Southwest to Stop Overbooking as United Uproar Echoes • Hacker News Board

Re: Southwest to Stop Overbooking as United Uproar Echoes

#91

Post by toyg » Thu, Apr 27, 2017, 10:26 PM UTC

thesumofall wrote: post #72

toyg wrote: post #54

Earlier quoted context omitted.

Yep, the main difference in Ryanair's model is that basically all tickets are nonrefundable. This way, even if the plane leaves half-empty on the day despite being fully booked, it will have paid for itself - which is what should happen, really. What you lose by renouncing overbooking is the ability to change your ticket without paying for it again (which is what happen with Ryanair - fees to alter bookings are so hu…

That's not really an argument. Profits could have been even higher if they had leveraged overbooking. And some of Ryanair's tickets are certainly below marginal costs - making me wonder if really all fights pay for themselves that easily. My guess why they don't use overbooking: it's really complicated. Both finding the right balance of overbooking as well as managing the procedures at the airport. Ryanair has simply…

> Profits could have been even higher if they had leveraged overbooking.

But risk would also be much higher - as you say, handling overbooking correctly is complicated, and when it goes wrong it can go very wrong. Ryanair didn't just renounce revenue, they renounced risk and the costs associated with managing that risk.

> And some of Ryanair's tickets are certainly below marginal costs

The operational word being some. Much-fanfared rock-bottom prices nowadays are very limited, and the cost of a seat goes up very very quickly after they're exhausted. The cheap tickets are now a marketing proposition for the real ones.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#92

Post by amorphid » Thu, Apr 27, 2017, 10:26 PM UTC

koolba wrote: post #22

jemfinch wrote: post #2

Does that mean ticket prices will increase?

Southwest already allows cancelling your ticket up to the last minute for a future credit so presumably most people that will miss the flight do so already. I wouldn't expect this impacts their fares much, if at all. Now if United, AA, or other large airlines that don't offer cancellation did this, that'd be another story.

Southwest's cancellation policy is a big reason why I love them.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#93

Post by pauldino » Thu, Apr 27, 2017, 10:28 PM UTC

amorphid wrote: post #84

corford wrote: post #81

Earlier quoted context omitted.

Overbooking is a technique used by legacy airlines. Pure LCCs don't use it (certainly in Europe) because their tickets are non-refundable other than from EC261 claims and they don't have inter-lining or partnerships with other carriers. I'm surprised Southwest were overbooking in the first place given they're a budget airline... Edit: An exception may be Easyjet (though I've never seen it happen and I fly them a lot)…

Southwest flights aren't that cheap unless you book in advance. And they used to (still might?) have a very flexible refund policy. You could not show up for a flight, never call, and still get a full credit for the value of your ticket to any other Southwest flight in the next 12 months w/ no penalty. I really like Southwest.

They've restricted it slightly: now you have to notify them at least 10 minutes before the flight. But still no penalties - I really hope they don't have to do away with that policy since that's the main thing I like about Southwest.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#94

Post by diogenescynic » Thu, Apr 27, 2017, 10:32 PM UTC

aresant wrote: post #12

This response feels knee jerk. It's been demonstrated in countless other threads (1) and articles (2) how economically important it is to overbook. Overbooking is central to airline profitability and their ability to provide flexibility - like partial refunds, or SW's "open tickets" policy on business select. As a consumer I appreciate these things and find them incredibly useful. United's response of "We'll push the…

>how economically important it is to overbook.

I still don't believe this claim. A 727 seats 129, a 787 seats 290, and a 747 seats 366. That means it only makes flights slightly less expensive. I only travel a few times a year and I'd rather pay 2% more than get bumped off my flight.

Why do we allow airlines to overbook but not movie theaters or other industries? This seems like an artificial advantage we've given them and it doesn't seem beneficial at all to the average consumer.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#95

Post by briandear » Thu, Apr 27, 2017, 10:32 PM UTC

SilasX wrote: post #85

aresant wrote: post #12

This response feels knee jerk. It's been demonstrated in countless other threads (1) and articles (2) how economically important it is to overbook. Overbooking is central to airline profitability and their ability to provide flexibility - like partial refunds, or SW's "open tickets" policy on business select. As a consumer I appreciate these things and find them incredibly useful. United's response of "We'll push the…

I understand the benefits of overbooking and I think it's an overreaction to stop it entirely. But, couldn't they make the tradeoff more explicit and transparent for the customer? "This ticket allows you to be bumped, for which you will be paid $X. You can pay $Y more to make it a permanent you-own-this-slot-we're-not-f'ing-around reservation." None of this, "oh, you didn't read and memorize the minutiae of overbooki…

It already IS transparent. Every single ticket counter generally has some form of overbooking notice. -- at lesst they did when I flew through DFW a few weeks ago. I don't think anyone reading this is unaware of overbooking. It isn't some mysterious secret clause on a TOS page somewhere.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#96

Post by rlanday » Thu, Apr 27, 2017, 10:34 PM UTC

pdelbarba wrote: post #60

loeg wrote: post #37

Earlier quoted context omitted.

Why cap at $10,000? There needn't be any cap.

If it gets really high, I imagine passengers would do their best to drive it up. Would you volunteer if the offer was $2k out of a $100k vs a $10k pool? It defies classic game theory to an extent, but humans like to roll the dice.

You're going to collude with ~100 random strangers to prevent anyone else from taking the offer until it gets to the level you want it to get to, and then agree to split it somehow? Ha ha ha.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#97

Post by shliachtx » Thu, Apr 27, 2017, 10:35 PM UTC

ubernostrum wrote: post #3

jemfinch wrote: post #2

Does that mean ticket prices will increase?

Southwest already often isn't the cheapest, or even close to the cheapest, fare on many routes. And whether this causes an increase in fares will mostly depend on the existing load factor. If they already had planes mostly going out with a few empty seats, they don't necessarily have to change anything.

They are currently in the process of moving to a more flexible scheduling system (until now they could only have a weekday and weekend schedule) which should allow them to have more profitable flights (as they dont need to flt an empty plane for 3 days if only 2 days are high volume).

Re: Southwest to Stop Overbooking as United Uproar Echoes

#98

Post by briandear » Thu, Apr 27, 2017, 10:37 PM UTC

beamatronic wrote: post #38

aresant wrote: post #12

This response feels knee jerk. It's been demonstrated in countless other threads (1) and articles (2) how economically important it is to overbook. Overbooking is central to airline profitability and their ability to provide flexibility - like partial refunds, or SW's "open tickets" policy on business select. As a consumer I appreciate these things and find them incredibly useful. United's response of "We'll push the…

Is it possible to sell an overbook and a non-overbook class of tickets separately, and clearly delineate that to the customer as such?

If you buy a higher fare class you won't get bumped -- or extremely rarely. I fly 60,000 miles per year and I have never been bumped. But I also don't buy bulk-fare consolidator tickets from travelocity-type sellers either.

Involuntary bumps are extremely rare statistically anyway.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#99

Post by knz » Thu, Apr 27, 2017, 10:37 PM UTC

ewanm89 wrote: post #53

jrockway wrote: post #44

Earlier quoted context omitted.

You're right that it's not intrinsically essential. To an airline, a flight that leaves with an empty seat is basically throwing money away; that empty seat doesn't mean you can take less fuel, fewer flight crew members, or wear out the airplane less. Therefore, the empty seat saves the airline no money. Furthermore, people often miss their flights. Overbooking is one way to deal with these two assumptions. Assume a…

Well, there is more fuel left in the tank, so there is less on the refill so yes it does save fuel, not much but it does save some. I prefer no refunds for no-show policy myself, that is how it works when I buy a ticket to see a play. Now refundable upto 48 hours before the flight might be even fairer.

> I prefer no refunds for no-show policy myself, that is how it works when I buy a ticket to see a play.

What about if you are flying long haul and linking up to a domestic flight on another airline? "Oh, we can't help you because your previous flight was delayed due to weather/mechanical/congestion.you should have flown on one carrier even if the price was 2x"?

Airport congestion is a big issue in the US, as is weather related delays.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#100

Post by crystalmeph » Thu, Apr 27, 2017, 10:37 PM UTC

coderholic wrote: post #35

gregschlom wrote: post #17

I have a question for the HN crowd: what would happen if airlines sold their seats at a fixed price and let customers resell them? For the sake of the discussion let's assume that all seats are in the same class (ie: economy) - there are no business / first class seats. So the idea would be: 1. All seats are sold at the same price, no matter how early or how late you buy. The price covers all the costs associated wit…

It's not done because it'd mean less profit for the airline.

Exactly, even when you add in the transfer fee proposed here. Any rational ticket holder wouldn't sell their ticket for less than [what they paid for it] + [the transfer fee], and that means the airline let someone else get money they could have got if they had just sold the ticket directly to the second person.

The only scenario where this would be useful is if the the original purchaser is willing to sell their ticket at a loss for some reason, e.g. if they know they can't make it and just need to minimize their losses. But at least Southwest airlines already has a customer-friendly solution here, they will credit you the full price of the ticket for a future flight, for most tickets at least.