Overselling or overbooking is sale of a volatile good or service in excess of actual supply. Overselling is a common practice in the travel and hospitality sectors, in which it is expected that some people will cancel. The practice occurs as an intentional business strategy in which sellers expect that some buyers will not consume all of the resources they are entitled to, or that some buyers will cancel. The practice of overselling aims to ensure that 100% of available supply will be used, resulting in the maximum return on investment. If more customers than the seller expects do wish to purchase or use the sold commodity, it may leave some customers lacking a service they expected to receive. Overbooking is regulated (though rarely prohibited) in many countries and industries, and companies that do practice it are often required or forced by market competition to offer large amounts of compensation to customers as an incentive for them to not take up their purchase. An alternative to overbooking is discouraging consumers from buying services they do not actually intend to use. This can be done by making reservations non-refundable, a common practice among low-cost carriers and railways, or requiring customers wishing to cancel their right to a service to pay a termination fee.
Tourism industry An airline, rail or shipping company may book more customers onto an aircraft, train or cruise ship than can actually be accommodated. This allows them to have a (nearly) full vehicle on most runs, even if some customers miss the trip (tickets are often rebookable afterward). Such customers are called no-shows. If everyone shows up, at least in the case of airlines, the overbooking will cause an oversale.
Airlines
When a flight is oversold, the airline prevents some passengers from boarding, even though they have purchased a ticket. This is called "bumping". Airlines may ask for volunteers to give away their seats, or refuse boarding to certain passengers, in exchange for compensation that may include cash, an additional free ticket and/or an upgrade on a later flight. They can do this and still make more money than if they booked only to the plane's capacity and had it take off with empty seats. As of 2018, 351,904 passengers of the 17 major U.S. airlines were bumped annually, among them 10,938 involuntarily. This figure covers only flights originating in the U.S., including both domestic and international destinations. Overbooking is one of the tactics used by airlines to reduce their loss caused by no-shows; other tactics include requiring all passengers to reconfirm, or charging no-show penalty fees. A few airline frequent flyer programs actually allow a customer the privilege of flying an already overbooked flight; another customer will be asked to leave. Often, only economy class is overbooked while higher classes are not, allowing the airline to upgrade some passengers to otherwise unused seats while providing assurance to higher paying customers. In the EU since 2005, as of 2021, Regulation 261/2004 requires airlines to first appeal for passengers to voluntarily release their seat, maybe by giving an offer of compensation but its amount is not regulated. If volunteers are insufficient, airlines will then refuse some passengers the right to board, in which case Regulation 261/2004 sets out compensation requirements for airlines that deny boarding to passengers due to overbooking. Regulation 261/2004 does not mention the fate of passengers who failed to reconfirm and have been denied boarding. In the U.S. since 1978, as of 2021, CFR Title 14 Part 250 requires airlines to first appeal for passengers to voluntarily release their seat. The amount of compensation is not regulated. If volunteers are insufficient, airlines will then refuse some passengers the right to board. In such case, since 1968, Part 250 defines minimum compensation that must be paid. Passengers who fail to reconfirm do not receive this compensation.
Specific cases In 2007, Air Deccan, the Indian low-cost airline was found by Directorate General of Civil Aviation to overbook even when they weren't permitted to do so. They were accused of cheating passengers by tagging the confirmed tickets as no show for compensating the additional seats. The airline pocketed all the money made by overbooking, minus airport tax, without offering a later flight for overbooked customers. The passengers that arrive last, either on time or even a minute late, become the target. In 2011, Delta Air Lines began a practice in which they overbook some flights, using algorithms to determine how many seats to overbook based on historical data, and allow passengers checking in for the overbooked flight to state the value of travel vouchers they would be willing to accept in exchange for taking a later flight. The airline then selects the passengers who will be bumped to a later flight based on the lowest bids. According to the airline, the biggest cost saving from the practice is that it improves on-time flight departures, since gate attendants are not burdened with negotiating with passengers that are considering being bumped from the flight. Among the three major U.S. carriers, Delta had the highest rate of total bumped passengers (96 per 100,000 passengers vs. 95 on United Airlines and 50 on American Airlines), but the lowest rate of involuntarily bumped passengers (3 per 100,000 vs. 5 on American and 11 on United). In the past some airlines, like JetBlue Airways, did not overbook as a policy that provides incentive and avoids customer disappointment. They were able to do this and remain profitable as the majority of their customers are tourists, instead of business fliers, and their tickets are non-refundable, thereby lowering the chances of passengers missing their flights. Since 2017 JetBlue again began overbooking flights. In early April 2017, severe weather on the East Coast of the United States caused many flight cancellations, with Delta having more than 3,200 cancellations in a five-day period. Due to the large number of stranded passengers trying to board flights, many were far overbooked, resulting in Delta paying out unusually high-priced vouchers, with one group of three passengers being paid over $11,000 over a weekend of delays as a result of the overbooking.
Involuntary deboarding
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