Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Southwest to Stop Overbooking as United Uproar Echoes

bloomberg.com

Post reply on HN
Print view View original

311–320 of 335 posts

Re: Southwest to Stop Overbooking as United Uproar Echoes

#311

Post by lutorm »

onli wrote: post #251
lutorm wrote: post #181

Earlier quoted context omitted.

The actual limit is 4x the price of the ticket, capped at $1350, so it could very well have been down in the $400 range.

There is no limit. It is a minimum, and it does not work like you seem to think it does (if you blame regulations, which is how I read that comment). See https://www.usatoday.com/story/travel/flights/todayinthesky/... : > For example, an involuntarily bumped traveler who arrives to his final destination more than two hours late (fours internationally) is entitled to an amount worth 400% of his one-way fare (capped at…

I am well aware of how it works. What I said is that the incentives to offer more than what they are legally required to offer by the IDB regulations (which does have an upper limit) are significantly lessened since the IDB rules give them a "get out of contract free" card for that amount.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#312

Post by ajmurmann »

Veratyr wrote: post #305
kalleboo wrote: post #264

Earlier quoted context omitted.

Mythbusters also did a segment on boarding efficiency. Their conclusion that "back to front" boarding was the slowest, and "no assigned seats" was the fastest, but that passengers hated boarding with no assigned seats. Window-middle-aisle boarding was second-fastest. My experience is that American passengers are just terrible. Planes here in Japan board so quickly in comparison, with a standard back-to-front boarding…

Is it accurate to say that Japanese are just used to orderly boarding in general? I haven't visited yet but just watching the amount of order and efficiency at train stations on YouTube is crazy compared to the US.

In my limited experience from boosting Japan I'd say that Japanese public life is generally much more organized than in the US.

At the train station there are markings indicating were the doors of the train are gonna be and people line up at the markings. It makes it really easy to pick a good spot to wait for the train and makes boarding so much less stressful. At least for me. In SF train stops I'd always be strategizing where to position myself and keep repositioning as more waiting passengers are bunching up in certain areas. I'm crazy that way. So Japan was very relaxing for me.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#313

Post by jessriedel »

gshulegaard wrote: post #309
jessriedel wrote: post #119

Earlier quoted context omitted.

Why do you think the consumer doesn't capture any of the surplus?

There is a difference between Surplus and Utility. I think there is a case to be made that this practice increases Consumer Utility and trades it somewhat for Producer Surplus...but generally speaking, Price Discrimination increases Producer Surplus (thereby reducing Consumer Surplus). I gave a more detailed response to cameldrv.

> Price Discrimination increases Producer Surplus (thereby reducing Consumer Surplus).

Price discrimination does not necessarily reduce consumer surplus. In this case in particular, there is a large surplus being created by the fact that planes fly more full, and I don't know any reason to think that consumers don't capture much or most of this .

Re: Southwest to Stop Overbooking as United Uproar Echoes

#314

Post by brewdad »

zeroer wrote: post #137
TeMPOraL wrote: post #50

Earlier quoted context omitted.

The way I understand it, if airlines were to offer fixed-price tickets with no class distinction, then there wouldn't be almost any flights - i.e. there's no point at which, for a typical flight, number of tickets bought * fixed price >= costs of fueling a jet and paying the crew.

The obvious answer is that plane ticket prices would increase. Some people wouldn't fly and some flights wouldn't fly.

So everyone is worse off? How is that an improvement?

Re: Southwest to Stop Overbooking as United Uproar Echoes

#315

Post by ghaff »

corobo wrote: post #268
johngalt wrote: post #57

The problem isn't overbooking. The problem is not auctioning the seats higher when overbooked. I've seen a number of overbooked southwest flights and people can't line up fast enough for a $300 flight credit + next available flight. I can't imagine it ever going over $1k. IMHO if any airline should continue overbooking it's SWA. No first class, no assigned seats. Most of the flights are short range with multiple flig…

Do people really miss their flights so often that overbooking isn't often an issue or do a lot of flights have people that need to wait for the next one? As someone that's never flown it's surprising to me that overbooking is even a thing airlines do, who's out there missing their flights? I can't even imagine cancelling a pre-booked taxi never mind a flight!

Yes. Mostly because of delays that cause them to miss a flight that they're connecting with.

You also have people oversleeping, getting caught in traffic, getting confused about their flight time. It happens. I've missed a few flights in my life for these reasons. (But just a few.)

Finally, business travelers do make last minute cancelations and changes on a pretty regular basis--for example, to get on an earlier flight out.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#316

Post by GordonS »

dx034 wrote: post #286
GordonS wrote: post #225

Earlier quoted context omitted.

I've seen this happen many a time with British Airways in the UK too - they just keep offering more money until someone volunteers to move to a later flight. Seems like a good way to manage overbooking, and I've never seen it not work.

The difference is that in the UK, you'll either have multiple flights a day or can take train/car without much delay instead. That's very different in more sparsely populated countries as the US. But cash is likely to be the main issue here. If united had offered $800 cash, they would've probably found someone to rent a car and drive down there instead of flying.

Often this is true, yes. But I've also seen this happen with flights within Europe on occasion too - the bidding usually starts with £100-£200 cash plus a night in a good hotel with transfers dinner paid for, and a flight the next day. I don't think I've ever heard the auction go very much past that. I guess there is always someone not in a hurry willing to extend their trip by 1 day. Actually, I think I considered it myself one time, but someone else took the deal while I was still thinking on it!

Compensation is definitely the main issue. If United had offered a decent sum of cash (I mean cash, absolutely not United vouchers) they would certainly find someone willing.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#317

Post by ghaff »

crystalmeph wrote: post #100
coderholic wrote: post #35

Earlier quoted context omitted.

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 tic…

Original purchasers sell their tickets at a loss back to the airline all the time (for credit). It's called canceling your flight because your plans change for some reason.

As you point out, Southwest lets you do this for free. And JetBlue is something pretty reasonable as I recall. Unfortunately most of the fee-addicted airlines have really ratcheted up their cancellation fee however.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#318

Post by kwhitefoot »

wutbrodo wrote: post #221
dopu wrote: post #199

Earlier quoted context omitted.

The problem is overbooking, though. Corporations are getting preferential treatment by being allowed to sell services which they're not going to fulfill. The boner people on HN have for objectivism really does get quite old.

> Corporations are getting preferential treatment by being allowed to sell services which they're not going to fulfill. Does the contract of carriage say the service they're selling is a guaranteed flight? Spoiler: No. I hate the air travel experience as much as the next guy, but for the life of me I can't understand the derangement that seems to take hold of people when they start talking about. All else held equal,…

Contracts are irrelevant here because there is no competition in that market, you have to accept the contract or walk to your destination. For contracts to be meaningful the parties have to be of comparable power and both parties must have the opportunity to choose a competing good or service. This is plainly not the case here.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#319

Post by jrockway »

Karunamon wrote: post #65
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…

> that empty seat doesn't mean you can take less fuel I was under the impression that the fuel load for each flight is calculated based on a formula that averages the weight for each passenger and their expected luggage. Fewer passengers than expected = more fuel left over after the flight.

If the 100-passenger airplane always had only 99 passengers, there would probably be noticeably lower fuel cost. But a 99-person airplane would be even cheaper.

Re: Southwest to Stop Overbooking as United Uproar Echoes

#320

Post by gshulegaard »

jessriedel wrote: post #313
gshulegaard wrote: post #309

Earlier quoted context omitted.

There is a difference between Surplus and Utility. I think there is a case to be made that this practice increases Consumer Utility and trades it somewhat for Producer Surplus...but generally speaking, Price Discrimination increases Producer Surplus (thereby reducing Consumer Surplus). I gave a more detailed response to cameldrv.

> Price Discrimination increases Producer Surplus (thereby reducing Consumer Surplus). Price discrimination does not necessarily reduce consumer surplus. In this case in particular, there is a large surplus being created by the fact that planes fly more full, and I don't know any reason to think that consumers don't capture much or most of this .

I would be interested to see how you would graph price discrimination not reducing consumer surplus. Price Discrimination in itself is about redistributing surplus from consumer to producer.

> a large surplus being created by the fact that planes fly more full

I think you are conflating surplus with utility. Full flights have more utility than not full flights...but the market surplus available is unaltered.

Maximizing utility is not a bad goal to have...but it is distinct from Consumer and Producer surplus.

> I don't know any reason to think that consumers don't capture much or most of this .

Because in general most of the surplus is captured by the Producer and the producer doesn't have any incentive to redistribute it back to the consumer. Not having an incentive doesn't mean they don't, I am just pointing out airlines aren't incentivized to reduce the seat cost of a late purchaser by the amount of the cancellation fee for the person that cancelled their flight...or even offer the seat at the price the original person paid.

Anecdotally (as mentioned in my other comment) we can compare United to Vrigin. Let's assume that a whole bunch of "surplus" is created by overbooking. United overbooks, Virgin does not. If the consumer captures most of this than United flights should be cheaper than Virgin ones in almost every way (ticket price, bag check fees, cancellation provisions, etc.). I fly from SFO-PDX twice a month. Virgin America consistently has lower priced fares than United.

This is observational and anecdotal...but the result casts doubt on the hypothesis that the consumer captures most of the surplus generated by overbooking. Admittedly, I wouldn't expect the consumer to do so from a purely theoretical stand point .

Post reply on HN