The age-old ritual of the passenger bump is getting a high-tech makeover at Delta Air Lines Inc.
The overhaul could dial down the drama for consumers at departure gates around the U.S. at a time when airplanes are flying fuller than ever. In addition, it could save Delta money as regulators consider increasing the amount that airlines must pay passengers who get bumped involuntarily from overbooked flights.
For decades airlines have overbooked flights to avoid taking off with empty seats when passengers with reservations don’t show up at the airport for a flight. Between 8 percent to 10 percent of passengers with reservations for a particular flight typically don’t show up, according to Peter Belobaba, the director of MIT’s Global Airline Industry Program.
When too many people show up, airline-gate agents embark on last-minute negotiations with passengers who might be willing to take a later flight in return for a financial incentive.
Delta’s new system, which has been up and running since last month, replaces that often-chaotic system with a silent auction that asks passengers to name their price electronically before they arrive at the departure gate if it looks as though there may not be enough seats on a flight.
Passengers who check in with Delta online before leaving for the airport or at kiosks before going through security can type in the dollar amount they would accept from the airline to be bumped from their flight. Delta can then accept the lowest bids, eliminating a lot of the uncertainty early.
Delta, the second-largest U.S. airline by traffic, is flying solo thus far. But many already see the future–both the good and the bad.
“I think it will definitely eliminate a lot of the confusions and questions at the gate,” said Charlie Leocha, head of the Consumer Travel Alliance, a nonprofit consumer-rights group.
The new system could also give Delta a negotiating edge with the consumer because it can pick the lowest bids and passengers won’t know how low others are willing to go.
By contrast, rival airlines continue to broadcast their offers–typically vouchers for future travel ranging from $200 to $400–to passengers at the departure gate. They keep ratcheting up their offers until enough passengers accept, often just minutes before a flight is scheduled to depart.
The new Delta system “pits the consumer against the consumer, rather than the airline petitioning the passengers,” Mr. Leocha said.
It is also being implemented as the Department of Transportation is considering a proposal that would require airlines to pay customers as much as $1,300 if they are bumped involuntarily to a later flight, up from $800. Under U.S. rules, airlines don’t have to pay anything to passengers when they cancel entire flights for weather or other reasons. That is not scheduled to change.
The number of passengers on U.S. airlines who agreed to be bumped from flights in the first nine months of 2010 rose to 541,694 from 510,878 in the like 2009 period, according to the Department of Transportation.
The number of passengers who were involuntarily bumped from overbooked flights rose to 53,287 from 52,219 over the same period.
Airlines are expected to face even more negotiations over overbooked flights in 2011. Passenger load factors on U.S. airplanes are already at a record, and they are expected to rise again this year as demand continues to grow. At the same time, airlines plan to keep domestic capacity roughly flat.
Atlanta-based Delta says the new bidding system allowing passengers to be voluntarily bumped is a “win-win” for consumers as well as the airline because it boosts efficiency and removes a lot of the chaos at the gate. Delta wouldn’t say how many fliers have used the new system.
“Saving three or four minutes at the gate has a big operational impact,” said Paul Skrbec, a Delta spokesman. He acknowledged that the price Delta has to pay fliers to agree to be bumped“ probably would be cheaper” under the silent auction.
-By Mike Esterl, The Wall Street Journal
If this is customer service, then the airlines had better be prepared for backlash. It’s already difficult to fly commercially and this is just one more insult. Do they do this when they see an overweight passenger who didn’t buy two seats so they can free up an entire side of a plane for the obese?
This makes no sense.
It’s impossible to make a “reservation” without paying for the ticket. If you don’t show up the airline keeps the money. No different than buying seats for a Bears game. They are OVER SELLING their product. What would happen if they could double sell Bears tickets? In today’s computer age there is no excuse for continuing this dumb practice.
Reality, the person with the ticket that doesn’t make the plane takes a later flight than the one they were scheduled. I fly for business purposes and frequently don’t make my scheduled flight back home because things run long at a customer. Business travelers pay a lot more per ticket than the average leisure traveler for this.
Here’s my price: Twice my one-way ticket price PLUS $1000.00.
Now if everyone does the same . . .
@Michael60647 – I’m only asking for $500 and a latter flight. How’s that for a bidding war? (I’m flying to Austin for the weekend, and I don’t care if I use my drink coupon at Starbucks and kill a few hours for a later flight…which will bump me up to business class also.)
There never seems to be anyone around to help fliers to make alternate arrangements. So now they’d have someone around to monitor the lowest bids?
If only they were nearly as concerned about passengers having enough leg room and not charging for every possible thing for those who do show up for the flights!
Airlines today know they have consumers by the _____, and they don’t care. Well, I take that back: they love it. And this is just another example. What choice do people have? Seemingly not much. Once one institutes another revenue source, the others jump on board.
BTW, I think this Delta concept is another slam against the customer. When some pinhead bids $50, the airline wins and all the other inconvenienced customers lose. And Delta knows there’ll always be a pinhead in the bunch.
Unless you want to make it a law that airlines can’t overbook their planes (which means ticket prices will go up the 8-10% for the missed reservations mentioned in the article), what is wrong with this system? Windycity’s argument is flawed-if someone bids $50, then that guy gets $50 and loses his seat. If they need a second seat, the next lowest bidder gets paid his bid amount. If you don’t want to lose your seat, then bid $5000 and you won’t be inconvenienced. It ain’t that hard. Seriously, people can figure out a way to complain about anything. If you feel the need to complain, I’d start with the 2% you just lost each year from your income with the tax hike.
The airline has already made its money when they oversold the plane. They now want you to help them keep it by lowballing people who get bumped! If the government is raising the fee to $1300, you can make Delta stop this silliness. Everybody do as Michael suggested, “Twice my one-way ticket price PLUS $1000.00″, which should be more than $1300 the government is going to make them pay.
Complainers, complainers. This isn’t a bad deal.
Haven’t you ever been waiting at a gate while the attendants working the computers are frantically trying to make deals with various people? It’s hard to imagine a slower process.
Complaining that now they need to have someone extra around to monitor the bids? Are you serious? You don’t think their computers are capable of ranking bids?
Look – like Jay said, if you don’t want to be bumped, bid high (or I’m betting they will have an option stating you refuse to be bumped). Yeah, I’m thinking there will usually be some 20-something around who wouldn’t mind in the least taking a later flight for a few hundred dollars.
There have been instances when I’ve had the time to take a later flight and would have if I’d have been offered cash to be bumped, but my luck has usually been a travel voucher for a future trip so I passed.
I don’t see the problem here.
Too bad customers can’t buy airline tickets and then auction them off to other consumers.
THAT would give consumers some real power in dealing with airlines.