Why Do Airlines Overbook Seats on Flights?

Air travel has the potential to be an extremely stressful activity. There is turbulence, a limit on the amount of baggage passengers are allowed to bring on board, intrusions by airport security, and an exaggerated dread of plane crashes. If all of these annoyances weren't bad enough, once a passenger finally makes it to their gate, there is a chance that they may be "bumped," which means that they will not be allowed to occupy the seat that they paid for since the flight was oversold. Why do airlines make it a practise to overbook their flights? To put it another way, why do they sell additional spots on the aircraft when there are only so many seats available?

The simple answer to this question is that it comes down to money: in order to maximise their earnings, airlines want to make sure that each flight is as full as it can possibly be. It is speculated that airlines habitually oversell their tickets in order to recoup the expenses incurred by the airline as a result of passengers who cancel their reservations or who do not show up for their scheduled flights. (On any given aircraft, there is a certain number of seats that were previously assigned that become available right before takeoff.) Since airlines lose money on seats that aren't occupied, they use overbooking to ensure that every available seat on their aircraft is generating revenue for the business. The "no-show rate," which is used to assist airlines in determining how many additional tickets to sell, is calculated using data collected from previous flights that connected the same points. For instance, if the data from the majority of an airline's flights indicate that five customers normally do not show up for the journey from Phoenix to Houston, the airline will sell five additional tickets for the flight in order to compensate for the lost revenue. Due to the imprecision of such calculations, there are occasionally more passengers checking in for a flight than there are seats available on the aircraft. In these situations, the airline and the passengers who were bumped must come to an agreement before the flight can take off, which could involve the passengers being rebooked on a later flight or being compensated with air travel vouchers or cash.

It has been suggested that passengers who buy their tickets at the eleventh hour stand to benefit from the overbooking procedure. If an aircraft still has empty seats before it takes off from the gate, the airline may choose to sell those seats at a reduced price in order to earn some of the income that it would have otherwise lost. On the other hand, not every seat is the same. The passengers in a flight's coach and business classes are the ones who are the most likely to be relocated to another seat. Because first-class tickets generate the highest income per flight, airlines almost never choose to put themselves in the position of potentially angering passengers in first class. Additionally, frequent travellers, passengers who check in to the aircraft early, and passengers whose air-travel itinerary would be most disrupted by being bumped have greater influence in these situations than the occasional traveller or the traveller who checks in shortly before the airline's scheduled departure time. This is because regular fliers and passengers who check in early have priority seating on flights.