Airlines use complicated strategy to overbook flights

Overbooking flights often looks like a random lottery process in the sky, filled with guessing games and pandemonium — even if it’s typically not quite as chaotic as the United Airlines flight Sunday that saw a passenger dragged off the plane.

Turns out it’s a carefully calculated process.

Every day, airline revenue management teams run data analysis to predict how many passengers can be booked on specific flights in order to maximize profits and minimize empty seats — all without having to handsomely compensate too many customers.

The teams compile historical data, check on holidays and heavy traffic travel days, and create an algorithm. “They also consider big conferences and conventions that you wouldn’t normally think about, as well as big sporting events or anything else that impacts demand,” according to airline industry expert Brett Snyder, president of Cranky Flier, LLC, an airline travel blog out of Long Beach, Calif.

Mr. Snyder says small airlines order “revenue management systems” off the shelf from Sabre or PROS. Larger firms, including American Airlines, may design their own to better leverage commerce data and attempt to perfect the booking process.

With the systems in place, intentional overbooking is not only a trade norm, but a mostly successful one.

Ten in 10,000 Delta Air Lines customers, on average, were

compensated for volunteering to give up their seats last year, according to a Department of Transportation data analysis by MileCards.com, an independent airline comparison service.

The voluntary part is the key to the equation — a metric that was missing in the public relations debacle that engulfed United this week after 69-year-old physician David Dao was forcibly removed from his seat on a flight from Chicago to Kentucky. That scene was captured by other passengers on their cell phones.

Generally, the process is calmer. “You can see that Delta really stands out because it has the most denied bookings by far, but they’re mostly voluntary,” Mr. Snyder said. “The rate of overselling has gone up but the rate of bumping has gone down.”

Comparatively, runnerup United compensated 7.2 in 10,000 passengers, on average, and Southwest came in at 5.9.

Airlines tend to get the equations right, Mr. Snyder said. “As recently as 10 years ago, the airlines still sold 72 percent of seats. They’ve gotten really good at it to the point that they now fill 80 percent of seats.”

Budget airlines that are less sophisticated tend to be less aggressive in overselling, he said. Since many use generic revenue management systems, they may not be experts at prediction.

Mr. Snyder, who has worked in the past as a senior analyst for America West Airlines, among other positions with American Airlines and United, said that overbooking is a sophisticated, as well as legal, process.

According to the U.S. Department of Transportation’s updated Fly Rights, overbooking is not illegal. Most airlines use the tool to account for no-show travelers. When faced with involuntary bumping, airlines often tell customers they have been randomly selected for a reassigned flight. But even the process used to create a “bump-at-will” list is compiled by programs with discriminating data, Mr. Snyder said. Although dependent on seemingly objective computer algorithms, the list is not actually randomized, he said.

In United’s Contract of Carriage, “Rule 25 Denied Boarding Compensation” states that the priority of confirmed passengers “may be determined based on a passenger’s fare class, itinerary, status of frequent flyer program membership, and the time in which the passenger presents him or herself for check-in without advanced seat assignment.”

In other words, longtime customers who belong to American’s AAdvantage program or perhaps Southwest Airlines’ Rapid Rewards program might be safer from a “bump-at-will” list than those who scope “cheap flights Pittsburgh to Boston” on Google.

“United says their bump list is random, but it’s not random according to their policy,” Mr. Snyder explained. “They even say they have criteria for who gets bumped. They use an algorithm, but there are set decision points for that list.”

Of course, most conversations — whether about voluntary or involuntary bumping — occur at check-in counters, according to Alicia Seah, an airline industry expert at Dynasty Travel, a Singaporebased travel agency. United’s operations on Sunday in which the passengers had already boarded the plane were an outlier, she said.

Ms. Seah said airline smartphone apps, which allow passengers to check-in for a flight, are a crucial tool for estimating whether a flight will be overbooked. If most of the seats are filled when you look at the chart online, there’s a good chance the airline will be looking for volunteers at the gate, inperson. She noted, though, that no two airlines operate the same way.

At Pittsburgh International Airport in Findlay, budget and premium carriers have their own policies for overbooking.

Philip Stewart, a spokesperson for JetBlue, said the company “has a long-standing customer-friendly policy to not oversell flights.”

A spokesperson for Southwest said that in potential oversale situations, “Employees solicit volunteers who are willing to change their travel plans.”

United did not respond to several requests for comment. American, Air Canada, Allegiant Air and Delta also did not return email requests.