Can't we make overbooking more efficient and less painful with our mobile devices?

I’ve written before about overbooking and how it’s good for passengers as well as for the airlines. If we have a service (airline seats, rental cars, hotel rooms) where the seller knows it’s extremely likely that with 100 available slots, 20 will not show up, we can have two results:

  1. As soon as all 100 are taken, they declare it sold out. People reschedule or abandon trips, or at least take 2nd choices. However, the sold out plane takes off with 20 empty seats. If half of all flights sell out, you would find yourself blocked from taking the flight you want in 1 out of 10 of the flights you book on short notice.
  2. Instead of declaring it sold out, they oversell. When they mispredict, they find ways to compensate people to give up their reservation, or eventually, but ideally rarely or never, force some people to do so. A small fraction of people voluntarily yield, and a very tiny fraction do so involuntarily. (About 1 passenger in 10,000 faces involuntary bump, and it never happens to people who buy more expensive tickets or have status with the airline, unless they are late for the flight.)

I know which travel world I want to live in. To me that’s not the question. The question instead is, in the world where every traveler has a smartphone, why isn’t this done a lot better.

So many of our institutions were designed before the arrival of smartphones — it was just 10 years ago that they started taking over — and they are still the same today. In fact, many things are still designed for a world where people don’t even have email when they travel.

One step taken last week is United Airlines’ new Flex-Schedule program.

In this new program, first you must sign up and be a member of their Mileage Plus FF program. If you do, and you have already booked a seat on a flight that looks like it will be over-over-booked — ie. it will need volunteers — they will email you well in advance asking you to volunteer early. They promise an alternate flight with the same day and airport, and will compensate you you one of their travel vouchers. Those vouchers are not very valuable, of course, but this is what they offer.

When a flight is sure to overbook, the airline still sells tickets, but raises the price up high. This assures that the people buying last minute are very keen to get on that flight. They are premium customers, and unlikely to volunteer. The volunteers have to come from more price conscious customers who booked earlier. And so United realizes that most of those customers have e-mail and phones, and can respond quickly to such an offer.

I think they can go much further than this. Every airline, hotel and rental car should be tracking demand and supply at all times — which they already do. They are making models of just how many people are likely to really show for the flight. They track the history of passengers, to see if they are the sort who always shows or if they often change flights. They know the on-time records of all the feeder flights making connections, and on flight day, they know the actual times for those flights.

What they don’t have is information on the moods and locations of the passengers. Truth is, if I’m not going to use a seat, my phone probably knows that in advance, without me telling it. Or if I’m uncertain, my phone has the ability with notifications to get me to quickly confirm my intentions.

Yes, this means some minor loss of privacy — but actually very little. First of all, this is a very specific yielding of data, which is not nearly the sort of problem that allowing general access to data like your location is. Secondly, the airline doesn’t need to see your data at all. Instead, it can tell your phone, “If he’s not within 20 minutes of the airport by 3:30, ask him if he wants to give up his seat.” The airline does not learn where you are, just that you were not close to the airport. They just give the phone (or a server based tool that knows your location) the parameters of where you need to be if you will make the reservation.

In extreme cases, your phone can know where it is in the airport, and figure out if you have a chance of making the flight or not. But if it’s smart, it buzzed you long ago with the worry that you might not make it, perhaps providing an offer, or another flight if you’re an elite status passenger. You might not even waste the trip to the airport. Likewise, flights might be held slightly (or at least not takeoff early) if important passengers are known to be almost there.

Done well, you could very much love this for they might actually offer you a better deal if you tell them sooner you are going to miss the flight. With most tickets, you pay a penalty if you miss a flight or simply don’t take one, and they could make it smaller, in exchange for their ability to resell that seat sooner.

This is even more important with rental cars and hotel rooms. Unlike airline seats, most of these are reserved without penalty. You can no-show at no cost. Which means more no-shows. In airlines, the number of people who no-show and forfeit their ticket are few. Most of the no-shows are actually people who missed connections. The car rental companies get your flight number to know when you will land but also to know if you won’t make it at all. The hotels could also benefit in how they manage things.

I love the ability to make reservations without any penalty for not showing up. At the same time, that has to come with overselling to make sense, and so I’m willing to see slight reductions in my ability to do this. For example, I don’t think it’s unreasonable for me to have to re-confirm these reservations using my online connectivity. (Since phones and batteries and connections die, this can’t be 100% but it could still be pretty good.

smart phone

"in the world where every traveler has a smartphone"
I do not have a smart phone and I travel. Do you have any data on how many travelers do have smart phones, or is it just that in your silicon valley circle it seems to be the case?

Not many

Smartphone penetration is very high now in the USA, and growing around the world, so while there will always be folks like you without such a phone, you will be few.

All that means is that your phone can’t be figuring out for you that you’re likely to not make a flight. You would have to do this yourself, or the airline would send you text messages saying, “Hey, tell us now if you’re not going to make it and we’ll reward you for telling us.” You could turn that off, and then you get today’s default behaviour, which is that you get treated as a no-show, which is not very good for you.

Not a Frequent Flyer

Brad,

Re: When a flight is sure to overbook, the airline still sells tickets, but raises the price up high. This assures that the people buying last minute are very keen to get on that flight. They are premium customers, and unlikely to volunteer.

I don't fly much...maybe once a year or so. I have *never* missed a flight and have never been in a position to volunteer, since I almost always fly with more than one person. If the airline starts bumping people who purchased their ticket well in advance to make room for these last minute high priced "more valuable" passengers, then I will get angry.

Or maybe I don't understand what is happening here?

You might get angry

When an airline has an overbooked situation at the gate, they first start asking for volunteers. They keep bumping the compensation to get them. In the old days, they stopped increasing it when they hit a certain level because then the option for involuntary bump becomes cheaper for them. However, after the Republic Air dragged-doctor incident, most airlines decided to change their formula, to raise the offer for volunteers much higher.

If, however, they get to where they don’t have volunteers, they have said they prioritize the passengers. People who paid the lowest prices for their tickets are first on the list for involuntary bump, and people with elite status on the airline are not on the list.

So yes, if you paid $300 for your ticket months ago, they will bump you over somebody who paid $600 yesterday. And you might get angry, but I am not sure how far you will get trying to convince them they should bump somebody who paid twice as much as you to keep you. If they did, they would not be able to sell the $600 tickets (and they very much want to sell those, they are where most of the profit comes from) because people would know they were prone for bumping.

Of course, you can always buy a $600 ticket months in advance and you won’t be bumped. Or be an elite. You get what you pay for. Almost nobody does this of course. (Some elites deliberately buy slightly more expensive tickets not to avoid bumping but because it puts them ahead in the list for “free” upgrades.)

But I don’t see another solution. If they don’t oversell sufficiently, they often turn away a lot of people from “sold out” flights just to have empty seats fly — and ticket prices go up as well. If they do oversell, they will sometimes underestimate and need to bump.

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