Air Canada agents reveal overselling practices • Hacker News Board

Re: Air Canada agents reveal overselling practices

#101

Post by lsv1 » Mon, Feb 11, 2019, 12:51 PM UTC

This practice is used in almost every industry with finite inventory by Revenue Management teams where there is opportunity to pre-empt a booking, slot, or (where I am most familiar) a tv spot.

I recall working for television systems management and having a revenue and yield optimization consultant from the airline industry present to our company with methods we could use to increased revenue by booking even more spots than we had and either pre-empting more low value TV spots with automatic optimization and moving of the spots, or simply taking more time away from marketing or promotional ads from the network.

Most of the practices recommended by this consultant we had already implemented, but there were some really neat recommendations specifically from the airline industry in order to maximize revenue, most of them revolved around overbooking. Eligible TV spots would be automatically moved forward (front-loaded) into weekly rotation selling options (groups of program sold under the same name and price).

I could go on forever, but I suppose as a general comment regarding revenue management and yield optimization there is nothing which surprises me about these practices.

Re: Air Canada agents reveal overselling practices

#102

Post by kbos87 » Mon, Feb 11, 2019, 12:52 PM UTC

I was on an Air Canada flight recently, and I swore it would be my last. Every step of the experience of buying a seat and checking in was tainted with growth hacking BS, and I felt nickel & dimed in ways other airlines are probably rushing to catch up to.

- Choosing ANY seat in economy or getting any transparency into where they are putting you comes at an additional charge. I haven't seen this before, not sure how common it's become.

- While at the gate, I received a push asking if I wanted to BID on an upgrade to first class. I could "offer" anywhere between $450 and $900 and see whether or not I'd snag a better seat.

Air travel has long since become an anti-consumer race to the bottom. Capitalism has failed here.

Re: Air Canada agents reveal overselling practices

#103

Post by wlll » Mon, Feb 11, 2019, 12:59 PM UTC

mruts wrote: post #84

deathanatos wrote: post #73

Earlier quoted context omitted.

> But from passengers' point of view, there aren't always enough people who'll voluntarily accept an offer to transfer to a different flight once they are at the gate awaiting boarding There are; they just won't accept any offer. Most of the airline offers I have been offered in this situation were paltry: reschedule and some airline "credit". Give me a partial or full refund, and I'll be much more willing to volunte…

I've seen some very lucrative offers. Like $500 credit, upgrade to first class tomorrow, AND a 4-star hotel room. That might not be the norm, but that's a pretty amazing deal.

I was held at checkin for an Economy Plus BA flight from San Diego to London and they asked for volunteers to get the next flight (same time the next day) and you would get $800 cash (prepaid credit card) and a hotel room for the night.

A few people took the offer, I didn't. As a result they denied me boarding and gave me the exact same deal, except it was a $1250 pre-paid credit card. I never expected to be quite so happy about not being allowed on a plane.

Re: Air Canada agents reveal overselling practices

#104

Post by skywhopper » Mon, Feb 11, 2019, 12:59 PM UTC

lsv1 wrote: post #101

This practice is used in almost every industry with finite inventory by Revenue Management teams where there is opportunity to pre-empt a booking, slot, or (where I am most familiar) a tv spot. I recall working for television systems management and having a revenue and yield optimization consultant from the airline industry present to our company with methods we could use to increased revenue by booking even more spo…

I think the important thing here is just honesty in the business practice. Presumably you were upfront with your clients about what they were actually purchasing and what the risks were. The article here is not about overselling per se but about lying about it.

Re: Air Canada agents reveal overselling practices

#105

Post by ahje » Mon, Feb 11, 2019, 1:01 PM UTC

notahacker wrote: post #85

FearNotDaniel wrote: post #67

Is this only a North American thing? I've flown hundreds of times within Europe over the last few years, and every single time I've had a seat assigned at online check in, usually 24-72hrs before boarding depending on airline. I've seen lines of standby passengers at Frankfurt, waiting at the gate just in case they get lucky at the last minute, but knowing in advance that they don't have a seat on that plane unless s…

I suspect it's rarer in Europe because the mandatory compensation costs of failing to put a passenger on a flight close to the originally scheduled time are so high. That said, I've had a gate agent try very hard to bump me off an intra-EU flight which I assume was due to overbooking (I was on business, so I expect they bumped a later arrival with a more expensive ticket instead...)

In the EU airlines have to compensate passengers who are denied boarding if the reason is that the flight is overbooked: https://europa.eu/youreurope/citizens/travel/passenger-right...

The same applies for flights cancelled for operational reasons, and the airlines may end up having to book tickets with one of their competitors if the competitor have seats available.

Re: Air Canada agents reveal overselling practices

#106

Post by rlpb » Mon, Feb 11, 2019, 1:05 PM UTC

martin_a wrote: post #98

rlpb wrote: post #87

Earlier quoted context omitted.

Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. > In fact, it would be considered fraud. Fraud involves deception. This doesn't apply in a market environment where it is widely known that the…

> Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. No. You have to calculate for compensations for the people who have to be left behind because the flight was oversold. As you can read in the comments, those compensations can come in quite expensive. And rebooking passengers to other flights means that you can't sell that specific seat at the right p…

> You have to calculate for compensations for the people who have to be left behind because the flight was oversold.

Sure, but factor those in and you still end up being able to offer cheaper ticket prices by overselling. It is clear that this is true from existing market behaviour.

> You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up.

That is one way of running an airline. However, given that some proportion of passengers change their plans in practice, overselling will cause a reduction of ticket prices in a competitive environment. This is just textbook economics and I'm not sure how I can explain this concept better to you.

> If this type of calculation does not cover your costs as the airline, you have a bigger problem in general.

The airline industry disagrees with you.

> I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up.

You can find it to be whatever you want, but it is legal and not fraud. Wishing it to be fraud doesn't make it so. You could seek to make overselling illegal. If this were to happen then it would be illegal, but still not fraud.

Re: Air Canada agents reveal overselling practices

#107

Post by mxab » Mon, Feb 11, 2019, 1:11 PM UTC

tomp wrote: post #90

colde wrote: post #70

Earlier quoted context omitted.

The site addresses this pretty well at almost the top of the page: - If your flight is within the EU and is operated either by an EU or a non-EU airline - If your flight arrives in the EU from outside the EU and is operated by an EU airline - If your flight departs from the EU to a non-EU country operated by an EU or a non-EU airline - If you have not already received benefits (compensation, re-routing, assistance fr…

Wow is an Icelanding airline, the flight was departing from Iceland, so none of the above are relevant.

> EU means the 28 EU countries [...] as well as Iceland, Norway and Switzerland.

It's in the next paragraph.

Re: Air Canada agents reveal overselling practices

#108

Post by lisper » Mon, Feb 11, 2019, 1:14 PM UTC

rlpb wrote: post #87

lisper wrote: post #65

Earlier quoted context omitted.

> Because if a seat is sold twice but only used one that's more profit than if every seat is only sold once. Well, yeah, but that badly misses the point. Selling any product twice is more profitable than selling it only once, all else being equal. But in most industries, selling the same product twice is considered unacceptable. In fact, it would be considered fraud. The story that the airlines tell to make people th…

Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. > In fact, it would be considered fraud. Fraud involves deception. This doesn't apply in a market environment where it is widely known that the…

I think the Right Answer is for the airlines to sell two different ticket classes: guaranteed seats, which may not be oversold, and standby seats, which can be. That way everyone knows what they're getting.

Re: Air Canada agents reveal overselling practices

#109

Post by lisper » Mon, Feb 11, 2019, 1:16 PM UTC

tomhoward wrote: post #96

lisper wrote: post #92

Earlier quoted context omitted.

No, it's not complicated at all. Just sell "standby" tickets and "guaranteed seat" tickets. The problem is that right now every ticket is effectively a standby ticket, and this is buried in the fine print.

I keep explaining to you, in good faith, based on 10+ years in this industry, why things aren't all they seem, and you keep inventing new reasons why it really should be that simple but that you seem to think nobody has thought of yet. A lot of people have thought a lot about these problems for a long time now. Many of them are both clever and well-intentioned. I understand that last sentence is where we differ. So I…

> I guess we're done here.

You've chosen to invoke an Argument By Authority, so I guess you're right.

Re: Air Canada agents reveal overselling practices

#110

Post by moring » Mon, Feb 11, 2019, 1:23 PM UTC

detaro wrote: post #99

rlpb wrote: post #87

Earlier quoted context omitted.

Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. > In fact, it would be considered fraud. Fraud involves deception. This doesn't apply in a market environment where it is widely known that the…

I wonder what the effects would be if the airlines had to put a clear statement directly above the "buy now" button, like "You might not be allowed to take this flight if too many people turn up for it, see our compensation policy if this happens here". It shouldn't make a difference at all if it's actually "widely known" to all participants, but I suspect it actually isn't.

While I seriously doubt that overselling is really widely known, it is also quite an assumption that repeating a widely known fact has no effect on customer behavior.

As something between data and anecdata to support that statement, I've seen measured conversion rates indicate that customers cancel an online shopping deal after they have already agreed to it, after being redirected to PayPal. Those numbers were way too high to indicate just users who couldn't remember their passwords, so we assumed (here's the non-data part) that they jumped off when they realized that they have to log into PayPal and pay real money now. And those things are widely known, certainly so to a customer who has paid with PayPal in the past.