I've been thinking about FR's policy of "no refunds if you don't fly" and wondering if this is (sometimes) a mistake. FR depends heavily on ancillaries - the people who are just a simple low-fare-bum-on-seat-without-ancillaries are not desirable unless the flight has a load factor well under 90%
Furthermore, a no-refunds policy discourages ticket sales if a person is unsure if they will fly or not.
I'm wondering if FR should experiment by emailing people who have booked a very low fare without ancillaries, offering a partial rebate as a non-refundable limited-life FR voucher if ticket sales are heading to a load factor of at least 90%. Essentially offer a targetted payoff to the least profitable customers (and nobody else) who no longer want to fly to sell their seat back to FR, and enable FR to resell the seat to a more profitable customer. By issuing a FR voucher, the money can still be recognised as FR revenue and won't leak outside the company. Data collected from customer's profiles will show who tends not to book ancillaries like baggage, further helping identify the bookings that FR probably won't find profitable.
Yes, FR could achieve this by overbooking, but no-show rates are always a bit unpredictable. Particularly on low frequency routes, the EU261 compensation bill makes denied boarding expensive relative to the fare for LCCs - which would push FR to being more cautious on overbooking than they might otherwise need to be.
Any thoughts ?
Last edited by davidjohnson6; 21st September 2023 at 01:05.