Why do airlines overbook flights?

Why do airlines overbook flights?

*Updated April 2015

A portion of airfares sold on a flight come with the option to switch flights or cancel with little or no penalty. These are often purchased by business travellers that require flexibility to change their plans or by consumers when the lowest fares are sold out. There are usually a portion of travellers that do not show up for their flights, either because they simply miss it or because their ticket can be applied to another flight or refunded altogether.

Since the airline can lose revenue on these seats, they purposely overbook flights based on prior statistics of the “no-show factor” also called yield management, with the intent that they’ll actually fill the aircraft with 100% occupancy. They can predict with fairly good accuracy how many travellers will not show up on the 5pm Friday flight from Chicago to Toronto, and how many will show up earlier wanting to go home for the weekend after business was done.

But sometimes, there are situations where more people show up for the flight than there are seats.  Chartered airlines and tour operators seldom overbook because the no-show rate is low. The majority of people are travelling for packaged holidays.

If everyone is checked-in on time and you have a confirmed seat, the airline can’t bump you, so there is nothing to worry about.  They have to ask for volunteers to take the next flight in exchange for some form of compensation. Compensation generally starts low and keeps rising until someone offers to “get bumped.” A couple of hundred dollars cash or travel voucher is usually offered, depending on the length of delay – but amounts up to $800 have been offered for 6-hour flight delays.

The longer the delay, the better the benefits. If you’d like to volunteer to forfeit your seat, you could end up earning cash, travel vouchers, meal coupons, stays in airport lounges, etc. for your inconvenience.