Delta’s new system of accepting bids for passengers who are willing to be bumped is being billed as a win-win for consumers and the airlines alike. But, I see potential problems.
In a perfect world, travelers would have a better idea if they might be bumped, giving them a better chance of making backup arrangements. And the airline and passengers both benefit from a potentially smoother situation at the airport.
This is especially true around the holidays when passengers are loaded down and often more stressed with family travel. A call for volunteers at the same time other travelers are already waiting and milling around the check-in counter waiting for seat assignments — let’s just say it’s no one’s idea of fun.
But as a travel agent who has seen airlines take good ideas, and then get greedy with them, I can see some real potential for abuse here.
Say, for example, a particular flight is overbookedl and the airline starts looking for bumping bids. And because there are a number of people who either have flexible schedules or want/need the money, they get a lot of low bids. So a greedy yield-management employee might think, “Well, heck, if people are willing to be bumped for $200, let’s sell a lot more $650 seats on that flight.
As long as the number of bidders is lower than the overbooking total, a carrier can in theory keep selling those higher priced seats, and figure they will deal with it by paying off the “winners.”
Now, on some level, that’s a fair enough deal in a free market, but even a smoother bumping process is still going to slow things down somewhat at the airport, and will almost certainly increase the seating wars. (The more people who get confirmed at the last minute, the more couples and families will be split up, and then most of them will try to negotiate seats on board.)
The temptation really to overbook will be even stronger for special events. For example, earlier this month Stanford was in the Orange Bowl January 3 in Miami, a bid they accepted a few weeks prior to the game. But flights from South Florida (Miami or Fort Lauderdale) on January 4 were already close to full with holiday travelers, and the remaining seats sold out quickly. Within a week there were no nonstops back to California at any price on the 4th or 5th.
In this case, an airline could easily put bumping up for bids, and charge double the price for new travelers based on what ticket-holders would accept —organized ticket scalping. This happens for sporting events and some theater tickets already, except in this case, only the airlines would be able to control the sales and thus the profit.
Overall, it just doesn’t quite seem fair. (I know, since when did “fair” and “airlines” appear in the same sentence?) A traveler who buys a discount ticket generally pays a great deal for flexibility, even for changing a schedule by a few hours.
This new bidding system, if it expands to other carriers, will give airlines even more ability to maximum their per seat revenue, and reduce their dependence on guessing how many ticketed passengers will show up for a given flight.
One of the major airline arguments in favor of high change fees, in fact, is that they may end up with seats going to waste. So a bidding system might give airlines reason to reduce their fees? Don’t bet on it.
And what happens when someone bids on being bumped, but then weather or mechanical delays mean that a later flight might be much later. Can the bidder change his or her mind? And if not, is the airline obliged to raise the compensation.
My sense is that “bidding for bumping” has just too much potential for additional revenue not to become much more common in the industry. But stay tuned, the airlines have never met a golden goose they didn’t try to fatten to the point of killing.
