because they tend to be business people or leisure travelers who absolutely positively want to be at their destination at a specific time. Consequently they are also the least likely to cancel their flight at the last moment and then get a credit. The articles correct in saying that this now happens because as part of the bailout of the airlines one of the conditions was that the airlines were to nearly completely do away with change fees and must award people credit when they cancel. Although first class passengers are the least likely to cancel, there are first class passengers who buy the most expensive ticket which is fully refundable and as a result of absolutely positively having to be where they are they book two first class most expensive ticket and whichever airline is not delayed or flight canceled they use that airline then they get a full refund of the other airline they booked first class. I recently learned this. This is a stopgap for business travelers and other people who absolutely positively have to be where they are at a certain time. Again I would say Delta is the least likely company to involuntarily bump. they will do everything in their power including a near No limit of money to get people to voluntarily give up their seat. Also unfortunately I must tell you that there are red flagged VIPs who can show up the date of a flight pay first class or fly for free and end up bumping somebody who is already paid for a seat in first class. These include congressman, travel writers CEOs and anybody with the ability to to exercise and undue influence with the airline. As a result, even being in first class there is still a chance you will be involuntarily bumped if they can 't find anybody else in first class to voluntarily bump. A first class passenger is the passenger most likely not to accept any level of monetary compensation for giving up their seat voluntarily. Many of the first class passengers are the one per centerss and are flying commercial because their private jet doesn't have the range. Even if you're paying for $5, 000 to $10,000 for a one-way trip internationally, you can still be bumped involuntarily in order to get a VIP on board.
@Jack Robert Day
VIPs probably.
You forgot our beloved Federal Air Marshals, a TSA secret agent.
And shouldn't congressman or congresswoman fly standby or be denied before. The technically are supposed to serve the public. On the other hand they should bump other passengers when Congress is in session.
I have booked non rev on my company. I don’t care with overbooking :)
Increasing overbooking is a natural consequence of no change fees. If we want US carriers to have no change fees, then overbooking makes sense because the product has no value one minute after the boarding door closes.
The seat is already paid for.
Overbooking is fraud. They are selling a product they don't have and taking payment for it.
This should be prosecuted no different than if I sold my car to two people.
Withholding tax is fraud?
They are forcing me to pay for income I can deduct and taking payment for it.
IRS should be prosecuted no different than if I sold my car to two people.
Tax season is getting on my nerves.
Figures you travel blogger freeloaders would be the ones under the airlines desk giving blowjobs for upgrades and claiming it is a good thing that they are fraudulently selling seats that do not exist.
When n a customer is offered $1200 to give up a $600 seat, how does that help the “bottom line”?
it's pure statistics and probabilities. Delta is taking a low chance that they will have to pay to get someone to give up a seat for a much greater chance of gaining more revenue; once the door of an airplane closes, empty seats can never be filled with revenue.
Delta just has a remarkable ability to ensure that virtually no one is forced off a plane - and they still are one of the...
it's pure statistics and probabilities. Delta is taking a low chance that they will have to pay to get someone to give up a seat for a much greater chance of gaining more revenue; once the door of an airplane closes, empty seats can never be filled with revenue.
Delta just has a remarkable ability to ensure that virtually no one is forced off a plane - and they still are one of the most profitable airlines in the world and generate some of the best revenue premiums.
By all measures, it appears that Delta has the best balance between overbooking and customer service in the global airline industry.
Note that, according to the DOT, some other US airlines that don't even overbook have higher involuntary denied board rates than Delta - because operational reasons often lead to overbooking.
And, again, Delta is not increasing the rate of overbooking on departure day with these latest moves. They are changing the target to which they will fill the plane when they start accepting bookings earlier in the life of a flight's booking process - flights are available for sale 11 months in advance - so that they can adjust to the changing mix of business and leisure traffic
@Cherie
Well if Delta gives $1200 for your $600 seat, in layman term. And not those Tim Dunn gibberish, which may or may not be true, since we're talking about "bottom line" not to praise how profitable Delta is.
They make more money kicking 1 people (-1200) rather than flying with 3 (-1800) or more empty seats.
Post Covid no change penalty means more empty seats last minute.
I think it is insane to book over the amount of seats available. One, by doing it is false advertising of a available product which is not available. Second, I understand deboarding is mostly voluntary, however only individuals or parties od two can benefit from this perk and possibly calculated blessing. Thirdly, knowing many individuals who work for airlines one of airlines main selling point to get employees to work for them is the perk...
I think it is insane to book over the amount of seats available. One, by doing it is false advertising of a available product which is not available. Second, I understand deboarding is mostly voluntary, however only individuals or parties od two can benefit from this perk and possibly calculated blessing. Thirdly, knowing many individuals who work for airlines one of airlines main selling point to get employees to work for them is the perk of travel. If the airlines are overbooking this perk is no longer truly available and again a ploy not a truth on what is both available and provided.
Read the terms of service/contractor carriage…
Contracts cannot cover crimes. We can't have a contrract for you to steal items from the store for me. Overbooking is fraud. They are selling a product they do not have and do not intend to provide.
Great article, but one sentence stuck me as a bit off, "The way I view, the more voluntary denied boardings an airline has, the better."
I'm not sure this statement is true. Obviously if taken to it's extreme, I can't see how it would be beneficial if each flight had 20 voluntary denials. The downsides to voluntary denials could include drawn out boarding times, delayed push backs, increased costs, a negative perceived reputation, or even...
Great article, but one sentence stuck me as a bit off, "The way I view, the more voluntary denied boardings an airline has, the better."
I'm not sure this statement is true. Obviously if taken to it's extreme, I can't see how it would be beneficial if each flight had 20 voluntary denials. The downsides to voluntary denials could include drawn out boarding times, delayed push backs, increased costs, a negative perceived reputation, or even travelers that try to game the inefficiency and rack up travel credits.
The goal is obviously to maximize revenue from overbookings without having any denied boardings, so this probably is reached at some steady state rate of voluntary denials.
How about not overbooking to begin with.
How about paying 35% more for your ticket in exchange of no overbooking?
I hope every bumped passenger holds out for $10,000.
I hope so too, so I'll just take it right at $9,999.
But a zero sum game suggest I take the first offer at $200 or don't volunteer if I need to be on this flight.
People are too greedy (and dumb) for prisoners dilemma to work in your favor most of the time. Having 100+ passengers also works against you.
I've noticed airlines varying their approach with over booking and it appears to be more of a win win situation at least from my experience. On one flight during Xmas flying into nyc on business was pretty hefty. So I booked a flight on United to IAD instead because the price was almost 40% lower, same plane. Then I booked a separate flight into nyc and still saved a few hundred overall. Well a month...
I've noticed airlines varying their approach with over booking and it appears to be more of a win win situation at least from my experience. On one flight during Xmas flying into nyc on business was pretty hefty. So I booked a flight on United to IAD instead because the price was almost 40% lower, same plane. Then I booked a separate flight into nyc and still saved a few hundred overall. Well a month later ual called (non outsourced ie they understand when you explained why you did what you did). The flight was overbooked, there was still several weeks before the flight. She offered different compensation. Ultimately she just re-booked me into ewr, refunded my 2nd leg and everyone came out ahead more or less. I got my flight at the original lower price and avoided the connection. They probably sold my seat at a higher price.
Overbooking is a win-win situation. Either you are smart enough to realized it or not.
People are taking cheap (optimized) fare for granted.
@Eskimo mostly the left leaning are the ones who abhor Overbooking (but they surely love the 'subsidized' fares that derives from it). Totally understandable, to be from the left one has to absolutely lack understanding of the most basic economic principles.
@BBK
I don't think this is anything political. It's purely business.
Left or Right isn't the problem. Reading most comments in this blog, including other topics, can point you to an overall decline in common sense and intelligence. Prone to believing propaganda and fake news is a huge factor too. So whatever news source you're following says something, it must be true.
If you compensate enough and put me in business class I'll volunteer. That's why I add 2 extra days to my trip
Anyone who thinks this is a good idea.. Doesn't work for Delta.
Only hurts Delta employees who nonrevs. Good luck getting on flights. Take your bonus and pay for flights. Lol
Airlines have been investing in technology that tells them the optimum they can overbook without ever needing volunteers. I will bet you 80%+ of the time DL (and others) announce an overbooked flight and in the end volunteers are not needed.
someone gets it!
the point of revenue management systems is to figure out how much they need to overbook a flight IN ADVANCE in order to get to a full plane at departure.
Anyone that understands the very technical nature of the question knows that Delta is not saying that flights will be more overbooked on the day of departure. They are saying they will increase the TARGET that they will use that...
someone gets it!
the point of revenue management systems is to figure out how much they need to overbook a flight IN ADVANCE in order to get to a full plane at departure.
Anyone that understands the very technical nature of the question knows that Delta is not saying that flights will be more overbooked on the day of departure. They are saying they will increase the TARGET that they will use that will allow the system to overbook another percent or two IN ADVANCE so that they end up w/ a flight that is as full as it was before.
The analyst himself that asked the question noted it was a nerdy question and sadly, some people, copied the text word for word and still don't understand what was being discussed or what Delta said it is doing differently to deal w/ the change in mix between business and leisure travelers.
Ending up w/ a more overbooked flight on the day of departure is NOT what they said AT ALL.
Seems like a reasonable policy that will not result in any noticeable problems for their passengers. I read yesterday on CNBC that Delta has reported record bookings for this summer. Hard to argue against success.
Now that the inevitable sycophantic comment from Tim Dunn on a Delta related article has been made, we can all go on with the rest of our day.
you clearly have never bothered to see me defend other airlines - and yet they are there.
You would do well to focus on the discussion instead of other users.
There is an underlying message in this move, they are planning to keep the existing policies for changes and standbys for the foreseeable future. That change across the legacy carriers has been great for travelers.
I will gladly take a slightly higher chance of getting bumped (on paper) to keep free changes. Easy decision.
I also think the airlines have probably ended up benefiting from these change policies more than they might admit. If for no other reason, customer satisfaction has to be higher.
@jIm_usaIr
THIS! Exactly.
Screw all the other noise... what stuck out most was the implicit admission that the change-policies are here to stay!
Please don’t use Gary as source material. He didn’t even bother to read the original transcript but relied on someone else’s interpretation.
Delta said they are still adjusting to the change in business vs leisure bookings and are booking more earlier intending to come out at the same place. They specifically say they do not want to overbook more although they admit that is a risk.
Read the transcript or listen to the...
Please don’t use Gary as source material. He didn’t even bother to read the original transcript but relied on someone else’s interpretation.
Delta said they are still adjusting to the change in business vs leisure bookings and are booking more earlier intending to come out at the same place. They specifically say they do not want to overbook more although they admit that is a risk.
Read the transcript or listen to the earnings call recording yourself
Delta has a 0 percent ratio for involuntary denied boarding with the DOT
You spend so much time on Gary’s site for a guy that loves to call him names and disparage his article opinions on other sites.
Gary is more than capable of defending himself and he has responded.
You should spend more time contributing to the discussion and not worrying about other users and then Gary and Ben and everyone else might actually respond to you.
Delta did not say it intends to overbook more. It says it is accepting more bookings earlier which COULD result in more bookings as they adapt to different travel patterns.
The fact...
Gary is more than capable of defending himself and he has responded.
You should spend more time contributing to the discussion and not worrying about other users and then Gary and Ben and everyone else might actually respond to you.
Delta did not say it intends to overbook more. It says it is accepting more bookings earlier which COULD result in more bookings as they adapt to different travel patterns.
The fact that the mental midgets that criticize other users instead of discussing the topic at hand shows that they are out of their league
lol. thanks for the laugh. I do contribute, Tim. But when you go out and troll owners of blogs because of your own insecurities, I'll always call you out on your ridiculous insecurities. And they do respond to me. They usually are only laughing at you to mention your ignorant biases when they respond to you anyway.
Stop being a troll.
the complete hypocrisy and proof that YOU are the troll is that Gary told you to knock it off talking about other users on HIS site so you come over to someone else's to complain about activity on another site.
You truly are a piece of work.
Gary has never said that and he's more than welcome to email me. Thanks for playing.
What happens in Garyland is Gary’s issue and should stay there
Using Ben’s site to complain about activity on another site is about as close to the definition of a troll as there could be
@Tim Dunn - you literally make stuff up (some people call that lying). I provided you with a link to, and quote from, the transcript that showed that your claims were mistaken. In my post I cited someone who covered the issue first, as is my practice.
You provided a link on your site and I replied there
This is Ben’s site
Then why did you attack Gary’s credibility on Ben’s site?
Get a grip on reality.
why is it that Ben has multiple readers that completely grasped what Delta is doing, Ben didn't have to argue to defend himself, YOU are the only one that feels a need to trash anyone else, and Ben doesn't go elsewhere on the internet to defend himself?
My point was obvious. Copying someone else's work - whether Gary from someone else or Ben from Gary - does not produce enlightenment.
Some of Ben's own...
why is it that Ben has multiple readers that completely grasped what Delta is doing, Ben didn't have to argue to defend himself, YOU are the only one that feels a need to trash anyone else, and Ben doesn't go elsewhere on the internet to defend himself?
My point was obvious. Copying someone else's work - whether Gary from someone else or Ben from Gary - does not produce enlightenment.
Some of Ben's own readers - including me (who said the same thing on Gary's site) were able to figure out what Delta is doing - while you and others are more interested in complaining about me than grasping the topic at hand.
The problem is YOU, not me.
Get a grip on reality, Tim. Your delusion isn’t cute.
You’ve already been banned on a.net, IP address, writing style, and all.
Perhaps take a cue from that.
I know what delta is doing. So does Gary. You’re the one that went off because you don’t like the obvious connotations of even something slightly negative toward delta.
Hell, you even accuse Ben of copying and pasting other’s work without reading on his...
Get a grip on reality, Tim. Your delusion isn’t cute.
You’ve already been banned on a.net, IP address, writing style, and all.
Perhaps take a cue from that.
I know what delta is doing. So does Gary. You’re the one that went off because you don’t like the obvious connotations of even something slightly negative toward delta.
Hell, you even accuse Ben of copying and pasting other’s work without reading on his own. Why? Because they have a different opinion than you. You always go to childish name calling and cheap shots when you have no real argument.
Stop being a troll. And get a life. Seriously. Delta, aa, and United shouldn’t run your emotional life the way they do.
YOU are the trolll. I contribute to the subject. Other readers can see it and vote accordingly
You are simply jealous that you aren’t the center of attention
"Involuntary" is carrying a lot of weight there. Accepting a later flight because otherwise you are totally screwed isn't voluntary, that's under duress.
Delta has by far the most generous and lucrative VDB program in place (higher amounts that become Amex or Visa gift cards as opposed to vouchers and more willingness to offer higher classes of service for flexibility), so this is a great thing for people who are flexible.