The United Airlines is in trouble with passengers being thrown out of the plane by the security. Most of the people protested and even boycotted the United Airlines. After this crisis the company lost $750 million in the stock market. The CEO of United Airlines had apologized a day later but the crisis did not stop.
You were alarmed by the announcement that “There are more passengers, two passengers will come down” made on board. Then the security came and forced two passengers to go down although they did not want to do so. Does an airline have such a right? In airline industry this is called ‘overbook’. With the approval of the International Air Transport Association (IATA), airlines sell more tickets than planned Increasing revenue per flight with minimal impact from last minute cancellations is the main reason of this implementation. Because the vacant seat is written on the company’s damages. Paying the traveler a small penalty and transferring it to the next flight seems to cost less.
The airline performs a separate calculation for each flight. The last minute the percentage of open tickets, changes, or cancellations are checked. According to the estimated numbers of cancellations, different numbers of extra tickets are sold. It is not so much different from gambling. The company is taking risk to make money. A big airline can make $ 50 million a year from overbook.
The highest overbook rate is in the US. Large number of flights between airports are seen as the reason of high overbook rate in the US. The non-flying passenger can fly in another flight or in a different airway within 1-2 hours.
After the crisis of the United Airlines, there has been a public reaction demanding a new arrangement for overbooks in the United States. With the new application, companies will be offering more options to the passengers and, the compensation rates will be higher.