TICKET OVERSALES/BUMPING Overview:
For decades, federal law let airlines sell more tickets than they have seats. Most of the time, enough people cancelled, or were “no shows,” that everyone with a ticket could get on their flight. But now — with financially strapped carriers cutting back on flights — “bumping” of ticketed passengers is on the rise. DOT Department of Transportation is thinking about a lot of changes that could make oversales less painful for the traveling public. Open questions include whether DOT Department of Transportation should extend bumping compensation rules to more flights — and maybe even not allow oversales in some situations.
This post will tell you more about what the problems have been, and what solutions DOT Department of Transportation is considering – and alert you to questions DOT particularly wants people to comment on.
Overselling flights is supposed to be a win-win scenario for airlines and consumers. Airlines can reduce the number of empty seats caused by cancellations and “no shows,” and fuller flights help keep ticket prices down. Now, however, airlines are offering fewer flights — and the number of “bumpings” is on the rise. Fewer, fuller flights also mean that bumped passengers have more trouble getting rebooked. Several things about the current system add to the unpleasantness of being bumped:
- Bumped passengers whose arrival is delayed more than 1 hour are supposed to get compensation equal to their one-way fare. Delays of more than 2 hours for domestic flights (4 hours for international flights) are supposed to double the compensation for being bumped. But there’s a cap on the total amount airlines have to pay: $400 for shorter delays; $800 for longer delays. Fare prices have risen a lot faster, and further, than increases in these caps, so many passengers don’t get the full amount they are supposedly entitled to.
- The current bumping compensation rules apply only to flights on aircraft designed to hold 30 or more passengers. However, nowadays, many major airlines use regional carriers for at least a segment of the flight (e.g., between a small airport and a hub), and these carriers often use planes designed for fewer than 30 passengers. A passenger bumped from those flights has no compensation rights, even though this completely disrupts the rest of his/her trip.
- Many passengers fly on “zero fare tickets” — that is, they got the ticket with frequent flyer miles or vouchers. Airlines currently don’t have to compensate “zero fare” passengers for being bumped. Yet, these passengers have usually earned or paid for those tickets in some way, and they suffer the same inconvenience and costs by being bumped.
- Bumped passengers often don’t realize they have the right to be compensated in cash or by check. Current rules require that airlines give out a written notice that includes these options. But gate agents may verbally offer only a voucher for future travel — and passengers in the process of being bumped may not have the time to stop and read all the fine print.
- When airlines deal with an oversold flight by asking for volunteers, travelers may not have enough information to make the best decision in the circumstances. For example, an individual might agree to accept the lower amount of compensation given to volunteers, even though he/she was in line to be bumped and so might have gotten the higher involuntary compensation amount by waiting. Or, a passenger might decide to pass up the voluntary compensation, in the hope of getting the higher involuntary compensation — only to discover that he/she actually gets no compensation when bumped because, for example, the delay from rebooking was under 1 hour.
DOT is considering 6 changes that might improve the situation — by creating financial disincentives for airlines to significantly oversell flights, and/or by making the situation less painful for travelers when a flight is oversold:
First, DOT Department of Transportation is thinking about raising the compensation caps to $650 for shorter delays and $1300 for longer delays. These new figures are supposed to adjust for inflation, and were calculated using the Consumer Price Index for All Urban Consumers (CPI-U).
Second, to keep the caps from getting so out of line with ticket prices in the future, DOT Department of Transportation might implement an automatic inflation adjuster, using the CPI-U, that would raise the caps (without more rulemaking) every two years.
Third, DOT Department of Transportation might extend the bumping rules to include flights on smaller aircraft (more than 19 passenger seats, rather than the current 30-seat cut off.)
Fourth, DOT Department of Transportation might require that zero-fare passengers get the same rights as other passengers when bumped. The question about this is how to value such tickets for compensation purposes (see next section).
Fifth, to ensure that bumped passengers know they have a right to be compensated in cash, DOT Department of Transportation is considering requiring airlines to verbally offer the option of cash/check at the same time they offer travel vouchers. Gate agents would also have to explain any conditions or restrictions on use of the vouchers.
Sixth, DOT Department of Transportation might require giving passengers more information about the circumstances when the airlines ask for volunteers. Gate agents might have to tell passengers: (1) how the airline makes decisions about who’s in line to be bumped (e.g., based on time of check-in or fare); and (2) how long the delay from rebooking would be. This way, passengers could better assess the benefits and risks of volunteering vs. waiting to see if they are bumped. Exactly how this disclosure should happen is an open question. (see next section).
On bumping compensation:
- Are the proposed increases on compensation caps ($650/$1300) high enough?
- Should caps be eliminated entirely, so that airlines pay the actual amount, or double the amount, of the ticket price?
- Should the basic compensation formula be raised (for example, to twice the ticket price/four times the ticket price) to account for the fact that today’s “unbundled” fares often don’t include services like checked baggage and food that people now pay for on top of the ticket price?
When it comes to flights on smaller aircraft (19-29 seats), should DOT Department of Transportation completely prohibit oversales? Is a bumping situation more likely to occur with so few travelers? Are rebooking difficulties greater?
How should compensation for zero-fare tickets (e.g., frequent flyer tickets) be calculated? Should DOT Department of Transportation use the fare of the lowest priced ticket for a comparable class of ticket on the same flight? Or should airlines be allowed to pay compensation in the same “currency” as the ticket was “bought” with – so, for example, a frequent flyer ticketholder would get as many miles (or double the miles) as used for the ticket, plus cash for any taxes, fees, etc. paid? Do you have better ideas for fairly compensating these ticketholders?
What is the best time, and way, for giving passengers information to make good decisions about volunteering? Is there other information people need to decide on their best bumping strategy?
See what DOT Department of Transportation said on this issue: NPRM Section 6.
See the proposed rule text on this issue: Section 250.1.