In fairness to Aer Arran, both pax turned up dead on check in closing time and I think one may have been after the time, but still it doesn't make them look good when there are more people booked on the flight than the aircraft can carry!
A lot of the world's leading airlines do this, BA being one of the worst/best at it. They play on the law of averages in regards to no-shows and overbook accordingly to maximise revenues.
Passengers affected can get quite a sweet deal if taken off of the flight/volunteer.
I'm not sure how it works with LCCs or regional airlines though...