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Showing up for no-shows

Showing up for no-shows

WEDNESDAY, December 28, 2016
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Why airlines overbook, and how everyone is kept happy 

Sometimes it is quite easy to instantly earn $420 (Bt15,000): all you have to do is raise your hand fast enough while you are waiting to board your plane.
It happened recently when passengers were waiting at Munich Airport to leave on a flight to Toronto. When they were ready to board their plane, a Lufthansa employee said the flight was overbooked, and she asked whether there were three passengers willing to fly the next day instead, in exchange for immediate compensation of 400 euros.
The airline would of course pay for their overnight hotel stay too.
Students with little money, for example, often don’t need to think twice: they get to spend a night eating and sleeping at a five-star hotel and their holiday finances suddenly look a lot better.
On every flight, there are almost always passengers who fail to show up despite having booked and paid for their tickets. These no-shows are the reason why every airline routinely overbooks its planes.
With Lufthansa alone, for example, there are 3 million such no shows every year, says airline spokesman Florian Graenzdoerffer. That would be enough to completely fill 8,700 Boeing 747-model long-distance planes.
This is a big financial challenge for airlines, since planes are most profitable when they are flown full. We need to assume that planes are on average 10 per cent overbooked, says David Hasse, of the specialist portal
The fact that it is rare for anyone to be left behind fuming at the gate “has to do with airlines’ clever prediction management,” Hasse says.
David Hasse, a publisher at web newsletter Airlines know exactly on what routes passengers are most likely not to show up, and why.
Lufthansa confirms that they do have a system in place: while Japanese passengers almost always turn up at the gate, India’s no-show rate is particularly high, Graenzdoerffer says.
In order to calculate the probability that a certain number of places will remain empty on any given route, airlines need to take into account many parameters beyond behaviour-based empirical values in the various cultures, however.
“The prediction system includes reservation change statistics, up-to-date weather data, public holiday calendars, holiday periods and event information for the place of origin and the destination,” Hasse explains.
For instance, a Swede may have bought a cheap ticket for a weekend in Barcelona that set them back less than 50 euros. A few days before their flight, it becomes clear that it will be rather chilly due to a storm front over Spain. 
“There will then be a relatively high probability that this passenger will not show up for their flight,” the expert notes.
Lufthansa, for example, begins to feed data into its prediction system as many as 361 days ahead of any given take-off. The result of such a procedure is that last year 300,000 extra passengers actually got to fly in overbooked planes.
“For every passenger we have to tell at the gate that they cannot board the plane due to overbooking, there are eight we can offer a seat to, although the plane is overbooked,” Graenzdoerffer notes.
This not only leads to a more efficient use of plane capacity, but also allows airlines to “keep ticket prices as low as possible,” the Lufthansa spokesman says.
Some parts of the world regulate overbooking strictly. The EU’s Air Passenger Rights Regulation ordain that every airline compensate anyone left on the ground when no-show predictions go wrong.
They must also be booked on the next available flight, obviously at no extra cost, and the airline has to pick up the bill for a potential hotel stay and any meals, calls and transfers the change makes necessary.
Volunteers who opt to stand in for them get exactly the same rights, Graenzdoerffer says.
And it’s rare that nobody at all is open to the cash inducement.
Under some circumstances, the passengers who do not show up at the gate may face penalties.
“This can particularly happen someone games the ticket prices with a certain flight combination,” says Holger Hopperdietzel, a lawyer who specialises in travel and tourism cases.
For example, a ticket from Vienna to Bangkok via Frankfurt costs less than simply flying straight from Frankfurt to Bangkok, so it’s attractive to buy the cheaper ticket and throw away the first, short-haul coupon.
If you are caught doing that though, the airline will demand you pay extra, Hopperdietzel notes.
Most airlines state in their terms and conditions that passengers are obliged to use all flights included in their ticket in the order of the itinerary.
But if you simply call off a non-refundable there-and-back trip, there’s no contractual obligation to tell the airline that you won’t be on the plane.