Airlines routinely overbook flights, recognizing the statistical likelihood that a certain percentage of booked passengers won’t show. But when it appears that a particular flight will have too many folks ready to board with bags in tow, the airline has to get generous with one of two methods: a pre-emptive offer of cash vouchers, or actively bumping latecomers off the flight while proffering significant compensation. But the airlines have discovered they can get profitable again by trimming costs like this. So a holiday Delta passenger just had this appear on his airport check-in screen:
Delta’s essentially auctioning off flight bumps to the lower bidders, assuming that’ll cost them less than initiating offers themselves. It’s a type of reverse auction, with sellers (passengers) competing with each other for the buyer’s (airline) business. They’ve created a marketplace of sellers from what was previously a more exclusive seller’s market – just you and the supplicating counter agent – and that should naturally drive bump prices down.
The picture comes via economics blog Marginal Revolution, where the commenters raise some great points, among them:
– Without knowing your new itinerary, how do you know how much it’s worth to you to skip this flight?
– If the check-in monitor is strategically placed right in front of the dreaded TSA station, would bids drop?
– If there’s no maximum bid, couldn’t a group collude to drive up the compensation?
Update: More good analysis on the blog Cheep Talk.
