Why Do Airlines Overbook Their Flights? The Scoop on Overbooking

Confused about overbooking? So are many other passengers. Airlines overbook their flights by selling tickets to more passengers than can fit on the plane. It works if not everybody shows up. But if the plane is full, that can leave some passengers getting bumped to a later flight. So why do airlines overbook their flights? And what can you do about it? Get the inside story.

How does overbooking happen?

man waiting for his flight at the airport and speaking on his phone

Why do airlines overbook their flights? | LiudmylaSupynska/ iStock/ Getty Images

How does overbooking happen? Very deliberately, as it turns out. Airlines know that some people won’t show up for a flight. The Los Angeles Times reports that those passengers might have overslept. They could have gotten caught in traffic. Maybe they got held up at airport security. Or perhaps they simply forgot. TechCrunch reports that on average, the percentage of passengers who don’t show up for a flight hovers around 5%. But in certain circumstances, that number can skyrocket to 15%.

Here’s where overbooking comes in. If the passengers who don’t show up have refundable tickets, then the airline loses the revenue for those empty seats. To avoid flying planes with empty seats, airlines sell more seats than they really have available on the flight.

They calculate how many seats to oversell by guessing how many passengers are likely to miss the flight. According to the Times, “The goal is to come up with a number that fills the plane as close to full capacity without having to boot passengers off — either voluntarily or involuntarily.” After all, most passengers hate getting bumped from a flight.

Why do airlines overbook if passengers hate it?

When airlines determine how many seats to oversell on a given flight, they consider what they’ll need to spend to compensate passengers who get bumped. Being bumped from a flight is a much-maligned effect of overbooking. But some people don’t mind taking a voucher — or cash — to switch to a later flight. (Especially if they don’t have an urgent reason to arrive at their destination at a specific time.)

Plus, The Los Angeles Times notes that airlines continue overbooking because not that many passengers get bumped from flights each year. In 2016, the 12 largest U.S.-based carriers denied boarding to 475,000 passengers. “That’s a rate of about 6 passengers who are involuntarily bumped from flights for every 100,000 fliers,” the Times notes.

Plus, as TechCrunch explains, booking a plane ticket doesn’t guarantee you a seat on a specific flight. “You are buying a journey from one city to another,” the publication explains. Airlines regard flying with empty seats as the worst-case scenario. The unused tickets are also a liability because they’re often still valid. And airlines don’t know when passengers will show up to try to re-book their trip.

What do you get if you give up your seat?

Airport lounge

The compensation can make the delay worth it.  | iStock.com/Martin Barraud

Regardless of why airlines overbook, the outcome is the same. Occasionally, they have to ask for volunteers to give up their seats and take a later flight. Federal law stipulates that this as the first step. And the law also doesn’t limit how much compensation an airline can offer to get volunteers lining up at the gate agent’s podium. The airline could give you a $500 voucher, for instance. They’re willing to do that because it isn’t even close to a $500 loss for them.

Some people think that as long as you don’t have an urgent reason to get to your destination at the original arrival time, you should volunteer to give up your seat. The Points Guy reports that airlines likely won’t offer compensation higher than what they’d have to pay for bumping someone involuntarily. But if you play your cards right, the airline can make the delay worth your while.

What happens if you don’t give up your seat, but get bumped anyway?

If airlines can’t get enough passengers to give up their seats voluntarily, then they can choose passengers to remove involuntarily. Federal law doesn’t specify how they choose, according to The Los Angeles Times. But many airlines bump the passengers who paid the least for their ticket or bought the ticket last-minute. Some even bump the last people to check in for the flight.

Airlines don’t have to compensate passengers as long as the airline gets them to their destination within an hour of the arrival time of the overbooked flight. If the passenger arrives one to four hours later, then the carrier has to pay 200% of the original fare (with a cap of $675). And if the passenger gets to their destination more than four hours after their original arrival time, the airline has to pay 400% of the original fare (with a cap of $1,350). Airlines can pay in cash, vouchers, or a combination of the two.

Read more: 22 Things You Should Do When You’re on an Overbooked Flight

Check out The Cheat Sheet on Facebook!