Originally Posted by
Delight
I can see that overbooking makes sense if customers are buying tickets that allow changes, but if you sell more non refundable, non changeable tickets than you have seats, is that not fraud? I can't sell an item online to two different people in the hope that one of them never bothers to complain when I don't send them the item. Or can I?
I thought they they should sell standby tickets for full flights. Discounted and conditional on spare seats being available when check in closes. If no seats available you get a refund or allowed to move your booking to another flight. No overbooking but allows for extra revenue from no-shows.
Couple of words from revenue management here.
Overbooking takes place across all sorts of businesses. Restaurants take more bookings at the peak evening time than they have tables for, knowing that usually a proportion do not turn up. The proportion even varies by the weather, etc. So once in a while, with a reservation, you have to sit at the bar for 15 minutes.
With "full" flights you likely find that they were overbooked, but everyone got away. There are people in there who otherwise would have been turned away, and yet the flight would have departed with empty seats. Bear in mind that with 99% of OBs, you get away with it.
Regarding cheap standbys. the issue there is that pax, especially regulars (your best friends commercially) rapidly become wise to which flights normally are not 100% loaded, don't reserve, and you end up with less revenue than before. Sufficiently well known that there's a specific name for this, it is called "revenue dilution", where pax who would have paid a higher fare actually take advantage of a lower one. This is what actually happened, for example, when standbys were introduced across the Atlantic, to counter Laker's Skytrain.
Also, because you don't know until the last minute who will not turn up, having pax hanging around at the gate who may or may not get away just doesn't gel with current security management.