How can you manage overbooking and no-shows more effectively?

1 What is overbooking and why do airlines do it?

Overbooking is the practice of selling more seats than the actual capacity of the aircraft. Airlines do it to hedge against the risk of no-shows, which are passengers who do not show up for their flights. By overbooking, airlines can maximize their revenue and avoid flying with empty seats. However, overbooking also carries the risk of denied boarding, which is when some passengers are involuntarily bumped off their flights due to overselling. This can lead to customer dissatisfaction, compensation costs, and legal issues.

2 How to estimate the optimal level of overbooking?

The optimal level of overbooking depends on several factors, such as the demand, the cancellation rate, the no-show rate, the fare structure, the capacity, and the cost of denied boarding. To estimate the optimal level of overbooking, airline managers can use mathematical models, historical data, and forecasting techniques. One of the most common models is the Expected Marginal Seat Revenue (EMSR) model, which compares the expected revenue from selling an additional seat with the expected cost of bumping a passenger.

3 How to reduce the impact of no-shows?

No-shows can be detrimental to airlines, leading to revenue loss, operational disruption, and inventory imbalance. To reduce the impact of no-shows, airline managers can take several measures, such as charging fees or penalties for cancellations or changes, offering incentives or vouchers for voluntary changes or rebooking, implementing flexible or dynamic pricing strategies, using overbooking protection or priority rules for high-value or loyal customers, and communicating with passengers and confirming their travel plans. These steps can help reduce the impact of no-shows and ensure operational efficiency.

4 How to handle denied boarding situations?

In denied boarding situations, airline managers can ensure an effective response by applying clear and consistent policies and procedures, seeking volunteers to give up their seats in exchange for compensation or benefits, providing adequate information and assistance to affected passengers, offering alternative travel options or arrangements, and complying with relevant regulations and laws. This can help to reduce the stress and frustration for both passengers and airline staff.

5 How to monitor and evaluate your overbooking and no-show performance?

To ensure that your overbooking and no-show policies are working well, you should monitor and evaluate your performance regularly. Key performance indicators (KPIs) to track include the load factor (the percentage of seats occupied by passengers), spoilage rate (the percentage of seats that are sold but not flown), spill rate (the percentage of seats that are not sold but could have been flown), bumping rate (the percentage of passengers who are denied boarding), and customer satisfaction. By tracking and analyzing these KPIs, you can identify the strengths and weaknesses of your policies, allowing you to make adjustments as needed.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?