So why do airlines overbook?

Air Canada offered the following lengthy response when The Guardian sought an explanation on how overbooking on flights occurs:

“Situations where customers cannot be accommodated on flights due to overselling are very rare, especially when you consider we carry upwards of 150,000 customers a day.

Most often this situation arises due to aircraft switches, cases when a scheduled aircraft operating a flight becomes unavailable and we need to swap in an aircraft with fewer seats in order to operate the flight.

It is correct that some flights are oversold, but this is done using computer algorithms that look at large amounts of historical data to identify patterns where customers do not show up. When we do oversell we are conservative and sell below what the historic patterns predict will be the number of no-shows. Normally, the pattern holds and there is not an issue but sometimes, on rare occasions, the situation arises where customers must be moved to another flight due to an over-sale.

Most major airlines oversell and there are a couple reasons for this. First, if an aircraft departs with an empty seat, that seat is lost or spoiled and airlines can reduce this by overselling to mitigate the effect of no-shows and this helps keep the costs down for all customers. Overselling also makes it possible for us to sell flexible tickets, including fully refundable tickets, which many customers desire.

The Canadian Transport Agency has been asked to rule on overselling and has said it is acceptable. In Decision 181-C-A-2005 it said: ‘[33] With respect to the matter of overbooking, the Agency notes that this practice is commonplace among air carriers and, in general, works to the advantage of both air carriers and passengers because the carriers are able to operate at maximum capacity, thus resulting in reduced prices for consumers.’

We appreciate this is inconvenient for customers impacted by an oversold flight and we do take a very conservative approach to avoid this situation arising and, when it does, we pay significant compensation. Each situation is different but typically we are able to find volunteers to take a later flight and if not we will base our decision on other factors, such as whether the customer has onward connections or if they are checked-in and have an assigned seat. Such decisions are made before final seats are assigned and customers board the aircraft.’’